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P009963	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 24994 IMPLEMENTATION COMPLETION REPORT (IDA-23940) ONA CREDIT IN THE AMOUNT OF SDR$ 55\.189 MILLION (US$73\.28 MILLION EQUIVALENT) TO INDIA FOR A FAMILY WELFARE (URBAN SLUMS) PROJECT November 19, 2002 HUMAN DEVELOPMENT SECTOR UNIT SOUTH ASIA REGION This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective June30, 2002) Currency Unit = Rupee Rupee 1\.00 = US$ 0\.49 US$ 1\.00 = Rupee 49\.0 FISCAL YEAR April I March 31 ABBREVIATIONS AND ACRONYMS ANM - Auxiliary Nurse Midwife AP - Andhra Pradesh BCC - Bangalore City Corporation CBO - Community Based Organization CMDA - Calcutta Metropolitan Development Authority CUDP HI - Third IDA assisted Calcutta Urban Development Project DFID - Department for International Development DJB - Delhi Jal Board ESI - Employees State Insurance Corporation ESOPD - Extended Special Outpatient Department FP - Family Planning FW - Family Welfare GIS - Geographic Information System GOI- Government of India GOWB - Government of West Bengal HAU - Health Admrinistration Unit HIV- Human Immunodeficiency Virus HSCC - Hospital Services Consultancy CoTporation IMR - Infant Mortality Rate J J Cluster - Jhuggi Jhoupdi Clusters KMlA - Kolkata Metropolitan Development Authority LACI - Loan Administration Change Initiative MCD - Municipal Corporation of Delhi MCH - Matemal & Child Health MIS - Management Information Systems MOHIFW - Ministry of Health & Family Welfare MTR - Mid Term Review NMDC - New Delhi Municipal Corporation ODA - Overseas Development Authority PMP - Pnvate Medical Practitioners QAG - Quality Assurance Group RCH - Reproductive and Child Health SAR - Staff Appraisal Report SDR - Special Drawing Rights TFR - Total Fertility Rate UNICEF - United Nations Children's Fund UNFPA - United Nations Population Fund URS - Urban Revamping Scheme WHO - World Health Organization Vice President: Mieko Nishimizu Country Director: Michael F\. Carter Sector Director: Charles C\. Griffin Task Team Leader/Task Manager: G\.N\.V\. Ramana INDIA FAMILY WELFARE (URBAN SLUMS) PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 1 4\. Achievement of Objective and Outputs 5 5\. Major Factors Affecting Implementation and Outcome 9 6\. Sustainability 11 7\. Bank and Borrower Performance 12 8\. Lessons Learned 14 9\. Partner Comments 16 10\. Additional Information 16 Annex 1\. Key Performance Indicators/Log Frame Matrix 18 Annex 2\. Project Costs and Financing 19 Annex 3\. Economic Costs and Benefits 21 Annex 4\. Bank Inputs 22 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 25 Annex 6\. Ratings of Bank and Borrower Performance 26 Annex 7\. List of Supporting Documents 27 Annex 8\. Innovative Schemes 29 Annex 9\. Borrower's Evaluation Report 30 Annex 10\. Performance Indicators 47 Project ID: P009963 Project Name POPULATION VIII Team Leader: G N V Ramana TL Unit: SASHD ICR Type: Core ICR Report Date: December 17, 2002 1\. Project Data Name: POPULATION VIII L/C/TF Number: IDA-23940 Country/Department: INDIA Region: South Asia Regional Office Sector/subsector: Sub-national government administration (8%); Vocational training (4%); Health (84%); Other social services (4%) KEY DATES Original Revised/Actual PCD: 12/22/1989 Effective: 11/01/1992 06/30/1994 Appraisal: 04/01/1992 MTR: 11/20/1998 07/04/1998 Approval: 06/18/1992 Closing: 06/30/2001 06/30/2002 Borrower/Implementing Agency: GOI/MIN OF HEALTH & FAMILY WELFARE Other Partners: STAFF Current At Appraisal Vice President: Mieko Nishimizu Joseph D\. Wood Country Manager: Michael F\. Carter Heinz Vergin Sector Manager: Anabela Abreu Richard Lee Skolnik Team Leader at ICR: G\.N\.V\. Ramana Althea Hill ICR Primary Author: G\.N\.V\. Ramana; Sati Achath; Badrud Duza 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The original objectives of the US$81\.29 million project (IDA Credit US$ 73\. 28) were to: (a) reduce fertility, by improving access to and demand for family planning services; and (b) improve maternal and child health, by helping to decrease maternal and infant mortality rates among slum populations in the four metropolitan areas of Bangalore, Delhi, Hyderabad, and Kolkata\. The objectives were clearly stated, important to the country's social development, and realistic in scale and scope\. They were also timely and appropriate to the needs of the Borrower\. The aim was to address the formidable challenge of delivering cost-effective, affordable and quality reproductive and child health (RCH) interventions in the desperate slum setting of four large cities in India\. This was a largely neglected area demanding urgent attention for humane, health and political reasons\. The project was a critical part of the Bank's strategy of supporting human development and poverty alleviation in India, providing the opportunity to extend rapid and targeted assistance to the most vulnerable urban slum populations (about 1\.6 million poor women 15-44 years of age and about 850,000 children 0-4 years of age) who were not adequately covered by the existing Primacy Health Care infrastructure of the cities\. The project was consistent with the recommendations of the Krishnan Committee (1982), a landmark for policy guidelines on urban interventions\. It supported the Government of India's (GOI) Urban Revamping Scheme (1984), which had sought to imnprove the linkages between the provision of family welfare services and other basic health interventions, specifically clean drinking water and sewerage/sanitation facilities\. It was also in line with experiences emerging from previous programs, such as: Urban Basic Services for the Poor; Environmental Improvement in Urban Slums Program; Nehru Employment Scheme; Calcutta Urban Development Project m (CUDP III); and seven World Bank assisted Population Projects since 1973, including the family welfare project for Bombay (Mumbai) and Madras (Chennai) cities (1988-1995)\. These underscored the emerging strategies in urban family welfare and health interventions, including: (a) the value of integrating family welfare with basic health care; (b) the importance of linking family welfare and health with other development programs; and (c) the opportunities for their successful implementation through the involvement of community based organizations (CBOs)\. The present project (1994-2002) was the second IDA-supported population and health intervention specifically targeting urban slum populations\. It allowed for continued collaboration between the Bank and other development partners active in the sector in India, such as, ODA)/ DFID, UNICEF, WHO, UNFPA\. The project was fairly straight forward, and the activities and their projected execution were clearly defined\. The design provided a good deal of flexibility for adaptation in the project cities\. This was helpful in participatory planning and implementation by the local community\. 3\.2 Revised Objective: Following the Mid-Term Review (MTR) undertaken during May-June 1998 a third objective was added to pilot strengthening of family welfare logistic systems in two states - one relatively better performing (Tamil Nadu) and one weaker perforning (Uttar Pradesh)\. Fragmented handling, improper storage and irregular supplies due to lack of scientific logistic management systems were estimated to result in wastage of more than 10% of RCH supplies in India (Tamil Nadu and Uttar Pradesh Proposals - GOI 1998)\. MOHFW and several states identified strengthening of RCH supply logistics as a priority area during the MTR\. Lessons from these pilots could subsequently improve the efficiency and quality of urban family welfare programs in the country\. Based on the initial experience in four project cities and readiness for implementation, part of the savings were also utilized to expand ongoing project activities to more than 1\.6 million beneficiaries in the original four cities and about four million beneficiaries in 94 smaller towns in the states of Andhra Pradesh (73), Karnataka (11) and West Bengal (10)\. -2- 3\.3 Original Components: The project originally consisted of the following six components\. Component 1: Improving Access to Family Welfare (FW) and Maternal and Child Health (MCH) Services (US$ 40\.4 million: 42\.1% of the project) The urban slum populations had limited access to basic health facilities, which themselves were inadequate\. To address this limitation, the project supported the development of a client-responsive program for slum communities, which planned to utilize a fleet of trained female volunteers (Bustee Sevikas, link workers, trained Dais, Honorary Health Workers) who were residents of the slum community they served\. They were to work closely with the community and the health workers operating in the facilities created under the project\. Enhanced access to FW and MCH services was also sought through the construction of new service outlets and upgrading of existing facilities\. The project financed the costs of honoraria for the female volunteers; salaries of additional staff on a declining scale; and construction and renovation of about 600 health facilities, with furniture, equipment, and vehicles\. Component 1I: Improving the Quality of Family Welfare Services (US$ 10\.01 million: 10\.4% of the project) The project aimed to improve the quality of family welfare services by increased emphasis on: (a) pre- and in-service training for medical and paramedical staff; (b) training of female volunteers to help outreach service delivery; and (c) increased involvement of community based organizations (CBOs) and private medical practitioners (PMPs) in training as well as service delivery\. These activities would enable the municipalities to train about 21,000 health workers and local leaders\. The project was also to support the provision of essential supplies such as health worker kits, disposable delivery kits, medicines and family welfare supplies\. Component III: Increasing the Demandfor Family Welfare Services (US$ 9\.18 million: 9\.6 % of the project) The pre-project assessments identified low demand for family welfare and health services in the urban slums\. The project sought to improve demand through creating client-friendly ambience, and enhancing the health seeking behavior\. Increasing the participation of the municipal leaders and the urban slum communities in the design, implementation and supervision of the services was sought to promote local ownership\. Stakeholder consultation and sensitization were carried out prior to appraisal and planned to be continued during the implementation\. A critical element in increasing the demand for family welfare and health care was development of a sustainable IEC capacity in the municipalities though: (a) IEC activities and messages to trigger and sustain attitudinal and behavioral changes; (b) participatory approaches to design appropriate messages and media plans with focus on inter-personal communication; and (c) communications training for service delivery personnel\. The project was to support establishment of IEC cells in the municipalities, training, consultancy support, purchase of audio-visual equipment, and media time\. Component I V: Improving the Management ofFW Program (US$ 3\.14 million: 3\.3 % of the project) This component was to strengthen the Family Welfare (FW) program management in the municipalities by - 3- improving coordination with other municipal departments providing services to slum communities, especially those dealing with sanitation and water supply, education and nutrition\. Enhanced coordination with CBOs, PMPs and the community at large was also sought\. In order to effectively implement and monitor various project activities, improved capacity was to be built at the respective units through local and foreign training, use of local and foreign experts, equipment, vehicles, and salaries of additional management staff on a declining scale\. Special emphasis was to be given to training, management information systems (MIS), design and implementation of innovative schemes, and financial management\. Component V: Supporting Innovative Schemes (US$ 7\.76 million: 8\.1% of the project) To facilitate women's empowerment and income generation, the project envisaged innovative schemes\. These were to focus on young females and adolescent girls, and included supplementary nutrition, creche programs, environmental sanitation drives, and education and skill training\. The implementation was to be done in close collaboration with CBOs and local municipalities\. Component VI: Preparing Future Projects (US$ 8 million: 8\.3% of the project) The project made provision for preparation of new urban health programs for 15 cities in the states of Bihar, Madhya Pradesh, Maharashtra, and Uttar Pradesh\. 3\.4 Revised Components: As mentioned in Section 5\.4, with the savings of about US$38 million estimated at MTR, and in light of the revised objectives, one additional component on logistics support to Tamil Nadu and Uttar Pradesh was added to the project\. Component VII Strengthening FW Logistics in Tamil Nadu and Uttar Pradesh This component was to strengthen the logistics systems for pharmaceuticals and contraceptives for Family Welfare, with the potential of expansion to include vaccines\. Tamil Nadu was to expand capacity of 11 of the district warehouses and Uttar Pradesh was to strengthen capacity of the state warehouse and establish 14 new regional warehouses\. Logistics management capacity at state and regional levels was to be enhanced through staffing, training and establishment of computerized logistics management information systems\. 3\.5 Quality at Entry: The project design predates the inception of the Quality Assurance Group (QAG)\. Hence, there was no official assessment of its quality at entry\. Nevertheless, the ICR deems the quality at entry to be satisfactory and the project as well conceived\. During preparation of the project, major risk factors and lessons learned from other earlier projects in the health sector in India were considered and incorporated into the project design\. Provision for systematic training and supportive supervision was built in the design\. Extensive stakeholder consultations at the municipal and community levels, and the participatory process in project preparation substantially contributed to the quality and readiness at entry\. Gleaning the experiences of previous urban and community based health and development interventions also provided insight into the challenges and potentials for the project\. The focus of the project was brought in line with the shift from family planning towards comprehensive reproductive and child health services in 1994, soon after it became effective\. However, quality of entry could have been further enhanced had additional -4 - efforts during project preparation been taken in several areas: (a) better familiarization of the implementing agencies with the Bank's procurement and financial procedures; (b) timely acquisition of land for the new facilities; and (c) coordination of project efforts with relevant efforts of agencies providing education, skill development, and environmental sanitation, among others\. Despite adequate project preparation, there was a two year delay in effectiveness\. This is mainly due to delay in obtaining cabinet clearance consequent to changes in the federal government\. Efforts to obtain parallel clearances from board and Government of India immediately after negotiations would have prevented such delays\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Overall, the outcome of the project objectives was satisfactory\. In the original four project cities, there was a notable fertility decline among the slum populations (first objective); and markedly improved matemal and child health as evidenced by a decrease in infant mortality and increased use of essential RCH services by women and children (second objective), especially in Kolkata, Bangalore and Hyderabad\. Again, these improvements are more pronounced in the slums of Bangalore, Kolkata and Hyderabad and hence their achievement of the project objectives is rated "highly satisfactoty"\. Achievement of development objectives in Delhi (Tables I and 2) and new cities included after the MTR is rated satisfactory (Annex I and 8)\. The pilot for logistics system for contraceptive and MCH supplies (third/revised objective) is rated satisfactory for the state of Tamil Nadu and marginally satisfactory for Uttar Pradesh\. Table 1\. Changes in Key Impact Indicators Indicator Ban laore Delhi Hyderabad Kolkata Year Before After Before After Before After Before After Total Fertility Rate 3\.37 2\.01 5\.10 3\.77 3\.40 2\.09 1\.90 1\.70 Infant Mortality 78 22 100 53 81 69 56 26 R a te I _ _ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _I_ _ _ _ _ _ _ _ _ _ _ _ _ Source: Baseline and Endhne surveys Table 2\. Chan es in Key Process Indicators (%) Indicator Ban alore Delhi Hyderabad Kolkata Before After Before After Before After Before After Contraceptive Termina Prevalence l method 36\.1 51\.4 20\.0 22\.1 28\.5 62\.2 27\.3 34\.0 (Modern method) Total 39\.9 60\.8 33\.0 41\.7 41\.3 63\.8 52\.2* 51\.6 Antenatal Coverage (3+ contacts) 71\.0 84\.1 55\.0 53\.5 88\.0 95\.6 47\.0 87\.3 Institutional Delivery 76\.9 87\.9 14\.3* 27\.8 72\.0 96\.5 53\.9 89\.0 Fully Immunized Children 49\.6 89\.8 62\.0 55\.8 50\.0 82\.2 57\.1* 89\.1 (12-23 months) * Mid-term(1998) Source: Baseline and Endline Surveys -5- In view of other ongoing health and development interventions, attributing the observed changes to the project efforts needs to be interpreted with caution\. A comparative analysis was carried out with results from the household and facility surveys conducted by independent agencies in the four cities where the project was implemented for eight years, with results of National Family Health Survey (NFHS, 1992-93 and 1998-99)\. The following conclusions emerged: a\. The decline in Total Fertility Rate (TFR) was more pronounced for Bangalore and Hyderabad where TFR (2\.0 and 2\.1 respectively) approached replacement level of fertility\. Kolkata had the lowest TFR (1\.7) and had already been below the replacement level prior to project inception, and hence the rate of decline was less marked\. Delhi was behind the other cities\. It is difficult to precisely quantify the project's contribution to the fertility decline, since segregated data on urban slum residents are not available in NFHS\. The observed decline can to some extent be explained on the basis of increased contraceptive use, especially among low parity couples\. A third of the couples with one child in Kolkata and more than a quarter in Bangalore were using some modem contraceptives\. About a third of the users received contraceptive services from the project facilities\. A comparison of the annual rate of decline in TFR in project cities with that of NFHS (Urban) data revealed higher decline in Hyderabad, Bangalore, and Delhi (Annex 1)\. b\. The Infant Mortality Rate (IMR) registered a steady decline, especially in Bangalore (78 to 22), Delhi (100 to 53) and Kolkata (56 to 26)\. The decline was less marked in Hyderabad (81 to 69)\. The observed decline may to some extent be explained on the basis of increased use of essential RCH services\. More than 80 percent of the expectant women in Bangalore, Hyderabad and Kolkata received antenatal care\. A similar proportion of eligible children (12 -23 months) were fully immunized, and close to 90 percent of the deliveries in these three cities were institutional\. Between a half to three-fourths of these essential services were received from the project facilities (Annex 1)\. A comparison of the annual rate of decline of IMR in project cities with that of NFHS (Urban) data revealed more pronounced decline in Bangalore and Delhi (3-5 percent points a year)\. Matemal Mortality Ratios were not estimated due to large data requirements\. However, service statistics, focus group discussions and death audits from the project cities suggest that maternal deaths have become rare\. c\. All the planned logistic activities have been completed in Tamil Nadu and logistic management information systems (LMIS) were in place in all the newly built warehouses\. Uttar Pradesh has completed the planned infrastructure\. However, the LMIS is yet to made fully functional\. The significance of the above achievements may be appreciated against the formidable challenge of bringing family welfare and basic health services to the doorstep of the urban poor\. Pioneering initiatives were taken under the project\. Health care for slum populations became a priority in the local and state political agenda\. There was progressively strong community ownership of the interventions, spearheaded by the local leadership and grass-roots care givers\. The female community volunteers and local service providers became a major force in RCH delivery to the urban poor, and should remain a resource for the community much beyond the life of the project without any financial incentives\. Given the supportive milieu, there was a positive change in the health seeking behavior of the slum dwellers, especially the women-folk\. These profound processes, coupled with various innovative and income generating activities, led to an important beginning towards empowering the poor and previously voiceless urban slum and semi-literate women\. The degree of these accomplishments, which are difficult to quantify, did vary between the project cities and states\. Nonetheless, everywhere there was an increasingly notable change\. The progress along these processes would prove critical for the long-term outcomes\. In view of a comparative advantage along many of the above factors, Kolkata scored well in terms of - 6 - various process, outcome and impact indicators\. Experience from urban community based interventions in the preceding two decades, including the Bank supported CUDP programs, provided a facilitating environment in Kolkata to fully benefit from the project interventions\. Bangalore and Hyderabad followed closely\. Delhi was somewhat handicapped, partly because the project addressed the most vulnerable slum populations residing in temporary and shifting settlements (Jhuggi Jhoupdi Clusters)\. On the logistics side, Uttar Pradesh was more constrained owing to its weaker implementation capacities, compared to Tamil Nadu\. In the new cities, the project implementation took place only during the final two years of the project, and hence it would be some time before outcomes could be adequately documented\. 4\.2 Outputs by components: For most of the components, the outputs achieved matched or exceeded the project goals despite delayed effectiveness\. Also, due to delay in clearances for extension, the project closing date was extended by one year\. Details of various project outputs by components are given in Annex 1 and Annex 8\. Component L Improved access of the slum populations to FW and MCH services was highly satisfactory in Bangalore, Hyderabad and Kolkata and satisfactory in Delhi and the additional smaller towns\. RCH outreach services were extended to 11\.35 million urban slum/poor populations (double the SAR goal) residing in 2,247 slums in four metropolitan cities and 94 smaller towns\. 17,401 female volunteers (more than double the SAR figure) from the respective slum communities were working as social mobilizers and service providers to improve health seeking behaviors of the urban poor\. To provide clinical backup to outreach services, 614 new facilities were built close to the slums and 720 facilities were renovated (more than double the SAR targets)\. AP entered into innovative partnership with 192 CBOs to provide RCH services to urban poor in 74 towns\. Component II: Enhanced quality of FW and MCH services provided to slum populations was satisfactory for the originalfour project cities; the time frame was too short to bring in sufficient change for the additional smaller towns\. Training cells were established in all project cities to plan and implement systematic training for a large number of project volunteers and community leaders, besides the medical, technical and paramedical personnel\. In addition, communication and management training was also provided\. Nearly 27,000 persons were trained, exceeding the project goal by more than 50 percent\. Some of the advanced training was carried out in collaboration with reputed national institutions such as the Teachers Training Center of the Jawharlal Nehru Institute of Post Graduate Medical Education and Research (Pondichery), the Administrative Staff College of India (Hyderabad), the State Institute of Health and Family Welfare (Hyderabad), and the Indian Institute of Health Management Research (Jaipur)\. Some of the senior managers of the project attended the health financing training program of the World Bank Institute\. The project also provided for quality enhancing equipment, pharmaceuticals and consumables\. The MIS reports documented sustained supply of these inputs\. For the first time in the public sector, 30 urban health centers supported by the project in Bangalore received ISO 9002 accreditation for service quality\. Health care waste management, which was not originally planned under the project, was included subsequently to further enhance the quality of clinical care\. The Bank's review missions, done in conjunction with the implementation agencies, also played an important role in enhancing quality of services\. Component III: Increased demandfor FW and MCH services in the originalfour project cities was satisfactory; the time frame was too short to make a significant difference for the additional smaller towns\. A two pronged strategy was adopted to generate the demand for FW and MCH services -- first, establishment of services which are client friendly, operating at timings convenient to women residing in the slums; second, development of an IEC strategy, which has focus on priority health seeking behaviors - 7 - giving attention to inter-personal communication\. The target groups included adolescents and young women, women's groups and mothers-in-law\. Due to such strategic use of targeted and inter-personal communication, there were substantial savings (70% of planned) in this component\. The original four cities carried out most of the planned EEC activities (Annex 8)\. Component IV: Strengthened management and administration of municipal Health Departments was satisfactory for the originalfour project cities; the timeframe was too short to expect a significant change for the additional smaller towns\. High-level committees, headed by the Chief Secretaries of the respective states facilitated quick policy decisions, supported by executive/steering committees to oversee the project implementation\. 366 project managers received management training including procurement, quality improvement, managing RCH programs, and financing health sector reforms (SAR goal:200)\. Dedicated women's development units in Bangalore and Hyderabad proved to be an added advantage\. Successive IDA missions observed the capacities of procurement and LEC wings of these PMUs to be generally weak in all the cities, and training of the project team focused on these deficient areas\. In Hyderabad, change in construction management responsibility and non-availability of fully dedicated engineering wing resulted in construction delays and inadequate monitoring\. All project cities developed simple MIS\. Delhi and Kolkata effectively used this for management decisions such as, planning service delivery activities, provider output monitoring, introducing user fee, and planning and monitoring LEC campaigns\. Kolkata also piloted Geographic Infornation System (GIS) to identify the beneficiaries and monitor their access to FW and MCH services\. The funds flow to the municipalities was through MOHFW and the state Finance Departments\. Funds flow problems were faced by Delhi and Hyderabad in 1999-2000, which was expeditiously addressed by MOHFW\. A Loan Administration Change Initiative (LACI) for computerized management of physical and financial progress of the project was piloted in the four project cities, though this was not used as the basis for disbursements\. Component V\.: The progress toward supporting innovative schemes was satisfactory in the originalfour project cities; because of limited time, they were not implemented in the additional smaller towns\. As envisaged in SAR, these activities focused on empowering women through vocational training and education in the original four cities\. All states used services of CBOs for these activities\. A summnary of major activities under this component is given in Annex 8\. Component V7: Preparing Future Projects\. The scope of this component was changed during the mid term review with inclusion of 94 smaller towns from the states of Andhra Pradesh, Karnataka and West Bengal in the orginal scope of the project and introduction of component VII\. Component VII\. Strengthening the logistics system in Tamil Nadu was satisfactory, and marginally satisfactory in Uttar Pradesh\. Out of the 26 warehouses planned under the project, 24 were completed and made operational\. Tamil Nadu fully implemented an integrated pharmaceutical Logistic Management Information System (LMIS) in all the newly built warehouses\. UP engaged the services of Ms\. Hospital Services Consultancy Corporation (India) Ltd\., as procurement agent for goods/equipment\. In UP, a network of 13 regional warehouses were built, out of which three warehouses were transferred to the newly created state of Uttaranchal\. Software activities (LMIS and training) are being implemented with the support of USAID, and integrated family welfare and health supply logistics is being piloted in five districts under DA-supported UP Health Systems Development Project\. 4\.3 Net Present Value/Economic rate of return: Not applicable as this analysis was not done in SAR -8- 4\.4 Financial rate of return: Not applicable as this analysis was not done in SAR 4\.5 Institutional development impact: The project resulted in a modest institutional development impact\. It successfully engaged municipal bodies to plan and implement outcome based urban RCH services for the slum residents\. In the project cities a number of modalities are now in place to deliver community-based, easily accessible and affordable services to the urban poor\. The project cities have set-up an outreach service delivery system and effectively used community volunteers and client-friendly service providers for enhancing demand for the services offered\. Their impact is likely to continue long beyond the life of the project\. The project has also registered valuable successes in institutional development that could be replicable elsewhere with suitable adaptation\. These would include: 1\. Enhancing local ownership through decentralization (most project areas); 2\. Complementing the skills and service delivery arrangements through strategic partnership with private sector (use of part time doctors and specialists in Kolkata); 3\. Cost-sharing mechanisms for health care, with safety nets for those below the poverty line (well-set in Kolkata, and starting in Bangalore and AP); 4\. Outsourcing service delivery to CBOs (AP, Bangalore); 5\. Providing technical assistance to other states for ISO certification in quality of care (Karnataka); 6\. Extending technical assistance in healthcare logistics management (Tamil Nadu ); 7\. Using GIS to identify vulnerable populations and monitor provider performance, and to enhance municipal revenue 8\. (Kolkata); 9\. Piloting a Loan Administration Change Initiative (LACI) for computerized management of the financial, physical and procurement progress of the project in the original four project cities, which is gradually getting mainstreamed in such cities as Delhi\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: i\. Rapid urban growth and heterogeneous urban population proved to be a challenge: Steep increase in slum populations during the project period, especially in Delhi, made it difficult for the project teams to keepup with growing demands for services\. In addition, lack of homogeneity among slum residents, coming from neighboring states/countries to the large metropolitan cities, made planning and implementation of social mobilization activities very challenging\. ii\. Land scarcity was acute in all urban areas: The originally identified sites had to be shifted several times due to local pressures, competing demands from different sectors and community reluctance to permit construction of health facilities close to schools and parks\. Also, the prototype designs agreed during project preparation required larger sites for maternity homes and health centers, which were more difficult to obtain close to or in the slum areas\. Implementation of civil works was significantly delayed due to shifting of the identified sites and adaptation of the designs to suit the available sites\. iii\. Multiplicity of agencies providing health services posed management and implementation problems in all project cities: In Delhi, there were coordination problems for health service among different agencies, -9- such as Municipal Corporation of Delhi (MCD), New Delhi Municipal Corporation (NDMC), Delhi Cantonment Board, Delhi Jal Board (DJB), Delhi Government, and Employees State Insurance (ESI) Corporation\. Similarly, in Hyderabad, coordination of the project with secondary and tertiary facilities under different management constrained effective referral linkages\. Bangalore and Kolkata had fully dedicated maternity homes in adequate numbers that facilitated better follow-on care\. However, even in these two places, linkages with district and tertiary hospitals, not under the control of the municipalities, remained weak\. iv\. Lack ofpolitical ownership was a bottleneck in some cities: In Kolkata, strong political ownership by elected representatives played a positive role in the smooth implementation of the project and sustaining the reforms introduced\. On the other hand, in Delhi, despite best efforts by the project team, effective coordination between different agencies and levels could not happen to develop a common understanding on improving service delivery and promoting initiatives crucial for sustainability, such as introduction of cost sharing and client responsive working hours\. The experiences in Hyderabad and Bangalore were mixed, but mostly driven by some committed individuals\. (v) Exchange ratefluctuations generated additional rupee equivalent for the project: At project preparation the rupee-dollar exchange rate was 26\.2, while at closing this was close to 49\. As a result, the scope of the original project could be substantially expanded in the project states and a logistics pilot introduced in two new states\. 5\.2 Factors generally subject to government control: i\. Delayed GOI clearance affected timely take-off and implementation: The initial credit effectiveness was delayed by about two years due to changes in federal government after negotiations; and two national elections also delayed clearances for the expanded scope of the project following the MTR by about 18 months\. Avoidance of such delays would be critical for the future Bank supported projects\. ii\. Relocation and re- designation of slums made project implementation difficult: The coordination between the project and the slum development wing of the municipalities was weak\. This was particularly evident in Delhi where the JJ Clusters were shifted without prior consultation with the project team\. This resulted in under-utilization of project facilities in some locations and created demand for new facilities in relocated areas\. iii\. Problem offunds flow slowed down implementation in Delhi and AP: The project funds were channeled from GOI to the implementing municipality through respective state Finance Departments\. Funds flow problem was encountered in Delhi and Hyderabad in 1999-2000\. GOI expeditiously resolved this issue following its identification by the Bank's supervision mission\. It channeled the resources directly to the project account of Delhi and to the bank account of a society in AP, independent of the state Finance Department\. iv\. Bureaucratic procedures led to delayed staff appointment: Most of the municipalities had to depend on line departments for provision of staff\. Delhi had to appoint senior employees either through the Delhi Government or through Union Public Service Commission, and depend on the neighboring states for the appointment of Auxiliary Nurse Midwives (ANMs)\. As there was no District Medical Office in Hyderabad, which has the mandate to recruit ANMs, the corporation used services of a manpower supply company to engage them on contract\. This has been recently addressed with the creation of district health administration in Hyderabad\. Kolkata also faced difficulty in getting adequate staff nurses for the post of second tier supervisors and Bangalore had to depend on Director of Health Services to depute the staff -10- nurses\. v\. Needfor better Referral linkages: The referral linkages with facilities managed by the municipal Health Department were found to be inadequate despite having coordination committees at various levels\. A good effort was made in Hyderabad, where the program had better collaboration with the IDA-supported Blindness Control and HIV/AIDs programs\. 5\.3 Factors generally subject to implementing agency control: i\. Coordination among concerned agencies: In general, collaboration among different line departments within municipalities, such as, slum development, education, integrated child development services, and urban poverty alleviation programs, was not much evident\. However, in Kolkata where local bodies played an active role, the coordination was much better\. ii\. Turnover of senior staff disrupted implementation: Frequent transfer of key officials affected the implementation pace in Delhi (three Municipal Comrnissioners), and Hyderabad (12 Project Directors & 5 Joint Directors)\. Kolkata was the only city with continuity of the senior managers, which proved to be a substantial advantage for the project\. iii\. Insufficient delegation offinancial and administrative authority delayed implementation: In all the project cities, there were delays at the initial stages for obtaining clearances for proposals and payment of bills due to insufficient delegation to Project Director and complex administrative procedures\. To a major extent, all states started to address these problems by mid-term through the establishment of weekly/monthly senior level reviews\. iv\. Delayed implementation of Civil Works in Hyderabad due to absence of dedicated construction agency: All project cities had dedicated construction wings\. In Hyderabad, Andhra Pradesh Health Medical Housing Infrastructure Development Corporation was appointed as procurement agent for civil works and hence no dedicated wing was created\. As the implementation of the works program was delayed, the engineering wing of the corporation, which had several other responsibilities, was subsequently asked to implement the works program\. This resulted in construction delays and inadequate monitoring\. v\. Lack offamiliarity with Bank procedures resulted in slow implementation: Lack of familiarity with Bank procedures, especially on procurement and financial management, initially delayed implementation, despite regular interactions with the Bank staff and training given to project teams\. Changes in key mangers resulted in delayed procurement decisions\. In UP, there was considerable delay in the award of contracts in spite of appointing a dedicated procurement agent (HSCC)\. 5\.4 Costs and financing: The total cost of the project was US$ 88\.46million (as of November 5, 2002), compared with the SAR estimate of US$96\.08 million\. Out of the total costs, IDA Credit contributed to US$ 73\.28 million and the rest was counterpart funding\. Being a centrally sponsored project, GOI provided 90% of the counterpart funds and the remaining 10% was provided by the respective states\. In the case of the logistics component, GOI provided for the entire counterpart financing\. In addition, it is worth mentioning here that MTR estimated savings of about US$38 million\. This was largely due to depreciation of the Indian Rupee against the Special Drawing Rights (SDR) and project savings due to non-utilization of project preparation funds for new states\. - 11 - 6\. Sustainability 6\.1 Rationale for sustainability rating: Likely\. The sustainability of the project is rated as likely in both financial and institutional terms\. On the financing side, allocations were made in the FY 2003 budget by all the project cities to continue the activities generated by the project\. More important, these activities have been institutionalized and integrated with the respective city municipal corporations and urban family welfare bureaus in Bangalore and Hyderabad\. On the institutional side, in Kolkata, the management has been decentralized to local urban bodies, and the Chair Persons/Mayors of the 40 local bodies are now managing the program with technical oversight from KMDA\. Kolkata set up facility level Health Development Fund out of user fees - including higher fees from those above the poverty line -- and contributions from the community\. Following this example, project teams in other cities are also exploring the options to generate additional resources in partnership with representatives of local communities, NGOs and elected representatives of municipalities\. GOAP has assured the Bank that all contractual ANMs would be continued till regular staff are posted, and that maternity homes built under the project would be fully staffed\. As there is no provision for cost recovery, sustainability in Delhi would depend entirely on government funding\. The house of Municipal Corporation of Delhi (MCD) has passed resolution on October 23, 2002 to continue all staff positions created under the project including contractual staff and Basti Sevikas\. In addition, MCD has assured the Bank that all innovations started in the project would be sustained and MCD would ensure that all amenities for the facilities built under the project would be provided\. Very high level political commitment by the State of West Bengal contributed substantially to institutional sustainability of the project, as happened in the case of the earlier Bank-supported CUPD EII\. This would be worth emulating by other project states\. Effective internalization of management practices in the Health Departnents of city municipal corporations is expected to ensure institutional sustainability\. For example, Delhi has developed an excellent HMIS\. Likewise, Bangalore has strengthened its network of urban health centers and maternity homes, and has been able to sustain ISO 9002 certification for 30 health centers\. The trained community volunteers and other community based service providers should remain a permanent resource, available to the poor slum dwellers beyond the life of the project\. Different options have been tried in the project to sustain these workers\. The State Government in Kolkata has shown a strong commitment to pay honorarium to these workers, while in Hyderabad one time group incentive was given to link volunteers rather than a monthly honorarium\. Bangalore phased out the payments to the link volunteers once adequate demand is generated\. The process of client empowerment and the health seeking behavior generated by the project should also go a long way to facilitate sustainability\. A unique contribution of the project has been inscription of RCH and basic health care for the urban poor firmly on the community and state political agenda\. Within this premise, IPP 8, with appropriate adoption to suit local needs, is now widely acclaimed as a good model for delivering affordable (both by government and urban poor) and sustainable RCH services for vast urban slums around the country\. Sustainability of the interventions in the additional cities covered since the MTR should also be helped, if pursued along above lines\. As for the logistics support to two new states following the MTR, the outlook appears optimistic since the activities are already integrated in the RCH program at the state level, especially in Tanil Nadu\. 6\.2 Transition arrangement to regular operations: - 12- Same as Sec\. 6\.1 7\. Bank and Borrower Performance Bank 7\.1 Lending: Satisfactory\. The Bank's performance in the identification, preparation, and appraisal of the project was satisfactory\. The identification process focused on critical gaps and opportunities for interventions in family welfare and child health in urban slums\. The project's consistency with the government's development priorities and the Bank's country assistance strategy was assured\. In addition, the Bank also covered in-depth sociological aspects and local issues while designing the project\. With a harmonious team of a good skill mix, it brought in state-of-the-art expertise into project design, providing for flexibility and responsiveness to local needs\. However, effectiveness delay remains an important set-back to the project preparation\. Though no formal financial assessment was conducted during appraisal, issues relating to financial management were tackled in a timely manner during implementation"\. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects, such as technical, financial, economic, and institutional, including procurement and financial management\. In addition, during the appraisal, the Bank assessed the project's risks and benefits\. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal\. Extensive stakeholder consultations at community, metropolitan, state and national levels was highly productive, and initiated a process of ownership that proved invaluable at the implementation stage\. 7\.2 Supervision: Satisfactory\. The Bank's performance during the implementation of the project was satisfactory\. Sufficient budget and staff resources were allocated, and the project was adequately supervised and closely monitored\. Over the eight years of project implementation, there were 17 supervision missions, with an average of about two missions per year\. In addition, the bank team undertook mini-missions and joint reviews with state health systems projects\. The Bank's client relationship was very cordial and productive\. Review teams included specialists in public health, social demography, management and institutional issues, training and service delivery, IEC, MIS, civil works, logistics, financial management, and procurement\. External consultants were used for specific aspects of project components\. Participation of GOI, state and city representatives in the review missions enhanced Bank-Borrower bonding, and better understanding and expeditious resolution of implementation bottlenecks\. This also fostered mutual education on institutional and field issues, and supportive learning on the part of the implementing agencies in technical matters and Bank procedures\. Aide-Memoires were regularly prepared and transmitted, flagging outstanding issues and underscoring benchmarks for actions\. These alerted the government and the implementing agencies to problems with project execution and facilitated remedies in a timely manner, in conformity with Bank procedures\. The Form 590s and PSRs realistically rated the performance of the project both in terms of achievement of development objectives and project implementation\. Whenever delays in implementation occurred, the Bank Task Team was able to define concrete steps and timetable for putting the project back on track and pace\. The Bank paid sufficient attention to the project's likely development impact\. The quality of advice, and the follow-up on agreed actions were adequate\. Loan covenants and remedies were enforced effectively\. - 13 - With the decentralization of Bank functions to the Resident Mission in Delhi, the Bank could provide quick response and follow-up\. The staff also showed flexibility in suggesting needed modifications in implementation\. They worked closely with the government and the implementing agencies, and provided them with extensive assistance including technical advice\. The Bank conducted workshops for the municipalities at the early stages of implementation on specific subjects, such as procurement and disbursement at the end of the project, a stakeholder workshop was conducted to share the experience of the project\. The Bank partnered with USAID in the logistics component in UP, and provided hardware and built warehouses\. In addition, it collaborated with DFID for extending the project activities to other cities in West Bengal\. 7\.3 Overall Bank performance: Satisfactory\. Overall, the Bank perfonnance was satisfactory during project preparation, appraisal and implementation\. There was excellent coordination between the project team and all relevant sector and operations units\. Borrower 7\.4 Preparation: Satisfactory\. The Borrower's performance in the preparation of the project was satisfactory\. The Borrower displayed the required level of commitment to the objectives of the project and covered the adequacy of design and all major aspects, such as, technical, financial, economic, institutional, environmental and sociological factors, including stakeholder commitment\. The government officials and staff of the implementing agencies both at the central and state levels worked closely with the Bank's project team on a continual basis, with full cooperation and enthusiasm\. 7\.5 Government implementation performance: Satisfactory\. The government implementation performance was satisfactory\. It consistently maintained its commitment throughout the implementation\. However, delayed clearances for project effectiveness and extension after mid term remain major shortfalls\. MOHFW, which was responsible for the overall implementation of the project, consisted of senior policy makers and experienced managers\. They were very responsive to take corrective implementation measures, and were effective in dealing with outstanding operational issues\. Appropriate levels of review and approval were usually in place; financial accountability and follow-up was observed, and expenditures were duly authorized before they were incurred; and documentation was maintained properly for periodic review\. MOHFW ensured smooth funds flow to the implementing agencies, and fully collaborated with the Bank in setting up alternate mechanisms required in certain instances\. The project did not suffer from any counterpart funding problems, as GOI took timely corrective measures and made appropriate budget provisions\. Regular participation of MOHFW and state level officials in the Bank's supervision missions reinforced confidence among the implementing agencies and helped expeditious resolution of many issues, some instantaneously at the field level itself\. The audit reports from participating entities were generally available on or just after the due date, and had no major accountability issues\. Small disallowances were noted by the auditor, which were recovered from subsequent applications\. 7\.6 Implementing Agency: - 14 - Satisfactory\. The performance of Area Projects Division of MOHFW, which coordinated the project, was satisfactory\. It provided proactive follow-up to mitigate implementation bottlenecks, especially when funds flow problems were experienced in AP and Delhi\. The Joint Secretary and Director visited the state and helped in establishing alternative funds flow arrangements in AP (through society) and Delhi (direct release to project savings accounts)\. All projects had dedicated project management units with staff drawn from respective municipal corporations except for Kolkata where the Kolkata Metropolitan Development Authority (KMDA) put up a dedicated team from an earlier Bank supported project in the sector\. Performance of the PMUs was generally good\. They were receptive to Bank advice, and highly collaborative with respect to meeting demanding benchmarks and deadlines\. 7\.7 Overall Borrowerperformnance: Satisfactory\. The overall performance of the Borrower was satisfactory\. 8\. Lessons Learned Institutional * Minimizing effectivenss delays by obtaining all clearances in advance will be critical for future projects\. * Bringing health on to the local political agenda through decentralization, as happened very effectively in Kolkata, is critical for sustained delivery of health care to the slum populations\. * Long term engagement is needed both for building capacities of local municipalities and sensitizing slum communities for effective delivery of health services and their use by the urban poor\. * Factors that make a difference in enhancing access and demand for health services among the slum dwellers include: a) Neighborhood female community volunteers and local leaders acting as catalysts; b) Use of the private practitioners to complement public health services through provider incentives; c) Client friendly services provided at convenient locations and times\. * Cost sharing with adequate safe guards for the poor provides critical resources needed for sustaining quality care\. Retention of the user fees at the facilities help in local decisions\. * There is no single solution to addressing Urban RCH issues, and the strategies need to be flexible based on local needs and capacities\. * Innovative schemes need to be better oriented to project development objectives and departments implementing urban poverty reduction programs should be actively involved rather than the health departnent taking up this responsibility\. * While designing urban primary care projects, the need to develop permanent infrastructure should be carefully assessed, particularly in case of migratory populations like residents of JJClusters in Delhi\. * In urban health, there are more opportunities for public sector to strategically partner with private - 15 - and NGO sectors as it has been done in Kolkata (Part time medical officers from private sector) and in Andhra Pradesh (Service Delivery contracts with NGOs)\. Technical * While RCH services are critical, the service package for the urban poor should include a judicious mix of public health and curative care\. * Good referral linkages with facilities providing higher level care should be ensured, especially for emergency obstetric care\. Small stand-alone facilities like maternity homes are difficult to sustain\. * While formulating targeted health interventions for the urban poor, reproductive health needs of the males also need adequate attention\. Operational * Starting services early on even in makeshift facilities, and initiating demand generation activities will minimize loss of precious project time due to preoccupation with infrastructure development activities\. * Prioritizing behavior change initiatives to a focused set of interventions and strategic delivery of messages based on sound communications research are critical for successful demand generation activities\. * Health interventions for the urban poor need better coordination with ongoing slum development programs for addressing pressing problems of the slum dwellers, such as poverty alleviation and slum improvement\. 9\. Partner Comments (a) Borrower/implementing agency: The report is well documnented & quite comprehensive covering all aspects relating to project right from the planning stage to completion stage and contains all relevant information\. The specific comments are sent herewith for consideration/incorporation/modification * Page 9, para 1 point (a)- (c): have been mentioned in connection with the additional efforts during the project preparation\. These components can be effectively attempted only after the approval of the project, establishment of project management units and after posting of requisite staff\. In view of this, (a)-(c) require suitable modification\. * Page 9 para 4\. 1\. has rated the achievement of development objectives in new cities included after the MTR as satisfactory\. Considering the time available for the implementation of the project in these cities and the fact that the service delivery started without waiting for the completion of construction of facilities and improvement shown through the performance data in these additional cities, the performance for these new cities should also be rated as highly satisfactory\. * Page 10 last but 1 para mentions that the female community volunteer/local service providers should remain a resource for the community much beyond the life of the project\. In view of the fact that these volunteers are paid out of the project funds during the project implementation period and taking into account the resource constraints and other problems which may arise because of their continuation for a - 16 - longer period, it is opined that in projects implemented for about 7-8 years, efforts should be made to ensure that by the end of the project, the projects are owned by the local community itself through phasing out these volunteers during the project implementation\. Other altemative mechanism may also be thought in this regards\. * Page 17\. para 7\.3\. The Ministry has rated the Bank's performance as highly satisfactory in the ICR\. It is opined that the necessary modification may be considered * It is also felt that report should contain the latest financial achievements in-terms of costs and actual expenditure (state-wise)\. As of 31, October 2002, the expenditures for which claims were filed was estimated at Rs\. 396\.56 Crore\. * The World Bank cumbersome procedures, particularly relating to procurement and civil works and procedures required for approval is also one of the factor which also affected the project implementation (b) Cofinanciers: (c) Other partners (NGOs/prnvate sector): 10\. Additional Information ICR Team: G\. N\. V\. Ramana (ICR- Task Team Leader) Badrud Duza (Consultant) Sati Achath (Consultant) J\. G\. Sastry (Consultant) Parul Chhabra (Consultant) Agnelo Gomes (Team Assistant) Peer Reviewers: Ruth Levine Elizabeth Laura Lule - 17 - Anninex 1\. Key IPerformiinnace lfndlecatoirs/Log 1Frame Matri Outcome / Impact Indicators: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ :~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ A ct~~~~~~~~~~~~~~~~~a~~~~~~~I L at~~~~~~~~~~~~~~~~~s~~~~~~~~ E sti m a te~~~~~~~~~~~~~~~~~~A iu - m s ! F m (See Annex 10 (Performance Indicators) Output Indicators: See Annex 10 (Performance Indicators) End of project - 18- Annex 2\. 1Project Costs znd 1Financing Project Cost by Component (in US$ million equivalent) \.Actual/Latest Percentvge of ^ "; \.'-' ', ais^G aJ o ;-i \. I\. E b3,\.'' {,,~iz~rn4>r, ' " _sustrriaL(; v- § ate\. \. ppt'-aisal Projecot 6Cs B¢ CoMpo;en-a \.&5 US$ milion -n' US$ rinlion "'- Increase supply of family welfare services 40\.40 57\.00 141\.09 Improve quality of family welfare services 10\.01 12\.12 121\.08 Increase demand for family welfare services 9\.18 3\.85 41\.94 Management Improvement 3\.14 6\.69 213\.06 Innovative Schemes 7\.76 2\.69 34\.66 Preparation of new projects 8\.00 6\.11 Logistics Support 0\.00 Total Baseline Cost 78\.49 88\.46 Physical Contingencies 5\.94 PrlCS ContingencIes 11\.65 \.- Total Project Costs 96\.08 88\.46 Total Financing Required 96\.08 88\.46 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) \.~y~r~ r Cate\.ory -B \.Procurement Method ~ r \. Exp;Jri'VuiF\. Category ^I\.c'a 7ThaD Cest 1\. Works 0\.00 10\.90 7\.15 2\.10 20\.15 (0\.00) (9\.80) (6\.40) (0\.00) (16\.20) 2\. Goods 2\.00 20\.10 10\.60 0\.00 32\.70 (1\.80) (18\.20) (0\.00) (0\.00) (20\.00) 3\. Services 0\.00 0\.00 18\.05 0\.00 18\.05 (0\.00) (0\.00) (9\.28) (0\.00) (9\.28) 4\. Miscellaneous 0\.00 0\.00 0\.00 25\.70 25\.70 (0\.00) (0\.00) (0\.00) (15\.50) (15\.50) 5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 6\. MIscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 2\.00 31\.00 35\.80 27\.80 96\.60 (1\.80) (28\.00) (15\.68) (15\.50) (60\.98) 19- Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) \. - \. Procurement Method Category ics ~ ~ ~ ~ ~ ~ 2N\.B\.F\. 70h18~ COZ2 -:;\.;av2>3\."le Category I C B \. , NCR\. Other 1\. WorIts 0\.00 37\.32 4\.22 0\.00 41\.54 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 1\.15 9\.23 8\.91 0\.00 19\.29 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 3\. Services 0\.00 0\.35 9\.98 0\.00 10\.33 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 4\. GMiscellaneous 0\.00 0\.03 17\.26 0\.00 17\.29 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 5\. Misceflaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 6\. Miscellansous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 1\.15 46\.93 40\.37 0\.00 88\.45 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Theamounts financed by the IDA Credit were not separately available at the time of finalizing the ICR\. "Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\. 2'Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by C mponent (in US$ million equivalent) \. 1 Perce"ta\.gge L AS Comp ne Appraisal Estimate', Actual/Latest Estimate Bank Govt\. CoF Bank Govt CoF\. 3azA GZV2 r C>\. Increase supply of family 36\.36 4\.04 51\.30 5\.70 141\.1 141\.1 welfare services Improve quality of family 9\.01 1\.00 9\.70 2\.43 107\.7 243\.0 welfare services Increase demand for family 9\.18 0\.00 3\.85 0\.00 41\.9 0\.0 welfare services Management Improvement 2\.04 1\.10 4\.35 2\.34 213\.2 212\.7 Innovative Schemes 7\.76 0\.00 2\.69 0\.00 34\.7 0\.0 Preparation of new 6\.80 1\.20 0\.00 0\.00 0\.0 0\.0 projects Logistics Support 0\.00 0\.00 5\.19 0\.92 0\.0 0\.0 -20- Annex 3\. Economic Costs and Benefits Not Applicable - 21 - Annex 4\. Bank Inputs a)Missions: stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 20/10/1991 6 MISSION LEADER (1) ARCHITECT (1) ECONOMIST (1) MANAGEMENT (2) FINANCE (1) Appraisal/Negotiation 05/15/1992 6 ECONOMIST (1) POPULTION (1) LEGAL (1) DISBURSEMENT (1) LOAN (1) ARCHITECT (1) Supervision 05/22/1994 7 POPULATION (1); S S ARCHITECT (1); EEC (1); TRAINING (1); PHYSICIAN (1); MANAGEMENT (1); FINANCE (1) 12/31/1994 6 ARCHITECT (2); MISSION S S LEADER (1); TRAINING (2); PHARMACEUTICALS (1) 11/17/1995 6 MISSION LEADER (1); S S TRAINING (2); COMMUNITY PARTICIPATI (1); SERVICE DELIVERY (1); ARCHITECT (1) 04/15/1996 4 MISSION LEADER (1); S S MANAGEMENT (1); SERVICE DELIVERY (1); ARCHITECT (1) 12/06/1996 3 MISSION LEADER (1); S S COMMUNITY PARTIC (1); CONSULTANT (1) 05/21/1997 6 MISSION LEADER (1); S S COMMUNITY PARTICIPANT (1); IEC (1); TRAINING (1); CIVIL WORKS (1); MANAGEMENT (1) 11/17/1997 7 MISSION LEADER (1); IEC (1); S S TRAINING (2); CIVIL WORKS (1); MANAGEMENT (1); PROCUREMENT (1) -22 - 12/17/1998 6 TEAM LEADER (1); MISSION S S LEADER (1); PUBLIC HEALTH SPEC\. (1); NGO (1); CIVIL WORKS (1); PROCUREMENT (1) 02/18/1999 10 MISSION LEADER (1); TASK S S LEADER (1); PUBLIC HEALTH SPEC\. (2); CONSULTANT (1); ARCHITECT (1); FINANCIAL MGT\. (1); PROCUREMENT (1); TEAM ASSISTANT (1); IEC (1) 12/15/1999 8 TEAM LEADER (1); PUBLIC S S HEALTH SPLST\. (2); SRPUBLIC HEALTH SPLST (1); CONSULTANT (4) 05/15/2000 9 TEAM LEADER- ECONOMIST S S (1); PUBLIC HEALTH SPE\. (2); SR\. PUBLIC HEALTH SPE\. (1); TRAINING (1); IEC & SOCLAL MOBLI\. (1); PROCUREMENT (1); FINANCIAL MANAGEMENT (1); CIVIL WORKS (1) 05/15/2000 9 MISSION LEADER (1); SR\. S S PUBLIC HLT SPEC (2); IEC & SOCIAL MOBILIZAT (1); CIVIL WORKS (1); PROCUREMENT (1); FINANCIAL MANAGEMENT (1); TRAINING (1); TEAM LEADER (1) 05/15/2000 4 MISSION LEADER (1); CIVIL S S WORKS CONSULTANT (1); TEAM ASSISTANT (1); TRAINING CONSULTANT (1) 08/31/2001 5 MISSION LEADER (1); TEAM S s ASSISTANT (1); CIVIL WORKS CONSULTANT (1); TRAINING CONSULTANT (1); SOCIAL DEMOGRAPHY (1) 02/14/2002 5 MISSION LEADER (1); S S CONSULTANT (3); TEAM ASSISTANT (1) ICR 06/27/2002 8 MISSION LEADER (1) PUBLIC HEALTH(1) PROCUREMENT(1) FINANCE MGMT\. (1) -23- (b) Staff\. Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 114\.20 261\.40 Appraisal/Negotiation 33\.00 96\.20 Supervision 309\.39 714\.65 ICR 0\.48 9\.30 Total 457\.07 1081\.55 -24- Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating O Macro policies O H OSUOM O N * NA Fii Sector Policies OH SUOM ON O NA Ol Physical OH SUOM ON ONA 3 Financial OH OSUOM ON NA L Institutional Development O H O SU 0 M O N 0 NA LI Environmental O H OSUOM O N NA Social L Poverty Reduction O H SUOM O N O NA L Gender O H OSUOM ON ONA M Other (Please specify) O H SUOM O N O NA Partnership, Female volunteers, Community leadership L Private sector development 0 H O SU O M 0 N 0 NA L Public sector management 0 H O SU O M 0 N 0 NA OOther (Please specify) OH SUOM ON O NA NGO Development - 25- Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bankperformance Rating OI Lending OHS OS OU OHU Ol Supervision OHS OS OU OHU O-I Overall OHS OS O U O HU 6\.2 Borrowerperformance Rating El Preparation OHS OS OU O HU LGovernment implementation performance OHS OS OU 0 HU O Implementation agency performance O HS OS O U 0 HU LI Overall OHS OS O U O HU -26 - Annex 7\. List of Supporting Documents Bangalore 1\. Survey of Slums in Bangalore, Baseline Survey Volume I: Analytical Report (1992) ,STEM, Bangalore\. 2\. Survey of Slums in Bangalore, Baseline Survey Volume II: Basic Tables (1992), STEM, Bangalore\. 3\. Project Statistics (1996-1997), MIES UNIT, IPP-VIII, Family Welfare (Urban Slums) Project, Bangalore Mahanagar Palike, Bangalore\. 4\. Multi-indicators study (1997), India Population Project-VIII, Bangalore Mahanagarpalike, Center for Research in Health and Social Welfare Management, Bangalore\. 5\. Mid-term Review, IPP VIII\. Annexure (1998), Center for Research in Health and Social Welfare Management, Bangalore\. 6\. Project Review Status FY2001-2002 (July 2001-Dec 2001), Bangalore Mahanagar Palike, Urban Health Research and Training Institute, Bangalore\. 7\. Endline Survey Report, IPP-VIII, Bangalore (2002), Center for Research in Health and Social Welfare Management, Bangalore\. 8\. Endline Survey Report, IPP-VIII: Executive Summary (2002), Center for Research in Health and Social Welfare Management, Bangalore\. 9\. IDA-2394\.IN, Final Implementation Completion Report (March 2002), The Family Welfare (Urban Slums Project) IPP-VIII, Bangalore\. 10\. Status Reportfor the Review Meeting (April, 2002), Family Welfare Urban Slums (Population-VIII) Project, Govt\. of Karnataka, Dept\. of Health and Family Welfare\. 11\. Endline Survey Report: Executive Summary (May 2000), IPP-VIII, Centre for Research in Health and Social Welfare Management, Bangalore\. 12\. IDA-2394\.IN, Final Implementation Completion Report: IDA-2394\.IN (May 2002, The Family Welfare (Urban Slums Project) IPP-VII, Bangalore\. Delhi 1\. India Population Project VIII (Delhi): Pre-Project Studies - Baseline and Other Surveys (1993),Departrnent of Pediatrics, Maulana Azad Medical College, New Delhi\. 2\. Mid-term Review Reportfor IPP- VIII, Delhi (1998), Municipal Corporation of Delhi\. 3\. Mid-term Review of IPP- VIII in Delhi: Organization and Management, Final Report (1998), Operations Research Group, Delhi\. 4\. Proposalfor Strengthening of Services of the Maternity Homes run by M\.CD (1999), Office of the Project Director, IPP-VIII, M\.C\.D\., Delhi\. 5\. Final Report on Documenting Innovations Under IPP- VIII Project in the Delhi Urban Slums (June 2001), Asian Centre for Organisation Research and Development, New Delhi\. 6\. Endline Survey of IPP- VIII, Draft Final Report, Delhi (June 2002), Faith Healthcare (Private) Limited, New Delhi\. 7\. Implementation Completion Report-IPP VIII (2002),Municipal Corporation of Delhi\. Hyderabad -27- 1\. Report on Baseline Survey and Beneficiary Need Assessment Survey- IPP VIII (1993) ,Council for Social Development, Hyderabad\. 2\. Report on Mid-term Review-IPP VIII (1998), Centre for Economic and Social Studies, Hyderabad\. 3\. Endline Evaluation Survey of Family Welfare Urban Slums Health (IPP VIII) Hyderabad City (2002), Centre for Population and Development Studies, Hyderabad\. 4\. Implementation Completion Report- IPP VIII (June 2002), Municipal Corporation of Hyderabad\. Kolkata 1\. Baseline Survey Report JIntegrated Health Programme for Calcutta Metropolitan Area (aPP VIII), Institute of Local Government and Urban Studies, Govt\. of West Bengal\. 2\. Mid-term Review Report of health Facilities under IPP- VIII, Calcutta : Final Report\. 3\. Endline Survey Report, IPP- VIII, Kolkata (2002), Society for Socio-Economic studies and Services (SSESS), Kolkata\. 4\. Implementation Completion Report of IPP- VIII, Kolkata (2002), KMDA- Kolkata\. 5\. Reply to Bench Marks ofAide Memoire and ICR of the Project (2002), IPP- VIII, Kolkata by KMDA\. 6\. A Successful Project (2002): IPP VIII, Kolkata by KMDA\. Additional Cities 1\. IDA-2394, IN Implementation Completion Report: Family Welfare Urban Slums(Population-VIII) Project (Extended 11 cities), (August 2002), Govt\. of Karnataka\. 2\. Status Report for the Implementation Completion Report (ICR), Family Welfare Urban Slums Project (IPP-VIII)Meeting on 25th and 26th June 2002 at New Delhi by Govt\. of Karnataka, Dept\. of Health and Family Welfare\. 3\. Comprehensive Documentation for Drug Logistics and Warehousing (Sept 2002), Tamilnadu Medical Services Corporation Limited, Chenmai\. 4\. Coverage Evaluation Survey on Immunization: IPP- VIII Extn\. West Bengal (2002) ,Economic Information Technology, Kolkata\. 5\. Project Review Status, IPP-VIII -(Extn), 10 Additional Cities in West Bengal (April 2002), SUDA (Health Wing)\. Others 1\. Staff Appraisal Report: India, Document of the World Bank, Report no\. 10548-IN, (May 1992), Family Welfare(Urban Slums) Project\. 2\. Endline Survey Report(Draft Report), IPP-VIII, (July 2002), Institute of Research in Medical Statistics (ICMR), New Delhi\. -28- Additional Annex 8\. [Innovative Schemes] Innovative Schemes Bangalore Delhi Hyderabad Kolkata 337 Social Health & * 798 Women's groups were * 8324 Link * 12,000 Women Environment clubs contacted/formed Volunteers received vocational established in 415 slums enlisted and traming ( 6-months) * 5,460 adolescent girls Females trained * 1075 Children in creches were given vocational training * 2,175 Women attended established in slums in beauty culture, cutting and * 792 entrepreneurship tailoring, bindi making, home Women's Health development training * 1680 Adolescent girls management, soft toy making Groups received vocational training and jute products\. established * 15 Industrial women in zari and embroidery co-operative societies work, 41 in tailoring and * 54% of trained adolescents could m 792 formed knitting,\. 40 in radio and obtain A+ or A grades m their Revolving Funds T\.V repair, and 29 in use o skill training courses; for women created * 19,650 adolescent computers girls and young * 50% trained in beauty culture * 1,230 Thrift women from poor * 31 centers for non-formal had gainful employment groups established families received education centers of school reproductive health dropouts supported * 13,700 Adolescent education girls given health * 190 Clean hut competitions and nutrition * 7,596 Young women held education trained under reproductive health * 102 Play education schools established and * 297 Girl's schools 3060girls (3-5 renovated and Yrs) enrolled repaired * 135 Open * 10 Municipalities schools have set up established and Geographical 4,000 school Information System dropouts ( girls of 11 yrs and above) were enrolled * 3000 Adolescent girls given vocational training * 10 Govt\. girls schools provided with basic sanil facilities -29 - -30 - Additional Annex 9\. [Borrower's Evaluation Report] I\. BACKGROUND AND INTRODUCTION Area development projects have been taken up under the National Family Welfare Programnme with financial assistance from extemal funding agencies in different States with a view to increase outreach and coverage, while aiming to bring about reduction in maternal and child mortality and morbidity, in birth rate and increase in the couple protection rate\. These projects have contributed greatly towards the development of the physical infra-structural facilities in the project states, and improved the quality of health and family welfare services to the people\. The projects have also been instrumental in bringing down the birth rate, death rate, infant mortality rate and increase in couple protection rate\. The World Bank assisted Eighth India Population Project (IPP-VIII) was originally approved for implementation in four Metropolitan cities viz Bangalore, Kolkata, Delhi and Hyderabad for improvement of health and family welfare status of urban slum population in these cities for a period of five years from August 1993 at a total cost of Rs\. 223\.37 crores\. The project was approved by the World Bank for a credit of SDR 57\.70 million\. After the mid-term review conducted in 1998, the project was restructured to (a) expand activities in the 4 project cities; (b) expand activities to 94 smaller towns covering a population of about 4 million in the States of Andhra Pradeh, Karnataka and West Bengal and (c) strengthen logistic system in the States of Tamil Nadu and Uttar Pradesh (now Uttar Pradesh and Uttaranchal)\. In order to utilize the additional money which became available due to exchange rate variation and to complete the approved activities, the project-cost was revised twice and finally to Rs\.429\.40 crores and the coverage expanded and extended as mentioned above\. The project finally came to an end on the 30th June 2002\. This project was the Second World Bank assisted Population Project in India to provide integrated health and family services to urban population and strengthen linkages between family welfare services and other interventions\. The project targeted assistance to most vulnerable of about 11\.35 million urban slums/poor population in the 4 metro cities and 94 medium sized small towns/cities\. The IPP-VIII in Delhi catered to 12\.50 lakh people living in 929 JJ clusters; in Kolkata it covered 40 ULB, 3 Municipal corporation (37 municipalities) and benefited about 37\.13 lakhs people living in both sides of the Hooghly; in Hyderabad it was meant for 12\.13 lakh population in 793 slums and in Bangalore 8\.51 lakh population living in 525 slums\. Under additional city component, it covered a population of 28\.55 lakh in 74 Band C class municipalities of Andhra Pradesh; 5\.96 lakh in 11 towns/cities of Karnataka and 8\.67 lakh population in 10 towns of West Bengal\. The project design was based on a mix of successfil local experiences from the National Program on Urban Basic Services for the poor, IDA assisted Calcutta Urban Development Project-IH and IDA supported Fifti India Population Project (IPP-V) implemented in the cities of Bombay and Madras and recommendations of the Krishnan Committee\. As the project was directly under the administrative control of the respective municipalities/municipal corporations, the project was implemented by the project management units headed by Project Director with the assistance of Program Officers, technical and administrative staff in the four metro cities\. The Project Directors were delegated appropriate administrative and financial powers for smooth administration and implementation of the project\. In addition to this, all the States had high powered advisory/empowered committees under the chairmanship of Chief Secretaries with high level representation from all the Stake holders/concemed departments to review the progress of implementation of the project and to approve the action plan, project level advisory/implementation/monitoring committees - 31 - under the chairmanship of Secretary (FW)/Commissioner There were also purchase committees in each project to process the procurement activities of the project\. To assess the impact of the project the end-line surveys were conducted in all the four cities by independent agencies\. IRMS was appointed as the nodal agency by GOI\. II\. GOAL AND OBJECTIVES The goal of IPP-VIII was to attain Health for all by 2000 A\.D to achieve Net Reproductive Rate as unity with optimal fertility regulation and to improve the probability of survival of mothers and children\. To attain this goal, the following specific objectives were set: A\. To strengthen the existing matemal and child health care services so as to reduce infant, child and matemal mortality rates in urban slums\. B\. To reduce fertility level and pattem among the slum population\. The following broad strategies were adopted for achievement of the above-mentioned goals and objectives\. m\. STRATEGIES ADOPTED UNDER IPP-VIII The project had adopted five broad strategies to achieve the desired goals 1\. Expand the health and family welfare service delivery system to slum population by constructions of additional facilities near the slums, up-gradation of existing facilities, provision of need-based services and introducing appropriate area specific ways of service delivery, furnishing and equipping the health facilities with equipment and drug; 2\. Increase the demand for family welfare services through (a) an expanded program of information, education and communication (b) increased participation of non-govemmental /private voluntary organization, private medical practitioners, medical colleges and the community in the family welfare programme; 3\. Improve the quality of family welfare services being provided to the slums\. It was planned to (a) provide supervisory, managerial, technical and inter-personal skills to all levels of health functionaries through pre-service, in service and on the job training and (b) Establish and upgrade facilities available for training in the four cities\. 4\. Strengthen the Management Information System and Project Management structure\. 5\. Inplement innovative schemes for improving not only quality of health services but also quality of life\. This included community based contraceptive depots, service delivery through NGOs in under served areas, formation of health advisory committees, creches, vocational taining programme, payment for services availed by non-beneficiaries, etc\. - 32 - IV\. ACHIEVEMENT OF PROJECT OBJECTIVES Overall Achievement: The precise impact of the project should be viewed in a much longer time frame than during the project implementation period, particularly in the new town/cities where project implementation started only in January 2000 and most of the facilities have been completed in the recent past\. However, the objectives have been achieved very satisfactorily in all the 4 cities showing a significant reduction in maternal and infant mortality rates and fertility rates at the end of the project as compared to the baseline survey\. Even in the additional cities, most of the activities envisaged have been completed within the project period\. The additional 94 cities/towns of Karnataka, West Bengal and Andhra Pradesh have been exhibiting promising results in the attainment of development objectives\. The assessment in the report is based on the input and process indicators supplemented by outcome indicators based on the data available from the Baseline survey, Mid-term review, End-line survey and Performance Reports from the States\. The project achieved its development objectives as could be seen from the summary sheet at Annexure-I relating to some important process and impact indicators\. The project has paved the way for improving and enhancing quality of service delivery and care in family welfare and MCH to the urban poor particularly urban slums in the identified cities/towns\. The experience of IPP-VIII will be used in formulation of Urban Health project and to develop guidelines/operational models for Urban Health Programs particularly in the slum area for nation-wide replication with suitable area specific modifications\. This project provided an opportunity to urban slum communities to participate and deternine the type of services required as per their felt needs\. The project conferred direct social benefits by increasing access to quality, family planning and MCH services; thereby it promoted a decline in fertility, morbidity and mortality among mothers, infants and children\. It also provided for affordable and accessible health services not only by having facilities at location convenient to the community, but also through a band of dedicated extension health workers\. For effective management of urban health facilities, IPP-VIII had developed health management information system\. Capacity building of health sector personnel was undertaken to ensure quality of services to the beneficiaries\. LACI was used as a project management tool for facilitating decision-making\. The project has, thus created a rich pool of managerial and technical skilled health personnel within the urban public health system\. The project was able to enhance the demand for MCH services by involving motivated grass-root level workers in IEC activities\. The experiences gained, lesson learnt and factors which affected the implementation of this project are being used to design future Urban Health Programs which is one of the thrust areas under the Tenth Five Year Plan, National Population Policy, 2000, National Health Policy, 2002 and Reproductive and Child Health Program Phase-Il\. The component-wise achievements are summarized as under:- Expanding the Health & Family Welfare Service Delivery System As stated earlier, the goal of IPP-VIII was to provide integrated health and family welfare services to urban poor, particularly those living in the slums\. Keeping in view the health needs of this section of the urban population, city specific service delivery models were operationalized\. Each of the service delivery - 33 - models envisage construction of new health facilities, upgradation/renovation of existing facilities, provision of need based services through area specific ways of service delivery and to make them operational by providing furniture, equipments, drugs and other incidentals for functioning of the facilities\. Under the project, a total of 1052 new facilities (excluding 25 warehouses in UP and TN) were constructed and 643 facilities were upgraded/renovated\. The new constructions inter-alia included 311 health centres, 165 health posts, 47 maternity homes/centres, 114 sub-centres, 107 health administrative units, 25 ESOPDs in four cities of Kolkata, Hyderabad, Delhi and Bangalore and 94 additional cities of Andhra Pradesh, West Bengal and Karnataka\. Under the logistic improvement component a total of 25 regional warehouses were constructed in the States of UP and Tamil Nadu\. The city/state-wise status of the facilities/warehouses constructed is given in Annexure-II\. Since the facilities were constructed in phases, most of the cities/States established the facilities and made them functional from rented buildings by posting the requisite staff and providing furniture, equipments etc\. The construction of above facilities improved the access and ensured provision of quality services\. The construction of the facilities enhanced the working environment of the outreach workers by providing health facility from where they could operate, maintain stores and records and conduct clinical sessions\. Similarly, the add- on OTs and construction of maternity homes improved institutional deliveries in all the cities and also attended to essential and emergency obstetric care\. New facilities and a large number of existing facilities were fully equipped and furnished and were provided with essential supplies ranging from daily consumables to the sophisticated equipments\. At the end of the project, all the facilities were operational and were providing outreach and clinical services to the targeted population\. As regards the utilization of funds, of the total expenditure of Rs\.377\.04 crores reported so far, the expenditure on civil works and equipments were estimated at Rs\.165\.71 crores (43\.95%) and Rs\. 84\.93 crores (22\.52%) respectively\. Thus it is seen that this component consumed about 66\.47% of the total expenditure\. The proportion of expenditure on civil works varied in all the four metro cities\. The city-wise proportion of expenditure on civil works to total expenditure in Delhi, Bangalore, Kolkata and Hyderabad were 38\.7%, 47\.7%, 30\.1% and 27\.7% respectively\. In order to strengthen service delivery, it is vital to improve access of the community to service facilities and also expand the outreach services to the remote and inaccessible parts of the service area\. In this context, it may be seen that the outreach services in all cities left significant impacts in beneficiary coverage as well as indicator movements\. One lesson learnt from this project is that investment in hardware components is justified only when spent on essential constructions\. It is more important to concentrate on actual service delivery from accessible and user friendly facilities which should be sustainable from the provider point of view\. Another lesson learnt from IPP-VIII is that that the operational maintenance issues pose a concem for all State Govemments\. Hence, low cost innovations both from construction and maintenance point of view may be explored from the very beginning of the project\. Another lesson leamt is that when the beneficiary population is essentially migratory or floating in nature as in the case of Delhi slums, investment in permanent constructions should be minimized and operationalisation of facilities in rented buildings could be a feasible option\. One of the possible innovations could be to establish the facilities without actual construction of new facilities and get them operationalised through NGOstNursing Homes/Corporate bodies\. Under the additional cities component of IPP-VIII, the State of Andhra Pradesh experimented with one such innovation where health centres were constructed but operationalized through NGOs\. This experiment has functioned successfully at reduced cost as compared to operationalization of similar facilities in the Govemment sector\. Over view of the civil works showed that it was only after 1995 that the civil work component geared up in all the four cities\. Finding a suitable site to construct the health facility as per the norms set by -34- the World Bank was a common problem faced by project implementers which delayed the civil works\. Inadequate fund flow mechanism delayed project implementation in the beginning, though later it was rectified to expedite the project implementation\. Further, World Bank procedures were not always commensurate with local government procedures, which further delayed commencing of construction work\. In Delhi, to meet the health needs of urban poor, the Municipal Corporation of Delhi (MCD) constructed three levels of health facilities, i\.e\., Maternity Homes-cum-Health Centre (6), Health Centres (21) and Health Posts (105)\. Since it was difficult to get space for the rest of the HPs, some of the health facilities were constructed a little far away from the slum pocket\. Moreover, shifting of slums to different places in future would affect utilization of the constructed health facilities\. In Bangalore, 55 HCs, 5 MHs, 1 training centre, 5 staff quarters attached to new MHs were newly constructed\. All the facilities are operational\. For the first time in India, Bangalore has obtained ISO 9002 certificate for 30 Health Centres in the public sector\. In Kolkata, all the targeted civil works were completed and made functional (construction of 114 sub-centres, 107 HAUs, 23 Maternity homes, 25 ESOPDs, 8 Regional Diagnostics Centres, central medical store and improvement of 300 govt\. run schools, renovation of 159 existing SC)\. In Hyderabad, 25 HPs, 5 Maternity Homes, 3 staff quarters were newly constructed, In Hyderabad, it was only after 1997-98 that construction work picked up momentum\. Quality of civil works was reported well and as per the norms set by the World Bank\. However, examination of sampled health facilities revealed certain defects\. Disposal of solid waste was a problem in all the cities, except Kolkata\. A few of the sampled facilities visited during end line survey had some problems of seepage, cracks and leakage in the building, incomplete compound wall or with newly developed cracks\. This calls for appropriate measures to ensure proper maintenance of the building\. Most of the surveyed health facilities were located at practically appropriate places with respect to accessibility, service to community and safety of the staff using the building in all the cities\. However, it was noticed that a few health facilities in Delhi, Bangalore and Hyderabad were constructed a little distance away from the slum area due to non-availability of land near the slums\. The utilization of such facilities by target groups is less than expected\. Human Resources/ Staff Position The over-all situation about staff availability was satisfactory at the end of the project in all the cities, except Delhi In Hyderabad, all sanctioned positions was filled either with regular staff or contractual staff\. In Kolkata all the sanctioned PTMOs was on contract basis and vacant posts were found in all levels of health facilities\. While, in Bangalore, most of the ANMs were deputed from City municipal Corporation/State government and 11 were freshly recruited\. The gross root level workers comprised 970 link volunteers in Bangalore, 544 Basti Sevikas in Delhi, 8324 link volunteers in Hyderabad and 3713 honorary health workers in Kolkata\. There was a clear appreciation for the work done by the grass-root level workers for spearheading the IPP-VIII\. As significant numbers of health functionaries were appointed on contract basis through placement agencies in Hyderabad, the commitment to provide quality of care on sustainable basis was questionable\. Similarly in Kolkata, some of the sanctioned posts could not be filled up as remuneration was low in relation to qualification or duty hours\. Therefore, this issue needs to be examined further by policy makers\. -35- The total expenditure on equipment so far is Rs\. 84\.93 crores which is 22\.52% of the total expenditure, The purchase in the Project for equipment, medicines and supplies was done through a Project Purchase Committee, which met as per need\. The End-line Survey shows that all equipments were in place in almost all the health facilities by the time of end line survey\. Supply of drugs and Medicines was good in general and procurement was timely\. Majority of the respondents were satisfied with the services provided by IPP-VIII facilities\. Improvement of Quality of Family Welfare Services The IPP-VIII Project envisaged to upgrade the supervisory, managerial, technical and inter-personnel skills of all levels of new and existing medical and para-medical personnel through pre-service, in service and on the job training and by increasing the availability of drugs, medicines and other appropriate health supplies\. The training component was carried "out as planned and this contributed significantly to the achievement of the project objectives\. The training cells created in the cities helped to focus on all types of trainings with equal importance\. They also did well to draw in training associated with national programs viz\. RCH Program\. The project also oriented grass root level workers, conununity stakeholders/leaders and adolescents\. At the end of the project, a total of 34236 no\. of personnel (20288 Kolkata, 7035 in Hyderabad 2327 in Delhi and 4586 in Bangalore) were imparted training in the original 4 cities\. The personnel included medical personnel, para-medical personnel, link volunteers, private medical practitioners, NGOs, local leaders, Aaganwari workers, teachers, municipal leaders, dais etc\. Majority of the trainees appreciated the training program as it has contributed towards improvement in their knowledge\. Therefore, the project has improved the knowledge of health personnel, which would go a long way to improve service delivery, bring down the fertility levels and reduce the level of infant morbidity and mortality in slum population\. All the four cities, refresher courses/specialized trainings for the staff were involved in the implementation, right from the PUM staff to grass-root level workers to the community\. The project managers received training on various aspects like procurement, quality improvement, LACI etc\. Linkages were established with different Institutions by IPP-VIII and most of the training targets were achieved\. Over thirteen thousand (13,207) health functionaries were trained on various aspects of RCH services at the end of the project\. In Delhi, a separate training cell was established to cater to the training needs of all categories of employees\. The training included orientation, refresher, skilled based, managerial and IPC\. For this purpose, the cell developed linkages with premier institutes like NIHFW, AIMS, IIPA, various hospitals and Delhi Government\. This cell now has a well developed training hall\. Due to good quality work, the training cell of IPP8 has now been given the responsibility of conducting RCH training for various categories of staff of MCD and Delhi Government in association with NWIFW\. In Bangalore, improvement of quality of family welfare services was continuously effected by graded placement of adequately trained and motivated staff\. They were also supplied with equipments and other items for upgrading the service capacity of health centres and maternity homes\. Further standard management protocol for processes and treatment were prepared and issued\. A new training centre with 4 seminar houses, 7 group discussion rooms, residential block and provision of audio-visual ads was also constructed\. This training centre is likely to be registered as an autonomous institute\. In Kolkata, local private practitioners were recruited and trained in clinical skills, including IUD insertions\. The first & second tier supervisors underwent 30 days training on supervision, administration - 36 - and record keeping\. The HHWs were given training on campaigning on health awareness, family planning, nutrition and sanitation\. Vocational training courses were organized to generate appropriate skills and for creating income opporunity among women in poor household\. The trainees were given tool kits to carry on their job after training for gainful employment\. Innovative program on reproductive health education for the adolescent girls and young women was also taken up and the 5 days training courses were conducted by lady professionals in all the municipalities benefiting about 19450 such beneficiaries\. In Hyderabad, a training wing was established\. After assessment of the training needs, the training plans were modified and revised action plans were prepared for training program\. Medical officers posted in newly constructed UHPs were given induction training program\. The training imparted inter-alia included family welfare service management and supervision, safe deliveries, abortion, MTP and diagnosis and management of RTI, STI & HIV\. Strengthening of Demand Generation Activities The project envisaged achieving this objective by promoting information, education, communication through an expanded program with increased participation of NGOs, private medical practitioners, medical colleges and the community in the family welfare program\. Appropriate activities were carried out in all the implementing cities/States\. All the 4 project cities had dedicated IEC wings\. Initiating the project with number of messages and multiple media, the focus was gradually shifted to interpersonal communication and rationalization of activities\. Workshop were also organized from time to time to refocus the IEC activities on specific behavior change linked to the project development objectives\. The key areas of behavior change were, however, focused on limited activities such as early ante-natal registration, measles immunization, safe deliveries, use of contraceptives, spacing methods and age at marriage\. All project cities used community based workers/volunteers as effective links with communities to bring about behavior change\. Increased community participation and involvement of Private medical practitioners, NGO's, Anganwadi workers and grass-root level workers (Link workers in Bangalore, Bastee Sevikas in Delhi, Link Volunteers in Hyderabad and HHWs in Kolkata) helped in creating a demand for preventive health and family welfare services\. The staff involved in IEC was trained in IEC activities\. All together, 4307 elected representatives were sensitized about reproductive health issues and about 25000 adolescents given education on reproductive health\. Discussion during End-line Survey with PMU staff, Health functionaries and beneficiaries revealed that the IEC activities let to increase in the utilization of MCH services in all the cities\. NGOs' participation was also very active in all the cities to carry out IEC activities for creating demand\. In Hyderabad the media was used for showing video films\. The other activities inter-alia included banners, puppet shows, street plays and cultural programmes for dissemination of health and family welfare messages\. Hyderabad organized a total of 1432 video film shows, 292 puppet shows and 100 street plays/cultural programs\. In addition 12 hoardings were erected at prominent places in the city covering various messages on FW and RCH\. In Kolkata, the message, dissemination method and media were suitably adopted and regularly revised\. It was found that messages disseminated through entertainment media such as Folk songs, Drama, Magic Show, etc\., played effective role in bringing forth changes in attitude and behaviour\. However, most important media of behavioural change was interpersonal communication, especially through HHWs\. In Delhi, video films, puppet shows, street plays, group meeting, magic shows, competition amnong - 37 - HCs to meet targets and ranking of ANMs and Bastesevika contributed success to LEC activities\. IEC was effective in increasing utilization of ANC services\. Delhi organized 10645 meetings with mahila mandal, mother-in-laws and adolescent girls\. 10329 health talks were organized at school and folk media were effectively used and behavior changes were closely monitored\. In Bangalore, the media used was films, folk media, exhibition and integration them with health check ups, clean hut competition, well baby shows and creches\. Bangalore has implemented an LEC pilot in one of its target slums and expanded its demand generation activities based on the lessons learnt\. During the project period of 623 folk media programs and 4212 video screening were undertaken\. Strengthening management and administration of Municipal Health Department The decentralized system of management for effective implementation of the project activities was a unique feature of this project\. All the 4 cities had apex level committees viz\. State level empowered committee viz\. State level Empowered/Goveming Council committees under the chaimmanship of Chief Secretary with high level representation from all the stakeholders/concemed departments to oversee the implementation, approve action plan and budget etc\., project level advisory/implementation/monitoring committees under the chairmanship of Secretary (FW)/Commissioner, purchase committees and various other local bodies\. These committees facilitated the fast implementation and ensured coordination among various concerned departments and organizations\. In Kolkata, various local level communities viz\. local coordination committee in each municipality headed by Chairman/Mayor, Ward Committee headed by local councilor and Outreach Committee also helped in smooth implementation, monitoring and supervision of the project activities\. Different wings were created for managing the various project activities\. The project management units were assisted by various consultants, appointed from time to time as per the needs\. To facilitate smooth implementation, all the Project Directors were also delegated some financial and administrative powers\. The funds flow to the municipalities was through the State Finance Department\. This system worked well except in the cities of Delhi and Hyderabad for a certain period of time\. The issue was addressed and the fund flow mechanism was strengthened expeditiously by releasing funds direct to the Municipal Corporation of Delhi and to the State level society in Andhra Pradesh\. Each city also established a monitoring mechanism which was linked through CNA network of reporting of the State Government\. MIS was used as a tool for strategic decisions such as graded user fee, grading of health institutions, planning service delivery activities, IEC campaigns, preparation of project action plans, monitoring the performance and impact\. The project also had the distinction of being able to successfully implement Loan Administration Change Initiative (LACI) a pilot project for computerized management of physical and financial progress through software based system in all the 4 cities\. Besides, Kolkata also used Geographical Information System for validation of performance data, completeness and regularity of reporting\. Innovative Schemes and NGO Participation The private and voluntary sector which was given a key role in project implementation contributed significantly in meeting the project objectives\. In all the four cities, innovative schemes were implemented with the view of instituting long lasting effect on socio-economic and demographic behaviour of vulnerable section of urban population\. The major activities undertaken inter-alia included (i) partnership with private medical officers and specialist in service delivery at a lesser cost; (ii) vocational training and entrepreneurship program to generate appropriate skills and create income opportunities for women; (iii) - 38 - reproductive health education for adolescent girls, young women and boys; (iv) Geographical information system to strengthen the validation of performance data, completeness and regularity of reporting; (v) laboratory quality assurance system (vi) hospital waste management system; (vii) fund generation system through development of health development fund; (viii) running of health centres by PVOs; (ix) running of creches, play schools, open schools and non formal schools, nutrition education for girls; (x) health camps etc\. The services of 77 NGOs/PVOs were used to implement innovative schemes in 4 project cities\. Table 3 shows a profile of important innovative schemes undertaken in the 4 cities\. A participatory approach was adopted for involvement of community, NGOs and private sector in the project\. Some of the NGOs were given autonomous control over project areas and not activity based projects\. The project continuously interacted with NGOs and other partners and monitored their activities in a participating manner before launching new schemes, the coordinators of the NGOs were also trained by the project to achieve desired results\. Through the NGOs, the community was also taken into confidence to implement the program\. Kolkata had the distinction of implementing the program by establishing an effective partnership of private medical officer and specialists on a part time and fees sharing basis in different level of health infrastructure resulted in lesser cost ensuring community participation and enhancing the scope of fund generation\. The fund generation system through Health Development Fund is also another important scheme undertaken to ensure sustainability to continue health program after the completion of the project period\. Andhra Pradesh has the unique distinction of experimentation by completely outsourcing the service delivery to NGOs in newly created 191 Uban Health Posts in 73 towns\. The experimentation of outsourcing service delivery to NGOs in 191 UHPs have been quite satisfactory with reduced cost\. In Bangalore, some NGOs provided sites for construction of Health Centres\. The PVOs were also involved in service delivery by running the Health Centres\. In Delhi, the community involvement was achieved through initiatives like involvement of Bastisevikas, formation of various community groups, specific training to community leaders and private medical practitioners\. Improved Contraceptive and maternal and Child Health Supply Logistics in Tamil Nadu and Uttar Pradesh including Uttaranchal Under the Project 24 regional warehouses (11 in Tamil Nadu, 11 in UP and 3 in Uttaranchal Pradesh) have been constructed and are operational now\. All the warehouses have been equipped with modem storage equipments and computers for the purpose of monitoring\. Tamil Nadu has fully implemented pharmaceutical Logistic Management Information System (LMIS) in all the newly built warehouses\. In UP, USAID is supporting the software activities including training and development of LMIS\. The Government of India will provide requisite assistance to meet the recurring liabilities of these warehouses after the completion of the project period\. V\. PROJECT COST AND EXPENDITURE As mentioned earlier, the originally approved cost for the four cities of Kolkatta, Bangalore, Hyderabad and Delhi was Rs\. 223\.37 Crores for the period August 93-98\. After the mid-term review in - 39- 1998, the project was restructured\. It was expanded and extended to 94 additional cities of Andhra Pradesh, Karnataka, West Bengal and for logistics support to Tamil Nadu and Uttar Pradesh\. The project cost was finally revised to Rs\.429\.40 crores and the project implementation period extended upto June, 2002\. The States have submitted claims for Rs\.377\.04 crores expenditure so far\. The likely expenditure upto the end of the project is estimated at Rs\.420\.47crores\. The Cost analysis of the expenditure city-wise and component wise (civil works, equipment, training/ consultants/innovative programme and incremental operating cost) are given in Tables 4 and 5\. The trend of the expenditure shows that in almost all the cities, expenditure received momentum by the end of 1998\. This could be due to initial time spent on preparatory activities relating to implementation of the project activities such as filling up of the posts, formation of various committees, selection of sites and land acquisition for various facilities, preparation of plan for civil works and procurement, identification of agencies to carry out civil work and procurement etc\. Of the total expenditure of Rs\.377\.04 crores reported so far, the expenditure on civil work, equipment, consultants service and training and incremental operating cost are Rs\. 165\.71 crores (43\.95%,), Rs\. 84\.93 crores (22\.52%), Rs\.37\.32 crores (9\.89%) Rs\.89\.07 crores (23\.62%) respectively\. Analysis of expenditure pattern under different components in four metro cities shows that Bangalore, Hyderabad, Kolkata & Delhi incurred 47\.7%, 27\.7%, 30% & 38\.7% respectively of its approved budget on civil works BANK'S PERFORMANCE The project design was consistent with World Bank's strategy and Government policy and was appropriate for achieving the stated objectives\. Overall bank performance is rated as highly satisfactory\. The supervision missions from August 1993 to June 2002 at least twice a year helped States in taking remedial action, modifying their plans as and when required and realistic monitoring of the project activities\. Initially, the decision makings of the bank relating to the project were being taken by the World Bank management at their headquarter at Washington DC which sometimes led to delay in certain approvals\. After the Mid-term review, significant decision making was made at the level of the World Bank country office at Delhi which helped in prompt decisions and consequent implementation of activities\. This also facilitated continuous dialogue and consultation between the Project Director and the Task leader and other staff of the Bank which greatly helped the project\. The entire team from the World Bank was supportive\. The project was also benefited by visits by World Bank technical experts from Public Health, MIES, procurement, civil works, training and IEC\. SUSTAINABILITY The effectiveness of a project depends largely on the institutional and financial sustainability of the project activities after donor funding has ceased to be in place\. It is also a reality that Urban Municipal Corporations and Urban local bodies face resource constraints particularly in the area of operation and maintenance of their assets\. Under IPP-VIII institutional sustainability has been ensured through (a) establishing community ownership; (b) securing effective partnership with the private sector and NGOs; (c) establishing accessible service outlets; (d) having a permanent source of health functionaries; (e) placing a system of effective monitoring of field perfonnance; (f) placing health as a priority item in the community agenda\. The fnancial sustainability has been ensured through (a) identifying women and child health as priority investment at the community level; (b) building assets with low operational costs; (c) generating/ building up strong commitments of urban local bodies to generate funding from service delivery and local resources and (d) creation of supplementary sources of funding through cost sharing with beneficiaries and -40- fast recoveries from non-beneficiaries\. In this context, certain innovations were introduced by the project cities contemplating the implications of sustainability well before the end of the project\. Some of the sustainability practices which were introduced/adopted by the project cities are as follows:- IPP 8 Kolkatta had agreed to provide for the recurring charges through the provision in the state budget of the Municipal Affairs Department\. This, of course, would only take care of the salaries, honorarium, rent and drug supplies for the project activities\. To attend to the wear and tear of the assets such as buildings, equipments and furniture, this project city had provided for the levy of service charges in a cross subsidy basis and user charges to build a Health Development Fund with the Urban Local bodies for utilization after the expiry of the project period\. In Delhi, the irnplementing agency viz\. MCD has in principle agreed to support project management and services\. In case of Hyderabad and Bangalore, the project activities have been integrated with the respective city Municipal Corporations and Urban Family Welfare Bureaus\. In case of Hyderabad, the Government of Andhra Pradesh will bear the expenditure towards salary portion and the Municipal Corporation of Hyderabad the expenditure towards non salary portion such as maintenance of the building, procurement of medicines, electricity charges and other contingent expenditure\. Cities are now exploring the options to generate additional resources in partnership with the representatives of local communities, NGOs and elected representatives of municipalities\. The recurring liabilities of the logistic component in UP, Uttaranchal and Tamil Nadu will be met by MOHFW\. The recurring liabilities of the project in 94 medium cities/towns of AP, Karnataka and West Bengal will be met by the respective State Governments by making requisite provision in their State budget\. REPLICABILITY All the four cities followed different operational models to implement the EPP-VII Project according to the city specific situation\. Because of the exclusiveness of the city specific innovations, the scope of replicability of these innovations should also take into account various factors inter-alia including local needs, capacity of the local bodies etc\. The four different models have got their strengthens as well as weaknesses\. The key lessons learnt such as bringing health on to the political agenda through decentralization, building sustained community capacities through neighbourhood volunteers, empowering of adolescent girls and women through vocational skills and entrepreneurship training, building partnership with the private sector to provide clinical service and focusing on financial viability needs highlighting for posterity\. However, some of the weaknesses of the project were inadequate male participation, inadequate convergence with the slum development activities, weak referral linkages and inadequate knowledge of bank procurement procedures\. An Experience Sharing Workshop of IPP-VIII Project was held in Kolkata on 14-15 February, 2002 which was attended amongst others by representatives of some non-IPP-VIII States, donor agencies, mayors of the local bodies etc\. During the workshop the following innovations crystallized for possible replicability with suitable modifications\. * Community drafted project with domiciallary orientation\. * Voluntary characteristic of grass root level workers\. * Bottom up approach\. * Active involvement of CBOS acting as solid platform\. -41 - * Developing community partnership * Active involvement of elected representatives\. * Some community development oriented activities a entry point activities\. * Effective management and supervision cell * Involvement with private medical practitioners and NGOs/CBOs for different service delivery\. * Linkage and utilization with private institutions\. * Coverage evaluation survey by extemal agency * Involvement of NGOs for IEC/CD activities\. PROJECT IMPACT Taking into consideration the achievements, performance of the project is termed as highly satisfactorily\. (Tle World Bank in their Aide Memoire of June 2002 has rated the performance of Development objective as highly satisfactory and implementation progress as satisfactory)\. The infrastructure created consisting of new construction of 1086 and renovation/repairs of 643 facilities, and Human Resource Development in the project period through training viz\. behavioral communication, skilled, clinical, management, procurement and financial has resulted in the improvement of service delivery and upgradation of the quality of services\. These would now need to be consolidated in order to ensure continued upgrading of the quantity and quality of services that the project initiated\. The process and outcome indicators on infrastructure and personnel development provide evidence of considerable achievement in capacity building of training and quality service delivery\. As indicated earlier the main objective of the IPP-VII Project was to reduce infant, child and matemal mortality rates and fertility levels\. To assess the impact of the project, the present status of the important indicators, both impact indicators and process indicators have been compared with those in the Baseline survey/Mid-term review\. The important impact indicators considered are IMR, TFR, CPR and CBR\. The process indicators inter-alia include proportion of women receiving full Ante natal care, proportion of children receiving complete coverage of immunization and proportion of women accessing facilities for institutional deliveries\. The Total Fertility Rate (IER), has declined in all cities\. It is reported in the End-line Survey Report that in Bangalore TFR declined from 3\.4 to 2\.0, in case of Delhi the decline was from 5\.1 to 3\.8, in case of Hyderabad, the decline was from 2\.6 to 2\.1 and in Kolkata 2\.0 (mid-term) to 1\.7\. Thus, it is seen that the decline was significant in case of Kolkata and Bangalore\. Kolkata has already crossed the replacement level (TFR 2\.1) while TFR of the slum population was close to replacement level in Bangalore, and Hyderabad\. The decline in TFR to a large extent is due to increased contraceptive prevalence rates - Bangalore (40% to 61%), Delhi (33% to 42%), Hyderabad (41% to 64%) with increased used of spacing methods\. The decline in fertility is also partly due to increase in age at marriage The mean age of marriage in Hyderabad and Kolkata is esfimated to be 18 years\. Age of marriage in Delhi and Bangalore, however, remain low at 16 years and 17\.1 years respectively\. The Infant Mortality Rate has declined substantially in all the four cities\. Comparison between end line survey and baseline data showed that the IMR has declined in (Bangalore: 78 to 22 , Delhi: 100 to 53 (adjusted), Hyderabad: 81 to 69 and Kolkata: 34 to 26 infant deaths per 1000 live births)\. This decline in IMR in all the four cities could be attributed to improvement in the child immunization and maternal health care services, including ANC check-up, TT, IFA, early antenatal check-up and institutional delivery which have shown overall improvement in all the 4 cities\. -42 - The end line survey showed high level of knowledge of HIV/AIDS, but relatively low level of knowledge about RTVISTD\. It was also found that many women have at least one reproductive health problem\. This calls for appropriate strategies on IEC and quality of reproductive health services provided at peripheral level\. The Crude Birth Rate also declined significantly in all the cities except Delhi\. Comparison between end line survey and baseline data showed that the CBR has declined in (Bangalore: 31\.9 to 19\.1, Hyderabad 26 to 19\.2 and Kolkata: 20\.8 to 16\.4)\. This decline is partly due to increase in spacing methods leading to a higher birth interval, increase in age of marriage and better contraceptive prevalence\. The Contraceptive Prevalence Rate both by terminal as well as spacing methods has shown significant increase irt all the 4 cities\. The CPR by any modem method has increased from (Bangalore: 39\.9% to 60\.8%, Delhi: 33% to 41\.7%, Hyderabad: 41\.3% to 63\.8% and Kolkata: 52\.2% (mid-term) to 51\.8%)\. Thus it is seen that except Delhi in all the other cities the CPR is more than 60%\. In Delhi the low percentage of CPR could be due to higher percentage of younger population, low age of marriage, less demand of family planning services and migrating nature of slum settlement which prevents sustainability of the impact\. However, the use of vasectomy in all the 4 cities despite project intervention continue to be low (less than 1%)\. The percentage of expectant women receiving full Ante Natal Care during pregnancy at the end of the project was estimated at more than 80% except Delhi (Bangalore 84\.1%, Kolkata 87\.3%, Hyderabad 95\.6%)\. In Delhi this proportion was around 53\.5%\. In Bangalore, Hyderabad and Kolkata about 90% of the deliveries were institutional deliveries which led to decline in IMR and matemal deaths\. However, in Delhi the institutional deliveries continued to be around 27\.8% which is likely to increase with imnproved utilization of these facilities\. The project also showed improvement in the percentage of children (12-23 months) fully immunized at the end of the project when compared to their status in the beginning of the project in all cities except Delhi\. This percentage increased from 49\.6% to 89\.8% in Bangalore; 50% to 82\.2% in Hyderabad and 57\.1% (mid-term) to 89\.1% in Kolkata\. In case of Delhi this percentage is still around 56% requiring more intensive outreach services and improved generation of demand\. There are many other process indicators which have also shown significant improvement as could be seen from the fact sheet annexed\. However, this all leads to the conclusion that the project largely met the development objectives as set forth in the project design\. These development objectives were reduction in the fertility among slum population and imnprovement in maternal and child health by helping to decrease morbidity and mortality among women in reproductive age and children\. MAJOR FACTORS AFFECTING THE PROJECT The Project had a slow start up and low levels of implementation during the first three years\. The factors which affected the implemented adversely inter-alia included (i) delay in establishing project management unit and various committees (ii) inadequate coordination between various line departments (iii) delay in release of funds to the implementing agencies (iv) delay in finding suitable sites for civil works (v) less emphasis on software activities (vi) shift in project management (vii) lack of familiarity with bank procedures regarding procurement and submission of claims and absence of well established MIS and inadequate monitoring\. In addition to the above factors, some other factors which remained weak during the project -43 - implementation period were evidenced by lack of adequate male participation, inadequate convergence with ongoing slum development activities, weak referral linkages with specialty hospitals and inadequate training in Bank procurement procedures are some that deserve improvement\. Factors contributing to the subsequent recovery and good progress and achievement of the desired objectives inter-alia included (a) commitment of the management at State and municipal level (b) appointment of dedicated managerial staff in key position (c) responsiveness to strong technical feedback provided by bank supervision missions (d) flexibility in the project design (e) key role played by the grass root level workers in facilitating linkages with the community and provided outreach services (f) involvement of extemal faculties and other institution in imparting training (g) public private partnership including implementation of innovative schemes to NGOs (h) involvement of the political leadership (i) dissemination of good practices (j) streamlining the funds flow mechanism (k) regular meetings of various committees (1) establishment of a well planned NIS (m) regular visits of the World Bank supervisory missions etc\. The other success stories inter-alia included (a) bringing health on to the political agenda through decentralization (b) building sustained community capacities through neighborhood volunteers (c) empowering the adolescent girls and women through vocational skill and entrepreneurship training (d) building partnership with private sector (e) focusing on financial viability\. KEY LESSONS LEARNT 1\. Despite high level of achievements in IPP-VHI, the replicability of different operational models on an uniform basis through out the country may not be feasible because of the city specificity of innovations required in implementation of such projects\. 2\. The implementation of the project was successful as it was implemented by Urban local bodies which were autonomous in nature and some of which resorted to self financing\. 3\. The objectives and the operational models took into account the needs of both staff and beneficiaries\. The project was manned by such agencies who shared a common vision and worked as a team to achieve the desired objective\. 4\. The use of female voluntary health workers viz\. link volunteers, Basti Sewikas etc\. selected from the local community played an important role in extending outreach services to the door steps of the slum dwellers which helped in creating a demand based and ensuring clients satisfaction\. 5\. The mid-term review and mid-term appraising reports of each project city helped in identifying the priority issues and for bringing firther improvement during implementation\. Intermittent studies and the timely mid-term evaluation helped in making mid-course corrections, expansion of the project activities and optimal utilization of the available credit\. 6\. Weak institutional capacity in the beginning contributed to slow start up and weak implementation in the early years of the project and several factors such as streamlining of the funds flow mechanism, appointment of dedicated staff, regular field monitoring and visits of the World Bank Mission etc\. helped strengthen implementation during the later part of the project\. This illustrates that active implementation requires adequacy and continuity of critical project staff\. 7\. The project also proved how important it was to establish the effective mechanism for timely flow - 44 - of funds to the implementing agencies viz\. municipal corporations and coordinated procurement activities\. The delay in release of funds from the State Finance Department to the implementing agency adversely affected the implementation of the project in the case of two project cities for a certain period of time\. This process was soon strengthened and efficient funds flow assisted project implementation\. 8\. Effective and continuous monitoring both from the Ministry and the World Bank helped the cities in taking mid-term corrections as and when required, completion of the activities within the stipulated period and achievement of the desired objectives\. 9\. Strong political will also played a key role in achievement of its objectives especially in Kolkata project\. 10\. Inadequacy and frequent change of critical staff at project management and technical leadership results in weak implementation capacity affecting the project implementation adversely\. 11\. Under the project, Loan Administrative Change Initiative was implemented as a pilot project during the mid-term of the project implementation\. This project was basically a project management tool which helped in linking physical and financial outcomes and facilitation in areas like procurement management, action plans and cash flow management\. Such projects or similar tools should be built in the project from the very beginning\. 12\. Under the project, facilities were established and service delivery started from rented buildings pending construction of new buildings\. This mechanism was found very useful as the mature range of service delivery could subsequently shift from temporary to permanent buildings\. This ensured optimum utilization of the newly constructed buildings\. 13\. The operational maintenance of facilities is not given due importance by State Governments\. Hence, low cost innovations both from construction and maintenance point of view need to be incorporated from the very beginning in the project design\. 14\. In cities where the beneficiary population is essentially migratory or floating in nature as in the case of Delhi slums, investment in permanent constructions should be minimized and operationalisation of facilities in rented buildings could be a feasible option\. 15\. Under the additional cities component, the State of Andhra Pradesh experimented with operationalized Health facilities through NGOs\. This experiment has functioned successfully at reduced cost as compared to operationalization of similar facilities in the Government sector\. One of the possible innovations could be to establish the facilities without actual construction of new facilities and get them operationalised through NGOs/Nursing Homes/Corporate bodies\. 16\. The project design and objectives should clearly incorporate during the beginning of the project provisions of making project interventions sustainable after the project period\. 17\. The mechanism to orient various committees and staff members of project and other concemed officials and sanctioning authorities about the bank procedures, rules and regulations etc\. must be a part of the project design so as to expedite decision making particularly on issues conceming procurement\. 18\. The flexibility in the project design enabled modification of certain approved activities and addition of certain new activities also helped in making this project a great success\. -45 - 19\. The convergence and integration of all developmental activities at State and Municipal levels with similar departments and programs is crucial for success of such projects\. Illustratively, convergence among departments of Rural Development Education, Child and Women Development, ICDS etc\. and also public private partnership went a long way to contribute the development objectives\. 20\. Ensuring decentralization, community involvement and women empowerment helps in rapid and effective acceptance of the services\. 21\. Beneficiary participation is also a key to success\. Assessed felt needs are to met\. Services are to be made accessible and affordable\. The client's satisfaction are to be assessed frequently and remedial measures for any cause of dissatisfaction are to be taken up promptly\. 22\. The workshops/seminars including ICR workshop held in February, 2002 with representation from some other States and departments and undertaking of various studies helped in documenting the processes that contributed to the successful implementation of the project including strengthen and weaknesses of various models\. This will facilitate designing the urban health program which is one the key thrust area during the Tenth Five Year Plan and as envisaged in NPP-2000, NHP-2002 and RCH-II\. 23\. Adequate leadership and dedication of the local elected bodies and their perception helped in successful implementation of the project\. 24\. Community involvement right from the stages of planning to implementation and monitoring of the project helps in acceptability, accessibility and affordability of the services and in developing a sense of ownership of the community\. 25\. Under the project, all the project cities used innovative type of IEC to educate and motivate the community and to increase the level of awareness of FW and MCH program\. Women link workers were selected among the slum dwellers @ 1 worker for about 200 families to act as a liaison between the health workers and the community for an effective health delivery system\. Their involvement in this task as voluntary workers without any remuneration/with little honorarium for their services created a great impact\. Timely referral of complicated cases, if any, to the nearest facility for medical attention was ensured through this network\. -46 - Table 1 Summ ry of Impact and Process Indicators of IPP-VIII in four cities S\.No Indicator Bangalore Delhi Hyderabad Kolkata I I Baseline Mid-term EndUne Baseline Mid-term EndDne Basellne Md-term Endline Baseline Mid-term EndUne A Impact Indicator 1 Infant mortality rate 77\.8 NA 22\.3 10O\. 36\.( 52\.6 81\.1 NA 69\.4 55\.6 33\.7 25\.6 (IMR) __ __ __ 2 Crude Birth Rate 31\.1 22\. 19\.1 NA 32\.1 33\. 26\.1 NA 19\.2 NA 20\. 16\.4 (CBR) 3 TotalFertilityRate 3\.37 2\.53 2\.01 5\.1 5\.1 3\.7 N NA 20\. NA 2\.0 1\. B Process Indicator _ _ \. 1 CPR (Any modem 39\.1 58\.1 60\.8 33\.1 NJ 41\.7 41\.1 NA 63\. NA 52\.2 51\.6 method) I 2 % Children in 12-23 39\. NA 89\. 62\.0 61\.1 55\.c 50\.C NA 82\. NA 57\.1 89\.1 months fully immunized by antigen (all) I I_I a BCG 80\.( 98\.4 100\.1 72\. NA 79\.9 50\.C NA 85\.6 78\.0 88\.6 98\.7 b DPT 60\. 82\. 96\., 68\. 74\. 72\. 48\. NA 83\. 64\.C 79\.3 97\.9 c Polio 60\.( 79\.4 94\.' 68\. 77\.4 76\.6 47\.1 NA 85\.1 70\.C 79\.7 99\.2 d Measles 45\.( 85\.1 90\.' 62\. 65\.8 55\.8 35\.C NA 90\.7 54\.a 67\.4 90\.4 3 Percent of expectant women received ANC a No contact NA NA 7\.q NA NA 23\.4 NA NA 2\.1 NA NA 5\.4 icontact NA NA 4\.4 NA NA 4\.3 NA NA 0\.1 NA NA 1\.5 2 contact NA NA 4\.5 NA NA 18\.8 NA NA 2\.5 NA NA 5\.8 3 and more contacts NA NA 84\.1 55\.0 29\.C 53\.5 NA NA 95\.E NA NA 87\.3 b Percent of expectant NA 82\. 84\., NA 34\.9 75\.1 6 NA 95\.6 76\. 88\.4 95\.8 women received TT immunization c Percent of expectant NA NA 45\.4 5\.0 11\.' 19\.3 NJ NA 97\.7 NA 66\.5 77 women 4 Percent of 76\. 85\.' 92\.1 NA 14\.3 27\.8 72\.( NJ 96\.5 53\.9 79\.1 89\.0 institutional delivery 5 Percent of births NA 85\. 93\.9 NA 32\. 45\. NA NA 96\.5 NA 81\.9 90\.0 attended by trained 1health personnel Estimate is based on a corrected factor based on using post survey check\. Traditional methods are high in Kolkata\. The CPR induding the traditional methods Is 75\.4\. This figure refers to 'Any contact\. -47 - Table 2 Profile of Innovative schemes undertaken in the four cities City Activities Area Achievement Bangalore I Social Health and To create awareness among slum dwellers 337 out of 401 target Environmental (SHE) clubs regarding early marriage, school drop-outs, formed (covering 415 FormedSocial Health and small family norms, personal hygiene and slums)337 out of 401 Environmental (SHE) clubs sanitation\.To create awareness among slum target formed (covering Formed dwellers regardmg early marriage, school 415 slums) drop-outs, small family norms, personal hygiene ______________________ and sanitation\. 2 Establishing creches at To provide proper care to the children of 45 out of 50 creches slumEstablishing creches at working mothersTo provide proper care to the established (1075 slum children of working mothers beneficiaries)45 out of 50 creches established (1075 _____________________________ _______________________________________________ beneficiaries) 3 Vocational Training for Self-employment promotion\. Tailoring and 1790 beneficiaries Adolescent girls Knitting, Radio and T\.V repair, Zari & ______________________ embroidery work & Computer training 4 Non-formal education centers To improve the literacy status of girls and to 31 centres established as for school drop outs and create a cadre who will propagate family welfare against target of 50 Non-beginners messages in the area 5 Awareness programmes Environmental Health, Sanitation, Personal 15650 beneficiaries _______________________ hygiene, MCH and FW programmes etc 6 Clean hut competitions For improving sanitation facilities 190 against target of 250 held 7 Well baby contest Organized for health of children 190 against target of 250 held 8 Health Checkup camps 437 held though target was 250 only Kolkata I Vocational training Wool knitting, Tailoring, Kantha Stitch 12,000 beneficiaries Beautician course, Embroidery Bag making & Silk Screen Printing\. 2 Entrepreneurship Identification of the business opportnities, 2175 beneficiaries Development Training linkages with different Govt\. & private agencies for promotion of business, financial & technical assistance, marketing and procure raw material 3 Encourage female education Renovation of girls school/Toilet 297 out of 300 schools I covered 4 Nutrition Awareness One day training programme for affordable diet No\. Of programme not Programme (N\.A\.P) provided 5 GIS Digitized maps having important information 10 municipalities were ________________________________________ covered 6 Hospital Solid waste Theoretical and practical training 10 local bodies management (re-orientation) to H\.O 7 Health development fund Levying fees to beneficiaries at cross subsidized This was done rates and by levying service charges at successfully concession rates to non- beneficiaries 8 Public-Private Partnership Appointment of PTMO " in ESOPDs and RDCs _____________________________ Specialist 9 Laboratory Quality Assurance 8 RDCs 43 technicians were -48 - System given up gradation I I System I I training\. -49 - City _ Activities Area Achievement Hyderaba 1 Training of primary Mothers Education, ANC, Immunization, nutrition, 2 training camps are d concept of pregnancies and importance of conducted in a year\. 5760 ________________________ institutional delivery beneficiaries 2 Training of Adolescent girls Integrated health training module designed to 13506 adolescent girls create awareness among the adolescent girls, benefited gender issues, importance of education, age of marriage, Pregnancy ANC, immunization, ________________________ delivery, cutting of umbilical cord etc\. 3 Nutrition Education for 1\. Preparation of low cost nutritious meal\. 9781 beneficiaries\. Adolescent girls 2\. Tested for the deficiencies in blood and was informed to MOs concerned for required ________________________ treatm ent\. 4 Play Schools To relieve mother and the eldest sibling of the 102 schools & 1973 family from looking after the youngest sibling\. beneficiaries\. Programme gained popularity\. ______________________ __________________________________ D em and to join by boys 5 Open Schools To bring back girls of 11 years and above who 135 schools and 7000 _ had dropped-out of main stream of education beneficiaries\. 6 Vocational Training for Training women to be eco\. Independence\. 3800 adolescents trained\. adolescents Computer education, Tailoring & dress nauking, Toy & Soap manufacturing, Agarbatti making, Organizing women Co-operatives, Typing and lab technician course\. 7 Sanitary Facilities for Govt\. Facilities of Both open Urinals and No 14 schools this activity girls' schools\. Urinals\. was carried out to the _______ __________________________________ satisfaction of the school Delhi I Female Education To bring them to mainstream education 6,888 females _______________________ Target= 10, 1 000 beneficiaries\. 2 EEC & Community Covered 5,72,607\. Mobilization 3 Skill Up-gradation Beauty Culture; Cutting & Tailoring; Bind 2722 beneficiaries\. 2 Year contracts making; Home Management, Jute craft and fancy paper bags\. 1 Year contract Tailoring & Embroidery 1800 beneficiaries 6 Month contract Embroidery; Beauty Culture Cutting & _________________ Tailoring & Dress Designing and Jute\. 4 Male Participation Meeting with men on RCH\. Meeting with 138547 ______ _ ___________________________________ m ales w ere arranged -50- Table 3 IMPROVING ACCESS TO RCH SERVICES - STATE/CITY-WISE CIVIL WORKS ACHIEVEMENT UNDER WORLD BANK ASSISTED IPP-VIII PROJECT S\. Facilities Bangalor Delhi Hyderab Kolkat Aditional cities of Logistics Total No\. e ad a A\.P\. Karnatak West U\.P\. Uttaranchs Tamil a Benga I Nadu 1 Health Centres 5 21 191 4___ 311 2 Health Posts 105 253' _ \. 165 3 Matenity 6 23 4 _ Homes/Centres _ ,_ Tramining Centres 1 1 _ Sub-centres =11 114 Health Adminmstration 1070 107* _ Unuts _ _ ESOPDs 25 _ _ 25 Centrml Medical 1 1 Stores Sub-Health Posts 25( 250 _ Drug Warehouses I 1 3 11 25 11 OPD-cum-MH I ! = I 1 1 Staff Quarters _ _ (a) New 3 8 _ (b) attached to MH 3 3 _ _ __ 3 1 Augmentation of 1 1 _ Office _ _ accomodation for City ___ Family Welfare Bureau _ _ _ Regional Diagnostic Centres Total 1077 Renovation of _ 1 Health Centres 83 = = 83 Maternity 2 21 4 _ Homes/Centres _ \. Sub-centres 159 __ _ _ 159 1\. Schools 297 29 1 UFWCs attached to 2 25 _MH _ I UFWCs into D type 33 33 Health Posts Total 643 In addition, 9 are operating In hired accomodatlon Table 4 Statement of Statewise/Citiwise Componentwise, Cost, Reported Expenditure & Likely Total expenditure under World Bank Assisted IPP - VIII Project States/ Cities Original Revised Reported Expenditure ( Component wise) Projected Cost Cost Expenditure upto June 02 (Rs\. in _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _L akhs) Civil Work Equipment Consultant Inc\.op\.Cost Total Services & _Training _ Bangalore 3923\.00 5283\.4 2494\.09 943\.02 561\.05 1230\.99 5229\.15 5283\.49 Calcutta 10164\.00 9832\.0 2844\.75 2900\.02 1201\.73 2529\.10 9475\.60 9905\.02 Delhi 4725\.00 7594\.0 2832\.31 1288\.13 497\.01 2695\.7q 7313\.29 7999\.63 Hyderabad 3515\.00 4596\.5C 1289\.86 1435\.00 531\.4 1390\.76 4647\.11 4649\.23 Addl\.cities in A\.P 5713\.4 3105\.2 424\.65 554\.5 71\.9 4156\.3 5578\.49 Addl\.cities in 2239\.1C 1195\.08 291\.53 126\.4: 191\.02 1804\.06 2001\.10 Kamataka Addl\.cities in West 4400\.0C 1321\.6 993\.17 215\.0 709\.8 3239\.6 3949\.23 Bengal I T\.N\. Logistics 1249\.57 871\.22 183\.02 12\.21 86\.75 1153\.21 1249\.57 U\.P\. Logistics 1982\.1 617\.01 34\.6 32\.31 1\.72 685\.7f 1382\.18 MOHFW 10\.0c 50\.0C 0\.0t 0\.0 0\.01 0\.0( 0\.0o 50\.00 TOTAL 22337\.06 42940\.3 16571\.21 8493\.21 3731\.84 8907\.91 37704\.31 42047\.94 * includes 6\.90 cr\. of share of land cost of Delhi State -52- Table 5 Statement of expenditure incurred yearwise, citiwise under World Bank Assisted IPP -VIII YEAR 1994-95 1995-96 1996-97 1997-98 1998-99 1999-200 2000-01 2001-02 2002-03 Total 0 Expenditure (Rs\. in lakhs) EXPENDITURE CATEGORY Bangalore 0\.0( 0\.0q 657\.47 704\.95 1176\.51 1133\.3C 945\.8E 596\.5 14\.3 5229\.15 % of Total Expenditure 12\.5\. 13\.4l 22\.5 21\.61 18\. 11\.4A 0\.21 Calcutta 95\.2 192\.1 704\.7 1277\.5 1693\.9 2280\.0 1939\.8 978\.0 313\.9 9475\.60 % of TotoiExpen diture 1\.0; 2\.0 7\.56 13\.76 18\.1 24\.44 20\.81 10\.4 1\.74_____ Delhi 50\.5f 110\.93 259\.83 546\.79 726\.6 1292\.1C 2077\.06 2150\.4 98\.9 7313\.29 % of Total Expenditure 0\.61 1\.5A 3\.5: 7\.5 9\.9 17\.7 2&85 29\.5 0\.9i Hyderabad 37\.51 87\.9( 439\.5' 488\.48 765\.6 1147\.1i 935\.22 726\.0 19\.61 4647\.11 %of Total Expenditure 0\.81 1\.91 9\.4 10\.53 16\.5 24\.74 20\.17 15\.66 0\.22_____ Addl\.cities in A\.P 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 1783\.3 1475\.11 897\.9 4156\.38 % of Total Expenditure 51\.8i 42\.8 5\.33 Addl\.cities in 0\.00 0\.0 0\.0 0\.0 0\.0 0\.0 85\.4 1207\.1 511\.4 1804\.06 Karnataka % of Total Expenditure 6\.54 92\.3 1\.11 Addl\.cities in West 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 761\.01 1671\.2 807\.4 3239\.68 Bengal I % of Total Expenditure 27\.50 60\.38 12\.12 T\.N\. Logistics 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 145\.7 362\.8 644\.63_ 1153\.28 % of Total Expenditure 15\.1l 37\.6 47\.21 U\.P\. Logistics 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 317\.1 368\.6 0\.0 685\.76 % of Total Expenditure 46\.24 53\.7 0\.071O MOHFW 0\.0o 0\.0o o\.o0 0\.0o 0 O\.0 0\.0o 0\.0o 0\.0( 0\.00 % of Total iExpenditure TOTAL 183\.3 391\.0 2061\.61 3017\.81 4362\.7 5852\.5 8990\.7 9536\.1 3308\.3 37704\.31 % of Total iExpenditure 0\.5a L\.1 5\.7i 8\.4 12\.2 16\.4 25\.2\. 26\.74 3\.4! -53 - Additional Annex 10\. [Performance Indicators] Table 1 Key Impact/Outcome Indicators Indicator Bangalore Delhi Hyderabad Kolkata Year 1993 2002 1993 2002 1993 2002 1993 2002 Total Fertihty Rate 3\.37 2\.01 5\.10 3\.77 3\.40 2\.09 1\.90 1\.70 InfantMortality 78 22 100 53 81 69 56 26 R ate I__ _ _ _ _ _ _ _ _ I _ _ __ _ Table 2 Estimated Project Contribution to impact Impact Indicator NFHS - Urban IPP-8 Difference Changes(annual) Changes (annual) (IPP-8 minus NFHS) TFR Bangalore -0\.08 -0\.17 -0\.09 Delhi -0\.11 -0\.17 -0\.06 Hyderabad -0\.05 -0\.16 -0\.11 Kolkata -0\.08 -0\.03 0\.05 IMR Bangalore -2\.28 -6\.94 4\.66 Delhi -2\.72 -5\.93 -3\.21 Hyderabad -2\.58 -1\.45 1\.13 Kolkata -6\.18 -3\.75 2\.43 * The desired change in case of TFR and IMR is negative since the project intends to reduce them\. Table 3 Key Process Indicators (%) Indicator Ban alore Delhi Hyderabad Kolkata 1993 2002 1993 2002 1993 2002 1993 2002 Contraceptive Termina Prevalence 1 method 36\.1 51\.4 20\.0 22\.1 28\.5 62\.2 27\.3 34\.0 (Modern method) Total 39\.9 60\.8 33\.0 41\.7 41\.3 63\.8 52\.2* 51\.6 Antenatal Coverage (3+ contacts) 71\.0 84\.1 55\.0 53\.5 88\.0 95\.6 47\.0 87\.3 Institutional Delivery 76\.9 87\.9 14\.3* 27\.8 72\.0 96\.5 53\.9 89\.0 Fully Immunized Children 49\.6 89\.8 62\.0 55\.8 50\.0 82\.2 57\.1* 89\.1 (12-23 months) Mid-term(1998) -54 - Table 4 Contraceptive Prevalence (%) by Parity Parity Bangalore Delhi Hyderabad Kolkata 0 1\.6 6\.1 1\.4 1 26\.0 18\.0 13\.2 33\.5 2-3 76\.1 44\.1 75\.9 63\.7 >=4_ _ 81\.2 45\.8 82\.4 66\.0 *Any modem method Table 5 Improving access to FW and MCH services - Outreach Services Original Cities CitySlums/Towns covered Slum /Poor Population Community based Volunteers Bangalore 525 slums 851,000 940 Link Volunteers Delhi 929 JJ Clusters 1,250,000 544 Basti Sevikas Hyderabad 793 Slums 1,213,000 8,324 Link Volunteers Kolkata 37 Municipalities and 3 Municipal 3,713,000 3,713 Honorary Health Corporations Workers Total 7,027,000 13,551 Additional Cities State CitySlums/Towns covered Slum /Poor Population Community based Volunteers Andhra Pradesh 73 B & C Class Municipalities 2,855,441 Karnataka 11 Towns/Cities 596,172 2,760 Resident Community Volunteers West Bengal 10 Towns 867,663 1,090 Honorary Health Workers Total 4,319,276 3,850 Slums: Urban areas inhabited by poor which are recognized by local municipal bodies J J Clusters: Cluster of semi-permanent structures inhabited by poor and not recognized as slums by municipal bodies Town: Urban areas with less than 500,000 population Cities: Urban areas with more than 500,000 population Table 6 Improving Access to FW and MCH Services - Civil Works in 4 Original Project Cities Type of facility Input Bang alore Delhi Hyderabad Kolkata AD SAR Achieve SAR Achieve SAR Achieve SAR Achieve SAR Achieve __ d d d d d Maternity Homes New 0 5 6 6 2 5 18 23 26 39 Renovation 21 25 0 21 10 0 0 0 31 46 Expanded Specialty OPD New 0 0 0 0 0 0 25 25 25 25 Health Centers/ New 60 55 19 21 36 25 109 107 224 208 Urban FW Centers/ Health Admunistratve Units __ _ Renovation 37 25 6 83 34 33 0 0 77 141 Health Posts/Sub Centers New 0 0 125 105 26 25 0 114 151 244 Repairs? 0 0 0 0 0 0 159 0 159 - 55 - Renovation I_I_ I I I Staff Quarters New 7 12 0 0 0 3 0 0 7 15 Traimng Center New I I 0 0 0 0 0 0 1 1 Construction of Regional Stores New 0 0 0 0 0 0 2 1 2 1 Renovation 0 1 0 0 0 0 0 0 0 1 Improvement in Schools Renovation 0 0 200 0 0 14 50 297 250 311 Total New 68 73 150 132 64 58 154 270 436 533 _ Renovation 58 51 - 206 104 - 44 47 50 -- 456 358 658 Table 7 Improvin access to FW and MCH services - Civil works in Additional cities and Logistics Type of facility Input A\. P\. Karnataka West Bengal T\. N\. U\. P\. Total Lo istics Lo istics MTR Achieved MTR Achieve MTR Achieved MTR Achieve MTR Achieve MTR Achieved d d d Matemity Homes (with New 0 0 8 8 11 11 0 0 0 0 19 19 ESOPD in West Bengal) Health Centers/ New 192 191 45 45 35 35 0 0 0 0 272 271 Urban FW centers/ Renovation 0 0 21 5 0 0 21 5 Health Administrative Umts Ware houses New _ 5 11 14 13 19 24 Total New 192 191 53 53 46 46 5 11 14 13 310 314 Renovation 0 0 21 5 0 0 0 0 0 0 21 5 Table 8 Improving uality of RCH Services - Skill Development Training \| Bangalore Delhi Hyderabad Kolkata All Category of Staff SAR Achieved SAR Achieved SAR Achieved SAR Achieved SAR Achieved Link Volunteers/HHW/ 970 1369 550 568 1000 6440 4400 5182 6920 13559 Basti Sewika _ _ _ _ _ _______ Para-medical staff including 484 571 729 2442 575 1528 983 897 2771 5438 supervisors _ _ _ _ _ _ _ _\| MedicalOfficers& 149 180 228 1073 170 623 710 761 1257 2637 Specialists I PnvateMedicalPractitioners 300 259 200 180 600 534 0 100 1100 1073 Project Managers 20 19 75 232 60 153 45 55 200 459 Murucipal CouncilorstLocal 400 270 300 256 3600 3694 100 100 4400 4320 leaders 2323 6005_12972 __6_238 16648_27486 TOTAL 2323 2668 2082 1 4751 6005 12972 6238 7095 16648 27486 - 56 - -57- I 1\.-\. 'MM Report No\.: 24994 Type: ~CR	REVIEW
P089852	ï»¿ ICRR 13110 Report Number : ICRR13110 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 02/16/2010 PROJ ID : P089852 Appraisal Actual Project Name : Mx Affordable US$M ): Project Costs (US$M): 200\.5 200\.5 Housing And Urban Poverty Reduction Development Policy Loan II Country : Mexico Loan /Credit (US$M Loan/ ): US$M): 200\.5 200\.5 Sector Board : UD US$M ): Cofinancing (US$M): Sector (s): Other social services (35%) Housing finance and real estate markets (25%) Central government administration (20%) Law and justice (10%) Sub-national government administration (10%) Theme (s): Access to urban services and housing (25% - P) Municipal finance (25% - P) Personal and property rights (24% - P) Poverty strategy analysis and monitoring (13% - S) Other public sector governance (13% - S) L/C Number : L7340 Board Approval Date : 07/25/2005 Partners involved : Closing Date : 06/30/2006 06/30/2006 Evaluator : Panel Reviewer : Group Manager : Group : Roy Gilbert James Sackey IEGSE ICR Reviews IEGSE 2\. Project Objectives and Components: a\. Objectives: According to Program Document Loan and Program Summary (p\. vii): Specific objectives : (a) to support the Governmentâs efforts to improve national policies and institutions for housing and urban development (b) to make the federal housing system more efficient by designing and implement a unified system of subsidies to facilitate access to housing by low and moderate -income families (c) to bolster systems for housing loans and savings and move them down -market\. (d) to strengthen urban real property registries and rights \. (e) to increase the supply of and access to urban land for poor people and improve this market âs functioning (f) to coordinate and support physical and social investments in poor neighborhoods (g) to increase the capacity to prevent and manage the damage caused by natural disasters b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): This operation, called HUDPL-II here, was triggered by 5 prior conditions, summarized below across the 5 thematic areas covered by the project (compared with HUSAL-I's 23) (i) Macro -framework : Maintenance of a sound macro-economic framework that is consistent with HUDPL -II's policy objectives and programs\. ii) National housing policy and institutional framework : - none (ii) (iii) iii ) Housing subsidies : GOM completed an evaluation of federal housing subsidy programs taking into account land and infrastructure subsidies delivered at the local level to federally assisted housing projects, and the results are to be reflected in the subsidy programs designed for 2006\. iv ) Housing credit and household savings : SHF has designed and implemented a pilot project to finance housing (iv) improvements and expansions, in accordance with standards agreed between GOM and the World Bank [IEG comment: this refers to SHF's housing micro-credit program] (v) Urban property registers and rights : Modernization of property registry systems in five more states according to agreed guidelines between the GOM and the World Bank \. vi ) National urban policy, slum upgrading and institutional strengthening : SEDESOL has strengthened [the] (vi) Habitat [upgrading program] through participatory planning, coordination and sequencing of investments \. vii ) Low and moderate -income land development : - none (vii) (viii) viii ) Natural disaster prevention and management : - none d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: As is normal practice for DPLs, project costs are regarded as being identical to the loan amount \. For HUDPL-II (as for follow-on HUDPL-III) the loan was originally intended to be for US$ 100 million\. But, at the request of GOM that was seeking to ease its domestic borrowing requirement, the loan amount was raised to US$ 200\.5 million (as it was later for HUDPL-III)\. HUDPL-II was appraised and disbursed on schedule \. 3\. Relevance of Objectives & Design: Rated Modest : HUDPL-II objectives were modestly relevant to the four pillars of the 2004 Country Partnership Strategy (CPS), namely poverty reduction, increased competitiveness, institutional strengthening and environmental sustainability\. Many ambitious objectives scattered across too many areas where key actions were not always aligned helped undermine relevance \. They remain modestly relevant to the more recent 2008 CPS, and its emphasis upon streamlining Bank assistance to Mexico, especially through DPLs \. Compared with its predecessor HUSAL -I, HUDPL-II became less relevant to CPS poverty reduction goals when it did not refer to poverty reduction as the overall objective of the Program\. On the housing side, the objectives remain modestly relevant to country policy that similarly sets poverty reduction as a modest priority for the housing sector, as opposed to increasing housing supply as a whole\. This is formulated in Mexicoâs âNational Housing Program 2007-2012â?, an integral part of the country âs national development plan for that period, with its priority emphasis upon seeking greater equality of opportunity in Mexico for all people in all sectors, especially housing \. On the urban development side, HUDPL -IIâs ongoing relevance is more difficult to assess, since the equivalent \. National Urban Development Program 2007-2012 has yet to be published at this writing\. HUDPL-II design was modestly relevant for including prior actions that were not always directly related to the operationâs objectives\. No prior actions were identified for three of the eight areas covered by the project \. Several chosen prior actions were not of sufficient scale that the achievement of the objectives demanded \. The relevance of the project design was undermined for still leaving out, as HUSAL -I did, key players, notably INFONAVIT and FOVISSSTE, of the housing side of the project \. Also, the project design did not make the roles of SEDESOL and CONAVIT on the urban development side of the operation clear \. The relevance of the design were further challenged by the ongoing disconnect between the housing and urban development sides, and by the overall coordination responsibilities of SHFâs (Sociedad Hipotecaria Federal - Federal Mortgage Company) whose writ did not run to INFONAVIT and FOVISSSTE that finance most of Mexico's mortgage loans \. In later comments on this evaluation, the Country Department confirmed that the participation of INFONAVIT, a large off -budget organization, was indeed beyond the scope of the program supported by these DPLs \. 4\. Achievement of Objectives (Efficacy): (a) to support the Governmentâs efforts to improve national policies and institutions for housing and urban development - modestly achieved \. An important institutional innovation after HUDPL -II was the creation of CONAVI, the national housing commission, which initially seemed to clarify the roles and responsibilities of housing institutions in Mexico, that expanded in the cases of INFONAVIT and FOVISSSTE \. Meanwhile however, SHF continued to improve its performance, becoming one of Mexico's best run investment banks \. HUDPL-II identified no new prior actions on top of HUSAL-I's\. (b) to make the federal housing system more efficient by designing and implement a unified system of subsidies to facilitate access to housing by low and moderate -income families - negligibly achieved \. Despite Bank efforts through supervision and fee-for-service contracts, there was little change in Mexico's housing subsidy system \. Below market interest rate subsidies offered by INFONAVIT and FOVISSSTE continued to be the most important, by far \. (c) to bolster systems for housing loans and savings and move them down -market - negligibly achieved \. There were few additional changes to the SHF /Sofoles system under HUDPL-II above what had already been achieved under the prior loan\. SHF mortgage lending affordable to lower and moderate -income households began to shrink as a share of the total, taking mortgage loans up -market instead of down-market as intended\. (d) to strengthen urban real property registries and rights - substantially achieved \. Modernization and standardization of these registries under the prior loan was extended under HUDPL -II to 5 more states, as planned\. (e) to coordinate and support physical and social investments to systematically upgrade poor neighborhoods - negligibly achieved \. Interaction between the ministry responsible, SEDESOL, and the Bank, slowed as the dialogue between them stalled\. External support to SEDESOL for this came mainly from the Inter -American Development Bank (IADB)\. (f) to increase the supply of urban land and access by the poor and improve this market âs function - negligibly achieved \. IEG found little evidence of results in this area that could be attributed to HUDPL -II\. HUDPL-II identified no new prior actions on top of HUSAL-I's\. (g) to better prevent and manage the impacts of natural disasters - negligibly achieved \. The achievements were limited and their scope did not go beyond the HÃ¡bitat program that adopted natural disaster risk atlases into more cities, but only a fraction of those that needed them \. HUDPL-II identified no new prior actions on top of HUSAL -I's\. 5\. Efficiency (not applicable to DPLs): ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The operation failed to achieve more than half its objectives, with the establishment of an undesirable move up-market by SHF/Sofoles housing finance\. Only one objective, that of strengthening property registries, was substantially achieved\. a\. Outcome Rating : Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: The significant risk comes from three directions \. First, the continuing complexity of the sector's institutional framework and overlapping and sometimes conflicting responsibilities among key actors within it \. Second, the distortions and inefficiencies of the unreformed and increasingly prevalent housing finance and subsidy model of INFONAVIT and FOVISSSTE\. Third, the present market aversion to secondary mortgage financing through investment in securities of any kind in the current financial crisis, after which confidence in these instruments is likely to be restored slowly\. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: Preparation was prompt, building exactly upon the framework of HUSAL -I\. Some minor revisions to the objective statement of HUDPL-II toned down a few of the least realistic aims of the first operation (HUSAL-I)\. But one, making housing subsidies more efficient, exaggerated the ambition of an unrealistic objective even more \. Nothing was done to reduce the excessive scope of the operation \. Thus, there was no substantial improvement in the QAE of HUDPL-II over HUSAL-I\. Typically of a policy operation, supervision was very light leaving the overall direction of the operation's achievements and dynamic changes to prior conditions unsupervised \. Thus supervision has little weight in the rating of overall Bank performance \. at -Entry :Unsatisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Moderately Satisfactory c\. Overall Bank Performance :Unsatisfactory 9\. Assessment of Borrower Performance: While GOM remained formally committed to the objectives of HUDPL -II, this support did not translate into policy for related sector reforms, such as on housing subsidies and on facilitating the supply of urban land, for instance \. On the other hand, GOM made its own priorities for the sector very clear, especially the large scale of housing production needed, 750,000 units per annum under President Fox and 1,000,000 units per annum under President Calderon\. Both GOM and SHF also made establishing SHF's financial credentials a quite explicit aim (that was not part of the HUDPL-II set of objectives)\. Under HUDPL-II, SHF/Sofoles mortgage lending began to move up-market, partly in response to the these financial imperatives \. SEDESOL did not enjoy a productive dialogue with the Bank under this loan \. a\. Government Performance :Unsatisfactory b\. Implementing Agency Performance :Unsatisfactory c\. Overall Borrower Performance :Unsatisfactory 10\. M&E Design, Implementation, & Utilization: The design of M&E for HUDPL-II was very poor\. As its predecessor's (HUSAL-I) this M&E still lacked targets and several performance indicators measured program outputs (e\.g\. number of cities with disaster-risk atlases) instead of the achievement of program objectives \. Like its predecessor, a striking shortcoming for the HUDPL -II operation with urban poverty in both its title and its main objective was the lack of criteria to identify precisely the two groups of the DPL's intended low-income beneficiaries, namely those targeted by âaffordableâ? housing and those targeted by âurban povertyâ? programs\. For this, earlier Bank-financed urban development operations in Mexico had referred to decile ranges of the income distribution for which data are readily available in Mexico \. One improvement in HUDPL-II was that some baseline data were collected for the first time \. Even so, the design shortcomings, particularly with respect to the lack of targets and clear idea of the intended beneficiaries, meant that M&E could not be effectively implemented under HUDPL -II\. Neither could M&E be utilized when HUDPL-II had no explicit targets for M&E to monitor in any of the areas covered by the operation\. The M&E failing is partly the result of the limited availability of consolidated information on the housing and urban development sectors in Mexico, in spite of the ready availability of good quality partial data on several sub -sectors within it\. a\. M&E Quality Rating : Negligible 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Reason for 12\. 12\. Ratings : ICR IEG Review Disagreement /Comments Outcome : Moderately Unsatisfactory Negligible achievement of more than Satisfactory half the operation's objectives \. Only one substantial achievement (strengthening property registries )\. Risk to Development Moderate Significant Currently--and for the foreseeable Outcome : future--market demand for the housing finance instruments sponsored by the operation, especially mortgages, is weak\. Bank Performance : Moderately Unsatisfactory Some necessary modification of Satisfactory operation design was done, but unrealistic objectives of serving the urban poor were retained\. Borrower Performance : Moderately Unsatisfactory Failure of SHF to take mortgages down Satisfactory market and unwillingness of GOM to take a stand on housing subsidy reform\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: From the ICR: There are trade offs between ambitious and comprehensive sectoral reform programs, which are potentially more beneficial, but inherently more risky, and more focused programs that address a limited range of issues for which both the potential benefits and risks are lower \. The Programâs relevance decreased when there was no coherent Government policy established in the sector where the Bank intervened, like urban development \. A policy-based loan may not always be the best instrument to address technical issues requiring considerable investment and which are not backed by an adequate policy framework \. Instead, a combination of policy and investment loans might have been more effective in meeting the Program âs goals\. Combining policy and investment loans at the same time, however, might have crowded out other important activities \. Inefficiencies and redundancies were produced due to the involvement of too many institutions, which were often at odds with each other over policy issues \. This was largely due to the large number of components and sectors under the umbrella of the Program \. A more focused approach, as previously mentioned, could have reduced these inefficiencies and redundancies \. The comprehensive nature of the Program required that adequate M&E provisions be written into the design of the operation; however this was not done until preparation of the second operation was well advanced \. HUTAL should have played a role in fixing the shortcomings of the Program and its implementing institutions in this area\. The timing of HUTAL should have been better aligned with the Program in order to provide added value to each component\. Additional lessons from IEG: The expected outcomes and scope of an operation should be subject to several reality checks at appraisal \. An important one is to ensure that essential partners âsuch as INFONAVIT in this caseâare fully on board and committed to the operation\. If they are not, or cannot be engaged for reasons of political economy, then the scope should be contained to cover more modest outcomes that can reasonably be obtained without such partners\. In large and sophisticated middle -income countries like Mexico, an operation should avoid promising sector-wide reforms when commensurate results cannot be realistically achieved in the short timeframe and with the relatively modest scale of assistance offered \. Housing finance through mortgage lending encounters an affordability floor \. Experience in Mexico shows that th poorer households below the 40 percentile of the income distribution cannot afford the cheapest formal housing unit through a market-based mortgage loan without a subsidy \. An affordability floor like this will vary from country to country depending upon household income levels, house prices and interest rates \. Operations aiming to support affordable housing and urban poverty reduction need to be explicit about their target beneficiary populations, with quantification of baselines and targets, and at completion, achievements \. Contrary to down-market aims, establishing a sound reputation in financial markets and sustaining a high quality and expanding portfolio can lead a new mortgage financier up -market, by targeting higher income borrowers with larger loans\. Markets perceive such loans as less risky \. They are also less costly to manage and contribute more to business growth \. 14\. Assessment Recommended? Yes No Why? 15\. Comments on Quality of ICR: This is a satisfactory ICR that, covering all three SALs /DPLs, is a complex self-evaluation exercise\. It is clear and accurate in laying out the multiple objectives and actions of each operation in the series \. In view of the challenge of attributing sector results to the operations, the ICR is realistic and cautious is claiming what has been achieved \. It is also candid about the shortcomings and failings of them \. It brings a significant body of evidence to bear upon the self-evaluation findings, and explicitly recognizes when such evidence is lacking \. The ICR assessment is weakened however, when it argues that the achievement of only three of the original eight objectives need feed into the final ratings\. Unless they have been reformulated or removed through a formal process of project restructuring, it is important that an evaluation includes a complete assessment of all of them \. The ICR provided useful lessons from this rich learning experience, that are especially relevant as the Bank undertakes more DPLs across different sectors\. a\.Quality of ICR Rating : Satisfactory	REVIEW
P076884	ï»¿ Document of The World Bank Report No: ICR1780 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-47830) ON A LOAN IN THE AMOUNT OF US$224 MILLION TO THE ISLAMIC REPUBLIC OF IRAN FOR THE NORTHERN CITIES WATER AND SANITATION PROJECT April 25, 2012 Sustainable Development Department Middle East and North Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective 00000000) Currency Unit = IRR IRR10,000 = US$0\.882 US$1\.00 = IRR11\.335 FISCAL YEAR March 21 -- March 20 ABBREVIATIONS AND ACRONYMS Japan International Cooperation APL Adaptable Program Loan JICA Agency AM Aide-Memoire LAP Land Acquisition Plan BNR Biological Nutrient Removal M&E Monitoring and Evaluation 5 Day Biochemical Oxygen BOD5 Demand MOE Ministry of Energy Management and Planning CAP Compliance Action Plans MPO Organization CAS Country Assistance Strategy MTR Midterm Review Mazandaran Water and Wastewater CR Collection Ratio MWWC Company DO Dissolved Oxygen NCs Neighborhood Committees DOE Department of Environment NEC National Economic Council Environmental Impact National Water and Wastewater EIA Assessment NWWEC Engineering Co\. Economic Internal Rate of EIRR Return O&M Operation and Maintenance Environmental Management EMP Plan PAD Project Appraisal Document ERR Economic Rate of Return PDO Project Development Objective ESO Environment & Safety Officer RAP Resettlement Action Plan EU European Union SA Special Account Food and Agriculture FAO Organization TA Technical Assistance FC Financial Controller TSU Technical Support Unit FDI Foreign Direct Investment UFW Unaccounted For Water Financial Internal Rate of FIRR Return WBI World Bank Institute FMR Financial Monitoring Report WHO World Health Organization FO Financial Officer WR Working Ratio FYDP Five Year Development Plan WS Water Supply GDP Gross Domestic Product WSS Water Supply and Sanitation GOI Government of Iran WTP Willingness to Pay Guilan Water and Wastewater GWWC Company WW Wastewater International Competitive ICB Bidding WWCs Water and Wastewater Companies Implementation Completion ICR Report WWCT Wastewater Collection and Treatment IR Iranian Rials WWMP Wastewater Management Plan ISR Implementation Status Report WWTP Wastewater Treatment Plant Vice President: Inger Andersen Country Director: Hedi Larbi Sector Manager: Francis Ato Brown Project Team Leader: Abdulhamid Azad ICR Team Leader: Abdulhamid Azad ISLAMIC REPUBLIC OF IRAN THE NORTHERN CITIES WATER SUPPLY AND SANITATION PROJECT CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 7 3\. Assessment of Outcomes\. 16 4\. Assessment of Risk to Development Outcome \. 20 5\. Assessment of Bank and Borrower Performance \. 20 6\. Lessons Learned \. 23 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 24 Annex 1\. Project Costs and Financing \. 25 Annex 2\. Outputs by Component \. 27 Annex 3\. Economic and Financial Analysis \. 32 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 34 Annex 5\. Beneficiary Survey Results\. 35 Annex 6\. Stakeholder Workshop Report and Results \. 36 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 37 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 59 Annex 9\. List of Supporting Documents \. 60 Annex 10\. Summary of Health Studies \. 61 Annex 11\. Summary of Sludge Study \. 62 MAP IBRD 33958 A\. Basic Information IR-NORTHERN CITIES WATER Iran, Islamic Republic Country: Project Name: SUPPLY & of SANITATION PROJECT Project ID: P076884 L/C/TF Number(s): IBRD-47830 ICR Date: 04/25/2012 ICR Type: Core ICR Lending Instrument: SIL Borrower: GOVERNMENT Original Total USD 224\.00M Disbursed Amount: USD 196\.69M Commitment: Revised Amount: USD 196\.69M Environmental Category: A Implementing Agencies: NWWEC Mazandaran Water and Wastewater Co\. Gilan Water and Wastewater Co\. Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/23/2004 Effectiveness: 10/25/2005 10/25/2005 Appraisal: 03/14/2005 Restructuring(s): Approval: 05/26/2005 Mid-term Review: 10/20/2008 12/16/2008 Closing: 12/31/2010 12/31/2010 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Moderately Implementing Quality of Supervision: Moderately Satisfactory Unsatisfactory Agency/Agencies: Overall Bank Moderately Overall Borrower Moderately Satisfactory i Performance: Unsatisfactory Performance: C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Sewerage 70 70 Water supply 30 30 Theme Code (as % of total Bank financing) Other human development 13 13 Other urban development 24 24 Pollution management and environmental health 25 25 Urban services and housing for the poor 25 25 Water resource management 13 13 E\. Bank Staff Positions At ICR At Approval Vice President: Inger Andersen Christiaan J\. Poortman Country Director: Hedi Larbi Joseph P\. Saba Sector Manager: Francis Ato Brown David J\. Steel Project Team Leader: Abdulhamid Azad Mohammed Benouahi ICR Team Leader: Abdulhamid Azad ICR Primary Author: Shaheena Nisar Abdulhamid Azad F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The main project development objectives are to: ii a) Enhance the quality of life in the four northern cities of Rasht, Anzali, Sari and Babol by: i\. improving the reliability of the water supply systems through rehabilitation and extension of the water supply networks; ii\. improving the health and urban environmental conditions by providing wastewater collection services and treatment facilities; and iii\. contributing to the environmental protection of the natural resources of the provinces (especially the Anzali Lagoon, an internationally recognized wetland)\. b) To improve the operational efficiency and financial sustainability of the Water and Wastewater Companies (WWCs)\. Revised Project Development Objectives (as approved by original approving authority) The objectives were not revised (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Working Ratio â WR Value Guilan: 1\.15 Guilan: 0\.75 Guilan: 1\.98 quantitative or Mazandaran: 0\.97 Mazandaran: 0\.75 Mazandaran: 1\.6 Qualitative) Date achieved 06/30/2004 12/31/2010 12/31/2010 Comments The Working Ratios have deteriorated because the expected tariff increase did (incl\. % not materialize\. Considering the recent changes in tariffs it is predicted that the achievement) working ratio will improve in the coming years\. Indicator 2 : Unaccounted for Water â UFW (%) Value Guilan: 35% Guilan: 27% Guilan: 21 to 27% quantitative or Mazandaran: 33% Mazandaran: 27% Mazandaran: 28% Qualitative) Date achieved 03/21/2005 12/31/2010 12/31/2010 Comments In Rasht and Anzali the UFW rate are 27% and 21% respectively\. Sari and (incl\. % Babol the UFW is estimated to be 28%\. It is expected that once all the works are achievement) completed the UFW rate indicator will be lower\. Indicator 3 : Incidence of Water Borne Diseases Rasht: 10%(2010) Reduction in Value Anzali: 12% (2010) incidence of quantitative or Not available waterborne Qualitative) Sari: 8% (2009) diseases Babol: 10% (2009) Date achieved 03/21/2005 12/31/2010 12/31/2010 Based on a heath study conducted in 2009/2010\. See the summary in annex 10\. Comments According the EMP data in all four cities drinking water quality meets national (incl\. % and WHO standards\. achievement) Indicator 4 : Water Quality of Receiving Bodies iii Quality of receiving Value Improvement in water bodies has quantitative or Not available water quality of been slightly Qualitative) receiving bodies\. improved Date achieved 03/21/2005 12/31/2010 12/31/2010 Continued monitoring of water quality parameters was done over the project's Comments lifetime\. Because the WWTPs are not yet fully operational and sewerage (incl\. % networks are not yet fully connected, water quality of water bodies has only achievement) slightly improved\. See secti (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Wastewater in Rasht, Anzali, Sari and Babol Indicator 1 : No\. of wastewater connections (% of pop\. Coverage) Sari: +16,000 Sari=13,000 (30%); (24\.5%) Sari and Babol =0 Babol: +16,300 Babol=12,000 Value (25%) (18\.4%) (quantitative Rasht traditional 84,717 Mazandaran = or Qualitative) Anzali Traditional 1,3801 Rasht: +70,400 25,000 Rasht= (40%); 20,000 (11%) Anzali: Anzali: 27,000 +27,000(65%); (65%)\. Date achieved 04/15/2005 12/31/2010 12/31/2010 The pumping stations and WWTPs of Sari and Babol are near completion\. The Comments connections at Rasht and Anzali are partial\. In Anzali about 10 percent of the (incl\. % western area has been connected to the WWTP through traditional house achievement) connections\. Indicator 2 : % of wastewater treated Babol: 14% Babol: 45% Value Sari: 35%, Sari: 14\.8% (quantitative Zero of all cities Anzali: 65%; or Qualitative) Rasht: 45%, Anzali: 10% Rasht: 0% Date achieved 04/15/2005 12/31/2010 12/31/2010 Comments Treatment plants for Rasht and Sari are being completed and the ones for Anzali (incl\. % and Babol have started to take in wastewater\. The inflow at Babol WWTP is achievement) currently 50 liters per second and in Sari is 40 l/s\. The inflow at Anzali is 23 l/s\. Water Supply in Rasht, Anzali, Sari and Babol Indicator 3 : Increase in No\. of water connections Value Rasht: 85,680 (>90%); Rasht: +28,950 Guilan: (quantitative Anzali: 18,100 (100%); Rasht: 16,449 or Qualitative) (>90%); Anzali: +7,690 (97\.10%) iv (100%); Anzali: 4,027(95%) Sari: 40,000 (100%); households Babol: 32,000 (100%) Sari: +5,000 (100%); Babol: Mazandaran: +4,000 (100%) Sari:7,500 (100%) Babol:6,500 (100%) Date achieved 04/15/2005 12/31/2010 12/31/2010 Comments (incl\. % achievement) Indicator 4 : Length of water pipes rehabilitated (km) Rasht: 460 km Anzali: 113 km Babol: 40 km Rasht: 440 km; Value Sari: 50 km Anzali: 95 km; (quantitative Zero for all cities 230 Sari: 50 km; or Qualitative) liters/person/day Babol: 40 km average from surface and ground water resources Date achieved 04/15/2005 12/31/2010 12/31/2010 In addition to: Rasht: 219 km allowing for 55,027 new connections Comments Anzali 98 km allowing for 8,500 new connections (incl\. % Babol: 157 km allowing for 8,000 new connections achievement) Sari: 134 km allowing for 10,000 new connections G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 06/30/2005 Satisfactory Satisfactory 0\.00 2 11/04/2005 Satisfactory Satisfactory 1\.12 3 05/30/2006 Satisfactory Satisfactory 5\.12 4 11/03/2006 Satisfactory Satisfactory 9\.90 5 06/28/2007 Satisfactory Satisfactory 31\.38 6 12/05/2007 Satisfactory Satisfactory 48\.17 7 06/09/2008 Satisfactory Satisfactory 73\.51 8 07/31/2008 Satisfactory Satisfactory 75\.97 9 05/21/2009 Moderately Satisfactory Moderately Satisfactory 104\.51 Moderately Moderately 10 10/17/2009 115\.17 Unsatisfactory Unsatisfactory Moderately 11 06/29/2010 Moderately Satisfactory 156\.31 Unsatisfactory Moderately Moderately 12 06/15/2011 169\.93 Unsatisfactory Unsatisfactory v H\. Restructuring (if any) Not Applicable I\. Disbursement Profile vi 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal Main Sector Issues Identified at Appraisal The Bankâs engagement with the water and sanitation sector in Iran started with the Tehran Drainage Project in the early 1990s\. At appraisal (2005), 98% of the urban population had access to water, but the system suffered from inefficient water use and high water losses\. Unaccounted-for water (UFW) averaged 35% nationally\. Rapid urbanization (2\.8% per year) and low tariff rates resulted in a consumption that was 70% higher than international standards\. In contrast, most Iranian cities lacked sewerage systems\. Antiquated urban household practices of sewage disposal and untreated waste water dumping into waterways impacted agricultural land and lagoons, causing major public health risks and environmental hazards\. Sector Issues in Guilan Province The two cities in Guilan Province, Rasht and Anzali, both located about 320 km to the north of Tehran, have been grown rapidly\. At appraisal, 85% of households in Rasht and Anzali were connected to the water distribution network\. Rashtâs aggregate demand at 124,000 m3 per day was expected to double in about 25 years due to increased urbanization\. Anzaliâs aggregate demand at 27,000 m3 per day was also expected to more than double in 25 years\. UFW in Guilan province was estimated at 35%\. Chemical, physical and bacteriological analyses, conducted at various points showed that drinking water supply quality complied with national and WHO standards\. One of the sector concerns was the lack of wastewater collection and treatment networks in the face of a growing population with a resulting increasing discharge of wastewater into the natural water bodies\. Where groundwater level was high, the risk of groundwater contamination and waterborne infectious diseases was significant\. In Rasht, discharge of raw wastewater had been severely polluting the Zarjoob and Goharood rivers which flow into the Anzali lagoon\. Pollution was highest during low summer flows when the rivers were transformed into sewers with Biological Oxygen Demand (BOD5) levels in both rivers up to 30 mg/l\. Dissolved Oxygen (DO) levels measured were as low as 10 mg/l\. The Government had devised a wastewater management plan for Rasht such that the wastewater generated in the three drainage zones of the city (western, eastern, and central) would be collected and conveyed by gravity to a single wastewater treatment plant located 4 km to the north-east of the city\. At appraisal, the wastewater collection system in Rasht was under construction, with priority given to the central drainage area which had the highest population density\. In Anzali 70% of the population was connected to one waste water collection system\. The combined wastewater and storm drainage collection network discharged into both the Anzali lagoon and into the Caspian Sea, through large sewer outfalls\. There was a need to install separate wastewater treatment plants for each 1 drainage zone in Anzali whereby the effluent loads would be given secondary treatment since the discharge of all treatment plants would eventually reach the sensitive water body of the Anzali lagoon\. The lagoon was (and is) the most prominent environmental feature in the project area and is listed as a âwetland of international importanceâ under the 1971 Ramsar Convention due to its importance as a natural wetland characteristic of the southern Caspian lowlands\. It supports an extremely diverse wetland flora and fauna\. Sector Issues in Mazandaran Province Sari, the capital city of the Mazandaran Province, and Babol, the second largest city, are both located to the north of Tehran and attract some 10 million tourists annually\. In Sari, the average water demand at 52,000 m3 per day was expected to rise to 97,000 m3 per day by 2029 while that of Babol would rise to more than 78,000 m3 per day from 42,000 m3 per day\. Groundwater has always been the major drinking water source and both cities had complete water coverage\. The quality of water supplied meets the national water quality standards\. The average losses in the systems at appraisal stood at around 32%\. The inadequate drainage system in both Sari and Babol had been impacting the living conditions of the people who used percolation pits as a way to dispose of household waste\. These pits have generally a 1 to 1\.2 m diameter and a depth of 8 to 10 m require frequent cleaning\. In Sari, total wastewater volume collected was projected to be 4,861 m3/day at the end of 2010 rising to 92,840 m3/day by the end of 2029\. Due to the high water table and low soil permeability, the use of existing pits for wastewater and sludge was unsatisfactory, creating a high risk of groundwater contamination and promoting the incidence of waterborne infectious diseases\. Water quality of the rivers had also deteriorated in the previous years because of industrial discharges and agriculture drainage\. The waters of the Tajan river passing through Babol had been used for agriculture\. Water quality measurements overall several months reported unsafe levels of coliform bacteria and BOD5\. The Babolrood river received a great part of the wastewater of Babol city from open drainage channels that ran along the roads adjacent to the residential areas\. Although the four cities had complete water coverage, the distribution network needed rehabilitation to improve efficiency\. The network also needed to be extended because of the population increase\. The degradation in environmental conditions needed to be arrested with improved sanitation\. Lack of adequate wastewater collection systems coupled with rapid growth of population had prompted the Government to designate water supply and sanitation projects as high priority projects\. Rationale for Bank assistance The current project was part of the sector investment plan prepared for the Third Five Year Development Plan (1999-2004) and Fourth Five Year Development Plan (2005-2010)\. Previous Bank assistance to the Iranian water and sanitation sector was fragmented and limited\. The April 2001 Interim Strategy (2001-2004) facilitated the dialogue for a renewed and strategic 2 partnership between the Bank and Iran with a view to following a reform agenda for promoting environmentally and socially sustainable development\. In 2002, the Bank prepared and disseminated a water and sanitation sector note providing recommendations for: (a) key institutional reforms such as clarification and demarcation of responsibilities of the institutions involved; (b) streamlining of financial policies and implementation of a tariff scheme consistent with cost recovery objectives; (c) optimization of investments and selection of appropriate least- cost technologies; (d) addressing environmental and health concerns; and (e) adopting and implementing integrated water resource management concepts\. In 2003, the Government endorsed the note in the context of sector discussions within the Country Assistance Strategy\. The Government approached the Bank to bridge the huge financing gap to address the infrastructure deficit and management of the water and sanitation sector\. The Bankâs assistance for water supply, sanitation and hygiene, irrigation and drainage, and water resource management was to be supported by the following four pillars: (i) recognizing that investment without reform is ineffective in reaching the goals of environmentally and socially sustainable development; (ii) people and institutions should be at the center of sustainable water resource development; (iii) delivering of water and other related services should be based on cost recovery principles; and (iv) safeguarding of water resources is a shared responsibility that involves tradeoffs\. In view of these principles, investment in the water and sanitation sector was envisaged for six cities in Iran\. The Government sought the Bankâs assistance for both the Ahwaz and Shiraz Project (2004-2009) and for this Northern Cities Water and Sanitation Project (NCWSP), with further investment considered under an adaptable programme loan (APL)\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators The main project development objectives (PDO) were to: 1) Enhance the quality of life in the four northern cities of Rasht, Anzali, Sari and Babol by: (a) improving the reliability of the water supply systems through rehabilitation and extension of the water supply networks; (b) improving the health and urban environmental conditions by providing wastewater collection services and treatment facilities; and (c) contributing to the environmental protection of the natural resources of the provinces (especially the Anzali Lagoon, an internationally recognized wetland); and 2) Improve the operational efficiency and financial sustainability of the Water and Wastewater Companies (WWCs) in Guilan and Mazandaran\. To measure project performance, four outcome indicators were chosen: 1\. Availability of water in distribution network in each project city 2\. Incidence of waterborne diseases in each project city 3\. Quality of receiving bodies 3 4\. Improved operational efficiency and financial sustainability: a\. Unaccounted for water (UFW) b\. Working ratio (WR) c\. Collection ratio (CR) 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/ justification There has been no revision of the project objectives\. 1\.4 Main Beneficiaries With adequate water resources available in the country, the project would ensure quality and reliability of water supplies to the existing 1\.1 million inhabitants and the growing population of the four northern cities Rasht and Anzali in Guilan and Sari and Babol in Mazandaran, Rasht accounting for half of the total population\. By providing access to all, the project would particularly benefit poor communities which, otherwise, would have to bear the inconvenience and high cost of water purchases from vendors\. Safe public supplies of water would reduce the threat of health hazards for the urban population\. Furthermore, by establishing wastewater collection and treatment systems, the project expected to improve the living conditions of 40% of the residents in Rasht, 65% in Anzali, 30% in Sari, and 25% in Babol\. The benefits of the improved waste disposal would be pecuniary and non- pecuniary\. At the same time all residents would benefit from the overall improvement in environmental conditions brought about by the project collection, treatment and disposal of wastewater and sludge, which would reduce the incidence waterborne disease such as low-lying poor residential areas, where standing pools of sewage created an imminent public health hazard, especially during the summer months\. This project therefore was expected to bring direct, tangible, inclusive and sustainable benefits for all, but particularly for the poor by improving dramatically the unacceptable conditions of environmental health and safety\. Among other direct beneficiaries would be the tourists to the Anzali lagoon and the Mazandaran province where the ecological conditions were expected to improve with the completion of the project\. Farmers would benefit from the availability of treated wastewater for irrigation on their farms\. 1\.5 Original Components Long-term development plans had been prepared for the extension of the water supply and wastewater collection and treatment systems in Rasht and Anzali (Guilan province), Sari and Babol (Mazandaran province) for the period 2004-2029\. These plans were formulated to serve a population of about 1\.0, 0\.25, 0\.4 and 0\.3 million, respectively\. They were to be implemented in four phases\. The current project covered works proposed under Phase 1\. The total project current cost was US$343 million\. The Bankâs share of financing was US$224 million\. This included support to Guilan and Mazandaran water and wastewater companies\. 4 A\. Projects in Guilan Province Component 1: Rasht Wastewater Collection & Treatment - US$81\.5 million This component aimed to extend and improve Rashtâs collection network through 70,000 new house connections, construction of approximately 560 km of laterals, interceptors, and trunk mains, and 16 pump/lift stations in addition to collection works already being executed under on- going contracts\. The project will also upgrade the wastewater treatment plant under construction with a biological nutrient removal unit, and measures to reduce the risk of discharge of untreated sewage in the event of temporary plant failure\. There will also be a study and an investment program for septage management (to address the wastes from households not connected to the wastewater network)\. Component 2: Rasht Improvement of the Water Supply System (US$50\.3 million) This component aimed at improving the service provision in Rasht through regulating the pressure and availability of water in the distribution network, as well as reduction in losses due to leakage\. This will be achieved by rehabilitation and extension of some 700 km of primary and secondary distribution piping, additional ground storage (two tanks of 40,000 m3 each, in addition to a new reservoir at Lakan of 30,000 m3), and rehabilitation of two existing elevated storage tanks and associate pumping stations\. There will also be a program to improve operational efficiency and reduce unaccounted-for water (including some instrumentation for automation, operation and maintenance equipment)\. Component 3: Anzali Wastewater Collection & Treatment (US$45\.4 million) This component aimed to extend and improve Anzaliâs collection network through: (i) provision of 27,000 new house connections (ii) construction of approximately 250 km of laterals, interceptors, and trunk mains, and (iii) 14 pump/lift stations, in addition to collection works already being executed under on-going contracts\. The Anzali wastewater treatment plant under construction will be improved through (i) upgrading it with a biological nutrient removal unit, and (ii) measures to eliminate the risk of discharge of untreated sewage in the event of temporary plant failure\. The project was also include the construction of the first module of the Ghazian wastewater treatment plant (12,000 m3/day capacity), and an investment program and associated studies for management of septage from those households that would have not been connected to the wastewater network in the first phase\. Component 4: Anzali Improvement of the Water Supply System (US$9\.1 million) This component aimed to rehabilitate and extend Anzaliâs water distribution network with: (i) 155 km of primary and secondary distribution network, (ii) a new 30,000 m3 reservoir at Ghazian, and associate pumping stations\. There was also be investment program to improve operational efficiency and reduce unaccounted-for water (including instrumentation for automation, operation and maintenance equipment)\. Component 5: Support to Guilan Water & Wastewater Company (US$ 20\.9 million) Under this component the project aimed to provide technical assistance, training and consultant services for institutional development and environmental management plan, Technical Support Unit (TSU), engineering design and construction supervision\. 5 B\. Projects in Mazandaran Province Component 6: Sari Wastewater Collection & Treatment (US$40\.3 million) This component included construction of a wastewater collection and treatment system in Sari through: (i) the provision of 16,000 new house connections, (ii) the construction of approximately 240 km of laterals, interceptors, and trunk mains, (iii) two pumping stations, and (iv) construction of the first module of the Sari wastewater treatment plant (23,200 m3/day)\. Component 7: Sari Improvement of the Water Supply System (US$4\.8 million) This component aimed to extend and rehabilitate Sariâs distribution network through: (i) replacement of 50 km of existing pipe, (ii) extension of the network with 65 km of pipe, and (iii) addition of 85 km of lateral pipes, and some 5,500 new water meters\. The component also includes an investment program and studies to improve operational efficiency and reduce unaccounted-for water (including operation and maintenance equipment)\. Component 8: Babol Wastewater Collection &Treatment (US$30\.3 million) The wastewater component included: (i) the provision of 16,300 new house connections, (ii) the construction of approximately 130 km of laterals, interceptors, and trunk mains, and (iii) six pumping and lift stations\. The wastewater treatment plant currently under construction will be improved through the construction of a 4 km outfall main plus the provision of facilities to store wastewater in case of emergencies\. Component 9: Babol Improvement of the Water Supply System (US$6\.1 million) This component included: (i) the provision of pumping equipment for five existing wells and collection lines, (ii) the construction of a 20,000 m3 ground reservoir and pumping station, (iii) the replacement of 40 km of existing pipe mains, (iv) extension of the network with an additional 32 km of mains, and (v) some 125 km of lateral pipes and 4,500 water meters\. There will also be an investment program (and associated studies) to improve operational efficiency and reduce unaccounted-for water (including operation and maintenance equipment)\. Component 10: Support to the Mazandaran Water & Wastewater Company (US$10\.241 million) Under this component the project aimed to provide technical assistance, training and consultant services for institutional development, technical support, engineering design and construction supervision\. 1\.6 Revised Components The components were not revised\. 1\.7 Other significant changes Not applicable\. 6 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry The project prepared an Environment Impact Assessment (EIA) and Social Assessment by consultations with line ministries, city authorities, provincial departments of the environment, operating water and wastewater companies, local communities, NGOs and the public\. The EIA determined the various sources of pollution and estimated the influence of the project on the effluent quality from the project area wastewater systems, discharging into rivers and the Anzali lagoon\. The project was expected to have significant economical, social and public health benefits with long-term positive environmental impacts due to reduced pollution of natural resources\. Positive environmental impacts would be assured by the enforcement of existing governmental regulations and standards along with continuous monitoring of the treated waters\. Various stakeholders (design consultants, representatives of the city councils, municipalities, regional water boards and others) were consulted for financial, environmental and social issues associated with the project\. Public meetings were held in Guilan and Mazandaran and the participants were made aware of the current state of water and wastewater services, project components, financial arrangements, and participation of the Bank and water and wastewater companies\. During preparation, feasibility studies were conducted to determine the most suitable options with respect to technical, economical, environmental, health, and social factors\. The project provided adequate design provisions for secondary treatment (through an activated sludge process) with installation of a Biological Nutrient Removal (BNR) system on each treatment plant to ensure treated effluent of acceptable quality for discharge in receiving water bodies and for agriculture\. The proposed project was classified as Category âAâ because of the construction of wastewater treatment plants, the re-use of sludge and treated effluent and the potential impact on the Anzali lagoon\. In the case of Guilan, the issue of the disposal of sludge from the new treatment plants had been under study\. The water and wastewater company agreed to provide the Bank with an environmental impact assessment of the option eventually chosen, no later than one year from effectiveness date\. The Social Safeguards Policy Framework approved for the Ahwaz and Shiraz project was considered applicable also to this project\. The Bank mission reviewed all land expropriation needs to assess compliance with the Bank safeguard policy\. On strategic grounds, the project design focused on improving the operational and financial capacities of existing water and wastewater companies so that they could function as autonomous entities\. Improving their capacities in terms of understanding Bank procurement policies and working in strict compliance with Bank procedures was a major implementation challenge faced by the project\. The project addressed this challenge by incorporating important lessons from the five year implementation of the Tehran Sewerage Project: (i) establishing a Technical Support Unit (TSU) to improve project management capacity; (ii) providing training on the Bankâs procurement, financial management, and safeguard issues to address project delays; and (iii) encouraging the establishment of a tariff scheme that would ensure financial viability of the water and wastewater companies\. Each TSU would be equipped with an engineer, 7 a financial management specialist, procurement and environment, and safety specialist\. The Manager of the TSU, chosen from the staff of the company, would provide a critical link with staff\. His or her functioning would be monitored by the national-level TSU in the National Water and Wastewater Engineering Company\. Procurement and financial management training would build the TSUsâ management capacities for smooth implementation of the Bank-financed project\. At the time of appraisal, the projectâs first year procurement packages were at a final design stage and were expected to be completed by the third quarter of 2005\. Project design was appropriate\. However, more attention should have been paid to potential land acquisition, which became a major issue during project implementation\. Government commitment has been strong throughout the project preparation, appraisal, implementation and operation\. Risks were assessed and addressed at the time of appraisal assuming that satisfactory implementation of the project would require: (i) a competent TSU in each company; and (ii) timely provision of counterpart funds provided by the Management and Planning Organization (MPO) and the water companies\. The PAD identified potential risks and mitigation measures deemed necessary at that time\. Table 1 presents the ICR assessment of the risks and the ICR team concurs with the overall risk assessment of the project to be Substantial\. 8 Table 1: Risk Assessment and Mitigation Measures Risk Risk Mitigation Measures ICR Assessment of the Risks Rating Planned at Appraisal (i) The water and S (i) Agreement has been reached (i) Measures are taken by the two wastewater with Government on key companies to reduce costs and improve companies will not indicators including financial operational efficiency yet the risk persists\. generate sufficient ones\. Governmentâs revenues and build commitment will ensure up capacity to pay for adequate tariff increases\. their O&M\. (ii) An adequate tariff S (ii) The Government and the (ii) In December 2010, the Government scheme will not be Bank have agreed on a policy announced increase in water tariffs from implemented\. reform package that would be average 8 cents/ m3 to 28 cents/m3\. If implemented in parallel with the implemented, the WWC would cover O&M project\. The Bankâs current and costs leading to low level of financial risk\. future involvement in the sector is based on the fulfillment of the content of this agreement\. (iii) An efficient M (iii) A competent TSU will be (iii) This risk should have been substantial\. project management selected in each water and capacity is not wastewater company\. established; and that contracts are not awarded to appropriately qualified contractors\. (iv) Procurement of S (iv) Bank and the Government (iv) The risk has been properly addressed by works, goods and have begun to implement an providing hands on training\. The risk has services is delayed\. agreement on the use of standard been reduced to low level, but much time documents acceptable to both has been lost during the implementation sides\. After a slow period when period\. all parties are used to this documentation, it is expected that procurement will be speeded up\. Moreover, it was agreed that a special procurement specialist will assist both companies in the first phase in launching the first year packages\. (v) The local sources M (v) Local funding being modest, (v) Delay in counterpart funding was one of financing will not the Government is committed to factor that caused delays\. At present be made available as significantly contribute to counterpart funding is expected to be needed and that financing the investment provided by the Government that holds the connection fees will program of the project, investments of the water sector in a high not be collected/paid especially the wastewater priority\. Connection fees are still an issue\. for as projected\. component\. Overall Risk S Rating S = Substantial; M = Moderate 9 2\.2 Implementation The project was approved in May 2005 became effective five months after the Board approval\. The project closed with an overall disbursement of about 87\.8% of the total loan amount of US$224 million\. An amount of US$27\.315 million was cancelled from the loan\. The Mazandaran water and wastewater company took local loans to pay its contractors when difficulties were experienced in the flow of funds in order to accelerate the implementation of works during the remaining few months up to the project closing date\. Some of the key components such as, wastewater treatment plants and pumping stations would only be finished more than two years after project closing date\. External Factors The main external factors responsible for slow project implementation were: ï Imposition of UN sanctions on Iran in 2007 caused delays in disbursements and implementation, because Project Special Accounts (PSA) denominated in US dollars had to be converted to Euros\. Delays were also incurred in the transfers of funds\. These delays and uncertainties impacted the pace of implementation of the works as contractors were hesitant to accelerate their activities under such uncertain conditions\. ï In connection with the UN sanctions the selection of equipment to be purchased by the project contributed to delays from the very beginning\. Specifications had to be reviewed against the list of prohibited items and entities identified by the relevant UN Resolutions\. ï Travel restrictions\. There were no Bank supervision missions between January 2009 and May 2010\. ï The Government expected that the Bank would agree to extend the closing date of the project\. However the Bank did not grant the extension of the closing date\. The task team encouraged the Government to carry out a revision of the procurement plans for each city reflecting prioritizing of sub-projects to be completed with existing Bank funds and/or else seek counterpart funds from the Government\. ï Because of cost-overruns due to increased construction and material costs, and underestimation of project costs at appraisal, the project faced a significant shortfall in project financing\. In order to fulfill the minimum objectives stated at appraisal, more funding was required from the government to finance the project\. Factors Subject to Government and Implementing Agencies Control Internal Implementation delays were caused by municipality and traffic police permit requirements, and delays in receiving counterpart funding\. Some issues arose on account of land acquisition resulting in delays in the construction of critical components such as the construction of pumping stations and wastewater treatment plants\. 10 An important aspect of the project design was the establishment of a TSU responsible for the planning, design and execution of the project while ensuring compliance with Bankâs procedures\. In the first two years of implementation, staffing of TSUs and staff turnover especially in the case of Guilan caused a lot of concern and consequential delays to the project\. At the beginning, the procurement process was mostly driven by consultants in charge of the design and preparation of bidding documents\. There was a long delay in appointing an engineer for Guilan TSU\. A fully staffed and competent TSU, with full support of the top management, was in place only two or three years after the start of the project\. The Mazandaran TSU performed better by replacing the external staff with company staff\. The Bank assessed improvements in the overall aspects of procurement and contract management and advised the TSU in Guilan to work closely with the technical department of the company\. Mid-term review (MTR) The MTR report (December 2008) indicated that the observed cost overruns were not only due to increases in market rates of construction materials, but also due to increases in service areas/ population numbers over and above what had been estimated at the time of appraisal\. Severe cost overruns in the engineering designs of the components in Mazandaran were due to significant discrepancies in planned, revised and actual costs\. The MTR assessed that project objectives were relevant and did not require any revision, albeit their fulfillment would require timely availability of more funds from the Government\. Despite procurement picking up, the MTR assessed that major construction works for wastewater treatment plants and pumping stations especially those in Anzali and Sari, would require more time to complete i\.e\. beyond the project closing date\. Following the MTR discussions, the TSUs prioritized packages that were essential to achieving project objectives and which fitted within the loan and government allocations already made\. Procurement and financial plans were constantly revised to ensure that project objectives would still be achieved\. While more counterpart funds were required to complete priority contracts, the less critical activities could be funded by the water and wastewater companies under their own implementation plans\. Regarding financial health of water and wastewater companies Reforms anticipated at the beginning of the project did not materialize during the implementation period causing slipping of the project objectives\. The higher working ratio than the baseline values established at the beginning of the project had been a clear reflection of this issue\. It was only in late 2010 that the Government announced the lifting of subsidies in many sectors, including water and sanitation\. At project closing the impact on the water tariff of the new policy was not yet clear in the cases of Mazandaran and Guilan\. 11 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E Design The projectâs four intermediate indicators reflected the physical outputs of the project and could be easily measured and targeted: (i) number of wastewater connections (%) of population coverage, and (ii) % of wastewater treated\. Indicators measuring progress in water components were (iii) increase in the number of water connections; and (iv) the length of water pipes rehabilitated\. One of the outcome indicators, availability of water in the distribution system was not monitored during the implementation period for lack of data being reported by the utility\. Social and environmental benefits of the project were supposed to be reflected by the indicators (3) reduced incidence of waterborne diseases and (4) improvement in water quality of receiving bodies\. WR and UFW indicators were specified with baselines at the start of the project and target values were specified\. The project provided for the UFW study for each water and wastewater company for better assessments and measurements\. During the implementation of the project, several studies were financed to establish baseline data for project outcome indicators (3) and (4)\. M&E Implementation The supervision of the project, including the management of the Environmental Monitoring Plan (EMP), was entrusted to the TSU to ensure that physical implementation resulted in satisfactory outcomes of the projectâs intermediate indicators and hence would lead to achievement of the PDOs\. Measures identified by the EMP were expected to be executed by the construction contractor (during the construction phase) and by the treatment plant operators (operation phase); both to be overseen by the Environment and Safety Officer (ESO) of the TSUs\. However, on account of difficult country conditions and an initial period of non-familiarity with the Bankâs procedures and guidelines, much time was spent in handling issues related to procurement and financial management\. M&E utilization Data on the progress of selected indicators was maintained by the TSUs\. TSUs maintained data on procurement and contract management and monitored the progress of project components\. To address funding shortfall, based on these data some activities were recommended to be financed by the government only\. Reliable outcomes and impacts could only realistically determined some years after commissioning of wastewater treatment plants and would not be easily determined during project implementation\. 12 2\.4 Safeguard and Fiduciary Compliance Safeguards: The findings of the EIA in the two provinces formed the basis of the Environmental Management Plan (EMP) with mitigation measures to allow achievement of the PDOs\. The Environment and Safety Officer (ESO) within each TSU was assigned to oversee the implementation of the EMP in conformity with the Environmental Assessment (OD 4\.01) and the Resettlement Policy (OP 4\.12)\. ï The ESO monitored the work of contractors during the construction stage\. Construction safety remained a high priority for the two implementing agencies\. ï Land acquisition was necessary in order to provide for 1) WWTPs 2) pumping stations and 3) drainage outfall channels\. Lack of timely counterpart funding to purchase land caused some project delays\. Two reports on the progress of land acquisition and resettlement covering Rasht and Anzali were prepared in November 2007 and July 2008 respectively\. ï To ensure safety of sludge for re-use by farmers as soil conditioner or fertilizer, the adopted treatment processes, the one year storage period, and the control of industrial discharges to the sewage system had to comply with the WHO nematode standard and EU and FAO guidelines\. It was expected that an âactivatedâ sludge process with nutrient control by the Biological Nutrient Removal system would be an option for the three WWTPs\. The Anzali lagoon would thus be protected\. ï Mazandaran (Sari and Babol) and Guilan (Rasht and Anzali) Septage Management Studies which addressed the wastes from households not connected to the wastewater network were considered useful by the water companies\. ï The Emergency Operation Plan for the Sari and Babol was completed and approved, while for Rasht and Anzali the final draft is available in Farsi\. In addition public awareness and safety workshops were conducted\. Fiduciary The financial management arrangements in both Guilan and Mazandaran have been satisfactory during the implementation period\. Initial delays in issuing FMRs were addressed by installing the Bank accounting software that was customized and configured for the project\. An accountant provided hands-on training to the TSU Financial Officer (FO) on system functionality\. The TSU FO in each company posted data on commitments, disbursements, projections and overall financial status and generated quarterly reports for project management reviews and decision making\. The Bankâs advice on strengthening the financial management was followed\. After installation of the new software and training, the financial management aspects continued to meet the requirements of the project in a satisfactory manner\. The quarterly FMRs were generated through the system and remitted on a timely basis to the Bank\. The project budgets and disbursement projections have been updated periodically\. The project SAs were reconciled periodically with the banksâ statements and the Bankâs client connection and withdrawal applications were issued 13 on a timely basis with minor deductions being applied to them by the Bank\. All payments were backed by signed contract or purchase orders\. The Financial Officer in each TSU followed due diligence procedures and maintained good relations with the Financial Controller in the Management and Planning Organization\. Both implementing agencies submitted audit reports and audited financial statements in accordance with the legal agreement\. Audits included project and entity audits that were received by the Bank and the audit findings which in general were all acceptable to the Bank with minor qualifications that were addressed by the TSUs\. Procurement Based on the Bankâs ex-post procurement review, the procurement process followed by the Government was satisfactory, albeit initially quite slow, and the procurement risk for the project was rated as moderate\. Filing was available and well kept; time allowed for submission of bids was generally sufficient and bids were being opened in public at stipulated time right after bid submission\. Minutes of bid opening and records of bid security were maintained\. In connection with the UN sanctions technical specifications had to be reviewed against the list of prohibited items identified by the relevant the U\.N\. Security Council Resolutions\. All the requirements were in compliance\. The Bank addressed issues of procurement by emphasizing the need to establish competent technical staff in TSUs\. It arranged extensive training and hired a consultant expert on Bank procurement procedures for 18 months to assist in the preparation of bidding documents\. The MWWC hired a procurement consultant to prepare bidding documents as the Bank suggested that a suitable contract management arrangement should be made since several packages especially under Sari and Babol water works experienced severe cost overruns\. 2\.5 Post-Completion Operation/Next Phase ï Completion of ongoing works through Government funding by 2013 i\. All the obligations related to signed contracts as well as the required funds to complete unfinished civil works contracts and installation of the BNRs units in Anzali will be financed by the Government\. Cost estimates are summarized in the following table: 14 Description Cost in US$ million Guilan-Water 22\.67 Guilan Wastewater 95\.96 Mazandaran-Water 3 Mazandaran 15 Wastewater ï Operation phase: the two utilities have prepared their O&M plans and the objective is to privatize the operation and maintenance services of the infrastructure including the treatment plants and the network\. ï Tariffs: the government subsidies are being removed; therefore the tariff structure is being changed to cover the full O&M cost\. This will lead to a reduction in the working ratio\. Worldwide experience points to the fact that a full cost recovery in the provision of wastewater treatment services is not a feasible goal and that investments are highly subsidized given the public good nature of this service\. ï The water quality will be monitored through established stations and laboratories\. The project should follow the recommendations made by the EMP\. A study was done to establish waterborne diseases incidence for all four cities and this study should be repeated after the project completion\. The sludge study in Guilan shows that co- composting and land application are the optimum options\. It is assumed that the existing composting factory in the city of Rasht can receive the sludge from wastewater treatment plants\. It should be noted that for this option, organizational participation between GWWC and the Rasht municipality is necessary\. In the Guilan province the coverage of the wastewater collection system was planned to be 40% during the first implementation phase covered by this project\. It will probably take another ten years before the wastewater collection system reaches an acceptable level of population coverage\. The estimated funds required for completion of water and wastewater works amount to US$500 million and this has been budgeted for in the Governmentâs sector investment plans\. In the Mazandaran province the estimated coverage of the wastewater collection system was planned to be 30% during the first implementation phase (covered by this project)\. It will probably take another ten years before the wastewater collection system reaches an acceptable level of population coverage\. The estimated funds required for completion of water and wastewater works amount to US$400 million, and this has also been budgeted for in the Governmentâs sector investment plans\. 15 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation Establishing modern wastewater and sanitation infrastructure along with efficient water supply systems to meet the growing demand for services in the Northern cities were relevant objectives designed in line with the Governmentâs aim to improve the quality of life for its citizens\. Moreover the projectâs PDOs of improving services, and generating health and environmental benefits and improving the efficiency, sustainability and financial autonomy of the WWCs remain still highly relevant for Iranâs continued economic and social development, particularly the improvement in living standards of the poorest section of the urban population\. Project design was generally appropriate for the achievement of the PDOs, although the scope of the activities to be achieved within the five year implementation period would have been optimistic even under normal conditions\. With the disruption during implementation as a result of application of sanctions it became impossible for the project to be completed within the original timeframe\. 3\.2 Achievement of Project Development Objectives Rating: Moderately Unsatisfactory PDO 1: Enhance the quality of life (a) By improving the reliability of water supply systems through rehabilitation and extension Rasht & Anzali water supply systems in Guilan: In Rasht, the target was achieved\. In Anzali the target was also achieved and more: 30% above target for rehabilitation and 66% above target for extension\. The progress in household connections was only 52% of the target\. In Anzali, the Ghazian reservoir (30,000 m3) and pumping stations have been completed\. In Rasht, the Lankan reservoir (30,000 m3) and two small reservoirs (240,000m3) were delayed by 18 months\. The bidding for UFW analysis and equipment occurred five months prior to project closing\. Sari & Babol water supply systems in Mazandaran: The most important achievement has been that all targets for household connections were met, whereas the works for rehabilitation of distribution piping and the extension of the distribution network advanced by 84% and 94%, respectively\. A reservoir (20,000 m3 capacity) was completed in Babol and five existing wells were connected to the distribution network\. For both Sari and Babol, the UFW analysis was 50% complete\. The most important achievement of the project has been the rehabilitation of distribution piping and the laying of extension pipes in the four cities in Guilan and Mazandaran\. Sari and Anzali cities have almost completed the water distribution systems\. In the city of Anzali, the distribution works have been overachieved\. 16 The UFW rates for Rasht and Anzali are 27% and 21% respectively\. In Sari and Babol the UFW is estimated at 28%\. It is expected that once all the works are completed the UFW rate will be lower\. (b) By improving health and urban environmental conditions by providing wastewater collection and treatment facilities Rasht & Anzali Wastewater: Construction of trunk mains, laterals, interceptors was about 50% achieved\. The wastewater treatment plant in Anzali has been completed and is operational\. The construction of the Ghazian wastewater treatment plant was 30% complete and is expected to be completed using Government funds over next two to three years\. The 24 hour emergency reservoir for Rasht will also be covered by the Government funds\. The intermediate outcome indicators could not be fully met at the time of project closing\. Sari & Babol Wastewater: The wastewater treatment plant in Babol has been completed\. The wastewater treatment plant in Sari was 97% completed by project closing date\. The quality of construction is highly satisfactory (see pictures in Annex 2)\. In Sari two pumping stations have been completed and in Babol three pumping stations are under construction\. The completion of house connections had progressed together with the construction of collection network, pumping stations and wastewater treatment plants\. The septage management study has been completed\. (c) By contributing to environmental protection of natural resources (especially the Anzali lagoon) Because the wastewater treatment plants are not yet fully operational and the sewerage networks are not yet fully connected, the water quality of the receiving water bodies, such as the Anzali lagoon, has improved only slightly so far\. A study was done to establish the baseline for waterborne diseases for all four cities and should be repeated after project completion\. Current water quality parameters are listed in Annex 2\. Sludge management and discharge by the treatment plants in Anzali and Rasht has been an overriding concern since both cities are responsible for 83% of urban waste discharged into the Anzali lagoon\. Design provisions were made for the installation of a BNR unit on each wastewater treatment plant to ensure effluent of acceptable quality for discharge into receiving water bodies\. As agreed with the Government (at the time of the MTR in 2008) these packages will be taken up by the water and wastewater company using their own resources\. The emergency reservoir in Rasht, expected to provide a further mitigation measure for the Anzali lagoon in case of malfunction of the treatment process, will also be financed by the water and wastewater company\. Active sludge management will also ensure improvement in the quality of water bodies\. 17 PDO: (2) Improvement in the operational efficiency and financial sustainability of WWCs ï Financial sustainability: The working ratio for Guilan was 1\.98 and for Mazandaran 1\.6 reflecting deterioration of the financial performance of both companies over the implementation period\. Considering the recent changes in tariffs it is assumed that the working ratio will improve in the coming years\. ï Operational efficiency: During implementation, measures to promote operational efficiencies were also undertaken by the water and wastewater companies, such as improve collection efficiency and reduce expenses\. The Government is promoting private sector participation in performance-based operation and maintenance contracts for the wastewater and water supply schemes ï Improvements in technical and environment capacities: The technical and managerial capacities of both the Guilan and Mazandaran water and wastewater companies have improved\. 3\.3 Efficiency See Annex 3\. No economic or financial analysis of the project has been attempted since the physical works were not completed\. It was not feasible to do an economic and financial analysis and compare the target values with the actual values at the end of the project\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory At the time of project closing the water supply components of the four cities were satisfactory\. However, the implementation of household connections under all four wastewater treatment components was not fully completed\. As such the protection of the Anzali lagoon remains a high priority, and this is recognized by the Government who is committed to completing the household connections and installing BNR units over the next two to three years using Government funds\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development During the construction phase of the project, a significant number of temporary jobs had been created\. In addition, several permanent jobs have also been created for the facilitiesâ operation and maintenance, and more jobs will be created after project completion\. Bank missions confirmed the dire physical state of sanitation and its impacts especially in the low-lying poor residential areas\. The poorest sections of the population in the project areas are hardest hit by the absence of water supply and sanitation services and will benefit most once the works are fully completed as planned\. 18 The social and gender impact of the project is particularly important for women, since they have traditional roles in water procurement, child care and caring for sick family members\. (b) Institutional Change/ Strengthening The staff of the National Water and Wastewater Company (NWWC), including the Guilan and Mazandaran water and wastewater companies including other provincial WWCs benefited from the projectâs institutional strengthening aspects, transfer of technical know-how and high-level capacity building through the various consultancies that have been contracted\. The capacity of national and local consulting engineers and contractors has also been strengthened because of the experience gained from the project\. Workshops conducted on asset management, use of a condominial approach as a low-cost technical solution, sewerage systems and other relevant topics have succeeded in creating awareness on the possibilities of improving operational efficiency of WWCs through non-conventional low-cost approaches\. In the public education context, a public awareness program was implemented through mass media, distribution of brochures and similar methods\. Twelve training workshops were organized in the province of Guilan for contractors, consultants and the experts of the Guilan water and wastewater company on safety and environment\. In addition the World Bank Institute has assisted the government in preparing several workshops related to institutional strengthening and sanitation strategy\. The workshops were held at the national level\. To assist all local water and wastewater companies, the National Water and Wastewater Company (NWWC) has documented the results and achievements of the health and environmental studies undertaken under the project\. Training materials are available on the NWWCâs website\. (c) Other Unintended Outcomes and Impacts (positive or negative) The Bank introduced a new way of doing business in the water and sanitation sector in Iran\. Issues raised during project implementation with respect to short-term environmental safety aspects and land acquisition have taught water and wastewater companies that in order to maximize gains from investment, it is important to align sector objectives with the will and support of the intended beneficiaries\. Responsiveness to social issues will gain communitiesâ confidence and promote their wastewater treatment services, benefiting long term financial sustainability of companies\. This approach represents a sharp contrast to past project interventions where the government focused almost entirely on âhardwareâ components and beneficiary participation was seen as less important\. The transition to more participatory approaches will necessarily be a longer term undertaking, but the project is an important step in this direction\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable\. 19 4\. Assessment of Risk to Development Outcome Rating: Substantial (a) The risk level depends on the governmentâs priorities for allocating resources to timely completion of the project works\. See Government ICR letter in Annex 7\. (b) Interviews indicated that despite the general perception of the population (86%) that the sewerage system is useful, 40% of the population surveyed indicated that the price was too high compared to the service provided and 38% believed that paying for a sewerage system was an imposed cost\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately satisfactory The preparation of the current project started in parallel with the Ahwaz and Shiraz project\. It took a year longer to complete the appraisal in order to ensure adequate technical, financial, economic and institutional aspects\. It was a project highly relevant for the country and in coherence with the major concerns expressed by the Government and public\. The project intended to find solutions to the deteriorating state of the environment caused by lack of sanitation and wastewater treatment plants\. Physical infrastructure was well defined with clear outputs and outcomes\. Adequacy, reliability and safety of water supplies to the growing urban population and ensuring 100% coverage of the growing population in the four northern cities was another important social dimension supported by the project\. The Bank considered âdelays in implementation capacityâ as one of the major risks and addressed it by providing extensive training\. Other reasons were delays in municipality and police permits\. During preparation, the project recognized that a lack of coordination among sector entities was an important risk factor\. Delays in project implementation and funding shortfalls led to postponement or cancellation of some elements of project components\. The project design was based on the expectation of full cost recovery by WWCs\. The PDO rested on an expectation of a 20% tariff increase without considering the short project implementation period\. (b) Quality of Supervision Rating: Moderately unsatisfactory The Bank planned two supervision missions a year during the first half of project implementation\. Due to travel restriction between January 2009 and May 2010 missions were not carried out for 14 months\. Accumulated delays and cost overruns added pressures to 20 procurement and contract management issues\. Nonetheless, the Bank missions provided expert advice regarding procurement and financial management matters, thereby enhancing the financial management skills of TSUs, and also on safeguard issues connected with land acquisition and construction safety, such that the overall compliance of safeguard policy 4\.1 was promoted\. The Bank financial management exercises provided projections for the budget shortfalls and facilitated the prioritization of procurement packages with the government\. The Bank encouraged tariff increases to reduce GWWC and MWWCâs financial uncertainty and improve their long term financial sustainability\. The Bank drew attention to the fact that tariff increases would also help alleviate the burden of budgetary support that would otherwise need to be provided by the government in case of funding shortfalls\. The government approved a âtargeted subsidies lawâ towards the end of the project, and this should support the eventual achievement of this aspect of the PDO\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory Delays in the transfer of funds (both from the Bank and from Government) and associated uncertainties impacted the pace of implementation of the works as contractors were hesitant to accelerate their activities under such uncertain conditions\. As such, it was not feasible for the project objectives to be fully completed within the original time frame, yet no project extension was provided\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory During project preparation, the Borrowerâs commitment and ownership were reflected through: (i) the government giving high priority to the sector, particularly to WW in its long-term planning and its request to the Bank for continued support to the sector; (ii) MOE financing from its own budget the background studies and its WTP for detailed engineering and preparation of tenders for the project; (iii) WWCs taking initiatives to respond quickly to the Bank's requirements and formally agreeing on the proposed strategy in the sector and future collaboration with the Bank; and (iv) willingness of the government to fund urgent operations (construction of network, wastewater treatment plants, etc\.) in many cities prior to the project implementation\. The Government had established a strong National Water & Wastewater Company (NWWEC) within the MOE, reporting directly to the Vice Minister for Water\. NWWEC through its own TSU staffed with a competent manager and national consultants was very committed and supportive of the project and extended full cooperation to the task team during implementation\. It was instrumental in keeping the project moving forward\. 21 However, the governmentâs commitment fluctuated during project implementation\. Not only were tariff reforms allowed to lag way behind the inflationary pressures experienced by the water and wastewater companies, the government also delayed the timely availability of counterpart funds needed for project execution\. The Government committed funds to continue with the implementation of ongoing packages for the execution of the project after project closing\. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory The performance of the Guilan water and wastewater company (GWWC) responsible for the execution of projects in Rasht and Anzali was moderately satisfactory\. The performance of the Mazandaran water and wastewater company (MWWC) responsible for the execution of projects in Sari and Babol was moderately satisfactory\. With the satisfactory performance of NWWEC TSU providing oversight and technical advice to the companies TSUs, the overall performance of the implementing agencies has been rated moderately satisfactory\. Project management: The project closed with delays in the implementation of wastewater treatment components\. Procurement and project management had been more of an issue in the case of GWWC than MWWC\. Much time was lost in addition to the delays on account of fund transfer issues\. Due to the large size and complexity of the wastewater treatment components, GWWC could not complete the critical elements like wastewater treatment plant and pumping stations\. In Mazandaran, the key elements of the sewerage system (including wastewater treatment plants and pumping stations in Sari and Babol) have been largely completed, underscoring the fact the project in Guilan being twice the size of that in Mazandaran made it difficult for GWWC to manage all challenges within a given period of time\. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory In view of challenges and issues that could have been avoided the overall Borrower performance has been rated moderately satisfactory\. Although tariff reforms were not implemented during the physical execution of the project, understanding the issue of subsidized tariffs at the high political level brings hope for the future financial autonomy of GWWC and MWWC\. The issue of financial performance of water and wastewater companies is expected to be resolved once the Government starts implementing its policy of removing all price subsidies from water tariffs\. The recent campaigns for the project are a reflection of understanding that reaching out to communities is a way to promote sustainability of the project\. 22 6\. Lessons Learned 1- Realism in project design is improved and risk to project development outcomes reduced when project preparation is adequate\. Realism in project design should be reflected by the projectâs complete assessment of all the local realities on the ground during project preparation\. In the case of the current project, this should have translated into evidence of adequate completion of preparation work for land acquisition and detailed estimates of engineering designs; preparation of bidding documents for the first year prepared by the borrower\. The construction of wastewater treatment facilities cannot be fully implemented in five years\. 2- Improved coordination should be an important aspect of institutional strengthening Institutional strengthening has focused on capacity building and training which was very important for the project\. However, although sector coordination was recognized as a possible problem area at the time of project preparation/appraisal, it was not given due consideration\. Coordination among the various stakeholders should be seen as an aspect of institutional development and an important determinant for project results\. 3- Despite individual and team efforts to implement a project in a professional manner, there are factors outside government and bank control that can have a major impact The UN sanctions constituted an impediment to the smooth implementation of the project since they impacted the transfer of funds for project activities\. In addition, the inability of the Bank team to travel to Iran for a period of eighteen months created a strained relationship\. Without proper and continuous supervision and the financial resources required for this task, it is evident that implementation gets delayed and capacities diminish\. 4- Avoid unrealistic expectations in terms of tariff adjustment\. Projects should be designed within the realm of realistic estimates and assumptions\. There is also a need to identify indicators that can monitor variables that can be directly attributed to the project\. The working ratio is not always the most appropriate indicator for financial sustainability as there are many external factors that affect it such as cost of materials (steel, cement and others) and energy\. A utility could be improving certain efficiencies but strong increases in market prices will affect the expenses considerably\. 23 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The TSUs in Guilan and Mazandaran and the Central Project Support unit reviewed a draft copy of the ICR and provided comments which were incorporated into the final version of the ICR\. Governmentâs own ICR which document the implementation experience and lessons learned can be found in Annex 7\. (b) Co-financiers Not applicable\. (c) Other partners and stakeholders Not applicable\. 24 Annex 1 Project Costs and Financing Appraisal Estimate Actual/Latest Components (USD Estimate (USD % of millions) millions) Appraisal 1 Rasht - Wastewater Collection and Treatment 81\.502 78\.4 96 2 Rasht - Water Supply Rehabilitation 50\.285 65\.7 131 Anzali - Wastewater Collection and 3 Treatment 45\.424 52\.3 115 4 Anzali - Water Supply Rehabilitation 9\.03 15 166 5 Guilan - Project Support (below) 17\.7 Environmental Management Plan 2\.517 Detailed Design and Supervision 16\.336 Institutional Support 2 6 Sari - Wastewater Collection and Treatment 40\.313 46\.3 115 7 Sari - Water Supply Rehabilitation 4\.848 7 144 8 Babol - Wastewater Collection and Treatment 30\.335 58\.4 193 9 Babol - Water Supply Rehabilitation 6\.066 3\.5 58 10 Mazandaran - Project Support (below) 0\.063 Environmental Management Plan 1\.116 Detailed Design and Supervision 7\.125 Institutional Support 2 Total Base Cost 298\.897 Physical Contingencies 26\.66 Price Contingencies 16\.775 Total Project Costs 342\.332 344\.363 101 Front-end fee IBRD 1\.12 1\.12 Total Financing 343\.452 345\.483 25 (b) Financing Appraisal Actual/Latest Estimate Estimate Percentage (USD (USD of Source of Funds millions) millions) Appraisal Borrower 58\.7 140\.22 239 International Bank for Reconstruction and Development 224 196\.685 88 Beneficiaries and WWC 60\.8 8\.83 15 Total 343\.5 345\.735 Canceled amount: 27\.3 US$ million 26 Annex 2\. Outputs by Component TABLE A: Status of Guilan wastewater treatment components Rasht and Anzali Waste Water Works Planned Status at Project Closing Rasht: 20,000 connections and Anzali 27,000 connections\. Construction of house Rasht: 70,400 connections Anzali: 27,000 Although most wastewater pipes have been laid down no connections were made yet to enable wastewater flow through the pipes\. Construction of trunk mains, Rasht: 360 km Rasht: 170 km laterals and interceptors Anzali: 253 km Anzali: 130 km Completion of ongoing Rasht: 100\.3 km collection system network Anzali: 25\.2 km Rasht: 16 Rasht: 4 under construction Pumping stations Anzali: 14 Anzali: 11 under construction Construction of 24 hr Emergency Reservoir To be constructed and financed by GWWC WW Treatment Plants in construction of Ghazaian 1st Ongoing construction of WWTP in Anzali Anzali module is 100% complete; the construction of Ghazaian WWTP is 40% complete WWTP upgrade to BNR 2 To be completed and financed by GWWC Septage Management Study Completed The consultant submitted the report\. TABLE B: Status of Guilan water supply components Rasht and Anzali Water Works Planned Status at Project Closing Construction of house Works to connect households to water connectionsâwater (W) Rasht = 28,950; services is underway\. So far, Guilan: Anzali = 7,690 +5,000 households (14%) Rasht : 440 km/261 km Rasht:460 km have been rehabilitated and Rehabilitation of distribution Rasht:Lankan Main = 15 km 220 km extended piping/ and extension of In Anzali = 113 km/99 km distribution network Anzali: 96 km/ 59km Rasht: Lakan (30,000 m3) 62% &ground reservoirs 87\.5% Construction of reservoirs (240,000 m3) and related facilities Anzali âGhazian ground Ghazian ground reservoir is 100% reservoir and pump station complete and operating (30,000 m3) Control & Instrumentation/ Rasht UFW Analysis and Anzali Equipment 27 STATUS OF PROJECTS IN MAZANDARAN TABLE C: Status of Mazandaran wastewater treatment components Sari and Babol Waste Water Works Planned Status at Project Closing Sari = 10,600, Babol=8,700\. Although most wastewater pipes have been laid down, because of lack of pumps and Construction of house Sari = 16,000 wastewater treatment plant, no connections connections Babol = 16,300 were made yet to enable wastewater flow through the pipes\. Construction of trunk mains, Sari = 240 km Sari = 369 km laterals and interceptors Babol = 127\.5 km Babol = 20 km Sari: 2 completed Pumping stations Babol: 6 3 under construction Sari = 1 (23,240 m3/d) Sari = 97% complete WW Treatment Plants Babol =1 Babol = completed Construction of outfalls & 5km outfall; 2 sludge storage sludge tanks tanks 100% Completed Septage Management Study Two studies Completed TABLE D: Status of Mazandaran water supply components Sari and Babol Water Works Planned Status at Project Closing Construction of house Sari = 5,500 Guilan = 5,000 households (14%) connectionsâwater (W) Babol= 4,500 Rehabilitation of distribution Sari = 200 km Sari =184km piping/ and extension of Babol = 197\.5 km Babol â 195 km distribution network Reservoir and pump stations Babol = 20, 000 m3 Completed Control & Instrumentation/ The study is 50% complete Sari UFW Analysis and Babol Equipment Water Quality: Location No\. of BOD5 DO NO3 PO4 E\.Coli stations mg/l mg/l per 100ml Mazandaran 2009-10 Tajan river 5 18\.8 - 8\.3 1\.6 1\.3xE7MPN Babolroud river 3 7\.3 - 7\.1 0\.44 9\.1xE4MPN Shazderoud river 3 9\.4 - 4\.2 0\.45 3\.1xE5MPN Guilan 2010-11 Goharroud river 2 9\.4 3\.5 - - 1\.2xE7MPN ZarJoob river 2 18\.6 4\.3 - - 6\.2xE6MPN Anzali Lagoon 6 25\.3 4\.6 - - - Rougas 28 Mazandaran â Babol wastewater treatment plant and house connections â July 2011 29 Mazandaran â Sari wastewater treatment plant and pumping station under construction â July 2011 30 Performance Ratings â ISR (2005-2010) Number 1 2 3 4 5 6 7 8 9 10 11 12 Year 2005 2006 2007 2008 2009 2010 Month May Nov June Dec June July May Oct\. June Dec Achievement of PDO S S S S S S S MS MU MU MU Implementation Progress S S S S S S S S MS MU MS MU Other Ratings Financial Management S S S S S S S S S MS S S Project Management S S S S S S S S MS MU MS MS Counterpart Funding S S S S MS MS MS MS MS MU MS S Procurement S S S MS MS S S S MS MU MS S Monitoring and Evaluation S S S S S S S S MS MU MU MS Project Component Ratings 1\. Rasht WW Collection & Treatment S S S S MS MS MS MS MS MU MU MS 2\. Rasht W Supply Rehabilitation S S S S MS MS MS MS MS MU MS MS 3\. Anzali WW Collection & Treatment S S S S MS MS MS MS MS MU MU MU 4\. Anzali W Supply Rehabilitation S S S S MS MS MS MS MS MS MS S 5\. Guilan TA S MS S MS MS MS MS MS MU MS MS 6\. Sari WW Collection & Treatment S S S S S S S S S MS MS MS 7 Sari W Supply Rehabilitation S S S S S S S S S S MS MS 8\. Babol WW Collection & Treatment S S S S S S S S S MS MS MS 9\. Babol W Supply Rehabilitation S S S S S S S S S MS MS 10\. Mazandaran TA S S S S S S S S MS MS S Overall Safeguard Compliance Environmental Assessment (OD 4\.01) S S MS MS MS MS S S MS MS MS Involuntary Resettlement (OP 4\.12) S S S MS MS MS MS S S MS MS MS Projects in International Waters (OP 7\.50) S S S S S S S S MS MS MS 31 Annex 3\. Economic and Financial Analysis Detailed economic and cost-benefit analysis of the project was conducted at appraisal\. The net benefits were derived for the period 2005 to 2009 in parallel with Iranâs WS and WW development programs\. The main benefit of the water supply component would be realized by the additional population who receive connections\. The benefit was determined by estimating the cost of alternative means of meeting water demand if piped water was not provided\. This would be the cost of water purchased from vendors estimated to be US$0\.75-US$0\.85 per m3\. Added to this cost was the householdsâ cost of installation and O&M of storage tanks\. Higher access and availability of clean water would result in higher demand from households\. This was estimated as another benefit of the project\. These benefits represented the minimum value of the true benefits since benefits derived from hygiene, quality and commodity advantages of access to potable pipe water were not accounted for\. The water sub-projects were largely justified based on the estimated rates of EIRR between 15% for Babol and 46% for Anzali\. Sensitivity analysis was conducted by reducing benefits and increasing costs by 10%\. The results indicated that IRRs remained higher than the cost of capital assumed at 10%\. In case of the water supply components, the project was expected to generate pecuniary and non pecuniary benefits for each city\. The main cost avoided and dominant benefit of the project was the: (i) avoidance of the cost of absorption wells and their maintenance\. Other expected benefits were:- (ii) reduction in water-borne diseases and associated costs of hospitalization, medication, loss of workdays and school days; (iii) reuse of treated WW in irrigation with associated increase in agricultural value-added; (iv) increase in tourism activity in a highly popular summer resort in Anzali; and (v) general improvements in the conditions of immediate neighborhoods and the environment in general with the associated improvement in the quality of life\. Most information for benefits (ii), (iii) and (iv) was taken from estimates presented by feasibility studies, social assessments and local health departments\. The benefit reflected by (v) was not accounted for on account of difficulties in estimations\. The base case scenario yielded EIRR between 2% for Sari and 11% for Anzali with a return of 6-7% for Babol and Rasht\. The returns were low as expected given that the four cities had started almost from scratch in WW services whereby initial investments were large while population coverage would be gradual due to technical and managerial constraints\. Realization of qualitative benefits, such as improvements in environmental conditions and quality of life justified the investments in wastewater components\. Detailed Financial analysis for each water and wastewater was conducted at appraisal by considering benefits of increased (i) water sales and wastewater disposal services, (ii) increased revenue from subscription fees, (iii) increased income from connection fees, and (iv) savings from reduced UFW\. The FIRR for MWWC was at 22\.4% and GWWC at 11\.8%\. An important assumption behind FIRR calculations was the high tariff increases that would fully cover O&M expenses\. In reality, tariffs moved up marginally (5% for some categories) against the expectation of tariff reforms\. Although financial analysis has not been conducted for this review, 32 it is evident that the PDO target of attaining financial sustainability would remain at a substantial risk as long as tariffs do not go up to cost recovery levels\. Also, the companies would have to focus on implementing connections especially in case of wastewater components\. By comparing working ratios, MWWC reflects better financial performance than GWWC\. Future financial situation of GWWC and MWWC rests on the following: (a) with the completion of investments supported by the current loan, they have to incur additional financial burden of the repayment of debt; (b) the loan obligation for GWWC is twice that of MWWC, and (c) new investments have to be operated and maintained even while household connections are not materialized\. In December 2010 the Government announced a policy of eliminating subsidies to the various utilities and replaces them with targeted subsidies to low-income beneficiaries\. This would imply that average tariffs would rise from 8 cents/m3 to 28 cents/m3\. The implementation of such reforms would ease cost recovery for WWCs and promote financial sustainability\. Nevertheless, the tariff structure is needlessly complex and there is a need for comprehensive reforms\. Historically, sewage charges were based on 70% of the water bills\. With the development of wastewater facilities, costs of sanitation services should be assessed separately from water so as to evaluate the appropriateness of the existing tariff structure\. Since most urban households were already connected to the water network and only a few were connected to a sewerage network that was yet to be constructed in most cases, the issues of willingness to pay and affordability of connection rights was expected to arise in the future although the Government decided to provide bank credit to facilitate connections including the required works inside homes\. 33 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Supervision/ICR Abdulhamid Azad Senior Irrigation Engineer MENSWA TTL Alexander E\. Bakalian Lead Water Resource Specialist TTL Mohammed Benouahi Consultant MNSSD Robert Bou Jaoude Program Coordinator SACPK Bekele Debele Negewo Water Resources Spec\. MNSWA Sepehr Fotovat Ahmadi Senior Procurement Specialist MNAPR Lizmara Kirchner Water & Sanitation Specialist LCSUW Peter J\. Kolsky Sr Water & Sanitation Spec\. LCSUW Ehsan Mahmoudkalayeh Consultant MNAPR Knut Opsal Sr Social Scientist MNSSO Parviz Piran Consultant MNSSD Dilip Kumar Prusty Chinari Finance Analyst CTRDM Satoru Ueda Lead Water Resources Specialist AFTWR (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including travel No\. of staff weeks and consultant costs) Lending FY04 0\.83 2\.2 FY05 43\.42 305\.6 FY06 0\.05 0\.04 FY07 6\.8 FY08 0\.00 Total: 44\.3 314\.58 Supervision/ICR FY04 0 0\.00 FY05 0 2\.5 FY06 24\.79 141\.2 FY07 25\.51 115\.3 FY08 32\.05 148\.9 FY09 27\.49 147\.3 FY10 22\.2 133\.4 Total: 132 688\.6 34 Annex 5\. Beneficiary Survey Results (if any) Not applicable\. 35 Annex 6 Stakeholder Workshop Report and Results (if any) Not applicable\. 36 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR Summary of Borrowerâs ICR Comments by National water and wastewater company (NWWEC) WB's performance The experience of close cooperation with the WB team on the northern cities water and sanitation project since the stages of project preparation and the feasibility studies can be divided into the following two periods: 1- The feasibility studies and implementation: At the beginning of this period, the WB's team underwent changes in structure of its technical staff, while the TTL was changed on three occasions during the implementation phase up to loan closing date\. Fortunately, these changes enhanced the capacities and qualifications of the task team to the extent that at final stages of the implementation and before the closing date, the project benefitted form the presence of a very qualified TTL and his team of experts\. Under the supervision of this team, in addition to appropriate guidance for enhancing the quality of executive works and proposing practical ideas to Iranian experts in their project implementation tasks, many training and capacity building workshops and courses were also organized\. Therefore, if the task team's performance during this period is to be evaluated according to WB standards, it would definitely be rated as satisfactory\. 2- The project's closing stages and problems related to the transfer of funds: Given the lessons learned from previous loans, the GWWC and MWWC's performance as far as disbursement is concerned showed an improvement both in quality and the speed of action\. However, at different sections a number of problems were imposed on the project by the Bank\. Delays of up to six months in payment of invoices caused by the non-replenishment of Special Accounts, increased bureaucracy in the Financial procedures and the imposition of greater than necessary documentation as a pre-requisite for PAR Code to ensure the proper expenditure of funds in the targeted projects as well as other problems during the loan period had a negative impact and undermined the speed of loan disbursement\. Throughout the loan period, GWWC and MWWC fully complied with the WB guidelines and regulations and tried to improve the processes according to schedules mentioned in PAD and the recommendations of the WB task and monitoring teams\. The different Aide Memoires bear witness to the successful performance of the companies in this regard\. It was expected that the World Bank would agree with a request for loan extension to ensure the completion of ongoing and critical packages, but unfortunately, this request was rejected\. In the meantime, to ensure the project's continuity during the default of payment by the WB, the companies paid the contractors on account basis from their own internal resources\. Project Management As mentioned in the Institutional and Implementation arrangement of the PAD, the project management has a significant role in the progress and ensuring the quality and quantity of the project\. According to PAD, the project management was to be carried out by the water and wastewater companies with the assistance and support of the TSUs\. However, the issue at stake in this regard relates to the performances of the said TSUs, as, for all practical purposes, the role 37 of these units in the project implementation was much greater that the one traced out in the PAD\. This is proven in the ICR prepared for the cities of Ahwaz and Shiraz, which states that the projects were implemented mainly by the TSUs\. The experiences of TSUs in Guilan and Mazandaran can be described as follows: 1- Guilan TSU: GWWC established this unit from the beginning and according to PAD recommendation by assigning a project manager from the Company\. The unit's condition for the initial two years of the project can be described as follows: - The manager selected for TSU lacked the capacity and expertise necessary for the task\. - The expert consultants, who were to form the core of the Unit, were selected by the mentioned manager alone and for this reason the selected individuals also lacked the necessary potentials, expertise and qualification to carry out the assignment\. - The Company's management showed no inclination towards employment of qualified consultants at adequate fees\. Therefore experienced specialists were not interested in collaboration\. - In Guilan, the Environment Safeguard Officer (ESO) was initially an expert from outside the company's body\. Despite a high academic background (University Professor on environmental engineering) and a full time cooperation contract, his actual involvement was unfortunately on part time basis and kept to a minimum, which created a number of difficulties for the environmental studies and other relevant functions, with some consequences such as the use of inexperienced consultants and delays in the start and completion of the projects continuing on until the closing date of the project\. After about three years and the follow ups by the NWWEC's Technical Support Unit, he was finally replaced by one independent consultant and an expert from within the Company\. This led to considerable improvement and progress of the environmental and safety studies of the projects\. The second consultant's cooperation lasted for a year, after which the Company's expert took over, showing satisfactory performance\. After about two years and observing the poor performance of the projects in Guilan, on the insistence of the NWWEC TSU, which had an oversight and coordination role in the projects, and the agreement of the NWWEC management, the GWWC TSU underwent changes to benefit a suitable management and better qualified staff and was subsequently able to better assist the projects by steering it on the right path\. It can safely be claimed that, had the initial selection of TSU management and staff been undertaken with greater care, the GWWC's performance would have been much better than today and this project could have even been considered as among the successful endeavors of the Bank\. 2- Like in Guilan, the Mazandaran Water and Wastewater Company selected a TSU Manager from its staff and engaged individual consultants for the different expertise requirements\. However, due to their poor performance, all the said consultants were replaced after one year with experts from within the Company's body\. The main reason for the poor performance of the selected experts can be related to the limited vision of the MWWC management in paying appropriate fees to engage experienced specialist\. 38 In Mazandaran an environmental expert from within the MWWC was assigned for the task on full time basis\. Nearly all the environmental projects of the Mazandaran Province were completed on time and at an appropriate quality\. The performance of the Mazandaran ESO is therefore rated as satisfactory\. 3- In summary, it can be concluded that: - The initial selection of a competent TSU manager is of great importance\. - The Unit's team of experts must be competent too, and in particular they should have a good working command of the English language, without which their expertise might prove to be futile\. - Limiting fees and salaries must not be the prime criteria in selection of qualified and experienced specialists\. - Experts chosen from the Company's staff must have the necessary qualifications for the task and the incentives for greater activity must be created through higher scale of salaries and wages\. - Although the idea of establishing a TSU instead of PMU for optimal use of the technical capacities of the water and wastewater companies is quite constructive, but the experiences of northern cities TSUs and before them the Shiraz and Ahwaz TSUs have shown them to be interested in affairs beyond their defined assignments and their interference in and interactions with executive departments in the Company undermine the trend of project implementation\. - The comparison between the experiences gained in the Provinces of Guilan and Mazandaran underlines the need to revise the structure of these companies' Technical Support Units\. On this basis, it is recommended to separate the safety and environmental sections and these functions be referred to either relevant units or to experienced experts in the companies\. For instance, in recent years work safety bureaus have been established in the companies\. Given their mandates and subject to necessary trainings, they could easily take over the ESO on safety issues\. - Different actions such as organizing training workshops throughout the country (in the fame of the WB loan to the cities of Ahwaz an Shiraz) as well as periodical forums of ESOs from project in different cities and provision of scientific and technical support by NWWEC TSU were taken to build capacity on environment and safety issues\. Despite this, these actions are evaluated as inadequate as far as the number of individuals trained and the number of environmental and safety subjects taught\. It is recommended that there would be a greater number of persons from the loan recipient companies participating in the training sessions, and the subject matters and the training procedures would be arranged in such a manner as to ensure that all the experts have passed the necessary trainings before the start of the projects\. In most cases, this procedure would ensure the necessary capacity building in the companies and would eliminate the need to engage independent environmental and safety consultant from the province\. - Although the Bank's experts have provided scientific and technical guidance and recommendations upon request, it was expected that the World Bank would have organized specialized training workshops on environmental and social issues to transfer 39 the global experiences on the subject, as it has done for other issues related to the projects\. - The experience shows that a great amount of time has been spent on preparing the TOR and obtaining the relevant No Objection from the Bank\. Whereas if these TORs would have been prepared at the beginning of the projects with the assistance of WB experts and standardized for all provinces, they would have made a significant impact on timely start and completion of the environmental studies\. - Moreover, the availability of guidelines and forms for the studies, particularly in the environmental and health monitoring section, in such a manner as to meet the ICR requirements, would have assisted in the execution of these studies\. It should be mentioned that the Ministry of Energy has in recent years prepared guidelines for monitoring the quality of surface and ground water resources, but there still is a need for similar guidelines for health and other environmental studies, report generation and documentation\. - The experiences of EOP and Septage studies in Guilan have shown that the selection of inappropriate consultant can lead to undesirable consequences for projects (at least in the form of elongation of the projects' duration)\. Although a part of the problems is related to the performance of the initial ESO in the Province, but a revision of processes (for instance NWWEC involvement in the consultant selection process) can be instrumental\. - A part of the problems undermining the environmental projects, especially the procurement of lab equipment for GWWC is related to the delays in obtaining the WB no objection and subsequently the problems of the transfer of funds\. - To build capacity and to apply the experiences gained from the environmental and safety aspects of the WB financed projects, NWWEC in collaboration with the experts involved in these projects has documented and published the results and the lessons learnt\. So far in this context, the Guidelines on Safety for Execution of Water and Wastewater Projects and the Standards for Auditing the Safety Status of the Companies have been prepared and have been notified to all the water and wastewater companies by the NWWEC Managing Director\. Moreover a book titled Septage Management â Lessons Learned from the Experience of WB Projects is under compilation and will be published shortly\. Plans have also been prepared for other books on environmental studies\. - Given the plans to ensure funds from domestic and international financial institutions, particularly the Islamic Development Bank, and the latter's insistence on undertaking environmental studies based on WB model; the experiences gained from WB financed projects have had a positive impact on the time and quality of the requested environmental studies\. - Given completion of the ongoing project in near future, the quality of life and environment in the covered area is expected to improve significantly\. To assess this impact, it would be necessary to continue the EMP and to repeat the health studies\. - The safety conditions of the projects show that despite efforts made by TSU âESO of the provinces, there is a considerable gap with the ideal situation\. Given the recent initiatives taken by NWWEC on the basis of the WB projects' experiences, the safety conditions of the projects are expected to improve considerably in near future\. 40 Summary of ICR prepared by the Guilan Water and Wastewater Company (GWWC) 1\. Introduction 1\.1 Project Description Islamic Republic of Iran has developed a program for water supply and wastewater collection system to be executed with financial assistance (as loan) from the World Bank\. The program was planned in three phases to cover to about 2027\. Phase I: Execution of the water and sanitation investment projects for the two cities of Ahwaz and Shiraz (2004-2009) and preparation and initiation of sector reforms, including supporting the Gal with TA programs and studies covering the following areas: demand management, customer education, institutional reforms, the regulatory framework, tariffs and cost recovery, technology and investment priorities, sanitation strategy and integrated water conservation\. A new tariff policy was planned to be drafted during this phase with WBI assistance\. Phase II: Execution of the water and sanitation investment projects for the four cities of Rasht, Anzali, Sari and Babol (2005-2010), launching of the studies prepared in phase I, and implementation of the new tariff scheme initiated and prepared in phase I\. Phase III: Implementation of reforms prepared under the first two phases\. Investment projects were planned to be prepared for other new cities under an adaptable program loan\. For phase II covering through 2005 and 2010, and a population of thousands; water supply and distribution networks and wastewater collection systems would be implemented and wastewater treatment works would be constructed in the Rasht and Anzali\. The sub-project included the rehabilitation, improvement and expansion of water and wastewater systems and facilities for the city of Rasht and Anzali\. The project further included operation and maintenance equipments and technical assistance training /consultant services for institutional development and project management, engineering design and construction supervision\. The GWWC received a Loan from the World Bank in amount of USD 148\.6 million toward a part of the cost of the project 1\.2 Project Development objectives The Main objectives are to: The main development objectives of the Project are to: (i) enhance the quality of life in the Borrowerâs two northern cities of Rasht, Anzali, by: (a) improving the reliability of the water supply systems through rehabilitation and extension of the water supply networks; (b) improving the health and urban environmental conditions by providing wastewater collection services and treatment facilities; (c) contributing to the environmental protection of the natural resources of the provinces (especially the Anzali Lagoon, an internationally recognized wetland); and (ii) improve the operational efficiency and financial sustainability of the Water and Wastewater Companies\. 41 1\.3 Project Description: The Project consists of the following parts, subject to such modifications thereof as the Borrower and the Bank may agree upon from time to time to achieve such objective: Part A: Rasht Wastewater Collection and Treatment 1\. Extending and improving Rashtâs Wastewater collection network through approximately 70,400 new house connections, the construction of approximately 558 km of laterals, interceptors, and trunk mains, and 16 pump and lift stations in addition to collection works\. 2\. Upgrading a wastewater treatment plant under construction with a biological nutrient-removal unit, including other measures to reduce the risk of discharge of untreated sewage in the event of temporary plant failure\. 3\. Undertaking a study and an investment program for septage management (to address waste from households not connected to the wastewater collection system)\. Part B: Rasht Water Supply System Improving service provision in Rasht through regulating the pressure and availability of water in the distribution network, as well as reduction in losses due to leakage through various measures, including rehabilitation and extension of primary and secondary distribution piping, additional ground storage, and rehabilitation of two existing elevated storage tanks and associated pump stations (this component was removed from WB project as it was implemented by Guilan Regional Water Company though local budget)\. Part C: Anzali Wastewater Collection and Treatment 1\. Extending and improving Anzaliâs Wastewater collection network through: (i) provision of approximately 27000 new house connections; (ii) construction of approximately 253 km of laterals, interceptors, and trunk mains; and (iii) additional pump and lift stations\. 2\. Improving Anzaliâs Wastewater treatment plant by upgrading it with a biological nutrient- removal unit, and including measures to eliminate the risk of discharge of untreated sewage in the event of temporary plant failure\. 3\. Constructing the first module of the Ghazian Wastewater treatment plant\. 4\. Carrying out an investment program and associated studies for management of septage from households that would have not been connected to the wastewater collection system network in the first phase\. Part D: Anzali Water Supply System 1\. Rehabilitating and extending Anzaliâs water distribution network with approximately 155 km of distribution network\. 2\. Carrying out an investment program to improve operational efficiency and reduce unaccounted-for water (including instrumentation for automation, operation and maintenance equipment)\. 42 Part E: Support to the Guilan Water and Wastewater Company For provision of technical assistance to enable the Guilan water and wastewater company to carry out its obligations under this project\. 2\. Project cost and financing plan Total project cost (Phase 1) was estimated at about US$237 million, with US$148\.6 million in loan\. The proposed Bank loan of US$148\.6 million financed about 66\.3 percent of the project cost\. The rest of the cost (US$75\.5 million) was to be financed by the borrower\. 3\. The project components: The project will include the following components: 3\.1 Civil work 3\.1\.1\. Rasht Wastewater Wastewater Collection Network The proposed first phase extension (2005 to 2010) of the wastewater collection system includes: - Construction of 70400 house connections - A collection network 558 km This component comprised of executing 558 km GRP and poly ethylene pipes\. In detail design total length of all packages was estimated to amount to 280 kilometers, out of which 169 km have been completed\. The remaining works are ongoing\. Wastewater treatment - The Rasht wastewater treatment plant had been under construction before the WB loan\. The addition of a biological nutrient removal unit was foreseen in this project\. - The reservoir tank to store wastewater for 24 in the treatment plant was added in this project\. In the midterm review both the above projects were removed from the implementation plan\. According to agreement these will be completed through local budget\. Trunk mains This component involved two contracts for construction of Wastewater collection Main Trunk of about 13691 meters in length, consisting of 5597 meter using pipes of 600 mm in diameter, 1500 meter with diameter 800 mm, 1500 meter with diameter 1000 mm and a further 5094 meter using pipes of 1400 mm in diameter made out of polycrete material\. These packages are under implementation\. 43 Pump and lift stations This component involved the construction of 16 pump and lift stations, out of which four are under construction\. 3\.1\.2\. Rasht Water Supply System This component aims at improving the service provision in Rasht through regulating the pressure and availability of water in the distribution network, as well as reduction in losses due to leakage\. This will be achieved by rehabilitation and extension of some 701 km of piping, out of which 641 km were completed, and ground storage tanks\. One storage tank of 30,000 m(3) (with a physical progress rate of 56 percent) and two 40,000 m(3) (with a physical progress of about 90 percent)\. There will also be a program to improve operational efficiency and to reduce unaccounted for water (including some instrumentation for automation, operation and maintenance equipment which were not realized due to transfer problem in the World Bank)\. Saravan- Lakan transmission main line (1,250 mm) which was removed from the World Bank project and is now under construction through local budget\. 3\.1\.3\. Anzali Wastewater Wastewater Collection system - Construction of 27000 house connections - A collection network of 253 km This component comprised of executing 253 km GRP and poly ethylene pipes\. In the detail design the total length of all packages was estimated to amount to 160 kilometer, out of which 130 km have been completed\. The remaining works are under construction and they will be completed shortly\. This component also included provision of 27,400 new house connections\. Wastewater Treatment - This component comprised of Civil detail design, construction, operation and maintenance of ANZALI Wastewater Treatment Plant-Eastern Zone (Based on available Treatment Process Design) with nominal capacity of 12000 m(3) / day, which will greatly improve the quality of the existing water bodies\. In addition, a better water quality will be provided for the agricultural use or for direct flow to the Caspian Sea\. - Upgrading of treatment plant to BNR and emergency basin\. - Completion of ongoing collection system works\. In the midterm review upgrading of exist wastewater treatment plant to BNR and its emergency basins had been removed from WB loan implementation program\. 44 Pump and lift Stations 14 lift and pump stations are planned in this project\. 3\.1\.4\. Anzali Water Supply Systems This component will rehabilitate and extend Anzaliâs water distribution network with 155 km of primary and secondary distribution network\. However, during the detail design, the total length of all estimated packages was increased to 211 kilometers\. This component is completed\. 3\.2\. Laboratory and operation equipment After receiving the World Bankâs no objection on bidding documents for four packages on lab equipment the NCB procedure were followed: - RG9: Procurement of video camera for well inspection\. - RG10: procurement of wastewater and laboratories equipment (HLPC and TIC analyzer)\. - RG11: procurement of wastewater and laboratories equipment(Microscope and Camera) - RG12: procurement of wastewater and laboratories equipment (General and Spectrometer)\. - RG13: Computer Hardware and UPS\. The evaluation reports for these packages were submitted to the World Bank and approved\. However, due to problems related to transfer of funds, these packages are still pending\. 3\.3\. Supports to the Guilan Water and Wastewater Company Under this component the project will provide technical assistance, training and consultant services for Institutional development and environmental management plan, Technical Support Unit (TSU), engineering design and construction supervision\. 3\.3\.1\. Services To enhance the capacity of GWWC, the staffs for TSU were chosen from private sectors\. They included: - TSU Manager (one full time GWWC staff) - TSU Procurement Officer (one full time Individual Consultant) - TSU Water and Wastewater Engineer (one full time Individual Consultant until year 4 of the project the after replaced by one full time GWWC staff) - TSU Environmental Officer (one full time Individual Consultant until year 4 of the project, thereafter replaced by one full time GWWC staff) - TSU Financial Officer (one full time Individual Consultant until year 4 of the project, thereafter replaced by one full time GWWC staff)\. 45 - Procurement experts (one full time GWWC staff and one part time Individual Consultant - For capacity building and transfer of experience of individual consultant to staffs of GWWC employed to same above position staffs from GWWC\. Feasibility study and detailed design To undertake the feasibility studies and to prepare the detailed design for the extension and rehabilitation of water distribution as well as the wastewater works including the collection system, the wastewater treatment plant and the pumping stations, qualified consultants were selected through local procedure for Rasht and Anzali\. Construction Supervision for water and waste water work in Rasht For supervision of construction contracts for execution of the water supply and distribution system, and reservoir, as well as the wastewater collection system and relevant pump stations in Rasht and Anzali; qualified consultants were selected through World Bank ICB procedure\. Environmental Studies - Furthermore, the environmental studies such as EMP and the Water Borne Diseases (Health) studies, which indicate the level of PSO achievement, were new experiences for the Company\. It is interested to continue the trend and to assess the impacts of the water and sanitation projects on the quality of life and environment\. - The ongoing CAP studies are expected to address and resolve the important issue of industrial discharges to the sewage system\. - Despite being addressed by the design consultant, the issue of sludge management, as raised in the PAD, became a major challenge and concern for GWWC, especially from its environmental and social aspects\. The studies have been able to remove a number of ambiguities and provide answers to some questions\. Although there remains many works to be done before reaching a viable solution, but through GWWC's pursuance and the application of the consultant's recommendations, one of the proposed solutions will be finalized and the relevant executive operations will be launched in a very near future\. - The septage management project addressed an outstanding issue of wastewater and environment particularly in the northern provinces\. There is a little experience in the country in this field and therefore finding a competent consultant was very difficult\. Despite the efforts and some noticeable results, the selected consultant has unfortunately not been up to the task, although after the numerous meetings and instructions given these studies are expected to be completed soon\. Since the problem of septage is common to other cities in the province, the Company looks forward to apply the outcomes of the studies to help in finding suitable solutions in other cities as well\. - The studies for Emergency Operation Plan (EOP) were also a new experience for the Company\. In recent years the Province of Guilan and particularly the city of Rasht have experienced crises such as earthquakes and heavy snowfalls and the extraordinary water and wastewater problems related to these disasters\. Following the events, a number of studies were undertaken to increase the safety of installations and to enhance the passive defense procedures\. Nevertheless, there were no specific and comprehensive studies related to Emergency Operation Plan\. The unfamiliarity of the subject for the consultant and the lack of experience in the field led to the lengthening of the studies, which are expected to conclude shortly, thereby enabling the Company to apply the outcomes to 46 prepare practical procedures during emergencies\. In this context, it will be necessary for the Company to undertake the necessary planning and capacity building on the basis of the consultant's recommendations\. 3\.4\. Conclusions Rasht - 678 km water supply and distribution pipes have been executed\. - 2 water storage tanks at a total volume of 80,000 m(3) (RW13 with 91\.64 % physical progress and RW14 with 83\.38 percent) and one water storage tank at a volume of 40000 m(3) (with 61\.72 percent physical progress) have been constructed\. - 170 km wastewater collection pipes have been executed\. - 4 main wastewater pumping stations have are under construction\. Anzali - 211 km water supply and distribution pipes have been completed\. - 130 km wastewater collection pipe have been executed\. - 4 main wastewater pumping stations and 7 lift stations are under construction\. - Ghazian wastewater treatment plant is under construction with a physical progress rate of 40\.21 percent\. 3\.5\.Performance indicator - The baseline for the working ratio at the beginning of the project was 1\.15, while the PAD had set a target of 0\.75\. However, due to a halt in tariffs increase during the project, this ratio was equal to 1\.98 at closing date\. Nevertheless, given the government's new plan for targeted subsidies, these tariffs are expected to increase rapidly in the coming years, thereby reducing the working ratio to an acceptable level\. In the meantime the company has started a drive to optimize operations and to reduce costs\. - Unaccounted for water was targeted to reach to 27 percent by 2009/10\. This indicator was measured as 22\.7% by the end of Mar 2011\. - The target period for bill collections by GWWC according to PAD was four months by 2009/10\. This has reached to 137 days\. Lessons Learned - Given the problems experienced in the transfer of funds, we believe the World Bank should find a safe and infallible way to transfer funds to the projects\. - The borrower should foresee emergency funds for critical situations such as those experienced over the last 10 months\. 47 - To ensure the best progress rate in the project, the borrower should prepare the bidding documents for selection of consultants and contractors before the effectiveness of the loan\. - Establishment of a local WB office in the borrower country can be of great help in the project procurement process\. - Discrepancies between WB guidelines and local laws have given rise to many questions asked by supervision offices from GWWC\. - PAR Code was a limitation for timely payment of contractors/consultants invoices, especially when the Iranian holidays do not coincide with those in other parts of the world\. - The application of international bidding documents especially FIDIC documents proved to be beneficial and a good experience for GWWC's staff\. - The experience of handling issues related to safety and environment in an independent manner was quite new in GWWC\. It should however be noted that in recent years, the Company had launched its Bureau for Work Safety and Protection to follow up on safety issues in all the Company's projects and departments\. - A main concern in the execution of the projects is related to the safety of the labor force and the citizens\. A number of challenges such as the reluctance of workers to use individual safety equipment, the negligence of safety issues by some contractors, inefficient supervision among others led to accidents particularly at the beginning of the projects\. The insistence of NWWEC, GWWC management and the WB on safety issues coupled with the numerous meetings with supervision consultants, contractors and other stakeholders, provision of necessary trainings, and constant inspections and controls of the construction sites had a positive impact on improving the conditions\. Nevertheless, the achievement of ideal situation requires planning and full cooperation among the different actors in future\. Following a notification by NWWEC, the Bureau for Work Safety and Protection has been established in GWWC, and on the strength of experiences gained through WB projects, the safety conditions of the Company's different aspects and projects are expected to improve\. - Before the project, GWWC and its Public Relations had limited experience on public awareness programs\. The extend of executive works in the frame of WB loan and the Bank's insistence on information dissemination, especially on increasing public awareness of the advantages and the disadvantages of the projects and the need for collaboration with the executives, required greater activity and closer contact with the public\. The use of mass media such as local papers and radio and TV, the distribution of brochures and pamphlets, the use of tracts and display boards coupled with direct dialogues and meetings with people living within the limits of the project sites were among procedures used for the purpose\. The Company has evaluated the actions as beneficial and deems it necessary to continue the trend, particularly after the launch of operations of the wastewater system with the aim of informing the public on the proper use of facilities and encouraging the subscribers to pay the relevant fees\. - Despite the problems, which were mainly due to the novelty of the experience, GWWC considers the WB projects, particularly the environmental studies as beneficial experiences, and plans to apply the outcomes in future projects\. 48 Thanks We would like to express our thanks to WB and NWWC teams for the cooperation shown to the GWWC staff during the project\. 49 Summary of ICR prepared by the Mazandaran Water and Wastewater Company (MWWC) 1\. Introduction 1\.1\. Project description Mazandaran Water & Wastewater Company (MWWC) implemented the Sari & Babol water and wastewater Sub-project\. The sub-project included the rehabilitation, improvement and expansion of water and wastewater systems and facilities for the cities of Sari & Babol\. The development was proposed to take place in 4 phases to cover the period to about 2029\. Phase 1 covered the years 2006 through 2010 and a population of 200000 persons\. Water supply and distribution networks and wastewater collection systems would be implemented and wastewater treatment works would be constructed\. The MWWC received a loan from the World Bank in amount of USD 75\.4 million as a part of the cost of the project\. 1\.2\. Project development objectives A: Enhance the quality of life in the two cities of Sari & Babol by (I) improving the reliability of the water supply systems through rehabilitation and extension of the water supply networks, (II) Improving the health and urban environmental conditions by providing wastewater collection services and treatment facilities, (III) Contributing to the environmental protection of the natural resources of the provinces\. B: to improve the operational efficiency and financial sustainability of the water and wastewater companies\. 1\.2\.1\. Project components The detailed description and components of the project are as follow: Sari wastewater collection and treatment: This component includes construction of a wastewater collection and treatment system in Sari through the: I) Provision of 16000 new house connections II) The construction of approximately 240km of laterals, interceptors, trunk mains and outfall- 2 pump stations and the construction of the first module of the Sari wastewater treatment plant (23240 m3/day) Sari improvement of the water supply system This component will extend and rehabilitate Sari's distribution network through: I) replacement of 50 km of existing pipe\. 50 II) Extension of the network with 65 km of pipe\. III) Addition of 85km of lateral pipes and some 5500 new water meters the component also includes an investment program and studies to improve operational efficiency and reduce Unaccounted For Water (including operation and maintenance equipment)\. Babol-wastewater collection and treatment the wastewater component will include: I) The provision of 16,300 new house connection\. II) The construction of approximately 130km of lateral, interceptors, and trunk mains\. III) Six pump and lift stations\. The Wastewater Treatment Plant currently under construction will be improved through the construction of 4 km Outfall main plus the provision of facilities to store wastewater in case of emergencies Babol-Improvement of the water supply network This component includes: I) The construction of 20000m3 ground reservoir and pumping station II) The replacement of 40 km of existing pipes mains III) Extension of the network with an additional 32km of mains and IV) Some 125km of lateral pipe and 4500 water meters there will also be an investment program land associated studies to improve operational efficiency and reduce Unaccounted for Water (including operation and maintenance equipment)\. 2\. Project costs and financing plan Total project cost (phase 1) was estimated at about US $105\.24 million with US$75\.4 million in foreign exchange and the civil works portion amounting to about 95\.4% the cost\. The proposed bank loan of US $75\.4 million financed about 71\.64 percent of the project cost and would meet nearly all the foreign exchange component\. The rest of the cost (29\.84 million) was being financed by the borrower\. 3\. Civil works 3\.1\. Sari water works Rehabilitation distribution network 50 km of distribution network has been rehabilitated\. Extension main 49\.5 km of extension mains was implemented\. 51 Extension of laterals 85 km of extension laterals was implemented and 5500 units of new water meters were installed\. 3\.2\. Babol Water Works Network rehabilitation 40 km of distribution network was rehabilitated\. Extension mains 30 km of extension main was implemented\. Extension of laterals 125 km of extension laterals was implemented and 4500 units of new water meter were installed\. The first steps of Unaccounted for Water study in Sari & Babol were completed\. 3\.3\. Sari wastewater works House connections 13000 house connections were installed in Sari\. Main & interceptors 108 km of main and interceptors were implemented\. Trunk sewers 1\.25 km of trunk sewer was implemented\. Pump station One unit of main pump station was implemented\. Treatment works One module of treatment works was implemented (23240 m3/day)\. Outfall 1 km Outfall was implemented\. Laterals 128 km of laterals were implemented\. Septage management and environmental study has been completed\. 52 3\.4\. Babol wastewater works House connections 12000 house connection were made in Babol\. Main & interceptors 38 km of main and interceptor were implemented\. Laterals 90 km of laterals were implemented\. Pump station Three unit pump stations were implemented\. Completion of wastewater treatment plant One module of wastewater treatment plant works was constructed (100000 person)\. Outfall 4\.5 km of outfall was implemented\. 4\. Services 4\.1\. Consulting services Technical Support Unit (TSU) To strengthen the capacity of (MWWC), the TSU staff was chosen from among the Company's personnel for the following posts: 1) TSU Manager 2) Procurement officer 3) Engineering officer (2 persons) 4) Environmental officer 5) Financial officer (2 persons) 6) Administrative officer Supervision of water and wastewater project To ensure that contracts are executed according to specifications and to keep the MWWC informed on progress made and on issues encountered, two consultants were selected for supervision of water and wastewater projects\. 53 Non Revenue Water One consultant was selected for the non revenue water study (Rahdane Sama consultant) Environmental Studies 1- Studies related to health, Emergency Operations Plan (EOP) and the Public Awareness studies were defined on the basis of the project's EIA and a consultant was selected for the purpose\. All the three studies were undertaken for the first time in Mazandaran, and their outcomes were both considerable and beneficial for MWWC\. a- The results of the water borne disease (health) show the impacts of the water and sanitation projects on the quality of life and underline their importance\. They can constitute a valid indicator for evaluating the project's efficiency and the achievement of PDO\. The Company is pursuing the studies with interest and intends to repeat the process after the completion of the works to assess their impact\. b- The public awareness studies were the first experience of its kind for MWWC and even the entire water and wastewater companies in the country\. They resulted in compilation of strategy for information dissemination and public participation for MWWC\. The results were distributed among the company's Public Relation and management\. Despite the numerous programs such as distribution of hand outs and brochures and interviews with local radio and TV to attract public participation in the projects and to encouraging the public to purchase subscriptions, use the services and pay for the fees, etc, the Company is expected to enhance the quality and effectiveness of the public training and awareness campaigns through application of the results and expansion of cooperation with other stakeholders such as the Department of Environment and the Province's Health Organization\. c- Although the cities of Sari and Babol have not met with an emergency situation in recent years, their geographical location from the point of view of earthquake and flooding is such that makes the availability of an EOP a necessity\. This experience was quite new for the Company and can supplement other studies related to safety of installations and passive defense\. The lack of similar studies in the country and the unfamiliarity of the subject for the consultants resulted in the lengthening of the studies\. Nevertheless, the final report was of good quality and its results were both significant and beneficial\. The Company must prepare its plans and capacity building programs according to the results of the study and the consultant's recommendations\. 2- Septage management project is among the important environmental studies on a critical problem of the Mazandaran Province, implemented in the frame of the WB loan\. Before this, there was a limited experience in the field of septage treatment in the Jooybar WWTP in Mazandaran, which was unfortunately a failure\. The selected consultant has fortunately undertaken extensive quality study in this field\. The results have shed a light on may obscure and ambiguous issues related to septage in the cities of Sari and Babol\. Given the geographic situation, the climatic conditions and the touristic nature of Mazandaran, the problem is prevalent in all regions of the Province and MWWC plans to compile a suitable strategy based on the study's results and to find a solution for septage management in other cities as well\. 54 Strengthening of MWWC The project has contributed to the following Strengthening and Capacity Building\. Establishing the TSU to support the project technically and to undertake the procurement and financial activities according to the World Bank procedures\. This group consisting of eight persons, is now well trained and experienced in managing similar projects benefiting from the World Bank loan and is considered as a valuable capacity for the country\. Training a number of the company's staff to enhance their capacity in managing big scale projects efficiently Strengthening national and local consulting engineers and contractors (four consultants and 24 contractors), especially the trained and skilled local contractors who are a great wealth for the province\. 5\. Project management report (PMR) Based on the World Bank regulation the Mazandaran Water & Wastewater Company agreed to follow the loan administrative change initiative (LACI) of the Bank\. 6\. Conclusion 6\.1\. Project assessment A- physical Sari wastewater 13000 new house connections were installed (81% of the plan)\. All 238 km of mains, interceptor, laterals, outfall and trunk mains have been executed (100% completion)\. One unit of main pump station has been constructed (100% completion)\. One module of wastewater treatment plant has been constructed (97% completion)\. Sari water 184 km of water supply and distribution pipes have been executed (92%)\. Babol wastewater 132\.5 km of mains, interceptors, laterals and outfall have been executed (100%)\. Three units of pump stations were constructed\. One module of wastewater treatment plant has been constructed (100% completion)\. 55 Babol water 195 km of water supply and distribution pipes have been executed (99% completion)\. Following Table shows the disbursement status of the projectâs packages Bank financed contracts according to procurement method Procurement Method Number of Contract Total Amount US Million $ International Competitive Building ICB 2 19\.317 National Competitive Building (NCB) 29 74\.791 Quality and Cost Based Selection (QCB) 5 4\.086 Total 36 98\.194 B- Performance Indicators According to PAD the total household connections in wastewater, which were to be established for Sari and Babol were 16000 and 16300 respectively\. But up to now the total number of connections in Sari and Babol in order stands at 13000 and 12000\. Based on our plan by end of year 2011, the total number of household connections which will be established in Sari will be 9,000 and in Babol 10,000\. These will be implemented through local budget, and in terms of population coverage it would mean that 105000 persons in Sari and 100000 persons in Babol will benefit from this wastewater disposal services\. The Mazandaran Water & Wastewater Company reduced the Unaccounted for Water from 33% to 28% through its water network rehabilitation\. After the completion of Unaccounted for Water studies, this will be further reduced to less than 27% by the end of 2011\. Meanwhile the Company will implement the remaining works until the end of 2011 through local funding\. With rehabilitation & extension 184 km of water network in Sari and 195 km in Babol and 10,000 consumers in Sari and 8,000 in Babol benefitted from better quality of portable water services\. The commissioning period for Sari & Babol wastewater project is 8 months, after which the operation and maintenance of the facilities will be outsourced to selected contractors\. The halt in the transfer of funds from July 26th, 2010 to date caused great difficulties for ongoing packages\. Another problem in the project concerns its closing date (31 Dec 2010)\. However, the supervising consultants must continue their task of revising and approving all the final statements during the grace period, at a time when the WB will no longer pay their fees\. Another problem experienced in the project was that on first year the borrower had to prepare the bidding documents and select contractors to start the work\. These processes took at least six months, which should be added to the closing date\. 56 - The Mazandaran Water and Wastewater Company assigned a staff expert as the ESO of the Technical Support Unit\. This had the positive result of better coordination with other departments in the Company\. Beyond this, the environmental and safety studies were a new experience for MWWC\. - The projects initially experienced many safety related difficulties at the work sites\. The insistence of NWWEC and WB on safety issues and the constant inspections and controls of the construction sites, coupled with mandating the contractors to comply with safety measures had a great impact on improving the conditions\. However, there is still work to be done to achieve the ideal situation\. Following a notification by NWWEC, the Bureau for Work Safety and Protection has been established in MWWC, and on the strength of experiences gained through WB projects, the safety conditions of the Company's different aspects and projects are expected to improve\. - The plan for monitoring the quality of surface and ground waters was prepared by the ESO of the TSU with the assistance of WB and NWWEC experts and implemented by MWWC\. This plan, which assesses the impact of raw wastewater discharge to the environment and provides a baseline data, was a new experience for the Company\. Although the Department of Environment (DOE) did not cooperate as expected, the Company is still interested to continue the work and to assess the impact of the water and sanitation project on the quality of life and environment\. 7- Next steps The completion of water and sanitary works in the cities of Sari and Babol can be addressed as two following steps: 1) Completion of the remaining works defined for this implementation phase and benefiting from WB loan by the end of 2011\. According to the PAD total household connections in wastewater to be established for Sari and Babol were 16000 and 16300 respectively\. However to date the total number of connections realized in Sari is 13000 and in Babol 12000\. Based on our plan, by the end of 2011, the total number of household connections which will be established in Sari and Babol will be 9,000 and 10,000 respectively, i\.e\., 105,000 persons in Sari and 100,000 persons in Babol will benefit by this wastewater disposal services\. To achieve this, MWWC requires the amounts mentioned in the following table (USD 18 million) The government has allocated the amount of USD18M as shown in table below: Item Description Cost in USD million 1 Mazandaran-Water 3 2 Mazandaran Wastewater 15 Total 18 2) Operation phase: MWWC has prepared its O&M plans and the future plan is to privatize the operation of the infrastructure including the treatment plants and the network\. 3) Tariffs: The government subsidies are being removed; therefore the tariff structure is being changed to cover the cost leading to a reduction in the working ratio\. 57 4) Next phase: The estimated coverage of the wastewater collection system was planned to be 30% during the first implementation phase\. This will be achieved following the completion of remaining works mentioned above\. An acceptable level of population coverage by wastewater collection in Sari and Babol requires a minimum of 10 years of construction period\. The estimated funds required for completion of water and wastewater works amounts to USD 400 million\. However, given the trend of allocations by the local government, this might take a longer period\. Therefore, ensuring funds from sources other than the Government from such institutions as WB, IDB, etc would accelerate the achievement of the goals\. 58 Annex 8\. Comments of Co-financiers and Other Partners/Stakeholders Not applicable\. 59 Annex 9\. List of Supporting Documents ï Project Appraisal Document (Report Number 31984-IR)\. Northern Cities Water Supply and Sanitation Project (April 28, 2005) ï Loan Agreement - Loan number 4783-IRN â June 27, 2005 ï Supervision Missionsâ Aide Memoires from 2005 to 2010 ï Implementation Status Report 1 to 12 ï Mid Term Review Report, December 2008 ï Sector Note: Cost Assessment of Environmental Degradation, Jun 30, 2005 60 Annex 10\. Summary of Health Studies Guilan: In Rasht, the average annual incidence of acute diarrhea in children under five years old was 10\.4% (9% in the intervention group and 11% in the control group)\. Considering the arrangement by season, in May the average incidence of acute diarrhea was 10% (9% in the intervention group and 12% in the control group), in August 12\.5% (11\.5% in the intervention group and 13\.4% in the control group), in November 9\.3% (8\.1% in the intervention group and 10\.5% in the control group), and in February 9% (8\.5% in the intervention group and 9\.8% in the control group)\. In Anzali, the average annual incidence of acute diarrhea in children under five years old was 12% (11% in the intervention group and 13% in the control group)\. Considering the arrangement by season, in May the average of incidence of acute diarrhea was 13% (11\.8% in the intervention group and 13\.5% in the control group), in August 13\.3 (12% in the intervention group and 14% in the control group), in November 11% (10% in the intervention group and 13\.1% in the control group), and February 10 % (9% in the intervention group and 11 % in the control group)\. The highest incidence of acute Diarrhea in both cities was seen in children from 2 to 5 years of age\. In brief, the incidence of Diarrhea in the Anzali was higher than in the Rasht and in the both cities is moderate\. It is expected to decrease with the initiation of the sewerage system program\. Mazandaran: Overall 9% of the children in Sari (8% in the intervention and 10 % in the control group) had experienced an episode of acute diarrhea\. In Babol, this figure was 10\.4% (10% in the intervention and 10%\.6 in the control group)\. In other words, on average, each child aged between 6 to 60 months living in Sari is inflicted with acute diarrhea, 2\.4 times a year, and in Babol, 2\.7 times a year\. The incidence of acute diarrhea in children between 6 months to 2 years was twice as high as those over 2 years of age\. In brief, the incidence of diarrhea in both Sari and Babol is intermediate\. It is expected that the wastewater management program will reduce the incidence of diarrhea\. 61 Annex 11\. Summary of Sludge Study The sludge study shows that all disposal options will have many positive impacts on environment in comparison with the lack of sanitary disposal and also in comparison with each other, there are many advantages and disadvantages\. Different options have different impacts on environmental components, for example, composting has the least negative effect on physical- chemical component and therefore composting is the best option from physical-chemical component point of view\. Incineration is the optimum option from biological component point of view and from social and economical points of view co-composting and land application are the optimum options respectively\. Therefore, the opinion of Guilan Water & Wastewater Company regarding the priority of component will be very important for selection of options, but generally analysis of matrix shows that co-composting is the optimum selection\. It must be noted that in this study it is assumed that available composting factory in the city of Rasht can receive sludge from wastewater treatment plants and extra-organizational participation which is in good condition\. It should be noted that for conduction of this option, the extra organizational participation is necessary and independent management of sludge by GWWC will not be possible\. Land application in undesired grass lands of Guilan province as the second priority will increase the costs of sludge transportation\. This option has positive effects on physical-chemical components but it should be considered that social and organizational resistance against this option will be a limiting factor\. It should be noted that for conduction of this option, the extra organizational participation is necessary and independent management of sludge by GWWC will not be possible same as co-composting option\. Considering the level of ground water in Guilan province, the probability of ground water pollution or costs of ground water pollution control in landfill option will increase\. It is recommended by international guidelines that the distance between landfill and wastewater treatment plant should be more than 2 km, and out of residential areas, therefore sludge transportation costs will increase in this option too\. Landfill has the third priority and the sludge composting is the fourth priority\. The main causes of that are social impacts, specially the lack of public acceptance for the use of produced compost due to high fixed and current costs of this option\. With regard to assessment matrix, incineration of sludge is the last priority and the main reason for that is economical component\. Cost analysis shows that incineration is the most expensive option\. Incineration has the most positive impacts on environmental components and without considering the economical components, it will be the second priority\. With regard to technical potential of GWWC, if there was a proper management system for air pollution control, sludge incineration could be a proper option\. In the other hand if the incineration is selected as final disposal option, a stable and independent management of sludge will be possible\. 62 MAP 63 64 40Â° To Ankara 45Â° AZERBAIJAN 50Â° 55Â° 60Â° ARMENIA UZBEKISTAN TURKEY AZARBAY as -- Ar Khvoy - - - - Caspian To Turkmenbashy - JAN-E AZARBAYJAN-E - SHARQI - - Ardebil T U R K M E N I S TA N - Sea - Tabriz AR ISLAMIC REP\. Atr DA - - OF IRAN ek Orumiyeh ak Anzali Atr To Ashgabat - BIL GHA Bojnurd - Rasht - - - GILAN GOLESTAN RBI - - - - Sari Gorgan - Mahabad - Zanjan Babol Mashhad Sarakhs - - Qazvin - - ZANJAN - MAZANDARAN - - KORDESTAN - Shahrud - Sabzevar QAZVIN TEHRAN - Sanandaj TEHRAN SEMNAN - - Kavir-e 35Â° HAMADAN - Semnan 35Â° Namak IRAQ - - KERMANSHAH - Hamedan - - Taybad To Baghdad - - Kermanshah - MARKAZI Qom Dasht-e-Kavir ISLAMIC REPUBLIC OF IRAN (salt desert) - - Gonabad To Herat NORTHERN CITIES - Arak - - Kashan -- - Ilam LORESTAN - - - KHORASAN WATER SUPPLY AND - - E S FA H A N To Baghdad Khorramabad - AFGHANISTAN SANITATION PROJECT - Birjand Esfahan Shahr-e Kord YA Z D To Delaram Tig - - Babol PROJECT CITIES CHAHAR MAHALL Yazd ris - - -- KHUZESTAN VA-BAKHTIARI - Bafq SELECTED CITIES ph Eu r at - Ahvaz es - PROVINCE (OSTAN) CAPTIALS Zabol - - KOHGILUYEH VA NATIONAL CAPITAL - - BUYER AHMADI - - Yasuj H el m a n d MAIN ROADS 30Â° - Kerman 30Â° RAILROADS - - - PROVINCE (OSTAN) BOUNDARIES KUWAIT - - - FA R S - - KERMAN Zahedan INTERNATIONAL BOUNDARIES Shiraz Sirjan - PAKISTAN Bam To Quetta - Bushehr To Unayzah - - - BUSHEHR SISTAN VA - - BALUCHESTAN Bandar-e - - Kangan HORMOZGAN - - Iranshahr 0 100 200 Kilometers To Bela - Bandar 'Abbas 0 50 100 150 200 Miles BAHRAIN Bandar-e To Bela SAUDI Langeh This map was produced by the ARABIA - Jask - - 25Â° Map Design Unit of The World Bank\. 25Â° Chabahar The boundaries, colors, denominations QATAR and any other information shown on this map do not imply, on the part of Gulf of Oman S Arabian IBRD 33958 The World Bank Group, any judgment TE A IR on the legal status of any territory, or APRIL 2005 EM Sea any endorsement or acceptance of AB 45Â° 50Â° UNIT ED AR 55Â° OMAN 60Â° such boundaries\.	REVIEW
P070878	IEG Report Number: ICRR14676 ICR Review Independent Evaluation Group 1\. Project Data: Date Posted: 06/27/2015 Country: Guinea Project ID: P070878 Appraisal Actual Project Name: Coastal Marine And Project Costs (US$M): 21\.63 16\.71 Biodiversity Management L/C Number: Loan/Credit (US$M): 5\.0 4\.91 Sector Board: Environment Cofinancing (US$M): 13\.9 9\.2 Cofinanciers: Global Board Approval Date : 06/22/2006 Environment-Associate Closing Date: 12/31/2011 12/31/2013 d IDA Fund; International Fund for Agricultural Development and Foreign Multilateral Institutions (Unidentified) Sector(s): General agriculture fishing and forestry sector (65%); Sub-national government administration (20%); Other social services (10%); Central government administration (5%) Theme(s): Environmental policies and institutions (20% - P); Biodiversity (20% - P); Rural non-farm income generation (20% - P); Participation and civic engagement (20% - P); Decentralization (20% - P) Prepared by: Reviewed by: ICR Review Group: Coordinator: Santhadevi Meenakshy April Connelly Christopher David IEGPS1 Nelson 2\. Project Objectives and Components: a\. Objectives: This was a stand alone Global Environment Facility financed project, which had both a project development objectives (PDO) and global environment objectives (GEO)\. The original project development objective as stated in the Grant Agreement (Schedule 1 pg\. 6) was â to promote rational management of the Recipientâs coastal biodiversity for both conservation and sustainable development ends in selected priority areas (up to 17 of the Recipientâs Rural Development Communities), with a focus on those around sites identified under the Ramsar List of Wetlands of International Importance and shared watersheds, notably Alcatraz Island, Rio Pongo and Tristao Islands), with a particular emphasis on assisting communities in and around these priority areas to plan, implement and maintain environmentally sustainable and socially inclusive alternative livelihood options\.â The project development objective is stated in similar terms in the Project Appraisal Document (pg\. 7) âto promote rational management of Guineaâs coastal biodiversity for both conservation and sustainable development ends in selected priority areas, with a particular emphasis on assisting communities in and around these priority areas to plan implement and maintain environmentally sustainable and socially inclusive alternative livelihood options\. The original Global Environmental Objective stated in the project appraisal document was âto promote conservation of globally and nationally significant habitats and species in Guineaâs coastal zone in selected priority areas encompassing coastal Ramsar Sites\.â The Global Environment Objective was not reflected in the grant agreement\. As part of a Level 1 restructure in April 22, 2011, the PDO was revised and combined with the GEO\. The revised combined project objective was "to improve the conservation of the Recipientâs coastal and marine biological resources in selected Ramsar Sites\.â (Restructuring Paper, pg\. 6)\. In accordance with IEG guidelines, this review will use the PDO as presented in the original grant agreement as the basis for assessing the original objectives and the revised PDO as presented in the restructuring paper as the basis for assessing the revised objectives\. b\.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives/key associated outcome targets? Yes Date of Board Approval: 04/22/2011 c\. Components: There were five original components\. The ICR does not report the full cost of the components\. It only reflects the GEF contribution\. Component 1: Protection and Conservation of Coastal RAMSAR Sites (Approval cost was US$ 0\.9 million and Actual cost was US$1\.0 million)\. This component had three subcomponents\. They are (i) Establishment of an Integrated Conservation Zone\. This subcomponent was to establish at least one integrated coastal conservation zone and develop management plans through participatory mechanisms\. Two intervention areas, incorporating wetlands recognized under the RAMSAR Convention were included (Islands of Tristao, Alcatraz, and Rio Pongo); (ii) Conservation Zone Management\. This sub-component provided the Rural Communes (CRDs), local communities and local development/change agents with the core technical tools and financial support for the establishment and management of the coastal conservation; and (iii) Impact Monitoring and Evaluation\. This subcomponent would build impact monitoring and evaluation capacity for the two identified sites by establishing an on-site base, and providing operating costs, minimal equipment and transportation\. Component 2: Enabling Environment for Integrated Coastal Zone Management (ICZM) (Approval cost was US$ 0\.7 million and Actual cost was US$ 0\.6 million)\. This component had two subcomponents\. They are: (i) Institutional Strengthening\. Four sets of activities were included under this subcomponent: studies, targeted capacity building of the Ministry of Environment, a review of the adequacy of the legal framework related to Integrated Conservation Zones (ICZs), and basic training and workshops; and (ii) Coastal Zone Knowledge and Communication\. Two sets of activities were included under this subcomponent: (i) establishment of an institutionalized integrated coastal zone coordination exchange mechanism under the Ministry of Planning; and (ii) support to the existing information center of the Observatoire Guinee Maritime (OGM) to facilitate and enhance access to coastal and marine related information\. Component 3: Local Investment Fund (Approval cost was US$ 1\.6 million and Actual cost was US$ 1\.3 million)\.This component provided micro grants to communities for activities that were expected to have an incremental positive impact on biodiversity conservation and sustainable resource use\. Component 4: Support for Local Capacity Building (Approval cost was US$ 1\.0 million and Actual cost was US$ 1\.0 million)\. This component assisted populations of targeted CRDs to revise existing local development plan (PDLs) by using a more holistic development approach emphasizing sustainable natural resource use and conservation activities\. Component 5: Program Management, Monitoring and Evaluation (Approval cost was US$ 0\.8 million and Actual cost was US$ 1\.01million)\. This component ensured efficient and cost-effective implementation of the other four components Project Restructuring Due to political turmoil disbursements in the country were suspended from December 2008 to 2010\. When the Bank reengaged in 2011 the project was restructured along with the rest of the Guinea portfolio\. As part of project restructuring (April 22, 2011), the components were reduced in scope to focus on those activities that would have a rapid positive impact on the rural population, thereby reducing pressure on the natural resources and enabling achievement of the revised project development objective\. The activities were consolidated and restructured into four components: (i) Creation of MPAs in Ramsar Sites and support to their management; (ii) Capacity Building for MPAs management; (iii) Support to participative local development; and (iv) Project Management and Monitoring and Evaluation\. The project scope was reduced to focus on 11 communities, instead of the original 17 communities and the ceiling of the Special Account was increased from USD 550,000 to USD 1,000,000\. The National Coordination Unit (NCU) in charge of implementing the project was moved from Ministry of Planning to the Ministry of Decentralization\. The newly created Office of Biological Diversity and Protected Areas (OGDBAP), which operated under the purview of the Ministry of Environment, was put in charge of the creation of marine protected areas - MPAs (Component 1) and related capacity building activities (Component 2)\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Costs: The estimated cost at appraisal was US$ 21\.63 million\. The actual cost at completion was US$16\.71 million (Annex 1 of ICR)\. The ICR does not report the reasons that the actual project cost was below the appraisal estimate\. Financing: The project was financed by several financing sources\. The breakdown by source is as follows: 1) Global Environment Facility (GEF) ( appraisal US$ 5\.0 million and actual US$ 4\.91 million) 2) Local Communities, in the form of in kind contributions (appraisal US$ 1\.63 million and actual US$ 1\.50 million) 3) Global Environment-Associated IDA Fund (appraisal US$11\.70 million and actual US $ 7\.0 million) 4) International Fund for Agricultural Development (appraisal US$ 2\.0 million and actual US$ 2\.0 million) 5) Foreign Multilateral Institutions (Unidentified)(appraisal US$ 0\.20 million and actual US$0\.20 million) Borrower Contribution : The original borrower commitment was expected to be in the form of in-contributions values at US$ 1\.10 million\. The actual contribution was as expected, in kind contributions valued at US$ 1\.10 million\. Dates: The project closed on 12/31/2013\. The original closing date of 12/31/2011 was extended by two years order to compensate for the two years suspension\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Relevance of Original Objective: Substantial The original project objectives are aligned to the goal of improving the productivity and sustainable use of the natural resource base in both the Governmentâs First Poverty Reduction Strategy Paper and World Bankâs Country Assistance Strategy for Guinea for the period 2004-2006\. The CAS explicitly identified the project as a means to improve the management of Guineaâs environmental resources\. The objective are also aligned with the GEF Operational Program on Coastal, Marine and Freshwater Ecosystems and the strategic priorities for biodiversity and capacity building under GEF-3\. In addition, they relevant for helping Guinea to meet its obligations as a signatory to the UN Convention on Biodiversity, which Guinea ratified in 1993\. The projectâs objectives are also relevant to regional strategies\. Specifically, the New Partnership for Africa's Development (NEPAD) which calls for greater attention by multilateral development institutions to rural development and specifically targets the issue of natural resource degradation\. In promoting environmentally sustainable and socially inclusive alternative livelihood options the project objectives also conform to Pillar III of the World Bankâs Africa Action Plan which calls for supporting the drivers of growth by increasing agricultural productivity through the introduction of sustainable land management practices and building the capacity of women and the poor though socially inclusive capacity building activities and support to income generation\. The original objectives were less relevant to Guineaâs development priorities at project closure\. The ICR notes that natural resources conservation remains as an indicator in the Country Partnership Framework for the period 2014 to 2016 but there is no indication of a follow up activity due to the Bankâs selectivity criteria\. Likewise, the Governmentâs National Development Plan did not provide a clear mention of the coastal marine protection\. The ICR argues that the signing of Alcatraz and Tristao as Marine Protected Areas by presidential decree indicates that the Government still considers biodiversity important\. Relevance of Revised Objective: Modest The revised objective is more narrowly focused on improving the conservation of coastal and marine biological resources and no longer encompasses sustainable development\. This revised objective is consistent with the GEF Operational Program on Coastal, Marine and Freshwater Ecosystems, the strategic priorities for biodiversity and capacity building under GEF-3 and the UN Convention on Biodiversity\. But it is not relevant to the Governments 2011-2012 Poverty Reduction Strategy Paper and its companion Priority Action Plan, which identify five priority areas (good governance, poverty reduction, infrastructure, economic growth, and security)\. Nor is it relevant to the World Bankâs Interim Strategy for (FY11-12) which is focused on stabilization of the country through improved economic governance and macro stability; public services (including supporting social resilience to shocks); and creating jobs\. Nor is it relevant to the Country Partnership Strategy for the period FY 2014-FY2017 which highlights three strategic areas of engagement: (i) improving governance and service delivery, (ii) stimulating growth and economic diversification, and (iii) strengthening human capital\. As with the original objective, the ICR notes that although coastal marine protection is not mentioned in the Governmentâs current National Development Plan, the creation of Marine Protected Areas by presidential decree is an indication that biodiversity remains of importance\. b\. Relevance of Design: Original Design: Modest The ICR (pg\. 11) notes that âthe projectâs development and environmental objective were not well designed in the original results frameworkâ\. The original project objective statement could have been more clearly defined\. The project components were relevant to the achievement of the objectives but the design was complex and the project appraisal document did not provide much sufficient information on how to operationalize them\. The project design also employed a participatory approach that was relevant to achieving the project objectives but it entails a long term processes that were not adequately taken into account in the projectâs design\. Revised Design: Modest When the project was revised, the projectâs objectives were simplified into a combined PDO/GEO and the components were reduced in scope to focus only on those activities that would enable achievement of the revised DO within the projectâs remaining time period\. The projectâs participatory ecosystem approach was still considered valid and was retained\. The results chain was also revised to simplify it and to make it more focused\. In the process, indicators that were difficult to measure were dropped or replaced\. However, the simplification of the results framework removed critical outcome level links in the results chain, leaving a gap in the link between the projectâs outputs and its objectives\. The ICR also notes that the restructured project lost its broader national relevance\. It was originally designed to influence national policy and institutions with regard to coastal marine and biodiversity management but with the elimination of key PDO indicators it became a localized project narrowly focused on protecting two marine protected areas\. 4\. Achievement of Objectives (Efficacy): A level one restructuring was applied to the Project in April 2011\. The Development Objective was revised\. Therefore, efficacy is evaluated against both its original and revised PDO by measuring achievements at the time of project closing (December 2013)\. Original Objective âTo promote rational management of the Recipientâs coastal biodiversity for both conservation and sustainable development ends in selected priority areas (up to 17 of the Recipientâs Rural Development Communities), with a focus on those around sites identified under the Ramsar List of Wetlands of International Importance and shared watersheds, notably Alcatraz Island, Rio Pongo and Tristao Islands), with a particular emphasis on assisting communities in and around these priority areas to plan, implement and maintain environmentally sustainable and socially inclusive alternative livelihood optionsâ The original project objective is broken into two parts that are rated separately below\. Sub-objective 1: âPromote rational management of the Recipientâs coastal biodiversity for both conservation and sustainable development ends in selected priority areas \.â Outputs ï¬ Two marine protected areas (MPAs) were formally created by Presidential decree, fully meeting the project target\. ï¬ Management plans for the two MPAs were prepared that clearly define local responsibilities over terrestrial and marine ecosystems\. However, the ICR notes (pg\. 23) that funding to implement them is not yet assured\. ï¬ An ecosystem assessment and inventories of several flora and fauna were conducted in the MPAs\. ï¬ A monitoring and evaluation system for MPAs was established and is operational by project closure\. It is included in the management plans prepared for the 2 MPAs created by the project\. ï¬Â The project did not meet its target of completing preparatory work on a second Coastal Integrated Conservation Zone (ICZ), this was dropped during restructuring when the project scope was reduced, and the targeted area for the second ICZ was no longer included in the project\. Outcome The ICR does not report on evidence at an outcome level related to this objective\. The project originally planned to measure trend on five key species and water quality indicators to demonstrate outcomes related to this objective\. But this indicators was dropped at restructuring because they baseline data was not available\. No the other outcome level indicator was measured its place\. While marine protected areas were established and several tools were developed to aid in their management, no evidence is provide to show the extent to which these tools are being applied or the results of their application on marine and biodiversity resources\. Achievement of this sub-objective is modest \. Sub-objective 2: "Assist communities in and around these priority areas to plan , implement and maintain environmentally sustainable and socially inclusive alternative livelihood options \.â Outputs ï¬ The resident populations in 11 communities were sensitized, organized and trained in environmental matters in two MPA sites and local stakeholder management committees were created\. ï¬ The project strengthened the capacity of the 11 Rural Development Communities (CRDs) to implement Local Development Plans and Annual Investment Plans, with support from local development agents recruited by the project\. According to the ICR, the local development plans contain conservation measures\. But it is not clear how the plans will be funded following project closure\. ï¬ The project financed 94 micro-projects that were implemented by project closure (exceeding the target of 60)\. Of which 59% were women (exceeding the target of 30%)\. Outcome The micro-project financed under the project were expected to reduce anthropic pressure on natural resources\. But the ICR does not provide sufficient information on the results of the micro projects to determine whether or not they are having the intended effect\. The project originally included an indicator to measure the extent to which the micro projects had stabilized the natural resource base in areas under cultivation in project watershed target sites, but it was not measured and was dropped during project restructuring\. Achievement of this sub-objective is modest \. Revised Objective "To improve the conservation of the Recipientâs coastal and marine biological resources in selected Ramsar Sites â Outputs The outputs noted under the original project objectives are also relevant to the achievement of this objective\. In addition the following outputs were reported: ï¬ 100 personnel at the Ministry of Environment attended training for MPA management (target of 60 personnel exceeded by 167%)\. But no information is provided to indicate the extent that capacity of Ministry staff has increased as a result of the training, this would require evidence that the training had been effective and was being applied\. ï¬ A toolkit to establish, manage and monitor MPAs was developed and replicated by project closure (fully meeting the project target)\. ï¬ Work was ongoing at project closure to put in place a permanent environmental information and data hub for the coastal zone\. A data hub was under development but further work was required to integrate data from different sources\. ï¬ The project did not meet its target of having a detailed proposal for sustainable financing for MPAs by project closure\. The ICR reports that a workshop to discuss alternatives was held and the Government was working on establishing a conservation trust fund with a specific window for MPAs\. But a detailed proposal was not available as of project closure\. ICR also notes that short term prospects for this are unlikely\. ï¬ A permanent forum for coastal zone coordination and exchange was not achieved by project closure\. Two coordination meetings were under the project but the ICR reports that since the project's closure no meeting have been held due to lack of financing\. The ICR notes that during the last forum participants recommended establishing inter-ministerial committee to implement recommendations that came out of the fora, but costs would need to be Ministry after project closure, which seems unlikely\. ï¬ Local units and inter-CRD committees for the co-management of MPAs with local communities became operational in 2013 but their sustainability is questionable\. The ICR (pg\. 24) reports that village supervision committees and inter-district committees were established in the 7 CRDs in the two MPAs\. "The committees received initial training and were equipped with a motorcycle so they can be operational\. However, given the short period of time since their creation (the supervision committees) are not very strong\.(without further funding) it is unlikely they will remain functional after project closure\." Outcomes The ICR reports that the Management Effectiveness Tracking Tool (METT) applied to the two MPAs generated a 12 point improvement\. A baseline METT was assessed in June 2012 and a follow up METT was conducted in October 2013\. The ICR notes that, the METT is based on 30 questions\. Each of which is assigned a score from 0 to 3\. A 1 point improvement means that some aspect has either improved from poor to satisfactory or satisfactory to excellent\. The 12 areas in which an improvement was noted were: 1\. The MPA has been gazetted; 2\. The available information is sufficient for planning purposes; 3\. 75% of stakeholders are sensitized to the marine resources and their threats; 4\. An approved management plan exists but is only partly applied due to financial constraints; 5\. A research inventory addressing the needs of the AMP exists; 6\. The available staff is sufficient to manage the AMP; 7\. An M&E system exists, although the results are not systematically used for management purposes; 8\. Management objectives are sufficiently clear; 9\. Threats to the AMP have been somewhat reduced; 10\. Living conditions of the population have been somewhat improved; 11\. Environmental awareness has been improved; and 12\. 50% - 75% of stakeholders are satisfied with the process of creating the AMP\. The METT score is insufficient on its own to demonstrate achievement of this objective at the outcome level\. It does not demonstrate that marine and biodiversity resources in the MPAs are better conserved as a result of the improvements in these twelve areas\. In addition, as with the original objective there is no evidence is provide to show the extent to which the management tools developed by the project are being applied or the results of their application on the conservation of marine and biodiversity resources\. There are several statements in the ICR, that indicate that there are insufficient resources for implementing the management tools, including in the METT assessment itself\. Achievement of this objective is rated Modest\. 5\. Efficiency: Modest Economic and Financial Efficiency A quantitative cost-benefit analysis was not carried out at appraisal because the expected capacity building benefits had undetermined life expectancies and could not be quantified in monetary terms\. In addition, the demand-driven nature of investments left the specific investments under the GEF Project undetermined\. Further, not enough information was known about investment attitudes of the rural communities to attempt a simulation exercise (p\. 72 PAD)\. A cost-benefit analysis was not carried out at closure because of insufficient information\. According to the ICR the environmental, social and capacity-building benefits in particular were difficult to quantify\. In addition, the ICR team found it difficult to assess the value and cost-effectiveness of the many studies/consultancies that had been produced (close to 20% of project costs)\. The ICR (pg\. 14) notes that âmany of them were produced with significant delays and a consultant had to summarize the different studies so that they could be internalized by project staffâ, which suggests inefficiencies\. Finally, the costs and benefits of micro-projects (which also accounted for about 20% of project costs) were not systematically recorded and analyzed\. In addition, the ICR notes that a reliable assessment of the economic results of the micro project investments could only be done after several years\. The ICR presented the results of a socio-economic survey carried out at project closure, which found that the micro projects had demonstrated several benefits\. But it does not indicate whether the micro projects were cost effective because it does not factor in costs\. It is also unclear to what extent these benefits are the result of micro projects versus other factors, because the ICR does not explain the survey methodology\. The survey was administered to 9 of the 11 Rural Communes in the project area and covered topics related to the economic, social, organizational and institutional impact of the micro-projects that had been financed by the project\. The reported benefits were: 1\. The volume of production of all groups increased considerably, and those groups that only had one production cycle per year decreased from 75\.8% to 30\.3%\. Most groups produced two, three, or more times per year\. 2\. The number of markets supplied by these groups increased from 75 to 104\. Prior to the project most groups delivered their production to two markets and now, they served three markets\. Before the project, the markets served were mostly local (84%) and now 50% of the groups reached markets beyond their village\. 3\. The business volume of 4 out of 5 groups has increased\. The increases vary from > 6 million GNF (9%); 3-6 million GuinÃ©e Nouveau Franc (GNF) (14\.8% of groups); 1-3 million GNF (55\.6% of groups); and < 1 million GNF (22\.2% of groups)\. 4\. Several organizational changes were brought including: regular holding of meetings; consensual group decision making; keeping of accounting books; application of technical advice by extension agents; participative planning of activities; increase in mutual financial support among group members; support and advice to other village groups; and organization of practical training sessions with extension agents\. Administrative Efficiency Administrative efficiency is assessed in two phases: (i) a first phase (from effectiveness in July 2007 to December 2010) during which the project was stalled; and (ii) a second phase (after restructuring in April 2011 until project closing in December 2013)\. First Phase: The project experienced a number of implementation inefficiencies in this period\. During 2007â2008 hardly any activities were carried out on the ground\. There was high turnover of national project staff creating implementation hurdles\. For instance, the new PIU staff was unfamiliar with the project and they seemed to be under the erroneous impression that Component 3: Local Investment Fund could only be started once all the legal measures related to the establishment of the MPAs had been concluded\. This delayed the start of the micro-projects\. From 2008 to 2010, the country experienced political upheaval and turmoil, and disbursements were suspended for two years (page #7 of the ICR)\. Second Phase: During the remaining two years of implementation there were fewer inefficiencies, activities in the field were implemented and disbursement rates increased accordingly\. Due to the lack adequate information on costs and benefits, the inefficiencies in administration of the project, and inefficiencies in the implementation of activities such as consultancies, project efficiency is rated modest\. a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: As part of level 1 restructuring, project development objective was revised\. Therefore, the overall outcome rating was determined by (1) outcome based on ratings of relevance, efficacy, efficiency measured against the original key associated outcome targets and all assessed over the entire duration of the project combined with; (2) outcome based on ratings of relevance, efficacy, efficiency measured against the restructured key associated outcome targets all assessed over the entire duration of the project\. The two outcome ratings were combined using disbursement for the periods before and after restructuring, respectively\. Original ratings - The relevance of the project objective is substantial and design is rated modest\. The efficacy of achievement of the two sub-objectives are modest as is efficiency\. This yields an outcome rating of Unsatisfactory\. Restructured ratings - The relevance of the revised objectives and design are rated modest\. The efficacy of achievement of the project objective is rated modest\. Efficiency is rated modest\. The modest rating of all three dimensions of project outcome results in an Unsatisfactory outcome rating\. Overall Outcome\. At the time of Board approval, 12\.6% of the loan had been disbursed\. Given the unsatisfactory rating for original Outcome of 2, its weighted value is (2 x 0\.13) = 0\.26\. Given an unsatisfactory rating for restructured Outcome of 2, its weighted value is (2 x 0\.87) = 1\.74\. Together these sum to 2 = Unsatisfactory\. a\. Outcome Rating: Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: Project gains face several risks\. The ICR points out that implementation on the ground only took place for two years and its gains made need further consolidation and the agencies in charge of managing the MPAs and the micro projects need continued reinforcement\. As noted in the section of efficacy the management committees created the two MPAs need further support to remain operational and funding for implementation of MPA management plans is not assured\. While the Government is now better aware of the importance and benefits of protecting the coastal marine zone and its biodiversity, there is still uncertainty that it will be able to mobilize the resources to ensure that adequate follow up support is provided\. A study on sustainable financing was not carried out by the project and, at the time of the ICR's writing no resources had been earmarked to finance the implementation of the management plans\. At project closure the Ministry of the Environment was actively pursuing the establishment of a trust fund for natural resources management, including a window for the financing of coastal/marine protected areas, but the ICR notes that this initiative could take several years\. The fate of the MPAs also depends on whether Guinea follows a sustainable economic development path\. Given long term nature of project objectives the risks are significant\. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: a\. Quality at entry: The project appraisal document was comprehensive in a number of areas, including a roots threat analysis and an assessment of the project intervention and target sites\. But it fell short in its assessment of the project's institutional and implementation arrangements and the risks of political and institutional instability were overlooked\. In addition, there was no comprehensive strategy for institutional strengthening\. According to the ICR, it was assumed that this could be done through a series of uncoordinated studies with technical assistance\. This to too many consultancy contracts\. The ICR also notes that the technical reference manual for selected micro-projects was not done at preparation, it was only prepared in 2011, which in turn delayed implementation of the micro-projects\. The ICR also critique the original project design for having too much of a research orientation\. The project's results framework was overly complex and out of step with the implementing agencies capacity\. It included a large number of environmental indicators that had no baseline and some were difficult to measure in the project time frame, placing a large burden on the implementing agency\. In addition, the project lacked an appropriate exit strategy\. Insufficient attention given to what would happen once the project came to an end and no short and longer-term training plan was prepared\. Quality-at-Entry Rating: Unsatisfactory b\. Quality of supervision: Over the life of the project, there were 15 implementation support missions and three task team leaders (TTLs)\. The implementation support missions became regular only at the beginning of 2011, after the stabilization of the political situation, and the Bankâs re-engagement with the country\. The composition and skill mix of project implementation support missions were reported to have been adequate\. In addition to the TTL, supervision mission included environmental specialist, and specialized staff for finance, procurement, accounting, disbursement and social safeguard measures\. Mission members came from both HQ and the field\. During the initial years of the project, the Bank supervision team was unable to overcome implementation challenges that arose as result of the overly complex project design, which was not sufficiently understood by national project staff, and the political and institutional instability in the country\. The Bank implementation support teams were also unable to correct the original lack of clarity in the design of the M&E system and to provide timely assistance to the Government implementing agencies\. Disbursements and supervision missions by the Bank were suspended between November 2008 and 2010\. When the Bank re-engaged in 2011, the project was simplified, which allowed implementation to get back on track\. Through the formal restructuring the PDO/GEO and components were simplified and the results framework was revised\. With the reduction in indicators and the introduction of more measurable ones, data collection and use became much more systematic and the monitoring framework was regularly updated\. However, the revised indicators did not allow for an adequate assessment of project outcomes\. The closing date was also extended to compensate for the two years suspension\. The restructuring paper was elaborated in a participatory manner and training in project management was provided to project staff\. This led to the development of a greater sense of ownership by the client\. As a result, the dialogue between the Recipient and the Bank improved significantly and more of a partnership developed, this contributed to a situation in which recommendations that were made by implementation support missions were followed up by actions on the part of the National Coordination Unit\. According to the ICR (pg\. 17), the improved partnership was most likely due to a combination of factors: a) a change in TTL/task teams and b) a more clearly defined project that was better understood by the Guineans, therefore easier to successfully implement with fewer disappointments and criticisms on both sides\. The Bank was also proactive in mobilizing additional safeguards training when capacity limitations came to light\. Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Unsatisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Initially government commitment to the project was negatively affected by the political and institutional instability\. However, once the political turmoil in the country was overcome, the newly elected government showed its interest and commitment to the project\. The Presidential Decree was issued and the two MPAs were signed on May 30, 2013\. Following project restructuring there was no interference from the Government in day-to-day management decisions\. In 2012, the Government organized a multi-donor workshop, including representatives of the mining companies, international donors and NGOs, to discuss possibilities for establishing a trust fund for natural resource conservation with the participation of all the major international donors of Guinea and the international mining companies that were active in the country\. According to the ICR, unfortunately, this initiative did not yet lead to tangible results but the Ministry of Environment continues to work on the establishment of a trust fund for natural resource management and protection of specific sites (p\. 18 of the ICR)\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance: The Project National Coordination Unit (Cellule Nationale de Coordination, CNC), was responsible for the overall management and coordination of the project\. This unit also implemented another Bank funded project, The Village Community Support Program\. The CNC was strengthened under the project with the addition of key staff that included: a technical specialist in NRM familiar with GEF policies and procedures, a safeguards specialist, an M&E specialist, and environmental education specialist for training people at the local level\. The CNC was also supported by a Natural Resource Management focal point based in the provincial capital close to the MPAs and by decentralized teams at the local levels\. According to the ICR the CNC team was competent and committed and did a good job of explaining the projectâs objective to local stakeholders (population, local politicians and elected officials, and decentralized staff of the various ministries involved) and in getting their buy in\. The support of various ministerial staff at the local level to the project management set-up allowed for efficient identification, implementation and supervision of NRM and income generating micro-projects\. However, a high level of turnover of national level staff was disruptive to implementation during the initial 2006-2008 period\. Overall project management was satisfactory but there were some weaknesses in the administration of consultancy contracts and studies and in the timely preparation of procurement plans\. Also, the results of some of the studies were not fully internalized and diffused beyond the Project Implementation Unit\. Implementation of components 1 and 2 of the project were managed by the Ministry of Environment, Forests and Water, the National Directorate for Forestry and Water and the National Fisheries Institute were in charge, with the support of the CNC\. The ICR reports that their performance was satisfactory\. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The original M&E system was designed to determine: (i) links between poverty reduction/activity systems dynamics and the state of biodiversity; (ii) pertinence, efficacy and replicability of the new approach toward sustainable local development; and (iii) the overall impact of the project\. It proposed following methods and tools to do so: (i) detailed baseline studies covering biodiversity, activity systems and poverty; and (ii) an evaluation system consisting of four modules for comparison of the evolution of different indicators\. The four modules included: (a) state of coastal and marine ecosystem; (b) rural activity systems evolution; (c) poverty; and (d) capacities\. Each module was supposed to include a certain number of surveys with a common sample of households/production units\. A state of the ecosystem evaluation was planned to take place during mid-term and end-term\. These surveys were supposed to be coupled with consumer surveys that would have made it possible to know the type and amount of resources extracted from the natural environment by the households and used for the different domestic and commercial purposes\. Finally, a poverty dashboard that would use indicators was also planned\. A dashboard was proposed to use indicators such as monetary poverty, living standards indicators, access to resources, and qualitative indicators to identify local perception of poverty\. However, according to the ICR, the system as designed was too ambitious and was highly oriented towards research and science with little regard for practical implementation\. Annex 3 of the Project Appraisal Document provides hardly any information on the key operational elements of the projectâs M&E system\. There were too many indicators and some of those selected were difficult to measure\. Examples of hard-to-measure outcome indicators were: âStabilization of natural resource base in areas under cultivation in project watershed target sitesâ and âPositive trend for key species and water quality indicators\.â b\. M&E Implementation: The lack of specificity in the description of the M&E system in the PAD, its overemphasis on research and science aspects, and the technical capacity constraints of the implementing agencies made the establishment and implementation of M&E a difficult task\. The initial Bank implementation support teams were not able to correct the original lack of clarity in the design of the M&E system or to provide timely assistance to the Government implementing agencies\. At restructuring, the M&E system was simplified and the results framework and monitoring indicators were adjusted, dropping and replacing the indicators that were cumbersome to measure\. The indicators related to the stabilization of the natural resource base and the measurement of trends for key species and water quality were dropped, as these could only be measured after a longer period than the newly agreed upon closing date\. Studies related to ecosystem development were also canceled for the same reason\. However, the revised indicators were insufficient for measuring the achievement of the project objectives outcome level, they were all output indicators\. With the modifications introduced during the restructuring, the M&E system performed much better\. With the reduction in indicators and the introduction of more measurable ones, data collection and use became much more systematic and the monitoring framework was regularly updated\. Data were collected by the different executing agencies at the local, regional and national levels and synthesized by the National Coordination Unit\. The Management Effectiveness Tracking Tools for biodiversity (METT) for Tristao and Alcatraz were filled out by Guinean Office of Parks (OGUIPAR)\.The baseline study carried out by the Observatoire GuinÃ©e Maritime (OGM) during project preparation was supposed to be repeated at the end of the project but it did not materialize\. The ICR notes that the original baseline study was a voluminous three part descriptive report of several hundred pages that was not synthesized\. Towards the end of the project the M&E system was expanded to include an ecological monitoring system for MPA management\. However, operationalization of the ecological monitoring system for MPA management was only started during the final year of project implementation and was still ongoing at the time of the ICRâs writing\. The local conservation teams established under the decrees creating the two MPAs also received the necessary equipment (boat, radio VHF, GPS, motor cycles) and were trained\. c\. M&E Utilization: The ICR provides little information on the use of information generated by the M&E system\. M&E Quality Rating: Modest 11\. Other Issues a\. Safeguards: The project was classified as category B and triggered the Bank policies related to: environmental assessment (OP 4\.01), natural habitats (OP 4\.04), and involuntary resettlement (OP 4\.12)\. The necessary safeguards instruments were prepared and disclosed prior to appraisal\. The ICR reports that safeguard specialists regularly reviewed environmental and social safeguard aspects during implementation support missions and did not report any major issues\. Environment An environment assessment was carried out for all proposed micro-projects and screening forms were developed to exclude those that might have had a negative environmental impact\. No micro-project was funded unless it passed this test\. Committees were set up to follow up on the environmental aspects of micro-projects\. Local staff of the various technical ministries, especially forest guards and agricultural extension agents but also local elected officials, were trained in environmental safeguard measures and in filling out the screening forms\. There was weak knowledge of ESMF by field staff involved with the selection of the last batch of micro-projects but this was addressed by the Bank by bringing it to the attention of safeguard specialist in the National Coordination Unit and sanctioning safeguards training for the involved persons\. According to the ICR (pg\. 10) âduring its last year, the project was instrumental in promoting a nation-wide use of the World Bankâs safeguard policies in all of the micro-projects carried out by the VCSPâ, a Bank funded community development project that was implemented in parallel\. Natural habitats No information on compliance measures is provided except that MPAs secured coastal natural habitats and mangrove forests\. Social No resettlement was involved under the project\. The approach taken by the project was to accept that people would continue living within the MPAs, with mandatory acceptance of the binding rules on the access and use of natural resources\. In return, they were compensated through income generating activities promoted under the micro-projects\. b\. Fiduciary Compliance: Procurement Procurement was centralized in the CNC and whenever possible, purchases were grouped with procurements under VCSP2 for economies of scale\. At times, procurement plans were not updated in a timely manner and some issues regarding the recording of procurement files at the national and regional levels were noted and corrected\. Procurement of consultancy services for studies was often delayed as the quality of Terms of References was often weak and had to be thoroughly reviewed by the task team which involved lengthy interactions with the PIU\. Financial Management The financial management system was part of the VCSP set-up and used the same financial management procedures that had been adapted from the manual prepared for the first phase of the VCSP\. Project accounts were regularly kept and withdrawal applications were prepared directly from the projectâs accounting software\. However, given the fact that financial matters involved local communities and a regional project unit, justifications for expenditures were often delayed\. Financial statements were audited and certified without qualifications\. However, the accounting software was weak in terms of not allowing for automatic consolidation of data for the preparation of financial statements, which had to be done by hand\. The ICR reports that the manual process required close supervision by the Bank Financial Management Specialist but that it did not have a negative impact on project implementation\. c\. Unintended Impacts (positive or negative): According to the ICR, the project has had a demonstration effect that goes beyond the project area\. World Bank safeguard policies regarding environmental and social aspects of projects are now applied to all socio-economic infrastructure projects financed by VCSP 2, which are systematically screened\. Due to the training and sensitization activities of the project, micro-projects that protected natural resources directly or indirectly became frequent\. Micro-projects are now often in second place after social infrastructure investments such as schools and health posts and are no longer considered at the end priority list in the local development plans\. d\. Other: None 12\. Ratings: ICR IEG Review Reason for Disagreement/Comments Outcome: Moderately Unsatisfactory For both the original and revised Unsatisfactory project, all three dimensions of the outcome rating were modest (relevance, efficacy and efficiency), according to the OPCS/IEG harmonized rating criteria this corresponds to an Unsatisfactory rating\. Risk to Development Significant Significant Outcome: Bank Performance: Moderately Moderately Unsatisfactory Unsatisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR: Satisfactory NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: Four of the ICR lessons modified by IEG are reported below: MPA management is a long term process contingent on continued funding\. Prospects for one or more follow-on operations, financed by the Bank and/or other donors should be assessed prior to creation of MPAs, as it is unlikely that this process can be finalized within the usual 5-year time framework of the Bank Projects\. In high risk environments like Guinea the stability of Bank and Borrower core teams is important\. The use of Skype or other communication technologies can facilitate timely trouble shooting by ensuring frequent communication between the two teams\. Multi-dimensional and multi sectoral projects require implementation through multiple institutions and need an integrated approach to institutional strengthening that goes beyond short term consultancies and separate studies\. The clear definition of outcome indicators with base line data is a critical part of project preparation and if revisions to indicators are needed attention should be paid to ensuring that the revised indicators are sufficiently outcome oriented\. Outcome indicators should be relevant, simple and measurable\. If no baseline data is available for any chosen indicator, it should be either dropped or replaced with another plausible indicator that could measure the achievement of the DO\. When revising key performance that are difficult to measure it is important that the new indicators measure results at the outcome level, otherwise they will be insufficient for demonstrating satisfactory achievement of the project objectives\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR describes the implementation of the project clearly\. Its extensive report of project investments gives the reader a good idea of project activities and problems faced\. The section on lessons learnt is evidence based and comprehensive\. Stakeholders are well defined and the draft endorses their participation in various segments of the project cycle\. The quality of the ICR falls short in the following areas: The safeguards section does not mention measures taken to comply with the Bank policy on Natural habitats (OP 4\.04)\. The ICR does not provides details on the original component that was excluded during restructuring and on what grounds it was excluded or how the five original components were compromised to develop the four restructured components\. The costs by component in Annex 1 do not reflect the full costs of each component, it only reflects the cost financed by GEF\. The ICR does not use the correct rating score in assessing the achievement of objectives\. Its uses a six point rating scale, whereas OPCS/IEG harmonized guidelines call for a four point rating scale\. The split rating methodology has not been applied to all appropriate sections\. The ICR does not assess the relevance of the original and revised objectives separately\. Instead there is one combined discussion of relevance\. a\.Quality of ICR Rating : Satisfactory	REVIEW
P110845	ï»¿ ICRR 14510 Report Number : ICRR14510 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 10/28/2014 Country : Albania Project ID : P110845 Appraisal Actual Project Name : Disaster Risk US$M ): Project Costs (US$M): 10\.17 10\.52 Mitigation And Adaptation Project L/C Number : C4460; L7563 Loan/ US$M): Loan /Credit (US$M): 9\.16 8\.35 Sector Board : Urban Development Cofinancing (US$M): US$M ): 0 0\.64 Cofinanciers : Global Facility for Board Approval Date : 06/19/2008 Disaster Reduction Closing Date : 02/28/2012 06/30/2013 and Recovery (GFDRR) Sector (s): Flood protection (43%); Central government administration (35%); Non-compulsory pensions and insurance (22%) Theme (s): Natural disaster management (67% - P); Social risk mitigation (33% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Gianni Zanini Robert Mark Lacey Christopher David IEGPS1 Nelson 2\. Project Objectives and Components: a\. Objectives: The Albania Disaster Risk Mitigation and Adaptation Project (AL-DRMAP) was to be the first of two APL projects for Albania programmed for three years, as well as the first project within the framework of the broader regional South East Europe Disaster Risk Mitigation and Adaptation Program (SEE-DRMAP)\. According to the PAD, the objective of the regional program was to reduce vulnerability to disasters, by supporting the development and financing of country specific strategies addressing disaster preparedness, disaster risk insurance and hedging instruments, disaster risk mitigation and adaptation, and contingency financing in case of disasters \. The Albania programâs overall objective was (a) to reduce Albania's vulnerability to natural and man -made hazards and (b) to limit human, economic, and financial losses due to disasters \. The initial phase of the program was designed as a technical assistance project (the AL-DRMAP) to consolidate and upgrade Albania âs capacity to plan for, mitigate and respond to disasters \. The second phase was envisaged as a large investment project (about US$40 million) to strengthen mitigation measures, disaster risk management and emergency response capacities \. According to the AL-DRMAPâs Project Appraisal Document (PAD) and Financing Agreement (FA), the first phase projectâs (the AL-DRMAPâs) development objective (PDO) was to strengthen the country âs institutional capacities toward the broader programâs objectives (a) and (b) mentioned above\. A management-approved (level 2) restructuring in January 2012 made some modifications to the key associated outcome targets, but did not change the PDO \. The revisions in the key associated outcome targets are not such as to warrant a split evaluation: Original targets (FA, pp\. 5-6 and PAD, pp\. 6-8) 1\. Strengthened disaster risk mitigation planning and emergency management, and enhanced emergency response capacity, including through the âdevelopmentâ? of a national risk management strategy and investment program, to reduce vulnerability and limit losses from disasters; 2\. Strengthened hydro-meteorological services resulting in accurate forecasts, to reduce vulnerability and limit losses from floods and extreme weather events, and also to help business planning; 3\. Improved building codes, both to reduce vulnerability and limit losses from seismic activities; and 4\. Provision of access to catastrophic risk insurance, to limit financial losses \. Revised targets (ICR, page 4): A\. Disaster Risk Mitigation Strategy and Investment Program developed [same as PAD p\. 7]; B\.Newly produced hydrometeorological products meet WMO standards [same as PAD p\. 7]; C\. Revisions to building codes bringing them to EU standards are ready for adoption [consistent with PAD p\.7]; and D\. Catastrophic risk insurance is available to businesses, households and governments [consistent with PAD p\. 6 and p\. 8] b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: The project had five main components, each with a number of specific activities listed below (with status after the January 2012 restructuring noted in brackets )\. Component costs were denominated in euros \. 1\. Disaster Risk Management and Preparedness (appraisal cost: â¬2\.90 million or US$4\.53 million; actual: â¬4\.04 million or US$5,26 million)\. The component objective was to support capacity building for emergency response mechanism through provision of necessary equipment, and strengthening disaster risk mitigation planning \. Specific activities were: a\. Strengthening disaster risk mitigation planning and emergency management i\. Review and update the emergency response legislative framework (update deferred) ii\. Develop national disaster risk management strategy and investment program iii\. Prepare and implement a public awareness and education program (dropped) b\. Enhancement of emergency response capacity i\. Procure emergency response equipment ii\. Strengthen existing emergency operations center iii\. Prepare feasibility studies for establishment of an emergency communications system iv\. Develop emergency response procedures (dropped) v\. Prepare and implement exercises and training for first responders (dropped) vi\. Procurement of fifty boats with motors for the first responder teams in order to cope with the heavy floods in Shkodra Region in December 2010 (added) 2\. Strengthening of Hydro -meteorological Services (appraisal cost: â¬1\.24 million or US$1\.87 million; actual: â¬0\.90 million or US$1\.17 million)\. The component objective was that disaster risk managers (including households, farmers, and forest managers) receive more-timely, more-accurate hydro-meteorological forecasts and services and consequently undertake more -beneficial preparatory measures to limit weather risks \. Specific activities were: a\. Increasing accessibility of data b\. Upgrading the monitoring network c\. Developing capacity to prepare forecast products tailored to disaster management 3\. Development of Building Codes (appraisal cost: â¬0\.22 million or US$1\.34 million; actual: â¬0\.17 million or US$0\.22 million)\. The componentâs objective was to reduce hazard risks through development of improved building codes and mechanisms for introduction of improved standards \. Specific activities were: a\. Building Code Development b\. Licensing of Engineers (dropped) c\. Training of Engineers 4\. Catastrophe Insurance \. (appraisal cost: â¬1\.60 million or US$ 2\.50 million; actual â¬1\.73 million or US$2\.25 million)\. The main objective of the component was to make catastrophe insurance available to Albanian households and small and medium enterprises (SME) through the establishment of the SEE Catastrophic Risk Insurance Facility (CRIF), of which Albania became a shareholder and member \. Specific activities were: a\. Securing Albaniaâs membership in the SEE CRIF and paying its membership contribution b\. Establishing the presence of the CRIF in the Albanian insurance market, including via the enactment of laws and regulations conducive to its operation and via a public education and awareness campaign \. 5\. Project Management, Contingency and Other (appraisal cost: â¬0\.61 million or US$0\.95 million; actual: â¬0\.73 million or US$0\.95 million)\. The component was to finance some of the project management costs, such as the procurement and financial management consultants, the monitoring and evaluation activities, communication expenses, reporting and audits \. As part of the response to a major flood events which occurred in December 2010, the World agreed to conduct a study with Global Facility for Disaster Reduction and Recovery (GFDRR) funding in order to assist the Government of Albania to prepare a comprehensive flood risk assessment and management plan for the Lower Drini-Buna Basin, including options for flood risk mitigation measures \. The study cost â¬0\.46 million (US$0\.60 million equivalent)\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: 1\. Project Cost\. The total project cost at appraisal (including contingencies and the front -end fee) was â¬6\.54 million or US$9\.16 million, while the total actual project costs were â¬7\.56 million or US$9\.84 million at the exchange rate as of 06/30/2013 (closing date)\. The increased project cost is not explained in the ICR, but expenses on Component 1 were 39 percent higher than envisaged \. A likely explanation is the (unidentified in the ICR) cost of the added activity of procuring 50 boats with motors for first responders, which must have been larger than the savings from the dropped activities\. Components 2 and 3 were slightly below, and Component 4 slightly above, their appraisal costs \. In Component 5, actual management costs were double the amount envisaged, but overall the contingency allocations roughly offset the added cost of the Lower Drini -Buna Basin study\. Exchange rate fluctuations explain the lower US dollar actual cost\. 2\. Financing\. The project was expected at appraisal to be funded by an IDA credit for the first three components (â¬3\.94 million or US$ 6\.16 million) and by an IBRD loan for the fourth component (â¬1\.94 or US$3\.0 million)\. The actual contribution by IDA was â¬4\.05 million or US$ 5\.27 million and by the IBRD â¬1\.95 million or US$2\.54\. The GFDRR added a contribution of â¬0\.46 million or US$ 0\.6 during implementation\. There were no other external sources of finance\. 3\. Borrower Contribution \. The Borrower contributed â¬1\.09 million (US$1\.42 million equivalent) compared to â¬0\.67 million (US$1\.05 million equivalent) envisaged at appraisal\. No explanation was given in the ICR for this change \. 4\. Dates\. There were two extensions to the closing date \. The first, of 12 months to February 28, 2013, was as part of the January 2012 restructuring and was because the completion of initiated activities was expected to go beyond the original closing date of February, 2012\. The second, of four months to June 30, 2013, was granted in December, 2012, since a number of critical activities (notably the emergency response equipment, development of the insurance products, and development of a national disaster risk management strategy and investment plan ) were not going to be completed by February 28, 2013\. The total implementation period was, therefore, five years, that is, 16 months (27%) longer than anticipated at appraisal \. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: High\. High \. The projectâs objectives are explicitly listed under a key pillar in the World Bank Group âs Country Partnership for Albania for the Fiscal Years 2011-2014\. Reducing Albaniaâs high vulnerability to climate change and to natural and man-made disasters was one of the three strategic priorities of the CPS \. It was also a goal of the CAS Progress Report of 2008\. Improved disaster risk management is also central to the Government âs strategy\. Following the demilitarization of the emergency response function, the Government had initiated changes in the institutional set -up and planning process for disaster risk management, but it recognized that its organizational and technical capacities remained low\. According to a 2005 World Bank global study, 86\.4 percent of Albaniaâs land, 88\.6 percent of its population, and 88\.5 percent of its GDP were at risk from two or more hazards, \. And a 2006 IEG evaluation of disaster assistance by the Bank recommended more emphasis on preventive risk mitigation and on risk insurance mechanisms, rather than traditional emergency response assistance \. However, South East Europe, and Albania in particular, was characterized by low organizational and technical capability to respond effectively to emergencies, weak capacity to forecast weather, lack of a strategy and public investment plan to address its high vulnerabilities, and lack of catastrophe insurance\. To begin addressing these hazards, the World Bank in the late 2000s worked together with the United Nations International Strategy for Disaster Reduction and multiple donors and partners to establish a Global Facility for Disaster Reduction and Recovery (GFDRR) and to develop a regional program (SEE-DRMAP)\. b\. Relevance of Design: Substantial \. There are two dimensions to the AL-DRMAP projectâs APL-type design\. One is the projectâs focus on first building capacity and ensuring the enabling policy and regulatory framework (e\.g\. a risk mitigation strategy and priority investment plan, new building codes, etc\.) with modest funding (Phase I of the APL), as a prerequisite for a Catastrophe Risk Deferred Drawdown Option (CAT DDO, a separate contingent financing facility in case of emergency needs) and for bigger investment projects (Phase II of the APL and beyond, to improve the disaster risk mitigation physical infrastructure and emergency response equipment)\. The APL approach was appropriate given the time required to accomplish necessary institution and capacity building \. The second dimension relates to the relevance of the project âs design (components, activities) to its objectives\. All components had a clear statement of objectives, which if achieved would indeed contribute substantively to the PDO \. The specific activities to be funded under each component were all relevant, tailored to the country âs conditions, and convincingly linked to the components â objectives\. While the ICR does not discuss how the project addressed the equally important issue of the overlapping responsibilities of the many civilian and military agencies involved in primary weather data gathering and forecasting (IGEWE, Air Force Command Weather Forecast Service, National Air Traffic Agency, Harbor Masters under the Ministry of Public Works,Transport and Telecommunications, the Ministry of Agriculture, and KESH, the forest fire agency in the Ministry of the Environment; see PAD p \. 22), this was subsequently clarified by the project team \. Two memoranda of understanding dealing with coordination and data sharing were under discussion at the time of project appraisal, and were subsequently agreed before project effectiveness between IGEWE and the other two key agencies involved\. 4\. Achievement of Objectives (Efficacy): The projectâs development objective (PDO) was to strengthen Albania âs institutional capacities to a ) reduce its vulnerability to natural and man -made hazards and (b) limit its human, economic, and financial losses due to disasters \. Efficacy will be assessed on the basis of the available evidence on the achievement of the key four associated project outcomes identified in the FA and in the PAD that addressed the key institutional weaknesses targeted by the projectâs activities\. 1\. Strengthened disaster risk mitigation planning and emergency management, and enhanced emergency response capacity \. Modest \. Outputs The following outputs from the project were relevant to the achievement of this intended outcome : (i) a Disaster Risk Management Strategy and Investment Plan was drafted and is being reviewed by the new government; (ii) the emergency response legislative framework was reviewed as part of drafting the strategy and investment plan; (iii) all emergency response equipment was provided to the respective response units; (iv) the National Operation Centre was strengthened through new Information Technology (IT) hardware equipment and office furniture; and (v) a feasibility study for an Integrated Emergency Call System 112 was completed and the Government is now looking for financial support from different donors to establish a modern 112 emergency communication system in accordance with European standards\. Outcomes While there is some evidence of strengthened emergency response capacity and management thanks to the equipment provided under the project (motorboats and IT-related items), insufficient evidence is available of strengthened risk mitigation planning \. In terms of actual results on the ground, outputs (iii) and (iv) contributed to enhancing the former\. The key (revised) outcome indicator was the âdevelopmentâ? of a disaster risk mitigation strategy and investment program, which was indeed met \. While these and the other outputs are necessary steps towards enhancing the government âs institutional capabilities for mitigation planning and emergency management, however, they nevertheless fall short of having enhanced such capabilities in reality \. The new Government (in office since June 2013) has not yet adopted the new draft strategy, the investment plan or the emergency legislative framework\. Furthermore, only preliminary steps have been taken towards establishing a modern 112 emergency communications system\. 2\. Strengthened hydro -meteorological services resulting in accurate forecasts \. Modest \. Outputs Various project outputs were intended to contribute to the achievement of this outcome : (i) accessibility, sharing and quality of historical and real-time data was improved (meeting WMO standards as of March 2014); (ii) the monitoring network was upgraded (including with 40 new monitoring stations installed and the old ones refurbished ); and (iii) capacity was developed to prepare forecast products tailored to disaster management (with 3-day and 7-day bulletins being published)\. Outcomes No evidence is presented in the ICR to show that the accuracy of forecasting has improved \. According to the PAD, there was to have been a user -assessment survey, the results of which would have provided some evidence of enhanced service quality \. However, the ICR (page 16) reports that Component 2 (of which the survey would have been a part) did not start effectively until after the mid -term review in December, 2010\. The survey was dropped at the January 2012 restructuring\. There are indications that adequate staffing and operational budget on a continuous basis for IGEWEâs weather forecasts and disaster alerts have still to be secured \. 3\. Building codes improved to reduce risks from seismic activities \. Modest \. Outputs New codes in line with European Union standards were prepared and widely disseminated \. Local engineers and architects were trained\. Outcomes The new codes have not yet been legally adopted \. Prior to legal adoption, other Eurocodes need to be updated, an exercise which has to be coordinated with both national and European Commission institutions \. Until the new codes are adopted, the status of actual building standards in Albania has not improved and neither have the risks from seismic activities been reduced \. 4\. Provision of access to catastrophic risk insurance (to limit financial losses to households, businesses and government )\. Substantial \. Outputs Supported by the project, Albania has become a founding member and part owner of Europa Re, a reinsurance company licensed and operational in Switzerland and created under the SEE -CRIF\. The catastrophic risk insurance infrastructure and regulatory framework is in place and about half of the existing private insurance companies in Albania already registered with the Europa Re \. Outcomes When the ICR was completed, no policies had yet been sold to the public \. However, according to the project team, such policies have become available since the end of March 2014\. Moreover, a public awareness and education campaign, which was dropped at the January 2012 restructuring, has since been developed and is ready to be rolled out\. As of early September, 2014, two insurance companies had already sold policies to individuals and two more are ready to sell their products; all four have deposited their promotion packages for approval with the Financial Supervisory Authority\. They were planning to launch their products in mid -September, 2014, through media, billboards, etc\., in Tirana and other cities of Albania \. The project outputs discussed above also contribute to the APL program âs objectives of (a) reducing the countryâs vulnerability to natural and man-made hazards and (b) limiting its human, economic, and financial losses due to disasters\. However, two of the three triggers for the APL -second phase were not achieved by the project âs (extended) closing date (June 2013) and indeed had not been achieved by September 2014: (i) a Disaster Risk Mitigation Strategy and Investment Plan acceptable to the Bank and approved by the Government; and (ii) implementation of an institutional arrangement with clearly defined roles and responsibilities that facilitate coordination of the three public agencies officially involved in weather monitoring tasks \. The ICR is not clear on whether the third trigger has been achieved, that is, (iii) effective publication on a public website of data gathered with the support of project financing, including digitized climate data \. 5\. Efficiency: The PAD (Annex 9) provided a list of key damages by type of disaster, with quantitative estimates of past financial costs for some of these damages \. It also listed in qualitative terms the key benefits expected from damages to be mitigated or avoided thanks to the project \. However, it provided a quantitative analysis of costs and benefits only for the hydro-meteorological component, concluding that this project âs component was going to be economically viable, with an ERR higher than 12 percent\. No ERR estimate for the entire project, however, was attempted \. The ICR instead estimates ERR ranges for the entire project, according to two distinct methodologies \. Both such methodologies took into account the benefits expected solely from improved weather forecasts (Component 2) but the costs of the entire project (thus, not only the actual costs of Component 2)\. The first methodology is based on applying a global benchmark of GDP benefits estimated for a number of developing countries and yields a range of 34-120 percent for the projectâs ERR\. The second methodology is based on sector -specific estimates by national experts of the potential losses being mitigated for the Albanian economy and yields a project âs ERR of 20-37 percent\. Most of the underlying assumptions used in the ERR estimation at appraisal and at completion appear reasonable, but the high ERR estimates depend crucially on the availability of quality and accurate forecasts \. While there is evidence presented in the ICR of more frequency of weather forecasts, no evidence is available to gauge their improved quality and accuracy \. This lack of evidence was the basis for the âmodestâ? efficacy rating of the second key associated outcome (âStrengthened hydro-meteorological services resulting in accurate forecasts â?) in Section 4 above\. There were also a number of administrative and operational inefficiencies \. The effectiveness deadline was extended four times (the project finally became effective in November, 2009, nearly 18 months after Board approval)\. The project experienced significant delays in the initial years of implementation due mainly to the lack of effective institutional arrangements and a low level of readiness, Although the mid -term review, held in December 2010, had identified both the need for, and content of, a restructuring, the latter was not finally achieved until over a year later, in January, 2012\. There were delays in obtaining a formal request from the Government for the restructuring and then in getting the restructuring agreement signed (see Section 9a below), partly due to what the ICR (page 9) describes as âthe ambiguity of the effectiveness of the modifications, and particularly, in the reallocation of the Loan and Credit proceeds\.â? These delays and the need for enhanced supervision during the last three years of the project â s life contributed to a doubling of the project âs management costs (â¬0\.25 million compared to â¬0\.12 million at appraisal)\. Efficiency is rated modest \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate Yes 20% 100% * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Relevance of objectives is rated high and that of design substantial \. Efficacy of one out of four objectives is rated substantial, while the other three are assessed as modest \. There is little evidence of strengthened risk mitigation planning and improved weather forecasting, while the new building codes are yet to be legally adopted \. The triggers that would have unlocked both a Catastrophe Risk Deferred Drawdown Option (CAT-DDO) and a larger investment project under the APL-second phase were not achieved \. Efficiency is rated modest due mainly to lack of evidence for a crucial assumption underpinning the estimated ERRs \. Consequently, overall outcome is assessed as moderately unsatisfactory \. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: Due to the overall weak institutional environment and the numerous follow -up operational actions still required for long-term sustainability of the project âs outcomes, the risk to development outcome is deemed significant \. The most critical among such actions are : (i) finalizing and adopting the disaster risk strategy and investment plan; (ii) securing adequate staffing and operational budget on a continuous basis for IGEWE âs weather forecasts and disaster alerts; and (iii) adopting the improved building codes \. The new Government elected in June 2013, in its comments to the ICR, assured the Bank of its commitment to providing the necessary budgetary support to IGEWE and to reviewing the draft disaster risk strategy and investment plan\. However, it did not say that such a reviewed strategy and plan would be adopted, nor did it mention the need to adopt into law the improved building codes and in general to working towards fulfilling all the conditions necessary for an adequate disaster risk mitigation policy that the Bank could support through a larger investment credit \. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: a\. Quality at entry: The structure of the project and the content of its components incorporated to a large extent the lessons and recommendations from global and regional experience and various regional studies, and especially (i) focus on ex-ante disaster risk reduction measures; importance of (ii) integrated, comprehensive multi-hazard disaster risk reduction approach; (iii) regional cooperation; (iv) dissemination of high-quality weather forecasts; and phasing of large investments after a consistent policy framework is in place, institutional capacity has been strengthened, and there is evidence of adequate budget provisions for operations and maintenance Moreover, these were well tailored to the country-specific weaknesses and constraints and were well aligned with the PDO \. Three main risks were correctly identified at appraisal : weak institutional capacity and governance, limited cooperation and coordination among government agencies, and lack of regional participation in SEE -CRIF\. But the Bank underestimated all three and /or it overestimated the effectiveness of the mitigating measures that it included in the project and that it believed brought the risks down to a âmoderateâ? level\. These risks in fact were at the root of the subsequent delays in project effectiveness and implementation M&E design was adequate, though in some cases some indicators were overly ambitious (see Section 10a below)\. No safeguard policies were triggered and adequate provision with fiduciary compliance was made \. There were, however, significant shortcomings in Quality at Entry \. Design omitted to address the issue of institutional reform of the main weather -forecasting agency (IGEWE)\. At Board approval, the project was not ready for implementation\. Implementation arrangements were not in place, and critical project preparation activities were not carried out before Board approval, thus contributing to major implementation delays during the first three years of the project \. For example , the terms of reference for key studies and consultancy services had not been developed;, and the technical specifications for main procurement items (including emergency equipment had not been prepared \. Neither a national project management team, nor a national high -level supervisory or advisory body, nor terms of reference for key studies and consultancy services, nor technical specification for goods to be procured were in place at the time of Board approval \. Moreover, the PAD did not mention the role of other aid partners involved in disaster risk management in Albania \. The ICR and the Borrowerâs comments are, however, clear on the critical role that such partners played in ensuring the achievements of some of the original objectives, when the Bank only -funded project ran into major implementation difficulties\. at -Entry Rating : Quality -at- Moderately Unsatisfactory b\. Quality of supervision: For the first three years, the project suffered major implementation delays, beginning with lapses of 12 months between Board approval and effectiveness for the IDA credit and of nearly 18 months for the IBRD component\. During this period, Bank supervision made little headway in assisting the Borrower and the implementing agencies to overcome their lack of coordination and the confusion and challenges posed by the project âs new and unfamiliar approach to disaster risk mitigation (as noted in the Borrowerâs comments to the ICR)\. In 2009 and 2010 supervision mission were infrequent \. A mid-term review (MTR) in December 2010 took place after two and a half years at a time when only a single activity had effectively started (membership fee in the regional SEE-CRIF), disbursements were very low, and both Implementation Progress (IP) and progress towards meeting Development Objectives (DO) were rated fully or moderately unsatisfactory in supervision reports \. The MTR recommended a reallocation of funds between categories and a downward revision of the indicators â target values, though not of its development objectives and key associated outcome targets \. There were further delays in obtaining a formal request from the Government for the restructuring and then in getting the restructuring agreement signed (see Section 9a below), partly due to ambiguities of the agreed modifications and of the reallocations of project âs funds\. While the main responsibility for these delays rests with the Government, it may be asked whether the Bank proposed clear wording for the agreed modifications and reallocations and whether they provided sufficient assistance or were proactive enough in encouraging the Authorities to act more quickly \. It is only after September 2012 that implementation picked up, its IP rating was upgraded to moderately satisfactory (November 2012), and that Bank supervision improved \. Bank supervision played a role in supporting this improvement\. The Bank supervision team lacked a public sector management specialist who could help address the problems noted elsewhere of poor coordination and unclear division of responsibilities among agencies and other staffing and budgeting issues\. Quality of Supervision Rating : Moderately Unsatisfactory Overall Bank Performance Rating : Moderately Unsatisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Although the Government was committed to the broad objectives of the SEE -DRMAP, its implementation performance prior to the restructuring had significant shortcomings \. The Government caused serious delays in making the restructuring effective, and by not appointing an implementation team in a timely manner \. More delays followed because the Government âs senior officials did not learn as quickly as anticipated about the new approach to risk and to loss mitigation, to which the Government had nevertheless agreed \. After the restructuring had been agreed at the Mid-term Review in December 2010, a year passed before it was formally requested by the Government, and then another six months for it to be countersigned \. The wording of the agreed modifications and reallocations were not fully clarified in discussions with the Bank \. By that time, it was apparent that some project activities could not be completed by the new closing date (February 28, 2013) extended as part of the restructuring\. It was therefore necessary to extend the closing date for another four months till June 30, 2013\. After the restructuring the Government moved more decisively to implement the project and achieve the revised output targets\. However, there were still significant implementation delays, and the reviewing, revising and finally adoption of the disaster risk strategy and investment plan, as well as the improved building codes, were left to a new Government that took office in June 2013\. Government Performance Rating Moderately Unsatisfactory b\. Implementing Agency Performance: There were four main implementing agencies, the Project Management Team at the General Directorate of Civil Engineering (GDCE) of the Ministry of Interior (MOI), which played a leading role in project implementation, and three other implementation teams at the Institute for Geosciences, Environment, Water and Energy (IGEWE, responsible for the hydro-meteorological component), at the Ministry of Public Works, Transport and Telecommunications (MOPWTT, responsible for the building codes component ), and the Ministry of Finance (MOF)\. The performance of each of them was characterized by delays and coordination difficulties on many occasions throughout project implementation, especially before the project restructuring \. The Catastrophic insurance component under MOF, however, suffered delays only because of problems in the establishment of a regional SEE-CRIF for which MOF had no responsibility \. Nonetheless, all the implementing agencies succeeded in carrying out many of the original activities and all the added activities (after the mid-term review in December 2010 and/or after the restructuring in January 2012) in a timely manner, thus producing the outputs discussed in Section 4 above\. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: At appraisal, a comprehensive M&E framework was designed (Annex 3 of the PAD), with specified project component outcomes consistent with the project âs overall objectives and with each component âs objectives, intermediate and final indicators consistent with the postulated outcomes, detailed target values for each indicator, adequate reporting frequency by the implementing agencies, appropriate data instruments including user surveys of the quality of weather forecasting and disaster alerts, and clear agency responsibilities for measuring and reporting values for each project indicator \. The overall responsibility for project monitoring and evaluation was vested with the PMT unit at the Ministry of the Interior \. The M&E framework was to be supported by the implementation teams in the IGEWE (for the hydro-meteorological component), MOPWT (for the building codes component ) and MOF (for the risk insurance component)\. Since little of value with respect to the outcome indicators was in place at the start of the project, as described in the project âs background section, no detailed baseline assessments were needed \. A weakness of the M&E design was its lack of attention to the issue of attribution and the role of other external co-funding partners (such as the European Union, the Italian Government, and the Swedish Aid Agency )\. At appraisal, the results indicators were concrete and outcome -focused, but also in some cases more ambitious than the PDO and key associated outcomes specified in the FA and in the main body of the PAD b\. M&E Implementation: For the first two and half years of the project, implementation was very slow and only irregular output reporting by the implementing agency was available \. The only notable disbursement was the membership contribution to the regional SEE-CRIF\. After the January 2012 restructuring, the results indicators were made both more consistent with the projectâs outcomes and more realistic with the pace of implementation \. Specifically, they were cited as the âdevelopmentâ? of draft strategies, investment plans, and building codes rather than as their formal adoption by Government\. Similarly, for the fourth component, the indicator became âavailabilityâ? of catastrophic risk insurance to the public rather than the actual sale of policies to businesses or households \. Due to the late and compressed implementation schedule of the restructured components, the Bank agreed with the Government to drop all user surveys \. Thus, for example, no quantitative data were collected as to users â satisfaction with the accuracy and timing of weather forecasts and disaster alerts \. Only outputs and qualitative indicators of achievement (such as development of a strategy and investment plan, development of building codes, availability of weather forecasts and technical quality meeting WMO standards of the hydro -meteorological real-time data, and availability of risk insurance to the public ) were closely monitored and reported on a regular basis during the last three years (mid-2011 to April-2014)\. c\. M&E Utilization: The intention was to use the information from the M&E for making any needed adjustment to the project during implementation and for helping improve the design of the expected APL second phase larger investment project in Albania as well as of similar initiatives in neighboring countries under the SEE -DRMAP framework\. None of this took place, mainly due to the project âs implementation delays and the focus in its last two years on making progress on the componentsâ activities\. Monitoring continued after project closing, as the ICR reported outcomes and specific indicators on all components as of March-April 2014\. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: No safeguards policies were triggered by this Category C operation \. âHowever, as a matter of due diligence, it was decided that the disaster risk mitigation strategy to be developed under the project would identify whether future displacement/resettlement would be likely to be called for, and if so, should indicate the actions needed to carry this out in compliance with the requirements of OP 4\.12â? (ICR, page 10)\. b\. Fiduciary Compliance: Procurement \. The ICR (page 10) reports that, other than delays stemming from weak capacity in the Project Management Team and the need to select members of the Bid Evaluation Committee from various Ministries, there were no issues with procurement \. A post review was conducted jointly with financial management staff and its results were recorded in a post-review report\. There were no reported cases of misprocurement \. Financial Management\. According to the ICR (page 11), âdisbursement and financial management arrangements were adequate including project accounting and reporting arrangements, internal control procedures, planning and budgeting, and audit\.â? Financial management was rated âsatisfactoryâ? throughout in supervision reports \. The ICR does not state whether or not external auditors â opinions were qualified\. c\. Unintended Impacts (positive or negative): None d\. Other: 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Relevance of objectives is rated high Satisfactory Unsatisfactory and that of design substantial \. Efficacy of one out of four objectives is rated substantial, while the other three are assessed as modest\. There is little concrete evidence in the ICR of strengthened risk management planning and improved weather forecasting, while the new building codes are yet to be legally adopted \. The triggers that would have unlocked both a CAT-DDO and a larger investment project under the APL-second phase were not achieved \. Efficiency is rated modest due to significant operational and administrative inefficiencies\. Risk to Development Significant Significant Outcome : Bank Performance : Moderately Moderately There were significant shortcomings in Satisfactory Unsatisfactory Quality at Entry, including an important omission in project design and the lack of project readiness at Board approval \. There were also significant shortcomings in the Quality of Supervision, including the need for greater pro-activity in assisting the Borrower to meet the challenges of the project's new approach (for Albania) to disaster risk management, and of coordination of the several agencies involved\. The Bank supervision team lacked a public sector management specialist\. Borrower Performance : Moderately Moderately There were significant shortcomings in Satisfactory Unsatisfactory Government performance, including serious delays in meeting effectiveness conditions and in approving and countersigning the restructuring \. Because Implementing Agency performance is rated moderately satisfactory, the overall rating for Borrower performance is determined by the Outcome assessment in accordance with the Joint IEG/OCPS Harmonization Criteria\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The following three lessons have been selected from those presented in the ICR, with some adaptation of language, as being of particular importance : If a project is presented to the Board for approval before it is ready for implementation, significant delays are likely to result \. In this case, the lack of adequate implementation arrangements, technical specifications and terms of reference for key studies and consultancy services were not in place at the time of Board approval\. Such shortcomings have a particularly negative impact when approaches new to the country are introduced, requiring considerable education and buy -in from government officials and other key stakeholders \. Dealing with a large number of government ministries and agencies, each with the ability to act autonomously, can lead to serious coordination problems and consequent implementation delays \. Such was the case here\. Even if all agencies are on board with respect to the project âs objectives and the activities agreed for their specific component, minor departures from established bureaucratic procedures can still cause major delays\. The design of the implementation arrangements led to a demand for strong coordination that proved beyond the capacity of the Borrower \. A cautious approach at the beginning of a potentially large and complex program can reduce the risk of failure, while allowing progress at the Borrower âs chosen pace towards meeting the conditions necessary for larger -scale support in the form of either investment projects or Development Policy Loans \. In this case, the project, which was the initial one supporting the program, focused on needed capacity building and reforms to the policy and legal framework \. An APL can be an appropriate tool for such an approach \. IEG adds the following two lessons : Lack of consistency among key indicator targets presented in the different project documents can make the task of both the implementation and evaluation teams more difficult \. In this case, there was inconsistency concerning the key outcome targets between the Financing Agreement and the PAD, and even within the PAD itself (with stronger targets contained in an Annex than those in the main text )\. The ICR was consequently confused as to whether the January 2012 restructuring had brought about a significant change in the key outcome targets or not \. Where other external partners play an important role in ensuring the achievement of at least some of the project âs objectives, it is important that this role be fully discussed in the appraisal documents and its implications for attribution considered in the ICR \. In this case, the PAD does not assess the role of other partners â such as the Italian Civil Protection, the UN International Strategy for Disaster Reduction and World Meteorological Organization -- involved in disaster risk management in Albania \. The ICR fully acknowledges their role, especially in helping to sustain the implementation of the DRMAP when the Bank project ran into difficulties\. However, the attribution dimension would have benefited from a fuller discussion \. 14\. Assessment Recommended? Yes No Why? Given the significant risk for the sustainability of the project's benefits and the many follow -actions expected, it would be useful to verify whether there is further concrete evidence concerning the intended outcomes of both the project and wider program\. This would be appropriately achieved through a combined assessment with the APL-Phase II project, should the latter come to fruition \. 15\. Comments on Quality of ICR: The ICR is well organized, providing quality analysis, addressing all aspects of project performance, frank in discussing quality at entry and implementation delays, and internally consistent \. Moreover, both in the main report and in the M&E annex, project outputs and outcomes (where available) are clearly listed\. There are some shortcomings\. The analysis of achievement of results is based to a large extent on a set of indicators which go beyond the achievement of key associated outcomes and are not, in fact, consistent with the intended outcomes as set out in the development objectives sections in the Financing Agreement and the main body of the PAD \. There is no discussion of external project audits \. The cost and financing tables in Annex 1 are presented in euros rather than US dollar equivalents\. a\.Quality of ICR Rating : Satisfactory	REVIEW
P083929	IEG Report Number: ICRR14661 ICR Review Independent Evaluation Group 1\. Project Data: Date Posted: 06/02/2015 Country: Pakistan Project ID: P083929 Appraisal Actual Project Name: Punjab Municipal Project Costs (US$M): 59\.00 54\.59 Services Improvement Project (pmsip) L/C Number: L7380 Loan/Credit (US$M): 50\.00 48\.85 Sector Board: Water Cofinancing (US$M): Cofinanciers: Board Approval Date : 06/01/2006 Closing Date: Sector(s): Water supply (40%); Solid waste management (20%); Roads and highways (20%); Sub-national government administration (10%); Sewerage (10%) Theme(s): Other urban development (33% - P); Urban services and housing for the poor (33% - P); Municipal governance and institution building (17% - S); Municipal finance (17% - S) Prepared by: Reviewed by: ICR Review Group: Coordinator: Robert Mark Lacey Christopher David Christopher David IEGPS1 Nelson Nelson 2\. Project Objectives and Components: a\. Objectives: According to the Loan Agreement (Schedule 2), âthe objective of the Project is to improve the delivery and effectiveness of urban services in Punjab\.â According to the Project Appraisal Document (PAD, page 11), âthe objective of the project is to improve the viability and effectiveness of urban services provided by the participating TMAs, and to make such improvements sustainable and replicable in other TMAs through the creation of a performance-based management framework at both TMA and provincial levels\.â This Review is based on the statement of objectives in the Loan Agreement\. The key associated outcome targets are: Improved effectiveness and financial and technical viability of urban services provided by participating TMAs\. Rising levels of satisfaction among key stakeholder groups with respect to services targeted under the project and improvement in selected service delivery indicators\. Government of Punjabâs improved capacity to monitor TMA performance\. Government of Punjabâs improved capacity to manage cultural heritage assets\. Tehsil Municipal Authorities\. A Tehsil is an administrative division of India, Pakistan and some historical states of South Asia\. It is an area of land with a city or town that serves as its administrative center, with possible additional towns, and usually a number of villages\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: The appraisal estimates of the cost of each component are derived from the PAD (page 14)\. The ICR does not contain complete information about actual costs by component\. There are component costs expressed in Pakistan rupees (ICR, Annex 1, table (c)), but the total of these when converted into US dollars at the exchange rate provided is considerably less than the total project cost in US dollars (Annex 1, Table (a))\. Component 1: Grants to TMAs: appraisal estimate US$48\.7 million (of which US$3\.2 million for capacity grants and US$45\.5 for development grants)\. Capacity Grants would finance needed improvements in TMAsâ systems and business procedures in the areas of urban planning, financial management (including budget management), investment planning for service delivery, and operation and maintenance\. Development Grants would finance infrastructure investments (âsub-projectsâ) in the TMAs\. Initial selection of TMAs for the grants would be based on: a) ratio of own source revenue to total recurrent revenue; and b) ratio of development funds expenditure to total development funds available (as a gauge of implementation capacity)\. Subsequent selection would be subject to the TMAâs achieving the performance targets specified in previous grant awards, and producing a list of prioritized projects through a comprehensive planning process\. Component 2: Support For Other Institutions : appraisal estimate: US$10\.2 million\. This component was to assist the Government of Punjab through (i) capacity building of the Local Government and Rural Development Department (the parent Department of all local governments in the Province); (ii) enhancing the capacity of the newly established Urban Unit in the Planning and Development Department (the Unit is mandated with providing technical assistance to the Planning and Development Department on all matters relating to the urban sector); and (iii) supporting the operations of the Punjab Municipal Development Company (PMDFC) through the provision of consultancy services (PMDFC was established in 1998, under a previous Bank project, as an independent, government-sponsored, non-profit company\. There is no information on the companyâs overall mission\. The Government of Punjab delegated the day-to-day implementation of the project to the Company)\. A level 2 restructuring became effective in August, 2010\. It (a) i) scaled up the Capacity Grants sub-component to 105 TMAs from 37; (b) ii) strengthening the management of infrastructure investments under the Performance Grants sub-component; and (c) addition of Intermediate outcome indicators to the results framework\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost\. According to the PAD (page 14), the total cost estimated at appraisal was US$59\.0 million, including a front end fee of US$0\.1 million\. This is given as US$50 million in Annex 1, table (a), of the ICR, but this figure refers only to the activities financed by the Bank loan\. Total actual costs must be derived from the financing table (b), which shows total financing required as US$54\.59 million (of which US$48\.85 million came from the IBRD Loan and US$5\.74 million from the Borrower\. Financing\. According to the ICR (Annex 1, table (b)), US$48\.85 million of the IBRD Loan of US$50 million was disbursed\. No information is provided in the ICR on the undisbursed balance of US$1\.15 million; the project team subsequently informed IEG that it was canceled\. There were no other external sources of financing\. Borrower Contribution \. This consisted of the TMAsâ 15% up-front contribution to the sub-projects financed by the development grants\. The ICR reports the actual total as US$5\.74 million, 64\.5% of the amount estimated at appraisal\. However, the ICR also states that nine TMAs provided land in lieu of this contribution, mainly for landfill sites\. Dates\. As part of the August 2010 level 2 restructuring, the loan closing date was extended by twenty three months from December 31, 2010 to November 30, 2012 to enable Institutional Development activities to be implemented over a larger universe of TMAs (the number of participating TMAs was increased from 37 to 105)\. In November 2012, the closing date was extended for a further 12 months to November 30 2013, "primarily to ensure that the institutional reforms introduced in TMAs were embedded in their systems, particularly in the TMAs which became partners since late 2010" (ICR, page 4)\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Substantial\. The projectâs objectives are relevant to the World Bank Groupâs Country Partnership Strategy (CPS) for Pakistan for the Fiscal Years (FY) 2010-2014\. Under Pillar 3 of the CPS, âImproving Infrastructure to Support Growth,â a new and stronger emphasis on improving urban infrastructure services became apparent\. The project under review is specifically mentioned in the CPS as part of the Bankâs efforts to support institutional strengthening for improved municipal service delivery\. These efforts are relatively recent in origin, and the FY2006-2009 Country Assistance Strategy is the first for some time to include urban infrastructure improvements in the Bankâs repertoire in Pakistan\. Interventions were geographically restricted to cities in Punjab Province and the focus was on âstrengthening management practices, not actual improvements in servicesâ (IEG Completion Report for the FY2010-2014 CPS)\. The project documents contain little reference to Pakistan Government strategy for the urban sector\. However, the PAD states that opportunities for Bank reengagement in the sector emerged as a result of the priority given to devolution reforms and the delivery of services at the local level\. b\. Relevance of Design: Substantial\. The statement of objectives is clear\. The activities incorporated in project design were relevant to achieving the objectives\. Enhancing the delivery and effectiveness of urban services was to be attained through improving the management capacity in both TMAs and in the provincial government\. The project was conceived as an incentive fund for TMAs willing to improve their performance\. To this end, the project would (i) finance consultancies technical assistance and training to strengthen TMAsâ systems and business procedures in the areas of urban planning, financial management (including budget management), investment planning for service delivery, and operation and maintenance, as well as the capacity to identify, prioritize and implement infrastructure sub-projects through on-the-job practice; (ii) finance appropriately selected infrastructure sub-projects, which would serve the double purpose of providing incentives to TMAs to improve their planning and management performance, and lead to better delivery of public services; and (iii) strengthen the capabilities of the provincial authorities to monitor and evaluate the performance of the TMAs through the provision of consulting services and training\. The support provided to TMAs was designed to go further than conventional capacity building and to involve a comprehensive approach to institutional development\. This approach was based on a model of piloting, learning and scaling up, with a view to enable constant feedback from TMA officials in order to customize and improve initiatives\. Performance management was also to benefit from an enhanced system for registering and addressing customer complaints\. Design also included activities to enhance provincial authoritiesâ capacity to manage cultural heritage assets such as the Walled City of Lahore, by assisting in the planning and implementation of resettlement and the sharing of benefits in a complex urban environment\. This activity was an addendum and is not directly relevant to the development objectives\. 4\. Achievement of Objectives (Efficacy): The extent to which the projectâs objective -- to improve the delivery and effectiveness of urban services in Punjab â was achieved is rated substantial\. Outputs ï¬ A monitoring cell was established in the provincial Local Government and Community Development Department (LG&CDD), which is the parent institution for all local governments in the province\. This monitoring cell is electonically linked to the Punjab Municipal Development Fund Companyâs (PMDFC) M&E system, through which TMAs report on agreed municipal service indicators\. The cell is thus assisting the LG&CDD oversee TMA performance on municipal service delivery irrespective of source of funding\. ï¬ 105 TMAs benefited from project institutional development initiatives\. The original target was 19, subsequently expanded to 37, and then again to 105 at a level 2 restructuring effective August, 2010\. ï¬ A complaints tracking system has been put in place\. The system enables complaints to be tracked until they are resolved\. It can also be used to identify systemic issues in service delivery\. ï¬ A computerized financial management system was put in place and operationalized in all TMAs across the province to assist in budgeting, accounting and financial management, as well as streamlining reporting to the provincial level\. ï¬ A participatory planning process has been introduced in all participating TMAs\. Plans of existing structures and geographical information system (GIS) maps were developed as planning tools in the TMAs\. ï¬ Websites were developed for all TMAs with a view to enhancing public disclosure and access to information\. TMAs were assisted in uploading their performance management system data on web-based software, facilitating concurrent reporting to the provincial authorities\. ï¬ Over 3,000 officials across 105 TMAs received training in the use of computerized systems and business processes introduced through the project\. These ranged from basic computer literacy to data collection, compilation, and reporting, website launching and updating, conducting road rating surveys, contract and project management, procurement, and use of engineering equipment\. ï¬ Institutional frameworks and standard procedures for routine and periodic maintenance of infrastructure assets were developed and piloted in two TMAs for water supply, two others for solid waste management, and in another for roads\. Training on operation and maintenance organization and procedures was provided to the staff of other TMAs (number not specified)\. ï¬ Funding for sub-projects in the form of âperformance grantsâ was provided to those TMAs that fulfilled the following selection criteria: (i) ratio of own source revenue to total recurrent revenue (value of the ratio is not specified); (ii) ratio of development funds expenditure to total development funds available (as a gauge of implementation capacity, value also unspecified); (iii) identification of priority infrastructure investments through a participatory planning process; and (iv) agreement to contribute up-front 15% of the sub-project cost, to fund subsequent O&M costs, and to submit a detailed application including a service improvement plan, and performance indicators and targets\. ï¬ A total of 39 completed sub-projects in 29 urban centers were financed by performance grants, involving a total expenditure of just under PKR3 billion (approximately US$28 million)\. 17 of these were in water supply, 13 in roads, and six in solid waste management\. The remaining three were single sub-projects in sewerage, parks and fire-fighting equipment\. In addition, two sub-projects were incomplete at closure, and a further three were terminated and subsequently completed with TMA and provincial funding (sectors unspecified)\. ï¬ Outputs related to Cultural Heritage management included amendments to the existing legislative framework; (b) rationalization of institutional mandates for management of heritage assets; and (c) implementation of a pilot project in the Walled City of Lahore (the pilot project included the creation of a Heritage Trail, to showcase methods and benefits of conservation of cultural assets\. Outcomes Two Institutional Development Assessments were undertaken by the Punjab Municipal Development Fund Company (PMDFC, one of the two implementing agencies), with assistance from the Bankâs supervision team, the first just before the mid-term review (MTR) held in January 2010, and the second in early 2013, about six months before closure\. The ICR provides only a brief summary of the Assessmentsâ conclusions, and there is a paucity of quantitative information\. Much of what follows, therefore, is taken from the Assessment reports themselves (provided by the project team at IEGâs request) and from the more detailed summary included in the Aide-Memoire to the final supervision mission\. Overall, the Assessments indicate that project interventions have improved capacity and systems in the TMAs for service delivery, planning and revenue management: ï¬ The adoption of the Complaints Tracking System (CTS) has facilitated the systematic organization of complaint information, standardization and reduction of resolution time, and redressing of individual complaints\. In addition, TMAs are reportedly using the CTS for identification of problem areas and to identify rehabilitation and maintenance requirements\. At project closure, 81 out of 105 beneficiary TMAs were resolving more than 90% of complaints against service delivery\. Approximately 86% of respondents stated that CTS has made the resolution of complaints more efficient\. 56% credited the system for improvements in service delivery\. 85% of respondents stated that the time taken to resolve complaints has decreased due to CTS, and 50% believed that CTS is the major factor responsible for improving and standardizing complaint resolution time\. 84% of respondents reported that CTS is a major factor in improving the confidence of citizens\. The Assessments state that the CTS has enhanced public confidence in the complaint resolution systems\. 79% of the respondents reported that the number of complaints in their TMAs have increased and out of those 46% attributed this increase directly to CTS\. ï¬ The introduction of the Performance Management System (PMS) has enabled TMA officials to quantify municipal service coverage, evaluate service quality, and monitor TMA staff performance\. 92% of the respondents consider service delivery data maintained by project beneficiary TMAs better or significantly better than the corresponding information available at other TMAs in the province\. 100% of the respondents cited the PMS as the most important or significant factor in improving service delivery data\. 95% of the respondents reported that project TMAs have a better capacity to monitor staff performance than non-beneficiary TMAs\. As in the case of the CTS, the 2013 Assessment indicates that TMAs are beginning to utilize the PMS for more sophisticated objectives such as identification of rehabilitation and maintenance requirements, and decision making on service delivery needs\. However, Assessment results also indicate that PMS data are still not being utilized to their full potential as a decision making tool in the areas of budget allocation, identification of capital investments, and allocation of funds for operation and maintenance\. TMAs tended to consider the project itself as the major client for the data generated by the system, and their focus was accordingly on collecting and updating information for project monitoring purposes\. ï¬ The Computerized Financial Management System (CFMS) has been introduced in 102 TMAs, against an original target of ten\. 94% of the respondents to the Assessments reported that CFMS has reduced the time taken to generate financial reports and improved presentation of financial data\. It has also reportedly improved reconciliation of accounts, and maintenance of a ledger of receipts and expenditures\. 48% of respondents consider that CFMS has facilitated the recovery of arrears by TMAs (through, for example, the utilization of electronic record-keeping and bill generation for water supply consumers)\. The Assessments note the need for further intensive training for TMA staff in the use of the CFMS and also the need to negotiate full legal acceptance by the provincial authorities of CFMS reports as valid audit documents\. A full transition to CFMS will only be achieved once such a validation becomes effective\. ï¬ For 68% of respondents, project beneficiary TMA staff have better computer skills (including development and use of websites) than those of their non-beneficiary colleagues\. Interestingly, however, 72% believed that the computer training provided under the project increased their level of comfort with computers only marginally if at all\. Training was seen to be supply rather than demand-driven\. As the Assessments said, factors other than the training (including on-the-job skill transfers) obviously played a greater role in enhancing computer skills\. ï¬ The websites developed are, according to the Assessments, ineffective\. Only 10% of the respondents considered that the TMA websites had a significant impact in disseminating useful information to the public, while 55% believed they had no significant impact\. 35% of respondents saw no improvement in terms of disclosure of information to the public\. According to 80% of the respondents, the websites were updatedonly in response to direct requests from the project, if at all\. ï¬ Project interventions have proved that they can be replicated, as indicated by the scaling up from 37 to 105 TMAs following the January 2010 mid-term review\. This should help to ensure sustainability, and a widespread anchoring of the new approaches\. The sub-projects delivered by TMAs under the project are reported to be much larger in scope and size than the initiatives previously managed by the TMAs\. However, no quantitative evidence or concrete examples are provided in the ICR\. An enhanced contract management regime (including clearly defined roles and responsibilities, standard operating procedures and checklists) has improved contractual compliance and enabled more timely completion of projects\. The percentage delay in completion for the 39 sub-projects financed under the project fell steadily through the implementation period from over 200% for sub-projects started in 2007 to 80% in 2009 and to 27% in 2012\. The overall average delay fell from 72% prior to the introduction of improved contract management to 27% subsequently\. Better timeliness has been accompanied by enhanced quality of sub-projects\. Training, strong oversight by the PMDFC, and practical exposure of TMA staff to national competitive bidding are reported to have contributed to this result\. However, no quantitative indications of improved quality are provided by the ICR\. The population benefiting from the 39 completed sub-projects is estimated at about 1\.7 million\. This estimate is based on the coverage area of each sub-project using GIS maps of the urban center where the sub-projects were implemented\. At closure, 74% of solid waste was disposed of in landfill sites developed under the project compared to a baseline of zero (there were no landfill sites) and a target of 70%\. About 550,000 persons are estimated to have benefited from this\. The percentage of streetlights functioning in the TMAs was 73% at closure, compared to a baseline of 70% and a target of 75% (although the project did not invest in improved street lighting, this is considered to be an indicator of improved service monitoring procedures)\. Among the 11 TMAs with project-financed water supply sub-projects, the percentage of households connected to the system was 53% at closure compared to a baseline of 40% and a target of 59%\. The 30\.3 kilometers of urban roads constructed or rehabilitated directly benefited just under 550,000 people (no baseline or target)\. Direct beneficiaries were taken to be those persons living within 500 meters of the roadway, as estimated using the GIS maps\. A beneficiary survey was conducted by an independent contractor\. It covered 14 completed sub-projects (eight water supply, four road and street improvements, and two solid waste management)\. Each selected sub-project had been fully operational for at least six months prior to the survey\. Results are broadly positive\. As a result of street and road interventions, 66% reported improved access, 87% reduced travel time, 83% higher property values along the roadside, and 75% enhanced business opportunities\. 72% of respondents confirmed improvement in primary collection of solid waste and cleanliness of their neighborhoods after sub-project completion\. Responses in the water supply sector are the least positive\. Only 54% responded that the quantity of water supply had increased, and 56% that water pressure had improved\. 61% perceived an improvement in the quality of water\. The relatively weak results for quantity and pressure of water may be attributable to the energy crisis in the country, which negatively affected the ability of TMAs to pump and supply water in the desired quantities\. More encouraging was the percentage of respondents using TMA-supplied water as their primary source rather than private bore holes or hand pumps\. This rose to 74% after the installation of the sub-projects compared to 36% beforehand\. With regard to cultural heritage management, the effectiveness of the project-supported institutional framework and capacity building in conserving and productively exploiting cultural assets were to be tested through piloting improvements to the Royal Route in Lahore (the route used by the Mogul Emperors when traveling to or from destinations such as Delhi)\. The pilot could not be completed by project closure\. Improvements to the facades of 773 buildings were 72% complete, together with 52% of the paving work on 57 streets in the pilot area\. Related infrastructure rehabilitation (water supply, sewerage, storm water drainage, electricity supply) had rates of completion varying from 60% to 80%\. The main reasons were: (a) inability to foresee the precise nature and extent of the works at the appraisal stage; (b) weak contract management at the Walled City of Lahore Authority (WCLA, the implementing agency for the cultural heritage activities); and (c) underestimation of the time and effort needed for preparatory work before the main works could begin\. According to the ICR (page 38), the remaining works will be funded by the provincial government\. 5\. Efficiency: Investments were demand-driven, and only a few sub-projects could be identified at appraisal\. An ex ante economic analysis was carried out for two sub-projects, one in water supply and the other in roads\. The benefits were calculated by estimating the additional surplus for water consumers due to increased water supply\. This method was used because of unavailability of data to estimate health benefits, or those from time savings due to increased piped water supply\. Three ERRs were estimated on the basis of three different assumptions concerning consumer demand: (a) 24% assuming a constant budget demand curve; (b) 20% assuming a straight line demand curve; and (c) 12% assuming willingness to pay as a percentage of income\. As the PAD (page 83) notes, âthe results are highly sensitive to assumed values of some of the parameters and would only deliver a fragile economic justification\.â The ex ante ERR for the roads sub-project was estimated at 17%\. The Highway Development and Management (HDM) Model-4 was used for the analysis, and the assumed benefits were reduced vehicle operating costs and travel time, and increased commercial property values\. At closure, the two sub-projects assessed at appraisal were subjected to an ex post analysis for comparison purposes\. Two additional sub-projects, one in the water sector, and the other in roads, were also analyzed\. It is unclear why ex post ERRs for more sub-projects were not calculated\. It is known from the Beneficiary Survey that at least 14 had been fully functional for at least six months before the Survey was conducted, an event which itself took place some months before closure\. The methodology used for calculating the ex post benefits of the water supply sub-projects is different from that at appraisal\. Data on health benefits were reportedly available at closure, and this was considered a superior measure to that of consumer surplus, especially given distortions resulting from low tariffs\. Other benefits included were municipal government revenue from water fees, but these were not substantial\. Assumptions of tariff increases and collection rates were scaled down from the appraisal levels, as was the assumption concerning the speed at which households would be connected to the water system\. The ex post ERR for the sub-project analyzed at appraisal is estimated at 13%, and that of the other water supply sub-project chosen (which was the largest for the sector) is 5%, well below the chosen discount rate of 12%\. The ex post ERRs for the two roads sub-projects were 14\.9% for the one also estimated at appraisal and 15% for the additional one\. The same methodology was used as for the ex ante analysis\. There were a number of operational and administrative inefficiencies which, together with the expansion in the number of participating TMAs, resulted in extensions to the closing date totaling nearly three years (64%)\. Among the causes of delay were: (a) low responses to invitations to bid, resulting mainly from the major earthquake of 2005; (b) weak TMA capacity for procurement of works and contract management in the initial period of implementation, resulting in a low disbursement rate at the time of the mid-term review; and (c) frequent staff turnover in TMAs resulting in the erosion of capacities built up\. Efficiency is rated modest\. a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Relevance of both objectives and design is rated substantial\. On balance, efficacy is rated substantial\. The Institutional Development Assessments indicate positive achievements in the building of managerial capacity in the TMAs, and the interventions were scaled up to include almost three times as many TMAs as originally proposed\. The sub-projects improved delivery of infrastructure services to the urban population in the participating TMAs, although some outcomes were below target\. Beneficiary satisfaction was broadly positive, though generally low in the water sector\. Efficiency is rated modest â ERRs were calculated ex post for only four sub-projects; the ERR for one of the initiatives is well below the discount rate, while those for the others exceed it only narrowly\. There were also administrative and operational inefficiencies contributing to a three year delay in project completion\. Overall outcome is assessed as moderately satisfactory \. a\. Outcome Rating: Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: There is a significant political risk\. In 2009, the provincial government did not hold local elections that were due that year under the provisions of the Local Government Ordinance of 2001\. Instead, it continued to control districts through directly appointed officers as permitted under the 2001 law\. The law was replaced through the enactment of the Punjab Local Government Act in 2013\. This new law also envisions elections, but these have been constantly postponed, and their date remains uncertain at the time of writing (February, 2015)\. Once they occur, local government in the Province would undergo major structural changes including the reorganization of the TMAs which benefited from the project into Municipal Corporations or Municipal Committees\. The provincial authorities will need to take measures to ensure that these new structures sustain the project-supported interventions\. Many of the institutional changes introduced by the project still lacked legal validation at closure, thereby presenting a significant risk to sustainability\. For example, the LG&CDD was not successful in negotiating with the Auditor General of Pakistan recognition of the outputs of the computerized financial management system as legally valid audits\. According to the project team, it is likely that legal validation of the audits and other institutional changes will have to await the notification of Rules of Procedure under the 2013 local government legislation\. However, this in turn would likely not occur until after elections are held and a new administration installed\. There is also a significant technical risk\. Although the project established procedures for routine and periodic maintenance, these were piloted only for infrastructure funded by the project\. The pilot would therefore need to be scaled up, and the requisite resources mobilized, to cover all municipal infrastructure\. If this is not done, then there is a risk that works financed under the project would eventually not be adequately maintained either\. Persistent low tariffs have already undermined the rate of return on the projectâs water supply investments, and may adversely affect their future financial viability\. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: a\. Quality at entry: The Bank project preparation team engaged in in-depth consultations with relevant stakeholders, especially the TMAs, the provincial government's Local Government and Community Development Department, and the Punjab Municipal Development Fund Company\. The consultations were of a particular importance in a context of relatively new legal and administrative structures resulting from the 2001 Local Government Ordinance\. Seeking out the views of the TMAs helped to ensure that project interventions fitted their priorities and were customized to their needs\. The requirements of the provincial authorities were also addressed, including what they would need to monitor effectively the performance of the TMAs\. Preparation drew on lessons learned from previous Bank interventions in supporting local government and in the urban sector, although these interventions were mostly elsewhere, since the project was the first of its nature in Pakistan\. The lessons (PAD, page 14) include: (a) the need for strong borrower ownership and a concomitant willingness to commit the necessary resources for making sustainable institutional improvements allied with technical assistance and training; (b) internal government procedures must be streamlined, and effective monitoring systems established; (c) the focus with regard to sub-project identification, appraisal and implementation should be at the level of the local agencies (in this case the TMAs); (d) to help ensure that investments are demand-driven, municipalities should contribute to capital costs as well as assuming responsibility for operations and maintenance; and (e) size and complexity of project-supported initiatives, while expected to exceed past municipal efforts, must nonetheless be aligned with planning and implementation capacity\. Relevant risks were, except for one important omission, correctly identified\. Low implementing agency procurement capacity and weak market response to bidding invitations were both rated high and both materialized\. Mitigation was to be through training and capacity building in the first case and inclusion of price escalation clauses, increases in mobilization advances, and reduction in certain qualification criteria in the second\. The first set of mitigation measures inevitably took time, and there were serious procurement-related delays in the early years of implementation\. Capacity constraints arising from weaknesses in some of the consulting firms were not foreseen\. Risks of lags in operations and maintenance performance, and of continued dispute concerning the application of national financial reporting standards to the Punjab were rated moderate\. Risks of design and engineering incapacity, and of inability on the part of the Punjab Municipal Development Fund Company to perform its monitoring and supervisory roles, were rated low\. The one risk not considered was the political one â that elections and changes in the legislative framework governing local authorities might result in major structural changes which, in turn, would threaten to undermine the projectâs institutional strengthening efforts\. This risk would have been difficult to foresee at the time of appraisal, and indeed did not materialize during implementation\. It has, however, since become apparent and constitutes a significant risk to development outcome (see Section 7 above)\. Provisions for managing safeguards and fiduciary compliance were adequate\. There were three moderate shortcomings in Quality at Entry\. First, M&E design could have developed more concrete outcome indicators (see Section 10a below)\. Second, there were notable differences between the statement of objectives in the PAD and that in the Loan Agreement\. Third, the link between the cultural heritage activities and the projectâs development objectives was not fully clear\. Moreover, as noted in Section 4 above, the preparations and institutional arrangements for carrying out these activities were less than fully adequate\. Quality-at-Entry Rating: Moderately Satisfactory b\. Quality of supervision: The supervision team possessed the requisite skill mix for the project and included specialists in urban development, financial management, procurement and contract management, social development, environmental safeguards, municipal engineering, and cultural heritage revitalization\. 15 Implementation Status Reports (ISRs) were filed during the seven years of implementation, and regular missions were supplemented by shorter visits to sub-project sites and TMAs\. Resources for supervision were adequate\. Continuity was good, with the co-Task Team Leader (TTL) at the preparation stage remaining as TTL throughout implementation\. Supervision reports and Aide-Memoires were systematic and informative, and ratings largely appropriate â progress towards achievement of Development Objectives was rated satisfactory throughout, as was Implementation Progress except for six ISRs between the end of 2008 and the end of 2009, when it was rated moderately satisfactory\. This reflected the low disbursement rate during the period preceding and immediately following the mid-term review (MTR, January, 2010)\. After corrective measures adopted at the MTR, disbursements accelerated notably\. The level 2 restructuring effective August, 2010, was appropriate and timely\. The Bank provided timely and pertinent assistance to the TMAs and implementing agencies, with which it sustained a good working relationship\. The Borrowerâs ICR (ICR, Annex 7) indicates satisfaction with the technical and advisory support provided by the Bank team in areas such as design and implementation of the performance management system, and computerization of the financial management system\. M&E implementation was largely adequate and was carried out in the framework of the performance management system, although no outcome indicators beyond the results of the surveys were developed (see Section 10b below)\. The ICR reports compliance with safeguards policies and (despite some early procurement-related problems) with fiduciary policies also (see Section 11 below)\. Quality of Supervision Rating : Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: This Section assesses the performance of the Government of Punjab, and also the Central Government of Pakistan to the extent that the latterâs actions or inactions affected the implementation and outcomes of the project\. The Government of Punjab, and more specifically the Local Government and Community Development Department (LG&CDD), showed strong commitment to, and ownership of, the project during both preparation and implementation\. Although the Department's technical capacity was low at the outset, it was gradually built up, and progress was made in developing a framework and mechanism for monitoring TMA performance\. In its own evaluation of the project, the main implementing agency, the Punjab Municipal Development Fund Company (PMDFC), noted that LG&CDD provided support whenever a relevant policy input was required (ICR, Annex 7)\. It also made substantial efforts to address project implementation issues in a timely manner, and to ensure adequate coordination among the different stakeholders\. There were, nonetheless, three moderate shortcomings in the performance of the LG&CDD and Government performance more generally: ï Many of the institutional changes introduced by the project still lacked legal validation at closure, thereby presenting a significant risk to sustainability\. For example, the LG&CDD was not successful in coordinating with the Auditor General of Pakistan to recognize the outputs of the computerized financial management system as legally recognized audits\. ï During the middle part of the implementation period , continuing ambiguity on the future of the local government system affected decision-making by TMA leadership, thereby reducing the pace of sub-project implementation, and in turn disbursements\. ï The water tariff was not increased as had been anticipated (although such increases were not a covenant or other requirement of the project), thereby reducing to an important degree the rate of return on some project investments\. These tariffs are set by the provincial authorities and are outside the control of the TMAs\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance: There were two implementing agencies: PMDFC for the components related to capacity and performance grants to the TMAs, and the Walled City of Lahore Authority (WCLA) for the cultural heritage sub-component\. PMDFCâs performance is rated satisfactory\. Although PMDFC is a government sponsored, non-profit entity, limited by guarantee, its employment as an implementing agency brought the approach and frequently enhanced efficiency of the corporate sector to bear on the management of a public sector project\. The company was successful in engaging the required competencies and skills to develop and implement the institutional enhancements supported by the project\. Its expertise in procurement and contract management was made available to the TMAs, which initially had very low capacity in these areas, both directly and through hands-on training of TMA staff\. The Company monitored the application of Standard Operating Procedures for works contracts, and also carried out periodic contract management audits\. The Company managed project finances in a satisfactory manner, and provided adequate assurance that project funds were being used for the intended purposes\. M&E, including the use of project interventions to capture data on TMA performance indicators, was generally well managed\. There was compliance with Government of Pakistan and World Bank safeguard policies, both environmental and social (see section 11a below)\. WCLA management of fiduciary and safeguards dimensions was also adequate\. In addition, the successful application of Bank safeguard policies on the removal of hundreds of encroachments in a complex urban setting is noteworthy\. However, capacity weaknesses in WCLA, including weak contract management, were an important contributory factor to the non-completion of the cultural heritage pilot by project closure\. WCLAâs performance is rated moderately satisfactory \. Overall implementing agency performance is rated moderately satisfactory \. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: Institutional responsibility for the M&E framework was to be jointly shared by the TMAs, PMDFC and LG&CDD in the context of the projectâs performance management system\. An agreed reporting format was developed including progress reports against performance indicators developed in performance management workshops involving all relevant stakeholders\. Rather than directly monitorable outcome indicators, there was to be reliance on âindependent technical and social audit teams,â which would provide evidence of improved effectiveness and technical and financial viability of services provided by TMAs, as well as of satisfaction on the part of consumers\. In addition, the PAD (pages 42-46) presents a list of nine core service delivery indicators and 17 âcore capacity effectiveness indicators; both lists were to be monitored by the TMASs and by the PMDFC as part of the project-supported performance management system\. They were developed at the first performance management workshop held in Lahore\. From these lists, the following intermediate outcome indicators were chosen for M&E purposes: (a) percentage of households connected to the water supply system; (b) percentage of street lights working; (c) percentage of solid waste disposed of daily at the landfill site; (d) the number of TMA staff trained in information technology; (e) the number of TMAs with updated GIS maps; (f) the number of TMAs using the computerized financial management information system to generate reports for the annual audit of local funds; (g) the number of TMAs with updated investment plans; and (h) the number of TMAs with at least â90% complaint resolution efficiency\.â Target values were set in consultation with the TMAS\. Data generated by the performance management system allowed baseline values to be identified for most intermediate outcome indicators\. The vague and qualitative nature of the outcome indicators was explained in the ICR by the fact that this was a demand-driven project\. However, the adequacy of this explanation is not evident\. More concrete indicators could have been developed for future application\. As a minimum, the kind of information to be abstracted from the audit teamsâ reports could have been specified\. b\. M&E Implementation: Statistics related to municipal services such as water supply, refuse collection and street lighting were collected regularly in the framework of the performance management system\. These were supplemented by two Institutional Development Assessments (IDAs) administered in 19 TMAs before the mid-term review, and in 37 TMAs (including the original 19) in 2012\. In addition, a Beneficiary Perception Survey on Infrastructure Investments was administered in 2012-13 by an external consulting firm, to gauge beneficiary satisfaction levels with completed infrastructure investments\. The ICR (page 10) states that these exercises provided the information necessary to evaluate the achievement of the outcome and intermediate outcome indicators\. c\. M&E Utilization: There is little discussion in the ICR of the utilization of the M&E framework\. M&E Quality Rating: Modest 11\. Other Issues a\. Safeguards: The project was classified as Category âAâ for Environmental Assessment purposes\. In addition to Environmental Assessment (OP 4\.01), two safeguard policies were triggered: Cultural Property (OP 4\.11) and Involuntary Resettlement (OP 4\.12)\. Environment\. The PAD (page 16) reports that PMDFC prepared an Environmental and Social Management Framework (ESMF) that would be applied to all sub-projects, and that âappropriate environmental review and appraisal steps have been integrated into PMDFCâs overall project appraisal processâ (page 24)\. The ICR (page 11) reports that âenvironmental safeguards aspects of sub-projects were managed in compliance with relevant Bank environment policies\.â The ICR (page 10) states that âthe ESMF was used to screen all development grants for their anticipated environmental and social impacts, and included extensive public consultations with multiple categories of stakeholders\.â PMDFCâs environmental management system is described as ârobustâ (ICR, page 10)\. It âexercised due diligence of Pakistan and Punjab environmental regulations, and implemented site specific mitigation measures identified and designed in environmental management plansâ (pages 10-11)\. Moreover, PMDFC exceeded normal requirements through activities such as training of TMAsâ environmental management staff and organizing public hearings for sub-projects\. The project also assisted in developing the capacity of the provincial Environmental Protection Department in a number of areas, including development of checklists and conduct of public consultations (now routine) and development of Environment and Social Impact Assessments for Category A sub-projects (for example, solid waste management and waste water disposal)\. Cultural Property\. According to the PAD (page 25), planned investments were to be localized and designed so as to minimize the impact on cultural property\. In addition, the cultural heritage component aimed to strengthen the capacity of the authorities to manage existing assets\. In this context, it was considered that a separate cultural heritage plan would not be necessary\. There is no discussion of this safeguard in the ICR\. Involuntary Resettlement\. This was mainly related to the cultural heritage activities under Component 2\. The ICR (page 10) reports that âsocial safeguards were implemented in a satisfactory manner through â¦\. a Resettlement Framework\.â A Resettlement Action Plan (RAP) was implemented in the Walled City of Lahore pilot project area\. âSome 147 shops and 264 encroachments were removed, and 732 shops were provided temporary support\. The scale of consultations was significant, with more than a thousand meetings conducted during RAP implementation\. Through creating a replicable model of resettlement and citizen engagement in urban cultural heritage conservation, the project has created a demonstration effect and built staff capacity to manage social issues in a complex setting\.â b\. Fiduciary Compliance: Financial Management\. The ICR (page 11) reports that financial management was rated satisfactory in supervision reports throughout implementation\. Relevant staff in the TMAs and PMDFC remained in place\. As noted in Section 4 above, financial management systems in 102 TMAs were computerized, thereby contributing to more efficient budgeting and accounting and upward reportingFinancial Management\. The ICR (page 11) reports that financial management was rated satisfactory in supervision reports throughout implementation\. Relevant staff in the TMAs and PMDFC remained in place\. As noted in Section 4, financial management systems in 102 TMAs were computerized, thereby contributing to more efficient budgeting and accounting as well as reporting upwards to the provincial level\. The ICR states that externally audited financial statements were mostly produced by the due date and that âauditorsâ performance was satisfactory\.â However, the ICR does not specify whether or not external auditorsâ opinions were qualified (the project team subsequently informed IEG that the opinions were unqualified)\. Procurement: As anticipated during preparation, procurement experienced difficulties in the initial years of implementation due to limited capacity in the TMAs and weak responses to bidding invitations in the wake of the major earthquake of 2005\. Two rounds of bidding were unsuccessful\. Following workshops with potential bidders, qualification requirements were eased, performance guarantees reduced, and price adjustment clauses introduced into all contracts\. These measures, together with technical assistance and capacity building programs, enabled procurement to be accelerated in the period following the mid-term review (January, 2010)\. Standard operating procedures improved contract management\. Two non-performing firms were debarred, a rare occurrence in Punjab\. There were no recorded cases of mis-procurement\. c\. Unintended Impacts (positive or negative): d\. Other: 12\. Ratings: ICR IEG Review Reason for Disagreement/Comments Outcome: Satisfactory Moderately Relevance of both objectives and Satisfactory design is rated substantial\. On balance, efficacy is rated substantial, reflecting evidence of advances made in institutional strengthening and service delivery, although some targets were not met\. Efficiency is rated modest â ERRs were calculated ex post for only four sub-projects, and; the ERR for one of those is well below the discount rate\. Administrative and operational inefficiencies contributed to a three year delay in project completion\. Risk to Development Significant Significant Outcome: Bank Performance: Moderately Moderately The ICR Data Sheet rates Quality at Satisfactory Satisfactory Entry moderately satisfactory, as does the main text on page 7\. However, on page 21, the ICR rates Quality at Entry as fully satisfactory\. The project team subsequently informed IEG that the moderately satisfactory rating is the valid one\. The ICR rates overall Bank performance as fully satisfactory in both the Data Sheet and on page 22 of the main text\. Since Quality at Entry is moderately satisfactory, this is inconsistent with the Harmonization Criteria\. Borrower Performance : Satisfactory Moderately Moderate shortcomings in the Satisfactory performance of the provincial government included lack of legal validation for important institutional changes introduced by the project, continuing ambiguity on the future of the local government system, and maintaining artificially low water tariff, thereby the rate of return on some project investments\. Quality of ICR: Unsatisfactory NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: IEG draws the following lessons from the experience of preparing and implementing this project: ï¬ Project implementation and evaluation are assisted by consistent development objectives in the project documents\. In this case, there are important discrepancies between the statement of objectives in the PAD and that in the Loan Agreement\. ï¬ Activities undertaken under the project are more easily justified if they are seen to be clearly related to the statement of objectives as written\. In this case, the link between the objectives and the cultural heritage activities was less than fully clear\. ï¬ Implementation and evaluation of a project rely on a robust M&E framework incorporating concrete and specific outcome indicators\. In this case, there was reliance on institutional development assessments and beneficiary surveys to evaluate outcomes, and the project documents do not make clear what kind of information it was expecting from these exercises\. As a consequence, the evidential basis for the outcome evaluation in the ICR was less strong than it might have been\. ï¬ Although political changes are difficult to predict, an analysis of the political economy of local government in Punjab could have provided more insights into the risks to development outcome resulting from changes in political structures\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: Given the centrality of the results of the Institutional Development Assessments (IDAs) for evaluating the outcomes of the project, considerably more information regarding the Assessmentsâ conclusions should have been provided in the ICR (in an Annex if necessary)\. With a few exceptions (such as the discussion of the time taken to complete infrastructure sub-projects), the ICR lacks concrete examples and quantitative evidence both from the Assessments and more generally\. It is unclear from the ICR whether the information is not available in the Assessments, or whether the lack of evidence is the result of poor reporting (an examination of the IDAs themselves, supplied by the project team, suggests the latter)\. Several important statements are unsupported by evidence -- for example, that the computerized financial management system has facilitated the recovery of arrears\. It is stated that tariffs were not adjusted as anticipated and that this undermined the rate of return of project investments, but not what the expected increase in tariffs was or why it was not authorized\. There are other shortcomings: ï¬ More explanation on the lack of legal validation for project-supported institutional changes and auditing procedures would have been useful\. ï¬ The general (that is, non-project specific ) lessons learned tend towards banality or even tautology (for example, âinstitutional development requires persistence and diligence to unfold and achieve sustainable results,â or âcontinuity of financial management staff and requisite capacity building at operational as well as managerial tiers, helps in effective financial managementâ)\. Moreover, it is not stated how or whether these lessons are rooted in the empirical experience of the project\. ï¬ Why does the fact that the projectâs precise activities were demand driven impeded the development of concrete indicators? ï¬ Actual project costs by component are supplied in Pakistan rupees, but not in US dollars\. ï¬ There is no reporting on the utilization of the M&E framework\. ï¬ It is not stated whether or not external auditorsâ opinions were unqualified\. ï¬ There is inconsistency between the moderately satisfactory rating of Quality at Entry in the Data Sheet and on page 7 of the main text and the fully satisfactory rating on page 21\. a\.Quality of ICR Rating : Unsatisfactory	REVIEW
P007087	ï»¿ ICRR 11139 Report Number : ICRR11139 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 05/01/2002 PROJ ID : P007087 Appraisal Actual Project Name : Social Development II: Project Costs 102\.2 87\.6 Health And Nutrition US$M ) (US$M) (fasbase) Country : Ecuador Loan /Credit (US$M) Loan/ US$M ) 70 68\.9 Sector (s): Board: HE - Health (74%), Cofinancing None Central government US$M ) (US$M) administration (13%), Sanitation (13%) L/C Number : L3510 Board Approval 92 FY ) (FY) Partners involved : UNDP, PAHO Closing Date 06/30/1999 06/30/2001 Prepared by : Reviewed by : Group Manager : Group : Roy Jacobstein Laurie Effron Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The project objectives were: to expand basic health care, nutrition and sanitation coverage to reach the poorest population groups; to improve the quality of already-provided basic health care services to the poor, and to strengthen decision-making and management of public sector institutions involved in the delivery of basic health, nutrition and sanitation programs\. These development objectives remained the same during the period of project implementation as well as during project extension\. b\. Components The original project had four components: Basic Health Care, Nutrition, Basic Sanitation and Safe Water, and Sector Policy and Institutional Strengthening\. In 1995 the nutrition component was redefined to focus essentially on supporting the national micronutrient program\. In 1996, a new subcomponent under Basic Health Care, the Emergency Care Network, was added\. In 1997, the El NiÃ±o Contingency Component was added\. During supplemental project extension, three components were funded, two of them new: Health Care Emergency, Basic Sanitation and Safe Water, and Malaria Control\. c\. Comments on Project Cost, Financing and Dates The original project cost was $102\.2 million, with a $70 million Bank loan and $32\.2 million counterpart contribution\. In 1999 a supplemental loan was developed as part of a broader Bank strategy, at which time the project was extended by 19 months and supplemental cost of $22 million, of which $20\.2 million was a supplemental Bank loan and $1\.8 million the planned supplemental Government contribution\. Final actual costs for the original project were $87\.6 million, with $68\.9 of the Bank loan expended, and Government funding of $18\.7 million provided\. Actual estimates for the supplemental loan are $11\.8 million, with $10\.9 of Bank funds expended, and $1\.0 million of Government funding expended\. Approximately 20% of overall costsâactual as well as plannedâ went to technical assistance and training\. 3\. Achievement of Relevant Objectives: The original project met or exceeded all its original objectives, despite marked Government turnover during the project periods (6 different Presidents and 10 different Health Ministers in 8 yearsâbut continuity of Bank staff\.) A new primary health care model was developed and widely established, and a nationwide micronutrient program was also established\. Basic sanitation and safe water were extended to even more communities than originally planned, including the validation of an intervention methodology that included extensive community participation\. The MOH was able, by the end of the project, for the first time to provide complete and timely budget reporting\. In contrast to the high performance of the original project, the supplemental project had a limited performance which generally fell short of objectives\. 4\. Significant Outcomes/Impacts: Basic health care, nutrition and sanitation services were extended to 3\.2 million people (as opposed to the planned 2 million) in the poorest regions of the country\. Infrastructure objectives were exceeded by 63%, with almost 400 upgrades of health facilities occurring\. Approximately 19,000 health personnel were trained\. Cost recovery schemes were instituted and local funds were mobilized in the face of national government shortfalls\. Health outcomes improved dramatically, e\.g\., in one province prenatal care utilization increased from 21% to 88% and in another, immunization rates increased from 17% to 94%\. These improvements are emblematicâin 2000, Ecuador had no reported cases of measles or polio, and only 2 cases of diphtheria\. In nutrition, 90% of producers complied with fortification norms, anemia in mothers dropped from 50% to 40%, and Vitamin A deficiency in 1-3 year-old children and post-partum women dropped from 15% to 10%\. Water and sanitation infrastructure interventions benefited 190,000 people in 235 rural communities, with notably lower levels of water-borne illness\. Emergency care greatly improved, with emergency response times reduced from 4 hours to 10-15 minutes, first-48 hour mortality rates reduced, and a monitoring system in place for the three largest cities\. All of these achievements are being sustained\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Shortcomings in the original project were few, although the national health MIS has not been fully functional, and, with respect to health improvement in project areas, whereas 63% demonstrated very good progress on a wide range of relevant variables (e\.g\., quality of infrastructure and availability of needed drugs, medical supplies and human resources,) 21% of project areas showed only moderate improvement and 16% had only marginal improvement\. In the project extension period, due largely to the wide degree of political and institutional instability that prevailed, all components performed unsatisfactorily, with less than 54% of the loan utilized\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory The original project merited a rating of highly satisfactory, but the unsatisfactory performance of the supplemental loan suggests an overall satisfactory rating \. Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Highly Satisfactory Highly Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Exemplary NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: Well-designed and implemented PHC, nutrition and water and sanitation programs can have a demonstrable health impact\. Furthermore, this can be achieved in the presence of great political instability if such instability is countered by sound project design, and stability on the Bank side\. Pilot testing, when well-conceived and coupled with interest on the part of the implementers in the pilot resultsâand thus likely follow-through on successful initial outcomesâis not only appropriate, but can lead to national scale-up\. (For example, the micronutrient program developed under the project became a national program, mandated by Presidential decree\.) When well-designed and implemented, development of an emergency services network can yield highâand measurableâreturns\. Public-private partnerships in micronutrient fortification programsâwhen accompanied by high-level political commitment, and thus programmatic follow-throughâcan be very effective\. Large investments in technical assistance and training can be associated withâand likely contribute significantly toâhighly successful programs\. 8\. Assessment Recommended? Yes No Why? Yesâfor impact\. For example, the generally high quality of the emergency services network that was established is in marked contrast to Bank experience in this type of intervention in the ECA region\. Also, there were innovative financing arrangements to compensate for central government funding shortfalls\. And in general, the project was well-conceived and implemented from a public health program perspective, and it yielded impressive results\. 9\. Comments on Quality of ICR: The ICR was exemplary and is an excellent model\. It is characterized by thorough analysis, lucid prose, and ample supporting evidence, often quantitative in nature\. It is internally consistent, supports its judgmentsâboth positive and negativeâwith appropriate evidence, and contains a robust lessons learned section\.	REVIEW
P040990	Document of The World Bank Report No: ICR00001108 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-32050, TF-22458) ON A CREDIT IN THE AMOUNT OF SDR 12\.5 MILLION (US$ 17\.5 MILLION EQUIVALENT) AND A GLOBAL ENVIRONMENTAL FACILITY GRANT IN THE AMOUNT OF US$ 4\.7 MILLION TO THE GOVERNMENT OF THE REPUBLIC OF CAPE VERDE FOR AN ENERGY AND WATER SECTOR REFORM AND DEVELOPMENT PROJECT June 30, 2009 Energy Unit Country Department AFTEG Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective as of June 29, 2009) Currency Unit = Cape Verde Escudo (CVE) Euro 1\.00 = US$ 1\.40495 US$ 1\.00 = Euro 0\.711769 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ADP Água de Portugal (Water Utility of Portugal) ARE Agência de Regulação Económica (Agency for Economic Regulation) CAS Country Assistance Strategy CNAG Conselho Nacional de Águas (National Council of Water) CO2 Carbon Dioxide CVE Cape Verde Escudo DGIE Direcção Geral da Indústria e Energia (Directorate of Industry and Energy) EDP Electricidad de Portugal (Power Utility of Portugal) ELECTRA Empresa Publica de Electricidade e Água (Public Company for Electricity and Water) ESAP Environmental and Social Action Plan EU European Union GEF Global Environment Facility GoCV Government of Cape Verde HFO Heavy Fuel Oil ICB International Competitive Bidding IDA International Development Association Infraco Infrastructure Development projects in Africa and South East Asia INGRH Instituto Nacional de Gestão dos Recursos Hídricos (National Institute for Water Resources Management) IRR Internal Rate of Return MAAA Ministério da Agricultura, Alimentação e Ambiente (Ministry of Agriculture, Food and Environment) M&E Monitoring and Evaluation MECC Ministério de Economia, Crescimento e Competitividade (Ministry of the Economy, Growth and Competitiveness) MIH Ministério das Infra-estruturas e Habitação (Ministry of Infrastructure and Housing) MCIE Ministério do Comêrcio, Indústria e Energia (Ministry of Trade, Industry and Energy) MTR Mid-Term Review NDP National Development Plan NPV Net Present Value OPEC Oil Producing and Exporting Countries PDO Project Development Objectives PEAS Projecto Energia, Água e Saneamento (Energy and Water Reform and Development Project) PHRD Policy and Human Resources Development Fund PMU Project Management Unit PSR Project Status Report PV Photovoltaic KPI Key Performance Indicator SEPA Secretariado Executivo Para o Ambiente (Executive Secretary for Environment) SP Strategic Partner SSA Sub-Saharan Africa TA Technical Assistance VPM Vice Prime Minister (Office of the Vice-President) Vice President: Obiageli K\. Ezekweseli Country Director: Habib M\. Fetini Sector Manager: Subramanian V\. Iyer Project Team Leader: Stephan Claude Frederic Garnier ICR Team Leader: Stephan Claude Frederic Garnier ICR Primary Author: Joseph W\.B\. Bredie REPUBLIC OF CAPE VERDE Energy and Water Sector Reform and Development Project CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development and Global Environment Objectives Design\. 1 2\. Key Factors Affecting Implementation and Outcomes \. 5 3\. Assessment of Outcomes\. 10 4\. Assessment of Risk to Development Outcome and Global Environment Outcome \. 14 5\. Assessment of Bank and Borrower Performance \. 14 6\. Lessons Learned\. 17 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 20 Annex 1\. Project Costs and Financing\. 21 Annex 2\. Outputs by Goals and Objectives\. 23 Annex 3\. Economic and Financial Analysis\. 26 Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 27 Annex 5\. Beneficiary Survey Results\. 29 Annex 6\. Stakeholder Workshop Report and Results\. 30 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 31 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 33 Annex 9\. List of Supporting Documents \. 34 A\. Basic Information CV-Energy & Water Country: Cape Verde Project Name: SIL (FY99) COFN-04320,IDA- Project ID: P040990,P042054 L/C/TF Number(s): 32050,TF-22458 ICR Date: 06/30/2009 ICR Type: Core ICR GOV\.OF CAPE Lending Instrument: SIL,SIL Borrower: VERDE Original Total XDR 12\.5M,USD 4\.7M Disbursed Amount: XDR 12\.5M,USD 1\.9M Commitment: Environmental Category: B,B Focal Area: C Implementing Agencies: Prorama Energia, Agua E Saneamento Cofinanciers and Other External Partners: B\. Key Dates CV-Energy & Water SIL (FY99) - P040990 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/02/1997 Effectiveness: 10/01/1999 12/15/1999 Appraisal: 05/25/1998 Restructuring(s): 12/18/2006 Approval: 05/11/1999 Mid-term Review: Closing: 06/30/2004 06/29/2007 CV-GEF Energy & Water SIL (FY99) - P042054 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/02/1997 Effectiveness: 10/03/1999 12/15/1999 Appraisal: 05/25/1998 Restructuring(s): Approval: 05/11/1999 Mid-term Review: Closing: 06/30/2004 12/31/2008 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes Unsatisfactory GEO Outcomes Unsatisfactory Risk to Development Outcome Substantial i Risk to GEO Outcome Substantial Bank Performance Unsatisfactory Borrower Performance Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry Moderately Unsatisfactory Government: Unsatisfactory Quality of Supervision: Unsatisfactory Implementing Moderately Agency/Agencies: Unsatisfactory Overall Bank Overall Borrower Performance Unsatisfactory Performance Unsatisfactory C\.3 Quality at Entry and Implementation Performance Indicators CV-Energy & Water SIL (FY99) - P040990 Implementation QAG Assessments Performance Indicators (if any) Rating: Potential Problem Project Quality at Entry at any time (Yes/No): No (QEA) None Problem Project at any Quality of time (Yes/No): No Supervision (QSA) None DO rating before Moderately Closing/Inactive status Satisfactory CV-GEF Energy & Water SIL (FY99) - P042054 Implementation QAG Assessments Performance Indicators (if any) Rating: Potential Problem Project Quality at Entry at any time (Yes/No): No (QEA) None Problem Project at any Quality of time (Yes/No): No Supervision (QSA) None GEO rating before Closing/Inactive Status Unsatisfactory D\. Sector and Theme Codes CV-Energy & Water SIL (FY99) - P040990 Original Actual Sector Code (as % of total Bank financing) Power 44 44 Renewable energy 7 7 ii Sanitation 10 10 Water supply 39 39 Theme Code (as % of total Bank financing) Climate change 20 20 Other financial and private sector development 20 20 Other urban development 20 20 Regulation and competition policy 20 20 State enterprise/bank restructuring and privatization 20 20 CV-GEF Energy & Water SIL (FY99) - P042054 Original Actual Sector Code (as % of total Bank financing) Renewable energy 100 100 Theme Code (as % of total Bank financing) Climate change 25 25 Other financial and private sector development 25 25 Other urban development 25 25 Pollution management and environmental health 25 25 E\. Bank Staff CV-Energy & Water SIL (FY99) - P040990 Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo Country Director: Habib M\. Fetini Mahmood A\. Ayub Sector Manager: Subramaniam V\. Iyer Mark D\. Tomlinson Project Team Leader: Stephan Claude Frederic Garnier Philippe J-P\. Durand ICR Team Leader: Stephan Claude Frederic Garnier ICR Primary Author: Joseph W\. B\. Bredie iii CV-GEF Energy & Water SIL (FY99) - P042054 Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo Country Director: Habib M\. Fetini Mahmood A\. Ayub Sector Manager: Subramaniam V\. Iyer Mark D\. Tomlinson Project Team Leader: Stephan Claude Frederic Garnier Philippe J-P\. Durand ICR Team Leader: Stephan Claude Frederic Garnier ICR Primary Author: Joseph W\. B\. Bredie F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) Project was embedded in the objectives of the National Development Plan for 1997- 2000, and was to support the Government strategy to increase private sector participation in the infrastructure sectors\. Development objectives are (i) to improve the supply of power, water and sanitation systems; (ii) to increase operational and end-use efficiency in the power and water sectors: (iii) to lessen the barriers to the development of renewable energy resources; and (iv) foster sound management of water resources\. Specific objectives are:(a) privatization of Electra; (b) increased private participation in and financial autonomy of water operations; (c) expansion and rehabilitation of power, water and sanitation systems in major urban centers; ( d) development of wind power capacity with private financing; ( e) promotion of solar photovoltaic and wind energy systems for decentralized use; (f) development of a regulatory and legal framework in the power and water sectors; (g) capacity strengthening for regulation, and promotion of energy efficiency\. Revised Project Development Objectives (as approved by original approving authority) Global Environment Objectives (from Project Appraisal Document) To reduce contribution to greenhouse gas emissions through increased use of wind power and solar photovoltaic electric systems in the energy balance of Cape Verde\. Revised Global Environment Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 1 : Improved access to electricity, water and sanitation services, with optimum use of renewable resources, and promotion of priv ate sector participation\. iv Households Access to electricity in Access to major urban centers: electricity Praia - 69 % Praia - 90% Midelo - 92% Mindelo - 98% Value Access to water: Access to water (quantitative or Praia -25% Praia -45% Qualitative) Mindelo - 50%\. Mindelo -60% Access to sanitation Access to services: sanitation Praia - 8% Praia - 2 0% Mindelo -20% Mindelo -30% Date achieved 12/31/1998 12/31/2006 Comments (incl\. % achievement) Indicator 2 : Increased operational and end-use efficiency in the power and water sectors\. Electra to achieve Electra to achieve cost break-even on recovery by end-2002\. operations in 2008, Value Electricity losses decline if appropriate (quantitative or from 25% to 15% by actions are taken\. Qualitative) 2002, water losses :23% However 2006 in Praia , and 20% in will be anothe year Mindelo of c ontinuing poor performance\. Date achieved 12/31/1998 12/31/2006 Comments (incl\. % achievement) (b) GEO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 1 : Under GEF OP#6, remove the barriers to grid connected wind generation and off-grid PV electric systems\. Penetration of wind Penetration of wind will remain Value power average 19% of about same, until (quantitative or total electricity supply inwindfarm Qualitative) 2002; and 4,500 houselds connected off-grid solar extension is PV sys tems carried out in 2007\. Date achieved 12/31/1998 12/31/2006 v Comments (incl\. % achievement) (c) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Household access to electricity at 80%, to water at 50%, and to sanitation at 35% in Praia by year 2002\. See comparison with Value above\. The original The Target Values (quantitative or values at appraisal were at project Qualitative) over-estimated due to completion revised lack of accurate data\. accordingly\. Date achieved 06/10/2005 06/10/2005 Comments (incl\. % achievement) Indicator 2 : Penetration of wind power in the main electricity grids average about 19% by year 2002\. Target value will now reflect possible Appraisal estimate was accomplishment Value based on expectations by project end, and (quantitative or from development of the expected to be 8% Qualitative) windfarm, and the private penetration of approach to development wind power, and of so lar PV system ab out 1,000 individual household solar PV systems\. Date achieved 06/10/2005 06/10/2005 Comments (incl\. % achievement) vi G\. Ratings of Project Performance in ISRs - Actual Disbursements No\. Date ISR Archived DO GEO IP (USD millions) Project 1 Project 2 1 12/25/1999 S S S 0\.00 0\.00 2 04/27/2000 S S S 1\.52 0\.20 3 10/16/2000 HS HS S 2\.04 0\.20 4 12/07/2000 HS HS S 2\.04 0\.20 5 05/30/2001 HS HS S 2\.92 0\.32 6 12/27/2001 HS HS S 3\.50 0\.44 7 03/11/2002 S S S 3\.70 0\.44 8 12/13/2002 S S S 6\.08 0\.66 9 04/18/2003 S S S 6\.64 0\.67 10 12/02/2003 U S U 8\.36 0\.67 11 06/01/2004 U S U 9\.04 0\.67 12 06/15/2005 U U U 11\.05 0\.85 13 11/08/2005 U U U 12\.03 0\.85 14 06/30/2006 U U MS 13\.99 0\.94 15 12/28/2006 MU MU MU 16\.90 1\.04 16 06/25/2007 MS MS MS 17\.46 1\.05 17 12/17/2007 MS MS MS 17\.55 1\.06 18 06/03/2008 MS MS MS 17\.55 1\.22 19 06/25/2008 MU MU MS 17\.55 1\.22 20 12/24/2008 U U U 17\.49 1\.44 vii H\. Restructuring (if any) Amount Disbursed Board ApprovedISR Ratings atat Restructuring in Restructuring Restructuring Reason for USD millions Date(s) Restructuring & Key PDO GEO Changes Made Change Change DO GEO IP Project1 Project 2 12/18/2006 MU MU 16\.90 I\. Disbursement Profile P040990 viii P042054 ix 1\. Project Context, Development and Global Environment Objectives Design 1\.1 Context at Appraisal 1\. Resource Scarcity\. The Republic of Cape Verde (CV), an island state off the coast of Senegal, has historically struggled with scarce energy and water resources\. For energy it was entirely dependent on imported sources of fossil fuel for power generation\. Local wind and solar energy were underdeveloped\. Energy was also required for desalination to produce water\. Even groundwater was scarce with average rainfall of 227mm/year and only 20% of that ending up in groundwater systems\. In addition, the basic infrastructure for electricity, water and sewerage was old, beginning to deteriorate and covering only central parts of the major cities\. The deteriorating water and sewerage systems posed a public health threat\. 2\. Sector Institutions\. Until the end of the 90's, there was no public service law and the institutional framework for the power and water sector was weak\. Tariffs for electricity and water had been fixed since 1985 and there was no cost indexing mechanism\. ELECTRA, the national power and water utility generated and distributed power and desalinated water on four islands\. It operated at a deficit, lacked financial and technical resources to maintain old generating assets and public distribution systems, and capital for expansion\. The Government of Cape Verde (GoCV) financed the operating deficit and, in addition, subsidized customers by keeping tariffs low\. Municipal utilities were the only source for power and groundwater on the other five inhabited islands\. S\. Vicente had the only water treatment plant\. In 1999 at appraisal, only 43% of household were connected to the electric grid, 20% to water supply (with only a few hours/day or days/week service), 50% connected to the waste water system in Mindelo and only 7% in Praia, the capital\. Electricity and water losses were around 14% and 23% respectively due primarily to lack of maintenance and system's age\. 3\. Sector Policy\. The government's 1999 policy for the energy and water sectors, part of the 1997-2000 National Development Plan (NDP), called for: extending service coverage; improving service quality; reducing prices for electricity and water for consumers; providing incentives for conservation; encouraging renewable energy sources; and installing water treatment plants\. To achieve that it intended to: (i) establish the legal and regulatory framework and regulatory authorities; define tariffs; (ii) privatize ELECTRA; (iii) create municipal enterprises for water treatment; find private providers for off-grid energy particularly photovoltaic (PV); and (iv) develop grid-connected wind power\. 4\. The Project\. The Energy and Water Sector Reform and Development Project (Programa Energia, Agua e Saneamento - PEAS) built on the 1987 IDA Infrastructure and Technical Assistance Project (Cr\.1954-CV) which had assisted ELECTRA in reducing distribution losses\. PEAS was designed to support the agreements reached at the 1997 donor roundtable, organized by the GoCV, to reform the power and water sectors and privatize ELECTRA\. PEAS supported the government's 1999 sector policy 1 and the strategy for private sector participation\. It was consistent with the 1997 Country Assistance Strategy (CAS) which focused on achieving a viable and stable macroeconomic framework, consolidating policy reform for privatization, and accelerating poverty reduction\. PEAS supported the climate change operational program of the Global Environment Facility (GEF) aimed at promoting renewable energy by reducing cost\. 5\. Project Rationale\. At the time of project preparation, in the late 90's, the prevailing enthusiasm for private participation in infrastructure in developing countries was clear\. The project design reflected worldwide and regional experience which suggested that institutional development by way of privatization ensures efficiency gains in a short period of time, and that sustainable development required improved institutional framework, optimum use of available resources and improved productivity of human capital by targeting poverty issues\. There was strong ownership of this on the part of the Government\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 6\. PEAS was embedded in the objectives of the NDP, and was to support the Government strategy to increase private sector participation in the infrastructure sectors\. The development objectives were to: (i) improve the supply of power, water and sanitation systems; (ii) increase operational and end-use efficiency in the power and water sectors: (iii) lessen the barriers to the development of renewable energy resources; and (iv) foster sound management of water resources\. Specific objectives were: (a) privatization of ELECTRA; (b) increased private participation in and financial autonomy of water operations; (c) expansion and rehabilitation of power, water and sanitation systems in major urban centers; (d) development of wind power capacity with private financing; (e) promotion of solar photovoltaic and wind energy systems for decentralized use; (f) development of a regulatory and legal framework in the power and water sectors; and (g) capacity strengthening for regulation, and promotion of energy efficiency\. 7\. The Key Performance Indicators were: (i) Household access to electricity in Praia and Mindelo increasing to 90% and 99% respectively by 2007; (ii) Household access to water in Praia and Mindelo increasing to 65% and 90% respectively by 2007; (iii) Household access to sanitation in Praia increasing to 43% by 2007; (iv) The penetration of wind power on the three main grids (Praia, Mindelo & Sal) to an average of 19% by 2002; (v) 4,500 households to gain access to electricity from off-grid renewable sources; (vi) Cost recovery achieved for water distribution in 2002 (without subsidy); (vii) Water losses declining\. 2 1\.3 Original Global Environment Objectives (GEO) and Key Indicators (as approved) 8\. The GEO was to reduce carbon emissions from power generation through increased use of wind power and solar photovoltaic electric systems in the energy balance of Cape Verde\. 9\. The Key Performance Indicators were: (i) Full privatization of the power sector; (ii) Private participation in largest municipal water companies; (iii) Government subsidy for ELECTRA is phased out by 2000; (iv) At least 15% of all electricity generated by renewable energy by the year 2003; (v) Savings of 6500 tons of petroleum products in 2004 (substituted with renewable energy), equivalent to 19,000 tons of C02\. 1\.4 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO were not revised\. 1\.5 Revised GEO (as approved by original approving authority) and Key Indicators, and reasons/justification The GEO were not revised\. 1\.6 Main Beneficiaries 10\. Expected benefits of the project included: (i) improved quality of life and health for targeted population through increased access to electricity, safe water and sanitation systems; (ii) enhanced private sector development through supply of least-cost, reliable energy and water by private companies; (iii) increased private sector investment in the power and water sectors which would alleviate pressure on public resources; (iv) modernization of the power and water sectors; (v) foreign exchange savings by reducing the imports of fuel for power generation; (vi) development of efficient entities for the monitoring and regulation of power and water sectors; and (vii) reduction of greenhouse gas emissions and both its social and environmental benefits\. 11\. The project targeted the population and enterprises of major and secondary urban centers, including those that suffered from unsatisfactory power and water services and those in periphery urban areas that did not have access to these services and used inferior, less safe and more expensive means of supply\. The project also targeted part of those isolated households that were likely to be excluded from modern supply of electricity in the medium term (about 12,000 households)\. Cape Verde's enterprises would benefit from the project by participating in new companies in the power and water sectors to supply, install and maintain renewable energy systems\. 3 1\.7 Original Components (as approved) 12\. The original components of the project are: 12\.1\. Reform and Development of the Power Sector\. (i) Support for the privatization of ELECTRA; (ii) implementation of a sound regulatory and legal framework; (iii) promotion of demand-side management and energy efficient equipment; (iv) strengthening MCIE's capacity for policy, coordination and monitoring; (v) supply electricity to about 4,000 new customers; (vi) implement a sector investment program (marginally economic grid extension and mitigation of environment liabilities); and (v) related studies, technical assistance and training\. 12\.2\. Renewable Energy Promotion and Development\. (i) Extension of 7\.8 MW of grid-connected wind farms in Praia, Mindelo and Sal; (ii) development of decentralized wind or solar photovoltaic public and individual systems; and (iii) related studies, technical assistance and training\. 12\.3\. Reform and Development of the Water Sector\. (i) Support for the implementation of a sound regulatory and legal framework; (ii) creation of autonomous municipal water companies in Assomada and other municipalities; (iii) extension and rehabilitation of the primary and secondary water distribution network and water production systems in Praia, Mindelo, Assomada and Tarrafal; and (iv) related studies, technical assistance and training\. 12\.4\. Sanitation Development\. (i) Extension of sanitation systems in Praia; (ii) improvement of sanitation systems in Assomada; (iii) construction of wastewater reuse systems for Praia; and (iv) related studies, technical assistance and training\. 12\.5\. Project Coordination and Monitoring\. Support to the Project Management Unit (staff, equipment) and for the implementation of the Environmental management program (studies, TA & training)\. 1\.8 Revised Components The components were not revised\. 1\.9 Other significant changes 13\. Extensions of the Closing Date\. The combined IDA-GEF project was last extended on December 2006 to ensure progress on the legal and regulatory framework; then the IDA Credit closed on June 29, 2007\. The GEF Grant was first extended for twelve months to December 31, 2007, to allow the Government to enable the procurement of the grid-connected wind farms and the off-grid individual PV systems which encountered delays due to procurement problems and lack of investor interest\. By the fourth and final extension, the original closing date of June 30, 2004 had been extended to December 31, 2008 to implement the redesigned critical Wind Farm Project\. 4 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 14\. Preparation commenced in 1996 with a project unit preparing technical, social and environmental sector studies financed by a Japan Policy and Human Resources Development Fund (PHRD) grant\. Preparation accelerated with the 1997 water and power sector reform donor roundtable\. Civil society representatives and eight donors participated in the roundtable and reached consensus on privatizing ELECTRA and coordinating donor programs in the water and sanitation sector of the major urban centers under the umbrella of PEAS\. It was decided to establish a task force and regulatory committee to prepare the legal and regulatory framework for the privatization of ELECTRA and for tariff reform\. This was to be completed by 1998\. In early 1999 at appraisal, a Privatization Advisor had been recruited and the Statement of Sector Development Policy had been issued\. The legal framework for privatization was signed in late 1999\. 15\. PEAS was approved in May 1999, a year after appraisal, and became effective seven months later in December 1999\. Effectiveness conditions included the release by the GoCV of final documents for the privatization of ELECTRA (including a draft concession agreement) satisfactory to IDA\. However, elections in 2000 delayed the signing of the concession agreement till 2002 when the new Government had come into power\. Soon, the complexity of PEAS privatization of the national utility for electricity and water, expanding its generation capacity, reducing its losses, improving its efficiency, collection and finance, setting tariffs, environmental remediation, social connections for the poor, procuring renewable energy projects, expanding water supply and sanitation systems and treating plants became apparent and started to slow implementation\. In part, these implementation issues were aggravated by PEAS's fragmentation project activities spread over nine islands each with their own power and water systems and local agencies and municipalities to manage these\. Moreover, it soon became apparent that implementation capacity of ELECTRA, the newly established regulatory agency, the environmental agency, and the ministries in charge of energy and water was weak\. 16\. PEAS' design did not include mitigating measures to deal with the delays, complexity or fragmentation\. The risk that Government commitment for the privatization would falter was considered negligible to modest\. In addition, risks related to an unsatisfactory concession agreement were considered negligible and to be mitigated with the recruitment of advisors (which was done in 2005 with limited benefits)\. Also, technical or economic limitations to the wind farm extension were considered negligible while household's ability/willingness to pay for power, water and sanitation services that do not meet their expectations was considered modest as was the performance of implementing entities and delays with procurement decisions\. However, overall risk rating was substantial\. Taken together, PEAS' design and quality-at-entry were moderately unsatisfactory given the complexities, fragmentation, weak implementation and procurement capacity and the unrealistic expectations regarding consumers' willingness to pay for sanitation services (in view of the fact that all or most had septic 5 tanks) and their demand for PV systems (in view of the expanded connections and rural electrification)\. 2\.2 Implementation 17\. The success of the project was largely predicated on its implementation by a financially viable ELECTRA, under the management and majority ownership of a private foreign operator\. The implementation period (2000-2008) turned out to be unpropitious for the restoration of power sector finances\. The continued rise in oil prices throughout the period seriously affected ELECTRA because its power generation is based almost exclusively on imported oil\. In addition, the authorities failed to put in place adequate tariff mechanisms allowing for cost recovery\. Starting from a situation where electricity tariffs were below cost recovery, the GoCV found it politically and socially difficult to adjust tariffs to ensure adequate return on investments for the private operator, in addition to the increase required to pass on rising oil prices to consumers\. The poor performance of ELECTRA and the issues with tariffs affected implementation severely\. 18\. Failure of ELECTRA's privatization\. According to the sector development policy, the GoCV had decided to privatize ELECTRA because not only did it supply power to less than half and water to only one fifth of households, but it did so at costs that generated financial deficits that had to be covered by government contributions\. The privatization agreement, which included investments by the Strategic Partners (SP) in power and desalination plants, was signed in late 2000\. But the finalization of the concession agreement was held up for a variety of reasons including the delays in the mobilization of the funds by the SP and disagreements between the SP and the GoCV (which was represented on ELECTRA Board of Directors) on the tariff adjustments to accompany the investments\. The 2000/2001 elections, resulting in a new Government delayed the signing of the concession agreement further till 2002\. Investments expanding power generation and water production capacity eventually took place in 2002/2003\. This allowed a significant increase in access to utility services (ELECTRA's customers increased from less than 30,000 in 1998 to around 95,000 in 2008)\. It also resulted in an improvement in generation efficiency and costs (with new engines running on HFO instead of diesel)\. 19\. However, management and supervision by the Board remained ineffective and ELECTRA's dire financial position hold up improvement in other areas\. Quality and reliability of service remained inadequate, and brown-outs and cuts in water supply continued\. High levels of distribution losses, resulting from fraud and illegal connections, persisted, particularly in Praia\. The SP trained staff, but their participation in ELECTRA's daily management was minimal, especially in the strategic, financial and engineering areas\. No further investments were made during 2004-2006 given the persistent disagreements over tariff adjustments\. Eventually, in 2006 the GoCV recuperated a majority equity participation in ELECTRA and assumed again the responsibility for appointing the managers of the utility\. ELECTRA's operational performance deteriorated further in 2007\. In 2008, the SP ceded back to the GoCV their remaining equity share in ELECTRA\. 6 20\. In addition to managing the expansion of power generation and desalination capacity, ELECTRA took on, under the concession agreement, several commitments related to project components, such as: operating a new water treatment plant in Praia, connecting a much larger proportion of households to the expanded water supply and sewerage systems, managing the procurement of the wind farm extensions and of the PV system\. Achieving these goals proved difficult given ELECTRA financial distress and persistent disagreements between the SP and the authorities regarding tariff adjustments\. 21\. Privatization did bring positive changes in some areas, such as financial reporting and accounting\. However, at project completion, key indicators of commercial and financial performance had not improved\. ELECTRA's financial situation remained dire, and in the absence of significant investments after 2003, the growing demand for power, water and sanitation remained unmet\. 22\. Regulatory Delays\. To accompany privatization, the legal and regulatory framework for the sector had to be developed from scratch\. Legislation for power, water, concessionary arrangements and independent regulations was passed in 1999\. However, adequate tariff-setting mechanisms and regulatory arrangements for the sectors had yet to be put in place\. During project preparation, these were identified as key elements for the success of privatization, and PEAS included technical assistance to support "the implementation of a sound regulatory framework for the power and water sectors, to be monitored and enforced by a multi-sector regulatory entity"\. However, their absence at the beginning of the privatization process proved to be a source of uncertainties, conflicts and failure\. Subsequently, in the absence of sustained political commitment, putting in place adequate tariff regulation proved difficult\. 23\. The (first) Multisectoral Regulatory Agency was created in 2000, but appointment and training of staff were slow and regulatory capacity remained inadequate\. In view of this situation, the newly elected GoCV dissolved the agency in 2002\. The (second) Agency for Economic Regulation (Agencia de Regulacao Economica ARE) created in 2003 also took a long time to develop staff and regulatory capacity\. The GoCV enacted legislation to cap tariffs for five years allowing ARE only annual adjustments based on cost factors\. However, these adjustments were difficult to make given ARE's capacity and the lack of planification of ELECTRA's investments (aggravated by the physical distance between ELECTRA's headquarter located in Mindelo on the Island of S\. Vicente and the regulator located in the capital Praia on Santiago)\. At project closing, after significant technical assistance, supported by the Bank, ARE functioned satisfactorily, but consumers find tariffs for electricity and water, and particularly sewerage, high in view of the inadequate supply and the frequent cuts\. 24\. Procurement Problems\. The first tender for the wind farms was launched in 2002\. IDA had agreed (Project Appraisal Document-PAD p\. 9; Aide Memoire of 11/27/2000) that ELECTRA could use its own procurement procedures\. However, it did not approve the prequalification proposing instead a new ICB tender with post qualification\. The ICB was launched in 2003 and one of the two bids was considered responsive\. However, ELECTRA could not come up with the funds to pay the gap 7 between the GEF grant and bid price\. During 2006 and 2007, the GoCV looked for new donors to co-finance the wind farms\. In 2007, Infraco - an EU-NGO for public-private partnership agreed to develop a much larger (28MW instead of 5MW) wind farm extension project\. Infraco issued EU standard bidding documents, but although the Bank agreed that these were unrestrictive, transparent and competitive, it could not accept a tender that did not use Bank procedures and procurement documents (the bidding document used by the project sponsors would have required numerous waivers to ensure compliance with the Bank guidelines including the World Bank Fraud and Corruption / Audit, the Bank Remedies and the refunding clauses in the case of misprocurement in the EPC contract)\. Consequently, the Bank did not approve the use of the GEF grant for this tender despite an official request for waivers from the GoCV\. Sixty percent of the GEF grant for renewable energy was cancelled\. 25\. It should be noted that none of the supervision missions included procurement specialists and the PMU said that between 2003 and 2007 it had to wait, often for months, to obtain no-objections or advice for procurement activities\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 26\. The PAD does not have an M&E section\. Annex 1 lists 27 Key Performance Indicators (KPIs), five for sector-related CAS Goal, seven for the PDOs and GEF operational program objective, and fifteen for project outputs\. The monitoring would be done from supervision, economic and sector reports\. The indicators have individual achievement dates, with the majority for the power; water and sanitation; and, renewable energy components to be reached by 2007\. The KPIs have been monitored and updated only in 2002, 2006 and at closing\. It is clear that the project did not invest enough in a specific M&E system neither for the PMU nor for ELECTRA\. Neither the Bank, the PMU nor ELECTRA paid sufficient attention to the KPIs; the M&E system in place failed in generating data in a timely manner, as a result, during most of the project's lifetime, ARE barely knew what to look for and then got little from ELECTRA to work on\. Therefore, there is a clear disconnect with the M&E satisfactory rating in the PSRs\. 27\. At Mid Term Review (MTR), the KPIs were reviewed for achievement and realism\. Proposals for resetting starting points and unrealistic targets and problematic definitions were put forward when the starting point of the indicator clearly relied on faulty data or the targets were unrealistic (as noted in the Aide memoire of the January 2003 mission)\. However, target values were never formally revised\. The majority of the GEO and PDO indicators had either not been achieved or not reported on and therefore clearly not used\. Exceptions were ELECTRA's privatization, investments, and training of workers which had been achieved\. Also achieved were: the per capita water consumption in Praia and Assomada for 2002; the legal framework for the water/sanitation sector; and, the installation of autonomous water services\. The PMU has updated the indicators at closing which are shown in the data sheet, part F\. Results Framework Analysis and in Annex 2\. Globally, only one third of the 27 indicators have been achieved\. 8 2\.4 Safeguard and Fiduciary Compliance 28\. Safeguards\. The Executive Secretary for Environment (Secretariado Executivo Para o Ambiente-SEPA) was to oversee compliance with the Environmental and Social Action Plan (ESAP)\. The ESAP comprised the cleaning up of ELECTRA's production sites (noise, gas emissions and oil spills) and applying social and environmental standards during the construction of the power, water and sanitation systems infrastructures\. Although SEPA's Directorate was provided with the required equipments to fulfill their work, it was not effective at monitoring and ensuring compliance and was replaced in 2005 by the General Direction of the Environment of the Ministry of Environment Agriculture and Fishing\. Compliance was ensured through regular Bank supervision missions (although these did not include safeguard specialists), the inclusion of mitigation measures in construction contracts, and the oversight of the implementation of the mitigation activities by ELECTRA\. These were completed in 2005\. There was no resettlement, either for the construction, or the acquisition of sites for the wind farms, and OP 4\.12 Involuntary Resettlement did not apply\. 29\. Fiduciary\. Financial management including audits has been satisfactory throughout implementation\. Supervision missions included financial management specialists at the MTR and in 2006\. The procurement of some activities on the other hand was plagued by confusion and misunderstandings\. The Bank did not allow other than its own procurement procedures for the purchase of wind power equipments\. With the benefit of hindsight, this impossibility should have been clarified from the beginning, instead of leaving open the possibility of the use of ELECTRA's own procedures\. Also, the PIU has indicated that access to and supervision by procurement specialists was not sufficient (paragraph 23)\. While procurement related issues were not the primary cause of the very partial implementation of the renewable energy component, they created additional delays without which an earlier restructuring of this component might have been possible\. 2\.5 Post-completion Operation/Next Phase 30\. Connections to the water supply and sewerage continue to be made although at a very slow pace, for instance, about 200/year for sewerage connections in Tarrafal\. At this rate it will take years before the water treatment plants can function properly\. In view of the continuing strong demand for more power and water, ELECTRA's investment plans include power and water production, water reserve build-up, and distribution expansion\. However, unresolved revenue/tariff-, collection and billing-, and operational issues hamper efforts to meet demand\. These issues and lack of capital/equity make it difficult for ELECTRA to access capital markets and investors to finance expansion of supply\. The Bank is working with ELECTRA to address strategic and financing issues and investments in power on the islands of Sal and Sao Vicente and in water in Praia\. 31\. Further sector reforms in terms of restructuring ELECTRA and tariff reform are needed to achieve PEAS objectives of efficiency, sound management and renewable energy\. The GoCV plans to restructure ELECTRA and the Bank is proposing support for 9 policy, strategy, efficiency and cost reforms\. The Bank and other donors are also looking into further support for ARE to strengthen its regulatory capacity\. Tariffs do not yet function as incentives for ELECTRA to improve efficiency and meet demand, while high connection fees discourage consumers from connecting to sewers\. On the other hand, given observed oil price volatility, ELECTRA should be able to pass on fully and without delays the variations of oil prices to its customers\. The use of the current tariff methodology based on performance benchmarks developed for distribution utilities in developed countries is not appropriate (at least in the short run)\. This is important as the Government has been clear that it wishes to avoid subsidizing inefficiency at ELECTRA through higher tariffs\. Therefore, a robust and incentive-compatible tariff adjustment mechanism that is better tailored to Cape Verde's logistical realities is still essential for the viability of the power and water sectors\. Since ARE has not been able to function without political interference in tariff setting, it is recommended to review ARE's governance arrangements, including a better delineation of its role in relation to that of other agencies exercising regulatory functions, and to strengthen its analytical capacity to base tariffs on sound economic and social analysis\. Additional capacity building within ARE will be required\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 32\. The PDO of improving supply of power, water and sanitation, increase efficiency, and develop renewable energy were (and remain) important priorities for Cape Verde and for Bank assistance\. PEAS's design to establish the legal and regulatory environment, privatize utilities, increase supply, and expand renewable energy was relevant\. 33\. The project was designed around the introduction of private participation\. The success of the project was largely predicated on its implementation by a financially viable ELECTRA, under the management and majority ownership of a private foreign operator\. The Renewable Energy Component, with the objective to increase Grid Connected Wind farms (7\.8MW) and off-grid electrification services using photovoltaic and wind systems have proved to be unsuccessful due to lack of financing to fill the gap and weak appraisal of market conditions for the PV system, which was largely superseded by on-grid electrification\. 34\. Implementation did result in increased connections to power, water and sanitation albeit less than planned for water and sanitation and insufficient to satisfy demand\. No new renewable energy resources have been built despite grant funding availability and extensive technical assistance\. 3\.2 Achievement of Project Development Objectives and Global Environment Objectives 35\. The PDO indicators for improved access to energy, water and sanitation were not achieved, although access improved significantly for energy (90% of households connected), less rapidly for water (60% connected and consumption still low) and very gradually for sanitation (30% connected) (see Annex 2)\. This level of achievement 10 resulted from the investments in power and desalination by ELECTRA and in basic infrastructure under PEAS\. The achievement will improve after the closing date of PEAS with the additional connections that are planned for the next 4 or 5 years\. This is possible since the water supply and sanitation - including waste water treatment - systems have been greatly expanded and rehabilitated in the major urban and suburban areas\. An increase in the supply of water and a decrease in the high costs of connection particularly for sewerage are needed to optimize the PEAS investments in basic water, sewerage and water treatment infrastructure\. 36\. Private sector participation in the sector was achieved for most of the life of PEAS with the buy-in of ELECTRA by private partners\. Lack and/or failure of (tariff) regulations and ineffective management and supervision by the Board caused ELECTRA to revert back to the State, partially at the end of 2006, and completely in 2008, without much if any benefit from the privatization in terms of commercial performance or quality of service\. Efficiency improvements in energy and water use have not been adequately monitored and do not appear to have been achieved with the notable exception of the generalization of efficient lighting financed under the GEF grant, which is the most cost- effective way to reduce energy consumption and reduce green-house emissions\. Distribution losses in both sectors remain high\. Clandestine connections, especially in Praia, are now a major issue causing unacceptable levels of distribution losses\. It has to be noted that since ELECTRA's management reverted back to the State, the situation and sector sustainability has worsened\. 37\. The GEF objective of removing barriers to renewable energy has been extensively studied both before and during implementation\. It has not been achieved, however, as a result of a mix of design, management and supervision failures\. No new sources of renewable energy grid-connected wind farm extensions and off-grid PV systems - have been built due to inability to finance by ELECTRA and failed procurement of the wind farms and conceptual and analytical misunderstandings of the viability of the PV systems\. Greenhouse gas emissions have not been monitored, but are very likely to have declined as a result of increased efficiency in desalination and cleaner power generation plants\. 3\.3 Efficiency 38\. PEAS was to bring about efficiency improvements in water and sanitation and power, lower the cost of services to consumers, increase revenues for the Government, and improve the environment\. At appraisal, the investment in increasing water supply was projected to yield a Net Present Value (NPV) of 797 million CVE\. At closing, the NPV was calculated at 993 million CVE\. For sanitation, the average incremental cost per cubic meter of effluent was estimated at 30\.23 CVE at appraisal\. At completion, this incremental cost was not possible to calculate due to lack of data\. The improvements in efficiency, quantity and quality of electricity were not quantified at appraisal and are likely to have been achieved at least in part (see Annex 2)\. Benefits in terms of reduced losses and increased revenues to the Government as a result of privatization have not been achieved\. The Government had to exchange financing subsidies for power and water for financial guarantees of ELECTRA's commercial loans\. The renewable energy component was not realized and the economic benefits from that have not been achieved\. 11 39\. Financial benefits in terms of increased revenues and efficiency for ELECTRA have not been achieved largely because of inadequate tariff adjustments and the reversal of ELECTRA's privatization\. International investors have not been found for the off-grid PV systems\. Institutional benefits have been uneven although consumers in secondary towns have benefitted from the establishment of autonomous utility companies in terms of better quality services\. On the other hand, the costs of services have increased for both power and water while the service quality of the latter has not\. PEAS has brought about improvements in the environment\. ELECTRA's power plants have been cleaned-up; emissions from desalination and generation have been lowered thanks to better technologies that use less energy and fuel\. 3\.4 Justification of Overall Outcome and Global Environment Outcome Rating Rating: Unsatisfactory 40\. The partial outcomes of PEAS in terms of: (i) increased power, water and sanitation services; (ii) better sector institutions and a new regulatory framework; and (iii) mixed outcomes with privatization and efficiency, have been lowered by the fact that the renewable component has not been realized\. The assessment of outcomes must also take into account the rapid increase in customer demand for sector services\. For instance, population growth in Praia has been between 2 and 3% annually for most of the life of PEAS\. While supply has increased, the demand for connections has begun to exceed the increase in supply\. As a result, the level of service (i\.e\. liters of water/day available per customer) has been declining\. Also, the small base of basic infrastructure at effectiveness and the almost total lack of a legal and regulatory framework, combined with a weak national utility must be taken into account in assessing progress with increasing supply of power, water and sanitation and developing a regulatory framework and tariff agency\. But, even taking the small positive outcomes in the global environment into account the overall outcome is unsatisfactory\. 41\. The GEF objective of removing barriers to renewable energy, it has not been achieved and no new sources of renewable energy have been built\. The GEF disbursement rate is, at the end of the project, low with less than 40%\. The KPIs for the GEF component have not been achieved\. The one redeeming future has been the effective support for energy efficient lighting; however the overall outcome is unsatisfactory\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 42\. PEAS's increases in access to power, water and sanitation have contributed to poverty reduction\. As a matter of fact, PEAS financed some 3,200 social connections to power for poor families\. It is unfortunate that such an initiative did not cover all targeted stakeholders, especially the poor and most vulnerable households in Tarrafal and Praia\. Consequently, this missed opportunity resulted in lower social outcomes (in terms of environment enhancement and social development)\. The rural electrification and major 12 improvements of the roads network undertaken in parallel by the GoCV have brought electricity to towns and villages throughout the country and improved mobility and access to, among other, schools and markets\. Moreover, the GoCV gave away 300,000 low-consumption lamps (financed by the GEF portion of the project) to families helping to lower their electricity bills\. (b) Institutional Change/Strengthening 43\. Within the Cape Verdean government, the DGIE still does not have the technical means to efficiently manage the sector and exercise its supervisory role over ELECTRA and PEAS did not provide enough attention on DGIE's capacity building\. Institutional change in the regulatory area has been slow and it has been poor in the privatization policy area\. The GoCV created the legislative basis for the power, water and sanitation sector in 1999/2000, which did not exist\. It was less effective in creating an independent regulatory agency for the sector, which took until 2006\. Strengthening the Instituto Nacional de Gestão dos Recursos Hidricos (National Institute for Water Resource Management responsible for groundwater) was slow as was the strengthening of the environmental agency and ministry\. (c) Other Unintended Outcomes and Impacts (positive or negative) 44\. To improve public health PEAS not only included an expansion of the water and sewerage systems in urban areas to replace tanker trucks, old reservoirs, standpipes and septic tanks, but also water treatment plants in Praia, Tarrafal and St Cruz among others\. The new treatment plant in Praia operated by ELECTRA has a capacity of 8,000- 14,000m3/day and uses gas from sludge to treat the sludge so that it can be used for agricultural purposes\. However, in part because the water supply is still inadequate (a few hours/day), but more because connections to the expanded sewerage system are expensive, only about 1,000 households are connected and the plant gets less than 1,500m3 of sewerage/day\. This is insufficient to use the sludge processing part of the plant\. Also, some of the sophisticated purification sub-systems do not work\. The end result is that the sludge is dumped and the (semi-treated) effluent is pumped into the ocean (some 1,000m3/day)\. Only by 2014 is the plant expected to treat some 9\.000m3 of sewerage\. In Tarrafal, there are only 200 connections to the sewers and the (small amount of) sewerage is made to bypass the large treatment plant and dumped in the ocean\. The plant is St\. Cruz is also not used for similar reasons\. 45\. ARE has not been able to regulate the connection costs (for water/sewerage) charged by ELECTRA or come up with incentives to encourage household to connect to the sewerage system\. It is cheaper for household to use their (often self-built and not normally serviced) septic tanks\. Neither the intended impact on the environment from the investment in the wastewater treatment plants, nor the projected economic return (selling sludge and effluent) had been realized at closing\. 13 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 46\. There have not been further stakeholder workshops after the one in 1997 (paragraph 13)\. However, customers have various channels to discuss (or complain about) power, water or sanitation services\. ELECTRA has offices in most urban areas as has ARE where customers can discuss their issues\. As a matter of fact, ARE publishes information leaflets about public services and the rights of customers\. Finally, services and tariffs are subject of debate in the National Assembly, and representatives of the municipalities have a seat on the Board of ELECTRA\. 4\. Assessment of Risk to Development Outcome and Global Environment Outcome Rating: Substantial 47\. The GoCV is planning further expansion of power and water supply (www\.governo\.cv/ Programa do Governo Para A VII Legislatura 2006-2011)\. The infrastructure built and/or rehabilitated under PEAS will allow the distribution of energy and water to more consumers\. The greatest risk will be, however, to find a balance between tariffs that will be affordable for customers and at the same time enable utilities to recover cost and improve earnings\. The challenge for ARE will be to come up with a more progressive tariff structure that's responsive to consumers of different income and consumption levels\. In addition, a financial risk remains with regards to ELECTRA and to the guarantees provided by the Government\. ELECTRA's financial situation remains dire and its level of debt high and still needs to be addressed\. The risk to the global environment outcomes is relatively small although the challenge of untreated effluent being dumped into the sea needs to be resolved\. New power and desalination plants will have cleaner technologies, planned investments in wind power will help reduce emissions, and once the water treatment plants become fully operational, disposal of sewerage will improve\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 48\. PEAS's design responded to the urgent needs of customers for more energy, water and sewerage services\. Also, cooperation with other donors and with civil representatives and government agencies was satisfactory during preparation and appraisal\. Three donors, the Austrian Government, the OPEC Fund, and the European Union co-financed the Project\. However, with the benefit of hindsight, it appears that progress with a regulatory entity and framework was not sufficiently advanced, and the analyses of ELECTRA's financial health and of the prospects of attracting investors for the off-grid PV systems were overly optimistic\. In addition, the costing of the wind equipments was underestimated (in fairness, the devaluation of the USD against the euro 14 and increasing international demand for wind power equipments were parameters that were difficult to forecast at project preparation)\. The viability of the sewage plant was not sufficiently analyzed\. Connections for poor and vulnerable households should have been highly subsidized and seen as contributing to improvements in public health\. (b) Quality of Supervision Rating: Unsatisfactory 49\. The first supervision mission and the PMU agreed that future missions would be conducted semi-annually\. However, between the December 1999 effectiveness and the December 2008 closing, there were 12 missions with in some cases intervals exceeding 18 months\. Beginning in 2005, supervision missions actively addressed the unresolved tariff setting issue, providing technical assistance to ARE, and including financial analyst in supervisions\. The Bank financed the services of a mediator to help resolve the differences between the GoCV and the SP\. In view of the difficulties with ELECTRA's privatization and finances, management suggested to add the country economist to supervision missions, and to perform a quality of supervision assessment (QSA)\. These suggestions were not taken up\. Overall, there was an intense, if ultimately unsuccessful, supervision focus on salvaging the privatization experiment\. 50\. There were four Task Team Leaders (TTLs) over the lifetime of the project (9 years) and although the energy and sanitary specialists provided continuity, there was never a procurement specialist on the supervision missions to work with the PMU and ELECTRA on the complicated procurement of the wind farm extension, nor were Social Development or Environmental Specialists included to address the social and environmental issues\. As the Government's ICR indicates, the PMU at times did not know which staff could be contacted to help with procurement, regulatory, social or environmental issues\. Moreover, the project languished for long periods with insufficient proactivity of restructuring\. The MTR was done at the right time, but did not push for solutions with privatization and tariffs\. 51\. All this said, it is important to point out that the project has suffered from very negative external circumstances and the financial viability of ELECTRA and of the GoCV have been severely affected by the increase in oil prices\. In addition, the successful implementation of the project was predicated on the privatization of ELECTRA and on implementation by the private operators\. The Bank was very actively involved in trying to bridge the differences between EDP and the authorities regarding tariff adjustments and save privatization and the failure of the GoCV to put in place adequate tariff setting mechanisms cannot be blamed on a lack of effort on the Bank part\. It is not clear if more intense supervision efforts and resources would have made a significant difference\. The failure of privatization and the slow progress in the establishment of adequate regulatory institutions and mechanisms must be put in the context of similar problems with power/water sector reforms and privatization in Sub Saharan Africa countries in the same period\. The complete dependence of ELECTRA on imported oil products for power generation and water production meant that the stress put by the oil price shock on ELECTRA was even more severe than for other African utilities\. 15 (c) Justification of Rating for Overall Bank Performance Rating: Unsatisfactory 52\. Bank performance in terms of working with the GoCV in establishing: (i) a regulatory environment and authority; (ii) a commercially minded and responsive supervisory Board for ELECTRA; and (iii) a tariff structure that provided incentives for ELECTRA as well as for consumers, was not effective overall\. In part because of the lack of continuity in the TTLs and uneven skill composition of the task teams, supervision was less effective than expected by the GoCV\. PEAS was designed to make major contribution to both social and environmental conditions with the renewable energy projects, however inconsistencies about procurement procedures, paucity of timely advice, and misunderstandings contributed to cancellation of these project investments\. 5\.2 Borrower Performance (a) Government Performance Rating: Unsatisfactory 53\. At the time of project preparation, in the late 90's, the prevailing enthusiasm for private participation in infrastructure in developing countries was clear\. However, the delay with the preparation of the regulatory framework and the establishment of the agency was to haunt the privatization of ELECTRA as well as the implementation of PEAS\. Throughout the privatization episode, the strength of GoCV commitment to privatization and tariff reform remained in question\. The government was committed to protecting the consumers by keeping tariffs low\. The resulting tariff did not reflect commercial costs in an environment of rising oil prices\. These conflicting policies affected the success of ELECTRA's privatization and ELECTRA's performance has worsened since the return to public ownership with a rapid rise in non-technical losses in Praia\. It is not clear if even at this time, the expertise of ELECTRA's Board is adequate to deal with the many strategic difficulties in the planning, financing, billing, and maintenance areas the utility is facing\. The sector ministries and ARE have been only partially effective in overseeing regulations, the utilities and tariffs, and environmental protection\. The government's performance in implementing PEAS was unsatisfactory and there is a need for structural sector reforms in the ministries to improve oversight of ELECTRA and the municipal utilities and for genuine independence of regulatory agencies if investments in the water and electricity sectors are to generate the expected benefits\. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory 54\. The PMU has been diligent in the fiduciary area and in reporting\. It has worked well with the other donors, but has been less proactive with ELECTRA, ARE, the sector ministries and the Government\. Although a number of issues are not fully under its control, the PMU has to share the failure in coordinating the management and procurement of the renewable energy projects with ELECTRA, the sector ministries and 16 the Bank\. Similarly, the agencies ARE, INGRH and SEPA - have also shown uneven performance\. ELECTRA's performance has been unsatisfactory and part of that was due to poor oversight by the Board, especially of the government and municipal representatives who had golden shares in the company\. (c) Justification of Rating for Overall Borrower Performance Rating: Unsatisfactory 55\. While preparation of PEAS by the PMU, ministries, agencies and the Government showed strong commitment, these partners have been less effective in implementing the Project\. PEAS was not given the attention it required from DGIE, commensurate with the level of resources provided to DGIE under PEAS\. The dispute with the SP over investment efficiency and tariff policy persisted for a large share of the life of the project, and the underlying issues remained unresolved after Government resumed ownership of ELECTRA in 2006\. Parts of PEAS investments such as the extension of the water and sewerage systems and the water treatment plants are not operational and do not generate benefits\. In the end, customers are not having their need for power, water and sanitation met despite the investments made\. The Government has to take its share of responsibility for this unsatisfactory situation\. 6\. Lessons Learned 56\. Project preparation and quality at entry\. Some issues could have been better anticipated during project preparation\. - The underestimation of the difficulties and risks related to privatization had a significant impact on project implementation\. While there was broad agreement on the overall privatization scheme, there was insufficient appreciation and consensus on among other issues, the tariff, and the duration and exclusiveness conditions of the concession agreement\. Moreover, even after the agreement had been signed, disagreements persisted about the timing and size of investments, source and cost of finance/loans, tariffs, earnings and efficiency/performance standards\. It is now widely accepted that an enabling condition for a successful privatization is to put in place a comprehensive, sound concession agreement (including tariff adjustment provisions) prior to signing a privatization contract\. - The project suffered from an unrealistic timeframe for the implementation of the legal and regulatory reform\. Initiating the privatization process when the legal and regulatory framework has to be established from scratch is a major challenge\. Although in retrospect, the sequencing of the legal and regulatory reform in relation to the privatization process could be called into question, the focus here is the insufficient time allocated to the establishment of the regulatory agency prior to project effectiveness\. Experience from other countries has shown that, in principle, a role of the regulator is to play an honest-broker role, independently intermediating between the government and 17 operator\. Its earlier establishment might have mitigated the many difficulties that impacted the privatization process\. - The implementation of the regulatory framework and entity was crucial for the success of this power/water project, but was designed and supported under a different IDA-financed project, which created some difficulties during implementation\. The ingredients of successful utility regulation are largely sector specific and it appears important to have a strong and sustained input of sector experts in the design and supervision of activities in support to regulatory reform and capacity-building\. - With hindsight, the support to regulatory reform provided by the Bank under this project appears to have not been focused enough on the critical elements for the success of the project\. One possible approach would have been to move forward with regulation by contract, which is a well established model for water utilities, and is used as well as for small power utilities\. A contractual tariff adjustment formula could have been agreed at the time of privatization\. It would have set the indexing parameters for the first few years of privatization (e\.g\. five years), and established the broad principles for subsequent revisions\. This would have left enough time to establish the sector regulator and build its capacity, which could have avoided the disputes between the GoCV and the SP over tariff adjustments that were the main source of failure of the privatization experiment\. - Finally, in retrospect, a strong policy and regulatory framework also needed to be in place to exploit opportunities for alternative energy, in order to deal in a satisfactory manner with demand-side issues\. Cape Verde had excellent opportunities for alternative energies but a policy and regulatory framework conducive to renewable energy needed to be in place for wide scale adoption to be successful\. Most potential users did not have enough incentives, or could not afford the initial investment in energy systems such as solar\. It is imperative for the Government and donors to find a way to have customers take a longer view about their energy needs and costs and act upon incentives to invest in alternative energies to meet their needs\. Similarly, the demand-side issues had not been sufficiently analyzed for the sanitation component\. 57\. Putting in place robust and realistic tariff adjustment mechanisms is still essential for the viability of the power and water sectors\. Given observed oil price volatility, ELECTRA should be able to pass on fully and without delays the variations of oil prices to its customers\. There is ample evidence that financially distressed utilities react by cutting maintenance and reducing investments, and that their operational performance tends to deteriorate as a result\. The tariffs set by ARE, need to recognize that ELECTRA's costs of operation are inherently high: providing electricity and water services to nine inhabited islands (only three of which have any substantial demand) presents ELECTRA with serious logistical challenges\. In addition, ELECTRA will need to meet the increase in demand and catch up with the lack of investments since 2003\. In 18 this context, the use of tariff methodologies and performance benchmarks developed for distribution utilities in developed countries is not appropriate\. 58\. Addressing the Social Dimension of utility services and affordability issues\. The issue of affordability, for the poorest consumers, has been a significant one at several points in the implementation of this project (PV component, sanitation, tariff adjustment)\. Given the positive externalities of sanitation, and the existence of underutilized infrastructure, it is urgent to put in place adequate pricing incentives for increasing the number of connections\. Subsidizing the upfront connection fee would appear to be a logical option\. 59\. A more general concern, which the Authorities will always need to take into consideration, is the inherent tension between seeking a cost-reflective tariff structure on the one hand, and taking into account social and political considerations on the other\. The two most salient issues are (i) the existence of social features in the tariff, and (ii) having a uniform national tariff\. Regarding the first point, a `lifeline' tariff is already in place in Cape Verde\. In comparison with other most other SSA countries, this tariff is narrowly targeted towards the smallest users\. In particular, the benefit is limited to consumers using less than 40 kWh per month\. As a result, a consumer using 50 kWh per month pays the same price per unit as a much larger and wealthier customer consuming ten times as much\. In principle, targeting the benefit of the lifeline tariff towards the poorest users is commendable\. The downside is that it could make it more difficult to implement the needed tariff adjustments\. As many other countries, Cape Verde has a national uniform tariff for electricity, in spite of very significant differences in the cost of supply between islands\. Therefore, the overall financial viability of the utility depends on its ability to generate surplus with the most profitable customers (commercial users in islands supplied with HFO)\. Any decision regarding the scope of ELECTRA's operation (expansion of services towards less profitable users, sub-concessioning services for some islands) must be preceded by an analysis of its impact on ELECTRA's overall financial viability\. 60\. Improving ELECTRA's governance\. As the major shareholder of ELECTRA, the GoCV has the responsibility to appoint board members possessing the adequate experience and commitment for the function, and to hold them accountable\. In addition, while the primary responsibility lies with ELECTRA's management, it will also require an effective and sustained support of the GoCV (to combat fraud, disconnect users in default, eliminate illegal connections, and reduce the arrears of municipalities)\. The sectoral reform are unlikely to succeed without significant attention to governance, notably to aligning incentives; promoting transparency and benchmarking; enforcing the rule of law (especially to reduce non-technical losses)\. 61\. Lessons for the design of future Bank operations\. A general lesson is that projects should remain relatively simple\. It appears important to limit the number of activities and their complexity to take into account the implementation capacity of the client, and the limitation on supervision resources\. This is especially the case for components and sub-components that involve capacity and institution building, whose 19 implementation is lengthy and can occupy a large part of the dialogue with the authorities\. One recommendation would be to focus on the institutional and regulatory issues that are critical for the success of the project\. A general support for sector reform, on the basis of a weak commitment of the authorities, has limited probability of achieving the intended results\. Another key lesson is to address the issues of affordability and financial viability at the project preparation stage\. The implication is for instance to make sure that the promotion of renewable energy, either is cost effective for the utilities or users, or is supported by adequate transfer and subsidy mechanisms\. This would also be the case for other investments that expand services in areas for which the utility is not able to charge cost-recovering tariffs (e\.g\. expanding access in rural areas for poor consumers)\. The fact that the provision of social services has a cost for the utility and that it needs to be able to cross-subsidy these services or be compensated by other means is essential\. It appears also important to focus on investments that increase the efficiency of the utility (for instance by lowering generation cost, or water production costs)\. Such investments often have the benefit of expanding supply and lowering costs at the same time\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 62\. A summary of the Borrower's implementation completion report is provided in Annex 7\. The report provides primarily detailed information and explanations of what was accomplished by component\. Among the few issues the report raises are delays in no-objection, the question of the skill mix of the supervision team, and the fact that several missions comprised just the TTL instead of a team of different experts such as procurement, social and environmental safeguards specialists (paragraph 44)\. The Borrower's ICR emphasizes the increases in coverage achieved during the life of the project and concludes that PEAS' contribution to the power, water and sanitation sectors was satisfactory\. (b) Co financiers (no comments obtained yet) (c) Other partners and stakeholders (no comments obtained yet) 20 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) CV-Energy & Water SIL (FY99) - P040990 Appraisal Estimate Actual/Latest Components Percentage of (USD millions) Estimate (USD millions) Appraisal POWER SECTOR REFORM & DEVELOPMENT 9\.15 5\.04 55\.1% REFORM AND DEVELOPMENT OF WATER 12\.38 16\.26 127\.0% SECTOR SANITATION DEVELOPMENT 5\.61 6\.49 115\.7% PROJECT COORDINATION AND MONITORING 2\.32 2\.07 89\.2% RENEWABLE ENERGY PROMOTION & 9\.33 DEVELOPMENT CV-GEF Energy & Water SIL (FY99) - P042054 Actual/Latest Components Appraisal Estimate Percentage of (USD millions) Estimate (USD millions) Appraisal RENEWABLE ENERGY PROMOTION & 4\.7 1\.83 38\.9% DEVELOPMENT Total Baseline Cost 43\.49 Physical Contingencies 3\.23 Price Contingencies 1\.27 Total Project Costs 48\.00 31\.69 66\.0% PPF 1\.50 21 (b) Financing Appraisal Actual/Latest Source of Funds Estimate Estimate Percentage of (USD (USD Appraisal millions) millions) GOVERNMENT OF CAPE VERDE 3\.53 2\.34 66\.3% INTERNATIONAL DEVELOPMENT ASSOCIATION 17\.52 16\.18 92\.5% (IDA) ELECTRA, SA 7\.65 2\.83 37\.0% EUROPEAN UNION (EU) 7\.54 3\.74 49\.6% AUSTRIAN GOVERNMENT 0\.76 0\.76 100\.0% GLOBAL ENVIRONMENT FACILITY (GEF) 4\.71 1\.83 38\.9% OPEC FUND 4\.51 4\.00 88\.7% PRIVATE CONCESSIONAIRES 1\.77 0\.00 Total Project Costs 48\.00 31\.69 66\.0% 22 Annex 2\. Outputs by Goals and Objectives Project Goals, PDOs, GEF Key Performance Project Outputs Objectives, and outputs at Indicators appraisal\. Sector-related CAS Goals 1\. Full privatization of the power 1\. Partially achieved\. ELECTRA was 51% Promote sustainable development by sector privatized in 2000/2001, but ELECTRA's encouraging public-private privatization failed and GoCV recuperated partnership in provision of economic majority equity in 2006\. infrastructure\. 2\. Private participation in largest 2\. Thirteen (13) autonomous local utilities municipal water companies\. have been established\. 3\. Government subsidy for 3\. No subsidies were provided to ELECTRA is phased out by 2000 ELECTRA between 2000 and 2003 but from 2003, subsidies were to be provided again due to the lack of adequate adjustment tariff formula\. Global Environment Objective 4\. At least 15 % of all electricity 4\. No additional electricity generated by Mitigation of climate change through generated by renewable energy renewable energy by the year 2003\. reduction of greenhouse gas by the year 2003 Renewable energy penetration in 2008 is emissions less than 3%\. 5\. Savings of 6,500 tons of 5\. Maximum savings over the course of the petroleum products in 2004 project was 1,700 tons of petroleum (substituted with renewable products in 2006, equivalent to about 4,500 energy), equivalent to 19,000 tons tons of CO2 of C02\. Project Development Objectives 1\. Household access to electricity 1\. Household access to electricity increased (i) Improved access to energy, water increasing as follows (in %): as follows (in %): and improved sanitation services 98 02 07 98 02 07 08 with optimum use of renewable Praia 69 80 90 Praia 76 65 79 81 resources and promotion of private Mindelo 92 95 99 Mindelo 92 82 96 99 sector participation\. 2\. Household access to water 2\. Household access to water increased as increasing as follows (in %): follows (in %): 2000 02 07 2000 02 07 08 (ii) Increased operational and end- Praia 30 50 65 Praia 22 28 45 45 use efficiency in the power and Mindelo 57 80 90 Mindelo 51 53 59 61 water sectors\. 3\. Household access to sanitation 3\. Household access to sanitation increasing as follows (in %): increasing as follows (in %): 2000 02 07 2002 07 08 Praia 8 10 30 Praia 9 17 18 GEF Objectives 4\. The penetration of wind power 4\. The penetration of wind power on the Under GEF OP#6, remove the on the three main grids (Praia, three main grids has decreased to less than barriers gto grid connected wind Mindelo & Sal) averages 19% by 3% in 2008 (coming from existing wind generation and off-grid PV electric 2002\. farms) systems 5\. 4,500 households gain access 5\. No households connected to off-grid to electricity from off-grid solar PV system\. renewable sources\. 23 6\. Cost recovery achieved for 6\. Not achieved water distribution in 2002 (without subsidy) 7\. Water losses declining as 7\. Water losses changed as follows (in %): follows (in %): 2000 02 07 2000 02 07 08 Praia 23 18 15 Praia 29 34 33 38 Mindelo 25 18 15 Mindelo 24 23 30 25 Project Outputs (1) Privatized ELECTRA 1\.1 ELECTRA privatized by 1\.1 Contract with the Strategic Partner was with improved commercial December 1999 signed in 2001 but ELECTRA's viability and establishment privatization failed and GoCV recuperated of an efficient & majority equity in 2006\. independent regulatory entity\. 1\.2 More than 90% of committed 1\.2 60% of planned investments by investments by ELECTRA ELECTRA privatized were made between privatized materialize in a timely 2001-2006 (of which 85% in 2001 and manner\. 2002) 1\.3 100% of former ELECTRA & 1\.3 About 60% of employees had been EMAP employees trained by the trained by 2003\. privatized Electra by 2003\. 1\.4 Revenue targets for privatized 1\.4 Revenue targets for privatized ELECTRA are met\. ELECTRA were not set or met\. 1\.5 89 electricity customers per 1\.5 120 electricity customers per ELECTRA employee by 2003, ELECTRA employee by 2003 (and 181 by 2007 and 184 by 2008) 1\.6 Rate of return on Electra's 1\.6 Rate of return on ELECTRA's assets assets increases to 8% in 2003 decreased to -2\.6% in 2003 and -10 by 2007) 1\.7 Power/water regulatory entity 1\.7 (1st) Power/water regulatory entity fully operational by 12/99 established by 2000\. (2nd) entity operational by 2003, and fully operational by 2006\. (2) Increased electricity 2\.1 7\.2 MW new wind capacity is 2\.1 Not achieved\. demand met by private added to the existing system\. sector involvement in developing grid-connected 2\.2 Photovoltaic systems 2\.2 Not achieved\. wind power and commercialized by at least 2 photovoltaic systems for private enterprises by 2002\. decentralized rural areas\. (3) Increased quantity, 3\.1 Per capita water consumption 3\.1 Per capita water consumption quality and reliability of rising as follows (1/d) changed as follows (1/d) drinking water for Praia 2000 02 07 2000 02 07 and Mindelo, integrated Praia 35 60 80 Praia 65 62 47 multisectoral water Mindelo 35 50 90 Mindelo 41 41 34 resource strategy and Assomada 42 50 50 Assomada na na 77 24 strengthened regulatory 3\.2 Water quality meets WHO 3\.2 Water quality meets WHO Standards\. framework for water sector\. Standards\. 3\.3 Satisfactory regulatory framework for 3\.3 Satisfactory regulatory water/sanitation sector in place since 2006 framework for water/sanitation sector in place by 12/99 3\.4 Four secondary centers water 3\.4 Five secondary centers water utilities utilities have been strengthened have been strengthened by 2000, and 13 by by 2000, and 8 by year 2007 year 2007 3\.5 Groundwater use and quality 3\.5 Groundwater use and quality fully fully monitored nationwide by monitored nationwide by INGRH since INGRH by year 2003 year 2003 (4) Increased coverage of sanitation 4\. At least 5% of wastewater in 4\. None of wastewater in Praia is systems in Praia and improved Praia is recovered for irrigation or recovered for irrigation or other purposes\. recovery of wastewater other purposes\. 25 Annex 3\. Economic and Financial Analysis (including assumptions in the analysis) For the water investment component, the PAD had estimated the following financial and economic results based on projections of costs, revenues and benefits directly related to the project: NPV (CVE million) IRR Financial analysis -326 3% Economic analysis 797 42% Due to the lack of project specific data for the ICR, we have calculated financial and economic NPV and IRR for the water business of ELECTRA as a whole\. These indicators are based on overall investments in the water sector and incremental costs and benefits related to those investments since 1999\. All analysis is in real CVE of 1999 and uses a 12% discount rate\. Because of the different methodology used, these figures are not comparable to the estimates above\. In the projections beyond 2008, it is assumed that water sales and operating cost increase by an average of 3% per year, while the tariff remains constant, all in real terms\. The main difference between the financial and economic analyses is that the former relies on actual tariffs while the latter uses a higher estimated willingness to pay for piped water\. NPV (CVE million) IRR Financial analysis 99 13% Economic analysis 993 24% On the basis of this analysis, the water investment component of the project (as a part of overall investment in the water sector of Cape Verde) is viable financially and economically\. The number of ELECTRA water customers almost doubled from 16,534 in 2000 to 32,172 in 2008, significantly improving access to clean water\. However, it appears that supply of clean water could not keep up with increased connections as consumption per capita dropped by 33% during the same period\. For the sanitation component, the PAD had estimated an NPV of 96 ECV million and an IRR of 27%\. We were not able to calculate similar indicators for the ICR due to lack of data\. For the Power Sector Reform and Development component of the project, the main financial and economic benefits were expected to be derived from the restructuring and more efficient management associated with the privatization of Electra\. Those benefits were not quantified in the PAD; instead, a theoretical discussion of the economic costs and benefits of utility privatization had been presented\. Given that the privatization failed, that Electra was returned to full public ownership by 2008 and that several performance indicators have actually deteriorated, it is reasonable to conclude that this component has not been successful from financial and economic perspectives\. 26 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty Lending Philippe Durand Lead Energy Specialist AFTG1 Team Leader Matar Fall Lead Water and Sanitation Spec AFTU2 Water & Sanitation Specialist Noureddine Bouzaher Senior energy Economist AFTG1 Economic analysis Richard Spencer IENDP Renewable energy Susana Hristodoulakis Project cost Magaye Gaye Financial Management Agilson Perazza Consultant Environmental impact assessment Serge Pagnucco Financial Analysis Supervision/ICR Noureddine Bouzaher Senior energy Economist AFTTG1 Team Leader Sam O'Brien Senior energy Specialist AFTEG Team Leader Fanny Kathinka Missfeldt- Ringius Sr Energy Econ\. AFTEG Team Leader Boris Utria AFTEG Team Leader Stephan Claude Frederic Garnier Senior energy Specialist AFTEG Team Leader Amadou Tidiane Toure Lead Procurement Specialist SARPS Procurement Specialist Bourama Diaite Senior Procurement Specialist AFTPC Procurement Specialist Fabrice Karl Bertholet Financial Analyst AFTEG Financial Analyst Fily Sissoko Sr Financial Management Financial Specia LCSFM Management Luz Meza-Bartrina Sr Counsel LEGAF Matar Fall Lead Water and Sanitation Water & Sanitation Spec AFTU2 Specialist Sylvia Michele Diez Operations Officer ETW Seynabou Thiaw Seye Program Assistant Lu Ha AFTEG Program Assisatnt 27 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle No\. of staff weeks USD Thousands (including travel and consultant costs) Lending FY98 0\.00 FY99 0\.00 FY00 0\.00 Total: 0\.00 Supervision/ICR FY00 11 40\.54 FY01 11 33\.51 FY02 7 26\.95 FY03 18 79\.91 FY04 16 69\.31 FY05 24 129\.07 FY06 13 112\.23 FY07 17 2\.06 FY08 5 0\.00 Total: 122 493\.58 28 Annex 5\. Beneficiary Survey Results (if any) 29 Annex 6\. Stakeholder Workshop Report and Results (if any) 30 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR PROGRAM COMPLETION REPORT April 17, 2009 Inacio Mendes Pereira Unidade de Coordenação PROGRAMA ENERGIA, AGUA E SANEAMENTO (PEAS) Summary in English I\. Introduction\. PEAS was part of the 1997-2000 National Development Plan to reform the power, water and sanitation sectors\. PEAS objectives were: improve the supply of power, water and sanitation systems; increase operational and end-use efficiency in the power and water sectors: lessen the barriers to the development of renewable energy resources; and foster sound management of water resources\. The cost was US$ 48\.0 million, financed by the GoCV, IDA, EU, Austria, OPEC, ELECTRA and Private Operators\. It had 5 components\. II\. Performance Indicators\. PEAS had 26 Key Performance Indicators, five for sector-related CAS Goal, six for the PDO and GEF operational program objective, and 11 for project outputs\. III Purpose of the Report\. To provide IDA and the GoCV a report of the implementation, the technical, financial and administrative coordination by UCPEAS, and the results obtained\. IV\. Results and Impact of PEAS\. A\. Energy Sector - Sector reform included the passing of (new) laws Lei # 54/99; 75/99; 5/99; and 76/99 - for power, natural resources, water and regulations\. Privatization of ELECTRA was realized when EDP and IPE Agua de Portugal - purchased respectively 31% and 20% of shares in ELECTRA in 2000\. Between 2001 and 2006 an estimated US$ 79\.0 million was invested in power generation and transmission and desalination (Table 4\.1)\. However, ELECTRA's revenues stayed in the red (US$ 8\.0 million in 1999 and US$ 18\.0 million in 2007)\. Access to power expanded to 81% in Praia and 99% in Mindelo by 2008\. The extension of the wind farms was aborted and wind power continued to contribute only around 3% nationwide\. Regulatory reform was first managed by ARM and subsequently by ARE\. Besides some 3,200 social connections and 300,000 low-energy lamps conservation made little headway\. B\. Water and Sanitation Sector - Reforms of the water and sanitation sector included studies of the water tariff in Praia and the extension and rehabilitation of the primary and secondary infrastructure (some 20,000 meters of new pipes for water and 30,000 meters for sewerage)\. It included the construction of new reservoirs and replacement of water mains in Praia, Mindelo, Assomada, Tarrafal, Chao Bom, Ribeira da Prata and purchase of garbage trucks\. The water treatment plant in Praia was 31 renovated and expanded, but operates below optimum levels\. Thirteen new municipal utilities have been established to service customers in S\. Nicolau, Santo Antao, Maio, Fogo, Brava\. Technical assistance was extended to INGRH and to ELECTRA\. C\. Program Management - The project coordination unit managed procurement, studies, technical assistance and coordination with other agencies\. ELECTRA in 2006 completed the environmental clean-up of its generation sites (Table 4\.8) and INGRH began testing water quality in 2004\. The UCPEAS produced annual reports to inform Bank supervision missions about implementation progress\. Supervision missions were however not bi-annual and several comprised only the TTL or the energy or sanitation specialist\. UCPEAS also managed the project accounts which were audited annually by an independent auditor\. D Sector Financing - A total of US$ 37\.22 million was disbursed of the US$ 48\.0 million project cost estimated at appraisal\. IDA financed 43\.5%, the EU 22\.6%, OPEP 10\.7%, ELECTRA, SA 7\.6%, the GoCV 6\.2%, GEF 4\.9%, and Austria 4\.3% of the project cost\. V\. Performance of Partners\. IDA during implementation was slow in issuing no- objections for procurement\. Also, the skill-mix of the teams was uneven after 2003 which slowed implementation\. Finally, the frequent changes in TTL (four) also required that the UCPEAS had to bring TTLs up-to-date on implementation which was time- consuming\. ELECTRA SA\. performance was marked by delays with the planned investments in power and water and particularly with regard to the wind farm extension sub-project which had to be postponed and eventually cancelled\. The OPEC Fund showed considerable flexibility in allowing its funds which were planned for Tarrafal to be used for the social connections in Praia\. Both the EU and the Austrian Cooperation were effective and timely in their financing, implementation and supervision of their investments\. The performance of the GoCV, municipalities, sector ministries and agencies was uneven\. The UCPEAS performed satisfactory\. VI Global Evaluation\. PEAS was well designed and was to make a substantial contribution to national development in the power, water and sanitation sectors\. Initial implementation was slow, characterized by the issues surrounding the privatization of ELECTRA\. By October 2002 at the MTR about 60% of the physical aspects of the project had been implemented, but only 33% of the project funds had been disbursed\. The performance of ELECTRA held up implementation for most of the life of PEAS\. Four extensions were necessary to compensate for delays\. The water and sanitation component was well implemented except the operation of the water treatment plants\. Sector reform was slow, but by completion most reforms had been put into place\. At closing about 66% of the funds had been used which is moderately unsatisfactory\. VII Final Conclusions\. The water and sanitation component has made a contribution to improving services in these areas\. Also, the provision of power by ELECTRA has improved nation-wide\. Municipal utilities have improved services in secondary towns and villages\. Despite several constraints, particularly the need for further restructuring of 32 ELECTRA, PEAS has made a satisfactory contribution to the power, water and sanitation sectors\. VIII Lessons Learned\. The solar power sub-project was poorly conceived in terms of responding to the socio-economic situation with the intended customers probably too poor to pay\. It was also problematic to have the financing of the wind farm extension sub-project depend on a company which operated at a loss for years on end\. Also, the limited expertise in municipalities to manage utilities and the investments in water and sanitation systems slowed the implementation\. Procurement was delayed by having to wait for no-objection from the bank which took often several months\. The extension of the closing date allowed the GoCV to delay its allocation of counterpart funds\. Cape Verde had no experience or models for utility regulations it could use to establish the legal and regulatory framework for the sector\. Local businesses benefitted from working with foreign ones in the public works projects\. Also, the international procurement of plant and equipment was beneficial for local companies and ELECTRA to acquaint themselves with new technologies and standards\. Annexes: List of Studies conducted Table 4\.1 Investments made by ELECTRA, SA Table 4\.3a Performance Indicators power and water Table 4\.4 Performance Indicators renewable energy Table 4\.8 Mitigating measures of the Environmental Protection Plan Table 4\.17 Overall achievement of PDO Indicators Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders (no comments obtained yet) 33 Annex 9\. List of Supporting Documents 1\. Agencia de Regulacao Economica ARE\. Agency for Economic Regulation, Republic of Cape Verde, Legal Framework for Independent Regulatory Agencies\. 2\. Agencia de Regulacao Economica ARE\. Servicos Publicos O que os utentes precisam saber? 3\. Government of Cape Verde\. Conselho de Ministros Decreto-Lei No 75/99, De 30 de Dezembro; Decreto-Lei No 54/99 de 30 de Agosto; Decreto-Lei No 30/2006 de 12 de Junho; Lei No\. 41/II/84 de 18 de Junho\. 4\. Republica de Cabo Verde\. Programa Energia, Agua e Saneamento, Unidade de Coordenacao\. Relatorio De desempenho do Programa, referente ao Ano de 2007, Janeiro de 2008\. 5\. Cape Verde Energy and Water Sector Reform and Development Project Project Appraisal Document, Africa Region\. 6\. Development Credit Agreement, Energy and Water Sector Reform and Development Project between REPUBLIC OF CAPE VERDE and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated June 3, 1999 CREDIT NUMBER 3205 CV\. 7\. GEF Trust Fund grant Number TF022458 Trust Fund Grant Agreement Energy and Water Sector Reform and Development Project Trust Fund Grant Agreement Energy and Water Sector Reform and Development Project) between REPUBLIC OF CAPE VERDE and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Dated June 3, 1999\. 8\. Supervision Reports, ISRs and aide memoires\. 9\. Program Completion Report, Inacio Mendes Pereira, Unidade de Coordenacao, April 15, 2009\. 34	REVIEW
P113218	ï»¿ Document of The World Bank Report No: ICR00001448 IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-092796) ON A GRANT IN THE AMOUNT US$ 7\.0 MILLION EQUIVALENT TO THE SOMALIA FOR A RAPID RESPONSE REHABILITATION OF RURAL LIVELIHOODS PROJECT March 17, 2011 Agriculture and Rural Development Unit Sustainable Development Department Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective 00000000) Currency Unit US$ 1\.00 = Somali Shilling 1605\.00 July 1 - June 30 FISCAL YEAR ABBREVIATIONS AND ACRONYMS ELDSCPCMI Emergency Livestock Disease Surveillance and Control and Promoting Competitive Meat Industry ESMF Environment and Social Management Framework EPP Emergency Project Paper EU European Union FMFA Financial Management Framework Agreement FAO Food and Agriculture Organization of the United Nations FPCR Food Price Crisis Response GFRP Global Food Crises Response Program ICR Implementation Completion and Results Report ISN Interim Strategy Note JNA Joint Needs Assessment M&E Monitoring and Evaluation NGO Non-Governmental Organization PDO Project Development Objectives PIM Project Implementation Manual PMP Pest Management Plan PPP Public Private Partnerships RC Regional Coordinator RDP Reconstruction and Development Program RRRRLP Rapid Response Rehabilitation of Rural Livelihoods Project TF Trust Fund TFG Transitional Federal Government Vice President: Obiageli Katryn Ezekwesili Country Director: Johannes Zutt Sector Manager: Karen M\. Brooks Project Team Leader: Berhane Manna ICR Team Leader: Kidane Pietros SOMALIA RAPID RESPONSE REHABILITATION OF RURAL LIVELIHOODS PROJECT TABLE OF CONTENTS A\.Â BASICÂ INFORMATIONÂ \.Â IIIÂ B\.Â KEYÂ DATESÂ \.Â IIIÂ C\.Â RATINGSÂ SUMMARYÂ \.Â IIIÂ D\.Â SECTORÂ ANDÂ THEMEÂ CODESÂ \.Â IVÂ E\.Â BANKÂ STAFFÂ \.Â IVÂ F\.Â RESULTSÂ FRAMEWORKÂ ANALYSISÂ \.Â IVÂ G\.Â RATINGSÂ OFÂ PROJECTÂ PERFORMANCEÂ INÂ ISRSÂ \.Â VIÂ H\.Â RESTRUCTURINGÂ (IFÂ ANY)Â \.Â VIIÂ IÂ Â DISBURSEMENTÂ PROFILEÂ \.Â VIIÂ 1\.Â PROJECTÂ CONTEXT,Â DEVELOPMENTÂ OBJECTIVESÂ ANDÂ DESIGNÂ \.Â 1Â \. 2\.Â Â KEYÂ FACTORSÂ AFFECTINGÂ IMPLEMENTATIONÂ ANDÂ OUTCOMEÂ \.Â 4Â 3\.Â Â ASSESSMENTÂ OFÂ OUTCOMEÂ \.Â 9Â 4\.Â Â ASSESSMENTÂ OFÂ RISKSÂ TOÂ DEVELOPMENTÂ OUTCOMEÂ \.Â 2Â 1 5\.Â Â ASSESSMENTÂ OFÂ BANKÂ ANDÂ BORROWERÂ PERFORMANCEÂ \.Â 3Â 1 6\.Â Â LESSONSÂ LEARNEDÂ \.Â 4Â 1 7\.Â Â COMMENTSÂ ONÂ ISSUESÂ RAISEDÂ BYÂ BORROWER/IMPLEMENTINGÂ AGENCIES/PARTNERSÂ \.Â 6Â 1 ANNEXÂ 1\.Â PROJECTÂ COSTSÂ ANDÂ FINANCINGÂ \.Â 7Â 1 ANNEXÂ 2\.Â OUTPUTSÂ BYÂ COMPONENTÂ \.Â 8Â 1 ANNEXÂ 3\.Â ECONOMICÂ ANDÂ FINANCIALÂ ANALYSISÂ \.Â 4Â 2 ANNEXÂ 4\.Â BANKÂ LENDINGÂ ANDÂ IMPLEMENTATIONÂ SUPPORT/SUPERVISIONÂ PROCESSESÂ \.Â 5Â 2 ANNEXÂ 5\.Â BENEFICIARYÂ SURVEYÂ RESULTSÂ \.Â 6Â \. 2 ANNEXÂ 6\.Â STAKEHOLDERÂ WORKSHOPÂ REPORTÂ ANDÂ RESULTSÂ \.Â 7Â 2 ANNEXÂ 7\.Â SUMMARYÂ OFÂ IMPLEMENTATIONÂ AGENCYÂ ICRÂ AND/ORÂ COMMENTSÂ ONÂ DRAFTÂ ICRÂ \.Â 8Â 2 ANNEXÂ 8\.Â COMMENTSÂ OFÂ COFINANCIERSÂ ANDÂ OTHERÂ PARTNERS/STAKEHOLDERSÂ \.Â 8Â 3 ANNEXÂ 9\.Â LISTÂ OFÂ SUPPORTINGÂ DOCUMENTSÂ \.Â 9Â 3 ANNEXÂ 10\.Â MAPÂ OFÂ ACHIEVEMENTSÂ \.Â 0Â 4 ANNEXÂ 11\.Â MAPÂ \.Â 1Â 4 Â Â A\. Basic Information SO Rapid Response Country: Somalia Project Name: Rehab of Rural Livel Project ID: P113218 L/C/TF Number(s): TF-92796 ICR Date: 03/28/2011 ICR Type: Core ICR TRANSITIONAL Lending Instrument: ERL Borrower: GOVERNMENT OF SOMALIA Original Total USD 7\.0M Disbursed Amount: USD 7\.0M Commitment: Revised Amount: USD 7\.0M Environmental Category: B Implementing Agencies: FAO Somalia Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 07/28/2008 Effectiveness: 09/02/2008 09/18/2008 Appraisal: 08/05/2008 Restructuring(s): Approval: 09/05/2008 Mid-term Review: 10/26/2009 Closing: 09/30/2010 09/30/2010 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Highly Satisfactory Borrower Performance: Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Highly Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Highly Satisfactory Satisfactory Performance: Performance: i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Animal production 38 38 Crops 33 33 Irrigation and drainage 29 29 Theme Code (as % of total Bank financing) Global food crisis response 100 100 E\. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Obiageli Katryn Ezekwesili Country Director: Johannes C\.M\. Zutt Karen Mcconnell Brooks Sector Manager: Karen Mcconnell Brooks Karen Mcconnell Brooks Project Team Leader: Berhane Manna Berhane Manna ICR Team Leader: Berhane Manna ICR Primary Author: Pietros Kidane F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) Percentage increase in crop and livestock production in areas affected by the food crises Revised Project Development Objectives (as approved by original approving authority) ii (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Percentage increase in crop and livestock production in areas affected by the Indicator 1 : food crises Post War Average (1995 Percentage yield Value # 2009) crop yield in increase in targeted quantitative or targeted areas ranging 15% increase n/a areas ranging 38% Qualitative) from 0\.3 (t/Ha) to 0\.56 to over 100% a (T/Ha) Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments (incl\. % achievement) Indicator 2 : Percentage increase in the availability of food in food insecure areas Agriculture: Production levels in targeted areas have Agriculture: Production increased by over levels estimated on the 100,000 tons basis of PWA yields in Value targeted areas are of quantitative or 15% increase n/a Livestock: 15,527 tons Qualitative) Production are projected to Livestock: 0 tons of meat increase by 11875\.5 and offals ton of meat and offals at the end of 2011 Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments ALL agriculture intervention were concentrated in the first year of (incl\. % implementation, in order to ensure immediate impact 100% achieved achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Number of farmers using improved inputs/technology Value ALL targeted farmers 35,000 farmers (quantitative could not afford improved 15,000 farmers n/a received improved or Qualitative) inputs inputs and training Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments Over achieved (incl\. % iii achievement) Indicator 2 : Percentage increase in crop yield\. Post War Average (1995 Percentage yield Value # 2009) crop yield in increase in targeted (quantitative targeted areas ranging 30% increase n/a areas ranging 38% or Qualitative) from 0\.3 (t/ha) to 0\.56 to over 100% (T/ha) Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments ALL agriculture intervention were concentrated in the first year of (incl\. % implementation, in order to ensure immediate impact 100% achieved\. achievement) Indicator 3 : Percentage increase in area (ha) under cultivation\. Primo secondario scheme Primo secondario was serving 2,600 ha serving 13,700 ha Value before rehabilitation after rehabilitation (quantitative n/a n/a or Qualitative) Tuggarey scheme was Tuggarey serving serving 120 ha before 5,000 ha after rehabilitation rehabilitation Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments ALL rehabilitation was completed during the first year of project implementation (incl\. % in order to ensure immediate impact in food production\. Over achieved; achievement) Indicator 4 : Increase in meat production that meets minimum standard Production of meat Before the construction that meets the Value the SHs each producing 0 minimum standard (quantitative n/a n/a tons/year meat that meats expected to or Qualitative) minimum standards increased to 10,920 tons/year Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments (incl\. % None achieved but projected since the SH are yet to begin functioning\. achievement) Indicator 5 : Number of hides/skin processed and marketed per year Increase by over Value 300% expected (quantitative 116, 844 hides and skins n/a 38% due to increase in or Qualitative) slaughter and recovery Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments None achieved but projected since the SH are yet to begin functioning at full (incl\. % capacity\. achievement) Indicator 6 : Percentage increase in offal#s processed and consumed per year Value 955\.5 tons of Only 25% (318\.5 tons) of (quantitative 35% 300% additional offal all offals were recovered or Qualitative) expected to be iv recovered and marketed Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments (incl\. % achievement) Indicator 7 : Increase in total (kg) of dry meat processed and marketed per year 80 tons of Value additional dry meat 40 tons of dry meat (quantitative 100% N/A expected to be produced annually or Qualitative) produced and marketed Date achieved 01/15/2009 01/15/2009 01/15/2009 11/30/2010 Comments (incl\. % achievement) G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 03/16/2009 Satisfactory Satisfactory 4\.35 2 09/15/2009 Satisfactory Satisfactory 7\.00 3 02/21/2010 Satisfactory Satisfactory 7\.00 H\. Restructuring (if any) Not Applicable v I\. Disbursement Profile vi 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. Somalia is a very poor country with serious security and governance issues, following the prolonged civil strife that started in 1991, which is still on-going\. This makes it a high risk country\. Since 1991, Somalia has ceased to function as a unitary state, and public affairs are carried out through three separate regions, viz\., Southern Central Somalia, Puntland and Somaliland, and international aid is apportioned between these administrations\. The internationally recognized central authority is the Transitional Federal Government (TFG), which is endeavoring to end the civil war with the support of the African Union and other international organizations and countries\. However, results have not come about as swiftly as expected\. 2\. About 50% of Somaliaâs population, estimated at 7\.7 million in 2006, depends for its livelihood on nomadic pastoralist production system, while one quarter on sedentary agro-pastoralist/riverine economy\. Some 73% of the population lives in general poverty\. About 80% of the rural population and 61% the urban population are poor\. The population living in extreme poverty, i\.e\., on less than US$ 1 per day, is estimated at 43%\. The impact of economic distress would have been more disastrous had it not been for the roughly US$ 1\.00 billion per annum of remittances\. 3\. In 2005, a joint needs assessment (JNA) exercise was initiated in Somalia with a view to identifying key development areas and financial needs for a period of five years\. The JNA was carried out by multi-disciplinary teams of international and local experts, including experts from the Diaspora, and undertook a comprehensive consultation with different stakeholders in Somalia\. The teams completed the needs assessment of the different socio-economic sectors, and their results were used for the preparation of a recovery strategy for the country, known as the Reconstruction and Development Program (RDP) for Somalia, and was based on three pillars: improvement of peace, security and governance; strengthening essential basic services and social protection; and creating an enabling environment for private sector-led growth to expand employment and reduce poverty\. 4\. In line with the strategies developed under RDP and the Interim Strategy Note (ISN), the Bank proposed to assist Somalia by addressing the existing food crises that were triggered by: low agricultural productivity; high food prices; the deterioration of irrigation and flood control infrastructures; and lack of agricultural services to farmers\. The economy of Somalia is heavily dependent on food imports, and with the increase of prices of the major imported food crops, particularly wheat and rice, people resorted to local cereals mainly maize and sorghum\. However, due to unfavorable climate and lack of agricultural services, production of these local crops was dismal, and their prices more than doubled during the formulation of the project\. The inflationary trend, coupled with the devaluation of the local currency, has depressed the purchasing power of the 1 households, leading to increased food insecurity\. Another source of concern was the possible backlash from the downturn of the global economy on the well being and incomes of the Diaspora, which could in that case lead to decline in remittances\. 5\. The gravity of the food crises in the country and the need to address immediately the challenges posed by these crises provided the Bank the rational for its engagement in Somalia through a project under its Global Food Crisis Response Program (GFRP)\. The proposed Rapid Response Rehabilitation of Rural Livelihoods Project (RRRRLP) is fully consistent with the goals of the GFRP\. The project would be financed from the Food Price Crisis Response (FPCR) Trust Fund (TF)\. 1\.2 Original Project Development Objectives (PDO) and Key Performance Indicators (as Approved)\. The project development objective was to increase crop and livestock production in areas affected by the food crisis\. Key performance indicators comprised: ï distribution of agricultural inputs to 15,000 households in South Central Somalia; ï rehabilitation of 150 km of irrigation canals, 40 km of embankments, 20 sluice gates, 65 water catchments and 110 km of feeder roads; ï production of fodder on an area of 500 ha; and ï rehabilitation of two slaughter houses and provision of training in nutrition to women and to all the public and private sector operators that are involved in meat processing and handling\. 1\.3 Revised Project Objectives and Key Performance Indicators\. 6\. The projectâs PDO and key indicators were not revised 1\.4 Main Beneficiaries 7\. The main project beneficiaries were households from the farming, agro-pastoral and pastoral communities of the three regions\. Criteria for selecting specific areas were documented in the Project Implementation Manual (PIM) and included: availability of on-going agricultural projects implemented by Food and Agriculture Organization of the United Nations (FAO) or Non-Governmental Organizations (NGOs); vulnerability of livelihood assets of households; high incidence of poverty; presence of internally displaced persons; acceptable security situation; and geographical proximity of the districts and village clusters\. The selection of development sites was determined in consultation with key public and private sector stakeholders and the different communities\. The selection of households that would benefit from increased food crop production aimed at reaching out to poor farmers affected by the food crisis\. However, within this group, a conscious targeting was made to reach women, particularly those who were heads of households\. Beneficiaries from slaughter house development activities were a wide spectrum of the society: livestock producers, business men and women, as well as local administrations\. 2 1\.5 Original components 8\. The original project components were two: I) Improving Food Production Capacity ï Distribution of technology packages (seeds, fertilizer and farm implements) to farmers in Shebelle valley (maize) and in the Sorghum belt (sorghum); and training of farmers in improved agronomic and nutritional practices\. ï Carrying out profile surveys for all canals, embankments and roads that need to be improved and the rehabilitation of infrastructure through a combination of private sector contracts and labor sourced from the communities\. II) Support Strategies for Using Livestock Resources to Address the Current Food Crisis ï Increasing livestock production and productivity through the provision of high quality fodder seeds; reducing seasonal feed shortfalls by improving fodder harvesting, storage and conservation with nutritional additives; enhancing fodder market access through improved quality and extending the shelf-life of feed by baling; training of farmers/pastoralists in the preparation of silage and range rehabilitation techniques; and increasing the area under fodder production by stabilizing rivers and irrigation canals with grasses\. ï Rehabilitation of two slaughter houses (one in Somaliland and another in Puntland); training of slaughter house laborers in appropriate and hygienic meat handling; improving the collection and preparation of hides and skins and other by-products for improved nutrition and increased incomes, including consumption of offals; and support to the production and sale of traditionally processed meat\. 1\.6 Revised Components 9\. Project components were not revised\. 1\.7 Other Significant Changes 10\. The most important revision was the change of location and scope of the two pre- identified slaughter houses\. This change entailed the amendment of the Grant Agreement\. The change was required because, after close examination, it was discovered that the existing facilities were designed and operated without proper environmental and sanitary considerations, hence not suitable for rehabilitation as foreseen under the project\. In addition, they were situated in close proximity to peoplesâ habitations, resulting in a potential health hazard\. Therefore, it was decided to establish new slaughter houses that were efficient and environmentally friendly, and far from the peoplesâ dwellings\. Another change was the exclusion of road rehabilitation from the project as this was covered under a new European Union (EU) program - Food Facility Grant â which was not foreseen when RRRRLP was approved\. The funds earmarked for roads were transferred 3 to canal improvement, thereby expanding further the area to be cultivated under irrigation\. 2\. Key Factors Affecting Implementation and Outcome 2\.1 Project Preparation, Design and Quality at Entry 11\. The dire food crisis in Somalia caused the Bank to select the country to receive urgent assistance under GFRP\. This assistance was found to be fully aligned with the findings and recommendations of the RDP and the ISN\. The decision to initiate some relief and rehabilitation activities in Somalia despite the security challenges was motivated by the potentially extreme food insecurity situation that could have arisen in Somalia as a result from the global food crisis\. 12\. It was clear from the outset that the project had to respond to an urgent situation; hence the entire project preparation process to final approval was carried out in a record time, about eight weeks only\. The emergency situation did not allow time for a thorough project analysis during preparation, but the experience and analytical work of FAO was taken into account in considering implementation and security risks\. The key elements that influenced project design were the need to: (i) prepare a project that was simple with straightforward objectives and few components; (ii) strike a balance between provision of emergency assistance and rehabilitation/development activities; (iii) focus on building project activities on existing programs; (iv) avoid specifying precise project areas given the fluid security situation in the country; and (v) incorporate flexibility\. 13\. Project formulation was carried out along the lines outlined above\. The projectâs strategy and objectives were well articulated\. It had a clear development objective, which was âto increase food crop and livestock productionâ? and consisted of two components\. Project support between emergency assistance (distribution of seeds and fertilizer and hand tools) and rehabilitation/development activities (rehabilitation of irrigation infrastructure and slaughter houses) was more tilted towards the latter in terms of allocation of funds\. This was seen as a sensible decision, not only because the rehabilitation/development activities would have long-term impacts on production, but also the labor employed for civil works would provide immediate income to the poor\. All project interventions were to build upon existing programs being carried out by FAO and other donors\. With the exception of the two slaughter houses, no project area was specified, thereby allowing the project flexibility in selecting secure areas\. Flexibility in Bank procedures was critical to addressing the projectâs implementation needs\. With no central authority in the country that could implement the project, a major flexibility element was introduced to project management whereby FAO was designated as the implementing agency\. FAO was entrusted the responsibility for the overall management, monitoring and supervision of the project in partnership with existing NGOs, local authorities and communities\. Considering Somaliaâs political and social situation, and FAOâs prominence in implementing agricultural projects, this decision was deemed most appropriate as it gave the project a higher likelihood of being implemented and meeting its objective as planned and on timely basis\. 4 14\. The failure to detect the poor status of the old slaughter houses during project preparation is singled out as an important shortcoming in project formulation\. 2\.2 Implementation 15\. Project start up was swift, because FAO was already operating in the three regions of Somalia through its local offices\. Therefore, the time usually spent for mobilization was used in actual execution of project activities\. Within one month of project effectiveness, all required staff were recruited and put in place\. Preparation of the Project Implementation Manual (PIM) started in earnest providing details of the entire schedule of project implementation, including the size and scope of activities, areas and implementation partners selected, system of monitoring and evaluation and procedures for overall management of the project\. The PIM was a clear and well detailed document, and provided project staff and implementation partners with sufficient details for implementation planning\. 16\. The project was implemented under the following organizational structure: (i) at field level, FAO had three regional coordinators (RCs), one per region, and these coordinators spearheaded project planning and implementation and liaised with local authorities; and (ii) in Nairobi, the Emergency Operations Unit for Somalia undertook the management and supervision of the project under the leadership of a fully dedicated Project Manager (PM)\. A Project Advisory Committee (PAC), whose membership included Government staff and implementing NGOs, provided coordination of activities\. The technical personnel of the Emergency Operations Unit and that of FAO offices in Rome and Addis Ababa provided technical support to the project\. 17\. Implementation of the project was carried out as planned\. Most of the crop related activities were completed a few months ahead of schedule\. Construction of the slaughter houses was also accomplished on time; although their operations were delayed until some government rules were issued and made effective\. The rapid action by project management coupled with the Bankâs prompt response to proposals made by project management contributed to keeping implementation on track\. 18\. The elements listed below were crucial in the successful implementation of the project: a) The decision to entrust FAO with overall project management and the proposal to build project activities on the on-going agricultural programs allowed for rapid deployment\. Not only was FAO present in the country implementing agricultural programs, it was closely working with the three regional governments, and had good relationships with NGOs who were implementing other donors projects\. Therefore, FAO was in a position to: (i) appreciate which on-going programs would need to be taken up under the project and which NGO partner would be suitable for a specific task in a given area; and (ii) advise on active involvement of implementing partners who were executing rural-based programs\. Most of the 5 NGOs that were executing emergency or development programs were knowledgeable about issues facing Somalia, and had developed good relationships with the local authorities and communities\. These actions greatly facilitated project implementation\. b) Flexibility in being able to choose and operate in a wide area, enabled project management to plan in deserving areas with relatively lower security risk\. c) Continuity of project staff\. d) A functional monitoring and evaluation (M&E) system that provided timely information on project performance\. 19\. There were hardly any noteworthy security incidents that have affected the project\. Minor interference by some combatant factions was recorded in limited areas, but was largely inconsequential\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 20\. M&E design: The key performance indicators identified in the Emergency Project Paper (EPP) were adequate to monitor project implementation and performance\. FAO had already established an M&E system for Somalia, and the project built on the existing system by incorporating the key indicators as reflected in the EPP\. The M&E system was examined jointly by the first Bank review mission and the Project Manger (PM), and led to the development of a revised âresults chain chartâ? and âcore output and intermediary indicatorsâ? for progress monitoring\. The reviewers considered that the M&E system was appropriate for monitoring project implementation and performance, and was judged capable of producing reports on a regular basis, including financial statements\. A monitoring output and outcome indicators matrix was thus put in place, to be updated on a regular basis, often every two weeks\. 21\. M&E implementation\. Adaptation of the new project requirements to the existing M&E system was carried out rapidly, and monitoring of project activities proceeded expeditiously\. At the field level, monitoring of activities was carried out by the three RCs, who were assisted by a number of project staff and implementing agencies\. The RCs sent regular reports, often bi-weekly, to the Nairobi office\. The project management in Nairobi compiled these reports into 6-monthly progress reports and annual reports which were submitted to FAO headquarters and to the Bank\. In addition, the Nairobi project staff undertook field missions to validate the routine reports, and physically monitor activities at the project sites\. Further, the PM followed project progress through periodic meetings with project staff and implementing partners, as well as by telephone and e-mail\. The Food Security and Nutrition Analysis Unit (FSNAU), a Project within FAO, played an important role in the projectâs M&E by providing management with updated information on the situation of the rural people\. The FSNAU carried out seasonal assessment of crop and animal production in order to understand the availability/accessibility of home-produced commodities that contribute to food security\. 22\. M&E utilization\. The continuous reporting mechanism provided project management and the Bank with a clear picture on the progress of project implementation 6 and outcome\. Fortunately, the bulk of the reporting was positive, hence project management concentrated fully on advancing project implementation, not distracted by undesirable outcomes\. The comprehensive documentation on project implementation and outcome is now being utilized for preparing a second-phase project, very likely to follow the same path as this project\. 2\.3 Safeguard and Fiduciary Compliance 23\. Environmental Safeguards: At appraisal, three environmental concerns were raised, and these triggered Bank Operational Policies: OP 4\.01 Environmental Assessment, OP 4\.09 Pest Management, and OP 7\.50 Projects on International Waterways\. After a close scrutiny of the proposed rehabilitation works, it was decided that no follow-up was necessary with regard to OP 7\.50, as project activities would not affect the quality or the quantity of water to the riparians\. However, preparation of studies was required to address concerns of project safeguards with regard to OP 4\.01 and OP 4\.09\. Accordingly, the project management team prepared an Environment and Social Management Framework (ESMF) and a Pest Management Plan (PMP), within six months of project start up, as envisaged at appraisal\. The ESMF and the PMP that were prepared under the project were found to have adequate safeguard guidance for implementing the project\. The EMSF provided guidelines for screening, review and approval of project activities\. The availability of the EMSF was crucial during the review of the slaughter houses, as it offered the necessary guidance for tackling the issues related to rehabilitation of old facilities versus construction of new ones\. Even when it was decided to build new facilities, the safeguard policies that were outlined in the EMSF indicated the need for an environmental impact study\. Consequently, an environmental impact study was prepared for the new slaughter houses in Boroma and Bossasso\. This study assessed the environmental and socio-economic impact of the slaughter houses, suggested mitigation measures and developed an Environmental Management Plan\. 24\. Financial Management: The financial management arrangements of the project were carried out in the context of the World Bank/United Nations Financial Management Framework Agreement (FMFA), to which FAO is signatory\. Under this agreement, FAO carried out the financial management of the project using its established financial rules and procedures\. The funds were, therefore, channeled to FAO, and the FAO Representative in Nairobi was responsible for overseeing the proper utilization of funds by the Operational Unit and field offices\. According to the FMFA, the Bankâs audit requirements are met through the normal biennium audit of FAO\. Therefore, project management prepared and submitted to the Bank un-audited semi-annual financial reports\. These reports provided statement of sources and uses of funds; opening and closing balances of the funds from the Bank; and actual and budgeted expenditures by component and/or activity, for the semi-annual period and cumulatively for the project\. FAO maintained a separate ledger account for recording the transactions related to RRRRLP\. The Bank review missions that examined the operations of the Grant Account, disbursement procedures, transaction on payment vouchers and other account records, concluded that the financial management of the project was adequate\. Project 7 disbursement was carried out faster than planned\. About 70% of the funds were disbursed within the first year of the project\. 25\. Procurement: FAO procurement procedures, contained in the FAO Manual, were followed in the implementation of the project\. The principles of transparency, impartiality and competition were followed to ensure the efficient use of funds\. Procurement of goods valued under US$500 was carried directly from suppliers or shops, while those worth more than US$500 but less than US$5,000 required at least 3 written quotations from reliable suppliers or service providers\. For procurement of goods and services exceeding US$5,000, a competitive bidding process was used\. No serious procurement issues were faced by the project, but for the record, two incidents need to be mentioned: (a) there was about a two months delay in the delivery of equipment and material required for the construction of slaughter house1; and (b) the purchase of sub- standard agricultural tools from few local suppliers, which delayed distribution to about 10% of beneficiaries\. Although the tools were all replaced at no additional charge, this experience provided project management with an opportunity to review its approach regarding similar procurements and its relationship with some suppliers\. This will be done without abandoning the idea of injecting money into the system by supporting local blacksmiths as suppliers of tools\. 26\. Legal Covenants: The Grant Agreement did not have specific legal covenants\. 2\.4 Post-completion Operation/Next Phase 27\. Encouraged by the successful implementation of RRRRLP, and given the persistent food crisis that still prevails in the country, FAO expressed interest to a visiting Bank mission for a repeater project\. Following this dialogue, a concept note was submitted by FAO to the Bank, which was later developed into a preparation report\. The total cost of the proposed second-phase project is estimated at US$11\.5 million, and is currently under consideration by the Bank\. The second-phase project aims at consolidating the gains achieved thus far by RRRRLP and other projects implemented by FAO, as well as improving the overall performance of agricultural production, mainly staple local food crops and livestock\. Likewise, the second-phase of a project that was being implemented in parallel to RRRRLP - the Emergency Livestock Disease Surveillance and Control and Promoting Competitive Meat Industry (ELDSCPCMI) - has been prepared for possible financing by the State and Peace-Building Fund (SPF)\. The first- phase of ELDSCPCMI provided US$0\.90 million during FY 09, and has played an important role in the provision of quality animal health services by supporting veterinary workers and professionals, as well as enhancing quality improvement in the meat industry\. The second-phase program of ELDSCPCMI aims to build further on the achievements made under the first-phase\. 1 The delay in Somaliland was due to slow port clearance affected by regional elections; while the delay in Puntland was due to non accessibility of Bossasso port by large vessels during the monsoon season\. 8 3\. Assessment of Outcome 3\.1 Relevance of Objectives, Design and Implementation 28\. The objective of the project is highly relevant now, as it was during its conceptualization\. Enabling communities affected by food crises to improve their agricultural production and productivity is still the objective of Somaliaâs recovery strategy\. Projectâs support in the production of the main local food crops (maize and sorghum) through the provision of selected seeds and expanding irrigation was a particularly perceptive proposition\. Focusing on local food crops has become even more important now in view of the increase in prices and price volatility for major internationally traded crops\. Likewise, supporting the livestock sector through improved production and conservation of feed has proven to be valid support to the different stakeholders in the sector\. The result was a revitalized livestock export; and an increase in the harvest, conservation and trade of hay and crop by-products\. The new slaughter houses also promise well for the supply of hygienic meat and a large increase in the recovery of by-products\. The introduction of a collaborative arrangement between the public and private sectors in the management of the new slaughter houses, known as Public and Private Partnership (PPP), has opened a promising path for the efficient and financially sustainable management of other slaughter house in the country\. Under this arrangement, the public sector would own the facilities, but the private sector would manage them on commercial basis under a company act\. 3\.2 Achievement of Project Development Objectives 29\. As an emergency operation, the project cannot be expected to address broad agricultural development agenda\. Nevertheless, the project has made an important contribution to the short and medium-term development aspirations of the concerned communities\. The key outcome indicators as shown in the EPP were: percent increase in crop production in the project area affected by the food crisis; and percent increase in meat production in project area that meets standards\. With regard to crop production, the project has collected data from the field and confirmed that significant increase in production has been achieved, as shown below (Map of project area intervention is shown in Annex 10)\. Area covered under input distribution and estimates of incremental production Crop Area Production Prior to Production at Balance (tons) Cultivated Project Project (ha) Intervention (tons) Completion (tons) Maize 12,000 8,100 36,000 27,900 Sorghum 18,000 7,450 45\.400 37,950 Total 30,000 15,550 81,400 65,850 30\. The above increased production refers to the results of the input distribution program only\. A dramatic increase in sorghum production has been observed due to improved seeds and good response from Triple Super phosphate (TSP) application on 9 alkaline soils, which led to higher yields\. Figures collected by the project indicate that sorghum yields varied from 0\.25 to 0\.65 tons per ha before project intervention, but increased to a minimum of 1\.6 and a maximum of 5\.8 tons per ha with project support\. In the case of rainfed maize, these varied from 0\.55 to 0\.9 tons per ha, against 1\.6 to 3\.2 tons per ha with project intervention\. Details on more intermediary outcome indicators are given in Annex 2\. 31\. The above production figures do not include the 16,000 ha of newly irrigated land that was added as a result of canal rehabilitation in lower Shebelle\. This area, which was not cultivated before the rehabilitation, would now produce about 40,000 tons of maize during the main season, assuming a conservative yield of 2\.5 tons per ha\. This addition would raise total output in the major season to some 105,850 tons (para 29)\. This does not take into account another full season that remains to produce other irrigated crops such as vegetable and leguminous crops\. The above production figures illustrate that project objectives have been realized as envisaged\. 32\. Within the livestock sector, about 640 ha of land has been cultivated to fodder by project farmers for their own livestock needs and for the market\. In addition, fodder seed production on about 320 ha of land has been carried out, and individual farmers have been bulking the improved seeds and selling the hay straw on the market at prices that varied from US$350 to US$450 per ton\. Sixty-three water catchment areas were rehabilitated by the project, and these have contributed to extend the period of water availability by few months, thus facilitating livestock trade\. With regard to the improvement of slaughter houses, and production of quality meat; achievements so far are the closing of two inefficient and environmentally unsound facilities and the establishment of two modern facilities, along with a pioneering management set up, i\.e\., the PPP\. In terms of actual meat production, however, the slaughter houses started operations only in March 2011\. They were delayed by arguments within the main stake holders in Boroma, and bureaucratic difficulties in Bossasso (Para\. 41) 33\. The project has also established a farm produce market place, following a strong request by the communities\. This outcome was not foreseen under the project, and is now a functioning facility, operated by a market committee organized by the project\. 3\.3\. Efficiency 34\. As indicated in the EPP, rapid response rehabilitation of livelihoods project, targeted at poor beneficiaries in an unstable political and economic environment, does not lend itself to financial or economic analysis\. In spite of the difficulties in carrying out thorough analysis, however, the socio-economic impact of the project has been significant as witnessed by beneficiaries and practitioners alike\. Taking into account all activities, the project has reached about 74,000 households or some 444,000 individuals, which is an appreciable figure\. 35\. In terms of easing the food crises, which was the specific objective of the project, it has made a vital contribution to the domestic supply\. In view of the incremental production mentioned above (105,850 tons), and assuming a per capita consumption of 10 cereals of 130 kg per person, it can be deduced that the project contributed to the annual cereal needs of about 815,000 people2\. The increased availability of crops has helped in stabilizing food prices\. According to project management, there was about a 15% drop in project area food crop prices recorded in 2009, an indication of improved supplies and market confidence, some of which was likely due to this project\. 36\. The impact on the livestock sector is equally significant\. The project is credited, in part, for contributing to increased f livestock export in 2010, by virtue of increasing fodder production and water availability\. Regrettably, the benefits from the slaughter houses are slightly deferred due to implementation delays explained above\. Now that operations have begun as of last month, their contribution to the supply of good quality and hygienic meat will be significant\. The facilities are well equipped for efficient utilization of by-products and for the promotion of offal as a cheap source of protein\. 3\.4 Justification of Overall Outcome Rating 37\. The overall rating is satisfactory\. The project development objective was to increase crop and livestock production in areas affected by the food crisis\. The satisfactory outcome rating in terms of achieving this objective is based on the high relevance of the PDO; the achievement of all the project outcome indicators; the realization of the two new slaughter houses and the closure of polluting and insanitary facilities; and the contribution to increased food crop and livestock production as a result of the expansion of irrigated area, supply of agricultural inputs, production of fodder, as well as rehabilitation of water catchment for livestock\. For example, the food production under rainfed increased from 15,000 tons to 81,000 tones\. Similarly, under the newly irrigated land, an additional 40, 000 tons of maize is expected to be produced, excluding follow up of mixed crops\. \. 3\.5 Overarching Themes, other Outcomes and Impacts (a) Poverty Impact, Gender Aspects and Social Development 38\. The entire focus of the project was to assist the people who were suffering from the food crises in Somalia\. Accordingly, project activities enabled farmers and pastoralists to raise their incomes through increased crop and livestock production, as well as cash for work on the rehabilitation programs\. Although there has been no quantitative analysis on the precise impact of the project, field staff have reported evidence of reduced poverty in the areas covered by the project\. Many of the beneficiary farmers were able to generate sufficient food for them and for the market, thereby contributing to stabilizing prices (Para\. 35)\. Laborers were able to buy food using the incomes earned by working on the rehabilitation activities\. 39\. Gender was an important factor in the project design; hence the project has succeeded in enabling about 30% of female-headed households to become beneficiaries 2 Assuming six people per household 11 of the distribution of improved agricultural inputs\. In addition, about 5,000 women were trained in nutritional well being, and up to 25% of employment in the canal and water catchment rehabilitation activities was dedicated to women, thereby ensuring cash income from the civil works\. Parallel to the general nutrition training, women were sensitized on the importance of offals â which are the most affordable category of meat - in the supply of vital nutrients that can help in reducing malnutrition related diseases such as anemia\. The bulk of the training program on meat quality assurance was imparted to women, although this was open to both the genders\. This training will be beneficial to the general public as the retail meat market is dominated by women\. The project has, therefore, made serious efforts to benefit and involve women in the project\. 40\. The project was implemented by organizations outside the government framework; hence there was no explicit institutional change or strengthening foreseen under the project\. The project has, however, involved some technical staff of the regional governments, mostly in project planning, and this interaction has contributed to capacity building\. In particular, with regard to local authorities involved in veterinary service and tax collection, the project has created conditions for better meat inspection and increased revenues\. Project management has also initiated collaboration with regional governments by signing letters of agreement that entrusts the execution of some aspects of the project under their institutional framework\. This initiative appears to have raised technical interest and staff morale\. An important change to slaughter house management was also introduced through the PPPs, which have now become useful instruments for sustainable cooperation between the two sectors\. However, a clear definition of the cooperative agreement and modus operandi of the PPPs should be spelled out from the outset, thereby precluding misinterpretation or misunderstanding of the agreement by the concerned parties\. This would help to avoid delays in start up of operations\. The establishment of the current two PPPs was carried out in parallel with the construction of the slaughter houses, and arguments commenced during the launching of the operations\. When the PPP was created in Boroma, an important component of the private sector, the butchers, did not want to join the PPP Company\. Later on, however, they changed their minds and wanted to become share holders, with a threat that they will derail the agreement by boycotting the facilities, if they were not accepted\. In Bossasso, the PPP was not able to begin operations because the Government delayed the handing over of the new slaughter house to the municipality\. (c) Other Unintended Outcomes and Impact (positive or Negative) None\. 4\. Assessment of Risks to Development Outcome 41\. The risk to development outcome is moderately high, if account is taken of the persisting civil conflict and the consequent political instability and lack of security\. Nobody can predict with some level of certainty as to what the future political situation will be, or when the civil conflict will end\. Hence, this situation leaves no margin for unqualified optimism\. This risk was clear from the outset, identified in the EPP, and mitigating measures were established to reduce this risk\. It is difficult to prepare 12 extenuating actions for risks that emanate from the civil strife, although some positive results could be expected from the efforts of the international and regional organizations in bringing about peace in the country\. Other than this, any discussion or analysis of mitigating measures become highly speculative\. Therefore, it is clear that the decision by the Bank and other donors to proceed with emergency and development assistance in the country, despite the challenges, recognizes that the risk was worth taking, provided that human catastrophe is avoided and that these activities contribute to the peace-building process\. 42\. Apart from the political and security related risks, unfavorable climate, such as drought and floods, are possible threats, although some project activities such as improvement in soil and water conservation, rehabilitation of irrigation and flood control infrastructure, will reduce crop failure or damage\. However, the real risk mitigating factor against the loss of project achievements is the strong feeling of ownership that the beneficiaries, communities and local authorities conferred on the project\. Unless hindered by factors beyond their control, these actors will ensure the continuation of project activities as planned\. Moreover, the project has put in place sustainable mechanisms for seed production, operation and maintenance of the irrigation system, as well as operation of the slaughter houses\. FAO, the implementing agency for this project and many of the NGOs will continue working in these areas for the foreseeable future and would also be able to provide input into the sustainability of these project interventions\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry 43\. Rating: highly satisfactory\. The Bank was swift in responding to the request of emergency assistance to Somalia\. The entire process from project identification to approval was carried out in only eight weeks\. Yet, this promptness did not affect the quality of the project\. To the contrary, the project was well conceived, and its objective in tackling Somaliaâs food crises by increasing agricultural production was an appropriate approach\. Emergency interventions, such as the distribution of agricultural inputs, and development activities that have short-to medium-term goals, e\.g\. the rehabilitation of agricultural infrastructure, were well balanced\. The latter are expected to lead to a self- sustaining production system, because the project has invigorated the water user communities to be able to operate and maintain the systems\. Designating FAO to take charge of project implementation and management, together with its implementing partners, was a wise decision as this provided the project with the best alternative for its successful implementation\. (b) Quality of Supervision 44\. Rating: satisfactory\. Supervision by the Bank was constrained due to restriction of visits by international experts in the country\. Supervision in the project areas were, therefore, carried out by FAO field offices periodically and the quality of monitoring and data collection and reporting was very good\. The overall supervision by the Emergency 13 Operating Unit in Nairobi was also more than adequate\. In addition, to the periodic meeting of the field staff in Nairobi, this office communicated with the field staff by available means (telephone, e-mail and radio) to assess project progress and status\. This enabled the Unit to have a clear picture of day-to-day implementation in the field, and to provide its support by addressing difficulties that arose\. 45\. Three Bank missions visited Nairobi to review project progress, and in all cases they made positive contributions to project implementation\. The first mission that visited about four months after project effectiveness was instrumental in expediting implementation as it finalized and cleared all the important start up actions\. The mission supported project management by suggesting improvement to the preparation of six- monthly action plans, and advised on how to deal with the issue of slaughter houses rehabilitation versus new construction\. The second Bank mission focused more on the finalization of the slaughter houses and the establishment of the PPPs, and assisted project management in preparing an action plan for the completion of the facilities\. This supervision mission had discussed and agreed with FAO on the need to prepare a second- phase project\. In spite of the inherent difficulties in visiting Somalia, the Task Team Leader visited key project areas, including the slaughterhouse construction sites, during the three review missions to see project implementation on the ground, and provided support and encouragement to the project staff\. (a) Government Performance 46\. Rating: not applicable\. Involvement of the Somali Government in project implementation was not foreseen under the project\. However, the project benefitted from the support of the regional and local authorities particularly in the planning of project implementation\. Local authorities were generally supportive as they viewed the project as a non political program whose only goal was to help the rural communities\. (b) Implementing Agencies 47\. Rating: satisfactory\. This is based on the successful implementation of project activities as intended and on a timely basis\. For instance, the food crop related activities were completed ahead of time, and the outcome of improving the slaughter houses was much superior to what had been planned\. The performance of FAO and its implementing partners was more than satisfactory, but short of highly satisfactory mainly due to the oversight of the conditions of the old slaughter houses during project preparation\. FAO adjusted very quickly to changes in the plans for construction of slaughterhouses and completed construction with only relatively small delays\. 6\. Lessons Learned 48\. The following lessons could be drawn from the implementation of the project: ï In instances where security and governance situations are precarious due to civil strife, it pays to assign project implementation and management responsibilities to reputable and experienced institutions that are operating in the country\. The timely implementation of the project has a lot to do with the familiarity of FAO 14 and its implementing partners with the project area, as well as the good relationship established with the local communities and authorities\. ï There is much to be gained by designing project activities that build upon on- going programs, as this allows the utilization of knowledge accumulated over time by staff of different organizations, local communities and the private sector\. This, in turn, leads to expeditious planning and implementation of project activities, especially of repeater programs; reduced costs of planning; and smooth implementation of activities due to well established relationships with the local authorities, communities and project beneficiaries\. Involving the communities in the identification of target beneficiaries (e\.g\. resource-poor farmers and women- headed households) has enabled the project to assist the intended and deserving people\. ï The perception and understanding in the different regions that the project was a genuine support to the population, induced people from all factions of the society to accept it as a useful undertaking with no political motivation\. This meant that there was a sense of collective project ownership and implicit and explicit backing for its successful implementation\. This explains why the project was allowed to operate as intended, not being affected by any political faction, in a milieu where different political and clan factions fight to impose their views on others\. ï In an unstable setting such as in Somalia, where normal trading is disrupted, it is important to base emergency recovery and rehabilitation programs on the production of traditional crops\. These crops substituted for imported foods in the local markets thus reducing the impact of soaring global food prices on consumers\. \. ï As demonstrated by the project, there is a good opportunity for sustainable cooperation between the public and private sector under a PPP arrangement\. However, in high risk country situations like this, appropriate sequencing of the establishment of PPP companies, and the construction of the facilities that they are supposed to operate, is of paramount importance\. It is important to carry out a thorough assessment of the potential local partners for the facilities management, and based on this assessment adjust the timing of the establishment of the PPP to encourage the best possible sets of investors by reducing their risk or risk perception\. This should be done by providing potential participants with sufficient information on the operation of the PPP and enough confidence that the project would move forward, and then adjusting sequencing to their needs\. ï The EPP rightly indicated that undertaking financial or economic analysis in an unstable social, political and economic environment, where the exact project areas are not even identified, becomes difficult, if not impossible\. However, once the farmers and project areas are known, and arrangements for collecting data is made available under the M&E system, deliberate effort should be made to collect farm management information that can allow some farm income analysis\. The collection of data under the project did not focus on this aspect, but the second- phase project should aim at collecting data on farm management or operation\. 15 7\. Comments on Issues Raised By Borrower/Implementing Agencies/Partners (a) Implementing agency Comments made by the Implementing Agency on the Bank draft ICRR were as follows: âThank you for sharing the Implementation Completion and Results Report, prepared under Rapid Response Rehabilitation of Rural Livelihoods Project (RRRRLP - OSRO/SOM/808/WBK), with FAO\. We have closely reviewed the report and found it very satisfactory\. Therefore, we fully agree with the Implementation Completion and Results Report findings\. I take this opportunity to express my sincere thanks to the World Bank team (based in both Washington and Nairobi) for their unstinted and critical backstopping, invaluable guidance and close monitoring/supervision of Project implementation which made possible to conclude the RRRRL Project successfully with notable and sustainable impact on project beneficiaries in Somalia\. I look forward to working/collaborating with the World Bank to implement much needed emergency and recovery projects/programs in Somalia in the near futureâ? Best regards, Luca Alinovi O-i-C FAO Somalia Unquote (b) Co-financiers 49\. The project did not have a co-financing arrangement\. However, the simultaneous implementation of ELDSCPCMI in the area was a useful complement to the project as it amplified project scope in supporting the livestock sector\. (c) Other partners and stakeholders 50\. None\. 16 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) Improving Food Production 0\.00 3\.70 Capacity Support Strategies for Using Livestock Resources to Address 0\.00 2\.30 Current Food Crisis Total Baseline Cost 0\.00 6\.00 Physical Contingencies 0\.00 0\.00 0\.00 Price Contingencies 0\.00 0\.00 0\.00 Total Project Costs 0\.00 6\.00 0\.00 0\.00 \.00 0\.00 0\.00 \.00 Total Financing Required 0\.00 6\.00 (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 0\.00 0\.00 \.00 Special Financing 7\.00 0\.00 \.00 17 Annex 2\. Outputs by Component Output and Outcome Indicators Status as off Achievements Program end of the RRRRLP percentage of Type of specific Indicator project Component planned and indicator outcome (September Comments 2010) -185 Mt of Sorghum; 250 Mt of Seeds procured maize; Achieved Output and Distributed 550 kg of 100 % vegetable Availability seeds\. of appropriate agric inputs Tools procured 31,000 sickles Achieved and distributed and 31,000 hoes Output 100 % (number) Fertilizer Urea 600 tons Achieved Output procured and and TSP 125 100 % distributed tons Primo Achieved 127% Secondario Strengthening scheme, 125 km Agricultural Achieved 100% Production Tuggarrey System scheme 65 km Rehabilitation Length of ion of canals Rehabilitation Output irrigation rehabilitated of 3 culverts infrastructure (km) and sluice gate/primary canal intake rehabilitation of secondary canals 50 km (using cash for work ) 18 Status as off Achievements Program end of the RRRRLP percentage of Type of specific Indicator project Component planned and indicator outcome (September Comments 2010) 10 WC in Somaliland\. Achieved 100%\. Total 5 WC in Lower improvement of Shebelle\. 355, 048 cubic 33 WC in meters of water Puntland holding capacity; 15 WC (Bay and serving 6,300 Bakol) HH; and Water supporting about catchment 371,000 head of rehabilitated livestock\. (number) Primo Secondario scheme: a total of 12,285 ha of Area under newly irrigated new irrigation area, benefitting Improved and HH 11,700 hh access to Intermediate benefitting\. Achieved 127% irrigation outcome (ha and water number) Tugarrey scheme : a total 5,000 ha of newly irrigated land, benefiting 5,000 hh - 17,000 farmers Improved HH Producers received access to receiving Achieved Intermediate fertilizers in Gu appropriate fertilizer 113 % outcome and Deyr agric inputs (number) season\. (seeds, tools Area cultivated Total 13,200 ha: Achieved Intermediate and fertilizer) with fertilizers urea -10,200 ha; 100 % outcome 19 Status as off Achievements Program end of the RRRRLP percentage of Type of specific Indicator project Component planned and indicator outcome (September Comments 2010) (ha) TSP -3,000 ha\. Producers Achieved receiving 186 % Intermediate 28,000 improved seeds outcome (number) Total 44,535 ha: -19,087 ha Area cultivated maize; Intermediate with improved -14,700 ha outcome seeds (ha) sorghum; and 10,747 ha vegetables Producers Achieved 33, 000 hh\. receiving 220 % Intermediate improved tools outcome (number) Area cultivated Intermediate with improved 44,886 ha outcome tools (hectares) Increased Maize/sorghum food production at These data production HH level in extracted from Intermediate and/or targeted areas field check outcome productivity (tons and analysis (FAO) of selected percent crops increase) Strengthening Achieved farmersâ Farmers 100 % skills on receiving Intermediate 35,000 proper use of training outcome improved (numbers) inputs\. Achieved - Somaliland: 100 % 169 ha planted Enhance using improved In some Strengthen livestock Number of fodder seeds villages of livestock production fodder plots - Puntland: 150 Output Somaliland, production through developed (ha) ha planted using producers have system improved improved already re-sown feed system fodder seeds the seeds they harvested the previous season 20 Status as off Achievements Program end of the RRRRLP percentage of Type of specific Indicator project Component planned and indicator outcome (September Comments 2010) Achieved 100 % Total 946 hh : - HH involved in Somaliland 324 production of hh; and Beneficiaries pasture/fodder Puntland 622hh also received (number) training in fodder production and bulking Achieved - 163 farmers 100% Farmers (Somaliland) receiving and 356 farmers Farmers improved (Puntland)\. produced 200 pasture/fodder Access to kg of seeds and seeds (number) Intermediate improved 5 tons of outcome pasture seeds fodder per ha Total 637 ha : -Somaliland 387 Area cultivated ha; to improve Achieved -Puntland 250 pasture/fodder 100 % ha production (ha) Slaughter One in Boroma Achieved houses (Somaliland)and 100 % constructed one in Bosasso Increase (Puntland) Output production of Intermediate livestock outcome products and food safety hh consuming Not yet The facilities products from Operational are expected to the facilities start operations in March 2011 HH- household; Sh â Slaughterhouse 21 Additional information on area cultivated, yields and production of target districts TargetedÂ TargetedÂ districtsÂ crop TargetedÂ YieldÂ (t/Ha)Â ProductionÂ (t)Â beforeÂ YieldÂ (t/Ha)Â ProductionÂ regionsÂ areaÂ (Ha)Â beforeÂ interventionÂ afterÂ Â intervention (t)Â afterÂ interventionÂ interventionÂ LowerÂ QoryooleÂ Maize 1500 0\.9 1350 2\.6 3900 ShebelleÂ MerkaÂ Maize 2000 0\.9 1800 2\.6 5200 AfgoyeÂ Maize 1500 0\.9 1350 2\.6 3900 Â MiddleÂ BalcadÂ Maize 2500 0\.55 1375 3\.2 8000 ShebelleÂ JowharÂ Maize 2500 0\.55 1375 3\.2 8000 MahadayÂ Sorghum 2500 0\.5 1250 1\.6 4000 Â HiranÂ BeletweyneÂ Sorghum 3000 0\.5 1500 1\.6 4800 Â JalalaqsiÂ Sorghum 2500 0 1\.6 4000 BayÂ QansaxdeereÂ Sorghum 1250 0\.3 375 3\.7 4625 Â DinsorÂ Sorghum 1250 0\.3 375 5\.8 7250 MiddleÂ SakowÂ Sorghum 1250 0\.3 375 2\.2 2750 JubaÂ Â BualeÂ Sorghum 1250 0\.25 312\.5 2\.2 2750 SomalilandÂ Gabiley,Â Hargeisa,Â Boroma,Â Sorghum 5000 0\.65 3250 3 15000 Lughaya,Â ZailacÂ SomalilandÂ Boroma,Â Lughaya,Â ZailacÂ Maize 2000 0\.42 840 3\.5 7000 TotalÂ 15527\.5 81175 22 Additional Information on Slaughterhouse Capacity =Animal Boroma KG of meat Kg of offal Bosasso KG of meat Kg of offal FULL species (Somaliland) available per recovered per (Puntland available per recovered per Potential of Slaughter carcass for carcass Slaughter carcass for carcass the new House, daily consumption House, consumption structures slaughtering daily capacity slaughtering capacity Sheep & 250-300 15-20 4-5 700-800 15-20 4-5 1600 goats carcasses kg/carcass kg/carcass carcasses kg/carcass kg/carcass carcasses/day Cattle 20-25 170-250 10-15 No cattle n/a n/a 80 carcasses kg/carcass kg/carcass slaughtered carcasses/day Camels 6-10 250-300 15-20 30-35 250-300 15-20 50 carcasses kg/carcass kg/carcass carcasses kg/carcass kg/carcass carcasses/day 23 Annex 3\. Economic and Financial Analysis (including assumptions in the analysis) The civil conflict in Somalia and the emergency nature of the project have not facilitated the undertaking of economic and financial analysis during project preparation and appraisal\. Likewise, even at completion, there is no information-base that enables to carry out meaningful economic and financial analysis of the project\. 24 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty Lending Berhane Manna Task Team Lead AFTAR David Freese Sr\. Finance Officer LOAFC Dahir Warsame Sr\. Procurement Specialist AFTPC Evarist Baimu Counsel LEGAF Henry Amena Financial Management Specialist AFTFM Amuguni Edeltraut Gilgan-Hunt Sr\. Environmental Specialist AFTEN Ronald Isaacson Sr\. Social Scientist AFTCS Mohamood Noor Agricultural Consultant AFTAR J\.R\. Deep Ford Sr\. Economist FAO/IC Graham Farmer FA0 Officer in-Charge for Somalia FAO/Nairobi Sergio Innocente Agricultural Officer FAO/TCES Massimo Castiello Livestock Project Coordinator for FAO/TCES Somalia Renato Marai ARDOPIS Project Coordinator for FAO/FSAU Somalia Grainne Moloney Nutrition Project Manager FAO/FSAU Almaz Teklesenbet Program Assistant AFTAR Supervision/ICR Evarist F\. Baimu Counsel LEGAF Henry Amena Amuguni (Sr\. Financial Management AFTFM Specialist ) Dahir Warsame Sr\. Procurement Officer AFTPC Almaz Teklesenbet Temporary AFTAR (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending 2009 10\.19 50\.69 Total: 10\.19 50\.69 Supervision/ICR 2009 4\.75 18\.86 2010 9\.25 38\.35 2011 5\.20 22\.59 Total: 19\.20 79\.79 25 Annex 5\. Beneficiary Survey Results (if any) Not available 26 Annex 6\. Stakeholder Workshop Report and Results (if any) Not available 27 Annex 7\. Summary of Implementation Agency ICR and/or Comments on Draft ICR INTRODUCTION The following ICR is prepared and presented by the implementing agency, which is the Food and Agriculture Organization of the United Nations (FAO)\. The implementing agency has prepared the ICR in close collaboration and consultation with the Government\. Hence, the report contains Government inputs, and reflects their views\. RELEVANCE of OBJECTIVES, DESIGN and IMPLEMENTATION Project performance in terms of timely completion of planned activities, targeting of beneficiaries, outcomes and outputs gauges the relevance and appropriateness of objectives, design and implementation\. What seem to be the project factors of success include the simple design focusing on key actions that contribute the most to increasing food availability (particularly area specific improved inputs and rehabilitated infrastructure), clear identification of local government authorities and NGOs and their involvement in project preparation and implementation, and a decentralized task team, which ensures close monitoring of implementation progress\. The project was relevant and timely as regards the global food prices crisis, and in general the unprecedented soaring prices of agricultural commodities in 2008\. The project was also in line with the RDP for Somalia (2006), which is the agreed framework for support to Somalia for the next five years\. The RDP has 3 pillars: a\. deepening peace, improving security, and establishing good governance; b\. investing in people through improved social services; and c\. establishing a sustainable enabling environment for rapid poverty reducing development\. The second and third pillars are of immediate relevance to this project\. The project was also consistent with the broader objectives of the GFRP which are to: (i) reduce the negative impact of high and volatile food prices on the lives of the poor in a timely way; (ii) support governments in the design of sustainable policies that mitigate the adverse impacts of high and more volatile food prices on poverty while minimizing the creation of long-term market distortions; and (iii) support broad-based growth in productivity and market participation in agriculture to ensure an adequate and sustainable food supply response\. The project was implemented following the guidelines and instruments set in the GFRP Framework document, approved by the Board in May 2008\. ACHIEVEMENT OF PDO Achievement of project objectives is measured based on the key performance indicators in the Project Paper\. The key outcome indicator was defined as âPercent increase in crop production in project areas affected by the food crisis and Percent increase in meat production in project areas that meets standardâ?\. Data were collated from the FSNAU for 28 yield and production estimates\. For the purpose of project M&E, and with incremental support from the project, FAO organized field checks/crop production assessment surveys to ensure appropriate documentation of project performance\. The FSNAU Project within FAO plays an important role in assessing the development of the situation in Somalia\. It thus provides continuously updated data, which are used for M&E purposes\. The FSNAU independent seasonal assessment investigates crop and animal production with regard to availability/accessibility of home-produced commodities that contribute to the food security of the three administrative regions of Somalia\. Provision of improved agricultural inputs: The provision of farm inputs and training on improved farming methods has contributed immensely to increased crop yields as shown in the table below, derived from field checked post-distribution data\. Target PD yields Gu 2009 Variance PWA Variance district (T/ha) yields (T/ha) (T/ha) 1995-2009 Mahaday 3\.21 0\.2 3\.01 0\.3 2\.91 Beltweyn 1\.67 0\.2 1\.47 0\.3 1\.37 Qansax 3\.75 0\.4 3\.35 0\.35 3\.4 dere Dinsoor 6 0\.6 5\.4 0\.35 5\.65 Sacco 2\.2 0\.65 1\.55 0\.25 1\.95 Maize Jowhar 3\.2 0\.55 2\.65 0\.55 2\.65 Mahadai 3\.2 0\.55 2\.65 0\.55 2\.65 Merka 2\.6 0\.9 1\.7 0\.56 2\.04 Analysis of data on application of the TSP fertilizer showed that the application increased sorghum yields by as much as six times or by 650 percent (Dinssor district), as shown below\. Crop District Village With TSP Without TSP (T/ha) (T/ha) Sorghum Qansax dere Bam Bam 4 0\.7 Qansax dere Qasaaley 2\.5 1\.2 The Mid-Term Review Report also notes that âcomparison between sorghum and maize yields following distribution of improved agricultural inputs in the target areas and the Gu 2009 yields in none target areas of the same districts as well as the post-war average (PWA) Gu yields (1995â2008) show that the improved inputs increased cereal crop yields significantlyâ?\. The distributed inputs continue to significantly contribute to increased crop yields and production in Deyr 2009/10 as well in project target areas\. In the case of Deyr cereals, a 29 remarkable improvement was noticed as reported by the FSNAU post-Deyr 2009/10 assessment report released on 3 March 2010\. According to the latest FSNAU report, cereal (sorghum and maize) production in southern Somalia is significantly above the PWA (158 percent) and the five year average (164 percent) and 319 percent of Deyr 2008/09\. The project target areas are located in highlighted regions (bold) mentioned in the above table (source: FSNAU post-Gu 2009 and post-Deyr 2009/10 assessment reports released on 8 September 2009 and 3 March 2010)\. Rehabilitation of irrigation schemes: Primo Secondario and part of Tugaarey irrigation schemes that were rehabilitated in Gu 2009 increased water availability by three to four times in Gu 2009 and Deyr 2009/10 and contributed to increased cereal production\. Similarly, rehabilitation of the remaining part of the Tugaarey irrigation scheme in October 2009 opened up new areas for irrigated crop production in Deyr 2009/10 and thus contributed to increased cereal production in Deyr 2009/10\. Irrigation schemes Before rehabilitation After rehabilitation Primo Secondario 2 600 ha improperly 13 700 ha (of this, 11 100 irrigated ha are newly opened with inadequate irrigation up land for farming and 2 water 600 ha are now properly irrigated with adequate irrigation water) Tugaarey 120 ha improperly irrigated 5 000 ha (of this, 4 880 ha with inadequate irrigation are newly opened up water land for farming and 120 ha are now properly irrigated with adequate irrigation water) The following statement quoted from the independently prepared FSNAU Food Security and Nutrition-Special Brief Gu 2009 released on 8 September 2009 shows the impact of rehabilitation of irrigation systems\. âIn contrast, the food security situation has significantly improved in Lower Shebelle primarily due to an exceptionally good Gu cereal and cash crop production and an off- season Gu production\. This has not only improved food access through increased own production, but is also generating increased opportunities for income from product sales, wage labour, and marketing activities\. Gu 2009 cereal production is 118% PWA and 170 % five-year average, which is the 4th highest production in over a decade\. This good production is due to improved irrigation accessibility, increase in cultivated area, enhanced security situation, and reduced tensions over land tenure and increased access to water\. There is also normal grazing and browsing conditions and good livestock body conditions for all species leading to normal calving and kidding rates\. Milk production is normal and herd sizes 30 are increasing for all species\. Labour opportunities and daily wage rates have also improved due to high labour demand for Gu 2009 agricultural activitiesâ?\. Rehabilitation of water catchments: Sixty-three water catchments were rehabilitated, with a total improvement of 355 048 m3 of water-holding capacity, serving 6 300 households and supporting 371 000 head of animals\. The improved/rehabilitated water catchments were able hold more water for longer periods in 2009 and 2010, which improved access to and the availability of water for livestock\. In addition, 3 155 households beneficiated from cash-forâwork activities while rehabilitating 30 water catchments\. On average, each cash-for-work beneficiary received USD 80 while rehabilitating 30 water catchments\. The strategy of selecting and rehabilitating water catchments along stock and market routes paid off as the flow of animals using the stock and market routes soared after the formal lifting of the trade ban on live animals\. The fact that the 63 water catchments were able to hold more water for longer periods meant that the animals were well watered and arrived at the terminal markets in good body condition, which attracted better prices as shown in the table below\. Furthermore, the volume of livestock exported through Berbera and Bosasso ports in 2009 was 9 percent higher than in 2008, as shown in the table\. However, the exports of cattle and camel declined slightly in 2009 owing to severe drought in region five of Ethiopia (which normally provides 65 percent of export animals) and an outbreak of nonspecific skin disease in cattle and camel in Somalia\. It is important that the next phase of the FAO-World Bank RRRRL Project allocates some resources to address animal health emergencies\. Name of 2008 2009 livestock No of animal Average unit No of animal Average unit species exported price (USD) exported price (USD) Sheep and 2 456 294 34 2 715 457 41 goats Cattle 158 097 173 155 390 196 Camels 54 154 254 35 537 286 Total 2 668 545 2 906 384 Source: FSNAU post-Deyr 2008 and 2009 Technical Series Reports (released on 4 March 2009 and 31 March 2010 respectively)\. Another notable development in the rapid increase in demand for animals is that the fierce competition for animals has not only led to better prices but a change in the mode of procurement where the age-old âsold on trust to be paid later systemâ? and barter trade have been replaced by cash (USD) at the source\. Fodder bulking and production, crop residue improvements and range rehabilitation: On average, each targeted bulker produced an estimated 2 quintals of fodder seed per ha and no farmer is willing to sell harvested seed in the market because it is too precious\. Almost 70 percent of bulkers opted to share harvested seeds with neighbors and other community members for the exchange of other goods and also as Zakat, thus enhancing social bonding and local community relations\. The rest of the bulkers opted to store fodder seeds for the next season\. In addition, on average each bulker produced an estimated 5 tonnes of fodder per ha, which they sold at the rate of USD 350 â 450/5 tonnes in the open market\. 31 On average, each fodder production farmer produced an estimated 5 tonnes of fodder per ha, which they sold at the rate of USD 350 â 450/5 tonnes in the open market\. Each crop residue beneficiary produced 3 tonnes/ha of maize/sorghum stalks for their own use\. The wastage was reduced from 800 kg/ha to 100 kg/ha through the provision and use of baling boxes\. This increased the amount of feed available at household level during the dry season which served to sustain milk production for home consumption\. The âformalâ? opening of the Saudi Arabia live animals market has had an unexpected bonus for the fodder producers and traders as not only the volume of traded animals increased but so has the demand for fodder\. The demand is expected to grow even faster after the slaughterhouses, which are now not able to buy enough animals for their daily slaughter off the market, establish their own holding/fattening grounds to serve the slaughterhouses\. Although the ongoing rains in Somalia could trigger climate-related animal and human diseases, they are a boon for the fodder producers and traders and the increased production will find a captive market along the stock and market routes, export slaughter facilities and the ports\. Construction of slaughter facilities with value addition services: As the construction of Boroma slaughter facility was just concluded and construction process was still ongoing at Bosasso slaughter facility, it would be premature to measure the impact at this point\. However, the expected impact of this activity is mentioned below\. (i) Environment and public health â¢ Consumers will be provided with high quality meat with low levels of contamination\. This will reduce meat-borne infections otherwise transmitted through heavily contaminated meat\. This will safeguard consumers from public health hazards, reducing the health burden on families and Government-operated health institutions\. â¢ Large quantities of by-products are left behind at the slaughterhouse\. They fall in the category of inedible offal\. These need to be suitably processed and used\. The slaughter facilities will now have the infrastructure to reduce this kind of waste with a benefit for the economy and the environment/public health\. â¢ Another important and positive environmental impact of the new animal processing standards will be the reduction of untreated wastewater in the environment which may also affect the public health\. â¢ The relocation of the Boroma and Bossaso slaughter facilities in areas âfarâ? from the town will considerably reduce the threats to public health, particularly around rapidly expanding population areas\. â¢ Improved meat hygiene handling practices will reduce the risks to abattoir staff from contracting diseases associated with their profession\. 32 (ii) Governance â¢ Enhanced recognition by the community of the role of the local authorities through (a) increasing their capacity to provide indirect public service and to regulate the slaughter sector; and (b) public physical assets and subsequent improved access to services and business opportunities in the meat value chain\. â¢ Enhanced possibility to establish a sustainable HACCP system at the level of the slaughter facilities\. â¢ The ministries responsible for the livestock affairs and the local governments now have specific legal tools to enforce compliance with SSOPs and GHPs, among others procedures\. â¢ Both the private and public sectors now have a clear responsibility related to the sustainability of the slaughter services and compliance with suitable meat food safety standards\. â¢ The new slaughter operation arrangements foreseen in the Lease Agreement will have the effect of reducing and preventing illegal slaughtering\. â¢ The ultimate increase in the meat trade will increase local government revenues and thus their service delivery financial capacity\. (iii) Socio-economic impact â¢ Job opportunities creation: it is estimated that about 36 people will be permanently employed by the slaughter companies in addition to the previous workers involved in the sector\. Furthermore, through infrastructure activities carried out by FAO, several short-term job opportunities will be created\. Other long-term job and business opportunities might be created through the valorization of meat by-products using the expertise and infrastructure of the slaughter facilities in the future\. â¢ Better working environment in the abattoirs and increased income for the slaughterers: the new modern facilities will improve the morale of the workers who will be operating in a clean and safer environment\. â¢ In addition to the provided equipment/tools, the new slaughterhouse structures and associated facilities in addition trainings offered to operators will enhance their skills and productivity with positive effect on their revenue income and reduce occupational hazards\. â¢ Worker social protection: the Health Escrow account foreseen in the Lease Agreements will provide social and health care protection to the slaughter facility operators, including those recruited by the meat owner (slaughterers)\. â¢ Meat traders increased income: improved conditions of hygiene will enable the production of meat with low levels of contamination\. The low contaminated meat will have a longer shelfâlife, thus minimizing losses through early spoilage thereby increasing sale returns for traders\. â¢ Initial local capital invested: Bossaso and Boroma shareholders have invested a total of USD 300 000\. The operations will generate, over time, other financial resources that will be invested in the ordinary and extraordinary maintenance of the infrastructure or new infrastructure\. â¢ Safe recovery of by-products: the facilities will improve safe recovery of white offal that will promote the availability of cheap proteins for low-income households\. This 33 will improve the financial returns for meat sellers as well\. Safe recovery of hides and skins will further increase operatorsâ income\. â¢ Increased meat sales: high quality meat will increase demand by consumers thereby improving returns for meat sellers and livestock producers\. This will reinforce the pastoralistsâ production system and enhance their resilience\. â¢ Potential future investment: the local experience which will be matured in the domestic slaughter sector might be used in future to expand the business in the meat export sector, hence generating additional investment and impacting on the local economy and job opportunities\. â¢ Reduces externalities: consumers and meat chain stakeholders will bear all the slaughter costs\. This means that part of the revenue of the slaughter operations will be addressed to reduce previous sector externalities\. EFFICIENCY The activities were implemented by FAO Somalia in collaboration with implementing partners\. The implementation arrangements have functioned as anticipated in the Project Document and thus facilitated efficient and effective implementation of the project activities\. The project management effectively coordinated the project activities with other FAO units and experts, i\.e\. SWALIM for the rehabilitation of irrigation schemes, FSNAU for nutrition activities and monitoring project impact, the FAO livestock team based in Nairobi, FAO technical teams based in Addis Ababa and Rome and the gender expert on gender issues\. This avoided duplication of efforts while creating much needed synergy\. The management structure, which was simple enough to allow for quick decision-making, comprises a Project Management Unit, made up of a Project Manager, Operations Manager and a Project Assistant based in Nairobi (headquarters) and field coordinators in Puntland, Somaliland and central-south Somalia\. The project recruited highly qualified international and national staff, with lengthy experience in managing similar projects in Somalia\. The financial arrangements for this project are based on the World Bank/United Nations FMFA to which FAO is a signatory\. FAO has maintained separate accounting for advances and expenditures related to the project\. In the implementation of all activities, the project strictly adhered to the FAO procurement procedures contained in the FAO Procurement Manual\. The principles of transparency, impartiality and competition were followed to ensure that the project obtained value for money\. Early planning and timely distribution of agricultural inputs to 35 000 targeted households during their first cropping season greatly improved the efficiency of the implementation of subcomponent 1\.1 (increased food production through distribution of improved inputs) through increased crop yields and production at the household level during the Gu and Deyr 2009 and Gu 2010 seasons\. Similarly, early identification and technical surveys of infrastructure sites for rehabilitation and 100 percent completion of 34 rehabilitation works during the first year of project implementation enabled the project to increase cropped area under irrigation, improve water availability and increase crop yields and production at the household level\. M&E of activities was designed to document project outcomes and intermediary results and to provide information for assessing the outcomes and impacts of the project\. A monitoring plan using an output/outcome indicator matrix is in place and is updated on a regular basis (often biweekly) with copies sent to the World Bank\. This is an important tool for monitoring progress\. LESSONS LEARNED Rehabilitation of irrigation schemes together with distribution of appropriate agricultural inputs significantly improved crop yields and production: The project had a significant impact on crop production and yields at the target householdsâ level owing to the rehabilitation of irrigation schemes and distribution of appropriate agricultural inputs\. The project intervention resulted in improved access to and availability of adequate quantities of irrigation water at the right time, planting of good quality and improved crop seeds with the application of urea (a critical input), which eventually led to an increased cropped area and significantly improved targeted householdsâ crop production and yields\. According to the independent FSNAU assessment report of 8 September 2009, cereal production is 2 percent higher than the Gu PWA 1995â2008, 58 percent higher than the five year average and is the second highest Gu cereal production in the last seven years\. Most of the 2009 Gu season cereals were produced in Lower Shabelle6 (51 percent of total cereal production in Somalia)\. The main factors that contributed to increased production include average rainfall levels (Gu rains and Hagaa showers), improved irrigation systems, increased access to water in the riverine areas of Lower Shebelle, and high local cereal prices\. As a result, there were significant increases in area under cultivation in Lower Shebelle (by 30 percent)\. Increased crop yields and production in Vertisols through application of TSP: Based on local soil conditions (extremely alkaline and more than 8 pH), the project provided TSP fertilizer to target households in Bay and Middle Juba regions\. The main reason for providing TSP specifically was that phosphorous is a critical element in crop production but is missing in the high pH soil profile of the target areas\. As a result of the project intervention, there was a marked improvement in crop production and yields\. On average, the application of TSP fertilizer resulted in a 410 percent increase in crop yields\. The project experience of TSP fertilizer confirmed that area-specific appropriate agricultural inputs significantly and positively impact on crop yields and production\. Mechanized rehabilitation of water catchments is cost effective, more efficient and effective than cash for work-based rehabilitation: Two strategies were used to implement this component of the project namely: a) excavators/bulldozers; and b) cash for work\. Based on the project experience, both methods work and have their advantages 35 and disadvantages\. The cash for work injected liquidity into the local economy and was able to gainfully occupy young men and women while generating a lot of good will\. The method was, however, slow and more expensive than hiring mechanized services\. The mechanized services were faster and cheaper, but there were no secondary benefits to target beneficiaries\. Based on the project objective and priorities, selection of the right approach (mechanical or cash for work) has to be carefully considered\. Improvement of meat quality and hygiene through establishment of improved slaughter facilities: As an integral part of establishing the slaughter facilities in Boroma, Somaliland and Bosasso, Puntland, the project encouraged and facilitated the development of PPPs for the first time applied to slaughterhouses and spearheaded the initiative\. Implementation of the strategy took much longer than expected as community dialogue and mobilization were preceded by the introduction and marketing of the PPP concept\. In the end, the protracted process was worth the effort as the PPPs in Boroma and Bosasso were able to mobilize local investors who raised over USD 270 000 towards the venture\. It is noteworthy that the process also generated a great sense of ownership within the community, the local authority and relevant ministries, while injecting sustainability\. Multiplier effect of fodder bulking and production: The project promoted and facilitated the establishment of fodder bulking and fodder production sites\. The establishment of fodder bulking sites proved a successful experience as seeds provided were multiplied successfully and redistributed among community members and interestingly re-sown by project beneficiaries and non beneficiaries\. This example shows multiplication of fodder seeds in the second season by community members, which is clearly an unintended positive impact of the project intervention\. The successful fodder production sites also generated lot of interest among community members in fodder production and generated huge demand for fodder seeds which can be met by ongoing fodder seed multiplication processes undertaken by project beneficiaries and non-beneficiaries\. Effective monitoring through partnership with local professional associations/agricultural departments: As part of the project monitoring strategy, Somali Technical Working Group (a professional association of Somali agronomists) and the Ministry of Agriculture of the Transitional Federal Government were fully and actively involved in the follow up and monitoring of project implementation particularly distribution of agric inputs activity in southern Somalia\. Engagement of these two bodies proved efficient and effective in monitoring of project activities due to their extensive professional networks and good and constant working relationships with target communities\. This option could be replicated wherever possible inside and outside the Somalia context in order to harness local resources\. Enhanced project sustainability through partnership with local government ministries: For the first time for FAO Somalia, the RRRRL Project signed by LoA with the Ministry of Agriculture, Somaliland in early 2009 for the distribution of agricultural inputs\. The adoption of the strategy to use the LoA was preferred as it would inject sustainability to the project while building the capacity of the Ministry to use and account for external 36 funding and supervise projects/programs\. The project management provided close supervision and support to the Ministry during LoA implementation\. Subsequently, the project realized that the Ministry implemented the LoA successfully in a professional way and enhanced the sustainability of the project activities owing to continuous follow up by the Ministry extension officers\. As a result of this exercise, there was a general improved understanding and working relationship between FAO Somalia and the Ministry, improved Ministry familiarity with the project, and improved Ministry confidence and capacity on project implementation\. This is a remarkable milestone\. Based on this successful experience, the RRRRL Project and other FAO Somalia projects signed eight LoAs with the different Ministries in Somaliland, Puntland and the Transitional Federal Government\. 37 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders Not available\. 38 Annex 9\. List of Supporting Documents World Bank, Food Price Crises Response Trust Fund, Emergency Project Paper; (Report No\. 44929-SO, August 25, 2010)\. World Bank, First IDA Review Mission of RRRRLP, Aid-Memoire (February 2-6, 2009)\. World Bank, IDA Implementation Review Mission of RRRRLP and ELDSCPCMI, Aid- Memoire (July, 19-24)\. World Bank, RRRRLP, Minutes of the Rapid Response Committee Decision Meeting (August 1, 2008)\. World Bank, RRRRLP Mid-Term Review Mission, Aid-Memoire (November 30 to December 6, 2009)\. World Bank, RRRRLP Mid-Term Review Mission, Aid-Memoire (November 30 to December 6, 2009)\. World Bank, Food Price Crisis Response Trust Fund Grant Agreement (RRRRLP) between IDA and FAO (September 2008) World Bank, RRRRLP Agreed Minutes of Negotiations (August 14, 2008)\. FAO, RRRRLP Mid-Term Review Report (September 2009)\. FAO, RRRRLP Environment and Social Management Framework (December 2008)\. FAO, RRRRLP Project Implementation Manual (March December 2009)\. FAO, RRRRLP First Progress Report, (May 1, 2009)\. FAO, RRRRLP Second Progress Report, (September 30, 2009\. FAO, RRRRLP Third Progress Report, (April 1, 2010)\. FAO, RRRRLP Implementation Completion and Results Report, (September 30, 2010 FSAU, Food Security and Analysis Unit-Somalia, 288/09 Post Deyr Analysis, Technical Series (Report No\. V\. 17 March 4, 2009)\. ETC East Africa Ltd\., Socio Economic Study, RRRRLP (January 2009)\. 39 IBRD 33483 SOMALIA SELECTED CITIES AND TOWNS MAIN ROADS REGION CAPITALS RAILROADS NATIONAL CAPITAL REGION BOUNDARIES RIVERS INTERNATIONAL BOUNDARIES 40Â°E ERITREA REP\. OF 45Â°E 50Â°E YEMEN REP\. OF YEMEN Aden Caluula To DJIBOUTI of Gulf DesÃ© Saylac Maydh Dh Boosaaso ar Surud Ad \. oo (2,408 m ) Mts r w Ceerigaabo Va AWDAL o l l eHurdiyo Bullaxaar ad y M BARI Xaafuun Baki y 10Â°N WOQOOYI Ca SANAAG Kar Kar Mts\. 10Â°N GALBEED Qardho To Burao Bandarbeyla Hargeysa Garadag Addis Ababa TOGDHEER SOOL Laascaanood Garoowe NUGAAL Eyl ETHIOPIA Gaalkacyo MUDUG Hilalaya To Imi Dhuusa Mareeb To Hobyo Kibre Ferfer GALGUDUUD 5Â°N Mengist 5Â°N Beledweyne Ceel Buur BAKOOL Xuddur HIRAAN Luuq Buulobarde INDIAN leel Shabe Garbahaarey Baydhabo SHABEELLAHA OCEAN GEDO DHEXE Wanlaweyn Jawhar Cadale Buurhakaba B AY Baardheere HA JUBBADA LLA MOGADISHU BEE SE BANAADIR DHEXE S HA OO Marka To H Jub Mado Gashi a a a K E N YA Bu'aale Baraawe r Bilis Jilib i Qooqaani SOMALIA d a 0Â° Jamaame 0Â° JUBBADA n To Nairobi HOOSE Kismaayo 0 50 100 150 200 Kilometers e B 0 50 100 150 Miles This map was produced by the Map Design Unit of The World Bank\. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries\. 40Â°E 45Â°E 50Â°E NOVEMBER 2004 The original had problem with text extraction\. pdftotext Unable to extract text\.	REVIEW
P035698	ï»¿ ICRR 12509 Report Number : ICRR12509 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 09/28/2006 PROJ ID :P035698 Appraisal Actual Project Name :Hunan Power Development Project Costs 742\.2 435\.8 Project US$M ) (US$M) Country :China Loan/ Loan US$M ) /Credit (US$M) 300 137\.3 Sector (s):Board: ): US$M ) EMT - Power (100%) Cofinancing (US$M) 447\.2 298\.5 L/C Number :L4350 FY ) Board Approval (FY) 98 Partners involved : Closing Date 12/31/2004 12/31/2005 Evaluator : Panel Reviewer : Division Manager : Division : Robert Mark Lacey Ridley Nelson Alain A\. Barbu IEGSG 2\. Project Objectives and Components a\. Objectives a\. Objectives The overall objective of the project was to alleviate power shortages in Hunan Province by providing efficient, reliable and environmentally sound power supply\. As the Bankâs first involvement in the power sector in the Province, the intention was to bring international experience to bear on some of the technological, institutional and environmental challenges facing Hunan\. Meeting these challenges would, in turn, help to address the issue of uneven development between Chinaâs coastal Provinces and interior ones such as Hunan\. The project was a complex exercise, involving the introduction of new technology and institutional reforms to an agency (the Hunan Electric Power Company, HEPC) which had never previously worked with the Bank, all in the context of a major sector reform\. b\. Components (or Key Conditions in the case of Adjustment Loans ): There were four components: i) Supply and installation of two additional 300 MW anthracite-powered generating units at the Leiyang Power Plant (LPP) (US$518\.7 million at appraisal; US$297\.1 million actual)\. This component aimed to alleviate the power shortage in the Province, improve the generational mix in a system dominated by seasonally affected hydropower, and facilitate the retirement of ten aging generation units in the Hunan power grid which were inefficient and environmentally hazardous\. ii) Reinforcement of the existing 220V transmission line through planned installation of 789 kilometers of new lines together with expanded transformer substation capacity (US$228\.5 million at appraisal; US$138 million actual)\. The original intention of this component, as well as reinforcing the transmission line, was to connect the LPP with a privately built and operated power plant at Changsha (under BOT arrangements)\. This, however, never materialized and the actual length of line built was 547 kilometers (see âRevisionsâ? below)\. (iii) Technical assistance (the cost of this component is not separated out in the ICR) covering (a) engineering services for the management and supervision of new construction; (b) the implementation of a restructuring plan for HEPC; and (c) improvement of HEPCâs financial management system\. (iv) Institutional development and training (the cost of this component is not separated out in the ICR) to build HEPCâ s capacity to achieve the projetcâs objectives under the new operating arrangements\. Revisions\. The main foreign investor in the BOT Changsha generating plant withdrew in 1999\. This is attributed by the ICR to the effects of the East Asian financial crisis\. As the plant did not materialize, the portion of the transmission line associated with it was dropped from the project\. c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost\. Project costs at completion were US$435 million, 40 percent lower than the US$737\.2 million forecast at appraisal\. This was due principally to (i) lower than foreseen international prices; (ii) efficient construction management; and (iii) the withdrawal of the foreign investor from the BOT which led to the construction of about 230 fewer kilometers of line than anticipated\. The reduced costs and concomitant foreign exchange savings led to three cancellations (in 2000, 2001 and 2004) totaling US$162 million; a further undisbursed balance of US$0\.8 million was cancelled at completion\. 54 percent of the original Bank loan of US$300 million was therefore unspent\. The pricing carried out at appraisal, particularly regarding the generation component, was too conservative, although it appears to have closely followed Bank guidelines\. In the event, the substantial overestimate caused the Borrower unnecessarily high financing charges\. Financing\. The IBRD loan was to cover 40 percent of the project cost as estimated at appraisal\. 40 percent was to be funded by local borrowing and 20 percent by the utility companiesâ own funds\. Borrower Contribution\. The reduced project cost had a substantially greater impact on the financing provided through the IBRD loan than on internal financing sources (the utility companiesâ own funds and local borrowing)\. While Bank financing, at US$138 million, was 46 percent of that foreseen at appraisal, local financing, at US$297 million, was two-thirds of the appraisal estimate\. Local borrowing financed nearly 50 percent of the completed project cost\. This reflected the proportionally lower foreign exchange costs\. Dates\. Overall implementation took about two years longer than anticipated, and the original closing date of December 31 2004, was extended by one year\. The main causes of the delays were: (a) the project did not become effective until December 1999, 18 months after approval (for reasons which the ICR does not make clear); (b) there were delays in finalizing the bidding documents, reflecting the lack of experience of HEPC with Bank procurement procedures; (c) the winning bidder filed for bankruptcy under US Chapter 11, and the contract was not signed until June 2001, after a financial guarantee had been arranged; (d) the Government then held up implementation due to an unexpected slowdown in demand between 2000 and 2002 which led to surplus capacity in Hunan Province; and (e) the project was implemented during a period of major change and restructuring in Chinaâs power sector\. 3\. Relevance of Objectives & Design : The project was responsive to the Borrowerâs priorities, both national and local, and reflected the Bankâs strategic goals in China\. It was designed to address a number of key sector issues, including infrastructure bottlenecks, the negative environmental impact of antiquated thermal plants, insufficient investment in transmission, inadequate wholesale pricing, and lack of private sector interest in Hunanâs power sector\. The project built upon three major ESW exercises carried out between 1993 and 1997\. It was also relevant to two key themes of the 1997 CAS for China: infrastructure development and environmental protection\. The mix of investment in physical generation and transmission facilities, progressive retirement of antiquated thermal plants, and institutional development, was appropriate\. The project design was sound and quality at entry satisfactory\. It was demonstrated that the project was the most cost effective alternative available to address the issues identified\. Implementation took place in a rapidly evolving policy environment, in which Chinaâs powers sector was undergoing major structural changes\. It coincided, moreover, with a period of considerable turbulence for the economies of East Asia\. The impact of many, though not all, of these shifting sands, was specifically foreseen at the design stage\. In any event, the changes, far from undermining the projectâs relevance, if anything reinforced it\. The fundamental goals â meeting rapidly increasing demand of electric power in a cost effective and environmentally sustainable manner â remain as critical at completion as they were at design\. The same may be said for the other objectives, especially the support for corporatization and institution building to further the process of power sector reform\. Project objectives remain, therefore, consistent with at least two key goals stated in the 2003 CAS and 2006 Country Partnership Strategy: managing resource scarcity and environmental challenges; and strengthening public and market institutions 4\. Achievement of Objectives (Efficacy) : Despite delays, physical investment was fully and satisfactorily completed\. The project achieved most, though not all, of its development objectives\. a) Alleviation of power shortages\. Rating : Satisfactory \. The project has enabled rapidly increasing electricity demand in Hunan Province to be met in an environmentally sustainable and cost effective manner\. By project completion, the operation of the two power plants was highly satisfactory, and the availability factors, at 95 and 99 percent respectively, exceeded those targeted at appraisal\. Reductions in production losses due to power shortages and increased output enabled by the project were both greater than anticipated at appraisal\. b) Improved efficiency\. Rating : Satisfactory\. The project has led to a considerable increase in fuel efficiency â from 434 grams of coal per KWh at appraisal to 357 (on average) at completion\. Again, the appraisal target (380) was exceeded\. c) Enhanced reliability of electricity supply\. Rating : Satisfactory \. Reliability, as measured by load shedding and the number of faults per 100 kilometers of transmission line per year, has improved substantially, though by less than anticipated at appraisal\. This was because the measure at completion was made during 2004 and 2005 when the Province suffered from unusually severe winter storms\. Although the system was severely stretched and, indeed, incapacitated during the worst of the storms, and although there was major load shedding, that portion of the transmission and distribution system reinforced by the project proved highly reliable\. The project was credited with preventing a total collapse of the Hunan grid\. (d) Improved environmental performance\. Rating: Moderately Satisfactory \. The specific targets related to environmental impact and management concerned emission rates for air pollutants sulfur dioxide (SO2), nitrogen oxide (NOx), and TSP\. The reductions in SO2 and NOx anticipated at appraisal did not take place\. This is because no controls were put in place for new plants, and the decommissioning of antiquated plants was delayed\. TSP emissions did improve as a result of the commissioning of highly efficient dust collection systems in new, fuel efficient power plants\. New government imposed tariffs are in force regarding SO2 and NOx emissions, and HEPC anticipates that these, together with the fact that the antiquated plants are now decommissioned, will lead to the expected reductions in the future\. Environmental training, procurement of environmental operating equipment, and development of air quality control monitoring capabilities at the local Environmental Protection Bureau were all performed satisfactorily\. e) Institutional reforms and improved sector management\. Rating : Moderately Unsatisfactory \. The ICR rates this component as satisfactory, although it was only partially accomplished\. According to the PAD, HEPC was expected to relinquish all government and regulatory functions; it was to transfer generation assets and associated liabilities and personnel to generation companies; and it was thereafter to operate only as a grid company\. As accompanying measures, a competitive power market was to be established in Hunan, and the LPP was to be incorporated as an independent power producer with full legal and financial autonomy\. These latter actions were described in the PAD as key institutional reforms supported by the project\. Although much of the planned restructuring did take place, LPP was not made into an independent power producer\. Rather, the assets were transferred to the large China Datang Group Company, headquartered in Beijing\. It is not clear from the ICR to what extent this limits LPPâs freedom of action\. It certainly does not have the originally intended legal and financial autonomy\. Similarly, a competitive power market in Hunan has not been accomplished\. In 2002, the Government decided to develop and establish competitive power markets on a regional rather than provincial level\. At the time of project completion, such a market was still in the design and preparation stage for the Central China Region (including Hunan Province) since it was not one of the pilot Regions\. Engineering services and financial management were carried out satisfactorily, although in both cases HEPC decided to use in-house services rather than those of the international consultancies proposed at appraisal\. The $1 million training program, anticipated at appraisal, was significantly under-spent and no legal training took place\. The ICR does not clarify the reasons for this\. 5\. Efficiency : The generation component was justified primarily on least cost analysis, looking at system requirements during the period 1997-2025\. At completion, the weight of this component in total project cost was practically the same as at appraisal (just under 70%)\. A cost benefit analysis of the transmission component was carried out\. At appraisal, the IERR was estimated at 19\.4%\. The completion estimate, calculated in the ICR, is 15\.4 percent\. The lower return is explained by a longer than anticipated construction period, and consequently delayed completion\. The return is, however, within the range established in the risk analysis during appraisal, and is considered satisfactory 6\. M&E Design, Implementation, & Utilization: The design of both the overall development and project objectives and of the key performance indicators is satisfactory\. The latter include a list of specific, relevant and easily monitorable measures attached to each of the broader goals of each project component and sub-component 7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative): Environment\. The project was rated âCategory Aâ? under the World Bankâs Environmental Assessment Safeguards policy, and environmental considerations were duly incorporated into the projectâs design\. According to the ICR, all implementing agencies are fully committed to proper environmental management and were diligent in carrying out the program\. However, there is some contradiction between this assertion and the fact that no SO2 and NOx controls for new generating plants were implemented as anticipated at appraisal\. Resettlement\. Both the generation and transmission components involved some compulsory land acquisition and resettlement\. According to the PAD, over 1,200 persons in Hunan Province were to be affected\. Bank approved resettlement action plans (RAPs) were adopted and implemented\. Compensation standards were periodically renegotiated and adjusted in accordance with the populationsâ changing expectations\. There was not a single law suit to challenge resettlement compensation â this is almost unprecedented in Hunan\. Fiduciary\. HEPCâs debt/income ratio remained at or close to the covenanted 1\.5\. Audit reports of a satisfactory quality have been presented to the Bank on an annual basis\. Since 2003, following sector restructuring, high quality financial forecasts have been produced\. However, HEPCâs return on equity has been substantially below the covenanted 8 percent\. This reflected mandated coverage extensions in low income areas, the setting of a low rate of return as a matter of policy, and policy-related distortion leading to reduced recorded income and higher recorded expenditure\. The Bank eventually agreed to drop this covenant in the face of persistent non-compliance\. 8\. Ratings : ICR ICR Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial While agreeing with the ICRâs overall rating, there are, nonetheless, three concerns\. First, LPP does not enjoy the degree of financial and managerial autonomy anticipated at appraisal, and its current de facto independence is not legally robust\. Second, a competitive power market in Hunan Province is yet to be established\. Third, the failure to meet the financial covenant on HEPCâs rate of return on equity appears to reflect the impact of questionable policies\. Sustainability : Highly Likely Likely Failure to achieve some of the key institutional reforms, including introduction of competition, raises some concerns over sustainability\. This merits a rating of âLikelyâ? rather than âHighly Likely\.â? Bank Performance : Satisfactory Satisfactory Project design was sound, quality at entry was high, and supervision adequate\. Good working relationships with counterparts were established\. The Bank acted in a flexible and timely manner to adjust to rapidly changing circumstances\. However, project cost estimates at appraisal were much too high and reflect over-cautious Bank policies and guidelines\. Borrower Perf \.: Satisfactory Satisfactory The Governmentâs commitment to the project objectives and sector reform is strong\. The power companies and sector agencies performed well\. Certain policies have, nevertheless, impacted negatively on HEPCâs financial situation, and have delayed or modified the introduction of competition\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \. 9\. Lessons: As the ICR points out, the main lessons are: â¢ It would be useful to give more guidance on procurement in unusual cases, such as the bankruptcy of the winning bidder\. This is especially so where the Borrower, like HEPC, has no previous experience of dealing with the Bank\. â¢ Much of the work intended for international consultants was in fact carried out successfully at a local level\. The Bank should seek to avoid bias towards large international firms\. Lists of firms providing advisory services should increasingly include practitioners (in this case, power companies) as well as management consultancies\. In particular more consideration should be given to in-house engineering and supervision services rather than the use of consultants\. â¢ Bank guidelines and practice should be adjusted to ensure more realistic cost estimates (and hence lower financial charges for the Borrower) at the appraisal stage\. â¢ More care should be directed towards assessing training needs and the related budget for training expenses\. In Hunan, these were constantly changing as sector reforms progressed\. Moreover, training on institutional reform is useful only if the trainers are thoroughly familiar with the country, the sector and the institutions concerned\. â¢ The success of the resettlement reflects strong commitment at all levels of Government, flexibility in the light of changing circumstances, and soundly designed resettlement action plans\. 10\. Assessment Recommended? Yes No 11\. Comments on Quality of ICR: The ICR is thorough, well written and well organized\. It gives the reader a clear picture of the evolution of an ambitious project implemented against a constantly shifting economic, institutional and policy background\. More clarity on some individual issues â for example, why it took 18 months for the project to become effective, and why the training budget was substantially under-spent â would have been useful\.	REVIEW
P082375	ï»¿ ICRR 13907 Report Number : ICRR13907 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 04/30/2013 Country : Albania Project ID : P082375 Appraisal Actual Project Name : Natural Resources US$M ): Project Costs (US$M): 19\.40 17\.90 Development Project L/C Number : C4074 Loan /Credit (US$M): Loan/ US$M ): 7\.00 6\.93 Sector Board : Agriculture and Rural US$M): Cofinancing (US$M ): 10\.20 8\.53 Development Cofinanciers : GEF, Swedish Board Approval Date : 06/09/2005 International Closing Date : 11/01/2010 06/30/2011 Development Cooperation Agency (SIDA) Sector (s): Forestry (49%); General agriculture fishing and forestry sector (23%); Central government administration (18%); Flood protection (8%); Sub-national government administration (2%) Theme (s): Land administration and management (29% - P); Participation and civic engagement (29% - P); Water resource management (14% - S); Climate change (14% - S); Decentralization (14% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Hassan Wally George T\. K\. Pitman Soniya Carvalho IEGPS1 2\. Project Objectives and Components: a\. Objectives: According to the Project Appraisal Document (PAD, p\. 4) the Project Development Objectives were : "to establish or maintain sustainable, community -based natural resource management in about 218 communes in upland and mountainous erosion -prone lands\." The development objectives as stated in the Development Credit Agreement (p\. 17) and the Global Environment Facility Trust Fund Grant Agreement (p\.16) were identical\. The Global Environment Objective (PAD, p\. 5) was: "to reverse severe degradation of upland and mountainous erosion -prone lands, and sediment runoff to the Adriatic Sea, through rehabilitating and sustainably managing natural resources, including globally significant biodiversity"\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: ( Appraisal cost : US$12 A: Improved Management and Governance of Forests and Pastures \. (Appraisal 12 \.66 million, actual US$ 12\. US$11\. 11 \.92 million )\. This includes three sub-components: cost : US$11 A\.1: Strengthening participatory forest and pasture management in communes that were supported under Albania Forest Project (AFP)\. To update existing communal forest and pasture management plans that were prepared under the AFP; document different individual and user group rights over commune forest and pasture lands to better secure users â tenure rights; and support implementation of updated forest and pasture management plans established under the AFP\. A\.2: Introducing participatory forest and pasture management \. To prepare participatory communal forest and pasture management plans in about 73 communes; and support implementation of the forest and pasture management plans through provision of small scale investments \. A\.3: Strengthening governance for forest and pasture management\. To strengthen governance for forest and pasture management through training of General Directorate of Forests and Pastures and District Forest Service in participatory provision of extension advice; build the capacity of existing and new Forest and Pasture User Associations, as well as the growing network of non -governmental Associations, with focus on technical effectiveness, financial and social sustainability; and implement priority actions in the National Strategy for the Development of Forests and Pastures \. ( Appraisal cost : US$3 B: Improved Management and Governance of Watersheds \. (Appraisal 89 , actual cost : US$3 US$ 3\.89, US$ 3\.30 million )\. This includes two sub-components: B\.1: Introducing integrated resource management in micro -catchments\. To pilot integrated resource management in 30 micro-catchments selected in a participatory and transparent manner; prepare or update forest and pasture management plans for 30 communes; and provide small-scale investments and/or technical support for activities identified in the planning process\. B\.2: Strengthening governance for watershed management \. Provide training for regional agricultural directorates, drainage boards, District Forest Service and commune staff, at district, regional and national levels in the provision of extension advice in the context of micro-catchment management\. Support ongoing legal developments regarding land administration and tenure through drawing on the project's experience in forest and pasture management\. ( Appraisal cost : US$1 C: Management and Monitoring \. (Appraisal 95 , actual cost : US$2 US$ 1\.95, US$ 2\.29 million )\. Provide support at the central level for a small project management team with overall responsibility for procurement and financial management; and for regional coordinators where component B will be implemented \. Services would also be contracted to assist with enhanced public awareness of the benefits of sustainable natural resource management, project monitoring and evaluation, implementation of the Environmental Management Framework and carbon sequestration verification and monitoring \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost \. The total appraisal cost was US$ 19\.40 million including US$0\.37 and US$0\.53 million for physical and price contingencies, respectively \. Actual cost was US$17\.90 million\. Financing \. The Bank provided a Credit of US$ 7\.00 million of which US$6\.93 million was disbursed\. At closing US$0\.16 million was canceled\. In addition it received a GEF Grant of US$ 5\.05 million that, because of appreciation of Special Drawing Rights, increased to US$ 5\.53 million equivalent\. At completion, US$1\.02 million was cancelled and net disbursement of the Grant was US$ 4\.51 million\. The Swedish International Development Cooperation Agency cofinanced the project by contributing US$ 4\.53 million compared to an appraisal target of US$ 5\.23 million\. The ICR (p\. 23) highlighted that the disbursement of SIDA funds were affected by the depreciation of US dollar which led to a higher dollar equivalent amount that could not be absorbed\. In addition, there was an unspecified amount of financing from the Netherlands Development Organization that implemented component A3\.1 (PAD, p\. 9)\. It was expected at appraisal also that the International Fund for Agricultural Development was likely to provide parallel financing of US$20 million over the period 2006-2011\. Borrower Contribution \. At appraisal the borrower agreed to provide US$ 2\.20 million of counterpart funding\. The borrower actually provided US$1\.74 million representing 79% of the appraisal estimate\. Dates \. The project was expected to close by 11/01/2010, however, the closing date was extended by 8 months to 06/30/2011\. The extension was necessary to help local governments finalize the preparation of forest and pasture management plans and implement ensuing forest and pasture improvement investments; and assist the Government of Albania in implementing the institutional forestry reform through staff training, institutional and legal advice at central, regional and local levels \. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Substantial \. The objectives were relevant at the beginning of the project and remained so at completion \. Sustainable management of Albaniaâs natural resources in upland areas is key to improving the productivity and incomes of the population living in these areas (58% of the total), to broader landscape and ecosystems conservation, and also to ensure more reliable delivery of hydro -electric power, erosion control and flood management in lower lying areas where the population is increasing rapidly \. Objectives are relevant to Albania's National Strategy for Development and Integration (2007-13) which, among other things, calls for a clear vision for protecting natural resources from pollution and degradation through natural conservation, maintenance of biodiversity, rehabilitation of degraded forests and continuation of the transfer of forests and pastures to local government units \. Project objectives are relevant to the current Country Partnership Strategy (FY11-FY14) whose third strategic objective is to reduce Albaniaâs vulnerability to climate change, including safeguarding watersheds, reducing erosion and ensuring and sustaining other environmental services \. The Global Environmental objective is in line with the GEF Operational Program 15 - Sustainable Land Management (PAD, p\. 4) and it would also contribute tangential results for GEF's Operational Program 12 (Integrated Ecosystem Management) and Operational Program 3 (Forest Ecosystems)\. The project would also be expected to contribute to the GEF's International Waterway focal area through activities aimed at reducing sediment flow to the Adriatic Sea \. b\. Relevance of Design: Substantial \. Design included a clear statement of objectives which described the expected outputs and outcomes and the target area for project activities\. The activities and inputs â the preparation and implementation of forest, pasture and water shed management plans, supported by institutional policy reforms - to achieve the desired outcomes were logical and relevant, as was the inclusion of capacity -building activities to improve the ability of local communes to manage natural resources\. A recent IEG study found that participatory forest management "has delivered livelihood enhancing benefits as well as positive environmental outcomes \." However, the objective to achieve sustainable participatory and community-based natural resource management is challenging given that sustainability relies on multiple variables, including institutional, legal, and capacity adjustments, some of which could be beyond project control\. For example, the project design included no institutional mechanisms to ensure that 70% of commune collected fees would be reinvestment for forestry and pasture management (ICR, p\. 26)\. It also provided insufficient institutional support, for example, for mapping services related to land registration and land tenure \. While the GEOâs objective to rehabilitate and manage natural resources sustainably was covered by specific project activities, there was nothing specific to ensure that this included globally significant biodiversity \. In a subsequent communication, the region explained that funding for the GEO came from the land degradation focal area not global biodiversity\. The region also explained that the introduction of carbon sequestration was innovative putting Albania as the first country globally to design and use the methodology for assisted natural regeneration, recognized and validated by the United Nations Framework Convention on Climate Change (UNFCCC) under the Clean Development Mechanism (CDM)\. 4\. Achievement of Objectives (Efficacy): The project has two PDOs: (a) to establish community-based natural resource management in about 218 communes in upland and mountainous erosion -prone lands; (b) to maintain sustainable, community-based natural resource management in about 218 communes in upland and mountainous erosion -prone lands\. The GEO was to reverse severe degradation of upland and mountainous erosion -prone lands, and sediment runoff to the Adriatic Sea, through rehabilitating and sustainably managing natural resources, including globally significant biodiversity \. The achievement of these objectives is described below \. Not all the achievement described below can be attributed to the project because of several parallel -financed activities funded by IFAD\. In addition, the parallel-financed Program for Forestry Multi Donor Trust Fund is funding a small project on innovative financing schemes for sustainable forestry management for Albania and Kosovo \. In a subsequent communication, the region explained that no significant project achievements in communal forestry management can be attributed to either the IFAD or the PROFOR activities \. IFAD support (from December 1999 to March 31, 2008) of $ 23\.1 million to communal forestry and pasture management has been marginal \. IFAD support relevant to this project was a sub -activity among the IFAD program and was provided to 4 communes only\. Nonetheless, Bank team reached an agreement with the Mountainous Area Development Agency that the same guidelines and process developed under the project for the preparation of communal forest and pasture management plans would be used for the implementation of IFAD funded sub -activity\. As for the PROFOR grant on Innovative Financing for Sustainable Forest Management in Southwest Balkans, the grant started to be implemented in September 2011, 1 month before the closure of the project \. (a) establish community -based natural resource management in about 218 communes in upland and mountainous erosion -prone lands : Substantial Outputs : The project trained the targeted number of 2,000 members of Forest and Pasture User Associations at regional and local levels covering a wide range of topics \. The project trained 19 national and regional forest extension advisors (exceeding the target of 15), who subsequently served as trainers for other staff of the Forests and Pastures and Forest Service \. In addition 196 district and commune level forest extension officers (target: 120) were trained on sustainable forest management\. The project also supported provision of training to 45 staff members (target 60) of agricultural directorates and drainage boards on topics related to integrated resource management \. About 62,000 commune members were trained in watershed management planning approaches \. 111 Communal Forest and Pasture Management Plans (that were initially prepared under Albania Forestry Project covering an area of 373,368 ha) were updated and approved\. In addition, 110 new Plans were prepared covering an area of 307,665 ha\. Outcomes : The ICR (p\. 20) notes that the fate of extension service was not clear until late in the project \. The Bank's Task Team explained that the extension service was established and organized in central, local and regional levels by Ministerial Decree No\. 496, dated 25/07/2011\. 209 Plans were implemented through small-scale investment grants for community -based natural resource management activities\. 30 micro-catchment plans (target: 30) covering an area of 161,478 ha were prepared, approved and implemented (ICR, p\.41)\. By project completion, the total area of land being managed by local communities in accordance with sustainable natural resource management plans supporting rehabilitation of natural resources, habitats and indigenous species was 775,511 ha compared to a target of 660,000 ha and a baseline of 450,000 ha (ICR, pp\. 4,5)\. (b) maintain sustainable, community -based natural resource management in about 218 communes in upland and mountainous erosion -prone lands : Modest Outputs : The project attempted to improve the legal and regulatory framework for forest and pasture management through supporting a review of the legal status of Forest and Pasture User Associations; drafting of necessary decisions for the forestry and pasture law; and guidelines on working volumes \. However, a new forest and pasture law was still in the drafting stage at completion (ICR, p\. 20)\. The project team emphasized that a draft of the law was being prepared through a consultative process by the Ministry of Environment, Forestry and Water Administration and is expected to be submitted for governmental approval by December 2012\. The Project supported small-scale investments in 24 communes for assisted natural regeneration of forests including 1,866 hectares of afforested land; 1,200 hectares of forest improvements; and 86 kilometers of fencing\. This is only about half the target area of 6,000 ha\. Usufruct rights were defined, agreed, documented, mapped and demarcated in 251 communes (target: 218)\. Outcomes : According to the beneficiary survey 92% of the families included in the survey sample showed improved income (ICR, Annex 5)\.The average annual household income in communities in which forestry and pasture management plans were implemented increased by 8% and by 28% respectively in communities were micro-catchment plans were implemented compared to a target of 10%\. However, the ICR reported that there was no progress on the reinvestment of collected fees due to failure of local authorities to levy user fees (target: 70%)\. Further communication with the Bank's Task Team revealed that in a pilot program, financed by SIDA and implemented by the Dutch Development Organization, 10 out of 13 project-supported communes managed to collect fees ranging from US$ 380 to US$16,000\. The team also explained that pilot activities created a functional fee and tariff collection system linked to resource planning and use, along with reinvestment and service provision in each pilot commune \. Only 5 of the targeted 218 communes have registered tenure rights over forest and pasture land \. In a subsequent communication the region explained that another 40 communes are currently undergoing the registration process\. The ICR (p\. 7) notes that high registration fees and incompatibility of maps contained in the management plans with maps at the Immovable Property Registration Office were the main reasons behind the failure to achieve better results in this area \. The registration fee was waived through a decree by the Council of Ministers issued on September 29, 2010, but the maps incompatibility persisted till the closing of the project (ICR, p\. 20)\. The project team explained that on May, 2, 2012 a national seminar was held in Tirana on forest and pasture registration with the participation of Ministers of Environment, Forest and Justice where the maps issue was widely discussed \. The Bank's Task Team told IEG it is optimistic that this issue would be resolved given that Albania is just finishing the first registration of properties and would soon apply an electronic cadaster system\. The Global Environment Objective was to reverse severe degradation of upland and mountainous erosion -prone lands, and sediment runoff to the Adriatic Sea : Erosion reduction measures were established on 31,116 ha (target: 12,000 ha), causing an estimated erosion reduction of about 223,000 tons (target: 200,000) (ICR, p\. 5)\. The amount of CO 2 sequestered from 2004 to 2010 was estimated to be 63,759 tons, or 40% of the appraisal target of 160,000 tons\. According to the ICR (p\. 6) the project fell short of achieving its target due to implementation delays, smaller implementation area than initially planned and uncertainty surrounding initial carbon sequestration estimates \. It is expected that the project will lead to sequestration of CO 2 in the range of 140,000 to 160,000 tons by 2018\. 5\. Efficiency: The PAD (Annex 9) provided a thorough economic analysis that incorporates both qualitative and quantitative impacts\. A sensitivity analysis assessed the potential risk to the project achieving a positive and significant rate of return\. The economic analysis estimated that the overall Economic Rate of Return (ERR) for the project, including both upstream and downstream benefits, would be 21%\. Economic benefits included direct benefits such as increased agricultural yield and increased sustainable harvests of fuel wood, timber, non -timber forest products and fodder, as well as indirect benefits such as the reduced damage from downstream floods and sedimentation, soil stabilization, resource regeneration and biodiversity enhancement \. The ICR (Annex 3) included an economic analysis that assessed the quantifiable incremental project benefits over 45-year period from 2005 to 2049\. The extended time was to allow for some benefits such as increased timber harvest to accrue\. The analysis estimated that the ERR would be 21% and a Net Present Value of US$9\.2 million at a 12% discount rate\. The ICR's ERR was slightly lower than in the PAD because it did not include an estimate for flood damage repair costs which according to the ICR (p\. 44) were "highly speculative"\. Administrative efficiency was modest \. Administrative weaknesses were acute in the first two years of implementation when some procurement activities almost stalled (ICR, p\. 22)\. This also led to delays and a backlog of procurement activities\. Procurement arrangement for the community participation proved to be of marginal value due to the complexity of the contracts \. Finally, the ICR (p\.34) pointed out that, according to the Swedish embassy, the project management poorly managed currency fluctuations of the US dollar against the Swedish Krona \. This resulted in under-spending of grant funds and eventually 13% of SIDA's trust fund had to be transferred back to Sweden at the time of the Grant closing\. Overall Efficiency is rated substantial, with minor weaknesses\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal Yes 21\.2% 100% ICR estimate Yes 20\.6% 100% * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Relevance of objectives and design are both rated substantial \. The project managed to implement sustainable natural resource management plans supporting rehabilitation of natural resources, habitats and indigenous species on 775,511 ha\. However, there were doubts regarding the sustainability of community resource management given that the majority of communes did not secure tenure rights over forests and pasture lands and failed to levy user fees\. Efficacy of the first objective is rated substantial and rated modest for the second objective\. Efficiency is rated substantial \. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: Risk to Development Outcome is rated significant \. The delay in drafting a forestry law that clearly describes the roles and responsibilities of involved parties could undermine the project outcomes \. In a subsequent communication the region clarified that a new forestry law is expected to be submitted to the Council of Ministers and then Parliament for approval following the recommendations from the Working Group established in 2012, and the inputs from legal advice and stakeholder consultations financed under a Swedish Grant expected to be completed by March 2013\. There are also doubts regarding the financial stability of the Forest and Pasture User Associations in a post-project environment\. The failure of the majority of communes under the project to register tenure rights may jeopardize community-based resource management\. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: a\. Quality at entry: The Bank identified an operation that was relevant to the Albanian environment and rural livelihood \. The operation was regionally and globally relevant since it addressed sustainable land management and climate change mitigation, and project activities were geared towards priority areas identified by the country's strategic documents\. However, the Bank underestimated the weak technical capacity in the country as well as the time needed for revising the forestry law \. Design also failed to anticipate the lack of political will by local leaders to levy fees for grazing and fuel wood \. Design of M&E arrangements for the GEO was weak, and the only indicator used for it was a poor match that did not fully capture the impact of the proposed activities \. at -Entry Rating : Quality -at- Moderately Unsatisfactory b\. Quality of supervision: The Bank supervision team provided timely guidance and closely supervised implementation \. The team maintained a constructive dialogue with the project's major stakeholders and established good rapport with other donors\. However, a notable shortcoming throughout supervision was the way the team dealt with the revised structure of the Results Framework - in some cases there was lack of proper recorded justification, and lack of formal amendment of the legal agreements to reflect changes in outcome and intermediate outcome indicators (ICR, p\. 29)\. Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The Government demonstrated highly variable commitment with strong support during project preparation, and uneven commitment during implementation \. Such wavering commitment was a function of shifting political priorities, reorganization of government entities and lack of adequate coordination among government bodies \. Counterpart funds were received with delays \. The project implementation oversight committee was inactive for about two years and failed to provide strategic guidance to the project and the project technical committee proved to be a largely non-functional entity\. Although Government commitment improved towards the end of the project, some activities still suffered from delays : the establishment of the forestry extension service; and addressing the incompatibility in the scale of management plan maps with that required by the country âs Immovable Property Registration Office\. In a subsequent communication, the region highlighted that the Government transferred 60% of state owned forests to communes and noted that the Government remains committed to improving institutional and legal framework and further supporting the forest decentralization process \. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance: The project was implemented under the forest directorate of the Ministry of Environment, Forests and Water Administration through a dedicated project management team that under -performed\. Implementation suffered from weak capacity which resulted in poor decision -making and lack of coordination among stakeholders \. Management team performance was variable and faced significant challenges with M&E and other management issues, but their performance improved towards the final years of the project \. The project benefited from solid and effective performance by the regional coordinators \. Implementing Agency Performance Rating : Moderately Unsatisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The PAD (Annex 3) included three outcome indicators geared towards measuring the achievement of the objectives and one outcome indicator gauging the achievement of GEO \. The indicators seemed relevant as they were focused on the area of land under management plans, the increase in household incomes, the level of re-investment of collected user fees, and more secure usufruct rights \. However, gauging the sustainability of community management of forests and pastures would require a longer time of monitoring than the project could provide\. The GEO outcome indicator did not fully capture the achievement the full range of expected outcomes \. M&E activities were to be handled by the Project Management Team and activities were to include the preparation of a baseline survey, regular updates on indicators and an impact assessment measuring the social, environmental and economic benefits of the project activities (PAD, p\. 47)\. b\. M&E Implementation: Efforts to set up an M&E system suffered from delays and setbacks and eventually M&E was outsourced to a consulting company (ICR, p\. 21); even then M&E still suffered from delays and an overly complex software design \. To meet stringent requirements of carbon monitoring the project provided training for 70 professionals representing Regional Coordinators, District Forest Service, Forest and Pasture User Associations and community foresters to track and monitor carbon sequestration activities \. At mid-term review (MTR), a better outcome indicator was introduced to gauge soil erosion, but it was not clear why it was introduced as a development objective rather than a GEO indicator\. The reasons the team opted to change the outcome indicator gauging usufruct rights to become an intermediate indicator is unclear\. c\. M&E Utilization: Delays in establishing a functional M&E system negatively impacted the ability of the project management to comply with reporting requirements during the early years of the project \. Data reported to the Bank was mostly on procurement and financial management with little information on the project output /outcome indicators (ICR, p\. 21)\. M&E activities improved after MTR, and project management began producing progress reports and impact assessments despite constantly struggling to update the Results Framework \. Overall, M&E data was not utilized in the best way to serve project evaluation and inform decision -making during project implementation (ICR, p\. 21)\. In a subsequent communication, the region explained that the project indicators were fully measured and by project closure, the project monitoring team prepared a thorough analysis of the effectiveness and efficiency of all project interventions\. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: Environmental Assessment \. The project was rated a Category 'B' under OP 4\.01 Environmental Assessment\. In general, the project was viewed as having a positive impact on the environment and natural resources in upland areas of Albania, as well as downstream resources in the watersheds where the project activities would be implemented\. According to the ICR (p\. 23) potential environmental impacts arising from commune -level activities were addressed through the implementation of an Environmental Management Framework\. Two environmental audits in 2010 and 2011 confirmed compliance with requirements of the Framework and provided evidence on the positive impact of the project on the environment (ICR, p\. 23)\. b\. Fiduciary Compliance: Financial management \. The project maintained a moderately satisfactory financial management system through the project life as confirmed by financial management reviews \. Project annual audits were clear, or with minor issues that were addressed\. The project suffered from slow disbursements due to implementation delays combined with overly optimistic disbursement estimates (ICR, p\. 23)\. The 2009 financial management review highlighted two concerns regarding disbursement monitoring and forecasting; and compliance with financial management requirement at commune level\. The latter concern was resolved; however, disbursement monitoring and forecasting continued to be problematic till the end of the project (ICR, p\. 22)\. Procurement \. Procurement post-reviews found that procurement processes were of generally of moderately satisfactory quality, reliability, timeliness, and transparency with some corrective actions requested by the Bank \. Procurement activities and contract management suffered from weak capacity at Project Management team level \. Weakness was acute in the first two years of implementation when procurement activities for complex assignments almost stalled (ICR, p\. 22)\. This also led to delays and a backlog of procurement activities \. Procurement arrangement for the community participation method proved to be of marginal value due to the complexity of the contracts \. This contributed to implementation delays due to the time spent by the project management team on this activity for 251 communes covered by the project (ICR, p\. 23)\. c\. Unintended Impacts (positive or negative): Positive impacts \. The project set the stage for expanding the possibilities of derived incomes to chargeable environmental services\. The project experience revealed that natural assets could bring potential economic benefits to communities through the provision of environmental services \. d\. Other: 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Efficacy of the second objective was Satisfactory modest due to failure to achieve target on natural regeneration and to reinvest collected fees as well as limited number of communities who registered tenure rights over forest and pasture lands\. Risk to Development Significant Significant Outcome : Bank Performance : Satisfactory Moderately The Bank under estimated the time Satisfactory needed for revising the forestry law as well as client's weak technical capacity \. There were design shortcomings and M&E weaknesses\. Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The following lessons are emphasized from the ICR with some rearrangement by IEG : Flexible design and adaptation to local conditions is critical to the success of the participatory approach \. Community participatory processes, including communal natural resource management are highly specific activities that need to be developed in a localized contextual setting \. Design of such projects should be flexible and accommodate underlying factors such as landscape, climate, tradition, wealth, communal social capital, and absorption capacity \. There should be a realization that exogenous approaches to community activities should be based on a reasonable degree of flexibility derived from the factors above \. A standardized approach to all participating communities may therefore be a less preferred option \. Furthermore, the application of top-down approaches is quite questionable in settings with a high degree of variance in local readiness for implementation\. Local stakeholder involvement remains a key determinant for success \. Local stakeholder involvement was necessary for receiving feedback on local site conditions and other commune -specific issues\. Raising awareness, communication and confidence building measures are required for local buy -in, and must be a staple of any community based projects \. Project design should be realistic and compatible with the political environment of a country \. Projects in countries that lack key pieces of legislation or embark on reforms that are not covered by existing regulations should set realistic objectives for such reforms and /or plan accordingly\. Projects that span electoral dates should take this into consideration \. Attention should be given also to projects with interdependent components or sub-components and whether the failure of one will jeopardize others \. 14\. Assessment Recommended? Yes No Why? To assess the sustainability of community -based forest and pasture management \. 15\. Comments on Quality of ICR: The ICR provided a thorough and concise account of project activities and a candid view of shortcomings \. The lessons drawn are based on the project experience and evidence \. Outputs and outcomes are evidence -based\. However, the economic analysis should have included non -project controls in order to avoid doubts on the project's contribution to observed benefits \. a\.Quality of ICR Rating : Satisfactory	REVIEW
P075163	ROMANIA Hazard Risk Mitigation and Emergency Preparedness Project Report No\. 135542 MARCH 26, 2019 Â© 2019 International Bank for Reconstruction This work is a product of the staff of The World RIGHTS AND PERMISSIONS and Development / The World Bank Bank with external contributions\. The findings, The material in this work is subject to copyright\. 1818 H Street NW interpretations, and conclusions expressed in Because The World Bank encourages Washington DC 20433 this work do not necessarily reflect the views of dissemination of its knowledge, this work may be Telephone: 202-473-1000 The World Bank, its Board of Executive reproduced, in whole or in part, for Internet: www\.worldbank\.org Directors, or the governments they represent\. noncommercial purposes as long as full attribution to this work is given\. AttributionâPlease cite the work as follows: The World Bank does not guarantee the World Bank\. 2019\. RomaniaâHazard Risk accuracy of the data included in this work\. The Any queries on rights and licenses, including Mitigation and Emergency Preparedness boundaries, colors, denominations, and other subsidiary rights, should be addressed to Project\. Independent Evaluation Group, Project information shown on any map in this work do World Bank Publications, The World Bank Performance Assessment Report 135542\. not imply any judgment on the part of The Group, 1818 H Street NW, Washington, DC Washington, DC: World Bank\. World Bank concerning the legal status of any 20433, USA; fax: 202-522-2625; e-mail: territory or the endorsement or acceptance of pubrights@worldbank\.org\. such boundaries\. Report No\.: 135542 PROJECT PERFORMANCE ASSESSMENT REPORT ROMANIA HAZARD RISK MITIGATION AND EMERGENCY PREPAREDNESS PROJECT (IBRD-47360) March 26, 2019 Financial,Â PrivateÂ Sector,Â andÂ SustainableÂ DevelopmentÂ IndependentÂ EvaluationÂ GroupÂ Currency Equivalents (as of June 30 of each year) CurrencyÂ UnitÂ =Â RomanianÂ LeiÂ 2004Â Â $1\.00Â Â 33490\.70Â 2009Â Â $1\.00Â Â 2\.98Â 2005Â Â $1\.00Â Â 2\.99Â Â 2010Â Â $1\.00Â Â 3\.52Â 2006Â Â $1\.00Â Â 2\.86Â Â 2011Â Â $1\.00Â Â 2\.93Â 2007Â Â $1\.00Â Â 2\.36Â 2012Â Â $1\.00Â Â 3\.54Â 2008Â Â $1\.00Â Â 2\.32Â AllÂ dollarÂ amountsÂ areÂ U\.S\.Â dollarsÂ unlessÂ otherwiseÂ indicated\.Â Abbreviations CASÂ CountryÂ AssistanceÂ StrategyÂ CatÂ DDOÂ CatastropheÂ DeferredÂ DrawdownÂ OptionÂ DRMÂ disasterÂ riskÂ managementÂ EMISÂ emergencyÂ managementÂ informationÂ systemÂ EUÂ EuropeanÂ UnionÂ GEFÂ GlobalÂ EnvironmentÂ FacilityÂ GIESÂ GeneralÂ InspectorateÂ forÂ EmergencyÂ SituationsÂ HRMEPÂ HazardÂ RiskÂ MitigationÂ andÂ EmergencyÂ PreparednessÂ (project)Â ICRÂ ImplementationÂ CompletionÂ andÂ ResultsÂ (report)Â IEGÂ IndependentÂ EvaluationÂ GroupÂ IRRÂ internalÂ rateÂ ofÂ returnÂ M&EÂ monitoringÂ andÂ evaluationÂ NARWÂ NationalÂ AdministrationÂ RomanianÂ WatersÂ PADÂ ProjectÂ AppraisalÂ DocumentÂ PAIDÂ (Insurance)Â PoolÂ againstÂ NaturalÂ DisastersÂ Â PDOÂ projectÂ developmentÂ objectiveÂ PPARÂ ProjectÂ PerformanceÂ AssessmentÂ ReportÂ SMISUÂ Â Â Â SistemulÂ deÂ ManagementÂ InformaÅ£ionalÂ pentruÂ SituaÅ£iiÂ deÂ UrgenÅ£ÄÂ Fiscal Year Government:Â JanuaryÂ 1Â toÂ DecemberÂ 31Â Director-General, Independent Evaluation Alison Evans Director, Financial, Private Sector, and Sustainable Development JosÃ© C\. Carbajo MartÃnez Manager, Sustainable Development Midori Makino Task Manager Stephen Hutton ii Contents Preface \.vii Summary \. viii 1\. Background and Context \.1 2\. Relevance of the Objectives and Design\.2 Objectives \.2 Relevance of the Objectives \.2 Design \. 4 Components \. 4Â Restructuring\. 4Â Implementation Arrangements \. 5Â Relevance of the Design \.5 3\. Implementation \.7 Planned versus Actual Expenditure by Component \. 7 Implementation Experience \. 7 Safeguards Compliance \. 8Â Financial Management and Procurement \. 9Â 4\. Achievement of the Objectives\. 10 5\. Efficiency \. 19 6\. Ratings \. 20 Outcome \. 20 Risk to Development Outcome \. 21 Bank Performance \. 21 Quality at Entry\.21Â Quality of Supervision \. 22Â Borrower Performance \. 23 Government Performance \. 23Â Implementing Agency Performance \. 24Â Monitoring and Evaluation \. 25 Design \. 25Â Implementation \. 25Â iii Use \. 26Â 7\. Lessons\. 26 Table Table 1: Project Cost by Component (in millions of $) \. 7 Appendixes Appendix A\. Basic Data Sheet \. 31 Appendix B\. List of Persons Met \. 33 Appendix C\. Borrower Comments \. 37 Appendix D\. PDO-level Indicators, Targets, and Values Achieved \. 38 This report was prepared by Richard J\. Tobin, who assessed the project in October and November 2018, under the supervision of Stephen Hutton\. Gheorghe Caraseni provided technical support and local knowledge in Romania\. The report was peer reviewed by Diana Vargas and panel reviewed by Lauren Kelly\. Jean Jacques Ahouansou and Richard Kraus provided administrative support\. iv Principal Ratings Indicator ICR ICR Review PPAR Outcome Moderately Satisfactory Moderately Satisfactory Moderately Unsatisfactory Risk to development Moderate Significant Significant outcome Bank performance Moderately Satisfactory Moderately Satisfactory Moderately Unsatisfactory Borrower performance Moderately Satisfactory Moderately Satisfactory Moderately Unsatisfactory Note: The Implementation Completion and Results Report (ICR) is a self-evaluation by the responsible Global Practice\. The ICR Review is an intermediate Independent Evaluation Group product that seeks to independently validate the findings of the ICR\. PPAR = Project Performance Assessment Report\. Key Staff Responsible Management Appraisal Completion Project Team Leader Christoph Pusch Gabriel Ionita Sector Manager or Practice Manager Marjory-Ann Bromhead Sumila Gulyani Country Director Anand K\. Seth Peter Harrold v IEG Mission: Improving the World Bank Groupâs development results through excellence in independent evaluation\. About This Report The Independent Evaluation Group (IEG) assesses the programs and activities of the World Bank for two purposes: first, to ensure the integrity of the World Bankâs self-evaluation process and to verify that the World Bankâs work is producing the expected results, and second, to help develop improved directions, policies, and procedures through the dissemination of lessons drawn from experience\. As part of this work, IEG annually assesses 20â25 percent of the World Bankâs lending operations through fieldwork\. In selecting operations for assessment, preference is given to those that are innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which Executive Directors or World Bank management have requested assessments; and those that are likely to generate important lessons\. To prepare a Project Performance Assessment Report (PPAR), IEG staff examine project files and other documents, visit the borrowing country to discuss the operation with the government, and other in-country stakeholders, interview World Bank staff and other donor agency staff both at headquarters and in local offices as appropriate, and apply other evaluative methods as needed\. Each PPAR is subject to technical peer review, internal IEG panel review, and management approval\. Once cleared internally, the PPAR is commented on by the responsible World Bank Country Management Unit\. The PPAR is also sent to the borrower for review\. IEG incorporates both World Bank and borrower comments as appropriate, and the borrowersâ comments are attached to the document that is sent to the World Bankâs Board of Executive Directors\. After an assessment report has been sent to the Board, it is disclosed to the public\. About the IEG Rating System for Public Sector Evaluations IEGâs use of multiple evaluation methods offers both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or sectoral approach\. IEG evaluators all apply the same basic method to arrive at their project ratings\. Following is the definition and rating scale used for each evaluation criterion (additional information is available on the IEG website: http://ieg\.worldbankgroup\.org)\. Outcome: The extent to which the operationâs major relevant objectives were achieved, or are expected to be achieved, efficiently\. The rating has three dimensions: relevance, efficacy, and efficiency\. Relevance includes relevance of objectives and relevance of design\. Relevance of objectives is the extent to which the projectâs objectives are consistent with the countryâs current development priorities and with current World Bank country and sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, country assistance strategies, sector strategy papers, and operational policies)\. Relevance of design is the extent to which the projectâs design is consistent with the stated objectives\. Efficacy is the extent to which the projectâs objectives were achieved, or are expected to be achieved, taking into account their relative importance\. Efficiency is the extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of capital and benefits at least cost compared with alternatives\. The efficiency dimension is not applied to development policy operations, which provide general budget support\. Possible ratings for outcome: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, highly unsatisfactory\. Risk to development outcome: The risk, at the time of evaluation, that development outcomes (or expected outcomes) will not be maintained (or realized)\. Possible ratings for risk to development outcome: high, significant, moderate, negligible to low, and not evaluable\. Bank performance: The extent to which services provided by the World Bank ensured quality at entry of the operation and supported effective implementation through appropriate supervision (including ensuring adequate transition arrangements for regular operation of supported activities after loan or credit closing, toward the achievement of development outcomes)\. The rating has two dimensions: quality at entry and quality of supervision\. Possible ratings for Bank performance: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, and highly unsatisfactory\. Borrower performance: The extent to which the borrower (including the government and implementing agency or agencies) ensured quality of preparation and implementation, and complied with covenants and agreements, toward the achievement of development outcomes\. The rating has two dimensions: government performance and implementing agenciesâ performance\. Possible ratings for borrower performance: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, and highly unsatisfactory\. vi Preface ThisÂ ProjectÂ PerformanceÂ AssessmentÂ ReportÂ (PPAR)Â isÂ forÂ RomaniaâsÂ HazardÂ RiskÂ MitigationÂ andÂ EmergencyÂ PreparednessÂ ProjectÂ (HRMEP,Â P075163),Â includingÂ aÂ grantÂ fromÂ theÂ GlobalÂ EnvironmentÂ FacilityÂ (GEF,Â P081950)\.Â TheÂ reportÂ evaluatesÂ howÂ theÂ projectÂ performedÂ againstÂ itsÂ projectÂ developmentÂ objectiveÂ andÂ seeksÂ toÂ determineÂ whetherÂ theÂ projectÂ achievedÂ itsÂ intendedÂ outcomes\.Â ThisÂ PPARÂ wasÂ completedÂ atÂ theÂ requestÂ ofÂ theÂ WorldÂ BankâsÂ Social,Â Urban,Â Rural,Â andÂ ResilienceÂ GlobalÂ Practice,Â whichÂ indicatedÂ significantÂ learningÂ potentialÂ fromÂ theÂ projectÂ andÂ isÂ basedÂ onÂ anÂ IndependentÂ EvaluationÂ GroupÂ (IEG)Â strategyÂ toÂ conductÂ aÂ clusterÂ ofÂ projectÂ assessmentsÂ onÂ disasterÂ riskÂ managementÂ (DRM)\.Â TheÂ WorldÂ BankâsÂ BoardÂ ofÂ ExecutiveÂ DirectorsÂ approvedÂ theÂ HRMEPÂ onÂ MayÂ 20,Â 2004\.Â TheÂ projectÂ becameÂ effectiveÂ inÂ OctoberÂ 2004\.Â AfterÂ severalÂ restructuringsÂ theÂ projectÂ closedÂ onÂ JuneÂ 30,Â 2012\.Â TotalÂ projectÂ costsÂ wereÂ $174\.83Â millionÂ againstÂ anÂ appraisalÂ estimateÂ ofÂ $203\.65Â million\.Â ThisÂ PPARÂ isÂ basedÂ onÂ findingsÂ andÂ conclusionsÂ ofÂ reviewsÂ ofÂ theÂ WorldÂ BankâsÂ projectÂ documentationÂ andÂ otherÂ relevantÂ documentation,Â expertÂ interviews,Â andÂ aÂ fieldÂ missionÂ toÂ RomaniaÂ carriedÂ outÂ byÂ RichardÂ J\.Â TobinÂ andÂ GheorgheÂ Caraseni,Â consultantsÂ toÂ IEG,Â betweenÂ OctoberÂ 22Â andÂ NovemberÂ 2,Â 2018\.Â Â TheÂ consultantsÂ metÂ withÂ projectÂ stakeholders,Â includingÂ staffÂ ofÂ projectÂ managementÂ units,Â projectÂ beneficiaries,Â governmentÂ counterpartsÂ andÂ partners,Â andÂ WorldÂ BankÂ staff\.Â TheÂ contributionsÂ ofÂ allÂ stakeholders,Â includingÂ WorldÂ BankÂ staffÂ inÂ WashingtonÂ DCÂ andÂ BucharestÂ andÂ stakeholdersÂ inÂ Romania,Â areÂ gratefullyÂ acknowledged\.Â FollowingÂ standardÂ IEGÂ procedures,Â copiesÂ ofÂ theÂ draftÂ PPARÂ wereÂ sharedÂ withÂ theÂ relevantÂ governmentÂ officialsÂ andÂ agenciesÂ forÂ theirÂ reviewÂ andÂ feedback,Â andÂ areÂ publishedÂ inÂ fullÂ inÂ AppendixÂ C\.Â Â vii Â Summary RomaniaâsÂ HazardÂ RiskÂ MitigationÂ andÂ EmergencyÂ PreparednessÂ (HRMEP)Â project,Â whichÂ wasÂ implementedÂ betweenÂ 2004Â andÂ 2012,Â wasÂ oneÂ ofÂ theÂ WorldÂ BankâsÂ firstÂ effortsÂ toÂ provideÂ exÂ anteÂ assistanceÂ toÂ reduceÂ orÂ mitigateÂ aÂ countryâsÂ vulnerabilitiesÂ toÂ naturalÂ disastersÂ relatedÂ toÂ floods,Â landslides,Â andÂ earthquakes\.Â InÂ theÂ oneÂ hundredÂ yearsÂ beforeÂ theÂ projectÂ began,Â RomaniaÂ hadÂ experiencedÂ moreÂ thanÂ aÂ dozenÂ earthquakesÂ ofÂ magnitudeÂ 7\.0Â orÂ greater\.Â AnÂ earthquakeÂ inÂ 1977,Â forÂ example,Â causedÂ theÂ deathÂ ofÂ almostÂ 1,600Â people,Â mostlyÂ inÂ Bucharest,Â andÂ asÂ muchÂ asÂ $2Â billionÂ inÂ economicÂ losses\.Â Â FloodingÂ isÂ commonÂ throughoutÂ Romania\.Â NearlyÂ 500,000Â peopleÂ andÂ 1\.3Â millionÂ hectaresÂ areÂ atÂ seriousÂ riskÂ ofÂ floodingÂ eachÂ year\.Â AÂ floodÂ inÂ 1991,Â forÂ example,Â causedÂ damagesÂ ofÂ almostÂ $500Â millionÂ andÂ damagedÂ moreÂ thanÂ 12,000Â buildings,Â almostÂ 1,000Â kilometersÂ ofÂ roads,Â andÂ 150Â bridges\.Â BetweenÂ 1992Â andÂ 2003,Â theÂ governmentÂ estimatedÂ thatÂ damagesÂ dueÂ toÂ floodingÂ exceededÂ $6\.1Â billion\.1Â ApproximatelyÂ 50,000Â households,Â 250,000Â people,Â andÂ 700,000Â hectaresÂ areÂ alsoÂ atÂ riskÂ ofÂ landslides\.Â TheÂ governmentÂ soughtÂ theÂ supportÂ ofÂ theÂ WorldÂ BankÂ toÂ reduceÂ vulnerabilityÂ toÂ theseÂ andÂ otherÂ naturalÂ disastersÂ inÂ aÂ proactiveÂ manner,Â leadingÂ toÂ theÂ approvalÂ ofÂ theÂ HRMEP\.Â Â TheÂ projectÂ developmentÂ objectiveÂ (PDO)Â wasÂ toÂ assistÂ theÂ governmentÂ inÂ âreducingÂ theÂ environmental,Â social,Â andÂ economicÂ vulnerabilityÂ toÂ naturalÂ disastersÂ andÂ catastrophicÂ miningÂ accidentÂ spillsÂ ofÂ pollutants\.âÂ TheÂ PDOÂ alsoÂ includedÂ howÂ theÂ objectiveÂ wouldÂ beÂ achieved:Â (i)Â theÂ strengtheningÂ ofÂ emergencyÂ managementÂ andÂ riskÂ financingÂ capacity;Â (ii)Â earthquakeÂ riskÂ reduction;Â (iii)Â floodÂ andÂ landslideÂ riskÂ reduction;Â and,Â (iv)Â riskÂ reductionÂ ofÂ miningÂ accidentsÂ inÂ theÂ TiszaÂ BasinÂ inÂ northwestÂ Romania\.Â Â TheÂ developmentÂ objectiveÂ wasÂ relevantÂ toÂ theÂ countryÂ contextÂ andÂ wellÂ alignedÂ withÂ theÂ governmentâsÂ andÂ theÂ WorldÂ BankâsÂ prioritiesÂ atÂ theÂ startÂ ofÂ theÂ project\.Â ThatÂ relevanceÂ diminishedÂ inÂ theÂ followingÂ yearsÂ asÂ shownÂ byÂ theÂ relativelyÂ lowerÂ prioritizationÂ ofÂ disasterÂ riskÂ managementÂ inÂ theÂ twoÂ countryÂ partnershipÂ strategiesÂ developedÂ duringÂ theÂ lifeÂ ofÂ theÂ project\.Â DespiteÂ thatÂ changeÂ inÂ emphasis,Â theÂ projectâsÂ relevanceÂ isÂ ratedÂ asÂ substantialÂ dueÂ toÂ theÂ highÂ andÂ continuingÂ riskÂ ofÂ naturalÂ disastersÂ inÂ Romania\.Â TheÂ projectÂ wasÂ innovativeÂ inÂ itsÂ designÂ asÂ oneÂ ofÂ theÂ firstÂ WorldÂ BankÂ projectsÂ focusingÂ onÂ exÂ anteÂ riskÂ reductionÂ ratherÂ thanÂ respondingÂ toÂ aÂ specificÂ disaster\.Â TheÂ WorldÂ BankÂ andÂ theÂ governmentÂ choseÂ whatÂ theyÂ identifiedÂ asÂ aÂ comprehensive,Â multihazardÂ multisectorÂ approachÂ forÂ theÂ projectÂ whileÂ rejectingÂ aÂ designÂ thatÂ focusedÂ onlyÂ onÂ aÂ singleÂ hazardÂ inÂ theÂ beliefÂ thatÂ coordinatedÂ disasterÂ managementÂ bringsÂ betterÂ results\.Â TheÂ approachÂ involvedÂ fourÂ projectÂ components,Â eachÂ withÂ aÂ separateÂ projectÂ managementÂ unitÂ (PMU)Â inÂ differentÂ ministries\.Â TheÂ contentsÂ ofÂ eachÂ componentÂ wereÂ logical:Â inÂ mostÂ viii Â instancesÂ theÂ linkagesÂ betweenÂ theÂ interventions,Â theirÂ outputs,Â andÂ theÂ desiredÂ outcomesÂ wereÂ clear,Â thoughÂ howÂ theyÂ wouldÂ achieveÂ theÂ PDOÂ wasÂ sometimesÂ lessÂ clear\.Â ButÂ despiteÂ theÂ highÂ expectationsÂ forÂ whatÂ wasÂ labeledÂ asÂ aÂ ânewÂ BankÂ paradigmÂ forÂ disasterÂ riskÂ management,âÂ inÂ RomaniaÂ theÂ approachÂ provedÂ toÂ beÂ complicated,Â cumbersome,Â andÂ operationallyÂ inefficient,Â inÂ partÂ becauseÂ ofÂ weakÂ incentivesÂ forÂ cooperationÂ orÂ coordinationÂ betweenÂ theÂ PMUs\.Â AsÂ aÂ result,Â theÂ inabilityÂ toÂ operationalizeÂ theÂ multisectoralÂ approachÂ effectivelyÂ ledÂ theÂ designÂ ofÂ subsequentÂ projectsÂ toÂ addressÂ differentÂ sectorsÂ throughÂ separateÂ projectsÂ inÂ aÂ series\.Â ForÂ thoseÂ andÂ otherÂ deficiencies,Â theÂ projectâsÂ relevanceÂ ofÂ designÂ isÂ ratedÂ asÂ modest\.Â TheÂ projectâsÂ efficacyÂ isÂ modestÂ asÂ itÂ didÂ notÂ fullyÂ achieveÂ itsÂ intendedÂ developmentÂ results\.Â TheÂ projectÂ didÂ notÂ measureÂ reductionsÂ inÂ vulnerabilityÂ (environmental,Â social,Â orÂ economic),Â thusÂ itÂ lackedÂ clearÂ metricsÂ toÂ permitÂ aÂ directÂ assessmentÂ ofÂ efficacy\.Â AsÂ anÂ alternative,Â theÂ efficacyÂ ofÂ theÂ projectÂ wasÂ assessedÂ summingÂ upÂ theÂ achievementsÂ ofÂ theÂ individualÂ interventions\.Â Â Â Â AÂ longâdelayedÂ emergencyÂ managementÂ informationÂ system,Â intendedÂ toÂ strengthenÂ technicalÂ andÂ institutionalÂ capacity,Â hasÂ beenÂ ofÂ limitedÂ practicalÂ valueÂ duringÂ floods\.Â TheÂ seismicÂ retrofittingÂ ofÂ 44Â publicÂ buildingsÂ hasÂ reducedÂ vulnerability,Â butÂ performanceÂ wasÂ underminedÂ byÂ notÂ followingÂ establishedÂ selectionÂ criteriaÂ forÂ identifyingÂ highâpriorityÂ sites,Â suchÂ as,Â forÂ example,Â theÂ headquartersÂ ofÂ theÂ GeneralÂ InspectorateÂ forÂ EmergencyÂ Situations\.Â TheÂ tenÂ floodâprotectionÂ measuresÂ completedÂ duringÂ theÂ projectÂ haveÂ reducedÂ vulnerabilityÂ toÂ floods,Â thoughÂ oneÂ suchÂ measureÂ isÂ alreadyÂ inÂ needÂ ofÂ substantialÂ repair\.Â SevenÂ atâriskÂ damsÂ wereÂ rehabilitated,Â butÂ theÂ workÂ isÂ incomplete\.Â OneÂ largeÂ damÂ hasÂ notÂ yetÂ receivedÂ finalÂ certificationÂ ofÂ itsÂ operationalÂ safety\.Â PilotÂ studiesÂ onÂ landslidesÂ wereÂ notÂ completedÂ andÂ didÂ notÂ produceÂ meaningfulÂ benefitsÂ orÂ reduceÂ vulnerability\.Â TheÂ ratingÂ forÂ efficiencyÂ isÂ modest\.Â TheÂ projectÂ carriedÂ outÂ anÂ economicÂ analysisÂ forÂ onlyÂ oneÂ ofÂ theÂ fourÂ components\.Â TheÂ analysisÂ estimatedÂ theÂ averageÂ internalÂ ratesÂ ofÂ returnÂ forÂ theÂ floodâcontrolÂ projectsÂ toÂ beÂ 19\.4Â percent,Â whichÂ wasÂ lessÂ thanÂ theÂ 28\.8Â percentÂ projectedÂ atÂ appraisal\.Â TheÂ internalÂ rateÂ ofÂ returnÂ ofÂ damÂ safetyÂ investmentsÂ wasÂ estimatedÂ toÂ beÂ 22\.4Â percentÂ versusÂ theÂ 26\.5Â percentÂ estimatedÂ atÂ appraisal\.Â TheÂ estimatedÂ endâofâprojectÂ benefitâcostÂ ratiosÂ ofÂ theÂ floodâprotectionÂ andÂ damâsafetyÂ measuresÂ wereÂ 2\.15Â andÂ 3\.60,Â respectively\.Â ThereÂ wereÂ discrepanciesÂ inÂ theÂ dataÂ usedÂ inÂ theÂ analysis\.Â Â TheÂ ratingÂ forÂ outcomeÂ isÂ moderatelyÂ unsatisfactory\.Â NotÂ allÂ theÂ projectâsÂ majorÂ andÂ initialÂ objectivesÂ wereÂ achieved\.Â ThereÂ wereÂ successesÂ withÂ severalÂ constructionÂ worksÂ andÂ withÂ theÂ creationÂ ofÂ aÂ programÂ thatÂ providesÂ catastropheÂ riskÂ insurance,Â butÂ theÂ ix Â vulnerabilitiesÂ reducedÂ wereÂ modestÂ inÂ lineÂ withÂ theÂ evidenceÂ supportingÂ theÂ ratingsÂ forÂ relevanceÂ ofÂ design,Â efficacy,Â andÂ efficiency\.Â TheÂ riskÂ toÂ developmentÂ outcomeÂ isÂ ratedÂ asÂ significant\.Â WhenÂ theÂ projectÂ endedÂ inÂ midâ2012,Â theÂ WorldÂ BankâsÂ andÂ theÂ governmentâsÂ attentionÂ toÂ theÂ projectâsÂ objectivesÂ hadÂ diminished\.Â ManyÂ publicÂ buildingsÂ essentialÂ toÂ emergencyÂ planningÂ andÂ response,Â whichÂ hadÂ beenÂ identifiedÂ asÂ priorityÂ candidatesÂ forÂ retrofitting,Â remainedÂ inÂ theirÂ atâriskÂ condition\.Â SeveralÂ vulnerableÂ damsÂ experiencedÂ theÂ sameÂ situation\.Â TheÂ projectâfundedÂ emergencyÂ managementÂ informationÂ systemÂ remainsÂ largelyÂ unused\.Â ItÂ hasÂ yetÂ toÂ serveÂ wellÂ theÂ purposesÂ forÂ whichÂ itÂ isÂ intended\.Â TheÂ absenceÂ ofÂ followâonÂ trainingÂ onÂ theÂ system,Â itsÂ agingÂ equipment,Â andÂ itsÂ outdatedÂ softwareÂ putÂ theÂ systemâsÂ valueÂ atÂ risk\.Â TheÂ WorldÂ BankâsÂ projectÂ appraisalÂ statedÂ thatÂ theÂ projectÂ wouldÂ enhanceÂ theÂ governmentâsÂ institutionalÂ capacityÂ toÂ beÂ betterÂ preparedÂ forÂ naturalÂ disasters\.Â TheÂ WorldÂ BankÂ concludedÂ inÂ 2018,Â however,Â thatÂ theÂ currentÂ policy,Â legal,Â institutionalÂ environmentÂ isÂ exacerbatingÂ theÂ lossesÂ associatedÂ withÂ naturalÂ disasters\.Â TheÂ WorldÂ BankÂ furtherÂ notedÂ persistentÂ underfundingÂ forÂ floodÂ protectionÂ andÂ aÂ lackÂ ofÂ investmentÂ inÂ seismicÂ riskÂ reductionÂ inÂ theÂ buildingÂ sector\.Â ManyÂ ofÂ theÂ problemsÂ identifiedÂ inÂ 2004Â thusÂ remain\.Â TheÂ projectâsÂ qualityÂ atÂ entryÂ isÂ ratedÂ asÂ moderatelyÂ unsatisfactory\.Â TheÂ organizationalÂ andÂ institutionalÂ arrangementsÂ wereÂ overlyÂ complexÂ andÂ notÂ designedÂ toÂ readilyÂ facilitateÂ envisionedÂ synergiesÂ orÂ operationalÂ efficiencies\.Â TheÂ WorldÂ BankÂ alsoÂ overestimatedÂ theÂ projectâsÂ readinessÂ forÂ implementation\.Â AtÂ appraisalÂ theÂ WorldÂ BankÂ assertedÂ thatÂ completedÂ designsÂ wereÂ availableÂ forÂ theÂ retrofittingÂ ofÂ 23Â publicÂ buildings\.Â InÂ contrast,Â onlyÂ oneÂ designÂ existedÂ whenÂ theÂ projectÂ startedÂ andÂ itÂ wasÂ incomplete\.Â TheÂ costÂ ofÂ theÂ constructionÂ worksÂ andÂ theÂ timeÂ neededÂ forÂ theÂ completionÂ ofÂ severalÂ tasksÂ wereÂ significantlyÂ underestimated\.Â Â TheÂ BankâsÂ qualityÂ ofÂ supervisionÂ andÂ theÂ overallÂ ratingÂ forÂ BankÂ performanceÂ areÂ ratedÂ asÂ moderatelyÂ unsatisfactory\.Â TheÂ projectÂ encounteredÂ multipleÂ delaysÂ (andÂ theÂ needÂ forÂ severalÂ extensions);Â problemsÂ withÂ procurement;Â understaffingÂ ofÂ theÂ fourÂ projectÂ managementÂ unitsÂ (PMUs);Â andÂ situationsÂ inÂ whichÂ agreedâcriteriaÂ forÂ constructionÂ worksÂ wereÂ notÂ followed\.Â EachÂ ofÂ thoseÂ situationsÂ providedÂ opportunitiesÂ forÂ activeÂ projectÂ supervision,Â whichÂ wasÂ notÂ alwaysÂ apparent\.Â ThroughÂ theÂ projectâsÂ firstÂ thirdÂ (orÂ 24Â months),Â lessÂ thanÂ 4Â percentÂ ofÂ theÂ loanÂ hadÂ beenÂ disbursedÂ (andÂ lessÂ thanÂ 8Â percentÂ atÂ theÂ projectâsÂ originalÂ midpoint)\.Â AnÂ extensionÂ ofÂ theÂ projectâsÂ completionÂ dateÂ appearedÂ unavoidableÂ asÂ earlyÂ asÂ 2006,Â butÂ theÂ firstÂ ofÂ twoÂ extensionsÂ wereÂ notÂ initiatedÂ untilÂ 2009\.Â Â TheÂ ratingÂ forÂ theÂ borrowerâsÂ performanceÂ isÂ moderatelyÂ unsatisfactory\.Â AlthoughÂ theÂ governmentÂ stronglyÂ supportedÂ theÂ projectÂ duringÂ preparation,Â itÂ becameÂ lessÂ ofÂ aÂ x Â priorityÂ asÂ theÂ countryÂ movedÂ towardsÂ accessionÂ toÂ theÂ EuropeanÂ Union,Â whichÂ RomaniaÂ joinedÂ inÂ 2007\.Â EvidenceÂ ofÂ theseÂ eventsÂ wasÂ reflectedÂ inÂ lackÂ ofÂ attentionÂ toÂ timelyÂ resolutionÂ ofÂ criticalÂ issuesÂ andÂ insufficientÂ funding,Â support,Â andÂ supervisionÂ byÂ responsibleÂ officialsÂ andÂ aÂ diminishedÂ interestÂ inÂ BankÂ financing\.Â TheÂ governmentÂ missedÂ theÂ deadlineÂ forÂ establishingÂ aÂ projectÂ steeringÂ committee\.Â OnceÂ theÂ committeeÂ wasÂ establishedÂ itÂ rarelyÂ metÂ inÂ theÂ projectâsÂ initialÂ years\.Â WhenÂ theÂ committeeÂ met,Â itÂ oftenÂ limitedÂ itsÂ activitiesÂ toÂ hearingÂ reportsÂ onÂ theÂ projectâsÂ implementationÂ ratherÂ thanÂ guidingÂ andÂ critiquingÂ itsÂ implementation\.Â Â TheÂ ratingÂ forÂ implementingÂ agencyÂ performanceÂ isÂ moderatelyÂ unsatisfactory\.Â ThroughoutÂ muchÂ ofÂ theÂ projectÂ itsÂ fourÂ PMUsÂ facedÂ considerableÂ challenges\.Â OneÂ unitÂ wasÂ staffedÂ toÂ manageÂ contractsÂ forÂ theÂ seismicÂ retrofittingÂ ofÂ buildingsÂ butÂ laterÂ wasÂ alsoÂ taskedÂ withÂ managingÂ theÂ associatedÂ andÂ moreÂ expensiveÂ contractsÂ forÂ returningÂ thoseÂ buildingsÂ toÂ fullÂ functionality\.Â LessÂ thanÂ aÂ yearÂ intoÂ theÂ projectÂ theÂ WorldÂ BankÂ consideredÂ thatÂ theÂ effortsÂ ofÂ anotherÂ PMUÂ toÂ preventÂ accidentalÂ spillsÂ ofÂ mineÂ wastesÂ toÂ beÂ atÂ riskÂ dueÂ toÂ theÂ absenceÂ ofÂ effectiveÂ management\.Â TheÂ creationÂ ofÂ aÂ thirdÂ PMUÂ wasÂ delayedÂ forÂ moreÂ thanÂ twoÂ yearsÂ becauseÂ ofÂ theÂ weakÂ performanceÂ ofÂ itsÂ originalÂ hostÂ agency\.Â Â KeyÂ lessonsÂ fromÂ theÂ experienceÂ ofÂ theÂ projectÂ includeÂ theÂ followingÂ (seeÂ sectionÂ 7Â forÂ otherÂ lessons):Â Â Â DependingÂ onÂ multiple,Â functionallyÂ independentÂ implementingÂ agenciesÂ forÂ multisectorÂ projectsÂ canÂ increaseÂ complexityÂ withoutÂ providingÂ commensurateÂ benefits\.Â ResponsibilityÂ forÂ reducingÂ theÂ identifiedÂ vulnerabilitiesÂ wasÂ dividedÂ amongÂ fourÂ PMUs,Â eachÂ ofÂ whichÂ wasÂ inÂ aÂ differentÂ agencyÂ orÂ ministry\.Â ThereÂ wereÂ fewÂ reasonsÂ forÂ collaborationÂ amongÂ them\.Â TheÂ projectâsÂ designÂ wasÂ undulyÂ complexÂ andÂ providedÂ fewÂ discernibleÂ benefitsÂ forÂ theÂ projectâsÂ implementation\.Â Â Â Multisectoral,Â multihazardÂ effortsÂ toÂ reduceÂ vulnerabilityÂ toÂ disastersÂ mayÂ notÂ offerÂ synergiesÂ orÂ economiesÂ ofÂ scopeÂ inÂ theÂ absenceÂ ofÂ clearÂ logicalÂ linksÂ betweenÂ activitiesÂ andÂ incentivesÂ forÂ coordinationÂ byÂ theÂ institutionsÂ responsibleÂ forÂ them\.Â TheÂ projectÂ wasÂ unsuccessfulÂ inÂ demonstratingÂ theÂ advantagesÂ ofÂ theseÂ effortsÂ inÂ RomaniaÂ andÂ didÂ notÂ achieveÂ efficienciesÂ inÂ implementationÂ thatÂ hadÂ beenÂ expectedÂ atÂ appraisal\.Â Â SubsequentÂ disasterÂ riskÂ managementÂ projectsÂ inÂ RomaniaÂ areÂ targetingÂ oneÂ sectorÂ atÂ aÂ timeÂ throughÂ aÂ seriesÂ ofÂ projectsÂ approach\.Â InÂ aÂ projectÂ designedÂ toÂ mitigateÂ theÂ riskÂ ofÂ naturalÂ disasters,Â itÂ isÂ essentialÂ thatÂ sitesÂ criticalÂ forÂ vulnerabilityÂ reductionÂ areÂ bothÂ properlyÂ identifiedÂ andÂ systematicallyÂ supportedÂ throughoutÂ theÂ lifeÂ ofÂ aÂ project\.Â AdjustmentsÂ mayÂ beÂ necessary,Â butÂ projectsÂ shouldÂ ensureÂ thatÂ selectivityÂ criteriaÂ areÂ respected\.Â WhenÂ criteriaÂ forÂ prioritizingÂ sitesÂ xi Â areÂ notÂ followed,Â theÂ resultÂ mayÂ beÂ aÂ suboptimalÂ allocationÂ ofÂ projectÂ funds\.Â InÂ thisÂ projectÂ theÂ appraisalÂ stressedÂ thatÂ theÂ projectÂ wouldÂ focusÂ onÂ highâpriorityÂ measuresÂ andÂ constructionÂ worksÂ capableÂ ofÂ reducingÂ social,Â economic,Â andÂ environmentalÂ vulnerabilities\.Â DespiteÂ thisÂ aim,Â aÂ portionÂ ofÂ theÂ projectâsÂ resourcesÂ wereÂ devotedÂ toÂ sitesÂ withÂ lowerÂ risks\.Â Â WhenÂ supportingÂ structuralÂ retrofits,Â financingÂ onlyÂ theÂ retrofittingÂ andÂ notÂ theÂ costÂ ofÂ returningÂ buildingsÂ toÂ functionalityÂ isÂ likelyÂ toÂ leadÂ toÂ problemsÂ withÂ implementation\.Â SeparatingÂ theÂ sourceÂ ofÂ fundsÂ forÂ retrofittingÂ buildingsÂ fromÂ theÂ fundsÂ forÂ theÂ returnÂ toÂ functionalityÂ wasÂ undesirable,Â especiallyÂ becauseÂ theÂ distinctionÂ wasÂ notÂ clearlyÂ communicatedÂ upfrontÂ inÂ theÂ projectÂ appraisalÂ documentÂ orÂ toÂ beneficiaries\.Â TheÂ resultÂ wasÂ thatÂ manyÂ highÂ priorityÂ buildingsÂ wereÂ unableÂ toÂ carryÂ outÂ retrofitsÂ becauseÂ theyÂ wereÂ unableÂ toÂ coverÂ theÂ costÂ ofÂ returnÂ toÂ functionality\.Â Â Â Â JosÃ©Â CarbajoÂ MartÃnezÂ Director,Â Financial,Â PrivateÂ Sector,Â Â andÂ SustainableÂ DevelopmentÂ IndependentÂ EvaluationÂ GroupÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1Â MinistryÂ ofÂ EnvironmentÂ andÂ WaterÂ Management,Â FloodÂ ManagementÂ inÂ Romania:Â PresentÂ andÂ Future,Â noÂ date\.Â AvailableÂ atÂ https://www\.inboâ news\.org/en/file/262113/download?token=_qdFXrlqÂ xii Â 1\. Background and Context 1\.1 InÂ theÂ 100Â yearsÂ beforeÂ theÂ HRMEPÂ projectÂ began,Â RomaniaÂ hadÂ experiencedÂ moreÂ thanÂ aÂ dozenÂ earthquakesÂ ofÂ magnitudeÂ 7\.0Â orÂ greaterÂ andÂ moreÂ areÂ anticipated\.Â AnÂ earthquakeÂ inÂ 1977Â causedÂ theÂ deathÂ ofÂ almostÂ 1,600Â people,Â mostlyÂ inÂ Bucharest,Â andÂ asÂ muchÂ asÂ $2Â billionÂ inÂ economicÂ lossesÂ dueÂ largelyÂ toÂ theÂ moreÂ thanÂ 32,000Â buildingsÂ thatÂ wereÂ damagedÂ orÂ destroyed\.Â DuringÂ theÂ projectâsÂ development,Â theÂ WorldÂ BankÂ estimatedÂ thatÂ twoâthirdsÂ ofÂ RomaniaâsÂ urbanÂ populationÂ isÂ exposedÂ toÂ seismicÂ risksÂ fromÂ theÂ VranceaÂ faultÂ zone,Â whichÂ includesÂ Bucharest\.Â AsÂ muchÂ asÂ 80Â percentÂ ofÂ theÂ countryâsÂ GDPÂ wasÂ producedÂ inÂ highlyÂ seismicallyÂ proneÂ areas\.2Â 1\.2 FloodingÂ isÂ commonÂ throughoutÂ Romania\.Â AccordingÂ toÂ theÂ WorldÂ BankâsÂ appraisalÂ ofÂ theÂ project,Â nearlyÂ 500,000Â peopleÂ andÂ 1\.3Â millionÂ hectaresÂ (ha)Â wereÂ atÂ seriousÂ riskÂ ofÂ floodingÂ eachÂ year\.Â AÂ floodÂ inÂ 1991Â causedÂ damagesÂ ofÂ almostÂ $500Â millionÂ andÂ damagedÂ moreÂ thanÂ 12,000Â buildings,Â almostÂ 1,000Â kmÂ ofÂ roads,Â andÂ 150Â bridges\.Â BetweenÂ 1992Â andÂ 2003,Â theÂ governmentÂ estimatedÂ thatÂ damagesÂ dueÂ toÂ floodingÂ exceededÂ $6\.1Â billion\.3Â LandslidesÂ areÂ alsoÂ commonÂ andÂ placeÂ atÂ riskÂ atÂ leastÂ 50,000Â households,Â 250,000Â people,Â andÂ 700,000Â ha\.Â 1\.3 RomaniaÂ hasÂ nearlyÂ 250Â largeÂ damsÂ andÂ overÂ 1,200Â smallÂ dams\.Â ManyÂ ofÂ theseÂ damsÂ wereÂ atÂ riskÂ ofÂ failureÂ orÂ collapseÂ dueÂ toÂ damageÂ orÂ flawedÂ construction\.Â SomeÂ damsÂ storeÂ mineÂ tailings,Â manyÂ ofÂ whichÂ containÂ toxicÂ pollutantsÂ thatÂ canÂ threatenÂ publicÂ healthÂ andÂ damageÂ surfaceÂ waters,Â includingÂ theÂ DanubeÂ River,Â whichÂ flowsÂ intoÂ theÂ BlackÂ Sea\.Â PoorÂ management,Â insufficientÂ maintenance,Â andÂ inadequateÂ monitoringÂ haveÂ ledÂ toÂ majorÂ spillageÂ eventsÂ inÂ theÂ past\.Â 1\.4 AlthoughÂ naturalÂ disastersÂ areÂ commonÂ andÂ persistent,Â RomaniaâsÂ disasterâ responseÂ agenciesÂ wereÂ typicallyÂ underfinancedÂ andÂ withoutÂ theÂ necessaryÂ technical,Â institutional,Â andÂ financialÂ capacity\.4Â AsÂ theÂ projectÂ appraisalÂ documentÂ (PAD)Â explained,Â âDeficienciesÂ inÂ protectiveÂ investments,Â equipment,Â communicationÂ systemsÂ andÂ limitedÂ accessÂ toÂ upâtoâdateÂ knowledgeÂ andÂ technicalÂ schemesâÂ providedÂ examplesÂ ofÂ theÂ shortcomingsÂ thatÂ hamperedÂ emergencyÂ preparedness,Â mitigation,Â andÂ management\.Â TheÂ governmentÂ lackedÂ sufficientÂ resourcesÂ relativeÂ toÂ otherÂ competingÂ prioritiesÂ toÂ implementÂ theÂ actionsÂ neededÂ toÂ reduceÂ theÂ countryâsÂ social,Â andÂ economic,Â andÂ environmentalÂ vulnerabilities\.Â Â 1\.5 InÂ anÂ effortÂ toÂ beÂ proactiveÂ andÂ toÂ reduceÂ theÂ countryâsÂ vulnerabilitiesÂ toÂ naturalÂ disasters,Â theÂ governmentÂ soughtÂ theÂ WorldÂ BankâsÂ technicalÂ andÂ financialÂ assistance\.Â ThisÂ requestÂ ledÂ toÂ theÂ developmentÂ ofÂ HRMEP,Â whichÂ wasÂ intendedÂ toÂ beÂ anÂ innovative,Â flagshipÂ projectÂ toÂ addressÂ theÂ risksÂ ofÂ naturalÂ hazardsÂ beforeÂ theyÂ occurredÂ andÂ toÂ promoteÂ preparednessÂ forÂ hazardsÂ likelyÂ toÂ occur\.Â AsÂ WorldÂ BankÂ staffÂ noted,Â theÂ 1 Â projectÂ wouldÂ alsoÂ provideÂ valuableÂ lessonsÂ forÂ futureÂ BankâfundedÂ projectsÂ onÂ disasterÂ riskÂ management\.Â 2\. Relevance of the Objectives and Design Objectives 2\.1 TheÂ projectÂ developmentÂ objectiveÂ (PDO)Â inÂ theÂ loanÂ agreementÂ wasÂ toÂ assistÂ theÂ âBorrowerÂ inÂ reducingÂ theÂ environmental,Â social,Â andÂ economicÂ vulnerabilityÂ toÂ naturalÂ disastersÂ andÂ catastrophicÂ miningÂ accidentalÂ spillsÂ through:Â (i)Â strengtheningÂ theÂ institutionalÂ andÂ technicalÂ capacityÂ forÂ disasterÂ managementÂ andÂ emergencyÂ response;Â (ii)Â implementingÂ specificÂ riskÂ reductionÂ measuresÂ forÂ floods,Â landslides,Â andÂ earthquakes;Â (iii)Â improvingÂ theÂ safetyÂ ofÂ selectedÂ waterÂ retentionÂ dams;Â andÂ (iv)Â improvingÂ theÂ managementÂ andÂ safetyÂ ofÂ tailingsÂ damsÂ andÂ wasteÂ dumpÂ facilities\.â5Â Â FollowingÂ IEGÂ evaluationÂ methodology,Â thisÂ assessmentÂ evaluatesÂ againstÂ theÂ intendedÂ outcomeÂ (reducedÂ environmental,Â socialÂ andÂ economicÂ vulnerabilityÂ toÂ naturalÂ disastersÂ andÂ catastrophicÂ miningÂ spills)\.6Â 2\.2 TheÂ PADÂ includedÂ theÂ sameÂ objectiveÂ butÂ withÂ threeÂ changes\.Â TheÂ PADÂ addedÂ âthroughÂ upgradingÂ communicationÂ andÂ informationÂ systemsâÂ toÂ theÂ endÂ ofÂ itemÂ (i)Â above,Â usedÂ âinvestmentsâÂ ratherÂ thanÂ âmeasuresâÂ forÂ itemÂ (ii),Â andÂ changedÂ itemÂ (iv)Â toÂ âimprovingÂ onÂ aÂ pilotÂ basisÂ theÂ managementÂ andÂ safetyÂ ofÂ tailingsÂ damsÂ andÂ wasteÂ dumpÂ facilities\.âÂ 2\.3 TheÂ projectÂ alsoÂ includedÂ aÂ $7Â millionÂ grantÂ fromÂ theÂ GlobalÂ EnvironmentÂ FacilityÂ (GEF)Â toÂ supportÂ itemÂ (iv)Â aboveÂ andÂ theÂ protectionÂ ofÂ internationalÂ watersÂ inÂ theÂ TiszaÂ Basin,Â anÂ areaÂ ofÂ moreÂ thanÂ 150,000Â km2Â inÂ fiveÂ countries,Â includingÂ largeÂ partsÂ ofÂ westernÂ Romania\.Â TheÂ projectâsÂ globalÂ environmentalÂ objectiveÂ wasÂ toÂ âdemonstrateÂ andÂ provideÂ forÂ replicationÂ forÂ theÂ reductionÂ ofÂ catastrophicÂ miningÂ spillsÂ ofÂ transboundaryÂ pollutionÂ loads\.âÂ Relevance of the Objectives 2\.4 RomaniaÂ hasÂ anÂ unfortunateÂ propensityÂ toÂ sufferÂ fromÂ frequentÂ naturalÂ disasters,Â especiallyÂ thoseÂ relatedÂ toÂ floodsÂ andÂ landslides\.Â NoÂ lessÂ important,Â Romania,Â andÂ especiallyÂ Bucharest,Â areÂ atÂ aÂ highÂ riskÂ ofÂ potentiallyÂ catastrophicÂ earthquakes\.Â TheÂ VranceaÂ earthquakeÂ zone,Â whichÂ encompassesÂ 16Â countiesÂ inÂ easternÂ Romania,Â isÂ oneÂ ofÂ theÂ mostÂ activeÂ seismicÂ areasÂ inÂ Europe\.Â TheseÂ possibleÂ disastersÂ poseÂ environmental,Â social,Â andÂ economicÂ vulnerabilitiesÂ dueÂ toÂ gapsÂ inÂ managementÂ capacityÂ andÂ insufficientlyÂ mitigatedÂ risks\.Â MiningÂ wasteÂ hadÂ beenÂ identifiedÂ asÂ posingÂ anÂ environmentalÂ hazard\.Â TheÂ projectÂ wasÂ timely,Â initiallyÂ relevant,Â andÂ responsiveÂ toÂ 2 Â RomaniaâsÂ highÂ susceptibilityÂ toÂ naturalÂ disasters\.Â Nonetheless,Â theÂ specificÂ framingÂ ofÂ âenvironmental,Â social,Â andÂ economicÂ vulnerabilityâÂ wasÂ notÂ separatelyÂ articulated,Â thoughÂ theseÂ haveÂ overlappingÂ butÂ distinctÂ characteristics\.Â InÂ practiceÂ theÂ projectÂ focusedÂ onÂ generalÂ disasterÂ vulnerabilityÂ reductionÂ andÂ theseÂ lensesÂ didÂ notÂ substantiallyÂ informÂ implementationÂ orÂ theÂ measurementÂ ofÂ results\.Â 2\.5 TheÂ PDOÂ wasÂ appropriatelyÂ relevantÂ andÂ compatibleÂ withÂ theÂ WorldÂ BankâsÂ CountryÂ AssistanceÂ StrategyÂ (CAS),Â whichÂ hadÂ beenÂ approvedÂ inÂ MayÂ 2001\.Â AlthoughÂ theÂ CASÂ predatedÂ theÂ projectâsÂ approvalÂ byÂ severalÂ years,Â theÂ CASÂ notedÂ theÂ WorldÂ BankâsÂ intentÂ toÂ extendÂ aÂ loanÂ toÂ âassistÂ inÂ RomaniaÊ¹sÂ effortsÂ toÂ mitigateÂ theÂ costsÂ ofÂ damageÂ fromÂ earthquakesâ¦,Â floods,Â droughts,Â toxicÂ waste,Â andÂ otherÂ naturalÂ andÂ manâ madeÂ disastersÂ which,Â takenÂ together,Â regularlyÂ plagueÂ theÂ country\.âÂ TheÂ forthcomingÂ loan,Â theÂ CASÂ explainedÂ âwouldÂ focusÂ onÂ disasterÂ preparednessÂ andÂ strengtheningÂ RomaniaâsÂ existingÂ rapidÂ responseÂ capacityâ¦ThisÂ couldÂ includeÂ changesÂ inÂ landâuseÂ planning,Â communityÂ involvementÂ andÂ education,Â floodÂ protectionÂ works,Â safetyÂ ofÂ floodÂ controlÂ dams,Â someÂ retrofittingÂ ofÂ publicÂ buildingsÂ inÂ BucharestÂ toÂ meetÂ earthquakeÂ buildingÂ codes,Â andÂ theÂ establishmentÂ ofÂ aÂ nationalÂ catastrophicÂ insuranceÂ scheme\.âÂ 2\.6 TheÂ projectâsÂ objectiveÂ toÂ reduceÂ RomaniaâsÂ vulnerabilityÂ toÂ naturalÂ disastersÂ remainedÂ relevantÂ throughoutÂ theÂ project\.Â Nonetheless,Â theÂ objectiveÂ didÂ notÂ representÂ aÂ clearÂ andÂ continuingÂ priorityÂ forÂ eitherÂ theÂ WorldÂ BankÂ orÂ theÂ government\.Â TheÂ WorldÂ BankâsÂ CountryÂ PartnershipÂ StrategyÂ forÂ FY06â09Â neitherÂ discussedÂ theÂ projectÂ norÂ theÂ mitigationÂ ofÂ naturalÂ disasters\.Â Furthermore,Â theÂ strategyÂ hadÂ noÂ benchmarksÂ orÂ targetsÂ forÂ hazardÂ riskÂ mitigation,Â thusÂ suggestingÂ thatÂ theÂ projectÂ wasÂ noÂ longerÂ relevantÂ toÂ theÂ WorldÂ BankâsÂ objectivesÂ inÂ Romania\.Â TheÂ nextÂ partnershipÂ strategy,Â issuedÂ inÂ JuneÂ 2009Â (andÂ coveringÂ theÂ nextÂ fourÂ fiscalÂ years),Â didÂ mentionÂ theÂ mitigationÂ ofÂ risksÂ fromÂ earthquakes,Â unsafeÂ dams,Â andÂ wasteÂ depositsÂ fromÂ theÂ miningÂ industryÂ butÂ notÂ fromÂ floodsÂ orÂ landslides\.Â TheÂ 2009Â strategyÂ alsoÂ mischaracterizedÂ theÂ project,Â statingÂ thatÂ itÂ wasÂ reducingÂ vulnerabilitiesÂ toÂ naturalÂ andÂ technologicalÂ disasters,Â whichÂ theÂ HRMEPÂ wasÂ neverÂ intendedÂ toÂ do\.Â TheÂ projectâsÂ relevanceÂ toÂ theÂ WorldÂ BankâsÂ strategicÂ objectivesÂ wasÂ alsoÂ unclear\.Â TheÂ project,Â accordingÂ toÂ theÂ partnershipÂ strategy,Â wasÂ supposedlyÂ contributingÂ toÂ crisisâmanagementÂ measuresÂ inÂ theÂ financialÂ sectorÂ andÂ establishingÂ theÂ buildingÂ blocksÂ forÂ sustainableÂ convergenceÂ toÂ theÂ averageÂ livingÂ standardsÂ inÂ theÂ EuropeanÂ UnionÂ (EU)\.7Â Â 2\.7 GivenÂ RomaniaâsÂ highÂ andÂ continuingÂ vulnerabilityÂ toÂ naturalÂ disasters,Â theÂ relevanceÂ ofÂ theÂ projectâsÂ primaryÂ objectiveÂ isÂ ratedÂ asÂ substantial\.Â 2\.8 TheÂ relevanceÂ ofÂ theÂ GEFâsupportedÂ activitiesÂ toÂ reduceÂ accidentalÂ spillsÂ ofÂ mineÂ wastesÂ isÂ notÂ separatelyÂ ratedÂ (hereÂ orÂ elsewhereÂ inÂ thisÂ report),Â butÂ theÂ activitiesÂ wereÂ 3 Â compatibleÂ withÂ theÂ facilityâsÂ operationalÂ strategy\.Â TheÂ activitiesÂ supportedÂ longâtermÂ protectionÂ ofÂ internationalÂ watersÂ asÂ wellÂ asÂ theÂ financingÂ ofÂ innovativeÂ demonstrationsÂ forÂ reducingÂ contaminantsÂ inÂ theseÂ waters\.Â OneÂ purposeÂ ofÂ suchÂ demonstrationsÂ wouldÂ beÂ toÂ identifyÂ reductionÂ measuresÂ withÂ theÂ highestÂ benefits\.Â Design 2\.9 TheÂ project,Â accordingÂ toÂ theÂ PAD,Â wasÂ designedÂ toÂ useÂ aÂ comprehensive,Â multihazardÂ riskâmanagementÂ approachÂ inÂ theÂ contextÂ ofÂ aÂ frameworkÂ program\.Â FourÂ separateÂ projectÂ componentsÂ wouldÂ supportÂ activitiesÂ complementaryÂ toÂ theÂ governmentâs\.Â Furthermore,Â theÂ designÂ wasÂ intendedÂ toÂ promoteÂ closeÂ coordinationÂ amongÂ theÂ agenciesÂ (andÂ theirÂ correspondingÂ PMUs)Â responsibleÂ forÂ mitigatingÂ theÂ vulnerabilitiesÂ associatedÂ withÂ floods,Â landslides,Â earthquakes,Â andÂ accidentalÂ spillsÂ ofÂ mineÂ wastes\.Â Components 2\.10 ComponentÂ AÂ soughtÂ toÂ strengthenÂ emergencyÂ managementÂ andÂ RomaniaâsÂ riskâ financingÂ capacity\.Â TheÂ designÂ includedÂ developmentÂ ofÂ anÂ emergencyÂ managementÂ informationÂ systemÂ (EMIS),Â technicalÂ assistanceÂ toÂ supportÂ anÂ insuranceÂ programÂ coveringÂ disasterÂ risks,Â andÂ developingÂ aÂ scenarioÂ modelingÂ theÂ effectsÂ ofÂ earthquakeÂ inÂ theÂ VranceaÂ seismicÂ zone\.Â 2\.11 ComponentÂ BÂ focusedÂ onÂ theÂ reductionÂ ofÂ risksÂ toÂ dueÂ toÂ earthquakes\.Â TheÂ designÂ focusedÂ onÂ retrofittingÂ highâpriorityÂ publicÂ facilities,Â providingÂ trainingÂ onÂ retrofitting,Â andÂ reviewingÂ buildingÂ codes\.Â 2\.12 ComponentÂ CÂ addressedÂ theÂ reductionÂ ofÂ risksÂ associatedÂ withÂ floodsÂ andÂ landslides\.Â TheÂ designÂ supportedÂ constructionÂ worksÂ toÂ reduceÂ risksÂ fromÂ floodingÂ andÂ potentiallyÂ unsafeÂ damsÂ andÂ pilotÂ studiesÂ forÂ modelingÂ andÂ remediatingÂ theÂ risksÂ ofÂ landslides\.Â 2\.13 ComponentÂ DÂ addressedÂ riskÂ reductionÂ ofÂ miningÂ accidentsÂ inÂ theÂ TiszaÂ Basin,Â throughÂ monitoring,Â remediation,Â andÂ responseÂ capacity\.Â Â Restructuring 2\.14 TheÂ projectÂ wasÂ restructuredÂ sixÂ times,Â includingÂ threeÂ timesÂ inÂ theÂ projectâsÂ lastÂ sixÂ months\.8Â WhenÂ theÂ governmentÂ realizedÂ thatÂ notÂ allÂ tasksÂ couldÂ beÂ completedÂ byÂ theÂ originalÂ closingÂ date,Â aÂ restructuringÂ inÂ 2009Â extendedÂ theÂ projectÂ untilÂ DecemberÂ 2011\.Â InÂ addition,Â theÂ projectâsÂ scopeÂ andÂ numberÂ ofÂ activitiesÂ wereÂ reducedÂ dueÂ toÂ currencyÂ depreciationÂ andÂ theÂ increasedÂ costsÂ ofÂ construction\.Â TheÂ PDOÂ indicatorsÂ remainedÂ unchangedÂ butÂ severalÂ targetsÂ inÂ ComponentsÂ BÂ andÂ CÂ wereÂ revisedÂ downward\.Â TheÂ 4 Â projectÂ underwentÂ aÂ secondÂ restructuringÂ inÂ AugustÂ 2010Â toÂ applyÂ theÂ WorldÂ BankâsÂ SafeguardÂ PolicyÂ onÂ InvoluntaryÂ Resettlement\.Â Â 2\.15 AÂ thirdÂ restructuring,Â inÂ DecemberÂ 2010,Â reallocatedÂ resourcesÂ amongÂ componentsÂ toÂ permitÂ completionÂ ofÂ activitiesÂ inÂ ComponentsÂ BÂ andÂ CÂ andÂ toÂ improveÂ theÂ useÂ ofÂ theÂ GEFÂ grantÂ inÂ ComponentÂ D\.Â AnotherÂ restructuringÂ inÂ DecemberÂ 2011Â alsoÂ reallocatedÂ resourcesÂ amongÂ components,Â extendedÂ theÂ closingÂ dateÂ toÂ JuneÂ 30,Â 2012,Â andÂ cancelledÂ $6\.68Â millionÂ ofÂ theÂ loanÂ inÂ responseÂ toÂ theÂ governmentâsÂ request\.Â TwoÂ additionalÂ restructurings,Â inÂ 2012,Â furtherÂ reallocatedÂ resourcesÂ amongÂ components\.Â 2\.16 ExtendingÂ theÂ projectÂ lifeÂ wasÂ appropriateÂ givenÂ theÂ delaysÂ inÂ implementationÂ forÂ someÂ activities\.Â TheÂ WorldÂ BankÂ correctlyÂ appliedÂ aÂ restructuringÂ toÂ triggerÂ itsÂ InvoluntaryÂ ResettlementÂ policyÂ onceÂ itÂ wasÂ realizedÂ thatÂ thisÂ wouldÂ beÂ anÂ issue\.Â OtherÂ restructuringsÂ aimedÂ atÂ reallocatingÂ resourcesÂ wereÂ likelyÂ necessaryÂ givenÂ theÂ WorldÂ BankâsÂ rulesÂ atÂ theÂ timeÂ andÂ theÂ needÂ toÂ balanceÂ resourcesÂ acrossÂ manyÂ activities\.Â 2\.17 TheÂ restructuringsÂ didÂ notÂ changeÂ theÂ PDOÂ orÂ theÂ GEFâsÂ globalÂ environmentalÂ objective\.Â Implementation Arrangements 2\.18 ProjectÂ managementÂ unitsÂ (PMUs)Â wereÂ createdÂ withinÂ ministriesÂ withÂ ministryÂ staffÂ forÂ theÂ fourÂ projectÂ components,Â asÂ follows:Â ï ComponentÂ A:Â MinistryÂ ofÂ AdministrationÂ andÂ InteriorÂ ï ComponentÂ B:Â InitiallyÂ inÂ theÂ MinistryÂ ofÂ Transport,Â Construction,Â andÂ TourismÂ andÂ thenÂ inÂ theÂ reconstitutedÂ MinistryÂ ofÂ RegionalÂ DevelopmentÂ andÂ Tourism\.Â ï ComponentÂ C:Â InitiallyÂ inÂ theÂ NationalÂ AdministrationÂ RomanianÂ WatersÂ andÂ thenÂ inÂ theÂ MinistryÂ ofÂ EnvironmentÂ andÂ Forests\.Â ï ComponentÂ D:Â NationalÂ AgencyÂ forÂ MineralÂ ResourcesÂ 2\.19 EachÂ PMUÂ wasÂ intendedÂ toÂ haveÂ fullÂ responsibilityÂ forÂ allÂ technicalÂ aspectsÂ ofÂ implementation,Â monitoring,Â procurement,Â andÂ financialÂ management\.Â TheÂ PMUÂ forÂ ComponentÂ BÂ wasÂ alsoÂ responsibleÂ forÂ consolidationÂ ofÂ financialÂ andÂ implementationÂ reportsÂ fromÂ theÂ otherÂ PMUs\.Â TheÂ PMUsÂ wereÂ closedÂ atÂ orÂ shortlyÂ afterÂ theÂ projectâsÂ closure\.Â Â Relevance of the Design 2\.20 TheÂ HRMEPÂ representedÂ oneÂ ofÂ theÂ WorldÂ BankâsÂ firstÂ exÂ anteÂ emergencyÂ preparednessÂ projectsÂ intendedÂ toÂ provideÂ assistanceÂ toÂ reduceÂ orÂ mitigateÂ aÂ countryâsÂ vulnerabilitiesÂ toÂ naturalÂ disastersÂ andÂ thusÂ toÂ enhanceÂ resilience\.Â TheÂ projectâsÂ centralÂ assumptionÂ wasÂ thatÂ itsÂ interventionsÂ wouldÂ reduceÂ theÂ social,Â economic,Â andÂ 5 Â environmentalÂ vulnerabilitiesÂ toÂ naturalÂ disasters\.Â InÂ mostÂ instancesÂ theÂ assumedÂ linkageÂ betweenÂ theÂ interventions,Â theirÂ outputs,Â andÂ theÂ desiredÂ outcomesÂ areÂ clear\.Â EffectiveÂ floodÂ protectionÂ measures,Â forÂ example,Â reduceÂ theÂ likelihoodÂ ofÂ floodsÂ andÂ theÂ social,Â economic,Â andÂ environmentalÂ harmsÂ theyÂ canÂ cause\.Â WhenÂ agingÂ damsÂ areÂ rehabilitatedÂ andÂ becomeÂ lessÂ likelyÂ toÂ fail,Â similarÂ benefitsÂ follow\.Â RetrofittingÂ ofÂ buildingsÂ reducesÂ theirÂ occupantsâÂ vulnerabilityÂ toÂ deathÂ orÂ injury,Â theÂ costsÂ ofÂ respondingÂ toÂ earthquakes,Â andÂ theÂ costsÂ ofÂ repairingÂ damagedÂ buildings\.Â RetrofittingÂ alsoÂ reducesÂ theÂ potentialÂ environmentalÂ consequencesÂ ofÂ earthquakes,Â whichÂ includeÂ fires,Â explosions,Â debris,Â exposureÂ toÂ hazardousÂ substances,Â andÂ dustÂ thatÂ canÂ diminishÂ airÂ quality\.Â Â 2\.21 InÂ choosingÂ aÂ comprehensive,Â multihazardÂ approach,Â theÂ WorldÂ BankÂ andÂ theÂ governmentÂ hadÂ consideredÂ butÂ rejectedÂ anÂ approachÂ focusingÂ onlyÂ onÂ aÂ singleÂ hazardÂ inÂ theÂ beliefÂ thatÂ coordinatedÂ disasterÂ managementÂ bringsÂ betterÂ resultsÂ thanÂ aÂ unisectoralÂ approach\.9Â AsÂ theÂ WorldÂ BankÂ explained,Â âDevelopmentÂ ofÂ separateÂ operationsÂ basedÂ onÂ theÂ typeÂ ofÂ disasterÂ wasÂ determinedÂ asÂ inefficientÂ asÂ itÂ canÂ leadÂ toÂ overlappingÂ activitiesÂ andÂ lackÂ ofÂ coordinationâÂ amongÂ theÂ responsibleÂ authorities\.10Â ThisÂ reasoningÂ reflectsÂ theÂ WorldÂ BankâsÂ beliefÂ thatÂ aÂ coordinated,Â multisectorÂ approachÂ representsÂ bestÂ practice\.Â Â 2\.22 TheÂ multisector,Â multihazardÂ approachÂ wasÂ unsuccessfulÂ inÂ Romania\.Â TheÂ designâsÂ causalÂ assumptionsÂ aboutÂ theÂ needÂ forÂ multisectoralÂ collaborationÂ wereÂ valid,Â butÂ theÂ designÂ lackedÂ theÂ institutionalÂ linkageÂ toÂ achieveÂ thisÂ collaboration\.11Â AtÂ appraisal,Â theÂ WorldÂ BankÂ declaredÂ thatÂ theÂ projectâsÂ proactiveÂ approachÂ toÂ riskÂ mitigationÂ wouldÂ demonstrateÂ itsÂ institutionalÂ meritsÂ andÂ thatÂ advancedÂ planningÂ andÂ investmentÂ wouldÂ reduceÂ theÂ socialÂ andÂ economicÂ costsÂ ofÂ disasters\.Â ByÂ theÂ timeÂ ofÂ completion,Â however,Â theÂ WorldÂ BankÂ concludedÂ inÂ itsÂ selfâevaluationÂ ofÂ theÂ projectÂ thatÂ whatÂ wasÂ supposedÂ toÂ beÂ aÂ ânewÂ BankÂ paradigmÂ forÂ disasterÂ riskÂ managementâÂ wasÂ unsuccessful,Â addingÂ thatÂ neitherÂ theÂ projectÂ designÂ norÂ theÂ implementationÂ arrangementsÂ haveÂ anyÂ relevanceÂ forÂ futureÂ projects\.12Â FutureÂ BankÂ projectsÂ onÂ DRMÂ inÂ RomaniaÂ haveÂ adoptedÂ aÂ SeriesÂ ofÂ ProjectsÂ approachÂ whereÂ differentÂ sectorsÂ areÂ coveredÂ byÂ separateÂ projects\.13Â Â 2\.23 DespiteÂ theÂ projectâsÂ relianceÂ onÂ bestÂ practiceÂ thereÂ wereÂ noÂ naturalÂ synergiesÂ betweenÂ severalÂ projectÂ components\.Â RemediationÂ ofÂ toxicÂ substancesÂ fromÂ miningÂ operationsÂ doesÂ notÂ complementÂ retrofittingÂ ofÂ buildings,Â especiallyÂ whenÂ differentÂ ministriesÂ wereÂ responsibleÂ forÂ theseÂ tasks\.Â RepresentativesÂ fromÂ theÂ MinistryÂ ofÂ FinanceÂ notedÂ thatÂ itÂ wasÂ âextremelyÂ difficultâÂ toÂ coordinateÂ theÂ publicÂ agenciesâÂ implementationÂ ofÂ theÂ project\.Â ToÂ succeed,Â aÂ multisectorÂ approachÂ forÂ riskÂ reductionÂ requiresÂ strongÂ governmentÂ mandateÂ andÂ leadershipÂ andÂ theÂ coordinatingÂ entityâsÂ commitment,Â whichÂ wereÂ notÂ presentÂ inÂ thisÂ case\.Â 6 Â 2\.24 TheÂ designÂ reflectedÂ aÂ decisionÂ toÂ fundÂ onlyÂ structuralÂ retrofitsÂ butÂ notÂ buildingsâÂ returnÂ toÂ functionality\.Â TheÂ latterÂ taskÂ involvedÂ suchÂ thingsÂ asÂ restoringÂ electricity,Â plumbing,Â heating,Â andÂ airÂ conditioningÂ andÂ updatingÂ orÂ installingÂ elevatorsÂ andÂ lightingÂ fixturesÂ and,Â inÂ theÂ caseÂ ofÂ hospitals,Â ensuringÂ thatÂ theyÂ metÂ theÂ newlyÂ applicableÂ standardsÂ ofÂ theÂ EU\.Â RestoringÂ functionallyÂ wasÂ typicallyÂ muchÂ moreÂ expensiveÂ thanÂ theÂ retrofitting,Â andÂ theÂ tasksÂ requiredÂ compatibleÂ architecturalÂ andÂ engineeringÂ designs\.Â PerhapsÂ mostÂ important,Â theÂ decisionÂ toÂ fundÂ onlyÂ theÂ retrofittingÂ wasÂ notÂ sufficientlyÂ communicatedÂ toÂ keyÂ stakeholdersÂ orÂ buildingÂ ownersÂ untilÂ afterÂ theyÂ hadÂ agreedÂ toÂ haveÂ theirÂ buildingsÂ retrofitted\.Â 2\.25 RelevanceÂ ofÂ theÂ originalÂ andÂ restructuredÂ designÂ isÂ ratedÂ asÂ modest\.Â 3\. Implementation Planned versus Actual Expenditure by Component 3\.1 TheÂ loanÂ wasÂ approvedÂ forÂ $150Â million,Â ofÂ whichÂ 92Â percentÂ orÂ $138\.45Â millionÂ wasÂ disbursed\.Â TheÂ GEFÂ providedÂ aÂ grantÂ ofÂ $7Â millionÂ forÂ ComponentÂ D\.Â TheÂ governmentÂ alsoÂ allocatedÂ $46\.66Â millionÂ toÂ theÂ project,Â butÂ itsÂ actualÂ expendituresÂ wereÂ $35\.9Â million\.Â TheÂ differenceÂ betweenÂ plannedÂ andÂ disbursedÂ amountsÂ shownÂ inÂ TableÂ 1Â resultedÂ fromÂ fluctuationsÂ inÂ exchangeÂ rates,Â theÂ inabilityÂ toÂ commitÂ allÂ resourcesÂ byÂ theÂ projectâsÂ end,Â andÂ theÂ governmentâsÂ requestÂ inÂ DecemberÂ 2011Â toÂ cancelÂ $6\.68Â millionÂ ofÂ theÂ loan\.Â Â Table 1: Project Cost by Component (in millions of $) Component Appraisal Actual Estimate Costs A â Strengthening of Emergency Management and Risk Financing 10\.90 14\.74 B â Earthquake Risk Reduction 71\.20 56\.49 C â Flood and Landslide Risk Reduction 101\.09 99\.31 D â Risk Reduction of Mining Accidents 15\.25 4\.29 E â Project Managementa 5\.21 Total 203\.65 174\.83 Â Costs for project management are included in the actual costs of Components A â D\.Â Â Â a Implementation Experience 3\.2 TheÂ loanÂ andÂ theÂ GEFÂ grantÂ wereÂ appraisedÂ inÂ JanuaryÂ 2004Â andÂ approvedÂ inÂ MayÂ 2004\.Â BothÂ becameÂ effectiveÂ onÂ OctoberÂ 20,Â 2004\.Â TheÂ originalÂ closingÂ dateÂ wasÂ DecemberÂ 31,Â 2009,Â butÂ itÂ wasÂ twiceÂ extendedÂ untilÂ JuneÂ 30,Â 2012\.Â TheÂ WorldÂ BankÂ acknowledgedÂ thatÂ theÂ originallyÂ plannedÂ implementationÂ periodÂ ofÂ 5\.5Â yearsÂ wasÂ 7 Â unrealistic\.Â TheÂ teamÂ thatÂ designedÂ theÂ projectÂ hadÂ recommendedÂ sevenÂ years,Â butÂ aÂ decisionÂ wasÂ madeÂ toÂ startÂ withÂ theÂ shorterÂ durationÂ withÂ theÂ hopeÂ thatÂ itÂ wouldÂ instillÂ aÂ senseÂ ofÂ urgencyÂ andÂ encourageÂ rapidÂ implementation\.Â However,Â thisÂ didÂ notÂ occur\.Â 3\.3 AtÂ leastÂ twoÂ keyÂ eventsÂ adverselyÂ affectedÂ theÂ projectâsÂ implementation\.Â First,Â RomaniaâsÂ membershipÂ inÂ theÂ EUÂ shiftedÂ theÂ governmentâsÂ attentionÂ toÂ itsÂ newÂ responsibilitiesÂ andÂ obligationsÂ asÂ aÂ memberÂ ofÂ theÂ unionÂ and,Â inÂ turn,Â theÂ borrowerâsÂ performanceÂ (seeÂ sectionÂ 6\.21)\.Â AsÂ anÂ example,Â designsÂ forÂ retrofittingÂ hadÂ toÂ beÂ amendedÂ toÂ complyÂ withÂ theÂ EUâsÂ standards,Â andÂ thisÂ processÂ delayedÂ theÂ projectâsÂ implementation\.Â NoÂ lessÂ important,Â membershipÂ encouragedÂ theÂ exportÂ ofÂ laborÂ andÂ expertiseÂ butÂ importedÂ inflation\.Â AccessionÂ toÂ theÂ EUÂ permittedÂ RomaniansÂ toÂ moveÂ freelyÂ toÂ otherÂ EUÂ countriesÂ inÂ searchÂ ofÂ higherÂ wagesÂ whileÂ theÂ costÂ ofÂ laborÂ andÂ constructionÂ withinÂ RomaniaÂ increasedÂ byÂ moreÂ thanÂ 20Â percentÂ afterÂ 2007\.Â Â 3\.4 Second,Â RomaniaÂ experiencedÂ aÂ severeÂ financialÂ crisisÂ beginningÂ inÂ lateÂ 2008\.Â InÂ anÂ effortÂ toÂ improveÂ managementÂ ofÂ publicÂ debt,Â theÂ MinistryÂ ofÂ PublicÂ FinanceÂ decidedÂ thatÂ fundsÂ forÂ theÂ projectÂ wouldÂ beÂ advancedÂ fromÂ theÂ stateÂ budgetÂ andÂ thenÂ reimbursedÂ fromÂ theÂ loanÂ beginningÂ inÂ 2009\.Â GivenÂ theÂ governmentâsÂ financialÂ constraints,Â theÂ ministryÂ couldÂ notÂ guaranteeÂ thatÂ itÂ wouldÂ beÂ ableÂ toÂ prefinanceÂ sufficientÂ fundsÂ forÂ theÂ project\.Â TheÂ WorldÂ BankÂ ratedÂ thisÂ riskÂ asÂ substantial\.14Â AlthoughÂ ministryÂ staffÂ disagree,Â theÂ newÂ arrangementÂ ledÂ toÂ delaysÂ inÂ theÂ projectâsÂ implementationÂ asÂ wellÂ asÂ uncertaintyÂ aboutÂ whetherÂ projectÂ activitiesÂ wouldÂ beÂ fundedÂ andÂ when\.Â Â 3\.5 TheÂ governmentÂ alsoÂ mandatedÂ thatÂ salariesÂ ofÂ publicÂ employeesÂ beÂ cutÂ byÂ asÂ muchÂ asÂ 75Â percentÂ inÂ earlyÂ 2009\.15Â FurtherÂ reductionsÂ inÂ salariesÂ wereÂ imposedÂ whenÂ theÂ governmentÂ acceptedÂ theÂ termsÂ ofÂ aÂ StandbyÂ ArrangementÂ forÂ â¬18\.5Â billionÂ fromÂ theÂ InternationalÂ MonetaryÂ FundÂ inÂ MarchÂ 2009\.Â TheÂ reducedÂ salariesÂ devastatedÂ moraleÂ amongÂ theÂ PMUsÂ andÂ compromisedÂ theirÂ abilityÂ toÂ fillÂ theÂ positionsÂ ofÂ thoseÂ whoÂ leftÂ theÂ PMUsÂ asÂ aÂ resultÂ ofÂ theÂ salaryÂ reductions\.Â ThisÂ situationÂ exacerbatedÂ aÂ relatedÂ problem,Â namelyÂ understaffedÂ PMUsÂ thatÂ predatedÂ theÂ economicÂ crisis\.Â Safeguards Compliance 3\.6 TheÂ WorldÂ BankÂ initiallyÂ appliedÂ fourÂ safeguards:Â 3\.7 EnvironmentalÂ AssessmentÂ (BankÂ OperationalÂ PolicyÂ 4\.01)Â asÂ itÂ wouldÂ applyÂ toÂ theÂ constructionÂ worksÂ forÂ ComponentsÂ B,Â C,Â andÂ D\.Â ToÂ implementÂ theÂ policy,Â theÂ WorldÂ BankÂ reviewedÂ andÂ approvedÂ theÂ governmentâsÂ environmentalÂ assessmentsÂ andÂ managementÂ plansÂ forÂ theÂ threeÂ components\.Â InÂ addition,Â separateÂ environmentalÂ plansÂ wereÂ developedÂ andÂ appliedÂ toÂ individualÂ constructionÂ contracts\.Â TheÂ WorldÂ BankÂ monitoredÂ adherenceÂ toÂ theseÂ plansÂ asÂ partÂ ofÂ itsÂ ongoingÂ supervisionÂ responsibilities\.Â 8 Â ï CulturalÂ PropertyÂ (BankÂ OperationalÂ PolicyÂ 11\.03)Â becauseÂ someÂ ofÂ theÂ buildingsÂ toÂ beÂ retrofittedÂ toÂ mitigateÂ seismicÂ riskÂ underÂ ComponentÂ BÂ wereÂ historicalÂ monumentsÂ orÂ culturallyÂ important\.Â ï SafetyÂ ofÂ DamsÂ (BankÂ OperationalÂ PolicyÂ 4\.37)\.Â ï ProjectsÂ inÂ InternationalÂ WatersÂ (BankÂ OperationalÂ PolicyÂ 7\.50Â andÂ GEFÂ OperationalÂ PolicyÂ 7\.50)Â forÂ theÂ preventionÂ andÂ remediationÂ ofÂ spillsÂ ofÂ toxicÂ substancesÂ fromÂ mineÂ sitesÂ underÂ ComponentÂ D\.Â 3\.8 TheÂ WorldÂ BankâsÂ implementationÂ supportÂ missionÂ inÂ midâ2012Â concludedÂ thatÂ âtheÂ overallÂ statusÂ ofÂ [the]Â environmentalÂ programÂ implementedâ¦isÂ consideredÂ satisfactory,Â andÂ allÂ worksÂ wereÂ implementedÂ inÂ complianceÂ withÂ theÂ localÂ andÂ [the]Â BankâsÂ environmentalÂ safeguards\.â16Â Â 3\.9 DuringÂ appraisalÂ theÂ governmentÂ hadÂ confirmedÂ thatÂ allÂ constructionÂ worksÂ wouldÂ occurÂ onÂ publiclyÂ ownedÂ land,Â soÂ itÂ wasÂ notÂ deemedÂ necessaryÂ toÂ applyÂ theÂ WorldÂ BankâsÂ policyÂ onÂ InvoluntaryÂ ResettlementÂ (OperationalÂ PolicyÂ 4\.12)\.Â DuringÂ implementation,Â however,Â itÂ becameÂ necessaryÂ toÂ acquireÂ someÂ privatelyÂ ownedÂ landÂ forÂ constructionÂ worksÂ atÂ threeÂ sitesÂ inÂ earlyÂ toÂ midâ2009\.Â Â 3\.10 AÂ projectÂ restructuring,Â inÂ AugustÂ 2010,Â triggeredÂ operationalÂ policyÂ 4\.12Â toÂ systematizeÂ treatmentÂ ofÂ anyÂ futureÂ landÂ acquisition\.17Â TheÂ restructuringÂ paperÂ claimedÂ thatÂ theÂ acquisitionÂ hadÂ occurredÂ inÂ accordanceÂ withÂ RomanianÂ lawÂ andÂ consistentÂ withÂ theÂ WorldÂ BankâsÂ operationalÂ policy\.18Â DespiteÂ thisÂ claim,Â theÂ acquisitionÂ hadÂ occurredÂ withoutÂ theÂ WorldÂ BankâsÂ reviewÂ orÂ priorÂ knowledge,Â soÂ someÂ ofÂ theÂ policyâsÂ requirementsÂ hadÂ notÂ beenÂ applied\.Â TheÂ policyÂ requiresÂ aÂ resettlementÂ planÂ thatÂ hasÂ beenÂ disclosedÂ toÂ theÂ publicÂ inÂ advanceÂ ofÂ landÂ acquisition,Â butÂ noÂ planÂ hadÂ beenÂ preparedÂ orÂ disclosed\.Â TheÂ restructuringÂ paperÂ explainedÂ howÂ theÂ governmentÂ hadÂ addressedÂ theÂ resettlementÂ toÂ theÂ landÂ ownersâÂ satisfactionÂ andÂ identifiedÂ otherÂ sitesÂ whereÂ theÂ policyÂ mightÂ apply\.Â Financial Management and Procurement 3\.11 TheÂ projectâsÂ financialÂ managementÂ wasÂ wellÂ andÂ timelyÂ supervised\.Â TheÂ projectÂ wasÂ inÂ complianceÂ withÂ theÂ financialÂ covenantsÂ includedÂ inÂ theÂ legalÂ agreementsÂ betweenÂ theÂ WorldÂ BankÂ andÂ theÂ government\.Â TheÂ PMUsÂ hadÂ adequateÂ internalÂ controls,Â includingÂ regularÂ reconciliationÂ ofÂ bankÂ accountsÂ andÂ disbursementÂ summaries\.Â ReportsÂ fromÂ independentÂ auditorsÂ providedÂ cleanÂ auditÂ opinions,Â andÂ noÂ internalÂ controlÂ issuesÂ wereÂ identified\.Â 3\.12 TheÂ projectâsÂ successÂ withÂ procurementÂ wasÂ mixed\.Â ThereÂ wereÂ manyÂ complexÂ contractsÂ successfullyÂ consummatedÂ butÂ thereÂ wereÂ alsoÂ situationsÂ inÂ whichÂ problemsÂ 9 Â existedÂ withÂ procurement\.Â SeveralÂ PMUsÂ wereÂ understaffed,Â inadequatelyÂ staffedÂ forÂ procurement,Â andÂ lackedÂ relevantÂ capacity\.Â 3\.13 ThereÂ wereÂ alsoÂ severalÂ instancesÂ ofÂ longÂ delaysÂ inÂ procurementÂ dueÂ toÂ theÂ needÂ forÂ multipleÂ internalÂ clearancesÂ withinÂ ministriesÂ andÂ theÂ PMUsâÂ inabilityÂ toÂ assessÂ theÂ technicalÂ qualityÂ ofÂ someÂ proposalsÂ forÂ constructionÂ works\.Â OtherÂ problemsÂ includedÂ impreciseÂ orÂ unclearÂ termsÂ ofÂ referenceÂ inÂ tenderÂ documents,Â withÂ theÂ procurementÂ ofÂ aÂ contractorÂ forÂ theÂ developmentÂ ofÂ theÂ EMISÂ asÂ theÂ bestÂ ofÂ severalÂ examples\.Â ConcernsÂ aboutÂ procurementÂ wereÂ evidentÂ throughoutÂ muchÂ ofÂ theÂ project\.Â TheÂ WorldÂ BankÂ identifiedÂ procurementÂ andÂ contractingÂ asÂ theÂ HRMEPâsÂ âmainÂ challengeâÂ inÂ earlyÂ 2007\.19Â DueÂ toÂ theÂ slowÂ rateÂ ofÂ procurementsÂ andÂ disbursementsÂ andÂ theÂ WorldÂ BankâsÂ concernÂ aboutÂ âseriousÂ deficienciesâÂ inÂ procurement,Â theÂ HRMEPÂ wasÂ includedÂ inÂ theÂ WorldÂ BankâsÂ listÂ ofÂ projectsÂ atÂ risk\.Â Â 3\.14 InÂ otherÂ instancesÂ contractsÂ hadÂ toÂ beÂ terminatedÂ dueÂ toÂ missedÂ deadlines,Â flawedÂ designsÂ forÂ constructionÂ works,Â poorÂ performanceÂ ofÂ contractedÂ firms,Â orÂ becauseÂ ofÂ aÂ PMUâsÂ inabilityÂ toÂ resolveÂ differencesÂ ofÂ opinionÂ withÂ theseÂ firms\.Â ExamplesÂ ofÂ theÂ latterÂ includeÂ contractsÂ forÂ theÂ retrofittingÂ ofÂ IasuÂ CityÂ HallÂ (ComponentÂ B),Â aÂ pilotÂ studyÂ onÂ landslidesÂ (ComponentÂ C),Â andÂ forÂ trainingÂ onÂ monitoringÂ ofÂ mineÂ wastesÂ (ComponentÂ D)\.20Â Â 3\.15 SomeÂ siteÂ supervisorsÂ forÂ constructionÂ worksÂ wereÂ hiredÂ afterÂ theÂ constructionÂ theyÂ wereÂ expectedÂ toÂ monitorÂ hadÂ alreadyÂ begun\.Â OneÂ PMUÂ issuedÂ contractsÂ withÂ completionÂ datesÂ afterÂ theÂ endÂ ofÂ theÂ HRMEP,Â whenÂ noÂ moneyÂ wouldÂ haveÂ beenÂ availableÂ toÂ payÂ theÂ contractedÂ firms\.Â AnotherÂ PMUÂ issuedÂ contractsÂ toÂ consultantsÂ afterÂ theyÂ hadÂ completedÂ theirÂ work,Â anÂ approachÂ theÂ WorldÂ BankÂ forbids\.Â 4\. Achievement of the Objectives Objective: reducing the environmental, social, and economic vulnerability to natural disasters and catastrophic mining accidental spills 4\.1 TheÂ projectâsÂ centralÂ assumptionÂ wasÂ thatÂ itsÂ interventionsÂ wouldÂ reduceÂ theÂ social,Â economic,Â andÂ environmentalÂ vulnerabilitiesÂ toÂ naturalÂ disasters\.Â WereÂ theseÂ outcomesÂ achievedÂ and,Â equallyÂ important,Â wereÂ theÂ projectâsÂ resourcesÂ allocatedÂ toÂ sitesÂ withÂ âhighÂ publicÂ benefit,âÂ asÂ theÂ PADÂ claimedÂ wouldÂ beÂ theÂ case?21Â TheÂ sectionsÂ thatÂ followÂ addressÂ thisÂ question,Â butÂ doÂ soÂ inÂ theÂ contextÂ ofÂ twoÂ fundamentalÂ concerns\.Â First,Â theÂ projectÂ didÂ notÂ haveÂ aÂ clearÂ causalÂ theoryÂ ofÂ whatÂ itÂ meansÂ toÂ reduceÂ theÂ vulnerabilitiesÂ associatedÂ withÂ floods,Â landslides,Â andÂ earthquakes\.Â Second,Â noneÂ ofÂ theÂ 10 Â PDOâlevelÂ indicatorsÂ includedÂ measurableÂ outcomesÂ thatÂ depictÂ theÂ magnitudeÂ ofÂ theÂ expectedÂ reductionsÂ inÂ theÂ threeÂ vulnerabilitiesÂ orÂ forÂ theÂ numberÂ ofÂ peopleÂ expectedÂ toÂ benefitÂ fromÂ theÂ project\.Â RatherÂ thanÂ outcomesÂ causallyÂ linkedÂ toÂ theÂ PDO,Â theÂ originalÂ indicatorsÂ andÂ theirÂ targetsÂ shownÂ inÂ AppendixÂ DÂ reflectÂ outputsÂ andÂ supplyâsideÂ deliverablesÂ (e\.g\.,Â numberÂ ofÂ buildingsÂ retrofitted)\.Â OfÂ theÂ eightÂ originalÂ targetsÂ forÂ outputs,Â onlyÂ threeÂ wereÂ fullyÂ achievedÂ whenÂ theÂ projectÂ closed\.Â AsÂ aÂ resultÂ ofÂ theÂ twoÂ concerns,Â assessmentÂ ofÂ theÂ projectâsÂ efficacyÂ isÂ basedÂ onÂ theÂ summedÂ achievementÂ ofÂ theÂ projectâsÂ interventions\.Â ReducingÂ SocialÂ andÂ EconomicÂ VulnerabilityÂ throughÂ theÂ EstablishmentÂ ofÂ anÂ EMISÂ andÂ CatastropheÂ RiskÂ InsuranceÂ 4\.2 AnÂ effectiveÂ EMISÂ thatÂ providesÂ informationÂ onÂ disasterÂ riskÂ toÂ theÂ endâuserÂ inÂ aÂ timelyÂ wayÂ isÂ criticallyÂ importantÂ toÂ reduceÂ socialÂ andÂ economicÂ vulnerabilitiesÂ andÂ toÂ respondÂ toÂ disastersÂ whenÂ theyÂ occur\.Â TheÂ projectâsÂ effortsÂ toÂ createÂ anÂ effectiveÂ EMISÂ haveÂ notÂ beenÂ fullyÂ successful\.Â ThereÂ isÂ aÂ limitedÂ evidenceÂ thatÂ itÂ hasÂ improvedÂ responsesÂ inÂ theÂ aftermathÂ ofÂ naturalÂ disastersÂ (notablyÂ floods)Â orÂ haveÂ hadÂ positiveÂ longâtermÂ effectsÂ byÂ âprovidingÂ aÂ rangeÂ ofÂ tangibleÂ outcomes,Â includingÂ avoidedÂ lossÂ ofÂ life,Â propertyÂ andÂ livelihood,âÂ asÂ theÂ PADÂ hadÂ forecast\.22Â AÂ contractÂ forÂ theÂ developmentÂ ofÂ anÂ EMIS,Â whichÂ wasÂ theÂ projectâsÂ onlyÂ effortÂ toÂ strengthenÂ emergencyÂ managementÂ relatedÂ toÂ floods,Â landslides,Â andÂ earthquakes,Â wasÂ issuedÂ inÂ MayÂ 2008\.23Â TheÂ WorldÂ BankÂ hadÂ projectedÂ thatÂ finalÂ acceptanceÂ ofÂ whatÂ wouldÂ becomeÂ theÂ SistemulÂ deÂ ManagementÂ InformaÅ£ionalÂ pentruÂ SituaÅ£iiÂ deÂ UrgenÅ£ÄÂ (SMISU)Â wouldÂ occurÂ inÂ 2013Â âÂ afterÂ theÂ projectÂ closed\.Â ThisÂ optimismÂ wasÂ unjustified\.Â AfterÂ multipleÂ delays,Â problemsÂ withÂ theÂ software,Â disagreementsÂ withÂ theÂ contractor,Â andÂ aÂ legalÂ challengeÂ involvingÂ allegationsÂ ofÂ flawedÂ procurement,Â SMISUÂ gainedÂ finalÂ acceptanceÂ fromÂ theÂ GeneralÂ InspectorateÂ forÂ EmergencyÂ SituationsÂ (GIES)Â inÂ SeptemberÂ 2017\.Â Â 4\.3 TheÂ systemÂ wasÂ describedÂ asÂ difficultÂ toÂ operate,Â userÂ unfriendly,Â notÂ particularlyÂ helpfulÂ duringÂ aÂ flood,Â undulyÂ burdensomeÂ inÂ termsÂ ofÂ enteringÂ data,Â andÂ requiringÂ constantÂ updatingÂ ofÂ information\.Â AmongÂ theÂ countyÂ inspectoratesÂ forÂ emergencyÂ servicesÂ visitedÂ forÂ thisÂ review,Â includingÂ threeÂ thatÂ hadÂ experiencedÂ floodingÂ inÂ 2018,Â thereÂ wasÂ agreementÂ thatÂ SMISUÂ isÂ notÂ contributingÂ toÂ orÂ enhancingÂ managementÂ ofÂ emergencyÂ responsesÂ atÂ theÂ localÂ orÂ countyÂ level\.Â AsÂ multipleÂ respondentsÂ observed,Â andÂ whichÂ theÂ GIESÂ andÂ theÂ systemâsÂ developerÂ agreed,Â muchÂ ofÂ theÂ SMISUârelatedÂ hardwareÂ isÂ outdated,Â closeÂ toÂ obsolescence,Â andÂ nearlyÂ incapableÂ ofÂ performingÂ itsÂ intendedÂ functions\.Â TheÂ countiesâÂ computerÂ operatingÂ system,Â MicrosoftÂ Vista,Â isÂ similarlyÂ outdated\.Â MicrosoftÂ stoppedÂ retailÂ salesÂ ofÂ VistaÂ inÂ 2010Â andÂ stoppedÂ providingÂ bugÂ fixesÂ andÂ securityÂ updatesÂ inÂ AprilÂ 2017\.Â TheseÂ problemsÂ doÂ notÂ reflectÂ flawsÂ inÂ theÂ systemâsÂ designÂ butÂ ratherÂ aÂ decisionÂ notÂ toÂ investÂ resourcesÂ toÂ ensureÂ theÂ systemâsÂ continuedÂ functionalÂ viabilityÂ afterÂ theÂ projectÂ closed\.Â Â Â 11 Â 4\.4 SomeÂ trainingÂ wasÂ providedÂ toÂ SMISUâsÂ usersÂ inÂ 2011,Â butÂ noÂ agency,Â includingÂ GIES,Â nowÂ providesÂ anyÂ trainingÂ onÂ aÂ systemÂ thatÂ isÂ considerablyÂ differentÂ thanÂ theÂ oneÂ initiallyÂ created\.Â Furthermore,Â withÂ theÂ exceptionÂ ofÂ theÂ GIES,Â whichÂ isÂ partÂ ofÂ theÂ MinistryÂ ofÂ InternalÂ Affairs,Â otherÂ keyÂ ministriesÂ onlyÂ occasionallyÂ addÂ orÂ updateÂ theirÂ dataÂ forÂ SMISU\.Â ThisÂ isÂ unfortunate\.Â TheÂ systemÂ wasÂ intendedÂ toÂ promoteÂ informationÂ sharingÂ amongÂ ministries\.Â InÂ contrast,Â GIESÂ isÂ usingÂ theÂ systemÂ toÂ collectÂ andÂ aggregateÂ dataÂ onÂ theÂ damagesÂ thatÂ disastersÂ cause\.Â 4\.5 InÂ OctoberÂ 2018Â GIESÂ conductedÂ aÂ mockÂ exercise,Â whichÂ simulatedÂ anÂ earthquakeÂ ofÂ 7\.5Â magnitudeÂ inÂ Bucharest\.Â AccordingÂ toÂ theÂ GIES,Â SMISUÂ wasÂ notÂ usedÂ duringÂ theÂ exercise,Â perhapsÂ becauseÂ ofÂ itsÂ limitationsÂ andÂ becauseÂ notÂ allÂ theÂ governmentÂ agenciesÂ involvedÂ inÂ theÂ simulationÂ areÂ familiarÂ withÂ theÂ system\.Â 4\.6 AÂ catastropheÂ insuranceÂ programÂ wasÂ establishedÂ withÂ theÂ projectâsÂ support,Â butÂ theÂ programâsÂ lowÂ penetrationÂ hasÂ onlyÂ aÂ smallÂ effectÂ onÂ reducingÂ theÂ socialÂ andÂ economicÂ vulnerabilitiesÂ associatedÂ withÂ theÂ coveredÂ perils\.Â AÂ privateâsectorÂ PoolÂ againstÂ NaturalÂ CatastrophesÂ (PAID)Â wasÂ createdÂ inÂ 2008Â andÂ issuedÂ itsÂ firstÂ policiesÂ inÂ 2010\.Â PAIDÂ providesÂ coverageÂ (forÂ residencesÂ only)Â forÂ damagesÂ sufferedÂ fromÂ earthquakes,Â floods,Â andÂ landslides\.Â TheÂ insuranceÂ providesÂ socialÂ asÂ wellÂ asÂ economicÂ benefitsÂ byÂ usingÂ anÂ insuranceÂ instrumentÂ toÂ manageÂ theÂ risksÂ thatÂ householdsÂ face\.Â 4\.7 TheÂ coverageÂ isÂ legallyÂ mandatedÂ forÂ allÂ residences,Â butÂ theÂ actualÂ penetrationÂ rateÂ wasÂ 19Â percentÂ inÂ DecemberÂ 2018\.24Â PenetrationÂ tendsÂ toÂ beÂ higherÂ inÂ areasÂ withÂ newÂ constructionÂ andÂ inÂ Bucharest\.Â LocalÂ authoritiesÂ areÂ responsibleÂ forÂ enforcementÂ butÂ areÂ disinclinedÂ toÂ actÂ dueÂ toÂ theÂ unpopularityÂ ofÂ enforcement\.Â ThereÂ isÂ alsoÂ aÂ problemÂ ofÂ moralÂ hazard\.Â AccordingÂ toÂ interviewsÂ withÂ insuranceÂ expertsÂ andÂ otherÂ stakeholders,Â localÂ orÂ countyÂ governments,Â thoughÂ legallyÂ prohibited,Â oftenÂ indemnifyÂ victimsÂ ofÂ naturalÂ disasters,Â includingÂ thoseÂ withoutÂ PAIDÂ insurance,Â financiallyÂ orÂ throughÂ theÂ donationÂ ofÂ buildingÂ materials\.Â 4\.8 PAIDÂ isÂ financiallyÂ soundÂ andÂ oneÂ ofÂ theÂ mostÂ efficientÂ insuranceÂ providersÂ inÂ Romania\.25Â Â InterviewsÂ withÂ staffÂ atÂ PAIDÂ revealedÂ thatÂ theÂ programÂ hasÂ aboutÂ â¬900Â millionÂ inÂ reinsurance,Â aÂ solvencyÂ ratioÂ wellÂ aboutÂ theÂ averageÂ forÂ insuranceÂ companiesÂ inÂ Romania,Â hasÂ neverÂ hadÂ aÂ yearÂ inÂ whichÂ payoutsÂ exceededÂ theÂ programâsÂ income,Â andÂ itsÂ averageÂ claimÂ isÂ aboutÂ â¬1,000\.26Â Â 4\.9 IfÂ homeownersÂ shouldÂ bearÂ someÂ orÂ evenÂ allÂ financialÂ responsibilityÂ forÂ theirÂ homesÂ andÂ addressÂ thatÂ responsibilityÂ thoughÂ insurance,Â thenÂ PAIDÂ providesÂ anÂ inexpensiveÂ wayÂ toÂ doÂ so\.Â DependingÂ onÂ theÂ typeÂ ofÂ buildingÂ materialsÂ used,Â premiumsÂ areÂ eitherÂ â¬10Â orÂ â¬20Â perÂ year\.Â ThereÂ isÂ noÂ deductibleÂ andÂ damagesÂ areÂ coveredÂ upÂ toÂ 12 Â â¬20,000\.Â AsÂ penetrationÂ ratesÂ increase,Â PAIDÂ canÂ assumeÂ muchÂ ofÂ theÂ financialÂ burdenÂ ofÂ disastersÂ whileÂ decreasingÂ theÂ governmentâsÂ fiscalÂ exposureÂ toÂ them\.Â Â 4\.10 ThisÂ fiscalÂ exposureÂ mayÂ leadÂ toÂ aÂ perverseÂ incentive\.Â TheÂ WorldÂ BankÂ approvedÂ aÂ â¬400Â millionÂ CatastropheÂ DeferredÂ DrawdownÂ OptionÂ (CatÂ DDO)Â forÂ RomaniaÂ inÂ 2018\.Â TheÂ CatÂ DDOÂ isÂ aÂ contingentÂ financingÂ lineÂ thatÂ providesÂ immediateÂ liquidityÂ toÂ addressÂ shocksÂ relatedÂ toÂ naturalÂ disastersÂ orÂ healthârelatedÂ emergencies\.Â TheÂ governmentÂ canÂ useÂ theÂ financingÂ inÂ anyÂ wayÂ itÂ chooses,Â includingÂ indemnificationÂ ofÂ thoseÂ sufferingÂ damagesÂ fromÂ floods,Â landslides,Â orÂ earthquakes\.27Â ThereÂ wasÂ strongÂ butÂ mixedÂ reactionÂ toÂ theÂ possibleÂ effectsÂ ofÂ theÂ CatÂ DDOÂ onÂ PAID\.Â PAIDÂ andÂ someÂ BankÂ staffÂ raisedÂ concernsÂ thatÂ theÂ CatÂ DDOÂ enablesÂ theÂ governmentÂ toÂ indemnifyÂ privateÂ disasterÂ lossesÂ withÂ theÂ consequenceÂ thatÂ theÂ incentiveÂ forÂ homeownersÂ toÂ insureÂ theirÂ ownÂ lossesÂ throughÂ PAIDÂ couldÂ beÂ undermined\.Â OtherÂ BankÂ staffÂ correctlyÂ notedÂ thatÂ ifÂ thisÂ incentiveÂ isÂ present,Â thenÂ itÂ existedÂ beforeÂ theÂ introductionÂ ofÂ theÂ CatâDDO\.Â Moreover,Â theÂ fiscalÂ disciplineÂ ofÂ aÂ governmentÂ toÂ ensureÂ homeownersÂ haveÂ insuranceÂ andÂ areÂ notÂ awaitingÂ governmentÂ supportÂ forÂ rebuildingÂ orÂ reconstructionÂ isÂ rareÂ inÂ anyÂ countryÂ regardlessÂ ofÂ whetherÂ aÂ CatâDDOÂ isÂ inÂ place\.Â PAIDÂ doesÂ notÂ provideÂ anyÂ coverageÂ forÂ publicÂ buildingsÂ soÂ theÂ governmentÂ bearsÂ aÂ substantialÂ financialÂ riskÂ inÂ theÂ eventÂ ofÂ aÂ majorÂ earthquake\.Â TheÂ CatÂ DDOÂ canÂ mitigateÂ atÂ leastÂ someÂ ofÂ thisÂ risk\.Â 4\.11 AnÂ earthquakeÂ scenarioÂ forÂ theÂ 16âcountyÂ VranceaÂ seismicÂ zoneÂ wasÂ completed,Â butÂ itsÂ contributionÂ toÂ reducingÂ socialÂ andÂ economicÂ vulnerabilitiesÂ isÂ uncertain\.Â TheÂ scenarioÂ wasÂ intendedÂ toÂ modelÂ potentialÂ damagesÂ toÂ residential,Â commercial,Â industrial,Â andÂ publicÂ buildingsÂ fromÂ theÂ zoneâsÂ maximumÂ probableÂ earthquake\.Â InÂ addition,Â theÂ scenarioÂ formedÂ theÂ basisÂ forÂ theÂ developmentÂ ofÂ revisedÂ responseÂ plansÂ inÂ theÂ eventÂ ofÂ anÂ earthquake\.Â TheÂ WorldÂ BankâsÂ implementationÂ andÂ resultsÂ reportÂ (ICR)Â claimedÂ thatÂ theÂ scenarioÂ wouldÂ beÂ transferredÂ toÂ PAIDÂ forÂ itsÂ riskÂ modeling\.Â ThisÂ transferÂ didÂ notÂ occur\.Â PAIDÂ wasÂ informedÂ thatÂ transferringÂ aÂ governmentâownedÂ resourceÂ forÂ theÂ economicÂ benefitÂ ofÂ aÂ privateÂ entityÂ isÂ notÂ legallyÂ possible\.Â ForÂ theÂ sameÂ reasonÂ theÂ scenarioÂ wasÂ notÂ sharedÂ withÂ RomaniaâsÂ academicÂ expertsÂ onÂ earthquakesÂ whoÂ couldÂ useÂ itÂ forÂ teachingÂ andÂ research\.Â ReducingÂ Social,Â Economic,Â andÂ EnvironmentalÂ VulnerabilityÂ byÂ AddressingÂ EarthquakeÂ RiskÂ ReductionÂ Â 4\.12 TheÂ projectâsÂ retrofittingÂ ofÂ publicÂ buildingsÂ moderatelyÂ reducedÂ theÂ social,Â economic,Â andÂ environmentalÂ vulnerabilityÂ toÂ damageÂ fromÂ earthquakes\.Â AmongÂ theÂ buildingsÂ thatÂ wereÂ retrofitted,Â notÂ allÂ wereÂ essentialÂ forÂ RomaniaâsÂ socialÂ functioning,Â asÂ theÂ PADÂ hadÂ indicated\.Â 13 Â 4\.13 OverÂ theÂ lifeÂ ofÂ theÂ projectÂ theÂ numberÂ ofÂ buildingsÂ toÂ beÂ retrofittedÂ changedÂ frequently\.Â TheÂ governmentÂ hadÂ initiallyÂ identifiedÂ 84Â structuresÂ toÂ beÂ retrofittedÂ withÂ projectÂ funds;Â theÂ projectÂ wasÂ partiallyÂ successfulÂ inÂ achievingÂ thisÂ objective\.28Â ByÂ midâ 2011,Â however,Â 36Â buildingsÂ hadÂ beenÂ withdrawnÂ atÂ theÂ ownersâÂ requestÂ forÂ severalÂ reasonsÂ orÂ asÂ aÂ resultÂ ofÂ theÂ PMUâsÂ reprioritizationÂ andÂ slowÂ performance\.Â AfterÂ theseÂ changesÂ theÂ netÂ resultÂ wasÂ thatÂ 48Â publicÂ structuresÂ wereÂ supposedÂ toÂ beÂ retrofitted;Â 44Â wereÂ eventuallyÂ retrofittedÂ includingÂ eightÂ completedÂ afterÂ theÂ projectâsÂ closureÂ withÂ governmentÂ funding\.Â TheÂ 44Â includedÂ 17Â emergencyÂ andÂ disasterÂ responseÂ facilities,Â 14Â hospitals,Â 10Â educationalÂ facilities,Â andÂ 3Â buildingsÂ categorizedÂ asÂ essentialÂ publicÂ buildings\.Â AboutÂ 23,350Â peopleÂ workingÂ inÂ theseÂ buildingsÂ wereÂ protected\.Â Â 4\.14 TheÂ WorldÂ BankÂ hadÂ identifiedÂ fourÂ criteriaÂ toÂ rankÂ buildingsÂ toÂ beÂ retrofitted:Â criticalityÂ toÂ responseÂ andÂ recoveryÂ operations;Â safetyÂ andÂ higherÂ riskÂ forÂ theÂ population;Â costÂ effectivenessÂ orÂ benefitâcostÂ analysis;Â and,Â feasibilityÂ andÂ appropriatenessÂ ofÂ theÂ retrofitÂ measures\.Â TheÂ actualÂ selectionÂ processÂ didÂ notÂ consistentlyÂ applyÂ theseÂ criteria\.Â BuildingsÂ toÂ beÂ retrofittedÂ wouldÂ be,Â accordingÂ toÂ theÂ WorldÂ Bank,Â âcriticalÂ publicÂ facilitiesâÂ thatÂ haveÂ âaÂ paramountÂ roleÂ inÂ theÂ emergencyÂ responseÂ andÂ preparednessÂ systemÂ andÂ thoseÂ thatÂ areÂ essentialÂ forÂ theÂ countryâsÂ socialÂ functioning\.â29Â SeveralÂ respondentsÂ notedÂ inÂ interviews,Â however,Â thatÂ someÂ buildingsÂ wereÂ selectedÂ onÂ theÂ basisÂ ofÂ politicalÂ favoritismÂ andÂ thusÂ didÂ notÂ fullyÂ adhereÂ toÂ theÂ selectionÂ criteria\.Â InÂ addition,Â someÂ occupantsÂ wereÂ unsureÂ whyÂ theirÂ buildingsÂ hadÂ beenÂ selectedÂ forÂ seismicÂ retrofitting,Â thusÂ suggestingÂ thatÂ theirÂ buildingsÂ mayÂ notÂ haveÂ beenÂ essentialÂ toÂ recoveryÂ andÂ response\.Â 4\.15 TheÂ headquartersÂ ofÂ theÂ GIESÂ inÂ BucharestÂ (whichÂ coordinatesÂ postdisasterÂ emergencyÂ response)Â wasÂ oneÂ siteÂ aboutÂ whichÂ thereÂ wasÂ noÂ disagreementÂ aboutÂ itsÂ urgentÂ needÂ forÂ retrofitting\.Â TheÂ buildingÂ isÂ seismicallyÂ vulnerableÂ andÂ wasÂ toÂ beÂ theÂ coreÂ locationÂ ofÂ theÂ SMISU\.Â TheÂ headquartersÂ wasÂ notÂ retrofittedÂ beforeÂ theÂ HRMEPÂ closed,Â soÂ theÂ buildingÂ wasÂ droppedÂ fromÂ theÂ project\.30Â StaffÂ atÂ GIESÂ indicatedÂ thatÂ retrofittingÂ wasÂ expectedÂ toÂ beginÂ inÂ 2019Â withÂ financingÂ fromÂ theÂ NationalÂ InvestmentÂ CompanyÂ (underÂ theÂ MinistryÂ ofÂ RegionalÂ Development)\.Â 4\.16 TheÂ projectâsÂ approachÂ ofÂ coveringÂ onlyÂ structuralÂ retrofitsÂ butÂ notÂ theÂ costsÂ ofÂ returningÂ buildingsÂ toÂ fullÂ functionalityÂ weakenedÂ effortsÂ toÂ retrofitÂ criticalÂ publicÂ facilities\.31Â TheÂ governmentâsÂ preferenceÂ wasÂ toÂ useÂ theÂ loanÂ toÂ financeÂ theÂ retrofittingÂ ofÂ buildingsÂ butÂ toÂ useÂ itsÂ annualÂ budgetaryÂ resourcesÂ forÂ financingÂ theÂ buildingsâÂ returnÂ toÂ functionality\.Â ThisÂ separation,Â theÂ governmentÂ believed,Â wouldÂ allowÂ itÂ toÂ keepÂ theÂ latterÂ costsÂ underÂ strictÂ controlÂ andÂ maximizeÂ theÂ useÂ ofÂ theÂ loanâsÂ resourcesÂ forÂ retrofitting\.Â Â Â 4\.17 TheÂ governmentÂ firstÂ signedÂ memorandaÂ ofÂ understandingÂ withÂ theÂ buildingsâÂ owners,Â whichÂ wereÂ notÂ necessarilyÂ theÂ sameÂ asÂ theÂ occupantsÂ asÂ inÂ theÂ caseÂ ofÂ hospitals\.Â 14 Â OnlyÂ uponÂ completionÂ ofÂ theÂ memoranda,Â accordingÂ toÂ severalÂ respondents,Â wereÂ theÂ buildingsâÂ ownersÂ orÂ occupantsÂ informedÂ thatÂ theyÂ wouldÂ beÂ responsibleÂ forÂ obtainingÂ theÂ fundsÂ toÂ coverÂ theÂ buildingsâÂ returnÂ toÂ functionality\.Â TheÂ processÂ ofÂ obtainingÂ cofinancingÂ wasÂ rarelyÂ promptÂ orÂ efficient\.Â TheÂ âextraâÂ fundsÂ typicallyÂ comprisedÂ asÂ muchÂ asÂ 50Â percentÂ orÂ moreÂ ofÂ theÂ totalÂ costs,Â andÂ theÂ PMUÂ didÂ notÂ haveÂ controlÂ overÂ theÂ cofinancingÂ orÂ itsÂ sources\.Â Â 4\.18 TheÂ WorldÂ BankÂ hadÂ initiallyÂ declaredÂ thatÂ theÂ loanâsÂ resourcesÂ couldÂ notÂ beÂ usedÂ toÂ retrofitÂ aÂ buildingÂ unlessÂ thereÂ wasÂ aÂ bindingÂ commitmentÂ ofÂ resourcesÂ toÂ coverÂ theÂ functionalityârelatedÂ costsÂ ofÂ constructionÂ andÂ equipment\.Â GivenÂ theÂ delaysÂ andÂ challengesÂ inÂ obtainingÂ fundingÂ forÂ theÂ functionalityârelatedÂ costsÂ theÂ WorldÂ BankÂ subsequentlyÂ offeredÂ toÂ amendÂ theÂ loanÂ toÂ coverÂ theÂ costsÂ ofÂ returnÂ toÂ functionality\.Â DoingÂ soÂ wouldÂ haveÂ easedÂ theÂ abilityÂ toÂ followÂ selectionÂ criteriaÂ andÂ toÂ targetÂ theÂ mostÂ criticalÂ buildingsÂ butÂ wouldÂ haveÂ reducedÂ theÂ fundsÂ availableÂ forÂ retrofittingÂ andÂ thusÂ theÂ numberÂ ofÂ buildingsÂ toÂ beÂ retrofitted\.Â TheÂ PMUÂ rejectedÂ thisÂ option;Â theÂ numberÂ ofÂ buildingsÂ retrofittedÂ wasÂ deemedÂ toÂ beÂ importantÂ inÂ termsÂ ofÂ meetingÂ theÂ projectâsÂ targetsÂ forÂ ComponentÂ B\.Â Instead,Â aÂ compromiseÂ wasÂ implementedÂ inÂ whichÂ theÂ WorldÂ BankÂ andÂ PMUÂ agreedÂ thatÂ theÂ loanÂ couldÂ beÂ usedÂ toÂ financeÂ theÂ functionalityârelatedÂ designÂ costsÂ butÂ notÂ theirÂ implementation\.Â 4\.19 TheÂ consequenceÂ ofÂ notÂ usingÂ theÂ projectÂ toÂ coverÂ returnÂ toÂ functionalityÂ wasÂ thatÂ theÂ targetingÂ criteriaÂ wereÂ compromised\.Â SelectionÂ ofÂ buildingsÂ forÂ retrofitÂ wasÂ madeÂ substantiallyÂ becauseÂ ofÂ theÂ availabilityÂ ofÂ financingÂ forÂ theÂ returnÂ toÂ functionality\.Â Â HighâpriorityÂ buildingsÂ basedÂ onÂ theÂ criteriaÂ wouldÂ notÂ beÂ retrofittedÂ unlessÂ fundsÂ wereÂ alsoÂ availableÂ forÂ theÂ costÂ ofÂ returningÂ themÂ toÂ fullÂ functionality,Â andÂ thisÂ wasÂ notÂ alwaysÂ present\.Â TheÂ lowÂ qualityÂ ofÂ manyÂ functionalityârelatedÂ designs,Â whichÂ wereÂ beyondÂ theÂ WorldÂ BankâsÂ control,Â alsoÂ affectedÂ theÂ selectionÂ processÂ asÂ wellÂ asÂ theÂ costsÂ ofÂ theÂ construction\.Â Â 4\.20 AmongÂ theÂ originalÂ listÂ ofÂ 84Â publicÂ buildingsÂ toÂ beÂ retrofitted,Â theÂ WorldÂ BankÂ hadÂ estimatedÂ thatÂ thereÂ wereÂ asÂ manyÂ asÂ 30Â separateÂ owners\.Â ToÂ addressÂ theÂ likelyÂ complexityÂ associatedÂ withÂ multipleÂ owners,Â theÂ WorldÂ BankÂ andÂ theÂ governmentÂ agreedÂ toÂ bringÂ theÂ targetedÂ publicÂ buildingsÂ underÂ theÂ temporaryÂ authorityÂ ofÂ aÂ singleÂ ministryÂ duringÂ theirÂ retrofitting\.Â ThisÂ innovativeÂ approachÂ hadÂ mixedÂ results\.Â OnÂ theÂ oneÂ hand,Â aÂ singleÂ ministryÂ (andÂ itsÂ PMUÂ forÂ ComponentÂ B)Â wouldÂ beÂ ableÂ toÂ manageÂ theÂ retrofitting\.Â OnÂ theÂ otherÂ hand,Â havingÂ multipleÂ ownersÂ increasedÂ theÂ numberÂ ofÂ ministries,Â agencies,Â andÂ localÂ orÂ countyÂ governmentsÂ withÂ whichÂ theÂ PMUÂ neededÂ toÂ collaborate\.Â TheÂ situationÂ alsoÂ createdÂ theÂ possibilityÂ thatÂ theÂ contractedÂ firmsÂ forÂ eachÂ ofÂ theÂ twoÂ tasksÂ âÂ theÂ retrofittingÂ andÂ theÂ returnÂ toÂ functionalityÂ âÂ wouldÂ beÂ managedÂ separately\.Â InÂ theÂ beliefÂ thatÂ itÂ wouldÂ beÂ inefficientÂ toÂ haveÂ separateÂ projectÂ managersÂ forÂ eachÂ task,Â theÂ WorldÂ BankÂ andÂ theÂ governmentÂ agreedÂ thatÂ theÂ PMUÂ wouldÂ manageÂ 15 Â bothÂ tasks,Â thusÂ increasingÂ substantiallyÂ theÂ PMUâsÂ workloadÂ withoutÂ aÂ commensurateÂ increaseÂ inÂ theÂ sizeÂ ofÂ itsÂ staff\.Â 4\.21 InÂ severalÂ instances,Â aÂ buildingâsÂ permanentÂ ownersÂ orÂ occupantsÂ didÂ notÂ themselvesÂ haveÂ sufficientÂ resourcesÂ forÂ theÂ functionalityârelatedÂ costsÂ andÂ thusÂ hadÂ toÂ requestÂ fundsÂ fromÂ aÂ ministryÂ orÂ theirÂ localÂ governments,Â severalÂ ofÂ whichÂ hadÂ noÂ otherÂ involvementÂ withÂ theÂ project\.Â OtherÂ ownersÂ wereÂ unableÂ toÂ provideÂ allÂ theÂ fundingÂ requiredÂ forÂ theÂ costsÂ ofÂ returningÂ theirÂ buildingsÂ toÂ fullÂ functionality\.Â NearÂ theÂ projectâsÂ closingÂ theÂ WorldÂ BankÂ reportedÂ thatÂ theÂ ownersÂ ofÂ twoÂ buildingsÂ requestedÂ thatÂ contractsÂ beÂ haltedÂ âÂ afterÂ theÂ retrofittingÂ hadÂ beenÂ completedÂ âÂ becauseÂ theyÂ lackedÂ theÂ moneyÂ toÂ completeÂ theÂ rehabilitation\.32Â 4\.22 TheÂ projectÂ facilitatedÂ andÂ promotedÂ introductionÂ ofÂ innovativeÂ andÂ costâ effectiveÂ methodsÂ forÂ seismicÂ retrofittingÂ throughÂ reviewÂ andÂ revisionÂ ofÂ theÂ countryâsÂ buildingÂ codesÂ forÂ constructionÂ ofÂ newÂ andÂ retrofittingÂ ofÂ existingÂ buildingsÂ toÂ meetÂ theÂ EUâsÂ requirements\.Â TheÂ projectÂ alsoÂ supportedÂ theÂ pilotingÂ ofÂ theÂ newÂ retrofittingÂ methods\.Â AsÂ theÂ WorldÂ BankÂ noted,Â however,Â âtheÂ implementationÂ ofÂ newÂ methodsÂ forÂ seismicÂ retrofittingÂ failedÂ becauseÂ ofÂ theÂ poorÂ performanceÂ ofÂ consultantsÂ andÂ delaysÂ inÂ preparationÂ ofÂ theÂ designsÂ fallingÂ beyondÂ theÂ projectÂ timeframe\.â33Â TheÂ projectÂ includedÂ resourcesÂ toÂ fundÂ professionalÂ trainingÂ inÂ costâeffectiveÂ retrofittingÂ methodsÂ âasÂ soonÂ asÂ practicalÂ afterÂ fundingÂ isÂ approvedâÂ thatÂ wouldÂ leadÂ toÂ certificationÂ thatÂ academicÂ institutionsÂ wouldÂ recognize\.34Â TheÂ firmÂ hiredÂ toÂ developÂ theÂ trainingÂ materialsÂ wasÂ scheduledÂ toÂ deliverÂ themÂ twoÂ daysÂ beforeÂ theÂ projectÂ closed,Â butÂ aÂ lengthy,Â unresolvedÂ disputeÂ betweenÂ theÂ firmÂ andÂ theÂ PMUÂ meantÂ thatÂ neitherÂ theÂ trainingÂ norÂ aÂ proposedÂ studyÂ tourÂ occurred\.Â ThisÂ situationÂ thusÂ representedÂ aÂ missedÂ opportunityÂ toÂ enhanceÂ RomaniaâsÂ capacity,Â includingÂ thatÂ inÂ theÂ privateÂ sector,Â toÂ mitigateÂ seismicÂ risksÂ afterÂ theÂ projectâsÂ end\.Â TheÂ WorldÂ BankâsÂ postprojectÂ reviewÂ concludedÂ thatÂ âtheÂ benefitsÂ ofÂ capacityÂ buildingÂ underÂ thisÂ componentÂ couldÂ notÂ beÂ identified\.âÂ ReducingÂ theÂ Social,Â Economic,Â andÂ EnvironmentalÂ VulnerabilitiesÂ AssociatedÂ withÂ FloodsÂ 4\.23 MoreÂ thanÂ 43,500Â peopleÂ benefitedÂ fromÂ floodÂ protectionÂ measuresÂ atÂ 10Â locationsÂ (versusÂ theÂ 12Â locationsÂ originallyÂ proposed)Â butÂ notÂ allÂ priorityÂ locationsÂ identifiedÂ duringÂ appraisalÂ benefittedÂ fromÂ theÂ project\.Â 4\.24 TheÂ WorldÂ BankâsÂ postprojectÂ assertionÂ thatÂ peopleÂ coveredÂ byÂ protectionÂ worksÂ wereÂ noÂ longerÂ atÂ riskÂ ofÂ damageÂ fromÂ floodsÂ wasÂ overstated;Â protectiveÂ measuresÂ areÂ neverÂ completelyÂ effective\.35Â 4\.25 LikeÂ theÂ retrofittingÂ ofÂ buildingsÂ describedÂ above,Â twoÂ highÂ priorityÂ areasÂ forÂ floodÂ protectionÂ didÂ notÂ benefitÂ fromÂ theÂ project\.Â AsÂ anÂ illustration,Â BabadagÂ hadÂ beenÂ 16 Â identifiedÂ asÂ aÂ siteÂ withÂ aÂ highÂ vulnerabilityÂ toÂ floodsÂ atÂ appraisal\.Â AÂ designÂ wasÂ developedÂ forÂ theÂ site,Â butÂ theÂ projectÂ didÂ notÂ fundÂ anyÂ constructionÂ there\.Â Â Â 4\.26 FiftyâfiveÂ large,Â publiclyÂ ownedÂ damsÂ hadÂ beenÂ identifiedÂ atÂ appraisalÂ asÂ beingÂ unsafeÂ andÂ inÂ needÂ ofÂ rehabilitation\.Â OfÂ theseÂ theÂ projectÂ intendedÂ toÂ rehabilitateÂ eightÂ largeÂ damsÂ (plusÂ fiveÂ smallÂ dams)\.Â FourÂ largeÂ andÂ threeÂ smallÂ damsÂ wereÂ rehabilitatedÂ andÂ providedÂ protectionÂ forÂ almostÂ 223,000Â people,Â aÂ notableÂ achievement\.Â 4\.27 UponÂ completionÂ ofÂ theÂ rehabilitationÂ ofÂ theÂ sevenÂ damsÂ eachÂ shouldÂ haveÂ beenÂ issuedÂ licensesÂ forÂ theirÂ fullÂ operation\.Â WorkÂ onÂ theÂ DriduÂ damÂ wasÂ finishedÂ inÂ 2012,Â butÂ theÂ damÂ hadÂ notÂ receivedÂ finalÂ certificationÂ asÂ ofÂ NovemberÂ 2018Â dueÂ possiblyÂ toÂ concernsÂ aboutÂ someÂ unfinishedÂ workÂ forÂ whichÂ thereÂ isÂ noÂ clearÂ solution\.Â 4\.28 SixÂ damsÂ wereÂ droppedÂ fromÂ financingÂ becauseÂ theÂ loanÂ amountÂ provedÂ insufficientÂ dueÂ toÂ theÂ governmentâsÂ initialÂ underestimationÂ ofÂ costsÂ inÂ feasibilityÂ studies\.Â ThisÂ situationÂ requiredÂ aÂ restartÂ ofÂ theÂ designÂ processÂ thatÂ producedÂ newÂ estimatesÂ leadingÂ toÂ aÂ doublingÂ ofÂ theÂ costsÂ ofÂ theÂ damsÂ onÂ theÂ priorityÂ list\.36Â ThisÂ situationÂ highlightsÂ theÂ problemÂ ofÂ proceedingÂ withÂ theÂ projectÂ withoutÂ validÂ andÂ defensibleÂ feasibilityÂ studiesÂ (andÂ parallelsÂ aÂ similarÂ situationÂ withÂ theÂ problematicÂ designsÂ forÂ retrofittingÂ ofÂ publicÂ buildingsÂ notedÂ inÂ sectionÂ 6\.11)\.Â 4\.29 DesignsÂ orÂ feasibilityÂ studiesÂ wereÂ completedÂ forÂ theÂ rehabilitationÂ ofÂ sixÂ dams,Â butÂ thenÂ notÂ subsequentlyÂ used\.Â SeveralÂ respondentsÂ notedÂ thatÂ aÂ largeÂ damÂ atÂ highÂ riskÂ ofÂ failure,Â atÂ LakeÂ Siriu,Â wasÂ moreÂ inÂ needÂ ofÂ attentionÂ thanÂ someÂ ofÂ theÂ damsÂ thatÂ wereÂ rehabilitated\.Â InÂ twoÂ instancesÂ feasibilityÂ studiesÂ wereÂ deemedÂ toÂ beÂ deficientÂ butÂ neitherÂ damÂ hadÂ beenÂ rehabilitatedÂ throughÂ 2018Â despiteÂ havingÂ beenÂ identifiedÂ asÂ inÂ needÂ ofÂ immediateÂ rehabilitationÂ inÂ 2004\.Â TheÂ WorldÂ BankÂ hadÂ wantedÂ toÂ increaseÂ theÂ sizeÂ ofÂ theÂ loanÂ toÂ permitÂ completionÂ ofÂ theÂ rehabilitationÂ butÂ theÂ governmentÂ declined\.Â ItÂ didÂ notÂ wantÂ toÂ incurÂ moreÂ debt\.Â Â 4\.30 TheÂ pilotÂ studiesÂ onÂ landslidesÂ wereÂ notÂ completedÂ andÂ didÂ notÂ produceÂ anyÂ meaningfulÂ benefitsÂ orÂ reduceÂ anyÂ vulnerabilities\.Â TheÂ studiesÂ wereÂ intendedÂ toÂ developÂ mathematicalÂ modelsÂ toÂ determineÂ theÂ conditionsÂ underÂ whichÂ landslidesÂ mightÂ occurÂ andÂ aÂ manualÂ onÂ monitoringÂ andÂ interpretingÂ dataÂ collectedÂ fromÂ twoÂ pilotÂ sites\.Â TheÂ studiesÂ wereÂ notÂ completedÂ andÂ noÂ tangibleÂ resultsÂ wereÂ producedÂ dueÂ toÂ theÂ contractedÂ firmâsÂ unacceptableÂ performanceÂ andÂ theÂ PMUâsÂ poorÂ management\.Â 4\.31 MonitoringÂ equipmentÂ hadÂ beenÂ installedÂ atÂ Sinaia,Â anÂ urbanÂ site,Â andÂ onÂ theÂ rightÂ bankÂ ofÂ theÂ SaceleÂ dam\.Â InÂ OctoberÂ 2018,Â however,Â thereÂ wasÂ noÂ ongoingÂ monitoringÂ atÂ Sinaia\.Â AsÂ Sacele,Â theÂ monitoringÂ continuedÂ sporadicallyÂ dueÂ toÂ problemsÂ withÂ theÂ equipment\.Â MoreÂ important,Â evenÂ whenÂ theÂ monitoringÂ isÂ operational,Â itsÂ valueÂ 17 Â isÂ minimal\.Â NoÂ publicÂ employeesÂ atÂ theÂ damÂ haveÂ beenÂ trainedÂ toÂ analyzeÂ theÂ dataÂ orÂ toÂ assessÂ theirÂ implicationsÂ forÂ possibleÂ landslidesÂ thatÂ couldÂ damageÂ theÂ dam\.Â Â 4\.32 AÂ draftÂ manualÂ forÂ monitoringÂ landslidesÂ wasÂ preparedÂ butÂ notÂ submittedÂ toÂ projectÂ staffÂ untilÂ oneÂ dayÂ beforeÂ theÂ projectâsÂ closing\.Â TheÂ manualÂ hadÂ notÂ beenÂ completedÂ asÂ ofÂ lateÂ 2018\.Â InternationalÂ trainingÂ onÂ landslideÂ forecastingÂ wasÂ supposedÂ toÂ beÂ providedÂ toÂ RomanianÂ researchers,Â butÂ thatÂ trainingÂ didÂ notÂ occurÂ dueÂ toÂ theÂ problemsÂ withÂ theÂ contractedÂ firmÂ mentionedÂ above\.Â Â ReducingÂ theÂ Social,Â Economic,Â andÂ EnvironmentalÂ VulnerabilitiesÂ AssociatedÂ withÂ MiningÂ AccidentsÂ inÂ theÂ TiszaÂ BasinÂ 4\.33 TheÂ GEFâsÂ globalÂ environmentalÂ objectiveÂ wasÂ toÂ demonstrateÂ andÂ provideÂ forÂ replicationÂ forÂ theÂ reductionÂ ofÂ catastrophicÂ accidentalÂ spillsÂ ofÂ transboundaryÂ pollutionÂ loadsÂ fromÂ mineÂ operationsÂ flowingÂ intoÂ theÂ DanubeÂ andÂ BlackÂ SeaÂ Basins\.Â TheÂ projectâsÂ primaryÂ meansÂ toÂ achieveÂ thisÂ objectiveÂ wasÂ remediationÂ andÂ hazardÂ preventionÂ interventionsÂ atÂ highâpriority,Â governmentâownedÂ miningÂ sites\.Â Â 4\.34 ThisÂ wasÂ theÂ projectâsÂ smallestÂ component,Â usingÂ lessÂ thanÂ 2\.5Â percentÂ ofÂ theÂ projectâsÂ resources\.Â WithÂ theseÂ resourcesÂ theÂ componentÂ hadÂ severalÂ successes\.Â AtÂ theÂ projectâsÂ completionÂ sixÂ remediatedÂ sitesÂ (versusÂ threeÂ thatÂ hadÂ beenÂ projected)Â hadÂ ceasedÂ toÂ beÂ aÂ significantÂ environmentalÂ risks,Â emissionsÂ ofÂ contaminatedÂ dustÂ wereÂ reduced,Â surfaceÂ runoff,Â andÂ groundwaterÂ infiltrationÂ hadÂ beenÂ terminated,Â andÂ levelsÂ ofÂ toxicÂ pollutantsÂ fromÂ mineÂ spillsÂ enteringÂ theÂ DanubeÂ RiverÂ andÂ BlackÂ SeaÂ hadÂ declined\.37Â Â 4\.35 TheseÂ achievementsÂ representÂ aÂ significantÂ success,Â butÂ theÂ postprojectÂ situationÂ isÂ notÂ asÂ compelling\.Â AtÂ remediatedÂ sitesÂ whereÂ monitoringÂ equipmentÂ wasÂ placed,Â someÂ ofÂ itÂ hasÂ beenÂ damagedÂ orÂ stolenÂ sinceÂ 2012\.Â TheÂ projectÂ providedÂ extensiveÂ trainingÂ intendedÂ toÂ buildÂ capacity,Â butÂ theÂ trainingâsÂ benefitsÂ andÂ consequencesÂ remainÂ uncertain\.Â ThereÂ wasÂ noÂ effortÂ toÂ evaluateÂ itsÂ success\.Â Finally,Â oneÂ ofÂ theÂ componentâsÂ objectivesÂ wasÂ toÂ promoteÂ transboundaryÂ cooperation\.Â TheÂ projectÂ sponsoredÂ multipleÂ internationalÂ eventsÂ andÂ meetings,Â butÂ thereÂ doesÂ notÂ appearÂ toÂ beÂ anyÂ sustainedÂ longâ termÂ transboundaryÂ cooperationÂ dueÂ toÂ theÂ projectÂ accordingÂ toÂ thoseÂ interviewedÂ forÂ thisÂ assessment\.Â SummarizingÂ theÂ OutcomesÂ AchievedÂ 4\.36 WhenÂ theÂ projectÂ endedÂ inÂ midâ2012,Â theÂ WorldÂ BankâsÂ andÂ theÂ governmentâsÂ attentionÂ toÂ theÂ projectâsÂ objectivesÂ hadÂ diminished\.Â ManyÂ publicÂ buildingsÂ essentialÂ toÂ emergencyÂ planningÂ andÂ responseÂ andÂ thatÂ hadÂ beenÂ identifiedÂ asÂ priorityÂ candidatesÂ forÂ retrofittingÂ remainedÂ inÂ theirÂ atâriskÂ condition\.Â TheÂ sameÂ situationÂ existsÂ withÂ severalÂ dams\.Â AlthoughÂ muchÂ remainedÂ toÂ beÂ done,Â noÂ followâupÂ projectsÂ wereÂ plannedÂ atÂ 18 Â closure\.Â SeveralÂ ministriesÂ hadÂ expressedÂ someÂ interest,Â butÂ theyÂ didÂ notÂ pursueÂ thisÂ interestÂ withÂ theÂ MinistryÂ ofÂ Finance\.38Â Â 4\.37 InÂ termsÂ ofÂ outcomesÂ achievedÂ relatedÂ toÂ effortsÂ toÂ reduceÂ theÂ vulnerabilitiesÂ associatedÂ withÂ floods,Â landslides,Â andÂ earthquakes,Â theÂ ratingÂ forÂ efficacyÂ isÂ modest\.Â InÂ accordanceÂ withÂ IEGÂ practice,Â noÂ ratingÂ isÂ assignedÂ toÂ theÂ GEFâsÂ globalÂ environmentalÂ objectiveÂ toÂ reduceÂ pollutionÂ fromÂ accidentalÂ mineÂ spills\.Â 5\. Efficiency 5\.1 TheÂ PADâsÂ postprojectÂ economicÂ analysisÂ focusedÂ solelyÂ onÂ theÂ projectedÂ benefitsÂ ofÂ investmentsÂ inÂ theÂ reductionÂ ofÂ floodÂ risksÂ andÂ theÂ safetyÂ ofÂ dams,Â whichÂ representedÂ 57Â percentÂ ofÂ theÂ projectâsÂ expenditures\.Â TheÂ analysisÂ estimatedÂ theÂ averageÂ internalÂ ratesÂ ofÂ returnÂ (IRR)Â forÂ theÂ floodâcontrolÂ projectsÂ toÂ beÂ 19\.4Â percent,Â whichÂ wasÂ lessÂ thanÂ theÂ 28\.8Â percentÂ projectedÂ atÂ appraisal\.Â ForÂ theÂ investmentsÂ relatedÂ toÂ damÂ safety,Â theÂ IRRÂ wasÂ estimatedÂ toÂ beÂ 22\.4Â percentÂ versusÂ theÂ 26\.5Â percentÂ estimatedÂ atÂ appraisal\.Â ForÂ theÂ floodâprotectionÂ andÂ damâsafetyÂ measuresÂ theÂ estimatedÂ endâofâ projectÂ benefitâcostÂ ratiosÂ wereÂ 2\.15Â andÂ 3\.60,Â respectively\.39Â TheÂ analysesÂ didÂ notÂ estimateÂ theÂ valueÂ ofÂ humanÂ lifeÂ orÂ explainÂ howÂ monetaryÂ valuesÂ wereÂ determinedÂ orÂ assignedÂ forÂ anyÂ ofÂ theÂ projectedÂ costsÂ orÂ benefits\.Â 5\.2 NeitherÂ theÂ economicÂ analysisÂ atÂ appraisalÂ norÂ inÂ theÂ ICRÂ consideredÂ orÂ justifiedÂ economicallyÂ anyÂ ofÂ theÂ investmentsÂ associatedÂ withÂ ComponentsÂ A,Â B,Â orÂ D\.Â InÂ theÂ caseÂ ofÂ theÂ seismicÂ retrofitting,Â theÂ originalÂ selectionÂ ofÂ buildingsÂ wasÂ basedÂ partiallyÂ onÂ theÂ governmentâsÂ estimatesÂ ofÂ costÂ effectivenessÂ orÂ benefitâcostÂ analysis\.40Â ForÂ componentÂ D,Â theÂ PADÂ observedÂ thatÂ theÂ projectÂ wouldÂ âinstitutionalizeÂ aÂ consistentÂ riskÂ managementÂ approachÂ toÂ identifyÂ costâeffectiveÂ riskÂ reductionÂ measuresâ¦,Â soÂ availableÂ resourcesÂ canÂ beÂ channeledÂ toÂ thoseÂ measuresÂ withÂ theÂ highestÂ benefits\.â41Â Â 5\.3 ThereÂ wereÂ sixÂ highâpriorityÂ damsÂ forÂ whichÂ designsÂ orÂ feasibilityÂ studiesÂ wereÂ completedÂ atÂ aÂ costÂ ofÂ severalÂ hundredÂ thousandÂ dollarsÂ butÂ thenÂ notÂ turnedÂ intoÂ contractsÂ forÂ theÂ designedÂ work\.Â NoneÂ ofÂ theseÂ costsÂ wereÂ includedÂ inÂ theÂ economicÂ analysis\.Â TheÂ analysisÂ prematurelyÂ calculatedÂ theÂ benefitâcostÂ ratioÂ forÂ theÂ rehabilitationÂ ofÂ aÂ smallÂ damÂ atÂ Sanmihaiu,Â butÂ mostÂ ofÂ theÂ requiredÂ workÂ hadÂ notÂ beenÂ completedÂ byÂ theÂ projectâsÂ endÂ (orÂ byÂ lateÂ 2018)\.Â 5\.4 SeveralÂ numbersÂ usedÂ inÂ theÂ exÂ postÂ economicÂ analysisÂ doÂ notÂ correspondÂ withÂ theÂ numbersÂ inÂ theÂ preprojectÂ socialÂ assessmentÂ orÂ theÂ actual,Â contractedÂ costsÂ ofÂ rehabilitation\.Â TheÂ WorldÂ BankÂ (andÂ theÂ economicÂ analysisÂ includedÂ inÂ theÂ ICR)Â estimatedÂ thatÂ thereÂ wouldÂ beÂ nearlyÂ 108,000Â beneficiariesÂ fromÂ theÂ rehabilitationÂ ofÂ thatÂ dam\.Â AtÂ theÂ projectâsÂ closingÂ theÂ PMUÂ estimatedÂ thatÂ numberÂ toÂ beÂ lessÂ thanÂ 31,000\.Â Â 19 Â 5\.5 ToÂ assessÂ theÂ sustainabilityÂ ofÂ theÂ HRMEPâsÂ investments,Â aÂ preprojectÂ socialÂ assessmentÂ declaredÂ thatÂ aÂ baselineÂ surveyÂ ofÂ theÂ incomeÂ andÂ employmentÂ situationÂ inÂ theÂ projectÂ areasÂ âshallÂ beÂ carriedÂ outÂ forÂ allÂ subprojectsâÂ atÂ theÂ HRMEPâsÂ beginning,Â midpoint,Â afterÂ implementation\.Â NoneÂ ofÂ theseÂ surveysÂ wereÂ initiated\.Â 5\.6 TheÂ projectâsÂ administrativeÂ efficiencyÂ inÂ implementingÂ theÂ projectÂ cannotÂ beÂ assessed\.Â ProjectÂ managementÂ costsÂ hadÂ beenÂ estimatedÂ toÂ beÂ $5\.21Â millionÂ includingÂ $3\.14Â millionÂ fromÂ theÂ loan,Â butÂ theÂ fourÂ PMUsÂ didÂ notÂ individuallyÂ trackÂ theirÂ actualÂ costsÂ forÂ implementingÂ theirÂ components\.42Â Â 5\.7 TheÂ ratingÂ forÂ efficiencyÂ isÂ modestÂ dueÂ toÂ theÂ absenceÂ ofÂ analysisÂ onÂ theÂ costsÂ andÂ benefitsÂ associatedÂ withÂ ComponentsÂ A,Â B,Â andÂ DÂ andÂ theÂ discrepanciesÂ inÂ theÂ dataÂ usedÂ inÂ theÂ economicÂ analysisÂ forÂ ComponentÂ C\.Â 6\. Ratings Outcome 6\.1 TheÂ projectâsÂ developmentÂ objectiveÂ wasÂ relevantÂ toÂ countryÂ conditions,Â toÂ theÂ governmentâsÂ strategiesÂ atÂ appraisal,Â andÂ toÂ theÂ WorldÂ BankâsÂ CASÂ inÂ effectÂ whenÂ theÂ projectÂ started\.Â AlthoughÂ theÂ projectÂ remainedÂ relevantÂ toÂ countryÂ conditionsÂ duringÂ itsÂ implementation,Â theÂ relevanceÂ toÂ theÂ WorldÂ BankâsÂ andÂ theÂ governmentâsÂ prioritiesÂ diminishedÂ considerablyÂ soonÂ afterÂ theÂ projectÂ startedÂ (seeÂ sectionÂ 2\.6)\.Â 6\.2 DespiteÂ aÂ weakÂ andÂ overlyÂ complexÂ projectÂ design,Â theÂ projectÂ financedÂ severalÂ outputsÂ thatÂ modestlyÂ contributedÂ toÂ theÂ reductionÂ ofÂ disasterârelatedÂ vulnerabilities\.Â TheseÂ includedÂ theÂ seismicÂ retrofittingÂ ofÂ 44Â publicÂ buildings,Â floodÂ protectionÂ measuresÂ atÂ 10Â sites,Â andÂ theÂ rehabilitationÂ ofÂ 7Â damsÂ atÂ riskÂ ofÂ failure\.Â 6\.3 EfficacyÂ wasÂ underminedÂ becauseÂ theÂ projectÂ didÂ notÂ consistentlyÂ targetÂ sitesÂ withÂ theÂ greatestÂ vulnerabilities\.Â MeasurementÂ wasÂ alsoÂ aÂ challenge\.Â TheÂ projectÂ didÂ notÂ includeÂ outcomeÂ indicatorsÂ thatÂ couldÂ causallyÂ connectÂ theÂ outputsÂ toÂ theÂ objectiveÂ ofÂ reducedÂ vulnerability\.Â CriticalÂ technicalÂ capacityÂ buildingÂ wasÂ notÂ achievedÂ asÂ evidencedÂ byÂ theÂ lackÂ ofÂ applicationÂ ofÂ theÂ EMIS\.Â TheÂ projectÂ didÂ mitigateÂ risksÂ relatedÂ toÂ toxicÂ pollutantsÂ fromÂ mineÂ spillsÂ enteringÂ theÂ DanubeÂ RiverÂ andÂ theÂ BlackÂ Sea\.Â TheÂ latterÂ wasÂ achievedÂ atÂ aÂ muchÂ lowerÂ costÂ thanÂ hadÂ beenÂ anticipated\.Â TheÂ projectÂ alsoÂ contributedÂ toÂ theÂ creationÂ ofÂ aÂ lowâcostÂ insuranceÂ schemeÂ toÂ coverÂ lossesÂ dueÂ toÂ RomaniaâsÂ mostÂ commonÂ naturalÂ disasters\.Â PenetrationÂ ratesÂ areÂ lowerÂ thanÂ desired,Â butÂ thisÂ isÂ notÂ anÂ outcomeÂ forÂ whichÂ theÂ WorldÂ BankÂ bearsÂ responsibility\.Â 20 Â 6\.4 TheÂ projectâsÂ efficiencyÂ isÂ uncertainÂ dueÂ toÂ questionsÂ aboutÂ theÂ validityÂ ofÂ theÂ dataÂ usedÂ andÂ theÂ WorldÂ BankâsÂ decisionÂ notÂ toÂ conductÂ anyÂ economicÂ analysisÂ ofÂ threeÂ projectÂ components\.Â 6\.5 Overall,Â theÂ projectâsÂ outcomeÂ isÂ ratedÂ asÂ moderatelyÂ unsatisfactory\.Â Risk to Development Outcome 6\.6 TheÂ EMISÂ remainsÂ largelyÂ unused;Â itÂ hasÂ yetÂ toÂ serveÂ wellÂ theÂ purposesÂ forÂ whichÂ itÂ isÂ intended\.Â Furthermore,Â theÂ lackÂ ofÂ followâonÂ trainingÂ onÂ theÂ system,Â itsÂ agingÂ equipment,Â andÂ itsÂ outdatedÂ softwareÂ imperilÂ theÂ systemâsÂ value\.Â 6\.7 PAID,Â theÂ catastropheÂ riskÂ insurance,Â coversÂ lessÂ thanÂ oneÂ inÂ fiveÂ households\.Â ConcernÂ existsÂ aboutÂ itsÂ continuedÂ viabilityÂ inÂ theÂ faceÂ ofÂ theÂ CatÂ DDO,Â whichÂ theÂ WorldÂ BankÂ providedÂ inÂ 2018\.Â PAIDÂ helpsÂ toÂ reduceÂ theÂ governmentâsÂ contingentÂ liabilityÂ byÂ transferringÂ highlyÂ concentratedÂ catastropheÂ riskÂ toÂ theÂ internationalÂ reinsuranceÂ andÂ capitalÂ marketsÂ and,Â inÂ turn,Â reducesÂ RomaniaâsÂ economicÂ vulnerabilities\.Â SomeÂ BankÂ staffÂ argueÂ thatÂ theÂ CatÂ DDOÂ doesÂ theÂ opposite;Â itÂ retainsÂ thisÂ riskÂ withinÂ RomaniaÂ whileÂ ignoringÂ theÂ willingnessÂ ofÂ internationalÂ reinsuranceÂ marketsÂ toÂ acceptÂ theÂ risk\.Â 6\.8 TheÂ PADÂ hadÂ statedÂ thatÂ theÂ projectÂ wouldÂ enhanceÂ theÂ governmentâsÂ institutionalÂ capacityÂ toÂ beÂ betterÂ preparedÂ forÂ naturalÂ disasters\.Â AtÂ appraisalÂ theÂ WorldÂ BankÂ hadÂ alsoÂ predictedÂ thatÂ theÂ existingÂ levelÂ ofÂ scientificÂ andÂ technicalÂ expertiseÂ inÂ RomaniaÂ providedÂ assuranceÂ thatÂ theÂ projectâsÂ benefitsÂ wouldÂ notÂ onlyÂ beÂ sustainedÂ butÂ furtherÂ advancedÂ inÂ theÂ future\.43Â DespiteÂ theseÂ claims,Â theÂ WorldÂ BankÂ concludedÂ inÂ 2018Â thatÂ theÂ currentÂ policy,Â legal,Â institutionalÂ environmentÂ isÂ exacerbatingÂ theÂ lossesÂ associatedÂ withÂ naturalÂ disasters\.Â TheÂ WorldÂ BankÂ furtherÂ notedÂ persistentÂ underfundingÂ forÂ floodÂ protectionÂ andÂ aÂ lackÂ ofÂ investmentÂ inÂ seismicÂ riskÂ reductionÂ inÂ theÂ buildingÂ sector\.44Â ManyÂ ofÂ theÂ problemsÂ identifiedÂ inÂ 2004Â thusÂ remain\.Â ThereÂ isÂ alsoÂ littleÂ evidenceÂ thatÂ theÂ institutionalÂ capacityÂ andÂ knowledgeÂ theÂ governmentÂ gainedÂ duringÂ theÂ projectÂ hasÂ benefittedÂ theÂ privateÂ sectorâsÂ capacityÂ forÂ emergencyÂ preparednessÂ orÂ responseÂ inÂ theÂ eventÂ ofÂ anÂ earthquake\.45Â 6\.9 TheÂ riskÂ toÂ developmentÂ outcomeÂ isÂ ratedÂ asÂ significant\.Â Â Bank Performance Quality at Entry 6\.10 SuitableÂ specialistsÂ wereÂ involvedÂ inÂ theÂ projectâsÂ preparation,Â andÂ theyÂ wereÂ providedÂ withÂ adequateÂ resourcesÂ inÂ termsÂ ofÂ budgetÂ andÂ time\.Â WhenÂ theÂ projectÂ beganÂ itsÂ taskÂ teamÂ leaderÂ wasÂ basedÂ inÂ WashingtonÂ butÂ soonÂ changedÂ toÂ aÂ wellârespectedÂ RomanianÂ staffÂ memberÂ basedÂ inÂ Bucharest\.Â ThisÂ wasÂ aÂ positiveÂ developmentÂ inÂ termsÂ ofÂ 21 Â theÂ HRMEPâsÂ dayâtoâdayÂ managementÂ andÂ fortuitousÂ asÂ wellÂ becauseÂ thisÂ teamÂ leaderÂ remainedÂ withÂ theÂ projectÂ untilÂ itsÂ completionÂ inÂ 2012\.Â 6\.11 TheÂ WorldÂ BankÂ overestimatedÂ theÂ projectâsÂ readinessÂ forÂ implementation\.Â TheÂ WorldÂ BankÂ assertedÂ atÂ appraisalÂ thatÂ completedÂ designsÂ wereÂ availableÂ forÂ theÂ retrofittingÂ ofÂ 23Â publicÂ buildings\.Â InÂ contrast,Â theÂ WorldÂ BankÂ concludedÂ thatÂ onlyÂ oneÂ incompleteÂ designÂ existedÂ whenÂ theÂ projectÂ started\.46Â TheÂ costÂ ofÂ theÂ constructionÂ worksÂ andÂ theÂ timeÂ neededÂ forÂ completionÂ ofÂ severalÂ tasksÂ wasÂ significantlyÂ underestimated\.Â TheÂ WorldÂ BankÂ projectedÂ thatÂ allÂ theÂ tasksÂ associatedÂ withÂ ComponentÂ AÂ wouldÂ beÂ completedÂ withinÂ threeÂ andÂ oneâhalfÂ years,Â afterÂ whichÂ timeÂ theÂ PMUÂ wouldÂ ceaseÂ operations\.47Â WhenÂ theÂ projectÂ endedÂ afterÂ almostÂ eightÂ yearsÂ (andÂ afterÂ twoÂ extensions)Â theÂ PMUÂ wasÂ stillÂ inÂ operationÂ andÂ notÂ allÂ ofÂ itsÂ tasksÂ hadÂ beenÂ completed\.Â Â 6\.12 TheÂ projectâsÂ multihazardÂ approachÂ addedÂ complexity,Â causedÂ projectÂ fundsÂ toÂ beÂ spreadÂ tooÂ thinlyÂ acrossÂ moreÂ thanÂ 60Â projectÂ sites,Â andÂ createdÂ aÂ complexÂ implementationÂ structure\.Â FourÂ PMUsÂ wereÂ deemedÂ necessaryÂ toÂ matchÂ theÂ organizationalÂ responsibilitiesÂ ofÂ theÂ fourÂ ministriesÂ involvedÂ withÂ theÂ project\.Â 6\.13 AnÂ overlyÂ detailedÂ projectedÂ budgetÂ didÂ notÂ appropriatelyÂ allocateÂ resourcesÂ amongÂ theÂ fourÂ components\.Â OneÂ BankÂ officialÂ deemedÂ theÂ loanâsÂ disbursementÂ scheduleÂ toÂ beÂ âextremelyÂ andÂ unusuallyÂ fragmented\.âÂ TheÂ actualÂ expenditureÂ forÂ reducingÂ theÂ risksÂ ofÂ miningÂ accidentsÂ inÂ theÂ TiszaÂ BasinÂ wereÂ aboutÂ 70Â percentÂ lowerÂ thanÂ hadÂ beenÂ projectedÂ dueÂ toÂ overestimationÂ ofÂ theÂ costsÂ andÂ theÂ withdrawalÂ ofÂ aÂ highâ riskÂ siteÂ fromÂ theÂ projectÂ whenÂ itÂ wasÂ transferredÂ toÂ privateÂ ownership\.48Â TheÂ costsÂ forÂ strengtheningÂ emergencyÂ managementÂ wereÂ 35Â percentÂ higherÂ thanÂ hadÂ beenÂ projectedÂ dueÂ toÂ aÂ miscalculationÂ ofÂ theÂ timeÂ neededÂ toÂ achieveÂ itsÂ objectivesÂ andÂ theÂ higherâthanâ expectedÂ costsÂ forÂ completingÂ theÂ EMIS\.Â ReallocatingÂ resourcesÂ wasÂ cumbersome,Â timeÂ consuming,Â andÂ requiredÂ cabinetâlevelÂ approvalÂ asÂ wellÂ asÂ fourÂ restructuringsÂ ofÂ theÂ project\.Â Â Â 6\.14 TheÂ qualityÂ atÂ entryÂ isÂ ratedÂ asÂ moderatelyÂ unsatisfactory\.Â Quality of Supervision 6\.15 OverÂ theÂ lifeÂ ofÂ theÂ projectÂ theÂ WorldÂ BankÂ completedÂ moreÂ thanÂ 20Â supervisionÂ missionsÂ toÂ reviewÂ theÂ statusÂ ofÂ theÂ projectâsÂ implementationÂ andÂ itsÂ financialÂ managementÂ andÂ toÂ identifyÂ issuesÂ thatÂ neededÂ theÂ governmentâsÂ orÂ theÂ PMUsâÂ attention\.Â TheÂ missionsÂ typicallyÂ ledÂ toÂ lengthyÂ summaryÂ reportsÂ onÂ theÂ statusÂ ofÂ allÂ projectÂ activities\.Â AÂ midtermÂ reviewÂ wasÂ completedÂ inÂ lateÂ 2007\.Â 6\.16 TheÂ reportsÂ wereÂ comprehensiveÂ andÂ candidÂ aboutÂ theÂ projectâsÂ strengthsÂ andÂ weaknesses,Â especiallyÂ theÂ latterÂ duringÂ theÂ HRMEPâsÂ earlyÂ andÂ middleÂ years\.Â AsÂ 22 Â alreadyÂ discussed,Â theÂ projectÂ encounteredÂ multipleÂ delays,Â problemsÂ withÂ procurement,Â understaffingÂ ofÂ theÂ PMUs,Â andÂ situationsÂ inÂ whichÂ agreedâcriteriaÂ forÂ constructionÂ worksÂ wereÂ notÂ followed\.Â EachÂ ofÂ theseÂ situationsÂ providedÂ opportunitiesÂ forÂ supervisoryÂ proactivity\.Â ThatÂ traitÂ wasÂ notÂ alwaysÂ apparent\.Â ThereÂ isÂ limitedÂ evidenceÂ thatÂ RomaniaâsÂ membershipÂ inÂ theÂ EUÂ causedÂ theÂ WorldÂ BankÂ toÂ reconsiderÂ theÂ projectâsÂ approaches,Â itsÂ objectives,Â orÂ theÂ governmentâsÂ alternativeÂ sourcesÂ ofÂ funding\.Â 6\.17 ThroughÂ theÂ projectâsÂ firstÂ thirdÂ (orÂ 24Â months),Â lessÂ thanÂ 4Â percentÂ ofÂ theÂ loanÂ hadÂ beenÂ disbursedÂ (andÂ lessÂ thanÂ 8Â percentÂ atÂ theÂ projectâsÂ originalÂ midpoint)\.Â AnÂ extensionÂ ofÂ theÂ projectâsÂ completionÂ dateÂ appearedÂ unavoidableÂ asÂ earlyÂ asÂ 2006,Â butÂ theÂ firstÂ ofÂ twoÂ extensionsÂ wasÂ notÂ initiatedÂ untilÂ 2009\.49Â TheÂ firstÂ reallocationÂ ofÂ resourcesÂ didÂ notÂ occurÂ untilÂ DecemberÂ 2010Â (seeÂ sectionÂ 2\.15),Â butÂ theÂ needÂ forÂ reallocationÂ hadÂ beenÂ identifiedÂ lessÂ thanÂ sixÂ monthsÂ afterÂ theÂ projectÂ began\.Â TheÂ PMUsÂ wereÂ continuallyÂ understaffed\.Â TheÂ WorldÂ BankÂ oftenÂ informedÂ theÂ governmentÂ ofÂ thisÂ concernÂ butÂ wasÂ seeminglyÂ unsuccessfulÂ inÂ obtainingÂ theÂ desiredÂ results\.Â 6\.18 TheÂ WorldÂ BankÂ ratedÂ theÂ projectâsÂ implementationÂ asÂ âmoderatelyÂ unsatisfactoryâÂ inÂ midâ2006\.Â InÂ theÂ WorldÂ BankâsÂ judgment,Â aÂ projectÂ isÂ atÂ riskÂ whenÂ aÂ ratingÂ isÂ lessÂ thanÂ âmoderatelyÂ satisfactory\.â50Â ProactiveÂ supervisionÂ isÂ essentialÂ inÂ suchÂ instances\.Â TheÂ WorldÂ BankâsÂ increasedÂ supervisionÂ wasÂ onlyÂ partiallyÂ successful\.Â ProblemsÂ withÂ procurementÂ andÂ contractÂ managementÂ wereÂ persistent,Â butÂ theÂ WorldÂ BankâsÂ supervisionÂ wasÂ notÂ completelyÂ successfulÂ inÂ addressingÂ thisÂ problem\.Â Likewise,Â theÂ WorldÂ BankÂ wasÂ notÂ successfulÂ inÂ itsÂ effortsÂ toÂ ensureÂ effectiveÂ coordinationÂ amongÂ theÂ fourÂ PMUsÂ inÂ termsÂ ofÂ monitoringÂ andÂ evaluationÂ (M&E)Â (seeÂ sectionÂ 6\.33)\.Â Â 6\.19 OnceÂ theÂ projectÂ endedÂ theÂ WorldÂ BankÂ hadÂ noÂ furtherÂ roleÂ inÂ ensuringÂ orÂ overseeingÂ completionÂ ofÂ theÂ retrofittingÂ ofÂ eightÂ buildingsÂ forÂ whichÂ workÂ hadÂ startedÂ butÂ leftÂ unfinishedÂ duringÂ theÂ project\.Â TheÂ sameÂ situationÂ existedÂ forÂ severalÂ damsÂ andÂ forÂ theÂ EMIS\.Â Â 6\.20 TheÂ BankâsÂ qualityÂ ofÂ supervisionÂ isÂ ratedÂ asÂ moderatelyÂ unsatisfactoryÂ asÂ isÂ theÂ overallÂ ratingÂ forÂ BankÂ performance\.Â Borrower Performance Government Performance 6\.21 TheÂ governmentÂ stronglyÂ supportedÂ theÂ projectÂ duringÂ preparation\.Â TheÂ projectÂ becameÂ lessÂ ofÂ aÂ priorityÂ asÂ theÂ countryÂ movedÂ towardÂ membershipÂ inÂ theÂ EU\.Â EvidenceÂ ofÂ theÂ transitionâsÂ effectsÂ wasÂ reflectedÂ inÂ lackÂ ofÂ attentionÂ toÂ timelyÂ resolutionÂ ofÂ criticalÂ issuesÂ andÂ insufficientÂ funding,Â support,Â andÂ supervisionÂ byÂ responsibleÂ officialsÂ asÂ wellÂ 23 Â asÂ diminishedÂ interestÂ inÂ BankÂ financing\.Â TheseÂ circumstancesÂ createdÂ problemsÂ forÂ theÂ projectâsÂ timelyÂ implementation\.Â 6\.22 Â TheÂ governmentÂ agreedÂ toÂ establishÂ aÂ projectÂ steeringÂ committeeÂ withÂ representativesÂ ofÂ theÂ keyÂ ministriesÂ asÂ aÂ conditionÂ ofÂ theÂ loanâsÂ effectiveness\.Â ItÂ wouldÂ overseeÂ theÂ projectâsÂ implementation,Â ensureÂ cooperationÂ amongÂ theÂ implementingÂ agencies,Â andÂ resolveÂ criticalÂ issuesÂ thatÂ mightÂ ariseÂ duringÂ implementation\.Â TheÂ governmentÂ missedÂ theÂ deadlineÂ forÂ establishingÂ theÂ committee\.Â OnceÂ theÂ committeeÂ wasÂ establishedÂ itÂ rarelyÂ metÂ inÂ theÂ projectâsÂ initialÂ years\.Â WhenÂ theÂ committeeÂ didÂ meet,Â itÂ oftenÂ limitedÂ itsÂ activitiesÂ toÂ hearingÂ reportsÂ onÂ theÂ projectâsÂ implementationÂ ratherÂ thanÂ guidingÂ andÂ critiquingÂ implementation\.Â Â 6\.23 TheÂ ratingÂ forÂ governmentÂ performanceÂ isÂ moderatelyÂ unsatisfactory\.Â Implementing Agency Performance 6\.24 TheÂ keyÂ tasksÂ includedÂ inÂ theÂ ComponentÂ AÂ âÂ theÂ EMIS,Â PAID,Â andÂ theÂ VranceaÂ earthquakeÂ scenarioÂ âÂ wereÂ notÂ naturallyÂ related\.Â ThisÂ meantÂ theÂ staffÂ expertiseÂ inÂ oneÂ area,Â suchÂ asÂ catastropheÂ insurance,Â wouldÂ likelyÂ beÂ irrelevantÂ toÂ theÂ oversightÂ orÂ managementÂ ofÂ tasksÂ relatedÂ toÂ theÂ EMIS\.Â Furthermore,Â thereÂ wereÂ noÂ naturalÂ synergiesÂ betweenÂ theÂ tasksÂ inÂ thisÂ componentÂ andÂ theÂ constructionârelatedÂ tasksÂ forÂ retrofittingÂ buildingsÂ orÂ theÂ floodâprotectionÂ activities\.Â 6\.25 TheÂ PMUÂ forÂ ComponentÂ BÂ hadÂ toÂ manageÂ relationsÂ withÂ multipleÂ ownersÂ ofÂ theÂ publicÂ buildingsÂ toÂ beÂ retrofitted,Â explainÂ toÂ theseÂ ownersÂ theÂ needÂ forÂ cofinancingÂ forÂ returningÂ theÂ buildingsÂ toÂ functionality,Â andÂ thenÂ manageÂ contractsÂ ofÂ farÂ greaterÂ valueÂ thanÂ theÂ WorldÂ BankÂ hadÂ envisaged\.Â TheÂ costÂ ofÂ returningÂ buildingsÂ toÂ fullÂ functionalityÂ was,Â onÂ average,Â aboutÂ 50Â percentÂ moreÂ thanÂ theÂ costÂ ofÂ retrofittingÂ them\.51Â UnderstandablyÂ then,Â theÂ ownersÂ orÂ occupantsÂ ofÂ theÂ buildingsÂ wereÂ entitledÂ toÂ theirÂ opinionsÂ âÂ andÂ oftenÂ expressedÂ themÂ âÂ aboutÂ howÂ theÂ PMUÂ shouldÂ manageÂ theÂ singleÂ contractsÂ thatÂ combinedÂ retrofittingÂ andÂ functionality\.Â TheÂ PMUÂ hadÂ insufficientÂ capacityÂ toÂ manageÂ theÂ dualâfunctionÂ contracts\.Â AsÂ oneÂ keyÂ respondentÂ concluded,Â managingÂ suchÂ contractsÂ wasÂ âhorrible\.âÂ Â 6\.26 TheÂ PMUÂ forÂ ComponentÂ CÂ wasÂ initiallyÂ intendedÂ toÂ beÂ inÂ theÂ NationalÂ AdministrationÂ RomanianÂ WatersÂ (NARW)Â (withinÂ theÂ MinistryÂ ofÂ EnvironmentÂ andÂ WaterÂ Management,Â whichÂ subsequentlyÂ becameÂ theÂ MinistryÂ ofÂ EnvironmentÂ andÂ Forests)\.Â DissatisfactionÂ withÂ theÂ NARWâsÂ lackÂ ofÂ performanceÂ ledÂ theÂ WorldÂ BankÂ toÂ recommendÂ thatÂ aÂ PMUÂ beÂ relocatedÂ toÂ theÂ ministry,Â whichÂ itÂ was\.Â AÂ PMUÂ wasÂ thenÂ createdÂ inÂ midâ2006\.Â TheÂ newÂ locationÂ didÂ notÂ solveÂ allÂ theÂ problems\.Â TwoÂ yearsÂ laterÂ theÂ WorldÂ BankÂ expressedÂ concernsÂ aboutÂ flawsÂ inÂ theÂ PMUâsÂ procurementÂ andÂ poorÂ communicationsÂ withÂ WorldÂ BankÂ staff\.Â 24 Â 6\.27 TheÂ PMUÂ forÂ ComponentÂ DÂ wasÂ alsoÂ challenged\.Â LessÂ thanÂ aÂ yearÂ intoÂ theÂ projectÂ theÂ WorldÂ BankÂ deemedÂ theÂ componentÂ toÂ beÂ atÂ riskÂ dueÂ toÂ theÂ absenceÂ ofÂ anyÂ managementÂ fromÂ theÂ NationalÂ AgencyÂ forÂ MineralÂ ResourcesÂ (NAMR)\.Â InadequateÂ salariesÂ andÂ weakÂ incentivesÂ discouragedÂ suitableÂ levelsÂ ofÂ productivity,Â butÂ theÂ NAMRÂ wasÂ unresponsiveÂ toÂ theÂ WorldÂ BankâsÂ requestÂ thatÂ theseÂ issuesÂ beÂ addressed\.Â Furthermore,Â theÂ WorldÂ BankÂ expressedÂ concernÂ aboutÂ theÂ PMUâsÂ technicalÂ expertiseÂ andÂ poorÂ andÂ inadequateÂ supervisionÂ ofÂ consultants\.Â 6\.28 TheÂ ratingÂ forÂ implementingÂ agencyÂ performanceÂ isÂ moderatelyÂ unsatisfactoryÂ andÂ moderatelyÂ unsatisfactoryÂ forÂ borrowerÂ performance\.Â Monitoring and Evaluation Design 6\.29 IndicatorsÂ wereÂ insufficientÂ toÂ demonstrateÂ achievementÂ ofÂ theÂ projectâsÂ intendedÂ outcomes,Â andÂ theÂ social/economic/environmentalÂ languageÂ fromÂ theÂ PDOÂ wasÂ notÂ wellÂ reflectedÂ inÂ theÂ selectionÂ ofÂ indicators\.Â 6\.30 TheÂ projectÊ¹sÂ M&EÂ systemÂ includedÂ fiveÂ outcomeÂ indicatorsÂ forÂ theÂ PDO,Â twoÂ outcomeÂ indicatorsÂ forÂ theÂ GEFâsÂ globalÂ objective,Â andÂ tenÂ intermediateÂ outcomeÂ indicators\.Â TheÂ indicatorsÂ wereÂ intendedÂ toÂ monitorÂ theÂ implementationÂ progressÂ ofÂ eachÂ component,Â butÂ theyÂ didÂ notÂ suitablyÂ measureÂ progressÂ inÂ reducingÂ vulnerabilitiesÂ toÂ naturalÂ disasters\.Â Â 6\.31 ThereÂ wereÂ incompleteÂ measuresÂ forÂ someÂ indicators\.Â TheÂ firstÂ PDOâlevelÂ indicatorÂ addressedÂ theÂ strengtheningÂ ofÂ institutionalÂ andÂ technicalÂ capacityÂ forÂ emergencyÂ managementÂ andÂ response,Â butÂ notÂ aÂ reductionÂ inÂ vulnerabilities\.Â TheÂ targetÂ wasÂ theÂ installationÂ ofÂ EMISÂ softwareÂ andÂ equipmentÂ atÂ 23Â sites\.52Â ProvidingÂ softwareÂ andÂ equipmentÂ isÂ notÂ equivalentÂ toÂ increasingÂ capacity\.Â 6\.32 TheÂ PMUÂ forÂ ComponentÂ BÂ wasÂ assignedÂ responsibilityÂ forÂ overallÂ coordinationÂ andÂ reporting,Â includingÂ consolidationÂ ofÂ implementationÂ progressÂ reportsÂ fromÂ theÂ otherÂ threeÂ PMUs\.Â TheÂ PADÂ notedÂ thatÂ theÂ fourÂ PMUsÂ wouldÂ hireÂ monitoringÂ andÂ evaluationÂ specialistsÂ toÂ conductÂ periodicÂ reviewsÂ ofÂ theÂ projectâsÂ socialÂ developmentÂ objectivesÂ toÂ ensureÂ thatÂ theÂ objectivesÂ wouldÂ beÂ achieved\.Â Implementation 6\.33 TheÂ fourÂ PMUsÂ collectedÂ monitoringÂ dataÂ asÂ theyÂ wereÂ expectedÂ toÂ doÂ forÂ eachÂ component,Â includingÂ dataÂ onÂ theÂ statusÂ ofÂ implementation\.Â AlthoughÂ theÂ M&EârelatedÂ effortsÂ ofÂ theÂ individualÂ PMUsÂ mightÂ haveÂ beenÂ sufficient,Â submissionsÂ ofÂ theirÂ implementationÂ progressÂ reportsÂ toÂ theÂ PMUÂ forÂ ComponentÂ BÂ wereÂ oftenÂ lateÂ orÂ 25 Â inconsistent\.Â TheÂ WorldÂ BankÂ hadÂ recommendedÂ theÂ creationÂ ofÂ aÂ jointÂ M&EÂ systemÂ overarchingÂ theÂ fourÂ PMUs\.Â AllÂ theÂ participatingÂ agenciesÂ agreed,Â butÂ thereÂ wasÂ noÂ progressÂ inÂ implementingÂ theÂ systemÂ soÂ theÂ ideaÂ wasÂ dropped\.Â Â Use 6\.34 TheÂ projectâsÂ M&EÂ influencedÂ decisionsÂ aboutÂ theÂ reassessmentÂ ofÂ priorityÂ sitesÂ forÂ constructionÂ worksÂ andÂ theÂ selectionÂ ofÂ newÂ sites\.Â Â 6\.35 TheÂ ratingÂ forÂ M&EÂ isÂ modest\.Â Â 7\. Lessons 7\.1 DependingÂ onÂ multiple,Â functionallyÂ independentÂ implementingÂ agenciesÂ forÂ multisectorÂ projectsÂ canÂ increaseÂ complexityÂ withoutÂ providingÂ commensurateÂ benefits\.Â ResponsibilityÂ forÂ reducingÂ theÂ identifiedÂ vulnerabilitiesÂ wasÂ dividedÂ amongÂ fourÂ PMUs,Â eachÂ ofÂ whichÂ wasÂ inÂ aÂ differentÂ agencyÂ orÂ ministry\.Â ThereÂ wereÂ fewÂ reasonsÂ forÂ collaborationÂ amongÂ them\.Â TheÂ projectâsÂ designÂ wasÂ undulyÂ complexÂ andÂ providedÂ fewÂ discernibleÂ benefitsÂ forÂ theÂ projectâsÂ implementation\.Â Â Â 7\.2 Multisectoral,Â multihazardÂ effortsÂ toÂ reduceÂ vulnerabilityÂ toÂ disastersÂ mayÂ notÂ offerÂ synergiesÂ orÂ economiesÂ ofÂ scopeÂ inÂ theÂ absenceÂ ofÂ clearÂ logicalÂ linksÂ betweenÂ activitiesÂ andÂ incentivesÂ forÂ coordinationÂ byÂ theÂ institutionsÂ responsibleÂ forÂ them\.Â TheÂ projectÂ wasÂ unsuccessfulÂ inÂ demonstratingÂ theÂ advantagesÂ ofÂ theseÂ effortsÂ inÂ RomaniaÂ andÂ didÂ notÂ achieveÂ efficienciesÂ inÂ implementationÂ thatÂ hadÂ beenÂ expectedÂ atÂ appraisal\.Â Â SubsequentÂ disasterÂ riskÂ managementÂ projectsÂ inÂ RomaniaÂ areÂ targetingÂ oneÂ sectorÂ atÂ aÂ timeÂ throughÂ aÂ seriesÂ ofÂ projectsÂ approach\.Â 7\.3 InÂ aÂ projectÂ designedÂ toÂ mitigateÂ theÂ riskÂ ofÂ naturalÂ disasters,Â itÂ isÂ essentialÂ thatÂ sitesÂ criticalÂ forÂ vulnerabilityÂ reductionÂ areÂ bothÂ properlyÂ identifiedÂ andÂ systematicallyÂ supportedÂ throughoutÂ theÂ lifeÂ ofÂ aÂ project\.Â AdjustmentsÂ mayÂ beÂ necessary,Â butÂ projectsÂ shouldÂ ensureÂ thatÂ selectivityÂ criteriaÂ areÂ respected\.Â WhenÂ criteriaÂ forÂ prioritizingÂ sitesÂ areÂ notÂ followed,Â theÂ resultÂ mayÂ beÂ aÂ suboptimalÂ allocationÂ ofÂ projectÂ funds\.Â TheÂ WorldÂ BankâsÂ projectÂ appraisalÂ stressedÂ thatÂ theÂ projectÂ wouldÂ focusÂ onÂ highâpriorityÂ measuresÂ andÂ constructionÂ worksÂ capableÂ ofÂ reducingÂ social,Â economic,Â andÂ environmentalÂ vulnerabilities\.Â DespiteÂ thisÂ aim,Â aÂ portionÂ ofÂ theÂ projectâsÂ resourcesÂ wereÂ devotedÂ toÂ sitesÂ withÂ lowerÂ risks\.Â Â 7\.4 WhenÂ supportingÂ structuralÂ retrofits,Â financingÂ onlyÂ theÂ retrofittingÂ andÂ notÂ theÂ costÂ ofÂ returningÂ buildingsÂ toÂ functionalityÂ isÂ likelyÂ toÂ leadÂ toÂ problemsÂ withÂ implementation\.Â SeparatingÂ theÂ sourceÂ ofÂ fundsÂ forÂ retrofittingÂ buildingsÂ fromÂ theÂ fundsÂ forÂ theÂ returnÂ toÂ functionalityÂ wasÂ undesirable,Â especiallyÂ becauseÂ theÂ distinctionÂ wasÂ 26 Â notÂ clearlyÂ communicatedÂ upfrontÂ inÂ theÂ projectÂ appraisalÂ documentÂ orÂ toÂ beneficiaries\.Â TheÂ resultÂ wasÂ thatÂ someÂ highÂ priorityÂ buildingsÂ wereÂ notÂ retrofittedÂ becauseÂ theirÂ ownersÂ wereÂ unableÂ toÂ coverÂ theÂ costÂ ofÂ returnÂ toÂ functionality\.Â 7\.5 WhenÂ thereÂ areÂ opportunitiesÂ toÂ enhanceÂ aÂ governmentâsÂ capacityÂ andÂ toÂ increaseÂ institutionalÂ knowledge,Â theseÂ opportunitiesÂ canÂ usefullyÂ beÂ extendedÂ toÂ theÂ privateÂ andÂ nonprofitÂ sectors\.Â AlthoughÂ theÂ projectÂ hadÂ intendedÂ toÂ enhanceÂ capacityÂ inÂ theÂ privateÂ sector,Â legalÂ barriersÂ limitedÂ theÂ extentÂ toÂ whichÂ thisÂ occurred\.Â 7\.6 EmergencyÂ managementÂ informationÂ systemsÂ areÂ mostÂ usefulÂ whenÂ matchedÂ withÂ theÂ needs,Â capabilities,Â andÂ technologicalÂ capacityÂ ofÂ intendedÂ users\.Â DevelopmentÂ ofÂ theÂ EMISÂ tookÂ farÂ longerÂ thanÂ hadÂ beenÂ anticipated,Â butÂ theÂ endÂ resultÂ hasÂ notÂ fulfilledÂ theÂ needsÂ ofÂ itÂ intendedÂ usersÂ atÂ theÂ localÂ orÂ countyÂ level\.Â 7\.7 EconomicÂ analysisÂ ofÂ individualÂ constructionÂ works,Â asÂ wasÂ theÂ caseÂ withÂ theÂ HRMEP,Â isÂ insufficientÂ andÂ potentiallyÂ misleadingÂ whenÂ theÂ resultsÂ areÂ extrapolatedÂ toÂ theÂ entireÂ projectÂ withoutÂ includingÂ allÂ costsÂ incurredÂ duringÂ implementation\.Â HadÂ theseÂ andÂ otherÂ costsÂ beenÂ includedÂ inÂ theÂ economicÂ analysis,Â theÂ calculatedÂ economicÂ benefitsÂ mightÂ notÂ haveÂ beenÂ asÂ large\.Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 2Â PAD,Â p\.Â 5\.Â 3Â MinistryÂ ofÂ EnvironmentÂ andÂ WaterÂ Management,Â FloodÂ ManagementÂ inÂ Romania:Â PresentÂ andÂ Future,Â noÂ date\.Â AvailableÂ atÂ https://www\.inboâ news\.org/en/file/262113/download?token=_qdFXrlqÂ 4Â WorldÂ Bank,Â HRMEP,Â IdentificationÂ Mission,Â DecemberÂ 5â21,Â 2001\.Â 5Â AÂ tailingsÂ damÂ isÂ usedÂ toÂ storeÂ byproductsÂ ofÂ miningÂ operations\.Â WasteâdumpÂ facilitiesÂ similarlyÂ containÂ theÂ toxicÂ wastesÂ ofÂ miningÂ operations\.Â 6Â TheÂ IEGÂ projectÂ evaluationÂ methodologyÂ makesÂ thisÂ clear:Â âSomeÂ PDOÂ statementsÂ articulateÂ objectivesÂ (i\.e\.Â expectedÂ outcomes)Â butÂ alsoÂ includeÂ componentsÂ orÂ activitiesÂ orÂ outputsÂ contributingÂ toÂ thoseÂ objectives,Â usuallyÂ followingÂ statementsÂ suchÂ asÂ âbyÂ meansÂ of,âÂ âthrough,âÂ orÂ âby\.âÂ InÂ thisÂ case,Â theÂ elementÂ whoseÂ achievementÂ shouldÂ beÂ assessedÂ isÂ onlyÂ theÂ expectedÂ outcomes\.Â Components,Â activities,Â andÂ outputsÂ shouldÂ beÂ factoredÂ intoÂ theÂ resultsÂ chainÂ analysisÂ âÂ inÂ otherÂ words,Â theyÂ mayÂ helpÂ toÂ demonstrateÂ theÂ causalÂ (or,Â atÂ least,Â plausiblyÂ causal)Â relationshipÂ betweenÂ theÂ projectâsÂ interventionsÂ andÂ achievedÂ outcomes\.âÂ 7Â WorldÂ Bank,Â CountryÂ PartnershipÂ Strategy,Â FY06âFY09,Â MayÂ 16,Â 2006;Â CountryÂ PartnershipÂ StrategyÂ forÂ theÂ PeriodÂ JulyÂ 2009âJuneÂ 2013,Â JuneÂ 12,Â 2009,Â p\.Â 33Â andÂ AnnexÂ C,Â p\.Â 13\.Â 8Â BankÂ projectsÂ mustÂ beÂ restructured:Â (i)Â whenÂ aÂ PDOÂ isÂ modifiedÂ orÂ thereÂ areÂ changesÂ inÂ aÂ safeguardÂ categoryÂ (aÂ LevelÂ OneÂ restructuring)Â orÂ (ii)Â whenÂ thereÂ areÂ anyÂ otherÂ projectÂ modifications,Â suchÂ asÂ aÂ reallocationÂ ofÂ resources,Â thatÂ doÂ notÂ changeÂ aÂ projectâsÂ PDOÂ (aÂ LevelÂ TwoÂ restructuring)\.Â 9Â PAD,Â p\.Â 16\.Â 10Â Ibid\.Â Â 27 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 11Â ForÂ example,Â theÂ WorldÂ BankÂ notedÂ thatÂ theÂ projectÂ wouldÂ âsupportÂ theÂ ongoingÂ structuralÂ changesÂ inÂ emergencyÂ managementÂ inÂ RomaniaÂ âÂ especiallyÂ theÂ creationÂ ofÂ effectiveÂ linkagesÂ andÂ coordinationÂ betweenÂ theÂ keyÂ institutionsÂ involvedÂ inÂ disasterÂ managementÂ functions,Â bothÂ atÂ theÂ centralÂ andÂ localÂ levels\.âÂ PAD,Â pÂ 11\.Â 12Â ImplementationÂ CompletionÂ andÂ ResultsÂ ReportÂ (ICR)Â forÂ theÂ HRMEP,Â ReportÂ No\.Â ICRÂ 2384,Â DecemberÂ 27,Â 2012,Â p\.Â 10\.Â 13Â ThisÂ approachÂ meansÂ thatÂ thereÂ areÂ individualÂ PIUsÂ forÂ differentÂ sectorsÂ whereÂ theÂ progressÂ againstÂ oneÂ projectÂ isÂ notÂ affectedÂ byÂ lackÂ ofÂ progressÂ byÂ anotherÂ âÂ andÂ whereÂ theÂ WorldÂ BankÂ canÂ scaleÂ upÂ itsÂ engagementÂ slowlyÂ sectorÂ byÂ sector\.Â 14Â WorldÂ Bank,Â RestructuringÂ PaperÂ onÂ aÂ ProposedÂ ProjectÂ RestructuringÂ ofÂ theÂ HRMEP,Â ReportÂ No\.Â 55569âRO,Â AugustÂ 24,Â 2010\.Â SoonÂ afterÂ theÂ newÂ procedureÂ beganÂ theÂ WorldÂ BankÂ notedÂ overdueÂ paymentsÂ forÂ completedÂ workÂ andÂ nearlyÂ aÂ yearâsÂ delayÂ inÂ theÂ governmentâsâdecisionÂ makingÂ aboutÂ theÂ scope,Â sourceÂ ofÂ financing,Â andÂ timetableÂ ofÂ remainingÂ projectÂ activities\.Â WorldÂ Bank,Â AideÂ Memoire,Â ImplementationÂ SupportÂ Mission,Â MayÂ 5â15,Â 2009\.Â 15Â RelativelyÂ highÂ inflationÂ alsoÂ reducedÂ theÂ purchasingÂ powerÂ ofÂ theÂ compensationÂ ofÂ theÂ PMUsâÂ staff\.Â 16Â WorldÂ Bank,Â AideâMemoire,Â ImplementationÂ SupportÂ Mission,Â MayÂ 21â31,Â 2012\.Â 17Â WorldÂ Bank,Â RestructuringÂ Paper,Â AugustÂ 24,Â 2010\.Â 18Â Ibid\.Â 19Â WorldÂ Bank,Â AideÂ Memoire,Â ProjectÂ SupervisionÂ Mission,Â JanuaryÂ 22â25,Â 2007\.Â 20Â TheseÂ examplesÂ suggestÂ thatÂ someÂ consultantsÂ andÂ contractorsÂ shouldÂ neverÂ haveÂ beenÂ hiredÂ butÂ contextÂ isÂ importantÂ here\.Â TheÂ projectÂ didÂ notÂ alwaysÂ haveÂ aÂ wideÂ choiceÂ ofÂ possibleÂ contractors\.Â SeveralÂ requestsÂ forÂ expressionsÂ ofÂ interestÂ drewÂ eitherÂ noÂ responsesÂ orÂ onlyÂ oneÂ orÂ twoÂ responses\.Â InÂ atÂ leastÂ fourÂ instancesÂ forÂ ComponentÂ BÂ theÂ tenderingÂ processÂ hadÂ toÂ beÂ repeatedÂ forÂ theseÂ reasons\.Â FirmsÂ thatÂ didÂ respondÂ toÂ requestsÂ forÂ expressionsÂ ofÂ interestÂ wereÂ occasionallyÂ unqualified\.Â TheÂ WorldÂ BankÂ alsoÂ concludedÂ thatÂ theÂ PMUÂ forÂ theÂ componentÂ hadÂ insufficientÂ capacityÂ toÂ handleÂ itsÂ largeÂ portfolioÂ ofÂ procurementÂ andÂ technicalÂ activities\.Â 21Â PAD,Â p\.Â 8\.Â 22Â Ibid\.,Â p\.Â 21\.Â TheÂ PADÂ alsoÂ observedÂ thatÂ theÂ emergencyÂ preparednessÂ measuresÂ wouldÂ reduceÂ âlossesÂ andÂ damageÂ toÂ publicÂ andÂ privateÂ assetsÂ occurringÂ asÂ [a]Â resultÂ ofÂ theÂ catastrophicÂ eventsâ¦âÂ 23Â TheÂ PADÂ describedÂ separateÂ tasksÂ for:Â (a)Â upgradingÂ emergencyÂ communicationsÂ atÂ theÂ national,Â regional,Â andÂ localÂ levelsÂ andÂ (b)Â developmentÂ ofÂ anÂ EMIS\.Â WhenÂ theÂ projectÂ wasÂ restructuredÂ inÂ AugustÂ 2010Â theseÂ tasksÂ wereÂ combined\.Â TheÂ newÂ taskÂ wasÂ theÂ implementationÂ ofÂ aÂ modernizedÂ managementÂ informationÂ systemÂ toÂ integrateÂ dataÂ managementÂ andÂ voiceÂ communications\.Â 24Â PAIDÂ website,Â https://www\.paidromania\.ro/hartaâpad\.Â ThereÂ wereÂ 1\.7Â millionÂ policiesÂ inÂ forceÂ asÂ ofÂ DecemberÂ 21,Â 2018\.Â 25Â SeeÂ TheÂ RomanianÂ Journal,Â âPAIDÂ ableÂ toÂ payÂ EURÂ 900Â MÂ inÂ caseÂ ofÂ majorÂ disasterÂ inÂ Romania,âÂ JuneÂ 20,Â 2017\.Â TheÂ articleÂ notedÂ thatÂ theÂ rateÂ ofÂ PAIDâsÂ totalÂ expensesÂ wasÂ theÂ lowestÂ ofÂ allÂ insuranceÂ companiesÂ inÂ RomaniaÂ inÂ 2016\.Â AvailableÂ atÂ https://www\.romaniajournal\.ro/paidâableâ toâpayâeurâ900âmâinâcaseâofâmajorâdisasterâinâromania/;Â SeeÂ alsoÂ MariusÂ DanÂ Gavriletea,Â Â 28 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â âCatastropheÂ riskÂ managementÂ inÂ RomaniaÂ andÂ TransylvaniaâÂ specifics\.Â IssuesÂ forÂ nationalÂ andÂ localÂ administrations,âÂ EconomicÂ ResearchÂ EkonomskaÂ IstraÅ¾ivanja,Â 30:1,Â 761â776,Â 2017\.Â 26Â InterviewÂ withÂ PAIDÂ staff,Â Bucharest,Â NovemberÂ 1,Â 2018\.Â 27Â TheÂ indemnificationÂ ofÂ privateÂ lossesÂ isÂ commonlyÂ prohibitedÂ byÂ law,Â butÂ moneyÂ isÂ fungible\.Â Moreover,Â severalÂ respondentsÂ notedÂ thatÂ localÂ governmentsÂ inÂ RomaniaÂ oftenÂ useÂ publicÂ resourcesÂ toÂ indemnifyÂ privateÂ losses\.Â 28Â PAD,Â p\.Â 52\.Â PriorÂ toÂ appraisal,Â aÂ governmentÂ assessmentÂ hadÂ identifiedÂ 1,100Â schools,Â 128Â universityÂ buildings,Â andÂ 65Â hospitalsÂ asÂ beingÂ atÂ riskÂ ofÂ damageÂ dueÂ toÂ earthquakes\.Â TheÂ 84Â structuresÂ chosenÂ forÂ retrofittingÂ thusÂ representedÂ onlyÂ aÂ smallÂ fractionÂ ofÂ theÂ buildingsÂ thatÂ wouldÂ benefitÂ fromÂ retrofitting\.Â PAD,Â p\.Â 6\.Â 29Â Ibid\.,Â p\.Â 8\.Â 30Â WorldÂ Bank,Â AideÂ Memoire,Â ImplementationÂ SupportÂ Mission,Â OctoberÂ 25âNovemberÂ 5,Â 2010\.Â TheÂ GIESÂ buildingÂ hadÂ legalÂ problemsÂ ofÂ ownershipÂ thatÂ wereÂ notÂ resolvedÂ untilÂ 2009\.Â Furthermore,Â theÂ feasibilityÂ studyÂ andÂ technicalÂ designÂ forÂ theÂ retrofittingÂ hadÂ beenÂ rejectedÂ atÂ reviewÂ stage,Â andÂ thisÂ triggeredÂ aÂ technicalÂ disputeÂ thatÂ lastedÂ fourÂ yearsÂ andÂ requiredÂ redesign\.Â NewÂ designsÂ wereÂ availableÂ onlyÂ inÂ 2011,Â tooÂ lateÂ forÂ procurementÂ andÂ implementationÂ ofÂ theÂ retrofitting\.Â 31Â AÂ WorldÂ BankÂ supervisionÂ inÂ JuneÂ 2006Â incorrectlyÂ declaredÂ thatÂ theÂ projectâsÂ designÂ hadÂ âemphasizedÂ theÂ needÂ forÂ beneficiaryÂ cofinancingÂ toÂ coverÂ theÂ worksÂ notÂ eligibleÂ forÂ projectÂ financing\.âÂ WorldÂ Bank,Â AideÂ Memoire,Â SupervisionÂ Mission,Â JuneÂ 26â30,Â 2006\.Â 32Â WorldÂ Bank,Â AideÂ Memoire,Â ImplementationÂ SupportÂ Mission,Â NovemberÂ 9â18,Â 2011\.Â 33Â WorldÂ Bank,Â AideÂ Memoire,Â ImplementationÂ SupportÂ Mission,Â MayÂ 21â31,Â 2012\.Â 34Â PAD,Â p\.Â 55\.Â 35Â ICRÂ forÂ theÂ HRMEP,Â ReportÂ No\.Â ICRÂ 2384,Â DecemberÂ 27,Â 2012,Â p\.Â viii\.Â 36Â DesignsÂ orÂ feasibilityÂ studiesÂ wereÂ completedÂ forÂ theÂ rehabilitationÂ ofÂ sixÂ dams,Â butÂ thenÂ notÂ subsequentlyÂ used\.Â 37 Â WorldÂ Bank,Â ImplementationÂ StatusÂ andÂ ResultsÂ Report,Â HRMEP,Â JuneÂ 26,Â 2012\.Â 38 Â ThisÂ situationÂ andÂ theÂ WorldÂ BankâsÂ approachÂ toÂ DRMÂ inÂ RomaniaÂ changedÂ inÂ 2018\.Â TheÂ WorldÂ BankÂ providedÂ aÂ $60Â millionÂ loanÂ inÂ thatÂ yearÂ forÂ strengtheningÂ DRMÂ inÂ Romania\.Â AdditionalÂ loansÂ forÂ DRMÂ willÂ follow\.Â TheÂ loansÂ willÂ aimÂ forÂ aÂ multisectoralÂ approachÂ butÂ recognizeÂ thatÂ coordinationÂ acrossÂ ministriesÂ (orÂ evenÂ agenciesÂ withinÂ aÂ singleÂ ministry)Â isÂ problematicÂ becauseÂ ofÂ theirÂ distinctÂ mandates\.Â HenceÂ theÂ WorldÂ BankÂ isÂ usingÂ aÂ seriesâofâ projectsÂ approachÂ (ratherÂ thanÂ anÂ approachÂ thatÂ combinesÂ distinctÂ hazardsÂ inÂ aÂ singleÂ project)Â togetherÂ withÂ broadÂ policyÂ reformsÂ andÂ advisoryÂ services\.Â TheÂ loansÂ willÂ relyÂ onÂ individualÂ projectÂ implementationÂ units\.Â ThisÂ willÂ avoidÂ aÂ situationÂ inÂ whichÂ progressÂ inÂ oneÂ projectÂ mightÂ sufferÂ fromÂ lackÂ ofÂ progressÂ inÂ another\.Â ThisÂ approachÂ willÂ alsoÂ allowÂ theÂ governmentÂ toÂ increaseÂ itsÂ attentionÂ toÂ DRMÂ slowlyÂ sectorÂ byÂ sector\.Â TheÂ initialÂ loanâsÂ objectiveÂ isÂ toÂ enhanceÂ theÂ resilienceÂ ofÂ criticalÂ disasterÂ andÂ emergencyÂ responseÂ facilitiesÂ andÂ toÂ strengthenÂ theÂ institutionalÂ capacitiesÂ inÂ investmentÂ planningÂ forÂ disasterÂ riskÂ reductionÂ andÂ climateÂ changeÂ adaptation\.Â TheÂ projectÂ seeksÂ toÂ improveÂ theÂ seismicÂ safetyÂ andÂ disasterÂ resilienceÂ ofÂ criticalÂ disasterÂ andÂ emergencyÂ responseÂ buildingsÂ throughÂ investmentsÂ inÂ buildingÂ infrastructure,Â structuralÂ strengthening,Â andÂ modernization\.Â TheÂ projectÂ alsoÂ seeksÂ toÂ enhanceÂ institutionalÂ capacityÂ forÂ Â 29 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â riskÂ reductionÂ andÂ toÂ accelerateÂ riskÂ reductionÂ throughÂ improvedÂ understandingÂ ofÂ disasterÂ andÂ climateÂ risksÂ inÂ Romania\.Â 39Â TheseÂ benefitsÂ wereÂ calculatedÂ asÂ avoidedÂ floodÂ damageÂ toÂ assetsÂ overÂ theÂ lifeÂ ofÂ theÂ constructionÂ worksÂ andÂ wereÂ estimatedÂ usingÂ aÂ lossâprobabilityÂ functionÂ basedÂ onÂ dataÂ collectedÂ fromÂ theÂ projectÂ area\.Â 40Â TheÂ WorldÂ BankâsÂ identificationÂ missionÂ inÂ DecemberÂ 2001Â statedÂ thatÂ buildingsÂ wouldÂ beÂ âretrofittedÂ ifÂ provenÂ economicallyÂ justifiable\.âÂ Â Â 41Â PAD,Â pp\.Â 8Â andÂ 52Â forÂ ComponentÂ BÂ andÂ p\.Â 9Â forÂ ComponentÂ D\.Â 42Â WithÂ theÂ exceptionÂ ofÂ aÂ procurementÂ specialist,Â theÂ hostÂ agencyÂ financedÂ theÂ projectÂ managementÂ costsÂ forÂ theÂ PMUÂ forÂ ComponentÂ C\.Â Â Â 43Â PAD,Â pp\.Â 11Â andÂ 34\.Â 44Â WorldÂ Bank,Â FromÂ UnevenÂ GrowthÂ toÂ InclusiveÂ Development:Â RomaniaâsÂ PathÂ toÂ SharedÂ Prosperity,Â 2018,Â pp\.Â 55,Â 61â62\.Â 45 Â RomaniaâInsider\.com,Â â40Â YearsÂ afterÂ theÂ GreatÂ EarthquakeÂ ofÂ 1977,Â BucharestÂ IsÂ NotÂ PreparedÂ toÂ WithstandÂ aÂ SimilarÂ Event,âÂ MarchÂ 4,Â 2017\.Â AvailableÂ atÂ https://www\.romaniaâinsider\.com/40â yearsâafterâtheâgreatâearthquakeâofâ1977âbucharestâisânotâpreparedâtoâwithstandâaâsimilarâevent/Â 46Â PAD,Â p\.Â 52:Â theÂ projectÂ willÂ financeÂ âtheÂ reviewÂ ofÂ designsÂ forÂ aboutÂ 23Â objectsÂ forÂ whichÂ designsÂ areÂ alreadyÂ completedÂ byÂ internationalÂ structuralÂ engineeringÂ consultant\.âÂ ICR,Â p\.1:Â âDetailedÂ (butÂ incomplete)Â designsÂ existedÂ onlyÂ forÂ oneÂ building;Â forÂ allÂ otherÂ constructionÂ activities,Â onlyÂ feasibilityÂ studiesÂ hadÂ beenÂ prepared\.âÂ 47Â Ibid\.,Â p\.Â 74\.Â 48Â TheÂ PADÂ hadÂ identifiedÂ RosiaÂ Poiani,Â theÂ secondÂ largestÂ copperÂ mineÂ inÂ Europe,Â asÂ aÂ highârisk,Â highâpriorityÂ siteÂ requiringÂ emergencyÂ action\.Â TheÂ governmentÂ requestedÂ thatÂ projectâfundedÂ remediationÂ activitiesÂ beÂ cancelledÂ whenÂ aÂ privateÂ investorÂ restartedÂ miningÂ operationsÂ andÂ agreedÂ toÂ spendÂ $50Â millionÂ onÂ remediationÂ andÂ environmentalÂ protection\.Â WorldÂ Bank,Â âMidâ TermÂ ReviewÂ Mission,âÂ NovemberÂ 15âDecemberÂ 7,Â 2007\.Â 49Â ExtensionÂ ofÂ aÂ projectâsÂ completionÂ dateÂ isÂ âconsideredÂ aÂ measureÂ ofÂ proactivityÂ onÂ theÂ taskÂ teamâsÂ sideÂ whenÂ carriedÂ outÂ inÂ anÂ appropriateÂ andÂ timelyÂ mannerâÂ (italicsÂ added)\.Â WorldÂ Bank,Â InvestmentÂ ProjectÂ FinancingÂ ImplementationÂ SupportÂ GuidanceÂ Note,Â 2013\.Â 50Â WorldÂ Bank,Â InvestmentÂ ProjectÂ FinancingÂ ImplementationÂ SupportÂ GuidanceÂ Note,Â 2013\.Â 51Â WorldÂ Bank,Â AideÂ Memoire,Â ImplementationÂ SupportÂ Mission,Â MayÂ 21â31,Â 2012\.Â Â 52Â TheÂ valueÂ reportedÂ inÂ theÂ ICRÂ wasÂ 48Â sites\.Â TheÂ systemÂ didÂ notÂ becomeÂ fullyÂ availableÂ forÂ theÂ countiesâÂ useÂ untilÂ earlyÂ 2018\.Â 30 Appendix A\. Basic Data Sheet HazardÂ RiskÂ MitigationÂ andÂ EmergencyÂ PreparednessÂ (IBRDâ47360lÂ TFâ53472)Â Â Table A\.1\. Key Project Data Actual or Current Actual as Percent Appraisal Estimate Estimate of Appraisal Financing ($, millions) ($, millions) Estimate Total project costs 203\.65 174\.83 85\.8 Loan amount 150\.00 138\.45 92\.3 Cofinancing (GEF grant) 7\.00 5\.88 84\.0 Cancellation 6\.68 Table A\.2\. Cumulative Estimated and Actual Disbursements Disbursements Fiscal Year Appraisal Estimate Actual Actual as percent of ($, millions) ($, millions) appraisal FY04 0\.53 0\.1 19% FY05 12\.9 2\.6 20% FY06 47\.42 7\.9 17% FY07 89\.2 26\.3 29% FY08 129\.0 55\.7 43% FY09 150 87\.0 58% FY10 150 102\.0 68% FY11 150 117\.0 78% FY12 150 138\.3 92% Table A\.3\. Project Dates EventÂ OriginalÂ ActualÂ ConceptÂ reviewÂ 3/8/2002Â 3/8/2002Â NegotiationsÂ 3/15/2004Â 3/15/2004Â BoardÂ approvalÂ Â 5/20/2004Â SigningÂ Â 5/26/2004Â EffectivenessÂ 7/1/2004Â 10/20/2004Â ClosingÂ dateÂ 12/31/2009 Â a 6/30/2012Â aÂ TheÂ LoanÂ AgreementÂ identifiedÂ theÂ expectedÂ closingÂ dateÂ asÂ JuneÂ 30,Â 2009\. Â Â Â 31 Â Â Table A\.4\. Staff Time and Cost WorldÂ BankÂ BudgetÂ OnlyÂ StaffÂ timeÂ CostaÂ StageÂ ofÂ ProjectÂ CycleÂ (no\.Â weeks)Â ($,Â thousands)Â LendingÂ Â Â FY04Â 37\.20Â 182\.33Â TotalÂ 37\.20Â 182\.33Â SupervisionÂ orÂ ICRÂ Â Â FY05Â 23\.88Â Â Â 73\.68Â FY06Â 31\.32Â 109\.12Â FY07Â 46\.43Â 134\.68Â FY08Â 41\.70Â 188\.22Â FY09Â 29\.91Â 119\.50Â FY10Â 32\.25Â 139\.28Â FY11Â 26\.02Â Â Â 87\.31Â FY12Â 13\.85Â Â Â 67\.78Â TotalÂ 245\.36Â 919\.57Â Note:Â ICRÂ =Â ImplementationÂ CompletionÂ andÂ ResultsÂ Report\.Â aÂ IncludingÂ travelÂ andÂ consultantÂ costs\.Â 32 Appendix B\. List of Persons Met WorldÂ BankÂ staffÂ TatianaÂ ProskurakoyaÂ Â CountryÂ Manager,Â RomaniaÂ ChristophÂ PuschÂ PracticeÂ Manager,Â SoutheastÂ AsiaÂ ClimateÂ ChangeÂ (andÂ theÂ firstÂ taskÂ teamÂ leaderÂ forÂ theÂ HRMEP)Â EugeneÂ GurenkoÂ Â Â LeadÂ FinancialÂ SectorÂ SpecialistÂ MarcelÂ IonescuâHeriouÂ Â SeniorÂ UrbanÂ SpecialistÂ AlannaÂ SimpsonÂ Â Â SeniorÂ DisasterÂ RiskÂ ManagementÂ SpecialistÂ ElifÂ AyhanÂ Â Â Â SeniorÂ DisasterÂ RiskÂ ManagementÂ SpecialistÂ VicaÂ BogaertsÂ Â Â Â SeniorÂ DisasterÂ RiskÂ ManagementÂ SpecialistÂ TafadzwaÂ DubeÂ Â Â DisasterÂ RiskÂ ManagementÂ SpecialistÂ Â PublicÂ officialsÂ BoniÂ FlorinelaÂ DirectorÂ General,Â InternationalÂ FinancialÂ Relations,Â MinistryÂ ofÂ PublicÂ FinanceÂ DianaÂ BlinduÂ HeadÂ ofÂ Division,Â InternationalÂ FinancialÂ Relations,Â MinistryÂ ofÂ PublicÂ FinanceÂ AuraÂ TudorÂ SeniorÂ Advisor,Â InternationalÂ FinancialÂ Relations,Â MinistryÂ ofÂ PublicÂ FinanceÂ AdelinaÂ CaracosteaÂ MinistryÂ ofÂ InternalÂ AffairsÂ (andÂ formerÂ PMUÂ member,Â ComponentÂ A,Â HRMEP)Â AdrianÂ RadescuÂ Â Â MinistryÂ ofÂ InternalÂ AffairsÂ DanielaÂ MihailaÂ Â Â MinistryÂ ofÂ InternalÂ AffairsÂ DamianÂ MihaiÂ DeputyÂ InspectorÂ General,Â GeneralÂ InspectorateÂ forÂ EmergencyÂ ServicesÂ PetruÂ HurezanuÂ LogisticÂ Specialist,Â GeneralÂ InspectorateÂ forÂ EmergencyÂ ServicesÂ LauraÂ ChiscopÂ ProcurementÂ Expert,Â GeneralÂ InspectorateÂ forÂ EmergencyÂ ServicesÂ BuleaÂ VirgilÂ CommunicationÂ andÂ InformationÂ Technology,Â GeneralÂ InspectorateÂ forÂ EmergencyÂ ServicesÂ DanielÂ DanailaÂ HeadÂ ofÂ NationalÂ Dispatch,Â GeneralÂ InspectorateÂ forÂ EmergencyÂ ServicesÂ DorelÂ DumeÂ DeputyÂ AdjacentÂ General,Â MinistryÂ ofÂ Environment,Â WatersÂ andÂ ForestsÂ 33 Â Â GheorgheÂ TulucÂ DeputyÂ AdjacentÂ General,Â MinistryÂ ofÂ Environment,Â WatersÂ andÂ ForestsÂ BeatriceÂ PopescuÂ MinistryÂ ofÂ Environment,Â WatersÂ andÂ ForestsÂ (andÂ formerÂ Director,Â PMUÂ ComponentÂ C,Â HRMEP)Â AltanÂ AbdulamitÂ Director,Â FloodÂ RiskÂ ManagementÂ andÂ DamÂ SafetyÂ Directorate,Â MinistryÂ ofÂ Environment,Â WatersÂ andÂ ForestsÂ SorinÂ RandasuÂ DirectorÂ forÂ RiskÂ Management,Â RomanianÂ WatersÂ PetrisorÂ MaziluÂ RomanianÂ WatersÂ EgretaÂ BassiÂ RomanianÂ Waters,Â ManeciuÂ DamÂ BragosÂ BarbuÂ RomanianÂ Waters,Â ManeciuÂ DamÂ GheorgheÂ BedreagaÂ RomanianÂ Waters,Â ManeciuÂ DamÂ RoxanaÂ AdamÂ RomanianÂ Waters,Â ManeciuÂ DamÂ GheorgheÂ MocanuÂ RomanianÂ Waters,Â DriduÂ DamÂ MarianaÂ NegroiuÂ RomanianÂ Waters,Â DriduÂ DamÂ BuscaÂ MadalinÂ ChiefÂ ofÂ OperationalÂ Unit,Â InspectorateÂ forÂ EmergencyÂ Situations,Â TeleormanÂ CountyÂ ManeaÂ PompiliuÂ FirstÂ DeputyÂ Chief,Â InspectorateÂ forÂ EmergencyÂ Situations,Â TeleormanÂ CountyÂ TrifuÂ EugenÂ Adjunct,Â InspectorateÂ forÂ EmergencyÂ Situations,Â TeleormanÂ CountyÂ MarianÂ ZlatescuÂ ChiefÂ ofÂ ConsolidationÂ Works,Â RomanianÂ Waters,Â TeleormanÂ CountyÂ DavidÂ ValeriuÂ DanÂ DeputyÂ PrimeÂ Adjutant,Â InspectorateÂ forÂ EmergencyÂ Situations,Â BrasovÂ CountyÂ RiciuÂ CosminÂ DeputyÂ Chief,Â OperationalÂ Controls,Â InspectorateÂ forÂ EmergencyÂ Situations,Â BrasovÂ CountyÂ NanÂ StefanÂ Chief,Â CommunicationsÂ andÂ InformationÂ Technology,Â InspectorateÂ forÂ EmergencyÂ Situations,Â BrasovÂ CountyÂ PomirleanuÂ DorinÂ ChiefÂ Engineer,Â SystemÂ ofÂ WaterÂ Management,Â RomanianÂ Waters,Â BrasovÂ GeorgeÂ SpanuÂ Chief,Â SaceleÂ Dam,Â BrasovÂ CountyÂ AdrianÂ SimteaÂ ChiefÂ Inspector,Â InspectorateÂ forÂ EmergencyÂ Situations,Â CovasnaÂ CountyÂ BorbolyÂ BelaâClaudiuÂ TemporaryÂ Chief,Â OperationalÂ Center,Â InspectorateÂ forÂ EmergencyÂ Situations,Â CovasnaÂ CountyÂ AdrianÂ NastutaÂ DeputyÂ ChiefÂ Inspector,Â InspectorateÂ forÂ EmergencyÂ Situations,Â CovasnaÂ CountyÂ 34 Â Â EliseiÂ DumitruÂ FirstÂ DeputyÂ ofÂ ChiefÂ Inspector,Â InspectorateÂ forÂ EmergencyÂ Situations,Â PrahovaÂ CountyÂ MascoluÂ AlexandruÂ AdjunctÂ ChiefÂ Inspector,Â InspectorateÂ forÂ EmergencyÂ Situations,Â PrahovaÂ CountyÂ ChivuÂ FlorinÂ ChiefÂ Deputy,Â OperationalÂ Center,Â InspectorateÂ forÂ EmergencyÂ Situations,Â PrahovaÂ CountyÂ OthersÂ GabrielÂ IonitaÂ Â Â Â TaskÂ TeamÂ Leader,Â HRMEPÂ StelaÂ PetrescuÂ Â Â Â Director,Â PMUÂ ComponentÂ B,Â HRMEPÂ BeatriceÂ PopescuÂ Director,Â PMUÂ ComponentÂ C,Â HRMEPÂ (andÂ withÂ theÂ MinistryÂ ofÂ Environment,Â WatersÂ andÂ ForestsÂ andÂ formerÂ atÂ theÂ timeÂ ofÂ theÂ review)Â AncaÂ BaciuÂ Â Â Â Director,Â PMUÂ ComponentÂ D,Â HRMEPÂ RaduÂ VacareanuÂ Â Â Rector,Â TechnicalÂ UniversityÂ ofÂ BucharestÂ DanielÂ LunguÂ Professor,Â TechnicalÂ UniversityÂ ofÂ CivilÂ EngineeringÂ MarianÂ MoiceanuÂ Â Â Rector,Â IanÂ MincuÂ UniversityÂ ofÂ ArchitectureÂ HoriaÂ MoldovanÂ Â Â ViceÂ Rector,Â IanÂ MincuÂ UniversityÂ ofÂ ArchitectureÂ ChristinaÂ OlgaÂ GocimanÂ Director,Â UrbanriskÂ NationalÂ ResearchÂ Project,Â IanÂ MincuÂ UniversityÂ ofÂ ArchitectureÂ SorinaâGeorgianaÂ RusuÂ HeadÂ ofÂ CommunicationsÂ andÂ InformationÂ Office,Â IanÂ MincuÂ UniversityÂ ofÂ ArchitectureÂ AlexandruÂ GavozdaÂ President,Â OrdinulÂ ArhitectilorÂ dinÂ RomaniaÂ MarianaÂ IonescuÂ InternationalÂ RelationsÂ Advisor,Â OrdinulÂ ArhitectilorÂ dinÂ RomaniaÂ EduardÂ MirceaÂ Â Â ChiefÂ Engineer,Â SpitalulÂ GrigoreÂ AlexandreÂ SCUÂ MarianÂ RosoiÂ Director,Â FinancialÂ Control,Â SpitalulÂ ClinicÂ deÂ UrgentaÂ BagdasarâArseniÂ AnaÂ MaresÂ Director,Â Nursing,Â SpitalulÂ ClinicÂ deÂ UrgentaÂ BagdasarâArseniÂ JuliaÂ NicolaÂ GeneralÂ InsuranceÂ Specialist,Â NationalÂ AssociationÂ ofÂ InsuranceÂ andÂ ReinsuranceÂ CompaniesÂ inÂ RomaniaÂ Â FlaviusÂ BaiasÂ Dean,Â FacultyÂ ofÂ Law,Â UniversityÂ ofÂ BucharestÂ AncaÂ ContÂ OperationsÂ Director,Â S&TÂ RomaniaÂ VictorÂ GradinescuÂ SolutionÂ Architect,Â S&TÂ RomaniaÂ DanÂ MoraruÂ SoftwareÂ Developer,Â S&TÂ RomaniaÂ GeorgeÂ ConstantinÂ InfrastructureÂ Administrator,Â S&TÂ RomaniaÂ CatalinÂ MititeluÂ CustomerÂ ServiceÂ TeamÂ Lead,Â S&TÂ RomaniaÂ 35 Â Â CojocaruÂ MihaiÂ TeamÂ Lead,Â S&TÂ RomaniaÂ NicoletaÂ RaduÂ DirectorÂ General,Â PAIDÂ NataliaÂ ManÂ DeputyÂ GeneralÂ Manager,Â PAIDÂ DanielÂ McElhennyÂ NationalÂ PreparednessÂ Coordinator,Â U\.S\.Â FederalÂ EmergencyÂ ManagementÂ AgencyÂ Â 36 Â Appendix C\. Borrower Comments Regarding the Report of the Independent Evaluation Group, please have in view that we would ask for the re-evaluation of the ratings, meaning that we support the initial ratings of the project\.Â Â Â Please receive our best regards, Â Â Boni Florinela CUCU General Director International Financial Relations General Directorate Ministry of Public Finance 37 Â Appendix D\. PDO-level Indicators, Targets, and Values Achieved Strengthened institutional and technical capacity for emergency management and emergency response through upgrading communication and information systemsa Original Target, 2004 Revised Target Value, Value Reported, Value during PPAR October 2009 December 2012 mission, 2018 --Modernized --EMIS installed in 23 --EMIS software --System in place at 48 communication and central and local developed and the sites but not available information administration system is ready to be for use at county level management systems institutions involved in used in real mode at 48 until 2018\. Practical are designed, procured, emergency sites after final value of the system at and implemented with a management\. operational acceptance the county level in daily use, national --Program for in 2013, but see next doubt\. coverage, and catastrophe insurance column\. --Catastrophe risk sufficiently staffed of dwellings is --Technical work to insurance program --Conceptual and legal operational support drafting the (PAID) is operational, framework for the legislation and but penetration rate is catastrophe financial institutional building for lower than anticipated\. risk transfer is the insurance program formulated and was completed\. disseminated to key policy makers Increased earthquake risk mitigation with some key, prioritized public facilities retrofitted More than 80 high- Forty high-priority Seismic retrofitting of Seismic retrofitting of priority public facilities public facilities 44 public buildings 44 public buildings are retrofitted to a level retrofitted to protect completed (including 8 completed\. Not all that allows for them from collapse in after project closure)\. these buildings are functioning after an case of a severe About 23,350 people essential for the earthquake of up to 7\.5 earthquake\. working in the buildings countryâs social magnitude\.Â are protected\. functioning\. Increased level of protection against floods of population exposed to high risk of recurrent floods --Nine flood mitigation --Eight flood mitigation Construction works for Construction works for schemes are upgraded schemes upgraded or flood protection flood protection or rehabilitated rehabilitated completed at ten sites, completed at ten sites\. --Three critical Danube --Two critical Danube including two along the Two hundred meters of River areas are River areas are Danube River\. concrete wall at Slanic rehabilitated rehabilitated Protection against collapsed during flood floods provided to over in 2018\. Reconstruction 43,500 people\. required\. Improved dam safety of the selected priority structures Eight large dams and Four large and three Work contracts for Dridu dam not fully five small dams are small dams are increasing the safety of certified as of late 2018\. rehabilitated\. rehabilitated to increase four large and three Project funded only safety\. small dams completed\. phase 1 work at Licenses for operation Sanmihaiu, which was at full capacity issued\. about 30-40 percent of total work required\. Work on phase 2 to begin in 2019\. 38 Â Demonstrate and provide a model for replication for the reduction of the catastrophic accidental spills of transboundary pollution loads from mine operations flowing into the Danube and Black Sea --Gradual reduction in --No spills\. --No spills from mines --no spills from mines number and negative --Significantly improved addressed in project\. addressed with project impacts of mining safety of at least three --Remediation works at funds\. Recurring accidental spills of high risk sites six sites completed\. problems with pollutants [from publicly --Management and Sites no longer pose a monitoring equipment\. owned mines] into the maintenance at level of significant Spillage accident at Tisza Basin and the best practice and environmental risk\. publicly owned Bozanta volume of toxic releases internationally accepted --70 percent target mine in October 2017\. from mines into the performance standards achieved\. --Guidelines and Danube River\. achieved for at least 70 --Seven guidelines for management in place --Improved factors of percent of the inventory tailings dams and waste but effectiveness safety in tailings of mine waste facilities\. facilities developed\. unknown\. facilities and increased Emergency response standards in risk plans completed for awareness and seven types of sites\. emergency preparedness Source: PAD Source: World Bank, Source: World Bank, Source: PPAR field Project Paper, October ICR, December 27, 2012\. mission, 2018\. 26, 2009 a The restructuring of the project in 2010 changed the last few words of the indicator to ââ¦through upgrading the information systems\.â 39	REVIEW
P054462	ï»¿ ICRR 12409 Report Number : ICRR12409 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 06/14/2006 PROJ ID :P054462 Appraisal Actual Project Name :Land Fund Project Project Costs 77\.2 80\.1 US$M ) (US$M) Country :Guatemala Loan/ US$M ) Loan /Credit (US$M) 23\.0 23\.0 Sector (s):Board: ): RDV - Other social US$M ) Cofinancing (US$M) services (54%), Roads and highways (13%), General industry and trade sector (13%), Water supply (12%), Central government administration (8%) L/C Number :L4432 FY ) Board Approval (FY) 99 Partners involved : Closing Date 12/31/2002 06/30/2005 Evaluator : Panel Reviewer : Division Manager : Division : Ridley Nelson Christopher D\. Gerrard Alain A\. Barbu IEGSG 2\. Project Objectives and Components a\. Objectives The development objective of the program, for which the project was the first phase, was to assist the Government of Guatemala to: (a) establish a program to facilitate beneficiaries' access to land; (b) support beneficiaries' access to technical assistance and productive subproject financing; and, (c) improve the legal and institutional framework so that land markets can work more efficiently \.The project was the first phase of an APL \. The objectives of the project were to help government to: (a) facilitate beneficiaries access to land; (b) help beneficiaries to access technical assistance and productive subproject financing; and, (c) initiate improvements to the efficiency of land markets \. Subsequent phases of the APL were to build on the lessons learned \. In the context of the 1996 Peace Accords, the program supported land -related commitments under the Socioeconomic and Agrarian and Indigenous Peoples sub -accords of that agreement\. b\. Components (or Key Conditions in the case of Adjustment Loans ): There were four main components: 1\. Institutional Strengthening (appraisal US$2\.0 million (total project costs); actual US$2\.0 million) supporting mainly FONTIERRAS (the Land Fund Institute) including the project management unit, social communication programs, training, legal research and M&E \. 2\. Community Strengthening (appraisal US$13\.3 million; actual US$ 5\.4 million), providing pre- and post-land purchase services including legal assistance, preparation of investment proposals, facilitating access to financial markets, and technical advice \. 3\. Community Subprojects (appraisal US$9\.7 million; actual US$16\.5 million) providing complementary social and productive infrastructure e \.g\. roads, mills, storage, marketing) to maximize opportunity of diversification \. 4\. Land Purchase and Lease (appraisal US$52\.0 million, actual US$56\.0 million), to finance land purchase and leases including initial grants\. c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Effectiveness was delayed for nearly two years due to the 1999 elections and the transition to the new government \. Largely for this reason, the project took six years to implement and closed two and a half years later than the appraisal projection\. Government financed all of the land purchase component, since the Bank does not finance land purchases\. The cost of the community subprojects component increased to 170% of appraisal estimates, while that of the community strengthening component declined to 41%, largely due to the doubling of the number of farms that were actually transferred in comparison with the appraisal targets (see 4 below)\. 3\. Relevance of Objectives & Design : Consistent with the borrower's priorities, the 1998 CAS gave priority to two main areas: supporting the Peace Accord and reducing poverty and social exclusion \.The objectives and design exhibit high relevance to these Bank and borrower priorities, in particular because of the central importance of the quite specific Peace Accord commitments \. 4\. Achievement of Objectives (Efficacy) : Achievement of the objective of facilitating beneficiary access to land was substantial \. The target population for this first APL phase was 7,500 families\. This was exceeded by over 100% with 15,487 families benefiting\. 71,371 hectares of land was distributed \. Average time elapsed from acceptance of an application to disbursement was 540 days\. With respect to the poverty element of the objective, more than 30% of beneficiaries were indigenous and more than 11% were female-headed households\. In pursuit of this outcome, the first Land Fund was established \. Achievement of the objective of supporting beneficiaries access to TA and productive subproject financing was, on balance, substantial , but with qualification \. Outcomes in terms of actual productivity increases were not yet evident when the project closed\. Given the need to focus on basic needs and the need to restore abandoned land, this might be expected since such processes take time \. However, the technical assistance was weak and was delayed \. Access to sub-project financing was achieved \. The project provided 186 groups of beneficiary farmers with legal and technical assistance to establish their status as fromal entities, negotiate with land owners, register their ownership of land purchased, and organize themselves for productive activites and land use planning on their newly acquired farms\. Achievement of the objective of initiating improvements to the efficiency of land markets was modest , as noted in the ICR\. The project supported large-scale processing of land purchases and established databases with some public access\. However, there was increased political intervention, costs were relatively high, and the program was only able to reach a modest share of the demand \. 5\. Efficiency : Efficiency is uncertain at this stage but is rated as modest on the current limited evidence\. Productivity has been slow to increase, partly for reasons given above \. However, the projections for increases in income in the partial economic analysis of the ICR appear optimistic in two of the four cases modelled, calling for about 100% increases in income over debt service over 4 years in one case and about 500% in the other case\. Moreover, there are some questions raised in the ICR about the loan repayment capacity for some farm types \. Increased productivity, even under the better agricultural environments, has been slower than projected in the assessment of the optimistic 23% ERR at appraisal\. However, in assessing this, allowance must be made for the fall in coffee prices which may rebound longer-term\. Finally, the FONTIERRAS program of which this project was a part was perceived by government as costly, suggesting government concern about efficiency, and the government is now seeking a less costly program with increased involvement of commercial banks through guarantee funds \. 6\. M&E Design, Implementation, & Utilization: An M&E system was established and appears to have functioned satisfactorily \. It provided key project performance indicators, including information on cost -effectiveness and the characteristics of project beneficiaries \. It also provided an independent study on the conditions of beneficiaries \. But there was no systematic attempt to assess project impacts\. 7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative): There are some suggestions that land expropriation processes needed improvement \. But there is not enough evidence in the ICR to assess whether any elements of this raise questions about any aspect of project -associated resettlement safeguards\. 8\. Ratings : ICR ICR Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory The more than satisfactory achievement of the first objective offsets the less satisfactory achievements of the second and third objectives\. Institutional Dev \.: Modest Modest The ICR rates this "Satisfactory" in the text, "Substantial" in the Annex ratings, but "Modest" in the summary page ratings (which is the rating quoted here )\. This review finds that the limited evidence as it stands points to Modest, partly due to the association in this case between institutional development and sustainability\. But the project did contribute to the establishment of the legal and implementation framework for land access, and established MIS -based processes, Sustainability : Likely Non-evaluable The APL 2 is not proceeding due to concerns about borrower commitment \. Some households are still in the process of receiving grants and although government has committed, through an Action Plan, to continue support, there remain uncertainties\. The refinancing of the Land Fund is a key to longer -term financial sustainability yet this has not yet been fully addressed and there are outstanding legal issues over contracts \. Furthermore, as noted in the ICR, there was a failure to implement the needed complementary interventions of the Peace Accord including a rural development strategy and transparent policies on expropriation\. All these issues leave doubts about sustainability which has a strong institutional element\. Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \. 9\. Lessons: The ICR offers a number of useful lessons of wider applicability which this review endorses : 1\. The willing seller/willing buyer approach to land redistribution supported by the project needs to be complemented by other policies such as regularization of land ownership, land taxation, and other interventions to create a dynamic market for land in the country \. 2\. Simply providing credit to puchase land is insufficient to increase beneficiaries' incomes \. This should be complemented by technical assistance to raise productivity, especially where extension is weak, and a fixed grant assistance allowing the option to convert some funds from land purchase to productive investments \. 3\. Beneficiaries should have full control of and responsibility for the use of credits and grants\. 4\. Support for basic needs should be carefully assessed and provided for upon the initial settlement of families in the acquired farms in order to free up the use of funds for productive investments\. 5\. Computerized financial management systems are important to avoid excessive demands on staff which increases the risk of errors \. 6\. M&E needs to be in place in advance of implementation and needs to include a focus on project impacts\. 7\. Land market information systems are very challenging and require a well -established and well-financed agency\. 10\. Assessment Recommended? Yes No 11\. Comments on Quality of ICR: The ICR is very clear and the outcomes are well linked to the objectives \. However, it is somewhat less strong on the economic analysis which, alongside sustainability, remains a key question in this project \. The argument that the community strengthening component achieved its objectives is unpersuasive given that less than half the appraisal estimate was spent on this component \.	REVIEW
P004403	ï»¿ ICRR 11794 Report Number : ICRR11794 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 06/08/2004 PROJ ID : P004403 Appraisal Actual Project Name : Cons\. Of Priority Pr Project Costs 22\.85 16\.65 US$M ) (US$M) Country : Philippines Loan/ US$M ) 20\.0 Loan /Credit (US$M) 15\.52 Sector (s): Board: RDV - Forestry Cofinancing (30%), Other domestic and US$M ) (US$M) international trade (25%), Roads and highways (24%), Crops (15%), Other social services (6%) L/C Number : Board Approval 94 FY ) (FY) Partners involved : Closing Date 06/30/2002 06/30/2002 Prepared by : Reviewed by : Group Manager : Group : John English John R\. Heath Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The Conservation of Priority Protected Areas Project (CPPAP), financed by a grant from the Global Environment Trust Fund, was a complement to the Bank -financed Environment and Natural Resources Sector Adjustment Program (ENR-SECAL)\. The CPPAP was to support the GOP's policies for the design and development of a protected areas system to conserve the nation's biodiversity heritage Its objectives were to (i) protect ten areas of high biodiversity value; (ii) improve management of protected areas (PAs) through strengthening the Department of Natural Resources (DENR); (iii) incorporate local people and NGOs into the management structure of PAs, and establish permanent funding mechanisms; (iv) confirm the tenure of indigenous cultural communities; and (v) develop sustainable forms of livelihood consistent with biodiversity conservation\. b\. Components At appraisal the project was defined as having four components : Site development: (25% of total cost): including provision of appropriate levels of staffing and construction of infrastructure in PAs: Resource management: (10% of total cost): including the establishment of a community -based and NGO-supported management structure, development of management plans, mapping, boundary demarcation, and habitat restoration\. Socio-economic management: (49% of total cost): the development of non-destructive livelihood projects in buffer zones and multiple-use areas, supported by community consultation and training : and National coordination, monitoring and technical assistance : (16% of total cost): providing for NGO-based project coordination: monitoring of project implementation, trends in biodiversity inventories, and assessment of management impacts; and technical assistance to individual PAs and to DENR's Protected Areas and Wildlife Bureau (PAWB) At the Mid-Term Review, the components were recast within the original objectives : Protected area planning and management : including mobilizing/organizing PA residents in participative management, strengthening PA management Boards (PAMBs) and Project Implementation Units (PIUs), preparing community oriented PA management plans, PA gazetting, and establishment of the Integrated Protected Areas Fund (IPAF); Biodiversity conservation: including patrolling by staff and communities; information, education and communication support; boundary demarcation, resource assessment and rehabilitation /restoration activities; biodiversity monitoring; and construction of basic infrastructure and installation of equipment; Tenurial security: covering surveys, claims documentation and processing, and issuance of tenurial instruments (TI); Livelihood systems: including the setting up of capital savings and mobilization schemes for organized PA residents, and establishment of mechanisms for use of IPAF; development and implementation of non-destructive livelihood projects with technology and market support, socio -economic profiling, and IEC training and support of livelihood development : and Project management and coordination : covering activities at the PCU level, including program coordinatioon, monitoring and evaluation, fund management, procurement and provision of TA and other assistance from experts and from partners; policy advocacy, lobbying and networking \. The project was jointly implemented by DENR, which is legally responsible for the protected areas, and a non-governmental organization established to implement the project - the NGOs for Integrated Protected Areas Incorporated (NIPA)\. NIPA was to be responsible, in particular, for the implementation of the field operations designed to improve the livelihoods of those living in or near the PAs \. c\. Comments on Project Cost, Financing and Dates Project cost was estimated at appraisal as US$ 22\.85 million, of which US$20\.0 million was to be covered by a grant from the Global Environmental Trust Fund \. Actual project expenditure was US$ 16\.65 million, of which US$15\.52 million was received from the trust fund \. The balance of US$4\.48 million of the grant was cancelled\. 3\. Achievement of Relevant Objectives: Achievement of project objectives was mixed \. Significant progress was made in establishing protection mechanisms for the 10 key sites\. Improvements were made in the capacity of DENR to undertake biodiversity conservation programs\. Community and NGO involvement at the ten sites has been enhanced \. Some progress has been made in improving tenurial arrangements for local indigenous people, but this has been subject to legal delays \. However, achievement in developing sustainable livelihoods (for which almost half of project financing was targeted ) has been minimal\. 4\. Significant Outcomes/Impacts: Protected area planning and management \. Satisfactory management plans have been prepared for all 10 PAs and implementation is underway\. Legal steps necessary to establish the PAs has been completed for four of them and the remainder are ongoing\. All 10 sites have operational PAMBs and are collaborating satisfactorily with the relevant Local Government Units (LGUs)\. All have established IPAFs, and user fees and contributions towards local costs have been collected\. However, operation of the IPAFs has not been entirely satisfactory because of the complex operational arrangements that restrict ease of withdrawal of funds \. Biodiversity conservation\. DENR budgetary constraints have limited its ability to increase staff, but progress has been made\. Non-project Danish TA improved the biodiversity monitoring system for the PAs and significant progress has been made in improving relationships with local communities \. This has led to the establishment of local volunteer brigades to augment work by DENR staff \. Tenurial security\. Limited but important progress was made in strengthening the legal rights of local communities, especially of indigenous peoples (IPs)\. Positive outcomes include the introduction of Community Based Resource Management Agreements for Protected Areas (CBRMA-PAs), participation of IPs in the PAMBs and in PA patrols, and the motivation for the Indigenous Peoples Rights Act, passed in 1997\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Livelihood systems\. There were considerable delays in developing a program and financing of local projects only started in 1998\. The remoteness of several of the areas limited the possibilities but this was compounded by weaknesses in NIPA\. Staff were inexperienced and implementation of those efforts that got going was spotty \. A total of 331 schemes are reported, covering a wide range of activities but the ICR contains no specifics \. Few schemes were successful and, in the aggregate, there is little to show for the effort \. Given the inexperience of the staff one wonders whether too wide a range was not attempted : a footnote the ICR lists 25 different production type projects and 7 other types\. Given the limitations on available skills in a new organization such as NIPA, this seems far too broad, especially as several of the project areas were remote \. Project management and coordination arrangements were weak and the strong implementation partnership between DENR and NIPA never developed \. In particular, financial and procurement management, by NIPA (including accounting, record keeping, monitoring and oversight, was highly unsatisfactory \. Problems included excessive overhead charges on consultant fees, inappropriate contract splitting to avoid due review process, expenditures not consistent with project objectives, and excessive expenditures on unfinished works \. These problems are under review by a special government investigative committee composed of the Departments of Justice, Finance and DENR\. The project was appraised and approved around the time of the Rio environmental conference \. At that time there was great pressure for greater involvement of NGOs in operations, especially in the environmental field \. The Philippines has (and had) an active NGO community and, in retrospect, the Bank was too ready to accept their views that they had the relevant capacities to undertake a major role in a project of this type \. Under the parallel ENR-SECAL the DENR was undertaking similar community level initiatives, apparently with a greater degree of success\. The Bank may be faulted for not having pressed at the CPPAP mid -term review for the role of NIPA to be reduced, with DENR perhaps taking over the livelihood and related operations in and around some of the PAs \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Moderately Progress was made on a number of Unsatisfactory fronts and significant, but limited, development benefits were achieved \. The main failure was in the livelihood support area, at which the largest share of financing was targeted\. The project achieved only some of its major objectives, but with significant environmental benefits\. Institutional Dev \.: Modest Modest Sustainability : Unlikely Unlikely Bank Performance : Unsatisfactory Unsatisfactory Borrower Perf \.: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: The ICR notes a total of 14 lessons, the most generally applicable of which are : Where implementation is to be the responsibility of a non -government agency, care needs to be taken not only in the choice of that agency, but also to ensure that the project design is appropriate for implementation by that agency\. Even if a project is focussed on technical operations, strength of an agency in technical areas is not enough \. Successful project implementation requires strength in management areas including finance, procurement, monitoring and oversight, and technical assistance should be sought if necessary \. Operations that rely heavily on statements of expenditure for reimbursement of a large number of small expenditures in remote locations carry a high risk and require the establishment of appropriate control mechanisms, such as standard documentation, sampling for review and a strong oversight capacity \. 8\. Assessment Recommended? Yes No Why? Should be considered as an input to any study of the effectiveness of the use of NGOs to manage project operations\. 9\. Comments on Quality of ICR: The ICR is generally satisfactory, but would have benefited from more detail on the outcome of the livelihood support component\. This accounted for nearly half of planned expenditure and was adjudged to be highly unsatisfactory and the major reason for the ICR rating the project outcome as unsatisfactory \.	REVIEW
P075995	ï»¿ ICRR 13358 Report Number : ICRR13358 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 05/17/2010 PROJ ID : P075995 Appraisal Actual Project Name : Agricultural Pollution Project Costs (US$M): US$M ): 10\.74 8\.17 Control Gef Project Country : Moldova Loan/ Loan /Credit (US$M ): US$M): 4\.95 4\.95 Sector Board : ARD US$M ): Cofinancing (US$M): 3\.93 1\.52 Sector (s): Irrigation and drainage (30%) General water sanitation and flood protection sector (30%) Central government administration (20%) Agricultural extension and research (10%) Forestry (10%) Theme (s): Pollution management and environmental health (33% - P) Other rural development (33% - P) Water resource management (17% - S) Land administration and management (17% - S) L/C Number : Board Approval Date : 02/26/2004 Partners involved : IDA; Closing Date : 12/31/2009 12/31/2009 Evaluator : Panel Reviewer : Group Manager : Group : John C\. English Robert Mark Lacey IEGSE ICR Reviews IEGSE 2\. Project Objectives and Components: a\. Objectives: Background \. The Moldova Agricultural Pollution Control Project (APCP) was not a self-standing project, but was a complement to the Rural Investment and Services Project (RISP), approved in Fiscal 2002\. The latter was the first phase of a two-phase Adaptable Program Credit and was completed in December, 2005\. The second phase is ongoing\. The main development objective of the RISP was to provide long -term support to accelerate agricultural recovery and growth so that Moldova's agricultural sector could play its full role in providing the underpinnings for future income growth and poverty reduction \. The project supported the development of rural advisory services, rural business development and finance for farmers and small businesses to assist them in obtaining relevant know -how, finance and legal ownership status in a defined region of the country \. Objectives \. The APCP was designed to complement this effort by promoting environment -friendly agricultural production technologies (see Section 3)\. Specifically, the Project Development Objective (PDO), as stated in the PAD, was "to significantly increase the use of mitigation measures by agro -industry and farmers to reduce nutrient discharge into the surface and ground water bodies in Moldova " (PAD pg\. 31-32) The Global Environmental Objective (GEO) was "to reduce, over the long-term, the discharge of nutrients and other agricultural pollutants into the Danube River and the Black Sea \." There is a significant difference between these objectives as will be discussed below \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The project had four components : Promotion of mitigation measures for reducing nutrient loads in water bodies \. (Estimated cost, US$9\.66 million or 90 percent of total cost\. Actual cost, US$6\.85 million, or 84 percent of total)\. This had two elements: (a) Collaboration with business development, rural support services, and rural finance activities under RISP \. (Estimated cost, US$ 6\.229 million or 59 percent of total cost\.) This program included (i) providing grants totaling up to US$ 2\.0 million to mitigate nutrient discharges from borrowers under RISP who were investing in an approved list of improved agricultural and agribusiness practices; and (ii) training rural service providers and RISP credit officers in nutrient reduction practices \. (b) Promotion of improved watershed management practices in the Lapusna basin \. (Estimated cost US$ 3\.36 million or 31 percent of total)\. This program included (i) manure management through 1,200 individual and 8 community manure platforms; (ii) promotion of environment-friendly agricultural practices; (iii) shrub and tree planting, including shelter belts, forest restoration and agro -forestry; (iv) Wetland restoration and promotion of sustainable wetland management practices in the basin; and (v) monitoring soil, water quality and environmental practices\. Strengthening National Policy, Regulatory and Enforcement Capacity \. (Estimated cost US$0\.09 million or 1 percent of total cost\. Actual expenditure, US$0\.23 million, or 3 percent of total)\. This was to strengthen Government's legislative, regulatory, and institutional capacity in agricultural pollution control by assisting the Ministry of Ecology, Construction and Territorial Development (MECTD) and the Ministry of Agriculture and Food Industry (MAFI) to develop a Code of Good Agricultural Practices \. Public Awareness and replication Strategy \. (Estimated cost US$ 0\.37 million or 3 percent of total; cost\. Actual expenditure, US$0\.41 million or 5 percent of total)\. Project Management and Evaluation\. (Estimated cost US$0\.62 million or 6 percent of total cost\. Actual expenditure, US$0\.69 million or 8 percent of total)\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Total expenditure was US$ 8\.17 million against US$ 10\.74 planned, although the GEF Trust Fund grant was fully disbursed\. The principal shortfall in anticipated expenditure was in funding from RISP by individual enterprises under Component 1 (a)\. This appears to have been because of a lower than anticipated level of agricultural or agric-business investment on which the environmental measures were piggy -backed\. The project was completed on time on December 31, 2009\. 3\. Relevance of Objectives & Design: Relevance of Objectives : Modest \. While the project's objectives specifically responded to significant and increasing environmental problems, and to the country's commitment under the Danube Convention, and were also consistent with the Bank's Country Partnership Strategy for Moldova -- which has minimizing environmental and social risks as one of its three pillar --, the relevance of the PDO is modest given that they were stated in output terms, setting the bar low ("increase use of") rather than in outcome terms (stating what the increased use was intended to result in)\. They were also rather vague ("significantly increase")\. Relevance of Design : Substantial \. Overall, project design was relevant to the PDO and the country situation\. First, the link to the RISP APL, operated in the same region, was appropriate (although it could have been more clearly explained) as the region chosen is environmentally significant, including an area of wetland at the junction of the Lapusna and Prut rivers (the major ones in the region) that is legally protected under the international Ramses Convention\. Second, the project emphasizes the agricultural source of most of the riverine pollution in regions such as this and the need to tackle this problem as an integral part of improvements of agricultural practices and productivity\. Overall Relevance : Modest \. 4\. Achievement of Objectives (Efficacy): Overall, the achievement of the PDO, as stated in the PAD, of increasing the use of mitigation methods by agro-industry, farmers and communities to reduce nutrient discharge, was substantial \. A range of mitigation measures were introduced : Linked directly to RISP , 100 RISP borrowers received grants for nutrient pollutant mitigation measures : 59 livestock farms constructed manure storage facilities; seven agro -processing enterprises constructed waste water treatment facilities; 25 crop farms installed efficient irrigation technology on erosion prone land; and nine crop farms introduced grassed water ways, tree plantations, and buffer strips \. The project supported a program by the Moldovan Soil Institute (MSI) to test and demonstrate environment - friendly agricultural practices both within the project area and nationally \. As a result, some 3,000 farmers applied at least one of the recommended practices and a 2008 survey indicated that usage among farmers in the project area was still significantly above the national average \. A range of watershed management practices were introduced\. Nearly 700 has of land were planted, including 156 has of communal land and almost 500 has of degraded land\. The resulting plantings included forest belts adjacent to major rivers and shelter belts \. An integrated management program was implemented in the major wetland, including forest restoration on about 25 has, and construction of two concrete and 10 wooden bridges to improve access\. Livestock waste management \. Three communities installed communal manure platforms, together with handling equipment to manage the effective disposal of animal waste \. Within these communities more than 660 household platforms were built, more that a third with farmer's own funds \. These measures resulted in manure storage for 46% of cattle, 16% of pigs and 14% of sheep and goats in the watershed \. Monitoring soil and water quality and environmental impacts \. The project strengthened the capacity of the MSI and the State Hydro-meteorological Centre (SHC) to monitor water and soil quality and established and maintained a number of monitoring sites\. Public Awareness\. The project supported a broad awareness campaign at local, regional and national levels \. Awareness of the pollution problem and of measures to address it among farmers, businesses and the general public was increased from four percent at the outset to 58 percent in the pilot project area and, among larger -scale farmers in the project area, some 36 adopted environment-friendly practices that increased their incomes \. In addition the project provided finances for contributions to the updating of laws on Ecological Farming and on Soil Conservation and to develop, publish and disseminate the Code of Good Agricultural Practices \. However, there is no clear evidence in the ICR as to whether these actions produced any measurable effect on the pollutant discharge from the area in which the project was located \. Annex 2 reports that the SHC installed eight monitoring stations along rivers in the area and undertook sampling in 17 shallow wells\. These measured a number of chemical and biological parameters \. "Chemical testing revealed that ammonium and nitrates concentrations have decreased at most monitoring stations in the last two years \." "The Balceana and Negrea tributaries continue to register high nitrate concentrations, but levels of discharged nutrients are declining on the monitored paired watersheds\." The project carried out the planned activities and these have had some impact in the desired direction, but the ICR does not systematically report the outcomes, so that no clear conclusion can be drawn regarding achievement of the longer-term GEO\. 5\. Efficiency (not applicable to DPLs): As is normally the case with a GEF project, incremental cost analysis was carried out \. The ICR estimated that under the project the cost of achieving a reduction of one kg of nitrogen or phosphorus would be US$ 3\.79 and US$3\.36 respectively, using the communal manure management arrangements in use or US$ 5\.96 and US$5\.69 using the facilities installed by the RISP participants \. According to the ICR these costs are comparable to others in the region and also elsewhere in the world (e\.g the Chesapeake Bay)\. However, in the absence of detail on the comparability of the activities/services, this ICR Review deems efficiency to be non -evaluable\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Relevance of the PDOs was modest given that they were stated in output terms, setting the bar low ("increase use of") rather than in outcome terms (stating what the increased use was intended to result in ), and were also rather vague ("significantly increase")\. Efficacy was substantial (against the stated objectives )\. Efficiency is non-evaluable\. Outcome is rated as moderately satisfactory \. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: Some aspects of project performance raise question as to the future performance of the sponsored activities \. While the MSI and SHC continue to operate their monitoring sites, the fact that the ICR does not report the results of their monitoring to date suggests that systematic reporting is not being carried out, rasing questions about the continued effectiveness of the monitoring program \. Only three of the proposed eight communal manure management programs were developed and there appear to be questions as to the longer -term viability of these operations\. The level of local commitment was raised by the Government of Moldova in its comment on the Project Completion Report, where it states that the achievement of the GEO "is jeopardized by the insufficient interest of the local public authorities in promoting the technologies proposed by the project ", and goes on to say that "replicating project activities will be possible only with the support and acceptance of the local public authorities \." a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: Quality at entry : Moderately Satisfactory \. The Bank responded effectively to the interest of the Moldovan authorities in addressing the chronic problem of nutrient run -off from agricultural operations (both crop and livestock) in the country\. Linking project-supported agricultural pollution activities to the ongoing RISP was innovative and demonstrated that environmental and agricultural goals could be compatible \. The Bank team also drew effectively from regional experience in tackling these issues, most specifically from Romania \. However, insufficient attention was perhaps paid to the capacity at the community level to manage operations like the proposed communal manure management system In the event, only three of the initially proposed communities proved able to move beyond expressing interest to actually implementing the program and the experience indicated the significant level of support that is required under Moldovan conditions \. Similarly, some of the problems encountered in implementing the wetland restoration effort might have been mitigated if preparation had probed more deeply into community expectations of this effort \. The communities expected that 'restoration' would make it easier for them to use the wetland area as they had (albeit illegally) in the past\. For the project, 'restoration' meant that the area would be changed to enhance its natural role as a wetland in mitigating run -off, etc\. and, in consequence, access would be restricted \. The ICR discusses this issue and points out actions which the Government could have taken to address it \. Supervision : Satisfactory \. Working with agencies with minimal experience of implementing Bank supported projects, staff maintained particularly close contact with implementing agencies, using video -conferences as well as six-monthly missions, in this way providing assistance in addressing the inevitable road blocks that came up, as well as supervising progress \. As a result, issues were resolved relatively expeditiously and significant changes were not necessary at the Mid -Term Review\. The project was completed within the planned timetable (the MTR and Completion dates were met) in a type of operation where slippage could easily have occurred \. at -Entry :Moderately Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory c\. Overall Bank Performance :Moderately Satisfactory 9\. Assessment of Borrower Performance: Government : Moderately Satisfactory \. Government strongly supported the project and, as it progressed, Steering Committee support and cooperation among agencies improved, fostered by close involvement of Bank staff\. Counterpart financing was handled effectively \. However, the Borrower's Project Completion Report (summarized in Annex 7 of the ICR) states that the achievement of the GEO is "jeopardized by the insufficient interest of the local public authorities in promoting technologies proposed by the project, " and goes on to say that "replicating project activities will be possible only with the support and acceptance of local public authorities \." Implementing agencies : Satisfactory \. The main implementing agency, the MECTD provided good support for the PIU and interacted effectively with the local councils involved \. in this it was well supported by the MAFI and its implementation unit, the Consolidated Agricultural Projects Implementation Unit \. Both ministries worked together well to provide technical advice and support both to the local councils responsible for the implementation of the manure management activities and to individual enterprises that installed manure management and /or waste water treatment systems\. These efforts were significant that both the MTR and Completion of the project were met on time \. This close collaboration was instrumental in enabling the project to undertake quick remedial action when drainage works adjacent to a major wetland area threatened to divert a water supply to the wetland \. a\. Government Performance :Moderately Satisfactory b\. Implementing Agency Performance :Satisfactory c\. Overall Borrower Performance :Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: Design\. Design The PAD indicated that the Project implementation Unit (PIU) would design an MIS for the project as the basis for M&E\. This was done, although there were some differences between the indicators used and those listed in the Supplemental Letter to the GEF Project Grant Agreement \. However, although the design was straight forward and the indicators were primarily related to key project outputs, the indicators used did not include measurements of outcome, such as water quality, even though the project supported the installation of monitoring devices and their use by SHC \. Implementation \. In addition to monitoring the basic indicators, the PIU undertook a number of other surveys and studies, including household surveys, questionnaires for RISP /APCP recipients, and soil and water quality monitoring programs\. The ICR reports that an impact assessment review was carried out during the final year of implementation, but it does not report the results \. Utilization \. The longer term use of the monitoring system is put into doubt by the note in the ICR that "most monitoring activities ended at project closure, because most were related to project outputs \. However, the Soil and Forestry Institutes and Hydromet received equipment and training to establish and maintain monitoring capacity beyond the Project\. Actual utilization will depend on the institutes' budget availability \." Given that the Borrowers' Completion report does not present the results of this activity to date, this does not suggest that the activity is a high priority\. a\. M&E Quality Rating : Modest 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Financial Management \. According to the ICR, there were no financial management or procurement issues during the project\. Audits were submitted on time and were unqualified \. Environmental Assessment \. The project was rated as "Category B" and an Environmental Assessment (EA) was carried out as part of project preparation \. An Environmental Management Plan was prepared to address the risks identified by the EA\. Compliance with the Bank's OP 4\.01 was rated as Satisfactory throughout implementation according to the ICR\. One shortcoming of the EA was that it did not note that the major wetland in the pilot area is a site registered under the Ramsar Convention and it also did not identify the potential conflicts between the objectives of the local communities regarding the site and the requirements of the Ramsar designation \.The ICR discusses this issue and points out actions which the Government could have taken to address it \. 12\. Ratings : 12\. ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Relevance of the PDOs was modest Satisfactory given that they were stated in output terms, setting the bar low ("increase use of") rather than in outcome terms (stating what the increased use was intended to result in), and were also rather vague ("significantly increase")\. Efficacy was substantial (against the stated objectives)\. Efficiency is non-evaluable\. Risk to Development Moderate Significant The report raises concerns about the Outcome : local level commitment towards the utilization of practices and technologies introduced by the project\. Bank Performance : Moderately Moderately Satisfactory Satisfactory Borrower Performance : Satisfactory Moderately The Borrower's Project Completion Satisfactory Report raises important issues concerning weak local authority commitment to the project's broader aims\. Government Performance was moderately satisfactory (see Section 9)\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: Project experience suggests the following lessons of general interest : Development of communally managed activities, such as the communal manure management systems supported by this operation, will require active involvement by local authorities and any project supporting such activities should provide for adequate technical and other support \. The provision for such support (both in staff time and funding) should comfortably exceed the share of the activity in total project cost \. It should be assumed that activities such as restoration, or otherwise changing areas that have not been under private control will create some local conflicts, since the area will have been used by some individuals or groups, even if they are not identified or come forward at the outset \. Plans should make provision for modifications necessary to resolve issues of this sort that arise during implementation \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR provides a concise review and assessment of the background to and implementation of this project and has a good balance between detail contained in the main text and annexes \. However, the relationship between the funding from this GEF grant under review and the linked RISP project is somewhat complex, and the report would have been improved by more detail on this issue \. a\.Quality of ICR Rating : Satisfactory	REVIEW
P088867	ï»¿ ICRR 14404 Report Number : ICRR14404 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 08/28/2014 Country : Serbia Project ID : P088867 Appraisal Actual Project Name : Energy Community Of US$M ): Project Costs (US$M): 30\.75 28\.58 South East Europe (apl) Program - Serbia And Montenegro Component - Serbia Project L/C Number : C4090 Loan /Credit (US$M): Loan/ US$M ): 21\.0 20\.56 Sector Board : Energy and Mining US$M): Cofinancing (US$M ): Cofinanciers : Board Approval Date : 06/30/2005 Closing Date : 02/28/2010 06/30/2012 Sector (s): Power (100%) Theme (s): Regional integration (50% - P); Regulation and competition policy (50% - P) Prepared by : Reviewed by : ICR Review Group : Coordinator : Richard L\. Berney Robert Mark Lacey Christopher David IEGPS1 Nelson 2\. Project Objectives and Components: a\. Objectives: The higher level objectives of the Bank âs Adoptable Lending Program for Energy Community of South East Europe (ECSEE-APL), which was approved by the Bank on January 27, 2005, is for the countries in the region to achieve their commitments under the 2005 Athens ECSEE Treaty to: (a) establish the energy market liberalization targets of the ECSEE Treaty; and (b) integrate their energy markets into the internal electricity market of the European Union in accordance with the ECSEE Treaty \. According to the Development Credit Agreement, the project âs development objectives were : (i) to improve electricity market access for consumers and suppliers and (ii) to strengthen the capacity of the energy institutions to participate in the regional electricity market\. (page 16)\. The Credit Agreement added that the improvement in market access would be âthrough (by) an increase in the quantity, quality, reliability, safety and efficiency of the bulk transmission system \.â? The statement of objectives in the Project Appraisal Document (PAD, page 5) is the same as that in the Credit Agreement \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: The project had two components : â¢ The 110 kV Substations and Related Activities : (Appraisal US$ 26\.3 million, Actual US$25\.8 million): The construction of five new 110 kV substations to be implemented by Elektro Privreda Sribje (EPS), the state-owned electric power utility\. â¢ The 110 kV Interconnecting Transmission Lines and Related Activities :(Appraisal US$30\.8 million , Actual US$28\.6 million): The construction of new 110 kV interconnecting transmission lines for the substations selected for investment under Component 1 of the project, to be implemented by the transmission system and market operator, Elektro Mreza Sribje (EMS)\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Costs: Total project cost was US$28\.6 million, or 96% of the appraisal estimate of US$29\.9 million\. Financing: The IDA credit was for US$ 21\.0 million equivalent\. US$20\.6 million was used\. The unused portion was refunded to the Bank\. Borrower Contribution: The Appraisal estimate of the contribution of the implementation agencies was US$ 9\.8 million\. Their actual contribution was US$8\.0 million\. The cost of the transmission components that EMS self -financed was not included in the ICR \. Dates: Project effectiveness was delayed by five months from the original estimate (from 9/28/05 to 2/28/06)\. The original closing date of February 28, 2010, was extended twice\. The first extension was for 22 months, to December 31, 2011 and the second was for six months to June 30, 2012\. Both extensions were motivated by delays associated with procurement problems which necessitated the rebidding of important contracts \. The first extension was caused by the forced withdrawal of the winning bidder, and the second by the failure of a supplier to deliver transformers equipment \. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Substantial The objective of improving electricity market access for consumers and suppliers was, and continues to be an important objective for the continued economic development of the country \. The current CPS states that one of the sectorâs significant challenges is to ensure inadequate power supplies do not stifle the country âs efforts to improve competitiveness and that Serbia âs energy capacity is coming under increasing stress because, inter alia, the age and poor record of maintenance has severely impacted reliability and efficiency in both power generation and in the power transmission system (para\.59-61)\. The objective of strengthening the capacity of the energy institutions to participate in the regional electricity market has continued to be a central element in the Bank âs ECSEE-APL support program\. This program has been a key component of the Bank âs support for the Stability Pact for South Eastern Europe (an institution aimed at strengthening peace, democracy, human rights and the economy ), and its working partnership with the European Commission\. Its objectives are the creation of a stable regulatory and market framework capable of attracting investment to the region in power systems, and the establishment of an integrated regional markets in SEE, closely linked to the European Union (EU) energy market and fully compliant with its rules \. This objective remained valid at the time of project closing\. The current (FY12-15) Country Partnership Strategy (CPS) considers the issue to be sufficiently important to state that in the future the Bank would support an energy sector investment program only in the context of significant sector reform involving the opening of the sector to private sector investment in power generation (page 73)\. b\. Relevance of Design: Negligible: Both project components directly support investments in 110 kV transmission lines and transformer stations \. Neither addresses the overarching objective of strengthening the capacity of the energy institutions to enable them to participate in the regional electricity market \. The PAD discussed at length the ongoing sector reform objectives, but there are no covenants or components in the Credit Agreement that could provide support for these sector objectives\. Instead, the project design focused exclusively on implementation of the physical infrastructure investments in 110 kV lines that support improvement in electricity access for domestic consumers \. The project documents make little connection between these infrastructure investments and the project âs sector policy objectives \. The projectâs focus is on enhancing the performance of a number of 110 kV transmission systems, which would benefit domestic consumers\. Larger transmission system improvements would be more directly relevant to Serbia âs integration into the energy markets of South Eastern Europe \. The ICR (page 5) states that the projectâs components âwere selected in a manner consistent with the regional program and the key objectives of the ECSEE, and in close consultation with other donors \. Hence, the choice of supporting the construction of a set of new 110kV substations and associated 110kV transmission lines âa particularly weak segment of Serbia âs power systemâ was an adequate complement to other donorsâ assistance that focused on the creation and institutional development of the [Transmission System and Market Operator ] and the new Regulatory Agency, and strengthening the transmission network to link Serbia to the regional electricity market \.â? Nonetheless, it would normally be expected that the Bank would have a more direct participation in the dialogue related to sector policy, and that a Bank project would contain activities and agreements pertaining to that participation \. 4\. Achievement of Objectives (Efficacy): (i) Improvement of electricity market access for consumers and suppliers : Substantial Outputs: EPS was able to increase the number of substations financed under the project from five to nine \. EMS supported this increase by using Bank funds for increasing the number of transmission towers, which were financed by the project, and using its own funds for the transmission lines \. At the time of the ICR mission (October 2012), two interconnecting transmission lines had yet to be completed \. While these works were initially part of the project, they were subsequently funded by EMS \. They are an essential dimension of the project since, until they are completed, the new substations will be unable to operate in a technically optimal manner \. EMS expected that they would be able to complete these transmission lines during 2013\. Outcome: The projectâs outcome target was that one year after the substations were fully commissioned, losses would be reduced by at least 15%; voltages would be within their operating limits; and energy interruptions would be reduced by at least 40%\.: Early results of four completed substations indicate that the targets for the quality of their output are being surpassed \. On average, energy losses have been reduced by 64%, energy interruptions by 87% and voltage drops by 62%\. ii) Strengthening the capacity of the institutions to participate in the regional electricity market (ii) : Negligible The project did not have any technical assistance component related to improving the sector âs institutional capacity\. Nor were there any covenants related to this matter \. There is, therefore, no causal link between project inputs and improvements in the functioning of sector institutions \. The process of sector restructuring or unbundling appears to have made little progress since the project became effective in 2007\. A sector regulator has been established, but has not proven to be independent, and electricity tariffs are still well below cost recovery levels \. While open access legislation has been passed, there have been no contracts signed between energy producers and energy consumers, primarily because the government controlled electricity tariffs are lower than the cost based pricing that would be the basis of any commercial agreements \. As the CPS Completion Report for Fiscal Years 2008-2011 (see the 2013-2016 CPS, page 73) puts it, âAlthough Serbia has signed the ECSEE treaty which puts in place the legal basis for market liberalization, the market is not in fact liberalized and remains dominated by the EPS \. Moreover, neither EPS restructuring nor the private investments in new generation capacity have occurred, despite large investment requirements in the 2010-2015 period\. Power companies continue to under -invest (especially in generation) and few official sources of finance are available to the sector\.â? 5\. Efficiency: Modest : The project got off to a slow start, primarily related to problems associated with the newly created bulk electricity transmission company (EMS), which had been separated from EPS, the previously fully integrated power company responsible for generation, transmission and distribution \. Problems also arose from the weak coordination between the two implementing agencies (EMS and EPS) and the Ministry of Energy (ME)\. There were procurement problems, which were mostly out of the control of the implementing agencies, but necessitated the rebidding of two major contracts because the winning bidder, who was the sole bidder for the transformers, had to withdraw following settlement with the World Bank related to past misconduct in other international activities\. This was the primary reason for the two extensions of the closing date and a 50% increase in the project implementation period (from 56 months to 84 months)\. Delays were also caused by application of the new Forestry Law (see Section 11a below)\. The ICRâs ex-post ERR (42%) is higher than the Appraisalâs estimated ERR (29%)\. The primary reason for this improvement is that the project completed the rehabilitation of ten new substations, double the number originally planned, made possible because EMS declined to use IDA funds for construction of the project related transmission lines\. However, the ICRâs calculation appears not to have taken into account the cost of the transmission line investments made by EMS\. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal Yes 29% 100% ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The relevance of the project âs objectives is rated substantial, and that of design negligible, because design included no activities or covenants related to sector policy objective \. Efficacy of the first objective -- improving electricity market access for consumers and suppliers - is rated substantial, but that of the second objective -- strengthening the capacity of institutions to participate in the regional electricity market -- is negligible\. The rating for efficiency is modest because, while the ERR is estimated to be substantial, benefits were postponed by the delayed completion of the transmission line upgrading \. Operational and administrative inefficiencies also affected implementation\. Overall outcome is rated moderately unsatisfactory \. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: The risk of faulty operation of the substations and transmission lines supported by the project is considered minimal\. The project used proven designs, and the technical and institutional capacity of the utilities in charge is adequate to maintain them in good working order \. There are, however, significant risks associated with sector reform in Serbia\. While the Government has partially unbundling the sector, established a separate regulatory agency and considerably increased electricity tariffs, the latter are still well below cost recovery levels \. The degree to which the benefits of the energy market will be achieved will depend on the political viability of increasing regulated tariffs to a level that makes the sector attractive to new investment, which it is not at the current time \. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: a\. Quality at entry: Quality at entry had several major shortcomings in addition to the exclusion of specific sector reform objectives and components from the project, which greatly limited its development effectiveness \. One of the two implementing agencies (EMS) had not been established at the time of Board approval, which delayed effectiveness\. Issues related to access to land needed for transmission lines had not been resolved \. M&E design was weak, with inadequate attention to baseline values \. However, provisions for compliance with fiduciary policies were satisfactory (see Section 11b for details)\. at -Entry Rating : Quality -at- Unsatisfactory b\. Quality of supervision: The Bank followed closely the execution of the project and provided guidance at critical moments \. Adequate resources were allocated âin quantity and qualityâ throughout the implementation period, including ten supervision missions and the continued provision of local support, particularly on fiduciary issues \. When winning bidders failed to meet their obligations, the Bank facilitated immediate rebidding of the contract \. When EPS decided to self-finance some of its original project components, steps were taken to transfer funds to expand the number of substation to be rehabilitated \. M&E implementation was satisfactory and addressed design weaknesses \. Management of safeguards and fiduciary aspects was reported to be generally satisfactory (see Section 11 below)\. Quality of Supervision Rating : Satisfactory Overall Bank Performance Rating : Moderately Unsatisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Although the Government supported the project throughout its entire execution, it showed a limited commitment towards the reform of the power sector; unbundling, for example, was only partial \. Fifty-four transmission substations were transferred from EMS to EPS as part of the new Energy Law, which took effect on January 1, 2013\. Problems of coordination between the implementing agencies and the Ministry of Energy delayed the effectiveness of the project \. The construction permits process âmanaged by the Ministry of the Environment, Mining and Spatial Planningâ took between eight to twelve months : an excessively long period that contributed towards delaying many activities \. The Governmentâs inability to adjust electricity tariffs at a faster pace could undermine the development of the energy market \. Government Performance Rating Moderately Unsatisfactory b\. Implementing Agency Performance: EPS and EMS were the implementing agencies for the project \. They put in place strong Project Implementation Units that received effective support from other corporate departments \. The selection of additional investments was based on sound planning \. Lessons learned during the initial stages were incorporated into the design of procurement packages thus achieving greater efficiency \. Most of the practical procurement problems encountered during execution were unexpected and beyond the control of the executing agencies \. However, their response to these problems was diligent and appropriate \. M&E implementation was satisfactory and addressed design weaknesses \. Management of safeguards and fiduciary aspects was reported to be generally satisfactory (see Section 11 below)\. Implementing Agency Performance Rating : Satisfactory Overall Borrower Performance Rating : Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The project development indicator for market liberalization was defined indirectly by references to the agreements on performance in ECSEE Treat\. However, there were no specific associated indicators that spoke to which elements of the treaty were to be used for evaluative purposes \. The" quality of supply" indicator were appropriate for evaluating the project, but they lacked baseline values \. The indicators were to be collected by EPS, which was appropriate, since it was responsible for the performance of the transmission substations \. b\. M&E Implementation: Quarterly reports from the PIU focused mostly on the status of works for each substation \. They included the identification of specific problems, updated schedules when required, and commercial completion estimates \. Progress in the reform agenda was not monitored \. It was not officially considered to be part of the project because it was expected to be followed by the Ministry of Energy within the context of ECSEE âs coordination mechanisms\. Data were collected towards the end of the project on the physical targets of the progress in project âs development impact, including âquality of supplyâ? indicators such as reductions in energy losses, better voltage performance, and reduced number of energy interruptions \. The market liberalization indicator was subsequently recognized as too vague and was revised to focus on market access requirements \. According to the ICR, EPS has proven to have the capacity to continue the evaluation of the project âs impact beyond the implementation period \. c\. M&E Utilization: Quarterly reports were used by the Bank staff to identify problems as they arose \. M&E Quality Rating : Substantial 11\. Other Issues a\. Safeguards: The project was classified as Category âBâ? for Environmental Assessment purposes \. Other than Environmental Assessment (OP 4\.01), the Land Acquisition and Resettlement safeguard (OP 4\.12) was triggered (PAD, page 17)\. According to the PAD, Environmental Management Plans (EMPs) were prepared for each of the sub -stations and the associated transmission lines \. The ICR (page 7) reports that âoverall, all substations and transmission lines were implemented without facing any significant problems, with the exception of the interconnecting transmission line for the Mosna substation (Phase II), which was affected by changes in the forestry legislation \." The issue was related to how much EMS must pay for cutting down trees in forested areas, and it was still unresolved at project closure \. However, according to information subsequently provided by the project team, the issue has now been resolved and this component is being implemented\. The ICR does not contain a clear statement that OP 4\.01 was complied with\. The project triggered the Involuntary Resettlement safeguard because land was acquired for some substation sites and for the associated transmission towers (ICR, page 7)\. The total amount of land required was described as minimal\. A Land Acquisition Plan were prepared by EPS and EMS and reviewed by the Bank \. It was disclosed to the public and consultations held at each of the five locations of the proposed substations along with the EMPs \. Information about public disclosure and consultation was disseminated to the public through multiple media \. Nonetheless, the confirmation of rights -of-way caused delays in the commissioning of some substations \. One case, involving a complaint by a single landowner, was still unresolved at the time of the ICR mission \. b\. Fiduciary Compliance: The quarterly project financial reports were submitted in a timely manner and in compliance with World Bank âs accounting policies and internal control procedures (ICR, page 8)\. The audits of the entities EPS and EMS and project financial statements were submitted on a regular basis, albeit with some minor delays during the period 2009-2010\. âThe audits on the project financial statements were satisfactory \. While in some exceptional cases audits were qualified (due to lack of compliance with International Standards on Auditing ), no weaknesses were found on internal controlsâ? (ICR, page 9)\. The project had no financial covenants \. Procurement activities, albeit with delays, were carried out in accordance with the World Bank âs Procurement Guidelines\. In spite of the overall weakness of the country in conducting public procurement, an assessment of EPS â s capacity in implementing procurement actions found that the implementing agency had adequate staff, in skills and quantity, to conduct the required procurement \. A Procurement Plan was developed by the Borrower at appraisal and subsequently updated as needed \. The ICR states that the procurement performance of the implementing agencies can be regarded as satisfactory (page 8)\. There were some issues largely outside their control \. For example, the winning bidder for the provision of transformer equipment for the first four transmission substations withdrew its bids following a settlement with the World Bank related to past misconduct by the firm in other international activities \. EPS had to rebid this contract\. While the re-bidding of the contract provided an unexpected benefit of lower prices, it also created a delay of more than half a year \. There were no reported cases of misprocurement \. c\. Unintended Impacts (positive or negative): d\. Other: 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately The relevance of objectives is rated Satisfactory Unsatisfactory substantial, but that of design negligible, because design included no activities or covenants related to sector policy objective\. Efficacy of the first objective -- improving electricity market access for consumers and suppliers - is rated substantial, but that of the second objective -- strengthening the capacity of the institutions to participate in the regional electricity market due to the effects of operational and administrative inefficiencies, including the delayed completion of the transmission line upgrading\. Risk to Development Moderate Significant The degree to which the benefits to the Outcome : energy sector are sustained will depend on the political viability of increasing regulated tariffs to a level that makes the sector attractive to new investment, which it is not at the current time\. Bank Performance : Moderately Moderately Quality at Entry had major Satisfactory Unsatisfactory shortcomings, including the exclusion of specific sector reform objectives from the project, incomplete implementation arrangements, non-resolution of land access issues, and inadequate M&E design\. Borrower Performance : Moderately Moderately The performance of the implementing Satisfactory Unsatisfactory agencies was satisfactory, but that of the Government had significant shortcomings, including the partial nature of reform efforts and weak coordination with implementing agencies\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The most important lessons drawn from the experience of preparing and implementing this project are : The coordination of both policy reform and physical project components could benefit from more clearly defined performance indicators, closely related to and fully consistent with the development objectivesand each of the projectâs components, particularly those related to policy objectives \. In the case of this project, there were no performance indicators related to the broad policy objective of meeting the institutional requirements of the ECSEE\. Carefully designed technical assistance activities for specific parts of an agreed reform agenda could be instrumental in ensuring an effective progress in these areas and therefore in maximizing project benefits \. For instance, an explicit technical assistance component aimed at supporting the Government in the design and implementation of a tariff policy could have proven beneficial in this case \. The challenges faced by new Implementing Agencies during a reform process justify additional support tailored to their specific needs \. The support provided to EPS and EMS (which was a newly created entity ) by an experienced supervision engineer during the first 18 months of implementation, as well as by the Bank âs local staff on fiduciary and safeguard issues, proved to be of great advantage and, therefore, a practice to be replicated in similar cases\. 14\. Assessment Recommended? Yes No Why? This is one of several South East Europe energy sector projects implemented under an ongoing APL program\. An in-depth evaluation of the program as a whole could provide some important lessons for regional initiatives elsewhere\. 15\. Comments on Quality of ICR: The ICR clearly explained the project âs exclusive focus on physical investments together with the lack of any policy objectives and related technical assistance \. It showed how this limited the Bank âs leverage in policy discussions on such matters as energy pricing, and the creation of a market framework capable of attracting investment \. It also provides a good analysis of the economic benefits of the investment program \. The ICR places the project within the context of the Bank âs support for the objectives of APL 2-ECSEE program and identifies the major challenges faced by the power sector, all but one of which the project did not address \. The economic analysis is thorough, but includes only the cost of the transformer stations, and leaves out the investment that EMS has made on its own account for the transmission lines \. The lessons are tentative and could have been more clearly stated (for example âProjects including both policy reform and infrastructure (physical) components pose additional challenges that require synchronized design and implementation\. Complementary and policy and physical components require a fine -tuningâ¦â?) A definitive statement as to whether policies had been complied with would have been helpful \. a\.Quality of ICR Rating : Satisfactory	REVIEW
P071191	Document of The World Bank Report No: ICR00001441 IMPLEMENTATION COMPLETION AND RESULTS REPORT (Loan No\.:IBRD47380) ON A LOAN IN THE AMOUNT OF US$279\.00 MILLION TO THE ISLAMIC REPUBLIC OF IRAN FOR A AHWAZ AND SHIRAZ WATER SUPPLY AND SANITATION PROJECT March 31, 2010 Finance, Private Sector and Infrastructure Group Middle East and North Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective September 2009) Currency Unit = Iranian Rial (IR) US$l\.0 = 9,868 Rials FISCAL YEAR March 21 -- March 20 ABBREVIATIONS AND ACRONYMS AM Aide-Memoire MOE Ministry of Energy AWWC Ahwaz Water and Wastewater Company MOU Memorandum of Understanding BOT Build Operate Transfer MTR Midterm Review CBOs Community-based Organizations NPV Net Present Value DBO Design-Build-Operate O&M Operation and Maintenance DO Development Objective PAD Project Appraisal Document KDOE Karun Department of Environment PDO Project Development Objective EA Environmental Assessment PPP Public-Private Partnership EMP Environmental Management Plan QAG Quality Assurance Group ERR Economic Rate of Return QALP Quality Assessment of Lending Portfolio FDI Foreign Direct Investment RAP Resettlement Action Plan FMR Financial Monitoring Report SA Special Account FYDP Five Year Development Plan SWWC Shiraz Water and Wastewater Company GAC Governance and Anti-Corruption TSU Technical Support Unit GDP Gross Domestic Product UFW Unaccounted for water ICR Implementation Completion Report WA Withdrawal applications IRR Iranian Rials WTP Willingness to pay ISR Implementation Status Report WWCs Water and Wastewater Companies LAP Land Acquisition Plan WWTP Wastewater treatment plant Vice President: Shamshad Akthar Country Director: Hedi Larbi Sector Manager: Francis Ato Brown Project Team Leader: Alex Bakalian ICR Team Leader: Bekele Debele Negewo ISLAMIC REPUBLIC OF IRAN AHWAZ AND SHIRAZ WATER SUPPLY AND SANITATION PROJECT CONTENTS Data Sheet A\. Basic Information \. i B\. Key Dates\. i C\. Ratings Summary\. i D\. Sector and Theme Codes \. ii E\. Bank Staff \. ii F\. Results Framework Analysis\. ii G\. Ratings of Project Performance in ISRs \. v I\. Disbursement Profile\. v 1\. Project Context, Development Objectives and Design\. 1 2\. Key Factors Affecting Implementation and Outcomes \. 6 3\. Assessment of Outcomes\. 14 4\. Assessment of Risk to Development Outcome \. 21 5\. Assessment of Bank and Borrower Performance \. 21 6\. Lessons Learned \. 27 Annex 1\. Project Costs and Financing\. 30 Annex 2\. Outputs by Component \. 31 Annex 3\. Economic and Financial Analysis\. 33 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 34 Annex 5\. Beneficiary Survey Results\. 36 Annex 6\. Stakeholder Workshop Report and Results \. 37 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 38 Annex 8: Comments of Cofinanciers and Other Partners/Stakeholders\. 51 Annex 9: List of Supporting Documents\. 52 MAP \. 53 A\. Basic Information IR-Ahwaz & Shiraz Iran, Islamic Republic Country: Project Name: Water Supply and of Sanitation Project Project ID: P071191 L/C/TF Number(s): IBRD-47380 ICR Date: 04/06/2010 ICR Type: Core ICR ISLAMIC REPUBLIC Lending Instrument: SIL Borrower: OF IRAN Original Total USD 279\.0M Disbursed Amount: USD 200\.6M Commitment: Revised Amount: USD 279\.0M Environmental Category: A Implementing Agencies: Shiraz Water and Wastewater Company Ahwaz Water and Wastewater Company National Water and Wastewater Engineering Company Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/17/2002 Effectiveness: 11/17/2004 11/17/2004 Appraisal: 02/13/2004 Restructuring(s): Approval: 05/25/2004 Mid-term Review: 10/28/2007 10/28/2007 Closing: 09/30/2009 09/30/2009 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Unsatisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Moderately Implementing Quality of Supervision: Moderately Satisfactory Unsatisfactory Agency/Agencies: Overall Bank Moderately Overall Borrower Moderately Satisfactory Performance: Unsatisfactory Performance: i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Unsatisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Sewerage 43 76 Water supply 57 24 Theme Code (as % of total Bank financing) Access to urban services and housing 33 33 Other human development 17 17 Other urban development 17 17 Pollution management and environmental health 33 33 E\. Bank Staff Positions At ICR At Approval Vice President: Shamshad Akhtar Christiaan J\. Poortman Country Director: Hedi Larbi Joseph P\. Saba Sector Manager: Francis Ato Brown Francoise Clottes Project Team Leader: Bekele Debele Negewo Mohammed Benouahi ICR Team Leader: Bekele Debele Negewo ICR Primary Author: Sati Achath F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The main objectives are to: (a) enhance the quality of life in the proposed cities, Ahwaz and Shiraz, particularly in poor areas by: (i) improving access to satisfactory water supply and significantly increasing coverage of sanitation services; and (ii) improving environmental, hygiene and health conditions, as well as promoting reuse of treated effluents; ii (b) strengthen and develop the capacity of Ahwaz and Shiraz Water and Wastewater Companies (WWCs), and assist the latter in improving their efficiency, sustainability and financial autonomy; and (c) initiate sector reforms, particularly with respect to institutional arrangements, the regulatory framework, demand management, as well as prepare a sanitation strategy\. Revised Project Development Objectives (as approved by original approving authority) N/A (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Indicator 1 : Unaccounted for water (%) Value Ahwaz: 27 Ahwaz: 40 quantitative or Ahwaz: 36\.3 Shiraz: 30 Shiraz: 27 Shiraz: 25 Qualitative) Date achieved 04/01/2004 06/30/2009 12/03/2009 Comments It is expected that once the Ahwaz water rehabilitation activities are completed (incl\. % the UFW indicator will be lower-as is the case for Shiraz company\. achievement) Indicator 2 : Working ratio Value Ahwaz: 0\.75 Ahwaz: 1\.23 quantitative or Ahwaz: 1\.00 Shiraz: 0\.92 Shiraz: 0\.75 Shiraz: 1\.19 Qualitative) Date achieved 04/01/2004 06/30/2009 09/03/2009 The working ratios have deteriorated because the expected tariff increase did not Comments materialized-despite high inflation environment\. It should be noted that the (incl\. % working ratio reported at mid-term included depreciation, which should not be achievement) the case\. Indicator 3 : Incidence of water borne diseases Value Reduction on Ahwaz: 34\.6% quantitative or incidence of water N/A Shiraz % Qualitative) borne diseases\. Date achieved 06/30/2008 06/30/2009 09/03/2009 The rehabilitation and expansion of water supply to new areas in both Ahwaz and Comments Shiraz will likely improve water quality, leading to reduced incidence of water (incl\. % borne diseases\. However, at this stage it was not possible to determine its achievement) achievement\. Indicator 4 : Quality of receiving water bodies Sixteen water qualtiy parameters (including Improvement in Quality of receiving Value organic and inorganc the quality of water bodies has quantitative or parameters) were receiving water not improved in a Qualitative) monitored over different bodies meaningful way\. seasons at different iii locations of relevant water bodies Date achieved 06/30/2008 06/30/2009 09/03/2009 Continued monitoring of about 16 water quality parameters was done over the Comments project life time\. Since most of the planned WWTPs are not operational and (incl\. % sewerage networks are not yet fully connected, water qualtiy of water bodies has achievement) not improved\. (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : Number of water connections (% of population coverage) Shiraz: +147,021 Value Shiraz: +22,000 Shiraz: 288,309 (92%) (100%coverage); (quantitative (100%) Ahwaz: Ahwaz: 189,922 (90%) Ahwaz: +79,853 or Qualitative) +19,000 (100%) (100% coverage) Date achieved 04/01/2004 06/30/2009 12/03/2009 Comments The targets have been surpassed\. Also, it appears that the original target values of (incl\. % 22,000 and 19,000 new connections, respectively, for Shiraz and Ahwaz, had achievement) not taken into account the increase in population over the project life\. Indicator 2 : Number of wastewater connections (% of population coverage) Value Shiraz: +50,000 Shiraz: +119,313 Shiraz: 22,700 (7\.5%) (quantitative (24%) Ahwaz: (45\.5%); Ahwaz: Ahwaz: 134,700 (60%) or Qualitative) +23,500 (80%) +99,175 (100%) Date achieved 04/01/2004 06/30/2009 12/03/2009 Comments The targets have been surpassed\. However, the system is not operational as some (incl\. % pumping stations and WWTPs are still under construction and not yet fully achievement) operational\. Indicator 3 : Percent wastewater treated Value Shiraz: 60%; Shiraz: 25%; (quantitative Shiraz: 10%; Ahwaz: 5% Ahwaz: 50% Ahwaz: 17% or Qualitative) Date achieved 04/01/2004 06/30/2009 09/03/2009 Contracts for the 2 WWTPs were signed in April 2009\. Construction is expected Comments to last about 30 months\. As a result, no connection was made to take effluents to (incl\. % new WWTPs\. Few connections to discharge effluents to existing WWTPs have achievement) been made\. Indicator 4 : Km of water pipes rehabilitated Value Shiraz: 235 km Shiraz: 235 km (quantitative Zero (100%); Ahwaz: Ahwaz: 266 km or Qualitative) 131\.1 km (49\.3%) Date achieved 04/01/2004 06/30/2009 09/03/2009 Comments Although the work in Shiraz has progressed satisfactorily, project (incl\. % implementation in Ahwaz faced significant delays especially at the start due to achievement) problems related to poor project management and procurement iv G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 06/30/2004 Satisfactory Satisfactory 0\.00 2 11/08/2004 Satisfactory Satisfactory 0\.00 3 04/14/2005 Satisfactory Satisfactory 7\.40 4 11/30/2005 Satisfactory 7\.40 5 05/12/2006 Satisfactory Moderately Satisfactory 10\.34 6 12/13/2006 Moderately Satisfactory Moderately Satisfactory 30\.17 Moderately Moderately 7 06/26/2007 60\.05 Unsatisfactory Unsatisfactory Moderately Moderately 8 10/05/2007 79\.10 Unsatisfactory Unsatisfactory 9 03/24/2008 Moderately Satisfactory Moderately Satisfactory 109\.99 10 09/15/2008 Moderately Satisfactory Moderately Satisfactory 129\.93 11 06/12/2009 Moderately Satisfactory Moderately Satisfactory 155\.08 12 09/10/2009 Unsatisfactory Unsatisfactory 159\.47 H\. Restructuring (if any) Not Applicable I\. Disbursement Profile v 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal Country and Sector Background: The Islamic Republic of Iran graduated from the Bank's borrower status in the early 1970s after the country prospered with increased revenue from oil\. However, in 1991 the lending started again due to the effects of the war with Iraq, debt crisis and a large earthquake, all of which resulted in declines in income levels\. In the 1990s, Iran embarked on a far-reaching political, economic and social reform program\. A very broad spectrum of Iran's political actors and society in general had embraced the overall principles and processes of the Third Five Year Development Plan (FYDP) 1999-2004\. Complex debate had centered on the speed, the dislocations, burden and social implications of the reform process, in particular with respect to the planned removal of energy sector subsidies\. Achievements during the period of the Third FYDP were impressive\. Iran had high foreign reserves, practically no external debt, no major balance of payments pressures and a moderate fiscal deficit\. Growth had been robust with real GDP growing on a 6 percent average during 2000/01 - 2002/03, reaching 7\.4 percent in 2003/04\. Efforts to move from an economy driven by state dominance and subsidies to increased private sector participation had some success, though private Foreign Direct Investment (FDI) and domestic investment remained low by international standards\. Sector Issues\. At appraisal, the main issues affecting the water sector in Iran were identified through various assessments\. They were: low water use efficiency in urban and rural settings; limited participation by stakeholders in development planning and management; large needs for rehabilitation and development of hydraulic infrastructure for sustainable water usage; problems of pollution caused by the discharge of untreated wastewater into public waterways and aquifers; and weak institutions involved in the sector and limited coordination among stakeholders\. Moreover, significant lack of sewerage infrastructure in urban areas, especially in areas where water tables are high, was evident\. Ahwaz--with population of about 950,000 (in 2004) and projected to reach 2\.2 million by year 2027, Ahwaz is one of the most important economic centers of Iran as it is located in an oil-rich region and hosts a number of large industries\. The Karoun River, the largest river in Iran, flows along Ahwaz and divides the city into two separate drainage zones: the eastern zone and the western zone\. Karoun River serves as sources of drinking water for Ahwaz City and neighboring cities downstream\. At appraisal, 99% and 60% of the population were connected to public water supply and sanitary sewerage, respectively\. Areas without sanitary sewerage either used seepage pits or discharged their wastewater in open channels, rivers or in open grounds creating health hazards\. Ahwaz at appraisal had only one wastewater treatment plant (WWTP) with a capacity to treat wastewater generated by only about 140,000 persons\. The pollution of the Karoun River is a major problem and a priority issue not only for Ahwaz but for the whole province\. The discharge of untreated municipal and industrial effluents, the drainage from agricultural lands, and the uncontrolled discharge of solid wastes directly into the river and its tributaries have considerably degraded the water quality of Karoun River\. Available treatment facilities have proved to be insufficient to produce adequate drinking water quality\. At 1 appraisal, water from well fields was being transferred around 70 km and blended with the river water in order to reduce the concentration of contaminants and make it treatable\. However, the maximum water that could be obtained from well fields represented only less than 10% of Ahwaz water demand and as such could not improve the degraded water quality to acceptable levels\. The poor water quality is largely contributing to high diarrhea prevalence that reaches 50% during peak months\. Out of the total gastro-enteritis cases in Iran during the year 2000, 10% were reported in Ahwaz, which accounts for only 1\.5% of the total population\. Furthermore, estimates of water production and consumption rates indicated a very high percentage of unaccounted for water--UFW (over 36%) due to poor conditions of the existing distribution network\. These situations called for urgent need for rehabilitation and expansion of the water and wastewater systems in Ahwaz, especially considering the fast growing population in the city\. Shiraz--with a population of 1\.2 million (in 2004) and projected to grow to about two million by 2027, Shiraz also faces considerable water and sanitation problems\. It was estimated that more than 99% of the inhabitants were connected to the city's water supply network\. Water quality monitoring indicated that the water supply was of acceptable quality and in compliance with national and WHO standards\. The major problems identified at the time were the high percentage of UFW (around 35%) and the need to rehabilitate a considerable portion of the network\. Other problems identified were the relatively low water quality (mainly high levels of hardness and nitrates) of alluvial groundwater sources and the insufficient water pressure in some zones of the distribution network\. The total water demand of the city at appraisal was estimated at 288,600m3/day and was expected to reach 474,400m3/day by the year 2027\. Although Shiraz could supply its residents with adequate water at the time of project preparation, with burgeoning population, the city was projected to run short of water and its capacity needed to be expanded in treatment and storage, as well as in the transmission and distribution network to meet the future water demand\. Lack of adequate wastewater collection, treatment and disposal were the main environmental concerns in Shiraz\. At appraisal, only 8% of the population was connected to the wastewater collection system\. Due to the high water table and low soil permeability, the use of existing seepage pits has been unsatisfactory causing groundwater contamination\. It was reported that around 21 wells have been decommissioned in the recent years due to contamination, mainly in areas where groundwater is relatively high\. Significant proportion of the wastewater was discharged in the seasonal rivers of the city or in open drainage channels that ran through residential areas\. During the dry periods, the channels became open wastewater collectors emitting noxious odors, attracting mosquitoes and affecting the health of the residents\. The wastewater collected by the existing sewers was conveyed along Khoshk River that divides the city in two parts and ultimately discharged in Maharloo Lake\. The project was deemed critical in order to improve public health conditions and to reduce the contamination of the water resources\. Rationale for Bank assistance: Past involvement of the Bank in Iran water sector had been limited and fragmented\. As a result, significant knowledge gaps had emerged\. Opportunities to reverse this trend were sought in the context of the April 2001 Interim Assistance Strategy (2001- 2004, Report No\. 220050 IRN) through dialogue, leading to the identification of promising Bank financed infrastructure projects in water supply and sanitation, and irrigation\. The emphasis in the dialogue slowly changed from a narrowly focused provision of commercial financing to a potential strategic partnership in development as Iran was embarking onto a reform agenda aimed at promoting growth in a socially and environmentally sustainable way and focusing on 2 competitiveness and inclusion into the global economy\. The objectives of the Fourth FYDP and the needs for implementation of the reform agenda had opened new opportunities for partnership in terms of technical assistance and a lending portfolio aimed at well targeted interventions focusing on integrating people, institutions and resources while combining infrastructure with knowledge for the water sector\. Problems such as the unreliable water supply systems, the inconsistent quality of drinking water, the poor performance of water distribution networks and the lack of adequate wastewater collection and treatment systems coupled with rapid growth of population and expansion of urban centers has prompted the Government of Iran (GOI) to consider water supply and sanitation projects as a high priority\. The GOI's priorities and reform agenda initiated in the third FYDP and planned for deepening during the fourth FYDP was considered as an opportunity for the Bank to use the large infrastructure needs in the sector to promote capacity building and institutional development, and also promote reforms in pricing policy of water supply and sanitation services consistent with the cost recovery objective\. Following the discussions that took place during the preparation of the Interim Assistance Strategy, the GOI and the Bank agreed to adopt the main conclusions of the sector strategy note which emphasized institutional reforms such as clarification and demarcation of the responsibilities of the institutions involved; streamlining of financial policies; implementation of a tariff scheme consistent with the cost recovery objective; optimization of investment; selecting appropriate least-cost technologies; addressing environmental and health concerns; and implementing an integrated water resource management\. It was further agreed by the GOI and the Bank that the abovementioned strategy would be implemented in the following three phases: a) Phase I: Execution o f the water and sanitation investment projects for the two cities of Ahwaz and Shiraz (2004-2009) and preparation and initiation of sector reforms, including supporting the GOI with TA programs and studies covering the following areas: demand management, customer education, institutional reforms, the regulatory framework, tariffs and cost recovery, technology and investment priorities, sanitation strategy and integrated water conservation\. A new tariff policy was planned to be drafted during this phase with WBI assistance\. b) Phase II: Execution of the water and sanitation investment projects for the four cities of Rasht, Anzali, Sari and Babol (2005-2010), launching of the studies prepared in phase I, and implementation of the new tariff scheme initiated and prepared in phase I\. c) Phase III: Implementation of reforms prepared under the first two phases\. Investment projects were planned to be prepared for other new cities under an adaptable program loan (APL)\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The main objectives of the project were to: a) enhance the quality of life in the two cities, Ahwaz and Shiraz, particularly in poor areas by: (i) improving access to satisfactory water supply and significantly increasing coverage of sanitation services; and (ii) improving environmental, hygiene and health conditions, as well as promoting reuse of treated effluents; b) strengthen and develop the capacity of Ahwaz and Shiraz Water and Wastewater Companies (WWCs), and assist the latter in improving their efficiency, sustainability and financial autonomy; and 3 c) initiate sector reforms, particularly with respect to institutional arrangements, the regulatory framework, demand management, as well as prepare a sanitation strategy\. Key Indicators were: Unaccounted for water (UFW) Working ratio Incidence of water borne diseases Quality of receiving water bodies Number of water connections (% of population coverage) Number of wastewater connections (% of population coverage) Percent wastewater treated Km of water pipes rehabilitated 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The objectives were not revised\. 1\.4 Main Beneficiaries The intended beneficiaries of the project were a population of about 2\.4 million people, living in two large cities, Ahwaz and Shiraz, representing about 3\.5% of the population of Iran\. While the water systems were well developed and coverage was almost total in the two cities, sewerage coverage was very low and the need to develop adequate sewage systems was urgent\. Because of the deleterious effects of the prevailing state of living conditions and the environment, the construction of modern sewage systems was expected to generate significant health and environmental benefits\. The implementation of the project would address the water and sanitation needs of the population of the two cities\. The topographic characters of these cities and the downstream effects of water and sewage flow were such that the most polluted areas were the ones inhabited by the poorest of the population\. Traditional water-related diseases such as helminthes, hepatitis A, conjunctivitis, skin diseases, and to a lesser extent typhoid and cholera were quite prevalent\. 1\.5 Original Components (as approved) The project consisted of four components as follows\. Component 1: Rehabilitation, improvement and expansion of water systems and facilities - US$121\.41 million (US$61\.74 million1) This component would provide funds to improve water services in Ahwaz and Shiraz based on their comprehensive development plans\. This component was divided into the following sub- components: 1\.a Water Resources - US$18\.98 million (US$ 9\.49 million) 1 Figures in parenthesis are the amounts to be financed by the Bank Loan\. 4 In Ahwaz, this component would finance the rehabilitation of the Emergency Water Treatment Plant and Water Treatment Plants 1 and 2, as well as the expansion o f Water Treatment Plant 2\. In Shiraz, this component would finance the drilling of 17 wells\. 1\.b Water Supply- US$102\.43 million (US$52\.25 million) In Ahwaz and Shiraz, this component would finance the rehabilitation and expansion of water networks including transmission lines (235\.8 km of pipes for Shiraz and 276 km of pipes for Ahwaz), as well as the construction of new reservoirs (4 for Shiraz and 5 for Ahwaz) and new pumping stations (two for Shiraz)\. In both cities, house connections were to be financed by the Water and Wastewater Companies (WWC)\. Component 2 - Rehabilitation, improvement and expansion of wastewater systems and facilities - US$311\.46 million (US$183\.39 million) This component would provide funds to improve wastewater services in Ahwaz and Shiraz based on their comprehensive development plans\. This component was divided into the following sub- components: 2\.a Wastewater trunk mains - US$121\.59 million (US$64\.00 million) In Ahwaz, this component would provide financing for the construction of the remaining segments of the Eastern and Western trunk mains 60 km, which are the main wastewater conveyors to the two wastewater treatment plants in the two zones\. In Shiraz, this component would provide financing for the construction of the remaining segments of the Emergency Zone trunk main and the Long-term Zone trunk main, which were the main wastewater conveyors to the two wastewater treatment plants\. 2\.b Laterals and interceptors - US$89\.43 million (US49\.64 million) In Ahwaz, this component would finance the construction of 266 km of laterals and interceptors as well as the construction of 16 pumping stations\. In Shiraz, this component would finance the construction of 740 km of laterals and interceptors\. 2\.c House connections -US$20\.29 million (US$10\.15 million) About 23,000 and 50,000 house connections would be implemented under the project in Ahwaz and Shiraz, respectively\. 2\.d Wastewater treatment plants and outfalls - US$80\.14 million (US$59\.60 million) In Ahwaz, this component would provide financing for the rehabilitation of the wastewater treatment plant in the west of Ahwaz (Choneibeh), as well as the construction of the first module of the wastewater treatment plant in the east of Ahwaz\. In Shiraz, this component would provide financing for the outfall of the existing Emergency treatment plant and the proposed new Long-term treatment plant as well as the construction of the first and second modules of the Long-term treatment Plant\. Component 3 - Provision of operation and maintenance equipment and consumer water meters for WWCs - US$2\.31 million (US$1\.85 million) This component financed operation and maintenance equipment and consumer water meters for WWCs\. 5 Component 4 - Capacity building, Technical Assistance (TA), training and consulting services - US$31\.86 million (US$29\.31 million) Subcomponents would include: Establishment of Technical Support Units (TSUs) at the NWWEC and at each WWC- US$5\.09 million (US$4\.69 million)\. Provision of TA and consulting services for institutional and capacity building including training of NWWEC's staff\. This would include the following studies: US$2\.79 million (US$ 2\.56 million)\. o Optimization of Sector Institutions o Demand Management Programs in WWCs, including leak detection exercises\. o Development of National Sanitation Strategy and Action Plan for sanitation and Hygiene in Iran\. o Capacity Building Program\. Provision of consulting services for engineering design, construction supervision, and any other technical studies that would be identified during the course of project preparation\. This component also included the cost of Design-Build-Operate (DBO) contracts, their design and supervision- US$19\.04 million (US$ 17\.51 million)\. Environmental Management Plan (EMP), including mitigation measures and monitoring activities to be implemented during design, construction and operation\. The plan would cover key issues such as water quality and quantity, treated effluent, industrial discharges, health and safety as well as sludge re-use and disposal\. - US$4\.94 million (US$4\.55 million)\. 1\.6 Revised Components The components were not revised\. 1\.7 Other significant changes There was no change in project design, scope and scale, implementing arrangements, and project schedule during implementation\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry Project Background\. The two cities of Ahwaz and Shiraz were selected for eligibility under the project from a list of prioritized urban areas included in the fourth five-year development plan\. This selection was based on the criteria of existing environmental conditions, including important environmental externalities going beyond the city's geographical boundaries, sewerage conditions and threat to health, and progress in project preparation\. The degree of pollution or pollution threat was the main selection criterion\. Although the design of the project was realistic given the momentum of the reform agenda at the time (which started during the third FYDP and planned to be further deepened during the fourth 6 FYDP), in hindsight, the: (i) project design was overoptimistic (e\.g\., tariff increase by over 20%) as the agreed upon tariff reforms did not materialize and therefore the financial sustainability of the WWCs could not be fully achieved; and (ii) time frame was too short to complete the project as designed given the lack of capacity by the Client, including lack of knowledge by the client of World Bank's fiduciary procedures, in order to implement such large and complex project in five years\. Soundness of background analysis\. As part of project preparation, sector background was studied, main sector issues were analyzed in depth, and government strategies to deal with these issues were also considered\. The project was classified as Category "A" because of the construction and expansion of water treatment plants and wastewater treatment plants, the re-use of sludge and treated effluents, the potential impact from the discharge of industrial effluents, the presence of archeological sites in Shiraz and the overall complexity of the project\. The Environmental Safeguard Category OP 4\.01 on Environmental Assessment was triggered\. EAs including EMPs were prepared for Shiraz and Ahwaz\. OPN 11\.03 "Cultural Property" was also triggered for Shiraz\. The project received an exemption for OP 7\.50\. Overall, environmental aspects were well included in the project design\. On safeguards, the project was socially inclusive as it was expected to benefit all consumers, including the poor, and environmental considerations were taken into account in project design\. In addition, various alternative approaches were evaluated under the Project in terms of strategic (public utilities or private sector approach); technical (number and location of treatment works, on-site sanitation, alignments for the trunk main systems, method of pipe-laying, pipe materials, and phasing for program implementation); and financial and economic (NPV and ERR) principles\. Neither the local legal and institutional environment nor the international conditions were found favorable at the time for the jump-start into advanced forms of private sector involvement such as build-operate-transfer (BOTs) or concessions as deep reforms needed to be implemented in advance in areas such as procurement regulations, foreign exchange regulations, banking, and labor regulations\. From technical viewpoint, the option of on-site sanitation was found unfeasible in Ahwaz and Shiraz due to high water tables\. For the wastewater treatment works, alternative treatment processes--activated sludge, oxidation ditches, oxidation ponds and aerated lagoons, and site locations--were evaluated with the activated sludge method proved to be the least cost solution\. The comparison between the different alternatives took into account investment and long-term O&M costs\. Various options have also been analyzed on the handling of sludge\. For the wastewater treatment works, considerations have also been given to conventional financing versus a DBO contract\. It was proposed to apply the DBO approach in order to optimize the design and to ensure proper O&M of completed works\. Long-term development plans had been designed for the expansion of water and wastewater systems and facilities in Ahwaz and Shiraz over the period 2004-2027\. These plans were formulated to serve a population of about 2\.2 and 1\.9 million, respectively, in Ahwaz and Shiraz by year 2027\. They were scheduled to be implemented in four phases and this project covered works proposed under Phase I\. The objectives and the components to support their achievement were clearly connected\. Lessons Learned from previous Bank-assisted projects\. The experience with the Tehran Sewerage Project highlighted the need to: (i) establish strong project management capacity through locating TSUs within government entities and WWCs rather than outside and to retain 7 institutional capacity within government institutions; (ii) plan and finance the necessary household connections to the water distribution and wastewater collection networks; (iii) familiarize the Borrower's staff with Bank requirements, including those related to safeguards; (iv) have an appropriate tariff scheme to ensure the financial viability of the WWCs; and (v) consider a selective use of the private sector\. Risk Assessment\. The overall risk of the project was rated as Moderate in the Project Appraisal Document (PAD)\. The ICR team agrees with this assessment\. The PAD had identified several potential risks and mitigation measures as deemed appropriate at the time\. At project completion, many of these identified risks had materialized\. The table below shows the risks and mitigation measures identified in the PAD along with an assessment of the risks by the ICR team\. Risk Mitigation Measure Risk ICR Assessment of the Risks Rating Planned at Appraisal (i) The WWCs may not Substantial Agreement was reached This risk factor was correctly identified and generate sufficient with government on appropriately rated\. The mitigation measures revenues and build up key indicators including suggested at appraisal were also appropriate\. capacity to pay for their financial ones\. However, although the government agreed to a O&M (including water Government's higher tariff increase (up to 22% per annum), the meter maintenance) and commitment would expected tariffs adjustment were not implemented part of capital ensure adequate tariff despite the large inflation prevalent in the country\. expenditures increases\. (ii) An adequate tariff Substantial See (i) above See (i) above scheme may not be implemented\. (iii) The WWCs may not Moderate TSU would be staffed This risk factor was correctly identified and properly benefit from with competent experts; appropriately rated\. The mitigation measures actions to be taken in in addition, a suggested at appraisal were also appropriate\. capacity building comprehensive training Although the mitigation worked for Shiraz by program would help hiring a competent TSU manager and staff, the raise WWC's capacity\. same cannot be said for Ahwaz given the frequent turnover of TSU manager and weak procurement and FM capacity which initially delayed the implementation progress\. However, with insistence from Bank mission, the Ahwaz water company later hired qualified procurement specialist and progress of project implementation and capacity building of the WWC peaked\. (iv) An efficient project Moderate See (iii) above See (iii) above management capacity may not be established; and that contracts may not be awarded to well qualified contractors\. (v) The sector may not Substantial Agreement was reached This risk factor was correctly identified and implement reforms with the government on appropriately rated\. The mitigation measures according to agreed upon sector reforms suggested at appraisal were also appropriate but strategy (institutions, tariffs, less realistic given that this project was one of the etc\.,) that would be few projects in the water sector that were initiated implemented in three in Iran after long years of Bank absence from the phases within the next country\. As a result, some of the reforms proposed three years\. These were ambitious and could not be achieved within reforms were linked to the project's lifetime\. future Bank lending\. 8 (vi) Local sources of Moderate Local funding was This risk factor was correctly identified and financing may not be modest and government appropriately rated\. The mitigation measures made available as needed was committed to suggested at appraisal were also appropriate\. Some and that connections and significantly contribute delays were observed in making counterpart funds pertinent connection fees to financing the available to the project, which resulted in may not be investment program of substantial delays in payment to contractors--and collected/paid for as the project, especially hence delayed construction\. Counterpart financing projected the wastewater faced problems both as the result of tariff being component\. frozen2, reducing the income of the water companies, and MPO allocations being delayed or reduced\. Moreover, some potential risks were not properly identified and addressed, including: Project implementation delays that could result from lack of coordination in obtaining permits from the municipality and traffic police, and land acquisition issues, which resulted in long delays\. Project readiness and feasibility of implementation completion within the project lifetime--at project appraisal, it was assumed that the design work carried out by consulting firm in Ahwaz--hired by the client--could be used\. However, the original designs had to be changed and new designs had to be done--this needed more time\. The Bank team had tried to encourage the Borrower to use qualified design consultants during project preparation\. As such, the project team should have included the associated risk with poor quality design\. Adequacy of participatory processes\. During project preparation, meetings were conducted in Ahwaz and Shiraz to discuss the technical, financial, environmental and social issues associated with the project\. These meetings were attended by the WWCs, design consultants, members of the city councils, municipalities, WWCs and various other stakeholders\. The EMP public workshop discussions were well conducted, informative, and well attended by officials and members of the public, men and women\. Non-Governmental Organizations (NGOs) and Community-based Organizations (CBOs) were involved, and the project had created a space in which elected councils (comprising in many cases active and committed citizens), individual citizens and the WWCs could enhance participation\. 2\.2 Implementation The project was not restructured, and no changes were made to the design\. The Bank conducted a Midterm Review (MTR) in October-November 2007\. The main objectives of the MTR were to assess the project's original development objectives against a review of project implementation to date, including the factors affecting the achievement of the project's goals\. In addition, the MTR reviewed the fiduciary aspects of project implementation, including financial management, procurement and safeguards, and agreed with the Borrower on the necessary steps to ensure the achievement of the project objectives until the closing of the loan\. 2 The tariff freeze took place as a result of a new policy by a newly elected parliament and government, after award of the loan\. 9 During the MTR it was also concluded that the project objectives were still relevant and that no changes were needed to the original objectives\. However, after reviewing the progress to date and future project implementation plans, the MTR team believed that a two to three year extension of the closing date of the project, or some of its components, was needed to complete the ongoing and planned works, including the implementation of the Design-Build-Operate (DBO) contracts for the treatment plants\. Project implementation was affected by the following factors: Factors outside government control or implementation agency (i) Due to imposition of the financial sanctions by the US in dealing with Iran, Special Accounts (SA) denominated in US$ had to be switched to Euro, and this resulted in delays in disbursements and project implementation\. In addition, these sanctions limited the ability of local firms to submit bid securities which also contributed to delays in project implementation\. (ii) Multiple UN sanctions discouraged potential bidders from outside Iran, thereby limiting the pool of competitive bids and leading to increased project costs\. In addition, because of the heavy reliance on local bidders, the quality and timeliness of many of the works suffered\. Finally, in connection with the sanctions the Bank put in place an additional system for screening the purchase of equipment under the project (specifications had to be reviewed against the list of prohibited items and entities identified by the relevant UN Resolutions), and this added another layer of clearance which also contributed to some delays early on\. (iii) The decision by the Bank not to extend the closing date of the project left the project (especially in Ahwaz) incomplete and under-funded as a result of which the project objectives could not be fully achieved\. Although the Bank believed at the MTR that a two to three year extension of the closing date was needed to complete the ongoing and planned works, the Bank did not grant a closing date extension nor did it communicate this decision to the borrower with enough advance notice for them to make proper transition arrangements\. In sum, the Bank did not use all the tools at its disposal--including extending the closing date of the project--to ensure full achievement of the project development objectives\. (iv) Following the civil unrest of June 2009, travel restrictions were put in place, and the task team was unable to conduct supervision missions during the last few months of the project's life\. This travel restriction limited the task team's ability to provide timely support to the project on the ground, and the Bank's technical and fiduciary supervision during this time relied on reports provided by the Borrower\. Factors subject to government control or implementation agency (i) Shortfall in project financing\. Because of cost-overruns due to increased construction and material costs, underestimation of project costs at appraisal, the project faced a significant shortfall in project financing, especially in Ahwaz\. In order to fulfill the minimum objectives stated at appraisal, more funding was required from the government to finance the implementation of priority projects already identified\. (ii) Delays in counterpart funding\. Availability of counterpart funding was another contributing cause for implementation delays\. Shortfall in the allocation of the government counterpart 10 contributions, particularly for the wastewater packages, had a negative impact on the project's cash flow\. (iii) Municipality and traffic police permits\. Obtaining permits from municipalities and traffic police was a persistent issue both in Ahwaz and Shiraz and a cause of delay for the implementation of the contracts awarded\. (iv) Change in designs\. In Ahwaz, implementation was slow because of change in designs due to poor quality of original design during project preparation, increase in costs, weak oversight and management of contracts\. (v) High turnover of staff in the Ahwaz TSU and weakness in the ability of the AWWC's technical department to provide adequate support affected project implementation\. (vi) Low tariff and lack of tariff adjustment\. Both SWWC and AWWC were not able to achieve the levels of financial performance that was projected during project preparation\. This was mainly due to the fact that the original financial projections for them relied on substantial increases in tariffs from 2005 onwards, which did not materialize due to a shift in the newly elected government's policy\. (vii) Procurement delays\. Delays in the procurement of the major packages and weak oversight within the AWWC management (especially for contract management) affected the overall progress of implementation\. (viii) Weak capacity of the consultant\. The original consultants of the project (especially in Ahwaz) were of low capacity to handle the workload increase as the result of the Loan\. However, since selection of new consultants was time consuming, the original consultants were used to their capacity at the beginning\. Eventually new consultants were selected for some of the tasks including DBO of treatment plants, detail design and supervision of water and wastewater works as improvements and changes in design were required midway through project implementation\. The most notable change was the requirement to construct a new water treatment plant in Ahwaz instead of rehabilitation of the existing one due to: (a) cost estimate of rehabilitation was almost the same as the cost of new construction, and (b) rehabilitating the existing water treatment plant would have required shutting down the plant, which in the absence of alternative sources of water for the population was found unfeasible\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E design\. This project was prepared before the World Bank implemented a more rigorous approach towards the M&E of its programs\. As such the design of M&E has some limitations, including the selection of appropriate indicators and target values to track the achievement of PDOs and intermediate outcome indicators\. That said, the project supported arrangements for M&E performance indicators, including population coverage of water supply and sanitation services; quantity of wastewater treated and quality of receiving water bodies; level of recovery of costs of operation and maintenance (O&M) and capital expenditures, as measured by the working ratio; and UFW\. Appropriate indicators are missing to track the level of achievement of the project under some components\. For example, provision of water supply and sanitation services to the poor has been indicated in the PDO, and there should have been some indicator to track the achievement of this 11 objective\. Similarly, the inclusion of incidence of water borne disease as one of the PDO indicators proved difficult in terms of easily establishing the baseline data and tracking its achievements over time\. The use of quality of receiving water bodies as one of the PDO indicators also proved difficult as many other pollution sources (industrial waste, agricultural runoff and solid waste) also affect the quality of receiving water bodies and improvements in the water quality of such large water bodies may not be significant and could take longer (beyond the project's life), and therefore this may not have been an appropriate indicator under such situation\. A simpler indicator (e\.g\., few water quality parameters) at appropriate locations to track water quality improvements (attributable to the project) could have been established\. The M&E design also lacked adequate targets for some indicators in order to enable tracking the level of project achievement\. For example, indicators such as incidence of water borne disease and quality of receiving water bodies did not have adequate targets against which project performances could be measured\. Similarly, for some of its indicators, the M&E design did not have adequate baseline data established at the beginning of project implementation\. The team clearly communicated with the implementing agencies to facilitate establishment of baseline data and continued monitoring of the indicators\. M&E implementation\. TSUs were regularly collecting most of the data according to the indicators developed during project preparation\. These data were closely monitored and the actual figures were compared with the target values\. For example, data on unaccounted for water, number of water and wastewater connections, working ratio, percentage of wastewater treated and length of water pipes rehabilitated were monitored and analyzed\. M&E utilization\. Appropriate data collected from quarterly reports of indicators was evaluated and used for decision making on project activities\. For example, prioritization of activities was made based on the data collected by the TSUs\. 2\.4 Safeguard and Fiduciary Compliance Safeguard issues\. An environmental assessment was prepared for the project, including preparation of the EMP, which was adhered to during project implementation\. The environmental impact of the investments was generally positive and there were no compliance issues in both Ahwaz and Shiraz\. In addition, several resettlement/land acquisition reviews were also carried out during implementation\. Land Acquisition Plans (LAPs) were prepared wherever land expropriations were involved\. In addition, wherever resettlement of people, including displacement of livelihoods, was involved, a Resettlement Action Plan (RAP) was prepared\. For example, in Ahwaz, the land for pumping station (AS23-1) located on Jomhori Boulevard (with surface area 800 sq\. m) was a residential house that belonged to two individual owners and agreement with them was reached, a down payment was paid, and the property was expropriated\. Since the deal involved resettlement of at least eight individuals, an abbreviated Resettlement Action Plan (RAP) was prepared\. Safeguard Policy (OP 4\.11) for cultural heritage sites was triggered for the project given Shiraz's historic value in Iran\. The Shiraz WWC engaged the Department of Cultural Heritage from the beginning and shared with them the detailed map of the project\. Upon careful review of the Project's map, the Department of Cultural Heritage gave permission indicating that the project in no way would be harmful to historic sites within or around the city\. Fiduciary issues\. Despite several trainings offered in relevant subjects and hiring of an international consultant to assist with building capacity, procurement was very slow in Ahwaz at 12 the beginning of the project\. The procurement activity in Ahwaz only picked up after two years into the project, when the new qualified procurement staff was recruited\. Also the differences between local regulations and Bank guidelines, delayed the preparation of first set of bidding documents in both Ahwaz and Shiraz\. There were also delays in providing counterpart funding, which resulted in protracted delays in paying contractors and hence delayed progress of implementation at both Ahwaz and Shiraz\. 2\.5 Post-completion Operation/Next Phase (a) Transition arrangements\. Projects under similar conditions would normally get extension of closing date to ensure full achievement of the PDO\. However, in the case of Iran, despite earlier assessment at the MTR by the Bank that the Project needed two to three year extension of closing date, the Project came to closure unexpectedly leaving many critical components of the project incomplete\. As such no specific transition arrangements are in place\. However, up until the time of this ICR preparation, project implementation has continued without any significant problems-- implementation of major contracts signed during the last phase of the project life such as WWTP DBOs and pumping stations are ongoing\. The ICR team has requested from the Government a plan of action on how it plans to complete the project, including funding and timeline of project implementation\. Unfortunately, the Borrower did not send us this information in time to attach it to the ICR\. With proper financial support, it may take about three years for the new DBO contracts to be completed and made operational\. Shiraz has new wells, providing good quality water, and the network has been completed, and the Shiraz WWC will be responsible for maintaining the network\. In Ahwaz, the water network is not yet completed\. In Shiraz the sewerage network is completed while in Ahwaz work was still ongoing\. Institutional\. Staffing and management will be provided by the AWWC and SWWC for regular operations\. Financial\. The Council has now approved a "targeted subsidies law" which might help alleviate the tariff issue\. This law calls for full coverage of O&M costs and eventually paying for full cost of water, to be implemented over a period of time\. This law will also provide a targeted subsidy to low-income families, but charge full cost from those who can afford to pay\. (b) List of performance indicators\. Same set of indicators used during project implementation will continue to be used after project closure\. However, both AWWC and SWWC could include the poverty dimension on top of existing indicators to assess the impacts of their projects on poorer segments of the society\. AWWC and SWWC may also simplify the indicators to track quality of receiving water bodies by selecting appropriate and simpler indicators that are easy to track\. (c) Future Impact Evaluation\. As the baseline survey on health was already done in 2008, it will be important to conduct an impact evaluation on health and environment jointly a year after the sewerage system has been in place and fully operational, including all house connections, pumping stations and WWTPs\. Based on how the Borrower plans to complete the remaining project activities, impact evaluation could take place three to five years from now\. Likewise, it will be important to have an impact evaluation of the financial sustainability of Ahwaz and Shiraz WWCs after the sewerage system has been in place and fully functional\. 13 (d) Studies\. The project supported a `diagnostic and performance improvement study' for the two WWCs in order to help the Ahwaz and Shiraz WWCs review their performance and draw up a business plan for their improvement\. After protracted delay of implementation, the study was contracted to an international consulting firm in early 2009\. However, after the firm delivered its inception report, due to travel restrictions to Iran, the company could not travel to Iran and continue its work, and the contract was eventually cancelled\. As the study, if implemented properly, will have a positive impact on the companies' performance, the companies are highly encouraged to continue with this study\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation The objectives of providing more water and sanitation services to more people, especially with the focus on the poor; improving the efficiency, sustainability and financial autonomy of the implementing agencies; and preparing for next steps to implement wider sector reforms - are still clear, relevant, and important to Iran's economic and social development\. They are also timely and appropriate to the current needs of the country's water sector\. For example, modern sewerage system will have direct benefits for those who are most exposed to contaminated runoff and uncollected sewerage\. 3\.2 Achievement of Project Development Objectives Unsatisfactory\. As demonstrated below, the project has many achievements to its credit, such as the reduction of UFW, increase in the number of water and wastewater connections, rehabilitation of water pipes, construction of reservoirs and wells, and construction of sludge storage tanks for the existing WWTPs in Shiraz\. Similarly, in Ahwaz the project achieved an increase in the number of water and wastewater connections, rehabilitation of water pipes and WWTP in Choinebeh, and construction of the majority of sewerage networks and some pumping stations\. In addition, the capacity of both SWCC and AWCC has been considerably strengthened because of the project\. The project was however not fully successful in achieving its development objectives\. For example, the UFW while improved in Shiraz has deteriorated in Ahwaz; working ratio and hence financial sustainability of both Ahwaz and Shiraz WWCs has significantly deteriorated; quality of receiving water bodies has not improved; and critical components of the project, including treatment plants, pumping stations and pipes are either incomplete or under construction and not fully operational\. As such some critical targets of PDOs indicators have not been fully met at the time of project closing date\. Lack of completion of the project as envisaged at the project design will disproportionately affect the poorer segments of the society as the majority of the remaining components of the project (in both Ahwaz and Shiraz) are located within these clusters of communities--mainly because the project by design has focused on poorer clusters--further undermining the realization of the project development objectives\. 14 The details of the project's achievements are as follows: A\. Shiraz sub-project (i) Improving access to satisfactory water supply and significantly increasing coverage of sanitation services The percentage of UFW has been reduced to 25%, compared to the baseline value of 30% and target value of 27%\. Number of water connections has increased by 147,021 new connections, compared to the target of 22,000 connections\. Number of wastewater connections has increased by 119,313, compared to the target of 50,000 new connections\. All 235 km of water pipes targeted at appraisal was rehabilitated\. 20 wells were drilled, each producing on average about 50 l/s, compared to the target of 17 wells\. Construction of one 3000 m3 reservoir is completed and operational and the other two is progressing, compared to a target of four reservoirs\. Construction of one remaining reservoir is being financed by the SWWC\. Construction of 30\.5 km of wastewater trunk mains is complete, compared the target of 95km\. Construction of 556 km of laterals and interceptors has been completed, compared to a target of 740 km\. All 32 sludge storage tanks have been completed\. Construction of two modules of WWTP with total capacity of 100,000m3/day has started, compared to a target of completing two modules of WWTP\. (ii) Improving environmental, hygiene and health conditions\. Health and hygiene: The project has facilitated in increasing the public access to safe potable water\. In addition, after the completion of several storage tanks as well as the rehabilitation and development of the network, some of which are under construction, water quality and network pressure will be enhanced and water shortage and UFW will be reduced, resulting in a better quality of life\. As for wastewater system, given the project's incomplete status, currently the only benefit that can be attributed to the project is the marginal improvement in the percentage of wastewater treated due to rehabilitation of the existing WWTP and wastewater connection from houses to this WWTP (which improved percent wastewater treated in Shiraz from 10% to 25%, compared to 60% target)\. Such improvements in the percent wastewater treated should improve the environmental quality of the receiving water bodies and also the quality of irrigation water from these water bodies--making reuse of treated effluents a viable water 15 source\. That said, provided that the Borrower timely finances the remaining components of the project and the wastewater system becomes fully operational, the targets set at the project design could be met\. At this point however, all the targets at the project design remain future targets at best\. A health study about the water borne diseases among children 6-60 months was done in 2007-2008 in selected areas in the city to assess the projects effects on health conditions\. As a follow-up study has not been done at project closing, it is not possible to assess the impact of the project in reducing water borne diseases\. Quality of receiving water bodies: baseline date has been established and a monitoring of natural water bodies is under progress\. So far, test results of 25 rounds of analyses of water quality has shown no appreciable improvement of water qualities of water bodies, which is not surprising given that WWTPs are yet in place and fully operational\. (iii) Promoting reuse of treated effluents\. Based on the existing plan, the main part of treated wastewater will be used in agriculture, which compensates water shortage for agriculture uses and helps the extension of agricultural activities\. In addition, a part of the treated wastewater can be discharged to the Maharloo Lake which has a key role for supplying its environmental flow\. Produced sludge will be used as fertilizer and conditioner in agricultural lands\. However, as it stands now, most of these activities have not been accomplished under the project, and therefore this objective has not been fully achieved\. B\. Ahwaz sub-project (a) Enhancing the quality of life in Ahwaz\. (i) Improving access to satisfactory water supply and significantly increasing coverage of sanitation services The percentage of UFW has increased to 40, compared the baseline value of 36\.3 and the target value of 27%--indicating that the water supply system in Ahwaz has deteriorated over the project lifetime\. Number of water connections has increased by additional 79,853 new connections, compared to a target value of 19,000 new connections\. Number of wastewater connections has increased by 99,175, compared to a target value of 23,500 new connections\. 131\.1km of water pipes was rehabilitated, which was 49\.3% of the target of 266 km\. Rehabilitation and extension of existing 3 WTPs (two completed and one ongoing), compared to 3 planned at appraisal\. 16 Construction of all five concrete reservoirs is ongoing, with one 50,000 m³ reservoir completed at WTP # 2\. Implementation of six pumping stations financed by the project is ongoing; two more pumping stations are being financed by the AWWC, compared to a target of 16 pumping stations\. Construction of 158 km of laterals and interceptors has been completed, compared to a target of 326km\. The construction of a new WWTP has just begun while the expansion and rehabilitation of the existing WWTP at Choneibeh is almost completed, compared to a target of rehabilitation of Choneibeh WWTP and construction of another new WWTP\. (ii) Improving environmental, hygiene and health conditions\. Health and hygiene: Similar to Shiraz, the project has facilitated in increasing the public access to safe potable water\. In addition, after completion of several storage tanks and rehabilitation and development of the network some of which are under construction, water quality and network pressure will be enhanced and water shortage and UFW will be reduced, all of which will contribute to a better quality of life\. Similar health study was conducted in Shiraz as was done for Ahwaz\. Environment quality: At the present, only a small portion of the collected sewerage is treated in the Choneibeh WWTP and the rest is discharged into the Karoun River and Maleh stream\. Development and completion of the project activities, especially the main trunks and WWTPs, would improve environmental quality\. (iii) Promoting reuse of treated effluents and sludge\. Currently, most of the raw sewerage is being discharged into the Karoun River and the Shadegan international Wetland\. However, once the project is completed and becomes fully operational, the plan is to treat the wastewater and discharge the treated effluent into these water bodies\. Also, the produced sludge is planned to be used as fertilizer and soil conditioner\. Given the project's incomplete status, currently the only benefit that can be attributed to the project is the marginal improvement in the percentage of wastewater treated due to rehabilitation of the Choneibeh WWTP (which improved percent wastewater treated in Ahwaz from 5% to 17%, compared to 50% target)\. Such improvements in the percent wastewater treated should improve the environmental quality of the Shadegan international wetland and also the quality of irrigation water from the Karoun River--making reuse of treated effluents a viable water source\. Environmental monitoring: A plan for monitoring of water resources' quality (surface and ground water), discharges, influent and effluent of emergency WWTP was prepared and implemented\. At present the baseline environment data has been established and the Karoun Department of Environment (KDOE) continues to monitor water quality\. Ahwaz WWC is expected to provide the required financial resources and manpower to continue the monitoring program\. (b) Strengthening and developing the capacity of Shiraz and Ahwaz WWCs\. 17 The capacity building component of the project has been successfully implemented and the objectives have been appreciably achieved\. The TSU was setup in such a way that about 50% of its staff, including TSU managers, is from the WWCs and the rest from private sector, including individual consultants, to promote cross-learning and capacity building of SWWC and AWWC staff\. The project supported a total of 104 week-long specialized training courses (prepared and delivered jointly by the IHE UNESCO, Delft Water Institute, and Shahid Abbaspour University of Technology in Tehran), from which more than 4000 experts, including the staff of SWWC and AWWC, in the sector nationwide benefited\. In addition, the project supported study tours abroad, from which about 390 persons benefitted, including the staff of SWWC and AWWC\. The Shiraz and Ahwaz WWCs also benefited from various studies conducted under this project, such as the environmental monitoring, industrial waste compliance action plan and emergency operation plan\. By participating in these studies, the staffs of the WWCs were exposed to these new approaches towards improving the reliability of water and sanitation services delivery system\. In addition, the M&E system developed under this project could serve as good practices for future water and wastewater projects\. Moreover, the purchase of various environmental monitoring equipments, including laboratory equipments, and O&M tools have improved AWWC's and SWWC's operations\. Some staff of WWCs benefited from the on-job trainings offered regarding data collection, quality control, data analyses and interpretation, which also contributed to capacity building of the WWCs\. However, the Ahwaz and Shiraz WWCs have not been able to achieve the levels of financial performance that had been projected during project preparation\. This is mainly due to the fact that the original financial projections for the WWCs relied on substantial increases in tariffs from 2005 onwards, which did not materialize due to a shift in the new government's policy\. Working ratio of 1\.23 and 1\.19 at the end of the project were higher than the baseline value of 1\.0 and 0\.92, respectively, for Ahwaz and Shiraz, and much higher than the target value of 0\.75\. C\. Initiating sector reforms, particularly with respect to institutional arrangements, the regulatory framework, demand management, and sanitation strategy The following activities under technical assistance of the project (under the responsibility of NWWEC) were conducted in order to support sector reforms: Institutional Optimization Study for Water Sector in Iran: was carried out in Iran in order to identify inefficiencies within the Iranian water institutions, looking at how the various water agencies in the country coordinate their activities and how decisions are made, water allocation and use, and demand management\. This greatly contributes towards initiating sector reforms by identifying inefficiencies within the sector and optimizing the delivery of services, and better use of the available resources\. National Wastewater Financing and Investment Strategy: this study looked at the feasibility analysis of the investment needs and investment planning in the country by identifying the investment needs, financing requirements and available resources, and how to achieve these investment needs\. As such, the study also looked at various potential financing modalities for wastewater, including tariffs (and the need for tariff adjustments), government financing, and private sector participation\. The study's results could play a key role in reforming the water and wastewater tariff structure throughout the country and in reducing the working ratio to the level of 0\.75, which were among the project objectives\. 18 Capacity Building in the Sector: the project financed national level training for about 4,000 sector professionals through one-week courses in various subject areas\. The contract that was managed by UNESCO-Delft Water Institute also provided study tours to some 390 top officials in the sector\. This contract was very successful in bringing cutting edge knowledge to a wide group of sector professionals, including to those from Ahwaz and Shiraz WWCs\. Bank Supported Seminars and Workshops\. The project also supported successful demand driven workshops in Iran, including: WBI Workshop: a 4-day workshop on Business Planning, Asset Management and Non- Revenue Water successfully took place in Tehran in May 2007\. About 500 sector specialists benefited from this workshop - which was organized with the help of the NWWEC\. Overall, the NWWEC management expressed full satisfaction with the quality and usefulness of the workshop and repeated its interest to continue in the provision of this type of training\. Economic assessment of wastewater projects and innovative wastewater collection and treatment technologies: a workshop was also organized in Iran to showcase the economic assessment of wastewater projects as well as innovative wastewater collection and treatment technologies used in Brazil\. The workshop was well attended by many water and wastewater practitioners from across Iran\. Procurement Workshop: one-day workshop on BOT, DBO and Turn Key projects, contracts, as well as contract management was held in June 2008\. About 30 sector specialists - including private consulting firms - attended the workshop, which was organized with the help of NWWEC\. Overall NWWEC provided positive feedback to the quality and usefulness of the workshop, and expressed its interest in having additional workshops on this topic\. All of the materials and presentations were made available to the participants in English and Farsi\. Workshop on experiences in Public-Private Partnership (PPP) in water and wastewater and Build Operate Transfer (BOT) contract management: in December 2008, the Bank organized a two-day workshop on the evolution of PPP in the water and sanitation sector with specific guidance on the procurement and implementation of BOT projects in the sector in Tehran\. The workshop was well attended by more than 100 sector specialists from various departments/ ministries, including utilities, private sector, ministry of energy and finance, etc\. An evaluation by NWWEC confirmed the relevance and importance of the seminar subject matter to the needs of those in attendance\. 3\.3 Efficiency At appraisal, a detailed financial, economic and cost-benefit analysis of the project was conducted\. According to this analysis, the benefits expected under the project from the provision of modem sewerage systems were better health for the targeted population, protection of the limited water resources, provision of an alternative source of water for irrigation and reduction in the cost of environmental degradation\. The main health effect would be a significant reduction in water-borne diseases, mainly in diarrhea and dysentery\. As a result, it was estimated that the project would be beneficial--estimated internal rate of return of over 20%\. The financial analysis showed that the project would generate sound financial benefits (financial rate of return of over 10%) to the Ahwaz and Shiraz WWCs from several sources, including increased water sales and disposal of wastewater, income from connection fees made possible from the new water and 19 wastewater connections and the increased tariff that will be implemented in order to meet financial performance targets agreed to between the GOI and the Bank\. As many of the project activities were not completed at the time of project closing date, for the ICR assessment, it was not feasible to do an economic and financial analysis and compare the target values with the actual values at the end of the project\. 3\.4 Justification of Overall Outcome Rating Rating: Unsatisfactory\. Based on the discussion given in Sections 3\.2, the overall outcome is rated as Unsatisfactory\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development Poverty Impact: During construction phase of the project, a significant number of temporary jobs had been created\. In addition, several permanent jobs have also been created for facilities' operation and maintenance that will be increased after project completion\. Further, the project, once completed, will supply reliable water (treated wastewater) for irrigation which can result in development of agricultural activities and productivity, and consequently increase farmers' income\. However, because of the incomplete nature of the project, and because the majority of remaining activities were to be conducted in the poorer sections of the community, the impact of the project on poverty could not be fully evaluated\. Gender Aspects: N/A Social Development: With improved access to clean water and sanitation, especially in schools, mosques, and public areas, there will be definite impact on social development\. Baseline on health indicators was completed in 2008\. However, as the project was closed without an extension, another survey after the project closure could not be conducted to find the impact of the project on social development, especially on health\. (b) Institutional Change/Strengthening The staff of NWWEC, AWWC, and SWWC, including the staff of Ahwaz and Shiraz TSUs have benefited from the training programs, seminars and workshops conducted under the project on procurement, financial management, environmental management, utility management and safeguard matters\. This in turn has contributed to capacity building of these institutions\. Moreover, the capacity of national and local consulting engineers and contractors has been strengthened because of the experience gained from the project\. Workshops conducted on asset management, use of condominial approach as a low-cost technical solution, sewerage system and other relevant topics have succeeded in creating awareness on the need for improving operational efficiency of WWCs through non-conventional low-cost approaches\. (c) Other Unintended Outcomes and Impacts (positive or negative) N/A 20 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not done\. 4\. Assessment of Risk to Development Outcome Ratings: Substantial Financial sustainability of AWWC and SWWC\. For covering the recurrent costs of WWCs, an increase in tariff is essential\. However, the lack of tariff adjustment in recent years has led to the erosion of the financial position of the Shiraz and Ahwaz utilities\. This issue is considered to be tied to political reasons and the government is covering the difference between the revenues and expenses\. However, in December 2009 the GOI approved a new law on Targeted Subsidies, according to which the tariffs for public services, including water and wastewater, are to be collected fully from the subscribers (based on cost prices) and the subsidies are to be paid in another and more direct manner to low income families\. According to the new law, the increase up to the real cost will be realized incrementally within three years\. Both in Ahwaz and Shiraz, DBO packages for WWTPs had been approved and contracts awarded\. Construction of these critical components of the project (if timely funding is made fully available) will take up to 36 months\. This is a risk which would not have risen had an extension on the implementation time been granted\. The intensity of the risk would depend on the government's priorities for allocating sufficient resources for timely completing the wastewater treatment plants\. If the government decides to provide adequate funds, the risk could be minimized\. Under the project, these treatment plants could have been completed and made operational within three to four years\. If they are not funded properly, they could take significantly longer time for completing\. In that case, the risk will be higher\. The poor are disproportionately affected due to lack of completion of the project components as the majority of the remaining sub-components of the project (both in Ahwaz and Shiraz) are located in poor neighborhoods\. It should be noted also that the proportion of completed projects is also higher in poorer neighborhoods given the focus of the project on the poor\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory\. The Bank's performance in the identification, preparation, and appraisal of the project was moderately satisfactory\. During preparation and appraisal, the Bank took into account the adequacy of project design and all major relevant aspects, such as technical, financial, economic, and institutional, including procurement and financial management\. A number of alternatives were considered for the project design\. In addition, lessons learned from the Tehran Sewerage Project were incorporated into the design of this project\. 21 Project preparation was carried out with an adequate number of specialists who provided the technical skill mix necessary to address sector concerns and to develop a good project design\. The Bank provided adequate resources in terms of staff weeks and dollar amount to ensure quality preparation and appraisal work (see Annex 4)\. A detailed feasibility study on the project was conducted during preparation and the framework for land acquisition was also completed during this period\. The project was consistent with the government priorities in the sector at the time\. The Bank had a consistently good working relationship with the Borrower during preparation and appraisal\. However, although the design of the project was realistic given the momentum of the reform agenda at the time (as discussed under section 2\.1), in hindsight, it is clear that the project design was overoptimistic in terms of its expectations for tariff adjustment (over 20%) and completion of the project within five years, especially given the lack of any demonstrated capacity to implement such large and complex project in such short time, and lack of knowledge by the client of World Bank's fiduciary procedures\. Likewise, even though most of the risk factors were identified and their mitigation measures were adopted, some other potential risks as mentioned in Section 2\.1 were not properly identified and addressed\. (b) Quality of Supervision Rating: Moderately Unsatisfactory A Quality Assessment of Lending Portfolio (QALP-I) was carried out in September 2009 by a QAG panel of reviewers for the project\. The panel rated the quality of design, Bank supervision, focus on development effectiveness, supervision inputs and processes, and candor and realism of ISRs as Satisfactory, and quality of implementation and the likelihood of achieving DOs as moderately satisfactory/likely\. QAG noted that: "The DOs are appropriate and relevant to the country's circumstances, and they focus on key priorities of the government\. Physical infrastructure is well defined with clear outputs and outcomes\. Connection targets were satisfactory, but utility outcomes (working ratios, unaccounted-for water) not realistic; effluent re-use did not have a target\. The design includes adequate capacity building measures such as a strong training component and technical support for implementing agencies\. The PAD candidly recognizes the lack of clarity in the institutional responsibilities and the limited technical capacity of institutions\. Measures proposed during the MTR to remove bottlenecks to project implementation were appropriate and carefully detailed\. The team has been consistent on pointing to implementation issues and their consequences for the achievement of the project's DOs\. The likelihood of achieving the PDOs has been rated Moderately Satisfactory\. This is based on the assumption that an extension of the closing date, if it were to be requested, will be granted, which the panel supports\. It should, however, be clear that holding the project to the original time-frame is likely to result in a less than satisfactory PDO outcome\." The project's achievements discussed under 3\.2 were possible through intensive and persistent follow-up by a strong task team\. The team was candid in its assessment of the project's failings and achievements, and focused on the project's development impact\. The task team regularly 22 prepared Aide-Memoires (AMs), alerted the government and the implementing agencies about issues found during project execution and facilitated prompt corrective action\. The Implementation Status Reports (ISRs) realistically rated the performance of the project both in terms of achievement of development objectives and project implementation progress\. The Bank allocated sufficient budget and staff resources, and the project was adequately supervised and closely monitored\. The Bank's procurement and financial management staff worked with the TSU staff to explain the rules and procedures to be applied during project implementation, with regard to procurement of goods and works, and selection of consultants, accounts and audits, based on the Loan and Project Agreement\. The task team carried out an MTR relatively on tie (in October-November 2007)\. Several workshops were conducted in subject matters including BOT, DBO and Turn Key projects, contracts, as well as contract management and procurement\. One important aspect of the Bank's performance and contribution was the continuity of the Task Team, including the task manager and other key sector specialists, from project inception through completion\. This continuity engendered consistency, depth and follow-up of the dialogue with the government and provided expertise to help the government analyze issues and implement actions as they emerged during supervision\. Environmental aspects were well supervised and reported on by the task team\. Most of the AMs included a section on environmental safeguards and a detailed action plan with next steps\. The team provided continuous implementation support and monitored closely the implementation of EMPs, identified performance difficulties and systematically proposed corrective measures\. On the above aspects, the Bank/task team's performance was rated Satisfactory\. On the other hand, there was a major shortcoming on the part of the Bank during implementation\. As mentioned in Section 2\.2, at the time of MTR, the Bank had come to the conclusion that a two to three year extension of the closing date of the project, or some of its components, was needed to complete the ongoing and planned works, including the implementation of the DBO contracts for the treatment plants\. Although the need for a closing date extension was known well in advance--at MTR stage, the official request for the same from the GOI came a year later (in December 2008)\. The Bank decided (in August 2009) not to grant the extension\. The Bank could have proactively extended the closing date of the project after the MTR--once it was clear that PDOs could not be fully achieved without such extension (similar to the Tehran Sewerage Project-Phase I)\. Similarly, the Bank should have responded to the Borrower's request without such delay (from December 2008 to August 2009) in order for the Borrower to make necessary transition arrangements\. As a result of this decision and with many critical components of the project (including treatment plants and pumping stations) still under construction and/or incomplete, the development objectives anticipated at the design of the project could not be fully achieved\. Although there were significant performance shortcomings from the Borrower (as discussed below) in terms of providing timely counterpart funding and appropriately adjusting tariffs in order to help the WWCs maintain their financial sustainability, and hence fulfilling relevant DOs as planned at appraisal, the project would have been on track to achieve a greater percentage of the DOs if the Bank had granted an extension of the project closing date because: significant capacity had been acquired by the implementing agencies over the project's life time and implementation momentum had peaked in Ahwaz after a slow start at the beginning of the project; 23 after a lengthy bidding process, major DBO contracts were signed during the last few months of the project's life and their implementation has started; significant components of the project, including water and sewerage networks have been put in place and only needed house connections and connections to pumps and treatment plants (once implementation of these contracts is completed); and the Borrower has recently approved a "targeted subsidies law" which might help alleviate the tariff issue and may eventually lead to the achievement by the WWCs of the relevant PDO indicator (working ratio)\. As such, significant achievements in terms of meeting planned targets at appraisal of PDO indicators (such as UFW, incidence of water borne disease and quality of receiving water bodies) and all intermediate outcome indicators would have been made had the project closing date been extended by three years\. Given the inability of achieving the project's DO in the absence of extending the project closing date, and also given that the poor are disproportionately affected if the project is left incomplete, the fact that an extension of closing date was not granted constitutes a major shortcoming\. As such, this aspect of the Bank's performance was rated Unsatisfactory\. Taking into account both aspects explained above, overall Bank performance during implementation was Moderately Unsatisfactory\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory Based on the Bank performance during lending phase and supervision as discussed above, and overall Bank Performance is rated as Moderately Unsatisfactory\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory At the time of project preparation, Borrower commitment and ownership were reflected through: (i) government giving high priority to the sector, particularly to wastewater in its long-term planning and its request to the Bank for continued support to the sector; (ii) MOE financing from its own budget the background studies and its willingness to pay (WTP) for detailed engineering and preparation of tenders for this project; (iii) WWCs taking initiatives to respond quickly to the Bank's requirements and formally agreeing on the proposed strategy in the sector and future collaboration with the Bank; and (iv) willingness of the government to fund urgent operations (construction of network, wastewater treatment plants, etc\.) in many cities prior to the project implementation\. The government had established a strong NWWEC within the Ministry of Energy, reporting directly to the Vice Minister for Water Supply and Sanitation\. NWWEC (through its own TSU staffed with competent manager and national consultants) was very committed and supportive of the project and extended full cooperation to the task team during implementation\. It was instrumental in keeping the project moving forward\. 24 On the other hand, the government commitment fluctuated during implementation\. For example, counterpart funding was not always made available on a timely basis, as a result of which implementation was adversely affected\. Likewise, as agreed, the performance of local water companies should have been reviewed and their tariffs should have been increased to ensure their financial sustainability\. Instead, for political reasons, the government decided to raise the tariff despite double digit (over 20%) inflation and high O&M costs\. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory The project was implemented by the SWWC, AWWC and NWWEC, and managed by their TSUs\. Shiraz Procurement and technical aspects\. The procurement management and technical supervision in Shiraz was satisfactory as the TSU used an experienced procurement officer from the beginning, along with a very experienced engineer who provided timely oversight with regard to designs and construction, and a qualified TSU manager who was actively involved in procurement\. This team received the same type of training as did the Ahwaz team (hands-on training provided by the Bank during supervision missions, along with the in-house training of the international consultant), but having higher qualifications they could manage to proceed with procurement activities in a much more professional manner, and faced less delays\. Financial Management\. The Financial Management arrangements were based on the use of the Shiraz WWC systems with an upgrade to facilitate the generation of Financial Monitoring Report (FMR)\. The financial management arrangements catered to the project needs and were able to generate various financial reports on a timely basis\. All invoices after being cleared by the TSU were subject to the applicable controls as defined by the local laws\. These laws stipulated that payments need to be approved and issued by the SWWC Financial controller (FC) and were subject to post audit by the "Divan Mohassebat" being the country Supreme Audit Institute in addition to the project external independent auditor\. An accounting system was installed and an external consulting firm was contracted to assist with the project accounts\. The accounting software was customized and configured for the project by an independent developer\. The accounting package comprised one module for recording the accounting transactions and another as a master file for the contracts\. The system functionality was able to reply fully to the project reporting requirement\. The quarterly FMRs were generated through the system and remitted on timely basis to the Bank\. The project SAs were reconciled periodically with the banks statements and the Bank's client connection and withdrawal applications (WA) were issued on timely basis with minor deductions being applied to them by the Bank\. All payments were backed by signed contract or purchase orders\. Issues faced during project implementation related to the US financial sanctions on Iran where funds denominated in US dollars were unable to be transferred to the Special Accounts (SA)\. The closure of the US $ SAs and opening of Euro SAs generated currency translation difficulties that impacted project reporting\. With the assistance of the consulting firm the project was able to introduce a currency translation mechanism (IRR, US$ and Euros) that enabled the reliable reporting in US $ despite the various currency denominations under the project\. 25 Environmental management\. The work of the Shiraz environmental unit was satisfactory and apart from the environmental planning expert, who prepared and managed documents, there was another specialist working in the unit as supervisor\. The Shiraz TSU organized many workshops on Environmental Safeguard and Safety, during which the issues of contractors, consultants, the client and safety were discussed\. In light of the above, overall performance of SWWC/TSU was Satisfactory\. Ahwaz Project management\. TSU's Project Manager changed three times during the project period, and there was also a high rate of staff turnover, which adversely affected the pace of implementation\. In addition, construction design changed two times, and contract management was also overall considered weak\. Procurement and technical aspects\. Originally it was difficult to find and hire qualified staff for the TSU\. As a result, the TSU was staffed by individuals from the AWCC with the assistance of one individual from an external consulting firm\. Even though these individuals were engineers and a few had experience with local procurement, none of these individuals had the required knowledge of World Bank procurement\. To remedy this shortcoming, in addition to the hands-on training provided by the Bank during supervision missions, an international consultant was hired by the Bank to provide the TSU with in-house training, but the TSU had initial difficulties with properly managing the procurement aspects of the project for the first couple of years\. The procurement activity in Ahwaz only picked up when a new experienced procurement staff was recruited\. Financial management\. Similar to that of Shiraz, the Financial Management arrangements were based on the use of the Ahwaz WWC systems\. Although these systems were able to comply fully with the project's reporting requirement, an upgrade was needed to facilitate the generation of the FMRs\. An accounting system was installed and an external individual consultant was hired to assist with the project accounts\. The quarterly FMRs were generated through the system and remitted on a timely basis to the Bank\. The project SAs were reconciled periodically with the banks statements and the Bank's client connection and WA were issued on a timely basis with minor deductions being applied to them by the Bank\. All payments were backed by signed contract or purchase orders\. The Ahwaz sub-project faced issues similar to those faced under the Shiraz sub-project in terms of US financial sanctions\. Environmental management\. The Ahwaz environmental unit was inadequately equipped for monitoring the safety and environmental issues of the ongoing projects and carried out its task with great difficulty\. However, despite the initial difficulties faced, the environmental specialist within the TSU was able to provide the project with baseline data to help monitor progress over time\. Overall performance of AWWC/TSU was thus Moderately Satisfactory\. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory\. 26 As discussed above, project performance was adversely impacted by the lack of timely counterpart funding which resulted in a protracted delay of contract implementation, and by the lack of tariff adjustment in line with local inflation and O&M costs needed to avert a financially unsustainable situation for the WWCs\. In addition, delays faced by the Ahwaz sub-project at the beginning due to poor staff quality and high turnover, especially in the top management of the TSU including the procurement staff affected the performance of AWWC\. Similarly, slow land acquisition, and municipality and traffic police permit processing added extra delays to project implementation\. In light of the government and implementing agencies performance as discussed above, the overall performance of the Borrower was Moderately Satisfactory\. 6\. Lessons Learned Important factors for the success of a project It is necessary to understand the political economy of the country vis-à-vis the feasibility of the project and also the achievability of targets\. Moreover, due diligence in terms of ensuring good quality at entry is very critical for setting realistic targets and devising implementation strategies\. For example, in the case of Ahwaz and Shiraz project, it would be overoptimistic to assume that all the institutional and policy reforms, including the financial sustainability of the WWCs, could be achieved in just five years, especially given the lack of adequate and recent prior experience by the Bank in the sector in Iran\. Implementation The project implementation should start only after all the essential preparatory work has been completed, and conversely, doing the preparatory work during implementation should be avoided as much as possible\. Once the implementation has started, persistence and perseverance are important for the success of the project\. It is good to understand on-the-ground rules and constraints for project implementation in order to either make room for such issues in project design and targets or design appropriate solutions to mitigate local constraints\. For example, in the case of Ahwaz and Shiraz project, designing a project expecting a tariff increase of over 20% was overoptimistic given the political economy of the country and the two cities involved\. As Iran had restarted implementing Bank projects after a gap of several years, the counterpart officials were not familiar with the Bank's policies and procedures, and as a result, a steep learning curve was involved\. In addition, for a project of this type, duration of more than five years is needed to complete project activities\. In light of these factors and as recommended by the MTR mission and QAG team, it would have been realistic and reasonable to extend the project by another two to three years, so that the project objectives could have been fully achieved\. M&E A strong M&E framework should be developed at the beginning and due attention should be given to training the staff and senior management connected with the project with regards to M&E so that they can appreciate its relevance and importance in the 27 implementation of the project--and not see resources that go to M&E as resources sub- optimally used\. Appropriate and adequate indicators should be established in order to sufficiently track project performance\. Performance indicators should be designed taking into account the existing institutional capacities\. For example, some of the indicators originally identified for incidence of water borne diseases and quality of receiving bodies are very difficult to measure\. The quality of receiving water bodies is an indicator that requires substantial sampling capacities and improvements in this indicator is usually a longer-term outcome (past the traditional implementation period of these projects)\. Similarly, adequate targets should be established to enable proper tracking of project objectives\. In addition, it is equally important to have a good baseline data\. It is important to establish a clear results framework from the outset and only identify results that are measureable\. Also, it is necessary to evaluate the project's performance against these results framework on regular basis, and not against disbursement rate that cannot necessarily be a good proxy for project performance\. Safeguards It is good to complete land acquisition and other social aspects of the project before the commencement of the implementation as these matters normally take a longer time than expected\. Procurement TSU teams must be appointed and trained before the project commencement (or as a condition for commencement), preventing delays as the result of learning curve\. Or smaller projects could be used for learning process, with larger ones kicking in after certain goals have been met\. Once a Memorandum of Understanding (MOU) has been signed by the government with the Bank, to follow the Bank's procurement guidelines, it is important for the government to follow the Bank's procurement procedures so that unnecessary delays can be avoided\. Using qualified consultants to assist with the original design and cost estimates would prevent large changes in the project during the implementation\. Tariff Avoid unrealistic expectations in terms of tariff adjustment\. Project design should be made within the realm of possible assumptions\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The NWWEC, SWWC and AWWC all reviewed the draft ICR and provided their comments, which were incorporated as much as possible in the revised ICR\. In addition, both Ahwaz and Shiraz WWCs also provided their ICRs, which have been summarized in Annex 7\. The full content of these ICRs are also available in the project's files\. NWWEC is of the opinion that the Borrower's performance should be rated satisfactory\. However, based on the detailed review of Borrower's performance described under section 5\.2, it 28 was decided that the rating of the Borrower's performance should remain moderately satisfactory\. (b) Cofinanciers N/A (c) Other partners and stakeholders (e\.g\. NGOs/private sector/civil society) N/A 29 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in US$ million equivalent) Appraisal Percentage of Actual (US$ Components Estimate Appraisal million) (US$ million) Ahwaz Rehabilitation, improvement and expansion of water 77\.06 35\.7 systems and facilities 27\.53 Rehabilitation, improvement and expansion of wastewater 157\.4 63\.97 40\.6 systems and facilities Provision o f operation and maintenance equipment and consumer water meters for WWCs' 1\.15 0\.65 56\.5 Technical assistance/consultant services, TSU and training 17\.32 7\.77 44\.9 Shiraz Rehabilitation, improvement and expansion of water 44\.35 44\.84 101\.1 systems and facilities Rehabilitation, improvement and expansion of wastewater 154\.05 167\.10 108\.5 systems and facilities Provision of operation and maintenance equipment and consumer water meters for WWCs' 1\.15 1\.03 89\.6 Technical assistance/consultant services, TSU and training 14\.54 9\.45 65\.0 Total Project Costs 467\.03 322\.31 69\.0 Front-end fee (IBRD only) 2\.79 1\.395 Total Financing Required 469\.82 322\.31 68\.6 (b) Co-financing (The appraisal estimate will be pre-populated from the Financing data in SAP/AUS; Percentage of Appraisal column will be calculated by the system) Appraisal Estimate Actual Percentage of Source of Funds (US$ million) (US$ million) Appraisal [Government] 132\.72 76\.53* 57\.7 [IBRD/IDA] 279\.17 200\.6 71\.9 Customers (Connection Fees) 58\.10 27\.88* 48\.0 * The total sum from the above two tables do not match\. After repeated trials, we failed to confirm the actual amount of money contributed to the project by the Borrower\. 30 Annex 2\. Outputs by Component Shiraz Component 1: Rehabilitation, improvement and expansion of water systems and facilities - 1\.a Water Resources 20 wells have been drilled\. 1\.b Water Supply 235 km water network and transmission lines have been rehabilitated and expanded; construction of one new reservoir has been completed, and construction of other two new reservoirs is ongoing\. One more reservoir and two pumping stations have been financed by SWWC\. Component 2 - Rehabilitation, improvement and expansion of wastewater systems and facilities 2\.a Wastewater trunk mains 30\.5 km trunk mains have been constructed\. 2\.b Laterals and interceptors 556 km laterals and interceptors have been constructed\. 2\.c House connections 119,313 connections have been installed\. 2\.d Wastewater treatment plants and outfalls Two modules with a total capacity of 100,000 m3/day are under construction\. Outfalls from the emergency and long-term WWTPs will be financed by the Regional Water Authority\. Component 3 - Provision of operation and maintenance equipment and consumer water meters for WWCs All necessary O&M equipments (e\.g\. 81 magnetic meters, one set of video meter camera and the main laboratory instruments and accessories) have been purchased\. Component 4 - Capacity building, Technical Assistance (TA), training and consulting services All targets have been achieved\. 31 Ahwaz Component 1: Rehabilitation, improvement and expansion of water systems and facilities - 1\.a Water Resources Rehabilitation of two WTPs is ongoing\. 1\.b Water Supply 131\.1km water network and transmission lines have been rehabilitated and expanded; construction of one new reservoir has been completed, and construction of other four new reservoirs is ongoing\. Component 2 - Rehabilitation, improvement and expansion of wastewater systems and facilities 2\.a&b Wastewater trunk mains, laterals and interceptors 158km of trunk mains, laterals and interceptors have been constructed\. 2\.c House connections 99,175 additional connections have been installed\. 2\.d Wastewater treatment plants and outfalls New construction of two modules (one with a capacity of 102,000 m3/day and another with 54,575m3/day) are under construction; rehabilitation of the Choneibeh WWTP is near completion\. Component 3 - Provision of operation and maintenance equipment and consumer water meters for WWCs Purchased: (i) computer units and systems; (ii) wastewater monitoring equipment; and (iii) vacuum tank for cleaning up of wastewater trunks\. Component 4 - Capacity building, Technical Assistance (TA), training and consulting services All targets have been achieved\. 32 Annex 3\. Economic and Financial Analysis At appraisal, a detailed financial, economic and cost-benefit analysis of the project was conducted\. According to this analysis, the benefits expected under the project from the provision of modem sewerage systems were better health for the targeted population, protection of the limited water resources, provision of an alternative source of water for irrigation and reduction in the cost of environmental degradation\. The main health effect would be a significant reduction in water-borne diseases, mainly in diarrhea and dysentery\. As a result, it was estimated that the project would be beneficial--estimated internal rate of return of over 20%\. The financial analysis showed that the project would generate sound financial benefits (financial rate of return of over 10%) to the Ahwaz and Shiraz WWCs from several sources, including increased water sales and disposal of wastewater, income from connection fees made possible from the new water and wastewater connections and the increased tariff that will be implemented in order to meet financial performance targets agreed to between the GOI and the Bank\. As many of the project activities were not completed at the time of project closing date, for the ICR assessment, it was not feasible to do an economic and financial analysis and compare the target values with the actual values at the end of the project\. 33 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Lead Water and Sanitation Task Team Leader, MNSSD Mohammed Benouahi Specialist TTL Infrastructure Sector Manager MNSSD Anna Bjerde Specialist Sr\. Financial Management Financial MNAFM Robert Bou Jaoude Specialist management Lead Financial Management Financial OPCFM Rafika Chaouali Specialist management Zakia Chummun Language Program Assistant MNSSD Program Assistant Peter J\. Kolsky Sr\. Water & Sanitation Spec\. ETWWA M&E Parviz Piran Social Scientist, local consultant MNSSD Social Mathewos Woldu Sr\. Economist AFTUW Former TTL Sepehr Fotovat Ahmadi Senior Procurement Specialist MNAPR Procurement Supervision/ICR Water and Sana Kh\.H\. Agha Al Nimer Sr\. Water & Sanitation Spec\. MNSWA sanitation specialist Alexander E\. Bakalian Lead Water Resource Specialist MNSWA TTL Lead Water and Sanitation Mohammed Benouahi MNSSD Former TTL Specialist Sr\. Financial Management Financial Robert Bou Jaoude MNAFM Specialist management Water and Bekele Debele Negewo Water Resources Specialist MNSWA sanitation specialist Sr\. Financial Management Financial Mona El-Chami MNAFM Specialist management Sepehr Fotovat Ahmadi Senior Procurement Specialist MNAPR Procurement Claire Kfouri Water & Sanitation Specialist MNSWA Sanitation specialist Lizmara Kirchner Water & Sanitation Specialist LCSUW Financial analyst Peter J\. Kolsky Sr\. Water & Sanitation Specialist ETWWA M&E Thao Le Nguyen Senior Finance Officer CTRFC Finance Knut Opsal Sr\. Social Scientist MNSSO Social Project Klas B\. Ringskog Lead Evaluation Officer, Consultant ECSSD management Parviz Piran Social Scientist, local consultant MNSSD Social Magalie Pradel Language Program Assistant MNSSD Program Assistant 34 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending FY01 6 27\.89 FY02 12 104\.47 FY03 24 228\.66 FY04 48 328\.80 FY05 0\.00 FY06 0\.00 FY07 0\.00 FY08 0\.00 FY09 0\.00 FY10 0\.00 Total: 90 689\.82 Supervision/ICR FY01 0\.00 FY02 0\.00 FY03 0\.00 FY04 6\.75 FY05 35 187\.67 FY06 28 175\.78 FY07 27 127\.54 FY08 38 184\.36 FY09 22 0\.00 FY10 (estimated) 45\.39 Total: 150 727\.49 35 Annex 5\. Beneficiary Survey Results N/A 36 Annex 6\. Stakeholder Workshop Report and Results (if any) 37 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR From Shiraz Water and Wastewater Company (SWWC) ICR 1\. Introduction 1\.1\. Project Description Shiraz Water and Wastewater Company (SWWC) implemented the Shiraz Water and Wastewater Sub-project\. The sub-project included the rehabilitation, improvement and expansion of water and wastewater systems and facilities for the city of Shiraz\. The development was proposed to take place in 3 phases to cover the period to about 2027\. For phase 1 covering through 2005 and 2009, and a population of million, water supply and distribution networks and wastewater collection systems would be implemented and wastewater treatment works would be constructed in the south east of the city with the use of treated effluents in the agricultural lands\. The project further included operation and maintenance equipments and technical assistance training /consultant services for institutional development and project management, engineering design and construction supervision\. The SWWC received a Loan from the World Bank in amount of USD 127\.21 million toward a part of the cost of the project\. 1\.2\. Project Development Objectives The main objectives were to: (a) enhance the quality of life in the city of Shiraz, particularly in poor areas by: (i) improving access to satisfactory water supply and significantly increasing coverage of sanitation services; and (ii) improving environmental, hygiene and health conditions, as well as promoting reuse of treated effluents; (b) Strengthen and develop the capacity of SWWC, and assist the latter in improving their efficiency, sustainability and financial autonomy; and (c) Initiate sector reforms, particularly with respect to institutional arrangements, the regulatory framework, demand management, as well as prepare a sanitation strategy\. The objectives under the first phase of the project would be achieved through: Provision of water supply and distribution networks and also provision of sanitary wastewater collection and treatment facilities\. Improvements in public health and reduction of surface and ground water pollution and also provision of treated wastewater for irrigation on the Harvestman Plane (Located in south east of Shiraz)\. 38 1\.3 Project Description The detailed description and components of the project are as follow: (i) Rehabilitation, improvement and expansion of water systems and facilities: Water resources: drilling and equipping of 17 new wells with total water abstracted amounts equaling 82,000 m3/day\. Water Supply: a) laying of 34 km GRP transmission pipelines with diameters ranging between 500 and 1200 mm; b) rehabilitation and extension of the water network including installation of pressure reducing valves with diameters ranging between 200-400 mm and a total length of 235 km of PE pipes; and c) construction of four concrete reservoirs 3000m3, 7500m3, 20000m3 and 40000m3 as well as construction of two pumping stations\. (ii) Rehabilitation, improvement and expansion of wastewater systems and facilities: Construction of 95 km of GRP trunk mains in the emergency and long- term areas; diameter range between 500- 1200 mm\. Construction of 740 km of PE laterals and interceptors\. Works under this subcomponent will cover an area of 5496 ha\. Construction of 50,000 additional house connections\. Construction of two modules wastewater treatment plant with a total capacity of 100,000 m3/d to be built under DBO contract\. Construction of 20 km GRP outfalls to discharge treated effluents as well as sludge storage site\. 2\. Project costs and financing Plan Total project cost (Phase 1) was estimated at about US$ 214\.10 million, with US$ 127\.17 million in foreign exchange\. The civil works portion amounted to about 92\.71 percent of the cost\. The proposed Bank loan of US$ 127\.17 million financed about 59\.40 percent of the project cost, and would meet nearly all the foreign exchange component\. The rest of the cost (US$ 86\.93 million) was being financed by the borrower\. 3\. Civil Works 3\.1\. Water Works: 3\.1\.1 Drilling and Equipping of 17 New Wells The work comprised drilling of 20 wells with total depth of 3250 m, provision and installation of steel pipes of 14 ft and 16 ft diameter, within 3 bids\. Drilling of 20 wells has been completed\. 39 3\.1\.2 Transmission Pipelines and Water Distribution Networks This component comprised of lying 34 km GRP transmission pipelines feeding distribution network and transmitting water from wells to reservoirs\. It also included rehabilitation and extension of 235 km of water networks\. All 269 km (34 km GRP and 235 km PE pipes) the lines and the networks is constructed (100 % percent of the target)\. 3\.1\.3 Construction of Storage Reservoirs Bidding of two concrete water storage reservoirs (out of 4) 3000 m3 and 40,000 m3 in volume was conducted with NCB procedure\. The contract was awarded on March 19, 2006 with a completion period of 24 months, and with a local contractor named "Arsam"\. The client was not satisfied with the progress of this project and finally the contract was terminated\. The new contracts of 40000 m3 and 3000 m3 reservoirs were awarded on June 17, 2008 and July 05, 2008 with two local contractors Pars Maroon and Salar Sahab respectively\. The previous Contractor (Arsam) has submitted litigation to the court and the client has confiscated its bid security\. The contract of the third reservoir 20000 m3 in volume was also conducted with Salar Sahab on August 14, 2008\. 3\.2 Wastewater Works: 3\.2\.1 Trunk Mains, Interceptor & Laterals About 536\.6 km of the mains, interceptor and laterals with diameters ranging from 200mm up to 1800 mm are yet constructed (64\.26 percent of the aim)\. The trunk main which conveys sewage to the long- term wastewater treatment plant has a length of 8220 meters and is a GRP pipe, 1800 mm in diameter and has been fully constructed\. 3\.2\.2 Wastewater Treatment Works The prequalification procedure has been carried out and three groups of JV contractors out of ten have been qualified by the Consultant (Schlegel) and the WB no- objection on the provided Pre- qualification Report was obtained on August 23, 2007\. The final Draft of the Tender Documents was sent for the WB on October 02, 2007, and the World Bank's approval was obtained on December 18, 2007\. 3\.2\.4 Outfalls Construction of two outfalls (20 km in length) to discharge treated effluent for the Emergency Plant and Long- term Treatment Plant to Lake Maharloo had been planned to be constructed\. The first one was later completely postponed because the effluent is to be discharged into the Sarvestan irrigation system, and the latter will be constructed in a shorter length as long as to discharge the effluent into the available constructed drainage system\. 40 3\.2\.5 Sludge Storage Tanks Construction of 32 separate cells, each one having internal dimension of "60m X 20m X 2m" is completely finished and handed- over\. 4\. Procurement of Goods and Equipments 4\.1\. 82 Magnetic Flow Meters After receiving the World Bank's no- objection on bidding documents on magnetic flow meters, the ICB procedure were followed\. Four bidders submitted their proposals and Absardar Company was the Least Evaluated Responsive Bidder with the offer of IRR 5,601,140,000\. The contract of purchasing 82 magnetic flow meters was signed and notified to this company\. 81 meters have been yet delivered\. 4\.2\. Main Laboratory Instruments and Accessories To strengthen the laboratories with the necessary equipments and chemicals, 6 contracts were awarded to qualified suppliers with total cost equal to IRR 3,445,958,000\. All equipments and chemicals have been delivered to the Labs\. 4\.3\.Office Equipments Due to urgent needs of the Technical Support Unit to some equipment, several requests were made to the suppliers and received appropriate and economical quotations\. In this concern, we have had some quotations to provide goods as follows: (i) Personal computer sets, printers, scanner, etc\.3 proposals were received, after obtaining the World Bank's No-Objection\. (ii) Desks, chairs, cupboards, meeting table, etc\. the same procedure to purchase these facilities were followed and the contract was awarded to the least cost quotes (Tajhiz Karan Fars) as the selected bidder at the total price of 82,555,000 Rails\. (iii) Two vehicles at a price of IRR 444,400,000 to be used for daily visits and supervisions of works under execution, attending meetings, contacts with officials and organizations in the city, etc\. (iv) Refrigerator, gas-stove, cooling device for rooms television set, video- project and screen telephone set, as were permitted upon our prior request to the Bank, and at a total price of prep of IRR 48,000,000\. (v) Server for computer unit's coordination and two other sets of personal computers at the cost of IRR 37,890,000\. The contract was made with the least evaluated responsive bidder\. 5\. Services 5\.1\. Consulting Services / Technical Assistance 5\.1\.1 Project Supporting Unit (TSU) To strengthen the in- house capacity of SWWC, the staffs for TSU were chosen from both in- house and private sectors and currently include: 41 TSU Manager (one full time SWWC staff) TSU Procurement Officer (one full Individual Consultant ) TSU Water and Sanitation Engineer (one full time Individual Consultant) TSU Environmental Officer (one full time Individual Consultant ) TSU Financial Officer (one private firm with one part time and two full time staff)\. Procurement experts (one full time SWWC staff and one part time Individual Consultant)\. Administration Expert (one full time SWWC staff)\. Supporting Office Staff (2 full time SWWC staff) General Services (one full time staff from private sector)\. Drivers (Two full time SWWC staff)\. 5\.1\.2\. Detailed Design of Water Distribution Networks For preparation of detailed design of the extension and rehabilitation of water distribution networks for the years 2-5, hiring a qualified consulting engineer was needed\. 5\.1\.4\. Construction Supervision of Water Distribution Networks To ensure that the contractors are executed according to specifications; and to keep the SWWC informed on progress made and on issues encountered ; and to make revisions in design as needed, a local consulting firm named "Iranab" was hired through ICB procedure\. The consultant supervised packages planned for the first implementation year but due to shortage of budget, execution of most of the packages of years 2-5 was postponed\. 5\.1\.5\. Wastewater Treatment Plant Consultancy Services To obtain high quality services for the treatment plant, a 3- phase contract with "Schlegel" of Germany (Leader), "Iranab" of Iran (Sub- consultant) who obtained the highest technical and financial score, was concluded\. First phase (Tendering): To study the available design criteria of the treatment plant; Pre- qualify the contractors; Preparation the tender documents for a "Design- Built and Operate (DBO)" tender; evaluation of proposals; and assistance in negotiations with the winner; and finally to study and confirmation of the contractor's design of the treatment plant\. Second phase: Supervision of construction of the treatment plant\. Third phase: supervision of operation of the treatment plant\. Under the first phase the Consultant reviewed the pre- qualification documents of the interested contractors (10 firms), and prepared a pre-qualification report based on the collected data and already prepared Pre- qualification Documents and Criteria\. 5\.1\.6\. Construction Supervision of Wastewater Collection System\. 3 (three) local consulting firms named, Iranab, Mahab- e- Ghods and Water& Wastewater Consulting Engineers are supervising the construction of the networks and the trunk mains\. Iranab has the responsibility of the first year packages and the other two consultants are engaged with the ones of years 2-5 which is being completed\. 42 5\.1\.7\. Preparation and implementation of Environmental Monitoring System: This activity is undertaken to be implemented by the Central Laboratory of SWWC\. To strengthen the laboratory with the necessary equipments and chemicals, the World Bank's approval has been achieved and US$ 306,352 was allocated for this purpose\. TSU procured the requirements and 6 contracts were awarded to 6 qualified suppliers\. At present all the equipments and chemicals have been delivered to the Labs\. Meanwhile based on the contracts obligations, the suppliers had the commitment of training of laboratory staff to strengthen capacities in application of the instruments and implementing analyses methods\. Monitoring Sampling Stations on water bodies, have been selected and 25 rounds of sampling and analyzes have been carried out up to April 2009\. The results obtained, has been reported to the World Bank\. 5\.1\.8\. Environmental and Safeguard Mitigation Measures About 32 worksites have been visited several times \.After each visit the worksites are scored and ranked and they are forced to implement the relevant mitigation measures permanently\. 5\.1\.9\. Industrial Waste Compliance Action Plans (CAPs) The SWWC requested proposals from a short- list (6 firms out of 13) of local consultants and through a bidding "Farsab Sanat" obtained the best technical/financial score to take over the above mentioned assignment\. Following receipt of no- objection from the Bank the contract with amount of IRR 521,410,579 was awarded to the Consultant\. This amount was adjusted to IRR 599,622,165 to meet the extra services\. The final report has been submitted and approved\. 5\.1\.10\. Emergency Operation Plan (EOP) 3 proposals received were opened\. The cost proposed are much higher than what has been estimated\. The minimum price offered was IRR Rials 53,500,000\. Due to some reasons such as a similar plan called "Strengthening the Structures" and also another plan called "Risk Management in SWWC" it was decided not to implement the Plan according to the World Bank's instruction\. 5\.1\.12\. Strengthening of SWWC The project has contributed the following strengthening and capacity buildings: ¾ Establishing the TSU to support the project technically and implement all procurements and financial activities according to the World Bank procedures\. This group consisting of five individual consultants is now well trained and experienced in managing similar projects benefited from the Bank's loans\. And is a valuable capacity for the country\. ¾ Training some of the Company's staff (at least six persons) as the Executive Managers to manage big scale projects efficiently\. ¾ Strengthening national and local consulting engineers and contractors (four consultants and 20 contractors) especially domestic trained and skilled contractors which are a great wealth for the province\. 43 ¾ Training a national consultant with DBO processing of a wastewater treatment plant, being as a sub-consultant of an International consulting engineer\. ¾ Strengthening the Company with the necessary equipments, instruments and goods which are usually impossible to supply them from the budget of the company (e\.g\.; 82 Magnetic Flow Meters, one set of Video- meter and high tech\. Laboratory Instruments, etc\.)\. With this equipments and instruments SWWC has improved its O&M facilities and owns one of the sophisticated water & wastewater laboratories which are a reference in the country\. 6\. Project Management Report (PMR) Based on the World Bank Regulations, the Shiraz Water and Wastewater Company agreed to follow the Loan Administrative Change Initiative (LACI) of the Bank\. 7\. Conclusion Project Assessment: (a) Physical: TM 20 new wells have been contracted, all have been drilled\. This means 17\.65 % beyond the plan\. TM All 269 Km of water supply and distribution pipes have been executed (100% completion)\. TM 3 reservoirs 43000 m3 total volume (out of 70500 m3) water storage reservoir has been contracted, with average physical progress of 80\.29%\. TM 556 km trunk-mains lateral and interceptor (out of 740 km) of the sewerage system has been contracted\. TM All necessary consulting engineers (Except one), TSU and individual consultants have been hired\. (b) Performance Indicators: SWWC's working ratio has slightly increased to 1\.19 (comparing to 0\.92 at appraisal), which means that the company has generated less revenues to pay for its operating expenses\. Level of accounts receivables have also increased to 114 days (compared to 167 at appraisal), and non revenue water which had been estimated up to about 30 % during the years 2004/ 2005,has been reduced to 25 %\. Constraints: (i) Shortage of Government's share in fund allocation till present amounts to 223,523,146,864 Rials (US$ 24,552,191) as fund deficit\. (ii) Increase in the previously forecast budget for the 2 modules of Long Term WWTPs (million US$ 26\.79 changed to million US$ 63\.69)\. 44 (iii)\. Extra Payments not predicted in the planned values ,which should be made as a result of price adjustment to contracts subject to adjustment for prices (for water packages about million US$ 5\.79 and for wastewater packages about million US$ 8\.09)\. (iv)\. According to the PAD, Bank share and GOI share are 60% and 40% for wastewater and 50% and 50% for Water works respectively, but based on the Loan Agreement, Bank share and GOI share are 80% and 20% for Wastewater and Water works respectively, on the other hand since payments for wastewater house connections is made from SWWC's business income, and accordingly, the Bank and GOI shares are reduced to 66% and 16\.5% respectively\. 45 From Ahwaz Water and Wastewater Company (AWWC) ICR 1 Introduction Ahwaz, the center of Khozestan province is located at approximately 875 Km\. from Tehran\. The present population is about 950,000 and is projected to reach 2\.2 million by the year 2027\. Ahwaz is one of the most important economical centers of the Islamic Republic of Iran as it is located in an oil-rich region and hosts a number of large industries; the Karoon River is the largest river in Iran, flows along Ahwaz and divides the city into two separate drainage zones\. The project covered the rehabilitation and expansion of the water supply and sanitation system in Ahwaz city in order to cope with growing demands\. The required works for water and wastewater would be completed over four phases\. With phase one from 2003 to 2007, phase two from 2008 to 2012,phase three from 2012 to 2017 and phase four 2018 to 2027 \. The Water and Sanitation Project covered works to be included in the first phase (2003 to 2007)\. 1\.1 Project Description Water supply: As part of the project, the following water works were included: Rehabilitation of the two existing water treatment plants by construction of pre-sedimentation units and the addition of dual media layers, ozonation and activated carbon in treatment plants no\.1 and 2\. Pipe laying of 10 km transmission pipelines from the water treatment plants no\. 1 and 2 to the storage reservoirs diameter ranges from 700-2000 mm\. Rehabilitation and extension of the water network with diameters ranging from 200-600 mm\. with a total length of 266km\. Construction of five concrete square reservoirs of 50,000 M³ capacity in Hasir Abad and water treatment plant # 2 area as well as construction of required pumping station\. Wastewater: Ahwaz wastewater plan proposed that sewerage generated in the western zone will be conveyed to the existing Choneibieh wastewater treatment plant, while sewerage generated in the eastern zone will be conveyed to a new wastewater treatment plant\. The Choneibieh Wastewater treatment plant would be rehabilitated and its capacity would be increased to reach 204,000 M³/d by the year 2027 \.The proposed new wastewater treatment plant in the eastern zone was based on activated sludge process plus nitrification, de-nitrification and chlorination \.The plant would be constructed in 3 phases to reach a capacity of 300,500 M³/ d by the year 2027\. As part of the project, the following wastewater works were included: Construction of 60 Km of concrete trunk main in east and west of Ahwaz , out of which 2\.6 Km of western trunk main with size 1200 mm, and 3\.5 Km of the eastern trunk main with size 1600 mm, would be constructed as tunnels\. The eastern trunk main would collect wastewater from the eastern basin and transfer it to the proposed new treatment plant, while the western trunk main would collect the wastewater from the western basin and transfer it to the existing Choniebieh treatment plant\. Construction of 162 Km, of PE laterals and interceptors and 16 lift and pump stations works under this sub-component would cover an area of 1465 ha \. 46 Rehabilitation and expansion of the existing treatment plant at the west of Ahwaz (Choneibeh), to meet its design capacity of 200,000 PE, this will be done by replacing various mechanical parts, repairing of concrete parts, adding a new unit that will enable treating a flow of 54,575m³/d as well as providing sludge lagoons and storage facilities\. Construction of first two modules of the treatment plant in east of Ahwaz with a capacity of 522,000 PE, treating a flow of 102,000m³/d, the proposed treatment process is activated sludge with nitrification and de-nitrification\. 1\.2 Benefits of the Project The project was expected to benefit a population of 1\.3 million people, living in Ahwaz city and representing about 1\.8 % of the population of Iran\. While the water systems are well developed and population coverage is almost total in the two cities, sewerage coverage is very low and the need to develop adequate sewage systems is urgent\. Only one wastewater treatment plant (WWTP), located in Ahwaz, is in operation at the present time and even this plant treats only part of the generated wastewater and is in need of rehabilitation\. Because of the deleterious effects of the current state of living conditions and the environment, the construction of modern sewage systems is expected to generate significant health and environmental benefits\. The implementation of the project would address the water and sanitation needs of the population of Ahwaz city, a large proportion of which is poor\. The topographic characters of the city in question and the downstream effects of water and sewage flow are such that the most polluted areas are the ones inhabited by the poorest of the population\. Traditional water-related diseases such as helminthes, hepatitis A, conjunctivitis, skin diseases, and to a lesser extent typhoid and cholera are quite prevalent\. (a) Economic The benefits expected under the project from the provision of modern sewerage systems were: better health for the targeted population, protection of the limited water resources, provision of an alternative source of water for irrigation and reduction in the cost of environmental degradation\. The main health effect would be a significant reduction in water-borne diseases, mainly in diarrhea and dysentery\. These diseases result in various economic costs - workdays missed for adults and schooldays missed for youngsters during the sickness period, the cost of medication and eventually of hospitalization\. In addition, there will be a significant improvement in the living conditions of targeted population\. The water component will provide safe and affordable drinkable water to the expanding population in the two cities\. (b) Environmental Major environmental issues were: (i) risk of poor performance of water treatment facilities that would lead to insufficient water quantity of inadequate quality if the water supply system is not properly maintained and monitored; (ii) possible discharge of toxic/harmful industrial substances into the wastewater collection network because of lack of enforcement on the provision of the required pre-treatment; and (iii) use of treated effluent for irrigation and of treated sludge for soil conditioning could, in case of any adverse diversions in treatment quality, cause a health threat to people\. (c) Public Health 47 Although water supply coverage is high, sanitation is desperately poor, particularly in unplanned and informal settlements, which are substantial in city of Ahwaz\. Individual infiltration sewerage systems are common\. With a deteriorated potable water infrastructure, drinking water is contaminated by untreated sewage\. During summer or when it rains, these create an unpleasant and unhealthy environment characterized by odor, flies and polluted stagnant water\. Poor children are particularly exposed, and pedestrian communication is difficult and unpleasant\. 2\. Project Cost and Financing Plan Total project cost for planning period (2005-2027) was estimated about IRR 3,960 billion (US$471\.52 million) from which US$87\.62 million was the cost of water supply and distribution system and US$383\.90 million was the cost of wastewater collection and treatment plants\. For the first phase (2005-2009) the total estimated cost of the project for water and wastewater was US$95\.54 million and US$157\.4 million respectively which was US$252\.93 million for both\. The amount of the allocated loan for Ahwaz project was US$149\.03 million\. 3 Civil Works (a) Water Works Two contracts, Rehabilitation of Water Treatment Plant's No\. 2 Intake (AW7) and Rehabilitation of Distribution Network (AW4/4), out of above mentioned stipulated contracts were terminated due to Contractor's fault and relevant Legal Procedures are going on\. As the results of ILF Feasibility Studies on possibility of Rehabilitation of Ahwaz Water Treatment Plant No\. 2 showed that the rehabilitation of this treatment plant is not technically and economically feasible and AWWC decision is on reconstructing a new treatment plant instead of rehabilitation of existing one\. This feasibility report has been approved by NWWEC's Technical Department and considering new scope of work, a new pre-qualification procedure has been started under package of PQ-AW6R\. (b) Wastewater Sector 13 contracts with a total amount of USD 47\.15 million were stipulated and awarded since effectiveness of World Bank's Loan and their construction is ongoing now\. One contract, Rehabilitation of Ahwaz West Wastewater Treatment Plant (AS6), was terminated due to Contractor's fault and relevant legal procedures are ongoing now\. Also three contracts have been completed (AS4 & AS4/7 & AS5)\. Pre-qualification procedures of four procurement packages worth USD 90 million were started after getting World Bank's no objections on relevant pre-qualification documents as follows: (i) Ahwaz Eastern Wastewater Treatment Plant (PQ-AS12) with cost estimate of USD 40 million\. Three bids were received and opened publicly on 6th October 2008 for Design, Built and operate of Ahwaz Eastern Wastewater Treatment Plant\. The evaluation of received bids was conducted by P2m Berlin Consulting Engineers\. (ii) Ahwaz West Main Trunks (PQ-AS9R) with cost estimate of USD 35 million in two lots\. It is going to be held until finalization of Ahwaz Eastern Wastewater Treatment Plant Contract (AS12) and if the World Bank's financial resources are available, it will be implemented under the IBRD Loan's resources; otherwise it is going to be executed under AWWC's Financial Resources\. 48 (iii) Ahwaz West Three Main Pumping Stations (PQ-AS24R) with cost estimate of USD 15 million\. Due to lack of World Bank's Financial Resources caused by growth of Inflation Rate and prioritization of remained packages, it is decided to hold the Implementation of this package by World Bank loan and it is going to be tendered through AWWC's available other Financial Resources\. Ahwaz Eastern Three Main Pumping Stations (PQ-AS23/2) with cost estimate of USD 10 million\. The pre-qualification procedure has been prepared by TSU/AWWC along with the ICB Bidding Documents and the relevant ICB was supposed to be started by the end of April 2008 but due to lack of World Bank's Financial Resources caused by growth of Inflation Rate and prioritization of remained packages, it is decided to hold the Implementation of this package by World Bank loan and it is going to be tendered through AWWC's available other Financial Resources by July 2009\. 4 Services (i) Consulting Services for Detailed Design & Procurement Packages of Water Supply Components for Implementation years 2 to 5\. The contract was awarded to Seureca from France and Dez Ab from Iran and the commencement of services is ongoing now\. The final updated feasibility studies of Ahwaz Water Sector has been submitted by the consultant and approved by AWWC's Technical Committee\. (ii) Consulting Services for Design, Build & Operate (DBO) of Ahwaz Eastern Wastewater Treatment Plant\. After getting World Bank's approval on draft version of negotiated contract, it has been awarded to P2m Berlin from Germany and local Sub-Consultant of Kar Avar from Iran\. (iii) Consulting Services for Supervision of Construction Contracts in Ahwaz Wastewater Sector Implementation years 2 to 5\. Due to ambiguities and errors that existed in RFP's TOR which resulted in receiving inconsistent and incomparable proposals, none of the short listed consultants obtained the minimum technical score required to pass\. The bidding process for selection of this consultant was cancelled and it was decided to be re-tendered\. After retendering, contract award it was awarded to Pars Jooyab from Iran\. The Commencement of services is ongoing now\. (iv)- Consulting Services for Supervision of Construction Contracts in Ahwaz Water Sector Implementation years 2 to 5\. The contract has been awarded to select consultant, joint-venture of Nespak from Pakistan and ATT from Iran\. The Commencement of services is ongoing now\. (v) Consulting Services for Design, Build & Operate (DBO) for Rehabilitation & Extension of Ahwaz Water Treatment Plant No\. 2\. The contract was awarded to Joint Venture of ILF from Austria and Pars Consult from Iran\. The Commencement of services is ongoing now\. (vi) - Environmental Monitoring Program (EMP) The Draft Report has been prepared and was submitted to the World Bank for reviews\. The World Bank comments on the report were received and forwarded to the consultant\. (vii) - Compliance Action Plans (CAPs) 49 The World Bank comments on the draft report were received and forwarded to the consultant for incorporating the comments\. (viii) - Consulting Services of Study using Water & Sewerage Systems on Incidence of Diarrhea between 6 60 months old children\. The Inception Report was prepared and submitted to the WB on 26/10/2007\. The field inspections were carried out by the consultants\. The Questionnaires were prepared and a group of representatives were sent to the houses and the required information/ data were collected\. The Final Report has been prepared and is submitted to the World Bank\. 50 Annex 8: Comments of Cofinanciers and Other Partners/Stakeholders N/A 51 Annex 9: List of Supporting Documents Project Implementation Plan Aide Memoires, Back-to-Office Reports, and Implementation Status Reports Project Progress Reports Project Appraisal Document for Iran: Ahwaz and Shiraz Water Supply and Sanitation Project, dated April 29, 2004 (Report No: 27223-IRN) Shiraz: Borrower's Evaluation Report dated January 2010 Ahwaz: Borrower's Evaluation Report dated February 2010 Other Supporting Documents Ahwaz WWC ICR Shiraz WWC ICR 52	REVIEW
P078692	ï»¿ ICRR 13414 Report Number : ICRR13414 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 03/16/2011 PROJ ID : P078692 Appraisal Actual Project Name : Post Secondary US$M ): Project Costs (US$M): 40\.5 22\.7 Education Project Country : Ethiopia Loan /Credit (US$M): Loan/ US$M ): 40\.0 22\.7 Sector Board : ED US$M): Cofinancing (US$M ): Sector (s): Tertiary education (80%) Central government administration (10%) Vocational training (10%) Theme (s): Education for the knowledge economy (67% - P) Improving labor markets (33% - S) L/C Number : C3984 Board Approval Date : 09/16/2004 Partners involved : Closing Date : 09/01/2009 09/01/2009 Evaluator : Panel Reviewer : Group Manager : Group : Alemayehu A\. Ambel John R\. Heath IEG ICR Review 1 IEGPS1 2\. Project Objectives and Components: a\. Objectives: The project development objective (PDO), according to the Project Appraisal Document (PAD) and the Development Credit Agreement (DCA), was "to increase the human resource development capacity of Ethiopia at the post-secondary education level \." (PAD, p\.11)\. The project was informally restructured in 2008\. The PDO was not revised\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The project had two components : US$35 million; Actual : US$22 Component 1: University Education (Appraisal : US$35 22 \.69 million )\.There US$22\. )\.There were three sub- sub -components : a\. Institutional Development Grants (IDG) (Appraisal: US$16 million; Actual: US$9\.93 million )\. This subcomponent included support for the basic capital expenses of eligible institutions \. It would supplement the Government's block grant allocation to universities \. It aimed at offsetting temporary gaps in revenue caused by a bulge in enrolments and the lag before the first revenues from the graduate tax were received \. The IDG support would be disbursed annually (US$4 million/year) based on evidence of implementation of major policy reforms proposed for the year \. b\. Higher Education System Support Institutions (Appraisal: US$4 million; Actual: US$1\.18 million)\. This subcomponent included support to the Quality and Relevance Assurance Agency (QRAA), the Ethiopian Higher Education Strategy Institute (EHESI), the National Pedagogical Resource Center (NPRC), and the central ministry (the Ministry of Education-MOE)\. c\. Development Innovation Fund (DIF) (Appraisal: US$15 million; Actual: US$11\.58 million)\. This subcomponent included support to stimulate innovation, promote modernizing changes, and reward quality enhancing efforts within universities\. The support had three windows through which proposals would be submitted : undergraduate program proposals, post-graduate program proposals, and institutional leadership and management proposals \. Component 2: Technical and Vocational Education and Training (TVET) TVET ) Innovation Program (Appraisal: US$4 million; Actual: US$ Nil)\. This component included support to expand and deepen the Ministry of Education (MOE) led system reform activities along the five pillars of TVET transformation including decentralization of service delivery; strengthening partnerships among stakeholders, especially between training providers and employers; development and implementation of a trades testing and certification system; cost sharing by beneficiaries; and market-based demand orientation to shape training \. The component included the following three sub -components: a\. Professional and Skill development (Appraisal: US$3\.2 million; Actual: US$ Nil)\. This subcomponent would focus on short and long term training via supporting technical assistance and instructional materials \. b\.Monitoring and Evaluation and Research (Appraisal: US$0\.38 million; Actual: US$ Nil )\. This subcomponent would finance studies by MOE and regional offices to identify training needs, develop and field test new curricula and assessment methodologies as well as validate testing and certification procedures \. c\.New Program Development (Appraisal: US$0\.43 million; Actual: US$ Nil )\. This subcomponent would finance institutional capacity building activities to MOE, regional offices and TVET institutions to design and test new instructional programs\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The project was restructured due to limited implementation progress \. The restructuring started in June 2008, and was completed in December 2008, about 8 months before the closing date \. The restructuring did not change the PDOs but revised performance indicators mainly by (a) dropping the indicator related to enrolment; (b) limiting the scope of monitoring of students (for on time completion of courses ) to undergraduate programs only; (c) adding the number of pre-accredited programs and institutions; and (d) streamlining the definition of benchmark policy triggers \. The restructuring eliminated the TVET component \. It also made some changes to the University Education component\. The block grant funding trigger was dropped from the IDG subcomponent \. Also, the allocation to the IDG sub-component was reduced from US$16 million to US$8\.3 million\. Overall, the restructuring reduced the total cost of the project from US$40 million to US$25 million\. At the time of restructuring US$15\.87 million was already disbursed\. 3\. Relevance of Objectives & Design: Objectives (Substantial )\.The )\. objectives are in line with Ethiopia's current Education Sector Development Program (ESDP III) that, inter alia, highlighted increasing capacity at post -secondary level institutions \. The prevailing (2008-11) Country Assistance Strategy (CAS) also indicates continued Bank engagement in expansion and quality improvements in the university system to enhance the country âs international competitiveness by improving its labor productivity at the top end of the labor market which is constrained by the lack of highly skilled workers \. The CAS also argues that âraising tertiary completion rates for women is critical for women âs empowermentâ? (CAS, p\. 26)\. \. Design (Modest )\. The project design was well focused with two components targeted to universities and to TVET which increase the human resource development capacity at the post -secondary education level \. The restructured design eliminated the second component (TVET) and focused on university capacity building only with emphasis on quality\. The project applied a two-pronged strategy in its attempt to support the enhancement of the human resource development quality of higher education : (i) rewarding higher educational institutions (HEI) through the IDG for reforms aimed at improving quality; and (ii) providing incentives for innovation through DIF \. However, the arrangements for the administration of the DIF program were inappropriate \. IDA's preparation team had originally envisaged that DIF would be implemented by the Ethiopian Institute for Higher Education Strategy (later renamed the Higher Education Strategy Center )\. The Government's preference was that the program should be administered by the Planning and Programming Department (PPD) of the MOE\. IDA accepted the Government's position at Negotiations even though it was unable to persuade the MOE to establish a DIF coordinating unit within PPD with the required technical skills to judge DIF proposals \. The ICR describes this acceptance as "a fatal mistake for the project" (p\. 14)\. The PAD highlights various risks attached to schemes like the DIF \. As the PAD itself acknowledges (p\. 34), even well functioning schemes tend to reward those who already have capacity and therefore may not increase the competitiveness of weaker performers \. 4\. Achievement of Objectives (Efficacy): Objective : Increase the human resource development capacity of Ethiopia at the post -secondary education level (Rating : Modest ) Outputs : IDG Rewards: Three key reforms supported by the project, and which would act as triggers for, and be rewarded through, the IDG, were: (i) accreditation, (ii) cost sharing through the introduction of a graduate tax to entering undergraduate students, and (iii) block grant financing\. Accreditation : The accreditation agency, the Higher Education Quality and Relevance Assurance Agency (HERQA), fell significantly short of the target number of institutions and programs to be accredited \. A total of 40 institutions and 120 programs were targeted to be pre -accredited and accredited \. By the end of the project a A total of 22 institutions and 35 programs were pre-accredited and a total of 31 institutions and 91 programs were accredited (ICR, pages 18-19)\. Cost sharing : The introduction of the concept of cost sharing in higher education through a graduate tax is an important innovation in Ethiopia\. The graduate tax had, however, been put in place prior to the project, which cannot therefore be credited with it (ICR, p\. 11)\. Block grants : The introduction of formula-based block grant funding for universities was a radical reform in Ethiopia for which there was no broad stakeholder buy -in\. The so-called consultations that took place during preparation took the form of "couple of meetings with the management of [one] university" (ICR, p\. 15)\. Not surprisingly, this proved insufficient\. As a consequence, the IDG trigger of the implementation of block grant funding had to be dropped at restructuring\. DIF Incentives for Innovation : A total of 187 DIF proposals were submitted and implemented; the target was 227 (ICR, p\. 19)\. DIF financed 110 laboratories and 350 research activities, arguably helping to increase academic institutional capacity\. But there were serious challenges \. The absorptive capacity of HEIs for DIF funding was contingent upon their initiative, commitment, and capacity \. As allocation of the resources was already predefined, differences in HEI attributes led to resource underutilization in some institutions and unmet demands in others \. The solution of reallocating funding to HEIs with higher absorptive capacity was not envisaged (ICR, p\. 7)\. This contributed to slow disbursement and, at closure, substantial unused resources \. During implementation, it became clear that, in a number of cases, individual schemes did not become institutionalized, and DIF activities had to be discontinued after the team leaders abandoned them (ICR, p\. 7)\. Outcomes : The original PDO indicators in the PAD (p\. 32) were: (i) Percentage of age cohort enrolled in university and TVET institutions, (ii) Number of graduates: undergrad, grad and TVET, (iii) Percentage of females entering and graduating by cohort, (iv) Percentage of sub-sector and institution level prime objectives achieved as part of strategic plans, and (v) Number of skill certification programs, accredited programs of instruction, and number of graduates from them\. The PAD then identified selected PDO indicators for university and TVET programs (PAD, p\. 11)\. As indicated earlier, the restructuring eliminated the TVET component \. Also, enrolment related indicators were dropped on the assumption that âthe project would not meaningfully influence the change in enrollments â? (ICR, p\. 3)\. On graduation rates, the project targeted 92% male and 82% female on time completion rates in undergraduate programs\. No information was reported on graduation and completion related indicators (ICR, p\. iii)\. The other aspect of the outcome indicators is on capacity of universities to support tertiary programs through the IDG awards and DIF proposals\. The IDG awards funded activities and reforms related to accreditation, cost sharing and block grant funding arrangements \. However, some of the reforms were introduced prior to the project\. For example, accreditation for private institutions had already been introduced prior to the project, to which its establishment cannot therefore be attributed (ICR, p\. 6)\. Besides, the addition of pre-accreditation at restructuring, had no value added since private HEIs needed official permission prior to establishment and operation, and the pre-accreditation does no more than grant such permission (ICR, p\.8)\. With regards to DIF proposals, the ICR reports that DIF "nurtured faculty-level initiatives to improve quality of education" (p\. 11), and the Borrower's ICR contains a number of apparent success stories, However, no attempt was made to assess systematically the impact of the initiatives supported by DIF on the quality of higher education or research\. HERQA's work nonetheless established the culture of exposing HEIs to scrutiny by making its audits of their quality publicly available\. This was an important outcome of the project and a novel and salutary experience, especially for public sector institutions (ICR, p\. 10)\. 5\. Efficiency (not applicable to DPLs): A financial, though not economic, analysis was conducted at appraisal based on estimated cost savings that were expected to accrue from innovations financed by the project \. The resultant financial rate of return was 14%\. No economic or financial analysis was attempted at closing because, according to the ICR (p\. 11), "it was not possible to calculate the cost savings directly attributable to the project \." No attempt was made to estimate efficiency by means of alternative methodologies, such as estimating the benefits to the economy and concerned individuals of enhanced quality and quantity of higher education, nor was there any calculation of cost effectiveness comparing this project to similar interventions in Ethiopia or elsewhere \. In the absence of any analysis or alternative indications, efficiency is rated modest \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re-estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Outcome is rated Moderately Unsatisfactory \. Project objectives were substantially relevant but design relevance was modest\. Efficacy is also rated modest : although there were some achievements -- the introduction of the concept of cost sharing for higher education is valuable, and the innovative experience for HEIs of being subjected to public scrutiny is salutary --the project had limited success in supplementing government resources during a period of massive expansion in tertiary education; only about half the IDA credit had been utilized at closure \. Efficiency is rated modest, based on the lack of evidence presented at closing \. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: Although the Government appears committed to the major policy changes that were introduced prior to the project -- cost sharing and accreditation -- there are significant risks to being able to sustain them \. Accreditation is a costly process and the number of HEIs is expanding rapidly \. On the positive side, the shift from free to cost -sharing higher education seems to have been accepted by the student body --there has been no mass agitation against this reform \. Also, a government institution (HERQAA), functioning with a regular government budget, is in place to implement the accreditation process\. However, the necessary technical and managerial skills to administer the new system are stretched very thin\. The shift to block grants has already been abandoned as an IDG trigger \. The evolution of the graduate tax is not being monitored and there is no indication of its sufficiency to substitute for project resources \. Most importantly, the overall demands made on Ethiopia's budget by the ongoing massive expansion of higher education will be at the expense of the country's MDG goals unless that budget is substantially increased \. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: at -Entry \. The PDO is unclear and the link between the PDO and output and outcome Ensuring Quality -at- indicators is weak\. Many important indicators were missing -- such as monitoring the evolution of cost sharing \. Although the PAD (pages 16-18) contains a summary of important lessons drawn from an analysis of Bank-financed tertiary education projects, a number of these lessons were not applied (ICR, p\. 6)\. In particular, the objectives and performance indicators were too ambitious for the Borrower's implementation capacity \. The Bank did attempt to apply another lesson -- that universities are better endowed than most public sector institutions -- but chose to abandon it at Negotiations in the face of the Government's wish to administer the DIF in the MOE rather than leaving it to the Higher Education Strategy Center \. The assumption that innovative funding mechanisms such as DIF could be completed in four years was over -optimistic\. The team relied too much on being able to reproduce the Bank's experience with such schemes in countries endowed with considerably greater capacity in Latin America, Eastern Europe and Asia \. When IDA financing was reduced from US$ 60 million to US$40 million, just before Negotiations, the duration of the project was reduced from five to four years \. Given the aim of changing the culture of universities, the original duration of five years would have been more appropriate\. Retaining the TVET component in spite of the significant reduction in financing added considerably to the risks\. Implementation arrangements, relying heavily on MOE's PPD, proved unsatisfactory \. More generally, the project preparation team overestimated the government's capacity for, and commitment to, implementing the project\. Quality of Supervision \. IDA supervised the project on a regular basis \. It also brought international experts (in areas of higher education reform, accreditation, labor market issues, and project management ) to work with MOE\. However, the ICR notes the supervision team's inability to take timely corrective actions to address unsatisfactory procurement and financial management performance documented in aide -memoires\. The Mid Term Review did not come up with adequate measures to improve the implementation of the project \. The restructuring was too late (8 months before closure) to have a significant impact on project progress \. In addition, the Borrower ICR claims that project implementation was delayed because the Bank was not responding promptly to withdrawal applications and "No Objection" requests for international competitive bidding (ICB) procurements\. at -Entry :Unsatisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Moderately Unsatisfactory c\. Overall Bank Performance :Unsatisfactory 9\. Assessment of Borrower Performance: The project was implemented by the Ministry of Education (MOE)\. The responsibility was given to the Planning and Programming Department (PPD) of the MOE, although, after restructuring, a greater role was assigned to the Higher Education Project Coordination Office (HEPCO)\. However, this affected only the last few months of the project\. The PPD did not have any executive authority and all decisions were taken at the higher level in the MOE, making it hard to separate the MOE performance from that of PPD \. Therefore, IEG applies the same rating to both agencies\. The following factors tended to undermine performance : Project implementation was negatively affected by poor ownership of the project by the Government following the switch of policy emphasis from improving existing HEIs to expanding the number of universities \. Implementation was also constrained by delays in establishing system support units (SSUs) and reluctance to grant them due autonomy\. The coordination capacity of PPD was insufficient for the number of entities that the project intended to benefit\. The communication between the PPD and the beneficiary agencies was poor \. For example, universities failed to provide timely reports to MOE (ICR, p\. 15)\. There were considerable weaknesses in fiduciary compliance \. The quality of most of the financial management reports was poor\. In addition, there were delays in reporting \. Other financial management problems included instances of ineligible expenditures and weakness in budget monitoring (ICR, p\.9)\. a\. Government Performance :Unsatisfactory b\. Implementing Agency Performance :Unsatisfactory c\. Overall Borrower Performance :Unsatisfactory 10\. M&E Design, Implementation, & Utilization: M&E Design : The M&E framework put in place at appraisal was inadequate (ICR, p\. 14)\. Baseline values were not collected for most indicators (PAD, pp\. 35-37)\. Some indicators were removed during restructuring (ICR page 3)\. Most of the indicators are based on project actions and outputs \. Relevant information would have been obtained if the PAD had included an impact assessment of the cost sharing and accreditation policies \. M&E Implementation : The ICR reports that data was collected only on few (and less relevant) indicators\. There is no information on others that are more relevant to monitoring and evaluating achievement of the PDO (e\.g\. % of undergraduate students completing on time and MA and Ph \.D degrees awarded annually, both disaggregated by gender)\. The project did not succeed in monitoring the evolution and progress of the graduate tax \. The Ministry of Education reportedly conducted a review of the graduate tax but did not make it available to IDA (ICR, p\. 10)\. No basis was, therefore, established to support the assumption made in the PAD (page 12) that revenues from the graduate tax, once collected, would meaningfully substitute for project resources \. In general, "meaningful monitoring of the performance indicators did not take place " (ICR p\. 9)\. M&E Utilization : There is no indication whether M&E data collected by this project were used to guide policy \. a\. M&E Quality Rating : Negligible 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Safeguards : No safeguard policy was triggered by this project which was classified as category C for the purposes of environmental assessment \. Physical works were minor and did not involve any resettlement or environmental disruption\. Fiduciary : the ICR reports considerable weaknesses in fiduciary compliance \. The quality of most of the financial management reports was poor\. In addition, there were delays in reporting \. There was also lack of adequate internal audit oversight\. Other financial management problems included instances of ineligible expenditures and weakness in budget monitoring (ICR, p\.9)\. At closure, overall project risk was assessed as substantial and financial management as moderately unsatisfactory \. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Unsatisfactory Unsatisfactory Risk to Development Moderate Significant The budgetary burden of the rapid Outcome : expansion of higher education combined with the technical and managerial challenges of sustaining the policy changes made, lead to a significant degree of risk (See Section 7)\. Bank Performance : Moderately Unsatisfactory QAE was unsatisfactory\. The PDO was Unsatisfactory imprecise, performance indicators were either missing or weakly linked to the PDO, project content and timetable were too ambitious for the country's capacity, and implementation arrangements inappropriate (See Section 8)\. Borrower Performance : Moderately Unsatisfactory Implementation was negatively affected Unsatisfactory by poor ownership of the project and delays in establishing system support units (SSUs) and reluctance to grant them due autonomy\. The coordination capacity of PPD was insufficient \. The communication between the PPD and the beneficiary agencies was poor \. (See Section 9)\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: Partly building on the ICR, this review suggests the following key lessons : Activities need to match local implementation capacities and constraints \. The implementation of this project revealed that it was overly complex and ambitious given the Borrower's limited capacity \. Competitive grant schemes can be useful complements to a fully -funded government program; but they can never substitute for that program in very poor countries with limited technical and administrative capacity \. The project aimed to achieve institutional strengthening through DIF awards \. Such schemes have significant set -up and maintenance costs because many people need training if their proposals are to be viable \. They also tend to reward those who already have capacity (e\.g\. to write proposals) and therefore do not necessarily help to make low performers competitive\. Projects that advocate reform of funding arrangements need extensive stakeholder participation and consultation \. The project aimed to introduce a formula -based block grant funding for universities \. This condition was included in the triggers for IDG awards \. However, the consultation was not adequate to secure stakeholder buy-in and the condition had to be dropped \. 14\. Assessment Recommended? Yes No Why? Further assessment is recommended to verify the outcome rating \. Also, an in depth assessment of the impact of cost-sharing arrangements (graduate tax) and institutional accreditation system, which are two key reforms supported by the project, would be an important input to the upcoming IEG study on post -primary education\. 15\. Comments on Quality of ICR: Although the ICR candidly assesses the project's strengths and weaknesses, documents useful information, and draws important lessons, it presents a number of shortcomings \. The discussion of efficacy could be strengthened and a sharper distinction made between outputs and outcomes \. The discussion of risks is incomplete, and government and implementing agency performance are not separated \. There is virtually no discussion of efficiency \. \. a\.Quality of ICR Rating : Satisfactory	REVIEW
P081771	IEG Report Number: ICRR14701 ICR Review Independent Evaluation Group 1\. Project Data: Date Posted: 06/30/2015 Country: Sri Lanka Project ID: P081771 Appraisal Actual Project Name: E-lanka Development Project Costs (US$M): 83\.00 85\.82 L/C Number: Loan/Credit (US$M): 53\.00 54\.40 Sector Board: Global Cofinancing (US$M): Information/Communi cations Technology Cofinanciers: Board Approval Date : 09/21/2004 Closing Date: 12/31/2009 12/31/2013 Sector(s): Information technology (40%); Telecommunications (30%); Central government administration (15%); General public administration sector (10%); Law and justice (5%) Theme(s): Rural services and infrastructure (33%); Administrative and civil service reform (33%); Infrastructure services for private sector development (17%); Micro; Small and Medium Enterprise support (17%) Prepared by: Reviewed by: ICR Review Group: Coordinator: Katharina Ferl Jorge Garcia-Garcia Lourdes N\. Pagaran IEGPS2 2\. Project Objectives and Components: a\. Objectives: According to the Loan Agreement of December 15, 2004 (p\.17) the Project Development Objective (PDO) is to âassist the Borrower in promoting the use of information and communication technology to: i) generate growth, employment and equity; (ii) provide affordable access to means of information and communication, including access by citizens and businesses to public information and services online; and (iii) encourage and enhance the competitiveness of industries, small and medium enterprises and other private sector entities\.â According to the Project Appraisal Documents (PAD) (p\.4) the PDO is âto enhance growth, and equity through (i) improved access and use of means of information and communication; (ii) access to and use of public services on-line by businesses and citizens (iii) enhanced competitiveness of the private sector and in particular of knowledge industry and SMEs\. â The Additional Financing Paper of January 5, 2012 (p\. 25) maintains these objectives\. Since one of the objectives of the Loan Agreement was broad and high level\. The review will use the project development objectives stated in the PAD, which are the same objectives stated in the Additional Financing Paper\. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: The project has six components (PAD p\.4)\. The ICR does not comment why actual spending for some components substantially exceeded the appraisal estimate\. This Review notes that Additional Financing was provided which could explain for the higher actual costs for some components\. Component 1: Information Communication Technology (ICT) Policy, Leadership and Institutional Development Program (appraisal estimate US $ 8 million, additional financing of US $ 2\.55 million, actual US$ 18\.63 million): This component was to finance building capacity for ICT leadership in different areas such as design, implementation and coordination of the overall e-Sri Lanka initiative\. Additional financing was to finance the implementation of an integrated communication strategy at the national, district and village level and improving the enabling environment in terms of new laws, policies, regulations and standards\. Component 2: ICT Human Resources Development and Industry Promotion Program (appraisal estimate US $ 5\.88 million, additional financing of US $ 1\.31 million, actual US$ 6\.49 million: This component was to finance the growth of the domestic ICT sector through various activities such as promoting ICT services, developing human resources for ICT, promoting ICT diffusion in the private sector, and enhancing competitiveness of the domestic ICT industry\. Additional financing was to finance the improvement of the location readiness Index for IT/ITES industry in terms of knowledge processing and ICT services\. Component 3: Regional Telecommunications Network (RTN) Development Program (appraisal estimate US $ 19 million, actual US$ 0\.83 million): This component was to finance competitive and affordable telecommunication services for targeted populations, who had low connectivity, in the poorest regions of the country\. This component was dropped in 2011\. Component 4: Telecenter Development Program (appraisal estimate US $ 7\.40 million, additional financing of US$ 2\.39 million, actual US$ 11\.40 million): This component was to finance the establishment of telecenters in rural areas in the South, North and East of the country to provide affordable community access to ICT\. Also voucher schemes and community outreach programs were included to increase demand for ICT services from targeted population\. Additional financing was to finance the establishment of 40 telecenters in underserved areas, the rolling out of e-services through these telecenters and one or two high impact services in partnership with the private sector\. Component 5: Reengineering Government Program (appraisal estimate (US$ 35\.20 million, additional financing of US$ 3\.75 million, actual US$ 37\.28 million): This component was to finance governance and public management reforms in order to improve the governmentâs efficiency, transparency, effectiveness, and quality of services\. Additional financing was to finance the scaling up and rolling out the Lanka Government Network (LGN) Phase 3, Lanka Gate and e-services\. Component 6: E-Society Program (US$ 4 million, actual US$ 2\.94 million): This component was to finance the promotion of affordable access to ICT for the most vulnerable population in Sri Lanka by scaling up successful initiatives and funding pilot projects\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Costs: The project was estimated to cost US$ 83\.00 million\. Actual cost was US$ 85\.82 million\. Financing: According to the PAD (p\. 90) and the Project Paper the project was supposed to be financed as follows: ï¬ A US$ 53 million IDA credit which was completely disbursed\. ï¬ A Japanese Trust Fund of US$ 914,660 was approved by the Bank of which US$ 416,753 was cancelled\. ï¬ Borrower Contribution: At appraisal, the estimate for the Borrowerâs and Donorsâ contribution was US$ 30 million\. Actual contribution was US$ 29\.50 million\. ï¬ Additional financing of US$ 11 million was approved by the Bank of which US$ 10\.4 million was disbursed\. Dates: The project was restructured six times: ï¬ US$ 5\.72 million was transferred towards the Tsunami Rehabilitation Relief\. ï¬ On March 2, 2009 amendments to Part A, C, and E of Schedule 2 were made\. Also sections 3\.04 and 3\.05 C were amended to reflect the changing governance and operating environment and funds were reallocated between components\. ï¬ On April 26, 2011 the RTN component was dropped and US$ 8\.7 million were cancelled\. SDR 1\.6 million was reallocated among remaining components\. The ICR does not state the US$ amount of the reallocated fund\. ï¬ On January 31, 2012 additional financing of US$ 11 million was approved by the Bank to support the implementation of expanded activities\. ï¬ The closing date was extended twice: From December 31, 2009 to December 31, 2011 and to December 31, 2013\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Substantial: The government had identified ICT as one of the instruments to achieve equity, economic growth, and peace by transforming key sectors of the economy technologically and institutionally\. The Bankâs Country Assistance Strategy (FY 2003-2006) built on Sri Lankaâs six core areas of its poverty reduction strategy including creating opportunities for pro-poor growth, investing in people, empowering the poor and strengthening governance\. The objectives of this project to generate growth, employment, equity, and improve competitiveness of industries are in line with the Bank's strategy and the government's poverty reduction strategy\. Also the current Bankâs Country Assistance Strategy (FY 2013-2016) focuses on shifting the structure of the economy to be more knowledge based and includes technical assistance activities to increase the size of the ICT work force\. b\. Relevance of Design: Modest: The planned activities to achieve the PDO were modestly relevant\. Activities to improve access and use of means of information and communication included establishing, telecenters, adopting laws to create a favorable environment for ICT and connecting government organizations to the Lanka Government Network\. Activities to improve the access and use of public services online by businesses and citizens included implementing e-government policies such as digitalizing birth, death and marriage certificates, and developing government operational portals or websites\. Activities to enhance competitiveness of private sector and in particular of knowledge industry and small and medium-sized enterprises (SMEs) included trainings to strengthen IT skills and promoting Sri Lanka as a destination for IT experts\. The project lacked a strong results chain, making it difficult to establish the link between the interventions, the outputs and intermediate outcomes, and the expected results\. In particular, with the economy in Sri Lanka growing above 6% per year between 2004 and 2013 and the widespread availability of technology in the world, it becomes difficult to assert and to ascertain that the growth in usage of IT and the creation of ICT jobs result from the project\. Also, the link between enhanced competitiveness and the increase in business usage as measured by the network readiness index was not clearly established\. 4\. Achievement of Objectives (Efficacy): The PDO was "to enhance growth, and equity through i) access to and use of means of information and communication; ii) access to and use of public services online by businesses and citizens, iii) enhancing competitiveness of private sector and in particular of knowledge industry and SMEs\.â 1\. Improve access and use of means of information and communication : Substantial Outputs: ï¬ 740 telecenters were established in underserved areas and all are functional, surpassing the revised target of 240 telecenters (of which 70% will be fully operational and 25% financially sustainable) and the original target of 200 telecenters (of which 85% will be fully operational and 37\.5% financially sustainable)\. However, the ICR notes (p\. v) that it is too early to assess their financial sustainability\. ï¬ Over 550 central and provincial governments were connected through the Lanka Government Network\. This indicator was added when additional financing was approved\. ï¬ Three major e-laws on electronic transactions, computer crimes and financial regulation were adapted\. Outcomes: ï¬ About 44,000 persons used telecenters in targeted communities, exceeding the original target of 33,000 and the revised target of 40,000\. ï¬ 40\.5% of telecenter users were women, meeting the original target of 40%\. 54\.3% of users were youth, not achieving the original target of 70%\. These targets were not modified when additional financing was approved\. ï¬ User satisfaction with applications established under the e-society grant mechanism reached 71%, meeting the target of 70%\. The e-society program aims to promote the innovative use of ICT to meet the economic and social needs of the most vulnerable groups in Sri Lanka by providing civil society with affordable access to information and communication\. These indicators were added when additional financing was approved\. 2\. Improve access to and use of public services online by businesses and citizens : Substantial Outputs: ï¬ 70% of government organizations comply with e-government policy, surpassing the target of 50%\. This indicator was added when additional financing was approved ï¬ 495 government agencies had a functioning operational portal or website, surpassing the original target of 100 and the revised target of 380\. ï¬ 25 additional e-services such as e-Pension, e-Population digitalization of birth, marriages, death certificates, e-Revenue licenses for citizens, private and public sectors were created, surpassing the original target of 20 e-services and the revised target of 20 additional e-services\. ï¬ 89 divisional secretariats implemented civil registry e-government application, not achieving the target of 200\. This indicator was added when additional financing was approved ï¬ A dedicated government cloud, an interoperability framework (standards to share secure data sharing), and local language initiatives to enable trilingual websites and databases were implemented\. ï¬ Government's response time to citizens using its services decreased by 29% surpassing the target of 20%\. 88% of citizens were highly satisfied and satisfied with government services, surpassing the target of 70%\. This indicator was added when additional financing was approved\. Outcomes: ï¬ Over 11 million people conducted transactions with the central government online, surpassing the revised and original targets of 7\.5 and 5 million targeted beneficiaries; whether this increase can be attributed to the project is another matter, since the economy was growing slightly above 6% between 2004 and 2013 and ICT became more readily available over the world and in Sri Lanka, not necessarily as a result of the project\. The outcome for this objective is aggregated and it is not clear how many businesses and how many citizens benefited from improved access and use of online public services\. ï¬ However, the nature of the outputs provide indications of progress towards achieving outcomes\. Also, the foundational investments in ICT suggest contributions to the achievement of this objective\. 3\. Enhancing competitiveness of private sector and in particular of knowledge industry and SMEs : Modest Outputs: ï¬ In order to increase competitiveness, over 1,053 people were trained under the IT-Enabled Services Skills Certification Program, surpassing the target of 1,000 people\. 35,000 ICT/Business Process Outsource were trained by ICTA\. Also 55 people were trained under the Trainer Program, exceeding the target of 50 people\. ï¬ Several programs were conducted to promote Sri Lanka as a destination for IT experts\. ï¬ ICTA built partnerships with international and local businesses and strengthened ICT associations\. Outcomes: ï¬ Improved competitiveness was measured through the Network Readiness Index that comes from the World Economic Forum\. The index assesses how prepared a country is to apply the benefits of ICT to promote economic growth and well-being; of the three categories that make the index, the business-usage subindex was selected as the results indicator for this objective\. The WEFâs Global Information Technology Review for 2014 gives a value of 3\.8 for the index of business usage, lower than the value of 4\.0 claimed in the ICR and lower than the target value of 4\.7\. ï¬ The number of jobs created in ICT industry reached about 75,000, exceeding its target value of 60,000\. This increase in employment could not be directly attributed to the project since Sri Lankaâs economy had been growing during the time of project implementation\. The ICR does not comment whether the Bank conduct an impact assessment/impact evaluation to establish attribution\. 5\. Efficiency: Modest: At appraisal it was expected, given the experience in other countries, that the strengthening of ICT will have a strong impact on the competitiveness and economic growth of Sri Lanka\. For example, the Bank estimated, based on the experience of other countries that reengineering government programs such as procurement could save US$ 34 to 64 million between 2005 and 2008 (PAD p\. 91)\. Also, the Bank expected that the establishment of telecenters will have a positive economic outcome\. Nevertheless, the Bank calculated that telecenters will have a rate of return of 6% over a five year period (PAD p\. 95)\. The ICR does not provide any evidence that the estimations provided in the PAD materialized\. Also, while the section on Efficiency in the ICR provides a large amount of information of the impact and the effectiveness of the project, it does not provide any information related to efficiency such as economic rate of return or cost- effectiveness\. Also, significant delays in project implementation due to serious problems with procurement and financial management indicate inefficiencies in the use of resources (see section 9b)\. Taken all these shortcomings into account, the overall efficiency is rated Modest\. a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Relevance of objective was Substantial since the government of Sri Lanka identified ICT as one of the instruments to achieve growth, peace, and equity\. Relevance of design was Modest due to the weak linkage between project outputs, intended outcomes and project objectives\. Achievement of the objective to improve access and use of means of information and communication is rated Substantial, achievement of the objective to improve access to and use of public services online by businesses and citizens is rated Substantial, achievement of the objective to Enhancing competitiveness of private sector and in particular of knowledge industry and SMEs is rated Modest\. Efficiency is rated Modest due to delays in project implementation that were indicative of inefficiencies in the use of the project's resources\. Therefore, the project's outcome rating is Moderately Satisfactory\. a\. Outcome Rating: Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The risk to development outcome is negligible to low due to the government's ongoing commitment to ICT\. Despite changes of government, the new government has continued its budget support for ICTA's operation and expressed interest in future Bank involvement in this area\. ICT continues to be an instrument for Sri Lanka's aim to shift the structure of the economy to be more knowledge based\. Also, capacity built within ICTA will be favorable for supporting this shift\. a\. Risk to Development Outcome Rating : Negligible to Low 8\. Assessment of Bank Performance: a\. Quality at entry: The Bank team prepared a project that was responsive to the governmentâs request and took into account the experience gained in other countries\. The project design had shortcomings such as the causal relationships between these planned interventions and underlying assumptions about how program actions would lead to intended outcomes were not logical and properly laid out\. The Bank did not take the complexity of the Regional Telecommunications Network Development Program Component into account, resulting in its cancellation\. Even though the Bank identified several risks, mitigation efforts were not sufficient\. Among those risks was ICT Agency's (ICTA) weak capacity in financial management and procurement, and lack of experience in the implementation of Bank projects\. Despite this ICTA was responsible for conducting complex financial management procedures\. It took over two years to develop a financial management system and for staff to become familiar with processes agreed to in the financial agreement\. Also, the Bank overestimated the capacity of the private sector to provide certain services and neglected building capacity in ICTA\. This led to delays in project implementation and to a significant increase in project expenditures\. The M&E design had several shortcomings (see section 10a)\. Quality-at-Entry Rating: Moderately Unsatisfactory b\. Quality of supervision: The Bank team was responsive to the government's requests, involved ICT experts to provide high quality technical input and showed flexibility in the use of project funds\. The Bank's supervision had several shortcomings\. Under the first IDA loan, the government did not sign with ICTA the Subsidiary Grant Agreement which was a requirement in the Financing Agreement\. The Bank did not take the necessary action to correct this\. Also, the Bank did not communicate to ICTA that once the Financing Agreement was signed, the Bankâs procurement rules needed to be followed\. Not knowing that obligation, ICTA followed its own rules to recruit, compensate, and allocate costs\. Furthermore, weak procurement capacity at ICTA was not appropriately addressed by the Bank all throughout implementation\. Quality of Supervision Rating : Unsatisfactory Overall Bank Performance Rating : Unsatisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The Government was committed to the project and made the necessary policy changes to enable the development of the ICT sector\. The Government supported the establishment of ICTA as an independent agency\. However, when the implementation of the project started, ICTA was not ready and lacked capacity, especially in financial management, procurement and M&E\. The Government did not consult with the telecom regulator and did not take sufficient actions to get the buy in from different stakeholders such as the telecom operators in the Rural Telecommunication Network Program\. This contributed to the cancellation of this component since no contract for the provision of cable connectivity could be awarded\. The Government breached a legal requirement with the Bank when it did not sign the Subsidiary Grant Agreement with ICTA\. According to the Bank team, the failure to sign the Subsidiary Grant Agreement (SGA) did not have a negative impact on project implementation\. For the additional financing, the Subsidiary Grant Agreement was only signed towards the end of the project in September 2013\. The Government demonstrated its ongoing commitment by providing budget funds to support ICTAâs operation also after the end of the project\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance: The project was implemented by ICTA, a government agency established to lead Information and Communication Technology reforms and implement this project\. ICTA was committed to the implementation of the project and supported the government in strengthening the policy framework for the sector\. ICTA faced several challenges during project implementation\. One of the major challenges was that ICTA had no experience in implementing Bank projects and lacked knowledge of financial management and procurement capacity\. ICTA also experienced a high turnover of staff, leading to delays in project implementation\. Another challenge was, as mentioned in section 8b, that ICTA followed its own recruitment, compensation and allocation of costs procedures\. ICTA faced multiple reporting obligations which led to an administrative burden in an agency with already limited capacity\. The M&E on project progress was conducted by an external firm while ICTA built capacity internally to continue M&E activities\. According to the Bank team, once the M&E system was established, ICTA took over and developed a comprehensive results based framework and M&E plan\. ICTA developed project specific indicators and log frames which helped project managers to understand the scope, objectives, measurement criteria, data collection methodologies and frequencies\. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The M&E design had the following weaknesses: The PDO consisted of broad objectives such as enhancing growth, employment, and equity whose achievement was difficult to attain with this project\. The indicators included in the Results Framework in the PAD (p\. 35) were inadequate to measure results and achievement of the objectives\. The Results Framework included five PDO indicators and 17 intermediate outcome indicators\. Three of the five PDO indicators focused on employment in the ICT industry, equity of access to and quality of ICT services are positively correlated to economic growth making it difficult to separate the effects of the project from those of growth\. The other two PDO indicators, in turn, measured growth and usage of ICT services, which could either be seen as a contribution to or a result of economic growth\. The M&E design entailed that M&E implementation would be outsourced to a private sector firm to increase economies of scale and ensure consistency and compatibility across all program areas\. Within ICTA a unit was established to oversee all M&E activities\. Also, external evaluation experts were hired to conduct a mid-term, project completion and ex-post impact evaluation\. b\. M&E Implementation: The M&E unit set up within ICTA was headed by a M&E specialist and capacity was built within this unit during implementation\. After the contract with the firm responsible for tracking project data ended, the M&E unit within ICTA took over\. The ICR (p\.21) states that delays in project implementation led to weaknesses in M&E\. M&E activities included collecting project data on a monthly basis, carrying out five evaluation surveys to collect baseline data, and conducting four final evaluations which focused on the achievement of development outcomes and impacts\. However, the baseline data was collected in 2007, two years after project effectiveness\. Also, the ICR does not provide any information if the ex-post impact evaluation was conducted\. In 2012, during the additional financing phase, eight intermediate outcome indicators were added since activities were scaled up, training coverage was expanded, and progress on policy changes and communication approach was started to be measured\. Three of the original intermediate outcome indicators were dropped since they were related to the cancelled Regional Telecommunications Network Development Program\. According to the ICR (p\. 9) capacity for M&E was also built among partners and stakeholders, which had a positive impact on the ownership of M&E\. c\. M&E Utilization: Findings of the evaluations were used to make adaptations in several areas (e\.g\. training methods and content, and support to e-society programs)\. However, the findings mainly measured outputs as opposed to outcomes\. M&E Quality Rating: Modest 11\. Other Issues a\. Safeguards: The project was rated category C\. According to the ICR no safeguards were triggered under this project\. b\. Fiduciary Compliance: Financial Management : According to the ICR (p\.10) the project experienced difficulties in its financial management at different times during implementation\. ICTA did not have sufficient capacity to perform complex financial management and experienced a high staff turnover\. It took ICTA more than two years to put in place an acceptable financial management system and become familiar with procedures as stated in the financing agreement\. By the time the mid-term review was conducted, financial management had improved and was rated Satisfactory\. Interim unaudited financial reports were submitted to the Bank on a quarterly basis\. The ICR (p\. 10) states that no major system and control issues were found during audits and the audits received unqualified opinions of the audited financial statements\. The Bank team stated that the adequacy of reporting and accounting provisions was satisfactory\. Procurement: According to the ICR (p\.10) the project experienced difficulties in its procurement part due to ICTAâs weak capacity to conduct complex procurement procedures\. ICTA did not comply with the Bankâs procurement guidelines as agreed in the financing agreement\. Instead, as already mentioned in section 8b, ICTA followed its own recruitment, compensation and allocation of costs procedures\. According to the ICR (p\.10), the Bank team and management did not take any timely actions to address this issue\. c\. Unintended Impacts (positive or negative): None reported\. d\. Other: 12\. Ratings: ICR IEG Review Reason for Disagreement/Comments Outcome: Satisfactory Moderately Relevance of Objectives was Satisfactory Substantial and Relevance of Design was Modest\. Two of the objectives were substantially achieved and one objective was modestly achieved\. Efficiency was rated Modest\. Risk to Development Negligible to Low Negligible to Low Outcome: Bank Performance: Moderately Unsatisfactory Lack of clearly defined results chain\. Unsatisfactory Bank did not address issues related to ICTA including weak procurement capacity\. Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR: Unsatisfactory NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The ICR (p\. 21) identifies several lessons, including: 1\. If the PDO of the project is too broad, not fully coherent with the scope of the project, and indicators inadequate, it becomes difficult to establish links between results and interventions and attribute results to the project\. In this case the PDO included enhancing growth, employment and equity in Sri Lanka which presented a challenge of attribution of project results to these economy-wide ultimate objectives\. 2\. Involving third parties, which are needed for a successful project implementation, already during the design phase of the project will allow to assess their ability and willingness to contribute to the project\. In this project, the unwillingness of third parties to contribute to the project led to the cancellation of the Regional Telecommunication Network Component and the inability to outsource ICTA services to the private sector\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR provides a large amount of information and is candid in its assessment and appropriately critical\. It provides an insightful discussion of implementation issues and useful lessons learned\. There are different PDO formulations between the PAD, the Financing Agreement and the Additional Financing and it would have been useful if the ICR reconciled the different PDO formulations and established the appropriate PDO to assess\. Despite its length the ICR fell short on providing more details in the financial management and procurement section since those areas were the most challenging during project implementation\. Its discussion of the project outcomes fails to separate achievements by project objectives, barely touches on the achievements associated with the results indicators, covers results not associated with the results framework and fails to explain why looking at that new set of results is relevant\. The ICR's efficiency section is weak\. It does not provide a good analysis, or evidence to inform whether the expected benefits at project appraisal actually materialized\. The ICR does not comment on why actual costs exceeded appraisal costs and its information on project costs and financing is unclear\. Also, the ICR does not provide a methodology for the beneficiary survey results\. Therefore, it is not clear how representative the results of the beneficiary survey are\. Due to all these shortcomings, the ICR is rated Unsatisfactory\. a\.Quality of ICR Rating : Unsatisfactory	REVIEW
P038687	ï»¿ ICRR 11886 Report Number : ICRR11886 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/15/2004 PROJ ID : P038687 Appraisal Actual Project Name : Lb - Vocational & Tech\.ed Project Costs 68\.88 31\.36 US$M ) (US$M) Country : Lebanon Loan /Credit (US$M) Loan/ US$M ) 63 29 Sector (s): Board: ED - Vocational Cofinancing training (77%), Central US$M ) (US$M) government administration (16%), Tertiary education (7%) L/C Number : L4298 Board Approval 99 FY ) (FY) Partners involved : Closing Date 12/31/2003 12/31/2003 Prepared by : Reviewed by : Group Manager : Group : Helen Abadzi Ridley Nelson Alain A\. Barbu OEDSG 2\. Project Objectives and Components a\. Objectives The development objective of the Vocational and Technical Education Project was to improve the performance of the Vocational and Technical Education (VTE) system by making it more demand driven and responsive to market needs\. Following restructuring in 2001, the development objective remained the same, but the revised design included the following specific objectives: (a) VTE policy environment improvement; (b) VTE system management and planning improvement, and (c) aligning the program profile, operating procedures and physical assets of the VTE system with labor market requirements\. These correspond closely to project components\. b\. Components Components were: (a) Institutional strengthening and capacity building (appraisal US$10\.01 million, actual US$2\.62) through: (i) strengthening the Ministry of Vocational and Technical Education (MVTE)'s management, planning, financial control capabilities, marketing and research; (ii) developing VTE policies including defining public /private sector roles in training, improving cost recovery, and increasing women ' s participation in the labor market; (iii) campaigns to improve the image of VTE and public attitude towards it; and (iv) establishing and maintaining a Project Implementation Unit (PIU)\. (b) Improvement of relevance, responsiveness and quality of training (appraisal US$17\.14, actual US$7\.49 million) through: (i) addressing current and expected training demand, including development of training programs that would attract women into more productive jobs; (ii) developing quality standards; (iii) developing modern curricula; and (iv) improving pre- and in-service training of teachers\. (c) Delivery mechanisms improvement (appraisal US$41\.74, actual US$21 million) through: (i) improving the efficiency of existing VTE schools by rehabilitating, expanding and re-equipping them; and (ii) developing new fields (model schools) in sectors with growth potential in partnership with the private sector\. Each subcomponent had multiple subcomponents\. c\. Comments on Project Cost, Financing and Dates The project's scope was reduced in 2001 and the loan was downsized from US$63 to US$29 million\. At that time, many of the multiple sub-sub-components were eliminated or consolidated\. Model schools, a campaign, and many technical assistance activities were eliminated\. The project closed on the date expected, but some components were continued in consolidation with a general education project (subsequently called Education Development Project\.) 3\. Achievement of Relevant Objectives: The overall objective of improving VTE performance by making it more demand-driven and responsive to market needs was not substantially achieved\. Though a number of preparatory subcomponents were carried out, actual changes to improve the relevance and quality of training were not brought about\. More specifically: - Improving policy environment - partly achieved\. A strategic framework document was prepared, approved by the Minister and ratified by the Council of Ministers\. (Its implementation, however, is uncertain\.) A monitoring and evaluation unit was established, though its work has been limited\. An information technology team was established and it planned a management information system, but its implementation will be carried out under the Education Development Project\. - Improving relevance and quality of training - partly achieved\. Competencies were established for 40 occupational specializations in high demand\. A trader study was undertaken, covering over 10,000 students and graduates, that was used to develop recommendations for program changes\. Existing equipment was inventoried, and an equipment procurement framework was satisfactorily developed\. - Improving delivery mechanisms - partly achieved\. Thirty schools were identified as requiring rehabilitations, and most of the work was completed; 25 others received electrical generators\. However equipment procurement was found to have irregularities and is still pending to be completed under the Education Development Project\. Technical assistance has successfully produced data gathering, curricular revisions, and pilot testing\. 4\. Significant Outcomes/Impacts: Significant outcomes and impacts are few\. The civil works needed in 30 training centers have been carried out, and a policy framework has been developed\. The curricular and equipment activities are being implemented through the Education Development Project and have not yet been completed\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): QAG rated quality at entry unsatisfactory\. There was little linkage with the private sector to establish a supportive network for institutions and graduates\. A large and confusing number of components was formulated that exceeded the implementation capacity of the country and the needs of a population emerging from a long war\. Little progress was made in implementation until the mid-term review\. At project closing, the ministerial department in charge of vocational education was seriously understaffed, with 83% of its positions vacant because of limited funding\. Delays were experienced in obtaining technical assistance and other inputs\. A teacher training program was not developed as expected\. A rate of return was calculated for graduates (12%), but the calculations were based on unsound assumptions\. The pay differential between trained and untrained persons was small, and fewer than 50% of the graduates found work in their specialty\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Moderately Although the development objective was Unsatisfactory not achieved, components necessary for its eventual achievement (buildings and policy framework) have been put in place\. Institutional Dev \.: Modest Modest Sustainability : Unlikely Non-evaluable The sustainability of the investments depends on the completion of relevant components of the Education Development Project\. While this project is proceeding, the unsatisfactory performance of the completed project creates uncertainty about the sustainability of the remaining components at this stage\. Bank Performance : Unsatisfactory Unsatisfactory Borrower Perf \.: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: - Publicly funded vocational education continues to play an important role in human resource training options\. However, its policy and implementation are often complex and require considerable expertise and commitment\. Unless there is suitable expertise and institutional capacity in government agencies, VTE projects have limited outcomes\. - VTE investments may be used best if in part they are dedicated to developing effective partnerships with the private sector\. Without a commitment from the private-sector and supportive network for institutions and graduates VTE projects may not be implemented successfully\. - In post-conflict countries where institutions have a dire lack of material and human resource repairs, attempts to fix them through the lens of a single project are risky\. Interventions might best be focused on prioritized strategic gaps in the system and making long-term, and progressive changes\. - Peer review comments during project preparation provide a valuable safeguard with respect to quality at entry\. Taking them substantively into account when designing a project may improve development effectiveness\. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The ICR is candid and provides a critical and thoughtful view of sectoral investments and Bank performance\. However, it is on the long side and some of the descriptive material could have been relegated to annexes\. Also, the table of staff weeks and amounts in Annex 4 is empty\.	REVIEW
P003590	Document of The World Bank Report No: 32216 IMPLEMENTATION COMPLETION REPORT (IF-N0280 SCL-41870 TF-29450) ON A LOAN IN THE AMOUNT OF US$30 MILLION AND A CREDIT IN THE AMOUNT OF SDR108\.5 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR THE QINBA MOUNTAINS POVERTY REDUCTION PROJECT June 24, 2005 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective May 2005) Currency Unit = Yuan Y1\.0 = US$ 0\.12 US$ 1\.0 = Y8\.27 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS 8-7 Plan National Seven-Year (1994-2000) Poverty Reduction Plan CAS Country Assistance Strategy CFPA China Foundation for Poverty Alleviation CWHRDC China Western Human Resources Development Center EMDP Ethnic Minorities Development Plan ERR Economic Rate of Return FCPMC Foreign Capital Project Management Center FRR Financial Rate of Return HRDC Human Resources Development Center IPMP Indigenous Peoples Mitigation Plan LGPR Leading Group for Poverty Reduction NPV Net Present Value PADO Poor Area Development Office PMO Project Management Office QAG Quality Assurance Group Qinba Project The Qinba Mountains Poverty Reduction Project QSA Quality of Supervision Assessment RSO Rural Survey Organization SAR Staff Appraisal Report SSB State Statistics Bureau SWPRP Southwest Poverty Reduction Project TVE Township and Village Enterprises Vice President: Jemal-ud-din Kassum, EAPVP Country Director David Dollar, EACCF Sector Director Mark D\. Wilson, EASRD Task Team Leader: Guo Li, EASRD CHINA QINBA MOUNTAINS POVERTY REDUCTION PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 14 6\. Sustainability 16 7\. Bank and Borrower Performance 17 8\. Lessons Learned 19 9\. Partner Comments 21 10\. Additional Information 23 Annex 1\. Key Performance Indicators/Log Frame Matrix 24 Annex 2\. Project Costs and Financing 26 Annex 3\. Economic Costs and Benefits 28 Annex 4\. Bank Inputs 31 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 34 Annex 6\. Ratings of Bank and Borrower Performance 35 Annex 7\. List of Supporting Documents 36 Annex 8\. The Qinba Project in A Farmer's Eyes 37 Annex 9\. Borrower's ICR Summary 40 Maps IBRD 27815 Project ID: P003590 Project Name: Qinba Mountains Poverty Reduction Project Team Leader: Guo Li TL Unit: EASRD ICR Type: Core ICR Report Date: June 24, 2005 1\. Project Data Name: Qinba Mountains Poverty Reduction Project L/C/TF Number: IF-N0280; SCL-41870; TF-29450 Country/Department: CHINA Region: East Asia and Pacific Region Sector/subsector: General agriculture, fishing and forestry sector (62%); Other social services (17%); General education sector (9%); Central government administration (9%); General transportation sector (3%) Theme: Other social protection and risk management (P); Poverty strategy, analysis and monitoring (P); Participation and civic engagement (S); Other rural development (S); Other environment and natural resources management (S) KEY DATES Original Revised/Actual PCD: 03/20/1996 Effective: 10/19/1997 10/16/1997 Appraisal: 01/10/1997 MTR: 06/04/2000 06/06/2000 Approval: 06/10/1997 Closing: 01/31/2004 12/31/2004 Borrower/Implementing Agency: The People's Republic of China/Sichuan, Shaanxi, and Ningxia Provinces Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Jean-Michel Severino Country Director: David R\. Dollar Nicholas C\. Hope Sector Director: Mark D\. Wilson Joseph R\. Goldberg Team Leader at ICR: Guo Li Alan L\. Piazza ICR Primary Author: Guo Li 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: HS Sustainability: HL Institutional Development Impact: H Bank Performance: S Borrower Performance: HS QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The Qinba Mountains Poverty Reduction Project (the Qinba Project) had the following development objectives: (a) to demonstrate the effectiveness of a focused multi-sectoral rural development project approach to poverty reduction; (b) to significantly reduce absolute poverty in 26 of the very poorest counties in Sichuan, Shaanxi and Ningxia provinces; (c) to facilitate increased labor mobility from the poor areas to better-off rural and rapidly growing urban areas; (d) to establish a new micro-finance mechanism to provide credit services to poor households; (e) to stabilize or even reverse upland environmental destruction; (f) to encourage greater local community participation; and (g) to upgrade poverty monitoring at the national and local levels\. These objectives were carefully examined and jointly chosen by the Government and the World Bank to ensure their consistency with the Government's National Seven-Year (1994-2000) Poverty Reduction Plan (the 8-7 Plan) and the Bank's Country Assistance Strategy (CAS)\. First, there was an adequate and effective involvement of the Leading Group for Poverty Reduction (LGPR) under the State Council in the whole project life; therefore, to a large extent, the Qinba Project was part of the Government's overall strategy to explore new models of poverty reduction\. The development objectives, therefore, were highly consistent with the 8-7 Plan which called for innovative measures to address issues in the following key areas: rural infrastructure, farming activities, improved access of the poor to off-farm employment opportunities, human capital development, rural industrial development, and institutional building, including setting up an independent and objective poverty monitoring system\. Second, these objectives were also highly consistent with the Bank's CAS, directly addressing two of the Bank's top operational priorities in China -- poverty reduction and environmental protection\. Third, the selection of these objectives built upon the strength of the Southwest Poverty Reduction Project (SWPRP, Project ID P003639)\. The successful implementation of SWPRP confirmed that the multi-sectoral model of poverty reduction represented a significant advance over previous poverty reduction mechanisms in China and was worthy of widespread adoption\. The Qinba Project focused more on the components which were most warmly received by the project's primary beneficiaries (e\.g\., land and farmer development, rural infrastructure, labor mobility) under SWPRP\. 3\.2 Revised Objective: The original objectives remained unchanged throughout the project's life\. 3\.3 Original Components: The project's objectives were to be achieved through the implementation of the following components: 1\. Labor mobility (13% of appraisal total project cost)\. This component was designed to provide employment to about 155,000 upland laborers over six years and to provide an important testing ground for assisting the organized flow of rural laborers into China's fast-growing regions\. The goal of the component was to be achieved through: (a) establishing a voluntary system of enhanced rural labor mobility for the upland absolute poor; (b) providing skill training through an enterprise reimbursement system; and (c) building a computerized demand-driven job placement system emphasizing local markets, monitoring of worker safety and living conditions, and reporting of abuses and grievances\. This was a highly innovative component\. 2\. Rural infrastructure (11% of appraisal total project cost)\. This component was designed to improve the poor's access to basic infrastructure including rural roads, human and animal drinking water supply, small-scale irrigation, agricultural drainage works, biogas digesters and rural electrification\. Rural - 2 - infrastructure construction has been regarded as the foundation for improving the poor's basic living and production conditions\. 3\. Land and farmer development (54% of appraisal total project cost)\. This was the biggest component in terms of investment and was designed to create a substantial and sustainable increase in agricultural productivity and incomes for project households\. The component also intended to stop (and in some cases to reverse) the trend of environmental degradation\. A menu of crop and livestock activities was developed on a participatory basis, from which the project households were to select their favored activities\. In addition, the component supported: (a) extension of improved agriculture and smallholder livestock management techniques and inputs; (b) establishment of tree crop nurseries and provision of saplings and tree crop management extension; (c) intensification of staple crop production on the modest amount of available flatland; (d) terracing for improved water and social conservation; and (e) the support of provincial and regional applied agricultural technology research\. 4\. Township and village enterprises (TVE) development (17% of appraisal total project cost)\. The component was designed to provide credit for labor-intensive commercially viable agroprocessing, mineral, service and handicraft industries that had strong backward linkages to poor households and met environmental safeguards\. The enterprises were to be selected according to a set of criteria which would maximize benefits to the poor: (a) cost per job created; (b) commercial feasibility; (c) work safety and environmental risks; (d) skill training; and (e) backward linkages to products produced by project households\. The selected enterprises were to be financed under sub-loans made by the project provinces on the Agricultural Bank of China's standard interest terms for similar activities\. 5\. Micro-finance (1% of appraisal total project cost)\. This was a pilot-based component with the objective of establishing a sustainable financial system to provide working capital loans (initial loans ranged from RMB400 to RMB700, and larger loans no more than RMB8000) to micro-enterprises run by poor households in project areas\. The main methodology was to employ an adaptation of the Grameen Bank model (emphasizing a joint liability lending)\. 6\. Institution building and project management (3% of appraisal total project cost)\. This component was designed to improve the capabilities of the Foreign Capital Project Management Center (FCPMC) and project management offices (PMOs) at all levels in project design and implementation, procurement, accounting, and internal monitoring and evaluation\. 7\. Poverty monitoring (1% of appraisal total project cost)\. This component intended to use improved State Statistics Bureau (SSB) survey instruments to provide a credible and comprehensive poverty profile, analyze the accuracy of the targeting of benefits to the absolute poor, and measure and evaluate the impact of the project's individual components\. There were four main elements of this component: (a) to upgrade the existing poverty monitoring system developed under SWPRP in order to adapt it to the conditions of the Qinba mountains region and more fully exploit the potential of the survey instruments for project evaluation; (b) to undertake baseline and annual follow-up surveys; (c) to process and analyze the collected survey data; and (d) to disseminate findings and information\. 3\.4 Revised Components: The TVE component performed poorly during the initial years of the implementation and was revised during the mid-term review, which was conducted in 2000\. The size of the component was significantly reduced, from about 17% of total project cost in the Staff Appraisal Report (SAR) to around 6%\. The funds released from the TVE component were used for more pro-poor programs, such as rural infrastructure and agricultural components which were most warmly welcomed by the beneficiaries\. - 3 - Many reasons explain the poor performance of the TVE component, but there are two factors worth special attention\. First, there was a high degree of government intervention in the implementation of this component\. The selection of enterprises, therefore, was not strictly based on the predetermined the set of criteria (see Section 3\.3)\. Second, all the enterprises suffered from a serious lack of equity which resulted in a lack of working capital\. It was impossible, therefore, for these enterprises to create job opportunities for the poor in the project area\. In addition, the expected prosperous market for the locally produced raw materials did not emerge\. Instead of generating tax revenue for the local governments, in many cases these enterprises became new fiscal burdens to the local governments and hence worsened local fiscal crises\. All these results were contrary to the original component expectations\. Useful lessons should be drawn from the implementation of the TVE component (see Section 4\.2)\. The significant reduction in the scale of the TVE component, on the other hand, clearly demonstrated the flexibility of the project design and advantages of a multi-sectoral project\. The funds released from the TVE component were mainly used for the Rural Infrastructure component and the Land and Farmer Development components, which were among the most welcomed components of the Qinba Project\. For example, by the end of the project implementation, the size of the rural infrastructure component increased by about 74% (see Section 4\.2), which was hailed by beneficiaries and PMOs at different levels as an unexpected huge success\. 3\.5 Quality at Entry: The project design predated the existence of the Quality Assurance Group (QAG) and hence there was no official assessment of the project's quality at entry\. However, it is believed that the quality at entry of the project was satisfactory for the following reasons\. First, there was a high degree of conformity of the project objectives with the CAS priorities and with the Government's strategy for poverty reduction\. Second, the design incorporated lessons learned from previous broad-based rural development projects, particularly experience from the successful implementation of SWPRP\. Third, the design paid adequate consideration to the challenges facing this project, including its high degree of complexity and number of innovations\. This consideration was fully reflected by the features of the project design, including choice of project management and organizational structure\. Fourth, the design was fully consistent with the Bank's safeguard policies\. Finally, and perhaps of most importance, the project achieved a profound development impact by the end of the implementation period without modification of its original objectives or any major revision of the project component structure (see Section 4\.1)\. Quality at entry, however, could have been even higher had the following issues been scrutinized and addressed more carefully\. First, the probability of the assumptions employed for designing the TVE component should have been assessed more carefully\. Second, a mechanism for ensuring even stronger participation from beneficiaries at the early stage of the implementation should have been established\. Third, more user-friendly and appropriate procurement methods with greater community participation should have been employed at the early period of the project implementation\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The achievement of the objectives and outputs of the Qinba Project was highly satisfactory\. The Qinba Project is an excellent example of achieving the intended development impact\. First, the project generated a significant and profound policy impact\. In its statement of nominating the World Bank as the recipient of the China Poverty Eradication Award on September 6, 2004, the Government made the following strongly positive evaluation of the Qinba Project: - 4 - "\. In Southwest and Qinba projects, the World Bank adopted several innovative approaches, such as village development planning and project based multi-sectoral methodology, which have generated great impact on developing China's poverty alleviation policy\. Particularly, the village development planning, labor mobility, and project-based multi-sectoral approach have already been incorporated into the China Poverty Alleviation Plan (2001-2010) by the Central Government, which will have profound impact on China's poverty alleviation efforts in the twenty-first century\." In addition, the World Bank became the first international organization to receive the China Poverty Eradication Award on October 17, 2004\. In an article published in the Guangming Daily on March 9, 2005, the Ministry of Finance summarized the Qinba Project's policy impact in highly favorable way: "\. Southwest and Qinba projects, through introducing project based multi-sectoral methodology and participatory approach, have made significant contributions in helping the Government to develop `a scientific approach to development' which is characterized by `putting the people first'\." Second, the project brought about remarkable economic and social improvements\. The SSB's independent monitoring of the project provides detailed information on these benefits (see Table 1)\. For example, the incidence of poverty was drastically reduced from 26\.7% (1997) to 4\.6% (2003)\. The current level of poverty incidence in the project area is now almost the same as the national average\. However, at the beginning of the project in 1997, the incidence of poverty in the project area was five times as high as of the national average\. In 2003, 100% of project villages had road access compared with only 72% in 1997\. By the end of 2003, per capita income in the project area had on average increased about 64% compared with that of 1997, an annual growth rate at 8\.1%\. By comparison, the national average growth rate of farmers' per capita income was around 4% during the same period of time\. The poor farmers' ability to deal with risks, as measured by the degree of food security and per capita cash at hand at the year-end (see Annex 1 for all key performance indicators), was also significantly strengthened\. SSB's independent monitoring and evaluation also showed that, after seven years of project implementation, the project villages are evidently less vulnerable than non-project villages to natural disasters\. Table 1\. Selected Indicators of Economic and Social Benefits 1 2 3 4 5 6 7 8 9 Year Poverty Food p\. c\. Villagers Villages Labor Remittance proportion Gender incidence security* income w/ access w/ migration of meat gap** safe water access sold in (%) roads market (kg) (yuan) (%) (%) (%) (billion yuan) (%) (%) 1997 26\.7 190 854 n\.a\. 71\.8 15 n\.a\. 38\.7 89\.8 2000 17\.9 331 1087 75 91\.0 22 n\.a\. 42\.7 96\.7 2003 4\.6 387 1398 86 100 25 1\.7 55\.9 98\.2 * Food security is measured by per capita grain storage at the year-end\. ** Gender gap is measured by the ratio of girls enrollment rate over boys' enrollment rate for the age group of 7-15\. Third, poor farmers' access to off-farm employment opportunities was significantly improved\. The labor mobility targets were exceeded in all project counties and the overall quality of implementation was excellent (see Section 4\.2)\. Households which participated in labor mobility not only realized rapid and substantial increases in income from worker remittances, but also significantly expanded their knowledge and views about the outside world and strengthened their self-confidence, which will have a lasting - 5 - development impact\. Interviews and project data confirmed that the labor mobility component was widely considered to be one of the most successful and well received components of the project\. Fourth, the goal of piloting micro-finance was also successfully achieved, particularly in the areas of institutional capacity building and reaching the poor\. However, given the current status of the overall financial sector in China, there is still a long way to go to achieve financially sustainable micro-finance institutions\. Fifth, the project also generated significant environmental and ecological benefits, which were confirmed by an independent environmental monitoring report in 2003\. The forest area increased by 49%, the irrigated area by 20%, and the terraced area by 22%\. The ratio of households with difficulty obtaining daily fuel materials, an indicator used to measure the change of ecological environment, decreased from 62% in 1997 to 41% in 2003\. Sixth, participation levels of the Qinba Project's farm households and communities increased over time, particularly in the second half of the project implementation period\. In the later stage of project implementation, participatory monitoring and evaluation was introduced to evaluate outcomes and impact of the project\. It was evident that the targeted groups started to influence and share control over priority setting, policy-making, resource allocations and access to public goods and services\. Nevertheless, the participatory work could have been better had an even more efficient mechanism been established at the early stage of the implementation\. Finally, in its 2004 monitoring report, SSB concluded that, compared with the SWPRP, "\.Qinba poverty monitoring component improved the sampling methods, questionnaire design, training, and field interview," and this had helped upgraded poverty monitoring at the national and local levels, and hence had an impact which went far beyond the project itself\. 4\.2 Outputs by components: 1\. Labor mobility ($48\.6 million SAR, $46\.1 actual) The labor mobility component is rated highly satisfactory\. This was a very challenging and highly innovative component, and the first step was the establishment of a capable implementation system with offices and staff at all levels in both originating and destination areas\. The initial institution building effort was fully successful and facilitated the achievement of about 133% of the SAR planned component output\. More importantly, extensive and rigorous analysis has convincingly documented that the labor mobility component was extraordinarily effective in achieving its development objective of expanding the upland poor's knowledge of and access to off-farm employment\. The outflow of migrant laborers from the project's upland villages has continued to expand following project completion, and this clearly shows that the favorable output and development outcome are fully sustainable\. The China Western Human Resources Development Center (CWHRDC) spearheaded the institution building at the central level, and played the crucial role in: (a) establishing the implementation organization at all levels; (b) identifying employment opportunities in the destination areas; and (c) monitoring the location and well-being of the very large number of migrant laborers spread across a wide geographic area\. The Sichuan and Shaanxi Human Resource Development Centers (HRDC) worked closely with the provincial PMOs to establish the implementation organization at the county and township levels and to supervise the work of these lower level organizational units during project implementation\. The county and township level units played the key role during implementation of identifying appropriate candidates for the labor mobility component and to provide them with orientation training prior to departure for their new - 6 - jobs\. This highly capable and extensive implementation organization made it possible to achieve the component's planned output targets\. Nearly 200,000 upland poor found off-farm employment through the labor mobility component, including roughly 110,000 inter-provincial migrant laborers\. The labor mobility monitoring system in combination with the pre-departure orientation training kept work related accidents and employment disputes to an absolute minimum\. CWHRDC found that less than 0\.04% of all project migrant laborers experienced serious accidents (27 reported) and disputes (40 reported)\. CWHRDC has conducted a careful and extensive assessment to understand the cost and benefits of the component (see Document No\. 9 of Annex 7)\. The assessment provides estimates (based on sample surveys) of the incomes received by the labor migrants, their remittances sent home to their extended families, and the ways these incomes were utilized by the migrants and their families\. These estimates show that the labor mobility component was a very powerful poverty reduction measure: total remittances are estimated to have been about RMB1\.7 billion (or about RMB7300 per migrant on average), with most of these funds being used for the purchase of agricultural production materials, improved housing, family medical care, educational expenses, and debt repayment\. More importantly, all of the documentation and participatory evaluation indicates that the most significant outcome has been the improved outlook on life and greater aspirations of the migrants\. This was clearly the case for migrant women (comprising about one quarter of all migrant laborers), who gained greater self esteem and confidence, reduced work burdens (upon return to their home villages), and increased economic independence\. The component's policy impact is also evident\. Based in part on the highly successful experience of the Southwest and Qinba Mountains Poverty Reduction Projects with labor mobility, China's poverty reduction program for 2001-2010 includes a major focus on labor mobility and vocation training\. The vocational training program seeks to further improve the upland poor's access of higher-paying off-farm employment\. Expanding on their successful experience with labor mobility under the Qinba project, for example, the Shaanxi Poor Area Development Office (PADO) provided vocational training opportunities for some 30,000 upland poor during 2004\. Based on contractual relationships with the vocational training schools, most of these upland poor were placed in better paying jobs following three to six month training periods (final payment to the vocational schools was dependent upon successful placement of the trainees in new jobs)\. 2\. Rural infrastructure ($40\.5 million SAR, $70\.6 million actual) This component is rated highly satisfactory\. The rural infrastructure component was one of the most warmly welcomed components\. In response to the farmers' demand, the size of the component was increased significantly to $70\.6 million actual, an increase of 74% over the estimated cost at appraisal\. The funding for increasing this component mainly came from funds released from the TVE component, increased counterpart funding, and the original unallocated funds\. Most of the increased funding was used for constructing access roads, rural energy supply, and small irrigation systems\. Implementation of the component significantly improved the project beneficiaries' basic living and production conditions\. Project information from Sichuan and Shaanxi showed that 2,258 km of roads were improved and constructed to Class IV Road standards, as compared with 892 km of new and improved roads envisaged at project appraisal\. In addition, 7,493 km of village access roads were constructed\. Road access coverage has now been extended to about 1\.9 million people, more than three times the originally planned number of beneficiaries\. Village access roads, generally varying from several km to 15 km in length and accessible to tractors and light vehicles, have been effective in linking many natural villages and hamlets to existing rural road networks, drawing them for the first time into the local main stream of rural economic activities\. Project households demonstrated great enthusiasm for this component, particularly for road construction, - 7 - with a very active participation\. Beneficiaries' contributed labor far exceeded in value the amount of cash injection by the project\. Construction of drinking water facilities was also one of the most welcomed activities\. By the end of the implementation, the project has successfully solved the drinking water problem for about 650,000 people, compared with the SAR target of 466,000\. These are low cost, simple facilities which have effectively relieved tens of thousands of project households from the daily hard labor of fetching drinking water from remote sources, thereby setting free numerous labor-days to be profitably utilized for food production and income generation activities\. In addition, small irrigation systems constructed through the project were very effective in stabilizing and increasing production of paddy and other food crops for home consumption and animal feed where there is surplus\. One useful lesson from the component implementation is that infrastructure construction, particularly road access, should be implemented first so that the benefits of activities under other components (e\.g\., agricultural component and labor mobility component) can be maximized due to improved access to input supplies, services, information, and markets\. 3\. Land and farmer development ($ 194\.8 million SAR, $232 million actual) This component is rated highly satisfactory\. This is the largest component in terms of investment and focused on solving the food security and cash income generation problems\. As shown by the SSB's independent monitoring report, both of the two major goals were fully achieved through activities such as farming, raising livestock, improving land quality, and applied agricultural research\. For example, average per capita income increased by about RMB544 (from RMB854 in 1997 to RMB1398 in 2003), which exceeded SAR target (RMB400)\. The per capita amount of stored grain at the year-end was more than doubled from 190 kg/person in 1997 to 387 kg/person in 2003 (see Table 1, Section 4\.1)\. Project area field visits consistently confirmed that the food security is no longer a problem for almost all farm households\. In addition, the general living standard of the poor households has been significantly raised\. Another powerful indicator is the consumption structure, as measured by the Engel coefficient, which was significantly improved\. By the end of 2003, the project villages' Engel coefficient--the ratio of expenditures on food consumption out of total expenditures--declined from 64% to about 53%, and this decline for the project villages was greater than that of non-project villages\. The poor households' ability to deal with risks and degree of market participation were also significantly strengthened (see Annex 1, Key Performance Indicators)\. Technical quality of project implementation has generally met the project's technical standards\. In response to the farmers' demand, the size of the component was increased from $195 million to $232 million, an increase of about 19%\. The funding for increasing this component mainly came from the funds released from decreasing the TVE component and unallocated fund\. This component also included supporting activities of applied research (total about $0\.5 million)\. About 75% of applied research investment was in Shaanxi Province\. The applied research program was a notable success for three principal reasons: (a) it was carefully focused on specific production bottlenecks in the farming system; (b) the research was done at the beginning of the project so that the results could be applied through the extension activities in later years; and (c) many of the research results was also applied to other parts of the project provinces\. As a result, the applied research program had a much wider impact than originally anticipated\. The coverage rate (i\.e\., the proportion of project households which participated in the Land and Farmer Development Component) was basically 100% in all three provinces, with an average investment intensity of RMB1988 per household\. In addition to the investment, the project also provided technical training to - 8 - the project households\. Women made up about half of those who received training; this represents significant progress compared with the beginning of the project implementation when women were only about 20% of the total\. There were many factors which contributed to the success of the component's implementation\. First, there was a synergy between the development of diversified farm structures and labor mobility cash income diversification, since both helped to reduce income risk and reduce households' vulnerability to falling back to poverty\. Second, there was a strong participation in terms of activity selection by project households, which led to increased profitability of component activities and increased repayment rates\. Third, the provision of series small support (ranged from RMB500 to RMB1200 per year) enabled farm households to build their asset base gradually over time with minimal risk and debt exposure\. Fourth, the development of farmer human resource capacity through training programs and the building of farmer self-confidence had a major impact and provided the human capital base for long-term economic development in the project areas\. Finally, there was high degree of integration of rural infrastructure with land and farmer, and labor mobility activities, which was a major catalyst to economic development through providing access to inputs, markets, services and information\. There were some factors which constrained the component from achieving an even higher degree of success\. First, tree crop activities did not fully achieve the expected benefits due to the long period (usually 4-5 years) before production and harvesting began, often weak training and extension, variable seedling quality, market changes, and seedling vulnerability to drought\. In future poverty projects, tree crops should generally be included as part of an integrated, diversified farm investment approach rather than as single project investments for poor households\. Second, an inappropriate choice of procurement methodology (i\.e\., time-consuming distribution process and a shrinking price difference between domestic and international markets of international competitive bidding procured fertilizer, chemicals, and plastic mulch, etc\.) at the early stage of the project implementation caused delay of the activities\. 4\. TVE Development ($62\.2 million SAR, $24\.5 million actual) This component is rated unsatisfactory\. Although the design of this component incorporated the lessons learned from initial implementation of the similar component in SWPRP, it turned out that the component was still too ambitious and underestimated the difficulties associated with the TVE sector as well as the rapid progress China was achieving in transforming its economy from a central-planned one to a market-oriented one\. Following the mid-term adjustment, the total amount of investment for the component was cut down from US$62 million to US$25 million (i\.e\., from 17% to around 6% of the total project investment)\. The greatest reduction was in Sichuan\. Investment in Shaanxi for this component was moderately adjusted down from US$28 million to US$20 million\. The released funding was reallocated to the activities which were warmly welcomed by the beneficiaries (such as the rural infrastructure component, land and farmer development component)\. At the time of appraisal, the Qinba Project was expected to support 150 enterprises\. At the time of the project completion, only 22 enterprises had been completed\. Of these, 12 were operational, 3 were in trial production and 7 were either not operational yet or had stopped operation, mostly because of a lack of working capital for operation\. All of the enterprises which were not-operational are in Shaanxi Province\. Of 23 small farmers market, 20 were operational, a much higher proportion than that for the enterprises\. It should be pointed out that, while most of the medium and larger TVEs supported by the project were eventually found not to be financially viable or to have had significant poverty reduction impacts, small scale enterprises and small scale farmers' markets were typically far more successful\. These enterprises, which were often privately owned, provided goods and services for the local market and relied on simple technologies\. Most of these enterprises were found to be financially viable, to have had favorable poverty - 9 - reduction and local fiscal impacts, and to have provided marketing channels for farm and other products produced by the poor\. Another indicator of success of the farmers' markets construction is that Sichuan Province, while significantly reducing the size of the component as a whole, doubled the number of markets constructed from 6 to 12\. The implementation of the TVE component has provided the following lessons\. First, the experience of the component in Shaanxi indicates that it was unwise for the project to invest in large-scale enterprises, given the natural and economic conditions and the level of government intervention in these counties\. Moreover, the project should have mitigated the risks by not focusing the investment in the six enterprises of the three project counties\. The investment in large-scale enterprises suffered from moral hazard problems when the enterprise owners did not have sufficient capital funds, as no individuals are finally responsible for the loan repayment\. Second, the time-consuming process of selecting enterprises and the relatively high rates of interest charged to them may have an adverse effect on the performance of the component: those enterprises which are able to access commercial loans (interest rates were around 5\.5 per cent per annum) would not be interested in the project loans\. This meant that it was the enterprises without commercial sources of finance which were most likely to apply for the project's funding\. Third, the small plants and small farmers' markets performed better than the large-scale enterprises\. This is because these activities require less capital investment and working capital, and less complicated technology and hence take less time to prepare\. All these fit the poor areas better\. Finally, agroprocessing plants do not necessarily add value to the farm products produced in the project areas\. A money-losing processing enterprise could have an adverse impact on the incomes and welfares of poor farmers in the project areas, as the local governments may have to collect more taxes and fees to make up the loss and/or persuade farmers to grow the raw materials for the plant which may not be in the best interest of farmers\. 5\. Micro-finance ($4\.1 million SAR, $6\.8 million actual) The component is rated marginally satisfactory\. In terms of the number of borrowers and the total amount of loans disbursed, the program has attained its targets and has so far provided almost RMB60 million of micro-loans to more than 40,000 borrowers in two project provinces\. By the end of June 2004, the program had a loan portfolio of over RMB10 million in Langzhong and Tongjiang counties of Sichuan (the program in Shaanxi was completed in September 2002)\. The program targeted the poor in the project counties and both the micro-loans and the training program provided by China Foundation for Poverty Alleviation (CFPA) to the program beneficiaries have impacted positively on the poor in the project counties\. Of all the micro-loans, more than 70 per cent has been used by the project beneficiaries for cropping and animal production and the rest mainly for transportation and agroprocessing\. The program was responsible for a number of innovations, including group lending, dynamic incentives and emphasis on women's participation\. Project beneficiaries decided on loan uses, and loans were provided in cash rather than in kind\. In addition, the program established basic loan disbursement and repayment procedures, an accounting and reporting system, and an internal control system\. The program is more transparent than other government channels in fund use and able to detect and trace the funds diverted by the county and township governments from the component\. Consequently, most micro-finance funds did reach the poor households in the project areas, and the program has achieved a much higher overall loan repayment rate compared with the agricultural component\. The micro-finance program in the project counties, however, will have a difficult time achieving financial sustainability, because (a) the program has no capital funds and almost all the funds for the micro-finance - 10 - operation are from the Bank loan that need to be repaid; (b) the rate of interest charged by the program (7% nominal and about 11% effective) barely cover the operational costs and the cost of funds (around 3\.2 per cent per annum); and (c) the start-up cost is higher and is not covered by the grant funds\. Moreover, the county governments in Ankang and Langzhong have been reluctant to use the project funds for the micro-finance component, and this led to frequent conflicts between the county governments and CFPA, the implementation agency in Beijing\. The program's major loan quality and financial indicators are shown in Table 2\. Table 2\. Key Performance Indicators for the Micro-finance Component Langzhong Ankang Tongjiang Total Loan Portfolio (RMB10,000) 487\.2 743\.58 626\.66 1857\.44 Loans past due at close (RMB10,000) 195\.7 557\.68 128\.35 881\.73 Overall Loan Repayment Rate (%) 83\.45 72\.27 92\.77 82\.26 Loan Arrears at close (%) 40\.17 75\.00 20\.48 47\.47 Total Income (RMB10,000) 152\.36 166\.3 164\.84 483\.5 Operational Income (RMB10,000) 99\.66 148\.78 134\.31 382\.75 Donations (RMB10,000) 52\.7 17\.53 30\.53 100\.76 Total Expenses (RMB10,000) 176\.66 212\.17 217\.48 606\.32 Interest Expenses (RMB10,000) 62\.5 116\.66 53\.31 232\.48 Provisions for Bad Loans (RMB10,000) 8\.91 3\.16 18\.8 30\.87 Operational Expenses (RMB10,000) 105\.25 92\.35 145\.37 342\.97 Profit or Losses (RMB10,000) -24\.3 -45\.87 -52\.65 -122\.81 Total Income/Total expenses (%) 86 78 76 80 Some valuable lessons can be drawn from the implementation of the micro-finance pilot\. First, some of the innovations, such as the loan disbursement and repayment procedures, group loans, the basic accounting, reporting and auditing system and participation of women, can be applied to the agricultural component with loans to individual households under the World Bank projects\. Second, the micro-finance programs funded with the Bank loans in China can hardly achieve operational and financial sustainability without alternative sources of funds to replace the Bank loans, as the program counties have to repay the loans to the Bank\. So far all the program counties have failed to obtain alternative funds to replace the Bank loans\. Third, since the county governments provided the guarantee for the repayment of the Bank loans, the governments have a strong incentive to intervene in the operation of the micro-finance institutions and micro-loans, which has resulted in a high proportion of non-performing loans for the program\. The county governments in all the three program counties have intervened in staff appointments and in the operation of the micro-finance institutions, and at least two program counties have diverted the funds from the micro-finance institutions for use in the non-program townships\. The intervention from local government in the uses of micro-finance funds has led to frequent conflicts between the local governments and the implementation agency at the national level, CFPA\. Fourth, in the program design, virtually no grant funds were designed to cover the start-up costs and the training of the micro-finance programs, which, in combination with the relatively low rate of interest, has resulted in financial losses of the program\. Finally, the program should have set up a computerized management information system at the early stage of the pilot\. 6\. Institution building ($8\.6 million SAR, $7\.6 million actual) This component is rated highly satisfactory\. The design and implementation built upon SWPRP's successful experience\. To cope with the above-average complexity of the project, a five-level project management system was established including the central, provincial, county, township, and village levels\. With adequate project support, strong leadership from the central government, and a high degree of commitment from the project staff, a highly capable, dedicated, and complete PMO system was formed\. - 11 - The PMO system is justifiably regarded as one of the project's greatest legacies and it was responsible for the successful implementation of the project\. The project provided adequate support in terms of training, spacious working space, office equipment and vehicles\. In terms of training, about 200 person/time participated abroad study tours and training, domestic training covered about 1200 person/time\. Project provinces also organized study tours, training among themselves, which in total covered about 3200 person/time\. Full time project staff numbered about 11000\. Effective institution building was the foundation for the successful implementation of this highly complex project in a very challenging environment\. Throughout the implementation period, there was a progressive build-up of institutions with a strong capacity to deliver results with accountability and use methods and procedures that are transparent and verifiable\. The benefits of successful institutional construction have gone far beyond the immediate results of poverty reduction in the project area\. Many project counties decided to retain and further strengthen the project teams developed under the project\. 7\. Poverty monitoring ($2\.0 million SAR, $1\.3 million actual) The component is rated satisfactory\. Based on the experience of SWPRP, the component improved the sampling method, questionnaire design, training and field interview procedures\. All these ensured the quality of the survey and the full achievement of the component objectives\. The survey program was designed on the basis of experience and lessons of SWPRP, and was reviewed by national specialists (Chinese Academy of Social Sciences) and international specialists (the World Bank's Research Department)\. The independent monitoring and evaluation continued for six years, following the baseline survey in 1997\. It covered 26 project counties and 2600 households in the baseline survey, 13 project counties and 1300 households in the following four years, and all 26 project counties and 2600 households again in 2002\. The data were collected through the visits of interviewers as well as the diary-book kept by the sample households\. The SSB's Rural Survey Organization (RSO) held a series of training session including both the central and provincial PMO staff\. The SSB also held training sessions in all project counties\. In addition, the Provincial Rural Survey branches had annual training courses for interviewers at the county level, and there was annual training for assistant enumerators from sampling villages\. Well organized field surveys promoted the data quality\. Careful data editing and analyzing further improved the quality of the data\. There are two ways in which the performance of this component could have been improved\. First, the duration of the monitoring period was not long enough to capture the full effects of the project\. The impact of some project activities could not appear in a short period and therefore were not captured by the survey, which lasted for six years\. Second, the survey did not capture villagers' direct assessment of the project, which would have made the impact evaluation more reliable and comprehensive\. It is believed that more qualitative indicators and participatory indicators should have been included\. Status of Women and Female Participation The project generated a variety of significant benefits which strengthened women's social status\. There are three important and tangible benefits worthy of particular attention\. First, rural infrastructure construction, particularly the construction of drinking water facilities, effectively liberated women from a heavy workload of water fetching, so that women have more time to participate in other social and economic activities\. Second, there was significant progress in terms of increasing women's participation in applied technical training\. In the early stage of project implementation, women only accounted for about 20% of those who received training\. However, by the end of the project implementation, the proportion - 12 - reached 50%\. Third, the labor mobility component improved women's access to off-farm jobs\. Women accounted for about 25% of all migrant laborers who found an off-farm job through the project\. All these benefits significantly strengthened women's social status since they gained greater self esteem and confidence, had reduced work burdens, and achieved increased economic independence\. Impact on Ethnic Minority People The project has generated a significant positive impact on ethnic minority people\. In the project area, these are mainly Hui nationalities who concentrate in Ningxia\. In the four project counties of Ningxia, Hui nationality accounts for 96% of the population in Jingyuan, 81% in Tongxin, 69% in Haiyuan, and 51% in Xiji\. In the SAR there was no independent Indigenous Peoples Mitigation Plan (IPMP) or Ethnic Minorities Development Plan (EMDP) since the whole project design in Ningxia could be treated as an IPMP or an EMDP\. A review conducted by the Bank's Social Development Specialist confirmed that the Hui nationality people had equal opportunities to participate in the project, and had benefited from project activities such as livestock raising, terracing, as well as cropping\. The living standards of those who took part in the project were clearly improved\. In addition, productive conditions as well as the residential environment in project villages were greatly bettered\. In sum, there is no doubt that Hui nationality farmers have benefited from the project\. 4\.3 Net Present Value/Economic rate of return: Data from different sources consistently confirm that the project achieved remarkable economic, social and environmental benefits\. These data (see Document No\. 9 of Annex 7) demonstrated a steady improvement of a series of key monitoring indicators\. The incidence of poverty, for example, declined from 26\.7% in 1997 to about 4\.6% in 2003; per capita income increased from RMB854 to RMB1398 during the same period (Annex 3, Table 3\.1)\. The beneficiaries obtained more development opportunities as shown by the enhanced market participation, strengthened ability of managing risks, increased girls' enrollment rate, and reduced gender disparity\. Project villages, in many aspects, out-performed non-project villages which generally enjoyed much better initial conditions\. For example, SSB's independent monitoring of the project convincingly shows that project villages are less vulnerable than non-project villages to natural disasters\. A traditional methodology is used for estimating the economic rate of return (ERR) of the project\. Data for calculating the ERR comes from provincial village surveys (conducted by PMOs) and a series of Poverty Monitoring Reports for the project (State Statistical Bureau, 1997-2004)\. Project benefits have been quantified for four major components: (a) labor mobility; (b) rural infrastructure (for the irrigation subcomponent); (c) land and farmer development; and (d) TVE development (for the rural market construction subcomponent)\. Investment in these four major components accounts for 96% of total project investment\. The benefits of other components (institutional building, poverty monitoring and micro-finance) are difficult to quantify and hence ERRs have not been calculated for them\. It should be pointed out that given their small share in the total project cost, their exclusion does not have a significant impact on the conclusion\. To get the ERR of the project as a whole, the individual ERRs are weighted by the investment proportion of corresponding components in the total project\. The overall economic rate of return to the project as a whole, under several conservative assumptions, is estimated to be 37%\. The following table presents estimated ERRs for the whole project as well as for specific components\. - 13 - Project as Labor Rural Land and TVE whole mobility infrastructure farmer development ICR 37% More than 50% 27% 36% 13% SAR 40% 43% n\.a\. 43% 47-71% 4\.4 Financial rate of return: No calculation has been made of the financial rate of return (FRR) of the project or of any of its components\. After twenty five years of market-oriented economic reforms, price distortions resulting from government intervention in the economy have largely been eliminated\. An integrated domestic market has been established and it is increasingly integrated with the international market\. Against this background, there is essentially no additional value to calculate the ERR and the FRR separately to capture the impact of price distortions\. The SAR found no significant difference between the economic and financial rates of return for the two components examined, with only exception of TVE component\. On this basis, it is believed that the estimated ERRs are representative of the FRRs\. 4\.5 Institutional development impact: The project's institutional development impact was high\. An efficient, capable, and dedicated project management system was established from the central level to the village level, with strong support from the central government (i\.e\., the LGPR under the State Council) as well as from the provinces (with the establishment of provincial project-based Leading Group, comprising by all relevant agencies)\. The performance of the PMO system is remarkable in almost all aspects of the project, including planning, implementing, monitoring, and evaluation (as discussed in Section 4\.1 and 4\.2)\. For example, the Central PMO developed a set of regulations covering loan management, implementation plan, procurement, reimbursement management, accounting and financial management, and monitoring and evaluation areas\. All these regulations were also adopted by most poverty reduction projects financed by domestic resources\. One of the strongest indicators of the high institutional development impact is the decision of many counties and provinces to retain, instead of dismantling, the project management offices at the completion of the project implementation\. These counties and provinces are planning to channel domestic resources through the existing project management system\. The project's significant and profound policy impact should also be regarded as a lasting institutional development impact (see Section 4\.1)\. This policy impact has received highly favorable reviews from the Shanghai conference participants\. The successful experience of the Qinba Project in institutional development also provided a good model for other countries to learn from\. For example, Vietnamese Government sent a delegation to the Qinba Project area to conduct a study tour in 2004\. In short, the Qinba Project significantly improved the poverty alleviation system's ability to make effective use of its human and financial resources\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: Factors which were beyond the control of Government and the implementation agency had a very positive impact on the project's implementation and the achievement of its objectives\. First, in the past decade, China's continuing strong economy growth provided a very favorable macroeconomic environment for project implementation\. For example, the high speed of urbanization and industrialization created a large amount of off-farm job opportunities for the migrant labors from the poor areas\. Second, market-oriented economic reform removed the constraints on the flow of most production inputs and outputs, which also positively contributed to the effectiveness of many project components (e\.g\., the Land and Farmer Development component)\. Third, the implementation of the Great Western Development Plan brought a - 14 - large amount of investment in large-scale infrastructure in the project provinces, which provided a favorable environment for farmers to access to better transportation and energy services\. All these factors had significantly favorable impacts on the project implementation and its outcomes\. Two factors adversely affected project implementation\. First, several natural disasters affected project implementation\. For example, a drought of four years' duration in Ningxia reduced the effectiveness of the agricultural activities\. However, from the perspective of the Qinba Project as a whole, the impact of these natural disasters was generally modest\. Second, rapid and profound changes in the macroeconomy and associated market risks invalidated many assumptions made for the TVE component, which contributed to its unsatisfactory performance\. 5\.2 Factors generally subject to government control: Factors which are generally subject to Government control also had a favorable impact on project implementation\. The Government maintained a high degree of commitment to poverty reduction throughout the project's life\. This high degree of commitment was essential to overcoming many obstacles which confronted the project and which were beyond the control of the PMOs\. One indicator of the commitment was the establishment of the project-based Leading Groups at provincial and county levels\. These Leading Groups, which served as multi-agency coordinators, provided strong support to project implementation in terms of ensuring timely provision of counterpart funding, preventing reimbursed project funding from being diverted to other uses, and other key roles\. The Government's over-emphasis on cost recovery, however, generated some adverse impact on project implementation and outcome\. The over-emphasis on cost recovery resulted in a bias at the project design stage in favor of those activities which were assumed to be able to generate direct cash returns and against those activities which were perceived not to have that ability\. This bias at least partially explains why, at the time of appraisal, the TVE development component accounted for 17% of the total project cost and rural infrastructure only for 11%\. However, it should be pointed out that the Government has begun to recognize the negative impact of emphasizing cost-recovery and started to emphasize the lasting benefits of public goods provision through projects\. 5\.3 Factors generally subject to implementing agency control: The Qinba Project's management system was a very strong and capable system which was indispensable to the project's successful implementation with lasting development impact\. The PMO system effectively took advantage of most factors which were under their control to improve the performance of the project\. In this aspect, the performance of the Central PMO and the Sichuan and Shaanxi provincial PMOs were excellent and worthy of particular congratulations\. For example, by noticing the unsatisfactory performance of the TVE component and realizing that the factors which contributed to it were generally beyond the control of the PMO system, the Central and Sichuan PMOs significantly scaled down the size of the TVE component and shifted the resources to the most welcomed activities such as rural infrastructure and agricultural components (See section 4\.2)\. The project results showed that this timely readjustment significantly contributed to the successful achievement of the project's development objectives\. Another example was the introduction of a provincial level cross-supervision arrangement ( jiaocha jiancha) for improving the implementation quality\. Sichuan sent a team to supervise the implementation quality of Shaanxi, Shaanxi sent a team to supervise the Ningxia's work, and Ningxia supervised the performance of Sichuan\. The cross-supervision was conducted about once every year and had two positive impacts: (a) it strengthened the project monitoring and supervision in addition to the Bank's twice-a-year regular supervisions; and (b) it provided a good opportunity for the timely scaling up of good practice in one area to another area\. In the final years of project implementation, the PMOs introduced the participatory monitoring methodology on a pilot basis which not only upgraded the project's - 15 - internal monitoring and evaluation work, but also strengthened the effectiveness of the project's implementation\. In a limited number of cases, however, county PMOs were inadequately staffed and their record keeping work needed to be strengthened\. This was the case particularly in Ningxia\. 5\.4 Costs and financing: The change in total project cost was modest\. The total project cost estimated at appraisal was $360 million, and the actual cost was about $389 million, an increase of 8%\. The increase mainly comes from surpassing the counterpart funding target\. Based on the data from the central PMO, the final counterpart funding utilized was about 18% above the estimate in the SAR\. 6\. Sustainability 6\.1 Rationale for sustainability rating: The sustainability of the project's development impact is rated highly likely, based on the following reasons\. First, the policy impact has greatly exceeded what was anticipated at appraisal, and the many innovative approaches tested through the project (such as labor mobility, participatory approach, household and project based multi-sectoral approach) have been mainstreamed into national policy and are now widely applied\. The most recent indicator of this sustainability is a new poverty project concept, proposed by the Government for the Bank's consideration, which fully incorporates these innovative approaches\. Second, the establishment, stability, and continuity of a strong project management system have also contributed favorably to the project's sustainability\. As discussed in previous sections (Section 4\.1, 4\.2, and 4\.5), many project counties have already decided to retain the PMO and will channel new resources through the Qinba Project management system\. Third, the significant improvement of beneficiaries' participation in the project implementation, self-confidence, and general human capital level will also contribute to the sustainability of the project's outcomes\. Many farmers told the Bank's supervision missions that the most important benefits they received from the project is their strengthened capacity to deal with risk, knowledge about new technologies, and better engagement in the market economy\. In short, the project set up a good platform for long-term sustainable development and improvement of their livelihoods\. The Bank's sixth round of Quality of Supervision Assessment (QSA6), conducted in September 2004, also rated the sustainability of this project as "likely" (the highest rate of the QSA)\. The QSA report states: "The progress of the project is now well advanced and it is possible to assess with some confidence that the project's results will be sustainable\. Given the high level of support from the Chinese authorities for the project activities and strong indications that key project activities will be scaled up, there is a good likelihood that sustainability will be achieved\." 6\.2 Transition arrangement to regular operations: Given the specific but effective institutional arrangement (e\.g\., the project based Leading Group for better coordination among different line bureaus), most project activities have been integrated into the regular operations of relevant departments\. This has significantly minimized the need for special transition arrangements, and ensures the appropriate technical and financial provisions to sustain project effectiveness in the post-implementation era\. As the implementation period approached its conclusion and during the final series of Bank supervision mission, the Bank put additional emphasis on these transitional arrangements to ensure regular operation\. Many measures have been discussed and agreed with the Government, such as improving the record keeping, re-flowing the project funds, and ensuring institutional - 16 - stability and continuity\. All these measures included technical, financial, and institutional provisions to ensure effective project operation in future\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank's performance in identification, preparation assistance, and appraisal of the project is rated satisfactory\. The identification of the project was fully consistent with government's poverty reduction strategy and in accordance with the Bank's CAS\. The design was made on the basis of success of the SWPRP\. During the stage of preparation assistance and appraisal, the Bank's team provided adequate technical, financial, economic, and institutional assistance, including procurement and financial management, to the client\. All these were made possible by Japanese Policy and Human Resources Development grant, consultant trust funds from various sources, and the strong capacity and high degree of continuity of the Bank's task team\. Most of the Bank's preparation team could undertake their work in Chinese, and hence spend much of their project preparation time at the village and household level obtaining a more in-depth understanding of the problems and identifying the possible solutions\. No major shortcomings of the preparation efforts have been identified\. The Bank could have done a better job in examining the assumptions about the TVE component design, even though the size of the component was reduced compared with the Government's original request and further adjustment and reduction was made during the mid-term review\. 7\.2 Supervision: The Bank's performance in the project's implementation supervision is rated satisfactory\. This rating is also consistent with the rating that QSA6 gave to the project (overall rating of 2 on the 6-point scale)\. The following factors contributed to this satisfactory rating\. First, throughout the project life, there has been a high degree of task team continuity, which fostered a long-term and trusting work relationship with the implementing agency and facilitated good quality supervisions\. Second, staff and consultants with the right expertise were mobilized, particularly in the first years of the project implementation, covering all project components\. Third, the task team had put in solid supervision efforts, with a sound and a timely focus on implementation problems and development effectiveness as measured by the M&E systems in place\. Fourth, special assessments were carried out to check compliance with the Bank's safeguard policies on environment and social aspects, which were also judged to be satisfactory\. The effectiveness of the Bank supervision efforts is clearly evident\. For example, on the counterpart funds issue, the Bank raised the problem during supervisions at all levels of the government, and this problem was subsequently resolved (see Section 5\.2 and 5\.4)\. Another example is that, due to its unsatisfactory performance, the TVE component was sharply reduced in size in response to strong recommendations made by the Bank's supervision missions\. In retrospect, the main supervision issue was inadequate funding for supervising such a complex project\. This issue was raised as the major issue for management attention in both QSA5 and QSA6, and it was one of main reasons why the environmental and financial management staff were not adequately involved in supervision during the latter part of project implementation\. Although this problem was successfully addressed in the final three supervision missions when the team did include environmental, financial management, and social development specialists, overall project implementation would have been even better had adequate supervision budgets been available at the early stage of the implementation\. - 17 - 7\.3 Overall Bank performance: The Bank's overall performance is rated satisfactory\. For this complex and multi-sectoral project, the Bank organized a strong and stable team from the beginning to the end of implementation\. The preparation and supervision all included the required expertise and local staff who continuously provided services in the areas of financial management, procurement management, environmental assessment, and ethnic minority development\. The Bank's task team was generally able to provide quick responses to the demands from the implementing agencies\. One of the most positive aspects was the Bank's flexibility in adjusting procurement methodologies and cost allocations among different components\. The Bank attempted to give government the maximum flexibility during the implementation to accommodate the rapidly changing economic and social environment\. EASRD's management also attached a great importance to this project by doing their best to secure an adequate budget and participating in several missions\. Borrower 7\.4 Preparation: The borrower's performance in project preparation is rated highly satisfactory\. First, as the flagship poverty reduction project with many innovative measures, the project received attention from the highest level of the Government\. For example, in October 1995, President Jiang Zemin, in his congratulatory letter to SWPRP's Launch Workshop, specifically asked the Leading Group for Poverty Reduction to "do its best to have a high quality preparation of the Qinba Mountains Poverty Reduction Project in order to contribute to the goal of basically eradicating absolute poverty in China by the end of 20th century\." Second, the borrower demonstrated a high degree of commitment during the preparation period\. The whole project preparation was finished within one and half years, with high quality work and covering all major areas correctly identified by the government's strategy (i\.e\., the 8-7 Plan)\. Third, the borrower incorporated many key lessons from the successful implementation of SWPRP in the project preparation\. Finally, because of the strong organizational structure of the project, all relevant agencies were effectively involved in the preparation of the project and most issues during the project preparation were resolved in a reasonable and timely manner\. 7\.5 Government implementation performance: The Government's implementation performance is rated highly satisfactory\. The importance of continuous strong government support to the success of the project is one of key lessons learned (see Section 8)\. As an indication of the Government's strong support to the project, the actual mobilization of the counterpart funding exceeded the amount in the SAR by about 18%\. The recommendations made in the Aide Memoires of the Bank's supervision missions received adequate attention from the PMOs and the issues identified were addressed by the PMOs diligently\. The Government also paid adequate attention to the institutional capacity building for PMOs at different levels through providing necessary support, which significantly contributed to the project's implementation\. 7\.6 Implementing Agency: The performance of the implementing agency at all levels is rated highly satisfactory\. Quality implementation of the Qinba Project has been quite challenging for the new PMO system, particularly since these provinces had no previous experience with implementing a Bank-financed poverty reduction project with a multi-sectoral approach\. In the end, the PMO system did an excellent job of the implementing the project in almost all aspects (see Section 5\.3)\. A dedicated team was established working toward common objectives\. As discussed in Section 4\.2, the PMO system was adequately staffed in most project counties, with a total of about 11000 full time staff in the PMO system at all levels\. The overall capacity of the PMO system in project management (including financial and procurement management, capacity building, etc\.) and monitoring and evaluation have been significantly strengthened\. Sichuan and Shaanxi, in - 18 - particular, did an outstanding job in project implementation\. Lastly, in order to provide useful lessons for the next generation poverty reduction projects, the implementing agency conducted several specific activity-based evaluation and impact studies, such as the special studies on labor mobility, applied research, and the TVE component\. Nevertheless, there were some actions which could have been taken to further enhance the performance of the PMO system\. For example, it is believed that the Ningxia PMO's institutional reorganization in the later years of project implementation had an unfavorable impact on the PMO's effectiveness\. Moreover, the Ningxia PMO could have had better quality internal monitoring and evaluation work had they provided more guidance to the county PMOs\. 7\.7 Overall Borrower performance: The overall borrower performance is rated highly satisfactory\. Like SWPRP, the Qinba Project was a complex multi-sectoral project which contained numerous innovations\. For example, the labor mobility component, the focus on beneficiaries' participation, and the emphasis on improving poverty monitoring were highly innovative activities in China in 1990s\. The borrower accepted the challenges of preparing and implementing this project, overcame all obstacles throughout the project's life, and accumulated valuable experience\. The borrower's success in the Qinba Project provided another convincing example that a multi-sectoral approach is one of the most effective ways for eradicating absolute poverty\. These experiences have had a profound impact on China's poverty reduction strategy and design of the general development policy (see Section 4\.1)\. 8\. Lessons Learned The successful implementation of the Qinba Project has provided the following key lessons, which should be helpful in terms of guiding the design of the next generation poverty reduction projects in China: Strong support and a high degree of commitment from government at all levels is a precondition of the project's successful implementation\. The Central Government at the highest levels and the State Council's LGPR provided strong support and leadership for the project\. The support was matched by the institution building component which strengthened the project management system at all levels\. The project would not have been as successful, and certainly would not have achieved the profound policy impacts, without LGPR's very strong and consistent support throughout the entire project life\. A strong and adequately supported Central PMO is essential for the success of a multi-province, multi-sectoral, and above-average complexity project\. The Central PMO (i\.e\., FCPMC under the State Council's LGPR) played an indispensable role throughout the whole project life in terms of ensuring effective project design and preparation, monitoring overall project implementation and achievements, identifying and addressing key implementation issues, promoting cross-provincial learning, and facilitating dissemination of the useful experiences and incorporation of them into national policies\. This is an important lesson that first emerged from SWPRP and was reconfirmed by the successful implementation of the Qinba Project\. A good synergy could be achieved through an integrated multi-sectoral approach\. With strong and sustained support from governments at all levels, the multi-sectoral approach has been demonstrated to be one of the most effective approaches in achieving significant poverty reduction on a sustainable basis in the worst-affected areas\. The Bank supervision missions repeatedly asked government officials and PMO staff at different levels and farmers about their preference between the multi-sectoral approach and the single-sector approach, and the answers were surprisingly consistent: all preferred the multi-sectoral - 19 - approach\. Indeed, officials of various levels of PMOs also pointed out that the Qinba Project should have expanded its scope to cover basic health and education activities (which were under separate but parallel projects) as had been done under SWPRP\. In fact, the SSB's independent monitoring reports provided evidence to support their argument\. In short, given that the poverty issue is a multi-dimensional one, a multi-sectoral approach can achieve a good synergy from bringing different activities together, which cannot be achieved by a single-sectoral approach\. Active participation of beneficiaries throughout the project life is essential for effective implementation and a better sense of ownership\. The importance of the active and effective participation of the beneficiaries has been increasingly recognized by the PMOs at different levels\. The high degree of participation in the second half of the project is regarded as one of the major factors which contributed to the success of the project\. PMOs at different levels believe that participation should be strengthened throughout the whole project life, and some effective ways of participation, including participatory evaluation and monitoring, have already been tested and scaled up in the project areas\. Effective institution building, including an emphasis on PMO's stability and continuity, is the foundation for successfully implementing a highly complex project in a very challenging environment\. Throughout the implementation period, there has been a progressive build-up of an implementation system with strong capacity and dedication to deliver results with accountability, using methods and procedures that are transparent and verifiable\. The benefits of successful institution building go far beyond the immediate results of poverty reduction in the project area\. Putting rural infrastructure first will ensure that benefits of activities under other components can be maximized\. Road access in remote mountainous project areas has had a major impact by changing agricultural systems from subsistence to cash-based through improved access to inputs, support services and markets\. For future projects in similar areas, rural infrastructure construction, particularly road access, should be implemented first so that benefits of activities under other components (including agriculture, labor mobility, education, and health) can be maximized\. Building flexibility into the project design will empower the project to accommodate a changing environment\. The project design needs to be flexible in order to accommodate a changing environment\. In this respect, the Qinba Project has set a good example\. For example, to reflect the changes in the macroeconomic environment, the size of the TVE component was reduced significantly\. In addition, in response to the beneficiaries' demand, the investment in rural infrastructure increased from about 11% of total project cost at appraisal to 18% actual\. In Sichuan province, the size of the rural infrastructure was almost doubled\. Promoting farmers' human capital development will strengthen the project's sustainability\. Many farmers have stated that one of the major project benefits was that it changed their way of thinking about how to improve their livelihoods\. This not only includes improved technical knowledge gained through project training, but also includes increased self-confidence in their own abilities gained by trying and succeeding at new things, and by access to new information\. Farmers' human capital development is a very important project achievement that provides a base for future economic development in project areas\. Rationale of supporting TVE activities should be carefully examined\. Based on the experience of the TVE component, there is a need to revisit the assumptions and reassess the efficacy of supporting enterprise development under similar poverty reduction projects\. Several fundamental questions should be asked and answered\. First, it must be determined whether it is appropriate to have such a component in - 20 - poverty reduction projects in an increasingly market-oriented economy in China\. Second, if a similar component still needs to be included in future programs, it must be determined whether the focus should be shifted from large- or medium-size state/collective enterprises to small private/collective enterprises, or even poor households' micro-enterprises\. Third, perhaps a phased approach might be more appropriate (e\.g\., at the early stage of the project, only a limited amount of funds would be available for enterprise development, limited to a small number of selected counties\. The component would be scaled up only after a satisfactory performance confirmed by the mid-term review)\. Finally, government intervention in the process of selecting beneficiary enterprises should be reduced and a more transparent and competitive enterprise selection process should be introduced\. Ensuring the independence of micro-finance institutions in its business operation is one of key conditions for achieving its financial sustainability\. The micro-finance pilot in the Qinba project showed that county governments had strong incentives to intervene in the operation of the micro-finance institutions due to the on-lending arrangement used, i\.e\., the county governments provided the guarantee for the repayment of the Bank loans\. The government interventions in staff appointments and use of loans resulted in a high proportion of non-performing loans, which severely weakened the ability of the micro-financial institutions to achieve financial sustainability\. One possible way to reduce or eliminate the government interventions could be to on-lend the Bank loans directly to CFPA or other independent micro-finance institutions from the Ministry of Finance or from the Central PMO, instead of through local governments\. 9\. Partner Comments (a) Borrower/implementing agency: The Qinba Mountains Poverty Reduction Project was the second large-scale poverty project financed jointly by the Chinese government and the World Bank\. Like the Southwest Poverty Reduction Project, the Qinba Project was also a multi-province and multi-sectoral project which directly targeted at the poorest households\. The Qinba Project had the following major characteristics: (a) the project design built upon strength of SWPRP and reflected mainstream thoughts of poverty reduction in mid 1990s; (b) the Qinba Project, through mobilizing about US$180 million financial resources from the World Bank, accelerated the process of fully achieving the goals set in the 8-7 Plan; (c) the Qinba Project generated many valuable lessons from its successful implementation which would be very useful for the Government to better design poverty reduction strategy in the 21st century; and (d) the Qinba Project established a good model for the great cause of global poverty reduction\. A\. Major Achievements (a) The poverty incidence in the project area was reduced at a speed faster than the national average\. The poverty incidence was 26\.7% in the project villages in 1997, and it was reduced to 4\.6% by the end of 2003\. During the same period, the national poverty incidence was reduced from about 5\.4% to 3\.1%\. In the project area, the poverty gap index was reduced from 3\.5% in 1997 to 0\.6% in 2003, and the weighted poverty gap index was reduced from 1\.2% in 1997 to 0\.2% in 2003\. (b) Per capita income increased significantly\. In 2003, per capita income in the project villages reached RMB1398, which was about 60% higher than that of 1997\. Put in another way, the annual growth rate of the income per capita in the project villages was 8\.1% from 1997 to 2003\. However, the national average of farmers' annual per capita income growth rate was about 4% during the same period of time\. (c) Rural infrastructure conditions were significantly improved\. The project solved the drinking water problem for 680,000 villagers and for 640,000 livestock\. The project constructed 9000 km of village - 21 - access roads, and the percentage of villages with road access increased from 72% in 1997 to 100% in 2003\. The percentage of villages with electricity access increased form 92% in 1997 to 100% in 2003, and the percentage of villages with telephone access increased from 23% in 1997 to 84% in 2003\. (d) There was an evident improvement of farmers' human capital and self-development capacity, which was a natural result of the project activities, including different applied technology training\. B\. The Qinba Project's Wide Development Impact (a) The project convincingly demonstrated the effectiveness of the multi-sectoral poverty reduction approach\. The Qinba Project abandoned the traditional approach employed by the government; instead, it adopted a multi-sectoral approach and increased household-level investment intensity\. The multi-sectoral approach achieved a synergy among different activities, and hence not only increased the farmers' income, improved their basic production and living conditions, and facilitated labor mobility, but also strengthened the farmers' capacity of pursuing self-reliance and self-development\. (b) The project had a profound policy impact\. The successful implementation of the Qinba Project provided many valuable lessons for better conducting national poverty alleviation work\. Many innovations of the project, such as participatory approach, village development planning, were incorporated into the China National Poverty Alleviation Strategy (2001-2010)\. (c) The project actively encouraged farmers' participation\. Compared with SWPRP, the Qinba Project achieved a better result of beneficiaries' participation\. The participation was reflected in the whole project cycle, from the project design to implementation, and from implementation to monitoring\. The better participation strengthened the farmers' sense of ownership and hence promoted the sustainability of the project\. (c) The project brought out positive changes in terms of women's status\. For example, the construction of drinking water facilities reduced women's workload, improved general sanitary conditions, and reduced the likelihood of some diseases\. Women's participation in some training activities also improved their production skills as well as management capacity\. As the implementation moved forward, women became a major source of family income and hence their economic and social status was improved\. (d) The project generated a positive environmental impact\. Addressing environmental degradation was one of development objectives of the Project\. Therefore, the project deliberately included many activities which directly targeted restoration of the ecosystem and the mitigation of environment pressure\. Land improvement activities (terracing, soil fertility conservation, afforestation through planting cash trees, etc\.) significantly reduced soil erosion and effectively stabilized or even reversed environmental degradation\. C\. Major Lessons (a) Overall quality of the project design could have been better\. At the project preparation stage, the feasibility of all activities was carefully examined\. However, given the wide scope of the project and short time for preparation, the feasibility of some activities, particularly for those under the TVE component, was not adequately scrutinized\. In addition, it was believed that more attention should be given to achieve a higher degree of complementarity among activities so that the effectiveness of a multi-sectoral project could have been maximized\. - 22 - (b) There should be more flexibility in terms of adjusting the project activities\. To address ever-changing economic environment as well as demands from farmers, the procedure for adjusting the project activities should be more simplified\. For example, at the early stage of the project implementation, it took two years to adjust the procurement methodologies for chemical fertilizer, pesticide, and plastic mulch, etc\., and hence the progress of the agricultural component was negatively affected\. (c) There is a need of exploring a new way to promote rural enterprise development\. The performance of the project's TVE component was not satisfactory due to the following reasons\. First, the selected enterprises had a serious lack of equity, and accordingly, there was a lack of working capital\. Second, feasibility studies of some enterprises were not carefully conducted, and the selection focused too much on large scale enterprises\. Third, enterprise ownership and the property rights arrangements of many TVEs were not clearly defined, and hence it ended up that no one was responsible for repaying the loan in many cases\. It is an important task to explore a better way of promoting TVE development to serve the poor farmers better, in terms of providing more employment opportunities, diversifying income sources, increasing income per capita, and raising the value-added of the agricultural products\. (d) Government should bear more responsibility of mobilizing counterpart funding\. After the financial sector reform in 1998, the management of subsidized loan was shifted from the Agricultural Development Bank (a policy bank) to the China Agricultural Bank (a commercial bank)\. However, there was a conflict between the objectives of a commercial bank and the objectives of poverty reduction\. The government had intended to rely on the subsidized loans as a major source of counterpart funding, but found it difficult to mobilize those founds following the 1998 financial sector reform\. Accordingly, the implementation of the project was negatively affected and farmers' contribution to the counterpart funding was increased\. (b) Cofinanciers: None (c) Other partners (NGOs/private sector): None 10\. Additional Information None\. - 23 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate A) Poverty Reduction Model: (1) Establish a focused multi-sectoral rural the multi-sectoral poverty reduction model did a focused multi-sectoral poverty reduction development project approach to poverty not exist model has been successfully established and reduction in China become and remained as a national policy (2) extend this model to China's other poor the model was only piloted in SWPRP the model has been successfully extended counties\. nationwide B) Reduce Poverty: (3) poverty headcount rate poverty incidence was 26\.7% poverty incidence was reduced to 4\.6% in 2003 (4) rate of poverty gap* 3\.5% in 1997 0\.6% in 2003 (5) rate of weighted poverty gap** 1\.2% in 1997 0\.2 in 2003 (6) per capita income 854 yuan in 1997 1398 yuan in 2003 C) Ability To Deal With Risks: (7) percentage of population with greater than 6% percentage of population with per capita 4% percentage of population with per capita subsistence levels of grain production, grain output less than 150kg/per year in 1997 grain output less than 150kg/per year in 1997 (8) per capita cash at hand at year-end 84 yuan in 1997 238 yuan in 2003 (9) per capita grain storage at year-end 190 kg in 1997 387 kg in 2003 (10) proportion of wage income 25\.9% in 1997 45\.7% in 2003 D) Rural Infrastrcuture Conditions: (11) percentage of villages with road access 71\.8% in 1997 100% in 2003 (12) percentage of villages with electricity access 92\.3% in 1997 100% in 2003 (13) percentage of villages with telephone access 23\.1% in 1997 83\.6% in 2003 (14) proportion of households with access to water within 100 meters 55% in 1997 79\.2% in 2003 (15) proportion of households spending less than 30 minutes per day fetching water 60% in 1997 86\.4% in 2003 * The rate of poverty gap is a measure of the additional income that would be necessary to bring a poor person up to the poverty line\. Summed across the poor population and normalized against the poverty line and total population size, the indicator can be used to assess the relative depth of poverty among subpopulations, across time, or internationally\. The rate of weighted poverty gap takes into account not only the distance separating the poor from the poverty line (the poverty gap), but also the inequality among the poor\. That is, a higher weight is placed on those households who are further away from the poverty line\. - 24 - Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate E) Labor Mobility: (16) the number of upland poor finding none in 1997 199276 persons found off-farm job through off-farm employment through the project the project by the end of 2003 (17) percentage of labor migrated for off-farm 15% in 1997 25% in 2003 job (18) remittances by these project financed none in 1997 RMB1\.7 billion yuan by the end of 2003 successful migrant laborers to their "home-village" families F) Micro-finance: (19) number of borrowers increased none in 1997 41000 borrowers by the end of the project (20) total loan portfolio none in 1997 RMB18\.6 million in 2003 G) Environmental Improvement: (21) percentage of households with difficulty 61\.5% in 1997 41% in 2003 securing fuel materials H) General Living Standards: (22) Engel coefficient* (%) 64% in 1997 53\.8% in 2003 (23) per capita living space 16\.6 square meters in 1997 23\.6 square meters in 2003 (24) per capita meat consumption 15\.8 kg in 1997 17\.6 kg in 2003 I) Gender: (25) girl-boy ratio for 7-12 age group students89\.8% in 1997 98\.2% in 2003 (boy=100) J) Market Participation (26) proportion of grain sold in market 10% in 1997 17\.8% in 2003 (27) proportion of meat sold in market 38\.7% in 1997 55\.9% in 2003 1End of project **The ratio of expenditures on food consumption out of total expenditures\. Over time the ratio tends to decline as incomes rise\. - 25 - Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Labor Mobility 37\.00 46\.10 124\.59 Rural Infrastructure 30\.70 70\.60 229\.97 Land and Farmer Development 149\.60 232\.00 155\.08 Township and Village Enterprises Development 47\.30 24\.50 51\.8 Micro-finance 3\.20 6\.80 212\.5 Institutional Building and Project Management 7\.80 7\.60 97\.44 Poverty Monitoring 2\.00 1\.30 62\.5 Total Baseline Cost 277\.60 388\.90 Physical Contingencies 13\.70 Price Contingencies 68\.70 Total Project Costs 360\.00 388\.90 Total Financing Required 360\.00 388\.90 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 27\.70 168\.80 0\.00 196\.50 (0\.00) (9\.70) (58\.50) (0\.00) (68\.20) 2\. Goods 40\.00 24\.20 12\.30 0\.00 76\.50 (40\.00) (18\.10) (10\.00) (0\.00) (68\.10) 3\. Services 0\.00 0\.00 11\.00 0\.00 11\.00 (0\.00) (0\.00) (11\.00) (0\.00) (11\.00) 4\. Labor Training and 0\.00 0\.00 43\.40 0\.00 43\.40 Placement (0\.00) (0\.00) (21\.70) (0\.00) (21\.70) 5\. Micro-finance Subloans 0\.00 0\.00 3\.60 0\.00 3\.60 (0\.00) (0\.00) (1\.80) (0\.00) (1\.80) 6\. Miscellaneous 0\.00 0\.00 15\.00 14\.00 29\.00 (0\.00) (0\.00) (9\.20) (0\.00) (9\.20) Total 40\.00 51\.90 254\.10 14\.00 360\.00 (40\.00) (27\.80) (112\.20) (0\.00) (180\.00) - 26 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 7\.93 242\.81 0\.00 250\.74 (0\.00) (2\.78) (77\.40) (0\.00) (80\.18) 2\. Goods 26\.14 5\.49 27\.29 0\.00 58\.92 (26\.14) (4\.69) (20\.14) (0\.00) (50\.97) 3\. Services 0\.00 0\.00 20\.24 0\.00 20\.24 (0\.00) (0\.00) (20\.24) (0\.00) (20\.24) 4\. Labor Training and 0\.00 0\.00 42\.86 0\.00 42\.86 Placement (0\.00) (0\.00) (17\.74) (0\.00) (17\.74) 5\. Micro-finance Subloans 0\.00 0\.00 6\.49 0\.00 6\.49 (0\.00) (0\.00) (3\.20) (0\.00) (3\.20) 6\. Miscellaneous 0\.00 0\.00 8\.96 0\.69 9\.65 (0\.00) (0\.00) (4\.67) (0\.00) (4\.67) Total 26\.14 13\.42 348\.65 0\.69 388\.90 (26\.14) (7\.47) (143\.39) (0\.00) (177\.00) 1/Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Labor Mobility 24\.60 24\.00 20\.90 25\.20 85\.0 105\.0 Rural Infrastructure 16\.00 24\.50 32\.00 38\.60 200\.0 157\.6 Land and Farmer 100\.70 94\.10 105\.20 126\.80 104\.5 134\.8 Development Township and Village 28\.80 33\.40 11\.10 13\.40 38\.5 40\.1 Enterprises Development Micro-finance 2\.00 2\.10 3\.10 3\.70 155\.0 176\.2 Institutional Building and 6\.70 1\.90 3\.50 4\.10 52\.2 215\.8 Project Management Poverty Monitoring 2\.00 1\.20 0\.05 60\.0 - 27 - Annex 3\. Economic Costs and Benefits Overall evaluation Data from different sources has consistently confirmed that the project achieved remarkable economic, social and environmental benefits\. There was a steady improvement of a series of key monitoring indicators\. The incidence of poverty, for example, declined from 27% in 1997 to about 5% in 2003; average per capita income increased from RMB854 to RMB1398 during the same period (Table 3\.1)\. The beneficiaries obtained more development opportunities as shown by the enhanced market participation, and strengthened ability to manage risks\. The project also resulted in an increased school enrollment rate of girls, and a reduced level of gender disparity\. Project villages, in many aspects, outperformed the non-project villages which generally enjoyed much better initial conditions\. For example, in 2003, the incidence of poverty was almost the same as the national average, whereas in 1997 it had been nearly five times as high as the national average\. The project also generated significant environmental and ecological benefits, which were confirmed by an independent environmental monitoring report of 2003\. The forest area was increased by 49%, the irrigated area by 20%, and the area of terrace by 22%\. The proportion of households with difficulty of obtaining daily fuel materials, an indicator used to measure the change of ecological environment, decreased from 62% in 1997 to 41% in 2003\. The overall ERR of the project as a whole, under several conservative assumptions, is estimated to be 37%\. Table 3\.1\. Selected Indicators of Economic and Social Benefits 1 2 3 4 5 6 7 8 9 Year Poverty Food p\. c\. Villagers Villages Labor Remittance proportion Gender incidence security income w/ access w/ migration of meat gap** safe water access sold in (%) roads market (kg) (yuan) (%) (%) (%) (billion yuan) (%) (%) 1997 26\.7 190 854 n\.a\. 71\.8 15 n\.a\. 38\.7 89\.8 2000 17\.9 331 1087 75 91\.0 22 n\.a\. 42\.7 96\.7 2003 4\.6 387 1398 86 100 25 1\.7 55\.9 98\.2 * Food security is measured by per capita grain storage at year-end\. ** Gender gap is measured by the ratio of girls' enrollment rate over boys' enrollment rate for the age group of 7-15\. Rate of return estimation Data for calculating the ERR comes from provincial village surveys (conducted by PMOs) and a series of Poverty Monitoring Report for The Qinba Project (State Statistical Bureau, 1997-2004)\. Project benefits have been quantified for four major components: (a) the labor mobility, (b) the rural infrastructure (for the irrigation subcomponent), (c) the land and farmer development, and (d) the TVE development (for the rural market construction subcomponent)\. Investment in these four major components accounts for 96% of total project investment\. The benefits of other components (institutional building, poverty monitoring and micro-finance) are difficult to quantify and hence ERRs have not been calculated for them\. Given their small share in the total project cost, their exclusion does not have a significant impact on the conclusion\. To get the ERR of the project as a whole, the individual ERRs are weighted by the investment proportion of corresponding components in the total project\. No calculation has been made of the financial rate of return (FRR) of the project or of any of its components\. After twenty five years of market-oriented economic reforms, price distortions resulting from - 28 - government intervention in the economy have largely been eliminated\. An integrated domestic market has been established and it is increasingly integrated with the international market\. Against this background, there is essentially no additional value to calculate the ERR and the FRR separately to capture the impact of price distortions\. The SAR found no significant difference between the economic and financial rates of return for the two components examined, with only exception of TVE component\. On this basis, it is believed that the estimated ERRs are representative of the FRRs\. Table 3\.2 presents estimated ERRs for the whole project as well as for specific components\. Table 3\.2 ERRs to the whole project and four components Project as Labor Rural Land and TVE whole mobility infrastructure farmer development ICR 37% More than 50% 27% 36% 13% SAR 40% 43% n\.a\. 43% 47-71% Labor mobility: This component has overwhelmingly been rated by the project beneficiaries as one of their most favorite components\. In many cases, farm households can easily repay what they borrowed from the project within the same year, which makes ERR undefined\. SSB's Poverty Monitoring Report also consistently shows that improving off-farm job opportunities has considerably contributed to the increase of per capita income\. Under a set of very conservative assumptions, by using the data from the representative village survey, the ERR for the Labor Mobility component is estimated to be more than 50%\. Rural infrastructure: Rural infrastructure is also one of the components most welcomed by the beneficiaries\. The Poverty Monitoring Report (SSB, 2001) shows that the small irrigation subcomponent results in 1\.35% increase of per capita income\. Based on this parameter and three other moderate assumptions about the number of beneficiaries, potential of per capita income growth after 10 years, and maintenance cost, the rate of return to the small irrigation subcomponent is estimated around 27%\. This ERR can be treated as the lower bound of the real ERR for the whole rural infrastructure component\. For example, when asked to rank the subcomponents of the infrastructure component, farmers always give the first two priorities to road construction and drinking water supply\. Farmers generally rank small irrigation as the third priority\. Therefore, it can be reasonably argued that ERRs for road and drinking water should be higher than that of small irrigation in order to match farmers' preference order\. Moreover, other researchers (e\.g\., Rozelle and Huang, 2003) also found similar results, which gives us additional confidence in our findings\. TVE development: The size of the component was significantly reduced and the focus was shifted after the mid-term review\. The whole component included two group activities: small farmers' markets construction (accounting for 20% of total component cost) and enterprises development (accounting for the remaining 80%)\. There were total 23 markets constructed and 22 enterprises obtained support from the project\. For the small market construction subcomponent, based on data from Sichuan Province and extrapolating the benefits over 20 years, the ERR for constructing local markets is about 42%\. For the enterprise development subcomponent, there is not enough data to calculate the ERR; however, it is assumed that the ERR is around 5% given its generally unsatisfactory performance\. Weighted by their share in the total project investment, the ERR for the whole TVE component is estimated 13%\. Land and farmer development: Following conventional methodology, the ERRs for the three subcomponents have been calculated: livestock subcomponent (including goat, pig, and silkworm), the cash-crop/tree-crop subcomponent (including tea and sugar cane), and the grain subcomponent (including - 29 - maize and rice)\. The overall weighted ERR for the whole component is about 36%, ranging from 22% (pig raising) to 66% (silkworm)\. Detailed calculations of the economic analysis, including methodologies, specific assumptions, crop budgets, and activity models, are provided in the project files (Annex 7, Document No\.14)\. - 30 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 11/15/1995 17 TTL (1), MICROFINANCE (2), SOCIAL (1), RESETTLEMENT (1), UN POVERTY ADVISOR (1), PROCUREMENT (1), INFRASTRUCTURE (1), AGRICULTTURE (2), ANTHROPOLOGIST (1), DIVISION CHIEF (1), ECONOMIST (2), ENVIRONMENTAL (1), HEALTH (1), EDUCATION (1) 04/21/1996 17 TTL (1), M & E (3), MICROFINANCE (1), SOCIAL (1), PROCUREMENT (1), INFRASTRUCTURE/INSTITUT ION (1), AGRICULTTURE (2), ETHNIC MINORITY (1), DIVISION CHIEF (1), ECONOMIST (1), GENDER (1), ENVIRONMENTAL (1), HEALTH (1), EDUCATION (1) 09/17/1996 14 TTL (1), MICROFINANCE (1), SOCIAL (1), LABOR MOBILITY (1), ENTERPRISES (1), INFRASTRUCTURE (2), AGRICULTTURE (2), ECONOMIST (1), ENVIRONMENTAL (1), HEALTH (1), EDUCATION (1) Appraisal/Negotiation 01//11/1997 9 TTL (1), MICROFINANCE (1), LAWYER (1), ECONOMIST (2), INFRASTRUCTURE/INSTI TUTION (1), AGRICULTURE (2), RESETTLEMENT (1) Supervision 11/18/1997 5 SR\. ECONOMIST (1); S S ENGINEER (1); AGRONOMIST (1); LABOR MOBILITY (1); AGRICULTURALIST (1) 04/24/1998 5 SR\. ECONOMIST (1); LABOR S S - 31 - MOBILITY (1); ENGINEER (1); AGRONOMIST (1); AGRICULTURALIST (1) 11/19/1998 7 MISSION LEADER (1); S S AGRICULTURE (2); INFRASTRUCTURE (1); LABOR/MICROCREDIT (1); TVES/MICROCREDIT (1); PARTICIPATION (1) 05/13/1999 5 TASK TEAM LEADER (1); S S ENGINEER (1); AGRICULTURALIST (1); ECONOMIST (2) 09/30/1999 5 MISSION LEADER (1); LABOR S S MOBILITY/CREDIT (1); INFRASTRUCTURE/INSTIT\. (1); AGRICULTURE (1); TVES/CREDIT (1) 06/09/2000 7 TASK MANAGER (1); RURAL S HS ENTERPRISE DEV\. (1); ENGINEER/INSTITUTIONS (1); AGRICULTURE (1); SOCIAL (2); FINANCIAL MANAGEMENT (1) 04/06/2001 4 MISSION LEADER (1); S HS ENGINEER (1); CREDIT SPECIALIST (1); AGRICULTURALIST (1) 06/17/2002 5 TEAM LEADER (1); CIVIL S S ENGINEER (1); ECONOMIST AND FINANCIA (1); AGRICULTURIST (1); DISBURSEMENT ANALYST (1) 11/02/2002 2 MISSION LEADER (1); S S ECONOMIST (1) 11/21/2003 8 TTL (1); ECONOMIST (1); S S SECTOR LEADER (1); ENVIRONMENTAL EXPERT (1); AGRICULTURAL EXPERT (1); INFRASTRUCTURE EXPERT (1); SECTOR DIRECTOR (1); FINANCIAL SPECIALIST (1) 06/08/2004 5 TTL (1); ECONOMIST (1); S S AGRICULTURAL EXPERT (1); INFRASTRUCTURE EXPERT (1); FINANCIAL SPECIALIST (1) 11/08/2004 3 TTL (1); FINANCIAL S S SPECIALIST (1); SOCIAL AND ENVIRONMENTAL SPECIALIST (1) - 32 - ICR 03/27/2005 4 TTL (1); SENIOR S S ECONOMIST (1); SENIOR AGRICULTURE SPECIALIST (1); MICRO-FINANCE SPECIALIST(1) (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation Appraisal/Negotiation 219\.84 Supervision 511\.38 ICR Total 731\.22 Identification/preparation costs incorporated in Appraisal/Negotiation; and ICR costs incorporated in Supervision\. - 33 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA The project has generated a significant positive impact on ethnic minority people\. A review conducted by the Bank's Social Development Specialist confirmed that the Hui nationality people had equal opportunities to participate in the project, and had benefited from project activities such as livestock raising, terracing, as well as cropping\. Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA The indepedent poverty monitoring implemented by the State Statistics Bureau had helped upgrading poverty monitoring at the national and local levels, and generated an impact which went far beyond the project itself\. - 34 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 35 - Annex 7\. List of Supporting Documents 1\. Qinba Mountains Poverty Reduction Project Staff Appraisal Report 2\. Aide Memoires 3\. Project Status Reports 4\. Qinba Mountains Poverty Reduction Project "Jungong" (completion) Report (by FCPMC, in Chinese) 5\. Component Evaluations 5\.1 Labor Mobility Component (by CWHRDC) 5\.2 TVE Component 5\.3 Micro-finance Component 5\.4 Applied Research Activities 6\. China Poverty Alleviation Plan (2001 to 2010) Leading Group for Poverty Reduction of the State Council 7\. New Development Concept: from the Perspective of International Cooperation, March 9, 2005, Guangming Daily (by Zhu Guangyao, Director General of International Department, Ministry of Finance) 8\. Qinba Project: Post-implementation Environmental Impact Evaluation, Sheng Dezhong, September 2003, China Agricultural University 9\. SSB Series Qinba Poverty Monitoring Reports (1997 to 2003) 10\. Documents from the National Conference in December, 2004 11\. National Seven-Year (1994-2000) Plan for Poverty Reduction (8-7 Plan) Leading Group for Poverty Reduction of the State Council 12\. English Translation of the Government's Statement on Nominating the World Bank As the Recipient of the China Poverty Eradication Award (September 2004) 13\. Report of the Sixth round of Quality of Supervision Assessment (QSA6) 14\. Rate of Return Calculations (spreadsheet) and Underlying Data (in Chinese) - 36 - Additional Annex 8\. The Qinba Project in A Farmer's Eyes My name is He Yuangui and I live in Dagoutou Village, Longchi Township, Jialing District, Nanchong City, Sichuan Province\. I have five family members and 8\.5 mu farmland, of which, 2\.5 mu paddy field and 6 mu dry land\. Since 1997, through the implementation of the Qinba Project, my family's economic situation has changed greatly\. Here I would like to share my views and feelings about the Qinba Project with all of you\. 1\. Construction of water conservancy facilities and village roads has led to the improvement of production and living environment Before the implementation of the project, my family had to spend half a work-day to carry water from the gully half a kilometer away\. The 2\.5 mu paddy field was very low quality land (we called it as "cold, bad and poisonous land") and due to insufficient sunlight, damages caused by disease and insect were very severe every year\. Almost all of the 6 mu dry land was with a slope greater than 25 degrees and cultivation was very difficult\. In addition, as there was no road, whenever I wanted to sell a pig, I had to ask four persons to carry it to the market about four kilometers away, and the labor cost and other expenses was more than RMB100\. At that time, the annual net income of the whole family was less than RMB1,600 and per capita grain was less than 150 kg\. Doggerel in our valley was: "mountains are high and stones are numerous, walking out of door to climb hills; the gully is too long and there are many bachelors in the village\." That is to say, our village had too many bachelors and young people could not find wives due to poverty\. In 1996, the working staff from the Qinba Project Office in Jialing District and the township Project Work Station visited our village and households and went to my home to talk to me\. They asked me what I was thinking and what I was expecting\. I said: "If the drinking water problem is not solved, our lives will not be guaranteed;" "To become rich, the first thing to do is to build road\. When the road is built, it will bring us a lot of conveniences" and "If our gully land was improved, the yield will be increased\." So with the help of the working staff from the district and county project offices and through the extensive participation of peasant households in the whole village, the village level planning for the Qinba Project was formulated for the whole village\. The first was to resolve the difficulty of water and road for the village\. With the rumbling sound of exploding rocks, the curtain of the Qinba Project was raised in our village\. After implementing the project for seven years, 59 irrigating storage ponds, 3 terrace ponds, 2 drinking water bailing projects, 28 manmade wells and 10 km village road were successively built\. My family also expanded 6 mu wooded area, improved 2\.5 mu low-yielding paddy field and 4 mu low-yielding dry lands and built 1 manmade well and improved our production and living environment\. 2\. Construction of industrial bases has expanded our money bag "Cultivating land is to cram ourselves with food, raising chicken and ducks is for edible oil and salt, and raising a fat pig is for the Spring Festival\." This was the true situation of our village before 1996\. "We can eat and fill, but do not have decent food; we work everyday, but do not have cash" is a common saying of all villagers\. When the Qinba Project was initiated, our village carried out 230 mu of improved wheat, 350 mu of plastic-mulched corn, 580 mu of paddy field, 180 mu of sweet potato, 200 mu of field vegetables, planted 650 mu of fruit forest, introduced high quality meat pigs and 960 goats, and built 110 stalk ammonification pits\. As a village cadre, I took the lead to carry out 4 mu of improved wheat, 5 mu plastic-mulched corn, 2\.5 mu paddy rice project, 3 mu sweet potato and 2 mu field vegetables; planted 5 mu fruit forest, raised 12 pork pigs and 4 high quality black goats, and built 1 ammonification basin, and - 37 - established the pillar industry for income increase for our family\. At the same time, I participated in 11 various trainings held by the district and township project offices\. My son attended the motorcycle repair training seminar in May 2001 and now is engaged in his own repair business\. My wife participated in 3 livestock breeding trainings\. Due to the project, the overall production and living skills of my family members have greatly improved\. 3\. Participation by farm households in the project evaluation enhanced the project effectiveness and transparency How is the implementation effectiveness of the Qinba Project? Leaders' favorable comments do not count, but peasants' comments do\. In the beginning of 2004, the District PMO used the method of participation to conduct final project acceptance and evaluation in our village and I was elected as a member of the evaluation group\. The acceptance evaluation results from the whole village showed that 283 peasant households were satisfied with the project implementation, accounting for 86% of project participating households, and 34 peasant households were basically satisfied, accounting for another 10% of project participating households\. Within the period of the Qinba Project implementation, the total investment in our village was RMB2\.3 million and the average amount of investment for each household was about RMB4,000 and per capita investment was RMB1,077\. My family received total RMB5,700 project fund and per capita fund was RMB1,140\. Through the utilization of the funds, we achieved the following great effects: Firstly, through infrastructure construction, agricultural production condition in our village has been greatly improved and per capita basic farmland (that is, stable and high yield land) was 0\.8 mu, increasing 0\.6 mu\. The previous situation of living at the mercy of weather has been changed and the ability to resist and defend against natural disasters has been strengthened\. The village road has been built, and this has changed previous situation of going out of door with sweat all over in sunny days and with mud all over in rainy days\. At the same time, it facilitates the flow of agricultural and sideline products as well as transporting agricultural production materials\. Running water is supplied for the whole village and labor time spent on fetching water has been significantly reduced\. Secondly, through crop and plant cultivation, livestock breeding, and finding off-farm employment through the labor mobility component, per capita income has been greatly increased\. Improvement of medium and low yielding field and standard agricultural crop cultivation has led to the increase of grain output\. For example, yield of one mu corn was 140 kg before improvement, but it reaches 310 kg after improvement\. This year for my family, the number of meat pigs and sheep for sale was 11 and 3 respectively, an increase of 8 and 2 respectively compared with that of 1996\. My family income has seen an increase of RMB7,700 due to livestock activities\. Since fruit forest activity was implemented, the fruit trees grow well and are expected to bear fruits successively and will play an active role in increasing my family income\. At the end of year 2004, per capita net income for my family was RMB3,680 yuan and per capita grain was 450 kg\. We have cast away our poverty hat and resolved the problem of inadequate food and inadequate clothing\. In sum, our life quality has been improved\. Thirdly, through technical training and labor mobility, each family of the whole village has at least one member who learned 1 or 2 applied technologies and become new type peasants\. I myself also have learned technologies such as crop cultivation, fruit tree planting, livestock breeding and project management through participation in district and county level trainings\. Now, I am a barefoot expert in our village and I share the knowledge I learned with other project peasant households in our village\. I am loved and esteemed by villagers\. In 2000, I was elected as the director of our Villagers' Committee and became a - 38 - village level leader\. My son is engaged in motorcycle repair and his annual income is over 8,000Yuan\. Through technical trainings in livestock breeding, my wife abandoned the traditional feeding method and adopted the new one\. She knows much more about production and marketing than before due to the project implementation\. My wife's status both in our family and in our community has been improved\. Fourthly, through the project implementation, my family living environment has been improved\. In October 2003, my family built 240 square meter brick and tile house and upgraded our kitchen and toilet, thus our living environment becomes better\. Also, our family has cable TV, telephone, refrigerator, washing machine, and even mobile phone now\. The implementation of the Qinba Project has changed the poverty situation in our village and given us a better life\. Here I shall thank the Poverty Alleviation Office at all levels, thank the PMOs, thank the World Bank, and thank all people who care about us in the poverty stricken region\. - 39 - Additional Annex 9\. Borrower's ICR Summary The Qinba Mountains Poverty Reduction Project was the second large-scale, cross-regional, and multi-sectoral poverty project cooperated between the World Bank and the Chinese Government\. The objectives of the project were to greatly reduce the absolute poverty in 26 national designated poor counties in Qinba mountains area, to solve problems of inadequate food and clothing for 2\.3 million poor people, and to demonstrate the effectiveness of an integrated poverty reduction model\. The total project investment was about RMB2,988,000,000, including $180,000,000 World Bank loan (of which, $150,000,000 credit from the International Development Association and $30,000,000 loan from the International Bank for Reconstruction and Development)\. The project was included in the Government's three-year national plan on utilizing foreign capital in March 1995 and preparation work started in September 1995\. The Qinba Project was approved by the World Bank in July 1997 and became effective in October 1997\. The project implementation was completed on July 31, 2004 and the project was closed on December 31, 2004\. The Government adopted and expanded the concept of the Southwest Poverty Reduction Project in the Qinba Project design\. The Qinba Project also reflected then mainstream views on overcoming rural poverty in China\. The project was successfully implemented with a full achievement of all development objectives\. There are many factors contributed to the project's success, such as the great importance attached by the leaders of Chinese Government at different levels, close and effective cooperation between related departments, arduous work of the project implementation agencies, and active participation of poor farm households in the whole process of the project implementation\. 1\. Overall Project Implementation Labor Mobility\. An investment of RMB383,000,000 was completed\. The component included investment of RMB210,000,000 in Sichuan Province and RMB173,000,000 in Shannxi Province\. Up to December 2003, totally 199,276 people as surplus labors were migrated from the project area (accounting for 100\.3% of the ultimate goal)\. Of which, 110,300 people were from Sichuan Province and 88,976 from Shannxi Province\. Rural Infrastructure\. The final investment of the component was about RMB586,000,000, about 200% of the appraisal goal\. This component was among one of farmers' most favorite components\. The total investment was greatly increased during the period of implementation as a response to the strong demand from farmers\. The source of funding for increasing the size of the component came from the unallocated funds reserved at the project appraisal stage, funds released from the rural enterprise component, and increased domestic counterpart fund\. By the end of implementation, 9,843 km village road were constructed, drinking water problems for 600,000 people was solved, irrigated area increased at 37,722 hectares, 4,228 biogas generating pits were built, 18,001 solar-energy stoves were constructed, and 78km rural 10kV-electric transmission line was established\. Land and Farmer Development\. This component had the highest investment amount and covered a wide range of activities\. The component's ultimate investment goal was RMB181,000,000 and the actual investment was RMB193,000,000\. Following seven years' project construction, most project activities were successfully completed except the construction of gravity trickle irrigation to which poor farmers were not willing to invest due to cost and associated great risks\. 58,273 hectares farmland and 30,196 irrigation land were newly added to the project villages; 71,250 hectares food crops such as wheat, paddy rice and core were planted; 37,218 hectares medicinal herbs and vegetables and 6,500,000 bags of edible funguses were planted; 63,899 hectares forest and fruit trees such as tea, mulberry silkworm, Chinese chestnut and - 40 - walnut were planted; more than 1,300,000 heads of domestic animals such as pig, sheep and cattle and approximately 1,800,000 small domestic fowls were raised; 7,216 hectares seed production land and 351 hectares tree cultivation were completed; over 2,300,000 person-time received applied technical trainings at county, township and village levels; veterinarian service was provided for over 1,600,000 heads of domestic animals; new technologies from four applied technical researches were extended to 77,901 hectares; totally 11 rural practical research subprojects were completed in the three project provinces\. Township and Village Enterprises Development\. Due to the rapid changes of market situation and insufficient preparation, implementation of the component moved very slowly at the beginning and significant adjustment was conducted at the mid-term review\. By the end of July 2004, total RMB203,000,000 investment was completed, accounting for 39\.8% of the appraisal estimate\. Sichuan made the greatest reduction of this component and final investment was only about 13\.0% of appraisal estimate\. Shaanxi completed RMB164,000,000 investment and Ningxia completed RMB6,350,000, accounting for 70\.0% and 26\.5% of the appraisal estimates respectively\. By the end of July 2004, the component totally supported 23 rural enterprises, of which 14 are still operating, 5 have completely stopped production, and the remaining 4 have not started operation yet\. Activities on rural market construction were generally satisfactory\. Out of 23 market places constructed by the component, 20 are operating normally\. Micro-finance\. This was a pilot based component\. Two counties (Langzhong in Sichuan and Hanbin in Shannxi) were selected as experimental spots for this component\. After the mid-term review of November 2000, Tongjiang County in Sichuan Province was added to the pilot\. By the end of June 30, 2004, the three counties totally completed RMB56,230,000 investment, accounting for 103\.4% of the finalized goal, and total amount of loans to farm households was RMB53,670,000, which was 107% of the final adjusted goal\. Total about 40,963 farm households received loan services from the component, which was about 121% of the ultimate goal\. Institutional Building and Project Management\. The component completed RMB63,393,000 investment, about 90% of the ultimate objective\. Of the total investment, RMB25,333,000 was in Sichuan, RMB29,793,000 in Shannxi, and RMB8,266,000 in Ningxia\. All the main construction contents were successfully completed\. 10,363m2 office area were constructed, 1,023 sets of office equipments were provided (e\.g\., computer, printer and facsimile apparatus), and 46 vehicles were purchased\. Total about 190,000 person-day project management personnel were trained and 17 overseas training and study tours were organized, participated by more than 200 person-time\. Poverty Monitoring\. Total investment was about RMB10,339,000, being 103\.8% of the appraisal objective\. Of the completed investment, RMB4,113,000 was for the State Statistics Bureau's poverty monitoring work and RMB6,225,000 was for monitoring labor mobility by the West Center\. In both 1997 and 2002, all 2,600 peasant households in 26 project counties were surveyed\. From 1998 to 2001, follow-up surveys were conducted for the 1,300 peasant households in the 13 project counties out of the 26 counties\. By the end of the project implementation, total six poverty monitoring reports on the project performance compiled by the State Statistics Bureau were published\. 2\. Project's Financial Aspects World Bank credit/loan\. By the end of September 2004, the three project provinces totally withdrawn 108,500,000 special drawing rights and $30,000,000 for World Bank account, amounted to about $171,990,00 due to exchange rate fluctuation\. In terms of Renminbi, the total amount was RMB1,422,360,000\. Of which, Sichuan withdrawn 50,360,000 special drawing rights and $15,110,000 - 41 - loan; Shaanxi 42,470,000 special drawing rights and $10,940,000; and Ningxia 9,750,000 special drawing rights and $3,930,000 loan\. China Western Human Resource Center withdrawn 5,920,000 special drawing rights and $16,000 loan\. According to analysis of the availability of World Bank funds in all provinces and regions, Sichuan, Shannxi, Ningxia and China West Human Resource Center completely realized the debts as scheduled by the end of 2004\. Counterpart fund\. By the end of project implementation, about RMB2,105,970,000 counterpart fund was made available to the project, being 124% of the planned figure\. Of the total counterpart fund mobilized, RMB1,303,510,000 was from Sichuan (125% of the planned figure); RMB621,800,000 from Shannxi (82% of the planned figure), and RMB180,670,000 from Ningxia (121% of the planned figure)\. Analysis of the counterpart funds in the three provinces shows that the total available amount of counterpart funds for the three provinces exceeded the appraisal targets\. Divided the counterpart funds by sources, RMB150,200,000 was financial fund (66% of the planned figure); RMB635,890,000 was subsidized land (66% of the planned figure); RMB142,130,000 was food for work fund (54% of the planned figure); RMB34,880,000 was special fund for the development of "three-west region" (101% of the planned figure); RMB63,000,000 was line-agency fund (122% of the planned figure); and RMB1,079,870,000 was farmers' contribution in kind and labor contribution (794% of the planned figure)\. During the project implementation, force account procurement methodology was more widely used than expected, and international competitive bidding was dropped in many cases; therefore, these changes required the increase of counterpart funding due to relatively low reimbursement rate for those categories procured through these methodologies\. Moreover, because of the exchange rate risk, the total funding from the World Bank was shrunk about 5%, which put additional pressure on mobilizing domestic counterpart funds\. As shown by the above detailed figures, due to the limited availability of counterpart fund from government channels, the proportion of farmers' contribution in the counterpart fund was too high\. 3\. Project Evaluation Achievement of overall project objective\. Firstly, the successful implementation of the Qinba Project has verified the effectiveness of the integrated poverty alleviation model\. It is well known that poverty is not only an economic problem; instead, it involves various aspects of society, environment, resource and human capital\. The Qinba Project abandoned the traditional poverty alleviation development model (i\.e\., single-sectoral approach), adopted the integrated and comprehensive approach to tackle the poverty reduction\. In addition, by introducing the financial resources from the World Bank, the project also increased the investment intensity in the field of poverty reduction\. It solved the basic food and clothing problem for 1,520,000 people, laid down a solid foundation for the sustainable development of the project region, and significantly improved the human capital level of those poverty stricken farmers\. Secondly, the project verified the effectiveness of reducing poverty through promoting labor mobility\. The Qinba Project transferred the surplus labors from the project regions to either costal area (outside of the provinces) or relatively developed areas within the project provinces for off-farm employment\. Promoting labor mobility has not only accelerated the transfer of surplus labor force in the poverty stricken region, but also become one of the rapidest and most effective ways for increasing cash income of those poor households\. Thirdly, the project improved national and local poverty monitoring system\. On the basis of Southwest Poverty Reduction Project, the State Statistics Bureau established a monitoring evaluation system conforming to the characteristics of the project to carry out dynamic monitoring and evaluation of the project performance\. The information from this independent monitoring provided an objective picture of the project implementation; at the same time, it also and helped the PMOs at different levels to address any major problems in the process of implementation in a timely manner\. Fourthly, the effectiveness of poverty - 42 - alleviation was significant and profound\. The direct objective of the project was to greatly reduce the absolute poverty in the 26 very poor counties of the three project provinces\. By the end of the implementation, the effect of poverty alleviation was significant\. For example, the speed of poverty incidence reduction was faster in the project areas than that in non-project area\. The poverty incidence rate of the project villages in 1997 was 26\.7% and was reduced to 4\.6% in 2003\. During the same period, the national average of poverty incidence was reduced from around 5% to 3\.1%\. Per capita net income of the project villages was greatly increased\. In 2003 the per capita net income of the project villages reached RMB1,398, a 60% increase compared with that of 1997\. Moreover, the implementation of infrastructure component resolved the drinking water difficulty for 680,000 people and 640,000 domestic animals\. The villages having roads increased from 72% in 1997 to 100% in 2003\. Fifthly, the project effectively stopped and even reversed the trend of environmental deterioration\. The overall environmental impact of the project was positive due to the following three factors: (a) the implementation of agricultural project has effectively improved environmental quality; (b) the infrastructure construction has improved farmers' production and living conditions and accordingly promoted their awareness of environmental protection; (c) labor migration successfully reduced the population pressure on land, which also generated a positive impact on environment\. Sixth, the project promoted the participation of the farm households and strengthened rural communities' development capacity\. Compared with the Southwest Poverty Reduction Project, participation of the poverty stricken farm households in the Qinba Project was more extensive and deeper and ran through the whole project cycle\. Finally, the implementation of the project produced a positive impact on women's status\. For example, through improving the infrastructure conditions (e\.g\., drinking water facilities), the project effectively reduced the workload of women in the agricultural production and family life\. Women's status was also improved through receiving various applied technical trainings\. In sum, women's basic production and management skills get strengthened through the project activities, and hence their status in both community and family was consequently improved\. Component implementation quality and benefits Labor Mobility\. Based on the feedback from the project villages and participating households, this component was well implemented in a way consistent with all technical standards\. The component carried out pre-employment trainings for the migrated labors\. Survey conducted by the China West Human Resource Center in 22 counties showed that the working and living conditions of the outgoing working people met the project's requirements, legal rights of the workers were protected, and the project benefits were evident\. The survey showed that in Sichuan and Shaanxi provinces, remittances sent back to home villages by the migrated labors reached RMB1,450,965,900 from 1998 to 2003\. In addition to sending cash back, the migrated labors also bought commodities and brought them back to their home villages, with the value around RMB258,578,600\. Therefore, the total benefits (combining the remittances and value of commodities together) was around RMB1,709,544,500\. Rural Infrastructure\. Based on sample surveys, infrastructure construction activities met or exceeded all pre-determined technical standards and specifications\. The major benefits of the component could be summarized as the following\. (a) The component basically solved the road access problem which was a bottleneck for the project area development, enhanced the connection between remote mountainous area and the outside world, and provided convenience to the poverty stricken farm households to be engaged in the market transactions\. (b) The component successfully solved the drinking water difficulty for the 680,000 people and 640,000 domestic animals in the project villages\. It also significantly mitigated the problem of securing fuel materials for villagers, which consequently reduced the rate of forest felling and hence promoted the environment protection\. Basically living and production conditions also enhanced the poor villagers' ability to fight against natural disasters\. - 43 - Land and Farmer Development\. Implementation of most farmland renovation and soil improvement works exceeded the technical standards specified by the project\. Farm household coverage reached 99\.9%\. Over 2 million person-time received technical trainings provided at different levels\. About 5000 production demonstration households were established\. The implementation of the project increased farmers' income and grain output and lifted them out of the trap of absolute poverty\. The practical research activities financed under this component also generated huge benefits to farm households by providing them better tailor practical technologies\. Some research activities were awarded the second and third prizes in the provisional level competition and evaluation\. Township and Village Enterprises Development\. The performance of this component was not satisfactory\. Of the 23 rural enterprises constructed, 14 are still operating, 5 have stopped operation, and the remaining 4 have not yet started operation\. How to effectively promote the rural industrial sector development is an issue needs further research\. Micro-finance\. Selection of farm households was appropriated conducted and almost 100% of fund reached the household level\. Organization or operation of farm household groups was basically standardized\. The ratio of success of household activities financed under the micro-finance pilot reached 98%\. The on-time repayment rate exceeded 90%\. Institutional Building and Project Management\. The Qinba Project established a five-level project implementation system from the Central level to the village level\. The project constructed office buildings for PMOs at different levels and provided necessary office equipments\. More than a thousand project management staff at various levels received training with various forms and rich contents\. Through training, the project management personnel at various levels learnt the knowledge of project management, finance, procurement, and monitoring and evaluation\. All these improved their working efficiency and strengthened their ability to organize, coordinate and manage projects\. Institutional construction ensured the quality of the project implementation\. Project Management\. The Qinba Project was a trans-regional and trans-sectoral integrated poverty alleviation project\. The project basically adopted the management model used by the Southwest Poverty Reduction Project, which had the project office system as the main implementation channel with cooperation from other line agencies\. The project accumulated valuable experience in project planning, management, and monitoring and evaluation, which provide a good reference for the poverty alleviation in the new century\. The main experience can be summarized as the following\. (a) The project leading group consisting of main line agencies made major decisions; the project management offices were mainly responsible for executing these major decisions and conducting other detailed project management; experts from different line agencies actively participated in project management in order to achieve better cooperation and synergy\. (b) The project effectively integrated the World Bank's procedure with domestic procedures to establish an effective and complete management system for poverty alleviation projects\. This system covered the areas of organizational management, implementation planning, financial and procurement management, technical management, monitoring and evaluation arrangements etc\. (c) The project kept and improved an independent monitoring system which significantly contributed to the project implementation and evaluation\. (d) The project emphasized the post-implementation management, importance of PMO's stability and continuity, the role of appropriate incentives to the project management staffs\. (e) The project management system absorbed the advanced project concept and scientific and standard project management thoughts from the World Bank, which will also benefit other domestic programs\. - 44 - 4\. Project Lessons Importance attached to the project from leaders is the precondition for the successful implementation of the Qinba Project\. The project was a trans-regional and multi-sectoral integrated poverty alleviation project, and it was directly related to the resolution of the adequate food and clothing problem of the broad masses in the poverty stricken regions and to the development of poverty stricken regions\. Therefore, leaders at various levels from the Central Government to local governments attached great importance to the project work\. In 1995, the then Chinese President Jiang Zemin requested, in its letter to the first World Bank Poverty Alleviation Project working conference, to spare no effort to conduct early stage preparation work for the Qinba Project\. During project preparation, the then State Counselor Chen Junsheng met with high level World Bank officials for many times to discuss project related issues\. To well implement the project, the secretaries and provincial governors of the three provinces (regions) personally looked into the project preparation and implementation work and coordinated to resolve related difficulties and problems\. All the project regions and counties made the project as their main work for local poverty alleviation development and the major leaders took command in person to create conditions for the project preparation and implementation\. Close inter-departmental cooperation is the important basis for success\. The quality of inter-departmental cooperation was an important factor of explaining the difference of project performance across provinces and counties\. The Qinba Project involved many departments such as poverty alleviation, finance, planning, agriculture, forestry, animal husbandry, water conservancy, transport, labor, bank and village and township enterprises\. It would be very difficult to complete this integrated poverty alleviation project if the whole implementation purely relied on a single department\. Instead, successful implementation needs mutual understanding, mutual support and full cooperation among all departments concerned\. From project preparation to implementation, project institutions at various levels and related departments at different levels established a favorable working relation of mutual trust, mutual understanding, and mutual respect\. The World Bank has identified that, when summarizing the experience of poverty projects in developing countries, the project design complexity and inter-institutional coordination were two major factors which explained the different results for multi-sectoral projects across different countries\. Sound management system is the essential guarantee for the project success\. As an exploratory and exemplary project, the Qinba Project established a management system with the project leading group as the decision making level, the project office as the principal implementation body, and the experts and advisory groups and business departments as technical support\. This system ensured clear leadership relationship from the vertical perspective, and also ensured cooperation relationship from the horizontal perspective\. Put in another way, this system ensured that (a) the major issues in the project could be promptly resolved, project preparation and implementation work schedule could be expedited, and project quality could be guaranteed; (b) international and domestic advanced experiences and practices could be timely and accurately incorporated into the project design and implementation; (c) project experience and lessons could be timely and accurately reported to the policy makers for being incorporated in general policy formation and other domestic project designs\. Standardized project management is an important means to ensure the project success\. To ensure the successful implementation of the project and achieve the project objective, the Qinba Project absorbed advanced project management concept and implementation procedures from the World Bank\. At the same time, the project also fully considered the local conditions\. By doing so, a complete set of standard and systematic management methods was established\. These methods simplified the complicated project management works\. - 45 - Extensive participation of farmers is a key step towards a successful project implementation and sustainability\. The active participation of farmers can sufficiently ensure the project design meets their demands, project success rate is improved, the continuous exertion of project benefit is guaranteed and farmers' self-development ability is constantly strengthened\. The Qinba Project fully absorbed the lessons of the previous World Bank projects, paid special attention to the characteristics of poverty stricken regions, regarded the participation of farmers as a key link of the project, and sufficiently respected the participation rights\. In the initial period of project preparation, numerous visits were paid to farm households to solicit their opinions and the design proposed project activity lists conforming to actual local situations and for their free choice\. During project implementation, farm household card and manuals were issued; the project contents and beneficiaries were published by notices to the whole village to increase the transparency\. By doing so, farmers had a better understanding about their rights, obligations and responsibilities, and the whole project enjoyed a higher degree of ownership\. However, as the Qinba Project involved an extensive area and the participation type poverty alleviation was a completely new content at that time, the degree of participation from farmers varied greatly across regions\. Therefore, there is a room to enhance and expand the participatory work in many aspects in future project work\. Overall quality of the project design could have been better and there should be more flexibility in terms of adjusting the project activities\. At the project preparation stage, the feasibility of all activities was carefully examined\. However, given the wide scope of the project and short time for preparation, the feasibility of some activities, particularly for those under the TVE component, was not adequately scrutinized\. In addition, it was believed that more attention should be given to achieve a higher degree of complementarity among activities so that the effectiveness of a multi-sectoral project could be maximized\. To address ever-changing economic environment as well as demands from farmers, the procedure for adjusting the project activities should be more simplified\. For example, at the early stage of the project implementation, it took two years to adjust the procurement methodologies for chemical fertilizer, pesticide, and plastic mulch, etc\., and hence the progress of the agricultural component was negatively affected\. There is an need to explore an effective way of better integrating the foreign project funds with the domestic resources so that the difficulty of mobilizing counterpart fund could be better overcome\. Counterpart fund is an important factor that affects project implementation schedule and quality\. The counterpart fund of the Qinba Project was borne by provincial, prefecture and county level governments respectively\. Sources of counterpart fund included subsidized loans, funds from financial system, and food for work funds\. Of these three types of funds, the subsidized loans accounted for the biggest proportion\. In the first two years of project implementation, the subsidized loans were managed by the China Agricultural Development Bank, a policy bank, and its availability was relatively guaranteed\. However, After the financial sector reform in 1998, the management of subsidized loan was shifted from the Agricultural Development Bank to the China Agricultural Bank (a commercial bank)\. There was an evident conflict between the objectives of a commercial bank and the objectives of poverty reduction\. The subsidized loans, which was originally planned as a major source of counterpart funding, were very difficult to be mobilized by the government after the financial sector reform, and accordingly, the implementation of the project was negatively affected\. The result was that proportion of farmers' contribution to the counterpart funding was increased\. To resolve this problem, it is needed to fundamentally reform the existing practice of mobilizing counterpart funds and better integrate the World Bank funds with the domestic funds\. It is advisable to consider to use the World Bank funds as counterpart funds for the national programs, i\.e\., the Bank's project is part of national program so that the domestic resources could be better utilized, which will also ensure a wider policy impact of the Bank's projects\. - 46 - There is a need to explore more effective ways to promote the rural enterprise development\. Rural enterprise project can provide job opportunities for poor farmers and increase their incomes, and it also can increase value-added to the agricultural products\. Therefore, it could be argued that supporting rural enterprises is a good type of activities to lift the poor farmers out of poverty trap\. The Qinba Project did some meaningful work in this regard and accumulated some useful lessons\. However, it still needs in-depth research and exploration on how to better carry out rural enterprise work in the poverty stricken regions\. 5\. Major Development Impacts The Qinba Project increased financial inputs in the China's poverty reduction course and accelerated the progress of successfully completion the 8-7 Plan\. The project totally mobilized $180,000,000 from the World Bank, amounting to RMB1,494,000,000\. The total project investment reached RMB2,998,000,000 (including counterpart fund of RMB1,494,000,000)\. For the 26 project counties in three project provinces, this meant that average investment intensity in each county reached RMB115,000,000, with annual investment of RMB20,000,000\. This investment amount was about 4-5 times of regular domestic fund mobilized by these national designated poor counties\. Such a large scale poverty alleviation investment generated significant positive impact\. The production and living conditions in the project areas have been greatly improved and the general living standard of the poor households was significantly raised\. Before the project implementation, the poverty (1997), the project areas had totally 1,920,000 poor people and poverty incidence rate was 26\.7%\. After the completion of the project implementation, the poor population in the project areas was reduced to 400,000 people and poverty incidence rate was 4\.6%\. Totally about 1,520,000 poor people were lifted out of poverty, which accounted for 3\.2% of 8-7 Plan reduced, accounting to 3\.2% of the total target of the National Seven-Year (1994-2000) Poverty Reduction Plan\. The project provided many useful lessons for the Chinese government to design new poverty alleviation policies for the 21st century\. Through fruitful cooperation with the World Bank in the implementation of Southwest and Qinba projects, Chinese Government has tested and formalized a set of poverty alleviation models which are consistent with the characteristics of Chinese situation\. These models include village development planning, participatory approach, labor mobility, micro-finance, project sustainability, and independent poverty monitoring and evaluation etc\. All these effective practices provided important inputs for designing poverty alleviation polices for the new era\. For example, most of them have been incorporated into the China Poverty Alleviation Plan (2001-2010)\. Put in another way, the approaches adopted by the Southwest and Qinba projects contributed to the fundamental transformation of the China's poverty alleviation approach\. The project strengthened and improved the human capital quality of cadres and masses in poverty stricken regions and laid a foundation for the sustainable development of project areas\. The whole project management system had about 11,000 people at different levels\. These staffs received professional trainings in project preparation, implementation, management, and monitoring and evaluation\. They are also tempered by the actual hard work and hence the overall capacity level was significantly improved\. This high quality team is one of most valuable assets generated by the project\. Many people not only played an important role in the project implementation, but also become the backbone force of the Chinese poverty alleviation work\. Some of them have been promoted to the leadership positions at different levels\. With regard to the poor farmers, there were 2,300,000 poor people have directly benefited from activities under components such as land and farmer development and labor mobility\. Through participating in the project training, project planning, project selection, project implementation and project management activities, they become more open-minded, and their general human capital level and production and living - 47 - skills have been significantly improved\. Their confidence over lifting themselves out of poverty through self-development has been strengthened\. All these has laid a foundation for the sustainable development of the project area, which could be regarded as the most far-reaching development impact generated by the project\. The project received attention from the international community and provided useful experience for the world poverty alleviation cause\. The successful implementation of the Southwest and Qinba projects in China has set a model for the world poverty elimination cause and received extensive attention from the international community\. The project has not only verified the effectiveness of the large-scale and multi-sectoral poverty alleviation approach, but also provided valuable experience for the poverty reduction cause of other developing countries\. In recent years, the developing countries such as Ethiopia and Viet Nam successively organized several study tours in the Qinba Project area\. Therefore, the Qinba Project also made contributions to the world-wide poverty alleviation cause and to the achievement of the United Nations millennium development goals\. - 48 - - 49 - \| \| N E I \| \| M O N G O L CHINA \| \| R\.) QINBA MOUNTAINS \| POVERTY REDUCTION \| \| ellow Yinchuan (Y PROJECT \| \| \| \| PROJECT COUNTIES \| \| \| \| \| \| \| SHANXI \| \| \|\| \| \| \| X I J I \| \| \| \| \| PROJECT COUNTIES \| Zhongwei \| N I N G X I A \| \| \| Ho \| \| \| \| RAILROADS \| \| \| Huang TONGXIN I \| \| ROADS \| \| \| \| X \| \| HAIYUAN \| RIVERS \| \| \| \| \| \| ELEVATIONS >1500 METERS \| )\.R \| \| N \| \| \| \| \| \| \| SELECTED CITIES Lanzhou \| \| \| X I J I \| wolleY( A \| \| PROVINCE CAPITALS \| \| \| \| \| \| \| Pingliang COUNTY (XIAN) BOUNDARIES \| \| JINGYUAN \| \| A \| Ho PROVINCE BOUNDARIES \| \| \| \| \| \| \| G A \| \| INTERNATIONAL BOUNDARIES \| \| N S U \| \| \| H \| (INSET) \| \| Huang \| \| \| \| \| \| \| \| \| \| \| \| \| S \| \| HENAN \| \| \| Q \| \| \| \| i n Baoji \| \| \| \| \| \| \| g \| l 0 100 200 300 \| \| \| \| \|\| \| \| i n g \| \| \| \| \| \| \| \| \| \| \| \| \| \| \| KILOMETERS \| Xi'an t \| M s \| \. \| n \| \| This map was produced by the Map Design Unit of The World Bank\. \| ZHASHUI \| The boundaries, colors, denominations and any other information shown LÜEYANG For detail \| see IBRD 28214 on this map do not imply, on the part of The World Bank Group, any \| NINGSHAN ZHENAN judgment on the legal status of any territory, or any endorsement or \| acceptance of such boundaries\. \| NINGQIANG \| \| \| \| \| \| \| \| XIXIANG \| \| \| \| \| \| \| \| HANYIN \| ANKANG \| \| \| \| \| ZHENBA \| RUSSIAN FEDERATION \|CHAOTIAN ANG \| HUBEI \| \| D a b a \| WANGCANG ZIY \| \| \| \| \| M t n s \. \| NANJIANG \| CANGXI \| TONGJIANG \| HEILONGJIANG \| \| \| LANGZHONG \| XUANHAN \| \| M O N G O L I A \| \| YILONG L J I L I N \| \| O \| NANBU \| G \| N \| O LIAONING \| \| QU M DEM\. PEOPLE'S \| JIALING \| (Yangtze R\.) \|\| XIAN\| N E I REP\. OF KOREA BEIJING Chengdu \| \| Beijing \|\| \| Area of map \| TIANJIN \| S I C H U A N \| REP\. OF \| \| HEBEI GUANGAN KOREA \| \| \| Jiang SHANXI SHANDONG Ye l l o w \| \| \| QINGHAI NINGXIA S e a \| \| \| \| Chang GANSU \| SHAANXI HENAN JIANGSU \| \| \| \| ANHUI SHANGHAI SHI \| \| \| HUBEI \| E a s t \| SICHUAN ZHEJIANG \| \| \| \| C h i n a \| \|\| \| \| \| XIZANG JIANGXI \| \| S e a \| \| \| \| HUNAN \| \| \| GUIZHOU FUJIAN \| \| \| TAIWAN \| H U N A N \| YUNNAN GUANGDONG \| \| GUANGXI \| \| HONG KONG, U\.K\. IBRD \| MACAO, PORT\. MA \| \| ANMAR VIETNAM Y \| LAO South 27815 1997 \| G U I Z H O U MY \| PEOPLE'S \| HAINAN China Sea \| \| THAILAND DEM\. \| REP\. PHILIPPINES	REVIEW
P004552	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 20213 IMPLEMENTATION COMPLETION REPORT (CPL-32040; SCL-3204A) ON A LOAN IN THE AMOUNT OF US$ 121\.8 MILLION TO THE REPUBLIC OF THE PHILIPPINES FOR A SMALL COCONUT FARMS DEVELOPMENT PROJECT June 6, 2000 Rural Development and Natural Resources Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective as of March 31, 2000) Currency Unit = Peso (P) 1 pesos = US$ 0\.0245 US$ 1\.00 = 40\.85 FISCAL YEAR Government: January 1 - December 31 ABBREVIATIONS AND ACRONYMS AADC Ayala Agricultural Development Corporation ARDB Agricultural Research and Development Branch (PCA) BSPC Begumbayan Seed Production Center CDO Coconut Development Officer CSPC Coconut Seed Production Center (Aroman) DA Department of Agriculture DBM Department of Budget and Management DRC Davao Research Center ERR Economic Rate of Return FOB Field Operations Branch (PCA) FRR Financial Rate of Return GOP Government of the Philippines ICR Implementation Completion Report LGU Local Government Unit ODA Overseas Development Agency (UK) - now DFID PCA Philippine Coconut Authority PTAL Plant Tissue Analysis Labatory SAR Staff Appraisal Report SZOPAD Special Zone of Peace and Development ZRC Zamboanga Research Center Vice President: Jemal-ud-din Kassum, EAPVP Country Manager/Director: Vinay K\. Bhargava, EACPF Sector Manager/Director: Geoffrey B\. Fox, EASRD Task Team Leader/Task Manager: Syed Husain, EASRD FOR OMCAL USE ONLY CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 3 5\. Major Factors Affecting Implementation and Outcome 8 6\. Sustainability 8 7\. Bank and Borrower Performance 10 8\. Lessons Learned 11 9\. Partner Comments 13 10\. Additional Information 19 Annex 1\. Key Perfornance Indicators/Log Frame Matrix 20 Annex 2\. Project Costs and Financing 22 Annex 3\. Economnic Costs and Benefits 25 Annex 4\. Bank Inputs 26 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 28 Annex 6\. Ratings of Bank and Borrower Performance 29 Annex 7\. List of Supporting Documents 30 This docment has a rericte dist ibutio and may be used by recipients only in the pe1form ace of their offici duties\. s ontes may not odrwise be disclosed without World Bak titio\. Project ID: P004552 Project Name: COCONUT FARMS DEVT\. Team Leader: Syed Husain TL Unit\. EASRD ICR Type: Core ICR Report Date: June 6, 2000 1\. Project Data Name: COCONUT FARMS DEVT\. L/C/TF Number: CPL-32040; SCL-3204A Country/Department: PHILIPPINES Region: East Asia and Pacific Region Sectorlsubsector: AM - Agro-Industry & Marketing; AP - Perennial Crops KEY DATES Original Revised/Actual PCD: 03/09/88 Effective: 09/14/90 11/14/90 Appraisal: 06/14/89 MTR: Approval: 05/24/90 Closing: 06/30/96 12/31/99 Borrower/lImplementing Agency: R\.P\./PHILIPPINES COCONUT AUTHORITY Other Partners: ODA (UK) - now DFID STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum A\. Karaosmanoglu Country Manager: Vinay K\. Bhargava Rolando Arrivillaga Sector Manager: Geoffrey B\. Fox D\.M\. Dowsett-Coirolo Team Leader at ICR: Syed Husain David Meadows ICR Primary Author: J\.H\. Weatherhogg (FAO) 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The project objectives were to launch a long-term program of coconut development and productivity improvement, supported by the necessary infrastructure and strengthened technical and support services; to increase the incomes of small-scale coconut farmers by improving coconut yields and copra quality; and to boost foreign exchange earnings by ensuring an increasing and reliable supply of higher quality copra for processing and the export market\. As described in the Staff Appraisal Report (SAR), the coconut sub-sector in the Philippines was of considerable importance\. Coconuts covered over 25% of the cultivated area, and coconut-based products were the third largest foreign exchange earner, accounting for 10% of total value of exports and 40% of the agricultural exports\. Furthennore, the small-scale coconut farmers were a major poverty group in the country, with a poverty incidence of 75%\. Investment in the coconut sub-sector under the project was thus aimed at benefiting a large section of the rural poor while also increasing the productivity of the coconut sub-sector and increasing foreign exchange earnings\. The sub-sector suffered from a steadily increasing proportion of coconuts over-age or senile, lack of fertiliser application, and poor processing resulting in low quality copra production\. A levy had been made on copra sales over the period 1973 to 1982, but was suspended after controversies arose relating to its operation\. Only a part of the levy collected was used for schemes benefiting coconut farners\. In 1987, the new Govermment reaffirmed interest in a long-term smallholder coconut development program\. The project was prepared and appraised over the period 1988-90\. The project's objectives were clear and focussed on a sub-sector of major importance to the economy and one that included around half a million families living in poverty\. It was, therefore, fully sensitive to the borrower's needs and development priorities\. The basic project design was simple, and the project was not perceived at appraisal as being particularly risky\. 3\.2 Revised Objective: T'he project's objectives remained unchanged throughout the extended implementation period\. 3\.3 Original Components: The project was intended as the first phase of a long-term small coconut farms development program with a 20-year target of replanting some 743,000 ha of senile coconuts and rehabilitation of about 418,000 ha of low-yielding palms\. The components of the project were: (i) establishment of seed gardens and nurseries to produce high-yielding hybrid coconut seedlings, which would, at full capacity, sustain a replanting program of about 50,000 ha/year; (ii) replanting with selected tall seedlings (9,600 ha) and hybrids (15,400 ha), including provision of inputs for inter-cropping during the first three years of replanting; (iii)rehabilitation of 348,000 ha of middle-aged palms through application of fertilizers for four consecutive years; (iv) nutrient support (fertilizers) for some 50,000 ha of immature palms established over the previous ten years under various schemes sponsored by the Philippine Coconut Authority (PCA); (v) copra quality improvement through equipping of an existing laboratory in Manila for aflatoxin assay and establishment of a second regional copra quality control laboratory in Cebu; support for a pilot scheme to introduce hot-air copra dryers to smallholders in 2 or 3 major mill catchment areas; and provision of technical assistance and training; and (vi) institutional strengthening of PCA through additional staff, vehicles and equipment, improved premises for six regional offices, technical assistance, training, strengthening of the Coconut Extension Training Center, and upgrading of PCA's coconut research program\. -2 - The components were generally well related to the project's objectives\. The project was targeted to small coconut farmers owning no more than 10 ha and aimed to ensure equity and to maximise number of beneficiaries by limiting project-supported replanting to one ha (later increased to two ha) and rehabilitation to three ha per farmer\. 3\.4 Revised Components: With the exception of the copra quality improvement component, for which the pilot program was not implemented, the general design of the components remained as set out at appraisal\. 3\.5 Quality at Entpy: The quality at entry is rated satisfactory, since the project was in line with Government policies and strategy\. The project's commodity focus was in response to the erratic and declining exports of coconut oil from the Philippines in the 1980s, and the need to re-establish confidence among end-users in the future supply of better quality coconut products vis-a-vis supply of substitutes like palm kernel oil from other countries\. The project thus appropriately sought to have an immediate production impact through rehabilitation (fertilisation) of mature coconut trees, and to increase coconut production and land use efficiency in the long term through replanting with high-yielding hybrid varieties\. However, there were some questionable aspects of quality at entry: (i) the project targets for replanting and rehabilitation were too ambitious within the five-year time frame for implementation, considering the lack of previous experience of PCA in handling a program of this mnagnitude, uncertainties of seed nut supply, and lack of adequate field staff; (ii) the choice given to farmers of cover crops or inter-crops for the replanting component was inappropriate: cover cropping is an essential element of success in cultivation of tree crops\. In Malaysia, Indonesia and Thailand, developing oil palm and rubber without a legume cover crop will never be considered\. Only in the later part of project implementation was cover cropping made mandatory; (iii) indicators and procedures for monitoring and evaluation of project impact were undefined; and (iv) while rehabilitation of mature palms was the main project component in terms of investments, there was no discussion in the SAR of post-rehabilitation activities for sustainability of the component\. It was only in 1998 that the post-rehabilitation policy and techniques were developed\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievementofobjective: The project outcome is rated satisfactory as the project was reasonably successful in achieving its objectives\. However, there was a delay of about four years in project implementation\. Performance was poor in the first five years\. By June 1996, the original loan closing date, disbursement was only about 40% of the Bank loan, replanting 36% of the appraisal target (actually lower since many of the replantings were later discarded due to poor quality), and rehabilitation of mature palms 29% of the target\. This was due to multiple problems including inadequate field staff, an acute shortage of hybrid seed nuts, insufficient counterpart funds, poor project management, delays in fertiliser procurement and distribution, etc\. The project remained a "problem project" from late 1993 to mid-1997\. A major turnaround effort after June 1996, using six-monthly action plans, led to achievement of most project outputs by loan closing in December 1999\. Substantial progress has now been made in initiating a long-term coconut development program, and small coconut farm productivity and incomes have risen (sections 4\.2 and 4\.4)\. If all project farmers continue to apply inorganic and organic fertilizers to their replanted and rehabilitated farms, incremental copra production from the project in year 2004 is estimated at 382,000 tons (valued at US$128 million in 1999 constant terms), compared to 405,000 tons expected at appraisal\. If all project farmers stop using inorganic fertilizers, incremental production will be about 90,000 tons per annum (valued at US$30 million)\. About half of the project benefits accrued to the Special Zone for Peace and Development areas in Mindanao, which have been receiving a high priority by the Govemment and the Bank in recent -3 - years for development assistance\. A major issue at project completion is the lack of consensus in the Government regarding the precise elements of the long-term coconut development program to be followed, which could build on and expand the project's main accomplishments (see firther section 6\.1)\. 4\.2 Outputs by components\. Seed Gardens and Nurseries\. Perforrnance on this component was uneven\. At appraisal, it was expected that five seed gardens would be established - one by PCA and four by the private sector\. However, only one private seed garden, owned by the Ayala Agricultural Development Corporation (AADC) in Mindanao, was contracted and that also in 1996, after the original loan closing date\. The seed garden, using an existing 200 ha plantation of tall palms to produce hybrid seeds, had an average annual production potential of around 2 million seed nuts, sufficient to replant an area of 8,000 ha\. The production was a difficult undertaking because of the height of the palms (10 meters), which hampered quality control, resulting in a higher than normal rate of off-types during the first two years of production\. In its three years of production (through June 2000), the AADC seed garden would have produced about 4\.9 million nuts, enough to plant 20,000 ha of hybrid coconuts\. The PCA seed garden developed at Aroman in Mindanao has had a number of problems, particularly relating to security and squatters\. As a result, it has been possible to develop only 234 ha of the 303 ha originally planned\. Despite these difficulties, the garden is now expected to deliver some 0\.9 million seed nuts in 2000 (sufficient to plant 3,750 ha), and, at full development in 2002-2003, should have an annual production of some 1\.8 million seed nuts (stifficient to plant 7,500 ha)\. Both seed gardens have suffered very badly from drought resulting from El Nifio\. Seed nut production at AADC fell by over 50% in 1999, while production at Aroman stopped almost entirely\. Nursery development has been in conformity with the annual replanting program\. However, management of the nurseries and the quality of seedlings produced are still among the weakest points in the field operations of PCA\. The condition of the nurseries varies greatly from Region to Region\. In some Regions, most of the recommended nursery techniques are not applied\. The main problems observed are: absence of planning, poor seedbed management, lack of irrigation facilities, half-filling of the polybags, insufficient seedling selection, and poor overall maintenance\. On the other hand, some nurseries have now reached a very good quality level, with a high rate of germination and excellent homogeneity of the seedlings produced\. This quality improvement has not been lost on the farmers who are now keen to avail of such planting material, and some of whom are even prepared to buy it\. In the post-project period, PCA should continue to focus on nurseries as show-windows of its technical know-how\. Replanting\. The replanting component has had a mixed implementation experience\. In total, some 25,680 ha was replanted, compared with an appraisal target of 25,000 ha\. However, due to a severe drought in 1992/93 and another in 1998, and the poor quality of seedlings distributed in early project years, the extent of replanted area surviving at project completion is estimated at around 19,300 ha (77% of the appraisal target), of which hybrids accounted for 16,100 ha and talls 3,200 ha (Annex 1)\. In the last three years of the project, a concerted effort was made to improve the quality of seedlings, and criteria for the selection of eligible farmers were changed (earlier, only agronomic suitability of the land was considered for replanting)\. This has resulted in much better survival of replantings, as demonstrated by the second replanting survey conducted in late 1999\. -4 - The progress made with cover-cropping and inter-cropping of replanted areas was unsatisfactory, as only 2,268 ha was cover-cropped (in 1999), and only 5,586 ha inter-cropped (mostly in 1999)\. The low proportion of cover-cropping and inter-cropping (12% and 29%, respectively, of the area replanted) was due to non-release of funds by PCA in earlier years for a variety of reasons, including cash flow problems\. Although under-planting (that is, planting coconuts under the old ones which are felled at a later stage, all at once or staggered) was allowed in the last years of the project on an experimental basis, no under-planting had been reported by the end of 1999\. Rehabilitation of Low-Yielding Palms The targets set at appraisal have been largely achieved by the end of the implementation period, as shown in the following table (ha receiving fertiliser applications): 4 applications 1 3 a Dlications 1 2 a Dlications I application \| Total I \. \. hectares \. ApRraisal target 80\.000 88,000 100,000 - 80\.000 348 000 Actual achievement 155300 1 130700 28\.400 62 400 1 406\.800 I/ 1/ If only areas which have received at least 2 applications are considered, the total area is about 344,400 ha\. Generally, implementation of the component has been satisfactory\. Single fertilisers were procured, and farmers were required to mix them before application in the field\. Due to this premixing, and the fact that the mixture included sodium chloride, which may be toxic for most other crops, the diversion of fertilisers to other crops appears to have been prevented\. However, two criticisms were made during project implementation on the project policy relating to fertiliser use: emphasis on inorganic fertilisers rather than organic fertilisers, and procurement of single rather than compound fertilisers\. Regarding the first criticism, a high dosage of mineral fertilisers (an average of 4\.5 kg/palm/year) was clearly required to rehabilitate mature unfertilised coconuts\. The four-year application period was necessary to allow build-up of the nutrient content of the soil back to an appropriate level of fertility before entering the post-rehabilitation period with reduced inputs\. Regarding the second criticism, compound fertilisers are more expensive than single fertilisers (Peso 350 per bag of 50 kg against Peso 250/bag), and their manufacturing and use presupposes a known given balance among nutrients, which in reality does not exist over large coconut areas\. As regards the impact of rehabilitation on copra yields, the two rehabilitation impact studies carried out in 1997 and 1999 confirm the favourable outcome\. The reported yields exceed appraisal expectations\. Yields on a large representative sample of mature local talls rehabilitated from 1991 onwards, as reported in the 1997 study (which interpreted yield data collected by the PCA's Coconut Development Officers), went up on average from 1,032 kg/ha of copra before rehabilitation to 1,521 kg/ha after one year, 1,756 kg/ha after two years, 1,855 kg/ha after three years, and 2,136 kg/ha after four years\. The 1999 study (which was based on a survey of a representative sample of farmers, and relied on the information supplied by the farmers rather than on yield measurements) reported an average yield level of 1,770 kg/ha of copra on rehabilitated farms, compared to 872 kg/ha before rehabilitation\. These reported yield increases are significantly higher than that estimated at appraisal (700 kg/ha and 1,467 kg/ha of copra before and after rehabilitation, respectively)\. One uncertain factor is the effect of El Nifto on the yields obtained\. As a result of the drought, nut production was well down in 1998 and 1999 when the second impact assessment was made\. That assessment reported a decline in average yields on rehabilitated farms to 1,312 kg/ha and 1,169 kg/ha of copra 2-3 years and 3-4 years after rehabilitation, respectively, which corresponds to 1998 and 1999, respectively\. -5 - An issue for yield sustainability during post-rehabilitation is the farmers' ability and willingness to continue to apply inorganic fertilisers to their rehabilitated coconuts (further details are in para\. 6\.1(b))\. PCA extension advice in earlier years was to apply organic fertilisers to sustain yields\. While it is important to maintain a good level of organic matter in the soil, regular inorganic fertiliser applications are essential to compensate the loss of nutrients taken away with the crop, and to sustain the yield\. This has been consistently proved in trials conducted by PCA\. A post-rehabilitation extension program (not developed at appraisal) was launched in 1998\. It included inter alia a leaflet for 350,000 farmers and farrmer training on recommendations relating to fertiliser use and cultural practices in the post-rehabilitation period\. Essentially, the post-rehabilitation extension drive was aimed at motivating farmers to use inorganic fertilisers, at application rates lower than that used for rehabilitation, supplemented with organic fertilisers, including coconut husks and other organic material or compost\. Intensification of the extension program is needed in the post-project period\. It is also important that PCA adopt the recommended post-rehabilitation techniques on its own plantations and research centers, and establish demonstration plots on selected farmers' fields\. Nutrient Support to Immature Palms\. During implementation, it was found that the area of immnature palns requiring additional fertilisation was less than that estimated at appraisal - largely due to poor survival of some of the earlier plantings\. The total area finally treated was some 21,000 ha, compared with a target of 50,000 ha at appraisal\. Copra Quality Improvement\. At the time of project appraisal, aflatoxin level in copra meal was a big issue in view of the anticipated tightening of the import regulations of the European Community\. Over the first two years of the project, the ODA (now DFID)-funded technical assistance was very useful and laboratory equipment for copra quality testing was provided\. However, analysis revealed that the hot air dryers were economically unviable\. Given the excess milling capacity, the competition among copra buyers was strong, thus undermining the development of a quality-based pricing system for copra\. The pilot program for hot air dryers was, therefore, not introduced, and no Bank loan disbursernent for the component (which accounted for 5\.5% of total project cost and 3\.6% of Bank loan) was made (see further Co-financier's Comment in Section 9)\. Institutional Strengthening of PCA\. The support for institutional strengthening envisaged at appraisal was largely implemented\. It did not prove possible for PCA to build up the number of extension staff- the Coconut Development Officers (CDOs) - to over 1,300 expected at appraisal (the actual total was about 1,000), and no staff were seconded from the Department of Agriculture (DA)\. Infrastructure improvements were made as planned (Annex 1) but with a delay that was extremely disappointing, particularly for the plant tissue analysis laboratory (PTAL), which became operational only in November 1999\. With the PTAL, PCA can now have an annual program of leaf sampling to improve its fertiliser recommendations for coconuts (PTAL should also offer its services to public and private sector customers, and thus strive to be self-financing)\. However, to complement the PTAL analyses, and to calibrate the fertiliser dosage recommended on the basis of leaf analysis results, a network of fertiliser reference trials in the main coconut growing areas is also needed\. The project's staff training program was successfully implemented (Annex 1)\. Technical assistance provided by ODA amounted to about 37 months\. As for the research sub-component, two research proposals were submitted by PCA in 1998 and agreed by the Bank\. The first research would have lasted three years, and would have directly assisted in the design of diversified coconut-based farming systems under the long-term coconut development program of PCA\. The second research would have lasted two years, and would have contributed to Integrated Pest Management on coconut through control of damages by the Oryctes beetle and the red weevil\. Due to slow decision-making in PCA, only the second research proposal was partly implemented by project completion\. - 6- 4\.3 Net Present Value/Economic rate of return: The ERR for the whole project, assuming that all farmers continue to apply fertilisers at the recommended rates after project completion, and using a standard conversion factor (SCF) of 1\.0 for labor and other non-tradeables, is re-estimated at 32%, compared to 40% at appraisal\. The NPV is Peso 7\.2 billion, discounted at 10%, and Peso 3\.3 billion, discounted at 15%\. With a SCF of 0\.9 for non-tradeables (as assumed at appraisal), the ERR improves to 39%\. Since the main project investment was in fertilisers, which resulted in a rapid increase in yields and production, a relatively high rate of return is to be expected\. A sensitivity analysis carried out shows that, even if all fanners discontinue applying inorganic fertilizers after project completion, the ERR would remain at 32%, although the NPV at 10% and 15% discount rates will decline to Peso 4\.3 and 1\.9 billion, respectively\. The ERR remains unchanged because the reduced cost of labor and fertilizers, and the residual favorable effect of fertilizer application under the project on copra yields in the first few years after the project, neutralize the adverse effect of the eventual decline in yields in later years of project life\. 4\.4 Financial rate of return: Incremental net returns per ha and per family labor day, estimated at project completion, are quite attractive (Annex 3)\. In particular, the incremental net return of Peso 8,590/ha from rehabilitation of mature palms is very significant, considering that less than Peso 600/ha is needed to buy inorganic fertilisers and thereby sustain post-rehabilitation yields\. For replanting with hybrids, the incremental return of Peso 19,042/ha at full development does not include an income of Peso 60,000/ha from sale of logs immediately after palms are felled for replanting\. The average net returns per family labor day, ranging from Peso 834 for replanting with local tails to Peso 1,235 for replanting with hyrbrids, are also very attractive, compared to the prevailing wage rate of about Peso 100 per day\. 4\.5 Institutional development impact: Project impact on institutional development of PCA has been positive and significant: (i) the establishment of the Aroman seed garden has provided valuable technical experience to PCA in operating a fairly large-scale planting material production facility; (ii) the project helped bring two of the Branches of PCA - the Field Operations Branch and the Agricultural Research and Development Branch - closer, although a lot of team spirit between the two Branches still needs to be fostered; (iii) the concerted efforts made during the last years of the project to improve nursery management have resulted in establishment of some nurseries of high quality, although furither improvement in many Regions is clearly required; (iv) the technical basis for the long-term coconut development program was firmly established under the project through formulation of revised selection criteria for farmers eligible for the replanting program; through preparation of the Techno-Guides on Replanting and Rehabilitation, Advisory Guide for PCA Agriculturists for Post-Rehabilitation, and Post-Rehabilitation Guide for the farmers involved in the rehabilitation program; and through the training of farmers and PCA staff on application of these techno-guides; (v) PCA developed some skills in handling the process of procurement, transport and distribution of large quantities of fertilisers annually, although a couple of Regions were unable to handle the process efficiently; (vi) the two impressive replanting surveys undertaken by PCA staff in 1997 and 1999 to determine the quality of replantings provided a valuable experience to PCA in carrying out high-quality monitoring and evaluation activities to assist management in taking corrective action; and (vii) the establishment of PTAL has provided a sophisticated instrument to PCA to help refine its fertiliser recommendations\. Although strengthening of the Small Coconut Farmers' Organizations (SCFOs) was not an explicit objective of the project, the SCFOs acquired considerable experience under the project in organizing and managing replanting and rehabilitation programs\. -7 - 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: Natural disasters have significantly affected the project\. In particular, there was a severe drought attributed to El Nifno in 1998, which had a severe adverse impact on coconut production and coconut seed garden output\. Civil disturbance has also been a problem in some locations, and has created difficulties for the PCA Aroman seed garden in Mindanao\. 5\.2 Factors generally subject to government control\. Government compliance with covenants was generally satisfactory, but allocation of counterpart funds was frequently inadequate, and Government support was not given to secondment of DA staff to work in the field for PCA\. Moreover, the long-term coconut development program and its financing arrangements were not prepared until 1997, and even now, there is no consensus among the central agencies on the precise elements of the long-term program to be pursued\. 5\.3 Factors generally subject to implementing agency control: There were several significant factors under the control of PCA, which were not addressed effectively and which consequently delayed project implementation and reduced its benefits: (i) for the replanting component, inadequate attention to the technical standards of nursery management and to farmer selection criteria in the early years of the project resulted in a significant net reduction in the replanted area; (ii) fund releases for cover-cropping and inter-cropping of replanted areas were unduly delayed, thus undermining the benefits of the component; (iii) weak monitoring arrangements for fertiliser transport and distribution and lack of decisive and prompt action resulted in a huge backlog of undistributed fertilisers in at least two Regions, and undermined the benefits of the rehabilitation component; and (iv) serious problems in management of the infrastructure component resulted in an enormous delay in its implementation, and consequently prevented the benefits, particularly of PTAL, from being realised during project implementation\. 5\.4 Costs andfinancing: Total project cost at completion is estimated at US$146\.2 million or about 95% of the appraisal estimate of US$154\.7 million (excluding hired labor cost financed by farmer beneficiaries)\. The cost saving in dollar terms was due to the significant depreciation of the Peso 1/\. In Peso terms, and excluding hired labor cost, there was an overall cost overrun of about 18% (Peso 4\.5 billion at project completion, compared to Peso 3\.8 billion at appraisal), which consisted of an overrun of 37% in Government counterpart contributions (Peso 1\. I and 0\.8 billion at completion and appraisal, respectively), and an overrun of 10% in Bank loan proceeds (Peso 3\.3 and 3\.0 billion at completion and appraisal, respectively)\. Expenditure on the rehabilitation component was significantly higher than expected at appraisal (Annex 2) due to larger area covered, and PCA's operating costs were higher due to the extended project implementation period\. The total Bank loan disbursed was US$108\.2 million, or 89% of the original loan amount of US$121\.8 million\. US$10\.9 million had been canceled earlier, and the remaining US$2\.7 million was canceled on May 11, 2000\. 1/ From Peso 22 per US$ in July 1989 to Peso 40\.85 per US$ in March 2000\. 6\. Sustainability 6\.! Rationale for sustainability rating: Project sustainability is not an issue, since even in the adverse scenario where all project farmers discontinue applying inorganic fertilizers, the returns on investments are not appreciably affected and the NPV and ERR remain very attractive (para\. 4\.3)\. However, to maximize farmer incomes by maintaining post-project yields at a high level, continued application of inorganic along with organic fertilizers would be needed: - 8 - (a) The funding required to provide fertilizers for the replantings undertaken in the last few years of the project is quite small\. For the year 2000, the fertilizers already procured in 1999 (and being distributed now), the carry-over funds from 1999, and the Peso 50 million allocation in the approved 2000 budget to sustain the project are adequate to take care of the fertilizer, seed nut and nursery requirements of the replantings under the project\. As for year 2001 and later, the Government and PCA appear to be committed to the replanting program\. (b) As regards prospects for continued fertilization of rehabilitated areas, the issue was studied in some depth as part of the second rehabilitation impact survey undertaken in 1999\. The results of the survey show that (correcting for some obvious data errors), of all the farmers whose farms had been rehabilitated under the project (four applications of fertilizers), 45% were using organic fertilizers after rehabilitation, 10% were using inorganic fertilizers, 8% were using both organic and inorganic fertilizers, and 37% were not using any fertilizers at all\. The proportion of farmers using either inorganic or both organic and inorganic fertilizers is fairly high in the provinces of Agusan del Sur (54%), Agusan del Norte (50%), and Antique (49%)\. These survey results contradict the general impression so far that farmers in the Philippines do not use inorganic fertilizers for coconuts, although in six of the 24 provinces surveyed, less than 10% of farmers use inorganic or both organic and inorganic fertilizers, with four provinces showing close to zero usage\. It is possible that the demonstration of yield increases from rehabilitation under the project has induced some farmers to use inorganic fertilizers and many farmners to use organic fertilizers\. There could be many reasons for the relatively low usage of inorganic fertilizers by farmers, including inconsistent extension messages from PCA, and farmers' expectations of more fertilizer distribution on a grant basis (the rehabilitation survey results show that, of the farmers not using fertilizers on rehabilitated farms, 45% did so because they were waiting for a free supply of fertilizers from PCA)\. Addressing the above factors could result in a lot more farmers using inorganic or both inorganic and organic fertilizers in the future\. Apart from the direct use of fertilizers for coconuts discussed above, one should also consider the indirect effects on coconut yields of the usage of fertilizers on inter-crops\. The second rehabilitation impact survey results show that 91% of farmers use inter-cropping on rehabilitated farms, and all of them use fertilizers (58% inorganic, 36% organic, and 6% both)\. This means that coconut on 58% of the rehabilitated farms is indirectly benefiting from the use of inorganic or both inorganic and organic fertilizers for inter-crops\. When one adds the direct use of fertilizers for coconuts to the indirect benefit from fertilized inter-crops, the prospects for relatively high post-project rehabilitation benefits appear reasonably good\. However, PCA should intensify its post-rehabilitation extension and demonstration programs (Section 4\.2, page 6)\. The project was intended to be the first phase of a long-term (20-year) coconut development program\. A program had been prepared in 1997 and the Government had committed to the Bank to find adequate funding for it 2/\. The precise committed amount has not yet been provided\. However, this issue affects expansion of project activities rather than their sustainability\. If a follow-on Tree Crops Project, which is currently being conceptualized and discussed among Government agencies, materializes, a long-term coconut development programn is likely to be its major component\. Moreover, a compromise proposal to unlock the considerable accumulated levy funds is now being worked out by the Government\. If this happens, funding of a long-term coconut development program, which is likely to include expansion of some of the important activities initiated or completed under the project, will cease to be an issue\. 2/ Letter from the then Secretary, Department of Agriculture, to the Bank, dated May 12, 1997: "\. \.1 am pleased to inform you that the Philippine Government through the Department of Agriculture in coordination with the Departmnent of Budget and Management commits to raise P450 M a year or such amount as may be necessary to fund the critical minimum of the Long Term Coconut Development Plan beginning Year 2000 - 2013\." - 9- 6\.2 Transition arrangement to regular operations: It is essential for PCA to prepare a Project Operation Plan (POP), which should include the operation of the Aroman seed garden, nurseries and the PTAL, and intensification of the post-rehabilitation program\. It is also important that indicators of project sustainability be agreed with the DA and other central agencies, and future M&E work focus on these indicators\. Some suggested indicators are: (i) annual production of hybrid seed nuts in PCA-managed and private seed gardens, and the annual replanting with hybrids; (ii) quality of replantings in terms of survival rate of seedlings planted, growth as measured by collar girth, and copra yield/ha in areas coming into production (this monitoring can be done by conducting replanting surveys similar to those conducted in 1997 and 1999 by PCA staff); and (iii) copra yield/ha, and use of organic and inorganic fertilisers on coconuts and inter-crops in rehabilitated areas (this analysis should be done through sample surveys conducted by independent consultants)\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Through identification, preparation and appraisal, Bank performance was generally satisfactory\. However, project targets for replanting and rehabilitation could have been more realistic in the light of risks which had already been perceived by appraisal\. Moreover, the Bank should have assisted PCA in locating private sector seed gardens early in the project, given the uncertainties relating to the Aroman seed garden\. 7\.2 Supervision: Project supervision by the Bank was regular, appropriately staffed and generally constructive and supportive of project implementation\. The Bank agreed to four extensions of the loan closing date, which is a rare practice in the Bank\. The Bank also assisted PCA in organising the workshop on Coconut-Based Farming Systems in June 1997, when the issue of inter-cropping was discussed in detail\. Several changes in project policies followed the workshop, including increase in allowable replanting per farmer from one to two ha, making of cover-cropping mandatory for replanting, increase in maximum entitlement per farmer for inter-cropping and cover-cropping assistance, increase in the budget for nurseries, etc\. The Bank also agreed in February 1999 to the Government's request to increase the disbursement percentage for Incremental Operating Cost from 25% to 90%, in line with the Bank's new policy to assist the Philippines in overcoming the counterpart funding problem resulting from the Asian financial crisis\. The Bank's Quality Assurance Group (QAG) included this project in the first Rapid Supervision Assessment (FY97), and gave highly satisfactory rating to overall quality of supervision, focus on development impact, and adequacy of supervision inputs and processes, and satisfactory rating to supervision of fiduciary aspects and realism of project performance ratings\. 7\.3 Overall Bank performance: The overall Bank performance was satisfactory\. Project objectives were relevant to the country's needs and Government and Bank development priorities and strategy; project preparation and appraisal were sensible and mostly pragmatic; and project supervision was sensitive, supportive and effective\. - 10- Borrower 7\.4 Preparation: Preparation was mostly satisfactory\. The ambitious size and scope of the project were reduced at appraisal, and should have been reduced further\. 7\.5 Government implementation performance: This is rated reasonably satisfactory\. The main problems were inadequate counterpart funds and slow releases of cash; extreme delay in producing a long-term coconut development program and its financing plan (received by the Bank on May 12, 1997 instead of June 30, 1993 stipulated in the Loan Agreement); delay in resolving land reform problems relating to the Aroman seed garden; and the inability of the DA to release field staff on secondment to PCA, and the subsequent delay in allowing PCA to recruit the necessary staff (the approval was finally given in mid-1995)\. 7\.6 Implementing Agency: The performance was mixed but satisfactory overall\. The significant areas where improved PCA performance was possible are listed in para\. 5\.3 above\. Moreover, PCA's accounting system remained weak, resulting in suspensions and disallowances of some project expenditures by the Commission on Audit\. Progress on settling these suspensions and disallowances remained unsatisfactory until loan closing because of lack of concerted initiatives by PCA\. 7\.7 Overall Borrower performance: The overall performance was satisfactory\. The main problem was the extreme delay in preparing a long-term coconut development program\. This program still needs to be fimned up, agreed, and adequately funded in the future\. 8\. Lessons Learned * A clear strategy and a development program for the coconut sub-sector are needed\. Although a long-term coconut development program had been prepared by an Inter-Agency Conmnittee of the Government in 1997, there is a lack of consensus on the precise elements of the strategy and the long-term program\. This appears to be largely due to the controversy about a commodity focus as opposed to a "holistic" approach\. The case for a commodity focus arises due to the unique status of coconuts in the Philippines (like that of rubber and oil pahn in Malaysia and Indonesia), the issue being whether the Philippines should attempt to maintain its predominant position in world coconut exports (which have earned US$0\.8- 1\.0 billion per annum for the country in recent years), particularly in view of the rapid expansion of exports of substitutes (principally, palm kernel oil) by some other countries in east Asia, and the threat that the end-users will switch to these substitutes due to lack of confidence in coconut oil availability, thus reducing the Philippines' share of world lauric oils market\. The issue is linked to low productivity and unstable production which remain the main problem in the coconut industry\. If the Government objective is to retain the Philippines' predominance in coconut oil exports, a commodity focus to any project or program for the sub-sector is unavoidable\. Another issue to consider is the technical (agronomic) constraint on viable inter-cropping in coconut areas due to the shading problem: the closed canopy of mature coconuts does not provide enough light to ensure reasonable yields for most inter-crops\. These two issues - the competition faced by coconut oil from substitutes in export markets, and the agronomic constraint of shading - need to be taken into account seriously\. Fortunately, because of the size of the sector (about 3 million ha), it is possible to have both elements in a long-term coconut development program: a commodity focus in areas which are suitable for high-yielding coconut and where farmers are interested in keeping coconut as the principal crop, - 11 - and a "holistic" approach in areas where farmers prefer to keep coconut as a secondary crop or to diversify out of it to other profitable crops or uses\. Replanting with potentially high-yielding hybrid varieties (along with cover-cropping and inter-cropping in the initial years), as part of the long-term program, would make it possible to obtain the same or higher production of copra on a much smaller area, thus facilitating the release of significant areas now under low-yielding coconut to more profitable crops or uses, and thus promote land use efficiency\. To make this strategy work, the Coconut Preservation Act (Republic Act 8048 of 1995) needs to be reviewed\. Under the Act, the coconut farmers are not allowed to diversify out of coconut to other crops, even if they are more profitable\. This is inherently contradictory to the "holistic" approach, which, by definition, should aim to maximize farmers' income\. The coconut farmers are the only group of farmers in the country who do not have the freedom of choice to change their cropping pattern\. This unfair and discriminatory treatment should end, and a clear strategy and a development program based on full farmer freedom should be formulated and implemented\. Forging of a consensus on the strategy and a long-term development program is the most difficult immediate challenge facing the Government for the effective development of the coconut sub-sector\. * In the perennial crops sub-sector, a single project can not address all major problems\. Because of the relatively long gestation period between planting and harvesting, and problems with the availability of long-term fnance, tree crops development needs to be handled as a continuous program, rather than through a single project\. - Private sector role needs to be actively exploited\. Project experience showed that when rapid production of seed or other planting material is required, it is better to rely on contract services with the private sector rather than attempting to establish a separate public sector facility\. * Innovative financing mechanisms are usually needed in the perennial crops sub-sector\. Because of the long gestation period, both the shortage of long-termn finance and farmers' unwillingness to borrow are common problems in planting and replanting of perennial crops\. Such operations can be financed on a grant basis from a cess levied on production or exports\. However, due to the scandal surrounding the coconut levy in the early 1980s, this option appears politically unfeasible in the Philippines at this stage\. As an alternative, cost-sharing arrangements between the public sector and the small coconut farmers would need to be evolved to finance a long-term replanting program\. 3 Commercialisation of coconut replanting is feasible\. Project experience shows that when high-quality coconut seedlings are available at reasonable prices, farmers are willing to buy the seedlings\. Because of the relatively high cost of planting material production at present, there is a need for innovative mechanisms to reduce the cost without sacrificing the quality, and thus help develop a market for hybrid seedlings\. * Hybrids outperform tall coconuts\. Project experience demonstrated that hybrids perform better than tall coconut palms: they start producing earlier and produce more\. Moreover, talls were found to be no more tolerant than the hybrids to poor ecological and agricultural conditions\. Even for resistance to typhoons, some of the PCA hybrids have very thick trunks and may perform as well as the talls\. For a crop which will occupy the land for over 50 years, it is worth producing and using the best planting material\. * Project readiness at entry is critical to timely implementation\. The deficient quality of the project at entry into the portfolio due to uncertainties of seednut supply, lack of adequate field staff, undefined procedures for fertilizer transport and distribution, and unclear M&E arrangements, seriously delayed project implementation and undermined its benefits\. - 12 - 9\. Partner Comments (a) Borrower/implementing agency: COMMENTS FROM PCA Section 4\.1\. - On the issue of a long termn development program for the coconut industry, the PCA is determined to implement the program prepared in 1997 but on a limited scope because of the uncertainty of sustainable funding for the program\. The current activities of the PCA is a combination of the banner program "Maunlad Na Niyugan Tugon Sa Kahirapan" (Maunlad Program for brevity) which promotes the adoption by the coconut farmers of an intensive integrated coconut based farming system and the sustainability of the SCFDP which includes both replanting and fertilization programs\. With respect to the issue of the coconut farmers' ability to continue with the application of inorganic fertilizers, many of the coconut farmers are willing to continue with the fertilization program\. However, they also express preference that the government continue to supply the fertilizers for free\. With the expected improvement in the earning capacity of the coconut farmers through the successful implementation of the Maunlad Program, which seeks to ensure additional income for the farmers from the intercropping and other agricultural and aquaculture activities in the coconut farms, the farmers will have the capability to purchase the required inorganic and organic fertilizers for the coconut palms\. And to further increase farmers' awareness and receptiveness to the fertilization program, the PCA will intensify post-rehabilitation activities as envisioned in the SCFDP\. The SCFDP has greatly helped the govermment's effort to sustain coconut production and alleviate the living conditions of the coconut farmers\. The importance and need for adequate funding whether from international or foreign lending institution like the World Bank or internally generated funds (other than government appropriation), is critical to the development of continued viability of the coconut industry\. It is for this reason that the PCA is looking at the implementation of the Small Tree Crop Diversification and Development Project as a sustainable effort to pursue the gains and investments made under the SCFDP and the tree crop sector as a whole\. Section 4\.2, page 4\. - The PCA is seriously considering the privatization of the seedgarden at Aroman, Carmen, North Cotabato, if funding for the continued operation of the seedgarden becomes unavailable or uncertain\. In the meantime, the PCA has secured the assurance of the Secretary of Agriculture that the operation of the Aroman Seedgarden will continue to receive support from the Department of Agriculture ("DA")\. Further, to sustain the replanting program, the PCA is also looking at establishing mini-seedgarden of about 50 hectares in each region, and later in strategic provinces within the region, to provide much needed seedlings\. In addition, the PCA has developed a synthetic variety ("synvar") of coconut which would allow the farmers to directly plant the seednuts from the (synvar) coconut palms planted in the farms without the need of setting up seedgarden\. Section 4\.2, Page 4\. - We agree that the condition of the nurseries varies from Region to Region and that management and maintenance of the nurseries have not been satisfactory\. However, as noted in the ICR, the PCA has been upgrading its capability in managing and improving the condition of the nurseries\. The participation of the Agricultural Research and Development Branch (ARDB) has been strengthened and the flow of funding for the nurseries will be facilitated to ensure the improvement in nursery maintenance\. - 13 - Section 4\.2, Page 5\. - On inorganic (mineral) fertilizer vs\. organic fertilizer, in SCFDP farms (representative of selected Regions) which achieved only marginal to slight increase in yields, the ARDB in 1998 analyzed leaf samnples from said farms and found these deficient in either one or more micronutrients (boron, zinc, manganese, copper) which indicates (i) the single fertilizers used did not optimize coconut yields in at least 100,000 has\. out of 406,800 has\. fertilized due to micronutrient deficiency; (ii) the combination of inorganic mineral fertilizers and organic fertilizers could insure sufficiency of both macronutrients and micronutrients, considering that organic fertilizers, particularly chicken manure based organic fertilizers, contain high concentration of micronutrients B, Zn, Cu, Mn and Fe\. The application of organic fertilizers is important not only as a source of micronutrients but also in farming sustainability because they induce high productivity and restore or conserve the physical, fertility and biological environment of coconut soils\. On application of single fertilizer vs\. compound fertilizer, using the "cheaper" single fertilizer as against the "'more expensive" compound fertilizer as the criterion in the selection of the proper fertilizer to apply, without considering the preference of farmers to have "one fertilizer grade supplying all the nutrients" required by coconut palms, does not contribute to sustainable coconut farming\. In fact, the price of single fertilizer is more expensive than compound fertilizer\. Based on current local prices of single fertilizer (FPA Report, February 2000), not on the SCFDP procurement price that is usually 10% lower because of international competitive bidding, the cost per tree of 4\.5 kg\. fertilizer (1\.5 kg\. 21-0-0 + 2 kg\. 0-0-60 + 1 kg\. 0-20-0) is P26\.10, while compound fertilizer (using the common 14-14-14 price of P395/50 kg\. bag) at different rates of application (i\.e\., 2 kg\./tree = P15\.8, 2\.5 kg\./tree = P19\.75, 3\.0 kg\./tree = P23\.70)\. Further, while the single fertilizer has an application rate of 4\.5 kg/tree/year, a compound fertilizer with components of 14-5-20 + 0\.2% borax, which also contains at least 15% Cl and 5% S, has a recommended application rate of only 2 kg\./tree/year, has clearly indicated by recent research findings of the PCA Davao Research Center (please see attached information)\. On a per hectare (100 trees/ha\.), the total cost of single fertilizer (P26\.10/tree) is higher at P2,610 as compared to compound fertilizer (P1 5\.80/tree per 2 kg\. fertilizer or P23\.70 per 3 kg\. fertilizer) of only 1,580 (2 kg\. fertilizer) or P2,370 (3 kg\. fertilizer)\. The advantage of compound fertilizer as a cheaper alternative to single fertilizer is evident from recent research finding that a balance nutrient (physiologically based nutrient uptake of coconut) compound fertilizer containing 14-5-20 + 0\.20% borax requires a lower application rate than single fertilizer\. A 50 kg\. bag of three (3 ) single fertilizers combined can fertilize only 11 coconut trees, while a 50 kg\. bag of compound fertilizer can fertilize 16 to 25 trees\. Section 4\.2, Page 6\. The PCA is currently looking into other technology on copra drying\. Section 4\.2, Page 6\. The SCFDP funded two (2) officers of PCA in finishing their PhDs: Ms\. Nemesia San Juan Bachiller in the field of Plant Pathology, and Mr\. Rolendio N\. Palomar in the field of Wood Science\. Section 4\.2, Page 6\. - Studies on leaf analysis with fertilizer trials conducted by PCA during the FAO/UNDP support period (1972-78) reviewed by the IRHO Director for Research, Mr\. M\. Ollagnier, show the reliability of PCA's use of leaf analysis to diagnose nutrient deficiencies in coconut farms in this country and improvement in yield (30% to 300%) from the formulate site-specific fertilizer combinations\. Thus, even without a network of on-farm fertilizer trials, the knowledge and information generated by PCA before the implementation of the SCFDP allow 80%-85% reliability of PCA-ARDB recommendation\. It is true that fertilizer recommendations based on field trials is the best method, but this is time consuming and expensive\. The PCA is using an acceptable and quicker tool - leaf analysis (not "trial and error method")\. - 14 - Moreover, the result of reference field trials is very location specific, in a Philippine environment characterized by diversity of soils, climatic conditions and cropping systems\. Section 5\.2\. - The apparent absence of a definite long term program to sustain the SCFDP was largely due to the uncertainty of funds to finance the major components of the project\. Nevertheless, the present administration is exerting great effort to secure sufficient funding to sustain the investment under the SCFDP, i\.e\., operation of the seedgarden; replanting and fertilization\. The PCA has received the unqualified support of the Secretary of Agriculture in its effort to implement developmental projects and programs for the coconut industry, such as the Maunlad Program and sustainability of the critical aspects of the replanting and fertilization components of the SCFDP\. Section 5\.3\. - Please see comments on Section 4\.2, page 4\. Section 7\.6\.- The majority of the suspensions and disallowances refer to transactions made and entered into during the first seven years (1991 to 1998) of implementation of the SCFDP\. Some of the transactions or contracts involved are questionable while a few, but involving huge amounts, are the subject of court proceedings for which the present administration is prevented from making any disposition without a definite ruling of the courts exercising jurisdiction\. Section 8, Lessons Learned, Par\. 1\. - We totally agree that the coconut industry deserves a special focus because of its strategic importance to the Philippine economy\. The PCA is committed to maintain the Philippine's predominant position in world coconut exports\. With the Philippines' accession to the WTO and a world economy marked by enhanced competition, it can ill afford to allow the collapse of the coconut industry where it has a clear advantage\. The PCA is committed to encourage private business participation in the development of high value coconut products and by-products to further secure and enhance its position in the world market for coconut products\. Section 8, Lessons Learned, Par\. 1\. We do not agree that the RA 8048 should be reviewed to give farmers the freedom to diversify into other profitable crops\. What are needed are (i) a more geographically specific program for coconut production and (ii) intensive integrated coconut based farming system to increase the income of coconut farmers\. On the first requirement, the PCA and Department of Agriculture has already identified specific agricultural zone where coconut productivity can be further increased and sustained\. Current efforts of the PCA is directed towards ensuring that production is increased and improved varieties of coconut are available in these specific areas\. On the second requirement, the PCA has launched the Maunlad Program which encourage the diversification of crops within the coconut farm with coconut as the main crop and provides additional skills to the coconut farmers to improve their knowledge and capability in producing and marketing coconut by-products and other agricultural crops and products\. Section 8, Lessons Learned, Par\. 4\. - We have been receiving positive feedback from the private sector to share in the burden of financing a long term development project for the coconut industry\. The possible areas of convergence of public and private investments are the establishment and maintenance of seedgardens and nurseries and development of post-harvest facilities and technology\. Yields Projections\. - Based on PCA Zamboanga Research Center reports, from 12 years onwards, the difference in the yield between tall varieties and hybrids is small\. It is, therefore, possible that the yield of local tall varieties has been underestimated\. -15 - Attachment-I EFFECTS ON COCONUT YIELD (30-YEAR OLD LAGUNA TALL VARIETY) OF THE APPLICATION OF MINERAL FERTILIZER (14-5-20 PLUS 0\.2% BORAX), 1993-98 PCA-DAVAO RESEARCH CENTER,BAGO OSHIRO, DAVAO CITY Table 1\. Annual Nut production (nuttree/year) as affected by Compound 14-5-20 + 0\.2% borax fertilizer KG FERTILIZER YEAR (PER TREE/YEAR) 1993 1994 1995 1996 1997 19981 1 55\.40 115\.00 116\.00 116\.60 100\.30 87\.20 2 57\.50 117\.60 121\.20 117\.30 107\.90 92\.70 3 59\.80 122\.00 116\.20 116\.20 104\.00 89\.77 AVERAGE 57\.57 118\.20 117\.80 116\.70 104\.07 89\.77 Est\. nuts/haI20 tre s 6912 14\.184 14136 14004 12\.480 10\.764 Table 2\. Copra Weight (ginut) KG FERTILIZER YEAR (PER TREE/YEAR) 1993 1994 1995 1996 1997 19981 1 204 222 219 228 235 199 2 213 227 218 226 234 190 4 204 227 227 239 235 206 AVERAGE 207 225 221 231 235 198 Table 3\. Annual Copra Yield (per tree/year) as affected by Compound 14-5-20 + 0\.2% borax fertilizer KG FERTILIZER _ YEAR __ \| (PER TREE/YEAR) 1993 1994 1995 1996 1997 19981 1 12\.50 25\.50 25\.10 24\.00 23\.50 17\.50 2 12\.20 26\.90 26\.30 26\.50 25\.60 17\.60 4 12\.30 27\.70 26\.50 27\.80 24\.40 18\.50 AVERAGE 12\.33 26\.70 25\.97 26\.10 24\.50 17\.87 Est\. t copra/ha 0120 trees 1\.47 3\.20 3\.10 3\.13 2\.93 2\.13 affected by El Niflo Source: ISFM CBFS, PCA-DRC -16- Attachment 9 Chemical Analysis and Average Nutrient Contents of Chicken Manure from Some Sources in Philippines (1999) URTADO FARM' ILUMINADA DOMINGO ALABEL TANAY NUTRIENT (Bago-Gallera, FARM 2 FARM' FARM2 FARM AVERAGE RANGE DC) (Bago-Gallera, (Bago Saka,DC) (Alabel, (Tanay, Rizal) DC) Sarangani) MArRON ITERIFNT3 Total Nitrogen (%) 2\.93 3\.06 0\.89 1\.15 2\.47 2\.10 0\.89 -3\.06 Total Phosphorus (%), P205 5\.49 7\.48 2\.25 1\.39 2\.64 3\.35 1\.39 -7\.48 lv Total Potassium (%), K20 2\.87 6\.79 1,57 3\.05 1\.20 3\.10 1\.20 - 6\.79 Total Calcium (%), CaO 7\.54 6\.64 0\.80 9\.07 2\.67 5\.34 0\.80 - 9\.07 Total magnesium (%), MgO 2\.63 2\.53 1\.30 2\.48 0\.80 1\.95 0\.80 - 2\.63 Sodium (%), Na 1\.17 1\.21 0\.50 1\.76 0\.21 0\.97 0\.21 -1\.76 Chlorine (%), Cl 0\.76 1\.37 0\.39 0\.47 0\.20 0\.64 0\.20 -1\.37 Sulfur (%), S 0\.86 2\.72 (T) (T) (T) 0\.90 (T) - 2\.72 uMaomuIaRIn3 Boron (ppm), B 4 46\.00 52\.00 14\.00 15\.00 100\.00 45 14\.00 - 100\.00 Zinc (ppm), Zn 1,489\.00 651\.00 345\.00 210\.00 253\.00 589 210\.00 -1,489\.00 Copper (ppm), Cu 222\.00 86\.00 143\.00 42\.00 88\.00 116 42\.00 - 222\.00 Manganese (ppm), Mn 5,581\.00 481\.00 1,718\.00 571\.00 207\.00 1,711 207\.00 - 5,581\.00 Iron (ppm), Fe 16,731\.00 1,157\.00 63,417\.00 15,753\.00 41,047\.00 27,621 1,157\.00 - 63,417\.00 Moisture Content (%) 15\.10 13\.10 18\.90 7\.80 14\.20 _ 7\.80 -18\.90 from Broilers 2from Layers 3 analyzed by dept\. of Agriculture laboratories (BSWM and PCA) (T) Trace or almost nil Source (Magat, 2000) - 17 - Attachmnt-3 Estimated Fertilizer Cost: Single Fetilizers and Compound Fertilizers [ { Price LP) ' Average Rate Cost/YearjP) Fertilizer Material Per 50 kg Per kg Per Tree/year Per tree Per Ha baa (kg) 2 Sinale Fertilizer3 21-0-0 (Amosul) 220 4\.4 1\.5 6\.60 0-0-60 (KCI) 350 7\.0 2\.0 14\.00 0-20-0 (Solowhos) 275 5\.5 1 1\. 5\.5 4\.5 26\.1 2610 O ComDound Fertilizer 14-14-14 395 7\.9 2\.0 15\.8 1580 2\.5 19\.75 1975 3\.0 23\.7 2370 1 FPA Fertilizer Price Monitoring, February 2000 2 @ 100 trees/ha 3 Note: 50 kg bag of combined 3 single fertilizers @ 4\.5 kg/tree I 11 trees 50 kq baq of combined fertilizer: @ 2 kg/tree 25 trees @ 3 kg/tree 16 trees (b) Cofinanciers: (Comments from Natural Resources International, Ltd, DFID) The equipment installed in the existing aflatoxin laboratory in Quezon City has been very heavily used\. However, the quality control laboratory, which was located in Davao rather than Cebu, has not been used to its full potential since the ending of the ODA-funded project\. It was decided to locate the regional copra quality control laboratory in Davao, because surveys conducted by the project revealed that aflatoxin levels were highest in this region\. Research fimnly established that practically all aflatoxin contamination occurred during the initial two week period, following the splitting of the coconut\. The high levels of aflatoxin in Davao were associated with production of copra by sun-drying, whereas traditional smoke drying imparted a resistance\. Local oil mills subsequently changed policy, and promoted smoke drying rather than sun-drying\. A colour brochure summarising the research findings and entitled 'Save the European Market: down with aflatoxin to 20 ppb in copra, copra cake and copra meal' was published\. This brochure, together with a colour flyer showing the yellow-green mould that produces aflatoxin, was used to extend the Project's findings in all the major copra-producing regions\. A revised regulation to implement new copra classification standards (Administrative Order No\. 01, series of 1991) was based on the research findings and encouraged early drying and introduced a mould classification with associated premiums for low mould and discounts for high mould levels\. This new classification did not prove very effective early in - 18- the marketing chain, where it was needed most, due to adherence of primary traders to traditional trading practices, and a shortage of supply which tended to reduce the effect of a quality-based pricing system\. A study tour delegation, headed by the Chairman of the PCA, visited the major European importers of copra by-products and informed them of the actions being taken to meet the recently introduced aflatoxin limit (20 pg/ kg)\. The irnporters were convinced that copra by-product produced in the Philippines could meet the new regulation, and that the marginal increase in PAH levels due to increased use of smoke driers could be removed at negligible cost during processing\. The threatened loss of the valuable ($75 million in 1987) European market for copra by-product was thus averted\. (c) Other partners (NGOs/private sector): N/A 10\. Additional Information N/A - 19 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: Launch a long-term program of coconut N\.A\. The project has initiated and laid the basis development for a long-term program\. Increase small coconut farm incomes: Without project With project Without project With project P per ha P per ha (1988 Constant Terms) (1999 Constant Terms) (a) Fertising mature local talls 4,370 6,857 6,766 15,355 (b) Nutrient support for hybrids 2,146 12,044 6,164 17,436 (c) Replanting with hybrids 2,237 19,315 3,184 22,226 (d) Replantng with local talls 4,320 10,469 2,945 15,016 Increase copra producton: Incremental tons in 2004 Incremental tons in 2004 405,000 382,000 - 20 - Output Indicators: Indct~Matu1~PIatP /J~ ~GuaULatt~tin Seedgardens Number 52 Area (ha) 250 each CSPC 303 AADC 200 Seed production 4th Year 409,000 9,353,795 (1) 5th to 6th year 1,336,000 Replanting Tall area (ha) 9600 3200 Hybrid area (ha) 15400 16,100 RehabilBtaton Mature palmis area (ha) 348000 406,800 Immature palms area (ha) 50000 21,047 (2) Insftitutonal Number of staff recruited Professional 78 499 (3) Support 683 387 Number of vehicles Cars 72 139 Light trucks 8 Tractors 7 Bus I Motorcycles 1700 661 Motorized banca 5 Technical assistance man/months ODA financed for CQ1 97 36\.5 Intemationlly recruited 12 mosi/p\.a\. 2 Staff Training (No\.) CDOs 1800 787 Overseas training Study tours to ASEAN countries 50 3 Short-term couses 5 35 Local Training MSc courses 1 0 8 Ph\.D courses 5 2 Short-term courses 50 1447 Infrastructure Number of buildings renovated 1 2 Number of new buildings 4 4 Structures in CSPC 10 (1) Aside from CSPC and AADC, production forcecast includes PCA DRC and ZRC, BSPC, WA and Tagnanan Talls assources of scednuts\. (2) The 21,047 ha was the eligible area found for the Nutrient Support Comiponent\. There was an over-estimation at appraisal of the area needing NS\. (3) Includes 455 contractual CDOs that were supposed to be seconided from the Department of Agriculture\. The secondment did not miaterialize because of devolution under the Local Government Code and transfer of the agriculturists from the DA to the Local Govemmient Units\. Note: The column 'Projected in last PSR' refers to projections in SAR\. End of project - 21 - Annex 2\. Project Costs and Financing Proect Cost by Com onent (in US$ million uivalent) Di i g rND~~~~~~S ~ Replanting 17\.50 20\.87 90 Rehabilitation 58\.40 100\.19 125 Nutrient Support 15\.50 6\.14 30 Copra Improvement 6\.30 1\.30 21 Research 4\.70 4\.42 74 Extension and Training 5\.30 4\.04 58 Institutional Strengthening 8\.10 9\.21 89 Total Baseline Cost 115\.80 146\.17 Physical Contingencies 10\.00 0\.00 Price Contingencies 28\.90 0\.00 Total Project Costs 154\.70 146\.17 Interest during construction Total Financing Required 154\.70 146\.17 Note: (i) Appraisal total cost excludes hired labor cost of US$21\.9 million equivalent, to be financed by farmer beneficiaries\. (ii) Actual/latest total cost excludes hired labor cost, financed by farner beneficiaries\. (iii) In the column 'Percentage at Appraisal', appraisal costs are inclusive of contingencies\. - 22 - Prolect Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1\. Works 2\.70 0\.80 0\.70 0\.00 4\.20 (2\.50) (0\.70) (0\.60) (0\.00) (3\.80) 2\. Goods 105\.10 0\.80 9\.40 0\.50 115\.80 (94\.70) (0\.50) (8\.00) (0\.00) (103\.20) 3\. Services 0\.00 0\.00 0\.90 0\.80 1\.70 (0\.00) (0\.00) (0\.90) (0\.00) (0\.90) 4\. Miscellaneous 0\.00 0\.00 27\.50 0\.00 27\.50 (0\.00) (0\.00) (8\.40) (0\.00) (8\.40) 5\. Miscellaneous 0\.00 0\.00 5\.50 0\.00 5\.50 (0\.00) (0\.00) (5\.50) (0\.00) (5\.50) 6\. Miscellaneous 0\.00 0\.00 0\.00 21\.90 21\.90 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 107\.80 1\.60 44\.00 23\.20 176\.60 _______________________ (97\.20) (1\.20) (23\.40) (0\.00) (121\.80) Note: The total cost of US$176\.60 million includes hired labor cost of US$21\.9 million equivalent, to be financed by farmer beneficiaries\. Project Costs by Procurement Arrangements (ActualULatest Estimate) (US$ million equivalent) 1\. Works 0\.00 1\.36 1\.49 0\.00 2\.85 (0\.00) (1\.20) (1\.34) (0\.00) (2\.54) 2\. Goods 81\.50 4\.00 23\.46 0\.20 109\.16 (81\.50) (1\.20) (5\.00) (0\.00) (87\.70) 3\. Services 0\.00 0\.00 1\.21 1\.00 2\.21 (0\.00) (0\.00) (1\.21) (0\.00) (1\.21) 4\. Miscellaneous 0\.00 0\.00 29\.25 0\.00 29\.25 (0\.00) (0\.00) (14\.04) (0\.00) (14\.04) 5\. Miscellaneous 0\.00 0\.00 2\.70 0\.00 2\.70 (0\.00) (0\.00) (2\.70) (0\.00) (2\.70) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 81\.50 5\.36 58\.11 1\.20 146\.17 (81\.50) (2\.40) (24\.29) (0\.00) (108\.19) "Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. v Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local govermment units\. -23 - Project Financin b Com ponent (in US$ million e uivalent) Civil Works 3 ;80 0\.40 _ __ 2\.54 0\.31 66\.8 77\.5 0\.0 Equip\. and Spare Parts 3\.50 0\.10 2\.50 0\.37 71\.4 370\.0 0\.0 Vehicles and Spare Parts 5\.10 0\.10 2\.94 0\.02 57\.6 20\.0 0\.0 Copra Improvement 4\.90 2\.00 1\.30 0\.00 0\.10 1\.20 0\.0 5\.0 92\.3 Research 0\.30 0\.00 0\.00 0\.0 0\.0 0\.0 Extension and Training 5\.50 2\.70 0\.00 49\.1 0\.0 0\.0 Technical Assistance 0\.40 1\.21 0\.00 302\.5 0\.0 0\.0 Farm Inputs 89\.90 10\.00 82\.26 20\.87 91\.5 208\.7 0\.0 Increm\. Operating Costs 8\.40 19\.00 14\.04 15\.11 167\.1 79\.5 0\.0 Total 121\.80 31\.60 1\.30 108\.19 36\.78 1\.20 88\.8 116\.4 92\.3 Note: (i) Government financing at apparaisal of US$31\.60 million excludes hired labor and local materials cost of US$21\.9 rmillion, which was expected to be financed by farmer beneficiaries\. In addition, inmputed incremental family labor cost of USS33 million equivalent was estimated at appraisal (ii) Government financing at project completion of US$36\.78 mnillion excludes hired labor cost, financed by farmer beneficiaTies\. (iii) The cofinancier's contnbution of US$1\.20 million equivalent atproject completion is by DFID (formerly ODA)/ Natural Resources Internaional Ltd, (E820,900, of which £146,192 was for laboratory equiprment and two vehicles, and the rest for consultancies, training, a workshop and extension materials)\. (iv) The costs of Research and Extension and Training in the above table are not comparable to those in the first table on Project Cost due to inclusion of civil works, vehicles, equipment farm inputs and incremental operating costs in different components in the first table\. -24 - Annex 3: Economic Costs and Benefits (Indicate Currency, units and base year) l' 13 ERR ~~26 18 31\.347 19,042 Note: Th appraisal increment14 tns/hadNP have 1b,28d 12,071 10 0 ~53 39 4,565 8,589 ;3;~~9 (Included wit\.h 18,168 1 1,272 W iWKW l Peso 997 Mill\. Peso 3,284 Mill\. n\.a\. n\.a\. S \| ! E ~Peso 7,452 Mill Peso 7,156 Mill\. n\.a\. n\.a\. ^ iM a a ~~~~40% 32% n\.a\. n\.a\. Nlote: 'Fhe appraisal incremental returns/ha and NPV have been converted to 1999 constant terms using the consumer price index\. - 25 - Annex 4\. Bank Inputs (a) Missions:\. Ste ofPrectCyce No\. cfProe n ilty Perfor:* ce R ati (e\.g\. 2 cnmss M4 t\. Ipeetto vlpn Identification/Preparation 2 TC, Ec S S Jan\. 88 Appraisal/Negotiation June/July 89 4 TC,Ec,FA,P S S Supervision Aug\.90 3 TC,L,Proc Nov/Dec 90 1 TC S HS Jul-91 2 TC,P U S Nov-91 2 TC,C S HS Aug/Sept\. 92 2 TC,C S S Jan/Feb 93 2 TC,FA S HS Aug/Sept\. 93 2 TC,C U HS Jan/Feb 94 1 TC U HS Aug/Sept\. 94 2 TC,C U S Jan/Feb 95 1 TC U S Aug/Sept\.95 2 TC,FA HU U April/May 96 3 Ec,AF,C U U Mar/April 97 3 Ec,AF,C S S Oct\. 97 2 Ec,C S S Mar\.98 2 Ec,C S S Sept\. 98 3 Ec,C,FA S S Mar\. 99 2 Ec,C S S Aug/Sept\.99 3 Ec,C, Proc S S ICR Feb\.2000 3 Ec (2) C S S Speciality: TC = Tree Crops Specialist Ec= Economist FA = Financial Analyst P = Processing Specialist L = Loans Officer Proc = Procurement Specialist AF = Accounts & Fin\. Specialist C = Coconut Specialist - 26 - (b) Staff: Stage of Prject Cycle AcLatest Estimate No\. Staff weekcs USS (,1O) Identification/Preparation 159\.1 206\.7 Appraisal/Negotiation 119\.2 153\.5 Supervision 543\.1 738\.7 ICR 30\.0 40\.4 Total 851\.4 1,139\.30 Above includes Bank-financed and trust fund consultants\. - 27 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Z Macro policies OH OSUOM ON * NA N Sector Policies O H OSUOM O N * NA Z Physical O H SUOM O N O NA Z Financial O H SUOM O N O NA O Institutional Development 0 H * SU O M 0 N 0 NA Z Environmental O H OSUOM O N * NA Social Z Poverty Reduction O H * SU O M ON O NA N Gender O H OSUOM O N * NA O Other (Please specify) N Private sector development 0 H O SUO M 0 N 0 NA FZ Public sector management 0 H O SU M 0 N 0 NA O Other (Please specify) Achievement of Objectives: relates to the objectives specified in the SAR Outputs by Components: relates to the outputs specified in the SAR - 28 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending OHS OS OU OHU * Supervision *HS OS OU OHU Z Overall OHS OS OU O HU 6\.2 Borrower performance Rating F Preparation O HS O S O U O HU Z Government implementation performance 0 HS 0 S 0 U 0 HU Z Implementation agency performance 0 HS 0 5 0 U 3 HU Z Overall OHS OS 0 U O HU -29 - Annex 7\. List of Supporting Documents Back-to-Office Report of the ICR Mission (March 27, 2000) Aide Memoire of the ICR Mission (March 27, 2000) Yield Impact Assessment of the SCFDP (UP, Los Banos, July 1997) A Study on the Sustainability of the Rehabilitation Component of the SCFDP (RICEDFI, November 1999) Replanting Survey (PCA, 1997) Second Replanting Survey (PCA, 1999) Financial and Economic Analysis Technical Aspects of the Small Coconut Farms Development Project QAG Report on the First (FY97) Rapid Supervision Assessment (September 29, 1997) - 30 -	REVIEW
P009973	Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 18765 IMPLEMENTATION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-TN) December 28, 1998 Infrastructure Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS Currency Unit Indian Rupee (Rs\.) US$1\.00 Rupee 13 (Appraisal 1988) US$1\.00 = Rupee 42\.5 (As of December 28, 1998) GOVERNMENT FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS ADT - Average Daily Traffic ARAN - Automated Road Analyzer BOT - Build-Operate-Transfer BRCD - Bihar Road Construction Department ERR - Economic Rate of Return GOB - Government of Bihar GOI - Government of India GOM - Government of Maharashtra HDM - Highway Design and Maintenance Standards Model III ICB - International Competitive Bidding ICR - Implementation Completion Report IRI - International Roughness Index MBIU - Mobile Bridge Inspection Unit MDR - Major District Roads MOST - Ministry of Surface Transport NlH - National Highways NPV - Net Present Value PIU - Project Implementation Unit PMS - Pavement Management System PWD(s) - Public Works Department(s) R&R - Resettlement and Rehabilitation Rs - Indian Rupee SAR - Staff Appraisal Report SH - State Highways SRP - States' Road Project UP - State of Uttar Pradesh VR - Village Roads Vice President Mieko Nishimizu Country Director Edwin R\. Lim Sector Manager Frannie Humplick Task Leader Yoneo Oka FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) Table of Contents Page No\. Preface \.i Evaluation Summary \. ii Introduction and Project Objectives \. ii Implementation Experience and Results \. iii Summary of Findings, Future Operation, and Key Lessons Learned \.v PART I - PROJECT IMPLEMENTATION ASSESSMENT A\. Statement /Evaluation of Objectives \. B\. Achievement of Objectives \.2 C\. Major Factors Affecting the Project \.6 D\. Project Sustainability \.7 E\. Bank Performance \.8 F\. Borrower Performance \.8\.8 G\. Assessment of Outcome \.9 H\. Future Operations \.10 I\. Key Lessons Learned \.10 PART II - STATISTICAL TABLES Table 1 Summnary of Assessment \.13 Table 2 Related Bank Loan/Credits \.14 Table 3 Project Timetable \.14 Table 4 Loan/Credit Disbursements: Cumulative and Actual \.15 Table 5 Key Indicators for Project Implementation \.16 Table 6 Key Indicators for Project Operation \.18 Table 7 Studies Included in Project \.18 Table 8A Project Cost \. 19 Table 8B Project Financing \. 19 Table 9 Economic Costs and Benefits \. 20 Table 10 Status of Legal Covenants \. 21 Table 11 Compliance with Operational Manual Statements \. 22 Table 12 Bank Resources: Staff Inputs \. 22 Table 13 Bank Resources: Mission \. 23 APPENDICES Appendix A The ICR Mission's Aide Memoire \. 24 Appendix B Borrower's Contribution to the ICR \. 36 Appendix C Economic Re-Evaluation \. 62 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization i IMPLEMENTATION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) PREFACE This is the Implementation Completion Report (ICR) for the States' Road Project in India, Loan No\. 2994-IN in the amount of US$170 million and Credit No\. 1959-IN in the amount of SDR 62\.2 million (US$80 million equivalent)\. The project was approved on October 20, 1988 and made effective on March 2, 1989\. The loan and credit were closed on June 30, 1998, after four extensions to the original closing date of June 30, 1995\. With the exception of some of the Bihar sub-components - the Bhagalpur bridge, approach roads and supporting consultant services - all other project components were closed on June 30, 1996, after two extensions (October 31, 1995 and June 30, 1996)\. The Bihar components were granted two further extensions (June 30, 1997 and June 30, 1998)\. Disbursements were completed on December 28, 1998 and July 12, 1994, for the loan and credit respectively\. The credit was fully disbursed, and the total amount disbursed under the loan and credit was US$188,665,924\. Three cancellations of the loan balance took place during the project totaling US$66,624,998\. The first two cancellations were for the purpose of reducing the scope of the project and occurred on May 1, 1993 (US$55,000,000) and November 20, 1996 (US$6,409,545)\. The third cancellation, representing the remaining balance, took place on December 28, 1998 (US$5,215,453)\. The ICR was prepared by Yoneo Oka (ICR Task Leader, SASIN), Fabio Galli (Financial Analyst, SASIN), and Rodrigo Archondo (Highway Engineer, Consultant)\. The ICR was reviewed by all required reviewers, and Peter Long (Highway Engineer, Consultant) served as the peer reviewer\. Preparation of this ICR started during the Bank's final supervision/ICR mission in June 1998\. It is based on documents in the project files, and material submitted by the Borrower\. The Borrower contributed to the preparation of the ICR by providing information to the ICR mission in the field\. In addition, the Borrower (the implementing agencies) provided comments on the report, which are given in Appendix B of this ICR\. ii IMPLEMENTAION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) EVALUATION SUMMARY Introduction 1\. The total length of the Indian road network (based on 1996 figures) is approximately 3,321,000 km; of which National Highways (NHs) represent 35,000 kmi, State Highways (SH) 135,000 km, other Public Works Department (PWD) Roads including Major District Roads (MDRs) 764,000 km, and the remaining 2,387,000 km are classified as other roads'\. Over the last 30 years, the road network has become the dominant mode of transportation in India for both freight and passengers\. In addition, road traffic in the last decade has grown at a rate of nearly 10 percent per year, and at present, the road network carries 60 percent of all freight traffic (ton/km) and 80 percent of all passenger traffic (passenger/km)\. 2\. In March 1987, the Government of India (GOI) expressed its interest in obtaining Bank assistance for the improvement of the core state road network (SHs and MDRs)\. The core state road network is used to classify an intermediate category of roads that falls between national highways and rural roads, based on traffic volume and function\. The States' Road Project was the Bank's first lending operation to focus on the improvement of India's core state road network\. Project Objectives 3\. The principal objectives of the project were to: (i) improve the quality of investment planning for India's highways and to rationalize the financing, planning, and implementation of road maintenance/improvement; and (ii) assist in rectifying the extensive and long-standing deficiencies in the condition, structure, and capacity of the road networks of the selected states\. 1 Other roads: 1,022,000 km of Panchayat Raj Roads; 211,000 km of Urban Roads; 916,000 km of Rural Roads; and, 238,000 km of Project Roads (those built and maintained by the forestry, irrigation, electric power and other departments of the govermnent)\. Hii 4\. At appraisal, the project included the following components: (i) civil works for the widening, strengthening, and improvement of road networks in the four States2; (ii) procurement of specialized equipment; (iii) staff training and technical assistance; and (iv) consultant services for studies and supervision of civil works\. Implementation Experience and Results 5\. Civil works, including the improvement (widening and strengthening) of state roads to 7 meters (width of carriage-way) as well as the construction of the Bhagalpur Bridge and its approach roads, represented 86 percent of the total cost of the project\. The nnajor factors affecting the timely implementation of civil works were: (i) the PWDs implementing the project were unfamiliar with the Bank's procurement practices and were not fully equipped to follow the Bank's procurement guidelines; (ii) ownership of the project by the PWDs was weak due to the multi-state nature of the project; and (iii) the contractors' poor physical and financial performance delayed contract implementation\. These and other factors resulted in major delays in the implementation of project components\. 6\. The performance ratings reflect the poor implementation results of the physical components of the project\. The implementation ratings by state are: satisfactory in Maharashtra, marginally satisfactory in Rajasthan, unsatisfactory in Uttar Pradesh, and highly unsatisfactory in Bihar\. Of the 1,508 km of roads that were to be completed under the reduced roads improvement scope of the project, only about 1,293 km were actually completed\. Additionally, the construction of the Bhagalpur Bridge and its approach roads were not completed during the life of the project and are not expected to be completed until June 2000 at the earliest\. 7\. Implementation performance of the other project components was mixed\. By component, they are as follows: (i) procurement of specialized equipment was deemed highly unsatisfactory\. After long delays, only three out of the seventeen categories of equipment were actually procured; (ii) the training component was fully implemented; a total of 40 staff from the four State PWDs participated in six major training courses; (iii) the supervision consultancy services component was rated marginally satisfactory\. The international consultants generally provided satisfactory results in their performance, however the impact of their managerial and technical skills transfer to domestic 2In Bihar civil works included the construction of a new bridge across the river Ganges, and approximately 100 km of State Road improvements\. In Maharashtra, Rajasthan, and Uttar Pradesh, civil works included approximately 670 km, 870 km and 600 km respectively, of State Road improvements\. iv contractors and PWDs was lower than expected; (iv) the implementation of a Pavement Management System (PMS) study was judged marginally satisfactory\. By project closure, about 30,000 km of SHs and MDRs had been surveyed and inventoried under the study, but the PMS's operationalization has not taken place as planned; and (v) the Maharashtra PWD Organization Study was viewed as marginally satisfactory\. The study focused on the changing role of the PWD and the growing participation of the private sector in the transport sector\. In implementing one of the study's recommendations, the Government of Maharashtra established the Maharashtra State Road Development Corporation, which is in charge of Build-Operate-Transfer (BOT) projects in the State\. 8\. The economic analysis for the improvement of roads undertaken at appraisal included 23 individual roads\. These 23 roads (excluding the Bhagalpur bridge), represented 75 percent of the original estimated total project cost and their estimated combined ERR was 30\.4 percent\. At the conclusion of the project, 16 of the 23 roads were completed\. In order to more accurately reflect the ex-post results, the final economic analysis re-evaluated appraisal estimates to focus specifically on the 16 roads completed with project financing as well as on two roads that were completed in Maharashtra with the State's own resources\. The ex-post traffic, construction costs, and construction times were measured on these 18 roads\. The staff appraisal report (SAR) estimates that ADT is 3,000 for 1997, while the ICR estimates ADT for the same year at 4,800 (60 percent higher than the SAR estimate)\. The re-evaluated appraisal estimates average construction costs per kilometer in 1988 at Rs\. 1\.8 million, while the ICR estimates the average at Rs\. 2\.5 million (40 percent higher) for the same year\. The re-evaluated appraisal estimates the average construction period as four years, while the ICR estimates 6 years\. The project also experienced a two to three year delay in implementation\. Consequently, for an operation period of 10 years, the re-evaluated appraisal estimate gives an ERR and net present value (NPV) in 1988 values of 32 percent and Rs\. 6,000 million, and the ICR gives an ERR and NPV in 1988 values of 64 percent and Rs\. 9,000 million\. Despite road improvement costs that were nearly 40 percent higher and an overall implementation delay of four to five years, the 60 percent higher traffic volume in 1997 resulted in higher ERR and NPV (which reflect the economic benefits generated by the project's road components) than originally estimated by the SAR\. 9\. The construction of the Bhagalpur Bridge and its approach roads have not been completed, therefore, the ICR evaluation of this component is only for reference purposes\. The economic evaluation method employed in the ICR replicates the method used in the SAR\. The SAR estimates ADT at 3,000 for the year 2000, while the ICR estimate for ADT is 6,400 (110 percent higher) for the same year\. A traffic growth rate of 4\.5 percent after the year 2000 is assumed in the ICR analysis\. The SAR estimates the total cost of the Bhagalpur Bridge component in 1988 prices at Rs\. 689 million, while the ICR estimates the total cost at Rs\. 864 million (25 percent higher), also in 1988 prices\. The SAR estimates the construction period of the Bhagalpur Bridge component at four years, while the ICR estimate is 10 years (projected)\. As a result, for an operating period of 20 years, the SAR estimates the ERR and NPV as 20 percent and Rs\. 400 million, while the ICR estimates the ERR and NPV as 19 percent and Rs\. 260 million respectively\. This difference is due to the 25 percent higher construction costs and much longer construction period, which more than offsets the economic benefits regardless of the higher than projected growth in traffic volumes\. 10\. The Bank's performance during the project preparation and implementation phases was marginally satisfactory\. The rating takes into consideration the multi-state nature of the project and that the budgetary resources allocated for project supervision were most probably inadequate\. v However, during the project preparation phase, the Bank team did not accurately assess the implementation and financial capacity of the implementing agencies (PWDs), and more importantly, the capacity of the domestic construction industry\. Both of these oversights led to substantial delays during the project implementation phase\. 11\. Overall, the performance of the PWDs during project implementation was weak\. Major factors that hampered their performance were: (i) the frequent turnover of key PWD staff, (ii) the lack of familiarity with Bank procedures at the state level; (iii) poor institutional mechanisms that resulted in slow decision-making; and (iv) inadequate attention to project design\. Furthermore, weak inter-agency coordination and inadequate communication with the Bank also adversely affected project implementation\. The cumulative effect of this was an average delay in completion of the state roads improvement component of four to five years\. Summary of Findings, Future Operations, and Key Lessons Learned 12\. Implementation of the physical components can be considered satisfactory in Maharashtra, marginally satisfactory in Rajasthan, unsatisfactory in Uttar Pradesh, and highly unsatisfactory in Bihar\. The state roads that were improved under the project serve as major intra and inter state trunk roads\. The purpose of these trunk roads is to carry heavy inter state traffic loads, and the project succeeded in reducing traffic congestion to a certain degree\. However, in some cases, roads that were improved under the project have already begun to deteriorate due to inadequate funding for road maintenance and poor construction quality\. 13\. The enhanced traffic carrying capability of the roads improved under the project should continue to reduce traffic congestion for the foreseeable future\. In the State of Maharashtra, funding has been secured and operational plans have been designed to address the maintenance of the state road network based on the experience gained during implementation and by utilizing organizational units that were established under the project\. 14\. Project ownership and quality at entry are essential factors in ensuring the successful implementation of a complex multi-state project\. With this in mind, all project preparation activities such as: (i) techno-economic feasibility studies; (ii) detailed engineering designs; (iii) resettlement and rehabilitation plans; (iv) environmental studies; and (v) site readiness, including land acquisition and utility removal, need to be completed well before the civil works contracts are initiated on the ground\. 15\. The preparation and implementation of a multi-state project like the SRP has proven to be ineffective as a result of a reduced sense of ownership by the participating states and the inadequate supervision resources provided by the Bank\. 16\. The inefficient organizational structure and weak implementation capabilities of some of the PWDs was a major reason for poor quality at entry and directly contributed to the partial achievement of the development objectives\. The early formation of an exclusive and empowered project implementation unit (PIU) with strong institutional capacity should help to ensure quality at entry\. Furthermore, up-front policy and institutional strengthening of state PWDs as well as intensive training in contracting and project management skills is critical\. vi 17\. The use of internationally experienced supervision consultants was introduced on a pilot basis under the project\. Their performance was mixed due to some resistance by the PVVDs in accepting the concept of independent supervision consultants, and the consultants' lack of familiarity with operating in India\. Internationally experienced supervision consultants can be effective only if implementing agencies are fully committed to using them effectively\. 18\. Adequate maintenance funding in conjunction with improved maintenance planning is absolutely essential in order to ensure the sustainability of project outcomes\. Effective road maintenance management, including planning and budgeting for the roads, is the key to the sustainability of project roads and the entire road network\. 19\. Without adequate arrangements for the repair and part replacement of equipment and machinery, the sustainability of the procurement component for specialized equipment in any project will be uncertain\. In future, the implementation of such a component should be considered from a broader perspective, including perhaps, the development and promotion of the private sector, which would help to ensure the sustainability of this type of component\. I IMPLEMENTATION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) PART I: PROJECT IMPLEMENTATION ASSESSMENT A\. STATEMENT/EVALUATION OF OBJECTIES 1\. After a break of nearly 20 years in lending to the roads sub-sector, the GOI finally agreed to use International Competitive Bidding (ICB) for Bank-funded roads projects\. As a result, lending resumed with the Bihar Rural Road Project (Credit 1072-IN, 1980), the National Highway Project (Loan 2534-IN, 1985), and the Gujarat Rural Roads Project (Credit 1757-IN, 1987)3\. The Board approved the States' Road Project (SRP) in 1988, initiating the first multi-state road project in India\. To ensure that a wide geographic dissemination of social and economic equity was generated by activities under the project, the states of Bihar, Maharashtra, Rajasthan, and Uttar Pradesh (UP) were selected to participate\. Objectives 2\. The project's development objectives were to extend policy and institutional improvements to the State level for the road sub-sector\. In particular, the project aimed to: (i) improve the quality of investment planning in highways and to rationalize the financing, planning, and implementation of road maintenance/improvement through the application of a systematic maintenance management program; and (ii) assist in rectifying the extensive and long-standing deficiencies in the condition, structure, and capacity of the road networks of the selected states by the introduction of larger construction contracts of sufficient individual size to encourage local firms to mechanize, but which, when grouped, would attract international interest\. 3\. To achieve the project development objectives, the project included the following main components: (i) civil works (road improvements) to improve and widen to two lanes of about 2,300 km of mostly single-lane roads in the four States\. (In Bihar, a major bridge across the river Ganga and about 100 km of State roads; in Maharashtra, about 670 km of State roads; in Rajasthan, about 870 km of State roads; and, in UP, 600 km of State roads); (ii) procurement of specialized equipment to assist the four States in monitoring the condition and usage of their road networks; 3The National Highway Project was rated unsatisfactory while the Gujarat Rural Roads Project was rated satisfactory\. 2 (iii) staff training and technical assistance which would emphasize the planning, design, and implementation of projects as well as developing the skills of road maintenance field staff; and (iv) consultant services for the introduction of the Pavement Management Systems (PMS) in each state, for supervision of one of the project contracts in each\. State, and in Maharashtra, for an organizational study of the State PWD\. B\. ACHIEVEMENT OF OBJECTIVES 4\. The development objectives of the project were only partially achieved due to a combination of delays, the partial attainment of the physical components, and the weak design and implementation of the non-physical components of the project\. The physical components of the project (state road improvements) were largely successful in introducing large-scale mechanized construction techniques, the input of supervision consultants, and larger contract packages at the State level\. However, due to the weak performance of the PWDs and various contractors, only about 1,293 km of state roads were improved (with substantial delays) against a stated staff appraisal report (SAR) target of 2,353 km\. Furthermore, the construction quality and design specifications of some of the roads were not adequate to meet the growing traffic volume needs that were to be carried by these roads\. The attainment of the non-physical objectives of the project did not meet project expectations for a variety of reasons\. First, the design of thp actual project components did not fully support the attainment of the stated non-physical objectives of the project\. There was a clear contradiction between the stated objectives in the SAR and the design of the project components, which did not enable such objectives to be obtained\. Second, the implementation of the non-physical components of the project (including the introduction of PMS, procurement of e quipment, and limited training of PWD staff) experienced delays and was deemed only partially successful by end of project\. 5\. Improvement of State Roads\. The implementation of the civil works component, which represented 86 percent of the original value of the project, was rated satisfactory in Maharashtra, marginally satisfactory in Rajasthan, unsatisfactory in Uttar Pradesh, and highly unsatisfactory in Bihar\. The civil works component included the widening and strengthening of roads (road improvements) from a single and/or intermediate lane to a width of 7 meters\. (Some stretches of road also included hard shoulders\.) As a result of the project, 1,293 km4 of roads have been widened and strengthened, out of the 2,253 km5 targeted in the SAR\. Financially, with respect to road improvements, 99 percent6 of the reduced scope of work value was disbursed\. Details of the implementation of the physical component in each State are described in the following paragraphs\. 6\. Road Improvements and Bridge Constructions in Bihar\. Implementation was determined to be highly unsatisfactory, since none of the components in Bihar vvere completed by June 1998\. Due to a wide variety of reasons, including poor planning and problems associated with land 41293 km of the roads were substantially completed by June 30, 1996\. Some other roads that were dropped were funded and completed by PWDs\. See table 5\. 5 See table 5: Key Indicators for Project Implementation\. 6 With regard to total disbursement of civil works, IDA: $81,322,775 out of $81,322,775 and IBRD: $96,742,092 out of $96,857,721\. 3 acquisition and the removal of utilities, the road improvement sub-component never began, and it was officially dropped from the project in June 1996\. Construction of the Bhagalpur bridge and its approach roads commenced in earnest only in 1993, and were far from completion by the time the project was finally closed on June 30, 19987\. 7\. Road Improvements in Maharashtra\. Implementation was determined to be satisfactory\. Of the planned 648 km of State Roads slated for improvement, 453 km, including an additional 8\.7 km for the Jalna Bypass were substantially completed by June 1996\. A further 204\.4 km, which were dropped from the project, due to a shortage of bituminous materials and poor performance of the contractors, were completed by the PVVD using its own resources by June 1997\. All civil works components were therefore fully completed\. By June 1996 when the Maharashtra component of the project was closed, the overall disbursement for civil works was 122 percent (in US$) of the original allocation\. 8\. Road Improvements in Rajasthan\. Implementation was determined to be marginally satisfactory\. Of the planned 868 km of State Roads slated for widening, 641 km were substantially completed by June 1996\. During the procurement process, the high price of bids and evidence of two instances of bid tampering forced the contracts to be re-packaged\. Consequently, the number of contracts was reduced from eight to six\. Of the six remaining contracts, one road component was cancelled and another contract was dropped from the project, due to poor contractor performance, leaving the construction of these roads incomplete\. The overall disbursement for civil works was 138 percent (in US$) of the original allocation\. 9\. Road Improvements in Uttar Pradesh\. Implementation was determined to be unsatisfactory\. Of the planned 600 km of State Roads slated for widening, only 198 km were substantially completed by June 1996\. During the procurement process, the contracts were re- packaged and reduced from nine to seven, due to the high price of bids\. Of the seven remaining bids, three contracts were not awarded and were cancelled from the project, due to the high price of the bids\. In one instance, poor contractor performance resulted in the expulsion of the contractor by the PW7D and the work was never completed\. The overall disbursement for civil works was 46 percent (in US$) of the original allocation\. 10\. Procurement of Specialized Equipment\. The implementation of the equipment procurement component was determined to be highly unsatisfactory\. Seventeen categories of equipment were initially identified to be procured in order to enhance the PWDs' institutional capacity for road construction, monitoring and maintenance work\. After substantial delays, only three categories of equipment were procured\. One of the three categories of equipment (four sets of Mobile Bridge Inspection Units (MBU)), was procured only after June 1996, which was after the closing date of the component\. The total disbursement for this component was only 11 percent (in US$) of the original allocation\. 11\. Training\. The training component of the project was fully implemented and determined to be satisfactory\. A total of 40 staff, ranging from assistant executives to superintendent engineers 7The Bhagalpur bridge (4,367 m concrete viaduct, crossing the Ganges River) and its approach roads (11 kin) are expected to be completed by June 2000\. As of June 30, 1998, physical and financial progress were rated 87 percent an 83 percent respectively\. 4 from the four State PWDs, participated in six training courses\. However, the impact-of this component was less than expected due to the frequent turnover among involved staff\. 12\. Supervision Consultant Services\. The supervision consultant services component of the project was determined to be marginally satisfactory\. As part of the project each State procured an international supervision consultant to supervise one road construction contract\. This approach was used in order to facilitate the introduction of international standards for quality control 'and contract management of large road contracts\. In Bihar, proof consultants were procured to review the design of the Bhagalpur Bridge\. In general, the supervision consultants provided satisfactory services\. However, their impact, in terms of the transfer of international standards to the PVVDs and contractors, was limited due to the lack of acceptance of the concept of independent project supervision consultants by some of the concerned PWDs\. 13\. Maintenance Network Management System Study\. The implementation of this study was determined to be marginally satisfactory\. The Maharashtra PWD took the initiative to manage the contract, while the Ministry of Surface Transport (MOST) chaired the steering committee\. The main objective of the study was to establish a maintenance network management system in each state, based on road inventories and conditions including traffic and the maintenance costs\. For this study, an ARAN vehicle mounted system was procured and approximately 30,000 km\. of State roads in the four States were surveyed\. The PMS hardware and software packages were installed in each PWD\. After the road inventory survey, the Rajasthan PWD established a working cell to manage the PMS and has conducted some surveys with the ARAN vehicle to update the database\. The Maharashtra PWD also used the PMS to maintain and update their database\. HIowever, the PWDs in Uttar Pradesh and Bihar have yet to fully utilize all aspects of the PMS\. The study was considered successful, but it has only achieved its partial impact in Rajasthan' and Maharashtra\. 14\. Maharashtra PWD Organization Study\. The implementation of the study was determined to be marginally satisfactory\. The Maharashtra PWD Organization study focused on the changing role of the PWD and the increasing participation of the private sector, including consultants and contractors, in the implementation of road infrastructure projects\. The Government of Maharashtra implemented one of the study's recommendations and established the Maharashtra State Road Development Corporation to oversee Build-Operate-Transfer (BOT) projects in the State\. The corporation has recently undertaken the BOT based Bombay-Nasik Expressway project\. 15\. The Economic Re-evaluation of the Road Improvement Sub-components\.9 The economic analysis in the SAR covered 23 individual roads (excluding the Bhagalpur Bridge) that accounted for 75 percent of the original total project cost\. The economic analysis conducted in the Implementation Completion Report (ICR) covers only 18 roads10 including two roads that were completed by the Maharashtra PWD using its own resources\. In order to reflect ex-post results, the 18 roads were also re-evaluated under ex-condition (re-evaluated SAR)\. In the analysis, all costs and benefits were converted into Indian Rupees (Rs) at 1988 prices\. The operational period of the roads was assumed to be 10 years in the case of both the re-evaluated SAR and the ICR\. 8The Rajasthan PWD is suffering from ARAN's continual breakdown and lack of spare parts\. 9See Appendix C\. Economic Re-Evaluation\. 10 See table 5: Key indicators for Project Implementation\. 5 16\. The results of the analysis are summarized in the table below\. The values for the average ERR and net present value (NPV) in the ICR are 63\.6 percent and Rs\. 9,142 million respectively, and in the re-evaluated SAR they are 32\.4 percent and Rs\. 6,150 million respectively\. These results indicate that the economic benefits of the roads completed are much higher than what was originally estimated by the SAR\. In relation to SAR estimates, the growth in actual traffic levels (1\.6 times above SAR estimates) more than offset the increased construction costs (1\.4 times\.above SAR estimates)\. In addition, construction initiation delays of two to three years and completion delays of two years (an actual total of six years as opposed to four years as estimated in the SAR), produced a higher than expected ERR/NPV\. Although the ICR shows a higher than estimated ERRINPV for the project when compared to the SAR, the construction costs in Rs\. terms are substantially higher than estimated\. These higher costs were due to: (i) actual bid prices that were higher than PWD estimates; (ii) poor designs that resulted in major re-designs, quantity changes, and adjustments to variation orders; and (iii) delays in the implementation of project components resulting from many factors including changes in variation orders\. Economic Re-evaluation for the Roads Completed Average ADT Average cost/km Average cost/km ERR NPV \| (1997) (M 1988 Rs\.) (1988 US$) (percent) (M 1988 Rs\. SAR 3,055 (1\.00) 1\.86 (1\.00) 140,000 30\.4 NA Re-evaluated SAR 3,055 (1\.00) 1\.86 (1\.00) 140,000 (1\.00) 32\.4 (1\.00) 6,150 (1\.00) ICR 4,794 (1\.63) 2\.45 (1\.37) 190,000 (1\.37) 63\.6 (1\.96) 9,142 (1\.49) the average of ratio of individual road\. 17\. Economic Re-evaluation for the Bhagalpur bridge Sub-component The results for the Bhagalpur Bridge are shown in the table below\. Since the bridge and its approach roads have not been completed, the values are for reference purposes only\. In the table, the ICR scenario is considered as the most realistic scenario\. The project cost was listed in the SAR as Rs\. 689 rnillion and Rs\. 864 million (both in 1988 prices) was assumed as the projected completion cost in the ICR\. In the re-evaluated SAR scenario, which assumes a six year delay in implementation and the same construction cost, the ERR increased to 23\.8 percent from 19\.6 percent and the NPV decreased to Rs\. 257 million from Rs\. 396 million (1988 prices)\. In the ICR scenario, the ERR dropped to 18\.6 percent from 23\.8 percent while the NPV was Rs\. 256 million (1988 prices), which was nearly the same as the re-evaluated SAR figures\. Economic Re-evaluation for the Bhagalpur Brid e Average Cost Cost ERR NPV ADT (2000) (M 1988 (M 1988 US$) (percent) (M 1988 Rs) _ _ _ _ _ _ ~Rs) SAR 2,982 (1\.00) 689 (1\.00) 53\.1 (1\.00) 20\.2 (19\.6) NA (396) Re-evaluated SAR* 2,982 (1\.00) 689 (1\.00) 53\.1 (1\.00) 23\.8 257 ICR (4\.5 percent traffic growth 6,353 (2\.13) 864 (1\.37) 66\.6 (1\.37) 18\.6 256 rate, year 2000 onward**) recalculated with minor corrections to SAR\. : construction cost, period, and traffic are the same as that of SAR, but 6 years delay in implementation\. traffic growth rate is the same as that of SAR until 1999\. 6 C\. MAJOR FACTORS AFFECTING THE PROJECT Factors not Generally Subject to Government Control 18\. For several months, the petroleum, oil, lubricant (POL) product shortages and price increases caused by the Gulf War negatively affected the progress of the civi]l works component in several States and in particular in Maharashtra\. Beginning in October 1990, and as a consequence of the Gulf War, the Bank decided to increase the percentage of civil works expenditures financed under the project from 60 to 90 percent\. 19\. Exceptional rains during the 1996 Monsoon season damaged two partially completed well foundations (P3 and P4) that were being constructed for the Bhagalpur Bridge and its approach roads\. As a result of this, and other factors such as the law and order situation in the Bhagalpur area (it was alleged that a contractor was threatened by local gangs making it difficult for him to work), the Bhagalpur Bridge and its approach roads will not be completed until June 2000 at the earliest\. Factors Generally Subject to Government Control 20\. The procurement of specialized equipment was considerably delayed and in one case (procurement of 4 MBIU's) was further delayed due to a major procurement dispute between two of the bidders\. Of the 17 categories of equipment to be procured under the project, only three were procured five to six years behind schedule\. Under the procurement arrangements, MOST acted on behalf of the four States and due to this cumbersome procurement arrangement, much time was wasted on inter-agency communication and extended decision-making\. For example, nearly two years were spent preparing the specialized equipment specifications for use in Indian conditions\. 21\. Cash flow problems at the state level had an intermittent affect on the payment flow to contractors, which in turn affected project implementation\. In the case of Bihar, payments to the contractor working on the Bhagalpur bridge were delayed by several months during the 1996 state election period\. In addition, GOI did not release in a timely fashion to the States the stipulated advance for externally aided projects\. This situation farther exacerbated the financial strain on the State governments, especially during the crucial April-June period of each year\. Factors Generally Subject to Implementing Agency Control 22\. The average length of the procurement sequence (from pre-\.qualification to notification of award) was two to three years\. This time period was considered excessive in comparison to the 10 months originally estimated for these activities\. The excessive delays were the result of: (i) the PWDs lack of familiarity with ICB; (ii) some resistance in accepting ICB; (iii) a long decision-making process/chain within State governments; (iv) long delays in finalizing the pre-qualification documents; (v) frequent turnover of key PWD staff, (vi) poor communication with the Bank; and (vii) a weak sense of ownership by the PWDs\. 23\. The average implementation period for the 16 civil works contracts that were completed under the project by June 1996 was approximately six years compared to a contractually stipulated period of three to four years\. This delay can be largely attributed to poor project preparation, including: (i) poor topographical surveys and engineering designs; (ii) insufficient site readiness regarding land acquisition; and (iii) the removal of trees and utilities from the right of way\. Most of 7 the engineering designs were prepared in-house by the PWDs\. These were of poor quality, often inaccurate, and resulted in extensive re-surveying and re-design\. In some cases, the contractors were forced to re-design after the contracts were awarded\. 24\. The contract size did not appear to be large enough to attract both internationally experienced and large domestic contractors\. Although the tenders were designed to target not only local but also internationally experienced contractors, all civil works contracts funded under the project were awarded to small to medium sized domestic contractors\. At the time the contracts were awarded, the small to medium sized local contractors were inexperienced as well as technically, financially, and managerially weak\. Although the contracts encouraged local contractors to mechanize and improve construction methods, their inexperience and lack of preparedness caused delays in civil works implementation\. D\. PROJECT SUSTAINABILITY 25\. The sustainability of the approximately 1,293 km of State roads improved under the project is dependent upon: (i) adequate monitoring of road conditions by the PWDs to address the priority maintenance needs of the road network; (ii) the availability of adequate maintenance funding; and (iii) the efficient use of the scarce resources available for maintenance\. Although all four PWDs involved in the project are fully aware of the importance of road maintenance in order to preserve the value of road assets, institutional and financial capabilities are generally inadequate to sustain the maintenance effort required to preserve both the roads improved under the project and the core state road network\. However, in the case of Maharashtra, the State government is trying to improve maintenance funding as mentioned in its operational plan\." Additionally, in the case of Rajasthan, as part of the conditions to prepare a follow-up state road project, the State government has pledged to eliminate the existing maintenance funding gap within the next five years which is an ambitious target to achieve\. 26\. The sustainability of the equipment and machinery procured is unlikely to be satisfactory\. Under the project, the MBIU, Dipstick Road Profilers, and Bitumen Distributors were procured for the four States\. Likewise the ARAN vehicle as well as the dTIMS and dROAD software packages, were procured under the PMS study\. All of these items, except for the MBIU12, are being used by the respective PWDs\. However, in the long run, since most of the equipment procured under the project is not mass-produced and after-sales service is fairly limited, it will be extremely difficult to keep the equipment running\. For example, the ARAN vehicle is made in Canada and there is no authorized dealer or after-sales support in India\. " See Appendix A\. The ICR Mission Aide Memoire\. 12 Maharashtra PWD received MBIU and uses it\. Rajasthan, Uttar Pradesh, and Bihar did not receive MBIUs as of June 1998\. 8 E\. BANK PERFORMANCE 27\. The Bank's performance was generally satisfactory in identifying the project, and unsatisfactory in project preparation and appraisal\. Considering the fact that it was a multi-state project and budgetary resources provided for supervision were inadequate, the supervision effort was rated as marginally satisfactory\. Project preparation did not adequately take into account the actual implementation and financial capacity of the implementing agencies (PWDs) and the local contracting industry, both of which made the project very difficult to implement and supervise\. This over- estimation of the local capacity to implement a complex multi-state road project in India also plagued, to an even greater extent, the implementation of the National Highway Project (Loan 2534- IN) which closed on December 31, 1993\. In retrospect, a more thorough and realistic assessment of the implementing agencies' institutional capacity to implement a complex multi-state project should have been conducted\. This would have helped to ensure better quality at entry, and consequently, greater success during project implementation\. 28\. Two preparation missions and one appraisal mission were carried out by the Bank, which focused mainly on project design and involved the discussion of basic procurement issues, contract size, supervision method, proposed studies, and training\. In the project design phase, the civil works components were selected on the basis of their techno-economic viability, which took into consideration the need to minimize land acquisition, resettlement, and encroachment in the right-of- way\. In addition, taking into account the multi-state nature of the project, the Bank team made an adequate effort to ensure the necessary commitment and cooperation from both the GOI and the four States involved\. 29\. Even though a total of 24 supervision missions were fielded by the Bank, the supervision effort was probably inadequate considering that the multi-state nature of the project made it difficult to visit all four states during each supervision mission\. Furthermore, due to the poor performance of the Bihar components, a disproportionate amount of the supervision resources had to be allocated to supervise these components at the expense of the other project components\. Clearly, the Bank grossly over-estimated the budget savings that could be generated by implementing a multi-state road project in India\. 30\. Due to the continued implementation problems of the Bihar components, Bank management took an active role in trying to resolve, at the highest level of both the GOB and the GOI, the issues affecting the implementation of these particular sub-components\. As a direct result of Bank management involvement it was decided to extend only some of the Bihar sub-components of the project for an additional two years, after the bulk of the project components were closed on June 30, 1996\. F\. BORROWER PERFORMANCE 31\. Borrower performance has been generally weak during project implementation\. Other factors like the frequent turnover of key PWD staff, lack of familiarity with Bank procurement procedures at the state level, slow decision-making processes, and inadequate attention to project design contributed to the relatively weak implementation performance by the Borrower\. 9 32\. During the early stages of project implementation, the lack of familiarity with ICB and other Bank procedures by the implementing States and MOST (also Director General of Supply and Disposal) delayed the procurement of contractors, supervision consultants, and equipment\. As a result, in most cases an average of at least two years elapsed before the procurement and award of civil works contracts were finalized\. 33\. After the civil works contracts were awarded, poorly detailed engineering designs, inadequate site readiness, and weak pre-qualification criteria often led to very slow initial construction progress\. Supervision of most of the civil works was done internally by PWDs engineering staff with mixed results\. These mixed results were due to the inadequate experience of the PWD staff in supervising large civil works contracts and in quality control management, both of which negatively affected the speed and implementation of the civil works contracts\. Furthermore, weak oversight by MOST in coordinating the procurement of equipment and in implementing the PMS resulted in major delays in the implementation of these two components\. 34\. The inexperience and inadequate implementation capacity of the PWDs, the long chain of command and cumbersome decision-making process, and the high turnover of key staff hampered the Borrower's ability to successfully implement the project\. Furthermore, weak inter-agency coordination and inadequate communication with the Bank also adversely affected project implementation\. 35\. Finally, the implementing agencies did not consistently meet the reporting requirements of the project in a timely fashion\. In addition to the poor reporting formats used, there were also delays in the submission of audit reports and quarterly progress reports to the Bank by all States and particular by the State of Bihar\. G\. ASSESSMENT OF OUTCOME 36\. The implementation outcome of the physical components of the project can be considered satisfactory in Maharashtra, marginally satisfactory in Rajasthan, unsatisfactory in Uttar Pradesh, and highly unsatisfactory in Bihar\. With a one year Loan/Credit extension, the majority of civil works contracts were substantially completed in the states of Maharashtra, Rajasthan, and Uttar Pradesh\. However, there were considerable delays in the procurement and the full execution of some of the civil works contracts\. The roads improved under the project serve as major trunk roads carrying heavy intra/inter-state traffic loads and have contributed to the reduction to a certain degree to traffic congestion\. However, in some cases, the physical deterioration of the roads has already occurred, which underscores the importance of construction quality and adequate maintenance to ensure their sustainability\. In the State of Bihar, none of the civil works components were completed\. The two roads slated for improvement in Bihar were dropped from the project\. The only remaining civil works sub-component, the construction of the Bhagalpur Bridge and its approach roads, were commenced, but will not be completed until June 2000 at the earliest\. 37\. The implementation of the other project components was deemed unsatisfactory\. After long delays especially in conducting the field surveys, the PMS was installed in all four states, although its full utilization was not covered under the project\. The procurement of equipment was delayed substantially and most of the items had not been procured when this component was closed on June 30, 1996\. 10 38\. The project provided PWD staff with relevant training, which contributed t6 improving the PWDs' institutional capacity to implement similar projects\. However\., some of the value of the training programs was lost due to frequent changes in the postings of the staff trained\. Finally, through the project, the local construction industry improved its mechanization and quality control capacity, and internationally experienced supervision consultants were introduced on a pilot basis at the state level\. H\. FUTURE OPERATIONS 39\. All widened and strengthened road segments under the project should continue to operate successfully with enhanced traffic carrying capabilities and ability to reduce congestion\. In the State of Maharashtra, concrete funding and operational plans have been drawn up to address the maintenance of the state road network, based on the experience gained and by using organizational units established under the project\. 40\. In the States of Maharashtra, Rajasthan, and Uttar Pradesh, follow-up state road projects are currently in various stages of preparation\. One of the key objectives for this new generation of road projects, is to ensure improved maintenance funding as well as maintenance management for the entire road network\. This is envisioned through the use of up-front actions, such as commitment from the highest levels in the forn of State Policy Letters, that would substantially increase maintenance funding\. Furthermore, institutional strengthening of the iimplementing agencies will be handled up-front and in a much more systematic manner\. 41\. In the State of Bihar, the Bhagalpur Bridge and Approach Roads components are still under implementation\. All necessary arrangements, including funding and compliance with the contracts, still need to be made in order to ensure the completion of work\. L\. KEY LESSONS LEARNED 42\. Quality at entry is essential to ensure the successful preparation and implementation of a complex multi-state project\. In this regard, all project preparation activities including techno- economic feasibility studies, detailed engineering designs, resettlement and rehabilitation (R & R)plans, and environmental studies need to be completed well before civil works contracts can begin on the ground\. In light of the experience gained from the implementation of the SRP, full site readiness (which includes R&R and environmental mitigation measures) is a sine qua non condition for loan effectiveness for the next generation of state road projects currently being prepared/implemented in India\. 43\. The weak organizational and implementation capacity of the implementing agencies combined with a low sense of project ownership (caused by the multi-state nature of the project) were two of the major reasons for the poor implementation record of the project\. This was compounded by the high turnover of project related staff which made it very difficult for staff from both the Bank and the PWDs to develop a high degree of project ownership\. The early forLation of an exclusive, empowered project implementation unit (PIU) with strong implementation capabilities is important to ensure higher quality at entry and effective project implementation\. The effective use of a PIJ can also enhance the sense of ownership since the staff is working on a full-time basis for the project\. 11 Furthermore, the development of up-front policy/institutional strengthening action plans for the implementing agencies, together with intensive implementation training in contract and project management during the early stages of project preparation is necessary to enhance implementation capabilities\. 44\. The preparation and implementation of a multi-state project like the SRP have proven to be ineffective due to a reduced sense of ownership by the participating states and inadequate supervision resources provided by the Bank\. More specifically, supervision resources provided by the Bank did not fully take into account the logistical difficulties of adequately supervising a multi-state project\. To properly supervise the project (considering that it was actually four individual state road projects rolled into one), supervision resources should have been at least double the actual allocation\. In order to increase the sense of ownership and provide adequate resources for project preparation and implementation, the next generation of state road projects are all single-state projects\. 45\. Adequate maintenance funding together with improved maintenance planning is essential to ensure the sustainability of project outcomes\. Some of the roads improved under the project have already started to deteriorate due to inadequate maintenance, higher than expected traffic volumes, poor construction quality and poor hydrology\. Effective road maintenance management, including planning and budgeting for the roads, is the key to the sustainability of project roads and the entire road network\. For the next generation of state road projects, all participating States have committed themselves to mobilize additional and/or alternative maintenance funding to meet the increasing needs of the road sector\. 46\. Without appropriate arrangements for the operation and maintenance of equipment and machinery procured under the project, the sustainability of this component will probably be unsatisfactory\. Furthermore, the equipment procured should have been more suitable for Indian conditions\. For example, one of the reasons why the ARAN survey vehicle did not perform well was because the width of the roads surveyed was inadequate and their riding quality was very low\. In other words, less sophisticated equipment should have been procured to more effectively deal with local conditions\. The implementation of such components should be reconsidered from a broader perspective, including perhaps, the development and promotion of the private sector, which would be responsible for carrying out works such as inventory surveys\. 47\. The pre-qualification of financially and technically weak contractors had a negative effect in the implementation of the civil works component of the project\. This factor was compounded by the lack of an adequate number of suitably qualified contractors seeking pre-qualification and by the almost total lack of internationally experienced contractors interested in bidding for the contracts\. Since financially and technically weak contractors were pre-qualified, several civil works contracts were dropped from the project during the mid-term review and the completion of most civil works contracts took much longer than originally expected\. Unless these two issues (pre-qualification of weak contractors and an inadequate number of interested internationally experienced contractors) are resolved, the implementation of road projects in India will continue to be plagued by construction delays, cost overruns, and low construction quality\. In order to encourage the participation of international contractors in future projects, both the PWDs and the Bank have taken measures to reduce the risks involved in recent road projects\. These measures include: (i) higher quality detailed engineering; (ii) more realistic bid estimates; and (iii) larger-sized contracts\. 12 48\. The primary focus of the project was on the physical improvement of the core state road network\. Not enough emphasis was placed on the design of project components, which were intended to support the stated development objective of the institutional improvement to the implementing agencies\. With the exception of the introduction of improved maintenance management practices through the establishment of a PMS, procurement of some equipment, and limited training of PWD staff, there was insufficient emphasis (backed by project components) on institutional modernization and strengthening\. With the next generation of State road projects, there will be a much greater emphasis on facilitating the transformation of the PWDs from service providers to the managers of state road networks\. This will mean that the institutional modernization and strengthening of the PWDs will not only be a stated key project development objective, but it will also be supported by up-front actions on reform, and by project components that will enable the attainment of this critical objective\. 13 PART n: STATISTICAL TABLES TABLE 1: SUMMARY OF ASSESSMENTS A\. Achievement of Objectives Substantial Partial Negligible Not Applicable Macroeconomic policies 0 0 0 U Sector policies 3 O O Financial objectives O * ° D Institutional development O3 * °l Physical objectives °3 * ° Poverty reduction O3 ° 0 P Gender concerns E13 0 0 P Other social objectives O O O U Environmental objectives EO a3 o \. Public sector management O O O P Private sector development E O 0 P B\. Project Sustainability Likely Unlikely Uncertain C\. Bank Performance Highly satisfactory Satisfactory Deficient Identification E E l Preparation assistance E E U Appraisal El El U Supervision E E U D\. Borrower Performance Highly satisfactory Satisfactory Deficient Preparation E O3 K Implementation E E U Covenant compliance El E E\. Assessment of Outcome Highly Satisfactory Unsatisfactory Highly Satisfactory Unsatisfactory E l * E 14 TABLE 2: RELATED BANK LOAN/CREDITS Loan/Credit Title Purpose Year of Status Approval IN PE-10566 Gujarat Widening & Strengthening of priority roads, - Negotiated State Highway Project maintenance of State roads, and reform and streng nof the Stateroadage IN PE-35159 Haryana Widening & Strengthening of priority roads, - Negotiated State Highway Project maintenance of State roads, and reform and strenghening of the State road age_y_ Ln\.4192-lN Widening & Strengthening of priority roads, 1997 Ongoing Andhra Pradesh State maintenance of State roads, and reform and \. \.w\.jqct sten gthe nng of the State road ag \. Cr\.23651Ln\. 3470-IN Modernize key sectors of national highways in six 1992 Ongoing Second National different States including Punjab, Haryana, Orissa, West TMj og Pctdes\.! a\. Ma\.i_shatraPrad\.sh\.ad \.Ma\.ras\.tra\. Cr\. 1757-IN Gujarat Construction, reconstruction, and improvement of about 1987 Closed Rural Road Project 6,300km of village roads, procurement of equipment and December 31, vehicles, construction of houses, offices, warehouses and 1995 workshops, engineering and consultant services, and technical assistance\.__ ____\. Ln\.2534-IN To construct/rehabilitate national highways in 6 states 1985 Closed National Highway and foster institutional development by strengthening the December 31, Project use of economic evaluation techniques for selectilng and 1993 - Lranking road investment proposal\. _ Cr\.1072-lN To provide all weather road comnmunication between 1980 Closed Bihar Rural Roads farms and markets\. June 30, Project 1988 TABLE 3: PROJECT TIMETABLE Steps in Project Cycle Date Planed Actual Date Identification (Executive Project Summary) June 1987 Preparation 1987/1988 Appraisal Feb\. 1988 Negotiation Sept\.13-20, 1988 Board Presentation Oct\. 20, 1988 Signing Nov\. 17, 1988 Effectiveness March 2, 1989 Project Completion June 30, 1998 Loan/Credit Closing June 30, 1995 June 30, 1998a La : Bilhar components (Bhagalpur Bridge, Approach road, and consultancy service) closed on June, 30, 1998\. All other components were closed on 30 June, 1996\. 15 TABLE 4: LOAN/CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL (US$ millions) FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 Appraisal Estimate 7\.50 10\.00 37\.50 50\.00 60\.00 47\.50 37\.50 - - - - Appraisal Cumulative 7\.50 17\.50 55\.00 105\.00 165\.00 212\.50 250\.00 - - - - Actual 17\.98 0\.00 6\.99 14\.15 33\.19 33\.23 35\.76 28\.88 13\.75 4\.69 0\.05 Actual Cumulative 17\.98 17\.98 24\.97 39\.12 72,31 105\.54 141\.30 170\.18 183\.93 188\.62 188\.67 Actual as % of estimate 240 0 19 28 55 70 95 - - - - (for each year) Date of final disbursement December 28, 1998 16 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION Initial Inipl- Key Impleinentation Indicator in SAR Estimnated mentation Plan Revised Scope Actual Parti A:\.Road Widening and Strengthening km km kmn km Bihar ________________________________ BhMgaIprBidjge ____4 4\.4 4\.4 Inoplt _Approach Roads ___10 10\.6 10\.6 Incom p~e Haji\.Mu\. \. i~Road ___51 51 51 Dropped Sonp - ChpaRoad 50 50 50 Dropped Total ____ 115 116 lOt 0 Maharashtra____ ________________________ Pune -Auran~gaba Rad 219 113,06k 113\.6 113\.6 Ahmnedn ~ Aragb- 92 Drppd Dropd _,ura4!jbad - Jalna Road 124 112\.4 Dopped Drped Nagpur-Kanp ~a4Ra 69 69 69 69 Akola- ingoliRoad 96 96 96 96 Wada - Biwadi Road 23 69\.4 Lb 69\.4 69\.4 Palgah 7-Wada Road 47 - ~- - - -Ahinendnag~ar - Kopargaon Road 95 96 l 96 9 Jalna Bypass - - Added 8\.7 8\.7 Total 673 648\.4 452\.7 452\.7 Bhiwadi -Alwar Road ___90 235 1 235 219 Alwar - Karauli Road 145 - - - Udaipur -Dabok Road ___16 113T- - 113 114\.8 Dabok - Chittorgarh Road 97 - - - Airn~: CittogarkRoad 186 186 221\.5 221\.5 Sirohi -Abu Road 63 85\.5 b 85\.5 85\.5 Abu - Mount Abu Road 23 - - - FqtehpKr- Churu Road 36 - 115 Cancelled __Cancelled Churu - Haryana Boarder 79--- Sikar - Haryanan Boader 133 133 Dropped Drpe Total 868 867\.5 655 __ 640\.8 Uttar Pradesh ___ _____ Sonauli_-93 48 48 48 _____ ~ ~~- 45\.2 La 45\.2 46\.2 Gorakl~~pur - Ballia Road ~~153 45a4 45 - 47 "' Cancelled Cancelled_ - 59\.2 La Cancelled Cancelled Faizabad - Allahabad Road ___ 143 47a 47\.4 47\.4 - 12\.6 Ia 12\.6 12\.6 - 86\.4 I 64 Icmlt All ahaba - Dohri~ALt Roqad 208 208\.7 Cancelled Cancelled Total ___597 599\.5 284\.6 199\.2 Grand total ~~~~~~~~~2253 2231\.4 1508\.3 Lc 1292_7_ 17 Part B: Consultancyervices / Studies Proof Consultant: Bhagalpur Bridge Bihar Bihar - Bihar and Approach Road Supervison (A1unedna~g~d) Maharashtra Maharash_tra - Maharashtra SPimer - ga Raiasthan Rajasthan Raja han S-upervision (Allahabad - Faizabad) UP UP UP Feasibihty Study for Bom - Nasik Road Maharashtra Maharashtra PWD Organization Study _Maharashtra Maharashtra Maharashtra Maharashtra Road Maintenance M ana ty 4 States 4 States 4 States 4 States Part C: ient__________ __ ______________\. Brid Insection Euipment 4 4 - 4 'g Dynamic Vehicle Weighing Equipment_ 8 8 - 0 Automatic Traffic Counters 80 80 0 Nuclear Den Measuring Equipment 24 24 - 0 Dvpai icLoe Penetrometers 12 12 -0 TRRL BumI grators 9 9 - Dpsfflick Road Profilers 4 4 - 2 Bitmen Distributors 8 8 - 8 Ch Spreaders __O ___ SurvEqument Sets 8 8 - 0 ,\.b _a \. yqupme __n _ ____ _ 1 1 -0 TrminigAids 1 1 - 0 \. Drive Simulators 4 4 - 0 Color/Ni g-Blindness Equient 24 24 0 Breahaysers_ ______ 40 40 - 0 Brake Testi uipment 24 24 - 0 Con uter Software 1 1 - 0 Part D: Traing ____ Pavement Rehabilitation and Modem 14 weeks 14 weeks 15 weeks 15 weeks Maintenance Management\. __ __ Bridge inspection, Rehabilitation, and 14 weeks 14 weeks 15 weeks 15 weeks MaintenanceManagemSystemfo Brides\. __ ___ Contrac t of Big Projects 14 weeks 14 weeks 17 weeks 17 weeks Design Construction and Operation of 14 weeks 14 weeks 14 weeks 14 weeks \.ress\. ___________ ___s\. E~qMi~ent procurement Management -__ - 4 weeks 4 weeks Works Procurement Management - \. - 4 weeks 4 weeks la Road section was split into two or three sections\. -: Road sections were combined into one section\. LI 429\.9 km of roads were cancelled in May 1993 and further 337\.4 km were dro4pd as per the request of the Department of Economics in August 1993; the 8\.7 kni-Jalna Bypass (Maharashtra), and 35\.5 km and minor 1\.8 km (Rajasthan) were added to the project\. The 337\.4 km and 101 km road component were officially dropped on June 30, 1996 from the project, and 86\.4 km are incomplete\. All components, except Bhagalpur Bridge and its approach roads, were closed in June 1996 after one-year extension from the original closing date of June 30, 1995\. /d: includes some components substantially completed under the project and fully completed by June 1997 with PWDs' own resources\. /e Program changed from Planning, design, and Construction of Interchanges to Contract management of Big Projects\. -: These programs were added\. Only one unit was received to Maharashtra\. Other three unit were procured by MOST but were not delivered to other states yet\. 18 TABLE 6: KEY INDICATORS FOR PROJECT OPERATION Estimated/ Actual: Cumulated road length (km)'/ Revised (km) Road Widening and Strengthening 1992 1993 1994 1995 1996 1997 1998 Bihar 115/116 0 0 0 0 0 0 0 Maharashtra 668/452\.7 155 265 348 445 452\.7 - - Rajasthan La 868/655 51 179 306 502 640\.8 - Uttar Pradesh La 597/284\.6 34 76 121 159 199\.2 - - Total 2248/1508\.3 240 520 775 1106 1292\.7 1292\.7 1292\.7 / The road length widening and strengthening completed was calculated based on the physical progress of each contract\. TABLE 7: STUDIES INCLUDED IN PROJECT Study Purpose as defined at Status Impact of Study AppraisaVRedefined 1\. Pavement To determine desirable The study was completed In Maharashtra Management Study annual outlays to repair/ in September 1996 with and Rajasthan, (PMS) rehabilitate priority sections four participating states PMS is utilized in in a net work and assess PMS cells under the a limited fashion requirement of fund Steering Committee in their allocations\. It provides a chaired by MOST\. About maintenance rapid and systematic 30,000km of road planing and measure for management to inventory data over the budgeting\. assess and compare different four state was stored in In Uttar Pradesh operational strategies\. PMS\. The Rajasthan and Bihar, it has PWD established a PMS not been utilized cell for the system and and its impact is utilizes it including negligible\. Automated Road Analyzer\. 2\. Organization Study Define objectives and The study was completed The Government of PWD of Maharashtra organization, recommend and final report was of Maharashtra how best it should be staffed submitted by the established the to meet its commitments and Consultant to the Maharashtra State how its resources should be Government\. Road structured and deployed Development throughout the state in order Corporation\. to achieve optimum efficiency\. It ascertains the budgetary needs of the recommended organisation\. 3\. Feasibility Study for Feasibility Study for Study was completed in The expressway Bombay - Nasik Road proposed 150 km of express, June 1996\. initiated as BOT Tahane to Nasik via basis by PWD\. Bhiwandi\. 19 TABLE 8A: PROJECT COSTS (USD million) Appraisal estimate Actual/ latest estimate L Item Local costs Foreign costs Total Local costs Foreign costs Total Civil Works 277\.3 109\.5 386\.8 213\.4 0\.3 213\.7 Land Acquisition 6\.8 - 6\.8 - - - Supervision of civil works 36\.3 - 36\.3 3\.6 3\.2 6\.8 Equipment 0\.7 5\.0 5\.7 0\.5 0\.1 0\.6 Training 1\.0 1\.0 2\.0 0\.9 0 0\.9 Studies 0\.7 11\.9 12\.6 2\.5 1\.1 3\.6 Total 322\.8 127\.4 450\.2 218\.5 4\.7 225\.6 La: Some figures are estimated\. TABLE 8B: PROJECT FINANCING (IJSD million) Appraisal Estimates Actual La Component World Bank Government Total World Bank Government Total Group of India Group of India Bihar State Roads 56\.6 42\.4 99\.0 28\.1 12\.1 40\.2 - & Bhagalpur Bridge Maharashtra State Roads 49\.7 38\.1 87\.8 53\.5 7\.4 60\.9 Rajasthan State Roads 58\.0 45\.6 103\.6 70\.9 11\.5 82\.4 Uttar Pradesh State Roads 85\.7 74\.1 159\.8 36\.2 5\.9 42\.1 Total Disbursement 250\.0 200\.2 450\.2 188\.7 36\.9 225\.6 /a: Some figures are estimated\. 20 TABLE 9: ECONOMIC COSTS AND B]ENEfITS (1988 USD million) Net Present Cost Benefits la Value @12% Lb ERR (%) Bihar State Roads SAR 22 48 6 16 ICR - - - - Bhagalpur Bridge Le SAR 39 297 31 20 ICR 67 269 20 19 Maharashtra State Roads SAR 44 330 111 45 ICR (Roads completed) 396 83 Rajasthan State Roads SAR 53 344 99 33 ICR (Roads completed) 240 64 Uttar Pradesh State Roads SAR 82 216 38 19 ICR (Roads completed) 68 31 In ICR an analysis period is a 14-year including a 10-year operation period\. In the case of Bhagalpur bridge, a 25-year including a 20-year of operation period\. La :NPV includes 25 % of salvage value\. 1k:Net present values (NPV) for SAR are re-calculated\. ICR values for Bhagalpur are projected values\. 21 TABLE 10: STATUS OF LEGAL COVENANTS Original Revised Agreement Section Covena Presen fIuflunFe hlfilhment Description of covenant Comments nt type t status nt date date Project 2\.01(a) 5 CD Each State shall carryout its respective part of the After delay complied with\. Agreement Project with due diligence and efficiently and m conformity with appropriate administrative, financial and engineering practices\. 2\.01(bXi) 2 C 03/31/1990 Each State to carry out its part of the Project in Complied with\. accordance with Inplementation Program contained in Schedule 2 of Project Agreement\. 2\.01(b)(ii) 5 C 03/31/1990 Each State to design, construct, strengthen and Complied with\. maintain roads under the Project m accordance with design standards and specifications specified by India Roads Congress in their issue numbers 3, 37 and 73\. 3\.01(a) 9 C Each State shall maintain records and accounts in Complied with\. accordance with sound accounting practices, their operations and financial conditions in respect of the Project\. 3\.01(b) 1 CP Audit - each State (due within mine months of FY SOE audit report for approach end)\. road contract in Bihar is overdue and is expected by 06/30/98\. Schedule 5 C Each State to establish a supervisory unit to assist 2, A1 in the coordination of implementation of its respective part of the Project\. Schedule 5 CP 12/31/1992 06/30/1995 Each State to complete a study to introduce a Study started in November 1992 2, A\.3(i) Road Maintenance Management System (RMS)\. and completed June 1995\. Schedule 5 CP States to progressively introduce RMS\. 2, A\.3(ii) Schedule 5 CP Each State to submit next year's construction 2, A\.4 program\. Schedule 5 NC Each State shall furmish involuntary resettlement In Bihar there was issue in Road 2, A5(i) components, but these were abandoned\. Schedule 5 NC Each State takes steps for resettlement and In Bihar there was issue in Road 2, A5(ii) rehabilitation of individuals adversely affected by components, but these were the project abandoned Schedule 9 NC 06/30/1989 01/30/1993 Bihar to furnish to the Bank action plan for New deadline set in folow-up 2, B\.6(i) Bhagalpur Bypass\. letter\. Schedule 5 C 12/31/1990 06/30/1994 Maharashtrato complete PWD reorganization Study started July 1993 and 2, C\.7(i) study\. completed in September 1994\. Development 2\.02(b) 3 C 12/31/1989 GOI to maintain a Special Account in dollars\. Complied with\. Credit Agreement 3\.01(b) 3 C GOI to make proceeds of loan available to each Complied with\. State in accordance with GO's standard arangements for development assistance to the States of India\. 4\.01(a) 1 C For expenditures made on basis of SOE, records Complied with\. and accounts reflecting these expenditures shall be maintained in accordance with sound accounting practices\. 4\.01(b) 1 CP 12/31/1993 Audit of SOE (due within nine months of FY Audit report for approach road end)\. contract in Bihar is expected by 06/30/98\. 4\.02 1 NC 09/30/1993 Audit - Special Account (due within six months of Not complied with\. FY end)\. 4\.03 5 CP 09/30/1989 GO, through MOST, shall (i) assist the States in Several items of equipment were procurement of goods, works and consultants' not procured by June 30, 1996, services required for project; and (ii) coordinate and component was closed at that arrangements for the provision of tramiing under time\. Part F(b) ofthe Project\. Covenant Types: 1= Accounts/audits 7 = Involuntary resettlement 13=Other\. 2 = Financial performance/revenue generation from beneficiaries 8 = Indigenous people\. Present Status: 3 = Flow and utilization of project fbnds\. 9 = Monitoring, review, and reporting\. C = covenant complied with\. 4 = Counterpart funding\. 10 = Project implementation not covered by categories 1-9\. CD = complied with after delay\. 5 = Management aspects of the project or executing agency\. 11 =Sectoral or cross-sectoral budgetary or other reources allocation\. CP = complied with partially\. 6 = Enviromnental covenants\. 12 = Sectoral or cross-sectoral policy/regulatory/institutional action\. NC = not complied with\. 22 TABLE 11: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS There was no significant lack of compliance with an applicable Bank Operational Manual Statement (OD or OP/BP)\. TABLE 12: BANK RESOURCES: STAFF INPUTS Stage of project Planned Actual Weeks US$ Weeks US$ Preparation to appraisal n\.a\. n\.a\. 45\.3 106,600 Appraisal n\.a\. n\.a\. 35\.2 70,100 Negociations through Boad approval n\.a\. n\.a\. 17\.3 38,900 Supervision'@ n\.a n\.a 259\.4 623,500 Completion n\.a\. n\.a\. 19\.9 56,400 Total n\.a\. n\.a\. 377\.0 895,500 Staff Week FY 87 88 89 90 91 92 93 94 95 96 97 98 99 Total Preparation to appraisal 4\.1 41\.1 45\.2 Appraisal 23\.0 12\.2 35\.2 Negociation through 17\.3 17\.3 Boad approval Supervision'/ 0\.1 12\.5 20\.8 34\.5 45\.2 47\.3 34\.5 23\.1 19\.9 12\.1 9\.4 259\.4 Completion 9\.4 10\.5 19\.9 Total 4\.1 64\.2 42\.0 20\.8 34\.5 45\.2 47\.3 34\.5 23\.1 19\.9 12\.1 18\.8 10\.5 377\.0 USS(1,000) FY 87 88 89 90 91 92 93 94 95 96 97 98 99 Total Preparation to appraisal 7\.4 99\.2 106\.6 Appraisal 50\.2 19\.9 70\.1 Negociation through 38\.9 38\.9 Boad approval Supervision-/ 27\.8 41\.7 75\.3 106\.8 117\.6 74\.4 74\.8 49\.6 29\.0 26\.5 623\.5 Completion 26\.4 30 56\.4 Total 7\.4 149\.4 86\.4 41\.7 75\.3 106\.8 117\.6 74\.4 74\.8 49\.6 29\.0 52\.9 30 895\.5 La: This was multi-state project therefore the supervision costs need to be looked at in the context of a multi-state project\. Also the supervision missions were often combined with other project such as the National Highway Project\. 23 TABLE 13: BANK RESOURCES: MISSIONS Stage of Project Month/ Number of Days in Specialized staff Performance Rating Lb Types of Year persons field skills represented/a problems __ Implemen- Developmen tation status t objectives Through appraisal 6/87 2 19 E Oct-Nov/87 4 18 E, EC, DC Appraisal Feb/88 6 22 E, EC, DC Supervision Feb-Mar/89 2 30 E Oct-Nov/89 3 23 E, EC 2 1 Jan-Feb/90 4 19 E,EC 2 1 May/90 6 19 E,EC 2 1 Nov-Dec/90 2 18 E 2 1 Mar/91 4 19 E 2 1 Sep-OctJ91 5 17 E,EC 2 1 Feb-Mar/92 3 25 E 2 2 Jul/92 2 21 E, EC 3 2 M, P Sep-Oct/92 3 19 E 3 2 M,P Restructure Jan/93 Feb-Mar/93 6 37 E 3 2 M, P Jul/93 5 26 E, O, I 3 2 M, P Oct-Nov/93 3 21 E, O 3 3 M, P Mar/94 3 25 E 3 3 M, P Jul/94 3 17 E, O U U M, P Feb/95 4 - FA, E, I U U M, P Jul-Aug/95 4 1 FA, E U U M,P Nov-Dec/95 3 1 FA, E U U M, P Jul/96 2 7 FA, E U U M, LC, En Mar/97 1 1 FA - - M, En May/97 3 6 FA,E S S Fi,M,LC, En Dec/97 2 4 E - - M,LC, En Jan/98 1 1 FA - - M, LC, En Supervision/Completion Jun/98 3 5 FA, E U S M Nov/98 1 5 E - a: E = Engineer, EC = Economist; FA = Financial Analyst; 0= Operation Officer : HS or I = Highly satisfactory; S or 2 = Satisfactory; U or 3 = unsatisfactory; HU or 4 =Highly Unsatisfactory Fu = Funding; Fi = Finance; T = Training; P = Procurement M = Project Management; LC = Legal Covenant; En Engineering 24 Appendix A IMPLEMENTATION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-uN) INITIATION OF IMPLEMENTATION COMPLETION REPORT AISSION AIDE MEMOIRE (August 4, 1998) 1\. A World Bank mission visited India during June 8 to 26, 1998 to initiate work on the preparation of the Implementation Completion Report (ICR) for the States' Road Project (Ln\. 2994/Cr\. 1959-IN)\. The full mission comprising Messrs\. Fabio Galli (Financial Analyst, SASIN), Yoneo Oka (Highway Engineer, SASIN), and Moncef Chaabouni (Consultant) visited Patna and Bihar during June 8 - 12, while Mr\. Yoneo Oka visited Mumbai, Maharashtra during June 15 and 16 and Messrs\. Fabio Galli and Yoneo Oka visited Jaipur, Rajasthan during June 18 and 19\. Also Messrs\. Yoneo Oka and A\. K\. Swaminathan (Highway Engineer, SASIN) met in N\. Delhi with officials of Ministry of Surface Transport (MOST) on June 23 and with officials of Government of Uttar Pradesh on June 25\. The mission wishes to thank officials of the Bihar Road Construction Department (BRCD), the PWDs of Maharashtra, Rajasthan, and UP, and MOST for the cooperation and patient assistance extended to the Bank mission\. Introduction 2\. A loan in the amount of $170 million and a credit in the amount of SDR 62\.2 million ($80 million equivalent) for the States' Road Project were approved on October 20, 1988 and became effective on March 2, 1989\. The expected project completion date was June 30, 1995\. The project covered four states, namely, Bihar, Maharashtra, Rajasthan, and Uttar Pradesh\. The project components included; (a) the widening and/or strengthening of about 2300 km of state roads; (b) construction of a bridge over the Ganga river at Bhagalpur; (c) procurement of specialised equipment to assist the management of the road system including procurement of a pavement management system (PMS) and; (d) staff training, technical assistance, and consultant services\. 3\. Lack of familiarity with Bank procurement procedures for the Governments, poor engineering, weak project quality of contractors, cash flow problerns, and removal of utilities etc\., caused major delays in project implementation\. As a result, the project was initially extended to October 31, 1995, and subsequently to June 30, 1996\. By this date, with the exception of the Bihar components, most of the project components had been completed, even though some civil works contracts equivalent to US$62 million had been cancelled\. 4\. On June 30, 1996, selective components of the project were extended by a further one year to June 30, 1997, namely; (a) Bhagalpur Bridge contract in Bihar; (b) Approach Roads to Bhagalpur Bridge contract and; (c) remaining consultant services contracts for Bhagalpur Bridge and Approach Roads contracts\. However, the completion of the bridge contract had been set back because of the need to reconstruct two partially completed well foundations washed away by exceptional scouring 25 Appendix A action during 1996 monsoon\. Because of this, a further one year extension was granted by the Bank to June 30, 1998 for the same components\. Although the construction of the Bhagalpur bridge and approach roads was not completed by June 1998, only approximately US$5\.3 million remained undisbursed under the project\. The Project 5\. The project's main objectives were to extend the policy/ institutional improvements, which were begun under the National Highway Project (Loan 2534-IN), to the State level, in particular by; (a) promoting the use of modem maintenance management systems, which each of the four states would put in place along the lines of what was being instituted by MOST for national highway network; (b) introducing improved construction methods through larger contract packages of a sufficient size to encourage local firms to mechanise, but which, when grouped together, would also attract international interest and; (c) introducing supervision by internationally experienced consultants on selected civil works contracts in all four states\. 6\. The project comprised components; (a) civil works; (b) procurement of specialised equipment to assist the participating four states in monitoring the condition and usage of their road networks and promoting road safety; (c) staff training, technical assistance (studies) and; (d) supervision consultant services\. The civil works component included about 2,300 km of road widening and/or strengthening in four states\. The procurement of specialized equipment included a device for measuring roughness of roads which was decided to be used in determining road condition, modern traffic counters, and mobile bridge inspection platforms, etc\. Training and technical assistance included a variety of training, the installation of a pavement management system study, and road inventory surveys pertaining to the study for establishing in each state a network maintenance management system\. Mission's Findings 7\. Achievement of project objectives\. As of June 1996, all civil works components were substantially completed in Maharashtra, Rajasthan, and Uttar Pradesh\. As regards to the Bihar components none of the project components were completed as of June 1998 the revised closing date of the project\. Out of 2300 km of state roads scheduled to be improved under the project, about 1500 km have completed while the remaining were cancelled and withdrawn from the project\. The status of physical completion of all of the project components is attached to the AM\. 8\. Procurement of most of the equipment, staff training, studies, and consultant services were substantially completed as of June 1996\. However, there were major delays in the procurement of the equipment and the installation of the PMS was also delayed\. 9\. The State of Bihar Components\. The Bihar components of the project comprised four civil works contracts and a proof consultant service\. Two of the civil works components (Hajipur- Muzzaffarpur (51 km) and Sonepur-Chhapra (50 km) roads) were not started due to lack of familiarity with Bank procurement procedure, land acquisition, and resettlement and rehabilitation issues\. These two components were formally closed on June 30, 1996\. The remaining components of the project; the Bhagalpur Bridge, Approach Roads to the bridge, and Proof Consultant Services were on the other hand extended four times to June 30, 1998\. 26 Appendix A 10\. Work on the Bhagalpur bridge contract, which includes a 5 km concrete bridge across the Ganga River, started in April 1991, two years after the project became effective\. This was caused by procurement delays due to a lack of familiarity with Bank procurement rules\. Furthermore during 1996 monsoon season, two partially completed well foundations (P3 & P4) in the navigational portion of the bridge were washed away by floods\. By the end of June 1998, physical and financial progress was respectively 87% and 83%\. This component is expected to be completed by June 2000 at the earliest\. The reconstruction of the two well foundations is currently under arbitration and could further delay the completion of the bridge works\. The Approach Road contract started on the ground only in December 1996 because of a variety of reasons including the reluctance of contractors to work in the Bhagalpur area\. By the end of June 1998, the works of embankment and subgrade were substantially finished and financial progress was about 58%\. This component is expected to be completed by June 1999, though there are currently law and order problems on site which could delay the completion of the works\. The proof consultant contract for the bridge component was expected to be extended to at least June 30, 1998\. 11\. The mission also visited the Hajipur-Muzzaffarpur road section\. High traffic volume was observed on this section where the pavement was still distressed even though periodic pavement maintenance works had been executed\. The other road section Sonepur-Chapra was reclassified by MOST in 1997 as a National Highway (NH19) and will be maintained as part of the NH network\. 12\. The State of Maharashtra Components\. The Maharashtra components of the project originally comprised seven civil works contracts, a supervision consujltant service, the PWD organisational study, and part of the PMS\. Seven civil works contracts were procured from July 1990 to January 1992\. Due to slow implementation progress, two contracts were withdrawn from the project during mid-term review\. A supervision consultant contract, which was for one of the withdrawn civil works contracts, was also terminated at the same time\. In conjunction with the mid- term review, the construction of the Jalna Bypass and the feasibility study of Bombay-Nasik Road components were added to the Maharashtra components of the project\. All Maharashtra components with the exception of the two cancelled civil works contracts, were substantially completed by June 30, 1996\. The two cancelled civil works contracts were fully completed by the PWD using their own funds in 1997\. 13\. The PWD organisational study was also completed on time even though most of the recommendations of the study have only been partially implemented by GOM\. However, as a result of the PWD organisational study, GOM has established the Maharashtra State Road Development Corporation which is in charge of BOT projects in the state\. The Corporation has taken up construction of Mumbai-Pune expressway on BOT basis\. 14\. The mission visited Pune - Ahmadnagar road section which was completed in 1995\. The mission observed high volumes of traffic on the road section and the pavement was in good condition thanks to regular road maintenance works\. The road roughness is surveyed regularly and utilised for the annual maintenance work program\. 15\. The State of Rajasthan Components\. The Rajasthan components of the project comprised six civil works contracts, a supervision consultant contract and a portion of the PMS\. Out of these components, one civil work was cancelled from the project during the midterm review due to poor implementation progress, and one civil work was not commenced and technically closed June 1996\. 27 Appendix A The other four civil works contracts and the supervision contract were substantially "completed by June 30, 1996\. 16\. The mission visited the Mahaura - Bhiwani road section which was fully completed by mid-1997\. The mission observed that long streches of the improved road section have already deteriorated with cracks, pot holes particularly in middle of the road which were maintained by patching\. Possible reasons for this premature deterioration are; (a) hydrology of the road was not adequately taken into account during detailed engineering; (b) improper pavement execution for the center part of the road due inadequate diversion of traffic flow and; (c) much higher than expected axle loads\. 17\. -The State of Uttar Pradesh Components\. The Uttar Pradesh components of the project comprised nine civil works contracts, a supervision consultant contract and part of the PMS\. Of the nine civil works contracts, three were fully completed by 1995, while three were cancelled during the mid-term review\. The final three civil works contracts started late and progressed slowly, and out of these three, two had been fully completed by 1997 with the state's own resources while the third has still not been completed\. 18\. Pavement Management Study\. The contract included procurement of a software package including dTIIMS and dROAD and etc\., to establish a PMS, inclusive of an automated road analyser (ARAN) to enable systematic road condition surveys in the four states\. Surveys of about 30,000 km of road inventory were carried out over the four states and this was stored in the PMS\. A steering committee chaired by MOST was established to manage the surveys and the establishment of the PMS in the four states covered by the project\. Also training programs including operator and system training for the ARAN vehicle were carried out\. The Rajasthan PWD, after completing the road inventory survey, established a working cell to manage the PMS and has conducted some surveys with the ARAN vehicle to update the road condition inventory database\. The Maharashtra PWD also uses the PMS to maintain an updated database of the condition of the core road network and conducts regular surveys using the ARAN vehicle\. However, in the case of Uttar Pradesh and Bihar the PMS is currently not being utilized\. 19\. Procurement of Equipment\. The procurement of equipment under the project was done by MOST on be half of the four states\. However, due to the lack of familiarity with Bank procurement procedures and weak coordination between MOST and the four states, not all of the equipment was procured by June 30, 1996 when this component was closed\. As a matter of fact, the procurement of four mobile bridge inspection units under the project has still not been completed due to litigation proceedings\. Key Lessons Learned 20\. Quality at entry is essential for the successful implementation of a complex multi-state project\. Detailed engineering design and site readiness for civil works including land acquisition, resettlement and rehabilitation, and removal of utility are major government responsibilities to ensure quality at entry\. Weak organisational and implementation capabilities of implementing agencies was a major reason for poor quality at entry and hence partially achieved development objectives\. In future projects, site readiness should be a sine qua non condition for project readiness for appraisal together with full awareness by the implementing agency of its responsibilities to implement the project\. 28 Appendix A 21\. The State Governments' familiarity with procurement and other Bank procedures is crucial to expedite project implementation\. This project was the first attempt to introduce ICB at State level\. Lack of familiarity with ICB caused major delays in procuring civil works under the project\. Furthermore, policy/institutional improvement of state PWD's together with intensive training in contract management skills are important to enhance implementation capabilities\. 22\. Internationally experienced supervision consultants are effective in transferring knowledge and technology of contract management and quality control to PWI) and contractors\. However if implementing agencies are not committed and do not feel full ownership of the project, the use of internationally experienced supervision consultants can even cause delays and increase costs in the execution of the civil works contracts\. Governments should take fuill responsibility for the coordination of all parties involved in the project, particularly the supervision consultants\. 23\. A multi-states project can weaken the sense of ownership of the project by individual states\. This can cause implementation delays and difficulties in supervising the project\. More effective institutional arrangements including single state projects are needed to enhance project ownership and project implementation\. 24\. Periodic maintenance after the completion of widening and strengthening of roads is important for sustainability of outcomes\. Some parts of the roads improved in the project have already started deteriorating due to heavy freight traffic and poor hydrology\. Effective road maintenance management including planning and budgeting for the roads is the key for the sustainability of project roads and the network\. 25\. Large size of the procurement works introduced in the project were effective to encourage local contractors to mechanize and to introduce improved construction methods although achievements were not fully satisfactory\. Further mechanisation is required to improve both the quality and durability of the roads improved\. ICR Preparation 26\. The mission discussed the ICR preparation and requested PWWDs and BRCD of the four states and MOST to prepare and provide the Bank with information required for ICR tables as follows: a) Key Indicators for Project Implementation; b) Key Indicators for Project Operation; c) Studies, Training, equipment procurement included in Project; d) Project Costs and; e) Project Financing\. 27\. The mission requested PWDs and BRCD to provide the Bank traffic data for each road required for comparison with the predicted data in Staff Appraisal Report\. 28\. It was agreed that PWDs, BRCD, and MOST will prepare the above data and will forward it to the Bank by August 12, 1998 and the Bank will review all the information received and send comments by August 31, 1998\. It was also agreed that PWDs, BRCD, and MOST will forward to the Bank revised and additional data based on the Bank's comments before September 30, 1998\. 29 Appendix A 29\. The mission requested PWDs and BRCD to provide the Bank fully prepared7 operational plans by August 12, 1998, which include future maintenance, operational, and budgeting plans for road sections improved and other studies procured under the project\. 30\. Borrower's contribution to ICR\. The mission requested PWDs, BRCD, and MOST to prepare their own project evaluation reports\. It should cover: (a) the project's execution and the initial operation characteristics of its key components; (b) the costs and benefit of the project; (c) the performance of the borrower, executing agencies, and the Bank with regard to their respective obligations under the Loan and Credit agreements; and (d) the extent to which the development objectives of the loan/credit were achieved\. This information is annexed to the ICR as a borrower's report\. Advice for preparing borrower's contribution to ICR is given in Attachment\. 31\. It was agreed that PWDs, BRCD, and MOST will forward their own project evaluation reports to the Bank by September 30, 1998\. 30 Appendix A Attachment: Status of Completion of Project Components Appraisal Initial Implementation Restructured Implementation Implementation Completion Bihar _ \. _ km ckm km 1 Bhagalpur Bridge 4 Bhagalpur Bridge (1/1) 4\.4 Bhagalpur Bridge 4\.4 Incomplete 2 Bridge Approach Road 10 Bridge Approach Road (2/1) 10\.6 Bridge Approach Road 10\.6 Incomplete 3 Hazipur-Muzzaffarpur 51 Hazipur-Muzzaffarpur road 51 Closed (6196) Road (2/3) 4 Sonepur-Chhapra Road 50 Sonepur-Chhapra Road(2/2) 50 Closed (6/96) 5 Supervision Supervision for Bhagalpur Proof consultant for Bridge Bhagalpur Bridge 6 Equipment By MOST By MOST Partially completed 7 Training By MOST By MOST through NMITE Completed 8 Maintenance By Maharashtra PWD By Maharashtra PWD Completed Management Study Maharashtra km km km 1 Pune - Aurangabad Road 219 Pune - Ahmednagar Road 113\.6 Pune - Ahmednagar Road 113\.6 Completed (7/90- (2) 11/95) _- Ahmednagar-Aurangabad 92 Cancelled (8/93) Completed (6/90- Road (3) 6/97 by PWD) 2 Aurangabad - Jalna Road 124 Aurangabad - Jalna (Jalna) 112\.4 Cancelled (8/93) Completed (6/90- Road (4) 6/97 by PWD) 3 Nagpur - Kanpa Road 69 Nagpur - Kanpa Road (6) 69 Nagpur - Kampa Road 69 Completed (1/92- 6/95) 4 Akola - Hingoli Road 96 Akola - Hingoli (Hingoli) 96 Akola - Hingoli (Hingoli) 96 Completed (6/90- Road (5) Road 3/95) 5 Wada-Biwadi Road 23 Wada-Bhiwadi, Palghar- 69\.4 Wada-Bhiwvandi, Palghar- 69\.4 Completed (12/90- Wada Road (1) Wada Roacl 5/97 by PWD) 6 Palgarh-Wada Road 47 _ 7 Ahimendnagar- 95 Ahmendnagar-Kopargaon 96 Ahmendnagar-Kopargaon 96 Completed (8/90- Kopargaon Road Road (7) Road 12/94) 8 Supervision Supervision for 92 Closed (6/96) __ Ahmednagar-Aurangabad Road 9 Equipment By MOST By MOST Partially completed 10 Training By MOST By MOST through N1THE II Maintenance Maintenance Management Maintenance Management Completed (11192- Management Study Study Study 9/96) 12 Organisation Study of Organisation Study of PWD Organisation Study of PWD Completed (7/93- PWD 9/94) Jalna Bypass (8) 8\.7 Completed (4/94- 1/97 by PWD) Feasibility Study of Completed (3/94- Bombay-Nasik Road 6/96) Rajsthan km km km 1 Bhiwadi - Alwar- Road 90 Bhiwadi-Alwar-Karauli 235 Bhiwadi-Alwar-Karauli 235 Completed Road (1/1,2/lA) Road 2 Alwar-Karauli Road 145 _ Completed 3 Udaipur-Dabok Road 16 Udaipur-Dabok-Chittorgarh 113 Udaipur-Dabok-Chittorgarh 113 Completed Road (1/2) Road 4 Dabok-Chittorgarh Road 97 __ __ 5 Ajimer-Chittorgarh Road 186 Ajimer-Chittorgarh Road 186 Ajimer-Chittorgarh Road 186 Completed (113,2/3A) 6 Sirolii-Abu 63 Sirohi-Abu-Mount Road 85\.5 Sirohi-Abu-Mount Road 85\.5 Completed (2/8) 7 Abu-Mount Road 23 _ 31 Appendix A Appraisal Initial Implementation Restructured Implementation Implementation Completion 8 Fatehour-Churu 36 Fatehpur-Churu-Haryana 115 Cancelled (5/93) Border (2/6) 9 Chulu-Haryana Border 79 _ 10 Sikar-Haryana Border 133 Sikar Haryana Border (1/4) 133 Cancelled (8193) Work closed and left incomplete 11 Supervision Supervision for Ajimer- Supervision for Ajimer- Completed Chittorgarh Road Chittorgarh Road 12 Training By MOST By MOST through NiTrE Completed 13 Equipment By MOST By MOST Partially completed 14 Maintenance By Maharashtra PWD By Maharashtra PWD Completed Management Study Uttar Pradesh km km km 1 Sonauli-Gorakhpur Road 93 Sonauli-Farenda Road (1/1) 48 Sonauli-Farenda Road 48 Completed Farenda-Gorakhpur 45\.2 Farenda-Gorakhpur Road 45\.2 Completed Road(1/2) 2 Gorakhpur-Ballia Road 153 Gorakhpur-Ballia Road 45 Gorakhpur-Ballia Road 45 Completed (1/3) Gorakupur-Ballia Road 47 Cancelled (5/93) (1/4) Gorakupur-Ballia Road 59\.2 Cancelled (5/93) (1/5) 3 Faizabad-Allahabad 143 Allahabad-Faizabad 47\.4 Allahabad-Faizabad Road 47\.4 Completed Road Road(2/7) Allahabad-Faizabad 12\.6 Allahabad-Faizabad Road 12\.6 Completed Bypass(2/8) Allahabad-Faizabad (2/9) 86\.4 Allahabad-Faizabad Road 86\.4 Incomplete 4 Allahabad-Dohrigat 208 Allahabad-Dohrigat (2/6) 208\.7 Cancelled (5/93) Road 5 Supervision Supervision for Allahabad- 146\.4 Supervision for Allahabad- 146\.4 Completed Faizabad Faizabad 6 Training By MOST By MOST through N1THE Completed 7 Equipment By MOST By MOST Partially completed 8 Maintenance By Maharashtra PWD By Maharashtra PWD Completed Management Study 32 Appendix A ATTACHMENT: GUIDANCE ON GOVERNMENTS' CONTRIBURTION TO THE ICR 1\. Governments' (Ministry of Surface Transport, State of Bihiar, State of Maharashtra, State of Rajasthan, and State of Uttar Pradesh) own project evaluation reports are an important part of an ICR\. It is attached, unedited, to the ICR sent to the World Bank Board\. It should cover, from borrower's perspective: (a) the project's execution and the initial operation characteristics of its key components; (b) the costs and benefit of the project; (c) the performance of the borrower, executing agencies, and the Bank with regard to their respective obligations ulnder the Loan and Credit agreements; and (d) the extent to which the development objectives of the loan/credit were achieved\. The topics to be covered and addressed in the report are project design, appraisal, implementation, and project results\. 2\. For project design, the contribution could address such questions as the appropriateness of the project's objectives, the size of the project and scope of the inviestments proposed, aspects of design leading to easy (or difficult) implementation and the effect on government institutions\. 3\. For project appraisal, comments should concentrate on any significant changes in the objectives, size, and scope of the project and whether these were appropriate\. 4\. For project implementation, comments and experience should cover the introduction and procurement of maintenance management study, larger construction contracts, international supervision consultant, and encouragement of local firms to mechanize\. 5\. For project result, comments should include an assessment of the direct physical benefits arising from the project\. Since economic re-analysis will be included in ICR, it is suggested, if government so wishes, that contribution could most usefully comment on the effects of the project from the government's perspective\. Such an analysis would be a most useful contribution to the ICR\. 6\. Based on the foregoing sections, contribution should list the main lessons learned from the implementation experience and arising from the above analysis\. 7\. The World Bank will be happy to provide any further elaboration or clarification needed to assist in the preparation of the contribution\. 33 Appendix A ATTACHMENT: OPERATIONAL PLAN State of Bihar (Received Sept\. 28, 1998) Since Ganga Bridge at Bhagalpur along with its approaches is a part of State Highway, this is to ensure uniform State level maintenance standards and funding levels to meet in prioritized manner the maintenance requirement of the whole bridge and road net work\. State of Maharashtra (Received Sept\. 31, 1998) 1\. The Government of Maharashtra (GOM) ensured Completion of works under the contracts awarded for the projects\. Except for Contract No\. 1 all other contracts are closed financially\. Final account will be closed for this contract during 1998-99 financial year\. 2\. Roads improved under this projects are looked after by the same executing Divisions\. Special funds are made available by the GOM for these up-keep and further improvement necessity caused due to increased traffic viz\. widening of bridges and small culverts, geometrical improvements to avoid accidents and to make each stretch of improved road, free of accident spots\. Monitoring of this activity is done by a officer of the rank of Superintending Engineer\. 3\. Three studies were carried out under this project viz\. Organization Study of PWD, Pavement System and Feasibility Study of Mumbai (Bombay) - Nasik Expressway\. i) Recommendations acceptable to GOM are underway for implementation\. ii) GOM gives high priority for training of more officers to PMS installed and extend the system to other important roads in the GOM's network\. iii) GOM is keen to execute the work of Expressway for which land acquisition is in progress\. Clearance from Environmental Department is at advance stage\. GOM is likely to take up this work through BOT in the near future after obtaining land in possession and getting Environment clearance\. Consultant have been appointed to carry out detailed engineering for this project\. 4\. Recently Improved road sections under State Roads World Bank Aided Projects are valued addition to the State Road Network in the State\. Government Of Maharashtra gives special attention for the upkeep of these road stretches\. Special repair funds are reserved for the upkeep of these road sections\. The re-newal strategy is based on every years roughness measurement observations\. Road sections where the roughness gone above the level of 2000 mm per km are necessarily tackled for\. Roughness Observations are take normally prior to on set of Mansoon which normally by middle of June every year\. Re-newal programs are chalked out & finalize up by October & execution is carried out during November to next May\. Re-newal treatment is normally 40 mm thick A\.C\. 34 Appendix A 5\. On some road sections if traffic demands widening by providing 1\.5 metre hard shoulders is also taken up through repair programs\. Traffic Count data is observed during third week of May & Dec\. every year on these road sections\. 6\. For other State roads the rate of fund is assumed as Rs\.31,500/ 25,575/ 25,475/ 19,708 per km\. for State Highway/Major District Road/Other District Road & Village Roads\. All the Maintenance Offices submit their Statistical data to Government of Maharashtra in the first quarter of new financial year, which is from 1st April to the next Calendar Year 31st March\. Repair funds are distributed on the basis of the length within the jurisdiction of that maintenance office\. Additional grants for special works are allotted by Government Of Maharashtra on its merits e\.g\. Maintenance to repair to major bridges, heavy repairs to road stretches under repairs, improving & strengthening program (RISP),Ghat Roads, Caution boards etc\. At the end of financial year work done during the year is reported to the Government of Maharashtra for monitoring & planning of grants for the new year\. State of Rajasthan (Received Nov\. 2, 1998) 1\. Maintenance of roads developed under State Road Project is done through non-plan budget of the State Govt\. The state has a total no\. of 78493kms\. of all kinds of roads of various categories as under:- 1\. National Highways(NHWs) 2964kms\. 2\. State Highways(SHIWs) 10039kms\. 3\. Major District Roads(MDRs) 5760kms\. 4\. Other District roads(ODRs) 12792kms\. 5\. Village Roads(VRs) 46938kms\. 2\. Although there are norms evolved by the XFinance Commission to determine the budget allotment in the maintenance of these roads on a per km\. basis, the funds exactly required as per these norms are not available on account of the non-availability of resources\. However funds allotted for maintenance are increased every year as per availability of resources\. 3\. National Highways are maintained against the funds provided by the MOST, Govt\. of India\. The state funds as allotted are spent as per requirement of State Highways, MDRs, ODRs and Village Roads in the year\. State Highways carry highest volume of traffic amongst the roads other than National Highways and the requirement of maintenance is therefore is maximum on the State Highways, next in the order of priority are MDRs, ODRs and then Village roads\. The development of 641kms\. of these four roads in the State Road Project has saved some money from the amount which were spent on these roads before this development and these savings are now diverted to other roads for better maintenance\. This way development of these roads has helped in the maintenance of the MDRs and ODRs\. The maintenance expenditure is also categorized into four categories of roads as above and at the end of the each financial year data of allotment / expenditure is maintained\. 35 Appendix A 4\. On some of these roads, re-construction and upgradation is also to be taken up on account of inadequacy of crust for the increased volume of traffic at a particular point of time\. Such upgradation are carried out either through maintenance budget or through the budget allotted at modernization through the State Plan\. The network of State Highways and MDRs as well as ODRs is deficient in road crust as well as in bridging, rail crossing etc\. and effort are being made to find the additional funds for these requirements either through the State Plan or through Externally Aided Projects\. The Government of Rajasthan has committed to further increase the maintenance allocation during the IXFive Year Plan extended up to 2003\. State of Uttar Pradesh (Received Nov\. 25, 1998) Although the present maintenance & budget plan of the Department is not sufficient for sustainable maintenance of such good quality roads but now as per Mew State Road Policy more stress has been given on the management & budget provisions of roads\. In this way proper maintenance shall be carried out to meet out the basic objectives of the project\. 36 Appendix B IMPLEMENTATION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) Borrower's Contribution to the ICR The State of Bihar A\. THE PROJECT EXECUTION AND THE INITIAL OPERATION CHARACTERESTICS OF ITS KEY COMPONENTS Implementation Experience 1\. The Department with the overall responsibility for the implementation of the project was the Bihar Road Construction Department (RCD)\. Although, the project became effective on March 2, 1989, it could not gather momentum till 1991, due to delays in finalizing the contract for the works and for other reasons enumerated below\. 2\. The construction of Ganga Bridge at Bhagalpur comprises of 4\.3672 km of the Main Bridge and 10\.6 km of its approach roads (the southern approach road is 1\.6 km and northern approach road is 9\.0 km)\. The work of Main Bridge was awarded for Rs\.550 million, as per the contract agreement; the work was scheduled to start on April 5, 1991, and to be completed on April 4, 1996\. Initially, there was a delay in transferring the Railway Yard at Bhagalpur to the contractor\. It was transferred in December 1991, which resulted iin the extension of the contract completion date to December 31, 1996\. 3\. As per the Loan Agreement, the project completion date vvas June 30, 1995\. It was extended till June 30, 1996, by the World Bank\. 4\. In the second package of the World Bank, there was the wiork of construction of approach roads of the Ganga Bridge at Bhagalpur\. All the formalities etc, for the pre- qualification tender & Notice Inviting Tender (NIT) for this work were prepared and tenders were invited in 1993 as per the approval norms and criteria laid down by the World Bank\. The tenders were invited several times\. First time, there was no tender\. Second time, there was only one tender which was too high to be approved\. Third time, there were two tenders, but again the rates were high\. The RCD rejected the tenders and decided to do the work departmentally\. But the World Bank did not approve of this action, nor did they agreed to divide the works into smaller groups\. Finally, with the approval of the World Bank, the work was awarded for Rs\. 421\.934 million\. As per the Contract Agreement, the work of approach roads was to start on June 6, 1996, and to be completed on June 5, 1999\. 5\. Considering all aspects, the World Bank Loan was again extended from June 30, 1996 to June 30, 1997\. 37 Appendix B 6\. The date of the completion of the contract Agreement for the construction of the Main Bridge at Bhagalpur was further extended from December 31, 1996, to December 31, 1997, due to a variation of soil parameters in the well foundations\. In actual condition, the soil met with in foundation in many wells were clayey in place of sandy one\. Clayey strata takes more time in sinking than sandy\. 7\. The work was going on as per schedule, but there were setbacks due to the unprecedented floods and a change in flow pattern of the river during the 1996 rainy season, which resulted in the loss of two partially constructed well foundations in the navigational portion of the bridge\. Because of this, the Bank granted a one year further extension to the project to June 30, 1998\. The contractor submitted clams for the reconstruction of these two wells which were rejected by GOB and as per the terms of the contract, the agency preferred to go for arbitration\. Due to the losses of these two wells and some other reasons, the contractor agreement was also given an extension till June 30, 1999, to match the completion date of the contract for the approach road works\. Finally, the Bank didn't extend the loan agreement beyond June 30, 1998; although the project had not yet been completed\. By the end of June 1998, the physical and financial progress of Main bridge was 87 % and 83 % respectively and the work in the embankment and subgrade in its approach roads were substantially completed and its financial progress was about 58 %\. The Ganga bridge and its approach roads at Bhagalpur are expected to be completed by June, 2000 at the earliest\. Now, GOB has to complete the project using its own resources\. 8\. There is every expectation of some problems coming in the way of such a huge gigantic project like construction of Ganga Bridge at Bhagalpur and that also in such a large meandering river like Ganges whose behavior can not be predicted at all\. As such, the delay in completion of such project cannot be ruled out\. 9\. Supervision by Proof Consultants: The civil works were supervised by the Proof Consultant\. Mls COWI consultant of Denmark, a firm of International repute, was appointed as Proof consultant for the construction of Ganga Bridge at Bhagalpur by GOB after obtaining concurrence of the World Bank\. M/s VPWI consultant was also appointed as proof consultant for the construction of its approach roads by entering into a supplementary agreement for the same\. The scope of work for the Proof Consultant was to check and recommend the designs of the bridge and to supervise the works on site including the quality control works and to suggest and recommend steps required for early and efficient execution of the works\. 10\. The project has succeeded in achieving now physical objectives too\. Regarding the procurement of construction and laboratory equipment: in all 7 items were to be procured for Bihar as per the SAR, but finally only two items namely (i) Bitumen pressure distributor - 2 Nos\. (ii) Mobile bridge Inspection Unit - 1 No\. were procured\. Procurement of the other five items were dropped by MOST as per discussion with a World Bank mission in July/August 1995, as the cost of only three items exceeded the total provision made in the SAR for the Bihar State\. Regarding training of personnel, it was conducted by the National Institute for the Training of Highway Engineers, New Delhi; under the supervision of MOST, personnel were given training at New Delhi and abroad\. Regarding Pavement Management Study, it was taken up and done under the direct supervision of MOST by the Maharashtra PWD\. 38 Appendix B Project Sustainability 11\. The civil works under this project were not completed by lune 30, 1998, the closing date of the loan agreement\. But 87 % of the works so far have been completed for the Main Bridge and the 58 % (financial progress) of the works have been completed for the Approach Roads through June 30, 1998\. The quality of the works are very good\. It is expected that after completion, these works will meet with design life\. The amount that will be allocated for maintenance of the approach roads will be as per norms prescribed by the Government\. Economic Re-evaluation 12\. The work of Ganga Bridge at Bhagalpur has not been completed as yet\. The actual economic re-evaluation can only be done after the bridge is complete and open to traffic\. B\. BORROWER'S PERFORMANCE 13\. The start of construction of the Ganga Bridge was delayed due to delays in the finalization of the bidding and the contract by the RCD and GOB\. The start of construction of the approach roads to the Ganga Bridge was also delayed much as the finalization of its contract and approval by the World Bank took time due to complications in different stages of the tender\. As such, the RCD could not receive World Bank assistance earlier than 1990 - 1991\. Moreover, the two project components of Hazipur - Muzaffarpur Road and Sonepur - Chhapra Road as shown in SAR could not be taken up due to non-acquisition of land, removal of trees, electric poles, public Health Engineering installations, and telephone poles etc\. in time and World Bank assistance for these projects were not extended beyond June 30, 1996\. There were further set backs due to the loss of two partially constructed foundation wells in constructing the Ganga Bridge from unprecedented floods and a change in the flow pattern of the river during the 1996 rains, and the settlement of claims associated with its reconstruction submitted by the contractor which took time due to an arbitration process\. As such, the actual completion of the project was further delayed\. Finally, World Bank assistance was not extended beyond June 30, 1998, and the GOB could not utilize the full loan sanctioned for Bihar\. C\. PERFORMANCE OF WORLD BANK 14\. Performance of the World Bank during both the project processing and implementation phases has been satisfactory except that while settling the contract for Approach Roads of Ganga Bridge at Bhagalpur, the Bank didn't agree to some of the proposals of GOB resulting in award of the contract at high rate\. The Bank was very responsible for increasing the disbursement percentage of Civil Works to 90 % from the original 60 % as enumerated in the SAR\. However, the borrower could not utilize much of the World Bank Loan till June 30, 1995, the original date of the completion of Loan Agreement due to various unavoidable reasons explained in Borrower performance\. However, the World Bank was kind enough to extend the project four times and finally till June 30, 1998\. The implementing agency considers that the World Bank Supervision Missions gave valuable guidance and support\. 39 Appendix B D\. THm EXTENT TO WHICH THE DEVELOPEMENT OBJECTIVES OF TH1E LOAN WERE ACHIEVED 15\. Under this project, only the major project component, the construction of a High Level Bridge and its approach roads across the river Ganges at Bhagalpur has been taken up\. However, this has also not been completed despite the closure of the Loan Agreement\. But when completed, this will significantly improve access to the under developed northern part of the state\. There is at present no permanent crossing of the river for 280 kms from the bridge at Mokameh to the Farakka Baridge at the West Bengal State border\. The bridge which lies about half way between these two structures, will substantially reduce the distance for many trips and promote north south integration\. Ultimately, the bridge will form part of a proposed National Highway running from the industrial belt in southern Bihar to Jogbani near the Nepal border\. It will facilitate the exchange of agricultural and mineral resources available on the two sides of the river and to reduce the distance of the prominent town/cities, such as, Katihar, Purnea, Saharsa, Forbesganj, and Khagaria from Bhagalpur\. However, to avoid adding the bridge traffic to the already severely congested down town area, bypass of Bhagalpur is desirable\. 40 Appendix B The State of Maharashtra A\. INTRODUCTION 1\. Maharashtra State's Road Project is the first project of such a kind in the State to improve the State's secondary network system falling in between the primary network of National Highways and Territory network of other District Roads and Rural Roads\. State Highways are the main trunk roads within the State Territory which carry almost 60% of the passenger and goods traffic\. The Project was undertaken to remove the deficiencies such as inadequate carriage way width, crust thickness and to improve the riding quality, etc\. B\. OBJECTIVES AND PROJECT DESCREPTION 2\. The project's main objectives were (i) to remove deficiencies in widths and the crust of the pavement which were inadequate compared to the traffic volume plying on the road sections, (ii) to improve the riding quality of the road surface, (iii) to promote use of modem maintenance management system, on the similar lines, on which it has been instituted by the Ministry of Surface Transport, GOI, for the National Highways ,(iv) to introduce improved construction methods through larger contracts of a sufficiently individual size to encourage local contracting firms to mechanize but which if grouped together would attract intemational interest, and (v) to introduce supervision by a Consultant of Intemational repute on some project\. 3\. The project consisted of eight civil works contracts covering a length of 668 km of State Highways to be improved to two lane carriage way\. This was modified and clubbed in seven civil contracts on FIDIC III form as per decisions taken during the visit of the World Bank Mission from October 14 to November 15, 1989\. The length to be covered was modified to 673\.80 kmn\. Out of these seven contracts, contract Nos\. m & IV were deleted from the World Bank Assistance in September 1993 and one civil works contract, No\. VIII, the construction of bypass outside Jalna city and second job of feasibility study of Mumbai (Bombay) -Nashik Expressway, was included in November 1994\. 4\. The objectives were to be met through (a) improvements of about 673 km of eight State Highway links, (b) the procurement of specialized equipment to assist the State in monitoring conditions of the State's road network, (c) staff training and technical assistance that would emphasize the planning, design and implementation of project and develop skills of road maintenance, and (d) consultancy services for the introduction of Pavement Management System\. 5\. As per SAR completion, the date for all the items of works in the project was December 21, 1994\. For several reasons, this was extended up to June 30, 1996\. The total cost of the project, including physical & financial contingencies, was US$87\.8 Million, out of which, the Bank's share was to be US$49\.7 Million\. The balance, US$38\.1 Million, was to be the borrower's share\. The US$49\.7 Million had two components 1) an IBRD Loan of US$33\.796 Million & 2) an IDA Credit of SDR 12\.395 Million (US$15\.904 Million equivalent)\. 41 Appendix B 5\.1\. The rate of upliftment of the loan amount was very slow in the initial period\., The Gulf war had it's effect on this issue\. Bank agreed to enhance the rate of disbursements from 60% to 90% of the expenditure on civil contracts from September 1, 1990\. This was continued till the last date of the closure of the agreement, June 30, 1996\. Full reimbursement was received from the World Bank by this date\. 6\. The Govermment of Maharashtra had no difficulty in arranging for allocating matching grants in the annual budget estimate\. C\. IMPLEMENTATION EXPERIENCE 7\. The P\.W\.D\. Government of Maharashtra was responsible for project implementation, including the preparation and management of all civil contracts\. Although the agreement was signed on November 17, 1988, and the project became effective on March 2, 1989, the agreements for six civil works costing Rs\. 1034\.047 Million were signed between June 1990 to December 1990\. One civil works contract, C-VI, costing Rs\. 131\.804 Million, for improvements to Nagpur - Umred - Kanpa Roads had to be resigned due to non-cooperation from the contractor to pay initial securities\. Bids were re invited for this contract and the work order for C-VI was issued in January 1992\. As per agreement with the Bank one of the civil contracts was to be supervised by a Supervision Consultant\. A separate contract was signed for the appointment of a Supervision Consultant to look after works in C-III\. According to the SAR, the supervision consultant was to be on the ground by June 1, 1989, however this was delayed due to late approval of the short-list\. The Supervision Consultant arrived on the ground on April 10, 1991\. The contract with the Supervision Consultant was terminated on the date of closure of the agreement with the Consultant\. Works in C-I,C-II,C-V,C-VI & C-VII were completed between December 31, 1994 to May 28, 1997\. 7\.1\. Out of seven contracts signed, works in C-III, improvements to the Ahmednagar- Aurangabad road & in C-IV, and improvements to the Aurangabad-Jalna-Mantha road could not progress well\. After a review taken by the visiting World Bank Mission in June 1993, these works were withdrawn from the World Bank assistance in September 1993\. The Government Of Maharashtra decided to execute these works from its own funds\. 7\.2\. The Government Of Maharashtra proposed to include two additional works to be added in this project in lieu of two works deleted in September 1993\. The World Bank agreed to this and accordingly the civil works construction of the Jalna Bypass and the second work of Feasibility Study of Mumbai-(Bombay) Nashik Expressway were added in this project in November 1994\. The construction work of the Jalna Bypass, C-VIII, was started in April 1994 & the construction work was completed in January 1997\. The easibility Study of the Mumbai- (Bombay) Nashik Expressway commenced on January 17, 1994 & the final report was submitted by the Consultant in June 1996\. 8\. Though two civil works in Contract No III and Contract No\. IV were deleted from the World Bank Assistance, these two jobs were successfully completed by PWD through Government of Maharashtra' s funds in June 1997\. 42 Appendix B 9\. The implementation record of the project is good\. All the civil works have been completed, including those two which were deleted from World Bank Assistance\. Detailed information in this respect is given in table under para 18 (II) titled "Implementation of the project"\. Feasibility study of Mumbai (Bombay) - Nashik Expressway has been completed\. Pavement Management System has been installed\. Twelve officers were sent for Training through NITHE (National Institute for the Training of Highway Engineers) in New Delhi\. Detailed information in this respect is given in a note (A) on Training\. 9\.1\. As per SAR, 17 Nos\. of Items of Equipment were to be purchased\. This was planned to be centrally purchased by the MOST for all the four participating States\. The MOST could purchase one unit of Mobile Bridge Inspection Unit, one unit of Dipstick Road Profiler & two units of Pressure Bitumin Distributors before the closure of the World Bank Assistance\. Information in respect of this is given in note (B) on Equipment\. 10\. Organizational Study of the State PWD was one of the items of the agreement\. TATA Consultancy Services from India completed the Study and the acceptable recommendations of the Study are planned to be implemented\. D\. PROJECT RESULTS 11\. The physical objectives for the civil works are achieved to the extent of satisfactory levels\. Items which were in balance as on June 30, 1996, have been subsequently completed\. As per SAR, the average cost of improvement works was expected to be Rs\. 1\.597 Million per km\. On completion, it is revealed that the actual average cost per krn for the improvement works, works out to Rs\.3\.188 Millions per km\. 12\. The cost of the project as per SAR was to be Rs\. 1265\.30 Million or US$87\.1 Million\. At the time of signing of the agreement, conversion rate was Rs\. 13\.65 per US Dollar\. During the entire period of the project implementation it kept on changing and at the time of the closure it went up to Rs\.35\.03 per US Dollar\. On the closure day i\.e\. June 30, 1996, the expenditure was to the tune of Rs\.1674\.48 Millions i\.e\. 132\.34 % of the total cost of the project, as per SAR\. After completing all the balance items it was observed that the total cost of this project on all the items including contingencies was Rs\.2510\.35 Million i\.e\. 198\.99% of the cost of the sanctioned project as per SAR\. The large increase in the project cost was mainly due to an increase in the conversion rate and due to additional Civil works and the feasibility study of the Mumbai (Bombay)-Nashik Expressway Project\. The additional cost is also attributed to some extent to the additional works executed on some of the improvement works\. 13\. In the past, the hot mix plants, vibratory rollers, pavers etc\. were available in and around a few big cities (ie\. Mumbai, Pune and Nagpur)\. Use of such machinery was restricted on the Primary Network i\.e\. National Highways or city streets only\. With the implementation of State Road projects, sophisticated equipment like computerized Controlled Hot Mix Plants, vibratory rollers, and electronically controlled Sensor Pavers are now a common feature of the tender conditions, not only for big size projects but also for works of'routine maintenance such as renewal works\. In almost all Districts 4-5 hot mix plants, vibratoty rollers, integrated crushing units and couple of sensor pavers are available\. 43 Appendix B 14\. The Pavement Management System has been installed\. At present only two trained Engineers are available\. The Govt\. of Maharashtra has planned to develop a training program, along with other three participating states: Rajasthan, Uttar Pradesh, and Bihar, so that every year, 10-12 Engineering officers will get trained on this system\. 15\. The works completed under this project are being maintained under regular maintenance program\. Operational plan of PWD to ensure sustainability is appended separately\. E\. FiNDINGS AND LESSONS LERANED 16\. Very important lessons have been learned by the Officers of the Government of Maharashtra while implementing this projects, which will help in improving the performance of such large size projects in future\. Some of these are listed below\. (a) Actions necessary at the time of project preparation: (i) Detailed Engineering and advance preparation is necessary to avoid additional items and increase in quantities during execution which leads to cost overrun\. (ii) Proper rate analysis matching with the specification for the items expected to be executed by the Contractor in order to avoid higher quotation by the intending bidders\. (iii) Identification of quarry for the materials to be used in construction is necessary to ensure that realistic lead charges are included in the estimate\. This also helps in giving proper rates in the bids by the intending bidders\. (b) Action prior to call for Bids: (i) If the quarries are acquired by the employer well in advance, time overruns due to extra time taken by the Contractor for execution work can be avoided\. (ii) Physical shifting of utility services prior to invitation of bids can avoids problem of time overrun in execution\. (iii) Pre-qualification on the basis of similar works & of similar magnitude helps in keeping the progress of works at desired level\. (c) Action during Implementation: (i) Work needs to be supervised by an experienced Engineer, to avoid delays in preparation of Planning Schedules & giving necessary decisions at appropriate time, thereby reducing the time over run\. (ii) Trained Foremen on a works reduces chances of improper action on the work, requiring corrections\. 44 Appendix B (iii) Positive participation of all concerned Government agencies is necessary to avoid undue delays in giving necessary permits\. F\. PROJECT REVIEW FROM THE BORROWER'S PERSPECTIVE 17\.1\. Project Design and Organization\. Preparation of initial project report, investigation, detailed engineering designs, bid documents etc\. were done by the PWD's Engineering officers in house\. A committee of three Superintending Engineers was formed under the chairmanship of Chief Engineer, P\.W\. region, Mumbai\. The main task was subdivided in to sub tasks: Survey, Preparation of Plans & Estimates, Feasibility reports, detailed engineering, Designs of structures etc\.; these tasks were assigned to different divisions working in the state PWD\. Project preparation was done by the road project wings and designs were done by the Design Organisation of PWD\. Bid documents and pre-qualification documents were prepared by the committee members\. During executions, modifications in respect of pavement structures, C\. D\. structures, grades etc\. were redesigned\. Preparation of working drawings etc\. were done by the staff of PWD in charge of the implementation of a particular work\. 17\.2\. Implementation of the Project\. There were seven packages consisting of 8 works as per the Table given below\. The packages were of very large size when compared to the normally then used in the Government jobs\. Banks guidelines were followed for pre qualification\. Although the size of the package was large for the domestic contractors, this could not attract foreign contractors\. 17\.3\. The project completion date was December 21, 1994, as per SAR\. This date was extended by the bank up to June 30, 1996\. The table given below indicates delays in completing works in almost all contracts\. Scheduled dates could not be adhered to for reasons such as, short supply of bitumen & diesel, non-availability of spare parts & piece works / Labour firms\. There were some difficulties which led to delayed completion ie\. difficulties in obtaining Quarry Permits, Electrical Connection, Foreign Exchange, Clearance from Pollution Control Authorities, Shifting of Utility Services\. External events like Gulf war also delayed completion mainly due to sudden & steep rise of prices of Petroleum products, vvhich had adverse effects on Contractor cash flow\. Contract Name Of Roads\. Project Start Date % Achievement on Date on which Nos\. Length of work 30\.6\.96 (date on 100% work (kmn) which W\.B\. was completed\. assistance was closed) I Wada- Bhiwandi Road & Palghar-Wada 69\.410 12\.01\.90 90 05\.28\.97 iRoad I_ _ _ _ _ _ _ _ _ _ _ _ _ _ II Pune-Ahmednagar Road 113\.600 07\.24\.90 100 11\.30\.95 III Ahmednagar-Aurangabad Road\. 92\.000 06\.17\.90 53 06\.20\.97 IV Aurangabad-Jalna Road 112\.400 06\.17\.90 62 06\.20\.97 V Akola-Hingoli Road\. 96\.000 06\.10\.90 100 03\.31\.95 VI -Nagpur-Umred- Kanpa Road\. 69\.000 01\.29\.92 100 06\.29\.95 VII Ahmednagar-Kopargaon Road 96\.000 08\.02\.90 100 12\.31\.94 VIII Jalna Bypass 8\.660 04\.28\.94 91 01\.11\.97 Feasibility Study Of Mumbai (Bombay)- _ January, 100 June 1996 Nasik Expressway\. 1994 Pavement Management System Study - 11\.24\.92 100 IJune 1996 _____I State Average: 87 45 Appendix B 18\. Pavement Management System Study\. The Pavement Management System has been developed for an identified network of heavy density corridors, consisting of 8,000 km of road lengths\. A PMS cell is established at Aurangabad, where this program has been loaded\. For updating the data loaded in this system, all field officers send updated data to the cell every year in the month of April or May\. Two technical officers have received training for operating this system\. Government of Maharashtra has planned a training program so that every \.year about 10 to 12 officers will receive training to make them capable of operating this system\. 19\. Training\. Under this item, 12 Nos of officers of the rank of Executive Engineer, Superintending Engineer & Chief Engineer were sent for training abroad\. This was centrally arranged by NITHE (National Institute for the Training for Highway Engineers), New Delhi\. Table on page 56 under note (A) Training, gives information about the names of the Officers with designations, titles of the training, period of the training & Countries where this training was imparted\. This table also indicates that 21 Man-months of Executive Engineers, 5 Man- months of Superintending Engineers & 2 Man-months of Chief Engineers were used for receiving this training programs\. 20\. Organization Study\. Organizational Study of PWD for Government of Maharashtra was another item for which Banks assistance was received\. Tata Consulting Services, Mumbai carried out this study and submitted their report on 19\.09\.94\. Some of the Recommendations made by the TCS are under consideration at the Government level\. 21\. Feasibility Study of Mumbai (Bombay) -Nasik Expressway\. M/S\. Wilbur Smith & Associates of USA were appointed as Consultants to carry out this feasibility study\. The Consultant carried out feasibility study from April 1994 to April 1996 and submitted their report in June 1996\. This report has been used for taking up this project under BOT\. Government Of Maharashtra is very keen on taking up construction work of Mumbai (Bombay)- Nashik Expressway project\. Actions of obtaining clearances from the Environmental Departments, land Acquisition proceedings & preparing Detailed Engineering are at advance stage\. All these activities are monitored periodically by a special Officer of the rank of Secretary at the government level\. 22\.1\. Performance by Borrower\. The performance of borrowers is considered to be very satisfactory in achieving above mentioned objectives\. The average achievement as on 30th June 1996, the date on which the World Bank assistance was closed, as can be seen from the table given in para 18 was approximately 87%\. All the balance improvement works have been completed physically in the subsequent period and the improved road stretches are serving very well to the road users\. As of today wide roads, bridges and improved riding quality led to attract large traffic volume on these road sections\. For long distance travelers the travel time has been reduced by 16 to 18%\. Substantial saving in the Vehicle Operating Cost has resulted in increase of ERR\. This project helped immensely in bringing modern techniques in the highway construction industry, and introduction of modern machinery and equipment\. PWD Engineers and Engineers working in the road construction Industry with the contractor have been benefited by this project\. Recently GOM has taken up a very ambitious program of improvement of State Roads ( Specially in the relatively backward area) of the state through state funds\. Techniques learned during implementation of this World Bank Projects are being used on these new road projects\. The size of the packages are large and intending contractors are required to possess fleet of modern machinery\. 46 Appendix B 22\.2\. Pavement Management System has been installed\. At present this system ineludes data for 8000 km lengths of some of State Highways\. Extending this system for all state highways and Major District Road is yet to be completed\. There is need to train many more officers\. GOM is launching a regular feature of imparting training to 10 to 12 officers every year\. 22\.3\. There were some problems due to which the benefits of use of supervision of a project by a independent consultant could not yield desired results\. The supervision consultant appointed for supervising the works in contract No\. III was well familiar with the FIDIC conditions of the contract\. He was impartial and was willing to guide the contractor in programming the project\. The consultant introduced the modem method of time-distance programming to monitor the road project\. With the consultants Association with an international consultants the departmental staff and the Indian counterpart of the consultant's team learn new methods and techniques of supervision, management of the large package contracts\. Unfortunately, the contractor could not accelerate or complete the work and supervision consultant had to be discontinued after expiry of his original contract period\. The supervision consultant being a foreign national had some problems in communication with the contractors lower level staff as well with outside agencies indirectly concerned with the project\. The supervision consultant was not familiar with the qualities and nature of Indian materials\. Therefore he insisted on full testing even for stone like good black basalt\. The proved conventional methods of construction in vogue created problems to the consultant who was more familiar with mechanised construction methods and this led to frustration at times\. 23\. Bank Performance\. Visits of the World Bank Mission proved to be very helpful in understanding problems and issues pertaining to the works executed and studies carried out\. In the course of execution, some modifications were felt necessary to achieve desired results\. During Mission's visits suggestions made by PWD Officers of GOM were considered favourably by the Mission\. When requested by PWD, GOM for adding two works in lieu of two works dropped, the request was considered favourably by the Mission\. 24\. Relationship with Bank Officers of State PWD, Government of Maharashtra\. would like to keep on record their appreciation of the valued support, substantial guidance and professional advice received by them from the members of the visiting mission during the course of implementation of this project\. GOM looks forward for such co-operation from the bank in the forthcoming new projects\. NOTES ON TRAINING AND EQUIPMENT A\. TRAINING 1\. As per SAR the training in the four States was to focus on the planning, design and management of Highway works with particular emphasis in the fields of construction, maintenance, and composition and management of the equipment holdings\. The courses were arranged through the National Institute for the Training of Highway Engineers (NITHE) New Delhi\. 47 Appendix B 2\. From Maharashtra in all 12 officers right from the rank of the Chief Engineer to the level of Executive Engineers had undergone different courses\. These 12 officers consisted of one Chief Engineer, three Superintending Engineers and eight Executive Engineers\. 3 \. Following table gives the title of the course, duration and the country where training was arranged and the names of the officers who undergone this course\. Sr\. Title Duration Country Number and level of Officer who No _ undergone the course I Pavement Rehabilitation & Modem Feb\.1993 to April Australia Three Executive Engineers\. Maintenance Management 1993 2 Bridge hispection and Rehabilitation, Feb\.1993 to April U\.K One Superintending Engineer and Maintenance and Management 1993 one Executive Engineer\. 3 Contract Management of big Projects\. Sept\.1993 to U\.K\. One Chief Engineer & one I L_ _ Oct 1993\. Superintending Engineer\. 4 Design Construction and operation of Sept 1993 to Canada Three Executive Engineers\. Expressway\. Dec\.1993\. 5 Equipment procurement Management\. 2\.5\.94 to 27\.5\.94 Italy One Executive Engineer\. 6 Works Procuremnent Management 2\.5\.95 to 26\.5\.95\. Italy One Superintendin- Engineer\. B\. EQUIPMENT 4\. As per SAR, some Modem Equipment were to be procured under this contract\. MOST was to act as Coordinating agency and ordered for these items centrally\. List of items as per SAR, Annexed 4\.1 and actual receipt is as indicated in the following table\. Sr\. Items Nos\. per state Nos\. of units of No\. as per SAR equipment received by GOM actually 1\. Mobile Bridge Inspection Unit\. 1 I 2\. Dynamic Vehicle Weighing Equipment 2 Nil 3\. Automatic Traffic Counters 20 Nil 4\. Nuclear Density Measuring Equipment 6 Nil 5\. Dynamic Cone Penetrometers 3 Nil 6\. TRRI, Bump Integrator 2 Nil 7\. Dipstick Road Profilers I S\. Bitumen Distributors 2 2 9\. Chip Spreaders 2 Nil 10\. Survey Equipment Sets Not specified Nil 11\. Laboratory Equipment Not specified Nil 12\. Training Aids Not specified Nil 13\. Drivers Simulators I Nil 14\. Colour/Night Blindness Equipment 6 Nil 15\. Breathalysers 10 Nil 16\. Break Testing Equipment 6 Nil 17\. Computer Software Not specified Nil Out of these items Bridge Inspection Unit could not be put in use\. There04&re somre problemns with the machine requiring repairs\. Training to the operators and some legal issues are to be sorted outi\. after sorting of these issues the unit can be put on use\. Other items are already put on use 48 Appendix B The State of Rajasthan A\. PROJECT DESIGN AND ORGANIZATION The World Bank had agreed for creditfloan assistance for the State Road Project for Rajasthan estimated to cost US$106 million (which is being revised) to provide (i)Widening, Strengthening, Cross Drainage works and Bypasses to the heavy traffic density corridors for the four State Road Projects, (ii)Construction with updated technology (iii)Improving the traffic movement on important roads to provide cost benefits to the road users\. ICB was done for selection of contractors, as per prevailing procedure of World Bank\. The loan amount sanctioned under the project was US$58 millions\. The agreement was signed on Nov\. 17, 1988\. The engineering investigation, design and cost estimates for project roads were done by the regular divisions of state P\.W\.D\. For construction & implementation, dedicated divisions and circles were created for the project\. The requirement of consultant for designing road was considered only for one road i\.e\. Ajmer to Chittorgarh\. It is now felt that consultants should have been engaged for complete project preparation as well as supervision, and the Engineers of the department should have been associated closely with them during preparation and supervision to acquire more experience of large projects\. It could be done in two Phases\. (i) Project preparation consultant to conduct feasibility study and economic evaluation for selection of roads\. (ii) Construction Supervision consultant who could act as an advisor to Chief Engineer and can also be entrusted with the job of project finance management and preparation of ICR etc\. It is suggested that frequent training, workshops and seminars are arranged by the department during project preparation and execution, in which World Bank officials, Consultants, Engineers of the state and other states are invited to share the knowledge of FIDIC conditions and technology\. It is also suggested that for survey and design, equipments of the latest technology should be used and on the completion of the project such equipments including hardwares and softwares which are procured through consultants should become the property of the department for further use in the department\. B\. IMPLEMENTATION OF THE PROJECT For implementation of the project, contracts for each project road were awarded to the contractors\. The road wise contract amounts are as under: (i) Ajmer Chittorgarh Road Rs 442\.13 million (ii) Udaipur Dabok Chittor Road Rs 261\.00 million (iii) Sirohi Mount Abu Road\. Rs 219\.37 million (iv) Alwar Bhiwadi Karauli Road Rs 742\.60 million Eligible contractors were pre-qualified as per World Bank's / GOR guidelines\. Unfortunately participation of foreign contractors was very limited\. 49 Appendix B Initially the project covered six roads are as under:- (i) Ajmer Chittorgarh Road (ii) Udaipur Dabok Chittor Road (iii) Sirohi Mount Abu Road\. (iv) Alwar Karauli Bhiwadi Road (v) Fatehpur Churu Rajgarh Road\. (vi) Sikar Pilani Road The road at sl no\. (v) was dropped altogether since the ceiling of credit / World Bank loan reached with the five projects already sanctioned and the road at sl\. no\. (vi) was dropped on account of failure of the contractor M/s Gammon India Ltd\. The work on the four roads sl\. no\. (i) to (iv) commenced in Oct\. '90 and completed in June '96 The World Bank extended the completion period by one year to June 30, 1996\. The work on the Bhiwadi Karauli road could not be completed mainly due to financial constraints\. There have been time and cost overruns on the project\. Substantial time over run were involved in land acquisition, shifting of utilities, liaison with Railways and for Rail Road crossing, ROBs and finalisation of design of project roads\. Since the initial surveys were done by the regular divisions subsequently time was taken in confirmation and transfer of survey data, modification and updating of design in the department\. This time and consequently cost over run could have been saved by the engagement of project supervision consultant as mentioned above\. In addition to the above, there was a general shortage of bitumen which contributed in delays in execution of the project\. The World Bank mnission in each of their visit has guided the project implementation which immensely helped in accelerating the progress\. C\. PERFORMANCE BY BORROWERS The objective of the project was to provide the required width and strength of the roads for the traffic to save on the vehicle operating cost and the accidents etc\. These objects have been achieved satisfactorily\. The execution of 26 nos\., bypasses (of length about 68km\.) at various locations and the four lanning of the Udaipur - Dabok Chittorgarh road has considerably improved the movement of the traffic together with the saving in travel time and cost on these roads\. The cost on recurring maintenance has also been saved as the crust is now properly designed and provided on these roads\. The pavement management system which was taken up as a part of the project has immensely helped the staff of the department, in learning the methodology to prepare and plan the maintenance operation on the State roads in a more scientific and cost saving basis\. The local and overseas training has helped the Engineers to equip themselves with latest techniques and practice in planning, design and construction of roads\. At the time of start of this project there were few local contractors capable for construction of quality road works\. Presently many other local contractors have come up who are capable to execute works of good quality\. The contractors have procured vibratory rollers, hot mix plant, paver finishers and other latest machinery which has increased the out put of work as well as has improved the quality\. However still there is scope of improvement in site management and utilisation of machinery\. 50 Appendix B Most of the deficiencies in pre-qualifications criteria identified during implementation of the project are being taken care of for future externally aided projects\. For further projects, it is proposed that land acquisition and shifting of utilities, statutory clearance construction of ROBs and rail crossing with railways should be taken up and completed at least three months before the construction work is awarded to the contractor\. This could be done with Technical Assistance loan and specific budgetary provision by the GOR\. It would also help in providing unhindered stretches of road as desired by the contractor to build on\. The hindrances free sections to be handed over should be decided in such a way that minimum inconvenience is caused to the traffic during constructiorn period\. It is also felt that simple land acquisition procedure enabling the department, to acquire the land at market rates in a period of three to six months may be considered by the GOR through the amendments in the Land Acquisition Act\. It will immensely cut down the time over run on account of land acquisition\. The road works completed under project have been transferred to the regular divisions for maintenance as was stipulated in the SAR\. D\. BANK'S PERFORMANCE The World Bank mission during each visit imparted valuable guidance and support by suggesting corrective measures in the project implementation and in design of the project\. Interaction with Bank and its supervision mission were useful in initiating corrective measures for speedy implementation of the project\. E\. RELATIONSHIP WITH THE BANK The Govt\. of Rajasthan would like to place on record its appreciation of the valuable support, guidance and professional advise from successive Bank missions during the course of the project which indeed went a long way in the successful completion of the project\. The Govt\. of Rajasthan would look forward for such co-operation in the future for development activities in the state\. 51 Appendix B The State of Uttar Pradesh World Bank Aided State Road Project was the first Externally Aided Project in the Road Sector of State of U\.P\. This project was planned for rehabilitation & Improvement of 604 km\. Roads Costing Rs\. 231\.26 crores which was divided in 9 packages\. Three package works were deleted by the World Bank due to exceptionally high tender rates\. Later, due to very slow progress on the work in contract package 9, the contractor was expelled & the State Government decided to execute the balance work of CP-9 from its own resources\. In this way the project work was reduced to a length of 201 km, costing Rs\. 177\.51 crores on the following roads: (i) Sonali Gorakhpur Road - 95 Km\. (ii) Gorakhpur-Ballia Road - 45 Km\. (iii) Faizabad Allahabad Road - 61 Km\. A\. PROJECT EXECUTION AND THE INITIAL OPERATION CHARACTERESTICS OF ITS KEY COMPONETNTS The State Road Project was planned to be executed by UPPWD, which is well settled & Technically equipped Department of the State\. Although the Survey & Planning Work of Project was started in the year 1987 but as it was the first externally Aided Project in which the incorporation of FIDIC conditions, ICB & Evaluation of big contracts, and Planning & Management of large contract Packages took considerable time & hence Project's execution could start in the year 1991\. The execution of works have been carried out satisfactorily according to the Implementation Schedule & almost all the schedule works have been completed in the Bank's loan period i\.e\. up to 30\. 6\. 96\. (i) idening & Strengthening of Sonali-Gorakhpur Road-95 km\. completed by 30\. 6\. 96\. (ii) Widening & Strengthening of Gorakhpur-Ballia Road-45 km\. completed by 30\. 6\. 96\. (iii) Widening & Strengthening of Faizabad-Allahabad Road-61 km\. completed by 31\. 3\. 97\. The execution work of Contract Package - 9 of Faizabad - Allahabad Road (km\. 141 to 226\.1 i\. e\. 86 km\.) was not be carried out by contractor as per schedule & as per mile stones of the contract agreement despite all the efforts from the Consultant - Engineer & Employment side, and ultimately the contractor was expelled in 1/95 & it was decided by the GOUP to executed the Balance work of Package from its own resources\. The initial operation characteristics of its key components have been satisfactory which are summarised below: (i) A Supervisory unit was established for execution of the Project headed by a Senior officer named as 52 Appendix B Chief Engineer World Bank Project (Road) U\.P\.P\.W\.D\., Lucknow The unit was consisting of adequate number of suitably qualified & experienced staff\. This supervisory unit has executed the Project work in the schedule time as detailed above\. In accordance with World Bank Condition for One Road i\.e\. Faizabad - Allahabad Road, an International Agency i\.e\. MIS N\. D\. Lea was engaged for Consultancy & Supervision of the work\. (ii) All necessary steps have been taken for training of staff of the P\.W\.D\. at all the levels\. Even some technical staff was sent for training in abroad countries so as to & learn advanced techniques and technology being adopted in the Road sector\. (iii) The studies have been carried out to introduce a Road Maintenance management system\. An ARAN survey for about 8000 kms\. important roads have been carried out and sufficient dates have been collected for improvement in the Maintenance & Management system of the State Roads\. The Staff has also been trained in the above sector\. A cell named as Pavement Management System PMS has been established in the Department which is well equipped & having sufficient data\. B\. THE COST & BENEFITS OF THE PROJECT The project was designed to support two lines of action at state level i\.e\. (i) to upgrade the roads from single lane to two lane and to increase their structural strength to levels commensurate with current & expected traffic & (ii) to introduce network management techniques which may result in better and more effective road maintenance & planning of road investments\. Now with the Project's execution 201 kms long important State Highway have been upgraded from single lane to two lane & these roads have gained much structural strength so as to accommodate current & expected traffic smoothly resulting Socio-economic development of the state\. The economic benefits arising out of saving in travel times & operating costs were estimated as per RUCS recommendations\. The average Economic Internal Rate of Return was estimated in SAR to be 19 %\. Now after Project execution the average ERR is growing to increase substantially & thus the estimated benefits have been achieved\. C\. THE PERFORMANCE OF THE BORROWER, EXCECUTION AGENCC1ES AND THE BANK WITH REGARDS TO THEIR RESPECTWE OBLIGATIONS UNDER THE LOAN CREDIT AGREEMENT The main objectives of the Project were to improve the planning design and execution of construction and maintenance work of state as well as to identify appropriate means of mobilizing resources needed to implement economically desirable increases in road outlays in the state\. The performance of Borrower is considered to be satisfactory in achieving the above objectives as important State highways of 201 kms\. Length have been upgraded & strengthened 53 Appendix B so as to impart & accelerate the Socio-economic Developments of the Backward areas of State\. Almost all the project works have been completed in the schedule time of the Banks, Loan Term\. Projects' schedule monitoring, upkeep of all the accounts & their submission to the appropriate offices have been carried out properly & in time\. During the operation of Project the Bank's guidance has been sought in all the sectors of Project i\.e\. Finance, Technical & Management etc\. The World bank's performance during the execution of Project has been found completely satisfactory\. The Bank's mission during each visit imparted valuable guidance & support by suggestion new methodology and corrective measures in Project implementation\. Flow of funds and reimbursement of claims of the Project have been done timely by the bank\. Relationship with Bank\. GOUP and U\.P\.P\.W\.D\., would like to place on record its appreciation of the Valued support, guidance and professional advice from Bank mission during the course of the Project which indeed went a long way in successful completion of the Project\. D\. THE EXTENT TO WHICH THE DEVELOPMENT OBJECTIVES OF THE LOAN/CREDIT WERE ACIEVED All the Development objectives of the Loan/Credit have been achieved by upgrading & strengthening about 200 kms\. Important State Highways of State as needed for Socio-economic development of the State\. The Project has also established a Pavement Management System which will help the Department in Maintenance & Management of Road network of State effectively\. E\. EXPERIENCE & SUGGESTIONS The experience gathered from the execution of the Project & Suggestions for better & speedy completion are as below: (i) Planning & Management of Works should be more comprehensive so that the works be completed well in the schedule time\. It requires that the Land Acquisition, Removal of Utilities & Designs & Drawings of all works should be completed in advance so that the progress may not suffer on these aspects\. Proper co-ordination is required in all the concerned departments & executing Agencies\. World Bank may also suggest the Borrowers in this context\. (ii) Contract Packages in such large volume are not desirable for the developing State like Uttar Pradesh because the local contractors with such huge Financial & Technical Status are rarely available\. Hence size of Packages should be medium having work value ranging from 150 to 250 million Rupees\. (iii) International Supervision Consultancy is not desirable in the state like U\.P\. because where there is sufficient Technical know how in the Department, then it becomes uneconomical\. In this project, two roads have been completed successfully by the State PWD in its own supervision\. 54 Appendix B (iv) It is also desirable that when due to certain unforeseen complications in the execution of work some extra time is needed for completion of work the Bank should pay cooperative attitude by extending the loan term so that the basic objectives of the project be achieved completely & all the beneficiaries be benefited\. (v) It has been experienced that in the Department an organization with experienced & willing personnel be established exclusively for Externally Aided Projects so that the problems & inconveniences caused due to changes & shifting of unit & personnel be rectified & also the project works be executed speedily & smoothly\. It is also desirable that the World Bank may also suggest strongly the GOUP in this aspect\. 55 Appendix B The Ministry of Surface Transport A\. TRAINING (a) Execution As per the SAR the training of officers of the four beneficiary states was to focus on the planning design and management of Highway works with particular emphasis in the field of construction, maintenance and management of Highway projects\. Suitable training programs were prepared and co-ordinated by the 'National Institute for Training of Highway Engineers" (NITHE) which is a principal institute for training of Highway Engineers in the country established under the agencies of the Ministry of Surface Transport\. In all six training courses were conducted on the following subjects: (i) Course I: Pavement rehabilitation and maintenance management system by Royal Melbourne Institute of Technology (RMIT), Australia\. (ii) Course II: Bridge inspection, rehabilitation and maintenance management system at Transport Research Laboratory in U\.K\. (iii) Course III: Contract management of Big Projects at the British Council in U\.K\. (iv) Course IV: Design, Construction and Operation of Expressway including interchanges at Ontario, Canada\. (v) Course V: Equipment procurement management in Italy, and (vi) Course VI: Works procurement management in Italy\. In all, 42 officers from the four beneficiary states received training as detailed below: Course Bihar Maharashtra Rajasthan Uttar Pradesh Total I 1 3 -2 6 ff 2 2 - 2 6 III 3 2 2 2 9 IV 4 3 8 4 19 V- I I VI - 1 - 1 Total 10 12 10 10 42 (b) The program provided a total of 148 person-months of training which comprised academic in India and field module in Australia, U\.K, Canada and Italy\. Total expenditure on training was about Rs\. 24 million\. The training programmes have been very useful and beneficial in (i) upgrading the capacity of PVVD in execution of highway projects\. (ii) providing exposure to the PWD officers to new technology in highways and bridges\. (iii) management of highways works including maintenance and management of the equipment holding\. 56 Appendix B (c) Performance of Borrower/executive agencies and the Bank\. The performance of the borrower, the executive agencies and the Bank on this component has been highly satisfactory in achieving the objectives\. (d) Achievement of objectives the main objectives of the training component of the loan vvas to assist the borrower state in bringing up institutional development of beneficiary states, 42 officers have been trained under this loan in various roads or highway design, construction and maintenance including exposure to new technologies\. Thus, the objectives of the loan have been met to a large extent\. However, further follow up actions are required to be taken by the borrower states so as to bring about effective changes in the respective states\. Since training is a continuous process, the same should be continued to achieve the required institutional development\. B\. PROCUREMENT OF SPECIALIZED EQUIPMENT (a) Execution 17 categories of equipment totaling to 257 nos\. were identified to be procured for the State Road Project as per the Staff Appraisal Report for the loan\. In Sept\. 1991, it was decided in consultation with beneficiary states and the World Bank that only 9 items of high priority equipment, totaling to 157 nos\. should be procured\. As agreed by the respective States and the World Bank, the Ministry of Surface Transport acted as the modal Ministry on behalf of beneficiary states for procurement of equipment\. The entire procurement of equipment was done by Director General of Supplies and Disposals (DGS&D), being the central procuring agency on behalf of Govt\. of India\. Specifications of equipment were finalized by the Ministry in consultation with the beneficiary states and were concurred in by the World Bank\. After obtaining the details of the consignees from the beneficiary states, indents were placed on DGS&D in August-November 1993\. DGS&D however, could invite tenders under ICB procedure for all the equipment in June 1994 after obtaining further details of the states\. After obtaining necessary clarifications from the International bidders and technical evaluation, the requisite concurrence of the World Bank was sought, DGS&D was able to place the orders for supply of 5 categories of equipment before the closing date of the loan, procurement of only 3 categories of following equipment totaling to 14 nos\. could materialize\. 1\. Dip Stick Read Road Profilers (one each to U\.P\. & Maharashtra) 2 nos\. 2\. Bitumen Pressure Distributors (two nos\. each to Bihar, U\.P\., Maharashtra and Rajasthan) 8 nos\. 3\.Mobile Bridge Inspection Units (one each to all the four beneficiary states) 4 nos\. 14 nos\. 57 Appendix B The first two equipment have already been supplied to the consignees\. Out of the four MBIU's two nos\. have already collected by the cosignees of Maharashtra and Bihar states and the remaining two MBIUs are yet to be collected by the consignees\. Beneficiary states are not willing to take over the units as the loan had already expired on 30h June, 96\. Ministry has made a request to the World Bank for providing necessary funds under the Second National Highway Project (Loan No\. 3470/Cr-2365) as a special case to the state so that the units can be used by them\. (b) Cost and Benefits Against the total budget provision of US$ 22\.4 million for this component, the total expenditure for procurement of 3 categories of equipment works out to US$ 2\.596 million and Rs\. 40\.15 rnillion (i\.e\., total expenditure of approximately US$ 3\.6 million)\. In terms of percentage, the total utilization against the budge provision is approximately 16%\. However, the expenditure amounting to US$ 2\.446 million was not reimbursed from the loan, as the closing date had already expired by the time the equipment had reached India\. Full benefits of procurement of specialized equipment could be achieved due to the following issues which were encountered during procurement\. (i) Preparation of specifications took almost 2 years as these were required to be prepared on the basis of availability of equipment in international market and its use in Indian conditions\. (ii) World Bank took 5-6 months or sometimes more time for approval of the specifications\. (iii) States took 1-2 years to intimate the consignee details\. This oculd be avided, if the consignee details had been finalised at the time of Approval\. (iv) In many cases the international firms did not submit tenders in accordance with Ministry's instruction/specification and DGS&D requirements\. This necessitated seeking of clarifications from concerned parties, resulting in delay in evaluation\. (c) Performance of Borrower/ Executive agency/ Bank The performance of the borrower and the executive agency was not satisfactory\. Moreover, the performance of the Bank was also not up to the mark because of the delays in certain approvals\. (d) Achievement of Objectives the equipment procured were required to enhance the road productivity and quality\. In this particular direction, the objective have not been fully achieved as all equipments envisaged in the loan could not be procured within the time frame\. 58 Appendix B C\. PAVEMENT MANAGEMENT ST1JDY (a) Excecution Pavement Management Study was implemented in the states of Bihar, Maharashtra, Rajasthan and Uttar Pradesh with the objective of introducing a modem Pavement Management Study (PMS) to ensure effective use of the road rehabilitation and mnaintenance funds\. The consultancy services for the study was awarded to M/s N\.D\. Lea International Ltd\. & Associates on 24\.11\.92\. However, the consultant commenced the work in November, 1993\. The period of services was 2 years\. A Pavement Maintenance Management System (PMMS) Cell was created at Aurangabad in Maharashtra\. The cousultant prepared the program for PMS\. Primary training for use of computer was given by the consultant to the Data collection Engineer of the PWD's for collecting the road data and carry out pavement management study (PMS)\. Mls N\. D\. Lea International Ltd\. & Associates also procured one Automated Road Analyser (ARAN)\. The vehicle was deployed in all the four states and field data for a total length of 29,706 Kms (Bihar-5872 Kms, Maharashtra-8343 Kms, Rajasthan-7887 Kms and U\.P\.-7604 Kms) were recorded\. The consultant had organised traffic count survey training at five locations i\.e\. Aurangabad, Akeluji, Pune, Nanded and Nagpur with traffic count data at 36 locations\. The consultant carried out axle load survey of eight location in Maharashtra during January, 1995 and loadman survey for 1600 Kms\. length was carried out in the month of April and May, 1995\. The consultant had also organised training on computer software on the following topics\. (i) Pre-requisite computer training (ii) Data collection and auditing (iii) Data processing (iv) Maintenance program development and budgeting\. The PMS scope covered state highways and Major District Roads in the Project States and was designed as computer aided system for utilising relational data base, and for Planning programming and Budgeting of pavement works\. Three modules, viz\., Planning and Programming Module (PPM), Design and Estimates Module (DEM) and Routine Maintenance Module (RM14) were developed\. Data collection was done using automated equipment, ARAN for Road inventory and visual survey along with Falling Weight Deflectometer (FWD) LOADMAN, ARAN AND LOADMAN were calibrated using 'MERILYN' and benkelman beam\. The study has been completed and system installed in the four states\. Detailed documentation prepared which include final report, user manuals for DEM, RMM and PPM as also the system manuals for DEM and RMM\. (b) Cost and Benefits The consultancy services for the PMS was awarded to M/s N\. D\. Lea & Associates at a cost of Rs\. 110 million (US$ 1\.523 million + DKK 3\.37 million + Rs\. 18\.97 million)\. Under this 59 Appendix B study, an ARAN was procured for road inventory and visual survey with Falling Weight Deflectometer (FWD) and about 30,000 Kms of state and major roads in all the four states were surveyed and inventoried\. PMS hardware and software package was also installed in each P\.W\.D\. (c) Performance of borrower/ executive agency/ Bank The performance of the borrower, executive agency and Bank for the component of this loan was satisfactory\. (d) Objectives The requisite objectives under the pavement management study have been achieved in full\. The principal objective of the study was to establish in each state maintenance network, management system based on (a) an inventory of their network, detailed road geometry, pavement type and condition (b) a continuing record of traffic flows and (c) the local costs of remedial treatments ranging from simple pothole repair to a full pavement reconstruction\. However, the Rajasthan PWD, after completing the road inventory survey, established a working cell to manage the PMS and has conducted some survey with the ARAN vehicle to update its road condition inventory data-base\. Maharashtra PWD also uses the PMS to maintain and update data base of the condition of its core road network\. In U\.P\. and Bihar, PMS is currently not being utilised\. The study was successful but its operationalisation has not fully occurred\. D\. BANK PERFOEMANCE The Bank's performance in achieving the objectives has been generally satisfactory except in procurement of specialized equipment\. E\. KEY LESSONS LEARNED (i) Project Preparation\. Project preparation of all Highway Projects should be carried out with the use of internationally experienced consultants so as to ensure good quality project\. (ii) Pre Construction Activities\. All project preparation activities like techno-economic feasibility studies, detailed engineering design, environmental studies pre-construction activities like land acquisition, shifting of utilities and award of work should be completed before civil works contracts can start on the ground\. Even the loan negotiations should commence only when the pre-construction activities have been substantially completed and pre-qualifications of contractors have been approve by the Bank\. (iii) Evaluation of Tenders\. Evaluation of tenders should be carried out expeditiously and thoroughly\. For this purpose tender documents should contain structured questions so that the response of tenderers is unambiguous\. It is advisable to have pre-award meetings with the 60 Appendix B successful tenderers to finalize any outstanding issues regarding details of deployment of equipment, personnel and cash inputs\. Special attention should be paid about the participation of all joint ventures partners\. (iv) Organization Set Up\. Dedicated team of officers should be deployed by PWDs for project implementation Policy/institutional strengthening of the State PWDs, together with intensive training in contract and project management skills at initial stages of project is important to enhance implementation capabilities\. (v) Supervision of Work\. External consultant should be engaged for supervision of works as 'Engineer' for better contract operations\. Certain powers should also be authorized to 'Engineer' for issue of variation orders\. (vi) Familiarity with the Bank's Procedure\. Lack of familiarity with ICB and other Bank procedures caused major delays in implementing civil works and other components under the project\. Hence familiarity with Bank procedures and ICB is a must lto start the project\. (vii) Contructor\. Contractor's project management capabilities need to be strengthened\. Positions like Plant Engineer and Quality Surveyor are generally missing in the contractor's organization\. This should be filled in for proper management of equipment and preparation of statement of account and claims\. Presently, there is no monitoring of works by contractors\. Conditions of contract should specify that the contractor would furnish monitoring report along with any remedial measures taken/proposed to be taken by them\. Changes in contractor's personnel should be avoided or at least minimized\. (viii) Changes during Execution\. Changes in specification and design during execution should be avoided, unless it is very essential\. (ix) Contract management\. Undue interference of Employer in contract management should be avoided\. Besides certain procedures should be streamlined to avoid delays\. Payment to contractors should be made at the earliest, after issue of Payment Certificate, but in no case later than 30 days as envisaged in the contract\. As per present practice, measurement books are required to be fulfilled in by hand\. Computer outputs duly signed should be accepted for measurement purposes\. Approval of Auditor General should be obtained for the same by GOI\. (x) Montoring\. A modem on-line monitoring system should be established at the Employer's office\. Dedicated team for monitoring should be established in the Employer's office who should be reporting the bottlenecks to the authorities regularly\. Close monitoring should be carried out, even on a weekly basis, right from commencement\. (xi) Bank's involvement\. Visits of Bank's missions are welcome\. It has been noted that sometimes the Mission renders advice on contractual matters to the employer and the contractor\. This has created some contractual problems in the past\. As per the norms of the Bank, complaints of contractors and consultants should be passed on to the executive agencies 61 Appendix B for consideration\. It is advisable that Bank's Mission refrains from any direct advice on contractual matters unless asked for by executing agencies\. (xii) Sustainability of Project\. Some of the roads improved under the Project have already started to deteriorate due to inadequate maintenance, higher traffic volumes, etc\. Effective road maintenance management, including planning and budgeting for the roads, is the key for sustainability of project roads and entire road projects\. (xiii) Institutional modernization\. With the new generation of state road projects there will be much more emphasis on facilitating the transformation of the PWDs from providers to managers of the state road networks\. This will mean institutional modernization and strengthening will be key project developments objective\. (xiv) Institutional procurement Arrangement\. The complete procurement of machinery etc\. should be the direct responsibility of the beneficiary state to avoid cumbersome institutional procurement arrangement\. This will reduce the wastage of time in inter-agency communications and decision making\. 62 Appendix C IMPLEMENTATION COMPLETION REPORT STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) ECONOMIC RE-EvALUATION Preface 1\. This appendix presents the economic re-evaluation of the hIdia States' Road Project\. It summarizes: the Staff Appraisal Report (SAR) economic evaluation methodology; the Implementation Completion Report (ICR) economic re-evaluation methodology and assumptions; and, an ex-post comparison\. Economic Evaluation Methodology in SAR 2\. The SAR presents the economic evaluation of the road strengthening and widening (improvements) works in Bihar, Maharashtra, Rajasthan, and Uttar Pradesh and the economic evaluation of the Bhagalpur bridge in Bihar\. The SAR quantified the benefits accruing from vehicle operating costs savings, time savings of working passengers and goods in transit, and road maintenance costs savings\. In the case of road improvements, these benefits have been quantified using the Highway Design and Maintenance Standards Model III (HDM), and in the case of the Bhagalpur bridge, benefits have been estimated by road user costs savings by the distance reductions and from avoiding the present transshipment from vehicle to ferry then back to vehicle again\. 3\. Road Improvements\. To estimate the net benefits of the road improvement components, the SAR used the 1HDM which simulates life cycle conditions, estimates road agency and user costs, and provides economic decision criteria for alternative maintenance or improvements investments\. The analysis period was set to fourteen years to capture ten years of project net benefits after the estimated four years construction period, and the salvage value at the end of the analysis period was set to 25 % of the investment costs\. The SAR presented the internal economic rates of return (ERR) for each investment option as well as the average for each state and the overall project (see Table A3), but it did not present the net present value (NPV) of project benefits\. The estimated overall ERR for the road works was 30\.4 % and the ERR range was from 11\.5 to 96\.8 %\. 4\. The SAR estimated that in 1988 the range of road roughness of the project roads was from 5\.0 to 8\.5 the international Roughness Index (IRI) and most roads were over twenty years old, in need of strengthening and widening (improvements) to a two lane standard of 7\.0 m with in some cases hard shoulders\. The daily traffic range in 1988 for the project roads was from 538 to 3144 ADT with an average of 1630 ADT, and the range of the expected traffic growth from 1988 to 2001 was from 6\.3 to 7\.5 % per annum\. 5\. Bhagalpur bridge\. To evaluate the Bhagalpur bridge, which included its approach road, ERR was calculated by costs and benefits in the "with" and "without" scenarios\. In the cost stream, construction and maintenance costs (0\.5% of construction cost) were considered\. In the benefit stream, vehicle operating cost saving, transshipment savings, and time savings were considered\. These were assessed by the diverting traffic from two road-cum-rail bridges and ferries, which cross the river 63 Appendix C Ganges, after applying a least distance matrix to the Origin Destination survey data\. -The estimated ERR was 20\.2 %\. 6\. Road Improvements\. The ICR ex-post economic evaluation was done for 16 roads that were completed under the project and 2 roads that were dropped but completed by the PWD own resources\. To perform the ICR ex-post economic evaluation, the HDM, 1988 prices, and 0\.8 financial to economic conversion factor were used\. These assumptions are the same as those used in the SAR\. A sample vehicle operating costs used in the ICR analysis, which is the most influential factor in the HDM, are shown in the table below\. Vehicle Operating Costs (1988 Rs per vehicle-kin) Roughness, IRI (rn/k) Car Bus Medium Tnick 2 2\.5 3\.9 2\.7 4 2\.6 4\.0 2\.9 6 2\.8 4\.1 3\.3 8 2\.9 4\.3 3\.6 10 3\.1 4\.5 3\.9 7\. In the ICR ex-post economic evaluation, following steps were taken\. (i) the first step taken was to replicate the SAR economic evaluation using the HDM based on the HDM inputs by provided on the SAR for roads and vehicle fleet characteristics (vehicle operating costs) as well as investment and maintenance costs\. The SAR did not provide all the required inputs; therefore, the missing data was estimated based on current experience on Indian roads and adjusted to replicate exactly the SAR rates of return\. The estimated data that was obtained this way was used consistently in the ex-post economic evaluation\. (ii) The second step was to re-evaluate the SAR rates of return, by increasing the analysis period from 14 to 20 years\. This was done because the SAR economic evaluation computed 10 years of net benefits after the four years construction period but the actual works were delayed on an average of three years with an average construction period of six years\. Therefore, to evaluate the consequences of the works completion delays and to compute at least ten years of project benefits after the construction period, the analysis period was increased to 20 years (1988 to 2007) for both the re-evaluated SAR calculations and the new ICR calculations\. (iii) The third step was to perform the ICR ex-post evaluation taking into consideration updated traffic data, construction costs, and construction period and timing, with an analysis period of 20 years and the same unit vehicle operating costs as in the SAR\. (iv) Finally, the fourth step was to compare the re- evaluated SAR results with the ICR results\. 8\. Bhagalpur bridge\. To perform the ICR econonic evaluation for the Bhagalpur bridge, the same methodology that was used in the SAR was applied assuming the completion of construction by June 2000\. The construction costs and the maintenance costs have been revised to reflect the actual and projected construction costs\. The benefits (vehicle operating cost saving, transshipment savings, and time savings) have been revised to reflect the projected bridge traffic data in 2000 provided by the GOB\. These benefits were calculated by assuming the same ratios of diversion in the SAR\. The evaluation period is the same as the SAR, 1989 to 2013, but the operation period was 19 years (1995-2013) in the SAR, while it was 14 years (2000-2013) in the ICR\. For the analysis following steps were taken\. (i) The first step was to replicate the SAR\. (ii) The second step was to re-evaluate SAR rates of return in the condition of delay in construction but the same construction cost\. (iii) The third step was to re-evaluate the SAR, in the condition of re-estimated construction cost and period, and traffics\. (iv) The fourth step was to compare the re-evaluated SAR and the ICR results\. 64 Appendix C 9\. Table Cl presents the ADT for each road in 1997 of the SAR estimates and ICR actual traffic\. It also presents the SAR estimates for traffic growth for the 1988-1997 period and the actual traffic growth for the same period\. The actual traffic in 1997 is, for most roads, higher than the SAR estimates by an average of 60 % for the roads that are completed\. Consequently, the actual growth rates are 1\.8 times higher than the SAR estimates\. For example, Maharashtra, the state with the most dynamic economy, had an average actual growth rate of 12\.3 % compared to an SAR estimate of 6\.6 %, and the average actual 1997 traffic is 1\.7 times higher than the SAR estimates\. 10\. Figure C1 shows the histograms of the ICR/SAR ratios for the 1997 traffic and the 1988- 1997 average annual traffic growth rate\. It is observed that only 23 % of the project roads had a 1997 traffic ICR/SAR ratio below 1\.0, while 77 % had a ratio higher than 1\.0, with 18 % having a ratio higher than 2\.0\. This indicates that the SAR grossly underestimated the expected traffic growth in these states, and this is corroborated by the 1988-1997 annual traffic growth ICR/SAR ratio histogram\. 11\. The estimated traffic for the Bhagalpur bridge in the SAR and the ICR are shown in the table C 1\. The ICR traffic estimation is far beyond the one in the SAR\. For the year 2000, it was estimated 3226 ADT in the SAR while it is 6995 ADT in the ICR\. This is 2\.2 times higher than that of the SAR\. This is mainly due to the expectation for vivid traffic growth between south and north area of the state including Nepal\. 12\. Table C2 presents the project financial costs for the roads that were completed under the project: (i) the project costs per km as estimated in the SAR; (ii) the actual costs per kin; (iii) the ICR/SAR ratio for project costs per km; (iv) the completion year; and, (v) the construction period\. All project financial costs are expressed in 1988 mnillion Rs, the SARP currency\. Hence, the costs were converted to 1988 Rs based on the costs distribution over the years of each project adjusted to 1988 costs using India's wholesale price index\. The average road improvements costs estimated in the SAR for the roads that are completed was 1\.9 million 1988 Rs per km ($140,000 in 1988 US$ per kin) and the average actual costs is 2\.5 million 1988 Rs per km ($190,000 in 1988 US$ per km), which represents about 5\.2 million 1998 Rs per km\. The SAR assumed a four-year construction period with a construction costs annual distribution of 12 %, 23 %, 43 %, and 22 %; while the average actual construction period was six years with an average construction costs annual distribution of 18 %, 22 %, 25 %, 18 %, 10 %, and 7 %\. Table C2 also shows that project costs for the roads that are completed are on average 1\.4 times higher than the SAR estimates (in 1988 Rs), with Rajasthan being the state with the highest cost increases (about 50 %)\. The reasons for higher costs includes; (i) high bids by contractors (lower estimation by PWIDs); (ii) poor designs that resulted in quantity changes and variation orders and; (iii) delays in implementation that involved many factors and resulted in variation orders\. 13\. The histogram of ICR/SAR ratios of the project financial costs per km for the roads are shown in figure C2\. From the figure, it is observed that only 11\.1 % of the projects had an ICR/SAR ratio below 1\.0, and 61\.1 % had a ratio between 1\.0 and 1\.5, and 28 % had a ratio higher than 1\.5\. The histogram of actual construction period shows that 61 % of the roads had a construction period between four and six years, and only 6 % had a construction period below four years\. The average construction period is 5\.8 years\. 65 Appendix C 14\. The financial construction cost for the Bhagalpur bridge was 689 million 1988 Rs in the SAR (construction period 1989-1994) and 864 million 1988 Rs is estimated in the ICR (construction period 1991-1999)\. 15\. Road Improvements\. The economic analysis of the SAR covered 23 individual roads that accounted for 75% of the original total project cost\. The economic analysis of the ICR covers 18 roads"3 including 2 roads that were completed by the Maharashtra PWD's own resources\. In order to reflect ex-post results, the 18 roads were also re-evaluated under ex condition (re-evaluated SAR)\. In the analysis, all costs and benefits were converted to Indian rupees of 1988 price\. The roads operational period is assumed 10 years in the cases of the re-evaluated SAR and ICR\. 16\. The economic re-evaluation are summarized in table C3, C4 and the table below\. The average ERR and NPV in the ICR are 63\.6% and 9,142 million Rs in 1988 price, and in the re-evaluated SAR they are 32\.4 % and 6,150 million Rs respectively\. This indicates that economic benefits of the roads completed are higher than that were estimated in the SAR\. This implies also that, in relation to the SAR estimates, the increased actual traffic (1\.6 times) compensated economic results although in the ICR there are devaluation by the increased construction costs (1\.4 times) and the construction delays (2 to 3 years delay in commencing the works and 6 years of actual construction period in the ICR while 4 years construction period in the SAR)\. Although the ICR shows the higher ERR and NPV, the costs are enormously higher than estimated and are explained; (a) high bids by contractors (lower estimation by PWDs); (b) poor designs that resulted in quantity changes and variation orders; and (c) delays in implementation that involved many factors and resulted in variation orders\. Economic Re-evaluation for the Roads Copleted Average Average cost/km Average cost/km ERR (%) NPV \.__________ ADT (1997) (M 1988 Rs) (M 1988 US$) 4 (M1988 Rs) SAR_ 3,055 (1\.00) 1\.79 (1\.00) 138,000 30\.4 NA Re-evaluated SAR 3,055 (1\.00) 1\.79 (1\.00) 138,000 (1\.00) 32\.4 (1\.00) 6,150 (1\.00) ICR 4,794 (1\.57) 2\.20 (1\.23) 170,000 (1\.23) 63\.6 (1\.96) 9,142 (1\.49) 17\. Bhagalpur bridge\. The result is shown in the table below\. Since the bridge and its approach road have not been completed, the values are only for reference\. In the table, the case of the ICR, which is with 4\.5 % traffic growth rate in the year 2000 onward and six year delay in implementation, is considered as a most realistic scenario\. The project cost is 505 million 1988 Rs in the SAR, while 691 million 1988 Rs is assumed in the ICR as the projected project cost\. In the re-evaluated SAR, where a six-year delay in implementation and the same construction cost are assumed, ERR increases to 23\.8 % from 19\.6 % and NPV devalues to 257 million from 396 million in 1988 Rs\. I n the ICR, ERR dropped to 18\.6 % from 23\.8 % while NPV is 256 million 1988 Rs, which is almost the same as the re-evaluated SAR\. Table CS shows the calculation of the case of the ICR\. 13 See table 5: Key indicators for Project implementation\. 66 Appendix C Economic Re-evaluation for the Bh_______bridge_\| Average Cost Cost ERR NPV ADT (2000) (M 1988 Rs) (M 1988 US$) (%) (M 1988 Rs) SAR 2,982 (1\.00) 689 (1\.00) 53\.1 (1\.00) 20\.2 NA (396) _____ ____ ____ (19\.6) _ _ _ _ _ _ Re-evaluated SAR* 2,982 (1\.00) 689 (1\.00) 53\.1 (1\.00) 23\.8 257 ICR (4\.5% traffic growth rate, 6,353 (2\.13) 864 (1\.25) 66\.6 (1\.25) 18\.6 256 year 2000 onward**) recalculated with minor corrections to SAR\. : construction cost, period, and traffic are the same as that of SAR, but 6 years delay in implementation\. traffic growth rate is the same as that of SAR until 1999\. ,;7 Appendix C INDIA STATES' ROAD PROJECT Table Cl - Traffic Appraisal Estimates and Actual Values 1997 Average Daily Traffic 1988-1997 Annual Traffic Growth (%) Estimated Actual ICR/ Estimated Actual ICRI SAR ICR SAR SAR ICR SAR BIHAR Hajipur - Muzzaffarpur 4295 NA NA 7\.5 NA NA Sonepur - Chhapra * 3641 NA NA 7\.0 NA NA Bhagalpur Bridge ** 3226 6995 2\.2 NA NA NA Average 3721 6995 2\.2 7\.3 NA NA MAHARASHTRA Pune - Aurangabad 4955 9484 1\.9 6\.4 14\.3 2\.2 Ahmednagar - Kopargaon 4513 10660 2\.4 6\.5 17\.2 2\.6 Ahmednagar - Aurangabad 4568 7774 1\.7 7\.9 14\.3 1\.8 Aurangabad - Jalna 3710 3144 0\.8 6\.4 4\.5 0\.7 Akola - Hingoli 1972 4099 2\.1 6\.3 15\.3 2\.4 Nagpur - Kanpa 3091 3069 1\.0 6\.4 6\.3 1\.0 Wada - Biwadi 2832 4426 1\.6 6\.5 11\.9 1\.8 Palgarh - Wada 3571 6712 1\.9 6\.5 14\.2 2\.2 Average 3652 6171 1\.7 6\.6 12\.3 1\.9 RAJASTHAN Bhiwadi - Alwar 1412 2459 1\.7 7\.0 13\.8 2\.0 Alwar- Karauli 1782 2667 1\.5 7\.0 11\.9 1\.7 Udaipu - Dabok 5780 6612 1\.1 7\.0 8\.6 1\.2 Dabok - Chittorgarh 1366 2733 2\.0 7\.0 15\.6 2\.2 Ajimer - Chittorgarh 4423 7600 1\.7 7\.0 13\.6 1\.9 Sirohi - Abu Road 3885 4187 1\.1 7\.0 7\.9 1\.1 Abu - Mount Abu Road 989 2648 2\.7 7\.0 19\.4 2\.8 Fatehpur - Churu * 1088 1029 0\.9 7\.0 6\.3 0\.9 Churu-HaryanaBdr\.* 1090 1189 1\.1 7\.0 8\.0 1\.1 Sikar - Haryana Bdr\. * 2664 1703 0\.6 7\.0 1\.8 0\.3 Average 2448 3283 1\.5 7\.0 10\.7 1\.5 UTTAR PRADESH Sonauli - Gorakhpur 1542 2954 1\.9 7\.5 15\.6 2\.1 Gorakhpur - Ballia 2590 2254 0\.9 7\.5 5\.9 0\.8 Faizabad - Allahabad 2013 2817 1\.4 7\.5 11\.6 1\.5 Allahabad - Dohrighat * 3856 3886 1\.0 7\.5 7\.6 1\.0 Average 2500 2978 1\.3 7\.5 10\.1 1\.4 ROAD WORKS Average * 3055 4794 1\.6 6\.9 12\.3 1\.8 Standard Deviation * 1434 2650 0\.5 0\.4 4\.1 0\.6 * The roads that are dropped\. ** SAR estimate for 2000 and currennt estimate for 2000\. The average and standard deviation are calculated for the roads that are completed (not dropped)\. Appendix C 68 INDIA STATES' ROAD PROJECT Table C2 - Financial Project Costs Appraisal Estimates and Actual Values (1988 Million Rupees) Estimated - SAR Actual - ICR Cost Length Total Cost Length Total Cost per km Completion Construction in km Cost per km in km Cost per km ICR/SAR Year Years BIHAR Hajipur - Muzzaffarpur* 51\.0 204\.5 4\.0 Work dropped in 1996 Sonepur - Chhapra * 50\.0 260\.2 5\.2 Work dropped in 1996 Bhagalpur Bridge* 4\.4 688\.5 156\.5 4\.4 691\.0 157\.0 1\.00 2000 Average 35\.1 384\.4 55\.2 4\.4 691\.0 157\.0 MAHARASHTRA Pune - Aurangabad 113\.6 142\.8 1\.3 113\.6 145\.0 1\.3 1\.02 1995 5\.3 Ahmednagar- Kopargaon 95\.0 123\.1 1\.3 95\.0 174\.6 1\.8 1\.42 1994 4\.3 Ahmednagar - Aurangabad 105\.4 142\.8 1\.4 92\.0 171\.4 1\.9 1\.38 1997 6\.9 Aurangabad-Jalna 124\.0 201\.2 1\.6 112\.4 166\.8 1\.5 0\.91 1997 6\.9 Akola - Hingoli 96\.0 123\.7 1\.3 96\.0 125\.5 1\.3 1\.01 1995 4\.7 Nagpur- Kanpa 69\.0 120\.3 1\.7 69\.0 250\.4 3\.6 2\.08 1995 3\.4 Wada- Biwadi 47\.0 68\.4 1\.5 47\.0 93\.2 2\.0 1\.36 1997 6\.4 Palgarh - Wada 23\.0 32\.1 1\.4 23\.0 45\.6 2\.0 1\.42 1997 6\.4 Average 84\.1 119\.3 1\.4 81\.0 146\.6 1\.9 1\.33 5\.5 RAJASTHAN Bhiwadi - Alwar 90\.0 144\.6 1\.6 83\.9 187\.5 2\.2 1\.39 1997 6\.0 Alwar- Karauli 145\.0 186\.0 1\.3 135\.1 301\.9 2\.2 1\.74 1997 6\.0 Udaipu - Dabok 16\.0 85\.7 5\.4 16\.3 98\.6 6\.1 1\.13 1997 8\.0 Dabok - Chittorgarh 97\.0 128\.3 1\.3 98\.5 147\.5 1\.5 1\.13 1997 8\.0 Ajimer - Chittorgarh 186\.0 268\.5 1\.4 221\.5 490\.7 2\.2 1\.53 1996 6\.0 Sirohi -Abu Road 63\.0 69\.0 1\.1 62\.5 135\.6 2\.2 1\.98 1996 5\.0 Abu - Mount Abu Road 23\.0 29\.4 1\.3 23\.0 49\.9 2\.2 1\.70 1996 5\.0 Fatehpur - Churu * 36\.0 32\.9 0\.9 Work dropped in 1993 Churu - Haryana Bdr\. * 79\.0 68\.7 0\.9 Work dropped in 1993 Sikar - Haryana Bdr\. * 133\.0 136\.9 1\.0 Work dropped in 1996 Average 86\.8 115\.0 1\.6 91\.5 201\.7 2\.7 1\.52 6\.3 UTTAR PRADESH Sonauli - Gorakhpur 93\.0 270\.1 2\.9 94\.2 310\.1 3\.3 1\.13 1995 6\.0 Gorakhpur- Ballia 153\.0 454\.5 3\.0 45\.0 124\.3 2\.8 0\.93 1995 6\.0 Faizabad - Allahabad 143\.0 412\.6 2\.9 60\.0 249\.1 4\.2 1\.44 1997 5\.0 Allahabad - Dohrighat * 208\.0 628\.0 3\.0 Work dropped in 1993 Average 149\.3 441\.3 2\.9 66\.4 227\.8 3\.4 1\.17 5\.7 ROAD WORKS Average* 93\.4 166\.8 1\.86 82\.7 181\.5 2\.45 1\.37 5\.8 Standard Deviation* 47\.5 118\.2 48\.5 107\.9 1\.2 1\.2 * The avarage and standard deviation are calculated for the roads that are completed (not dropped)\. Figure C1 - Traffic ICRISAR Ratios 1997 Average Daily Traffic ICR/SAR Ratio 1988-1997 Annual Traffic Growth ICRISAR Ratio 35 30 32 27 30 - 27 25 - 23 25 -23 20 -18 18 20- 15- 10 - ~~~~~~~~~~~~~~~~10 9 5 45 0 0 - , - 0\.0-0\.5 0\.5-1\.0 1\.0-1\.5 1\.5-2\.0 2\.0-2\.5 2\.5-3\.0 0\.0-0\.5 0\.5-1\.0 1\.0-1\.5 1\.5-2\.0 2\.0-2\.5 2\.5-3\.0 Range of 1997 Daily Traffic ICR/SAR Ratio Range of 1988-1997 Annual Traffic Growth ICR/SAR Ratio Fibure C2 - Proiect Costs ICRISAR Ratios and Actual Construction Duration Road Works Project Costs ICR/SAR Ratio Actual Construction Duration (years) 70 -35- 61 60 30 -28 50 -125 - 22 R40 20 2 2 a'\.30 - 2a,15 20 -10 10 5 0 0 0\.0-0\.5 0\.5-1\.0 1\.0-1\.5 1\.5-2\.0 2\.0-2\.5 2\.5-3\.0 3 -4 4 -5 5 -6 6 -7 7 -8 8 -9 Range of Road Works Project Costs ICRISAR Ratio Range of Actual Construction Duration States' Road Project Re-estimated Traffic Volume Table C 5 Economic Re-Evaluation of Bhagalpur Bridge 4\.5% Growth Rate after 2000 (Rs million) Actual construction economic cost Case (c) Year Cost Benefits Net Benefits Vehicle Operating Cost Savings Transshipment Savings Time Savings Induced Total Cars Buses Trucks Other Total Pass\. Goods Total Pass\. Goods Total 2000- 2000- 2000- 1989 0 4\.5% 4\.5% 4\.5% 4\.5% 4,5% 4\.5% 4\.5% 4\.5% 0\.0 1990 18\.9 -18\.9 1991 4\.3 -4\.3 1992 38\.9 -38\.9 1993 71\.5 -71\.5 1994 69\.8 -69\.8 1995 73\.0 -73\.0 1996 117\.7 -117\.7 1997 104\.8 -104\.8 1998 134\.8 -134\.8 1999 57\.3 -57\.3 2000 3\.5 12\.7 27\.0 61\.6 1\.1 102\.4 17\.3 62\.4 79\.7 9\.5 2\.7 12\.2 29\.1 223\.4 220\.0 2001 3,5 13\.3 28\.2 64\.4 1\.1 107\.0 18\.1 65\.2 83\.3 9\.9 2\.8 12\.7 30\.5 233\.5 230\.0 C 2002 3\.5 13\.9 29\.5 67\.3 1\.1 111\.8 18\.9 68\.1 87\.1 10\.4 2\.9 13\.3 31\.8 244\.0 240\.5 2003 3\.5 14\.5 30\.8 70\.3 1\.2 116\.8 19\.8 71\.2 91\.0 10\.8 3\.1 13\.9 33,3 255\.0 251\.5 2004 3\.5 15\.1 32\.2 73\.5 1\.3 122\.1 20\.7 74\.4 95\.1 11\.3 3\.2 14\.5 34\.8 266\.4 263\.0 2005 3\.5 15\.8 33\.7 76\.8 1\.3 127\.6 21\.6 77\.7 99\.3 11\.8 3\.3 15\.2 36\.3 278\.4 275\.0 2006 3\.5 16\.5 35\.2 80\.2 1\.4 133\.3 22\.6 81\.2 103\.8 12\.4 3\.5 15\.9 38\.0 291\.0 287\.5 2007 3\.5 17\.3 36\.8 83\.8 1\.4 139\.3 23\.6 84\.9 108\.5 12\.9 3\.6 16\.6 39,7 304\.1 300\.6 2008 3\.5 18\.1 38\.4 87\.6 1\.5 145\.6 24\.6 88\.7 113\.4 13\.5 3\.8 17\.3 41\.4 317\.7 314\.3 2009 3\.5 18\.9 40\.2 91\.6 1\.6 152\.2 25\.8 92\.7 118\.5 14\.1 4\.0 18\.1 43\.3 332\.0 328\.6 2010 3\.5 19\.7 42\.0 95\.7 1\.6 159\.0 26\.9 96\.9 123\.8 14\.8 4\.2 18\.9 45\.3 347\.0 343\.5 2011 3\.5 20\.6 43\.9 100\.0 1\.7 166\.2 28\.1 101\.2 129\.4 15\.4 4\.3 19\.8 47\.3 362\.6 359\.1 2012 3\.5 21\.5 45\.8 104\.5 1\.8 173\.6 29\.4 105\.8 135\.2 16\.1 4\.5 20\.6 49\.4 378\.9 \. 375\.4 2013 3\.5 22\.5 47\.9 109\.2 1\.9 181\.5 30\.7 110\.6 141\.3 16\.8 4\.7 21\.6 51\.6 396\.0 392\.5 Total Benefit = 3490\.6 EIRR = 18\.58% NPV(120k) = $255\.73 (1) Vehicle Operating Cost Savings: mutiplied by the ratio of ADT as of 2000, ICR/SAR\. Cars = 1796/770, Buses = 1704/863, Trucks = 2853/1349, Motor cycle = 602/244\. (2) Transshipment Savings: the same as SAR until 2000\. After 2000, 4\.5% of growth rate is assumed\. (3) Time Savings: the same as SAR until 2000\. After 2000, 4\.5% of growth rate is assumed\. INDIA STATES' ROAD PROJECT Table C4 -ICR Economic Evaluation Net Benefits Without Wth Net Without With Net Without Wth Net Without With Net Without With Net Without Wth Net Without With Net Wthout Wth Net IProject Proiect Beceltt Project Proleet Benetits Proieed Proiect Benefits Proledt Projedt Benefits Project Project Beneitts Project Project Benefits Project Proect Benefitt Proied Prolect Benefits Maharashtra Mahrashtra MaharashtMra Maharashtra Maharashtra Maharasitra Maharashtra Maharastra Pune - Ahmednagar Ahmednagar - Kopargaon Ahrnednagar - Aurangabad Aujnngabad - Maotha Akola - Kanhellon NasPur - Kanetd Pabgar - Wada Wada - Ambadij 1 365 365 0 345 345 0 296 296 C 307 307 0 131 131 0 132 132 0 93 93 0 61 61 0 2 419 419 0 402 402 0 336 336 0 318 318 0 148 148 0 138 138 0 105 105 0 69 69 0 3 491 491 0 473 473 0 393 393 0 340 340 0 173 173 0 150 150 0 123 123 0 81 81 0 4 576 576 0 564 570 -6 461 461 0 363 363 0 203 203 0 162 162 0 144 144 0 95 98 0 5 675 689 -14 656 678 -22 540 540 0 387 387 0 238 250 -12 176 200 -24 168 168 0 112 112 0 6 793 820 -27 764 814 -50 634 634 0 412 412 0 278 301 -23 190 236 -46 196 196 0 131 131 0 7 934 984 -S0 889 911 -22 745 763 -19 438 456 -18 326 369 -43 205 291 -86 229 238 -9 10 155 -4 8 1104 1129 -26 1036 741 295 877 913 -35 467 S00 -34 383 405 -22 221 265 -44 267 283 -17 171 180 -8 9 1312 982 329 1207 869 338 1024 1090 -66 497 560 -63 450 365 85 239 202 37 307 338 -32 195 211 -16 10 1555 1125 429 1406 1019 387 1174 1208 -34 530 563 -32 530 421 109 258 215 43 349 365 -16 222 230 -8 11 1800 1289 511 1637 1195 442 1337 954 383 567 416 151 627 486 141 280 229 51 398 283 114 253 178 74 12 2048 1482 506 1904 1401 502 1521 1092 429 606 435 171 745 561 184 304 244 so 453 324 129 287 204 84 13 2327 1720 607 2218 1944 574 1731 1251 480 649 455 194 890 648 241 330 259 71 51e 371 145 327 233 94 14 2455 1857 598 2341 1748 598 1825 1330 496 697 483 214 961 692 269 359 275 84 545 393 151 345 248 97 15 2601 2020 581 2480 1858 624 1931 1427 504 739 513 226 1019 742 278 391 294 97 576 418 159 365 265 100 16 2756 2203 553 2628 1980 649 2042 1535 507 782 544 238 1079 798 280 427 316 110 610 445 164 368 285 101 17 2920 2415 50 2785 2127 659 2158 1661 497 828 581 247 1142 861 281 466 340 126 645 477 168 408 308 t00 16 3094 2660 434 2951 2288 664 2285 1801 484 877 624 253 1208 930 278 503 366 137 682 513 169 432 334 98 19 3279 2943 336 3127 2463 664 2422 1961 460 929 671 258 1279 1007 272 534 395 139 722 552 170 4568 363 94 20 3474 3243 231 3314 2620 694 2566 2105 461 983 685 298 1353 1096 286 586 377 189 763 578 186 483 386 96 NPV 1,283 1,540 879 370 506 118 273 172 ERR 108\.4% 115\.6% 95\.9% 60\.8% 63\.5% 23\.6% 75\.7% 86\.7% tRajasthan Rajasthan Rajasthan Rajasthan Rajasthan Rajasthen Rajasthan Uttar Pradesh Bhjwadi - Alwar Aiwar - Karamu UdaiPur - Dabox n Dabok - Chittorparh Ainter - CNttorgarh Sirohi - Abu Road Abu Roal - Mount Abu Sonau i - GortPur 1 86 86 0 171 171 0 86 50 0 81 91 0 469 469 0 146 146 0 1 7 17 0 90 90 0 2 97 97 0 191 191 0 61 61 0 105 105 0 536 538 0 158 158 0 20 20 0 103 103 0 3 113 113 0 218 218 0 69 69 0 123 123 0 627 627 0 175 175 0 24 24 0 122 122 0 4 131 131 0 248 248 0 77 77 0 145 145 0 734 734 0 193 193 0 28 28 0 143 143 0 5 151 151 0 283 283 0 85 88 0 171 171 0 858 858 0 212 212 0 34 34 0 166 168 0 6 175 175 0 321 321 0 95 104 -9 201 214 -14 1004 1044 -39 233 246 -13 40 45 -S 197 226 -29 7 202 221 -19 366 397 -31 106 124 -18 236 262 -27 1177 1253 -76 257 282 -25 48 57 -9 231 288 -56 8 233 270 -37 416 476 -59 119 152 -33 277 327 -50 1385 1527 -141 283 330 -47 57 74 -17 272 377 -105 9 270 339 -69 474 865 -111 133 150 -17 326 352 -25 1637 1709 -72 311 336 -24 68 77 -9 320 373 -54 10 313 348 -35 541 598 -57 150 108 42 384 278 106 1946 1432 514 344 265 79 81 60 21 377 258 89 11 363 262 101 619 451 169 168 118 S0 453 322 131 2328 1632 696 381 286 95 97 72 25 448 333 112 12 417 298 119 710 505 205 184 128 86 528 373 155 2730 1860 870 423 309 114 115 86 29 528 386 143 13 474 339 135 813 565 248 200 140 60 609 431 178 3107 2146 961 470 334 137 137 103 34 628 446 182 14 502 360 142 871 600 271 211 1S0 61 644 458 186 3277 2330 947 508 354 154 145 109 36 676 474 202 15 531 382 149 922 637 285 223 161 62 682 486 196 3466 2538 928 541 378 163 153 116 38 715 504 212 16 563 405 167 977 677 300 236 175 62 722 518 204 36685 2792 873 572 405 167 182 123 40 758 539 218 17 596 430 166 1034 725 309 250 190 60 764 555 209 3874 3078 797 606 436 169 172 130 42 802 579 223 18 631 459 172 1095 780 315 264 206 58 809 596 213 4096 3411 688 641 470 171 182 138 44 849 624 226 19 668 492 177 1160 840 320 280 225 54 857 640 216 4340 3796 544 679 508 170 192 146 46 889 672 227 20 707 486 221 1228 841 396 296 227 68 907 660 246 4598 4157 441 718 522 186 203 145 58 981 665 287 NPV 226 427 97 358 1,670 272 63 303 ERR 45\.3% 48\.5% 40\.6% 60,1% 82\.2% 52\.9% 42\.4% 37\.0% Uttar Pradesh Uttar Pradesh Bihar State Bhagaltpur Bridge Maharastra State Rajasthan State tJttar Pradesh State Overae Road Works Overall Project _ Gorahpw - Ballia Faizabad - AHahabad Costs Benefits Net Benefits Road Works Road Works Road Works _ 1 239 239 a 185 185 0 0 0 0 1731 1731 0 1037 1037 0 514 514 0 3282 3282 0 0 2 252 252 0 206 206 0 0 a 0 1935 1935 0 1169 1169 0 5862 562 0 3665 3665 0 0 3 272 272 0 235 235 0 -4 0 -4 2225 2225 0 1349 1349 0 629 629 0 4202 4202 0 -4 4 293 293 0 266 266 0 -39 0 -39 2568 2574 -8 1596 1556 0 703 703 0 4826 4832 -6 -45 5 316 316 0 302 302 0 -72 0 -72 2951 3023 -72 1794 1794 0 786 786 0 5531 5603 -72 -144 6 339 380 -41 343 400 -57 -70 0 -70 3397 3543 -146 2070 2150 -81 879 1006 -127 6346 6699 -354 -423 7 364 442 -78 389 498 -109 -73 0 -73 3916 4166 -250 2391 2598 -205 984 1228 -243 7291 7990 -699 -772 8 391 536 -145 441 646 -205 -118 0 -118 4525 4416 109 2770 3156 -386 1104 1859 -455 8399 9130 -732 -849 9 420 495 -74 501 606 -105 -105 0 -108 5230 4617 613 3220 3549 -328 1241 1474' -233 9691 9639 52 -53 10 452 348 104 570 424 146 -135 0 -135 6025 5146 878 3760 3090 669 1399 1060 338 11183 9297 1888 1751 11 486 369 116 649 474 178 -57 0 -57 6698 5030 16 68 4409 3142 1266 1581 1176 405 12888 9349 3839 3482 12 524 391 133 738 529 209 -3 223 220 7868 5744 2125 5107 3559 1548 1791 1306 485 14765 10608 4157 4377 13 565 414 151 830 591 238 -3 237 233 8988 6582 2406 5810 4058 1752 2023 1452 571 16821 12092 4729 4962 14 610 439 171 878 627 251 -3 251 248 9527 7024 2503 6158 4361 1796 2163 1541 623 17848 12928 4922 5170 1s5 92 466 186 930 e66 264 -3 286 263 10102 7535 2567 6518 4698 1820 2297 1635 662 18917 13868 5049 5312 1e6 61 494 196 985 708 277 -3 282 279 10709 8107 2602 6897 8095 1802 2433 1741 691 20038 14943 5095 8374 17 731 525 207 1043 757 286 -3 299 296 11352 8769 2583 7296 8544 1751 2576 1861 715 21224 16174 5050 5346 18 775 558 216 1104 811 293 -3 317 314 12033 9516 2517 7718 6060 1658 2728 1963 735 22479 17569 4910 5223 19 820 597 224 1169 870 299 -3 336 333 12747 10355 2392 8174 6647 1527 2888 2139 749 23809 19141 4698 5000 20 869 554 315 1237 816 422 -3 3586 353 13502 11080 2442 8657 7039 1618 3058 2034 1024 25217 20133 5083 5436 21 -3 377 374 \. 374 22 -3 400 397 397 23 -3 424 421 421 24 -3 450 446 446 25 3 477 473 473 NPV 237 347 321 5,141 3,114 887 9,142 9463 ERR 2s\.8% 29\.6% 20\.3% 83\.3% 63\.5% 31\.3% 63\.6% _5\.5% Appendix C 72 INDIA STATES' ROAD PROJECT Table C3 - Economic Indicators SAR and ICR Estimates SAR SAR* ICR ICR/SAR* ERR ERR NPV ERR NPV ERR NPV (N1 (%) (M 1988 Rs) (%) (M 1988 Rs) ( BIHAR Hajipur- Muzzaffarpur 20\.2 Work dropped in 1996 Sonepur - Chhapra 12\.3 Work dropped in 1996 Bhagalpur Bridge 21\.2 23\.8 257 20\.3 321 0\.9 1\.2 State 18\.9 23\.8 257 20\.3 321 0\.9 1\.2 MAHARASHTRA Pune - Aurangabad 49\.9 50\.0 731 108\.4 1283 2\.2 1\.8 Ahmednagar- Kopargaon 96\.8 96\.9 664 115\.6 1540 1\.2 2\.3 Ahmednagar - Aurangabad 49\.8 50\.5 734 95\.9 879 1\.9 1\.2 Aurangabad - Jalna 38\.7 39\.7 636 60\.8 370 1\.5 0\.6 Akola - Hingoli 23\.3 26\.1 168 63\.5 506 2\.4 3\.0 Nagpur- Kanpa 22\.3 25\.7 166 23\.6 118 0\.9 0\.7 Wada - Biwadi 40\.3 41\.2 208 75\.7 273 1\.8 1\.3 Palgarh - Wada 52\.4 53\.0 148 86\.7 172 1\.6 1\.2 State 43\.6 47\.3 3455 83\.3 5141 1\.8 1\.5 RAJASTHAN Bhiwadi - Aiwar 21\.6 24\.2 139 45\.3 226 1\.9 1\.6 Alwar- Karauli 29\.1 31\.3 346 48\.5 427 1\.5 1\.2 Udaipu - Dabok 23\.9 25\.5 88 40\.6 97 1\.6 1\.1 Dabok - Chittorgarh 25\.7 27\.7 171 60\.1 358 2\.2 2\.1 Ajimer- Chittorgarh 38\.8 39\.9 936 82\.2 1670 2\.1 1\.8 Sirohi - Abu Road 45\.3 46\.5 324 52\.9 272 1\.1 0\.8 Abu - Mount Abu Road 26\.4 28\.2 26 42\.4 63 1\.5 2\.4 Fatehpur - Churu 30\.1 Work dropped in 1993 Churu - Haryana Bdr\. 28\.2 Work dropped in 1993 Sikar - Haryana Bdr\. 43\.1 Work dropped in 1996 State 32\.2 32\.7 2030 63\.5 3114 1\.9 1\.5 UTTAR PRADESH Sonauli - Gorakhpur 11\.7 15\.5 62 37\.0 303 2\.4 4\.9 Gorakhpur- Ballia 19\.2 22\.0 351 28\.8 237 1\.3 0\.7 Faizabad - Allahabad 17\.9 20\.0 252 29\.6 347 1\.5 1\.4 Allahabad - Dohrighat 24\.5 Work dropped in 1993 State 19\.6 19\.7 665 31\.3 887 1\.6 1\.3 ROAD WORKS ** 30\.4 32\.4 6150 63\.6 9142 1\.96 1\.49 PROJECT 27\.5 28\.7 6407 55\.5 9463 1\.93 1\.48 2SAR is reevaluated SAR where ERR and NPV are calculated based on SAR data with a 20 years analysis period\. * The values for SAR* and ICRISAR* are calculated for the roads that are completed\. The values for SAR* and ICR/SAR* are for the roads completed and Bhagalpur Bridge\.	REVIEW
P009841	ï»¿Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 16678 IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (CREDIT 1544-IN) June 10, 1997 Energy and Infrastructure Operations Division Country Department II South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Currency Unit = Rupee (Rs\.) Year U1S5j Rs\. SDR I= US $ 1983 (Appraisal) I1 00 1\.002 1985 (Credit Effectiveness) 12 05 1\.17 1986 12 48 1\.20 1987 12 63 1\.25 1988 (Mid Term) 13 24 1\.29 1989 1634 1\.32 1990 (Original Credit Closing) 17 26 1\.39 1991 20 73 1\.31 1992 3006 1\.45 1993 31 22 1\.40 1994 (Revised Credit Closing) 31 36 1\.40 All rates are as of April of each year except 1982 and 1985\. The rate used for 1985 was of August 1985\. Average rate over the implementation period was Rs\. 20\.33/US$\. FISCAL YEAR OF BORROWER April I to March 31 ABBREVIATIONS AND ACRONYMS ALIS Affordable Low Income Shelter Program BMC Bombay Municipal Corporation BMR Bombay Metropolitan Region BMRDA Bombay Metropolitan Region Development Authority BUDP Bombay Urban Development Project CIDCO City and Industrial Development Corporation ERR Economic Rate ol Return FOP Finance and Operations Plan (model) FSI Floor Space Inde\. GIS Geographic Information Systems GOI Government of India GOM Government of Maharashtra KMC Kalyan Municipal Corporation LISP Land Infrastructure Servicing Program LOGFAS Local Government Finance Administration and Services NMMC/NBMC Navi Mumbai Municipal Corporation/Navi Bombay Municipal Corporation MEIP Metropolitan Environmental Improvement Program MHADA Maharashtra lousing and Area Development Authority MIS Management Information Systems RCA Rent Control Act SAR Staff Appraisal Report SUP Slum Upgrading Program TATE Technical Assistance Training and Equipment TMC Thane Municipal Corporation ULCA Urban Land Ceiling Act Vice President Mieko Nishimizu Director - Robert S\. Drysdale Division Chief Jean-Frangois Bauer Task Manager Argun Ceyhan FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) TABLE OF CONTENI S PREFACE E V A L U A T IO N SU M M A R Y \. \.i PART I: PROJECT IMPLEMENTATION ASSESSMENT \.1 A \. P roject O bjectiv es \. \. B \. A chievem ent of Project O bjectives\. \.3 C \. M ajor Factors A ffecting the Project\.10 D \. P roject S u stainab ility \. \. 12 E \. B ank P erform ance\. I 2 F \. B orrow er P erform ance \.13 G \. A ssessm ent of O utcom e \. \.15 H \. F u tu re O p eration s \. \. \. I 6 1\. K ey L essons L earned \. \. 16 PART II: STATISTICAL ANNEXES Table 1 Summary of Assessments Table 2 Related Bank Loans/Credits Table 3 Project Timetable Table 4 Loan/Credit Disbursements: Cumulative Estimated Actual Table 5 Key Indicators for Project Implementation Table 6 Key Indicators for Project Operation Table 7 Studies Included in Project Table 8a Project Costs Table 8b Project Financing Table 9 Economic Costs and Benefits Table 10 Status of Legal Covenants Table 11 Compliance with Operational Manual Statements Table 12 Bank Resources: Staff Inputs Table 13 Bank Resources: Missions Appendix A: Mission's Aide-Memoire Appendix B: Borrower's Letter dated May 23, 1997\. Appendix B-Annex I: Borrower Contribution to ICR\. This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) Preface This is the Implementation Completion Report (ICR) for the Bombay Urban Development Project (BUDP)* for which a Credit of SDR 137\.7 million (equivalent to US$138 million at the time of appraisal) to India was approved on January 29, 1985\. The Credit became effective on August 22, 1985\. The Credit was closed on September 30, 1994 after being extended five times from the original closing date of September 30, 1990\. Final disbursement took place on May 17, 1994\. A total of SDR 93,495,400 (equivalent to US$124\.89 million) were disbursed\. A total of SDR 44,204,600 had earlier been canceled in 1991 and 1993\. The ICR was initiated by a mission comprising of Mr\. Evan Rotner (Mission Leader) and Ms\. Kim Cuenco (Urban Planner)"\. The ICR was reviewed by Mr\. Jean-Frangois Bauer, Chief, Energy and Infrastructure Operations Division and Mrs\. Kazuko Uchimura, Project Adviser, Country Department II, South Asia Region\. Preparation of this ICR began after the Bank's final supervision mission (September 1994)\. It is based on material in the project files\. The Borrower assisted significantly in the preparation of the ICR by preparing their own evaluation of the project's execution and initial preparation, and commenting on the initial draft ICR as well as a subsequent revised draft\. The Borrower's comments on the latter are given in Appendix B\. The Bank's and the Borrower's conclusions on Bank Performance, Borrower Performance and Assessment of Outcome differ significantly\. Because of this reason, the Borrower's contribution has been included in the ICR in its entirety (Appendix B)\. The name "Bombay" has been changed to "Mumbai"\. However, since the original name of the Project is Bombay Urban Development Project, the name Bombay was used in this ICR to refer to the current name of Mumbai\. Mr\. Sunil Mathrani, Consultant, contributed to the completion of the report, in early 1997\. IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) EVALUATION SUMMARY Introduction 1\. The Bank's initial involvement in urban development in India began in the 1970s and focused on three of India's largest cities -- Calcutta, Madras and Bombay\. The objective of these interventions was to raise the level of services provided to the population, and to strengthen urban planning and service delivery institutions, particularly those of local government\. The scope of these urban activities were subsequently broadened to include medium-sized cities\. The Bombay Urban Development Project (BUDP) identified land, infrastructure and shelter development as being the most critically neglected Bombay Metropolitan Region (BMR) problems which were not addressed by the Bank's earlier projects\. The Project formed part of the Government of Maharashtra's (GOM) Affordable Low Income Shelter (ALIS) Program in BMR for the period 1983/84-1989/90\. The overall objective of ALIS was to reduce the absolute number of households living in slums by increasing the supply of affordable shelter particularly to the poor\. BUDP also supported GOM's efforts to improve policies and institutions affecting the management of urban development\. Project Objectives 2\. The project aimed to increase the public supply of affordable land, infrastructure and shelter, particularly for low income families\. It sought to improve local governments' financial and administrative capacity to deliver and maintain services, and to plan and execute urban projects\. In so doing, it aimed to significantly reduce the cost of shelter investments through more efficient and equitable land use planning and pricing policies, appropriate performance- oriented design standards and development control and building regulations\. Finally, it aimed to direct a larger proportion of private investment in land servicing and shelter construction into low cost units for low income families\. 3\. Although the objectives remained valid and unchanged throughout the life of the Project, the emphasis shifted away from slum upgrading to municipal services and infrastructure when the project was restructured in late 1990\. Looking back, it is clear that these objectives although ambitious, were correct, given the problems identified at the time of project preparation\. Implementation Experience and Results 4\. The project had four major components: - 11 - (a) Land Infrastructure Servicing Program (LISP); (b) Slum Upgrading Program (SUP); (c) Local Government Finance Administration and Services (LOGFAS); and (d) Technical Assistance, Training and Equipment (TATE)\. Under LISP, physical targets for sites and services schemes were almost fully met\. Affordable, serviced plots were sold to nearly ninety thousand low-income households\. However, the target was achieved over a period of nine instead of five years, as expected at appraisal\. This time overrun has been taken into account in the overall project evaluation\. 5\. Only 22 percent of the SAR target for SUP was achieved\. The component proved very difficult to implement for a number of reasons, which shows the lack of a strong constituency for in-situ slum upgrading on a cost-recovery basis\. The scheme was undermined by competition from several parallel programs that financed essential infrastructure in slums, or provided new, free (or almost-free) housing to slum dwellers (Part 1, para\. 9)\. 6\. Financial objectives (affordable pricing for low income beneficiaries, while ensuring full cost recovery, charging real interest rates, and significant internal cash generation for project funding) were substantially achieved\. A revolving fund created in the Bombay Metropolitan Region Development Authority (BMRDA), from part of the repayments to GOM by the implementing agencies is now operational\. It is contributing to the development of capacity for financial intermediation in the area of municipal infrastructure\. 7\. Objectives regarding reforms in rent control, property tax and urban land ceiling were not fully achieved\. They were considered essential for achieving the long-term objectives of ALIS, but no specific actions were explicitly included in the project conditionality\. The Bank expected GOM to pursue these reforms in parallel with the project\. It would appear that while there was agreement on the importance of reforms between the Bank and Government officials, the complexities and resistance to such reforms were not adequately taken into account\. The Bank made a concerted attempt to promote these reforms and the unusually long delay in negotiating the project shows the extent of the efforts made (Part I, paras\. 18-21)\. 8\. The technical capacity of BMRDA, the Maharashtra Housing and Area Development Authority (MHADA) and the City and Industrial Development Corporation (CIDCO) to formulate, plan and implement projects was strengthened during the Project\. Nevertheless, experience with this project has shown that the ability of BMRDA and GOM to successfully coordinate large, multi-agency programs remains weak\. Hence, the overall achievement of this objective was only partial\. - 111 - Project Sustainability 9\. The project is unlikely to be sustainable because of the lack of political and institutional commitment to its approach\. BUDP, with its emphasis on cost recovery, and offering products with limited visibility encountered difficulty in evoking political commitment, particularly as regards major legislative reforms\. Frequent changes in leadership at the institutional level also contributed to this difficulty\. The Project would be sustainable only if GOM demonstrates commitment to the project's approach and objectives, which has not been the case for slum upgrading\. Sustainability and replicability of future sites and services schemes would be enhanced if they did not have to rely on governmental land, whose supply in the BMR is now limited\. Project Cost, Financing and Schedule 10\. The Project closed with a rupee expenditure of Rs\. 435\.81 crores (US$214\.33 million) as against Rs\. 282\.33 crores (US$256\.70 million) estimated in the SAR, but with a corresponding Credit utilization of SDR 93 million (US$124\.889 million) instead of the estimated SDR 137\.7 million (US$138 million)\. The SAR estimated a 6\.5 year completion period, but this proved to be over-optimistic as nine years were required instead\. The Project was restructured with two successive credit cancellations of SDR 37 million in December 1991 and SDR 7\.20 million in June 1993 (Part I, para\. 5)\. By June 1994, the balance of SDR 93 million was fully disbursed before the final closing date of September 1994\. Major Factors Affecting Achievement 11\. Communal disturbances in Bombay during the short period between December 1993 and February 1994, and the continuous depreciation of the rupee, particularly after the Gulf War in 1991, adversely affected credit utilization\. These factors were not within GOI's control\. Within Government control were several factors that influenced project implementation\. First, efforts to reform the Rent Control Act (RCA) and the Urban Land Ceiling Act (ULCA) were ineffective\. Second, the lack of government commitment to the SUP approach led to the continuation of grant-based improvement schemes and subsidized tenement programs which made SUP less attractive, and resulted in the limited achievement of these objectives\. Third, although introduced for well-intentioned environmental considerations, the general ban on quarrying and development of coastal wetlands adversely affected project implementation (Part I, para\. 30)\. Fourth, the unrealistic policy of retaining development plan reservations on slums held up the transfer of tenure to slum dwellers' cooperatives\. 12\. With the exception of MHADA, implementing agencies administered BUDP as a part of their other ongoing activities\. This resulted in less attention being given to BUDP\. There were also delays in bid evaluation and decisions regarding award of contracts by the Standing Committee which have been chronic problems in the Bombay Municipal Corporation (BMC)\. Many of the delays were mainly due to weak coordination at the governmental level which failed to resolve issues in a timely manner\. - iv - Bank and Borrower Performance 13\. Apart from a few shortcomings, Bank performance was generally satisfactory in the identification and preparation, and marginally satisfactory in appraisal and supervision of the project\. The unbroken continuity of the Bank Task Manager (Part I, para\. 42) and the BMRDA Manager responsible for the project was a positive feature\. However, the Bank should have allocated more resources for supervision during the last three years of implementation\. 14\. The Project had six implementing agencies plus a coordinating body and four distinct components'\. Performance varied according to agency and component and over time\. It is extremely difficult to integrate this degree of diversity into a single measure of Borrower performance spread over a twelve-year period\. Nevertheless, on balance, Borrower performance is rated as marginally satisfactory, although this assessment would not be justified for all implementing agencies\. Assessment of Outcome 15\. Despite the partial fulfillment of project goals, the overall outcome is assessed as marginally satisfactory, principally because of the success of the project's largest component, LISP 2\. By meeting the objective of improving the supply of serviced public land to low-income households, the project has enabled over half a million persons to benefit directly from the investments undertaken by the project\. The majority of the beneficiaries were close to, or below the poverty line (Part I, para\. 26)\. These benefits imply the transfer of real assets to the poor and the project has thereby contributed to alleviating poverty\. Finally, the ERR surpassed SAR estimates (Part I, para\. 25) and the project's financial targets have also been met\. Findings and Key Lessons 16\. The Project has demonstrated that: (a) The design of urban development projects should explicitly take into account socio-political factors that have a key impact on sector policies and where possible, alternative less ambitious reform options should be considered (Part I, para\. 22); 1/ Implementing Agencies Project Components Maharashtra Housing and Area Development Authority (MHADA) LISP, SUP, TATE City and Industrial Development Corporation (CIDCO) LISP, LOGFAS, TATE Bombay Municipal Corporation (BMC) LISP, SUP, LOGFAS, TATE Thane Municipal Corporation (TMC) LOGFAS, TATE Kalyan Municipal Corporation (KMC) LOGFAS, TATE Navi Bombay Municipal Corporation (NBMC) LOGFAS, TATE Bombay Metropolitan Region Development Authority (BMRDA) was the coordinating body\. / Estimates at appraisal were 85,000 plots; they were revised to 88,000 plots during restructuring\. Actually, 87,743 plots were developed under the program (Tables I and 2) (b) even holding up the processing of a substantial loan in support of investments is insufficient to bring about required legal and institutional reforms (Part I, para\. 18)\. However important the reforms may be, they will only occur if there is sufficient political will to confront the vested interests resisting them\. Once a loan becomes effective, attention is focused more on project-specific implementation objectives at the expense of broader and politically difficult sectoral reforms; (c) the Bank should not undermine its credibility by making explicit policy declarations to Borrowers and then ignore its own self-declared policy (Part I, para\. 20); (d) a project's physical and financial objectives can be largely achieved despite distorted sector policies\. As a result of BUDP, about half a million poor people have benefited from serviced plots and housing loans financed by the project\. The implementing agencies have acquired substantial financial resources from plot sales as a direct result of their participation in the project and are thus in a position to replicate the physical achievements of the project (Part I, para\. 51); (e) in order for such urban development programs involving multiple agencies to be implemented efficiently, it is necessary to strengthen the planning, coordination and management of urban services by these agencies\. Improvement of procurement practices is also essential (Part I, para\. 35 (e)); and (f) frequent changes of key personnel and staff, particularly from the Indian Administrative Service cadre have been a common problem in implementing long-term programs\. This has also been true of important engineering positions in BMC and MHADA\. The continuity of key personnel is critical to ensure commitment to project objectives\. IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) PART I\. PROJECT IMPLEMENTATION ASSESSMENT A\. PROJECT OBJECTIVES Background 1\. The Bank's initial involvement in urban development in India began in the early 1970s and focused on three of India's largest cities -- Calcutta, Madras and Bombay\. The objectives of these interventions were to raise the level of services provided to the population, and to strengthen urban planning and service delivery institutions, particularly those of local government\. The scope of these urban activities was subsequently broadened to include medium-sized cities\. 2\. The Bombay Urban Development Project (BUDP), prepared in 1982-83, identified land, infrastructure and shelter development as the most critically neglected problems in the Bombay Metropolitan Region (BMR)\. These had not been addressed by the Bank's earlier single-sector urban projects in Bombay, which had focused on the transport, water supply and sewerage sectors\. The Project formed part of the Government of Maharashtra's (GOM) Affordable Low- Income Shelter (ALIS) Program in the BMR for the period 1983/84-1989/90\. This program's long-term objective was to reduce the absolute number of households living in slums by increasing the supply of affordable shelter particularly to the poor\. BUDP also supported GOM's efforts to improve policies and institutions affecting the management of urban development\. Statement of Objectives 3\. The main objectives of the Project were as follows: (a) to increase the public supply of affordable land, infrastructure and shelter particularly for low income families and small businesses; (b) to improve local government's financial and administrative capacity to deliver and maintain services, particularly infrastructure created under BUDP; (c) to strengthen the government's institutional capacity to plan, coordinate, implement, and evaluate BUDP projects\. programs, and policies, and to replicate the achievements; -2- (d) to improve public sector cost recovery and to reduce in a major way public and private costs of shelter investments through more efficient and equitable land use planning and pricing policies and more appropriate performance-oriented design standards, development control and building regulations; and (e) to direct a larger proportion of private investment in land servicing and shelter construction into low cost units for low income families\. 4\. These objectives were translated into physical and investment targets as shown in Table 11\. Objectives (a) and (d) were directly and substantially supported by the investment program\. Objective (b) was partly supported by the investment program and technical assistance component\. Objective (c) was supported through the broadly defined technical assistance and training component\. However, objective (e) entailed legislative reforms, particularly in the Rent Control Act and Urban Land (Ceiling and Regulation) Act\. Table 1\. Bombay Urban Development Project Project Components Original SAR (1985) Restructured (Dec\. 1990) COMPONENTS Ph3sical Financial 1% Toial Physical Financial % Total S(Rs crores) ( Rs crores) 1\. Land Infrastructure 85,000 196\.3 69 88,000 366\.3 67 Servicing Program (LISP) plots plots of which: Not incl\. (109\.2) (20) la\. New Infrastructure works 2\. Slum Upgrading Program 100,000 53\.4 19 60,000 21\.6 4 (SUP) house- house- holds holds 3\. Local Government 30\.8 11 146\.5 27 Finance Administration & Services (LOGFAS) of which: Not incl\. 3a\. Additional services for 12 BMR towns\. 4\. Technical Assistance, 1\.9 1 10\.0 2 Training & Equipment (TATE) TOTAL 282\.4 100 544\.4 100 5\. The Project was formally restructured in December 19902 because only 37 percent of the Credit had been disbursed at its original closing date (September 1990)\. A three-year extension of the closing date was proposed and additional infrastructure investments costing about US$ 35 I/ Further details for physical targets (appraisal, revised and actual) are given in Part II; Table 5\. 2/ A memorandum (No\. R90-156) dated 14 December 1990, seeking appro, al for the restructuring was submitted to the Board\. -3- million, such as water supply and storm drainage were included in the project scope\. The Credit was also redistributed within categories, but no partial cancellation was envisaged at that point\. The respective scopes of LISP linked to off-site infrastructure and that of LOGFAS was considerably increased as part of the restructuring, while the SUP target was reduced and the funds allocated to it cut by US$ 35 million (Part II, Table 5)\. Other BMR municipalities were also brought within the scope of the project\. Evaluation of Objectives 6\. Although the objectives remained valid and unchanged throughout the life of the Project, the emphasis shifted away from slum upgrading to municipal services and infrastructure when the project was restructured\. Looking back, it is clear that these objectives although ambitious, were correct, given the problems identified at the time of project preparation\. While the importance of urban land and rent policy changes was widely recognized, given their highly political nature, it was unrealistic to expect that these reforms could be achieved as a result of pressure from the Bank through the limited leverage of the Project alone (para\. I1)\. B\. ACHIEVEMENT OF PROJECT OBJECTIVES Physical Components 7\. The LISP component (accounting for nearly 70 percent of disbursements), comprised sites and services schemes that predominantly developed 25-40 square meter sized plots with access to public utilities and community facilities\. The plots were sold at prices that varied according to size, location and access to amenities\. A covenant in the Project Agreement obliged GOM to ensure that at least 55 percent of the plots were sold to households at or below the Bombay poverty line\. The LISP physical targets were fully met, but were achieved over nine instead of the expected five years\. However, the SUP target was achieved only to the extent of 22 percent of the SAR target, despite the four-year extension of the project period\. The physical and financial progress of these components are given in Table 2\. Table 2\. Project Implementation Performance SAR Original Restructured (Dec\. 1990) Attual Actual as % ofretactamd Conponent Physical Financial Physical Financial Physical Financial Phyrical Anancial (Rs croresi (Rs croresi (Rs crores) % % 1 - la LISP si'0 orp 3 88,00(1 36o3 ','43 2977 997 31 plots plots plots 2\. SUP 100,000 53\.4 60,000 21\.6 22,204 7\.5 37\.0 35 households households households 3\. LOGFAS - 30\.8 - 146\.5 - 118\.1 - 81 4\. TATE (including - 1\.9 - 10\.0 - 12\.5 - 125 MEIP BUDP Total - 282\.3 544\.4 435\.8 - 80 * MEIP: Metropolitan Environmental Improvement Program -4- Slum Upgrading Program 8\. This component was intended to cover in-situ improvements for about 100,000 households, living mainly within the BMC area and accounting for about 12 percent of total number of households estimated to be living in hutments in 1981\. The component consisted of infrastructure improvements, loans for home improvement and leasehold tenure\. 9\. The component proved very difficult to implement for a number of reasons, which boil down to the lack of a strong constituency for in-situ slum upgrading on a cost-recovery basis\. First, the scheme was undermined by several parallel programs that financed essential infrastructure in slums, or provided new, free (or almost-free) housing to slum dwellers\. A substantial proportion of the target slums for SUP were thus reassigned to the Prime Minister's Grant Project, launched in 1987, which provided nearly Rs\. 60 crores to GOM for slum relocation as well as in-situ improvements\. The GOM budget also allocated Rs\. 3 million per year to each Member of the Legislative Assembly (MLA) for slum improvement grants in their constituencies\. Second, most of the slums were on land that had been classified for other public uses\. Reclassifying the land use encountered resistance from MHADA/BMC, which would have preferred this land to have remained in the public, non-residential domain for future development by these public agencies\. Third, in-situ improvements were also disliked by their staff because they did not lead to public works contracts for them to administer\. Finally, granting legal tenure to slum dwellers was also disliked by some local politicians as it diminished their influence because slum dwellers relied on these politicians to protect them from eviction\. 10\. The project's approach to slum upgrading thus did not serve as a model for other schemes\. On the contrary, politicians encouraged slum dwellers to opt for 'free' schemes and their demonstration effect (even if demand far outstripped supply), reduced community demand for the Bank-funded SUP\. Programs requiring unsustainable levels of subsidies, quite contrary to BUDP principles and approaches, thus became more popular amongst the target beneficiaries\. 11\. With hindsight, it appears that the decision taken at the time of project restructuring (December 1990) to retain this component' in the project was not justified\. It should have been canceled' because the nature and extent of the obstacles to implementing SUP was apparent to Bank and Project staff by that stage\. In August 1991, a letter from the Bank to the Metropolitan Commissioner, BMRDA, stated that tenure for slum dwellers was as important as physical improvements and contained a warning that the Bank would "discontinue financing" the SUP component in the absence of remedial action\. However, this threat was not acted upon, even though it would appear' that no further slum households benefited from the project over the remaining three years of implementation\. 3/ Albeit with a 40 percent reduction in the target number of households to 60,000\. 4/ However, it should be recognized that there would probably have been considerable reluctance on the part of the Bank as well as GOI to explicitly recognize that the SUP was a failure due to the power of vested interests which could not be overcome\. 5/ The Bank's letter of August 22, 1991 states that about 22,000 households had been covered by SUP at that point\. The total number of benefiting households at loan closure in September 1994 was unchanged\. -5- Institutional Strengthening and Capacity Building 12\. Objective (b) was addressed through the Local Government Finance and Administrative Systems (LOGFAS) component and partly supported by the Technical Assistance, Training and Equipment (TATE) component\. The technical capacity of BMRDA, MHADA and CIDCO to formulate, plan and implement projects was strengthened during the Project\. Nevertheless, experience with this project has shown that the ability of BMRDA and GOM to successfully coordinate large, multi-agency programs remains weak\. Hence, the overall achievement of this objective can only be considered as partial\. 13\. Objectives (b) and (c) were supported by a large number of studies and consultant services (Part II, Table-7)\. In particular, technical assistance succeeded in significantly developing institutional capacity in the following areas: (a) formulation and evaluation of land development projects targeted mainly towards low-income beneficiaries through the use of computer-based models in BMRDA, MHADA and CIDCO; (b) use of a computerized lottery system for beneficiary selection and commercial accounting for monitoring and collection of accounts receivable in MHADA; (c) use of a network-based, computerized Project Management System and computerized tracking of procurement, expenditure and Credit utilization in BMRDA; and (d) introduction of a Geographic Information System (GIS) for use in regional land use planning, transportation, other infrastructure planning and environmental management activities in BMRDA\. 14\. As a municipal finance agency, BMRDA made effective use of computerized Finance and Operations Plan (FOP) models for loan appraisals\. On the other hand, the organization and management studies carried out under the TATE component for MHADA, the Thane Municipal Corporation (TMC), the Kalyan Municipal Corporation (KMC) and the Navi Mumbai Municipal Corporation (NMMC) have had very little institutional impact\. While the studies were good, they were not utilized by the implementing agencies\. 15\. The project's cost reduction objective was directly related to LISP\. This objective was addressed by obtaining GOM's approval to modify land use and design standards for LISP\. Similar standards were later incorporated in the Development Control Regulations (1991) of the revised Development Plan of Bombay, thus substantially meeting this objective\. The project demonstrated that in the metropolitan shelter sector, increasing the supply of affordable serviced land through modifications in land use regulations and provision of trunk infrastructure to promote private land development for all income groups is fundamental\. The direct investment by public agencies in land development was an important part of the overall strategy with important demonstration effects\. -6- Reform of Sector Policies 16\. There was limited success in directing a larger proportion of private investment in land servicing and shelter construction into low cost units for the poor (Objective e)\. These actions depended on legal and sectoral reforms in rent control, property tax and urban land ceilings, which have not taken place\. They were considered essential for achieving the long-term objectives of ALIS, but no specific actions were explicitly included in the project conditionality\. The Bank expected GOM to pursue these reforms in parallel with the project\. 17\. BMRDA and GOM, also attempted several times to implement a pilot scheme of 'Guided Land Development' to attract private investment for low-income housing construction within the existing legal framework with financial support from the Project\. However, as a first step, BMRDA was to develop sites and services on land acquired though compensatory acquisition\. This scheme could not be implemented successfully either because of the refusal of landowners to give up their properties\. Then, BMRDA changed its approach to guided land development, and began promoting commercial development at a district center\. Under this modified approach, land was acquired notionally by GOM and returned to the owners provided they agreed to develop it along the guidelines set by BMRDA\. In the end, this approach stimulated land assembly, public use and the commercial development of the district center as originally envisaged by BMRDA\. Presently, BMRDA is using FSI as incentive and mechanism to bring about guided development, e\.g\. landowners get bonus FSI if they agree to allocate a portion of their land to smaller plots for the poor\. Hence, GOM has not given up on guided land development but rather has enlarged its scope as part of its land policy mechanisms\. Since then, BMRDA has extended the concept of Guided Land Development which is based on incentives in the form of development rights in its draft Regional Plan'\. 18\. The Project Appraisal team sought amendments to the Rent Control and BMC Acts in the second half of 1983, prior to negotiations\. Even at that stage, DEA had advised GOM that rent control reform was outside the scope of the issues which were relevant to the IDA interest in project'\. Since rent control reform by any single state raised national issues, GOI felt that they should not be a condition of negotiations\. Nevertheless, the Decision Memo issued after the review of the Issues Paper records that 'GOM should be requested to furnish IDA with a statement of intention prior to negotiations which should include its detailed action plan for rent control reform and a reasonable timeframe within which this objective would be achieved'\. The subsequent letter from the Bank to GOI conveyed these conditions of negotiations'\. 19\. GOM attempted to satisfy this condition by drafting legislative amendments by the time the Bank was ready to negotiate the Credit following Loan Committee clearance in January 1984\. However, DEA formally responded to the Bank's insistence on a statement of intent by stating that 'it is not the policy of GOI or the state government to submit statement of intentions 6/ Draft regional plan for the Bombay Metropolitan Region, 1991-2011, BMRDA, 1994\. 7/ Para\. 23 of the Issues Paper dated 13 September 1983\. / Letter from the Country Programs Division Chief to the Joint Secretary, DIA, dated 31 October, 1983\. -7- since it is not possible for any government to commit the legislature in this manner'\. There was no progress on this issue during the first half of 1984\. 20\. Thereafter, Bank staff attempted for several months to find a compromise which would enable negotiations to take place\. Finally, in October 1984, the Regional Management sought and obtained the approval of the Senior Vice President, Operations (SVPO) to proceed with negotiations, even without a statement of intentions, on the grounds that these reforms were not critical in the short term to the financial viability of the project'\. However, the SVPO suggested that the project size be reduced and GOI be advised that the Bank 'would not be prepared to undertake further lending for urban housing projects whose long-term viability is affected by rent control, unless satisfactory progress is made by GOM in enacting the envisaged amending legislation'"\. 21\. The negotiations were completed in December 1984, eleven months after initial Loan Committee approval\. The GOI delegation succeeded in convincing the Bank to retain the original size of the project without giving any specific assurance on rent control and property tax reform\. The agreed minutes of negotiation record that 'rent control reform was an important objective of the Government, as reflected in the Approach Paper of the Seventh Five-year Plan, and there was every intention to achieve this objective during the Seventh Plan Period'\. 22\. In conclusion, it would appear that while there was agreement on the importance of reforms between the Bank and Government officials at a technocratic level, the political risks to any government in Maharashtra of such reforms were not adequately taken into account\. The Bank made a concerted attempt to promote these reforms and the unusually long delay in negotiating the project shows the extent of the efforts made\. However, the political power of the 'renters lobby' which has prevented any reform in the State till today, should have been apparent to both sides even at that time\. The Project showed the futility of using a single investment project to leverage major reforms when the political commitment does not exist\. Nevertheless, although ULCA and RCA were not repealed, partial reforms did take place at the State level\. Some exemptions to the ULCA were given provided the landowner was prepared to develop land in a manner similar to sites-and-services\. There were also some minor changes to the RCA\. Additionally, BUDP tried to change existing standards that governed the land development process which limited public-private partnership and raised the cost of housing for the poor\. Under the Project, the Bank succeeded in obtaining a GOM sanction to modify land use and design standards of the LISP component\. The LISP provided serviced sites, including community facilities, core houses and housing expansion loans to over 110,000 households of which the majority were in lower income groups\. Similar standards were later incorporated into the 1991 Development Control Regulations of the Revised Plan of Bombay\. With regard to the acquisition of land for slums under the SUP component, although these were planned prior to project approval, the Project encountered many unanticipated problems, such as the coastal zone management plan (excluded coastal land), ban on quarrying for reclamation materials, changes of 9/ Memo from the RVP to the SVPO, dated 23 October, 1984\. 10/ The Bank ignored its own self-declared ban on further lending by proceeding with other urban projects in India even though there was no progress in rent control reform\. -8- reservations in the master plan for the transfer of tenure (the master plan was concurrently under revision at the time of project preparation), etc\. Financial Objectives 23\. The Project's financial objectives included affordable pricing for low income beneficiaries, while ensuring full cost recovery, and the charging of real interest rates to beneficiaries\. These have been substantially achieved\. Households were granted loan funds for part of the cost of the plots at unsubsidized conditions (12 percent interest rate over 20 years)\. Some problems were inevitably encountered with loan repayments by beneficiaries, but these have not jeopardized inflows to the BMRDA Revolving Fund (para\. 24)\. Internal cash generation by the project in the sites and services component exceeded the minimum 50 percent of project costs projected at appraisal\. This is due to income derived from the much higher than projected sale prices and revenues generated by the sale of middle and upper income residential and commercial plots\. 24\. In addition, the BMRDA-BUDP Revolving Fund was created in BMRDA in 1988, in part to assist the agency in developing the capacity for financial intermediation in the area of municipal infrastructure\. The Revolving Fund is fed by 45 percent of the principal to be repaid by the implementing agencies to GOM and is intended for use in financing future programs similar to BUDP\. Annual inflows are currently about Rs\. 20 crores and approved loans (at 12 percent for 15 years) to BMR municipalities to date amount to Rs\. 32 crores\. Economic Rate of Return (ERR) 25\. The project was designed as a program consisting of discrete components\. The ERR was not therefore worked out for the overall project, but was estimated for representative sub-projects\. The SAR estimated a weighted average rate of return based on prototype LISP and SUP sites to be 20\.4 percent (17\.9 percent and 31\.0 percent, respectively)\. The LISP ERR was estimated to range from 13 percent in Thane-Kalyan areas to 18 percent in Greater Bombay and 27 percent in New Bombay\. The methodology adopted included all costs net of taxes, and took as economic benefits the rental values of residential, commercial and institutional plots\. Following a similar methodology, the ERRs for three representative sites in Thane, Greater Bombay and New Bombay have been re-estimated on the basis of actual costs incurred (net of taxes), market prices and rental values at the time of first allotment of plots\. The re-estimated ERRs work out to be 42\.7 percent, 33\.5 percent and 40\.9 percent respectively (Part II: Table-9)\. Despite the longer period of construction, the ERRs are higher on account of the substantial increase in real estate prices and rental values in the BMR\. The SAR estimate of the ERR was based on land sale prices of Rs 45-600 per sq\. meter while the ex-post ERR has been calculated using Rs 750-4500 per sq\. meter\. Other non-quantified benefits from the project include: (a) substantial private investment in building construction; (b) considerable employment generation through small contractors who built single- storied simple structures for low-income cooperatives; and -9- (c) poverty alleviation\. The ERRs of individual schemes in SUP were also above the SAR estimates, mainly because of the substantial increase in real estate rental values and the transfer of land tenure being an integral part of SUP\. Social Objectives and Gender Concerns 26\. The social objectives of the project focused on poverty alleviation and the lack of access of the poor to urban services\. In particular, the LISP component had an explicit target of 45 to 55 percent of plots to be allocated to families below the poverty line, and 10 to 20 percent of plots for income groups immediately above the poverty line\. A comparative profile of LISP beneficiaries and income distribution based on household survey carried out for BMR1 in 1989 showed that this objective was met in terms of number of sites developed and the beneficiary proportions\. Similarly, under SUP, a large proportion of beneficiaries were below the poverty line, as confirmed in the base line surveys carried out by the BMRDA\. While no formal survey has been conducted on plot resales, the percentage is likely to be about 15-20 percent\. Plot layout and sizes have limited the transfers to the same low-income income group, with newer migrants buying plots from more established residents with already existing housing arrangements\. The reason for this is that the eligibility criteria used for selection of household required a minimum period of residency in the city\. This left out a large category of poor households who are recent migrants to the city and in search of a more stable residence\. Although the project did not have any explicit gender objectives, the Borrower adopted a policy of granting land tenure under SUP jointly to both the spouses of a household\. Environmental Objectives 27\. The project was prepared in 1982-83, at which time environmental concerns were not explicitly addressed\. Nevertheless to the extent that the project provided basic infrastructure services, it had beneficial environmental impacts\. LOGFAS investments, particularly in storm water drainage, assisted in flood prevention\. 28\. Moreover, a set of environmental studies for the Bombay Metropolitan Region were included in the scope of the restructured project as part of the Bank-executed Metropolitan Environmental Improvement Program (MEIP)\. These studies were successfully implemented under the TATE component\. They were: a) an environmental management strategy for the Bombay region; b) integrated environmental management of the Chembur-Thane-Belapur industrial as; and c) a solid waste management study\. 1/ Multipurpose household survey conducted jointly by ORG and BMRDA, 1990\. - 10- A considerable number of follow-up investments and policy initiatives emerged from this work\. Some have been taken up by the private sector, but there are several which the Government of Maharashtra and donors could support in the areas of solid waste management and water supply improvements, low cost sanitation and hazardous waste treatment\. C\. MAJOR FACTORS AFFECTING THE PROJECT 29\. There were two sets of factors outside government control which had a significant effect on project implementation\. These were the communal disturbances and bomb blasts in Bombay during the short period between December 1993 and February 1994, and the continuous depreciation of the Rupee, particularly after the Gulf War in 1991\. Between Effectiveness and Credit closing, the SDR strengthened by about 285 percent against the Rupee while the Indian Consumer Price Index rose much less (about 220 percent)\. Hence the amount of the Credit available in real terms rose sharply\. Credit utilization in SDR terms (93\.5 million) therefore appears poor as compared to the initial SDR 137\.7 million\. On the other hand, spending in Rupee terms (436 crores) was much higher than projected (Rs\. 282 crores)\. 30\. Within government control were several factors that influenced project implementation\. First, efforts to reform the RCA and ULCA were ineffective\. Second, the lack of government commitment to the SUP approach led to the continuation of grant-based improvement schemes and subsidized tenement programs which made SUP less attractive, and resulted in the limited achievement of these objectives (para\. 9)\. Third, although introduced for well-intentioned environmental considerations, the general ban on quarrying and development of coastal wetlands adversely affected project implementation because the LISP component depended on stone from the closed quarries and also some of the area to be developed lay within the coastal wetlands\. Due to the absence of proper planning and administrative measures to resolve this problem, implementation of LISP was considerably delayed\. Fourth, the unrealistic policy of retaining development plan reservations on slums held up the transfer of tenure to slum dwellers' cooperatives\. 31\. Of the factors within the control of implementing agencies, several had an important impact on implementation\. First, with the exception of MHADA, implementing agencies administered BUDP as a part of their other ongoing activities\. This resulted in insufficient attention being given to BUDP\. Realizing the need for closer monitoring and review, BMC subsequently assigned these responsibilities to the Chief Engineer of the Project Planning and Monitoring Cell, and Additional Municipal Commissioner after 1990\. Second, delays in bid evaluation and decisions regarding award of contracts by the Standing Committee have been chronic problems in BMC\. Although BMRDA produced monthly reports which compared progress vis-a-vis annual targets, it lacked the authority to introduce the necessary measures to speed up contract award\. The Technical and High Power Committees constituted by GOM were largely ineffective in enforcing recommended actions\. 32\. The Project was conceived more as a program based on prototype projects rather than as a conventional fully designed investment project where the entire investment is appraised upfront\. Certain deviations in the costs were therefore inevitable\. Estimation of physical quantities, base unit costs and price contingencies were largely adequate\. In fact, there were initial cost - 11 - underruns, particularly in land reclamation\. However, as the initial IDA Credit was determined using a constant exchange rate, significant rupee depreciation meant that an increase in investments in rupee terms could be supported without difficulty by the Credit\. The project closed with a rupee expenditure of Rs\. 435\.81 crores (US$214\.3 million) as against Rs\. 282\.3 crores (US$256\.7 million) estimated in the SAR, but with a corresponding Credit utilization of SDR 93 million (US$124\.9 million) instead of SDR 137\.7 million (US$138 million) estimated in the SAR\. The Project was implemented through 1,327 contracts, out of which 1,248 smaller contracts were awarded through Local Competitive Bidding (LCB) procedures\. The performance of contractors was generally satisfactory, although in most cases there was some time overrun\. 33\. The SAR estimated a 6\.5 year implementation period\. However, achieving the LISP target could only be accomplished with the extension of the credit closing date by four years to September 1994, for reasons given in para\. 35\. Some project completion works continued up to May 1995\. 34\. According to the initial SAR disbursement profile, SDR 137\.7 million was to be fully utilized by September 1990\. However, actual disbursement at that time was only SDR 40 million (42\.8 percent - Part II, Table 4a)\. Subsequently, there have been two cancellations\. SDR 37 million in December 1991 and SDR 7\.20 million in May 1993\. By June 1994 the remaining SDR 93 million was fully disbursed before the final closing date of September 1994\. 35\. The reasons for the project delays were as follows: (a) Although the original implementation schedule appeared appropriate at that time in order for the project to have a significant sectoral impact, the delays that have occurred during implementation have shown it to have been unrealistic; (b) many of the delays were due to weak and uncommitted coordination at the government level which failed to resolve issues in a timely manner\. For example, substantial land for LISP was allotted to MHADA only after being made a condition for Credit extension; (c) the ban on quarrying and the restrictions on reclaiming coastal wetlands added to the other administrative problems faced by the Project; (d) there was an inordinate delay in deciding the policy of granting tenure to slums located on land reserved for public purposes under the Development Plan; (e) of the implementing agencies, BMC encountered major problems in the selection of contractors and had generally slow and inefficient procurement practices\. For example, it used 120 to 150 days as the bid validity period instead of the normal 90 days; and (f) Frequent changes of key personnel and staff, particularly from the Indian Administrative Service cadre have been a common problem in implementing long-term programs\. This has also been true of important engineering positions - 12- in BMC and MHADA\. The continuity of key personnel is critical to ensure commitment to project objectives\. D\. PROJECT SUSTAINABILITY 36\. The project is unlikely to be sustainable because of the lack of political and institutional commitment to its approach\. BUDP, with its emphasis on cost recovery, and offering products with limited visibility encountered difficulty in evoking political commitment, particularly as regards major legislative reforms\. Frequent changes in leadership at the institutional level also contributed to this difficulty\. 37\. The Project would be sustainable only if Government demonstrates commitment to the project's approach and objectives, which has not been the case for slum upgrading\. Sustainability and replicability of future sites and services schemes would be enhanced if they did not have to rely on governmental land, whose supply in the BMR is now limited For that purpose, mechanisms such as Transfer of Development Rights (TDR) and other land policy innovations promoting land assembly through private sector and servicing will be of crucial importance\. 38\. The replicability of the project's off-site infrastructure investments will require greater participation by private financial intermediaries\. The BUDP Revolving Fund managed by BMRDA (para\. 24), could serve as a catalyst for a larger financial intermediation function by BMRDA in support of urban infrastructure investments\. The prospects for the sustainability of the Revolving Fund are good and the main implementing agencies have accumulated substantial financial resources as a result of their participation in the LISP component\. They are therefore in a position to replicate this scheme, provided adequate public land is available\. E\. BANK PERFORMANCE 39\. Apart from a few shortcomings, Bank performance was generally satisfactory in the identification and preparation of the project\. Bank performance at appraisal and supervision performance are rated as "marginally satisfactory" (paras\. 41 and 42)\. At the identification stage, the Bank correctly diagnosed the problems in the urban sector\. It carried out two key studies in 1980 which helped identify the priorities and policy issues which had not yet been addressed by the Bank's involvement in other sectors\. These studies helped develop consensus on the project's approach during the preparation phase\. 40\. Given the multi-sectoral issues faced in project design, project preparation was strengthened by the participation of an interdisciplinary team with expertise in physical and environmental planning, municipal engineering, solid waste management, financial analysis and urban economics\. Bank staff worked with the local team to formulate the project design and did not propose the use of consultants for formal preparation\. This contributed to borrower ownership and commitment, particularly by BMRDA, which was the coordinating agency\. However, the Bank appears to have overestimated implementation capacity at the time of appraisal and did not anticipate that the project would be handled by the implementing agencies as part of 'normal' business at a sluggish pace\. - 13 - 41\. The Bank also unsuccessfully attempted to use the Project as a vehicle to bring about legislative changes, even though GOM had expressed its inability to give any assurances on legislative matters\. This delayed negotiations by nearly one year without producing a firm GOM commitment in this area\. Eventually, the Bank's pre-condition for negotiations was dropped in lieu of 'satisfactory progress' being made by the state in amending the relevant legislation"\. In retrospect, attempting to achieve such far-reaching and politically sensitive policy changes by holding up the Project was perhaps naive\. More attention might have been given to alternative ways of achieving some of the same effects\. 42\. In all there were 19 supervision missions\. These missions contributed significantly to maintaining the momentum of the project, and supporting the project coordinating mechanism\. BMRDA found that the analysis of the status of the Project reflected in the supervision aide- memoires strengthened their ability to follow up on some difficult issues with GOM and other implementing agencies\. Of these missions, 13 took place to September 1990, the original credit closing date\. Thereafter, the supervision effort slackened off in intensity and frequency\. Oddly, this happened soon after the formal restructuring, when there would have been grounds for an enhanced supervision effort\. During the last three years of its life, the project was not supervised adequately (six short missions at long intervals)\. 43\. The change in supervision intensity may have been caused by the transfer of the Task Manager to another Department\. South Asia Country Department II did not assign a new task manager and the original TM continued the supervision\. Although continuity of the TM who had established a strong rapport with the local counterpart team and promoted the project as a collaborative effort was a positive feature, in retrospect it is concluded that the Bank should have allocated more resources for supervision during the last years of the project\. From the documents included in the Project Files, it appears that the Project received insufficient attention without much scrutiny, even when an exceptional fifth extension of closing date was agreed upon by the Bank\. In total, the 133 staff weeks (sw) devoted to supervision over nine years was significantly less than the 175 sw estimated in the SAR for a shorter six and a half year period\. F\. BORROWER PERFORMANCE 44\. The Project had six implementing agencies (MHADA, CIDCO, BMC, TMC, KMC, NBMC) plus a coordinating body (BMRDA) and four distinct components (LISP, SUP, LOGFAS, TATE -- para 4)\. Performance varied according to agency and component and over time\. It is extremely difficult to integrate this degree of diversity into a single measure of Borrower performance spread over a twelve-year period\. Nevertheless, on balance, Borrower performance in implementation is rated as marginally satisfactory, although this assessment would not be justified for all implementing agencies\. Whether the use of private agencies to 12/ There has been almost no progress in this area during the past decade\. An Amendment to the Delhi Rent Control Act has been prepared with the objective of introducing some flexibility in rent structures and encouraging house construction activities\. The proposed legislation would serve as a model to other states seeking to pass similar legislation\. In 1986, some reforms were introduced by GOM in the Rent Control Act, but they deal mainly with new properties\. These changes allow for a five year moratorium on rent restriction and thereafter limit the rents to a return of 15 percent per annum on the cost of land and building at the time of first letting\. In addition, the Model Rent Control Bill prepared by the GO[ has not yet been passed by the Maharashtra State Legislature\. - 14- implement the Project could have been more effective can be debated, but certainly the need for coordination among multiple agencies is important\. This was a critical function performed by BMRDA under the Project, and was particularly important since many of the problems were of a regulatory or legal nature, which would have been difficult for the private sector alone to sort out\. Moreover, may subprojects involved more than two agencies; it seems unlikely that a private agency would have been the appropriate agency to conflict resolution\. 45\. The technical inputs of BMRDA's planning unit in identifying preparing and appraising the project were satisfactory\. Government also demonstrated its initial commitment to the project by appointing the interdepartmental coordinating committee\. However, GOM commitment to some Project goals later turned out to be lacking\. 46\. In contrast to project preparation, Borrower performance during the implementation phase suffered from several shortcomings\. As a coordinating agency, BMRDA was strong in identifying problems based on its Management Information System (MIS) but weak in enforcing solutions\. In 1985, BMRDA issued a reporting procedure manual which provides information on various issues\. These include agency performance outside BUDP, procurement, marketing and allotment of plots, financial covenants and others\. Unfortunately, the use of this manual was limited to getting project specific expenditure data necessary for disbursement applications and recovery of monthly dues\. BMRDA maintained a highly satisfactory record of procurement activity which formed the basis for the review of physical and financial progress by Bank supervision missions\. In consultation with the implementing agencies, BMRDA prepared a yearly work program and translated it into monthly expenditure targets\. Its monthly progress reports compared the progress with these targets and brought out important issues to the attention of heads of implementing agencies and government\. However it did not have the powers to enforce any of the decisions and the project coordinating mechanism got energized only during the IDA supervision missions\. Although the Chief of the Planning Division of BMRDA, the main coordinating officer for the project, did not change for the entire duration of the project, there were frequent changes in the membership of the High Powered Coordinating Committee, BMRDA and other heads of implementing agencies\. These changes adversely affected the progress of the project and commitment to its objectives\. 47\. The roles of the public and private sectors are complementary rather than adversarial\. The primary function of a metropolitan planning agency such as BMRDA is to provide an effective framework for regional planning and development\. It is clear from past experience that at least two conditions are necessary to enable these agencies to perform this function effectively\. First, the agency must have sufficient political influence to perform its function effectively, and second, it should have adequate financial resources to put in place a few strategic infrastructure investments to which the market can respond to\. Purely advisory agencies, such as a Council of Governments, are too weak and not taken seriously\. Metropolitan planning agencies play an important role in laying the groundwork for private sector development by setting the rules of development, financing a few strategic investments, and facilitating the process of land use and building (zoning, subdivision regulations, etc\.) The private sector would not invest unless governments provide these benefits under consistent and reasonable rules of engagement\. In fact, cities with strong urban growth management regulations have flourished economically and have become very desirable places to live\. It is precisely the cities with weak planning and - 15- growth management that have stagnated\. The market on its own cannot be expected to seriously improve the urban environment, nor will it address poverty concerns\. BMRDA has been an effective metropolitan planning and development agency because it controls some resources that enable it to perform the functions above\. It is unlikely that the Bombay Metropolitan Regional Plan would be taken seriously if BMRDA had not evolved as a serious player in the real estate market\. However, BMRDA's actions under the Project did not distort the land market and thus crowd out private investment, because BMRDA's influence has been limited by the size of its holdings"\. The Agency has been able to generate resources from its activities with its land holdings not because BMRDA owned a significant large amount of land overall in the city's real estate market, but because of the fact that the real estate market was booming at the time BMRDA owned the land (it has since effectively dropped to 50%)\. Moreover, BMRDA has no intention to pursue a similar model or to operate in the land market in a big way\. BMRDA has since entered into partnership with the private sector (ICICI, HDFC, and IL&FS14) to set up a financial intermediary to finance state-wide urban infrastructure, and to solve major sectoral needs to support more efficient urban management\. The success of this public-private arrangement in the future will be worth watching\. 48\. MHADA's performance on LISP was highly satisfactory, but barely satisfactory on SUP\. CIDCO's performance in LISP varied from being rated as satisfactory to deficient, particularly on marketing of plots\. BMC's performance on SUP was deficient\. Implementation was stopped in 1991 after the announcement of a 2\.5 floor space index (FSI) scheme for slum redevelopment as an alternative approach involving private real estate developers, but this has not yet had any significant results either\. Although BMC's performance on procurement was procedurally correct, it encountered considerable delays in the pre-award and post-award stages, which resulted in overall unsatisfactory performance\. TMC and KMCs performance in implementing LOGFAS was generally satisfactory\. Overall it is rated as marginally satisfactory\. 49\. Compliance with loan covenants was rated satisfactory with respect to procurement, progress reports, accounts and audits, pricing and cost recovery\. However, it was deficient in the case of sector policies and institutional development\. Overall, compliance with loan covenants too is rated as marginally satisfactory\. G\. ASSESSMENT OF OUTCOME 50\. Despite the partial fulfillment of project goals, the overall outcome is assessed as marginally satisfactory, principally because of the success of the project's largest component, LISP\. By meeting the objective of improving the supply of serviced public land to low-income households, the project has enabled over half a million persons to benefit directly from the investments undertaken by the project"\. The majority of the beneficiaries were close to, or 13/ Bombay has 537 sq\.km of land within the BMC of which BMRDA has only 150 acres (in Bandra-Kurla) at its disposal\. 14/ ICICI: Industrial Credit and Investment Corporation of India; HDFC: Housing Development Finance Corporation; IL&FS Infrastructure Leasing and Financial Services Limited\. 15/ This is a very conservative estimate, based on 88,000 plots under LISP and 22,000 households under SUP (Table 2) and about 5 persons per family\. - 16- below the poverty line\. These benefits imply the transfer of real assets to the poor and the project has thereby contributed to alleviating poverty\. Finally, the ERR surpassed SAR estimates and the project's financial targets have also been met\. H\. FUTURE OPERATIONS 51\. The expenditure required to complete ongoing works after final Credit closing can be met by the various agencies from their own resources\. MHADA and CIDCO have generated cash surpluses of Rs 93\.8 crores (US$ 30\.3 million) and Rs\. 28\.3 crores ( US$ 9\.1 million) respectively\. These will be more than adequate to complete ongoing works\. In addition substantial revenue is expected from the sale of the balance of plots\. For BMC, the expenditure involved is rather small as compared to its annual budget\. TMC has completed all works already while KMC has already applied for financial assistance from the revolving fund established in BMRDA\. Given the resources available, it is possible to finance the completion of the project\. 52\. The assets created in the project are in the form of municipal infrastructure\. Adequate institutional provisions have been ensured for their use and maintenance\. No major problem is envisaged in this regard\. 53\. The BUDP program is linked to overall sector performance\. If shelter supply remains inadequate even for middle income groups, it is likely that plots meant for low income beneficiaries in the project will get transferred to higher income groups\. Hence, any future evaluation will have to be of the sector as a whole and not of the Project alone\. BMRDA is attempting to develop a regional information system to provide a basis for such a periodic evaluation\. I\. KEY LESSONS LEARNED 54\. This project has demonstrated that: (a) The design of urban development projects should explicitly take into account socio-political factors that have a key impact on sector policies and where possible alternative less ambitious reform options should be considered; (b) even holding up the processing of a substantial loan in support of investments is insufficient to bring about required legal and institutional reforms (para\. 18)\. However important the reforms may be, they will only occur if there is sufficient political will to confront the vested interests resisting them\. Once a loan becomes effective, attention is focused more on project-specific implementation objectives at the expense of broader and politically difficult sectoral reforms; (c) the Bank should not undermine its credibility by making explicit policy declarations to Borrowers and then ignore its own self-declared policy (para\. 20); (d) a project's physical and financial objectives can be largely achieved despite distorted sector policies\. As a result of BUDP, about half a million poor people - 17- have benefited from serviced plots and housing loans financed by the project\. The implementing agencies have acquired substantial financial resources from plot sales as a direct result of their participation in the project and are thus in a position to replicate the physical achievements of the project (para\. 51); (e) in order for such urban development programs involving multiple agencies to be implemented efficiently , it is necessary to strengthen the planning, coordination and management of urban services by these agencies\. Improvement of procurement practices is also essential (para\. 35 (e) ); and (f) frequent changes of key personnel and staff, particularly from the Indian Administrative Service cadre have been a common problem in implementing long-term programs\. This has also been true of important engineering positions in BMC and MHADA\. The continuity of key personnel is critical to ensure commitment to project objectives\. 55\. Most of these lessons are equally relevant for other urban and infrastructure projects in India\. - 18- PART II: STATISTICAL ANNEXES Table 1: Summary of Assessments A\. Achievement of Objectives Substantial Partial Negligible Not applicable Macro policies 1 II I U Sector policies [[1 Financial objectives E I I Institutional development I [ II Physical objectives 1 I Poverty reduction I Gender issues I I I U Other social objectives li I Environmental objectives II 0 I [i Public sector management W Private sector development I I U Other (specify) 8A Project Sustainability Likely Unlikely Uncertain U Highly Marginally C Bank Performance Satisfactory Satisfactory Satisfactory Deficient Identification I] E I I I I Preparation assistance I I N I I Appraisal H m II Supervision II I m Highly Marginally D\. Borrower Performance Satisfactory Satisfactory Satisfactory Deficient Preparation I I I [I Implementation I 1 U Covenant compliance HI IU Operation (if applicable) 1 I I I Highly Marginally Highly E\. Assessment of Outcome Satisfactory Satisfactory Satisfactory Unsatisfactory Unsatisfactory [1 II 1 0 \| L1 - 19- Table 2: Related Bank Loans/Credits Loan/Credit Title Ln\./Cr\. Purpose Year of Status Number\. Approval A\. Preceding Operations * Bombay Water Supply and Sewerage Cr\. 390-IN Water supply and 1974 Completed Project conveyance sewers in Greater Bombay * Second Bombay Water supply and Cr\. 842-IN Water supply and waste 1979 Partially Sewerage Project water treatment and completed\. disposal in Greater Residual Bombay works now proposed at B\.3 # Third Bombay Water Supply and Ln\. 2769-IN Expand water supply by 1987 On-going Sewerage Project Cr\. 1750-IN 455 mid in Greater Bombay * Bombay Urban Transport Project Ln\. 1335-IN Augmentation of bus 1977 Completed fleet, depots & workshops, traffic management & fly-over in Greater Bombay * Maharashtra Water Supply Project Cr\. 899-IN Water supply and 1979 Completed Sewerage in Thane- Kalyan-Bhiwandi subregion B\. Following Operations * Bombay Urban Transport II Improvement in railway Preparation commuter networks, in progress traffic and transportation management in BMR * Bombay Urban Resettlement and Preparation Rehabilitation under way * Bombay Sewerage Disposal Project Sewerage disposal Under through deep marine preparation outfalls and aerated lagoons * Fourth Bombay Water Supply and Develop middle Under Sewerage Project Vaitarna for additional preparation water supply 450 mid\. * Maharashtra Water Supply Project - To augment water Under Stage 11 supply to Thane Kalyan preparation Bhiwandi areas by developing Peshir water works - 20 - Table 3: Project Timetables Date Planned Actual Identification (Executive Project Summary) January 1981 Preparation June 21-July 3, 1982 Appraisal June 27-July 17, 1983 Negotiations November 1984 Board Presentation January 29, 1985 Signing March 1, 1985 Effectiveness August 22, 1985 Project Completion March 1990 March 31, 1995 Credit Closing date (original) September 30, 1990 First Extension with telex of 9/28/90 to September 30, 1991 Second Extension with telex of 10/25/91 to March 31, 1992 Third Extension with telex of 03/31/92 to September 30, 1992 Fourth Extension with telex of 10/14/92 to September 30, 1993 Fifth Extension with telex of 09/28/93 to September 30, 1994 Actual Credit closing date September 30, 1994 Table 4\. Credit Disbursements: Cumulative Estimated and Actual (US$ thousands) FY-85 FY-86 FY-87 FY\.88 FY-89 FY-90 FY-91 FY-92 FY-93 FY-94 Appraisal Estimate 5,500 31,700 74,100 110,700 129,900 136,900 138,000 Actual 7,109 11,573 21,273 34,745 48,798 62,964 21,308 101,371 124,889 Actual as % of SAR Estimate 0% 22\.4 15\.6 19\.2 26\.7 35\.6 45\.6 Date of Final Disbursement: May 17, 1994 -21 - Table 5: Key Indicators for Project Implementation Physical Targets Actual Components/Agencies SAR Revised September 1994 1\. Land Infrastructure Servicing Program (LISP) 85,000 88,000 87,743 of which: (a) MHADA Greater Bombay: Serviced sites 40,000 55,200 55,297 (b) Thane/Kalyan: Serviced sites 25,000 3,800 4,709 BMC Greater Bombay: Offsite Infrastructure Completed and Community Facilities Rehabilitation of Water Mainst * Partly Completed Priority Storm Water Drainage Works * Transferred to other Bank project Waste Water Treatment (Aerated Lagoons) Water Supply to Eastern Suburbs * Completed (c) CIDCO New Bombay: Serviced sites and Infrastructure 20,000 29,000 27,737 Master Balancing Reservoir at Shil and Transmission Completed Mains * Drawl if 30 nld water from Patalganga * Completed 2\. Slum Upgrading Program (SUP) 100,00 60,000 22,204 of which: (a) MHADA Greater Bombay: On Public Land 70,000 40,000 21,604 (b) On Private Land 10,000 0 0 (c) BMC on MCGBI Land 20,000 20,000 600 3\. Local Government Finance Administration and Services in Rs\. Crores (LOGFAS) Equipment and Civil Works for improving the maintenance of municipal services in BMC, NMMC, TMC and KMC Equipment 197 350 Road Maintenance 24 New 26 Solid Waste Management 123 works Sewerage Maintenance 50 added as 23 Water Maintenance 0 perthe 9 Fire Fighting 0 study 68 Others 0 under 25 Civil Works TATE Mahalaxmi Refuse Transfer Station Completed Augmentation of Water Supply in Kalyan and Dombivali Ongoing Storm Water Drainage Works in Thane & Kalyan * Completed Improving & Developing Services in Municipal Councils Ongoing 4\. Technical Assistance Training and Equipment (TA TE) For improving the capacity of the project implementing Completed and coordinating agencies Training 9 Studies 3 23 Equipment-Computers 35 Note: Being funded by BMRDA from the BUDP Revolving Fund\. * New works included in the project at time of restructuring (December 1990)\. ** Metropolitan Environment Improvement Program included - 22 - Table 6: Key Indicators for Project Operation No key Indicators for Project Operation were given in the SAR\. Table 7: Studies Included in the Project Name of Study Purpose as Agreed Status Impact of Study Organization Structure and Financial Top design organizational structure and Completed Accounting system has been Management Estate financial management systems for MHADA implemented\. Organizational study was not acted upon\. Benchmark Study of Slum Upgradation Program To establish pre-improvement conditions in the Completed Benchmark conditions were established\. slums be followed-up with a post But program not being implemented on implementation study a large scale, post implementation study has not been carried out\. Maharashtra Refuse Transfer Station feasibility To design refuse transfer station in Bombay Terminated MBC did not agree with consultants City\. design\. Project was redesigned and executed without stationary compactors\. Study of plots advertisement awareness in Due to low response to first advertisement of Completed The study concluded that the low Chakop LISP in Greater Bombay, MHADA proposed to response was due to poor marketing divert the smaller plots to the next higher strategy and advertisement\. The study income group\. suggested that a wider circulation and communication should improve the response\. MHADA adopted the suggestion and received better response for its future advertisements for low income plots\. Urban Management for Municipal Corporation Two separate Corporations were constituted in Completed Civil works and equipment identified for of Thana and Kalyan 1982 and 1983 for the newly areas of Thane municipal maintenance services have and Kalyan respectively\. Two independent been procured under DUBP\. Other studies were carried out for each of the recommendations have remained Corporations to propose a development unimplemented\. management system, organization structure and municipal finance systems\. Design of Water Supply Project for New to prepare, design and cost estimates for Project executed under BUDP\. Bombay using Patalganga as a source augmenting water supply to New Bombay by using Patalaganga as a source Mathematical Model for Siltation of Thane To study the hydrological impact of landfill in Completed Other environmental impact of Creek the Thane Creek\. reclamation on mangroves and marine life do not allow reclamation\. Municipal Services Requirement in 11 The Municipal Councils have been Completed BMRDA has commenced extending Municipal councils experiencing rapid growth in population, financial assistance through the BUDP\. industrial and other economic activities\. The Revolving fund to the municipal council purpose of the study was to develop FOP for by using study recommendations for each Municipal Council and identify capital appraisal of loan application\. investment program based on service requirement\. Geological Survey in Bombay Metropolitan To estimate the building materials requirement Completed The outcome of the study has been Region and identify geological appropriate location for included in the draft Revised Plan for quarrying stone/stand, weathered rock and clay BMR - 2011, and environmental for bricks\. protection guidelines issued\. Master Plan for Storm Water Drainage for To prepare a master plan for Storm Water Completed Priority storm water drains and Bombay Drainage and of rehabilitation of old sewers maintenance equipment were identified and procured under BUDP\. Environmental Design and Site Planning at Most of LISP sites in GB was on coastal Completed Site is being developed as per the Charkop IV wetlands\. As the understanding of consultants layout and designs\. environmental effects of landfill were learnt, layout planning was designed taking into account various environmental and ecological parameters like tidal impact zone, flora\. Solid Water management in Bhiwandi To recommend improved solid waste collection Completed The council has not taken any follow-up and dispatch practices\. action\. - 23 - Table 7: Studies Included in the Project (cont'd) Name of Study Purpose as Agreed Status Impact of Study Study of Storm Water Drainage in Mira To prepare a master plan of storm water Completed Priority investment on storm water Bhyander drainage and a pilot scheme of small bore drainage supported by BMRDA from sewers for conveyance of septic tank effluents\. BUDP: Revolving Fund Design of Water Distribution Network in To prepare water distribution network plan in Completed Part of works were financed from Kalyan conjunction with project of augmentation of BUDP\. Balance works are being water supply of Kalyan and Dombivli\. financed by BMRDA from BUDP: Revolving Fund\. Audio-visual of Slums To prepare audio-visual presentation of slum Completed Audio-visual material used\. upgrading program\. Feasibility Study - Vasai Virar Water Supply To prepare preliminary designs and cost Completed BMRDA has decided to finance works estimates of headworks, treatment plant, master up to MBR as BOLT (build, Own, balancing reservoir and distribution network, Lease and Transfer)\. and recommend financing, institutional and tariff policy\. Municipal Services Requirement for Navi To propose a development management Completed New Bombay municipal did not make Mumbai & Panvel Municipal Corporations system, organization structure and municipal use of systems recommended\. Panvel finance systems for two municipal corporation has not yet been corporations, namely New Bombay for established\. northern part and Panvel municipal corporation for the southern part of New Bombay Environment Management Strategy and Action To formulate environmental management Completed High priority in infrastructure project Plan strategy for BMR\. and integrated arrangement required for environmental coordination have been recommended\. Integrated Urban and Environmental Study of To identify on site emission reduction Completed Recommendation is under Chembur and Thank-Belapur measures, urban infrastructure improvements consideration\. and formulate a disaster management plan \. Solid Waste Management Disposal in Great To prepare a plan of action for collection Completed An investment program of Rs 200 has Bombay's bay transportation and disposal of solid waste emerged\. Study of Storm Water Drainage in Pen To prepare a storm water drainage master plan\. Completed Priority works financed by BMRDA from BUDP: Revolving Fund\. - 24 - Table 8A: Project Costs Appraisal Estimate (LSS NI) Actual/latest Estimate (USS NI) Local Foreign Total Local Foreign Total costs costs costs costs Land Infrastructure 113\.20 7\.70 120\.90 143\.21 3\.19 146\.50 Servicing Program (LISP) Slum Upgradation Program 32\.60 1\.40 34\.00 3\.55 0\.00 3\.55 (SUP) Assistance to Local 14\.70 3\.70 18\.40 26\.53 14\.23 40\.76 Government (LOGFAS) Technical Assistance 1\.30 0\.20 1\.50 5\.67 0\.00 5\.67 Training and Equipment (TATE) Design and supervision 17\.00 1\.50 18\.50 16\.47 1\.48 17\.95 Total Base Cost 178\.80 14\.50 193\.30 Physical contingencies 12\.50 1\.30 13\.80 Price contingencies 45\.90 3\.70 49\.60 Total 237\.2 19\.5 256\.7 195\.43 18\.90 214\.33 Table SB: Project Financing Appraisal Estimate (USS N) Actual/latest Estimate (USS M) Local Foreign Total Local Foreign Total costs costs costs costs IBRD/IDA 138\.00 124\.89 Government of Maharashtra 118\.70 89\.44 Total 237\.2 19\.5 256\.70 214\.33 - 25 - Table 9A: Economic Costs and Benefits A methodology similar to the one used in the SAR was used to estimate the main benefits of the LISP component for representative projects in Thane, Greater Bombay and New Bombay sub-regions\. In assessing the net economic benefits in terms of the economic rate of return (ERR), three representative sites - Panchpakhadi (27\.23 ha), charkop 1 (95 ha) and Kopar Khairane (117 ha) - out of the 22 developed in the three sub-regions have been taken\. all three representative sites are the largest in each of the sub- regions\. The methodology adopted for the ERR estimation is as follows: Costs: (a) The costs are derived from the financial costs excluding taxes (7\.3 percent as assessed in the SAR)\. (b) All chargeable and non-chargeable costs have been included, as in the SAR\. (c) No correction on the basis of shadow prices is done as all the construction materials are procured at market prices and not at administered prices\. Benefits: (a) The market value of land is derived from the location-specific property prices at the time of the first advertisement of each site, as quoted in the 'Accommodation times', a local newspaper specializing on land, housing and infrastructure\. (b) The market value of land, thus derived, is used to evaluate apartment plots in the LISP component\. Low income plots have less attractive location, narrower frontages and limited potential for expanded construction\. Hence, their market value is one-third to two-thirds the market value of apartment plots, as reflected in instances of informal resale by beneficiaries immediately after allotment\. The present analysis assumes that their value is approximately one-half of the price of apartment plots\. (c) The annual benefits resulting from the development of these plots is evaluated at 15 percent of the total market value of the developed land\. (d) 25 percent of the plots are allocated in the first year, 25 percent in the second year, and 50 percent in the third year\. The benefits are related to the market prices prevailing at the time of the first advertisements\. If benefits are corrected for subsequent increases, there would be a substantial increase in the benefit stream\. - 26 - Table 9B: MHADA-PANCHPAKHADI - Economic Analysis (coont'd) Year Economic Cost Net of Taxes Economic Benefits Net Benefits (Rs Lakhs) (Rs Lakhs) 0\.073 1984 0\.00 0\.00 1985 50\.05 50\.05 -50\.05 1986 13\.03 13\.03 -13\.03 1987 3\.33 3\.09 -3\.09 1988 155\.06 148\.12 57\.36 -90\.76 1989 59\.98 55\.66 114\.72 59\.05 1990 198\.07 194\.63 229\.43 34\.80 1991 150\.55 144\.06 229\.43 85\.37 1992 16\.20 16\.18 229\.43 213\.25 1993 4\.50 4\.29 229\.43 225\.14 1994 6\.48 6\.48 229\.43 222\.95 1995 2\.22 2\.22 229\.43 227\.21 1996 229\.43 229\.43 1997 229\.43 229\.43 1998 229\.43 229\.43 1999 229\.43 229\.43 2000 229\.43 229\.43 2001 229\.43 229\.43 2002 229\.43 229\.43 2003 229\.43 229\.43 2004 229\.43 229\.43 2005 229\.43 229\.43 2006 229\.43 229\.43 2007 229\.43 229\.43 2008 229\.43 229\.43 ERR: 42\.67 Type Apt\. Plots Commercial Plots Low Income Plots Total Value Area (Sq\.Ms\.) 58,081 2,947 70,096 Price (Rs/sq\.m) 1,500 4,500 750 Total Value 871\.22 132\.62 525\.72 1,529\.56 (Rs\.Lakhs) - 27 - Table 9C: CIDCO-KOPAR KHAIRANE - Economic Analysis (coont'd) Year Economic Cost Net of Taxes Economic Benefits Net Benefits (Rs Lakhs) (Rs Lakhs) 1987 85\.98 79\.70 -79\.70 1988 811\.60 761\.41 -751\.41 1989 994\.08 921\.51 -921\.51 1990 992\.75 920\.66 511\.13 -409\.53 1991 455\.82 423\.19 1,022\.26 599\.08 1992 687\.63 642\.57 2,044\.53 1,401\.96 1993 341\.65 317\.08 2,044\.53 1,727\.45 1994 379\.25 351\.56 2,044\.53 1,692\.96 1995 0\.00 0\.00 2,044\.53 2,044\.53 1996 2,044\.53 2,044\.53 1997 2,044\.53 2,044\.53 1998 2,044\.53 2,044\.53 1999 2,044\.53 2,044\.53 2000 2,044\.53 2,044\.53 2001 2,044\.53 2,044\.53 2002 2,044\.53 2,044\.53 2003 2,044\.53 2,044\.53 2004 2,044\.53 2,044\.53 2005 2,044\.53 2,044\.53 2006 2,044\.53 2,044\.53 2007 2,044\.53 2,044\.53 2008 2,044\.53 2,044\.53 ERR 40\.86% Type Apt\. Plots Commercial Plots Low Income Plots Total Value Area (Sq\.Ms\.) 35,7100 14,4307 23,7316 Price (Rs/sq\.m) 1,500 4500 750 Total Value 5,356\.50 6,493\.82 1,779\.87 13,630\.19 (Rs\.Lakhs) -28- Table 10: Status of Legal Covenants Agreement Section Type Status Original Description Comments Date PA Schd\. 2 2\.01 4 C Throughout GOM's commitment to project objectives set forth in Schedule 2 Development Credit Agreement, and GOM to provide necessary counterpart funds\. 2 9 C Throughout Selection of sites for the land and infrastructure servicing program and the slum upgrading program and their plans, layouts, designs and standards shall be satisfactory to IDA\. 3 12 NC 09/30/90 GOM will aim to implement about Impossible 10 percent of the slum upgrading under existing with households located on privately laws\. owned land\. 4 9 C Throughout The scope and timeframe in respect Some of a program of municipal services improvements and improvements in the made without development control and building formal regulations shall be implemented agreement with only after the recommendations of IDA\. the consultants for the program have been jointlN reviewed and agreed upon among GOI, GOM and IDA\. 5 3 C 09/30/87 BMRDA will establish a revolving IDA relaxed revised fund to be credited with 45 percent revolving fund, 03/89 of the principal amounts to be repaid eligibility to by the implementing agencies to include GOM in repayment of amounts on- municipal lent to them by GOM to implement infrastructure\. the project, the funds shall be treated as a non-refundable loan and shall be used for financing similar program in future (para\. 3\.09) 6 5 NC 1986-87 MHADA shall (i) limit new IDA's influence investments in housing schemes over MHADA's (excluding repairs, reconstruction non-IDA funded and slum improvements) outside the operations was project to Rs 10 crore per year during weak\. the peak period of the implementation of the project and use layouts, standards and superstructure in any new schemes outside the project based substantially on the building and development control regulations prescribed for land infrastructure servicing schemes under the project\. - 29 - Table 10: Status of Legal Covenants (cont'd) Agreement Section Type Status Original Description Comments Date PA Sched\. 2 6 5 NC 1986-87 (a) minimize the average cost per Ditto\. household for land development and housing construction, and (b) maximize the percentage of households with incomes at or below the absolute Bombay poverty level in the range of 55% to 75% of all beneficiary households\. 7 2 CP Throughout MHADA and CIDCO will aim to CIDCO's achieve the following performance collections were targets by fiscal year 1987/88: (a) not always design, supervision of construction satisfactory\. and management costs, including support services, not to exceed 12% of annual construction costs, (b) accounts receivable hire purchase and rental properties not to exceed an average of 3 months billing, and (c) estate management costs not exceed 4% of rental and installments receivable\. 8 2 C Throughout GOM will aim, in respect to LISP Revenues were (i) to recover fully all chargeable much higher costs, and target beneficiary than anticipated\. selection criteria and terms and conditions of sales and leases for residential, commercial, small industry and other plots, and for home improvement loans shall be an agreement among GOI, GOM and IDA, and (ii) on lending terms to beneficiaries for serviced plots and housing loans shall include inter alia that interest shall be charged at no less than 12% per annum GOM will aim in respect of SUP\. 11 9 CP Throughout BMRDA shall: (i) prepare and Materials review furnish to IDA not later than requirement was December 31 each year, an annual unrealistic\. report of the progress of the Affordable Low Income Sheiter Program for that year, together with proposals for actions required to be taken to meet the targets for the program for the following year, and (ii) review every six months the availability of materials and financial requirements for ALIS program (para\. 3\.20) (para\. 11 of Schedule 2 to Project Agreement)\. - 30 - Table 10: Status of Legal Covenants (cont'd) Agreement Section Type Status Original Description Comments Date PA Sched\. 2 12 5 CP Throughout GOM shall cause the implementing Difficulties agencies to provide each year experienced in sufficient budgetary provisions for monitoring\. adequate services maintenance in areas benefited by the Project PA Sched\. 1 2\.06 5 C Throughout GOM not to change subsidiary loan agreements with CIDCO & BMC\. PA 2\.08 5 C Throughout GOM to acquire and make available Delay in land land and rights for construction and acquisition operations of facilities under the major was a Project\. major factor in slow pace of project implementation\. PA 4\.01 1 CD Throughout (i) project implementing agencies will have their accounts and financial statements for each fiscal year audited in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to IDA; and (ii) the accounts and audits will be furnished to IDA not later than nine months after the end of each agencies' financial year (para\. 3\.19), (section 4\.01 of Project Agreement)\. Key: C = Full compliance NC= Not complied with CP= Partially complied with CD= Delayed compliance Table 11: Compliance with Operational Manual Statements There are no significant cases of lack of compliance with OMS\. -31 - Table 12: Bank Resources - Staff Inputs Stage of Project Cycle Actual Staff Weeks US$ thousand Preappraisal through Board 164\.7 254\.7 Supervision 133\.3 304\.9 Completion 10\.0 11\.8 Total 308\.0 571\.4 Table 13: Bank Missions Stag of Project :Dae No\. of Specialization Performance Problems Preparation Jun 82 7 FA, UP Mission Pre-appraisal Mar-83 5 FA, UP, FAD, ME, PHE Appraisal July-83 7 FA, UP, FAD, ME, PHE, SFA, ENG Appraisal through 2 PHE, SFA Board Supervision Feb-85 5 ME, PHE, SFA, ENG, I F, M Mission ME Aug-85 I ME I M Apr-86 3 ENGs 1 M Sep-86 1 EC 1 M Feb-87 3 ME, EC, ENG 1 M, P Jul-87 1 ME Oct-87 2 Jul-88 3 ENG, SFA 1 M, E Dec-88 1 ENG 2 M, E, P Apr-89 2 ENV, SFA 2 E, F Sep-89 1 SFA, R 2 M, P Apr-90 2 UP, ENV 2 P, E Jul-90 3 ENGs 3 P, M Dec-90 I EC 2 P, M Apr-91 2 EC, ME 2 P, M Oct-91 1 EC 2 F, P Aug-92 1 EC 2 P Dec-93 I EC 2 P Sep-94 2 EC, UP 2 P, E Completion Sep-94 2 EC, UP Staff Skills: ENG = Engineer ENV = Environmental Engineer SFA Senior Financial Analyst FAD = Financial Adviser EC = Economist UP = Urban Planner ME = Municipal Engineer PHE = Public Health Engineer Key: 1 = Minor problems F Financial E = Environmental 2 = Moderate problems M = managerial P = Procurement - 32 - Appendix A IMPLEMENTATION COMPLETION REPORT INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) MISSION'S AIDE-MEMOIRE (MISSION OF SEPTEMBER 1994) 1\. An IDA mission consisting of Mr\. Evan Rotner and Ms\. Kim Cuenco (SA21N) visited Bombay from September 21-15, 1994 to discuss with the Government of Maharashtra (GOM) the requirements for the completion of the Project's Implementation Completion Report (ICR) and other issues identified during the current and previous missions\. The mission wishes to express its appreciation for the assistance and cooperation provided by the Government of Maharashtra and the project management agencies\. 2\. The mission's primary objective was to ensure that actions necessary to complete the ICR by the required date are undertaken and to follow-up on the suggestions made by the 2-11 December, 1993 mission to BMRDA on the ICR preparation\. The report should be completed and distributed to the World Bank Board not later than six months after the closing date of September 30, 1994\. 3\. This aide-memoire summarizes the present status of ICR preparation and agreements on actions that need to be undertaken to complete the ICR before March 1995\. Status of ICR Preparation 4\. BMRDA has prepared a detailed draft outline of the project ICR, taking into consideration the suggestions made by the mission during its visit in December 1993\. The mission reviewed this outline with BMRDA and suggested for the following: (a) Project Description + Include information on extension dates (b) Project Coordination + explain how the project was designed and run as a program loan and the effective technical role of BMRDA in managing the project as an appraisal intermediary; * note the limited effectiveness of the technical committee; + highlight the importance of successfully computerizing project management; and - 33 - + note changes and improvements in procurement procedures and bid documents during implementation and comment on impact - if any - on procurement efficiency\. (c) Related Project Issues + discuss the negative impact of competing non-BUDP programs and sources of funds, particularly on the SUP component; * discuss reasons for the failure to implement urban renewal schemes in slum areas as an alternate to in-situ upgrading; and + on TA, note that the organizational and financial management studies had a good potential, which was a little utilized by the implementing agencies\. (d) Replicability + note that sustainability and replicability of project results will require greater participation by private financial intermediaries; and + recast the BUP as an infrastructure financing project, possibly through an evolution of the existing BMRDA urban infrastructure fund\. (e) Indicators for Project Implementation + consider using two tier indicators that allow more specifying in evaluating project performance; * include both financial and qualitative indicators for all components and individual agencies; + differentiate between the number of plots developed and households benefited (larger because of substantial number of apartment plots in BUDP); * include performance indicators for assessing the LOGFAS component performance; * include plot demand indicators (number of applications vis-A-vis quantity of sites available) and tables of details by scheme, plot type to indicate marketability; and + for Annexure, include a detailed PERT chart for a typical scheme and - say - one or two of the larger schemes like Charkop I and/or Koprekhairane, showing from the feasibility study stage to occupation and settlement forecast and actual activity times\. - 34 - (f) Other Suggestions + list technological initiatives introduced by the project, e\.g\. use of precast wall plinths, cut doors, etc\. Pre-cast drains at Koprekhairane and include under performance indicators; * include section on performance of contractors; + highlight the main finding that the project was highly financially viable (appraised funding vs actual funding/cost; recovery/profitability) with substantial social benefits; + record and explain that the implementing agencies (MHADA and CIDCO) have failed to pick up on the model, contrary to SAR expectations and forecasts; + include a section comparing the SAR forecast with actual project and other supplier's (private and public) contribution to the affordable supply of serviced plots/housing (the supply and demand balance was modeled in the SAR); + review and comment on maintenance of project assets by responsible agencies: MHADA, CIDCO and BMC; and + comment on the relationship between SAR expectations compared to the performance of exceptional site planning and engineering features (semi-private open space for low income clusters of small plots, dispersion of low income clusters among middle and higher income clusters; construction, marketing, staffing and services provided (or not) in community facilities provided by the project, performance-based roads, drains, water supply and sanitation engineering standards etc\.)\. 5\. It was agreed that BMRDA would submit a completed draft to the Bank by end- December 1994\. In the interim, it would forward to the Bank draft sections as they emerge\. Implementation Action Program (IAP) 6\. As part of the ICR, an IAP will be prepared by the Borrower describing the implementation and financing of all remaining activities beyond the closing date of the Project in accordance with the Project Agreement\. It should contain appropriate technical, financial and institutional arrangements to ensure effective project implementation and O&M including: (a) a schedule of all actions required to complete the project beyond the Credit Closing Date, in the sense that benefits/beneficiaries are in place; (b) a financing plan identifying the funding sources for unfinished investments to be funded using non-Bank funds; (c) an implementation plan for the operation and maintenance of completed investments; and (d) requirements for periodic monitoring and reporting (to GOM and IDA) by all implementing agencies on O&M activities and implementation of unfinished activities\. In particular, remaining sites and services schemes should be completed, allocated and occupied in accordance with the project agreement, with home improvement loans extended to eligible beneficiaries\. -35- Use of Project-Generated Surplus Funds by CIDCO and MHADA 7\. MHADA and CIDCO have generated substantial surpluses from project implementation\. These funds should not flow into general agency revenues, but ploughed back into the project to finance BUDP-type schemes within the credit period\. The mission requests that BMRDA/MHADA/CIDCO prepare and submit to IDA a plan for utilizing the surpluses for BUDP-type schemes\. Other Issues 8\. Un-Occupied Apartments Plots - Charkop\. The mission had noticed on an earlier site visit that a number of apartment plots in Charkop have been vacant for several years\. The mission had said at that time that "these were allotted earlier with IDA's agreement on a one- time basis outside the normal auction process to public sector agencies at average cost price\. One of the public sector agencies is Indian Air\. The failure of Indian Air and other public agencies, if any, to construct, abuses a special arrangement to the detriment of both the development and environmental value of the area near the plots and project financial returns"\. The mission was disappointed to find that its recommendation has been ignored and the MHADA appears not to have informed Indian Air and other public agencies, if any, that if they do not commence construction within 3 months their leases would be terminated in accordance with provisions in the lease agreements and the plots would be auctioned to the public at large\. The mission requests and expects that BMRDA/MHADA submit to IDA within 2 weeks, copies of lease termination notices for these and any such other plots in BUDP schemes - with lists of the same\. 9\. Maintenance-Sites and Services Schemes and Provision of Services\. The mission understands that Charkop sites and services scheme infrastructure assets have been turned over to the BMC for maintenance and operations\. We observed many instances in which the infrastructure is not being maintained or services provided - damaged roads and drains, uncollected garbage, etc\. MHADA (and CIDCO) should survey all completed schemes, inventory the maintenance and service requirements; and establish schedules and action program for setting them right as part of the ICR/IAP\. The mission requests that the survey and action program be sent to IDA by November 1994\. 10\. Community Development Services (CDS) Continuing Need for\. The mission visited one Cooperative Society Cluster (Sunrise) in the Gorai scheme which it visited in December 1993\. At that time the Society was just inaugurating obtaining its lease agreement and occupation certificate\. Since then, the Society has completed house construction up to about the roof level\. However, construction had obviously stopped for several months\. Our inquiries revealed that some of the society members may not have been able to come up with their share of the house construction costs\. This is not surprising\. Since costs are now estimated at about Rs\. 32,000/unit and the BUDP house construction loan is about Rs\. 15,000, some households with incomes of about Rs\. 1,200-1,800/mo (for the A, B and C low income plots) must find it difficult to raise the cash to cover construction costs\. - 36 - 11\. MHADA's community development wing should continue to be active on site to identify ways and means for assisting Societies to resolve difficulties like the financial one above and other ones connected with service and maintenance problems\. Merely because MHADA (and/or CIDCO) has completed construction and handed over plots and infrastructure to beneficiaries does not mean that their responsibility for a site had ended\. Achieving complete housing construction and full occupation of sites remains as a responsibility\. The mission requests that IDA be informed by November 1994 what arrangements MHADA/CIDCO are making to continue to provide CDS during the ongoing period of scheme house construction and occupation and community service start up\. Specific provisions for CDS should be included in the ICR/IAP\. Use of Credit Balance Available in the Special Account 12\. During the mission BMRDA asked whether or not there was about SDR 2,340,069\.30 remaining in the BUDP Special Account with DEA, which should be disbursed against outstanding eligible BUDP claims\. The mission has requested IDA to clarify the situation and will inform BMRDA of the outcome as soon as information is available\. - 37 - , Mumbai Metropolitan Region A707n1MIX B "* E\.Bndra - Kurla Complex\. Development Tlthority Bandra (E), Mumbai - 400 051\. E-MAIL: mmnrda@iasbm01\.vsnLet-if Tel\. No\. 642 9751 (8 Lines) EL:mmrdegasm01sNnt in FAX NO\. : 92-022-640 03 06 TELEX \. 011 - 78069 BMDA, IN P/BUDP/ICR/ 3 T May 23, 1997 To, Mr\. Jean-Francois Bauer Chief, Energy and Infrastructure Operations Division, Country Department II, South Asia Region, The World Bank, 1818 H Street N\.W\., Washington D\.C\. 20433, U\.S\.A\. Sub: BUDP - 1544 IN - Comments on ICR and Borrower's Contribution Dear Mr\. Bauer, Thanks for your letter dated May 8, 1997 sending us a copy of the BUDP-ICR\. As you are aware, we had a significant contribution to the drafting of earlier version of ICR, which was sent to Mr\. Robert Panfil on March 9, 1995\. Our formal 'Borrower's Contribution' to ICR was therefore rather brief\. Now that the ICR has undergone considerable change, we take this opportunity to present our contribution highlighting the conclusions that significantly differ from those of the revised ICR now sent\. The general performance of the project has been adjudged to be "marginally satisfactory"\. (This category of assessment is not observed in the World Bank Operations Manual on Good Practices GP 13\.55 of May 1994)\. Perhaps this conclusion has been arrived at by giving equal weightage to the sectoral policy objectives and achievements within the project framework\. Assigning such equal weightage to both these aspects of the project is highly unrealistic as achievements of policy objectives was obviously beyond the control of the project implementing agencies or the Bank Supervision staff\. Reforms in rent control legislations and urban land ceiling have not been achieved despite a number of high level Government of India commissions and committees recognising the need for such reforms\. Thus the project needs to be assessed with reference to the physical and financial targets of the project and the policy changes that could be brought about having a direct bearing on the project achievements\. With this perspective, we believe that the project could be rated as "satisfactory", and some of the components like LISP and LOGFAS could even be considered as "highly satisfactory"\. Some of the factual inaccuracies noticed from the revised ICR are also given as separate annexure to this letter With regards, Yours sincerely, (V\.K\. Phatak) Chief, Planning Division\. - 38 - APPENDIX B-ANNEX I BORROWER'S CONTRIBUTION TO TH E I\11LEMENTATION COMPLET1\ON REk?RT ON 2 C- 'A U'?3/JN DEVE~LO MENT OJC (Credit No\. 1544 IN) INDIA Mr a Rio I\viuinb,)i Metreiixlitan Region Deve]opi-nent Authorit), - 39 -2 INDIA BOMBAY URBAN DEVELOPMENT PROJECT (Credit 1544-IN) BORROWER'S CONTRIBUTION TO THE IMPLEMENTATION COMPLETION REPORT 1\.0 ObJectives 1\.1\. The objectives of Bombay Urban Development Project (BUDP) as stated in the SAR were; (i) to make a large increase in the public supply of affordable land, infrastructure and shelter particularly for low income families and small business; (ii) to substantially improve local government financial and administrative capacity to deliver and maintain services, particularly the infrastructure created under BUDP; ' (iii) to strengthen Government's institutional capacity to plan, coordinate, implement, and evaluate BUDP Projects, programs, and policies and replicate the achievement\.; (iv) through more efficient and equitable land use planning and pricing policies and more appropriate performance oriented design standards, development control and building regulations to aim at improved public sector cost recovery and major reduction in the public and private costs of shelter investments; and (v) to direct a larger proportion of private investment in land servicing and shelter construction in low cost units for low income families\.1 1\.2\. These objectives were translated into physical and investment targets to be 1 Staff Appraisal Report No\. 4794 - IN, India, Bombay Urban Development Project Urban and Water Supply Division, South Asia Projects Department, World Bank\. Washington D\.C\., 1985 (para 2\.08, pp 13)\. - 40 - 3 supported by IDA Credit of SDR 137\.7 million as given in Table 1\. Table 1 Rs\. in Crorcs COMPONENTS/AGENCIES SAR TARGETS Physical Financial 1 Land Infrastructure Servicing Program (LISP') Provision of 85,000 serviced sites including cormtnunity 85,000 196\.25 facilities, core houses and house expansion loans: MHADA Greater Bombay: Serviced Sites 40,000 81\.22 Thane / Kalyan: $crviced Sites 25,000 59\.58 BMC Greater Bombay: Offsite Infrastructure and Community Facilities 21\.54 CIDCO New Bombay: Serviced Sites and - 20,000 33\.91 Infrastructure 2 Slum Upgrading Program (SUP) Upgrading 100,000 slum households in Greater Bombay 100,000 53\.37 including provision of tenure, improved infrastructure services, home improvement loans, community facilities MHADA: Greater Bombay - On Public Land 79,000 35\.07 -On Private Land 10,000 5\.01 BMC: - On MCG Land 20,000 13\.29' 3 Local Government Finance Administration and Services (LOGFAS) 30\.78 Equipment and Civil Works for Improving the maintenance of roads, drains and collection and disposal of rcfuse in municipal corporations BMC 17\.70 TMC * 6\.25 KMC & CIDCO (NBMC) 6\.83 4 Technical Assistance Training and Equipment (TATE) 1\.93 For improving the capacity of the project implementing and coordinating agencies BUDP TOTAL 282\.33 1\.3\. The objectives of the project remained valid and unchanged, during implementation, except that the relative emphasis changed in favor of municipal services and infrastructure as shown in Table 2 below; Table 2 Rs\. in Crores COMPONENTS SAR TARGETS REVISED TARGETS Physical Financia % of Tot\. Physical Financial % of Tot\. 1 LISP 85,000 196\.25 69\.51% 88,000 257\.10 47\.23% 1 a New Infrastructure works 109\.20 20\.06% 2 SUP 100,000 53\.37 18\.90% 60,000 21\.60 3\.97% 3 LOGFAS 30\.78 10\.90% 146\.43 26\.90% 4 TATE 1\.93 0\.68% 10\.03 1\.84% BUDP TOTAL 282\.33 100\.00% 544\.36 100\.00% For details please refer Annexure 1\. 1\.4\. The policy related project objectives had two distinct aspects ; one related to - 41 - 4 Sectoral Policies and the other related to Project implementation\. The Sectoral Policy objectives, using project as vehicle, attempted to bring about legislative reforms particularly in Rent Control Act, Property Tax and Urban Land (Ceiling and Regulation) Act\. Some of these had national ramifications\. The policy objectives related to Project implementation had a more direct bearing on the project such as reforms in the Development Control and Building Regulations, Private Sector Participation in Land Development, Institutional\. Reforms and Capacity Building and Grant of Tenurial Rights to Slum Households' cooperatives\. The Planning Commission Task Force (1983), National Commission on Urbanization (1988) and National Housing Policies (1988 - 1992) have all recognized the importance of legislative reforms in Rent Control and Urban Land Ceiling\. However given the political implications of such reform process, not much progress has been achieved in this regard\. Expecting a single project to bring about significant legislative reforms was therefore rather unrealistic\. At te time of Project Appraisal and Negotiations, concern for environmental impact was not very pronouncqd\. The project therefore did not have explicit objectives related to environment\. However the project later supported such objectives through technical assistance to the World Bank supported Metropolitan Environment Improvement Programme\. 2\. Programme Approach Of The Project: 2\.1 The project was conceived more as a program based on prototype projects and not as a conventional fully designed project\. Certain deviations in the costs were therefore inevitable\. Estimation of physical quantities, base unit costs and price contingencies were largely adequate\. In fact, initially there were cost underruns particularly in land reclamation\. However, credit allocation was based on constant exchange rate\. Significant rupee depreciation therefore meant constant increase in investment in rupee terms that could be supported by availabld credit\. The project closed with a rupee expenditure of Rs\. 435\.81 crores (US $ million 214\.33)as against Rs\. 282\.33 crores (US $ 256\.70 million) estimated in SAR, but with corresponding credit utilization of SDR 93 million (US $ 124\.889 million) instead of SDR 137\.7 million (US $ 138 million) estimated in SAR\. The scope of LISP linked off site infrastructure and LOGFAS was considerably increased particularly by restructuring the project in 1991 (Annexure 1)\. The project was implemented through 1327 contracts out of which 1248 smaller contracts awarded through Local Competitive Bidding (LCB) procedure\. Performance of contractors was generally satisfactory though in most cases there was some time overrun\. - 42 - 5 POSSIBLE INVESTMENT UNDER CREDIT Investment 1 6(X) \.- - - - Expenditure 5(X) Investment 2 400 Lh C-3(X) ~ 200 - dP 1(X) - - a ' 0 i 03 CC C N\ F N 0 N a, C\ Date Note: Investment 1 indicates the expenditure that could be supported by the residual credit\. Expenditure indicates the actual cumulative expenditure\. & Investment 2 indicates total expenditure that could have been supported by the total credit\. 2\.2 SAR estimated a six and half year completion period commencing from the retroactively financed works starting in January 1981 to September 1990\. 1 lowever substantial progress in LISP was achieved only by extended credit closing date tf September, 1994 though some works wcre completed by May, 1995\. The SAt disbursement profile expected full utilization of SDR 137\.7 million by September 1990\. However, actual disbursement by that time was only SDR 40\.00 million\. After restructuring and enhanced disbursement rates, credit disbursements improved and by June 1994 entire credit of SDR 93 million (after two successive credit cancellation of SDR 37\.00 million in December 1993 and SDR 7\.20 million in June 1993) was fully disbursed before the extended closing date of September, 1994\. 3\. Achievements of Objectives 3\.1\. Objcctivc (i) was translated into two components viz\. LISP - Land Infrastructure Servicing Program and SUP - Slum Upgrading Program\. The physical and financial progress of these components is given in Table 3\. LISP target has been 'substantially' achieved in 9 years instead of 5 as expected in SAR\. SUP target however has been achieved only to the extent of 22% of SAR target despite four year extension of project period\. - 43 - 6 Table 3 Rs\. in crores COMPONENTS SAR TARGETS REV!SED ACI'UAL ACTUAL AS % OF TARCETS REV\.TARCETS 'hy\. Fin\. Phy\. Fin\. Phy\. Fin\. I'hy\. Fin\. 1+1 LISP 85,0() 196\.25 88,00(0 366\.30 87,743 297\.72 99\.71% 81\.28% 2 SUl, 100,000) 53\.37 60,000 21\.60 22,204 7\.46 37\.01% 34\.54% BUDP TOTAL 249\.62 - 387\.90 305\.18 78\.67% 3\.2\. Objective (ii) was partly translated into LOGFAS - Local Government Finance and Administrative Systems and partly supported by TATE - TeclAnical Assistance, Training and Equipment\. Table 4 provides financial progress of LOGFAS and TATE as compared to SAR targets\. As seen from this table the objective has been substantially achieved by supporting the investment necessary ifor efficient delivery of municipal services\. Table 4 Rs\. in crores f COMPONENTS FINANCIAL TARGETS ACTUAL S % OF SAK REVISED ACqUAL REV\.TAIRGETS 3 LOGFAS 30\.78 146\.43 118\.14 80\.68% 4 TATE 1\.93 10\.03 12\.49 124\.53% BUDP TOTAL 32\.71 156\.46 130\.63 83\.49% 3\.3\. Objective (iv) being directly related to LISP was first achieved by obtaining GOM sanction for modified landuse and design standards fo,r LISP\. Similar standards were later incorporated in the Development Control Regulations2 (1991) of the revised Development Plan of Bombay, thus 'substantially' achieving the objective\. 3\.4\. Objective (ii) and (iii) were supported by a large number of studies and consultant services\. Through this technical assistance and direct involvement in the project, institutional reforms and capacity building has been 'substantially' developed, notably in the following: (a) Formulating and evaluating land development projects mainly for low income beneficiaries with affordability and cost recovery considerations by using computer based models in MMRDA, MHADA and CIDCO\. (b) Using computerized lottery for drawing lots for beneficiary selection, commercial accounting for monitoring collection of receivable etc\. in MHADA\. (c) Using network based computerized Project Management Systerns and computerized tracking of procurement, expenditure and credit utilization in MMRDA\. 2Development Control Regulations for Greater Bombay 1991, Urban Development Department, Govcrnm Maharashtra\. - 44 - 7 (d) 11Developing Geographic Informnation Sv1,tCm (GIS) for use in regional land use planning, transportation, other infrastructure planning and environimental inanagennent in MMRZDA, (e) Using comnputer based layout design preparation in MHAIDA and CIDCO, and (f) M1\RDA thr6ugh its BUDP-Revolving Fund acting as a municipal finance agency and making effective use of computerized Finance and Operating Plan (FOP) mo,dels for loan appraisals\. BMRDA thus acquired a potential to become financial interm-ediary to finance m-unicipal infrastructure\. On the other hand, (g) Organization and Management Studies carried out under TATE compuncnt for M11ADA, TMC, KMC and NMMC have had very litle impact\. 3\.5\. Nine training programs including participation in international semninars and stud), tours were supported covering areas of Metropolitan Planning and Administration, Solid Waste Manag-emnent, Community Development, Urban Management, Municipal Finance Managemnent and Land Policy\. This helped improve capacity for metropolitan planning and mnanagement\. 3\.6\. Objective (v) was basically linked to legal arnd sectoral reforms at National and State level\. Reforms in urban land ceilingy, rent coiltrol and property tax therefore could not be substantially achieved\. Howvever, some reforms were carried out in Rent Control Act and Urban Land Ceiling Act as given in Annexure 11\. MMRDA attempted to implement a pilot scheme of 'Guided Land Development' to achieve objective related to promoting private participation in land development on LISP pattern, w,ithin the existing legal framnework and with financial support from the project\. This schemre relied upon the exemrption from compulsory acquisition as the incentive\. How\.ever as the compulsory acquisition itself could not be pursued , the schem-re of promoting private land development could not also succeed\. Changes in land use planning, building codes etc\. to reduce the costs of shelter investment and help cost recovery, have been 'substantially' achieved\. Financial objectives referred to affordable pricing for low income beneficiaries, full cost recovery, , interest rates to be charged and internal cash generation for project funding\. These have been 'substantially' achieved\. Substantial technical capacity has been developed in BMRDA, MHADA and CiDCO to formulate, plan and implement projects\. Similar capacities could not be developed amnong other implementing agencies\. Howev er capacity to coordinate large multi-agency program is still weak in BMRDA and GOM\. The achievement could be treated aIS 'partial'\. Physical objectives relate to LISP, SUP and LOGFAS components\. The achievement in each of these can be rated as substantial, Partial and substantial respectively with overall rating being 'substantial' thiough delayed\. 3\.7\. Lack of access to serviced land and municipal services causes deprivation of urban poor\. The project objective wvas therefore to n-ainly reach the poor through its - 45 - 8 LISP component\. The SAR had a site planning objective of ensuring 45 to 55% of plots for low income families below the poverty line and 10 to 20% plots for income groups immediately above the poverty line\. A comparative profile of LISP beneficiary and income distribution based on a 'Household Survey carried out for BMR'3 in 1989 shows that this objective has been largely achieved both in terms of number of sites developed and the beneficiary proportion (See graph below)\. In case of SUP too, the large proportion of beneficiaries were below the poverty line as confirmed in the base line surveys carried out by BMRDA\. However in this case the total scale of project implementation was only 25% of the SAR estimates\. BMR and LISP Income Profiles - 1981 100 90 ~LIST' Incomne Profile 90 80 -- - -- --- 70 Povcrty Line -->- S 60 50 / BMR Inconc Profile 40 - - ~ 0 I 71111 10 0t 0 500 1000 1500 20(X 2500 3000 3500 4000 45(X) Monthly Household Income (Rs\.) 3\.8\. The reasons for delays are analyzed as follows: a) Though the implementation schedule was 'right' in terms of desired sectoral impacts with the delays that have occurred it appears to be unrealistic\. b) Many delays are mainly on account of weak and uncommitted co- ordination at governmental level which failed to resolve issues in a timely manner\. Substantial land was allotted to MHADA only on account of conditions of extension\. Coordination mechanism got energized only during the IDA supervision missions and for responding to the conditions of extension\. 3 Multipurpose Household Survey of BMR, BMRDA and ORG, 1990\. - 46 - 9 c) Ban on quarrying and restrictions on reclaiming coastal wetland were the only technical problems faced by the project\. d) Inordinate delay in deciding the policy of granting tenure to slums located on land reserved for public purposes in the 'Development Plan'\. e) Enlarging the scope of project included two aerated lagoons at Versova and Malad which were unfinished works of an earlier Bank assisted Bombay II Water Supply and Sewerage Project (Credit No\. 842 IN)\. No significant progress could be achieved on these projects in BUDP\. These works were under consideration for inclusion in the Bank financed proposed 'Bombay Sewerage Disposal Project'\. f) Amongst the implementing agencies, BMCthad major problems of selection of contractors and generally inefficient procurement practices\. g) Even where civil works on LISP sites were complete, delays were caused in estate management stages of advertisement, scrutiny, selection and final allotment to the beneficiaries\. 4\. Project Sustainability: 4\.1\. The project is likely to be sustainable, only if Government develops and sustains commitment to project objectives and approaches\. Furthermore the project would not be sustainable if it has to rely on government land\. For that purpose land policy innovations promoting land assembly through privatd sector and servicing will be of crucial importance\. Providing basic trunk infrastructure like water, sanitation, roads and power should receive higher priority\. The follow-up project if any, has to support infrastructure and land policy initiatives\. However, as of now there appears to be no inclination on the part of the Bank to support such project\. However, MMRDA initiated Bombay Urban Infrastructure Project (BUIP)\. The Bank in response to the BUIP has indicated its to support to a financial intermediary\. 4\.2\. To help project sustainability, the BUDP had conceived of a BUDP Revolving Fund to be constituted in MMRDA\. This Fund has been constituted as agreed and is in operation since 1989\. Till March 1997, the Fund has approved loan of Rs\. 32\.41 crores and disbursed Rs\. 25\.87 crores for improvement of municipal infrastructure in BMR\. This should help project sustainability by way of financial support\. 5\. Bank Performance 5\.1\. The project was identified during informal discussions between GOM and the Bank missions in 1979 - 1980\. Bank carried out the Bombay City Study (1980) and Bombay Shelter Study - Urban Housing and Land (1980) through highly acclaimed academicians, Prof\. Harry W\. Richardson and Prof\. William C\. Wheaton respectively\. These studies helped identify the priorities and policy issues in urban land and shelter sector\. The studies generated considerable interest and debate amongst the Borrower agencies and helped develop consensus on approach to project preparation\. - 47 - 10 5\.2\. The Project Preparation took place in June - July 1982\. The project preparation was helped by competent mission comprising expert consultants in related fields\. (Architecture-Physical Planning, Environmental Planning, Municipal Engineering, Solid Waste Management, Financial Analysis and Urban Economics)\. The missions worked with the local team to evolve the project design and did not engage any consultant for formal preparation\. This helped in increased involvement and commitment to project particularly in BMRDA which was the co-ordinating agency\. 5\.3\. The project preparation paid acdequate attention to technical, financial, economic and institutional aspects\. However it could now be said with hindsight that it did not provide adequate attention to environmental considerations\. Its emphasis on improved services to slums, solid waste management and other municipal services is however indicative of its commitment to 'brown agenda'\. I 5\.4\. The Appraisal took place in June - July 1983 and was preceded by Pre - appraisal in March 1983\. The appraisal rightly brought out the major issues which may affect the achievement of project objectives\. These were; a) Sectoral policy issues like rent control and property tax reforms,'urban land ceiling act, b) Policies related to development of slums on private land, b) Adequacy of land available with implementing agencies, c) Strengthening of BMRDA as the coordinating agency, d) Strengthening municipal government in Thane, Kalyan and Navi Mumbai, e) Professional community development staff in 'TMC and MIIADA to ensure community participation in SUP, f) Restricting MHADA's non-DUDP annual program to less Rs\. 10 crores to ensure priority and commitment to BUDP, and g) Specifying cost recovery objectives in terms of interest rate to be charged and recovery performance for collecting monthly dues\. 5\.5\. Consensus could be developed amongst the implementing agencies and the Bank on all the issues except (a) and (b) above\. Bank attempted to use project as a vehicle to bring about legislative charges whereas the administrators expressed their inability to give any assurances on legislative matters\. This delayed the negotiations by nearly two years\. Though GOI gave some indication of action on these issues, nothing substantial happened on that front\. Attempting to use project for bringing out policy changes was perhaps naive\. 5\.6\. Bank performance from Identification through Appraisal and Negotiations was generally highly satisfactory mainly for continuity of Task Manager and the mix of competent consul;[ants, and their rapport with local team which helped project evolution as a joint team effort\. 5\.7\. The Project was declared effective in March 1985, though the Retroactively works commenced in January 1984\. The Credit became effective in August 22, 1985\. Bank performance in supervision of project implementation was also highly satisfactory mainly because of continuation of the same Task Manager who was on - 48 - 1 1 niny occasions lone member of the such missions\. Nineteen supervision missions through their extensive field visits, discussions with operational staff of implementing agencies and project beneficiaries, discussions with heads of implementing agencies and secretaries of government departments, energized the coordination mechanism\. Out of these thirteen were prior to September 1990 the original credit closing date and only six thereafter till September 1994\. Penetrating analysis of status of project reflected in the Aide Memoir strengthened the coordination agency to follow-up on some tricky issues\. Follow-up on advice was also persistent\. In particular, the supervision mission ensured; a) adequate enforcement of project covenants, b) judicious review of feasibility studies of LISP projects covering layout, engineering , beneficiary income profile, affordable pricing and cost recovery aspects, c) coordinated construction of LISP projects bv improved contract packaging, (The initial practice was to award separate contracts for works like water supply, sewerage, roads, etc\. The missions advised packaging of these contracts into a single contract for a particular area\. This improved coordination of construction activities at site\.); and improved bid documents that included 'price variation clause' and gradual conformity to the 'sample bidding document' recommended by the Bank, d) dynamic development of TATE component by incorporating additional consulting assistance as the need arose particularly in environment related activities such as planning of coastal wetlands, quarrying operations, Metropolitan Environment Improvement Program (MEIP) - studies related to Environmehtal Management Strategy, Solid Waste Management in Bombay, Environmental Management of industrially sensitive areas, engineering master plan and feasibility studies of storm water drainage -, water supply to New Bombay and Vasai-Virar, water distribution system in Kalyan and computerization and development of GIS capabilities in BMRDA, e) flexibility in modifying project contents keeping in view the project objectives, which led to inclusion of major off-site works not envisaged in SAR, expansion of LOGFAS component to cover schemes like electric crematoria; f) expedient use of conditions of extension of credit closing date to keep borrower's interest alive and stimulate early decisions on difficult issues like allotment of additional land to MHADA, allocation of - Patalganga water to Navi Mumbai and establishing Navi Mumbai Municipal Corporation which also helped physical and financial * progress in a large way\. From Annexure III, three distinct phases of land availability can be observed from the chronology chart of the availability of land and submission of feasibility studies to IDA\. The correlation between the Missions and procurement of land for the project can be clearly seen from the chart\. 5\.8\. Despite such persistent (sometimes nagging) efforts, the Supervision Missions maintained cordial relations with borrowing agencies and staff and worked together to achieve project objectives in best possible manner\. The project - 49 - 12 implementation did not involve any significant deviation from the Bank policies and procedures\. 6\. Borrower Performance 6\.1\. The technical input of MMRDA's planning unit in identifying, preparing and appraising the projects were 'highly satisfactory'\. Government [oo by appointing interdepartmental coordination committee demonstrated its will to pursue project objectives\. BMRDA and other implementing agencies worked with Bank missions without any external consultant assistance on proj(ct preparation\. Affordable Low Income Shelter Program (ALIS)P adequately covered sectoral, economic, technical, financial issued\. Explicit consideration of environmental factors was, however, not a part of the state of art then\. 6\.2\. Unlike during preparation, borrower performance during implementation' can be rated only as 'satisfactory'\. BMRDA as a coordinaton agency was strong in identifying problems based on its MIS but was weak in ensuring their solutions\. 3MRDA issued a 'Reporting Procedure Manual in 1985, covering information required on sectoral dimensions, agencies performance outside BUIDP, procurement, marketing and allotment of plots, financial covenants etc\. However it could not enforce this manual except for getting project specific expenditure data necessary for disbursement applications, and recovery of monthly dues\. BMRDA maintained highly satisfactory record of procurement which formed basis for review of physical and financial progress by Bank supervision missions\. BMRDA in consultation with implementing agencies prepared yearly work program and translated it into monthly expenditure targets\. Its monthly progress reports compared the progress with these targets and brought out important issues to the attention of heads of implementing agencies and government\. But it did not have powers to enforce any decisions\. Like the Task Manager of Bank, Chief, Planning Division of BMRDA who was the main coordinating officer continued from identification to completion of the project\. However frequent changes of Metropolitan Commission, BMRDA and other heads of implementing agencies adversely affected the progress of the project and commitment to objectives\. BMRDA also made concerted efforts to develop 'Guided Land Development' as an alternative to compulsory land acquisition\. MHADA's performance on LISP was 'highly satisfactory' but on SUP only moderately 'satisfactory'\. CIDCO's performance in LISP varied from satisfactory to deficient particularly en marketing of plots\. BMC's performance on SUP was deficient, it virtually stopped implementation in 1991 after the announcement of 2\.5 FSI scheme of slum redevelopment\. Its performance on procurement was though procedurally satisfactory involved considerable delays in pre-award and post award stages\. EMC used 120 to 150 days as the bid validity period instead of normal 90 days\. TMC and KMC's performance in implementing LOGFAS was generally satisfactory\. 6\.3\. The project did not have any specific macro economic policies, but in terms of sectoral policies it intended to bring about reforms in rent control, property tax, urban land ceiling, development control and building regulations and non-BUDP programs of MHADA and CIDCO\. Except for development control and building 4 The State Government constitutcd a Working Group in 1981, to follow up the discussions with the identifici Mission, which prepared the report on Affordablu Low Income Shelter Programme\. - 50 - 13 control regulations no significant impact was achieved in other areas\. In fact, in case of SUP programs quite contrary to 13UDP principles and approaches became more popular\. Regarding financial objectives internal cash generation, pricing at affordable levels for low income beneficiaries, full cost recovery, interest rate to be charged and recovery of monthly dues were highly satisfactorily achieved\. Achievement of institutional development objectives remained deficient\. Recommendations of Organization and Management studies carried out for MHADA, TMC, KMC and NBMC remained largely unimplemented\. BMRDA's role and function still continues to be a matter of debate\. Physical objectives were substantially achieved in LISP and LOGFAS but not in SUP\. Social objectives particularly benefiting the poor were also substantially achieved\. Overall implementation in physical and financial terms though delayed was highly satisfactory, but in respect of policy and institutional developm-ent deficient\. 6\.4\. There were fourteen important covenants in the Project Agreement\. Out of which seven have been fully complied, three have been partially complied, one covenant has been complied with delay\. Three covenants related to implementation of slum upgradation on private lands and limiting MHADA's new investment on non BUDP schemes have not been complied with\. Therefore the compliance with covenants was highly satisfactory with respect to procurement, progress reports, accounts and audits and pricing and cost recovery\. It was 'satisfactory' in respect of use of technical assistance and 'deficient' in case of sector policies and institutional development\. Overall, it could be rated as 'satisfactory'\. 7\. Assessment of Outcome 7\.1 The overall outcome of the BUDP is satisfactory, in the context of priority being given to the physical objective of improving supply of public land to low income beneficiaries which has been substantially achieved\. The Economic Rate of Return has surpassed SAR estimates and FRR shows achievement of financial objectives\. Although sustainability is likely only if major reforms in land policies and provision of adequate municipal infrastructure in peripheral areas is achieved\. It is indicative of changed priority over the years and not irrelevance of project objectives\. Sumrnary of assessments in given in Annexure IV\. 8\. Future Operations 8\.1\. The project was being implemented through 1327 contracts (including training), out of these 1007 contracts have been completed\. MHADA and CIDCO have generated cash surpluses of Rs\. 93\.79 crores and Rs\. 28\.33 crores respectively\. This will be adequate to complete their on going works\. in addition substantial revenue is expected by sale of balance plots\. For BMC the expenditure involved is rather small as compared to its annual budget\. TMC has completed all its works\. KMC has already applied for financial assistance from 13UDP: Revolving Fund established in BMRDA\. Given the fund available, it would be possible to finance completion of the project\. Assets created in the project are in the nature of municipal infrastructure\. Adequate instiLutional provisions have been ensured for their use and maintenance\. No major problem is envisaged in this regard\. 8\.2\. The programmatic objectives of the project are linked with overall sector - 51 - 1 4 performi-ance\. if shelter supply remains inadiequate even for middle income group, it is quite likely that plots m-eant for loN-w income beneficiaries in the project will get transferred to higher in come groups\. The evaluation in future will have to be of the sector as a whole and not of project alone\. BMNRDA is attempting to develop a reg,ional information system to provide basis for such periodic evaluation\. The emphasis in follow up action by the Bank will have to be on supporting infrastructure investment, land policy instrument' that ensure access to serviced land for the poor and institutional developme-int to finance, plan and co-ordinate development\. BIARDA could be considered as an intermediary in this regard\. 9\. Keyv Lessons Learnt 9\.1\. A project based investmnent programn cannot be used as an Qffective vehlicle to bring about legal and institutional reforms, however important they may be for the desirable sectoral impacts\. Once the loan becomes effective, thne borrower's attention (and to Somec extent of theo l3,)n1k) gets confinled to using the available funds and not on the seckoral r2forins\. 9\.2\. In case of urban sector, to implement program-s of improvemIent in quality of life through multi-sectoral projects involving rriqhiple agencies,, an integrated urban development approach is necessary\. However, for such programs to be implem-ented efficiently, planning and cooraination is of crucial signiificance\. In this regard an externial coordinatingc agency, w,hich is not directly implementing the project, is important for impartial monitoring and evaluation\. But most implementing agencies are autonomous and have their own procedure to make decisions\. If an external agency does not have an effective say\. in evaluating the decisions of the implementing agencies, coordination may turn out to be ineffective\. Certain 'emrpowvering' of coordinating agency is, therefore, essential\. 9\.3\. Frequent changes of personalitieF- in key positions, particularly belonging to the Indian Administrative Service, is of com-inon problem in implementing long term programs\. This is also true of key engineering positions in BMC and MHADA\. Certain amount of continuity of key personnel is, therefore, important in deVeloping Comm11itme)nt to project objectives and approaches\. 9\.4\. The work culture prevailing in most public sector institutions is alien to modern mnethods of project mnanagemIent\. Efforts are necessary to change this work culture\. Imposing project management consultants could only be a short term expedient solutions\. 9\.5\. In the Metropolitan Shelter Sector, increasing the supply of service land through provision of trunk infrastructure and supporting land policy instruments which promote private land development for all incomne groups is of fundamental importance\. Direct investment by public agencies in land development could only be a part of the overall strategy, having demonstration impacts\. 9\.6\. Most of these lessons are relevant for urban and infrastructure projects in India\. 52 - Annexure 1 Rs\. in Crores COMPONENTS/ AGENCIES SAR TARGETS REV\. TARGETS ACT\./Scp\.94 \._Phy\. Fin\. P1hy\. Fin\. Phy\. Fin\. 1 Land Infrastructure Servicing Program (LISP) Provision of 85,000 serviced sites including community 85,000 196\.25 88,000 366\.30 87,743 297\.72 facilities, core houses and house expansion loans: MHADA Greater Bombay: Serviced Sites 40,000 81\.22 55,200 136\.82 55,297 114\.86 Thane / Kalyan: Serviced Sites 25,000 59\.58 3,800 9\.78 4,709 9\.57 BMC Greater Bombay: Offsite Infrastructure and Community Facilities 21\.54 28\.90 25\.65 Rehabilitation of Water Mains 29\.20 11\.03 Priority Storm Water Drainage WYorks - 20\.00 17\.59 * Waste Water Treatment (Aerated Lagoons) 20\.00 8\.66 * Water Supply to Eastern Suburbs 20\.00 6\.92 CIDCO New Bombay: Serviced Sites and 20,000 33\.91 2 ,000 81\.60 27,737 79\.31 Infrastructure * Master Balancing Reservoir at Shil and 12\.00 12\.49 Trasmission Mains f * Drawl of 30 mid water from Patalganga 8\.00 11\.64 2 Slum Upgrading Program (SUP) Upgrading 100,000 slum households in Greater Bombay 100,000 53\.37 35,000 21\.60 22,204 7\.46 including provision of tenure, improved infrastructure services, home improvement loans, community facilities MHADA Greater Bombay - On Public Land 70,000 35\.07 27,500 19\.82 21,604 6\.13 - On Private Land 10,000 5\.01 0 0\.00 0 0\.00 BMC: - On MCGB Land 20,000 13\.29 7,500, 1\.78 600 1\.33 3 Local Government Finance Administration and Services (LOGFAS) 30\.78 146\.43 118\.14 Equipment and Civil Works for Improving the maintenence of roads, drains and collection and disposal of refuse in municipal corporations DMC 17\.70 34\.48 25\.07 TMC 6\.25 13\.79 21\.68 KMC & CIDCO (NBMC) 6\.83 13\.16 18\.88 KMC ++ Augmentation of Water Supply 35\.00 33\.05 CIDCO-(NBMC) ++ Equipments 20\.00 15\.36 Municipal Councils in BMR Improving and Developing Municipal 30\.00 4\.10 Services 4 Technical Assistance Training and Equipment (TATE) 1\.93 2\.03 9\.39 For improving the capacity of the project implementing and coordinating agencies +++ Metropolitan Environment Improvement 8\.00 3\.10 Programme BUDP TOTAL 282\.33 544\.36 435\.81 Note: * Items included in December 1988\. ** Items included after the Restructuring became effective from January 1991\. ++ As part of original project\. +++ Included as part of TATE\. - 53 - Annexure 11 After the Negotiations of the Project some amendments and reforms have been introduced in the Urban Land Ceiling Act and the Rent Control Act and are given below; 1\. Provisions of Section 20 & 21 of Urban (Land Ceiling and Regulation) Act, 1976: Section 21 of the Act entitles land holders to prepare schemes and develop their surplus land for weaker section housing and thereby obtain exemption from the provisions of the Act\. Such exemption can nQt be refused on the ground that the land is required for public purpose since such exemption is also in the public interest\. The pattern of development prescribed under Section 21 allowed development of residential tenements with a plinth arca upto 40 sq\.m and upto 80 sq\.m to'be constructed in equal numbers\. Iowever such development could not reach the most disadvantaged and hence the State Government prescribed guidelines for devqlopment of weaker section housing under Section 20 of the ULC Act\. A scheme was prepared under Section 20 in 1983, which envisaged construction of tenements of 25, 40 and 80 sq\.m\. plinth area on the surplus land and required landholders to surrender proportion of tenements (and also land for bigger lands) based on size of land holding\. This was struck down by tlhe High Court which did not view it to be in the public interest since; 1\. more than 50% land was released for the land holders; and 2\. there were no price restrictions on sale of tenements\. In 1986, the State Government formulated revised guideAnes for weaker section housing which were subsequently amended in 1988\. These are as follows: 1\. For Surplus Land below 4,000 sq\.m\. The land holder should build tenements of upto 40 sq\.m\. area on the entire net buildable land and sell 30% of such tenements to the State Government or Government nominees at predetermined rates\. 70% of the tenements can be sold by the land holder/developer in the open market at a predetermined rate and according to the allotment procedures to be laid down by the State Government (these will be similar to MHADA's policy of allotment)\. In both the cases the predetermined rates would be roughly equal to five times the land cost (as per the ULC Act rates) plus actual cost of construction and 15% profit on total expenditure\. 2\. For Surplus Land above 4,000 sq\.m\.: The surplus area excluding Development Plan reservations shall be divided into two equal componen' as given below; - 54 - The other alternative offered to the land holders is to surrender 65% of the land at ULC prices to MHADA and using the remaining 35% land for construction of apartments having an area of 40 to 80 sq\.m\. 2\. Rent Control Reforms: In 1986, The Government of Maharashtra introduced some reforms in the Rent Act but they mainly deal with the new properties\. These changes allow for a five-year moratorium on rent restriction and thereafter limit the rents to net return of 15% per annum on cost of land and building at the time,of first letting\. The system of short term Table- Scheme for Surplus land above 4000 Sq\.TV\. under ULC Component A: All plots admeasuring 25 Sq\.M\. each Type of Plot % Tenements Approximate Cost I(Rs\.) Sites & Services 5 (minimum) 6000-8000 plots+Core 10 (Minimum) 12000-14000 House I Room 85 (Maximum) Below 25000 Tenements Govt\. shall have the pre-emption in case of all plots in this component Component B: The land owner shall construct the tenements asper the following guidelines Tenement Size % of Tenements Right of pre-emption Upto 25 Sq\.M\. 30 60% at cost price 25-50 Sq\.M\. 20 10% at prescribed 50-80 Sq\.M\. 30 rate by Govt\. * The total area of pre-empted plots shall not exceed 12\.5% of the FSI on this component leasing was also revived, which was banned in 1973\. Ownership Transfers of Rent Controlled Buildings - 55- With a view to expand the scope of the runewval programme of the Rent Control Act affected buildings with active participation of tenants the Government of Maharashtra amended the Act to cnable the tenants' co-operativcs to purchase the buildings by paying 100 times the monthly rent as compensation to the owners\. This provision is inadequate as far as return to original owners is concerned; but some of the tenants cannot afford to pay even this meager compensation to the owners\. This scheme has remained locked up in prolonged litigation till 1992 when High Court finally upheld the amendments to MHADA Act but the matter is now in the Supreme Court\. National Housing Policy The National Housing Policy formulated in 1988 also proposed to amend the provisions of ULC and Rent Control Act\. Besides these changes, the Policy's, major objective was to motivate and help all people - particularly houseless and inadequately housed, to secure for themselves affordable shelter throug4 access to land, materials, technology and finance by creating an enabling environment\. The thrust of the Final Policy adopted by the Government in 1992 recommended the 'facilitator' role of public agencies\. The Model Rent Act An amendment to the Delhi Rent Control Act was prepared for the Union Territory of Delhi with the objectives of introducing reasonable -flexibility in rent structures and encouraging house construction activity\. Based on this Act, the Government of India prepared 'The Model Rent Control Bill' which aims at reducing controls on the rental housing market and promoting investments in new house construction for rental housing\. Following the Model Acte the Government of Maharashtra has prepared a bill which also aims at unifying, consolidating and amending laws prevailing in different parts of the State of Maharashtra\. The salient features of the bill are as follows: 1\. 40 years exemption fron provisions relating to standard rent and permitted increases provided for buildings newly constructed or reconstructed on or after 1st October 1987 and for premises not let or given on license for a continuous period of one year\. 2\. After the expiry of 40 years, the standard rent to be fixed for premises first let after 1st October, 1987 on the basis of 15% net return to the landlord on his investment in land and building plus all the out going in respect of the premises\. Provisions for lixation of standard rent for other premises remain unchanged\. However application for fixation of standard rent has to be made within a period of one year from the date of demand of excessive rent or permitted increases by the landlord or within a period of one year from commencement of this Act\. 3\. Exemptions provided for premises let to foreign missions, international agencies, multinational companies and public limited companies having a paid up share capital of more than Rs\. 1 crore\. 4\. Existing protection afforded to tenants to continue\. - 56 - 5\. Rent increase by the landlord allowed at a flat rate of 5% per annum for various uses after commencement of this Act\. The bill was proposed to be converted into an enforceable Act after it is passed by the State Legislature and approved by the Governor\. However, due to change in the Government, the bill was not processed\. - 57 - Annexure II Phases of Land Availability and Chronology of Submission of Feasibility Studies 690\.00 Cr * Malvani 590\.(0)0 K;ilamnboll ,Kharghar 490\.(X) -Charkop Il w \.5 ~~ ~ Kand vali\.hcu \. \.' \. \. Gorakshan 390\.00 \.tPnkhidi Corai 11 Mulund`I Charkop 11 Majiwade 1 290\.00 - \.khairnne 190\.00 ALroli Choarkop I \. rai I 90 (X) 1 1 May-83 Oct-84 Fcb-86 Jul-87 Nov-88 Mar-90 Aug-91 Dec-92 Month / Year - 55 - Sumnninry of Assessments Annexure IV A\. Achievnnt of Objcctives Substantial Partial Negligiblc Not applicable Macro Policics Sector Policics Financial objectives Instittuional development Physical objectives Poverty reduction Gender issues ÂlE Other social objectivcs Public sector management Private sector development Other (specify) B\. Project sustainability Likelv Unlikely Uncertain - 59 - Summary of Assessmients (Contd)\. Highlv C\. Bank performance satisfactory Satisfctorv Deficient Identification Preparation assistancC Appraisal Supervision D\. lorrower performancc satisfactorv Satjsfactory Deficient Preparat i on Implementation Covenant compliance Operation (if applicable) Highly Highly 1\. Assessment of oulcome satisfaokry i ory Uiisfactory unsatisfalctory IMAGING	REVIEW
P104774	ï»¿ ICRR 14372 Report Number : ICRR14372 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 06/27/2014 Country : Lebanon Project ID : P104774 Appraisal Actual Project Name : Lb-emergency Power US$M ): Project Costs (US$M): 8\.00 6\.12 Sector Reform Capacity Reinforcement L/C Number : Loan /Credit (US$M): Loan/ US$M ): 5\.00 5\.00 Sector Board : Energy and Mining US$M): Cofinancing (US$M ): 0\.97 0\.97 Cofinanciers : French Development Board Approval Date : 03/19/2007 Agency (AFD) Closing Date : 06/30/2009 12/31/2012 Sector (s): Central government administration (50%); Power (50%) Theme (s): Other public sector governance (50% - P); Regulation and competition policy (25% - S); Infrastructure services for private sector development (25% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Richard L\. Berney Ridley Nelson Christopher David IEGPS1 Nelson 2\. Project Objectives and Components: a\. Objectives: The development objectives of the project in the Grant Agreement were âto accelerate the implementation of [energy sector] reforms and [the] restructuring of Electricite du Leban (EdL) - by enhancing the capacity o f MOEW, EdL and the multi-ministry higher level committee â? (Page 6 ) The appraisal document used identical wording \. (Document T7692, page 6)\. This Review considers the enhancement of the capacity of Ministry of Energy and Water (MOEW), EdL, and the Multi-Ministry Higher level Committee (MMHLC) as the ways through which the objectives are to be implemented treating them as output targets \. b\.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives /key associated outcome targets? Yes Date of Board Approval: 12/31/2010 c\. Components: 1\. Provision of support to strengthen the capacity of the MOEW to implement power sector policy reform :(Actual U$1\.2 Million (at appraisal the component costs were not differentiated )) The technical assistance under this component included policy advice on key sector strategic issues, on the completion of on -going projects, and on the establishment of a regulatory agency \. During the restructuring of December 2010 a new study, âThe LNG solution for Lebanonâ?, was added\. 2\. Provision of support to the Government of Lebanon for the restructuring of EdL \. (Actual U$1\.85 million) The technical assistance under this component, envisaged advising the Government on the restructuring strategy of EdL, and proposing appropriate capitalization levels for each of the separate, independent entities that the restructuring would establish \. 3\. Provision of support to EdL to improve its operational and financial performance and to support the implementation of its restructuring\. (Actual U$2\.19 million) The service contract under this component was intended to address ways to improve generation efficiency including system reliability and efficiency, as well as commercial, financial and accounting issues\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost, Financing and Borrower Contribution : The estimated project cost at appraisal was US$ 8\.0 million, financed with US$5\.0 million from a Trust Fund Grant and US$3\.0 million from the Government of Lebanon\. The final project cost was US$6\.12 million, which included US$5\.0 million of the Trust Fund Grant, US$0\.97 million grant from the French Development Agency, ADF, and US$ 0\.15 million from the Government\. Dates: In June 2009 the project closing date was extended by 6 months to December 31 and then again for an additional year to end December, 2010, The rationale for these extensions was to provide additional time to ensure the adequate completion of the studies \. The project was restructured in December 2010 and extended for another two year (to Dec 31, 2012)\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Rating High :The projectâs objectives were and continue to be highly relevant to Lebanon âs development strategy\. The Governmentâs reform program was presented in the 2007 Paris III Conference\. It put considerable emphasis on power sector reform as part of the country âs sustainable reconstruction and economic recovery program \. The Bankâs 2011-2014 Country Partnership Strategy includes electricity as an explicit strategic infrastructure priority \. b\. Relevance of Design: The initial project component design provided comprehensive technical assistance to MOEW in the implementation of sector reforms (including the restructuring EdL ), and to EdL to assist it to improve its operational and technical performance\. Both of these project elements were highly relevant to the project âs stated objectives\. The initial development targets were logically linked to these targets \. However, the emergency project instrument to tackle issues unresolved for many years was unsuitable and the ambition excessive \. The Relevance of Design rating for the initial project is Modest The Dec 2010 restructuring added a new project component : a study of a proposal for the importation of LNG \. This was an important study for the power sector as a whole, as it was expected to be a critical element in improving the sectorâs efficiency by reducing the cost of electricity generation \. The rating for the Relevance of Design of the restructured project at a more modest scale is Substantial \. 4\. Achievement of Objectives (Efficacy): The original pre -restructured project Objective 1\. Accelerating the implementation of [energy sector ] reforms : Rating Modest Output: : The technical assistance program produced a wide ranging report for MOEW, with recommendations for strengthening its capacity to implement power sector reforms \. These included (i) a proposed power sector strategy; (ii) a fuel sourcing strategy; (iii) a proposal for establishing an energy sector regulator, (iv) tools and procedures for a sector regulator; and (v) a series of proposals designed to encourage Independent Power Producers \. These studies provided background material for the Government âs Policy Paper for the Energy Sector Policy Paper (ESPP) which emphasized the energy sector reforms that were needed for the country to develop a cost -effective electric power system\. The ESPP was approved by the cabinet in June 2010\. Outcomes: : Target 1: The preparation and beginning of implementation of a National Energy Strategy integrating a power sector least cost plan and a tariff study, O nly Partially Achieved - The Governmentâs Energy Sector Policy Paper substituted for a national energy strategy \. There is no least cost sector investment plan \. A tariff study could not be completed in the absence of a sector restructuring plan \. Target 2: Development of a fuel sourcing strategy \. Achieved \.: A fuel source strategy has been established and used to determine fuel mix of next generation of projects \. Target 3: Evaluate Proposed IPPs and, if viable, contracting them as a basic element in a power sector strategy : Not Achieved â No IPPs have been proposed \. Development Objective 2: Accelerating the implementation of the restructuring of EdL : The original pre- pre -restructured project : Rating Modest Output: Support for restructuring EdL through corporatization was to be implemented in two phases \. The first phase was to provide policy guidelines for a process of corporatizing EdL \. The second phase was to provide assistance for implementing these recommendations\. Only the first phase was completed \. Recommendations were made for a electricity sector market structure, including the roles of the public and private sector in the context of attracting private investment into generation and distribution, the critical elements of which were (i) the unbundling of EdL and corporatizing each sector; (ii) establishing a competitive structure for potential independent power producers; and (iii) establishing a power purchasing entity independent from EdL generation \. The contract for the second phase was cancelled, due to divergent views on the phase one report âs recommendations\. Outcome: : Target 1: That the Government would agree on a process for restructuring EdL and the Cabinet would approve the decrees necessary to implement the process \. Not Achieved Target 2: Asset register completed and level of capitalization and shareholding structure proposed for restructured companies\. Expected to be at least Partially Achieved - Objective 3: Enhancing the capacity of Electricity de Lebanon EdL ) Rating Modest (EdL) Output: Technical assistance was provided in a wide range of operational and management areas with the objective of improving EdLâs operational and financial performance \. Outcomes: The original outcome targets for this objective were mostly not achieved \. They were: Target 1: EdL is better managed with a more skilled staff base : Not Achieved - EdL has been unable to fill key financial, procurement, technical and commercial positions \. Target 2: EdLâs productivity gains make it more efficient; Not Achieved â there have been no reported productivity gains\. Target 3: The reliability of electricity supply is improved : Not Achieved â no new investment has been made to improve reliability of supply\. Target 4: Cost reduction projects are implemented \. Expected to be Achieved - Efficiency improvement plans have been developed for EdLâs power plants\. These improvement plans are being implemented for two plants by their O&M contractors, and are planned for EdL âs other two other plants as part of rehabilitation work currently being tendered\. Target 5: The financial gap in distribution is reduced :\. Likely to be Achieved â Private sector management contracts for distribution service providers' that are currently being implemented are expected to reduce the financial gap in distribution\. However, it is too early to have quantitative evidence supporting this \. The Restructured Project : The Government cancelled the contract for the second phase of the EdL study in early 2011\. The US$1\.8 million that had been allocated for this study was reallocated to support : (i) a revised roadmap for EdL corporatization; (ii) a study on the viability of using imported liquefied natural gas for power generation \. The Development Objectives were not changed, but the key performance target indicators were \. All three of the outcome indicator targets were dropped and new targets for energy sector reforms were approved during the restructuring \. In parallel with the objectives prior to restructuring, the following two objectives were the remaining focus of the reduced post-restructuring project (objectives numbered as for the pre -restructuring period\.) Objective 1: Accelerating the implementation of energy sector reforms : Rating Modest Output: A study implemented as part of the restructured project evaluates the technical details of a LNG importation project\. Outcome: Target 1: Establishment of a fuel source strategy : Achieved - A decision has been taken to proceed with a new LNG importing facility, which is to use rented offshore floating terminal facilities \. This project is in the process of being implemented, and procurement has started \. Target 2: Bidding documents to be prepared for new IPPs \. Not Achieved- This target replaced the original target of evaluating specific IPPs\. Not Achieved : MOEW is waiting for a firm commitment from Kuwaiti fund to finance consultants to complete a master plan and a location study for IPPs, and no potential private sector power producers have been identified\. None of the other original targets related to the implementation of energy sector reforms were achieved in the restructured project \. Objective 2; Accelerating the implementation of the restructuring of EdL : Rating Modest Output: A second study of the restructuring process initiated in 2010\. It produced a roadmap for EdLâs corporatization and restructuring that differed in timing and sequencing from the recommendations of the first study \. Outcome: : Target 1 :Not Achieved\. A roadmap for Ed restructuring would be finalized and agreed with the Government \. This replaced the original indicator target that EdL would be restructured and better managed, with a more skilled staff, and the intermediate target that the Cabinet would approve the decrees necessary to implement the restructuring process was also dropped \. However, the new, less demanding target was also not achieved \. The relevant Government Agencies still have substantial disagreements on how the process should be implemented, some of them supporting the proposal in the first study and some the proposals in the second study \. As a result, the Government has not yet approved a way forward \. Some progress has, however been made, in that there are two feasible alternative from which to choose, whereas before the project there were none \. The intermediate output target that EdL's assets be registered - Partially Achieved - This process is an essential element of the corporatizing process and is expected to be achieved for the assets involved in electricity distribution, but not for those involved in generation or transmission \. Following the approval of the 2010 PPES, electricity distribution activities (distribution to the final consumers ) has been allocated to private distribution companies \. These companies have been tasked with developing their own asset registers \. 5\. Efficiency: This was a technical assistance project, so no explicit economic or financial analysis was undertaken at the time of appraisal\. Potential long term economic impacts from the financed studies included, inter alia: reduction of sector investment needs; lower long term operating costs; and reduced need for individual small scale, inefficient diesel power generators\. Benefits that could potentially be associated, at least indirectly, with the outcomes of studies implemented under the project, include savings from rehabilitating two power plants evaluated under the project, estimated by the ICR to be about US$ 30 million per year, and savings from establishing a LNG import facility to enable the switch from fuel oil to imported LNG, which the ICR estimates has a NPV of US$ 200 million\. However, neither of these two outcomes has been achieved under the project \. The project financed two studies for developing a proposal for restructuring EdL \. While there may have been some overlap, the studies approached the restructuring challenge from different perspectives, and recommended different avenues for EdLâs transition towards corporatization \. The choices provided by the two studies are important elements in the subsequent discussion of the optimum restructuring path \. However, none of the recommendations from either study have been chosen for implementation This Emergency Project was designed to be implemented in two years, but took four and a half years to be completed\. While some of the objectives were met, important and fundamental issues evaluated in project financed studies, such as the restructuring of EdL have still not been resolved \. Efficiency is therefore judged to be Modest \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The project design involved a series of studies over a two year period, studies that were expected to lead the government making important decision on energy policies that had been politically controversial for many years \. This type of project design would have been more consistent with a standard technical assistance project than with an emergency technical assistance project \. Its relevance for an emergency assistance project was negligible although other design aspects leave Relevance of Design, on balance, rated Modest \. The project was restructured after three years, during which, with approximately two thirds of the project's fund spent, the Government had been unable to implement any specific actions in follow -up on the recommendations of the completed studies\. The rationale for the restructuring was the desire to utilize funds that had been allocated for the second stage of a study on corporatization of EdL \. The Government had been unable to move forward on this second stage study because of disagreements on its terms of reference \. The freed up funds were to be used for a new study on corporatizing EdL and for an evaluation of an imported LNG project proposal \. The achievement of the targets related to the project's objectives were modest for both the original project and for the restructured project, in the latter case partly because the objectives themselves were unaltered \. The project made some contribution to enhancing the capacity of the Ministry of Energy to implement a comprehensive energy sector plan but its contribution to the objective of improving the performance of EdL was very limited, both in terms of hiring new senior staff to improve its internal efficiency and corporatization to improve the efficiency of the sector as a whole\. The efficacy of the restructured project, which accounted for only $ 1\.4 million of the $5\.0 million Credit, was modest; the study on importing LNG has confirmed that this option should be pursued, but the other study on the corporatization of EdL failed to lead to a Government agreement on a corporatization plan \. Efficiency is also rated as modest\. Weighting before and after restructuring, when key indicators were changed, results in no significant rating differences so outcome is rated as unsatisfactory \. a\. Outcome Rating : Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: A political consensus on the proposed sector reforms and roadmap for restructuring of EdL will be hard to reach \. The likelihood that the Council of Ministers may not be able to reach decisions on these issues any time soon is significant\. Sectarian interests and political instability could also be a challenge to the implementation of any EdL restructuring plan\. Without an early consensus, the tools provided by this project for EdL âs restructuring would quickly become outdated\. The lack of the necessary sector reforms (e\.g\. tariff restructuring) would have a significant negative impact on the sector, as it would strongly undermine the sustainability of the planned investments, of the introduction of IPPs for generation, and of the overall sector efficiency \. Given the inherently political nature of these factors, and the subsequent uncertainties created by the fighting in Syria, the risk to development outcome is deemed to be high\. a\. Risk to Development Outcome Rating : High 8\. Assessment of Bank Performance: a\. Quality at entry: The project rationale was clear, its goals were in line with the Government âs priorities as defined in the framework of the Paris III conference, indicating that there was a significant commitment to the project âs Development Objectives from the relevant Government branches \. This technical assistance was aimed at providing support for the reforms of a Development Policy Loan, which was also under appraisal and was approved a few months later\. However the project design had several problems \. The choice of instrument was unsuited \. There was insufficient logic in classifying a technical assistance project as an emergency operation when it involved studies of issues that had been unresolved for many years\. The appraisal overestimated the real level of political consensus around the 2002 Electricity Law and the restructuring EdL, and the likelihood that the parallel reform implementation envisaged in the Development Policy Loan would achieve that consensus \. The choice of project development indicators suggests that the project âs potential outcomes (impacts) were significantly oversold, including the speed at which at which IPPs could be evaluated and contracted, as well as the speed that EdL could be restructured, could become more efficient, and could implement new cost reduction projects\. at -Entry Rating : Quality -at- Moderately Unsatisfactory b\. Quality of supervision: Bank supervision was competently handled during the early implementation with the contracting of the initial technical assistance project \. However the follow-up supervision was weak\. The phase one consultant report on EdL restructuring was delivered in 2008, but phase two was blocked by disagreements within the Government on the appropriateness of its recommendations on how to proceed with the commercialization process \. The supervision team left unresolved the issue of how to move forward for two years, until shortly before the project was to close\. If the project had been closed, the unused $ 1\.4 million allocated for the second phase study would have been cancelled\. Agreement on the restructuring of the project was achieved shortly before the closing date \. The Government agreed to cancel the controversial phase two study and a new study, with new terms of reference, was approved\. As explained in Section 6, above, the projectâs objectives were left unchanged but most of the development targets were dropped or modified, solely on the basis that the original targets were unattainable\. Project implementation proceeded smoothly after task team leadership was relocated to Lebanon in 2010 to facilitate implementation of the remaining studies, but even with the Bank âs considerable efforts the problem of opposing concepts of how to restructure of EdL remained unresolved \. Quality of Supervision Rating : Moderately Unsatisfactory Overall Bank Performance Rating : Moderately Unsatisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The Council for Development and Reconstruction (CDR) is identified in the Grant Agreement as the implementing agency\. The other agencies, MOEW, HCP, and EdL are considered in the ICR to be part of the Government, even though they were responsible for designing and implementing the various studies \. There were difficulties in establishing consensus among these agencies, and in the case of EdL, in establishing internal agreement within EdL on various aspects of EdL related studies \. Most importantly, the MMHLC, which was supposed to coordinate the project activities and reach agreement on how to implement the results of the various studies, never met\. The ICR also indicates that the Government did not provide their planned US$ 5 million contribution\. Government Performance Rating Unsatisfactory b\. Implementing Agency Performance: The management of CDR fulfilled its fiduciary functions as specified in the Grant Agreement \. In addition, when different branches of the Government had diverging opinions on how to proceed with the EdL restructuring study, it played a catalyzing role in unblocking overdue payments to consultants and in inducing consensus for the revised study \. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The M&E design was overly ambitious \. The PAD had 17 intermediate project development Indicators covering reinforcing the MOEW, restructuring of EdL and strengthening EdL \. While some were related to other ongoing projects, rather than this project, and some could not be expected to be implemented within the two year horizon of the project, others were well designed as measures of project success \. This included expectations for the establishment of a national energy strategy, and the creation of a Regulatory Agency, b\. M&E Implementation: The indicators were revised during the restructuring in late 2010 to reflect new expectations for project outcomes \. Many of the original indicators were dropped when it was decided that they were unattainable, and others more likely to be achieved were added\. c\. M&E Utilization: Rather than being used to support implementation of the project, the indicators were adjusted to follow likely outcomes\. M&E Quality Rating : Negligible 11\. Other Issues a\. Safeguards: This was a category C technical assistance \. No safeguard policies were triggered \. b\. Fiduciary Compliance: The project complied with the Bank âs financial management procedures and requirements \. It submitted interim un-audited financial reports on time, and audit reports were submitted with unqualified auditor âs opinion acceptable to the Bank\. All implementation and status reports (ISR) have consistently rated FM as satisfactory \. c\. Unintended Impacts (positive or negative): None d\. Other: None 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Unsatisfactory The outcome is rated unsatisfactory Satisfactory mainly because an agreed restructuring plan for EdL was not achieved \. Relevance of Design pre-restructuring, Efficacy and Efficiency were rated as modest, Weighting before and after restructuring did not change the overall rating\. Risk to Development Significant High There is still no political consensus on Outcome : the proposed sector reforms and roadmap for restructuring of EdL \. Nor is there any agreement on increasing tariffs to an economic level\. Bank Performance : Moderately Moderately Quality at entry is moderately Satisfactory Unsatisfactory unsatisfactory because the classification as an emergency project was inappropriate for studies on issues that had been constraints for many years\. Supervision was rated as moderately unsatisfactory because it left the issue of the phase two EdL restructuring activity unresolved for two years\. Borrower Performance : Moderately Moderately The Government's performance is Satisfactory Unsatisfactory rated as Unsatisfactory because its Multi-Ministry Higher Level Committee did not fulfill its agreed upon role \. It was supposed to coordinate the project activities and reach agreement on how to implement the results of the various studies, but it never met\. Quality of ICR : Unsatisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The following lessons have been taken with some adjustment in language from the ICR : A pragmatic and focused project development objective that is consistent with the level of resources involved is essential to provide a realistic assessment of a project âs likely impact\. In this case, the expectation that this small financial grant would be adequate to bring about significant restructuring of EdL was unrealistic and diluted the effectiveness of resources spent \. Transparency in the objectives of the energy sector reform process, and an ex -ante buy-in from major stakeholders is essential for the success of an energy sector restructuring \. In this project, there was a significant divergence between EdL âs and MOEWâs vision of how to proceed\. The first EdL restructuring study was led almost exclusively by the HCP, and the second EdL restructuring study was led almost exclusively by the MOEW\. Neither agency appear to have had established a significant buy -in from other important agencies and players\. It is essential to understand who the winners and losers are in any significant power sector reform, so as to create a pro-reform coalition that can help foster the process \. Otherwise, narrow interests are likely to overshadow national level interests \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR was satisfactory in explaining the problems that the project faced and in detailing the changes made during restructuring\. However, while it discusses project outputs, it provides little analysis of development outcomes, which are substantially less impressive when measured against the project âs unchanged Development Objectives \. The ICR argues that problems with project design and formulation of the intermediate development objectives were a natural result of the time pressure of an emergency recovery intervention \. However, it fails to follow this up and explore the logic behind classifying a technical assistance project as an emergency operation when it involved studies of politically sensitive issues that have been unresolved for many years \. It fails to discuss the fact that the only rationale for dropping many of the outcome targets was that they could not be attained \. An explanation of why the Government failed to provide the US$ 5 million indicated in the PAD would also have been useful \. a\.Quality of ICR Rating : Unsatisfactory	REVIEW
P003600	ï»¿ ICRR 11534 Report Number : ICRR11534 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/29/2003 PROJ ID : P003600 Appraisal Actual Project Name : Cn-technology Project Costs 402 365\.3 Development US$M ) (US$M) Country : China Loan/ Loan US$M ) 200 /Credit (US$M) 196\.8 Sector (s): Board: ED - Other industry Cofinancing 196 168\.6 (67%), General information US$M ) (US$M) and communications sector (15%), General energy sector (15%), Central government administration (3%) L/C Number : L3847 Board Approval 95 FY ) (FY) Partners involved : Closing Date 06/30/2001 12/31/2002 Prepared by : Reviewed by : Group Manager : Group : Elliott Hurwitz Gene Tidrick Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The project objective was to support the Government âs continuing reforms in technology policy and institutions so as to promote the development and/or adoption of clean, productivity -enhancing technologies in China âs industries\. The project was designed to accelerate diffusion and adaptation of technologies through deepening of technology markets and through institutional initiatives \. The ERCs were intended to be market -oriented, self-sufficient independent limited liability companies (LLCs)\. b\. Components ERCs Restructure Chinaâs large R&D establishment into market -responsive (1) Engineering Research Centers (ERCs): corporations\. ERCs had the objective of adapting, developing, and diffusing technologies, in particular those that have positive environmental impacts \. It was intended that the ERCs be supported at their creation by equity and loan finance from the Government, but then be subject to market forces, with no government subsidization \. (2) Strengthening the National Institute of Metrology (NIM) PCs ): Upgrade measurement NIM ) and Productivity Centers (PCs) and test equipment to improve standards; training and consulting services to upgrade measurement standards and quality control\. Assist PCs in dissemination of productivity -enhancing innovations\. c\. Comments on Project Cost, Financing and Dates Bank funds were generally used to import advanced equipment and industrial technologies, while local funds were used to construct or refurbish facilities \. It should be noted that Component 1, Engineering Research Centers, accounted for around 97% of project funding, and Component 2, Strengthen NIM and PCs, accounted for 3%\. 3\. Achievement of Relevant Objectives: (1) Engineering Research Centers (ERCs):ERCs Achievement was unsatisfactory : Of 47 ERCs supported under the project, 21 became LLCs, 8 became Stock Limited Corporations (SLCs), 8 became SOEs, and 10 were absorbed as R&D centers of other organizations (mostly SOEs)\. ERCs transferred around 600 research results, implemented 26,500 technology transfer contracts, and established 60 subsidiaries, including joint ventures (2) Strengthening the National Institute of Metrology (NIM) PCs ): Achievement was NIM ) and Productivity Centers (PCs) satisfactory : The NIM upgraded its facilities equipment and instrumentation, and improved its standards of measurement and other technical norms Assistance was provided to PCs in the dissemination of new technologies by establishing and improving databases and websites for standardization and quality control \. 4\. Significant Outcomes/Impacts: Significant outputs included substantial training provided to ERC staff NIM capabilities in measurement, calibration, and testing were substantially improved \. PCs established websites and databases to improve the provision of services to companies, especially SMEs PCs conducted training courses for 7,500 individuals 5\. Significant Shortcomings (including non-compliance with safeguard policies): There is insufficient evidence that the project accelerated the diffusion of technology, improved the productivity of industrial firms, or enhanced firms' environmental performance The ICR states that little or no evidence is available regarding project achievements with respect to key monitoring and evaluation criteria specified in the SAR : ERC profitability, FRR, and ERR; foreign partnerships formed; success of diffusion activities; productivity growth and better environmental performance among industrial users of ERC services \. Fewer ERCs became LLCs than had been envisioned (it was an explicit project commitment that all participating ERCs would develop a plan to become LLCs within 5 years of approval, i\.e\., February 2000, and would be required to implement that plan under their sub -loan agreement)\. It is unclear whether conversion to SOEs or to units within SOEs meets the project objectives \. There is a statement but no evidence that ERCs included in the project are self -supporting and no longer receiving government subsidies --an explicit project goal The ERRs of participating ERCs were either not reported (44 out of 47) or lower than envisioned (1\.5% to 4% vs\. 12% in the SAR) Project procurement arrangements were cumbersome, and delayed the project by around 18 months\. The (government) Project Office (PO) was initially understaffed (which deficiency was later remedied )\. Through most of project implementation the Golden China Corporation (GCC), the project financial agent, did not utilize available training and TA resources, which hindered procurement Some ERCs, instead of transferring technologies, began mass production of new products that embodied technologies which the ERC had developed \. While this practice tended to undermine achievement of project goals, the extent to which it took place is not known \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Unsatisfactory The institutional changes accomplished fell short of what was envisioned (see section 5) As detailed in section 5, there is insufficient evidence that the project accelerated the development and /or adoption of clean, productivity-enhancing technologies in Chinaâs industries\. For those ERCs included in the project, there is no evidence of their profitability or viability, or that they are not receiving subsides\. Institutional Dev \.: Modest Modest Sustainability : Likely Likely Bank Performance : Satisfactory Unsatisfactory The Bank did not maintain sufficient focus on the development impact of the project: --There is insufficient evidence that key project objectives were achieved \. While the Bank requested information on performance indicators as specified in the SAR--which were, in effect, measures of development impact--the government and ERCs did not provide these data, and the Bank acquiesced\. As the ICR states: "Progress reports\.focused mostly on procurement activities\. Repeated attempts by the Bank to have PO/GCC give more comprehensive report on achievement of project objectives\.remained unanswered\." --As noted in section 3, 29 of the 47 ERCs were converted to LLCs or SLCs, while the other 18 were not\. While the government committed to develop and implement a conversion plan for each ERC as part of its sub-loan agreement, there is no evidence that the Bank acted to insist on the conversion of the remaining 18 ERCs\. --An explicit project goal was that ERCs should be financially self-supporting and no longer receiving government subsidies \. However, there is insufficient evidence that this is now the case, or that the Bank acted to foster the self-sufficiency of ERCs\. Insufficient Bank supervision resources exacerbated procurement delays and hindered technical progress during part of the project \. PSRs during the last 2 years of implementation do not accurately reflect the status of project progress toward meeting development objectives: "The conversion of ERCs to LLCs or other corporate entities continues to move forward, and the establishment of technology companies under a business structure and under market conditions is visible\.the broad objective of the project is being achieved\." (PSRs 12/00 to 12/02) Borrower Perf \.: Satisfactory Unsatisfactory The government was reluctant to direct the ERCs to comply with project requirements\. This reluctance was partially responsible for shortfalls in the transformation of research entities to self-sustaining corporations (section 3), as well as in the largely unsuccessful effort to introduce business management concepts to the ERCs\. The government and the ERCs did not provide data in accordance with the SAR performance indicators, despite repeated requests from the Bank over a period of 3 years\. This lack of information hindered understanding of the extent to which project objectives were being achieved\. During the first part of the project, the PO was understaffed\. Throughout implementation, the GCC, which was responsible for disbursement, collection, and repayment of Bank funds, did not utilize available funding to bolster its capacity to carry out its responsibilities\. The failure of GCC to implement a database in a timely manner substantially contributed to project delays\. The project management structure was unwieldy and hindered procurement\. Quality of ICR : Unsatisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: The Bank should focus on a project's development impact and ensure that it is achieving satisfactory progress in this regard\. If management is not satisfied that this is the case, then restructuring or cancellation should be strongly considered\. 8\. Assessment Recommended? Yes No Why? It would be useful to assess project impact as a guide to future projects in this area \. A PPAR could also determine whether the basic project concept of converting state -owned research facilities into for -profit institutions was valid, or whether a different concept would have made more sense \. A cluster audit with other projects in the industrial sector could also be useful, as the China CAE found that around 50% of the unsatisfactory projects in the country were in that sector \. 9\. Comments on Quality of ICR: The ICR is unsatisfactory : 1\. It makes numerous assertions of project achievement which are not substantiated by evidence, e \.g\., "\.the transformation of university laboratories and research institutes into market -oriented technology development corporations was very successful \." (p\.3) "The business transformation of many research institutes involved many environmental activities, including the improvement in industrial waste treatment, paper industrial control technology, clean coal combustion technology, urban waste treatment technology, etc \. Many of these institutes were able to acquire patents for these technological breakthroughs and contributed greatly to the industrial application of these patented technologies\." (p\.4) "Technology invented at research institutes used to languish in the laboratories, the project has helped speed up its transfer to industry (sic)\." (p\. 6) 2\. The ICR does not provide details of sub -loans to ERCs: interest rates, term, repayment experience \. The ICR also does not provide information as to whether ERCs provided plans for conversion to LLCs, and whether they implemented those plans as they were required to do under their sub -loan agreements (SAR paras\. 4\.7 and 8\.1)\. 3\. Given the project shortcomings, many of which are acknowledged, the ICR project ratings are too optimistic \.	REVIEW
P073817	Document of The World Bank Report No: 25864 IMPLEMENTATION COMPLETION REPORT (SCL-46780) ON A LOAN IN THE AMOUNT OF US$100 MILLION TO THE REPUBLIC OF PERU FOR THE PROGRAMMATIC SOCIAL REFORM LOAN II June 23, 2003 Country Management Unit for Bolivia, Ecuador, Peru and Venezuela Human Development Sector Management Unit Latin America and the Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective as of 05/05/2003) Currency Unit = Nuevo Sol 3\.46 = US$ 1\.00 US$ 0\.29 = 1\.00 Nuevo Sol FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS CAF Andean Development Corporation (Corporación Andina de Fomento) CAS Country Assistance Strategy CGR National Controller's Office (Controlaría General de la República) CIAS Interministerial Commission on Social Affairs (Comisión Inter-Ministerial para Asuntos Sociales) CLAS Community-Managed Health Centres (Comunidades Locales de Administración de Salud) CONSUCODE National Council for Contracts and Procurement (Consejo de Contrataciones y Adquisiciones del Estado) COOPOP Popular Cooperation (Cooperación Popular) DISA Regional Health Department (Dirección de Salud) ENAHO National Household Survey (Encuesta Nacional de Hogares) ESSALUD Social Security Health Institute FONAHPU National Public Savings Fund (Fondo Nacional de Ahorro Público) FONCODES Social Development and Compensation Fund (Fondo Nacional de Compensación y Desarrollo Social) FSAL Financial Sector Adjustment Loan GDP Gross Domestic Product IDB Inter-American Development Bank IMF International Monetary Fund INADE National Development Institute (Instituto Nacional de Desarrollo) INEI National Statistical Institute (Instituto Nacional de Estadísticas e Informática) INS National Institute of Health (Instituto Nacional de Salud) MECEP Program for the Improvement of the Quality of Primary Education ( Programa de Mejoramiento de la Calidad de la Educación Primaria) MEF Ministry of Economic and Finance (Ministerio de Economía y Finanzas) MIMDES Ministry of Women and Social Development (Ministerio de la Mujer y Desarrollo Social) MINSA Ministry of Health (Ministerio de Salud) MOE Ministry of Education (Ministerio de Educación y Cultura) NGO Non-governmental organization PCM Presidency of the Council of Ministers (Presidencia del Consejo de Ministros) PPF Project Preparation Facility PRAL Pension Reform Adjustment Loan PRONAA National Program of Food Assistance (Programa Nacional de Apoyo Alimentario) PRONAMACHCS National Project for the Maintenance of Water Basins and Soil Conservation (Proyecto Nacional de Mantenimiento de Cuencas Hidrográficas y Conservación de Suelos) PSAL Programmatic Structural Adjustment Loan PSP Protected Social Program (Programa Social Protegido) PSRL Programmatic Social Reform Loan QAG Quality Assurance Group SIAF Integrated System of Financial Administration (Sistema Integrada de Administración Financiera) SIS-MI Integral Health Insurance-Mother and Child Component (Seguro Integral de Salud-Materno/infantil) SIVISO System of Social Accountability (Sistema de Vigilancia Social) SMI Mother and Child Health Insurance (Seguro Materno Infantil) SNP National Pension System (Sistema Nacional de Pensiones) TAL Technical assistance loan UE Executing Unit (Unidad Ejecutora) UN United Nations Vice President: David de Ferranti Country Manager/Director: Marcelo M\. Giugale Sector Manager/Director: Ana María Arriagada Task Team Leader/Task Manager: Evangeline Javier PERU PROGRAMMATIC SOCIAL REFORM LOAN II CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 6 5\. Major Factors Affecting Implementation and Outcome 17 6\. Sustainability 18 7\. Bank and Borrower Performance 19 8\. Lessons Learned 21 9\. Partner Comments 22 10\. Additional Information 22 Annex 1\. Key Performance Indicators/Log Frame Matrix 25 Annex 2\. Project Costs and Financing 32 Annex 3\. Economic Costs and Benefits 33 Annex 4\. Bank Inputs 34 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 35 Annex 6\. Ratings of Bank and Borrower Performance 36 Annex 7\. List of Supporting Documents 37 Project ID: P073817 Project Name: PE-Programmatic Social Reform Loan II Team Leader: Evangeline Javier TL Unit: LCSHH ICR Type: Core ICR Report Date: June 23, 2003 1\. Project Data Name: PE-Programmatic Social Reform Loan II L/C/TF Number: SCL-46780 Country/Department: PERU Region: Latin America and Caribbean Region Sector/subsector: Other social services (40%); Health (25%); General education sector (20%); Health insurance (8%); Compulsory pension and unemployment insurance (7%) Theme: Social risk coping (P); Public expenditure, financial management and procurement (P); Child health (S); Nutrition and food security (S); Civic engagement, participation and community driven development (S) KEY DATES Original Revised/Actual PCD: 12/10/2001 Effective: 10/09/2002 10/09/2002 Appraisal: 03/21/2002 MTR: Approval: 09/17/2002 Closing: 12/31/2002 12/31/2002 Borrower/Implementing Agency: GOVERNMENT OF PERU/MINISTRY OF ECONOMY AND FINANCE Other Partners: STAFF Current At Appraisal Vice President: David de Ferranti David De Ferranti Country Director: Marcelo Giugale Isabel Guerrero Sector Manager: Christopher Chamberlin Ana Maria Arriagada Team Leader at ICR: Evangeline Javier Evangeline Javier ICR Primary Author: Fred D\. Levy 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome:S Sustainability:L Institutional Development Impact:M Bank Performance:S Borrower Performance:S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: PSRL II was the second of an anticipated sequence of programmatic structural adjustment loans intended to support the Government's social reform program\. The broad objectives were essentially the same as those pursued under PSRL I--viz\., maintaining economic stability; establishing a more transparent, participatory and efficient process for allocating social expenditures; protecting critical anti-poverty expenditures from budgetary cuts; and improving the efficiency of social expenditures and the access of the poor to social programs\. Most of the actions to be undertaken under the loan were also continuations of measures initiated under PSRL I, building on the institutional foundations laid or fortified by the latter and on the substantial body of social sector studies and the broad consultative process carried out in the period leading up to it\. PSRL I had been prepared and negotiated with a Transition Government during the period of political uncertainty that followed the fall of the Fujimori Government\. The Peruvian economy was just beginning to emerge from several years of recession occasioned by external economic shocks and domestic political turmoil\. An immediate objective of that loan was thus to contribute to stabilizing the political and economic situation\. At the time of negotiating PSRL II, in contrast, the Government of President Toledo was beginning its second year in office\. Economic recovery was strengthening, and a two-year Stand-by Arrangement with the IMF was in place and on track\. The Government's commitment to the social reform program had been reconfirmed\. The situation continued fragile, however, and support to economic and social stability continued to be important objectives of PSRL II\. The opening of the political process had brought an increasing cacophony of competing voices to the formulation of public policy and legislation, and tight fiscal constraints limited the Government's ability to satisfy the public's demands for quick results\. Financial room for maneuver was also limited by Peru's high external debt and by popular resistance to further privatizations\. Bank management delayed by several months the presentation of PSRL II to the Board during the summer of 2002 because of extensive changes in the Cabinet and of the principal technical counterpart, who had negotiated the loan with the Bank team\. Bank Management sought reaffirmation that the new officials endorsed the reform program supported by PSRL II\. Assessment: Author's Note: There is an inherent dilemma in preparing a "completion report" in the traditional ICR format for a Programmatic Structural Adjustment Loan (PSAL)\. The PSAL is designed as one of a series of single-tranche loans in support of a medium-term adjustment program\. The individual loan is thus not a discrete product but rather a link in a product chain\. Since the individual loan is contingent on the program measures and achievements that qualified it, its very Board approval could be argued to constitute a "Satisfactory" rating for the operation itself, and that what follows is part of the preparation cycle for the next project\. On the other hand, since the success of a single link in the chain depends also on the integrity of the whole chain, it can be argued that the ICR for the individual operation must also consider the - 2 - progress that follows\. While the present ICR attempts to straddle these two concepts, further guidance from OED would be helpful for future ICRs for PSAL operations\. Perhaps, as an alternative, a brief note could be prepared after each individual operation commenting on the continuing relevance of the objectives and the overall progress since the beginning of the program, with a full ICR, including ratings, prepared only after the final loan of the program\. The PSRL program has been based on an intensive and continuing process of consultation with Peruvian political leaders and with civil society\. Broad participation in its design, monitoring and evaluation has been an integral part of the program\. Its focus on achieving greater stability, efficiency, and transparency of social expenditures; increasing civil society participation in their allocation and control; and improving their accessibility and targeting in accordance with anti-poverty objectives has been relevant and important to Peru's social and economic context\. A substantial volume of sector analysis carried out over the past several years, as well as pilot activities launched prior to and continuing under PSRL I have provided strong underpinnings for the design of many of its components\. This knowledge base was further strengthened by the completion of a major public expenditure review during 2002\. Studies and evaluations built into program components are intended to inform subsequent stages\. Nevertheless, several questions arise with regard to PSRL II's design and timing\. PSRL I already included a large number of specific actions, and benchmarks across several sectors were set out as objectives for the program and as triggers for subsequent support\. Rather than sharpening the program's focus, additional activities were introduced during the preparation of PSRL II, following priorities set out by Government counterparts\. A correspondingly larger number of agencies have been involved, requiring more intensive monitoring, supervision, and coordination by both the Bank and the Government\. In the event, however, this task was further complicated by the turnover of both managerial and technical staff in most of the participating agencies by the summer of 2002\. As further discussed below, progress among the components has been uneven, with some exceeding expectations while others fell short\. Even though all of the components were related to the central objectives of the program, it must again be asked whether a more concentrated emphasis on four or five key elements of the program might not have been more effective\. A second issue concerns the timing of the Board approval of PSRL II in the light of the changes of ministers and high-level technical staff that occurred at the beginning of the Toledo Government's second year in office (July/August 2002)\. Changes included, inter alia, key people in the technical secretariat of the Interministerial Commission for Social Affairs (CIAS), which bore a major responsibility for the design and coordination of the program within the government, the President of the Council of Ministers (PCM), who heads the CIAS, the Minister of Finance, and the Minister of Education\. Despite the Bank's efforts in this regard, it was not possible to determine at that time whether all the new teams in the line agencies would continue to implement the agreed actions\. The question is whether more time should not have been spent to reconfirm program commitment across the sectors and to prepare the implementing teams for the tasks at hand\. The timing issue appears to be inherent to the PSAL instrument itself\. The trigger conditions defined for the second PSRL had all been met, and there was a risk that delay could result in a loss of momentum jeopardizing the real progress that was being made\. - 3 - 3\.2 Revised Objective: Not applicable\. 3\.3 Original Components: As in all Bank adjustment operations, PSRL II was conditioned on the maintenance of sound macroeconomic policies, which was conventionally interpreted to mean that Peru remained in compliance with the terms of its Stand-by Arrangement with the IMF\. Although the presentation of social reform objectives was reorganized under the three "pillars" set out in the Government's own strategy statement, the social reforms supported by PSRL II were essentially the same as those declared for PSRL I\. Somewhat less attention was given in the second operation to the design and articulation of the social policy agenda, reflecting progress made in this regard under the first loan, while more attention was given to implementing the reforms designed under the first loan and to several new initiatives introduced by the Toledo Government\. The medium-term objectives of the program have been to: § Improve the anti-poverty focus of public expenditures through an overall shift of the public budget in favor of programs benefiting the poor, protecting critical social programs from budgetary cuts, strengthening social protection programs, enhancing the efficiency and targeting of food distribution programs, and unifying the management and objectives of the rural infrastructure programs (the "Dignity Pillar")\. § Improve the access of the poor to health and education programs by expanding the coverage of the maternal, infant, and student health insurance program and the community-managed health care facilities, by enhancing the efficiency of health services and health investments, by implementing a more focused approach to nutrition interventions, and by raising the quality of initial and primary education with particular focus on the rural areas (the "Equity Pillar")\. § Improve the transparency and social control of resource allocation through enhanced citizen access to budget information and program results, increased data reliability, the empowerment of citizens to participate in the policy and budget process, and a more open and accessible financial administration and procurement system (the "Institutionality Pillar")\. As in the first loan, the achievement of these interrelated objectives was linked to a large number of actions to be undertaken by various government agencies, with coordination centered in the Ministry of Economy and Finance (MEF) and the CIAS\. Building and institutionalizing the capacities of the MEF and CIAS to serve as centers for social policy analysis and coordination have thus also been important objectives of the program\. 3\.4 Revised Components: Not applicable\. - 4 - 3\.5 Quality at Entry: There has been no QAG review of PSRL II\. The conclusion of this ICR is that quality at entry was, on balance, Satisfactory\. The PSRL program has drawn upon a rich body of economic and sector studies and has been informed by extensive discussions with government officials, representatives of civil society groups and potential beneficiaries\. The objectives being pursued and the issues surrounding them were at the center of active and lively public debate over the previous two years, and several of the specific programs supported had already benefited from pilot experimentation\. The recently completed Public Expenditure Review (PER), as well as the evaluation of results being achieved under PSRL I, provided additional information that was taken into account in the design of the follow-up operation\. The PER included a public expenditure tracking survey, which was financed partly by PSRL II preparation resources, and covered several critical social programs\. PER results contributed significantly to the redesign of the benchmarks for the protected social programs and to the rationalization of social programs under PSRL II\. Early in the preparation of PSRL II, President Toledo met with high-level Bank officials and requested assistance in defining specific indicators for monitoring progress toward his Government's medium-term development objectives\. In response, the Bank incorporated in the preparation team technical experts to assist CIAS to develop targets and define future processes for monitoring a set of medium-term development indicators, many of which are related to the MDGs\. The social and transparency indicators served as a framework for PSRL II\. This work also became an important input to the new Peru CAS, which was then under preparation\. The preparation of PSRL II was also marked, both within the Bank and the Government, by the multi-sectoral collaboration which was started in PSRL I\. The PSRL II program itself helped to keep social issues high on the agenda of MEF, and MEF and CIAS staff worked closely together and with the line agencies in shaping and monitoring the program\. Inside the Bank as well, PSRL II preparation was carried out by a multi-sectoral team, that included not only the three HD subsectors, but also a strong participation of PREM, ESSD, and the civil society enhancement teams\. This new way of operating, breaking down the sectoral "silos", is now being replicated in a number of programmatic adjustment operations in the LAC region\. On the other hand, the addition of new program elements to an already complex program added under PSRL II inevitably complicated further the already difficult burden of program implementation\. These new elements were arguably appropriate, given the priority attached to them by the new Government, their importance to program objectives, and the desirability of incorporating them within the overall targeting and rationalization framework\. The new pension reform component promotes the redirection of massive subsidies currently benefiting the middle class\. Nevertheless, consideration might have been given instead to supporting some of these new or already-existing components under separate investment loans or coordinating their coverage under existing or planned operations of the IDB\. Jeopardizing future progress, moreover, was the substantial turnover prior to loan approval of key - 5 - officials and technical staff in the principal agencies responsible for design and implementation of the program\. As noted above, the presentation of PSRL II to the Board was delayed for several months in mid-2002 in order to confirm the Government's continued ownership of the program in the wake of these changes1\. Although some components may have benefited from additional technical work and analysis that continued in the interim, others, particularly in the education sector, were set back as a result\. Progress was also slowed by the parallel delay in preparation of the planned technical assistance loan\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: All of the formal "triggers" for going forward with PSRL II had been met prior to Board presentation\. As indicated in the earlier Author's Note, however, the present evaluation of outcomes under PSRL II seeks to assess ongoing progress toward the program's medium-term objectives rather than the accomplishment of discrete tasks\. In this dynamic context, the application of a rating to the operation as a whole is deceptively simplistic, inasmuch as the outcomes and achievements related to the large number of program components have varied widely, from progress exceeding initial expectations to practically no progress at all and, perhaps, even retrogression in a few instances\. With these caveats in mind, and giving due credit to the major advances that have been made in the greater emphasis, increasing rigor, and more participatory and transparent nature of programs aimed at reducing poverty, progress under the program thus far is rated Satisfactory\. The systematic attention now being given to anti-poverty objectives, to ensuring adequate funding and interagency coordination, and the effectiveness of social programs, and to mobilizing and reaping the benefits of increased civil society participation is unprecedented in Peru\. Tangible progress had been made, and the PSRL program has contributed importantly to these efforts\. Progress in some key areas, however, has lagged\. The institutionalization of the changes being pursued is necessarily a slow process and will continue to require informed public debate, steady and steadfast political leadership and visible results to change ingrained attitudes, overcome bureaucratic resistance, and build national consensus\. The specific objectives of PSRL II are discussed below under four broad headings, the first three corresponding to the three pillars of the Government's social reform program: (a) the Dignity Pillar, (b) the Equity Pillar; and (c) the Institutionality Pillar; plus (d) microeconomic management\. Specific program objectives and the status of their implementation as of end-March 2003 are summarized in Annex 1\. 4\.2 Outputs by components: (a) Improving the anti-poverty focus of public expenditures, protecting critical social programs, and ensuring adequate social protection\. Despite a substantial growth of social expenditures during the 1990s, Peru had developed no long-term strategy for poverty elimination and had not instituted a systematic mechanism for - 6 - protecting social expenditures in the event of short-term economic downturns\. Many programs lacked clear objectives and were duplicative, poorly targeted, badly managed, and/or had little impact on poverty\. PSRL II continued support, begun under the Second Financial Sector Adjustment Loan (FSAL II) and PSRL I, to: § Identify and monitor a set of key social programs (PSPs) of demonstrated efficacy, whose medium-term funding would be protected2; and § Consolidate and rationalize the many existing food distribution programs\. Added to the program's objectives were the Toledo Government's commitments to: § Reorient aggregate fiscal expenditures away from defense and internal security in favor of education, health, social protection, and rural infrastructure; § Unify the management and improve the anti-poverty targeting of rural infrastructure programs; § Initiate an emergency employment program; and § Improve the finances of the public pension system, while exploring options for redirecting its subsidy elements toward the poor\. Assessment: Social expenditures\. The Government made specific commitments with respect to the level of actual aggregate budget expenditures in 2002 for education, health, and social assistance, and for a real increase in these expenditures budgeted for 2003\. Specific commitments were also made with regard to actual 2001 and 2002 expenditures on the identified protected social programs\. The outcome of this sub-component under PSRL II is rated Moderately Satisfactory, the progress made in institutional development for the protection of social expenditures is rated Substantial, and sustainability is deemed Likely\. The 2002 actual aggregate expenditures for the social sectors (education, health, social assistance) were within the agreed budget targets while military and security expenditures were reduced\. On PSPs, actual expenditures in 2001 also met agreed target levels\. The number of PSPs was cut from 12 to 6 for 2002, targeting core social programs, removing less effective programs and providing somewhat greater budgetary flexibility for dealing with the existing fiscal stringency\. At the same time, the allocation for the more efficient PSPs was increased as a percentage of GDP, and efforts were continued to improve their targeting to beneficiaries in the two lowest quintiles of the income distribution\. The global amount budgeted for the PSPs in 2002 was maintained at 2001 real terms, thus meeting the PSRL II trigger condition\. As regards actual progress, data on 2002 actual program - 7 - expenditures are still in the process of being refined\. Nonetheless, some information are presented here in order to comply with the ICR deadline\. Preliminary data indicate that actual total expenditures for the 6 PSPs surpassed the budgeted amount by 2 percent in 2002\.3 However, shortfalls were experienced by the three investment programs in the education sector, where the resources budgeted were used instead to cover the costs of large numbers of temporary teachers contracted by the regional governments\. Investment targets may also have been unrealistic given the Education Ministry's limited capacity to prepare and process investment projects meeting the public investment law's procedural and quality criteria\. More rigorous selection of PSPs was a positive evolution in the PSRL program, and a more systematic approach was taken to their budgeting, evaluation, and monitoring\. The process is being further enhanced by the introduction of management contracts between MEF and the implementing agencies, which will be held accountable for their results and may be rewarded for goal achievement\. Food distribution programs\. The reform program called for the consolidation of food distribution programs, formerly scattered among a large number of separate agencies with varying and often unclear objectives\. Studies undertaken by the Bank and others over the past several years had raised serious questions about their cost (totaling some US$350 million per year), targeting, nutritional benefits, and probable misuse of funds\. These programs had long been protected, however, by political and bureaucratic interests, and progress was not expected to be easy\. The principal objectives of the consolidation are to reduce administrative costs, and to better focus food programs on nutritional objectives, particularly with regard to mothers and young children in the lowest income groups and in coordination with other nutritional interventions\. Studies of specific programs were initiated to analyze their impacts and to establish baseline information for their future monitoring and modification\. Funding of the less effective programs is to be gradually reduced and the resources shifted to the more effective programs\. On balance, the achievements under this sub-component are rated Satisfactory, the institutional development has been Substantial, and sustainability is Likely\. The scope of consolidation of food programs has exceeded the minimum target of PSRL II\. Five major food programs have been formally merged into two under the administration of PRONAA\. The specific modes of operation of the individual programs are being changed gradually, as the new organizational structure takes hold\. PRONAA, whose primary concerns in the past were to support farm prices and to manage the logistics of food distribution, appears to be genuinely refocused on nutritional objectives and toward the targeted beneficiaries\. Its newly constituted board of directors includes representation, among others, from the Ministry of Health (MINSA) to ensure coordination with the latter's programs of nutritional education and dietary supplementation for poor mothers and infants (see below)4\. The goals for retargeting the infant and school food programs, the largest of the programs now under PRONAA, to direct them towards areas of highest poverty concentration, were exceeded in 2002 and have been raised further for 2003\. Expenditures on the politically popular but poorly targeted Comedores Populares program have been sharply reduced since 2000, but exceeded their budget in 2002 and have been given a higher budget (albeit below actual 2002 expenditures) for 2003\. - 8 - Of the studies that were to have been undertaken following the approval of PSRL II, only the evaluation of the Vaso de Leche program has been completed and released5\. That study confirmed that the program, which accounts for more than a third of total expenditures on food programs, has practically no nutritional impact\. It is managed by local governments, however, and remains outside of PRONAA\. Difficult decisions remain to be taken regarding its future funding and, if continued, its orientation and management\. Those decisions will now be made in the context of the process of governmental decentralization\. Finally, after some delay, a proposed pilot program of cash transfers in lieu of feeding programs has recently been approved by PRONAA's board of directors, an implementing team has been assembled, and an initial 6-month phase is expected to begin shortly6\. Rural infrastructure\. A number of programs were created during the 1990s to improve small-scale infrastructure in the rural areas in the effort to better integrate economically remote regions into the national economy and to enhance their income-earning potential\. Several of these programs, which were administered by different ministries or autonomous institutes, were supported by the Bank and by other donors\. While the specialization of some of these activities--e\.g\., rural electrification--has justified their separate administration, many activities have overlapped in their objectives while applying different methodologies and targeting criteria\. In order to reduce administrative costs, achieve better coordination, and improve targeting toward areas of greatest poverty concentration, PSRL II supported the unification of overlapping activities under the administration of FONCODES, the Peruvian Social Fund\. Specific goals were also set for the targeting of FONCODES activities in 2002\. Progress thus far under this sub-component is Satisfactory, the expected institutional development is considered Modest, and its sustainability is Likely\. The benchmarks set for the targeting of FONCODES expenditures in 2002 were exceeded\. Despite some resistance from interested parties, including some donor agencies, an interagency commission was established and is now working out the details of the integration of programs\. Its report is expected by mid-2003\. Workfare programs\. Support was provided under the PSRL II program for the initiation and targeting of the Government's new rural and urban workfare programs (known as A Trabajar), intended to provide emergency employment as part of a more comprehensive safety net for the poor\. The rural and urban components of A Trabajar are administered separately, with the former under the jurisdiction of FONCODES and the latter under the Ministry of Labor and Employment Promotion\. With the Bank's assistance, wage level, sub-project, geographical, and family eligibility criteria were introduced to ensure that the activities financed would be labor-intensive and targeted at the lowest income groups, and would not substitute for other sources of employment\. Benchmarks were also agreed to hold down the administrative costs of the program and to incorporate a process of impact evaluation\. Progress under this sub-component is considered Satisfactory\. Considering that workfare is a new concept and initiative in Peru, institutional development is rated Substantial, and - 9 - sustainability is Likely\. As of March 2003, some 127,000 jobs, with a normal maximum duration of 4 months, had been created under the urban program\. Some 80,000 of these jobs were created in 2002\. In addition, 69,000 jobs (typically of 6-months duration) were created in 2002 under the rural program\. An agreed study of the wage rate set for the program confirmed its appropriateness as a self-targeting mechanism, and it has been applied accordingly\. Projects financed under both the urban and rural programs are presented and executed by local organizations with the participation of civil society groups and municipal authorities\. Although project sustainability is one criterion for selection, and local authorities are expected to commit to its maintenance, ex post supervision is not currently being done\. Both the urban and rural programs initially used the geographical poverty map as their initial targeting reference\. It was agreed that they would subsequently shift to targeting on the basis of household income and employment data\. Toward that end, the Labor Ministry contracted with the National Statistical Institute (INEI) for a household survey to establish a baseline for evaluation of the urban program\. This work was completed, and the data are now being cleaned and analyzed\. A similar agreement has not yet been signed between FONCODES and INEI to carry out a baseline survey for the rural program\. On the other hand, the rural program has met and exceeded targets set for the proportion of program costs accounted for by wages to unskilled labor, while there was a substantial shortfall from the same target in the urban program, as administrative costs exceeded their agreed benchmark7\. It must be noted that the urban program was just started in 2002 and thus, had to incur start-up costs while the rural program is run by FONCODES, an established institution\. Although A Trabajar was initially established as a temporary program, the Government intends to use the experience to create a permanent counter-cyclical jobs program that is flexible enough to contract or expand depending on Peru's economic situation\. Pension reform\. PSRL II also gave renewed attention to reform of Peru's extremely costly and inequitable public and private pension systems, building on previous support provided by the Bank's 1997 Pension Reform Adjustment Loan (PRAL) and the 1999 FSAL II, and by parallel operations of the IDB\. PSRL II included measures to reduce the system's burgeoning fiscal liabilities, while increasing the attractiveness to workers of shifting from the public to the private system and gradually shifting the weight of subsidies embodied in the overall system from middle-class recipients toward minimum old-age protection for the poor\. Progress under this sub-component is rated Satisfactory\. Institutional impact has thus far been Modest\. Sustainability is rated Likely\. Progress towards program objectives was made in 2002 with the passage of Law No\. 276178, which simultaneously put a ceiling and floor on the survivor benefits to be paid to widows and orphans of pensioners, and put age limits on payments to the latter, under the formally closed Cédula Viva pension system for government employees\. The new law also reduced the replacement rate for early retirees covered by the defined-benefit, pay-as-you-go National Pension System (SNP) and extended the years of salary history used to calculate the pension\. At the same time, the minimum pension under the SNP was raised\. Legislation has also been prepared, and awaits congressional approval, to mandate the publication of financial projections for the SNP, - 10 - including cash flow, reserves, and the actuarial costs of any proposed changes\. Not attacked by PSRL II was a long-standing central issue of pension reform: viz\., the indexing of Cédula Viva pensions to the salaries of active government employees9\. As a consequence of this provision, the fiscal impact of ordinary pay increases for public employees is multiplied several-fold, making infeasible badly needed reform of the level and structure of civil service salaries and the government's ability to attract and retain needed technical and managerial skills\. At the same time, the ad hoc efforts of public sector managers to get around the indexing provision by introducing a wide variety of non-pensionable pay supplements have weakened control over the pay system and have led to gross distortions and inequities in pay among and within agencies10\. The Peruvian Congress is currently drafting a new national Constitution, providing an opportunity to deal with the indexing issue\. The extreme political sensitivity of pension reform, however, and of any threat to the benefits of middle-class workers and retirees implies significant risk that progress could be stymied or reversed\. (b) Improving the access of the poor to health and education\. In addition to measures to increase and protect social expenditures, to improve program efficiency, and to better target them in favor of the poor, PSRL II has continued the support initiated under PSRL I for: § The expansion of the maternal and infant component of the Integrated Health Insurance Program (SIS-MI)\. § The expansion and capacity building of community-administered health facilities (CLAS)\. § The rationalization of health expenditures by better coordination between MINSA and ESSALUD, the separation of health financing from health provision within ESSALUD, and greater efficiency and transparency of ESSALUD activities\. § The reduction of inefficiencies in nutrition expenditures by consolidation and better targeting of food distribution programs (see discussion under the Dignity Pillar), and by more systematic efforts to improve the access of poor mothers to nutritional information and education, as well as micronutrients for pregnant women and young children under the SIS-MI\. § The improvement of initial and primary education, with particular attention to rural teacher incentives, qualifications, and performance\. A pilot project was initiated to provide special incentives to teachers to work in rural areas and to acquire bilingual skills\. These incentives were to be reinforced by the establishment of effective school councils with parental participation\. Maternal and infant insurance\. In an effort to confront the problem of affordability of health care, two public insurance programs were introduced by the Fujimori Government--the Seguro Escolar in 1997 for children from 5 to 17 years of age, and the Seguro Materno-Infantil (SIS-MI) for mothers and infants in 1999\. The insurance is non-contributive and is funded from the fiscal - 11 - budget\. Expanding the implementation of the latter program to cover all Regional Health Departments in Peru was set out as one of the objectives of PSRL I\. The unification of the two insurance programs under a single administration was also stipulated as a PSRL I benchmark\. These conditions were formally met, but the budget provided for SIS-MI in 2001 was not sufficient to increase the actual number of mother and infant beneficiaries\. The focus under PSRL II, therefore, was to assure adequate budget resources, and targets were set with regard to the actual number of SIS-MI beneficiaries\. An appropriate package of the services to which beneficiaries would be entitled was also to be defined and enacted into law\. Progress under this sub-component is rated Satisfactory, institutional development has been Substantial, and sustainability is Likely\. The amount budgeted for SIS-MI in 2002 met the PSRL II conditions, the target for number of beneficiaries was exceeded, and a Supreme Decree formalized beneficiary entitlement to an agreed package of covered services\. However, the actual amount spent on the program over the course of the year fell short of the agreed minimum amount, and, looking forward, the amounts budgeted for 2003 have not taken account of the agreed expansion of services\. As mentioned earlier, the budget numbers are still preliminary and further changes may occur as PSRL III preparation proceeds\. The integration of the two insurance programs has been carried out as agreed\. Performance agreements have also been introduced between MINSA and the Regional Health Departments to establish and hold authorities accountable for achieving agreed targets\. Community-administered health facilities\. PSRL II has continued the support begun under PSRL I for the expansion of the number of primary health facilities being co-managed by local communities and made more responsive to the needs and cultures of those communities\. This initiative began during the late 1990s and has been endorsed and pushed forward by the Toledo Government despite continuing resistance to this shift of authority away from the traditional bureaucracy and political interests\. Progress under this sub-component is rated Highly Satisfactory, institutional development has been Substantial, and sustainability appears Likely\. At end-1999, some 15 percent of public primary clinics were operated under the CLAS program\. This proportion had expanded to 25 percent by the time of approval of PSRL II, and the expansion has continued, reaching about 34\.5 percent of the more than 6,100 primary clinics in Peru as of March 2003\. In addition, a Ministerial Resolution was issued in May 2002 to strengthen local co-management at all care levels, and this is being progressively implemented\. Not surprisingly, managerial capacities vary widely among the communities\. There is general agreement, however, that the experience overall has been a success, and efforts are now being made by MINSA to expand training programs for local managers with assistance from the School of Public Administration\. Rationalization of health expenditures\. Investments in the health sector have long been characterized by massive waste of resources, as two powerful bureaucracies, MINSA and ESSALUD, continued to construct excess hospital capacity and offer medical services in virtual - 12 - competition with each other but undisciplined by market forces\. PSRL II continued the effort initiated under PSRL I to rationalize expenditures by initiating the exchange of services between the two institutions and the coordination of their investment plans11\. Guidelines for the institutional reform of ESSALUD were also to be adopted and implemented to achieve, inter alia, the separation of its health financing and health service provision functions, providing users greater freedom of choice among service providers, and greater decentralization and transparency of managerial decisions\. Progress under this sub-component is rated Moderately Satisfactory\. Institutional development is considered exceedingly Modest given the magnitude of the problem\. Sustainability is in doubt\. Over the past year, the interchange of 20 identified services was started, and studies have been undertaken in two pilot Departments to serve as the basis for coordinated investment planning\. Progress is also reported in the internal reforms being carried out by ESSALUD, but doubt about their continuity has been created by the recent firing of ESSALUD's president\. Efforts are also reported in Congress to increase ESSALUD's financial and managerial autonomy, granting it status equivalent to that of the central bank\. Meanwhile, the principal barrier to continued wasteful investment has been the hard line thus far taken by MEF in enforcing the procedures and criteria required by the Law of Public Investments\. Nutrition programs\. Significant progress was made over the 1990s in the improvement of nutrition indicators\. Nevertheless, despite huge expenditures over the past decade on food distribution programs, malnutrition remains a major problem in Peru\. In addition to the highly unequal income distribution, significant factors have included lack of access to clean water and health facilities, and poor maternal education with regard to health, nutrition and hygiene\. In addition to the efforts initiated under PSRL I to improve the efficiency and better target existing food distribution programs, PSRL II has included increased attention to nutrition education and promotion and to dietary supplementation through local health clinics\. Such interventions were to be included in the benefits package covered under the SIS-MI\. Progress under this sub-component is rated Unsatisfactory, and institutional development has been Negligible\. The question of sustainability is thus not yet relevant\. The requisite nutritional services have been included in the SIS-MI insurance coverage, and the National Health Institute (INS) has begun sample surveys of anemia and other nutritional deficiencies at the community level\. Little additional progress has been made, however, since the approval of PSRL II\. Targets were established for increasing the proportion of rural primary health facilities that provide a complete package of nutritional interventions, including education and iron supplements for gestating mothers and children less than 2 years of age\. The package of services to be provided in this respect remains to be defined, and no agency has yet been tasked with overseeing the implementation of this initiative\. Initial and primary education\. Although Peru has achieved virtually universal access to primary education over the past two decades, educational quality is very low, particularly in the rural areas\. Actions were initiated under PSRL I aimed at improving the quality of education - 13 - generally and of rural education in particular\. Support for this very ambitious agenda continued under PSRL II\. For the first time, Congress enacted regulations establishing merit criteria for the hiring of new teachers, and the Ministry of Education began to publish data on student performance\. Pilot efforts were begun also to rationalize the pay schedule for teachers; to create local school councils with parental participation that would, among other things, monitor teacher attendance, which has been a major source of poor educational quality in the more remote areas; to decentralize authority over the management of personnel and budget to local school directors; and to introduce a system for handling citizen complaints related to the educational system\. With particular regard to the improvement of rural education, a pilot program was developed to provide special incentives for teachers to work in rural areas and to develop bilingual skills for teaching indigenous children\. The amounts to be budgeted in 2002 for three major education projects were agreed under PSRL II\. Targets were also set with respect to the number of teachers to be included in the rural teaching incentive program in the 2002 school year, including training as well as financial rewards, and for the number of children to benefit later from the bilingual education initiatives\. A Ministerial Resolution was issued making the establishment of school councils mandatory nationwide, and targets were set for the number of schools with active councils\. A reduction of enrolments in teacher training institutions in a situation of large excess supply was also programmed\. The PSRL II conditions for Board presentation under this sub-component were met, but progress since loan approval has been mixed and, in several key areas, disappointing\. Outcome to date is rated Unsatisfactory\. Institutional development has been Modest\. With the resistance of the teachers' union to any incursions on job security and acquired rights, the sustainability of progress in this area is still in doubt\. Progress in implementing the program was severely disrupted by the replacement of the Minister of Education and virtually the entire team of responsible management-level and technical counterparts\. The agreed 2002 expenditure targets were met or exceeded for two of the three major education programs, but a substantial shortfall was experienced by Initial and Secondary Education\. Some 27,000 new teachers were hired in 2002 under the new merit-based criteria, thus exceeding the PSRL II target, but an almost equal number were hired on a fixed-term contract basis outside of the merit system\. The targeted number of teachers to be included in the pilot rural incentives program was also exceeded, but housing, which was to be one of the incentives, was not included\. Moreover, the monetary incentives provided were paid as a lump sum and not tied to any criteria of teacher performance or even teacher attendance, which has been a major problem in rural schools12\. None of the schools where the pilot was carried out had participatory school councils that might have provided active oversight13\. The training provided to the teachers, which was to focus on problems and techniques of multi-grade teaching, the typical context of Peru's rural schools, was also substantially different from what had been agreed and included no base-line analysis or evaluation\. Greater progress does appear to have been made with regard to bilingual education, where upgrading teacher language skills and the preparation of didactic materials is reported to have benefited some 90,000 children\. The targeted reduction in enrolments in teacher training institutions also appears to have been exceeded\. The Ministerial Resolution that had mandated the establishment of school councils was later - 14 - supplanted by a Supreme Decree that made them optional\. Expansion has consequently slowed, and fewer than half the targeted number (2,356 compared to a target of 5,000) have thus far been created\. The pilot effort undertaken by PSRL I to rationalize teacher payrolls in Lima/Callao, Trujillo, Sullana/Piura, and Huancavelica, covers about 40 percent of all teachers and appears to be working well, but little, if any, further progress has been made under PSRL II\. Although not an explicit objective of PSRL II, it had been hoped to achieve nationwide coverage by now\. The new team in the Education Ministry appears to be moving forward with respect to other PSRL objectives--e\.g\., redefinition of the teaching career, completing the inventory of teacher profiles, and the introduction of merit-based incentives with a system of evaluation and sanctions for misconduct\. An integral plan for initial education is currently being revised\. (c) Increasing transparency and social control over public expenditures, financial management and procurement\. Governance in Peru was long characterized by its lack of popular participation and transparency, either in the design or in the implementation of public programs\. By the end of the 1990s, however, transparency, participation and social control had become strongly asserted priorities of the country's citizens\. PSRL II continued the support provided under PSRL I to make social programs more transparent and accountable, to promote collaborative planning and budgeting processes, and to improve the systems of public financial administration and procurement\. In addition, it was intended to make statistical information generally more reliable and timely by providing administrative and financial autonomy to INEI\. Taking these many facets of the "institutionality pillar" into account, progress is rated on balance as Satisfactory, institutional development as Substantial, and sustainability as Likely\. Although performance has varied among the large number of activities supported under this "pillar", the overall progress that has been achieved towards more open and participatory political process since the beginning of the PSRL program was unimaginable three years ago\. The Integrated Financial Management System (SIAF) is rapidly being extended to the regional and municipal levels of government, and the system's accessibility and user friendliness as a source of budget and financial information has been improved, enabling citizens as well as officials themselves to monitor, analyze, and evaluate the funding of social programs disaggregated to the district level14\. The SIAF is now being used as a model by other countries\. Extensive training is being provided to local community groups to use the system, and the data are being distributed on CDs to areas lacking adequate internet facilities\. The regional and national roundtables (Mesas de Concertación) have served as active mechanisms for the development, mediation and expression of civil society views, and 9 regional development plans prepared with the participation of the Mesas have formed the basis for regional budget proposals for 200315\. A directive mandating the use of participatory processes in budget preparation for 2003 was sent to all regional departments, and preparatory workshops were conducted with the departments\. MEF is regularly publishing on its website semiannual reports on macroeconomic performance, - 15 - quarterly reports on budget execution, and data on the timing and amount of transfers to the municipalities\. The Contraloría General de la República (CGR) is reportedly now exercising effective audit control over the accounts of the Ministry of Defense and other security services\. A module to examine public perceptions about governmental transparency and the quality of social services is under preparation and will be added by INEI to the nationwide household survey\. The National Contracting and Procurement Agency (CONSUCODE) and CGR signed an interagency agreement for the implementation of control and supervision of procurement and contracting procedures, and the publication of control and supervision norms obligatory for all public agencies is pending\. A policy guide has been issued for the implementation of an electronic government procurement system to raise transparency and efficiency in public contracting\. An electronic web-based system has been developed for the bidding and awarding of small procurement contracts and is expected to open shortly on a pilot basis\. Some activities under this sub-component have lagged expectations\. The implementation of the System of Social Vigilance (SIVISO), whose design was promoted under PSRL I, has not progressed as intended\. The Defensoría del Pueblo, as noted earlier, has been without a designated chief executive for almost 3 years and appears to have lost the dynamism needed to play its expected role as a promoter of transparency and social control\. (d) Macroeconomic management\. At the time PSRL II was negotiated, Peru was emerging from several years of economic stagnation, coupled with rising unemployment and deteriorating poverty indicators\. After achieving growth of 7 percent per annum during 1993-97, Peru's growth averaged less than 1 percent during 1998-2001\. Performance under this condition is rated Highly Satisfactory\. Sustainability is considered Likely\. Institution-building impact: N/A\. Despite the reemergence of strong populist pressures, economic management has remained firm, and economic performance in Peru improved significantly in 2002\. Growth reached 5\.2 percent, with low inflation (1\.5 percent) and rising international reserves\. The easing of monetary policy, in part to offset the tendency of the sol to appreciate, has been facilitated by growing demand for sol-denominated financial assets\. The predominance of dollar holdings in the financial system, although still high, has been falling along with interest rates\. Employment growth, however, remains weak\. The Stand-by Arrangement approved by the IMF Board on February 1, 2002 has stayed on track, although two key structural reforms supported by the program remain to be implemented: completion of tax reform and implementation of a fiscally-neutral decentralization\. The near-term economic outlook is for continued strong growth (4-5 percent per annum) and low inflation\. The main risks are rooted in the high level of dollar-denominated liabilities in the private sector, the large public external debt, the uncertain external environment, and the fragile political situation\. 4\.3 Net Present Value/Economic rate of return: - 16 - Not applicable\. 4\.4 Financial rate of return: Not applicable\. 4\.5 Institutional development impact: While institutional change has been substantial in comparison to the situation prevailing at the fall of the Fujimori Government, and significant further progress has been made under some components of PSRL II, the latter's overall incremental impact is rated as Modest\. Assessments of the institutional development impacts of the various components of PSRL II have been given in the previous paragraphs\. In summary, progress continued in establishing and refining mechanisms to bring greater transparency to the governance of social programs, promote popular participation in the design of and budgeting for social programs, and facilitate monitoring and feedback regarding program implementation\. The strengthening of the social safety net and the budgetary protection and more effective targeting of key social expenditures have also become widely supported objectives of public policy, and progress has been made in introducing effective mechanisms to achieve them\. Good progress has also been made in the face of expected political and bureaucratic resistance, in the reorganization, rationalization, and redirection of Peru's hugely expensive food distribution programs, and similar efforts have begun with regard to rural infrastructure programs\. Less progress, however, has been made in the reform of investment decision-making in the health sector, and strong efforts are being mounted to stymie further reform\. Progress has also been disappointing with respect to the promising institutional and policy initiatives undertaken with the support of PSRL I for improvements in educational quality\. The strengthening of mechanisms of social policy analysis and coordination within the government has been a central institutional objective of the PSRL program from its inception\. The technical teams of MEF and CIAS have continued to play the central coordinating role and, for the most part, have done so effectively despite the turnover of staff experienced by CIAS and MEF as well as by their counterpart teams in the implementing agencies\. The PSRL framework itself has continued to provide an important tool of coordination and for maintaining program coherence\. However, the policy development and coordinating function has not been institutionalized within the Peruvian government\. Its staffing remains small, contracts are subject to annual renewal, and salaries remain dependent largely on funding from external donors\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: The Toledo Government came to office at a time of great political uncertainty and constrained fiscal resources\. It also inherited the PSRL program, which had been negotiated with the previous Transition Government\. After a year in office, however, the overall program had been endorsed and assumed by the new regime, and PSRL II had incorporated new components and emphases reflecting its priorities and proposals\. The fiscal situation remained tight, however, and - 17 - the new power of Congress and the division of political interests within it have constrained the Government's ability to move boldly in some needed, but politically controversial, directions\. 5\.2 Factors generally subject to government control: Despite strong populist pressures, the Government has maintained sound macroeconomic policies, restoring the confidence of investors and setting the foundation for the economic recovery now under way\. It has made clear its commitment to social and democratic reforms\. Nevertheless, the persistence of "politics as usual" in the continuing turnover of public sector managers and technical staff has disrupted progress in a number of programs, setting back the Government's own social agenda\. At the same time, while the Government has encouraged and facilitated the opening of public sector programs and decision-making to greater social participation and monitoring, it has as yet not effectively used the fora and channels of communication made available in this process to build consensus behind some of the difficult decisions that need to be taken\. 5\.3 Factors generally subject to implementing agency control: An unusually large number of implementing agencies has been responsible for the many activities incorporated into the program\. Many, if not most, of these agencies have suffered major turnovers of high-level staff since the inception of the program\. The principal agencies responsible for coordinating the implementation of the program and keeping activities on track--the CIAS and the technical advisory staff of MEF--have themselves experienced key turnovers\. The core teams in CIAS and MEF, however, have worked diligently to maintain momentum, including during the hiatus in the negotiation of PSRL II that followed the departure and replacement of key ministers\. 5\.4 Costs and financing: Not applicable 6\. Sustainability 6\.1 Rationale for sustainability rating: Sustainability ratings have been indicated above for the individual program components\. Viewed broadly, the sustainability of the program's overall achievements to this point in time is regarded as Likely\. The broad progress toward greater openness, transparency and responsiveness of government, as well as the enhanced attention being given to poverty and social protection responds to the aroused expectations and expressed priorities of the Peruvian electorate\. Less certainty of continuity attaches, however, to specific initiatives and activities encompassed under the PSRL program, where political and bureaucratic resistance in some instances remain strong, and government leadership has been uneven in attempting to overcome them\. Progress in rationalizing the food and nutrition programs, for example, now seems more assured than efforts to improve teacher incentives and performance\. - 18 - The greatest opportunities for ensuring the sustainability of the reforms supported by PSRL, and perhaps the greatest risks of setbacks, are now being opened by the accelerating process of decentralization of decision-making and executive power, itself a strongly felt aspiration of Peruvian civil society\. The devolution of authority and responsibilities to the regional and local levels will enormously expand the possibilities for meaningful citizen influence over the decisions of government and for holding public officials accountable for their performance\. The institutions of local government are still weak, however, and their tradition has not generally been one of broad participation and responsiveness to all but narrow interest groups\. Many of the initiatives under the PSRL program--e\.g\., greater fiscal accountability and reforms in the management of the food and rural infrastructure programs--will be directly affected and have to be adapted to decentralized administration\. The building of strong local government institutions should be a major focus of external assistance over the next several years\. 6\.2 Transition arrangement to regular operations: Not applicable\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank continued under PSRL II to dedicate considerable effort and strong staffing, from both Headquarters and the Country Office, to the support of the Government's social reform program\. PSRL II preparation served as a useful vehicle for providing technical assistance to the new Government\. Contributions in this regard included the elaboration of medium-term development objectives and indicators, the analysis of public expenditure allocation and effective utilization, and the sharing of experiences of other countries (e\.g\., South Africa, India, Mexico and Brazil) in enhancing citizen participation in public policy-making and monitoring\. Close consultations were also maintained with civil society organizations, and staff worked assiduously to sustain progress during the hiatus caused by Cabinet and high-level technical changes during mid-2002\. While the Bank's lending performance under PSRL II is thus rated as Satisfactory, concern about the design complexity of the program deserves to be highlighted\. The number of components and activities supported under the program was increased from the already heavily loaded program initiated under PSRL I, even as individual components were entering more complex phases of implementation\. These two factors complicated further the coordination and supervision responsibilities of the involved staff and government counterparts\. Moreover, given the costly turnover among counterparts, it might have been preferable to have waited still longer to consolidate the understanding and commitment of the new teams to the program and/or to have reduced the size and scope of the program\. Coordination with the IMF, particularly with regard to the fiscal implications of the program and efforts to support more decentralized and participatory budgetary processes, has been close and appropriate\. The public expenditure review, which contributed importantly to the design of PSRL II, was undertaken jointly with the IDB\. Coordination between the Bank and IDB in the areas - 19 - covered by PSRL II has also been constructive, particularly at the level of field offices\. This coordinating effort is especially important given the extensive overlap of the two IFIs' programs in support of fiscal, social, public administration, and pension reforms\. 7\.2 Supervision: Inasmuch as PSRL II was one link in a chain of programmed operations, there is essentially no distinction between its post-approval supervision and the preparation of the next operation\. Indeed, there was no formal supervision budget separate from that for the preparation of PSRL III or for work on parallel investment projects in health and education\. Given the large number of components and activities, and the need to reestablish mutual understandings and relationships when counterparts were replaced, these resources have necessarily been spread thin\. Nevertheless, Bank staff have been conscientious in pursuing program objectives and building consensus within both the government and civil society\. This broad effort is rated Satisfactory\. 7\.3 Overall Bank performance: On balance, Bank performance has been Satisfactory\. Borrower 7\.4 Preparation: Borrower performance in PSRL II's preparation is rated Satisfactory\. The preparation of PSRL II began right after the new Toledo Administration took office\. To the Government's credit, the agreements reached and actions started under PSRL I were continued without major disruption, leading to close and productive collaboration between the Bank and Government throughout the preparation and negotiation of PSRL II\. Government counterparts made effective use of the PSRL program to maintain the priority given to social issues on the Government's agenda\. They also judiciously managed implementation of the PHRD grant approved for the preparation of PSRL II\. As mentioned frequently in this report, however, the replacement of key counterparts during May/June 2002, lead to the Bank's decision to delay the presentation of PSRL II to the Board\. This disruption, together with the undue complexity of PSRL II, has slowed implementation of some the reform actions that were to follow\. 7\.5 Government implementation performance: The Borrower's implementation performance is rated Moderately Satisfactory\. As discussed above, implementation shortfalls were, in part, to be found in the operation's design\. Additional key staff turnovers in the second half of 2002 also affected implementation capacity\. While strong commitment and leadership have been demonstrated in some aspects of the program--e\.g\., transparency and reform of the food programs and the expansion of community co-managed primary health centers--less commitment and leadership have been shown with respect to some other politically difficult program elements--e\.g\., the rationalization of health - 20 - investments and achieving educational improvements in the classroom\. 7\.6 Implementing Agency: The implementing agencies' performance is rated Satisfactory\. A large number of line agencies have been responsible for the implementation of the various components of PSRL II\. The evaluation here refers only to the technical units of MEF and CIAS that were responsible for the overall coordination and monitoring of the program and were the principal points of contact with the Bank\. Like others, these units were also disrupted by key personnel changes over the past year as well as by changes in their respective ministers\. They worked diligently and continually to maintain the program's coherence and to keep it on track, including during the period of hiatus in 2002 and, reportedly, without being paid during part of this time\. 7\.7 Overall Borrower performance: Overall, Borrower performance is rated Satisfactory\. 8\. Lessons Learned As noted in the ICR for PSRL I, the start-up costs for the social reform program in the context of an abrupt move from the tradition of highly centralized, secretive, autocratic style government to transparent, participatory, responsive government were bound to be high and characterized by stops, turns, and wheel spinning\. This has been confirmed\. Other lessons, some now commonplace in the evaluation of Bank operations, include: 1\. The number of specific components, activities, conditions and implementing agencies incorporated into an operation should be bounded by and prioritized within the coordinating and supervision capacities of the Bank and the Borrower\. The designation of a subset of these elements as benchmarks and triggers for follow-up operations may help to specify priorities but does not significantly lighten coordinating and monitoring responsibilities, so long as the non-highlighted objectives are also to be taken seriously\. 2\. The PSAL instrument, designed as a series of one-tranche loans, is useful for giving flexibility to adjust program details over time, and thus, assures continuity of support to an agreed medium-term program of reforms\. It offers the potential in Peru, for example, of now adjusting program elements to the requirements of governmental decentralization, while maintaining the overall coherence of its programmatic objectives\. At the same time, however, it potentially presents a trade-off between maintaining continuity in support and evaluating rigorously the achievements of program phases whose future direction may change because of country circumstances\. Judgment is further complicated by the number of components, some of which will inevitably progress more rapidly than others\. Again, the designation of some objectives as triggers for follow-up operations may simplify the judgment in mechanical terms\. But it also sets up the potential dilemma (which seems to have characterized the timing of approval of PSRL II) of having fulfilled all the "legal" requirements for proceeding with the next operation, even as concerns may still exist about continued Borrower commitment to some program components as - 21 - evidenced by slowdown some follow up actions towards the next loan\. 3\. The probability of success of fast-disbursing programmatic loans that require substantial analytical foundations and involve significant institution building is enhanced by the availability of financing for technical assistance\. An accompanying technical assistance loan or similar financing under a parallel investment loan also provides the resources and "foot in the door" for the intensive supervision that is typically required by capacity-building support\. Conversely, the absence of such support may reduce the pace of reform\. 4\. The agenda of reforms encompassed by the PSRL and the successful decentralization of government functions are, appropriately, being given high priority in the assistance programs for Peru of the Bank, other IFIs, UN and bilateral agencies\. Greater attention should be given by all involved to achieving active coordination of these assistance efforts\. The Government of Peru itself needs to lead actively such coordination to ensure effectiveness of the assistance programs especially for the decentralization of government functions\. 9\. Partner Comments (a) Borrower/implementing agency: (Translated from Spanish) Before the year 2000, the government of Peru did not have a social policy instrument that would assure a medium-term strategy to improve social programs and the efficiency of social spending\. For this reason, the Programmatic Social Reform Loans (PSRL I and II) were very useful instruments because they permitted the design of the reforms to be implemented in the social sector\. At present, almost two years into the administration of the current government and with the publication of the "Bases for the Strategy to Overcome Poverty, an initial consensus has been reached regarding the characteristics of a suitable instrument that would allow the commitments included in the National Agreement to become operational\. In other words, a multi-annual social strategy is being developed to improve and/or strengthen the scope of the achievements reached under the PSRL I and II operations\. In this sense, it is necessary for the Bank to support the efforts made to continue developing said instrument and implementing a system to monitor and evaluate social policy objectives\. Nevertheless, we agree with the Bank's opinion with reference to the complexity of the design of the PSRL projects, especially with regards to the excessive number of benchmarks, which complicated coordination and supervision\. Thus, we share the recommendation of the Bank that future operations should include fewer conditions but whose impact should still contribute to the sustainability of the reforms set forth by these agreements\. - 22 - The Project The Peruvian government considers that, just like the previous PSRL I, this operation has been successful, given that it has contributed to strengthening and facilitating the continuity of social policy reforms, in the sense of improving the protection and efficiency of priority social programs - not only by saving resources, but also by increasing the quality of public services - increased participation by civil society in the control of social spending and improved transparency in public accounts\. Bank Performance The government is satisfied with the performance of the World Bank during the development of this operation, not only for their technical support and ongoing communication, but also for their dedication and time invested\. Borrower's Performance The government considers that it has taken important steps to institutionalize the reforms implemented in the social sector, however the government is also conscious of the fact that it is necessary to work even more on said reforms\. For that reason and given that the primary objective of the government is the "fight against poverty", the document "Strategy for Poverty Reduction and Economic Opportunities for the Poor" has been approved, which sets forth actions to accomplish this objective and is the base for the design and work of the PSRL III project\. Lima, May 2003 (b) Cofinanciers: Not applicable (c) Other partners (NGOs/private sector): Not applicable 10\. Additional Information Footnotes: 1\. More recent turnovers of officials key to the program have included the presidents of the National Statistical Institute (INEI) and of the Health Security Institute (ESSALUD)\. In addition, the Congress has never named a new National Ombudsman (Defensor del Pueblo) since the original holder of that position resigned in 2000 to become a candidate for the presidency\. 2\. The protection was specifically accorded to current and capital expenditures, exclusive of salaries, pensions and financial charges, financed from the ordinary budget and from foreign - 23 - resources\. Not included in the targeted funding were resources from privatization or fees and other revenues generated directly by the activities themselves\. 3\. It was agreed that expenditure targets for the PSPs would be reduced in the event that ordinary budget revenues fell by 3 percent or more in 2002\. In fact, revenues fell by 2 percent\. (Since definitive data on 2002 revenue collections only became available in May 2003, it would have been difficult in practice to adjust program expenditures on this basis\.) 4\. Overall nutrition policy guidelines are set by an interministerial National Commission on Food Security\. 5\. All the other studies, with the exception of that covering the school breakfast program, have reportedly been completed, but the final reports are still pending\. 6\. Some officials have expressed reservations about the introduction of cash transfers, partly because of the potential difficulty of controlling their targeting and expansion\. 7\. Administrators for the urban program point to high start-up costs associated with the need to install 26 local offices, and report that costs of administration are now falling\. 8\. Published in El Peruano on January 1, 2002\. 9\. The elimination of this indexing provision was one of the key conditions of the PRAL, but the action was declared unconstitutional by the Peruvian Supreme Court\. 10\. External donors, including the Bank, commonly contribute to these distortions by topping up the salaries of skilled counterparts\. 11\. The measures initiated under PSRL I were originally also to include the hospital investments of the Ministries of Defense and Interior, but they dropped out of the program during the course of loan preparation\. 12\. Teachers receiving both bonuses--for distance from urban centers and for bilingual skills--would realize about a one-third increase in their salary levels\. The lack of performance criteria attaching to the incentive bonus has led, not surprisingly, to demands from teachers closer to urban centers that they also be paid the additional amounts\. 13\. It is also unclear whether any of the schools with councils, most of which are located in urban areas, have kept any attendance or other records\. 14\. Development of the SIAF system has received substantial financial support from the IDB\. It was originally intended to extend only to the 194 provincial-level municipal governments, but, with the support of a US$10 million loan from the Andean Development Corporation, it will now be extended also to the 1,826 district-level municipalies\. The expansion of the system's capability and accessability does not seem yet to have been matched on the demand side, however\. According to the SIAF's administrator, more contacts ("hits") have come from external parties than from Peruvian civil society\. 15\. The Mesas participated in the preparation of 22 regional investment plans, but consensus was reached in only the 9\. The Bank has assisted in mobilizing grant funds to provide technical assistance to this effort\. The accelerating process of decentralization of governmental functions raises some uncertainty about the future role and institutionalization of the Mesas, which remains to be worked out\. - 24 - Annex 1\. Key Performance Indicators/Log Frame Matrix 1 ISSUES/PROBLEMS ACTIONS TAKEN AND STATUS AS OF MARCH 2003 I\. DIGNITY PILLAR: POVERTY REDUCTION, DECENT AND PRODUCTIVE JOB OPPORTUNITIES A\. Poverty Reduction: Reorientation of Public Expenditures and Social Protection Shift to Pro-Poor Public Expenditures The 2002 global approved budget for three defined priority social sector functions--Education Public expenditure needs and Culture, Health and Sanitation, and Social Assistance-- (S/11,391 million) was greater in to be appropriately real terms than the executed budget (S/10,085 million) for those functions in 20012\. The allocated to Peru's social 2002 executed budget was slightly lower (S/\. 11,181 million) than the amount budgeted but priorities was still within the agreed targets\. The Budget for these functions in 2003 (S/ 12,245 million) has again increased in real terms compared to the 2002 executed budget\. The 2002 approved budget allocation for Defense and Public Security (S/4,189 million) was reduced in real terms with respect to its 2001 executed budget (S/4,698 million), and the budget approved for 2003 has been kept at close the same level (S/ 4,617 million)\. Protected Social Programs (PSPs) The executed budget for PSPs exceeded agreed levels in 2001\. Pro-cyclical spending The number of PSPs was reduced from 12 in 2001 to 6 in 2002 in order to shift resources pattern does not ensure from less efficient to more efficient programs, permit somewhat greater fiscal flexibility and minimum financing target core social programs\. Their budget allocation was increased as a percentage of GDP, requirements of the PSPs and their targeting was improved in favor of the two lowest income quintiles\. in support of the GOP Social Protection The total (non-wage, non-financial, non-pension) approved budget for the 6 selected PSPs in Strategy\. 2002 was maintained at their 2001 levels in real terms, with a global allocation of S/2,321\. Preliminary information indicate that actual total expenditures (data are in the process of being reviewed) surpassed this level (S/ 2,363 million), but with significant shortfalls in 3 of the 6 programs, as follows (in million of soles): PSRL Exe\. 3 % Educación Inicial 230 124 54 Educación Primaria 229 142 62 Educación Secundaria 212 123 58 Salud Individual 835 735 88 Salud Colectiva 432 380 88 Promoción y Asistencia Social 383 859 224 Comunitaria TOTAL 2,321 2,363 102 Temporary Employment Lack of a counter-cyclical The Programa de Emergencia Social Productivo (PESP) - better known as A Trabajar is social protection program in operation generating temporary employment for poor families\. The rural and urban such as an employment programs are separately administered\. Initially, a monthly wage below the minimum wage (workfare) program\. was set at S/ 300, later modified to a daily wage of S/ 10 in rural areas and S/14 in urban areas to assure that the program was not substituting for otherwise available employment\. An - 25 - agreed study on the effects of the wage rate was carried out and confirmed the suitability of the rates adopted\. Prior to the presentation of PSRL II to the Board, 42 percent of the urban A Trabajar budget was allocated to urban districts in the first (poorest) income quintile, and 67 percent of the budget was allocated to districts in the first two quintiles\. Comparable budget allocations for the rural areas were 34 percent and 59 percent, respectively\. During the course of implementation, it was agreed to shift the base for future targeting from the geographical poverty map to directly target households instead\. Toward this end, a convenio was signed in October 2002 between INEI and the urban program to incorporate a special sample in the national household survey\. A similar arrangement has not yet been reached between INEI and the rural program, and the possibility of using FONCODE's own beneficiary data base is being explored as an alternative basis of evaluation\. On a geographical targeting basis, the results for the rural program in 2002 have exceeded those of 2001\. Targets were also agreed with regard to the minimum proportions of the urban and rural A Trabajar budgets to be spent on unskilled labor: viz\., 40 percent in the rural areas and 75 percent in the urban areas\. This target for the rural program was met, but there has been a shortfall from the target in the urban program because administrative costs related to the opening of new district-level offices\. Impact evaluations of both the urban and rural A Trabajar were also to be carried out on the basis of INEI survey data as described above\. The urban study is now being completed under the agreement with INEI\. Food Programs Duplication and lack of PRONAA and MINSA school breakfast and pre-school feeding programs have been merged coordination of food as proposed into a Nutrition Program under PRONAA under Supreme Decree No\. programs, resulting in: (i) 034-2002-PCM published on May 14, 2002\. In addition, three other programs ( excess expenditures and Complementación Alimentaria,Comedores Populares and the food program for sufferers of high administrative costs; tuberculosis--Pacfo) have been integrated into a Supplementary Food Program under ii) overlap and/or gaps in PRONAA\. coverage; iii) inadequate targeting; also, lack of The share of total expenditures on Vaso de Leche, Comedores Populares, Alimentación impact evaluation of Infantil and Desayunos Escolares for districts in the first (poorest) income quintile during the programs limits scope for period July 2001-April 2002 was 35\.5 percent, exceeding the agreed target of 30 percent, and effective reform\. the combined share of expenditures going to districts in the first and second income quintiles was 59\.6 percent, exceeding the targeted 55 percent\. During 2002, Alimentación Infantil spent 37 percent in districts of the first quintile and 68 percent in the first and second quintiles; Desayunos Escolares spent 22\.5 percent in first-quintile districts and 48 percent in first and second-quintile districts\. For 2003, Alimentación Infantil expenditures are programmed to reach ratios of 53 and 87 percent, respectively, and Desayunos Escolares is programmed to achieve 32 and 64 percent, respectively\. Comparable information is not available for Pacfo\. The total expenditures of Programa de Comedores Populares, which are intended to be reduced, amounted to S/ 91 million in 20024, exceeding the agreed budget of S/ 66 million, but still significantly below actual expenditures of S/ 133 million in 2000 and virtually equal to the S/ 90 million spent in 2001\. The budget for 2003 is S/ 79 million, so that the agreed reduction of expenditures on this program is not being achieved\. A pilot program of cash transfers in lieu of food is planned to be carried out in 5 districts and evaluated for possible replication\. Design of the program has only recently been agreed and a team assembled for managing it\. A first stage of the pilot is expected to be implemented by - 26 - mid-2003\. Pensions High-cost, Law No\. 27617, published on Jan\. 1st 2002, modified the pension regimes to: publicly-subsidized pension programs that benefit a Restructure the Sistema Nacional de Pensiones (SNP) for affiliates under 55 years and priviledged minority of the to incorporate the resources of the Consolidated Insurance Reserve Fund (FCR); population; majority Lower the survivor pension entitlement for unmarried daughters and widows of population remains without pensioners, while introducing both a cap and a floor; basic social insurance Lengthening the salary period for the calculation of pension for affiliates under age 55 coverage; distortions limit of the Cédula Viva pension system for government workers, while also absorbing the expansion of coverage under National Savings Fund (FONAHPU) into the pension fund and raising the minimum the private AFP system\. pension; Improve incentives for workers to switch to the private pension system, including the issuance of a new "recognition bond," the introduction of a minimum pension, and an early retirement provision for long-term unemployed\. Legislation to mandate the publication of cash-flow and actuarial projections for the SNP, of the projected impacts of any proposed changes to any of the systems, and of the actuarial reserves of public institutions is under preparation\. B\. Poverty Reduction: Rationalization of Rural Infrastructure Expenditures Duplication and lack of It has been agreed to unify several rural infrastructure programs--FONCODES itself, the coordination of rural infrastructure components of PRONAMACHCS, and the projects of INADE costing not more infrastructure programs, than S/ 300,000--under the administration of FONCODES\. A Supreme Decree was issued in resulting in: (i) high January 2003, naming a Commission to work out the details of the consolidation within 120 administrative costs; (ii) days\. Once the integration is completed, all the programs will follow the methodology of overlap and/or gaps in FONCODES\. coverage; (iii) inadequate targeting of some Some 24 percent of the expenditures of COOPOP, FONCODES, PRONAMACHS, Rural programs\. Electrification, and Rural Roads in 2002 were directed to districts in the first (poorest) rural income quintile, compared to a targeted 25 percent; 49 percent was assigned to the first and second quintiles as compared to the targeted 50 percent\. Of S/ 17 million spent on 1,360 projects by FONCODES itself in 2002, 57 percent was directed to districts in the first income quintile and 90 percent to districts in the first and second quintiles combined\. II\. EQUITY PILLAR: ACCESS TO HEALTH, NUTRITION, AND EDUCATION SERVICES A\.1\. Health: Access of the Poor to Health Services Mother/Child Health Insurance Coverage of SIS-MI has increased from 154,000 mothers and 395,000 children below 5 years Despite expanded of age in 2001 to 545,000 mothers and over 2 million children in 2002, exceeding the targets provision of health set by PSRL II\. services, a significant proportion of the poor An agreed benefit plan was approved and enacted\. by Supreme Decree No 003-2002-SA of population remains May 25, 2002 (Annex 1, Plans A and C), and a system has been established under which without access to health reimbursements can be made directly to health service providers\. services\. The integration of the operational systems of the student and maternal-infant insurance programs was effectively carried out, and Law No\. 27657, published on Jan\. 28, 2002, gave SIS the character of an autonomous decentralized agency\. - 27 - The overall budget for SIS in 2002 was S/\.231 million, slightly below the agreed S\./ 240 million, but the agreed S/\.116 million was designated for SIS-MI\. Actual budget expenditures for SIS in 2002 totaled S\./ 180 million, of which S\./ 97 million were for SIS-MI5 The agreement with MEF to fully budget any coverage changes under SIS-MI was carried out in 2002, but sufficient funds to cover the benefit expansion foreseen in 2003 have not been provided in the initial budget allocations\. Moreover, the SIS budget for 2003 is below the amount budgeted for 2002\. Health Service Management Lack of sufficient The number of health service establishments that are co-managed via the Comités Locales de mechanisms for community Administración de Salud (CLAS) has increased from 20 percent to 35 percent of the total co-management of health number of primary health care facilities, exceeding the 25 percent target agreed under PSRL services\. II\. MINSA has reaffirmed its intention to continue this expansion, for which the 2003 budget has been increased to S/ 83 million, compared to actual expenditures of S/ 61\.5 million in 2002\. Ministerial Resolution No\. 895-2002-SA/DM of May 23, 2002, directed at strengthening the co-management system for all levels of care, is being implemented\. Performance Management Agreements signed in 2002 between MINSA and 34 Regional Health Departments (DISAS), and MINSA Resolution No\. 225-2002 was issued to institute a monitoring plan for these Agreements, which include 18 performance indicators\. The Agreements are reportedly being actively monitored and the results documented\. A\.2\. Health: Improve Efficiency of Health Programs Duplication of health An action plan for reforms was approved in April 25, 2002, including measures to restructure programs\. ESSALUD and to make its operations more efficient and more transparent\. Implementation has thus far been partial\. A system for the purchase and sale of services between ESSALUD and MINSA was initiated in 2 Departments, Tacna and Huánico, and the desired interchange has begun\. The pilot is now to be expanded to cover an additional 6 Departments\. A joint investment plan has not yet been elaborated in the 2 pilot Departments\. Consultants have been invited to bid on a preparatory study of the supply of and demand for additional health facilities\. It is intended to extend this study later to the national level\. Investment proposals generally are being more rigorously evaluated through the National Investment Program procedures administered by MEF\. B\. Nutrition Inadequate strategies in A sample survey was carried out to establish baselines for targeted indicators, including the nutrition programs, proportion of primary level health facilities in rural areas that provide the complete package implying : (i) interventions of nutritional interventions for pregnant women; the proportion of women from districts in do not attend the priority the first and second income quintiles that received the full iron supplementation during their populations (children last pregnancy; and the proportion of children less than 2 years from districts in the first and below age 3 and poor second income quintiles that received preventive iron\. pregnant and lactating women), and (ii) excessive A Supreme Decree (No\. 003-2002-SA of May 25, 2002 Annex 1, Plan C) was issued emphasis is placed on food instituting an SIS-MI benefit plan that includes counseling in health, nutrition, and hygiene distribution, compared to and iron supplementation for pregnant women and children6 INS is now monitoring the other interventions such as number of mothers receiving iron supplements through health centers and carrying out health education, nutrition, sample surveys of anemia and other nutritional variables at the community level\. However, a hygiene, access to potable basic nutrition package for pregnant women and the institution responsible for supervising it - 28 - water, and other have yet to be designated\. complementary health interventions\. C\. Education and Culture Low incentives for Financial incentives have been paid under a PSRL II-supported pilot program to 600 rural teachers to stay in the teachers based on distance from urban areas, thus exceeding the target of 400\. Teacher rural areas\. Insufficient training under the program has been provided to 1,000 teachers as compared to a target of education coverage of 600\. The training provided, however, did not respond, as intended, to the needs of a children ages 0-5 in rural multi-grade teaching environment\. Evaluation of the program has also been judged areas\. inadequate, and plans are now being made to redo the pilot in 2003\. The agreed global budgets for 2002 were met or exceeded for two of the three Executing Units (UEs), but the realized actual budget for the third UE (MECEP Initial Education and Secondary Education) reached less than half of its targeted amount\. Bidding processes for didactic materials were suspended, and infrastructure works have been delayed, while funds were redistributed to cover the salaries of unbudgeted teachers\. There was also reportedly a problem of unavailability of counterpart funds\. An integral plan for initial education is currently being revised\. Lack of quality (teaching A new law and implementing regulations were enacted establishing merit criteria for the skills) criteria in teacher hiring of new teachers \. Some 27,000 teachers were hired under this new regime, as 7 hiring procedures and compared to a target of 22,000\. oversupply of teachers in the system\. The target for reducing enrollment in public and private teacher training institutions in 2002 has apparently been exceeded\. Admission targets in 2002 were 38\.6 % below 2001 levels, as compared to a targeted reduction of 30 percent\. Little progress has thus far been made toward altering the teacher career structure, introducing a merit-based teacher incentive and evaluation system, completing the inventory of teacher profiles, or introducing sanctions for misconduct\. Low quality of bilingual About 4,300 teachers have been trained in bilingual teaching skills, and an estimated 90,000 teaching is persistent, students received new didactic materials\. The training so far has not included all the agreed particularly in rural areas\. elements, specifically multi-grade teaching methods and Spanish as a second language\. Improvement of A system for registering citizen complaints in the education sector has been implemented transparency and public (Supreme Resolution No\. 273-2001-ED)\. The system is reportedly fully functional and on line participation mechanisms in in Lima, and is also functioning via a toll-free telephone line at the national level, albeit education sector\. inefficiently\. It is reported that few people are thus far making use of it\. A Ministry of Education Directive in March 2002 made the establishment of school councils with parental participation obligatory nationwide (Ministerial Resolution 168-2002-ED), but a later Supreme Decree has made the establishment of such councils optional\. As of end-March 2003, 2,356 councils were functioning in accordance with the Ministerial Directive, but little was known regarding the quality of their operation \. III\. INSTITUTIONAL PILLAR: BETTER GOVERNANCE A\. Transparency and Access to Information Lack of transparency of A strategy was presented for increased transparency in 6 selected programs (Educación Inicial, expenditures on social Educacion Secundaria, Salud Individual, Salud Colectiva, Promoción y Asistencia Social programs\. Problems with Comunitaria) as well as 5 specific activities and/ or programs (A Trabajar, Desayunos - 29 - budget expenditure Escolares, Comedores Populares, Vaso de Leche, and SIS-MI) has been presented\. The tracking system (SIAF), strategy includes measures to: (i) improve access to and the presentation of SIAF information including: i) lack of by linking it to sectoral program and activity information via an internet-based Friendly knowledge and capacity Window (Ventana Amigable), and (ii) increase the capacity of authorities and local for using the system; ii) communities for using the information as a planning and tracking tool\. system is not user-friendly; (iii) lack of More than 6,000 technicians around the country have been trained to use the system, including basic infrastructure the procurement module, and to train others in turn\. The newly designed Friendly Window is (internet access) at operative, and satellite dishes and solar panels will be utilized to extend transmission\. provincial and district level; iv) low capacity and Information on the amounts and timing of budgetary transfers to districts and municipalities speed of the national from customs duties, Vaso de Leche funds, Foncomun, and the mining royalty are provided on computing system\. the Economic Transparency Website (Portal de Transparencia Económica) of MEF\. A supreme decree has been drafted mandating the standardization of processes and technologies to facilitate ministerial production and use of data from the Geographical Information System\. The draft is currently under revision by the new administration of INEI\. Lack of dissemination of FONCODES issued a resolution to initiate a campaign for the dissemination of information information on programs, regarding rural A Trabajar to 530 districts\. budgets, eligible beneficiaries and expected A new organizational law for INEI was drafted to ensure its functional autonomy, but the results\. Legal Office under the new INEI management team has requested its revision\. Persistence of a "culture of A budget of S/ 3 million was made available for implementation of ENAHO (Household secrecy"\. Inconsistent Survey) IV at the departmental level, including the incorporation of a module on public application of program perceptions regarding transparency, practices and attitudes with respect to major social norms, over-charging for programs\. public services, lack of public awareness of A campaign by the Defensoría del Pueblo (Ombudsman Office) to promote citizen use of the citizens' rights, and channels being created to increase access to information and to process citizen complaints responsibilities of public was initiated, but its effectiveness has been restricted by the Defensoria's institutional servants\. limitations\. Consideration is being given to relying instead on new transparency mechanisms being created in the line agencies\. B\. Participation and Partnerships in Public Policy Social Control (Vigilancia Social) The attempt to implement SIVISO (social accountability system) in 10 districts of three Lack of formal and regional departments has not succeeded\. Alternative mechanisms are to be explored\. sustainable mechanisms for public oversight (only ad hoc and pilot efforts have been implemented to date)\. Citizen input to Social Policy Regional Mesas de Concertación participated in the formulation of 22 department Lack of clarity regarding development plans and consensus was reached with respect to 9 of them, exceeding the target - 30 - the role, composition and of 6\. procedures of the "Mesas de Concertación"\. A directive mandating the use of participatory processes in budget preparation for 2003 was sent to all regional departments, and preparatory workshops are being conducted with the Public discussions in the departments\. Mesas do not have impact on public policies The recent regional elections have now created some uncertainty regarding the future role and and procedures\. source of authority for the Mesas de Concertación\. C\. Transparency in Procurement and Financial Administration Improving transparency A policy guide has been issued for the implementation of an electronic government and efficiency in procurement system to raise transparency and efficiency in public contracting\. A Commission procurement procedures, was nominated in October 2002 to develop the system\. The website under the administration and strengthening the of CONSUCODE for listing contracts on offer has been developed\. The system for effecting government's capacity for small purchases is reported to be ready to open bidding procedures on a pilot basis\. fighting corruption\. The CGR and CONSUCODE signed an interagency agreement for the implementation of control and supervision of procurement and contracting procedures in December 2001\. The publication of control and supervision norms obligatory for all public agencies is pending\. Improving financial The National Control Law No\. 27785 was approved on July 22, 2002\. The Law ensures administration\. CGR's functional autonomy\. The CGR is exercising its ex-post control according to its legal mandate over the finances of the Ministry of Defense and other security services, and a special audit has been carried out\. The SIAF-Gl has been installed in 21 provincial municipalities\. With support from IDB and the CAF, the objective now is to implement the system in 194 provincial and 1,826 district-level municipalities\. MEF is producing and disseminating a semiannual report on progress under the Multi-annual Macroeconomic Framework and a quarterly report on budget execution\. Both reports are posted on MEF's Economic Transparency website\. 1\. The ordering of issues follows that of the Policy Matrix for PSRL II, presented as Annex 2 of the President's Report\. 2\. All references to approved budget refer to the Presupuesto Inicial de Apertura, while all references to executed budget refers to the Presupuesto Devengado\. Average inflation in 2001 was 1\.5 percent\. 3\. Includes expenditures financed by ordinary budget revenues and external resources, in accordance with the agreed targets\. If other sources of finance are also included--i\.e\., revenues from fees, etc\. collected by the projects themselves--expenditures for the 6 PSPs totaled S/ 2,576 million, well above the total target\. This inclusion, however, affects principally the programs for salud and asistencia social and does not offset the substantial shortfalls in the 3 education programs\. 4\. Only includes food and subsidies\. Business promotion, infrastructure and equipment support are excluded\. 5\. In the event of 3 percent revenue decline, the executed budget could be reduced by up to 10 percent under the formula agreed\. 6\. Access to rural water and sanitation services is being financed under other Bank and other donor operations\. 7\. Ley de Nombramiento de Maestros (Law No\. 27491 and Supreme Decree No\. 065-2001-ED; 071-2001-ED; 002-2002-ED)\. - 31 - Annex 2\. Project Costs and Financing Not applicable\. - 32 - Annex 3\. Economic Costs and Benefits Not applicable\. - 33 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation HQ/RM 13 SM, TM, SS, E, CSS, FS, PA, C S S September/2001 HQ February/2002 3 SS S S Appraisal/Negotiation HQ/RM 12 TM, SS, E, CSS, FS, PS, C S S April/2002 Supervision 2002 ICR HQ/RM 2 C S S March/2003 (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 47 269,364\.48 Appraisal/Negotiation 14\.84 85,160\.90 Supervision ICR 9\.71 55,577\.04 Total 71\.55 410,102\.42 - 34 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 35 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 36 - Annex 7\. List of Supporting Documents 1\. Ministerio de Economía y Finanzas: "Transparencia Económica", Manual del Usuario 2\. Ministerio de Educación: "Plan Estratégico Sectorial Multianual 2002-2006" Junio 2001\. 3\. Ministerio de Salud "Plan Estratégico Multianual de Salud 2002-2006" Lima\. 4\. Ministerio de Salud, Seguro Integral de Salud\. Estad´siticas a Diciembre del 2002, January 15, 2003\. 5\. Presidencia de la República: "Bases para la Estrategia de Superación de la Pobreza y Oportunidades Económicas para los Pobres ", Anexo Decreto Supremo No 002-2003-PCM, January 4, 2003 6\. World Bank, Peru: "Proposed Programmatic Social Reform Loan", President's Report, Report No P 7447-PE, April 2, 2001\. 7\. World Bank, Peru: "Proposed Programmatic Social Reform Loan II", Presidents Report, Report No\. P7514-PE, August 19, 2002\. 8\. World Bank, "Poverty and Social Developments in Peru, 1994-1997", A World Bank Country Study\. 9\. World Bank "Peruvian Education at a Crossroads", A world Bank Country Study\. 10\. World Bank "Peru Improving Health Care for the Poor" Report No 18549-PE, May 28, 1999\. 11\. World Bank "Implementation Completion Report" for PSRL I, Report No 23755, March 26, 2002\. 12\. World Bank "Peru Country Assistance Evaluation", Report No 24898-PE, September 25, 2002\. 13\. World Bank "Peru Restoring Fiscal Discipline for Poverty Reduction: A Public Expenditure Review" Report No 24286-PE October 24, 2002\. - 37 - - 38 -	REVIEW
P100789	INDIA Andhra Pradesh and Telangana State Community-Based Tank Management Project Report No\. 144222 DECEMBER 11, 2019 Â© 2019 International Bank for Reconstruction This work is a product of the staff of The World RIGHTS AND PERMISSIONS and Development / The World Bank Bank with external contributions\. The findings, The material in this work is subject to copyright\. 1818 H Street NW interpretations, and conclusions expressed in Because The World Bank encourages Washington DC 20433 this work do not necessarily reflect the views of dissemination of its knowledge, this work may be Telephone: 202-473-1000 The World Bank, its Board of Executive reproduced, in whole or in part, for Internet: www\.worldbank\.org Directors, or the governments they represent\. noncommercial purposes as long as full attribution to this work is given\. AttributionâPlease cite the work as follows: The World Bank does not guarantee the World Bank\. 2019\. IndiaâAndhra Pradesh and accuracy of the data included in this work\. The Any queries on rights and licenses, including Telangana State Community-Based Tank boundaries, colors, denominations, and other subsidiary rights, should be addressed to Management Project\. Independent Evaluation information shown on any map in this work do World Bank Publications, The World Bank Group, Project Performance Assessment Report not imply any judgment on the part of The Group, 1818 H Street NW, Washington, DC 144222\. Washington, DC: World Bank\. World Bank concerning the legal status of any 20433, USA; fax: 202-522-2625; e-mail: territory or the endorsement or acceptance of pubrights@worldbank\.org\. such boundaries\. Report No: 144222 PROJECT PERFORMANCE ASSESSMENT REPORT INDIA ANDHRA PRADESH AND TELANGANA STATE COMMUNITY-BASED TANK MANAGEMENT PROJECT (IBRD-48570, IDA-42910) December 11, 2019 Financial, Private Sector, and Sustainable Development Independent Evaluation Group Currency Equivalents (annual averages) Currency Unit = Indian Rupee (Re) 2007 $1\.00 Re 41\.2 2009 $1\.00 Re 46\.4 2011 $1\.00 Re 44\.5 2013 $1\.00 Re 59\.5 2015 $1\.00 Re 63\.6 Abbreviations APTCBTMP Andhra Pradesh and Telangana State Community-Based Tank Management Project IBRD International Bank for Reconstruction and Development IDA International Development Association IEG Independent Evaluation Group M&E monitoring and evaluations MLE Monitoring, Learning, and Evaluation O&M Operations and Maintenance PMU Project Management Unit WRD Water Resources Department WUA Water Usersâ Association All dollar amounts are U\.S\. dollars unless otherwise indicated\. Fiscal Year Government: July 1 â June 30 Director-General, Independent Evaluation Ms\. Alison Evans Director, Financial, Private Sector, and Sustainable Development Mr\. JosÃ© Carbajo MartÃnez Task Manager Mr\. Ramachandra Jammi ii Contents Preface \.vii Summary \. ix 1\. Background and Context \.1 World Bank Support for the Irrigation Sector \.2 2\. Relevance of the Objectives and Design\.3 Objectives \.3 Relevance of the Objectives \.3 Project Design \.4 Relevance of Project Design \.6 Monitoring and Evaluation \. 7 3\. Implementation \.9 4\. Achievement of the Objectives \. 10 Objective 1: Improve Agricultural Productivity \.11 Outputs at Project Completion \. 11 Outcome at Project Completion \. 12 IEG Findings \. 13 Objective 2: Improve the Management of Tank Systems\. 16 Outputs at Project Completion \. 16 Outcome at Project Completion \. 16 Conclusions on Efficacy\. 17 5\. Efficiency \. 18 6\. Ratings \. 19 Outcome \. 19 Risk to Development Outcome \. 20 Bank Performance \. 23 Quality at Entry \. 23 Quality of Supervision \. 23 Borrower Performance \. 24 Government Performance\. 24 Implementing Agency Performance\. 24 iii 7\. Lessons\. 25 Bibliography\. 26 Boxes Box 2\.1\. Institutional Arrangements for Monitoring, Learning, and Evaluation or Management Information Systems \.8 Tables Table 1\.1\. World Bank Irrigation Sector Project in Andhra Pradesh and Telangana States \.2 Table 4\.1\. Irrigation Tanks Visited \.11 Appendixes Appendix A\. Basic Data Sheet \. 27 Appendix B\. Compliance with Environmental and Social Safeguard Policies \. 28 Appendix C\. Site Visits and Observations\. 30 Appendix D\. Photos from Irrigation Tank Site Visits \. 37 Appendix E\. Self-Rating Card for Water Users Associations \. 41 Appendix F\. List of Persons Met\. 44 iv Principal Ratings Indicator ICR ICR Review PPAR Outcome Satisfactory Satisfactory Satisfactory Risk to development Modest Modest Substantial outcome Bank performance Satisfactory Moderately satisfactory Moderately satisfactory Borrower performance Moderately satisfactory Moderately satisfactory Moderately satisfactory Note: The Implementation Completion and Results Report (ICR) is a self-evaluation by the responsible Global Practice\. The ICR Review is an inâtermediate Independent Evaluation Group product that seeks to independently validate the findings of the ICR\. PPAR = Project Performance Assessment Report\. Key Staff Responsible Division Chief or Sector Project Task Manager or Leader Director Country Director Appraisal Deepak Ahluwalia Gajanand Pathmanathan Isabel M\. Guerrero Completion Ranjan Samantaray Meike van Ginneken Junaid Kamal Ahmad v IEG Mission: Improving World Bank Group development results through excellence in independent evaluation\. About This Report The Independent Evaluation Group (IEG) assesses the programs and activities of the World Bank for two purposes: first, to ensure the integrity of the World Bankâs self-evaluation process and to verify that the World Bankâs work is producing the expected results, and second, to help develop improved directions, policies, and procedures through the dissemination of lessons drawn from experience\. As part of this work, IEG annually assesses 20â25 percent of the World Bankâs lending operations through fieldwork\. In selecting operations for assessment, preference is given to those that are innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which Executive Directors or World Bank management have requested assessments; and those that are likely to generate important lessons\. To prepare a Project Performance Assessment Report (PPAR), IEG staff examine project files and other documents, visit the borrowing country to discuss the operation with the government, and other in-country stakeholders, interview World Bank staff and other donor agency staff both at headquarters and in local offices as appropriate, and apply other evaluative methods as needed\. Each PPAR is subject to technical peer review, internal IEG panel review, and management approval\. Once cleared internally, the PPAR is commented on by the responsible World Bank Country Management Unit\. The PPAR is also sent to the borrower for review\. IEG incorporates both World Bank and borrower comments as appropriate, and the borrowersâ comments are attached to the document that is sent to the World Bankâs Board of Executive Directors\. After an assessment report has been sent to the Board, it is disclosed to the public\. About the IEG Rating System for Public Sector Evaluations IEGâs use of multiple evaluation methods offers both rigor and a necessary level of flexibility to adapt to lending instrument, project design, or sectoral approach\. IEG evaluators all apply the same basic method to arrive at their project ratings\. Following is the definition and rating scale used for each evaluation criterion (additional information is available on the IEG website: http://ieg\.worldbankgroup\.org)\. Outcome: The extent to which the operationâs major relevant objectives were achieved, or are expected to be achieved, efficiently\. The rating has three dimensions: relevance, efficacy, and efficiency\. Relevance includes relevance of objectives and relevance of design\. Relevance of objectives is the extent to which the projectâs objectives are consistent with the countryâs current development priorities and with current World Bank country and sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, country assistance strategies, sector strategy papers, and operational policies)\. Relevance of design is the extent to which the projectâs design is consistent with the stated objectives\. Efficacy is the extent to which the projectâs objectives were achieved, or are expected to be achieved, taking into account their relative importance\. Efficiency is the extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of capital and benefits at least cost compared with alternatives\. The efficiency dimension is not applied to development policy operations, which provide general budget support\. Possible ratings for outcome: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, highly unsatisfactory\. Risk to development outcome: The risk, at the time of evaluation, that development outcomes (or expected outcomes) will not be maintained (or realized)\. Possible ratings for risk to development outcome: high, significant, moderate, negligible to low, and not evaluable\. Bank performance: The extent to which services provided by the World Bank ensured quality at entry of the operation and supported effective implementation through appropriate supervision (including ensuring adequate transition arrangements for regular operation of supported activities after loan or credit closing, toward the achievement of development outcomes)\. The rating has two dimensions: quality at entry and quality of supervision\. Possible ratings for Bank performance: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, and highly unsatisfactory\. Borrower performance: The extent to which the borrower (including the government and implementing agency or agencies) ensured quality of preparation and implementation, and complied with covenants and agreements, toward the achievement of development outcomes\. The rating has two dimensions: government performance and implementing agency(ies) performance\. Possible ratings for borrower performance: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory, unsatisfactory, and highly unsatisfactory\. vi Preface This is a Project Performance Assessment Report (PPAR) prepared by the Independent Evaluation Group (IEG) of the World Bank Group for the Andhra Pradesh and Telangana State Community-Based Tank Management Project in India (P100789)\. The project was approved on April 19, 2007, for $217\.8 million, supported by a World Bank loan and International Development Association credit, each of $94\.5 million\. The project cost at completion was $175\.8 million, nearly 20 percent lower than envisaged, of which $71\.6 million was financed by the International Bank for Reconstruction and Development and $86\.6 million by the International Development Association\. The project closed on July 31, 2016, three years and eight months later than originally scheduled\. This project was selected for an assessment because its design goes significantly beyond typical irrigation projects that focus mainly on traditional infrastructure rehabilitation\. It addresses institutional strengthening for water user associations; support services for agriculture, livestock, and fisheries; and participatory groundwater management, all geared toward improving agricultural productivity and rural livelihoods\. Lessons from this project provided input to IEGâs evaluation on sustainable irrigation service delivery\. The primary target audiences for this project assessment are the Water and Agriculture Global Practices of the World Bank\. This assessment is based on a review of relevant documentation, interviews with World Bank staff at headquarters and in country offices, and the findings of an IEG mission to Telangana February 18â22, 2019, and to Andhra Pradesh from February 25 to March 1, 2019\. Project performance was discussed in interviews with officials of the state government, Project Management Units, and staff of the World Bankâs country office\. IEG visited six villages in Telangana and five villages in Andhra Pradesh with the Project Management Unit and district-level officials and conducted discussions in each location with village officials, farmers, and fishers\. Discussions were followed by a general assembly of villagers with large representation of women and tail-end (far downstream) farmers\. Appendix G lists the persons met during the mission\. The mission expresses deep appreciation to Project Management Unit officials in both states for their meticulous preparation and support for the field visits and to the project directors and district officials, for liberally sparing time for insightful discussions on the project experience\. vii As per IEG procedure, a copy of the draft PPAR was sent to government officials and implementing agencies for their review and comments, but no comments were received\. viii Summary This Project Performance Assessment Report assesses the development effectiveness of Indiaâs Andhra Pradesh and Telangana State Community-Based Tank Management Project, which was approved in 2007 and closed in 2016\. The development objectives of the project were to (i) improve agricultural productivity with the assistance of selected tank-based producers; and (ii) improve the management of tank systems with the assistance of selected water user associations\. States and Sector Context At project appraisal in 2007, Andhra Pradesh state (which was bifurcated into Andhra Pradesh and Telangana in 2014) faced slowing growth in its agriculture sector\. Consecutive droughts and inadequate investments in irrigation were key factors explaining poor agricultural performance\. Among irrigation infrastructure, tanks (artificial water reservoirs fed by rainfall, streams or rivers) have historically played an important role in both states\. However, 1990 to 2005 saw a collective, steady decline in tank-based irrigationâfrom 1\.0 million hectares (24 percent of the irrigated area) to 0\.5 million hectares (12 percent of the irrigated area)âdue to lack of maintenance and an increase in the use of groundwater for irrigation (which further affected water levels in the tanks)\. The rehabilitation and modernization of tanks became the priority to improve levels of water storage and, thereby, the adequacy and reliability of irrigation water supply\. Community-based organizations, mainly water user associations (WUAs), played a crucial role in the basic maintenance of irrigation facilities and the efficient use and equitable sharing of water\. However, the challenges of ensuring the financial viability and technical capacity of WUAs or similar organizations required ongoing support from the government\. Performance and Ratings Relevance of project objectives is rated high\. At appraisal, the government of Andhra Pradesh placed emphasis on decentralized irrigation development with beneficiary participation\. The World Bank Groupâs India Country Assistance and Partnership Strategies covering FY05â17 aimed at increasing the efficiency of irrigation systems together with a community empowerment approach, to improve agricultural productivity and rural livelihoods\. At completion, the project objectives continued to be relevant to the governments of Andhra Pradesh and Telangana for boosting agricultural productivity and management of tank irrigation systems\. ix Relevance of project design is rated substantial\. To achieve the stated objectives, the project appropriately combined the modernization of irrigation structures with institutional strengthening of WUAs for tank management and agricultural livelihood improvement\. The project design could have benefited from a stronger sustainable agricultural production and marketing component and from a value chain analysis to complement efforts for crop diversification\. Greater attention could have been given to mechanisms and incentives for ensuring better coordination across multiple government departments, including agriculture, horticulture, fisheries, and animal husbandry\. Objective 1, to improve agricultural productivity with the assistance of selected tank- based producers, is rated substantial on efficacy\. At completion, agricultural and water productivity exceeded project targets significantly, whereas crop diversification toward high-value and water-efficient activities was somewhat lower than expected\. Sale values for rice paddy, groundnuts, and maize improved to some extent\. All tank-based fishing communities adopted improved fish production and harvesting techniques, leading to a steep increase in fish productivity\. The impact assessment study carried out at the end of the project largely attributes these results to the project meeting its targets for tank rehabilitation: 975 tanks in Andhra Pradesh and 1,182 tanks in Telangana irrigated 122,116 and 131,214 hectares, respectively, and covered 605,502 beneficiaries\. The planned diverse capacity building activities for 42,000 farmers also contributed to the positive results\. Independent Evaluation Group (IEG) findings\. IEG triangulated observations from site visits, feedback from project and government officials, beneficiaries, various data sources, and research studies\. The IEG mission visited a purposefully selected sample of five project sites and tanks in Andhra Pradesh and six in Telangana to assess the extent to which results from the project are being sustained\. The rehabilitated tank structures (bunds or embankments, check dams, guide walls, irrigation channels, sluices and shutters) were mostly in good operating condition\. Despite both states receiving less than normal rainfall in the last two years, most of the tanks reported availability of water in February, at the end of the rabi (winter crop) growing season and three to four months before the onset of the monsoon\. Groundwater has been recharged in most sites, with most tanks reporting higher water levels, and previously dry wells yielding water\. In some cases, tail-end (far downstream) farmers reported receiving larger quantities of water than before the project\. Feedback from beneficiaries and officials supports an overall positive trend toward crop diversification and significantly increased productivity in several instances\. Fishers at 8 of the 11 tanks visited by the IEG mission reported longer fishing seasonsâfrom greater availability of waterâand increased yields\. x The IEG mission was unable to get any systematic update about the commodity interest groups\. Informal feedback from officials and beneficiaries suggests that several of them may not be functioning at the level that they had reached at project completion\. Some farmer and fisher beneficiaries in the drought-prone Mehboobnagar district in Telangana reported that due to increases in production and income from agricultural activities attributable to the project, there is now less need for them to seek seasonal employment in urban areas\. Objective 2, improve the management of tank systems with the assistance of selected WUAs, is rated substantial on efficacy\. During the project, WUAs were provided with training in administrative and accounting functions and given responsibility for maintenance and allocation of water\. To that effect, the WUAs were assisted by members of support organizations (nongovernmental organizations engaged based on demonstrated relevant expertise)\. By project completion, 1,791 tanks were handed to WUAs for operation and maintenance\. Most WUAs reported holding general body meetings (about all members) regularly and maintaining appropriate cash books\. WUAs co-opted members from the public and included fishers and groundwater users\. The project introduced a self-rating tool for WUAs covering four work areas: participation and dialogue; performance; self-management; and innovations and technology adoption\. At project completion, the distribution of WUA performance based on this tool was as follows: 28 percent excellent; 56 percent good; 14 percent average; 2 percent poor\. But this exercise does not appear to have been continued after project completion\. Since project completion, WUAs in their original form have been discontinued in Telangana state, and plans are under way to replace them with institutions that will be composed of accountable bodies consisting of nominated rather than elected members\. In Andhra Pradesh, however, WUAs are expected to be strengthened in their current form including through the successor Andhra Pradesh Integrated Irrigation and Agricultural Transformation Project (P160463)\. IEG findings\. The IEG mission visited the WUA office building in the Kallepalli and Chinnapatha tank areas in Andhra Pradesh\. At these sites, the WUA had a dedicated building with an office and facility for meetings\. WUA members at both sites maintained records of meetings conducted regularly, and accounts for WUA fees and expenses\. Both WUAs displayed self-rating cards introduced under the project\. The increased availability of water from the project was not leveraged by any significant measures for improving water use efficiency, apart from the construction/ rehabilitation xi of field channels\. The farmers appear to continue with the traditional practice of flood irrigation, which is especially wasteful in drought-prone areas\. Efficiency is rated substantial with an estimated economic rate of return of 27\.5 percent at project completion, higher than the 23\.6 percent estimated at appraisal\. Three factors contributed to the increased benefits: First, an additional 63,740 hectares was brought into full irrigation status\. Second, improved water availability; and third, the adoption of improved technologies, such as hybrid seeds and better crop varieties and integrated nutrient management\. Administrative and implementation efficiency was negatively impacted by political disturbances between 2012 and 2014\. Overall project development outcome is rated satisfactory based on high relevance of objectives, and substantial ratings for relevance of project design, efficacy, and efficiency\. Risk to development outcome is rated substantial\. The main risks relate to the maintenance of rehabilitated infrastructure, which is subject to the continued improvement of the financial and technical capacity of WUAs and broader support from minor irrigation departments; continued support from multiple government agencies dealing with irrigation, agriculture, and market linkages; and the farmersâ ability to adopt water-efficient and sustainable agricultural practices and market diversified produce effectively\. Bank performance, based on quality at entry and supervision, is rated moderately satisfactory\. At appraisal, the World Bank identified several risks relating to adoption of new practices by farmers, overexploitation of groundwater, variability in rainfall, delays in implementation and coordination among government agencies, and water charge collection\. The risk of inadequate water charge collection and slow transfer of Operations and Maintenance funds to WUAs materialized during project implementation, and multisectoral coordination among the implementing agencies was not adequately addressed\. On balance, the World Bankâs quality at entry is rated moderately satisfactory\. Throughout project implementation, the World Bank maintained a productive relationship with the client despite political disruption that ultimately resulted in the separation of Telangana state from Andhra Pradesh\. The quality of supervision is rated satisfactory\. Borrower performance is rated moderately satisfactory based on government and implementing agency performance\. At project preparation, government of Andhra Pradesh demonstrated leadership through decentralizing water resources development at the community or farm level\. The project activities got off to a slow start and were gradually picking up pace when events leading to the stateâs bifurcation posed fresh xii challenges\. After state bifurcation, both states provided autonomy to their PMUs to effectively manage project activities\. Overall, implementing agency performance is rated moderately satisfactory\. Lessons The potential economic benefits from improved irrigation infrastructure cannot be adequately realized by beneficiaries without the coordinated and ongoing support of multiple government agencies and research extension services in agriculture\. The improved availability of water from the project could have been leveraged to a greater extent by providing coordinated and ongoing support for improved water management and sustainable agricultural practices, crop diversification to reduce risks and expand income sources, and developing better market linkages\. This could have been attempted through this project or parallel projects as had been done in other states in the country\. Continued support to WUAs in terms of resources and social intermediation, such as through nongovernmental organizations, is key to enhancing their capacity for improved water management in drought-prone areas\. Support provided under this project enabled WUAs to improve their performance on administrative functions but less so on financial and technical aspects\. A lack of stable and predictable technical and financial support after project completion has limited the efficacy of WUAs\. Although WUAs can be expected to take care of minor repairs and maintenance and clearing of vegetation, they need access to services and technical support for repairs of any significance and for mainstreaming sustainable agriculture and water management practices\. Benefits from increased water availability can be further increased if cropping decisions by smallholder farmers in drought-prone areas are informed by water budgeting and collective governance principles for sustainable use\. This project undertook significant initiatives to raise awareness and provide technical support to beneficiaries for making informed cropping decisions and applying water budgeting principles\. However, to mainstream these practices and overcome social and political barriers for their adoption, appropriate policies and incentives need to be instituted, as suggested by experience from similar projects in other states in India\. Such efforts can be usefully supported by introducing increasingly affordable measurement techniques using sensors and information and communication technology tools, making it increasingly feasible and affordable to reliably measure water conveyance and use\. JosÃ© Carbajo MartÃnez Director, Financial, Private Sector, and Sustainable Development xiii 1\. Background and Context 1\.1 At project appraisal in 2007, the state of Andhra Pradesh (which was bifurcated into the states of Andhra Pradesh and Telangana in 2014) faced slowing growth in its agriculture sector\. Between 1999 and 2006, agriculture grew at 2\.5 percent per year, with almost all growth coming from the livestock and fisheries subsectors; however, the crop subsector, which accounted for about 60 percent of state domestic product from agriculture, stagnated\. Consecutive droughts and inadequate investments in irrigation were key factors for poor agricultural performance\. 1\.2 Among irrigation infrastructure, tanks (artificial water reservoirs fed by rainfall, streams, or rivers) have historically played an important role in the state\. Farmers who do not have access to canal irrigation rely on surface irrigation from tanks for cultivation in addition to rainfall during the monsoon season and groundwater if they own a borewell\. The state had the largest number of tanks (approximately 74,000) and the largest area irrigated by tanks in India\. However, from 1999 to 2005, the state saw a steady decline in tank-based irrigation, from 1\.0 million hectares (24 percent of the irrigated area) to 0\.5 million hectares (12 percent of the irrigated area)âdue to a lack of maintenance and an increase in the use of groundwater for irrigation\. Most tanks were performing well below capacity with the percentage of actual area irrigated to potential created varying between 35 and 55 percent depending on rainfall\. 1\.3 Tank rehabilitation and modernization, to improve levels of storage and, therefore, adequacy and reliability of water supply for a greater period of the year, was therefore a priority\. Improvements to tanks can also potentially reduce overuse of groundwater and improve climate adaptation and water management and contribute to making agricultural activities more sustainable\. 1\.4 Evidence from a similar World Bank project (the Tamil Nadu Irrigated Agriculture Modernization and Water-Bodies Restoration and Management Project [P090768]; 2007â15) that was recently assessed by the Independent Evaluation Group (IEG), shows that when accompanied by well-rounded technical, financial and institutional support, tank rehabilitation can improve economic benefits from crop diversification, improved water use efficiency, and agricultural productivity (World Bank 2019a)\. This involves coordinated support from multiple government departments (agriculture, agricultural marketing, fisheries, animal husbandry, and water resource management) and connections with the private sector for market linkages and selected inputs\. 1\.5 The role of community-based organizations, mainly water user associations (WUAs), was crucial for basic maintenance of irrigation facilities and for the efficient use 1 and equitable sharing of available water\. However, ensuring the financial viability and technical capacity of WUAs or similar organizations is a challenge that requires ongoing support from the government\. 1\.6 At project appraisal, the World Bank had already been engaged in financing large irrigation construction projects in the state for a few decades\. Given the World Bankâs familiarity and experience with the stateâs irrigation sector, as well as relevant support to other states in the country, the government of Andhra Pradesh approached the World Bank for support in its new emphasis and major effort to upgrade tank-based irrigation infrastructure\. World Bank Support for the Irrigation Sector 1\.7 The Andhra Pradesh and Telangana Community-Based Tank Management Project (APTCBTMP; which is being assessed in this report) is succeeded by the Andhra Pradesh Integrated Irrigation and Agricultural Transformation Project (P160463) in the new state of Andhra Pradesh\. The new project builds on APTCBTMP and was approved in 2018 for a planned duration of seven years\. The development objective of the Andhra Pradesh Integrated Irrigation and Agriculture Transformation Project is to enhance agricultural productivity, profitability, and the climate resilience of smallholder farmers in selected districts\. The projectâs activities cover the rehabilitation and modernization of additional water tanks and small-scale community-based irrigation systems and capacity building for WUAs\. At the time of the IEG mission, no follow-up project was planned for Telangana state\. Table 1\.1\. World Bank Irrigation Sector Project in Andhra Pradesh and Telangana States Duration World Bank Commitment Project Title and Identification Number (fiscal year) ($, millions) Andhra Pradesh and Telangana State Community- 2007â17 174\.0 Based Tank Management Project (P100786) Water Sector Improvement Project (P100954) 2010â19 450\.6 Andhra Pradesh Integrated Irrigation and 2018â25 172\.2 Agricultural Transformation Project (P160463) 1\.8 The Water Sector Improvement Project (P100954; 2010â19), which addressed canal irrigation, was implemented largely in parallel with the APTCBTMP\. Its objectives were to improve irrigation service delivery on a sustainable basis to increase productivity of irrigated agriculture in the Nagarjunasagar irrigation canal system and to strengthen Andhra Pradeshâs institutional capacity for multisectoral planning, development, and management of its water resources\. The project also provided training and capacity building for members of WUAs\. The development outcome of this project was rated moderately satisfactory (World Bank 2019b)\. At the time of project 2 preparation for APTCBTMP, the option of combining the Water Sector Improvement Projectâs objectives into one project was considered but not pursued because of potential complexity of project design and institutional arrangements\. The projects were implemented by different World Bank teams through separate government departmental and Project Management Units (PMUs)\. 2\. Relevance of the Objectives and Design Objectives 2\.1 The project objectives were to (i) improve agricultural productivity with the assistance of selected tank-based producers; and (ii) improve the management of tank systems with the assistance of selected WUAs (World Bank 2007)\. 2\.2 The project covered the undivided state of Andhra Pradesh until it was bifurcated into two statesâAndhra Pradesh and Telanganaâat the end of 2014\. The project subsequently covered both the states until closure\. Relevance of the Objectives 2\.3 At appraisal, project objectives were highly relevant to the government of Andhra Pradeshâs priorities and its emphasis on decentralized irrigation development in the state\. By 2006â07, the state had allocated 84 percent of its irrigation budget for capital improvements, up from an average of 36 percent between 2001â02 and 2003â04\. Also, in 2005, the government of India initiated the Bharat Nirman program, which sought to increase irrigated area in the country by 10 million hectares\. As part of this program, the government of India included the restoration and renovation of tanks as a priority task for which a pilot scheme was launched in several states, including Andhra Pradesh\. The APTCBTMPâs objectives were also in line with the World Bank Groupâs India Country Assistance Strategy for FY05â08, which aimed to increase the efficiency of irrigation systems together with a community empowerment approach, to improve productivity of irrigation water and rural livelihoods\. 2\.4 At project completion, the project objectives continued to be highly relevant to the priorities of the governments of the new states of Andhra Pradesh and Telangana and the government of India\. This is underlined by major statewide schemes covering tank-based irrigationâNeeru Chettu in Andhra Pradesh and Mission Kakatiya in Telanganaâwhich commenced around the time this project was reaching completion\. These schemes are discussed in some detail in the Risk to Development Outcome section in chapter 6\. The objectives are in line with the government of Indiaâs 2012 National Water Policy to strengthen irrigated water resource management and increase 3 agricultural productivity\. The World Bank Groupâs Country Partnership Strategy for India (2013â17) highlighted the urgency of boosting Indiaâs agricultural productivity in the face of ongoing global food security concerns, pronounced food price volatility, and concerns about climate change\. 2\.5 The relevance of project objectives is rated high\. Project Design 2\.6 The project included three components: â¢ Institutional strengthening (appraisal cost: $16\.4 million; actual cost: $12\.85 million)\. This component financed capacity building, training, and extension activities aimed at enabling community-based institutionsâWUAs, fisheries cooperative societies, and farmer interest groupsâto assume greater responsibility for tank system management and for improvement of tank-based agricultural livelihoods\. â¢ Irrigation systems improvements (appraisal cost: $150\.6 million; actual cost: $144\.46 million)\. This component financed infrastructure and related activities aimed at enhancing the efficiency of water use in tank areas selected under the project\. It included two subcomponents: o Tank systems improvements: (i) improving the physical and operational performance of selected tank systems (which includes feeder channels above the tank reservoir, the tank itself, and the irrigation channels in the command area) through a range of interventions identified and executed in partnership with tank WUAs; (ii) securing the safety of the tank structure; and (iii) improving on-farm water management and water use efficiency\. This subcomponent would support the physical rehabilitation and modernization of tank systems with cultivated command area of between 40 and 2,000 hectares\. About 3,000 tanks on about 250,000 hectares, spread across 21 districts of the state, would be rehabilitated under the project\. o Participatory groundwater management: The aim of this subcomponent was to enable groundwater users in those tank systems that were subject to groundwater stress to improve the management of their groundwater resources, and thereby enhance their agricultural productivity and livelihoods\. â¢ Agricultural livelihoods support services (appraisal cost: $25\.2 million; actual cost: $23\.44 million)\. This component financed support services to enhance tank- 4 based livelihoods by increasing production, productivity, and profitability of agriculture, horticulture, fisheries, livestock, and other significant productive activities\. It included five subcomponents: o Agriculture and horticulture: increasing production and productivity of field, horticultural, and fodder crops in tank command areas\. o Livestock: increasing the production and productivity of milk, meat, and related animal products\. o Fisheries: improving production and productivity of tank fisheries\. o Foreshore plantation: effective use of tank foreshore areas in selected locations\. o Agri-business and marketing: increasing profitability and promoting product diversification and greater market orientation of production\. 2\.7 Project cost and financing\. The project cost estimated at appraisal was $217\.80 million, to be financed by an International Bank for Reconstruction and Development (IBRD) loan and an International Development Association (IDA) credit of $94\.5 million each; the borrower contributed $28\.80 million; and WUAs contributed $7 million\. The IBRD and IDA shares were reduced to $87 million each through restructuring in 2012\. Actual project cost at completion was $202\.80 million, about 7 percent lower than the appraisal estimate of $217\.80 million\. This consisted of actual IBRD and IDA contributions of $71\.59 from IBRD, $86\.60 million from IDA, and a borrower contribution of $17\.58 million\. The contribution from WUAs was not reported\. An amount of $15 million was canceled from the original loan amount due to currency devaluation and an additional $10 million was saved through savings within the project components and due to discontinuation of the livestock and foreshore plantation subcomponents after the midterm review\. 2\.8 Dates\. The project closed on July 31, 2016, three years and seven months after the originally scheduled date of December 31, 2012\. There were four project extensions that were needed to accommodate delays in the execution of works that resulted from political disturbances in the state during implementation\. The project had four level 2 restructurings (meaning the original objectives were not revised) as follows: â¢ October 30, 2012 (amount disbursed by this date: $87\.85 million): closing date extended from December 31, 2012, to September 30, 2014, due to slow pace of implementation\. 5 â¢ February 28, 2014 (amount disbursed by this date: $127\.11 million): to approve the partial cancellation of savings resulting from the depreciation of the Indian rupee\. â¢ May 29, 2014 (amount disbursed by this date: $129\.10 million): to approve the cancellation of $7\.50 million under IBRD and extend the closing date from Sep 30, 2014, to July 31, 2016, to compensate for implementation delays due to political events leading to the stateâs bifurcation\. â¢ December 22, 2014 (amount disbursed by this date: $133\.52 million): to accommodate the bifurcation of Andhra Pradesh into the new Andhra Pradesh and Telangana states\. 2\.9 A Midterm Review was carried out on September 13, 2010, leading to the cancellation of the livestock and foreshore plantation subcomponents due to lack of interest on the part of the corresponding government departments\. One reason for this appears to be the relatively low quantum of funds allocated by the project to these activities relative to departmental budgets\. Relevance of Project Design 2\.10 The project objectives are stated clearly but do not directly address the expected impacts from the project in terms of increased incomes and improved livelihoods of the target beneficiaries, though these issues are discussed at length in the project appraisal document\. Thus, the first objective of improving agricultural productivity with the assistance of selected tank-based producers is stated in terms of an outcome\. Similarly, the second objective of improving the management of tank systems with the assistance of selected WUAs is an intermediate outcome\. 2\.11 The range of inputs, outcomes, and impacts contained in the results framework can be logically linked to the stated objectives\. The main inputs were tank rehabilitation and capacity development for WUAs\. These were accompanied by activities for enhancing tank-based livelihoods and supporting agri-business and marketing\. Collectively, these inputs would improve the management of tank systems, enhance water availability and efficiency of water use, and therefore improve agricultural production and productivity\. Because it addressed tank rehabilitation and support activities that would help farmers realize the expected benefits from increased availability of water, the project design was quite comprehensive and robust\. The project appraisal document additionally states that the resulting outcomes would be increased profitability of agriculture, horticulture, fisheries, and livestock activities\. 6 2\.12 Given that the project design necessitated the involvement of multiple government departments, including agriculture, horticulture, fisheries, and animal husbandry, greater attention should have been paid to arrangements in the field for coordination and for incentivizing cooperation among them\. 2\.13 The project design could have benefited from a stronger marketing component and value chain analysis to complement efforts for crop diversification\. 2\.14 Overall, the relevance of project design is rated substantial\. Monitoring and Evaluation 2\.15 Design\. The Project Management Unit (PMU), through its dedicated Monitoring, Learning, and Evaluation (MLE) unitâcomprising one monitoring and evaluation (M&E) expert and one data analysis and documentation expertâhad overall responsibility for planning and coordinating M&E activities\. The PMU coordinated the M&E activities of three sets of entities: (i) the implementing departments or agencies at the state and district levels; (ii) an external M&E agency engaged as consultants for the duration of the project; and (iii) beneficiaries, primarily WUAs and various project- supported farmer interest groups\. The process of participatory MLE by beneficiaries was facilitated by local support organizations, an external agency, or the PMU or district- level units\. The structure adopted by the project to organize the M&E effort, the entities involved, and their responsibilities, from the village or tank level upward to the district and state levels, is described in box 2\.1\. 2\.16 The results framework included six outcome indicators, four to assess the first objective and two to assess the second\. There were also 16 intermediate outcome or output indicators to assess activities under the different project components\. These indicators were relevant and directly linked to the project objectives and were realistic and measurable, such as increase in productivity (kilograms per tonne per hectare, cropping intensity; percentage), and WUAs in rehabilitated tank systems whose Operations and Maintenance (O&M) expenditure is as per agreed annual O&M plans (percentage)\. The M&E design also provided for a baseline survey, and two impact assessments of the project (midterm and end of project) were completed\. Most indicators included targets at output and outcome levels, and several critical indicators also included baselines (for example, cropping intensity, irrigated areas, and productivity of crops)\. 2\.17 The baseline study was conducted in the first year of the project\. The project outputs were regularly monitored, and the PMU created a database for project activities\. However, the stateâs bifurcation in 2014 disrupted M&E activities and contributed to 7 delays in maintaining continuity in an external M&E agency, as described in the Procurement section\. Box 2\.1\. Institutional Arrangements for Monitoring, Learning, and Evaluation or Management Information Systems The Project Management Unitâs Monitoring, Learning, and Evaluation (MLE) unit activities included a baseline study; regular performance tracking of inputs and outputs by concerned implementing agencies; concurrent performance monitoring (on a sample basis) by external monitoring and evaluation agency; systematic (âpanel dataâ type) analysis of project i mpacts through repeated monitoring of the same sample set of households through project lifetime; midterm and final impact evaluations; and continuous participatory MLE by beneficiary groups at various levels\. The modalities at the village or tank, district, and state levels were as follows: â¢ Village or tank level\. Responsibility for monitoring and evaluation was with the water user associations (WUAs) and the project facilitators\. The project had over 250 support organizations involved in facilitating the project across 2,155 tank locations\. â¢ District level\. The manager of the management information system coordinated with the District Project Unit staff on capacity building for MLE for support organizations, district project units and WUAs\. â¢ State level\. The 21 project districts were divided among into four groups, and each group was assigned, for the purpose of mentoring and monitoring, to a multidisciplinary team comprising Project Management Unit experts and senior staff\. Each team had an appointed group leader\. â¢ WUA performance assessment\. This was consolidated group-wise, and the team responsible for it was held accountable for the results of the zone\. Each team had four or five members from the PMU, and the number of tanks assigned to each group ranged from 465 to 651\. 2\.18 Use\. The MLE system generated data on the results framework and for annual action plans\. Management information systems reports included progress of project implementation, release of funds, stakeholder details, and results of participatory assessments, all of which were regularly posted on the project website\. These data highlighted the projectâs achievements and reflected lessons learned from implementation\. These reports benefited from both qualitative and quantitative analysis of project activities\. Feedback from PMU officials suggests that impact assessment reports were used in planning implementation by the project team and World Bank staff as well as the Implementation Completion and Results Report preparation team\. 2\.19 The projectâs M&E is rated substantial\. 8 3\. Implementation 3\.1 At the beginning of the project, the overall responsibility for project implementation and coordination was with the Command Area Development wing in the Irrigation and Command Area Development Department of Andhra Pradesh\. The project was managed through a PMU\. The PMU, headed by the state project director with the rank of Special Commissioner, Command Area Development, included a multidisciplinary team comprising 13 specialists covering the Departments of Agriculture, Horticulture, Animal Husbandry, Fisheries, Forestry, Rural Development, Groundwater, and various support organizations and private service providers, as well as an M&E expert, a management information system manager, and a geographic management information system manager\. 3\.2 Corresponding District Project Units (DPUs) were established at the district level for each district headed by District Project Directors with smaller multi-disciplinary dedicated teams\. Eventually, the animal husbandry and forestry (foreshore plantation) aspects of the project were dropped, and the related departments ceased to have a role\. After state bifurcation, a second PMU was created in the state of Telangana under the same institutional structure as the original one\. 3\.3 Environmental and social safeguards compliance\. The project was classified in category B under the World Bankâs safeguard policies\. It triggered the following Operational Policy / Bank Procedure (OP/BP): Environmental Assessment (OP/BP 4\.01), Pest Management (OP 4\.09), Physical Cultural Resources (OP/BP 4\.11), Indigenous Peoples (OP/BP 4\.10), Involuntary Resettlement (OP/BP 4\.12); and Safety of Dams (OP/BP 4\.37)\. Likely adverse environmental impacts from tank rehabilitation were identified as improper disposal of silt, loss of tree cover or biodiversity, increase in the use of pesticides and chemical fertilizers after tank rehabilitation, and potential impacts on cultural property\. The project complied with each of the triggered safeguard policies, as detailed in appendix B\. 3\.4 Fiduciary compliance\. The PMU and the district project units had satisfactory financial management capacity\. The WUAs benefited from project activities and generally demonstrated their ability to successfully run a financial management system, which included timely fund disbursement, and regular monitoring and submission of expenditure statements\. The internal audit mechanism was assessed to be weak, and therefore, the internal audit function was contracted to an independent chartered accountant firm, which carried an internal audit annually\. The audit reports were not qualified\. 9 3\.5 Procurement\. The World Bankâs specialist report on procurement assessment did not find any serious lapses in procurement of goods, works, and services\. In March 2013, the project was found to be not in compliance with the legal covenant to appoint an external M&E agency\. The first contract awarded to an external M&E agency expired in February 28, 2013, in keeping with the original closing date\. Contracting a new M&E agency was delayed due to queries raised by the Andhra Pradesh Finance Department, which took time to resolve, especially in the runup to the stateâs bifurcation\. The lapse was rectified in December 2014 when an external consultant was contracted as the new M&E agency\. 4\. Achievement of the Objectives 4\.1 This section discusses the outputs and outcomes against each of the two project objectives at project completion, and the extent to which they are likely to have been sustained in the two years since project completion\. 4\.2 IEG field visits\. The IEG mission visited five project activity locations in Andhra Pradesh and six locations in Telangana (table 4\.1; appendix C)\. The purpose of these site visits was to assess the extent to which the outcomes from the infrastructure, institutional, and capacity building activities have been sustained and built on since project completion; and to get firsthand feedback from beneficiaries and field officials in this regard\. The locations were purposively selected to cover the main subregions and varying rainfall levels\. 10 Table 4\.1\. Irrigation Tanks Visited Ayacut (Irrigated Area) State Tank Name District Mandal Village (no\. acres) Telangana Pedda Cheruvu Medak Kowdipally Kowdipally 232 Rairao Cherevu Medak Narsapur Narsapur 515 Pentoni Cherevu Mahboobnagar Bijnepalli Palem 280 Kesarasamudram Mahboobnagar Nagarkurnool Nagarkurnool 1,594 Pedda Cherevu Warangal Ghanpur Ghanpur 628 Chalimela Vagu Warangal Bhupalpalle Bhupalpalle 730 Andhra Kallepalli West Godavari Lingalapalem Asannagudem 264 Pradesh Chinnapatha East Godavari Prathipadu K\. Kothapalle 184 Appalaraju Visakhapatnam Nakkapalli Vempadu 152 Haresamudram Ananthapuramu Madakasira Haresamudram 907 Kriyasakthi Vadayar Ananthapuramu C K Palli Mustikovela 417 4\.3 At each site, the mission visited the rehabilitated irrigation tank and related structures and standing crops in the ayacut (area served by an irrigation source) and conducted walking tours with farmers, fishers, and officials from the PMU and line departments\. The mission visited WUA offices where feasible and noted the quality of facilities and records maintained by the managing members\. At each village, these walking tours were followed by a one- to two-hour meeting with a broader assembly of 60â100 village residents, including village leaders and members of the WUA, and tail- end (downstream) farmers in the irrigation system\. At least one-third of those present were women\. These assemblies served to gather the views of a cross section of farmers and other beneficiaries about how the project activities had impacted their work and livelihoods and to corroborate feedback given by the PMU and line department officials\. Objective 1: Improve Agricultural Productivity 4\.4 Efficacy of the projectâs first objective, âimprove agricultural productivity with the assistance of selected tank-based producers,â is rated substantial on efficacy\. Outputs at Project Completion 4\.5 Overall, the project was successful in achieving the planned outputs for tank rehabilitation, increasing irrigated area, and capacity building\. At completion, the project met or exceeded its targets for tank rehabilitation; irrigation coverage of tank ayacut area; capacity building, training, and demonstration activities for farmers and fishermen; and creating commodity interest groups for marketing produce\. The number of direct beneficiaries from the project reached 605,052ânearly equal to the target of 605,188\. No attributable results were reported for the livestock and foreshore plantation 11 components, which were dropped during project implementation\. Findings were as follows: â¢ Tank rehabilitation\. The project rehabilitated 2,157 minor irrigation tanks as per the revised target, with a total area of 254,957 hectares\. This comprised 975 tanks in Andhra Pradesh and 1,182 tanks in Telangana with a design ayacut of 122,116 hectares and 131,214 hectares, respectively\. The improvements covered strengthening of reservoir embankments, renovating sluice or head regulators, and improving water distribution through field channels\. The quality of construction was broadly confirmed through about 5,000 quality control tests conducted by third party external consultants\. â¢ Irrigated area\. At the end of the project, 82 percent of the command area covered by the rehabilitated tanks was irrigated compared with a target of 75 percent and a baseline of 54 percent, amounting to an additional area of 63,739 hectares being covered by irrigation\. â¢ Participatory groundwater management\. This was implemented at 314 tanks (142 tanks in Andhra Pradesh and 172 in Telangana) as planned in 13 districts with a total tank command area of 25,000 hectares, to enable groundwater users to reduce groundwater stress and improve the sustainability of management of groundwater resources\. â¢ Capacity building for crop productivity and diversification\. The project supported training for 42,000 farmers and 7,343 crop technology demonstrations on adopting improved cultivation and water management practices\. Crop and input choices met or exceeded targets\. â¢ Agri-business and marketing\. Against a target of 1,500 commodity interest groups, 1,406 were started, with 22,154 members at project completion\. The purpose of creating commodity interest groups was to increase profitability, promote crop diversification, and expand market opportunities\. Outcome at Project Completion 4\.6 The project outputs resulted in generally positive outcomes for agricultural and water productivity, though results were lower than expected for crop diversification\. The project covered physical rehabilitation and modernization of tank systems with cultivated command area between 40 and 2,000 hectares\. About 3,000 tanks with an estimated ayacut of about 250,000 hectares (approximately 6 percent of all irrigated area) spread across 21 of 46 districts in undivided Andhra Pradesh\. 12 4\.7 Based on the results of the impact assessment at project completion, agricultural and water productivity significantly exceeded targets in project areas, whereas crop diversification away from rice paddy was lower than targeted\. Sale values for rice paddy, groundnuts (peanuts), and maize improved to some extent\. All tank-based fishing communities adopted improved fish production and harvesting techniques, and fish productivity increased steeply\. These positive results can be attributed to the project meeting its targets for tank rehabilitation, diverse capacity building activities for farmers, and creation of commodity interest groups\. Findings were as follows: â¢ Agricultural and water productivity\. Rice paddy, maize, groundnuts, and vegetables saw productivity increases of 36, 72, 113, and 40 percent, respectively, against corresponding targets of 25, 30, 25, and 30 percent\. Water productivity, calculated as crop output per unit of water from groundwater irrigation, increased by 38\.9 percent to Re 83,256 per hectare-meter, exceeding the target of 10 percent\. â¢ Crop diversification\. Rice paddy still covered 75 percent of the cultivated area (against a target of lowering it to 66 percent by substituting with higher-value crops), though results were better than expected in some drought-prone areas\. â¢ Marketing produce\. The creation of commodity interest groups helped increase the final sale value of rice paddy, groundnut, and maize by 9, 8, and 17 percent, with only maize exceeding the common target of 10 percent\. â¢ Fisheries\. All the tank-based fishing communities adopted improved fish production and harvesting techniques against a target of 80 percent, and fish productivity increased steeply by 324 percent overall in 1,146 tanks\. The project also generated employment for 99,956 fishers who were landless and/or belonged to weaker sections of society\. â¢ Water use efficiency\. The increased availability of water from the project was not leveraged by any significant measures for improving water use efficiency, apart from the construction/ rehabilitation of field channels\. The farmers appear to be continuing with the traditional practice of flood irrigation, which is especially wasteful in drought-prone areas\. IEG Findings 4\.8 Findings for all the visited tanks are presented in appendix C\. 4\.9 Infrastructure\. IEG triangulated observations from site visits, feedback from project and government officials, beneficiaries, various data sources, and research studies\. In all 11 tanks visited by the IEG mission, the rehabilitated tank infrastructure 13 (bunds or embankments), check dams, guide walls, irrigation channels, sluices, and shutters) were mostly in good operating condition, as confirmed by department officials, WUA members, and other local beneficiaries\. Selected pictorial illustrations of the physical facilities and meetings are presented in appendix D\. In some cases, some additional enhancements have been made by using state and local resources, such as bund widening and desilting\. 4\.10 For instance, at Pedda Cheruvu (Kowdipally) tank in Telangana, the bund was widened, the weir reconstructed, two sluices were replaced, and a 3-kilometer canal was relined\. Since then, the tank has been desilted and a stairway leading into the lake has been built for the convenience of washermen\. At Kallepalli tank in Andhra Pradesh, the bund was expanded from 0\.5 to 1\.7 meters and is now useful for basic transport, including agricultural inputs and produce, and three sluices were replaced\. 4\.11 Fisheries\. The IEG mission saw evidence of strong fisheries activity at 8 of the 11 tanks visited\. Fishers generally reported longer fishing seasons due to greater availability of water and increased yields\. The fisheries cooperative societies at these sites also received complementary support from the state governments in the form of free fish seed or fingerlings and two-wheelers and âtemposâ (small vans) for transporting their produce to the market\.1 4\.12 Water adequacy\. Despite both the states receiving less than normal rainfall in the last two years, most of the tanks reported availability of water in February, at the end of the rabi (winter) growing season and three to four months before the onset of the monsoon\.2 Beneficiaries reported that the tank rehabilitation works have contributed greatly to increase in water availability\. Groundwater has been recharged in most sites, with most tanks reporting higher water levels, and previously dry wells yielding water\. In some cases, tail-end farmers reported receiving larger quantities of water than before the project\. 4\.13 Crop diversification, intensification, and agricultural productivity\. The IEG mission was not able to obtain systematic updated information on agricultural productivity specific to the project areas since project completion\. This is because after project completion there were no resources or incentive for continuing M&E that was focused on the project sites\. Also, the separation of Telangana state from Andhra 1 When they have developed to the point where they can feed themselves, the fish are called fry\. When, in addition, they have developed scales and working fins, the transition to a juvenile fish is complete and it is called a fingerling\. Fingerlings are typically about the size of fingers\. 2The kharif cropping season is from JulyâOctober during the south-west monsoon and the rabi cropping season is from OctoberâMarch (winter)\. 14 Pradesh in 2014 affected the location of staff attached to the project and any possibility for continued data collection in terms of project interventions\. However, anecdotal information from departmental staff and beneficiaries supports an overall trend toward crop diversification and, in some instances, significantly increased productivity\. For example, at the Chalimela Vagu tank area in Telangana, even one crop was difficult to grow before the project, but now two crops are feasible, and there has been an increase in productivity of rice: 20â25 bags per acre during the kharif season and 40 bags per acre during the rabi season, representing an overall 20â25 percent increase in yield\. The system of rice intensification was partially adopted in this area, resulting in a 40 percent increase in yield\. In the Kriyasakthi Vadayar tank area in Andhra Pradesh, drip irrigation has been taken up to some extent for horticulture (bananas, other fruit, and hybrid vegetables), which also takes advantage of government subsidies)\. 4\.14 Water use efficiency\. Though the project has been able to ensure water for irrigation in the command area, no measures were put in place for improving water use efficiency, apart from the construction or rehabilitation of field channels\. The farmers appear to be continuing with the traditional practice of flood irrigation, which is especially wasteful in drought-prone areas\. The IEG mission saw evidence of sprinkler and drip systems, and ârain gunsâ3 in and around Ananthapuram district, but there is little or no such use in the project sites visited by the mission\. Also, the project did not strategically promote such methods\. In some of the project sites in Andhra Pradesh, project officials showed the use of piezometers for monitoring groundwater level and reported that local community-level village cadres are providing support to the owners of wells to understand the water availability, discharge rate, and recharge rate at regular intervals\. But this practice does not appear to be widespread, nor does it appear to be linked to decision making for water allocation and use\. 4\.15 Agricultural marketing\. The IEG mission was not able to get any systematic update of the commodity interest groups\. Informal feedback from officials and beneficiaries suggests that several of them may not be functioning at the level that they had reached by project completion\. 4\.16 Other benefits\. Tank rehabilitation has improved the availability of drinking water, livestock, and in some places, washermen (traditional laundrymen)\. In most of the sites, beneficiaries reported improved availability of drinking water in the command area and in nearby villages\. This has been made possible by both enhanced recharge of groundwater and lifting water from the tank influence area and by digging new shallow tube-wells in the tank submergence area\. Some livestock farmers reported that they do 3 A rain gun is a high-pressure, high-volume, large-diameter sprinkler irrigation system\. 15 not have to go farther afield for grazing or providing water to their animals\. Washermen have access to water for a longer period of the year than before\. Some farmer and fisher beneficiaries in the drought-prone Mehboobnagar district in Telangana reported that due to the increase in agricultural activities attributable to the project, there is now less need for them to seek seasonal employment in urban areas\. They stated that due to the project, they now have greater scope for work and their incomes have increased\. Objective 2: Improve the Management of Tank Systems 4\.17 Eficacy of the projectâs second objective, âimprove the management of tank systems with the assistance of selected WUAs,â is rated substantial on efficacy\. Outputs at Project Completion 4\.18 WUAs\. During the project, WUAs were provided with training in administrative and accounting functions and with responsibilities for maintenance and allocation of water\. Additionally, the WUAs were entrusted with responsibilities relating to rehabilitation activities\. 4\.19 The project introduced a system using OK cards, which were inspection documents for works being executed by contractors (tank bunds, sluices, mechanical fixtures, and other physical components of the rehabilitated tank systems) that were submitted to the project director\. WUAs were involved in filling out details of OK cards in their areas\. 4\.20 In addition to elected members, all the WUAs co-opted members from the public (farmer beneficiaries) as required, compared with a baseline of 4 percent of WUAs at the beginning of the project and a target of 90 percent\. The membership of WUAs also expanded to include fishers and groundwater users\. However, there was a low representation of women members in WUAs and management committees, where they occupied 14 percent and 16 percent of seats, respectively\. Outcome at Project Completion 4\.21 WUAs\. At project completion, 1,791 tanks were handed over to WUAs for operation and maintenance\. Of these, 97 percent met planned levels of O&M expenditure as agreed in annual O&M plans, compared with a target of 80 percent\. Based on a sample of 220 WUAs, the final impact assessment found that 81 percent of water users in rehabilitated tank systems were satisfied with WUA operation and maintenance compared with a target of 75 percent (Andhra Pradesh 2014a)\. 4\.22 Of the WUAs surveyed, 88 percent found that the OK card experience made it easier for them to understand the status of the institutional and technical aspects and to 16 build a sense of ownership over the tanks\. Several WUAs realized increased income from an improved water tax collection rate and lease income from the award of tank fishing rights to a greater extent than targeted\. 4\.23 A simple tool of Quantified Participatory Assessment was devised by the project for self-monitoring by primary stakeholders (see appendix E)\. This WUA self-rating tool is a single sheet or poster with 15 criteria in four different areas of the WUAâs work (participation and dialogue; performance; self-management; and innovations and technology adoption), each assigned a weight in accordance with its relative importance toward WUA functioning\. The maintenance and water allocation functions are reflected in the criteria under the Performance and Self-Management areas of the assessment\. The rating process was facilitated by support organizations, and the results showed that 27\.7 percent of the WUAs self-rated as excellent, 56\.1 percent as good, 13\.9 percent as average and only 2\.3 percent as poor\. 4\.24 An FAO study commended the APTCBTMP for its unique MLE design (box 2\.1) that conducted M&E during the project (FAO 2013), noting that the project recognized the centrality of WUAs in all interventions and made it possible through âtruly participatory systems and processesâ (Andhra Pradesh 2010, 4)\. The study found that participatory MLE by WUAs through self-rating of their own performance increased awareness and clarity of their roles and responsibilities\. 4\.25 The IEG mission visited the WUA office building in the Kallepalli and Chinnapatha tank areas in Andhra Pradesh\. At both these sites, the WUA had a dedicated building with an office and facility for meetings\. WUA members in both sites had meticulous records of regularly conducted meetings, and accounts for WUA fees and expenses\. Both WUAs displayed self-rating cards introduced under the project\. More observations for the two WUAs are presented in appendix C\. 4\.26 Since project completion, WUAs in their original form have been discontinued in Telangana pending a review to replace them with institutions composed of accountable bodies with nominated rather than elected members\. In Andhra Pradesh, however, WUAs will be strengthened in their current form, including through the successor Andhra Pradesh Integrated Irrigation and Agricultural Transformation Project (P160463)\. Conclusions on Efficacy 4\.27 Against the first objective of improved agricultural productivity, the outcomes for crop productivity and water productivity exceeded their targets, though there were shortcomings in meeting crop diversification goals\. These outcomes appear to have been largely sustained based on IEGâs observations at selected project sites\. Regarding the 17 second objective of improved tank management, WUAs have improved their administrative and accounting functions and have generally developed the capacity to monitor their own performance for core maintenance and water allocation tasks\. But, after project completion, there is an increased need for maintaining or improving overall financial sustainability and technical capacity of WUAs or alternative entities that may replace WUAs in Telangana state, with supplemental resources from the government as needed\. Based on the evidence presented in the above discussion for objectives 1 and 2, the project achieved the targets for the outcome indicators, with moderate shortcomings\. 5\. Efficiency 5\.1 At appraisal, the economic rate of return and the financial rate of return for the project were estimated to be 23\.6 percent and 18\.2 percent, respectively\. These values were calculated for a 25-year period using 2007 constant prices and a discount rate of 12 percent\. 5\.2 These estimates were based on the benefits that could be reasonably attributed to project outputs as follows: (i) expansion in area benefiting from irrigation, which increases production and cropping intensity; (ii) diversification, which involves a shift to higher-value crops; (iii) improved agricultural technology and practices, which increases agricultural productivity; (iv) improved water security for production in irrigated areas, which reduces production losses in low rainfall years; (v) increased output of fish through improvement in fish production techniques; (vi) increased milk production through breed upgradation and improved animal husbandry; and (vii) foreshore plantations, which are expected to produce commercial timber for the WUA\. Sensitivity analysis using different scenarios indicated that the project was able to absorb substantial negative impacts and yet generate robust returns\. 5\.3 The ex post economic analysis generally used the same methodology as at appraisal, except for benefits derived from the livestock and foreshore plantations (timber production) subcomponents, both of which were dropped during project implementation\. At project completion, the economic and financial rates of return were 27\.5 percent and 21\.0 percent respectively, exceeding the estimates at appraisal\. 5\.4 Three factors contributed to the favorable economic rate of return of the project while offsetting the reduction in economic returns due to the delays in project implementation after state bifurcation\. First, the project brought an additional 63,740 hectares of registered command areas into full irrigation status\. Second, improved water availability enabled farmers to diversify by shifting to nonpaddy, higher-value-added commodities such as maize and groundnuts\. Third, productivity for key crops was higher than projected at appraisal due to the adoption of improved technologies, such as 18 hybrid seeds and better crop varieties, integrated pest management, and integrated nutrient management\. 5\.5 Administrative and institutional efficiency\. The project closing date was extended from the original date of December 31, 2012, to July 31, 2016 (three years and seven months)\. This extension was needed because of delays in execution of works at the beginning of the project and delays due to political disturbances that began later and eventually led to the stateâs bifurcation in 2014\. Also, the government did not consistently release funds to the implementing departments in a timely manner, which contributed to delays particularly in the agricultural livelihoods component\. Further, the overall fiscal crisis in Andhra Pradesh resulted in low project disbursement halfway through, which had reached only 19 percent by 2010, against the planned 50 percent\. 5\.6 Overall, efficiency is rated substantial\. 6\. Ratings Outcome 6\.1 The relevance of project objectives is high because of the importance of tank irrigation to the states of Andhra Pradesh and Telangana, the clear case for rehabilitation of these structures, and the accompanying institutional needs\. The relevance of project design is substantial, as it provides for physical rehabilitation and capacity building geared to improved outcomes of crop productivity and management of tank systems\. Against the first objective, the outcomes for crop productivity and water productivity exceeded their targets, though there were shortcomings in meeting crop diversification goals\. Regarding the second objective, WUAs have improved their administrative and accounting functions and are able to monitor their own performance better for their core maintenance and water allocation tasks; but to improve their effectiveness, their overall financial sustainability and technical capacity needs to be either improved or supplemented by additional resources from the government\. Efficiency is rated substantial given the favorable rates of economic and financial return despite administrative and other delays, some of which are outside the control of both the World Bank and borrower\. 6\.2 Based on the ratings for relevance, efficacy, and efficiency, the project development outcome is rated satisfactory\. 19 Risk to Development Outcome 6\.3 The risks to sustainability of the projectâs development outcomes relate to the maintenance of rehabilitated infrastructure, effective functioning of WUAs, continued support from multiple government agencies dealing with irrigation, agriculture, and market linksages, and the ability of farmers to market diversified produce effectively\. In addition, there are uncertainties from uneven rainfall\. â¢ Maintenance of rehabilitated infrastructure\. The project used sound construction methods and quality control mechanisms for rehabilitating irrigation assets, and the responsibility for managing them was transferred to farmers and WUAs at project completion, after putting arrangements in place for O&M\. The rehabilitated assets are likely to be in good condition, given that the physical works were carried out with good quality control between four and nine years ago, and assuming that the sample of tanks visited by the IEG mission is representative of all rehabilitated tanks\. However, the ongoing condition of the tanks is subject to the financial and technical capacity of WUAs and broader support from minor irrigation departments\. â¢ Financial sustainability of WUAs\. Although the WUAs are generally capable of carrying out simple maintenance activities and clearing vegetation, they have limited technical and financial capacity for larger maintenance needs\. Although collection of water charges has improved, the amount that is collected (usually Re 100 or $1\.40 per acre) is a small fraction of O&M requirements\. For major maintenance needs, the WUAs are dependent on the resources allocated by the state governments for O&M, which are subject to competing priorities\. â¢ Technical and administrative capacity of WUAs\. During project implementation, WUAs had the backing of support organizations (nongovernmental organizations with demonstrated relevant expertise) to improve their capacity for carrying out their responsibilities\. The WUAs also gained exposure to maintenance and rehabilitation activities through their participation in less complex project-related works and their role in certifying portions of the OK card for quality control of the major works by contractors\. However, these sources of support and exposure have not continued after project completion, and unless ongoing arrangements for capacity building are made, WUAs (or their successors in Telangana) may relapse to preproject levels unless suitable provisions are made in a timely manner\. The institution of WUAs is sought to be strengthened in its present form in the new state of Andhra Pradesh, whereas Telangana is replacing it with a new mechanism\. 20 â¢ Ongoing support for improving agricultural and water use practices\. For farmer beneficiaries to derive potential economic benefits from tank rehabilitation, considerable handholding is needed on an ongoing basis from various government departments\. These departments cover agriculture and horticulture, fisheries and animal husbandry, and the extension arms of agricultural universities or research institutes and will need to provide their inputs in an coordinated manner for efficiency and synergy\. This has not happened to any significant extent during the project, and it is not clear whether there is any systematic thinking in this regard in either Andhra Pradesh or Telangana to undertake this effort\. â¢ Marketing facilities and linksages\. Although commodity interest groups were formed during the project, the status and functioning of these entities have not been tracked after project completion\. Providing common facilities for storage and drying can create strong incentives to members of commodity interest groups and other farmers to work cooperatively and put themselves in a stronger position to develop market linkages with public and private entities\. However, there does not appear to be statewide systematic efforts in this regard\. â¢ Variable rainfall and climate resilience\. Although the project did not have any explicit objective or component for climate resilience, by promoting conjunctive water use, improving the management of groundwater resources, and investing in storage tanks, farmers in Andhra Pradesh and Telangana have become relatively more resilient to successive drought episodes\. The ongoing successor, the Andhra Pradesh Integrated Irrigation and Agricultural Transformation Project, addresses climate resilience more directly\. The statewide schemes of Neeru Chettu and Mission Kakatiya are also likely to contribute to increased water storage more widely in the tanks in both Andhra Pradesh and Telangana, though positive results may take some years to materialize\. 6\.4 Andhra Pradesh and Telangana both have flagship programs playing a significant role in the expansion and sustainability of the development outcomes from APTCBTMP\. The schemes have internalized processes from the project related to participatory approaches for identifying and prioritizing infrastructure investments, quality control methods, and M&E for outputs and outcomes\. In particular, the project team in Telangana shared a letter from the chief minister to the finance minister of the government of India in the context of seeking funds for Mission Kakatiya, the state governmentâs flagship project for irrigation\. According to the letter, âthe State mechanism has had enough expertise in handling externally aided projects including ongoing projects like Water Sector Improvement Project, Community-based Tank 21 Management Project funded by the World Bank\.â4 It further states that âthe vast experience and lessons learnt under [APTCBTMP] â¦ will help in the design, implementation and management of the tank restoration project with greater convergence of line departments\.â 6\.5 Andhra Pradesh started the Neeru Chettu (literally, âtree of waterâ)5 scheme in 2014\. This scheme covers repairing and renovating existing water harvesting structures and the construction of new structures such as check dams, percolation tanks, minor irrigation tanks, subsurface dams and farm ponds for increasing the groundwater recharge; and conducting repairs, renovation and desiltation of tanks\. 6\.6 Similarly, the state government of Telangana launched Mission Kakatiya in 2015,6 a program for restoring all the minor irrigation tanks and lakes in the state\. The program aims to rejuvenate 46,531 tanks and lakes, storing 265 billion cubic meters water across the state in five years\. The tanks and lakes are dug to remove silt for increasing water storage capacity\. Initial results show that the gap ayacut under Mission Kakatiya tanks was brought down effectively from 42 percent in 2013 to 23 percent in 2016\. A marked improvement in groundwater table is also reported\. Telanganaâs Irrigation department has created the Telangana Water Resources Information System, which is a web-based portal using geo-spatial technologies to enhance the M&E for planning and decision making\.7 6\.7 The lessons learned from the implementation of APTCBTMP have been valuable for designing a second World Bankâfinanced phase of the project, Andhra Pradesh Integrated Irrigation and Agriculture Transformation Project with greater focus on climate-resilient sustainable agriculture and water management\. The focus of the project is for system improvement at a cascade level and use of remote sensing for efficient resource monitoring\. 6\.8 Based on the preceding discussion, the risk to development outcomes is rated substantial\. 4Letter from Telangana Chief Minister Shri K\. Chandrasekhar Rao to Finance Minister Shri Arun Jaitley\. 2014\. 5 https://irrigationap\.cgg\.gov\.in/wrd/neeruchettu\. 6 https://missionkakatiya\.cgg\.gov\.in\. 7 https://www\.isro\.gov\.in/earth-observation/twris\. 22 Bank Performance Quality at Entry 6\.9 The project design incorporated lessons on stakeholder participation and implementation effectiveness from the World Bankâsupported Andhra Pradesh Economic Restructuring Project and Karnataka Community-Based Tank Management Project\. 6\.10 At appraisal, the World Bank identified several risks relating to crop diversification, adoption of new practices by farmers, overexploitation of groundwater, variability in rainfall, delays in implementation, and water charge collection\. The project provided for mitigating measures for most of these risks\. However, it could have made a more nuanced analysis of changing rainfall patterns in time and across districts\. Also, the risk of inadequate water charge collection and slow transfer of O&M funds to WUAs materialized during project implementation, despite attempted mitigation measures\. 6\.11 Multisectoral coordination among the implementing agencies was not adequately addressed at entry, even though it was correctly identified as a substantial source of risk\. 6\.12 On balance, the World Bankâs quality at entry is rated moderately satisfactory\. Quality of Supervision 6\.13 The project was implemented in a challenging environment, particularly in 2011, when there was an increase in political instability in Andhra Pradesh, ultimately resulting in the stateâs bifurcation in 2014\. However, the World Bank maintained a productive relationship with the state government of Andhra Pradesh and, after bifurcation, the state government of Telangana as well\. In 2011, the World Bank team demonstrated candor through downgrading the project ratings to moderately unsatisfactory due to implementation delays that stemmed from political instability before bifurcation of the state\. The World Bank team steadily guided the project during the challenging time of state bifurcation and successfully resumed project activities in 2012\. The World Bank was also supportive and facilitated restructuring the project to reflect the creation of two PMUs in each state and ensure effective implementation of activities\. The project benefited from experienced World Bank specialists who contributed to the high quality of engineering work being undertaken and from fiduciary, procurement, and safeguards policies being put into place\. 6\.14 The quality of supervision is rated satisfactory\. 23 6\.15 Based on moderately satisfactory quality at entry and satisfactory quality of supervision, overall Bank performance is rated moderately satisfactory\. Borrower Performance Government Performance 6\.16 The government of India appropriately recognized the restoration and renovation of tanks to be a priority task to spur agricultural growth, for which it launched pilot schemes in many states, including Andhra Pradesh, and sought multilateral funding for the effort\. 6\.17 At the preparation stage, the government of Andhra Pradesh demonstrated leadership through decentralizing water resources development at the community or farm level\. This approach helped in strengthening WUAs and expanded their mandate beyond operation and maintenance to ensuring equitable water distribution among its members\. After state bifurcation, another PMU was created in the state of Telangana\. The two PMUs benefited from autonomy to effectively manage project activities\. High level government officials continued to coordinate various agencies to cooperate in implementing the project\. At the state level, a project steering committee headed by the chief secretary coordinated the annual plans of the irrigation, agriculture, animal husbandry, fisheries, and rural development departments\. 6\.18 Government performance is rated satisfactory\. Implementing Agency Performance 6\.19 The implementing agencies faced challenges due to state bifurcation, which contributed to implementation delays\. There were also some shortcomings including delays in the recruitment of a new external M&E agency as required by the legal covenant\. This delay put the borrower out of compliance for 20 months\. The project suffered from implementation delays (as discussed in the Efficiency section), some of which were beyond the control of the implementing agency\. 6\.20 Implementing agency performance is rated moderately satisfactory\. 6\.21 Based on the ratings for government and implementing agency performance, overall borrower performance is rated moderately satisfactory\. 24 7\. Lessons 7\.1 The potential economic benefits from improved irrigation infrastructure cannot be adequately realized by beneficiaries without the coordinated and ongoing support of multiple government agencies and research extension services in agriculture\. The improved availability of water from the project could have been leveraged to a greater extent by providing coordinated and ongoing support for improved water management and sustainable agricultural practices, crop diversification to reduce risks and expand income sources, and developing better market linkages\. This could have been attempted through this project or parallel projects, as had been done in other states in the country\. 7\.2 Continued support to WUAs in terms of resources and social intermediation, such as through nongovernmental organizations, is key to enhancing their capacity for improved water management in drought-prone areas\. Support provided under this project enabled WUAs to improve their performance on administrative functions but less so on financial and technical aspects\. A lack of stable and predictable technical and financial support after project completion has limited the efficacy of WUAs\. Although WUAs can be expected to take care of minor repairs and maintenance and clearing of vegetation, they need access to services and technical support for repairs of any significance and for mainstreaming sustainable agriculture and water management practices\. 7\.3 Benefits from increased water availability can be further increased if cropping decisions by smallholder farmers in drought-prone areas are informed by water budgeting and collective governance principles for sustainable use\. This project undertook significant initiatives to raise awareness and provide technical support to beneficiaries for making informed cropping decisions and applying water budgeting principles\. However, to mainstream these practices and overcome social and political barriers for their adoption, appropriate policies and incentives need to be instituted, as suggested by experience from similar projects in other states in India\. Such efforts can be usefully supported by introducing increasingly affordable measurement techniques using sensors and information and communication technology tools, making it increasingly feasible and affordable to reliably measure water conveyance and use\. 25 Bibliography Andhra Pradesh, Irrigation and Command Area Development Department\. 2010\. âAndhra Pradesh Community Based Tank Management Project\.â Newsletter 3, Andhra Pradesh Irrigation and Command Area Development Department, Hyderabad\. âââ\. 2014a\. Participatory Groundwater Management in APCBTMP: Impact Assessment Study\. Hyderabad: Andhra Pradesh Irrigation and Command Area Development Department\. âââ\. 2014b\. APPCBTM Project: Select Success Stories\. Hyderabad: Andhra Pradesh Irrigation and Command Area Development Department\. FAO (Food and Agriculture Organization)\. 2013\. Smallholders and sustainable wells A Retrospect: Participatory Groundwater Management in Andhra Pradesh (India) Gine, Xavier, Anup Malani, Aprajit Mahajan, and Manaswini Rao\. Evaluation of Mission Kakatiya: Minor Irrigation Project in Telangana Tata Center for Development at University of Chicago\. https://tcd\.uchicago\.edu/projects/evaluation-of-mission-kakatiya- minor-irrigation-project-in-telangana/ Kumar, M\. D\. 2018\. Mission Kakatiya for Rejuvenating Tanks in Telangana: Making it a Mission Possible, in Water Policy Science and Politics, 2018 Kumar, M\. D\., and N\. Vedantam\. 2016\. Groundwater Use and Decline in Tank Irrigation: Analysis From Erstwhile Andhra Pradesh\. Rural Water Systems for Multiple Uses and Livelihood Security, 2016\. World Bank\. 2007\. IndiaâFinancing Agreement, C4291-IN Conformed\. Washington, DC: World Bank\. âââ\. 2019a\. India - Tamil Nadu Irrigated Agriculture Modernization and Water-Bodies Restoration and Management Project\. Washington, D\.C\. : World Bank Group\. https://hubs\.worldbank\.org/docs/imagebank/pages/docprofile\.aspx?nodeid=31434575 âââ\. 2019b\. India - Water Sector Improvement Project\. Washington, D\.C\. : World Bank Group\. https://hubs\.worldbank\.org/docs/imagebank/pages/docprofile\.aspx?nodeid=30808168 26 Appendix A\. Basic Data Sheet Andhra Pradesh and Telangana State Community-Based Tank Management Project (P100789)â(IBRD-48570, IDA-42910) Table A\.1\. Key Project Data Actual or Current Appraisal Estimate Estimate Actual as Percent of Financing ($, millions) ($, millions) Appraisal Estimate Total project costs 218 203 81 Loan amount Cofinancing â â â Cancellation â â â Table A\.2\. Cumulative Estimated and Actual Disbursements Disbursements FY08 FY09 FY10 FY11 FY12 FY13 Annual 11 31 54 52 35 6 Cumulative 11 42 96 148 183 189 Date of final disbursement: June 2017 Table A\.3\. Project Dates Event Original Actual Concept review 07/2/2007 07/27/2007 Appraisal - 12/22/2014 Board approval - 09/13/2010 Signing - 06/08/2007 Closing date 12/31/2012 07/31/2016 Table A\.4\. Other Project Data Borrower or Executing Agency Follow-on Operations Amount Operation Project ID ($, millions) Board Date Andhra Pradesh Integrated Irrigation and P160463 172\.2 10/23/2018 Agricultural Transformation Project (P160463) 27 Appendix B\. Compliance with Environmental and Social Safeguard Policies Environmental Assessment (Operational Policy / Bank Policy or OP/BP 4\.01)\. An Integrated Social and Environmental Assessment was prepared as part of project implementation\. Also, a Social and Environmental Management Framework was developed to manage and mitigate the social and environmental risks identified in the initial assessment\. The project reported full compliance with all environmental safeguard measures, including dam safety interventions\. Indigenous Peoples (OP/BP 4\.10)\. A tribal development strategy and a tribal development plan at the tank level were developed to ensure that tribal groups in tank areas would equally benefit from the project interventions as other groups\. The project supported training on sustainable water management practices, the formation of tribal commodity interest groups and exposure visits to progressive farms\. These activities benefited 42,151 tribal farmers\. Safety of Dams (OP/BP 4\.37)\. Sixty-eight tanks with a bund height at or above 10 meters were inspected by the Dam Safety Panel and were reported to be in compliance with safeguard provisions at project completion\. Pest Management (OP 4\.09)\. This safeguard was triggered because of the possibility of increased use of pesticides due to improved irrigation practices\. No further information was provided on mitigation or impacts for this safeguard policy, and it did not include a clear statement of compliance\. Involuntary Resettlement (OP/BP 4\.12)\. Involuntary Resettlement was triggered because of the risk that the water spread area and feeder channels might be encroached\. Partial encroachments were found in 643 tanks and seasonal cultivation in 243 tanks, with 29 seasonal cultivators having temporary dwelling units in two tanks\. At project completion, it was noted that in each of these tanks the seasonal cultivators with temporary dwellings willingly agreed to vacate or stop the encroachment and cultivation to help tank rehabilitation\. Provisions were made for affected people to gain relief and rehabilitation entitlements and other project benefits if resettlement was required\. The project team reported that project activities did not require any land acquisition or resettlement and rehabilitation\. Physical Cultural Resources (OPBP 4\.11)\. Cultural property was triggered because of the chance of finding some objects of cultural or archaeological value during civil works\. According to the project team, there were minor cultural protection measures, such as 28 ensuring that a temple near a bund in Rai Rao Cheruvu in Medak district that was being widened was not compromised\. 29 Appendix C\. Site Visits and Observations The Independent Evaluation Group (IEG) mission visited sites in Andhra Pradesh and Telangana to observe outcomes from the Andhra Pradesh and Telangana Community- Based Tank Management Project\. Infrastructure Improvements at Tanks Telangana At Pedda Cheruvu (Kowdipally), the bund was widened, the weir reconstructed, two sluices replaced, and a 3-kilometer canal relined\. Since then, the tank has been desilted and a stairway leading into the lake built for the convenience of washermen\. At Rairao Cheruvu, the bund was extended from 3\.5 meters to 18 meters width, and a 2-kilometer channel and 12 offtakes (branches) were upgraded\. The bund is now being developed into a recreational area\. At Kesarasamudram tank, 800 meters of irrigation channels were upgraded, and although the sluices were repaired, only two of the four are available for use\. At Pentoni Cheruvu, breach repair work extended the width of the bund from 3 meters to 6 meters\. At Pedda Cheruvu (Ghanpur), the bund of 3- to 4- kilometer radius was strengthened, along with work relating to the guide walls, canal systems, and sluices\. At Chalimela Vagu, a 6\.3-kilometer canal and a 1\.7-kilometer line feeder canal were lined, and check dams over the stream and an aqueduct were reconstructed or repaired\. Table C\.1\. Selected Details of Tanks and Other Infrastructure in Telangana Physical Works under the Tank Name Tank Features Project Pedda Cheruvu Ayacut: 232 acres Bund strengthening, sluice District: Medak Water Spread Area: 0\.82 sq m\. Mt construction, skin wall of surplus Mandal: Kowdipally Total Catchment Area: 14\.5 sq km weir, stone pitching on bund Village: Kowdipally Present Ayacut: 103 Acres Rairao Cherevu Tank Ayacut: 515 acres Canal lining, bund strengthening, Medak Water Spread Area\.9136 million: construction of retaining wall Mandal: Narsapur Total Catchment Area 22\.6884 sq\. km Village: Narsapur Tank Capacity 92\.92 million cft Length of Bund: 413 m Pentoni Cherevu Total Catchment Area: 12\.64 sq\. km Breach filling work, bund widening District: Mehboobnagar and strengthening, minor repairs of Mandal: Palem surplus weir, sluice construction, Village: Bijnepalli lining of channels 30 Physical Works under the Tank Name Tank Features Project Kesarasamudram Ayacut: 1,594 acres Sluice reconstruction, bund District: Mehboobnagar Length of Bund: 1,500 m strengthening, irrigation channel Mandal: Nagarkurnool construction Village: Nagarkurnool Pedda Cherevu Ayacut: 628 acres Construction of field channels and District: Warangal Mandal: Water Spread Area: 10\.64 sq\. km side wall, sluice reconstruction Ghanpur Village: Ghanpur Chalimela Vagu Ayacut: 730 acres Construction of under tunnel and District: Warangal Aquaducts, construction of Mandal: Bhupalapally checkdams (Matt), construction of guidewall Village: Bhupalapally Kallepalli Ayacut: 262\.76 acre Construction of tank; Water User District: West Godavari Water Spread Area: Association office of Asannagudem; Mandal: Lingapalem Total Catchment Area: 11\.2 sq\. km Lingapalem, West Godavari district; Village: Asannagudem Jungle clearance, sluice Tank Capacity: 9\.8 m cft reconstruction, field channel Present Ayacut: 263 acres construction, bund strengthening, Length of Bund: 1,040 m cause way construction Chinnapatha Ayacut: 184 acre Earth work, construction of District: East Godavari Water Spread Area: 4\.2 Ha retaining wall, CTFs; surplus course Mandal: Prathipadu Total Catchment Area: 1\.4 sq km and canals; closing of breached portions Village: K\. Kothapalle Tank Capacity: 17\.9 Mcft Present Ayacut: 151\.8 acre Length of Bund: 775 m Appalaraju Ayacut: 152 acres Sluice reconstruction, bund District: Visakhapatnam Water Spread Area: 0\.2 sq Km strengthening, surplus weir repair, Mandal: Nakkapalli Total Catchment Area: 3\.15 sq Km improvement of supply channel Village: Vempadu Tank Capacity: 10\.8 Mcft Present Ayacut: 151\.8 acres Length of Bund: 1,000 m Haresamudram Ayacut: 907 acres Bund strengthening, sluice repair, District: Anathapuramu Water Spread Area: 184\.6 Ha construction of retaining wall; Mandal: Madakasira Total Catchment Area: 231\.4 sq\. Km construction of irrigation channel Village: Hemasundaram Tank Capacity: 103\.3 mcft Present Ayacut: 367\.2 acres Length of Bund: 1,150 m Kriyasakthi Vadayar Ayacut: 417 acre Earth excavation, Bund District: Anathapuramu Water Spread Area: 0\.6 sq miles strengthening, construction of Mandal: C\. K\. Palli Total Catchment Area: 16\.7 sq\. mi\. sluices and guide wall Village: Mustikovela Tank Capacity: 96\.6 mcft Present Ayacut: 417 acres Length of Bund: 1,375 m 31 Andhra Pradesh At Kallepalli, the bund was expanded from 0\.5 to 1\.7 meters and is useful for basic transport, and three sluices were replaced\. The repair of the protection wall at the Chinnapatha tank now directs water into the tank that would have otherwise gone unused\. The tank saw repairs for two sluices or shutters and a weir\. At the Appalaraju tank, the closing of a gap allows water to be directed into the tank\. The Haresamudram tankâs bund was widened but needs to be strengthened further to prevent possible erosion, while the sluice is operating smoothly after repair\. The Kriyasakthi Vadayar tank had two retaining walls and sluice walls repaired\. Fisheries Activities in Tanks Telangana At Pentoni Cheruvu, Pedda Cheruvu (Ghanpur), and Chalimela Vagu, the fisheries cooperative societies (FCSs) reported membership of 270, 500, and 300 members, respectively\. At Pedda Cheruvu (Ghanpur) the fisheries department had conducted a workshop on improved techniques covering several FCS in a wider area\. Rairao Cheruvu, Pentoni Cheruvu, Pedda Cheruvu (Ghanpur), and Chelimela Vagu received free fingerlings ranging from 0\.2 million to 0\.9 million, which were matched or exceeded by the production from the tanks\. At Chalimela Vagu, 70 two-wheelers and 4 tempos were provided\. At the Chinnapatha tank, the FCS was provided with feed supply, seedlings, six two-wheelers, ice boxes, and community fishing nets\. Rairao Cheurvu yields 50 kilograms of fish per day during peak season, in contrast to uncertain yields before tank rehabilitation\. Andhra Pradesh The Chinnapatha tank reported yields of 1 to 5 tons of fish per month in the years since tank rehabilitation, while in the Kriyasakthi Vadayar tank, 30 tons of fish were harvested in the previous year\. All the FCS reported periodic visits and technical support from the fisheries departments, and free fingerlings and vehicles for use in transporting and marketing their produce\. Fishers from all the FCS noted\. At Kallepalli, Chinnapatha, and Kriyasakthi Vadayar tanks FCS have been created or strengthened during project implementation\. At Kesarasamudram government provided 40 two-wheelers and 2 tempos (small transport vans)\. 32 Water Adequacy in Tanks Telangana In Pedda Cheruvu (Kowdipally), which has experienced its third consecutive year of low rainfall, 100 borewells have been recharged, though 400 others remained inactive\. Although tail-end farmers as far as 3 kilometers away got water supply in 2014 for the first time in several years after rehabilitation works, this has decreased somewhat since then due to successive drought years\. Pentoni Cherevu saw groundwater levels improve up to a 3-kilometer radius due to project rehabilitation works supplemented by water from lift irrigation\. Pedda Cherevu (Ghanpur) now sees water year round compared with only a two-month period before the project, though it is noted that its water is also supplemented by a lift irrigation scheme\. Chelimela Vagu has scope for covering approximately 100 more acres and has its water sources supplemented by the Godavari river lift irrigation scheme\. Andhra Pradesh Near the Kallepalli tank, some farmers have adopted drip irrigation, and a beginning has been made in systematic water use planning\. In contrast to before the project, water is available during the summer months, and there is scope for further recharging of wells in case of good rains\. Surplus water from Chinnapatha, which also benefits from the Yeleru canal, goes to another downstream tank\. There is no shortage of water throughout the year, in contrast to dry phases in earlier years\. The area surrounding Haresamudram has seen significant borewell recharge and has the highest incidence of micro-irrigation (mainly drip irrigation) in the subregion and also benefits from water from the Srisailam reservoir\. Kesarasamudram saw groundwater in its vicinity rising from a depth to 200 feet to 80 feet, and recharging has taken place up to a radius of 4 kilometers\. However, tail-end farmers are not gaining as much as expected from increased tank water levels due to unchecked withdrawals of water upstream\. Kriyasakthi Vadayar tank has seen borewells in its area improve water depth from a depth of 20 meters to 10 meters\. The tank will also benefit from water from the Srisailam reservoir\. The water user association (WUA) for this tank uses a principle of equity to ensure that tail-end farmers get a fair share of water in proportion to their land area\. Crop Productivity and Diversification at Sites Telangana At the Pedda Cheruvu tank (Kowdipally), a second variety of crop has become possible, and it is anticipated that in the coming years, rabi (winter) season paddy and groundnut can be grown in an additional 100 acres\. The Pentoni Cheruvu area also supports two 33 crops, but there has not been much diversification from paddy\. The Pedda Cheruvu tank (Ghanpur) area has expanded from one crop to two paddy crops per year, though the yield of 40 bags per acre has not changed significantly\. Despite efforts to promote the system of rice intensification, there were no takers\. In the Chalimela Vagu tank area, growing even one crop was difficult before the project, but now two crops are feasible, and the productivity of rice has increased to 20â25 bags per acre during the kharif1 season, and 40 bags per acre during the rabi season, representing an overall 20â 25 percent increase in yield\. The system of rice intensification was partially adopted in this area, resulting a 40 percent increase in yield\. Andhra Pradesh In the Kallepalli tank area, there has been diversification from millet to rice paddy as a second crop\. In the Chinnapatha tank area, the ayacut increased from 120 acres to 184 acres, which yield two crops compared with only one\. Yield has increased sharply form 10 bags per hectare to 20â32 bags per hectare for the first crop and 40 bags per hectare for the second crop\. Tail-end farmers get 15â25 bags per acre\. Of the 135 farmers, 80 are doing direct seeding\. In the rabi season, half the area is devoted to seed production\. There has been diversification to pulses as a summer crop and a black gram and green gram\. Although further diversification to horticulture is possible, the presence of a large population of monkeys in the adjoining protected forest area, makes this transition infeasible\. In the Appalaraju tank area, the first crop is paddy, and the second is pulses, taking advantage of free seed provision from the government\. In the Haresamudram tank area, main crops are groundnut and maize, and fodder is additionally grown\. In the Kriyasakthi Vadayar tank area drip irrigation has been taken up to some extent for horticulture (bananas, other fruit, and hybrid vegetables), which also takes advantage of government subsidies\. Kallepalli and Chinnapatha Tank Water User Associations At Kallepalli, villagers have donated land and money to build a functional facility at the cost of Re 0\.28 million ($3,880)\. The WUA regularly collects a fee of Re 100 ($1\.40) per acre, which is turned over to the minor irrigation department and used for maintenance activities\. However, as in the case of all WUAs, the amount collected is only a small portion of maintenance needs and is necessarily supplemented by government funds\. The WUA meets regularly and maintains meticulous minutes of its proceedings\. The WUA members carry out simple maintenance works such as cleaning channels and 1The kharif cropping season is from JulyâOctober during the south-west monsoon and the rabi cropping season is from OctoberâMarch (winter)\. 34 clearing vegetation\. The WUA president and other members have been sent to the International Crops Research Institute for the Semi-Arid Tropics in Hyderabad and the Department of Agriculture to get exposure and training on agricultural techniques\. Similarly, the WUA at the Chinnapatha tank has a two-level office building with good provision for meetings, meets once in a month, and keeps clear minutes and accounts\. The WUA appears to function in a collegial manner and ensures that water allocation is done in an equitable manner that covers tail-end farmers\. The WUA carries out basic cleaning and maintenance activities\. At each of these locations, self-ratings cards using the format introduced under the project were clearly displayed, though it is not clear whether they were being regularly updated and monitored\. Other Observations Water use efficiency\. Though the project has ensured water for irrigation in the command area, no measures were put in place for improving water use efficiency, apart from the construction or rehabilitation of field channels\. The farmers appear to be continuing with the traditional practice of flood irrigation, which is especially wasteful in drought-prone areas\. Evidence indicates the adoption of sprinkler and drip systems, and ârain gunsâ (a high-pressure, high-volume, large-diameter sprinkler irrigation system) in and around Ananthapuram district, but there is little or no such use in the project sites visited by the mission\. Also, the project did not strategically promote such methods\. In some of the project sites in Andhra Pradesh, project officials showed the use of piezometers for monitoring groundwater level and how local community-level village cadres are providing support to the owners of wells to understand the water availability, water discharge rate, and water recharge rate at regular intervals\. But this practice does not appear to be widespread, nor does it appear to be linked to decision making for water allocation and use\. Agricultural marketing\. The IEG mission was not able to get any systematic updates of the commodity interest groups\. Informal feedback from officials and beneficiaries suggests that several of them may not be functioning at the level they had reached by project completion\. Other benefits\. Tank rehabilitation has improved the availability of drinking water, livestock, and in some places, washermen (traditional laundrymen)\. In most of the sites visited by IEG, beneficiaries reported improved availability of drinking water in the command area and in nearby villages\. This has been made possible by both enhancing the recharge of groundwater and lifting water from the tank influence area and by digging new shallow tube-wells in the tank submergence area\. Some livestock farmers 35 reported that they do not have to go farther afield to graze or provide water to their animals\. Washermen have access to water for the greater part of the year\. In Mehboobnagar district in Telangana, some farmer and fisher beneficiaries reported that there is less need for migrating to urban areas for seasonal employment due to the increase in agricultural activity, which provides a greater scope for work and income\. IEG visited the WUA office building in the Kallepalli and Chinnapatha tank areas in Andhra Pradesh\. At both these sites, the WUA had a dedicated building with an office and facility for meetings\. WUA members in both sites had meticulous records of regularly conducted meeting, and accounts for WUA fees and expenses\. Both WUAs displayed WUA self-rating cards introduced under the project\. 36 Appendix D\. Photos from Irrigation Tank Site Visits 37 38 Telangana 39 40 Appendix E\. Self-Rating Card for Water Users Associations 41 42 43 Appendix F\. List of Persons Met Government of Telangana Dr\. G\. Malsur Commissioner CADA, Water Resources Development (WRD) Mr\. K\. Shyam Sunder Chief Engineer-Minor Irrigation, WR Department Ms\. K\. Sneha Dy\. Project Director, CADA, WRD Mr\. M\. M\. Sajid Executive Engineer, CADA, WRD Ms\. Brahmini Asst\. Executive Engineer, CADA, WRD Mr\. Zuber Ahmed Dy Ex Engg, ICMARD, WRD Mr\. K\. Ramesh Sup\. Engg, Warangal Circle, ICMARD, WRD Mr\. Srawan Kumar Executive Engineer, Warangal Circle, ICMARD, WRD Mr\. Prasad Dy Ex Engg, ICMARD, WRD Mr\. P\. Malaya Ditrict Engg Consultant, Medak Mr\. B\. Yesieh Exe Engg, IB Division, Medak Mr\. R\. Srinivas Rao Dy Ex Engg, IB Subdivision Narsapur, Medak Mr\. C\. Nagaraja Asstt Engg, Kowdipalli, Medak Mr\. G\. Manbhushan Astt Engg, Narsapur, Medak Government of Andhra Pradesh Mr\. P\. S\. Ragahaviaiah Project Director, Andhra Pradesh Integrated Irrigation and Agriculture Transformation Project (APIIATP) Mr\. A\. G\. Mallikarjuna Reddy Chief Engineer, WRD Mr\. U\. Arun Kumar Asst\. Project Director (ID), APIIATP Mr\. D\. Gnanabhaskar Dev Asst\. Project Director (M&E/MIS), APIIATP Mr\. K\. Ramesh Babu Asst\. Project Director (Participatory Groundwater Management), APIIATP Mr\. Masthan Rao Agri-business expert, APIIAPT PMU Mr\. Gopala Krishna ID expert, APIIAPT, PMU Mr\. Joseph Plakkoottam M&E expert, PMU Mr\. L\. Makbul Saheb SE & DPD, DPMU Ms\. Kajeswaramma ADA, PMU Vijayawada Ms\. Ch Shashi Kiran ID and CB expert, PMU Mr\. Gopinadh EE, CADA, SPMU Mr\. V\. Prabhakar Executive Engineer, Ananthapuramu district, Mr\. Manohar Naidu APD (M&E), DPMU Mr\. Ram Bhupal Reddy APD (ID), DPMU Mr\. Prashad Agriculture Officer, Department of Agriculture, Ananthapuramu district Mr Reddaiah Horticulture Officer, Department of Horti, Ananthapuramu district, Government of Andhra Pradesh Mr Lakshminarayana FDO, Department of Fisheries, Ananthapuramu district Mr Ramesh Babu Asst\. Hydrologist, Groundwater Department Mr Rajendra Prasad APD, Groundwater Department Mr A Suresh Dy\. Chief Engg\., Minor Irrigation Mr D\. V\. Ramagopal EE, YI division, WRD Mr Narayana Rao Dy\. EE, CADA Mr T\. Jaya Raju Dy\. EE, Prathipada, WRD 44 Mr Chandra Sekhar AD, Department of Ag Mr A\. V\. Rajesh AO, Department of Ag Mr Srirama Krishna FDO, Department of Fisheries Ms Smeetha MPFEO, Department of Fisheries Mr G\. Gopal Exe\. Engineer, West Godavari Irrigation Division Mr Peddi Babu Asst\. Director, Dept of Fisheries, West Godavari district Mr N\. Rambabu Executive Engineeer, CADA, WRD Mr S\. Jagadiswar Rao Dy\. Exe Engg\., Vishakapatnam division, WRD Mr D\. J\. Kameswara Rao Dy\. Exe Engg\., Araku division, WRD Mr D\. Rajeswara Rao Dy\. Exe Engg\., Paderu division, WRD Ms N\. Rupa Agriculture Officer, Department of Ag Mr A\. Appalaraju WUA President, Appalaraju Tank Mr Amarvadi Rambabu WUA President, Chinapatha Tank Mr K\. Satyanarayana Raju WUA President, Venkayya Tank World Bank Mr\. Ranjan Samantaray Senior Agricultural Specialist Mr\. Yoro Sidibe Water Resources Management Specialist Kazuhiro Yoshida Senior Irrigation and Drainage Specialist 45	REVIEW
P057915	Document of The World Bank Report No: 27561 IMPLEMENTATION COMPLETION REPORT (IDA-32740) ON A CREDIT IN THE AMOUNT OF SDR1\.8 MILLION EQUIVALENT TO THE REPUBLIC OF YEMEN FOR A LEGAL AND JUDICIAL DEVELOPMENT PROJECT December 30, 2003 CURRENCY EQUIVALENTS (Exchange Rate Effective December 30, 2003) Currency Unit = Yemeni Rial (YER) YER 100 = US$ 0\.56 US$ 1 = YER 178 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS APL Adaptable Programmatic Loan CAS Country Assistance Strategy ICR Implementation Completion Report IDA International Development Association LIC Learning and Innovation Credit MOJ Ministry of Justice MOLA Ministry of Legal Affairs PAD Project Appraisal Document QAG Quality Assurance Group UNDP United Nations Development Programme Vice President: Christiaan J\. Poortman Country Director Mahmood A\. Ayub Sector Manager Zoubida Allaoua Task Manager: Elisabeth Sherwood YEMEN, REPUBLIC OF Legal and Judicial Development Project CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 1 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 6 6\. Sustainability 7 7\. Bank and Borrower Performance 8 8\. Lessons Learned 9 9\. Partner Comments 10 10\. Additional Information 10 Annex 1\. Key Performance Indicators/Log Frame Matrix 11 Annex 2\. Project Costs and Financing 12 Annex 3\. Economic Costs and Benefits 14 Annex 4\. Bank Inputs 15 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 16 Annex 6\. Ratings of Bank and Borrower Performance 17 Annex 7\. List of Supporting Documents 18 Annex 8\. Counterpart Completion Report 19 Implementation Completion Report Republic of Yemen Credit No\. 32740-YE Preface This is the Implementation Completion Report (ICR) for the Legal and Judicial Development Project to the Republic of Yemen\. The Project was approved on June 29, 1999 and made effective on January 24, 2000\. The Project closed on June 30, 2003\. The ICR was prepared by Ms\. Elisabeth Sherwood, with significant input from Mr\. Hadi Abushakra, Lead Counsel and Task Team Leader during project preparation and implementation, and Ms\. Linda Van Gelder, Senior Economist\. The report is based on a desk review of project files, disbursement records, discussions with staff involved in the project, and information received from Project counterparts at the Ministry of Justice and the Ministry of Legal Affairs in the Republic of Yemen\. Project ID: P057915 Project Name: Legal and Judicial Development Project Team Leader: Elisabeth Sherwood TL Unit: MNSIF ICR Type: Core ICR Report Date: December 31, 2003 1\. Project Data Name: Legal and Judicial Development Project L/C/TF Number: IDA-32740 Country/Department: REPUBLIC OF YEMEN Region: Middle East and North Africa Region Sector/subsector: Law and justice (80%); Central government administration (20%) Theme: Judicial and other dispute resolution mechanisms (P); Law reform (P); Access to law and justice (P); Personal and property rights (P) KEY DATES Original Revised/Actual PCD: 04/29/1998 Effective: 10/30/1999 01/24/2000 Appraisal: 09/29/1998 MTR: 12/31/2000 02/14/2001 Approval: 06/29/1999 Closing: 03/31/2002 06/30/2003 Borrower/Implementing Agency: Republic of Yemen/Ministry of Justice; Ministry of Legal Affairs Other Partners: STAFF Current At Appraisal Vice President: Christiaan J\. Poortman Kemal Dervis Country Director: Mahmood A\. Ayub Inder Sud Sector Manager: Zoubida Allaoua Wafik Grais Team Leader at ICR: Elisabeth Sherwood Hadi Abushakra ICR Primary Author: Elisabeth Sherwood 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: U Sustainability: UN Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: No 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The objectives of the Legal and Judicial Reform Project were to assess the impact of targeted training of judges and arbitrators on the effectiveness of the judiciary and to enhance the ability of the Ministry of Legal and Parliamentary Affairs to prepare and advise on business and economic legislation\. These objectives were designed in the context of economic and financial reforms that were ongoing at the time of project preparation, and reflected long-standing concerns regarding judicial weaknesses and their impact on the growth agenda and other development issues, and a weak legislative framework for business and investment\. The project was consistent with both the 1999 Country Assistance Strategy (CAS) and the 2002 CAS\. The 1999 CAS focused on the project and its planned follow-up as a means to address the problems of weak governance\. The 2002 CAS and its underlying Poverty Reduction Strategy Paper focus on the need to improve governance, the investment environment, and the judiciary, and the CAS states that improved governance underpins the four pillars of Bank intervention\. The project was prepared as a Learning and Innovation Credit (LIC) due to IDA's lack of previous involvement in the sector and the concern that World Bank involvement could provoke a backlash against reformers\. More important, according to key staff involved in the project and in Yemen during the project preparation period, the underlying objective was to see if a consituency for reform could be created and progress made toward a reform and development agenda\. While unfortunately not reflected in the final Project Appraisal Document (PAD), it was felt that exposure of the judicial community to outside perspectives and modern legal theory -- for example, through overseas training -- could serve to initiate new approaches and to expand the constituency of reform-minded judges within the sector\. This strengthening of the constituency for reform was essential for sustainable change in the sector\. There was widespread Bank management agreement that a LIC was the correct lending instrument for the operation, although consideration was also given to structuring the project as an Adaptable Programmatic Loan (APL)\. The LIC, as opposed to an APL, provided both the Bank and the government with a trial period of engagement, from which either party could withdraw if viewed as unsuccessful, or even counterproductive\. At the same time, and reflected in the 1999 CAS, Bank management committed to a follow-up APL that would provide the hardware and construction activities that were the primary request of the government, in conjunction with movement on an agreed reform agenda\. 3\.2 Revised Objective: Not applicable\. 3\.3 Original Components: The Project consisted of three components\. The first component focused on capacity building within the Ministry of Justice (MOJ) and among the judiciary, allocating US$ 2\.19 million equivalent to train sitting judges and arbitrators, to revise the curriculum at the Supreme Judicial Institute, and to carry out assessments and make recommendations regarding court administration and judgement execution\. In addition, this component was to finance a study of courthouse infrastructure needs and architectural designs (which would have fed into hard infrastructure investments as part of the follow-up APL), as well as some information technology equipment\. The second component allocated US$ 630,000 equivalent toward capacity building at the Ministry of Legal and Parliamentary Affairs (now simply the Ministry of Legal Affairs [MOLA]) regarding drafting of laws related to the economy, to commerce, and to investment, and carrying out diagnostic assessments of the legal framework governing business, economic, and financial activities and of the legal, regulatory, and administrative framework for land\. A third component allocated US$ 110,000 for a baseline study for an awareness campaign on the role of law and the judiciary in Yemen\. The first component was managed by the MOJ; the second and third components were managed by MOLA\. - 2 - 3\.4 Revised Components: Not applicable\. 3\.5 Quality at Entry: The quality at entry of the project is rated satisfactory\. The project was prepared despite enormous challenges in Yemen and in the judicial and legal sector, sharp divisions within the government regarding the necessity of changes in the structure of the economy and the related legal and judicial frameworks, and justified concerns regarding conflicts within the judiciary between traditionalists and modernists\. Dialogue during preparation was extremely difficult, and negotiations were put on hold for nearly six months\. The Bank continued its investment in the project due to the centrality of the weakness of the judiciary to the growth agenda and poverty alleviation -- i\.e\., the realization that, without fundamental changes in the administration of laws, other assistance could never achieve real effect -- and following requests from the Prime Minister, the Minister of Planning, and other donors that the Bank remain engaged in the sector\. Within that context, the project's objectives and components were appropriate and reasonably defined, there was reasonable dialogue among the parties and commitment within the counterpart agencies, and there was recognition of the very risky nature of the project and the high possibility of failure\. Caveats, however, relate to the setting of key performance indicators for the project and, to a lesser degree, to readiness for implementation\. Regarding the latter, contracting for technical assistance was not well advanced, and decisions about training were not finalized\. Had this been a full-scale investment project, this weakness would be considered more serious\. However, because of the experimental nature of the project, the fact that the first year's program was not fully prepared is not suprising or a significant comment on the quality at entry of the project\. It should be noted that more detailed preparation -- for example, an in-depth legal and judicial sector asessment -- was not possible given the wariness of both the Bank and the government toward the Bank's involvement in the sector\. To reiterate the point, the LIC was viewed as the first period of engagement between the two parties, which would provide each with a sense of whether there could be longer-term dialogue and assistance\. There was recognition within both the project team and country management that the expectations of the project were quite modest -- centering on a continuing dialogue with the sector, initial assessments of legal and regulatory frameworks in key sectors, and the participation of the judiciary in training -- and that the small LIC-funded project was the only reasonable intervention in the sector at the time\. Despite this, a matrix of performance indicators was insisted on by regional quality assurance staff, who at that time were under pressure to ensure that all projects had impeccable logical frameworks\. The task team therefore included in the Project Design Summary of the PAD a number of indicators that were simply overambitious given the scope of the project and unlikely, in the time frame, to indicate progress\. While a quality at entry assessment undertaken after Board approval noted that monitoring indicators were "inadequate for an objective assessment of the program's outcomes", i\.e\., that more detailed and sophisticated indicators should be used, this ICR judges that, given the components, the short time frame, and the very limited investment that the Bank was making, Bank's management and quality assurance staff should have limited performance indicators to simple output indicators\. Nevertheless, in accordance with ICR guidelines, this ICR will judge the project's performance based on the indicators as stated in the PAD\. Note that a quality at entry assessment was carried out after Board approval of the project, which rated quality at entry satisfactory\. The assessment noted weaknesses, however, in the preparation's analysis of institutional capacity and in readiness for implementation\. - 3 - 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Because of the way in which the objectives and performance indicators of the project were stated, there is no alternative but to state that achievement of the project's objectives was unsatisfactory\. Assessment of the objective of improving the effectiveness of the judiciary was to have been done through surveys of stakeholders (i\.e\., among the business and litigant communities), however, neither baseline nor end-project surveys were undertaken\. Regarding the objective of upgrading the capabilities of MOLA to prepare and advise on business and economic legislation, the project prepared a baseline of solid information regarding problems in the legal and regulatory frameworks for land, commerce, and investment, and staff participated in training abroad on legislative and regulatory drafting and on international legal trends in commercial and financial legislation\. However, it is not possible to assess at this time the impact of these activities\. Notwithstanding the above comments with respect to the achievement of objectives for the judiciary, reactions from participants in the project-funded training program were extremely positive\. Given the suspicion the program generated during project preparation -- that external training was unnecessary, that any external influence would infringe on Yemeni culture and tradition, etc\. -- the training was remarkably well received and accepted by the judiciary\. Equally important, the project enabled a significant amount of training of judicial clerks -- largely seen as a bottleneck in the system -- on efficient document handling and case management\. Finally, the project funded the purchase and/or production of necessary legal resources, which had been unavailable in the majority of courts\. In terms of the more realistic objective of assessing the feasibility of donor assistance to the sector, the project provided evidence that, while investment in the judiciary is welcome, assistance that approaches policy and the legal framework, or that may result in encroachments on established interests, are not possible without high level support in the government\. 4\.2 Outputs by components: The overall achievement of outputs under the project is rated satisfactory\. Overall outputs under the Judical Development Component are rated satisfactory, due to the significant amount of training provided both within and outside of Yemen\. Outputs under the Legal Development component are rated satisfactory, as assessments of the legal frameworks for investment and business and land and real estate were completed\. In terms of the Public Awareness Component, the single output -- the baseline survey of public attitudes toward the judiciary -- was completed\. Judicial Development Component: Overall, achievement of outputs under the Judicial Development Component is rated satisfactory, due to successful delivery of the training subcomponent\. At the end of the project, approximately 220 members of the judiciary -- primarily judges, as well as several arbitrators and officials within the Ministry of Justice -- had completed courses and practical training at the Supreme Judicial Institute in Egypt\. Courses included topics in commercial law (contracts, bankruptcy, banking instruments, etc\.) and penal law, such as criminal procedures and judicial investigations\. In addition, approximately 26 courses on the same topics were delivered to approximately 650 judges, arbitrators, and clerks through the High Judicial Institute (the only academic institution for the legal profession in Yemen) and the Yemen Abitration Center, while approximately 375 judges, prosecutors, and clerks received training at the Justice Information Center, which had recently been built up to organize case files and legal decisions\. Project-funded courses at the High Judicial Institute were taught by instructors primarily from Egypt and Jordan, with those from Egypt arranged through the larger training agreement with Egypt's Supreme Judicial Institute\. In total, approximately 80 percent of judges received training through the project\. Most important, subjects of courses arranged through the project had not previously been pursued on a regular basis by the Judicial Institute\. - 4 - Technical assistance outputs under the component were partly achieved\. An assessment of court administration and judgement execution was carried out successfully, and was slightly expanded to discuss other issues facing the judiciary\. An assessment of courthouse infrastructure and construction needs, which was originally intended as a potential input into a follow-up investment project, was not completed\. Finally, the curriculum at the High Judicial Institute was not revised and updated\. Outside of the project, the Ministry of Justice did pursue several actions that indicated commitment to development of capacity and willingness to discuss the weaknesses of the sector\. The successful development of the Justice Information Center, mentioned above, was a significant investment in the availability of information to the legal profession, and has been very well received\. More important, the Ministry did prepare a sector development strategy and published it -- actions that strongly indicated that there was a constituency for change\. Legal Development Component: Overall, achievement of outputs under the Legal Development Component is rated satisfactory\. The two diagnostic assessments envisioned under the component -- one on issues related to land, the other an assessment of business and investment-related legislation -- were completed, although it should be noted that difficulties completing the latter resulted in two extensions of the project\. This was due to poor quality in an initial report; following many months of discussion and negotiations, a new consultant team was hired to complete the assessment\. The second extension was caused by security concerns in Yemen that delayed the team's final consultations with counterparts\. The final report does provide a comprehensive assessment of weaknesses in Yemen's legal framework for business and investment, and is a good base for eventual reforms\. Capacity building took place as follows: MOLA staff participated in a course in legislative and regulatory policy in commercial matters at the Supreme Judicial Institute in Egypt, a detailed training program was prepared for the future, and job descriptions and terms of reference for MOLA staff positions were prepared\. Public Awareness Component: Achievement of outputs under the Public Awareness Component is rated satisfactory, as the output of a survey of public opinion was undertaken\. 4\.3 Net Present Value/Economic rate of return: Not applicable\. 4\.4 Financial rate of return: Not applicable\. 4\.5 Institutional development impact: The ICR judges the institutional development impact of the project as modest\. This is lower than the author and project stakeholders would prefer and is due to the lack of objective means to evaluate the impact\. The participation of a large number of judges in training in judicial and legal topics is thought to have had a substantial impact on institutional capacity within the judiciary and the MOF\. The component supported training of a cadre of judges, at all levels and throughout the system, with an appreciation for the value of commercial legal issues, for new methods of court and case administration and for investigative methods, and for communications among judges facing similar issues\. Project officials in Yemen responsible for the judicial development component feel strongly that the project has facilitated more open discussion of issues and greater availability of information, both about laws and judicial decisions in Yemen, and about legal trends elsewhere\. On a less positive note, political support for institutional development of the judiciary suffered a setback - 5 - midway through the project, when a cabinet reshuffle replaced the Minister of Justice\. As described below in paragraph 5\.2, the new Minister was suspicious of changes to the judiciary and of involvement of international financial institutions, which put project and non-project tasks on hold\. There has since been another change in the office, however, and it seems likely that the lack of interest at the ministerial level was temporary\. Unfortunately, the short-term change in leadership damaged international donors' perception of government commitment, and resulted in the Bank's and other donors' stepping back from the sector\. In the Bank's case, removal of the follow-up APL from the lending program and ongoing CAS discussions reduced potentially larger impact within the MOJ and MOLA, as the outputs supported by this project were to have been pursued in the follow-up project\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: A significant factor that affected project progress was the deterioration in the security situation in Yemen in 2002\. Following several security/terrorism-related incidents in the fall of 2002, World Bank staff were unable to travel to Yemen between late 2002 and April, 2003, limiting communications to fax and e-mail\. This also affected the work of the team of foreign consultants assessing the legal framework for business and investment, whose field visits to Yemen had to be postponed many months\. The project was extended in order to accommodate the expanded timeframe for the study\. 5\.2 Factors generally subject to government control: While commitment to the project remained strong among officials involved with the project, commitment to judicial and legal reform was inconsistent at the highest levels of government, a risk that was widely acknowledged in the PAD and among Bank management\. The implementation of the Judicial Development Component, in particular, was compromised in mid-2001 by the replacement of a reform-minded minister with a significantly more conservative minister\. While training in Sana'a was able to continue during his tenure, training in Egypt was largely curtailed, and was only able to restart after another cabinet-level change\. The overall reform and development agenda -- an update of which had been prepared in the first half of 2001 and which was a strong indicator of counterpart ownership -- was put aside\. While the replacement of the Minister of Justice was simply a domestic political issue, it nonetheless sent a message that modernization of the judiciary was not a priority\. As a consequence, the Bank withdrew its support for the follow-up project\. The above highlights an important challenge for the international community -- whether programs of assistance can be structured that can accommodate the fact that progress in a sector is almost never linear, and that change will occur in fits and starts, with periodic reverses\. In the case of this project, a temporary reversal resulted in the Bank and other donors essentially pulling out of the sector\. In this case, the Bank removed the incentive of a future investment project, which in turn discouraged full implementation of the ongoing project\. For example, once the follow-up APL was off the table, the Government no longer had an incentive to address the highly controversial issue of introducing a new curriculum at the High Judicial Institute\. Since that time, the environment for sector development has improved, and the Bank may re-engage, but the momentum built under the LIC has slowed\. 5\.3 Factors generally subject to implementing agency control: The implementation staff within the relevant ministries performed very well, and there were no problems directly ascribed to them that affected the project\. There were minor procurement problems that can be expected for agencies with little experience in Bank procurement -- bidding processes for several assignments had to be restarted, delaying work, and bidding for some computer equipment was repeated several times and never completed -- but these did not affect the outputs or outcome of the project\. - 6 - 5\.4 Costs and financing: Total disbursement from the Credit was approximately US$1\.88 million, or $620,000 (25 percent) less than appraised\. The lower disbursements were due primarily to lower costs on technical assistance (due to use of local consultants and non-implementation of some tasks) and lower procurement of equipment than expected\. Bank funding for training was slighly below original estimates (though higher than a mid-project reallocation), but trained a higher number of judges and arbitrators than originally envisaged\. It should be noted that most training was arranged free of tuition costs, through an agreement with Egypt's Supreme Judicial Institute\. By agreement with the Bank's country director for Yemen, the project funded travel and per diem costs for Yemeni participants in Egypt, and of Egyptian instructors in Yemen\. Of the approximately US$1\.2 million spent on training, approximately 70 percent was for travel and per diem of Yemeni participants in Egypt\. This arrangement enabled approximately 50 percent more judges to be trained in Cairo than would otherwise have been possible\. In June, 2002, approximately US$450,000 was reallocated from judicial training to goods and equipment for the MOJ\. However, it was ultimately not possible to use those funds\. A summary of allocations and actual disbursements is provided below\. The PAD indicated that total project costs would be approximately US$2\.9 million, with US$400,000 contributed by the counterpart\. At the same time, all components, with the exception of locally-procured equipment, were eligible for 100 percent reimbursement from the project\. Information regarding end-project counterpart contributions were not available for the ICR\. Summary of Credit Allocation and Disbursement (US$) Component Original Revised Allocation Final Disbursement Allocation (June 2002) Judicial Development Training 1,388,900 944,500 1,154,000 Consulting Services 298,600 298,600 122,300* Goods 187,500 632,000 153,700 Legal Development Training 180,600 90,300 0 Consulting Services (incl\. Public 298,600 388,900 380,200** awareness campaign) Goods 145,800 145,800 77,900 2,500,000 2,500,000 1,888,100 * of which $88,000 was for project management, including financial management of the project as a whole\. of which $25,200 was for project management 6\. Sustainability 6\.1 Rationale for sustainability rating: Sustainability of the project is judged to be unlikely\. While the impact of judicial training is viewed as positive, insufficient institutional and political support, as the project-funded assessment of court management and judicial process made clear, constrain the ability of the judiciary to focus on the tasks for which they are trained and hired\. Without significant investments in infrastructure, information, and training, gains supported by the project would be difficult to maintain\. In addition, the Bank's withdrawal from the sector for the near future reduced the chances of the investments made by the project being sustained\. The United Nations Development Programme (UNDP) is pursuing a pilot project at two courts - 7 - to improve court administration, and will also work on improving public awareness of judicial information and legal rights; implementation of that project may help to sustain the investments of this project\. With respect to development of the legal framework for land, busines and investment, sustainability is possible; MOLA has stated that the assessments undertaken through the project are being used as a basis for preparation of revised legislation\. 6\.2 Transition arrangement to regular operations: Arrangements for ongoing training and capacity building have not been confirmed\. The sector development strategy prepared by the MOJ assumes significant outside assistance, as does the training plan prepared for MOLA, however, donor assistance to the sector is limited at this time to a pilot project for model court administration\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Bank performance during project preparation is judged to be satisfactory\. The project was prepared within a very short time-frame, with very little experience in a highly sensitive and difficult sector\. The small project team established a dialogue with counterparts and pursued an appropriate program of technical assistance, despite government preference to use IDA funds for construction and hardware\. Bank management provided significant support to a project that was viewed as highly risky, with a very high chance of not achieving results\. 7\.2 Supervision: While the task team leader interacted extensively and on a daily basis with project counterparts to assist with technical sector issues and implementation in a manner that could be considered exemplary, on the whole supervision is judged to be unsatisfactory\. This is due to the lack of attention given to enabling an objective basis for evaluation, weak documentation of supervision, weak Bank management oversight, and lack of formal dialogue within the Bank regarding the objectives and achievements of the project\. The project was supervised on a limited budget, and the task team consisted for the first two years of the project of the task team leader and one staff resident in the country office\. This was considered sufficient thanks to the Arabic language capacity of the task team leader and the on-the-ground support at the country office\. However, changes in country office staffing, combined with the change at the ministerial level of the MOJ, resulted in the appearance of weak project implementation and government commitment\. The task team leader interacted with counterparts by phone and fax, and often undertook brief update visits in the context of other tasks, but little written information was produced with respect to project implementation and outputs\. For example, while six supervision missions are recorded during the supervision period, only three aide-memoires were prepared\. Finally, there was little focus on the end objectives of the project, although this was due in part to their lack of realism in the context of judicial and legal development in Yemen\. Bank support for the project waned following a change in country management\. A review of the Yemen portfolio was conducted shortly after the change in management, concluding that client commitment to judicial reform was not high\. As a result, a previously planned follow-on operation was dropped from the new CAS\. Bank management has stated that a future decision to be involved in the sector will depend on the results of the ongoing UNDP project\. Whether the Bank's withdrawal of support was correct or not, it reduced the Government's incentives to actively implement the remainder of the project\. The effect of this change in support -- and, in effect, in the Bank's strategy of engagement in crucial, but difficult, sectors -- highlights the weaknesses inherent in the short-term nature of Bank interventions\. Sector management was only lightly engaged in the progress of the project, in part due to to the task team - 8 - leader's not being under direct managerial supervision of the sector and therefore not in regular contact\. In addition, there was no sectoral expertise in the sector unit itself, resulting in an unclear understanding of the project\. Sector management did not press for a greater level of detail in project supervision reports, nor did it discuss project progress or strategy with the task team leader\. 7\.3 Overall Bank performance: Overall, Bank performance is rated satisfactory, on the basis of the quality of project preparation and in the strong dialogue built up between MOJ and MOLA staff and the task team leader\. Borrower 7\.4 Preparation: Borrower performance with respect to project preparation is rated satisfactory, particularly in terms of direct counterpart interactions with IDA\. Direct counterparts committed to an ambitious and potentially controversial program of activities\. However, mixed messages at the highest levels regarding willingness to proceed with the project were harbingers of future lack of government interest in the project\. 7\.5 Government implementation performance: Government performance with respect to project implementation is rated satisfactory despite the slow-down that resulted from changes at the Ministry of Justice\. A majority of project tasks were completed, and training continued, although the remaining non-implemented tasks had little impetus once the Bank decided not to pursue a follow-up APL\. 7\.6 Implementing Agency: The performance of the implementing agencies is judged to be satisfactory\. While formal project progress reports were not prepared (or requested by the Bank), the implementing teams tracked project disbursements and outputs well and worked well with the task team leader\. Project accounts were part of the ministerial accounts, but audits were prepared in a timely manner and did not indicate any problems\. There were some difficulties in procurement, which are understandable given the small amount of goods and services to be procured under the project, but this did not have an effect on the final outcome of the project\. 7\.7 Overall Borrower performance: Based on the above, overal borrower performance is rated as satisfactory\. 8\. Lessons Learned The experience of the project provides some lessons regarding the Bank's involvement in highly sensitive or contentious sectors, and regarding the Bank's management of learning and innovation projects\. First, with respect to the issue of the Bank's assistance to difficult but critical sectors, the project highlights the need for consistency in the Bank's strategy over an extended period of time and an understanding that there will inevitably be reversals in Government capacity to sustain momentum\. The Bank's tendancy to focus on the actions of individuals at particular points in time, rather than on the overall trend of government actions, is a particular weakness that needs to be overcome if it is to be successful in its mission\. With respect to learning and innovation projects, it is critical to honestly state what the learning objectives are, rather than to meet theoretical best-practice visions of what should be accomplished\. The extremely high monitoring and evaluation standards set for the project may have been appropriate for a country with relatively advanced sector monitoring capacity, or for a much larger project that could then allocate funds - 9 - specifically for monitoring and evaluation, but for an introductory LIC in a sector about which almost nothing was known, higher level outcome indicators should have been rejected in favor of simple output indicators\. Unfortunately, as this contradicts Bank guidelines regarding objective setting and logical framework development, it is unlikely that this lesson will be implemented in future operations with similar challenges\. The project provided some indication that it is possible to overcome disinclination to use foreign consultants for technical assistance, however, it is extremely important to balance the trade-offs between higher quality outputs from foreign consultants and buy-in from government counterparts\. In this project, heavy use of local consultants had a positive impact, but could potentially have had a greater impact if it had been combined with greater direct technical assistance from Bank staff during the course of supervision\. This was unfortunately not possible due to inadequate resources -- there are simply insufficient staff in terms of sectoral expertise and language ability, especially taking into account the other significant demands placed on them -- and security concerns that prevented staff from visiting Yemen\. The project provided an excellent example of the importance of local language skills\. For the judicial sector in Yemen, which has little interaction with the non Arabic-speaking world, there would not have been a project without an Arabic-speaking task team leader\. However, this also meant that much of project supervision was conducted by phone and fax, in Arabic\. This in turn placed additional importance on implementation documentation and thorough communications to management\. Finally, the project provided an example of the positive effect of ministry implementation\. At the time of project preparation, implementation responsibility for most Bank projects was placed in independent PIUs\. Placing implementation responsibility for the Legal and Judicial Development Project within the two relevant ministries (ministries that did not have previous experience with Bank projects) -- one of the first instances of the direction towards which the Bank was moving -- contributed in a positive way to ownership of the project by ministry staff and reinforcement of project goals\. However, it also placed additional burdens on the task team leader, and, as would be expected, resulted in a slowdown of activity as a consequence of the change in political leadership at the Ministry of Justice\. 9\. Partner Comments (a) Borrower/implementing agency: Project counterparts provided completion reports on the respective components of the project, which are provided in Annex 8\. Specific comments on the Bank's ICR were not received\. (b) Cofinanciers: Not applicable\. (c) Other partners (NGOs/private sector): Not applicable\. 10\. Additional Information - 10 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Assessment of the potential of training to Insufficient information to judge\. improve the effectiveness of the judiciary\. Improved capacity within MOLA to prepare Insufficient information to judge\. and advise on business and economic legislation\. Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate A cadre of trained judges 675 judges trained\. 675 judges trained A revised curriculum at the High Judicial Not completed\. Not completed\. Institute, and faculty trained in the revised curriculum A cadre of arbitrators trained in ADR 200 arbitrators trained 200 arbitrators trained mechanisms A diagnostic assessment and action plan to Assessment and recommendations Assessment and recommendations improve court administration and judgement completed\. completed\. execution Courthouse building plans Not completed\. Not completed\. A baseline study for an awareness campaign Study completed\. Study completed\. on the role of law and the judiciary in society A cadre of MOLA staff trained in issues of 30 staff participated in a training course\. 30 staff participated in a training course\. business, financial, and commercial law Diagnostic assessment of and action plan for Assessment and recommendations Assessment and recommendations the legal framework governing business, completed\. completed\. economic, and financial activities Diagnostic assessment of and action plan for Assessment and recommendations Assessment and recommendations the legal framework governing land tenure completed\. completed\. and titling 1End of project - 11 - Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Judicial Development Component 1\.96 1\.43 Legal Development Component 0\.56 0\.43 Public Awareness Costs 0\.10 0\.03 Total Baseline Cost 2\.62 1\.89 Physical Contingencies 0\.14 0\.00 Price Contingencies 0\.18 0\.00 Total Project Costs 2\.94 1\.89 Total Financing Required 2\.94 1\.89 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 0\.00 0\.36 0\.04 0\.00 0\.40 (0\.00) (0\.30) (0\.04) (0\.00) (0\.34) 3\. Services 0\.00 0\.00 2\.55 0\.00 2\.55 (0\.00) (0\.00) (2\.06) (0\.00) (2\.06) Total 0\.00 0\.36 2\.59 0\.00 2\.95 (0\.00) (0\.30) (2\.10) (0\.00) (2\.40) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 0\.00 0\.00 0\.23 0\.00 0\.23 (0\.00) (0\.00) (0\.23) (0\.00) (0\.23) 3\. Services 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (1\.60) (0\.00) (1\.60) Total 0\.00 0\.00 0\.23 0\.00 0\.23 (0\.00) (0\.00) (1\.83) (0\.00) (1\.83) 1/Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. - 12 - Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate IDA Govt\. CoF\. IDA Govt\. CoF\. IDA Govt\. CoF\. A\. Judicial Development 1\.87 0\.32 0\.00 1\.43 0\.00 76\.5 0\.0 0\.0 Component B\. Legal Development 0\.54 0\.09 0\.00 0\.43 0\.00 0\.00 79\.6 0\.0 0\.0 Component C\. Public Awareness 0\.10 0\.11 0\.00 0\.03 0\.00 0\.00 30\.0 0\.0 0\.0 Campaign - 13 - Annex 3\. Economic Costs and Benefits Not applicable\. - 14 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 05/22/1998 2 Senior Counsel/TTL; Counsel Appraisal/Negotiation 10/16/1998 3 Senior Counsel/TTL; Disbursement Specialist; Financial Management Specialist 10/31/1998 2 Senior Counsel/TTL Economist 05/24/1999 3 Senior Counsel/TTL; Economist; Financial Management Specialist Supervision 05/25/2000 2 Senior Counsel/TTL; S S Economist 10/10/2000 2 Senior Counsel/TTL: Senior S S Economist 02/14/2001 3 Senior Counsel/TTL; Senior S S Economist; Financial Management Specialist 07/29/2001 1 Senior Counsel/TTL S S 02/06/2002 2 Senior Counsel/TTL; Senior S S Economist 07/16/2002 1 Senior Counsel/TTL S S ICR Desk review only 1 Financial Sector S U Specialist/TTL (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 32 Appraisal/Negotiation 70 Supervision 161 ICR 10 Total 273 - 15 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 16 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 17 - Annex 7\. List of Supporting Documents 1\. Project Appraisal Document, Republic of Yemen, Legal and Judicial Development Project\. World Bank Report No\. 19567 YEM\. June 28, 1999 2\. Credit Agreement, Republic of Yemen and IDA, August 4, 1999 3\. Project Preparation and Supervision Files, including Aide-Memoires dated as follows, and their associated Project Supervision Reports, where applicable: June 2, 1998 February 14, 2001 February 6, 2002 July 15, 2002 4\. Quality at Entry Assessment, QAE3 5\. Final Report: Analysis of Legal Framework, and Training Program and Review of Organizational Arrangements and Job Descriptions (Ministry of Legal Affairs), GTZ International Services, May 2003 6\. The Judiciary of the Republic of Yemen: A study on Reform, Dr\. Yassin El-Ayouty, Esq\., September, 2001 7\. Legal Frame[work] of Lands and Real-Estate Possession in Yemen Republic, Ahmed Al-Abiad and Dr\. Hamzah M\. Shaher, date unknown\. - 18 - Additional Annex 8\. Counterpart Completion Report The following are summaries of completion reports submitted by project implementation teams at the Ministry of Justice and the Ministry of Legal Affairs\. The Ministry of Justice completion report was prepared by Ms\. Fatma Seif Al-Shibani (Project Financial Manager), Mr\. Lua Ismail Al-Wazir (Deputy Project Coordinator), and Dr\. Mohammed Gaafar Qasem, Former Under-Secretary at the Ministry\. This summary was prepared from a translation of their report\. The Ministry of Legal Affairs completion report was prepared by Mr\. Jamal Ali Ahmed, Project Coordinator\. Judicial Development Component Pursuant to the Development Credit Agreement signed on 31 May 1999 between the Government of the Republic of Yemen and International Development Association to finance the Legal and Judicial Development Project in the Republic of Yemen in the amount of 1\.8 million Special Drawing Rights (equivalent to $2\.5 million dollars), the proceeds of this credit have been distributed to the Ministry of Justice and the Ministry of Judicial Affairs\. The Ministry of Justice component, which totals $1,875,000, aims to: 1\. Improve the performance of the judicial system\. 2\. Enhance confidence in the judicial system\. 3\. Carry out a training program for members of the judiciary\. 4\. Carry out a training program to strengthen the capabilities and upgrade the skills of arbitrators in alternative dispute resolution mechanisms\. 5\. Carry out diagnostic assessments of court administration and judgment execution regulations and practices\. 6\. Prepare architectural plans to construct and rehabilitate courthouses countrywide\. The component funded training, technical assistance and studies, and the purchase of goods and equipment\. These are described below: 1\. Training Pursuant to the project, the Ministry signed a Memorandum of Understanding on 19 June 1999 for training Yemeni judicial cadres in the Arab Republic of Egypt\. This was in implementation of a Cooperation Protocol signed between our country and the Arab Republic of Egypt and covering legal and judicial activities\. The Memorandum of Understanding provides for setting up a training program consisting of 3-6 month training courses\. Each training course consists of two components\. One component, to be held in the National Center of Judicial Studies, is a series of lectures and workshops discussing actual cases\. Training objectives include presenting the underlying principles and regulations governing court procedures, public prosecutors offices and other legal institutions and allowing the trainees to share their judicial experiences in order to gain first-hand knowledge of the work system in place and how it is managed in courts and public prosecutors offices\. The training also provides opportunities for practical training and how to resolve practical and legal issues, gaining knowledge of the use of modern equipment and databases in the trainees' judicial field\. The following training courses were conducted\. External training was held largely in Cairo; internal training was held primarily in Sana'a, using trainers from the Egyptian National Center of Judicial Studies\. - 19 - External Training 1\. Public Prosecution Course length: Four months from 22 April 2000 through 21 August 2000\. Participants: 14 assistant district attorneys from public prosecution offices\. Training site: National Center of Judicial Studies, Arab Republic of Egypt\. Topics discussed included: 1\. The organizational structure of public prosecution 2\. Judicial inspection instructions and methods 3\. Criminal procedures 4\. Public Penal Code 5\. Applied criminal investigation and qualities of the investigator 6\. Substantiation controls and criminal proof 7\. Criminal warrants system 8\. Applying doctrine in criminal cases 9\. Ethics of hearing 10\. Judicial values and traditions 11\. Judicial logic 12\. Environmental crimes and the prosecution's role in curbing them 13\. Violation of copyrights 14\. Methods of conducting studies 15\. Auxiliary criminal sciences (forensic medicine, material evidence, forgery, counterfeiting, drugs and poisons) 16\. Human rights law 17\. Protecting intellectual property Coursework lasted five weeks, followed by a week-long evaluation test conducted by a board of consultants, which covered all topics that had been discussed\. The course was followed by practical training, consisting of case studies of actual cases\. These cases were distributed to the trainees to study in a workshop led by consultants\. This was designed to allow the trainees to familiarize themselves with the nature of work, the type of cases that would be referred to them, and how to investigate those cases and make appropriate decisions on them before a final disposition\. The practical component ran from 27 May 2000 through 31 July 2000\. Finally, participants participated in on-the-job training in courts in Cairo\. 2\. Judicial Studies Length of course: Six weeks from 1 July 2000 through 14 August 2000\. Participants: 20 assistant judges Training site: National Center of Judicial Studies, Arab Republic of Egypt\. Course objectives: Prepare judges to sit at the Bench, to master subject matter and procedures, to understand legal texts and their purposes, and to understand the legal opinions of those texts\. The training covered the law of civil and commercial procedures and law of evidence, civil law, and criminal procedure\. In addition, participants were able to attend civil or criminal case hearings and to discuss them with Egyptian judges\. Field trips were made to the Court of Appeal, the Constitutional Court, and the Center of - 20 - Judicial Data\. 3\. The World Bank's Judicial and Legal Reform Conference Length of course: One week in July 2000 Participants: One person Place: Marriott Hotel, Washington, D\.C\. Organizing agency: World Bank 4\. Commercial Law Course length: 31 days from 1 September 2000 through 3 October 2000\. Participants: 30 presiding judges and members of the commercial appeals courts and presiding judges and members of commercial courts of first instance\. Site of training; National Center of Judicial Studies and Cairo Regional Center for International Commercial Arbitration The purpose of the program was to keep the judges of commercial courts abreast of recent developments in this field in general while focusing on investment and commercial laws and codes, maritime laws and international laws and treaties in the commercial field\. The training course covered commercial contracts and sales, bank transactions, bankruptcy and debt workout, stock market activities, international agreements and transport and shipping law, among other topics\. 5\. For Supreme Court Judges Length of course: One week from 18 October 2000 to 26 October 2000 Participants: 10 Supreme Court judges Place: Court of Appeal, Arab Republic of Egypt 6\. Judicial Inspection Length of course: One week from 18 October 2000 to 26 October 2000 Participants: 10 members of the Judicial Inspection Board Place: Ministry of Justice, Public prosecution, Arab Republic of Egypt 7\. Arbitration A training program for licensed arbitrators held at the Cairo Regional Center for International Commercial Arbitration was attended by five arbitrators\. The course featured theoretical training and practical training covering a hypothetical dispute case in the field of international commercial arbitration\. The course covered the following topics: 1\. Modern trends concerning arbitration rules and other means of resolving international commercial disputes 2\. Arbitration agreement basic data 3\. Forming an arbitration board 4\. The law that must be applied with respect to procedures and subject 5\. Arbitrament: Its nature, data, interpretation, design, additional arbitrament 6\. Nullification of arbitrament - 21 - 7\. Executing arbitrament and related problems 8\. International construction contracts 9\. Role of the arbitration agency in the arbitration process 8\. Electronic Commerce and International Insolvency Under the auspices of Dr\. Esmat Abdul Meguid, Secretary General of the Arab League, the Regional Center for International Commercial Arbitration, in coordination with the Arab League and jointly with United Nations Council for International Trade law (UNCITRAL), the World Bank, and the International Council for Commercial Arbitration (ICCA), International Federation of Insolvency Professionals (INSOL) held an International Conference on Electronic Commerce and International Insolvency during the period from 20-22 November 2000\. On 23 November 2000 a meeting of the Arab Judicial Club was held at the Arab League Headquarters\. Eleven judges and arbitrators from all parts of Yemen participated\. 9\. International Criminal Court Issues Length of course: From 8 to 14 November 2000 Number of Participants: 5 judges Place: Arab League Subject: Coordinating Arab countries' stance on ratifying the International Criminal Court Act 10\. Criminal Law Length of course: Fourteen days from 10 March 2001 through 23 March 2001 Participants: 22 chiefs and members of penalty branches and presidents and members of penal courts of first instance from throughout the Republic of Yemen\. Training site: National Center for Judicial Studies, Arab Republic of Egypt 11\. Anticorruption Length of course: Fourteen days from 10 March 2001 through 23 March 2001 Participants: 14 public funds judges from all governorates of Yemen\. Training site: National Center for Judicial Studies, Arab Republic of Egypt 12\. Resolving Commercial Disputes Length of course: 7-10 May 2001 Participants: 5 arbitrators Subject: Discussing approaches to resolving commercial disputes, including arbitration and conciliation, etc\., as well as governing laws in the Gulf States and Yemen 13\. Commercial Law Length of course: 10-16 June 2002 Participants: 10 commercial judges Training site: National Center for Judicial Studies, Arab Republic of Egypt Subject and activity: A symposium on how to resolve some commercial disputes in accordance with Egyptian and Yemeni laws and a visit to a number of Egyptian courts specializing in commercial disputes - 22 - 14\. Civil Law Length of course: 3-4 September 2002 Participants: 15 judges Subject: Studying types of contracts and civil commitments and how to apply practical methods to resolving relative disputes 15 and 16\. Appellate Court Issues Length of course: 1-10 June 2003, and 14-27 June, 2003 Participants: 28 appeal judges Training site: National Center for Judicial Studies, Arab Republic of Egypt Activity: Group discussion of a number of appeals in civil and commercial lawsuits and court decisions on those appeals 17\. Judicial Review and Inspection Length of course: 21 June to 3 July 2003 Participants: 20 judges and district attorneys Training site: Judicial inspection councils at Ministry of Justice and Public Prosecution, Egypt Subject: Group discussion of methods used for inspecting judges and district attorneys and results achieved Internal Training Training held in Yemen consisted largely of legal and judicial overview and refresher courses, computer training, and miscellaneous courses\. The overview ("qualifying") and refresher courses were as follows: A total of three 3-month "Qualifying" Courses for judges and district attorneys were held in 2000, 2001, and 2002, training a total of 200 judges and district attorneys\. A comprehensive course in legal and judicial topics, the courses covered: 1\. Commercial law (bank transactions, checks, company mergers, bankruptcy, shipping, copyright law) 2\. Civil law 3\. Penal code 4\. Penal procedures 5\. Law of proof 6\. General topics about the administration of justice, arbitration, corruption, and ethics of the judiciary, and 7\. Law of civil and commercial procedures In addition, the course included practical training and field trips to criminal labs and the department of prisons\. Four 2-week "refresher" courses were held between 2000 and 2002 for a total of 210 judges and district attorneys\. Course objectives were to review case studies, with a view toward redressing deficiencies and inconsistencies in legal application\. The course covered the following topics: - 23 - 1\. Terminating contracts 2\. Drawbacks of consent 3\. Arrest and temporary detention warrants 4\. Forensic medicine 5\. Criminal procedures 6\. Civil law Two 3-month courses for court secretaries, held in 2002\. A total of 70 court secretaries participated in the courses, which consisted of training in court procedure, the substance of laws, court records and forms, etc\. Five courses in computer technology and use of the Ministry of Justice's Judiciary Data Center\. A total of 374 judges, clerks, and other employees of the Ministry of Justice were trained through these courses\. In addition, training held in Yemen and funded through the project included the following courses: 1\. Arbitration and Arbitration Procedures Length of course: One week from 24-29 June 2000 Participants: 50 arbitrators, commercial judges and jurists from all parts of the Republic Training site: Center for Conciliation and Arbitration of Yemen, Sanaa Course activity: Discussing arbitration procedures and arbitrament\. Participants discussed a number of issues, including major characteristics and legal principles of international commercial arbitration, bilateral and multilateral arbitration, and procedures, decisions and challenges to those decisions\. 2\. Arbitration and banking and construction dispute resolution: Length of course: One week from 21-26 October 2000 Participants: 50 arbitrators, commercial judges and jurists from all parts of Yemen Training site: Sanaa Course objectives: Banking and construction dispute resolution\. The course covered the following topics: 1\. Bank transactions 2\. Defaulted loan disputes resolution alternatives 3\. Issues related to conflict of laws governing banking and construction arbitration 4\. Dispute resolution in accordance with FEDIC provisions governing construction contracts 5\. Role of the expert 6\. Multiple parties in construction contracts 3\. The Role of Litigants and Related Parties in the Arbitration Process Length of course: 17 March through 22 March 2001 Participants: 59 judges from all governorates Training site: Hedda Hotel, Sanaa Course objectives: - 24 - 1\. Upgrading the skills and scientific and practical experiences of participants engaged in commercial and civil arbitration and introduce them to the role of litigants and other parties in the arbitration process\. 2\. Gaining knowledge of modern rules and laws on which international trade arbitration is based\. 3\. Studying the preventive and auxiliary role of judiciary in the arbitration process, including the role of national judiciary in executing or nullifying foreign arbitration rules\. 4\. Combining the theoretical component with a practical training involving a number of hypothetical disputes\. The objective is to increase the participants' scientific and practical competences\. Course topics included the rules and principles governing commercial arbitration, and the roles and responsibilities of various actors in the arbitration process\. The course included practical training in resolving disputes 4\. Islamic Law Length of course: Four months starting 3 August 2002 Participants: 40 judges and district attorneys Training site: Judiciary Data Center, Ministry of Justice, Sanaa Course objectives: Studying several Sharia cases in accordance with the provisions of Islamic Law and Yemeni Civil Law 5\. Court Administration Length of course: For one week starting 17 August 2002 Participants: 30 judges Training site: Higher Judicial Institute, Sanaa Course objectives: Discussing the best and most appropriate court administration procedures in various courts *********************** 2\. Technical Assistance and Studies The project funded a study of court infrastructure needs\. The study was assigned to a local office (Designs World) The project funded a study on assessing court administration, which was carried out by Dr\. Yaseen Al-Ayyouti, an international consultant\. 3\. Goods and Equipment: The project provided support to libraries of the Ministry of Justice, the Public Prosecutor's office, the Higher Judicial Institute, and courts by procuring for those libraries reference materials and legal, jurisprudent and legislative books, as well as Yemeni legislative references and necessary equipment\. A large number of legal and Islamic Law texts were procured to meet the needs of five libraries in a number of courts\. The Ministry of Justice purchased the books and equipment needed by the libraries and a distribution plan was prepared to distribute the books and references as follows: 1\. Supplying ten established court libraries with new books on Islamic Law\. 2\. Supplying the public prosecution library with books and references that have been selected and purchase - 25 - by the Office of the Attorney General\. 3\. Supplying the Higher Judicial Institute with whatever legal texts on Islamic Law are available\. In addition, the Judicial Data Center was equipped with a computer to start networking courts, prosecutor's offices, the Ministry of Justice, and prisons\. Bids were invited for procurement of a large number of computers and network connectivity equipment, in addition to the purchase of a card issuance system\. Technical and financial committees at the Ministry of Justice finalized a financial and technical analysis, but unfortunately after the closing of the credit\. Obstacles Faced by the Project 1\. Delays in approving and signing requests for withdrawals: The most significant obstacle encountered by the project was the unjustified long delay in approving and signing requests for withdrawals from the account to finance the various courses listed in the project by the competent agencies in the Ministry of Justice\. 2\. Recruitment of consultants for technical assistance and training: $171,000 was earmarked for technical assistance\. Because the date of arrival of those experts and their names were not known, this allocation was not used in the remaining period of the credit\. Therefore, a decision was taken to amend the allocation in this category to meet the needs of the Ministry and courts for devices and equipment after securing the approval of the concerned departments and the World Bank\. Indeed, the allocation was added to the goods category and bids were invited for procurement of computers and network connectivity equipment to connect the Ministry of Justice, the public prosecutor's office, the Central Prison, commercial courts and a number of appeal courts\. However, as a result of a delay by the concerned departments in the Ministry of Justice, the credit closed before the bid was finalized\. Legal Development Component The following have been achieved: Diagnostic study for commercial, economic, and financial legislation\. A legislative action plan, including terms of reference for follow-up work, proposed organizational arrangements and job descriptions for MOLA staff, and a detailed training plan for MOLA staff\. Training of MOLA staff in (i) commercial and economic legislation and (ii) computer, internet, and database operations\. Thirty MOLA staff participated in the former course, held at the Egyptian National Center for Judicial Studies, which covered general issues regarding legal statutes (objectives, institutional and political framework, drafting and amendment, etc\.) and commercial and financial laws (investment laws, banking, electronic transactions, private-sector participation in infrastructure agreements [e\.g\., build-own-operate-transfer agreements], intellectual property rights, international financial agreements and international borrowing, World Trade Organization agreements, financial markets, anti-money laundering, among others)\. In addition, the training included practical training at the legal department of the Egyptian State Council and at the Egyptian Ministry of Justice\. Diagnostic study for the legal framework of land ownership, ownership, deeds, and land - 26 - registration, and a proposed reform plan\. Baseline study of public opinion of the role of law and the judicial system, as an input into a planned public awareness campaign Goods: the project enabled the procurement of miscellaneous computers and other office equipment for Ministry use, including for Ministry branches in Ibb, Hajja, Mahweet, Aden, and Sa'da\. In addition, the project funded the purchase of encyclopedias of Arab laws and a database of Arab laws\. Particular accomplishments of the project are the completion of a number of diagnostic studies for the legal framework of financial, economic, and commercial nature, and the beginnings of the strategy for public awareness of legal issues\. This work constitutes a pillar for preparation and implementation of the legal plan and program which the Ministry is currently preparing, and which will then be submitted to the Cabinet for discussion and approval\. In addition, the training courses provided to MOLA staff were the first of this kind of for the Ministry, as the Ministry has never held such courses before\. Staff were introduced to several new topics, such as Build-Own-Operate-Transfer (BOOT) infrastructure projects and anti-money laundering\. Finally, the purchase of reference materials of Arab laws is extremely important for the Ministry and those interested in the law\. There were no serious challenges faced in the course of the project\. The task manager and the legal team worked in solidarity, despite security problems in the region between September 2002 and April 2003\. Most of the procedures were effected via fax and phone as well as visits made by Mr\. Abushakra\. We would like to express our deep acknowledgement and appreciation to Mr\. Hadi Abushakra for his remarkable efforts and illuminating instructions with regard to the project\. The Ministry is interested in further implementation of activities through the following: Keeping in touch with other relevant ministries to keep them informed on the final reports and on ways they can implement the recommendations of the report\. Approving the training plan and looking for local and foreign financial resources for its implementation\. - 27 - - 28 -	REVIEW
P065973	Document of The World Bank Report No: ICR00001049 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-35090 TF-26886) ON A CREDIT IN THE AMOUNT OF SDR 13\.2 MILLION TO THE LAO PEOPLE'S DEMOCRATIC REPUBLIC FOR AN AGRICULTURAL DEVELOPMENT PROJECT June 23, 2009 Rural Development, Natural Resources and Environment Sector Unit Sustainable Development Department East Asia and Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective November, 2008) Currency Unit = LAK - Kip LAK 1\.00 = US$ 0\.0001167952 US$ 1\.00 = 8,562 LAK FISCAL YEAR October 1 to September 30 ABBREVIATIONS AND ACRONYMS APB Agricultural Promotion Bank ADP Agricultural Development Project CAS Country Assistance Strategy CETU Central Extension Training Unit CTA Chief Technical Advisor DAFSO District Agriculture and Forestry Service Office DCA Development Credit Agreement EIRR Economic Internal Rate of Return EMAP Environmental Management Action Plan EMP Environment Management Plan FIGs Family Irrigation Groups GOL Government of Lao ICB International Competitive Bidding ICRR Implementation Completion and Results Report IDA International Development Agency IPM Integrated Pest Management JSDF Japanese Social Development Fund KPI Key Performance Indicators LWU Lao Women's Union M&E Monitoring and Evaluation MTR Mid-Term Review NAFES National Agriculture and Forestry Extension Service NAFRI National Agriculture and Forestry Research Institute NCB National Competitive Bidding NOL No Objection Letter NPV The Net Present Value PAFSO Provincial Agricultural and Forestry Service Office PAD Project Appraisal Report PCO Project Coordination Office PCR Project Completion Report PDO Project Development Objectives PETU Provincial Extension Training Unit PIS Provincial Irrigation Services PPIO Project Provincial Implementation Office PRA Participatory Rural Appraisal RAP Resettlement Action Plan TA Technical Advisor SGSA Second Generation Special Accounts SMS Subject Matter Specialists STEA Science, Technology and Environment Agency SUFORD Sustainable Forestry and Rural Development Project VDC Village Development Committee VDF Village Development Funds VIP Village Investment for Poor WUG/WUA Water User Group/Water User Association Vice President James W\. Adams, EAPVP Country Director Annette Dixon, EACTF Sector Manager Rahul Raturi, EASRE Project Team Leader Ulrich Schmitt, EASRE ICRR Team Leader Oliver Braedt, EASRE FOR OFFICIAL USE ONLY LAO PEOPLE'S DEMOCRATIC REPUBLIC Agricultural Development Project CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design \.1 2\. Key Factors Affecting Implementation and Outcomes\.5 3\. Assessment of Outcomes\.12 4\. Assessment of Risk to Development Outcome \.16 5\. Assessment of Bank and Borrower Performance\.17 6\. Lessons Learned (both project-specific and of wide general application) \.19 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \.21 Annex 1\. Project Costs and Financing \.21 Annex 2\. Outputs by Component\.24 Annex 3\. Economic and Financial Analysis\.31 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \.40 Annex 5\. Beneficiary Survey Results\.44 Annex 6\. Stakeholder Workshop Report and Results \.45 Annex 7\. Summary of Borrower's ICRR and/or Comments on Draft ICRR \.46 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\.51 Annex 9\. List of Supporting Documents\.52 MAP No\. 3 A\. Basic Information Lao People's LA-Agricultural Country: Project Name: Democratic Republic Development Project Project ID: P065973 L/C/TF Number(s): IDA-35090,TF-26886 ICR Date: 06/24/2009 ICR Type: Core ICR Lending Instrument: SIL Borrower: LAO PDR Original Total XDR 13\.2M Disbursed Amount: XDR 13\.1M Commitment: Environmental Category: B Implementing Agencies: Ministry of Agriculture and Forestry Cofinanciers and Other External Partners: B\. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 04/12/2000 Effectiveness: 11/26/2001 Appraisal: 01/29/2001 Restructuring(s): Approval: 05/29/2001 Mid-term Review: 03/07/2005 04/01/2005 Closing: 06/30/2007 06/30/2008 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Moderately Satisfactory Overall Bank Overall Borrower Performance: Moderately Satisfactory Performance: Moderately Satisfactory C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Performance Indicators (if any) Rating Potential Problem Project Yes Quality at Entry None at any time (Yes/No): (QEA): i Problem Project at any Quality of Yes Moderately Satisfactory time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Agricultural extension and research 13 13 General public administration sector 24 24 General transportation sector 10 10 General water, sanitation and flood protection sector 3 3 Irrigation and drainage 50 50 Theme Code (as % of total Bank financing) Decentralization 17 17 Other rural development 33 33 Other social protection and risk management 33 33 Participation and civic engagement 17 17 E\. Bank Staff Positions At ICR At Approval Vice President: James W\. Adams Jemal-ud-din Kassum Country Director: Annette Dixon Ian C\. Porter Sector Manager: Rahul Raturi Mark D\. Wilson Project Team Leader: Oliver Braedt Rahul Raturi ICR Team Leader: Oliver Braedt ICR Primary Author: Oliver Braedt F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The overall objective of the Agricultural Development Project (ADP) was to assist the Government of Lao (GOL) to reduce rural poverty in the project provinces by improving and increasing agricultural production\. This objective reflected GOL priorities regarding poverty reduction and the development of irrigated farming systems, and was in line with the World Bank's Country Assistance Strategy (CAS), which had poverty reduction as its overarching priority\. It was also consistent with the government strategy to devolve responsibilities and activities in support of agricultural development to the Provincial ii Agricultural and Forestry Service Office's (PAFSOs) and District Agriculture and Forestry Service Office's (DAFSOs)\. The Key Performance Indicators used to assess progress on outcomes are presented below\. Revised Project Development Objectives (as approved by original approving authority) The development objective was not formally revised during the course of the project\. (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 1 : Increased agricultural productivity in project-supported irrigation schemes: cropping intensity (CI) and paddy yields - 30% families - CI to increase by with rice Cropping Intensity (CI) =20% over 2000/01 surplus; - 23% with surplus Value 109% levels; - 70% with - 60% with rice quantitative or - yield levels for different - yields to increase rice sufficiency; Qualitative) paddy production systems by 15% over sufficiency; - 18% with rice 2000/01 levels - 0% with rice deficit deficit Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments Assumptions concerning CIs inconsistent (PAD indicates 53% and 20% (incl\. % increases and DCA 20%)\. Revised set of indicators developed at MTR\. achievement) Underachievement reflects delay in completion of infrastructure\. Indicator 2 : Improved access to basic agricultural services 50% of households Value No households adopting in project villages -50% trained - 50% trained quantitative or improved practices reporting farmers adpt farmerrs adopt new Qualitative) improved access new and adopting technologies technologies improved practices Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments No indicator given in PAD; while target is provided in DCA\. Revised indicator (incl\. % developed at MTR with target reported 100% achieved at closure\. (one time achievement) during last cropping season of project in 2007/08) Indicator 3 : Increase in household incomes Net farm income - 25% (LAK14- average household to increase by M) increase in income in irrigation 100% (over household villages increased Value 2000/01 levels) income from by LAK 17\.32 quantitative or No baseline data in PAD two years after agric\.producti million; Qualitative) completion of on in irrigation- average household irrigation villages; income in VIP rehabilitation - 20% increase villages increased works in household by about 50% iii income from activities in VIP villages Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments Indicator unquantified in PAD, with a target provided in DCA\. Revised (incl\. % indicators developed at MTR distinguishing between irrigation project villages achievement) and VIP villages\. Targets reported as achieved but not verifiable through formal survey data\. Information (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Programme for rehabilitating irrigation schemes implemented: 1)Increase in area benefiting from water security during rainy season Indicator 1 : 2)Increase in secure irrigation for dry season cropping: (a) of paddy; and (b) non- rice cash crops 3)Water User Groups/As 1) 7,320 ha 2) - 1,800 ha paddy 1) 7,250 ha 1) No baseline - 200 ha 2) 5,712 ha paddy 2) No baseline 1) 7,070 ha non-rice casch 2) No target set crops and Value 3) No WUGs established 3) Nos\. WUGs 3) WUA 115 ha non-rice (quantitative on gravity-supply taking over O&M established in cash crops or Qualitative) schemes, only at pump 3) 1 WUA and 18 schemes responsibilities all irrigation WUGs 4) No baseline 4) No target set schemes 4) Tertiary 4) 796 tertiary laterals for canals - 7,250 ha 2,000 ha completed completed Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments Area benefiting from secure irrigation in wet season taken as irrigable area or (incl\. % 'service area'\. Original targets were modified during implementation due to achievement) changed schemes (one each in Attapeu and Khammouane Provinces) and three cancellations\. Targets ac Programme for improving village access and water supplies/sanitation: 1) Village access tracks renovated Indicator 2 : 2) Transportation costs reduced 3) Drinking water wells and boreholes installed and equipped 4) Family and school sanitary facilities constructed Value 1) No baseline 1) 165km 1)165 km 1) 104km plus (quantitative 2) No baseline 2) No target set 2) Farm additional length on or Qualitative) 3) No baseline 3) Nos\. of products canal banks iv 4) No baseline households with transportation 2) Farm access safe water costs reduced transportation costs 4) No target set by 50% reduced by 35% 3) 140 wells 3) 200 wells constructed constructed; 164 and 200 pumps installed\. pumps 4) 5,363 family pits installed\. and 42 school pits 4) 5,000 constructed sanitary pits constructed Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments Access tracks sub-component reduced partly due to unit cost increases and partly (incl\. % to take account of provision of access facilities as part of irrigation rehabilitation achievement) works; shallow well target not met as wells in Saravane cancelled due to water quality Village Investment for the Poor: 1) Sub-projects implemented Indicator 3 : 2) Households participating in VIP 3) Proportion of participating households from ethnic minorities 1) 601 VIP sub-projects 1) 601 VIP sub- implemented projects 2) Nos\. implemented families 2) approx\. 6,000 Value Minimum 50% of participating families (quantitative No baseline total households in 3) 50% participating or Qualitative) project villages participating 3) 60% households participating from ethnic households from minorities ethnic minorities Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments (incl\. % Targets substantially achieved and activities firmly supported by beneficiaries\. achievement) Strengthening of Agricultural Services: 1) Establishment of Central and Provincial Extension Training Units Indicator 4 : 2) Staff and farmer training in new technologies 3) Adaptive research and demostration activities 1)No CETU or PETUs 1)One Central and 1)All 1) 100% of Value 2) No baseline four Provincial extension staff extension staff (quantitative 3) No activities ETUs established trained trained in extension or Qualitative) 4) No activities 2)Upgrading 2) 50% of service delivery DAFSO staff trained 2) 50% trained 3) No\. farmers farmers adopt farmers adopted v adopting improved new new technologies practices technologies 3) Yield increases 4) On-farm 3) trained from new demonstrations farmers technologies reach achieve 20% 30% yield increases Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments (incl\. % Revised indicators and targets developed at MTR stage\. Targets achieved\. achievement) Indicator 5 : Environmental Management 100% field 100% field staff 50% of Provincial staff trained trained for Value agricultural staff for supervisingsupervising (quantitative No baseline with improved implementatio implementation of or Qualitative) understanding of n of EMP in EMP in EM issues construction construction activities activities Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments (incl\. % Target modified at MTR and achieved by completion achievement) Indicator 6 : Implementation arrangements Administrative Key operations Manual manuals developeddeveloped and and applied\. M&Eimplemented\. Administrative Value system developed M&E system Manual developed (quantitative No baseline and timely revised, staff and approved by or Qualitative) reporting & trained and NAFES; M&E evaluation regular system revised and reporting system progress and reporting ongoing evaluation reports produced Date achieved 05/29/2001 05/30/2001 04/01/2005 06/30/2008 Comments M&E system developed but only fully functional in 2006; retro-active data (incl\. % collection from 2004 and questionable data quality\. achievement) G\. Ratings of Project Performance in ISRs Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 06/13/2001 Satisfactory Satisfactory 0\.00 vi 2 11/15/2001 Satisfactory Satisfactory 0\.00 3 02/15/2002 Satisfactory Satisfactory 0\.30 4 09/25/2002 Satisfactory Satisfactory 0\.30 5 12/23/2002 Satisfactory Satisfactory 0\.66 6 06/05/2003 Satisfactory Satisfactory 0\.82 7 12/17/2003 Satisfactory Satisfactory 1\.52 8 03/29/2004 Satisfactory Satisfactory 2\.02 9 10/12/2004 Satisfactory Satisfactory 3\.31 10 06/16/2005 Satisfactory Moderately Satisfactory 4\.50 11 02/12/2006 Moderately Satisfactory Moderately Unsatisfactory 7\.44 12 06/30/2006 Moderately Satisfactory Moderately Unsatisfactory 9\.41 13 12/29/2006 Moderately Satisfactory Moderately Satisfactory 11\.89 14 10/15/2007 Satisfactory Satisfactory 18\.64 15 08/05/2008 Satisfactory Satisfactory 19\.56 H\. Restructuring (if any) Not Applicable I\. Disbursement Profile vii 1\. PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN 1\.1 Context at Appraisal Country and Sector Context The project focused on the overarching priority of the World Bank's Country Assistance Strategy in place in 2001, namely poverty reduction\. It was also consistent with the CAS's objectives for the rural economy, which reflected the importance of the agriculture sector in contributing more than 50 percent of GDP and providing employment to over 80 percent of the country's labor force\. Wide-ranging sector work had been undertaken prior to project inception and the design responded to the key issues faced by the sector: (a) weak institutional and human resources capacity; (b) inadequacies in rural infrastructure and related support services; and (c) a weak enabling environment for rural sector development\. At the time of appraisal, annual sector growth rates had fallen from nearly 4 percent in the 1980s to around 3 percent and lower in the late-1990s\. Total cultivated area averaged at 700,000 ha, of which rice accounted for more than 80 percent\. However, only a small percentage was under irrigation and the sector was unable to meet the needs of both a growing population and provide surpluses, either for export or for food and feed processing industries\. Within this context, the project was conceived as a first phase of a long-term program in support of the Government's strategy for supporting growth in the agricultural sector and eliminating rural poverty\. It was also intended that the project would reinforce the Government's program of decentralization with increased responsibility devolved to Provincial and District administrations and community-level involvement in implementation\. Thus, the choice of project area was intended to target provinces with under-utilized agricultural potential and high incidences of poverty, proximity in geographic coverage, and ensure complementarily with other Government of Lao (GOL) programs\. 1\.2 Original Project Development Objectives and Key Performance Indicators The PAD is not consistent in the definition of the Project Development Objectives (PDOs)\. According to Section A1, "the primary objective of the project was to reduce rural poverty by improving and increasing agricultural production\. This it will do by taking a community-based approach, in designing and implementing components which directly impact the lives of the poor in the participating provinces and districts\. By addressing the underlying constraints faced by the agricultural sector, the project will also have a long-term positive impact on sector growth\. This too will contribute to reducing rural poverty"\. The results framework in Annex 1 states the following PDO: "Key constraints are removed to intensifying agriculture, increasing agricultural productivity, and providing basic services for low-income subsistence farmers through responding to community priority needs in target project areas"\. Given that the PAD mentions several objectives without a clear hierarchy, the ICRR has taken the PDO as stated in the 1 Development Credit Agreement (DCA) as this is legally binding and was not revised during project implementation\. The DCA defines the PDO as follows: "The objective of the project is to assist the Borrower in reducing rural poverty in the project provinces through the improvement of, and increase in agricultural production"\. In view of the discrepancies between the PAD and DCA regarding the Key Performance Indicators (KPI), with the PAD only establishing target values for a few outcome and output indicators and no baseline values provided, the ICRR uses KPIs as defined in the DCA including the target values\. At outcome level, these are: (a) increased agricultural productivity in project-supported irrigation schemes, with cropping intensity and paddy yields by 20 percent and 15 percent, respectively; (b) improved access to basic agricultural services: at least 50 percent of households in project area reporting improved access to advise from extension staff at mid-term and adopting improved agricultural practices at project closing; and (c) increase in household incomes by 100 percent over 2000/01 levels 2 years after completion of irrigation rehabilitation work\. The output-level KPI for each component of the project are detailed in Section F of the data sheet together with a discussion of their appropriateness in Section 2\.3\. 1\.3 Revised Project Development Objectives and Key Indicators, and reasons/justification The Project Development Objective was not formally revised during the course of the project\. However, following the April 2005 Mid-Term Review (MTR), KPIs were further quantified and additional KPIs were introduced, both at outcome and output levels3\. Baseline values were added from different years but the source and validity of this data could not be verified by the ICRR team\. These adjustments, and changes were, however, not reflected through legal amendments or approval requested at Vice President and/or Board level\. Changes were as follow: (a) indicators for measuring the impact of increased agricultural production and productivity on the income and food self-sufficiency of the target population were fine-tuned and quantified; (b) an additional key indicator reflecting the incidence of water-borne diseases was included at MTR in order to assess the impact of the social infrastructure works sub-component; and 3Output indicators identified in the PAD were restated as intermediate outcome indicators and target values were quantified where missing\. 2 (c) an additional indicator Village Development Committees developed and functioning was intended to assess the impact of project support on community-level capacities\. 1\.4 Main Beneficiaries The project's primary target groups were poor rural families (involving more than 50,000 individuals), primarily small-scale subsistence farmers and landless laborers within the four project provinces\. While a substantial proportion of project investments are targeted at rural populations involved in irrigated agriculture, the Village Investment for the Poor (VIP) component (Component 2) was targeted at landless households in irrigation villages, as well as at the poorest villages in the non-irrigated, upland areas, and within these at women, ethnic minorities, and poorer households\. The benefits from the project's activities accrue at several levels: (a) rehabilitating irrigation schemes results in increased cropping intensities (largely due to providing secure irrigation during the dry season), improved water control during the wet season and better on-farm water management, and better farming practices through extension and on-farm research, access to improved seeds and diversification into ordinary rice and other crops, all contributing to increased crop production and farm incomes; (b) support for social infrastructure (water supplies, sanitation and access roads) result in both direct social and economic benefits to all rural households in the project area; and (c) income generating activities under the VIP components targets poor households with no access to irrigation\. Significant institutional, social and economic benefits accrue from the institutional strengthening measures at all levels of government involved in the project, as well as for the farmers through improved technical support and their participation in the decision-making process\. 1\.5 Original Components At appraisal, the Agricultural Development Project (ADP) had six main components: (1) Rural Infrastructure; (2) Village Investment for the Poor (VIP); (3) Improved Agricultural Services; (4) Water Users Association (WUA); (5) Environmental Management; and (6) Support for Project Implementation and Coordination\. The DCA consolidated these to become three main components: Components 1 and 2 as at appraisal, and Component 3 consisting of the sub-components: (a) Institutional Strengthening for Agricultural Services (including WUA); (b) Environmental Management; and (c) Strengthening Implementation Arrangements\. At appraisal, all components were to be funded through the International Development Agency (IDA) Credit\. However, shortly after project effectiveness, the World Bank was able to secure grant funds totalling US$1\.14 million from the Japanese Social Development Fund (JSDF) to support the VIP component\. These funds were fully disbursed during the period 2002-05, and subsequently, upon request from GOL, the component was continued using the IDA Credit\. 3 Component 1: Rural Infrastructure (US$10\.97 M4, US$10\.75 M5) Three sub-components were financed: (a) Irrigation Infrastructure Rehabilitation - to rehabilitate some 22 irrigation schemes (both gravity and pump-based), complete construction of secondary canal systems at selected schemes, expand the coverage of tertiary distribution systems and convert diesel-motor pumps to electric pumps; (b) Rural Access Tracks - to rehabilitate some 165 km of village access tracks linking irrigation schemes rehabilitated under the project to villages and the road network, including road drainage crossings; and (c) Village Water Supply and Sanitation - to install household and school sanitary pits, shallow wells and tubewells, including equipment, and carry out health and hygiene awareness campaigns\. Component 2: Village Investment for the Poor (US$2\.02 M, US$1\.80 M) To provide grant financing for village-level, small-scale, demand-driven infrastructure and income-generating and other productive agricultural investment projects in villages not benefiting from irrigation scheme rehabilitation works\. The projects to be supported would be within the technical and managerial capacity of the villagers and would be closely linked and integrated with the agricultural extension component of the project\. Component 3: Institutional Strengthening and Implementation Support (US$ 5\.22 M, US$8\.28 M) Three sub-components were financed: (a) to strengthen the capacity of provincial and district-level Agricultural and Forestry Service Offices (PAFSO/DAFSO) in both providing technical services to farmers and in carrying out a program of on-farm adaptive research and demonstrations, and to establish and strengthen water users associations at the irrigation schemes being rehabilitated under the project; (b) to strengthen the capacity of PAFSOs and the provincial offices of the Science, Technology and Environment Agency (STEA) in monitoring environmental aspects of the project and providing appropriate guidance to project stakeholders on improved environmental management; and (c) to strengthen central level project coordination and the Provincial Project Implementation Offices (PPIO)\. This included technical assistance and training in planning, project and financial management, and the provision of vehicles and equipment\. 1\.6 Revised Components None\. 4Total at Appraisal, including contingencies see Annex 1\. 5Latest total estimate from SAP at preparation of ICRR, including contingencies see Annex 1 4 1\.7 Other Significant Changes The project became effective in October 2001 and responsibility for coordination of project implementation and reporting was to reside with a Project Coordination Office (PCO) in the Department of Planning of the Ministry of Agriculture and Forestry (MAF)\. In January 2002, IDA was informed that GOL had established a new agency, also under MAF, in August 2001, the National Agriculture and Forestry Extension Service (NAFES), which would be responsible for all agricultural extension activities, and for implementing externally-financed projects in the agriculture and forestry sectors\. Similarly, at provincial level, PAFSOs would be established and support extension agents at the district level\. Thus, in April 2002, the PCO was transferred to NAFES\. The Credit was amended in early 2002 to reflect the availability of grant support from the JSDF to finance the VIP component\. This was carried out in three phases: a first phase, comprising two years, and a second phase, comprising one further year, were funded with JSDF resources (US$1\.14 M)\. Upon a request from government, the third phase was implemented with the originally allocated funds under the IDA Credit from March 2005 to June 2007 (US$0\.33 M)\. In July 2005, IDA agreed to finance all incremental operating costs from the Credit with GOL only funding taxes and land compensation/resettlement costs\. Under a further amendment to the Credit in June 2007, IDA agreed to an extension of the project for a further 12 months to enable completion of ongoing subprojects and consolidation of activities using the balance of funds remaining under the Credit\. 2\. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES 2\.1 Project Preparation, Design and Quality at Entry The project quality at entry was moderately satisfactory\. Overall project design responded to the Government's sectoral strategy and priorities and built on the lessons from IDA operations in both the country and the region\. Its design focused on strengthening existing decentralized institutions, assisting demand-driven opportunities for relatively small-scale productive investments, and promoting community-based operation and maintenance of existing irrigation schemes\. However, on review, several areas are identified where project design could have been improved\. The appraisal document is, in several instances, inconsistent and provides variable detail of the major cost components of the project\. KPIs were poorly defined and the capacity development objectives and consequential training requirements at the project and component levels were not clearly stated\. The relative inexperience of decentralized integrated rural development in the country and the serious capacity constraints at institutional and human resource levels were identified at appraisal, but project design was not consistent with this assessment\. Although substantial resources were allocated in Component C, for project management and including international TA, project design is complex, with a wide range of decentralized activities and the need to coordinate inputs from different agencies in dispersed geographical areas\. 5 In addition, and more importantly, the implementation schedule for civil works was unrealistic in view of the considerable capacity constraints identified\. Rehabilitation works at five schemes were planned to start soon after project effectiveness to be followed by rehabilitation of a further eight schemes during the first year of the project\. Moreover, the inputs and time required for the preparation of Resettlement Action Plans (RAP) at each of the project's irrigation schemes were underestimated; and the project design did not adequately address the need for Water User Groups (WUGs) and Farmer Irrigation Groups (FIGs) to be trained in on-farm water management techniques, particularly for non-rice, dry season irrigated crops\. 2\.2 Implementation Overall Progress\. Initially, project implementation was very slow and unsatisfactory6\. The project only became fully operational two years after appraisal due to a combination of factors including: (a) a change in location of the project coordination functions and associated personnel changes; (b) delays in procurement of goods and civil works; and (c) late recruitment of the national and international TA team which was only fielded in May 2003\. Only the VIP component, which benefited from independent TA through JSDF funding, started in 2002\. Following the MTR in May 2005, overall implementation performance improved\. However, the civil works component lagged behind and most of the irrigation rehabilitation works was only completed during the last two years of project implementation\. A one-year extension was agreed in mid-2007 to utilize savings arising from: (a) the cancellation of irrigation sub-projects (non-feasible scheme or non-performing contractor); (b) redistribution in category expenditures; and (c) foreign exchange savings\. By the end of the implementation period, all intermediate outcome indicator targets had been substantially met with the delivery and installation of pump sets at the last irrigation scheme, flood damage repair works completed at two further schemes, and access tracks and remaining school latrines completed, VIP activities and agriculture extension activities fully funded\. The main implementation issues are summarized as follows: Delays in Civil Works\. Due to the initial difficulties with procurement and financial management and the delay in recruiting the TA team, preparation of irrigation and access track designs fell behind schedule\. Initial designs conducted by locally- recruited consultants had not been based on thorough consultations with farmers and district and provincial irrigation staff and were, in some cases, inappropriate\. The need to repeat designs led to further delays which were exacerbated by the requirement that RAPs should be prepared for each of the project's irrigation schemes, as well as Environmental Management Plans (EMPs) for seven of the schemes\. With little experience in the country on the procedures and requirements related to RAPs and EMPs, the Water Management Specialist on the TA team was required to assist this activity full- time\. Following design reviews and changes, and the acceptance of the RAPs, construction of the first phase of nine schemes commenced in the dry season of 2004/2005, some two years behind the schedule presented in the PAD\. The remaining 6However, the ISR ratings until MTR have been satisfactory\. 6 ten, second-phase, schemes were similarly delayed due principally to the need for design revisions\. In late 2005, heavy rains resulted in damage to several schemes that were recently completed and IDA assisted the project and TA staff in undertaking a detailed overall review of scheme designs as well as an evaluation of specific scheme damages\. Options were identified to address design weaknesses and to prepare remedial designs and repairs to damaged works\. Also following detailed design work, adjustments to access track lengths were incorporated in the final works to take account of the availability of access along main canal banks for villages benefiting from irrigation scheme rehabilitation and to allow for price increases resulting from fuel cost escalation\. Institutional Implementation Issues\. The limited capacity of provincial staff in procurement processing as well as in financial and other reporting was a persistent issue during project implementation, exacerbated by the late arrival of the TA and the weak position of the central Project Coordination Office (PCO) vis-à-vis the Provincial Project Implementation Offices (PPIOs)\. Within the decentralized implementation framework, the PPIOs had considerable autonomy in project implementation while the PCO's role was to coordinate overall implementation and serve as an intermediary between IDA and the PPIOs\. This frequently resulted in poor quality and delayed preparation of documentation and reports, weak bid evaluations, and serious shortcomings of the performance of the PCO - as consistently flagged in the Bank Supervision Reports until late-2006\. The TA team and IDA supervision missions focused on these areas and assisted in clarifying procedures, providing additional training where required, and intensifying supervision inputs\. Consequent improvements in procurement, financial management and contract management resulted in accelerated implementation of the civil works and extension activities and the project was able to meet or exceed most physical output targets\. Financial Management\. Although not identified as a critical risk factor at appraisal, financial management emerged as a major limitation to timely implementation due to staff capacity constraints and inadequate and/or inappropriate financial flow mechanisms\. With the responsibility for ADP implementation being passed to NAFES, staff that had received training in financial management was not transferred and the staff that was subsequently appointed to the PCO did not have adequate training and capacity in financial management\. In addition, the delayed development, and subsequent use of a chart of accounts for the project, as well as training in associated financial management software, also contributed to a situation where the project was at risk of being downgraded to unsatisfactory status\. A financial management consultant was engaged to strengthen the PCO's overall financial management activities and to reinforce provincial and district staff\. Successive supervision missions also addressed the issue and provided additional guidance from specialist staff based in Bangkok in addition to the short-term TA support\. In late 2005, it was agreed to restructure the finance unit in the PCO by combining it with the Sustainable Forestry and Rural Development Project (SUFORD) in NAFES and to recruit more qualified replacement staff\. Following these measures, and with GOL financial management procedures simplified, overall improvements to financial management functions were achieved and, in particular, to the management of 7 the project's Special Account and the provincial-level Second Generation Special Accounts (SGSA)\. Technical Assistance\. The project has used the amount of TA foreseen in the PAD, with some minor redistribution between international and regional (see Annex 2 for more detail)\. While the overall amount of TA was justified and necessary, it could have been used more effectively\. In addition to the delayed TA recruitment mentioned above, TA use by the PCO tended to be on an ad hoc basis, with specialists being called upon to address immediate needs and to assist the PCO in administrative matters rather than focus on pre-defined, and agreed work plans\. This was exacerbated by the fact that the PCO remained understaffed in critical skills' areas and during critical periods of project implementation, with the TA having to fill these gaps\. In addition, the programming of intermittent inputs from the Chief Technical Advisor (CTA) not only resulted in the Deputy Team Leader/Agricultural Training and Extension Specialist taking over his leadership role during periods of absence but also appears to have diluted his technical contribution to project activities\. In view of the relative complexity and dispersion of project activities and the evident capacity constraints facing the implementing agencies at central, provincial and district levels, it appears that the use of a full-time CTA presence during the initial project period to assist the PCO and provide quality assurance of project implementation monitoring, reporting and management procedures would have been a better use of TA resources\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E has been one of the weakest elements of the ADP and the efforts of the Bank and the TA team have been insufficient in this regard\. As noted in Section 2\.1, only a few of the KPI were clearly defined and quantified at appraisal and no proper baseline data is available for most KPI\. The baseline survey made available to the ICRR team consisted of a compilation of secondary data collected during 1999/2000, with unnecessarily detailed statistics on social and demographic indicators at district (not village) level (view Section F of data sheet)\. In 2003, Participatory Rapid Appraisals (PRA) were conducted for designing village development plans but the results have not been analyzed and aggregated and could hence not be used for monitoring purposes\. TA support for M&E was insufficient and of poor quality\. A project M&E manual was developed in late 2003 but the system was over-designed and too complex to be handled by district extension staff and much of the information to be collected was of little relevance for monitoring project progress\. The MTR mission revised and simplified the system, introduced additional KPIs at the outcome level, and stressed the need to fill vacant M&E positions in the PCO as well as mobilizing appropriate TA support\. However, some of the newly introduced KPIs are difficult to measure (e\.g\., household incomes and rice-self sufficiency levels and the incidence of water-borne diseases) and little follow-up support was provided to build the capacity of project staff at all levels to collect and analyze the data properly\. Only in late-2005 was an Administration and M&E Specialist appointed to the project and, by late-2006, the project's M&E activities were able to provide basic information on implementation progress as well as project impacts in line with the key indicators\. 8 Quality and reliability of the data remains questionable\. Some data on implementation progress and KPIs seems to have been collected retroactively since 2004, mainly on the intermediate outcome (output) level\. Moreover, some monitoring indicators were not clearly defined causing problems in interpreting the data collected7\. It is likely that such ambiguity also affected the quality of data collected by poorly trained extension workers, as evidenced by inconsistencies and gaps encountered in monitoring data made available to the ICRR team\. Data on the PDO outcome indicators have been reported since 2005 but information sources and methodology for collection and analysis could not be traced by the ICRR team\. In summary, there does not appear to have been a systematic process for M&E put in place during most of the project's implementation period\. These shortcomings pose severe challenges to the ICRR team in analyzing the project performance and the achievements of PDOs 2\.4 Safeguard and Fiduciary Compliance Environmental Issues\. These were rated as category B at appraisal\. The relatively small size of the irrigation systems to be rehabilitated and their geographical dispersion implied that the impact of the project would be generally small and that the project would provide a low-risk opportunity to build environmental expertise and experience within the concerned Lao institutions\. The project complied with the World Bank's safeguard policies and financed training, materials, specialist technical assistance and other support costs for raising awareness among farmers and extension staff, improving linkages to supplement the National Malaria Program, encouraging the use of Integrated Pest Management (IPM), and for monitoring the environmental impact of the project\. As envisaged, general Environmental Management Action Plans (EMAP) were developed and approved for the irrigation rehabilitation works, rural access road construction program and the water supply activities\. These were translated into Lao and included in the works contact documents, with the contractors being briefed on EMAP requirements and instructed to minimize negative environmental impacts and to implement mitigation measures adequately\. However, it is clear that EMAPs need to be integrated into the design and construction process, with environmental requirements incorporated into construction activities, and not treated as stand-alone documents\. The project also identified nine irrigation schemes (of the total 21 to be rehabilitated) that were either close to existing National Biodiversity Conservation Areas or could impact on local fisheries, and specific EMPs were undertaken for these schemes8 and specific plans also included in the construction contract documents\. During the latter part of the project, the Environmentalist Specialist TA prepared more detailed Environmental Technical Guidelines to provide more specific guidance for construction activities and these were included in the last civil works contracts\. In addition, a Best Construction Practices Study Tour was arranged for Project staff to observe current best practices in Queensland, Australia\. 7For example, the differences between command area, irrigable area and irrigated area were not always clear\. 8Due to changes/cancellations during project implementation, only seven EMPs were required\. 9 Resettlement Issues\. These aspects were anticipated at appraisal although the magnitude of adverse impact was expected to be marginal in view of the focus of the proposed works on rehabilitation of existing irrigation systems and the provision of rural access tracks\. It was also recognized that, during the course of construction, some land acquisition may be required and compensation for both this as well as crop losses due to either construction activities or long-term loss of land would need to be provided to affected farmers\. In compliance with IDA's safeguard policy, the project prepared a Policy Framework for Land Acquisition, Involuntary Resettlement, and Rehabilitation of Project Affected Persons which was endorsed by GOL and included in the Project Implementation Manual (PIM)\. This required the preparation of RAPs for all the irrigation schemes and access tracks and a good deal of time and effort were spent in their preparation, approval by IDA, and subsequent implementation with appropriate documentation\. In some cases, due to construction delays or the need for renovation works to damaged sections, supplementary plans were also required\. Issues arose concerning the detailed implementation of the RAPs, particularly in terms of the available choices for land compensation, the need for increased consultation during the planning process and the importance of both internal and external monitoring reporting\. Financial Management\. These aspects, although generally in compliance with IDA procedures, were, as indicated above at Section 2\.2, a major constraint to project implementation through most of the project disbursement period\. Areas identified for improvement include reducing the layers of approval required to process payments, tighter internal controls, and management of cash advances, expenditure documentation, and better compliance with deadlines for Financial Management (FM) reports and audits\. Procurement Management\. Some issues were identified during the course of World Bank supervision missions and were addressed by the PCO and the PPIOs concerned\. The main problems were related to lack of capacity and understanding of procurement guidelines\. Of particular concern was the case of possible collusion in Attapeu province during the bidding process for two irrigation scheme contracts and GOL and PCO acted in a timely manner to investigate and, subsequently, cancel the procurement process\. In June 2007, the Project Steering Committee (PSC) agreed to develop and implement, together with the World Bank, a pilot Action Plan for strengthening the transparency and accountability of procurement\. This is intended to provide improved disclosure of project procurement information, a complaints handling system, certification of ethical conduct on the part of contractors, suppliers and consultants, and improved shopping procedures\. While this could have been an important contribution to improving overall procurement performance, it has only been in place during the final one-year extension of the project\. 2\.5 Post-completion Operation/Next Phase Management responsibility for the continued operation and maintenance of the irrigation schemes rehabilitated under the project is vested with the WUGs\. Although by project closure, all WUGs were operating the irrigation schemes and water pumps, and collecting irrigation fees, none of the schemes appear to have an established maintenance plan\. While there appears to be a clear understanding on the need for scheme members to 10 contribute towards small repairs and administration expenses through the irrigation fee and to pay directly, where applicable, for pumping costs, the structure and level of these fees are insufficient (view Section 4)\. The post-construction role of government is generally rather vague: while expected to assist the WUGs in both managing and operating the schemes, organizing the production activities, as well as assisting with large repairs, it is clear that the capacities of the provincial and district services are low and for those provided with training under the project liable to be dissipated through staff transfers\. Budgets are also very limited\. and it is not evident that future major repair requirements will be easily met The project's success in demonstrating improved technical packages has has been partly attributable to two factors which are unlikely to continue after project completion: (a) farmer training has been largely carried out by provincial-level Subject Matter Specialists (SMS), with district extension workers (also trained by the SMS) making regular (mostly weekly) follow-up visits; and (b) some farm inputs were provided for free by the project for demonstration purposes to be repaid into Village Development Funds (VDF)9\. Such an intensive use of SMS resources is only possible at a limited scale and when dealing with a limited number of farmers\. For similar training to be provided for all farmers in the irrigation schemes, as well as those who live in the same villages but do not have access to irrigation, the extension staff at district levels will have to take over the training functions performed earlier by the SMS\. While the project was able to finance operational budgets for extension staff at provincial and district levels, there appears to be a high risk that insufficient budgetary allocations for continuing extension activities will result in potential gains being lost\. While provinces have indicated that budgetary requests covering these requirements have been submitted, there was no confirmation that these needs would be met\. Arrangements for post-completion operation of the VIP component activities remain somewhat undefined although the success of project interventions has reportedly led NAFES to expand the approach as one of its main platforms for poverty reduction in rural areas\. In the project area, it appears that each province will be developing its own strategy and approach to both institutionalizing the process and sustaining current achievements\. Thus, Saravane Province intends to build upon its VIP experience and is already using both VIP staff as teachers for VDF training and successful VIP households and villages as models for others\. VIP development methodologies will also be shared with other districts and other projects\. Khammouane and Attopeu report less ambitious plans for the future and it appears that existing VIP activities in these two provinces will be handed over to different district offices: VDFs being transferred to the Lao Women's Union (LWU) and schools to District Departments of Education\. In Champassak, the VDFs will be transferred to the District Department of Finance, probably a more secure arrangement than the LWU\. Whatever institutional arrangements are developed, it will clearly be important that concerned staff at province and district levels are provided with suitable training in such areas as PRA, micro-finance and bookkeeping\. 9Conflicting data was obtained by project staff on the amount of grant funded input delivery and did not allow quantification\. 11 3\. ASSESSMENT OF OUTCOMES 3\.1 Relevance of Objectives, Design and Implementation The project objective remains relevant to the development objectives of the country\. The government's Sixth National Socio Economic Development Plan (2006- 2010) aims to partially eliminate seasonal hunger from rice scarcity by enhancing rice productivity in the irrigated and rainfed lowlands of the country\. The World Bank's current Country Assistance Strategy (CAS) supports the government's poverty eradication strategy and, within this framework, seeks to strengthen opportunities for farmers to increase productivity and trade through an improved enabling environment\. ADP's approach responds to these projected outcomes\. 3\.2 Achievement of Project Development Objectives The overall PDO was to reduce poverty by increasing and improving agricultural production\. Assessing the achievement of this is, however, constrained by the serious deficiencies of the M&E data, especially in regard to the KPIs at outcome level introduced during the MTR\. Moreover, due to the delay in the completion of the rehabilitation works, the full project benefits in terms of improved and increased production only materialized towards the end of the project and its impact can only be assessed on the basis of one year of full operation\. Information has been derived from field visits, interviews with project beneficiaries and analysis of existing agricultural data (the increases in rice production and productivity also supports the existence of significant increase in household income)\. Even though no rigorous evaluation of poverty impact was made due to lack of adequate survey data, there is anecdotal evidence that increase in production in project areas has resulted in additional incomes\. Despite these caveats, available data suggests that the project met most of the intermediate outcome (output) indicators and considerable progress was made on the outcome indicators\. The project rehabilitated 19 schemes with a total irrigated service area of some 7,250 ha10 and exceeded the appraisal target in terms of total command area, dry season irrigated area and rice yields (view Annex 3)\. As a result, rice production and productivity increased substantially\. The increase of rice yields is attributable to improved water security, the use of improved seeds and the adoption of a broader spectrum of improved agricultural practices introduced and disseminated by the project\. According to project statistics, more than 50 percent of trained farmers apply improved practices\. The benefits of rehabilitating the irrigation schemes and rural infrastructure works, extended directly to some 6,350 members of water user groups\. In addition, an estimated 6,000 families in more than 200 villages benefited from household and community-level investments and capacity building provided under the VIP component\. Hence, the project has contributed to a significant increase of paddy production and improved production methods\. Levels of rice self-sufficiency reported have also increased, with some 23 percent of farmers' families with a rice surplus, 60 percent with rice self-sufficiency and 17 percent still facing a rice deficit\. Although the targets 10Modified from appraisal during implementation due to scheme changes (high cost, urban encroachment, contractor failure, contract cancellation) and substitutes\. 12 established at MTR have not yet been fully met, it represents a substantial improvement over the baseline situation11\.The diversification into non-rice crops has not yet taken place at a significant scale, due to marketing problems and high profitability of rice\. The data on household income presented in project reporting are not considered reliable by the ICRR team, for the reasons explained in Section 2\.3\. Nevertheless, increases in gross margins and returns to labor for paddy production and the expansion of dry season paddy production have a strong positive impact on household income and food security (view Annex 3)\. The incidence of waterborne diseases has decreased considerably since 2000 which may be attributable at least in part to the project investments in water and sanitation\. Moreover, Village Development Committees and WUGs have been established but their strength and sustainability remains doubtful (view Section 4)\. 3\.3 Efficiency Total costs for rehabilitation of irrigation systems and access roads amount to US$10\.3 million (financial) and US$9\.7 million (economic)\. With a total command area of 7,400 ha, direct investment costs per hectare amount to US$1,394 (financial) and US$1,314 (economic), which are within a reasonable range in South East Asia\. If total project costs excluding the VIP component are taken into account, unit costs increase to US$2,513 (financial) or US$2,430 (economic) per ha\. Table 1: Total Costs and Unit Costs for Irrigation Rehabilitation (in USD) Command Total costs Total costs Unit costs Unit costs area * (financial) (econonmic) (financial) (economic) Direct costs (irrigation rehab\. & access roads) 7,400 10,312,000 9,723,961 1,394 1,314 Total project costs per ha (excl\. VIP) 7,400 18,598,671 17,985,735 2,513 2,431 * Include Samong 1, for which more than half of the rehabilitation costs were financed by the project The Economic Internal Rate of Return (EIRR) was recalculated for the entire project costs and for the project costs excluding the VIP component\. Based on the total project costs, the EIRR amounts to 18\.9 percent and increases to 23\.2 percent if VIP related costs are excluded\. The Net Present Value (NPV) amounts to US$3,389,262 and US$4,667,962, respectively, at a discount rate of 12 percent\. This compares favorably with PAD estimates of an EIRR of 16\.3 percent and an NPV of USD2\.3 million and is attributable to the slight overachievement of key output targets (see Annex 3, Table 1)\. The sensitivity of EIRR and NPV to changes in key parameters has been assessed based on three scenarios including changes in rice prices and accelerated deterioration of irrigation infrastructure\. A 15 percent increase in paddy price would raise the EIRR up to 26\.0 (31\.8 percent) whereas a price decline of 15 percent would reduce it to 11\.8 percent (14\.8 percent)\. In the latter case, the NPV would turn negative at a discount rate of 12 percent\. This shows that the EIRR is highly sensitive to changes in paddy prices\. However, in view of the positive outlook for future rice prices at the time of the ICRR the probability for this scenario it appears to be low\. 1116 percent, 42 percent and 28 percent, respectively\. 13 Table 2: EIRR and NPV under alternative Scenarios Total costs (economic) Total costs excluding VIP (economic) EIRR (%) NPV (million EIRR (%) NPV USD)) (million USD) Base case 18\.9 3\.3 23\.2 4,7 Scenario 1 (rice price increases by 26\.0 6\.9 31\.8 8\.2 15%) Scenario 2 (rice price decreases by 11\.8 (0\.1) 14\.8 1\.2 15%) Scenario 3 (dry season irrigated area 15\.2 1\.4 19\.9 2\.6 decreases by 15% p\.a\.) Scenario 3 shows the effects of an accelerated decline of the irrigated area by 15 percent per year due to insufficient funding for maintenance and repair works and / or poor quality of the works\. Such scenario might not be unlikely in view of the insufficient funding used for preventive maintenance, the limited "on the job training" which could be provided to WUGs after the completion of the rehabilitation works and before the closure of the project\. It would resemble the situation observed in most irrigation schemes in Lao PDR following construction or rehabilitation\. However, as shown in Table 2, the impact is modest with the EIRR remaining at an acceptable 15\.4 percent (19\.9 percent)\. This result is partly attributable to the method of calculation whereby the same rate of decline is also applied to the without project situation where it results in a sharp reduction in dry season irrigation starting in year one\. The reduction of the EIRR would be more substantial if the scenario was applied to the total net benefits instead of the incremental net benefits of the project\. This highlights the importance of providing ongoing support to WUGs to enhance their capacity to ensure system maintenance and of adequate budget allocations at provincial level for repair works and operational costs of extension staff\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory There is evidence that the project achieved improvement and increase in agricultural production, and there are signs that this has likely led to some poverty reduction (through income increases)\. All these improvements were achieved at an estimated EIRR of 18\.1 percent\. Problems with procurement, financial management and institutional implementation capacities were progressively addressed and, at closure, the project was able to achieve full operation of all rehabilitated irrigation schemes, the completion of all village water supplies and sanitation works in target villages, improved levels of farm production skills and crop yields leading to increased farmers' incomes, and improved livelihoods in VIP villages\. Moreover, the project has taken up the challenge work through existing government structures at various levels within the context of an incipient decentralization process, rather than creating parallel structures\. Unfortunately, due to weak and incomplete M&E data and the absence of baseline and impact surveys and the delayed completion of the civil works, the full benefits of the project cannot be assessed with precision\. 14 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development\. The rehabilitation of irrigation schemes and rural infrastructure in the project area has resulted in increased agricultural production (principally rice) and positive effects on levels of poverty and social well-being\. However, the irrigation and agricultural services components of the project did not have an explicit poverty targeting strategy to include the poorest households within the villages\. According to project design these households (i\.e\., the landless) were to be reached through the VIP component\. However, implementation of the VIP component soon took a different approach focusing on poor non-irrigation villages in the target districts to expand the geographic outreach of the project\. No quantitative or qualitative data or studies are available to assess the intra- community and intra-household impacts of the project, apart from the VIP component\. On the latter, two qualitative evaluations have been conducted12 which show a considerable positive impact on household income and food security and empowerment of beneficiary households and village organizations\. These impacts have been especially noticeable in those villages where several projects were implemented\. While the VIP component was successful at geographic targeting focusing on the poorest villages and ethnic minority villages, its ability to target the poorest households within the villages was mixed\. Targeting outcomes depended on the approach taken by the District Implementation Team and on the internal village organization and power structures\. In some villages with inclusive power structures and/or the facilitation of poverty-sensitive DITs, activities were targeted at the poorest households whereas in other villages the poorest were excluded13\. Moreover, the VIP had no gender targeting strategy and, as a result, the project's impacts were less than they could have been\. Even woman-headed households, which seem to make up a significant slice of the poor in sample villages and are particularly vulnerable, received VIP assistance in only a few villages\. (b) Institutional Change/Strengthening\. The project was intended to support the government's decentralization strategy and, in terms of institutional aspects, was implemented in an evolving institutional environment\. It has done this by working through existing government structures and investing in staff capacity building and the improvement of certain administrative procedures\. It is clear that the staff training provided by the project has enhanced skills and capacity of staff at provincial and district levels in technical as well as administrative matters\. The VIP Evaluation notes that the project has increased the sensitivity of government staff at district and provincial level to interact with the village population and their capacity to use PRA methods and other bottom-up planning processes\. Moreover, it has contributed to strengthening the relations between government staff at District and Provincial levels\. While it is certain that this staff will be dispersed following project closure, it appears likely that their capacity will continue to be available for further development activities carried out by the decentralized agencies\. In addition, the changes introduced by the project to 12In 2005 and 2007 13Based on the notion of some village leaders that the poorest are incapable to carry out income generating projects and/or repay loans from Village Development Funds\. 15 administrative procedures at both central and decentralized levels with a view to accelerating over-long and cumbersome GOL practices will most likely remain in place to the benefit of the country's future administration\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable\. 4\. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME Rating: Substantial The risks to development outcome have been assessed in relation to short-, medium- and long-term factors which encompass infrastructure, organizational commitment, and institutional processes\. In the medium- and long-term, there are three main risks to the sustainability of the project's outcomes\. These are: (a) lack of maintenance of irrigation systems in the newly devolved operating environment; (b) decline of rice prices; and (c) lack of effective means to finance intensification of irrigated agriculture\. As mentioned in Section 2\.5, although WUGs have been formed and trained in all rehabilitated schemes, doubts remain about their ability to manage and maintain them properly\. Overall fee levels appear to be unrealistically low14 and the irrigation fee is generally divided between the district (20 percent) and the village development fund (80 percent), with the latter allocating only some 15 percent to scheme maintenance15\. These funds will be insufficient to cover more than the most basic maintenance work and will certainly fail to meet the costs of more important structural repairs or the provision of spare parts for pumps and gates\. All charges are levied on an area basis without consideration of the crop irrigated or water consumption\. Only one scheme has included any means of measuring water consumption16 and it will be impossible to base future irrigation fees on volumetric criteria without additional civil works\. An additional concern, reinforced by experience elsewhere in the country, is that maintenance is normally viewed as equivalent to repair and little consideration is given to routine, periodic preventive maintenance of irrigation systems (canals, drains, access roads, and structures)\. In summary, there appears to be little medium- to long-term prospect that the cycle of under-maintenance followed by rehabilitation substituting for deferred maintenance will be broken\. This will inevitably compromise the primary development outcome for the irrigation scheme beneficiaries\. The sustainability of on-farm benefits through the adoption of improved inputs hinges upon the future development of such key determinants for the profitability of irrigated paddy production as paddy prices, availability, and costs of quality inputs, and access to sufficient working capital to finance these inputs\. After only one year of irrigated cropping with improved technologies on fully rehabilitated schemes, it is 14For pump scheme, water fee is 150 kg of Paddy rice to 200 kg of paddy rice per ha per season; for gravity schemes, 60,000 kips per ha to 100,000 kips per ha is collected in dry season\. 15Exact figures vary within and between provinces\. 16All schemes reported to have included measuring flumes and gauged outlets in original designs but never installed\. 16 difficult to assess the sustainability of the on-farm results, especially in view of the recent fluctuations in rice and fertilizer prices\. Taking into account price projections for rice from early 2008, the price level during the latter half of the project implementation period (2005 - 2008) is likely to prevail or even increase in the medium- to long-term\. If these projections hold true, basic profitability prospects for paddy production will remain favorable\. However, even if rice prices are to remain favorable, farmers will still require access to sufficient working capital in order to purchase fertilizer and improved seeds\. Poorer farmers particularly can rarely afford to purchase improved inputs, resulting in only a partial adoption of recommended technology packages\. Limited access to credit has been identified as an important constraint during project implementation, although attenuated by the provision, at no cost, of limited amounts of inputs for demonstrations and initial adoption purposes, to be repaid into the VDF\. Moreover, farmers were trained in establishing and managing savings and credit groups and managing VDFs\. Unfortunately, no data is available to assess the outreach and sustainability of these informal financing mechanisms and it is questionable whether district extension staff have the necessary skills for training farmers in financial management and record keeping\. It can therefore be assumed that VDFs are, at best, only a partial solution to the farm-financing problem\. Sustained efforts are needed to improve the performance of village-based financial institutions and of formal financial institutions\. 5\. ASSESSMENT OF BANK AND BORROWER PERFORMANCE 5\.1 Bank (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory IDA performance at entry is rated moderately satisfactory\. Project design was consistent with the CAS that was current at preparation, with its fundamental objective of poverty reduction and, in the rural sector, its focus on investing in rural development and natural resource management, improving agricultural productivity, and supporting rural infrastructure development\. The PAD acknowledged the experience of other IDA operations in the country with regard to weak institutional capacity and public expenditure management but these problems were repeated under the project\. It is believed that the design should have been based on a fuller capacity assessment, in addition to the specific areas of procurement and financial management that were examined at appraisal\. This would have enabled the design to include a more clearly articulated capacity development strategy with clearly defined interventions, training requirements and indicators based on prior capacity assessments\. In particular, the implementation schedule for the civil works should have been set out more realistically in view of the prevailing institutional capacity constraints\. Detailed preparatory activities for the initial phase of civil works such as surveys, beneficiary selection and the preparation of RAPs and engineering designs should have 17 been prepared during project design to a level to permit the preparation of draft contract documents to be assessed during appraisal and finalised prior to project effectiveness\. (b) Quality of Supervision Rating: Moderately Satisfactory The overall supervision quality is rated as generally moderately satisfactory\. Between Project Launch in May 2001 and Closure in June 2008, four TTLs have been responsible for the project\. IDA supervision missions have visited the project reasonably regularly and these also included specialist inputs from the World Bank's Bangkok office staff or consultants, for both following-up on key actions as well as assisting training workshops particularly in the areas of procurement, financial management, rural/irrigation engineering and settlement safeguards\. However, there appears to have been some inconsistencies in responses from IDA staff to project requests during the initial phases of the project, in terms of both timeliness and guidance, and the "satisfactory" status of project performance reported by IDA supervision missions from mid-2001 to end-2004 appears over-optimistic in view of overall project progress\. After the MTR in April 2005, there was an increase in the intensity of IDA supervision missions, with the skills mix of team members significantly increased to address the continuing severe implementation delays and persistent financial management and procurement problems, as well as the problems of agricultural and organizational developments\. Performance reporting was generally more fully- documented with systematic attention given to follow-up the compliance status of earlier action plans\. However, insufficient attention has been paid to putting an effective M&E system in place and building the capacity of project staff to collect and analyze the required data in a proper way\. It also has to be mentioned that ADP's early implementation problems were not reflected in the Development Objective and Implementation Progress ratings in the ISRs (previously PSRs)\. The performance of the Development Objectives (DO) was generally rated as being Satisfactory, with a Moderately Satisfactory rating in three ISRs in 2006\. The Implementation Progress (IP) was rated Satisfactory for most of the implementation period, with an ISR in June 2005 reporting a Moderately Satisfactory status following the MTR and the adjustments agreed at that point\. Thereafter two ISRs in 2006 reported a Moderately Unsatisfactory IP rating, improving again at the end of 2006 to Moderately Satisfactory and Satisfactory until project closure\. Reasons for the Moderately Unsatisfactory ratings in 2006 were attributable mainly to: (a) Financial Management aspects that were not addressed despite written commitment from NAFES and project approval procedures had not been streamlined and hampered project implementation\. In addition, capacity in financial management remained critically weak; and (b) under design of the works and poor review by the PCO and consultants, and lack of timely field supervision of construction during last dry season for the Rural Infrastructure component\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 18 The overall World Bank performance is rated moderately satisfactory\. Over- optimistic design targets are confirmed, to some extent, by the implementation delays experienced during the project\. Other factors negatively affecting project implementation were, however, generally identified and assessed in a reasonably timely manner by IDA supervisions and assistance in resolving problems provided through either direct by IDA staff support or consultant inputs and training\. These were generally strengthened following the MTR mission and were effective in assisting the Borrower to fully achieve the project's targets\. 5\.2 Borrower Performance Rating: Moderately Satisfactory The overall Borrower performance is rated as moderately satisfactory\. While ADP was considered by Government to be a priority project and an important component of its decentralization strategy, there was a lack of commitment in staffing the central PCO after its transfer to NAFES and this resulted in serious shortcomings in project management capacity and implementation delays\. In particular, failure to implement actions agreed with earlier IDA supervision missions led the GOL to be in violation of several sections of the DCA and the project was downgraded to a Moderately Unsatisfactory status during 2006\. Furthermore, financial management constraints, particularly due to the weak capacity of finance staff at both the PCO and PPIOs, were persistent during almost all the project disbursement period\. M&E systems were set up prior to the MTR but could not be implemented\. Even after the MTR, the PCO and PPIOs continued to have difficulty in providing such information in a timely and consistent manner and making practical use of data collected to enable impact monitoring of the project to be achieved\. Coordination of activities among implementing agencies at the provincial and district levels, and between the district and provincial levels and the central level was also weak and adversely affected implementation, particularly in the areas of financial management, monitoring and reporting\. The weak capacities of, and inputs provided by, the Provincial Irrigation Services (PIS) also resulted in severe delays in the completion of revised engineering designs in two provinces late in the project's life\. The recruitment of specialist technical assistance was badly delayed until May 2003 and, once in place, was often used by the PCO and implementing agencies on a rather ad hoc basis\. However, PCO performance improved considerably during the second half of 2006 which justified the projects extension by one year and allowed the completion of civil works during 2007\. 6\. LESSONS LEARNED (BOTH PROJECT-SPECIFIC AND OF WIDE GENERAL APPLICATION) (d) Advanced stage of readiness for initial construction activities should be part of project design and appraisal\. If early project activities include construction works based on bidding procedures, sufficient time and financial resources should be provided during preparation to permit interaction with farmers, the preparation of RAPs in response to the requirements of settlement safeguard policies, and the preparation of construction designs and draft contract 19 documents for a first-year time slice\. These should be reviewed at appraisal\. Tenders should then be issued as soon as feasible after loan effectiveness\. (e) Institutional capacity assessments should underpin project design\. Project design should be informed by a broad and deep analysis of institutional capacities and a specific capacity development strategy should be developed as part of preparation\. This should also include a capacity development framework providing a set of proposed interventions and indicators which respond to the capacity constraints identified at the different levels of project implementation and for the staff concerned\. (f) Timing and skills mix of TA can improve overall project management\. Project experience shows that the CTA support to the PCO should be more continuous and that the CTA's expertise should provide support for project and program management, including financial management, planning and reporting, office and contract management, and experience of M&E systems\. Similarly, inputs of field-based TA staff should be programmed to provide a more stable, continual support for project staff\. Consideration should be given to instituting regular Borrower/Bank joint reviews of the performance of any TA inputs provided under the Credit\. (g) Improved access to marketing and farm finance are important elements of agricultural development\. Marketing problems appear to have both hindered crop diversification, especially for perishable crops like vegetables, as well as prevented a transition from glutinous to non-glutinous rice\. Issues concerning access to working capital are discussed in Section 4 and while both aspects have been acknowledged during project implementation, they could only be addressed marginally within the given project design\. More attention should be given to marketing and farm finance in future irrigation project designs, perhaps at the expense of other components such as VIP (in non-irrigation villages) which are only marginally linked to the main thrust of the project: the extension and intensification of irrigated farming\. (h) Improved on-farm water management is a key element of irrigated agriculture production\. Improvements to irrigation infrastructure should provide opportunities for both expanding areas under dry season irrigation at schemes where water resources are limiting and/or enabling diversification of irrigated cropping\. However, both opportunities require improved on-farm water management but little attention has been given to this aspect\. Indeed, this appears to be a general characteristic of the irrigation sector in the country and probably needs to be tackled in the context of a sub-sector program which also addresses the question of institutionalizing farm irrigation management and sustainable irrigation management transfers\. (i) M&E systems should match the capacity of project staff to collect, analyze and use the data\. Efforts to establish an M&E system fluctuated between being over- and under-designed and serious issues of data availability and quality reduced its usefulness during project implementation and for assessing the project results and outcomes\. Moreover, considerable resources were used 20 under the project for data collection as part of the village-level PRA exercises but this data was not properly analyzed and presented in a form that would serve as a baseline for the M&E system\. It would be preferable that simpler, less resource- demanding approaches should be used, in view of limited extension staff availability, and that M&E systems should be closely matched to analytical capacities and national reporting systems in order to avoid duplication and ensure full ownership among participating agencies\. 7\. COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING AGENCIES/PARTNERS Borrower/Implementing Agencies No comments, nor issues, were raised by the Borrower, implementing agency or other partners consulted\. 21 ANNEX 1\. PROJECT COSTS AND FINANCING (a) Project Cost by Component (in USD Million equivalent) Percentage of Appraisal Estimate Actual /Latest Components Appraisal (incl\.contingencies) Estimate 1\. Rural Infrastructure 1\.1 Irrigation Rehabilitation 8\.55 9\.170 107 1\.2 Rural Access Tracks 1\.87 1\.142 61 1\.3 Water Supply/Sanitation 0\.55 0\.437 79 Sub-total 10\.97 10\.749 98 2\. Village Investment for the Poor 2\.02 1\.800 82 3\. Inst Strengthening and Implementation Support 3\.1 Agricultural Training, Extension, & Research; and Support to WUGs 2\.82 2\.456 87 3\.2 Environmental Management 0\.29 0\.143 49 3\.3 Project coordination support PCO & 2\.11 5\.686 269 PPIOs 5\.22 8\.285 159 Sub-total Physical Contingencies (1\.10) Price Contingencies (1\.15) Total Project Costs 18\.21 20\.834 114 Project Preparation Facility (PPF) Front-end fee (IBRD only) Total Financing Required (b) Project costs by Category of Expenditure Appraisal Estimate Actual /Latest Estimate Percentage of Components (US$ million) (US$ million) Appraisal 1\. Civil Works 7\.50 10\.22 136 2\. Goods 1\.18 1\.48 125 3\. Grant VIP 1\.32 1\.47 111 4\. Incremental Operating 130 2\.06 2\.68 Costs 5\. Consultants' Services 2\.73 4\.24 156 6\. Training and Workshops 1\.16 0\.74 64 Physical and Price 2\.25 Contingencies Totals 18\.21 20\.83 114 22 (c) Financing Appraisal Actual/Latest Percentage of Source of Funds Type of Financing Estimate Estimate Appraisal (US$ million) (US$ million) Government & 1\.52 0\.278 18 other IDA 16\.69 19\.414 116 Japan Social Dev\. WB-administered TF - 1\.142 - Fund 23 ANNEX 2\. OUTPUTS BY COMPONENT Component 1: Rural Infrastructure (US$ 10\.97 million, US$10\.75 million) Achievements under this component are rated satisfactory\. This component is composed of three sub-components: (a) rehabilitation of existing small- and medium-sized, gravity- and pump-fed irrigation schemes; (b) construction of access tracks between the irrigation schemes and villages or rural road network; and (c) provision of village water supplies (shallow wells and boreholes, equipped with hand pumps) and sanitation facilities (household and school latrines)\. The component outputs were modified during implementation from levels projected in the PAD as a result of detailed studies undertaken for implementation, intermediate developments, and contractor non-performance\. At appraisal, key performance output indicators for the first sub-component were: (a) rehabilitation of 7,070 ha, leading to a 20 percent increase in cropping intensity; and (b) increase in paddy yields per hectare\. At completion, 19 schemes had been rehabilitated with a service area of 7,400 ha17, the cropping intensity reached 181percent18 (an increase of 66percent over the 109 percent level of the PAD estimate), and average paddy yields have increased consistently throughout the project area (ranging from 7 percent in Attapeu to some 30 percent in Khammouane for dry season cropping)\. Output indicators for the second sub-component were the rehabilitation of around 165 km of access tracks to provide improved access to markets and reduced traffic costs\. At completion, some 104 km were constructed and, in most cases, the works were included as part of the civil works contracts for the respective irrigation scheme rehabilitation\. The reduction in total length was largely due to the re-evaluation of proposals at one scheme Nondeng in Saravane Province which had originally been 60 km length\. The new works were reduced to 8\.3km with other access provided along canal banks as part of the rehabilitation works\. Indicators for the third sub-component consisted of the number of households with access to safe/potable drinking water supplies and the incidence of water borne diseases\. Implementation was based on a demand-driven process focusing on water supplies from tubewells and shallow wells equipped with manual hand pumps, and the provision of some 5,000-pit latrines\. Most provinces reached their targets with some 246 wells constructed, although shallow wells proved non-viable in Saravane and, in Champasak, the target were only partially met\. However, the target for household pit latrines was exceeded by some 11 percent, with some 5,630 constructed plus 44 school latrines\. On the basis that a typical water supply system can cater for some 25-30 households, it is estimated that project coverage could reach between 6,100 and 7,400 families\. 17Including Samong 1 scheme which was cancelled under the project after initial works had commenced; subsequently completed\. 18Source: ADP Project Completion Report 24 Component 2: Village Investment for the Poor (US$ 2\.02 million, US$1\.80 million) Achievements under this component are rated satisfactory\. This component was a block grant to be allocated at district level for implementing small-scale, village-level, demand-driven activities identified during the course of PRA exercises conducted in 15 of the poorest villages not benefiting from irrigation rehabilitation works\. Fifteen districts were targeted and at appraisal, it was foreseen that annual disbursements would amount to some US$20,000 per district\. Key output indicators included the number of beneficiary household groups, the number of ethnic women and minority groups submitting and having proposals accepted, and the number of sub-projects ranked satisfactory by village communities\. The component was carried out in three phases: two initial phases (March 2002 to February 2004 and February 2004 to February 2005) funded from the JSDF (US$1\.14 million) and a third phase (March 2005 to June 2007, with some activities extended to final completion in June 2008) funded from the IDA Credit (0\.326 million)\. VIP activities were carried out in 204 villages with a total number of 540 activities, divided into community and household level activities\. The main community activities were (with numbers): Village Development Funds (134); schools (53); water supply (33); rice bank (10); markets (7)\. The main household activities were (with numbers): pigs and goats (82), cattle (75), buffalo (63), poultry, fish and vegetable production (61), and handicrafts (6)\. The benefits arising from the VIP activities include both improvements to the quality of life due to the improved social infrastructure, as well as improved food security by such measures as the provision of animals, fish and poultry, as well as establishing markets, trading groups and revolving funds\. At appraisal, the average proportion of poor households in the sample villages was 38 percent, and at completion, it is 18 percent\.19 VDFs were VIP's most effective tool for reducing poverty, providing an opportunity to make small loans for low rates of interest which many villagers used to fund a variety of micro-enterprises\. VDFs were also the single most popular VIP activity, with 134 established in VIP's 204 villages\. While the project was reasonably successful in targeting ethnic minority groups (average of 3\.3 VIP activities per ethnic village, compared to an average of 2\.4 per Lao village and 3 for mixed villages), it was less successful at targeting women\. Some benefited directly from handicraft activities and tailoring though more benefited from traditional small animal raising activities (pigs and poultry)\. Also, while some villages selected their poorest people for activities, and these were either successful or failed due to the inability of the poor households to pay back loans, in many cases the poor households did not want the risk of participating, as repayments were perceived by them as difficult\. Component 3: Institutional Strengthening and Implementation Support (US$ 5\.22 million, US$8\.28 million) Achievements under this component are rated moderately satisfactory\. 19Source: ADP Project Completion Report by GOL: not all this decrease can be attributed to VIP as there have been other factors as well\. However, part of the improvement in every sample village is attributed by the villagers themselves to VIP\. 25 This component is composed of three sub-components: (a) strengthening the capacity of provincial and district-level PAFSO/DAFSO in both providing technical services to farmers and in carrying out a program of on-farm adaptive research and demonstrations, and to establish and strengthen water users associations at the irrigation schemes being rehabilitated under the project; (b) strengthening the capacity of PAFSOs and the provincial offices of STEA in monitoring environmental aspects of the project and providing appropriate guidance to project stakeholders on improved environmental management; and (c) strengthening central level project coordination (PCO) and the PPIO\. This included technical assistance and training in planning, project and financial management, and the provision of vehicles and equipment\. At appraisal, key performance output indicators for the first sub-component were: (i) establishment of a Central Extension Training Unit (CETU) and four provincial-level PETUs; (ii) the upgrading of DAFSO technical staff into generalist farming systems extension workers; (iii) implementation of adaptive research programmes and on-farm demonstrations of improved technology; (iv) the number of farmers trained and adopting improved agricultural practices, and (v) the number of WUGs taking over responsibility for irrigation scheme operation and maintenance\. The CETU and four PETUs were established with the four centers including meeting and training halls and dormitories to accommodate 40-50 trainees\. Construction/renovation works were completed in 2006 for the central level PCO/NAFES offices and for three PPIOs and provincial training centers, and the following year for the PPIO and training centre in Champasak\. Other renovation works were also carried out at the 15 DIT offices\. The progressive introduction of the Lao Extension Approach (LEA) during implementation was supported by the project's training and study tour programme\. Overall, the on-farm research and demonstration activities and related training were identified and selected on the basis of the results of PRA exercises and recommended technologies from the National Agriculture and Poverty Research (NAFRI) and NAFES\. A total of 319 agriculture trainings involving 934 training days and 21,511 trainees, including 4,894 women, were conducted between 2003-2008\. This training focused mainly on rice production technologies, dry-season cash crop production, agriculture extension systems, livestock production, soil improvement, and village development fund operations, detailed as follows: (j) Rice Production technologies: This covered the selection of improved rice varieties for the specific locations of the irrigation schemes, and the extension of rice cultivation technologies (land preparation, nurseries, transplanting, water management, pest control, and post harvesting)\. A total of 99 on-farm research and demonstration plots were implemented with the participation of 20,900 farmers20 (52 plots in dry season and 47 plots in rainy season)\. Other rice cultivation technologies were also introduced and demonstrated: rice direct seeding and SRI (le Systéme de Riziculture Intensive) System of Rice Intensification\. 20Total number of farmers, with most of farmers participating in the trials more than once\. 26 (k) Farmer-level rice seed multiplication: Foundation seeds were procured from the MAF agriculture stations and distributed to farmers\. Use of improved rice seed in the rainy season is rapidly being adopted by the farmers and increased from 10 percent in 200021 to 49 percent in 2007 (reported to be as high as 80 percent in Saravane and Champasak Provinces)\. For dry season rice, 95 percent of the areas were covered by the improved rice varieties in 2007, an increase from about 52 percent in 2004\. (l) Integrated Pest Management: Farmers were trained in both the safe use of chemicals and botanical applications for pest control\. Gallmidge was a serious rice pest in Khammouane province and has been successfully controlled by the IPM methods introduced by the Project\. Thirteen IPM demonstration activities (6 for dry season crops and 7 for rainy season crops) were conducted with the participation of 723 farmers\. (m) Cash crop production: Non-rice crop demonstrations included dry season irrigated soybean production using zero tillage technology, as well as corn, watermelon and vegetable production\. A total of 80 on-farm research and demonstrations were conducted with the participation of 1,964 farmers (56 plots in dry season and 24 plots in rainy season)\. The adoption of dry season soybean production has been limited due to the relatively low price offered in comparison with recent raddy price rises \. Similarly, only very modest areas 22 of dry season corn, sweet corn, watermelon, and vegetables have been cultivated in the dry season\. (n) Soil Improvement: Twenty-eight on-farm research and demonstrations of soil improvement methods (8 in the rainy season) were conducted with the participation of 467 farmers\. These covered such areas as: compost making and utilization, bio-fertilizer production and utilization, application of the semi-direct technology (zero tillage), and crop rotation of rice and legumes\. While bio-fertilizer and compost production have been adopted by farmers for fruit tree plantations and vegetable production, there has been limited use of them in paddy cultivation due to the large amount of raw material required\. (o) Animal Feed Production: Twenty-seven on-farm research demonstration plots of fodder crops and feed corn (12 in the dry season) were conducted with the participation of 460 farmers\. Adoption has been low as the free grazing continues to be practiced and recent high paddy prices have rendered other crops uncompetitive\. 21Source: PAD 22Paddy rice price was 1,200 Kip/kg in 2004 and 2,200 Kip/kg in 2008\. 27 (p) Fruit Tree Plantation: This activity was intended for villagers with no irrigated land and 22 demonstration plots were conducted with the participation of 328 farmers\. Improved variety fruit tree seedlings (mangoes, jujube, longan, lichees, coconuts, etc) were provided by the project and all fruit tree plantations are in good condition, with production expected after completion\. (q) Livestock Development: A total of 68 demonstrations of improved livestock activities were conducted with the participation of 5,290 farmers, two of them for cattle raising and the remainder for small ruminants and poultry\. Surveys conducted in 28 project villages show that the number of animals has increased due to the regular vaccination program with villagers paying for the vaccines\. (r) Fishery: Twenty-one demonstrations were conducted with the participation of 161 farmers covering fish growing and fingerling production\. Farmers' adoption rate has been high and fishpond areas have been extended by 33 percent compared with the 2004 status\. (s) Village Development Fund (VDF): VDF groups have been established and are operating well in 77 villages with a total membership of 4,400 and a total capital of 2,633\.65 Million Kips (US$312,000)\. The main contribution to the VDFs came from the post-harvest reimbursement of the cost of agriculture inputs provided by the project to the farmers\. WUGs were established during the period late 2002 to mid-2005 at all the schemes23 rehabilitated by the project\. These consist of 6,347 full family members with a further 635 temporary WUG members cultivating for dry season rice production through temporary tenant contracts with landowners\. Some 272 Farmer Irrigation Groups (FIG) were formed and strengthened by the project and training in support of WUG operations was also provided, as follows: WUG rules and regulations (4,290 trainees), environmental management, land use management for the irrigated land, land use contract management for tenant and land owners, gender issues, water pump maintenance, water user group fee collection and WUG fund management, etc\. (92 days of training involving 1,155 trainees, including 269 women)\.24 While there has been extensive training provided, the delay in completion of the irrigation scheme rehabilitation works reportedly resulted in a reduced level of awareness of WUG structures among farmers25\. However, during the 2007-08 dry seasons, all WUGs were actively operating in water management, water fee collection and land use management\. Key performance output indicators at appraisal for the second sub-component consisted of: (a) regular monitoring of the project for environmental impacts; (b) 23Except for one where a Water User Association had been established prior to its inclusion in the project\. 24Total numbers of the trainees, with farmers usually participating in more than one training\. 25ADP: Water Management Sub-Project operations and Maintenance WUG Report, March 2007 28 improved understanding of the impacts of irrigation development on fisheries and other environmental concerns; and (c) conduct of village-level dissemination on environmental issues\. The PAD required that specific EMPs be carried out for those schemes that appeared to be particularly sensitive in terms of fisheries and wetlands considerations\. Of the nine schemes indicated at appraisal, three schemes were cancelled or changed and one was replaced\. Specific EMPs were prepared for seven schemes, including a study on fish migration patterns, and these were approved by the Bank\. The specific plans were also included in the subsequent contract documents\. In addition, a general EMAP was prepared to cover all rural infrastructure works (irrigation rehabilitation, rural access road construction, and rural water supply schemes)\. A Lao version was prepared and included in all construction contract documents with the requirement that the contractor minimize negative environmental impacts and implement recommended mitigation measures\. Training in environmental awareness was also provided to site engineers, contractors, and provincial staff of STEA, and an overseas study tour was organized to observe best construction practices\. Conclusions from this tour included the following recommendations: early attention to good design practice in relation to future construction; EMPs and EMAPs need to be fully integrated into design and construction phases; more use of technical and environmental specifications in construction contract documents; EM considerations as part of pre-qualification criteria; use of "hold points" in contracts for intermediate controls; and contract payments to be linked to monitoring of quality and compliance with EA standards\. In terms of implementation support, the key performance output indicators at appraisal consisted of: (a) timely actions on government follow-up and implementation coordination; (b) key operations manual developed, applied and refined according to requirements; (c) number of project staff with improved competencies on project implementation, M&E, procurement processing and financial management; and (d) M&E system developed and timely monitoring reports and evaluation studies produced\. Project Coordination: The PCO was set up early in the project but was not fully staffed until the project was well underway, particularly in the areas of financial management and M&E\. At closure, it consisted of nine officers including the Project Coordinator, and the equivalent staff at provincial level totaled some 48 staff\. Technical Assistance was provided during implementation by key specialists recruited at international and regional levels, as well as national staff to reinforce the PPIOs, as follows: 29 Profile Original contract Final total (p-months) (p-months) International staff 30\.0 35\.97 CTA 18\.0 19\.97 Irrigation Engineer/ Procurement 7\.0 7\.07 Environmentalist 5\.0 8\.93 Regional staff 87\.0 112\.6 Deputy CTA/ Agricultural Training and Extension 30\.0 42\.7 Water Management 15\.0 25\.28 Community Development 10\.0 9\.83 Subject Matter Specialists (4 nos\.) 32\.0 34\.8 National staff 356\.0 423\.6 Assistant Irrigation Engineer (4 nos\.) 120\.0 164\.1 Community Development Worker (2 nos\.) 32\.0 36\.8 Agric\. Extension Worker (4 nos\.) 132\.0 150\.7 On-Farm Research Specialist (4 nos\.) 72\.0 72\.0 Training: Of the 416 training and study tour sessions organized during the project, staff directly associated to the project benefited from 166 sessions involving 545 days of training for a total of 4,352 trainees\. This total included 712 women\. On-the-job training in project management and coordination was provided at 18 sessions covering 39 days and involving 578 participants (73 female)\. Similarly, monitoring and evaluation training was provided at 11 sessions covering 55 days and involving 396 participants (55 female)\. In general, less training was provided than foreseen at appraisal due, principally, to delays in budget disbursement\. Vehicles and equipment: At central level, 4WD vehicles (8 nos\.), motorcycles (23 nos\.) and a minibus, plus office equipment were provided\. PPIOs were also provided with 4WD vehicles (16 nos\.), motorcycles (107 nos\.), and a similar mix of office equipment\. Monitoring and Evaluation: The initial M& E system developed by the project in late 2003 appears to have been overly complex and did not facilitate consistent reporting of project activities\. A refined set of impact indicators were developed at MTR and a simplified M&E manual was also developed\. The system was fully functional in 2006\. 30 ANNEX 3\. ECONOMIC AND FINANCIAL ANALYSIS Summary of Key Findings The project has exceeded its physical targets regarding total command area, irrigated area during the dry season and productivity increases\. However, diversification into non-glutinous rice and non-rice crops has been marginal; Unit costs for irrigation rehabilitation of USD 1,314 (direct investment costs) and USD 2,431 (total project costs excluding VIP) are within a reasonable range in South-East Asia; The analysis has been constrained by severe data limitations which made it difficult to track key output and outcome indicators especially during the first years of project implementation, and to estimate some of the project benefits; An EIRR of 23\.2 percent and NPV of USD 4\.6 million (excluding VIP) are above PAD estimates and suggest that economic benefits of the project are satisfactory; Sensitivity analysis shows high sensitivity of project benefits to fluctuations of rice prices\. Ne vertheless, current medium-term outlooks for rice prices and limited risk of project benefits being eroded by falling prices; and Accelerated deterioration of irrigation infrastructure due to poor maintenance and repairs pose a significant threat to sustaining project benefits\. Introduction This annex describes the benefits and costs of the project as they have been assessed at the end of project implementation and compares them with appraisal estimates\. To the extent possible, benefits have been quantified using available monitoring data and information gathered during fieldwork\. However, the re-assessment of the economic and financial impact of the project in line with the assumptions and methodology used at appraisal was constrained by the following limitations: unavailability of the PAD working paper on Economic and Financial Analysis with detailed crop budgets and other computations and respective explanation of the underlying assumptions and methodology\. The analysis had to rely on Annexes 4 and 5 of the PAD which present some overall results and general assumptions; lack of 2001 baseline data on relevant indicators: The baseline survey consists mainly of a compilation of secondary data providing detailed statistics on social and demographic indicators at district level, but with little information on farming practices such as use and costs of inputs, yields and output prices in the project area (at least no such document could be assessed by the ICRR team); limited availability of monitoring data: Disconnect between the baseline data from PAD and M&E data: The M&E system has only been established after the MT and no data is available for the period before 2004\. The system was initially overdesigned and underwent several revisions\. The final reporting format was only put in place in late 2006 and some data seems to have been collected 31 retroactively back to 2004\. Some performance indicators established in the PAD such as the area under supplementary irrigation are missing; and poor quality of monitoring data: Despite considerable cleaning and recollection of data, inconsistencies and gaps persist\. Moreover, the indicators collected are not always clearly defined causing some interpretation problems\. Such ambiguity has also affected the quality of data collection carried out by poorly trained extension workers\. As a result, M&E data has to be treated with caution and only provides a rough idea about outputs and achievements\. Main Project Benefits Projected and Achieved According to the Project Appraisal Document (PAD), the following benefits were envisaged: expansion of dry season irrigated area from 2,816 ha to 4,455 ha; expansion of supplemental irrigation during the wet season from 1,373 ha to 7,070 ha; yield increases due to introduction of improved seeds, fertilizer application and other agronomic practices during both seasons: from 2\.0 t to 3\.5 tons /ha, during wet season, and from 3\.8t to 4\.4 t during the dry season; complete shift from glutinous to non-glutinous rice season during the dry season; diversification into non-rice crops during the dry season from none to 273 ha of maize, 267 ha of soybeans and 91 ha of vegetables; and increased income from small livelihoods activities funded under the VIP component\. Table 1: Key Project Benefits Projected and Achieved Unit Baseline at PAD End of % of Appraisal estimate project appraisal for 2007 (2008) Target Direct Beneficiaries (irrigation) Families 7,300 6,347 87% Total command area ha 7,070 7,070 7,400 105% Dry season area irrigated ha 2,816 4,455 5,635 126% Wet season yields* Tons/ha 2\.2 3\.5 3\.7 106% Dry season yields* Tons/ha 3\.8 4\.4 4\.8 109% Diversification into non rice crops ha - 631 119 19% * Weighted averages for different crop budgets Table 1 summarizes some key output and outcome indicators comparing the baseline situation, PAD estimates and actual achievements at the end of the project implementation period\. The project has exceeded its physical targets regarding total command area, irrigated area during the dry season and yields\. However, due to the delays in completing civil works, the full project benefits only materialized during the last project year\. Table 2 shows some output and outcome indicators as monitored by the project over for the period from 2004 08 during which civil works, training and extension activities were implemented at farm level\. It shows that 272 FIGs with a total of 6,347 members have been formed by 2008\. Dry season paddy cultivation had declined 32 considerably from 2,816 ha in 2001 to 1,421 ha in 2004, due to lack of system maintenance26\. During construction, the cultivated area declined further to a low of 1,283ha in 2005/06, followed by a sharp increase up to 5,635ha in 2007/08, after construction works had been completed\. Table 2: Project Outputs Based on M&E Data 2004-05 2005-06 2006-07 2007-08 Farmer Irrigation Groups (FIG) Groups 135 159 215 272 Total FIG Members Persons 2777 2995 3794 6347 Wet seas on production Paddy rice area total Ha 7210 7319 7404 7464 Paddy areas with approved seeds Ha 1730 2200 3096 3684 Non-rice crops Ha 22 48 68 12 Dry season production Paddy rice area total Ha 1421 1283 1989 5635 Paddy areas with improved seeds Ha 736 791 1159 5343 Non-rice crops 36 30 63 119 Improved rice varieties were introduced by the project covering about half of the wet season area and almost the entire dry season paddy area in 2007/08\. Yields increased from between 2 and 2\.4 tons at appraisal to between 3 tons and 4\.2 tons during the wet season\. Dry season yields went up from 3\.8 tons to between 4\.2 tons and 5\.3 tons during the dry season, depending on technology levels\. Paddy cultivation during the wet season covers the entire command area of 7,400 ha of the 19 rehabilitated schemes (including Samong I)\. Despite these improvements in rice production technologies, no significant shift from glutinous to non-glutinous varieties has occurred and the overwhelming majority of farmers continue to grow glutinous rice varieties\. Moreover, diversification into non-rice crops has been marginal (119 ha in 20007/08, 19 percent of appraisal target), despite considerable on farm demonstration and training activities by the project\. The main reason for the limited diversification appears to be related to the difficulties in marketing of non-rice crops, especially for perishable crops like vegetables\. Estimation of Incremental Benefits Incremental benefits have been calculated by comparing the with project and without project scenarios, ex ante and ex post, over a 20 years period starting 2001\. Two adjustments have been made to the ex ante without-project scenario of the PAD: increase of the planted area during the wet season: The PAD projects a total cultivated area during the wet season of 5,143 ha throughout the entire period of analysis for the without project situation, despite a command area of 7,070 ha\. According to monitoring data, the cultivated wet season area was 7,210 ha in 2004 and further increased to 7,464 ha in 2007\. Project staff gave several possible explanations for this increase, none of which can really be attributed to 26According to project staff, the expectation of rehabilitation works led to a complete hold of repair and maintenance work by water users and government authorities\. 33 the project27\. In the absence of monitoring data, the PAD reported area is used for with and without project scenario until 2003 and the M&E data since 2004; and deterioration of the irrigated area: the PAD assumes a decline of wet season irrigated area from 1,373 ha to 917 ha at the end of project life, due to improper maintenance, which is equivalent to a 2 percent annual decline\. Based on the empirical evidence in the LAO irrigation sector, a decline of 10 percent p\.a\. is used as base case for the without project scenario\. Incremental net benefits have been estimated by subtracting net benefits of the adjusted without project scenario from the net benefits with project\. Incremental net benefits have been quantified based on the following project achievements: paddy yield increases during dry and wet season; and expansion of irrigated area during the dry season\. Given the absence of monitoring data on the area under supplementary irrigation, the impact of wet season irrigation on crop yields could not be measured\. According to project staff, supplementary irrigation only has an impact in years with a dry spell during the rainy season and none scripted has occurred during the project implementation period\. Moreover, it would difficult to disaggregate the impact of supplementary irrigation from other project interventions such as improved seeds and better crop management practices including fertilizer application\. Therefore, the effects of improved water security and better agricultural practices are reflected jointly in the crop budgets\. The net benefits of non-rice crops have not been quantified view of their marginal importance\. Lack of appropriate M&E data prevented a quantification of the incremental net benefits of the VIP component\. Crop Budgets In view of the predominance of paddy production, crop budgets were used for assessing the incremental benefits instead of farm models\. For the without project scenario, crop budgets were prepared based on the yields given in the PAD: 2 tons for wet season rainfed paddy (CB 1), 2\.5 tons for paddy with supplementary irrigation (CB 2) and 3\.8 tons (CB 3) for dry season paddy\. For the with project situation, two different technology levels have been modeled for each cropping season: wet season medium (CB 4) with an average yield of approximately 3 tons due to improved water management and improved rice cultivation practices; wet season high (CB 5) with an average yield of approximately 4\.2 tons due to and improved rice cultivation practices including the use of improved seeds and some fertilizer (in non-flood prone areas); dry season medium (CB 6) with an average yield of approximately 4\.2 tons due to improved seeds some fertilizer use (150 kg, half of the recommended doses); and 27Project staff gives different explanations for the difference in wet season cultivated area between the PAD and the M&E data, including the possibility of underreporting of wet season calculated area at appraisal, tightening of the Thai immigration policy in 2004 increasing the rural labour availability combined with increasing paddy prices at that time\. 34 dry season high (CB 7) with an average yield of approximately 5\.3 tons due to the use of improved seeds and the recommended amount of fertilizer (300kg)\. Table 3: Crop Budget Summary Return family Return to land (USD) Rural wage rate labour (USD) Without project Yields (kg) financial economic financial Wet season low (CB 1) 2,000 249\.8 131\.2 4\.0 2\.3 Wet season supplementary (CB 2) 2,500 296\.8 208\.2 4\.6 2\.3 Dry season low (CB 3) 3,800 440\.2 356\.8 7\.0 2\.3 With project Wet season medium (CB 4) 3,000 431\.9 308\.6 6\.6 2\.3 Wet season high (CB 5) 4,200 572\.3 480\.4 8\.3 2\.3 Dry season medium (CB 6) 4,300 484\.5 391\.3 7\.2 2\.3 Dry season high (CB 7) 5,300 577\.7 480\.0 8\.4 2\.3 Table 3 shows increases in returns to land and family labor during both seasons\. Returns to family labor are between 173 percent and 360 percent above the rural wage rate\. Returns to land and family labor increased especially during the wet season\. Crops budgets were based on data and information provided by project staff at central and provincial level and crosschecked during field visits\. Input use and yields reflect average levels for the four provinces over the project implementation period\. All prices and cost are expressed in domestic currency constant 2008 prices and converted into USD at the prevailing foreign exchange rate of 8,600 Kip/USD\. For the base case, a paddy price of Kip 1,848 has been used for the wet season reflecting the average price in the project area for the 2005 2008 periods in real terms\. It has been calculated based on the current prices received from the PPIOs and adjusted by the respective CPI rates\. Changes in real terms have been minor during the period fluctuating between Kip 1,596 in 2005 and Kip 2,158 in 2007\. Paddy prices for earlier years (2002 2004) were not available for the project area but most of the incremental costs and benefits at farm level accrued between 2005 -08\. Dry season rice is of lower quality and therefore mainly used for noodle and beer manufacturing\. Average prices during the dry season tend to be about 10 percent below wet season price\. Fertilizer prices are based on average farm gate prices in the project area during 2005 -07 in real terms (excluding the temporary peak during 2008)\. Further details on the assumptions used for crop budgets can be found in table 1 (Annex), Tables 2a 2g include the detailed crop budgets\. Evolution of Cropping Patterns The without project scenario (ex post) shows the following trends: increase of the wet season cultivated area in 2004; and decline of the irrigated area during wet and dry season at a rate of 10 percent p\.a\. The with project scenario uses baseline data for cultivated area and crop budgets 1 - 3 for the first 3 years (2001 04) given that project activities only commenced in 2004 at field level\. The period 2004 07 shows an increase in area planted with improved 35 agricultural technologies and water management reflected in an expansion of area under crop budgets 4 and 5 and substitution of area under crop budgets 1 and 2\. At the end of the project implementation period, half of the farmers are using improved seeds during the wet season\. This percentage is expected to continue during the rest of the analysis period since a further increase of the area with improved seeds during wet season is likely to cause labor shortages during peak periods (mainly transplanting and harvesting)\. The use of traditional varieties on some of the area attenuates labor peaks\. A reduction of the area under improved seeds seems unlikely in view of the substantial benefits achieved by farmers and the training of a number of farmers in seed multiplication under the project\. The effects of improved water management are reflected the yields assumptions in CBs 4 and 5\. During the dry season, project benefits result from the incremental area under irrigation and from yield increases (shift from CB 3 to CBs 6 and 7)\. Based on information collected during fieldwork, it is further assumed that half of the farmers use the full technology package (CB 7), whereas the other 50 percent apply half of the recommended amount of fertilizer (CB 6)\. From 2008 until 2021, an annual decline of 5 percent of the dry season irrigated area is projected, due to insufficient repair and maintenance\. This rate is assumed to be somewhat lower than in the without project scenario (10 percent) reflecting some benefits of rehabilitation and training of WUGs during the project, under an optimistic base case scenario\. Project Costs Annex 1 shows project costs at appraisal and completion\. Overall, costs were 14 percent above appraisal estimates and the most important cost overruns accrued for consultants (156 percent), civil works (136 percent), and incremental operating costs (130 percent)\. These cost overruns are mainly attributable to the delays in the implementation and completion of civil works and to increasing fuel prices\. Tables 7 and 8 in the accompanying Excel file show that the bulk of the expenditure occurred between 2005 and 2007\. Estimating the amount of water fees paid by farmers is challenging since most irrigation systems have only been functioning for one or two years after rehabilitation and no uniform approach has been applied in establishing irrigation service fees\. Nevertheless, many WUAs have adopted the official government regulation for gravity schemes, which establishes irrigation service fees in kind (paddy), rather than in monetary terms\. These fees are expressed in kind, amount to 200kg paddy for gravity and 150kg for pump schemes, and should cover operation and maintenance costs\. In addition, in pump schemes electricity costs of Kip 300,000 per ha are to be paid\. In addition, 1 percent of the investment costs are budgeted for repair works every five years, to be met by the Provincial Governments\. No systematic data exists about collection rates of irrigation service fees so far\. Fieldwork and a study on water users associations conducted by an international consultant in March 2007 suggest that fee collection only started in the dry season 2006/07\. A recent review of the irrigation sub-sector finds significant electricity debts of water users associations with pump irrigation\. No consistent information about wet 36 season irrigation and related fees has been available; hence, no quantification could be made\. For the analysis, a collection rate of 70 percent has been assumed\. For the analysis, an average irrigation fee amounts to Kip 257,000 per ha (USD 29\.8) has been computed for the dry season, based on average costs for gravity and pump irrigation adjusted by their respective shares in total dry season irrigated area and by a collection rate of 70 percent\. This amount is slightly above 2 percent of the average investment costs per ha (view Table 4)\. However, the only a part of the collected amount is used for O&M: According to the regulations, 20 percent should be transferred to the district as contributions for funding repair works, whereas the remaining 80 percent enters the Village Development Fund\. Only a fraction of this amount is designated for irrigation O&M and the rest spent for other village development activities\. Although no reliable data is available on the use of collected irrigation service fees in the 19 irrigation schemes, evidence suggests that the amounts used for O&M are insufficient to ensure the proper operation and maintenance of the rehabilitated area over the period of analysis (until 2021)\. Conversion from Financial into Economic Prices In the crop budgets in financial prices, only hired labor was costed (mainly for transplanting and harvesting) in order to calculate the returns to land, labor and capital\. For the conversion into economic prices, family labor was costed according to its opportunity costs\. During peak periods (transplanting and harvest), rural labor is fully employed and wage rates equal opportunity costs\. During other stages of the crop cycle, labor is costed at 50 percent of the rural wage rate reflecting rural underemployment\. The Lao economy is open and no major distortions in commodity and foreign exchange markets could be found\. A 5 percent import tax applies to fertilizer and the economic price has been adjusted accordingly although a significant share of fertilizer used in the project area is imported informally along the river\. Despite the existence of quantitative export restriction for rice, the commodity is widely exported informally along the river\. Glutinous rice is specialty rice consumed mainly in Laos and Northern Thailand and occasionally in Vietnam and China\. Prices are only indirectly correlated with world market prices for ordinary rice\. Glutinous rice is mainly exported to Thailand where significant demand exists, and to Vietnam and China\. Most exports occur informally and were estimated at about at 300,000 tons during 2007 by the Agro Processors Association, compared to only 3,670 tons reported in official statistics from the Ministry of Trade and Industry\. Most goods procured by the project through national or international competitive bidding and international shopping do not accrue taxes or other duties\. Civil works costs have not been broken down into major cost items in the cost tables received from the PCO\. Based on interviews held during the mission and in line with the Borrowers´ PCR, overall civil works costs were divided into 30 percent for labor and 70 percent for material, mostly imported\. Labor costs were adjusted by a shadow wage rate of 0\.8 to reflect the prevailing under-employment in Laos\. Cost Effectiveness and Re-evaluation of the Economic Internal Rate of Return 37 Total costs for rehabilitation of irrigation systems and access roads amount to USD 10\.3 million (financial) and USD 9\.7 million (economic)\. Divided by a total command area of 7,400 ha, costs per hectare amount to USD 1,394 (financial) and USD 1,314 (economic) which are within a reasonable range in South East Asia\. If total project cost excluding the VIP component are used, unit costs per increased to USD 2,513 (financial) or USD 2,430 (economic) per ha\. Table 4: Total Costs and Unit Costs for Irrigation Rehabilitation (in USD) Command Total costs Total costs Unit costs Unit costs area * (financial) (econonmic) (financial) (economic) Direct costs (irrigation rehab\. & access roads) 7,400 10,312,000 9,723,961 1,394 1,314 Total project costs per ha (excl\. VIP) 7,400 18,598,671 17,985,735 2,513 2,431 * Include Samong 1, for which more than half of the rehabilitation costs were financed by the project For the base case scenario, the Economic Internal Rate of Return (EIRR) was recalculated a) for the entire project costs, and b) for the project costs excluding the VIP component\. Based on the total project costs, the EIRR amounts to 18\.9 percent and increases to 23\.2 percent if VIP related costs are excluded\. The Net Present Value (NPV) amounts to USD 3,389,262 and USD 4,667,962, respectively, at a discount rate of 12 percent\. This compares favorably with PAD estimates of an EIRR of 16\.3 percent and an NPV of USD 2\.3 million\. The increase is consistent with the slight overachievement of key output targets (Table 1)\. Three alternative scenarios have also been modeled to assess the impact of changes in key parameters on EIRR and NPV\. The first two scenarios explore the impact of changes in paddy prices on the EIRR\. An increase of the paddy price 15 percent would drive the EIRR up to 26\.0 (31\.8 percent) whereas a decline by 15 percent would reduce it to 11\.8 percent (14\.8 percent)\. In the latter case, the NPV would turn negative at a discount rate of 12 percent\. This shows that the EIRR is highly sensitive to changes in paddy prices\. Table 5: EIRR and NPV under alternative Scenarios Total costs (economic) Total costs excluding VIP (economic) EIRR (%) NPV (million EIRR (%) NPV USD)) (million USD)) Base case 18\.9 3\.3 23\.2 4,7 Scenario 1 (rice price increases by 15%) 26\.0 6\.9 31\.8 8\.2 Scenario 2 (rice price decreases by 15%) 11\.8 (0\.1) 14\.8 1\.2 Scenario 3 (dry season irrigated area 15\.2 1\.4 19\.9 2\.6 decreases by 15% p\.a\.) Scenario 3 shows the effects of a decline of the irrigated area by 15 percent per year due to insufficient funding for maintenance and repair works and / or poor quality of the works\. Such scenario might not be unlikely in view of the insufficient funding used for preventive maintenance, the limited "on the job training" which could be provided to WUGs after the completion of the rehabilitation works and before the closure of the 38 project\. It would resemble the situation observed in most irrigation schemes in Laos following construction or rehabilitation\. The relatively modest decline of the EIRR to 15\.4 percent (19\.9 percent) is partly attributable to the method of calculation which applies the same rate of decline to the without project situation where it results in a sharp reduction in dry season irrigation starting in year 1\. The reduction of the EIRR would be more substantial if the scenario was applied to the total instead of the incremental net benefits of the project\. This highlights the importance of providing ongoing support to Water User Groups to enhance their capacity to ensure system maintenance and of adequate budget allocations at provincial level for repair works and operational costs of extension staff\. 39 ANNEX 4\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION PROCESSES (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Rahul Raturi Lead Economist Task Team Leader Mary Judd Anthropologist Aizad Khan Irrigation Engineer/Procurement Linda Schneider Institutions Enrique Crousillat Procurement Wijaya Wickrema Financial Management Preethi Wijeratne Financial Manager Carolina V\. Figueroa-Geron Economist Alvaro Bueno Agriculturist Karin Nordlander Legal Counsel O\. Ladipo Financial Management and Disbursement Uma Lele Peer Reviewer Nejdet Al-Salihi Peer Reviewer Guzman Garcia-Rivero Peer Reviewer Srish Kumar Economist Evelyn Cowan Program Assistant Kathryn Cherrie Program Assistant Supervision/ICRR Rahul Raturi Lead Economist EASRE Task Team Leader TTL since early Steven Schonberger Lead Operations Officer EASRE 2002 Susan Shen Lead Ecologist EASRE TTL since Oct\.04 Ulrich K\. H\. M\. Schmitt Sr\. Natural Resources Economist EASRE TTL since Jan\.07 Oliver Braedt Sr\. NRM Specialist / ICRR TTL EASRE TTL since Nov\.08 Mary Judd Anthropologist Preethi Wijeratne Financial Manager S\. Silapeth Procurement Analyst S\. Lahiri Sr\. WSS Specialist K\. de Alwis Agriculturalist C\. Lyle Irrigation Engineer J\. Himmel Hydrologist/Environmental Specialist N\. Phanyaphanh Program Assistant R\. Chisholm Sr\. Agriculturalist EASRE N\. Hawkesworth Institutional Specialist E\. Ponce Agricultural Extension Specialist K\. Danaisawat FMS F\. Doorman Agricultural Extension Specialist S\. Jensby Resettlemet Specialist Chinnakorn Chantra Procurement Specialist EAPCO Kannathee Danaisawat Financial Management Specialis EAPCO 40 Aizad Nawaz Khan Consultant EASRE Sybounheung Social Development Spec\. EASTS Phandanouvong Viengkeo Phetnavongxay Environmental Spec\. EASTS Souphanthachak Sisaleumsak Procurement Analyst EAPCO Olga Hoxon Rizo Program Assistant EASRE (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands No\. of staff weeks (including travel and consultant costs) Lending FY00 20 114\.83 FY01 34 221\.09 FY02 3 29\.38 FY03 -0\.35 FY04 0\.00 FY05 0\.00 FY06 0\.00 FY07 0\.00 FY08 0\.00 Total: 57 364\.95 Supervision/ICRR FY00 0\.00 FY01 9\.53 FY02 8 47\.54 FY03 9 43\.02 FY04 10 70\.79 FY05 37 173\.79 FY06 22 91\.83 FY07 21 82\.15 FY08 10 33\.83 FY09 4 0\.00 Total: 121 552\.48 41 (c) Mission Composition Mission/Date Mission member Title Identification mission R\. Raturi TTL September/October 1999 A\. Khan Irrigation Engineer/Procurement M\. Judd Anthropologist L\. Schneider Institutions Specialist Pre-Appraisal R\. Raturi TTL August/September 2000 M\. Judd Anthropologist P\. Wijeratne N\. Gordon S\. Silaphet A\. Khan, Irrigation Engineer/Procurement K\.S\. Sharma Irrigation Engineer A\. Bueno Agronomist J\. Himel S\. Kumar Project Appraisal R\. Raturi TTL January 2001 A\. Khan Irrig\. Engineer/Procurement A\. Bueno Agronomist C\. Figueroa-Geron Economist W\. Wickrema Financial Management Project Launch R\. Raturi TTL May/June 2001 M\. Judd Anthropologist P\. Wijeratne A\. Khan Irrigation Engineer C\. Chantra Procurement Specialist Implementation Review R\. Raturi TTL January 2002 M\. Judd Anthropologist P\. Wijeratne S\. Silapeth Procurement Analyst A\. Khan Irrigation Engineer S\. Lahiri Sr\. WSS Specialist C\. Chantra Procurement Specialist Agriculture and VIP Review M Judd Anthropologist May 2002 K\. de Alwis Agriculturalist Supervision S\. Schonberger TTL July 2002 Partial Supervision S\. Schonberger TTL (Procurement) October 2002 S\. Silaphet Procurement Analyst Partial Supervision (Project Coordination) Nov\. 2002 No information available in project documentation Partial Supervision (VIP and Financial Management) Feb\. No information available in project documentation `03 Partial Supervision (Financial Management, Procurement) No information available in project documentation June `03 Supervision S\. Schonberger TTL June/July 2003 C\. Lyle Irrigation Engineer J\. Himmel Hydrologist/Environment Spec\. K\. de Alwis Agriculturalist Partial Supervision S\. Lahiri Sr\. WSS Specialist July 2003 N\. Phanyaphanh Program Assistant, EWDEA Supervision S\. Schonberger TTL February 2004 Supervision S\. Schonberger TTL 42 Mission/Date Mission member Title September 2004 R\. Chisholm Agriculturalist A\. Khan Irrigation Specialist V\. Phetnavonxay Rural Development Specialist Ms\.S\. Shen Lead Ecologist/TTL Resettlement Supervision C\. Wang Mission Dec\.2004 V\. Phetnavongxay Rural Development Specialist Mid-Term Review S\. Shen Lead Ecologist/TTL April/May 2005 U\. Schmitt Rural Development Economist V\. Phetnavongxay Rural Development Specialist N\. Hawkesworth Institutions Specialist E\. Ponce Agricultural Extension Specialist A\. Khan Irrigation Engineer K\. Danaisawat p\.t\. Financial Management Specialist C\. Chantra Procurement Specialist Supervision Mission S\. Shen Lead Ecologist/TTL October 2005 U\. Schmitt Rural Development Economist K\. Danaisawat Financial Management Specialist C\. Chantra Procurement Specialist Supervision Mission (Rural A\. Khan Irrigation Engineer Infrastructure Component) November-December 2005 Supervision Mission S\. Shen Lead Ecologist/TTL May/June 2006 U\. Schmitt Rural Development Economist K\. Danaisawat Financial Management Specialist C\. Chantra Procurement Specialist F\. Doorman Agricultural Extension Specialist S\. Jensby Resettlement Specialist p\.t\. V\. Phetnavongxay Rural Development Specialist Supervision Mission S\. Shen Lead Ecologist/TTL November/December 2006 U\. Schmitt Rural Development Economist K\. Danaisawat Financial Management Specialist C\. Chantra Procurement Specialist F\. Doorman Agricultural Extension Specialist V\. Phetnavongxay Rural Development Officer S\. Sisaleumsak Procurement Analyst Supervision Mission U\. Schmitt Natural Resource Economist/TTL September 2007 K\. Danaisawat Financial Management Specialist C\. Chantra Procurement Specialist V Phetnavongxay Rural Development Officer S\. Phandanouvong Social Development Specialist Final Supervision Mission U\. Schmitt Rural Development Economist June 2008 K\. Danaisawat Financial Management Specialist C\. Chantra Procurement Specialist 43 ANNEX 5\. BENEFICIARY SURVEY RESULTS Not applicable\. 44 ANNEX 6\. STAKEHOLDER WORKSHOP REPORT AND RESULTS No stakeholder workshop was held for the project\. 45 ANNEX 7\. SUMMARY OF BORROWER'S ICRR AND/OR COMMENTS ON DRAFT ICRR Project Achievements The Project Appraisal Document included 21 irrigation schemes covering 7,070 ha as the schemes for rehabilitation under the Project\. Of these schemes, 18 were implemented (including two changes, Naphok replacing Naxaithong in Attapeu Province and Mouangkao replacing Thathot in Khammouane Province) and 3 were dropped\. Due to some changes in command area the final command area of the 18 schemes amounted to 7,250 ha\. Village access tracks were planned to provide the critical links between villages and existing main or gravel roads and between villages and irrigation systems\. These tracks were to enable easier provision of inputs to the agricultural systems and easier market access to agricultural produce\. Although 165 km of access tracks were originally planned, eventually only 104\.3 km were built under the project\. The water supply and sanitation component was based on a demand-driven approach combined with a limited range of options, with a focus on providing water supply through deep and shallow wells and the provision of some 5,000 sanitary pit latrines\. A total of 200 deep wells, 46 shallow wells, 5,636 family latrines and 44 school latrines were constructed under the Project\. Office renovations and construction of training centres were also carried out under the Project's civil works program\. Renovations of the PCO and the four PPIO offices was undertaken, along with small scale renovation works for 15 District offices\. Four Agricultural Training Centres were completed under the Project\. Under the environmental component, seven specific environmental management plans were prepared for schemes that had been flagged during project appraisal\. In addition, general environmental management plans were incorporated in the construction contracts to ensure safeguarding of people and the environment during construction activities\. Environmental technical guidelines were also developed under the Project and incorporated in the later civil works contracts\. The Credit Agreement for ADP required the Project to prepare resettlement plans, wherever two hundred or more villagers were adversely affected by a subproject, in accordance with the World Bank's Policy Framework for Compensation, Resettlement and Rehabilitation of Project Affected Persons\. Resettlement Plans were prepared for all schemes, approved by the World Bank, and implemented with appropriate documentation\. In some cases, due to construction delays or the need for renovation works to damaged sections, supplementary plans were required\. Training and study tour program were the main activities under the Agriculture extension component mainly to support the introduction of LEA, Agriculture demonstration and on-farm research activities\. A total of 319 Agriculture trainings, 934 training days, 21,511 trainees including 4,894 women trainees were conducted from 46 2003-2008\. The training mainly focused on rice production technologies, dry season cash crop production, agriculture extension system, livestock production and veterinary, soil improvement and village development fund operation\. On-farm research and demonstration activities were identified and selected based on the PRA (need assessment) results\. The technologies were recommended by the previous projects, NAFRI, NAFRI, NAFES, IRRI, CIAT and the technical department of the Ministry of Agriculture and Forestry\. The main technologies demonstrated were: (a) rice production; (b) farmer level rice seed production; (c) integrated pest management; (d) cash crop production; (e) soil improvement; (f) animal feed production; (g) fruit tree; (h) livestock; (i) fisheries; and (j) village development fund\. Water user groups in all irrigation schemes have been re-organized and strengthened\. To the end of March 2008, 272 Farmer Irrigation Groups have been formed and strengthened\. Total WUG members are 6,347 families\. There are 635 temporary WUG members (not included above) who cultivate the land mainly for the dry season rice production by signing tenant contracts with the land owners\. The Village Investment for the Poor component was carried out in three phases, the first two phases (March 2002 to February 2004 and February 2004 to February 2005) were funded from the Japan Social Development Fund (JSDF) and the third phase from March 2005 to June 2007 (some activities extended to June 2008) was funded out of the IDA Credit\. Expenditure under the JSDF totalled US$ 1,142,015\.72\. Expenditure under the IDA Credit reached US$ 325,918 (for sub-grants only)\. Activities were carried out in 204 villages in the 15 Project districts with a total number of 540 activities\. The main aim of the component was to assist the poor, ethnic minorities and women\. The PCO fulfilled the coordinating role, consolidating plans and budgets and reimbursement claims for all the Project offices\. Most procurement was coordinated from the PCO, with preparation of bidding documents carried out centrally, although the relevant bid evaluations for construction works were carried out by the PPIOs\. Bid evaluations were submitted to the PCO for review, before being submitted to the World Bank for approval\. The PCO also carried out all procurement of consultants, both for the main TA Team and individuals for other support services such as VIP, finance and M&E\. All reporting was managed from the PCO, with TA assistance, and auditors were also recruited by the PCO\. Implementation The Development Credit Agreement (3509 LA) for the Agricultural Development Project between the Lao People's Democratic Republic and the International Development Association was signed on 2 July 2001 and became effective on 26 October 2001, with a closure date of 30 June 2007\. The Credit Agreement required the appointment of a Procurement Specialist as a condition of loan effectiveness\. This was to assist the project with the initial procurement activities, particularly of the Project Consultants, local consultants for survey and design and vehicles and equipment\. This was effected, although the recruitment and 47 appointment of the Project Consultants was delayed and the Consultants were not fielded until May 2003\. Preparation of irrigation and access track designs by locally recruited consultants also fell behind schedule\. The Project Consultants carried out extensive design reviews, requested changes, and eventually the revised designs were accepted and construction commenced in dry season 2004/2005, two years behind the schedule in the Project Appraisal Document (PAD)\. Delays in construction were also caused by the need for the preparation, approval and implementation of the Resettlement Plans\. Preparation of Resettlement Plans took a great deal of time and these had to be completed, approved and implemented prior to commencement of construction\. The combination of delays eventually led to the agreement for a one-year extension in the Credit Agreement, with loan closure extended from 30 June 2007 to 30 June 2008\. Project costs at the time of appraisal amounted to US$ 18\.21 million, of which US$ 16\.69 million was to be met by the IDA Project Loan (equivalent to SDR 13\.20 million at SDR 1 = US$ 1\.264 on 1 May 2001)\. Although there have been several agreed reallocations of the loan proceeds, there has been no change in the total credit amount in terms of SDR\. However, due to the significant fluctuations in exchange rates, and the World Bank's decision in July 2005 to meet 100 percentaje of the Project's costs out of the loan, expenditure in dollar terms increased to reach US$ 19\.10 million\. At Project Appraisal, it was assumed that the Project period would be 5 years from late 2001 to the end of 2006, however the loan became effective on 26 October 2001, with a closure date of 30 June 2007\. Peak years of expenditure were expected to be 2004, 2005 and 2006, but delays in the recruitment of the Project Consultants (not fielded until May 2003) led to delays in implementation activities and by mid-term review (delayed one year) in April/May 2005, it was clear that the Project was running behind schedule and that a further year may be needed to complete the works\. The IDA eventually agreed to an extension of 12 months to enable completion of ongoing subprojects as well as utilization of the remaining funds\. Problems Encountered There were a number of problems with the irrigation system and access track designs, including a limited amount of local consultation with the district/provincial authorities or with farmer beneficiaries, and non-compliance with the technical conditions of the TOR\. Discussions were held with the two consulting firms and by late 2003 most of the design problems had been rectified and the work resubmitted\. The preparation of the Resettlement Plans proved to be much more onerous and time consuming than expected and led to delays in the tendering process, due to the requirement of approval and implementation of the resettlement plans prior to commencement of construction\. 48 During the 2005 wet season, excessive rainfall caused damage to several schemes that were under construction, resulting in a World Bank request to review all the designs to try to ensure that further damage would not be caused by design faults, and to prepare remedial designs for those schemes that had suffered damage\. However, it was not until the start of the 2007 wet season that most of the remedial works were completed\. One contractor that had been awarded contracts for Samong I and II in Attapeu and Nondeng I and II in Saravane was unable to perform up to expectations and the Project had to cancel all three contracts\. This resulted in delays to these schemes and contracts were remodelled and rebid\. Unfortunately, there was evidence of collusion amongst the bidders for Samong I and Samong II rebids, and the World Bank cancelled funding for these contracts and the Government of Lao also cancelled the contracts and blacklisted the concerned contractors for 3 years\. There was confusion in the setting up of VDFs for the irrigation villages\. These were intended to provide financial support for agricultural inputs such as fertilizer\. They were not meant to have the same function and modality of the VDFs set up for VIP activities, which had a much lower funding requirement\. Training activities did not reach their intended targets, partly due to funding difficulties, funds not available or not at the right time, and partly due to an overly ambitious training program\. Some 50 percent of the planned trainings were carried out\. The Village Investment for the Poor (VIP) was a new approach for many of the staff involved\. The main social sciences tool used was the Participatory Rapid Appraisal (PRA) and this was introduced to the Provincial and District staff engaged on the VIP component\. While the aim was to start from a bottom-up approach to planning VIP activities, in practice, a top-down list of possible activities was also presented to the villagers and this often formed the basis for the resulting projects\. To some extent this was logical, in that there were particular skills and projects that naturally fell under this type of small-scale activity\. The main challenge that faced the program was not technical nor social, but financial management\. The process of approval of a project and agreeing to funding was cumbersome involving too many signatures for such small amounts\. The main issue arising from the implementation arrangements was the lack of control that the PCO had over the PPIOs\. In fact, the PCO could only "coordinate" and not control\. Similarly, reporting and data collection was continuously difficult\. This applied to regular reporting as well as financial reporting and reimbursement claims\. The problems with financial management arose at the start of the Project, when ADP was handed over to NAFES to implement, and prior financial training of staff expected to be working on ADP was lost, as the staff were not transferred to ADP\. Staff that were appointed did not have the training or capacity to manage the finances adequately\. This also led to lack of proper supervision and assistance to the provincial level financial staff\. 49 Project Benefits Project benefits appear to be significant\. The field surveys have shown increases in paddy rice crop yields throughout the Project area\. Dry season crop yields are reported to range from 4\.10 t/ha in Attapeu, 4\.92 t/ha in Champasak, 5\.32 t/h in Khammouane and 5\.12 t/ha in Saravane, average of all schemes in each province is 4\.8 t/ha\. This compares with the PAD reported yield of 3\.8 t/ha for irrigated dry season HYV rice in the present or pre-project situation, and a predicted yield of 4\.4 t/ha\. Cropping intensity at appraisal was reported to be only 109 percent\. It was anticipated that cropping intensity with the project should increase to 162 percent In fact, during the 2007 dry season, the first year that all works were completed and all schemes functioning, Project cropping intensity reached 181 percent\. With the increase in yields and cropped area, production increases were substantial during 2007\. The PAD indicated that pre-project production of rice was only 12,071 tons, with a predicted production with project of 31,535 tons\. Reported total production for the 2007 year (wet and dry seasons) was 53,989 tons, or an incremental increase of 41,918 tons, or over 440 percent\. An economic analysis carried out in June 2008 showed that the irrigation schemes were very beneficial, with an overall EIRR of 26 percentage in the base case of a conservative yield of 4\.0 t/ha and a paddy rice price of Kip 2,200/kg, considering direct civil works costs alone and incremental dry season crop production\. If all costs are considered in this situation, the EIRR drops to 7 percent However, the crop yield of 4\.0 t/ha used is conservative, the benefits of increased yield in the whole project area in the wet season through improved cropping practices and greater use of HYVs and the incremental yield increase in the pre-project dry season irrigated area have been ignored\. If the FOB Thailand price is used, the EIRR increases dramatically to 54 percent even with all Project costs considered\. A separate analysis utilizing field data reports indicates an EIRR of 34 percentage if only irrigation costs are considered and 14 percent if all Project costs are considered\. It is suspected that these yields may be a little higher than reality, and that the base case above is more realistic\. Additional benefits that have not been quantified include the benefits from the VIP component, water supply and sanitation and livestock and vegetables\. All these activities have provided benefits particularly to the poor, ethnic minorities and women\. 50 ANNEX 8\. COMMENTS OF COFINANCIERS AND OTHER PARTNERS/STAKEHOLDERS Not applicable\. 51 ANNEX 9\. LIST OF SUPPORTING DOCUMENTS Project Concept Note Identification Mission Aide-Memoire + Annexes: October 1999 Project Preparation Report, April 2000 WB: Project Appraisal Document, May 2001 WB: Development Credit Agreement WB: JSDF Grant Agreement WB: Safeguard documents WB: ISRs (PSRs) and Aide-memoirs ADP: Mid-Term Review Report, March 2005 ADP: Analysis of VIP's Savings and Credit Sub-Projects, July 2006 ADP: VIP Impact Report, September 2006 ADP: Water Management Sub-Project operation and Maintenance WUGs, March 2007 ADP: Final Evaluation of VIP Component, May 2007 (draft) ADP: Project Completion Report, June 2008 MAF/Dept\. of Irrigation: Irrigation Diagnostic Study, August 2007, CES/AFD 52 100° 102° 104° 100° 105° 110° CHINA C H I N A ANMAR LAO 20° MY PEOPLE'S Gulf 20° DEM\. REP\. of Tonkin VIENTIANE 22° 22° V I E T N A M THAILAND Phongsaly 15° 15° PHONGSALY MYANMAR VIETNAM CAMBODIA Luang Namtha 10° Gulf Muang of 10° BOKEO LUANG Sai Thailand Sam Mekong NAMTHA Neua Ban 100° 105° 110° Huaisai OUDOMSAI HOUAPHAN Chiang LUANG Kong PRABANG 106° This map was produced by the Map Design 20° Unit of The World Bank\. The boundaries, 20° Pak Beng Mekong colors, denominations and any other Luang information shown on this map do not imply, Prabang on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries\. Xiang XIANG Sayaboury Khoang KHOANG T H A I L A N D Vang Vieng Xisomboun GULF SAYABOURY XAISOMBOUN VIENTIANE OF Pone BOLIKHAMSAI Mekong Paksane Hong Nam Ngum TONKIN Reservoir Namkading Mekong Thanaleng 18° 18° Sanakham Ban VIENTIANE Nongsu Kenethao PREFECTURE OF VIENTIANE Thakek KHAMMOUANE LAO PEOPLE'S DEMOCRATIC REPUBLIC AGRICULTURAL DEVELOPMENT PROJECT SAVANNAKHET PROJECT PROVINCES Keng Kabao Seno PRINCIPAL HIGHWAYS Savannakhet Ban HIGHWAYS Laksamsipha OTHER ROADS BORDER CROSSINGS 16° 16° AIRPORTS SARAVANE Saravane SELECTED TOWNS PROVINCE HEADQUARTERS SEKONG Sekong NATIONAL CAPITALS PROVINCE BOUNDARIES INTERNATIONAL BOUNDARIES Champasak CHAMPASAK Attapeu ATTAPEU 0 50 100 150 KILOMETERS Mekong 0 25 50 100 100 MILES FEBRUARY Khong IBRD 14° C A M B O D I A 14° 36741 2009 102° 104° 106°	REVIEW
P084078	IEG Report Number: ICRR14908 ICR Review Independent Evaluation Group 1\. Project Data: Date Posted: 06/01/2016 Country: Bangladesh Project ID: P084078 Appraisal Actual Project Name: National Agricultural Project Costs (US$M): 84\.60 73\.81 Technology Project L/C Number: Loan/Credit (US$M): 62\.60 54\.41 Sector Board: Agriculture and Rural Cofinancing (US$M): 19\.40 16\.99 Development Cofinanciers: International Fund for Board Approval Date : 02/07/2008 Agricultural Closing Date: 12/31/2013 12/31/2014 Development (IFAD) Sector(s): Agricultural extension and research (50%); Crops (20%); Animal production (15%); Sub-national government administration (10%); Central government administration (5%) Theme(s): Rural services and infrastructure (40%); Rural policies and institutions (40%); Participation and civic engagement (20%) Prepared by: Reviewed by: ICR Review Group: Coordinator: Hassan Wally Ridley Nelson Christopher David IEGPS1 Nelson 2\. Project Objectives and Components: a\. Objectives: The project was the first phase in a series of three Adaptable Program Loans (APLs) of a long-term program (15 years) that had an overall objective to "support GOBâS strategy to improve national agricultural productivity and farm income, with a particular focus on small and marginal farmers (PAD, p\. 6)\." The Project Appraisal Document (PAD, p\. 2) stated that the Project Development Objective (PDO) was to: "improve effectiveness of the national agricultural technology system in Bangladesh\." The Financing Agreement (p\. 4) stated that the project objective was to: "support the Recipientâs Program to improve the effectiveness of the national agricultural technology system and to improve agricultural productivity and farm income\." The revised objective according to the Restructuring Paper (p\. 8, para 15) was to:" improve the effectiveness of the National Agricultural Technology System (NATS), as measured by increase in agricultural productivity and farm income in selected districts\. " While there was a formal revision of the PDO through a Level 1 restructuring, this revision was mainly related to the scale of project activities by including the term "selected districts" in the PDO\. This review will assess the outcomes against the objective stated in the Financing Agreement factoring in the change in scale\. No split rating will be carried out because the PDO remained the same and the Level 1 restructuring was carried out six months before the project closing date when 93% of project expenditure was already disbursed\. The objective will be split into three sub-objective as follows: (i) improve the effectiveness of the national agricultural technology system; (ii) improve agricultural productivity; and (iii) improve farm income\. b\.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives/key associated outcome targets? Yes Date of Board Approval: 03/04/2014 c\. Components: 1\. Agricultural Research Support (Appraisal Cost: US$31\.90 million, Actual Cost US$: 27\.29 million)\. This component aimed to enhance the efficiency and effectiveness of the national agricultural research system through: (a) promotion of a pluralistic institutional structure by enabling entry of new partners to support the research system; (b) making agricultural research more participatory and demand-led; (c) developing technologies to promote sustainable intensification and diversification of agriculture and for post-harvest value addition; and (d) bridging the yield gap between what is possible and what was being currently achieved by farmers\. The component would have national coverage, and the following activities would be financed: (i) Competitive Grants Program (CGP)\. The Government would establish an autonomous Agricultural Research Foundation (KGF), with its own Governing Board, to manage the CGP with independence, objectivity and transparency\. The Agricultural Research Foundation would invite multi-disciplinary agricultural research and development proposals from all organizations with capacity to undertake such work, including the National Agricultural Research System institutes, universities, NGOs, and the private sector\. By opening the CGP to non-traditional partners, a more competitive pluralistic institutional structure for the National Agricultural Research System would be facilitated\. The priority research themes for competitive funding would be identified through a demand-led process involving farmers, including researchable priority themes/constraints identified during micro-level planning of agricultural extension\. (ii) Sponsored Public Goods Research (SPGR)\. Long-term strategic and crosscutting research would be supported on selected priority themes of public goods nature, e\.g\. issues related to sustainable management of natural resources, germplasm conservation\. The SPGR proposals would be largely prepared and implemented by the Agricultural Research Institutes under the National Agricultural Research System and coordinated by the Bangladesh Rural Advancement Committee\. However, partnerships between national and selected international institutions, with excellence in research and education in areas of relevance to Bangladesh, would be supported, especially to build capacity/skills of national institutions in ânew sciencesâ, e\.g\. molecular biology, bioinformatics\. (iii) Enhancing Institutional Efficiency \. To improve governance, institutional responsibilities and management systems of the National Agricultural Research System, the 1996 Bangladesh Rural Advancement Committee Act would be amended; and, if needed, the Acts of individual institutes under the Ministry of Agriculture (and possibly the Acts of institutes under the Ministry of Fisheries and Livestock) would be revised\. The amended Bangladesh Rural Advancement Committee Act would also incorporate proposal for introduction of uniform service rules for the National Agricultural Research System scientists\. Bangladesh Rural Advancement Committeeâs organizational structure would be rationalized and its capacity strengthened for improved resource allocation, prioritization, coordination, human resource development, monitoring and evaluation of research, as well as for promoting adoption of participatory research planning and implementation processes\. Concurrently, capacity of Bangladesh Rural Advancement Committee and Agricultural Research Institute would be enhanced to manage fiduciary responsibilities related to procurement and financial management\. Funding would be provided for preparation and implementation of a need-based human resource development plan, including enhancement of capacity in social sciences, access to information technology (IT) tools and techniques for improved communications and dissemination of research information\. 2\. Agricultural Extension Support (Appraisal Cost: US$33\.16 million, Actual cost: US$38\.16 million)\. This component aimed to establish a decentralized demand-led extension service, which was knowledge-based with greater accountability and responsiveness to farmers, with a focus on small and marginal farmers\. The following activities would be financed: (i) Mobilization of Common Interest Groups and Producersâ Organizations \. A key element of the decentralized and demand-led extension system would be the mobilization, organization and capacity building of small and marginal producers into Common Interest Groups with the help of NGOs\. Participating farmers would be helped to form groups based on agricultural livelihoods or some other common interest, e\.g\. credit, water use\. Existing groups formed under other programs would also be eligible to participate, following reorganization, where necessary, and orientation in the overall extension approach under the project\. Common Interest Groups would be empowered to play an increasingly important role in planning, budgeting, implementation and monitoring of extension activities\. Common Interest Groups would be federated into Producersâ Organizations at the Union (smallest rural and administrative local Government Unit in Bangladesh), Upazila (sub-district) and District levels, with an initial focus on developing the Union level organization\. Capacity of Producer's Organizations would be strengthened to articulate, as well as to prioritize needs expressed by Common Interest Groups, enhance responsiveness of the public service to their needs, promote linkages with the private sector and play an advocacy role\. (ii) Decentralization of Extension Service \. Would include: (a) targeting, motivation, organization and capacity building of Common Interest Groups to prepare and implement participatory extension micro-plans at the Union level reflecting the priority needs of the Common Interest Groups members; (b) aggregation of Union extension micro-plans to provide the Upazila extension plan, along with sub-sector (crops, livestock, fisheries) budget estimates, for review and approval by the Upazila Extension Coordination Committee (UECC); (c) funding for implementation of extension micro-plans through the Upazila accounts of the line departments; (d) technical support and training of Common Interest Groups by the Upazila and Union level extension teams who in turn would be trained and technically supported by the district level extension staff with the involvement of research scientists; (d) strengthening of research - extension - farmer linkages; and (e) the national level policy guidance, inter-agency/departmental coordination and monitoring and evaluation of the decentralized extension system by the National Extension Coordination Committee, supported by the District and Upazila level Extension Coordination Committees, with representation of all relevant stakeholders\. (iii) Enhancing Institutional Efficiency \. This sub-component consists of: (a) Knowledge Management and Human Resource Development \. To enhance two-way flow of knowledge and information between Common Interest Groups and other stakeholders (extension staff, research scientists, NGOs, the private sector and the local government), the project would support establishment of Farmersâ Information and Advice Centers at the Union level\. Dissemination of knowledge through demonstrations, exposure visits, workshops, seminars and validation trials would be supported\. Increased use of information and communication technologies would be financed\. Human Resource Development support would include need-based training programs for staff of the line departments, NGOs and Common Interest Groups members\. Emphasis would be placed on building skills in participatory extension management, as well as technical subjects\. The project would assist with rehabilitation of selected training facilities, preparation of project specific training modules, training of trainers and engagement of guest faculties for specialized training\. (b) Institutional Strengthening\. To improve the overall efficiency and responsiveness of the public extension service, the project would: (a) empower grassroots organizations of producers to participate in planning, implementation and monitoring of extension programs; (b) evaluate and revise current structure, functions and business procedures of different line departments, including capacity to manage fiduciary (financial management and procurement) responsibilities; (c) update Ministry of Agriculture's National Agricultural Policy and the New Agricultural Extension Policy and Extension Policy of the Department of Fisheries\. It would assist in preparation of a new Livestock Extension Policy that is consistent with GOBâS PRSP, and a national extension implementation strategy to strengthen coordination and synergy between extension activities of different line departments and complementarity with the private sector service providers\. 3\. Development of Supply Chains (Appraisal Cost: US$9\.30 million, Actual Cost: US$3\.99 million)\. For increasing and diversifying sources of income for small and marginal farmers, development of supply chains of selected commodities would be supported on a pilot basis\. For the pilot phase, the focus would be on the supply chains involving fresh vegetables, primarily for the domestic market\. To maximize profitability of rice and maize crops, the project would also assist with the development of different rice and maize types for markets demanding higher value differentiated products requiring minimal incremental investment on the part of resource poor farmers\. During implementation, supply chains of other commodities would be examined to identify opportunities for the small and marginal farmers\. The following activities would be financed: (i) Strengthening Farmer -Market Linkages\. To help Common Interest Groups to integrate with supply chains, the project would support contractual arrangements with service providers for the implementation of location specific participatory production and marketing plans\. The contracted service provider would help to develop Producer's Organizations, with focus on facilitating marketing agreements, involving both the open market channel and contract farming\. Under the open market channel, Common Interest Groups would be able to choose from a basket of market options, including sale in the local market or to a procurement agent procuring on behalf of a larger trader or a processor\. Under contract farming, Common Interest Groups would be linked with processors or trading organizations, building on experience gained from the on-going contract farming activities in the country\. Where appropriate, contract agreements would include provision of technical support, inputs and credit by the purchasing agency\. In addition, Common Interest Groups/ Producer's Organizations would be trained and demonstrated good agricultural practices\. The project would also assist Common Interest Groups/ Producer's Organizations to establish low cost packing and storage facilities\. Produce handling and sanitation facilities at selected local markets, where Common Interest Groups may take their produce for direct marketing, would be improved\. Introduction of higher sanitary and phyto-sanitary standards required by the national and export markets would be emphasized\. (ii) Enhancing Institutional Efficiency \. The focus of institutional strengthening interventions would be to improve institutional and operational effectiveness of Hortex, the specialized agency established by the Ministry of Agriculture to promote post-harvest value addition and market linkages to accelerate growth of high value chains of agricultural commodities\. Technical assistance would be provided to Hortex through a long-term international consultancy to develop capacity in promoting improved post harvest management practices, quality, marketing options, agribusiness development and knowledge management and communications\. Support would also be provided for: (a) capacity building of trainers and training programs aimed at capacity building of CIGs, POs, agribusiness staff and public officials (research, extension, regulators) in commercial farming practices; (b) information sharing with the public and private sector participants; and (c) development of effective linkages with the research system and support for validation trials, especially for work on local supply chains\. 4\. Project Management and Coordination (Appraisal Cost: US$9\.75 million, Actual Cost: 4\.36 million)\. This component would provide support for managing the project\. Supplemental support would be provided on a need-based to strengthen procurement, financial management, procurement, communication, M&E and social and environmental safeguards capacity in the implementing units\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost\. Total project cost at appraisal was expected to be US$84\.6 million (PAD, Annex 5)\. The ICR (Annex 1) reported that the actual project cost was US$73\.81 million\. Financing\. The Project was financed through an IDA Credit worth US$62\.6 million; and cofinanced with an IFAD credit worth US$19\.4 million\. Actual amounts disbursed were US$54\.41 million and US$16\.99 million for IDA and IFAD Credits, respectively (ICR, Annex 1)\. The project's operations portal shows that US$1\.8 million of IFAD funds and US$2\.8 million of IDA funds were undisbursed\. According to the ICR (para 23) these amounts were undisbursed because some activities related to Sponsored Public Goods Research grants, training and consulting services could not be completed as planned\. The ICR (para 23) also noted that the IDA funds were recommitted to the country program\. Borrower Contribution \. The borrower was expected to contribute US$2\.60 million of counterpart funds (PAD, Annex 5)\. At completion the borrower contributed US$2\.21 million (86% of appraisal amount)\. Dates\. The project closed late by one year\. It was restructured seven times, six Level 2 and one Level 1 restructuring\. The first was on March 31 2008, a Level 2, in order to set the Government's contribution in project financing to 3% of total project cost\. The second was on December 17, 2012, a Level 2, in order to resolve inconsistencies between the Development Project Proposal and the Financial Agreement; also the Financial Agreement was amended to reflect establishment of Procurement Core Team, reallocation/change in financing percentagesâ definition of Common Interest Groups, and Operating Costs\. The third was on December 2, 2013, a Level 2, in order to extend IDA Credit closing date by one year from December 31, 2013 to December 31, 2014\. The fourth was on February 6, 2014, a Level 2, in order to authorize an Additional Financing in the amount of US$7\.1 million to support the scale-up of the project, and a reallocation of Credit proceeds that were approved by the Regional Vice President\. Also, three new indicators were introduced to capture the quantitative achievements related to new technologies adopted, newly established Commodity Collection and Marketing Centers, and Farmersâ Information and Advice Centers\. The fifth was on March 4, 2014, a Level 1, where the PDO was revised; safeguard policies on environmental assessment, pest management, and indigenous peoples were triggered; and the environmental category of the project was re-classified from C to B\. The sixth was on October 21, 2014, a Level 2, where PDO level targets and intermediate outcome indicators were scaled back to the without Additional Financing situation when it was decided not to proceed with Additional Financing\. The seventh and last restructuring was a Level 2 on December 30, 2014 where US$2\.98 million equivalent of IDA Credit were cancelled as they could not be used within the project period\. The Mid-term Review was conducted on February 13, 2012 compared to an expected date of March 31, 2011, almost one year late\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: High\. At appraisal, objectives were highly relevant to the country conditions and Government priorities\. Agriculture was an important sector that accounted for 23% of the country's GDP\. The non-farm rural economy accounted for 33% of GDP\. The importance of agriculture and non-farm rural sectors was further highlighted given that 85% of the total poor lived in rural areas\. Hence, improvements in the economic performance of agriculture and non-farm rural sectors was considered critical for reducing poverty levels\. Objectives were in line with the Government's policy framework which had four priorities: intensification of major crops, diversification into high-value crops (horticulture), development of noncrop agriculture (fisheries, poultry, and livestock), and promotion of rural nonfarm activities (rural micro, small, and medium size enterprises)\. The project objectives also were in line with the goals of Bangladeshâs Poverty Reduction Strategy Paper (Unlocking the Potential , National Strategy for Accelerated Poverty Reduction, 2005, p\. 87) which gave high priority to accelerating agricultural growth to increase rural incomes, reduce poverty and improve food security\. Objectives were also in line with the World Bankâs FY06-09 Country Assistance Strategy (CAS) for Bangladesh which identified agricultural and rural development, employment generation and poverty reduction as key priority areas\. The CAS (p\. 40) stated that the World Bank Group would complement the Government's efforts by "providing support to improve agricultural productivity by strengthening capacities for research and technology, improving the functioning of agricultural markets, and promoting diversification into such subsectors as fisheries, an important emerging export sector\." At completion, objectives remain highly relevant to Government priorities as reflected in the 2011 Bangladesh Country Investment Plan where a sustainable and diversified agriculture through integrated research and extension has been identified as a priority area for support\. Objectives are also in line with the World Bankâs FY11-14 Country Assistance Strategy (CAS) for Bangladesh\. The CAS (p\. 11) emphasized that "improving the productivity of rice and other crops will be essential, and will require development and dissemination of higher yielding technologies, as well as better price signals for farmers\." b\. Relevance of Design: Substantial ï¬ Design included a broad statement of objectives that lacked specificity\. This was later addressed in the Financing Agreement where objectives became more focused\. The Results Framework also suffered from the lack of clarity of the PDO and other related outcome indicators\. ï¬ Project design focused on intensification of rice-based cropping systems, diversification to high value crops and development of non-crop agriculture (fisheries and livestock)\. Design was comprehensive and aimed to support three critical areas in the agriculture sector: research, extension and marketing\. ï¬ To achieve the stated objectives design featured four components\. The first would contribute to achieving the objectives through promoting improvements in agriculture research that would make the research system more responsive to farmer's demands and at the same time enhance the institutional capacity of the National Research System\. These activities were expected to generate new production technologies that would positively impact productivity\. ï¬ The second component focused on enhancing extension services through decentralizing agriculture extension agencies with bottom-up and participatory approach to improve efficiency of the system\. A more efficient extension system would enable better transfer and dissemination of new technologies among farmers\. In turn this would positively impact productivity especially if adoption rates were high among farmers\. ï¬ The third component focused on establishing links between farmers and markets through promoting participatory planning and market - led integration in supply chains planning\. Establishing these links would benefit farmers through getting better pricing for their produce and improving their income\. The fourth component focused on the arrangements for project management\. ï¬ The project also emphasized capacity building activities at the research, extension and market related institutions to ensure that these institutions could effectively carry out their mandates\. Design also promoted important institutional reforms including promoting new models for research funding (Competitive Grants) to attract private sector, civil society, NGO stakeholders in implementing farmers-needs driven agriculture research\. ï¬ However, design underestimated the time needed for enacting the Bangladesh Agricultural Research Council act which was a disbursement condition for the Agriculture Research component\. Consequently, executing activities under this component suffered from delays\. Implementation arrangements were complex and coordination among six different implementation agencies proved to be challenging\. 4\. Achievement of Objectives (Efficacy): Sub-objective (i): improve the effectiveness of the national agricultural technology system\. Substantial\. Outputs Agricultural Research Support ï¬ The project funded 109 PhD scholarships both at national (79) and international research (30) and academic institutions fully achieving their target of 109 in critically important agricultural research areas, which were identified through a comprehensive skills gap analysis at the national level\. ï¬ A total of 84 Competitive Grants Projects were completed, achieving 84% of the target of 100\. ï¬ A total of 108 Sponsored Public Goods Research were completed against the target of 45, target over achieved by 140%\. ï¬ 47 Non-NARS partners participated in Competitive grants Projects, which represents 69% of the target of 68\. However, in terms of budgets utilized by Non- NARS partners, the target was exceeded by 99%\. ï¬ A total of 48 new technologies were made available for extension, which exceeded the target of 25 by 97%\.The technology packages focused on: resource use efficiency and yield gap minimization for rice-based cropping system; diversification of the cropping system into high value crops; and livestock and fishery productivity enhancement\. Notable among the new technologies was the development of a salt tolerant rice variety for the vulnerable coastal zone (BINA dhan-10) that led to a seed multiplication program; and a heat tolerant summer tomato variety (BARI Hybrid Tomato 8) which was developed and released with yield potential of 35-40 t/ha\. ï¬ The project supported the establishment of an integrated Agricultural Research Management Information System (ARMIS) at BARC that linked 7 national agricultural research institutes\. ARMIS developed, tested, and rolled out 9 key modules in important areas such as financial management, human resources management, inventory, library management, procurement, research, training, vehicle and data bank\. ï¬ The project developed two documents (the Financial Codes Study and Institutional Development Manual) that contained key recommendations on enhancing transparency, financial autonomy and institutional effectiveness of the National Agricultural Research System\. ï¬ With project support, Bangladesh Agricultural Research Council prepared an important strategic document on national agricultural research "Vision Document on Agriculture for 2030 and beyond"\. Agricultural Extension Support ï¬ The project established more than 20,000 Common Interest Groups (CIG) in crop, livestock, and fisheries sub-sectors\. Being a village-level producer organization, these acted as key focal points for technology demonstration, dissemination, field days, training as well as input supply\. However, "efforts to aggregate them into higher-level Producer Organizations to better facilitate farmersâ access to technical, financial and marketing services were largely not achieved (ICR, para 52)\." ï¬ The project supported 50 collaborative extension sub-projects (target achieved), and a total of 48 technologies (16 for crops, 11 for livestock and 20 for fisheries) were made available for extension which exceeded the target of 25\. In addition, 1,345 Extension plans were developed and implemented at all 1,345 Unions (target achieved)\. These plans were more demand-responsive and helped selecting most appropriate technologies for farmers\. ï¬ 1,916,000 farmers (393,000 Common Interest Group farmers and 1,523,000 Non-Common Interest Group farmers) adopted the technologies against the target of 388,000\. Thus, overall achievement substantially exceeded the target\. ï¬ 732 Farmers' Information and Advisory Centers (FIACs) were established and functioning by project completion\. FIACs provided farm advisory services at the union level\. ï¬ 32 improved post-harvest technologies and management practices were demonstrated and adopted exceeding the target value of 20 by 60%\. Outcome ï¬ The project promoted competitive grants programs as a new approach for funding research\. This was expected to be an effective approach to make research more responsive to the needs and demands of small and marginal farmers\. The project also supported establishing the Agricultural Research Foundation as a non-profit pluralistic organization where public and private sector entities and NGOs could participate in the implementation of agricultural research\. The project also supported high-priority strategic and cross-cutting research works that the National Agricultural Research Institutes coordinated with the Bangladesh Agricultural Research Council\. These totalled 108 sub-projects covering 12 ecosystems; and 24% of these sub-projects focused on resolving agricultural technology issues related to vulnerable and climate stressed agro-ecological zones of the country\. ï¬ The project also supported the amendment of the 1996 Bangladesh Agricultural Research Council Act\. This was expected to improve governance, institutional responsibilities and management of the National Agricultural Research System\. Also, under the new amendment the Bangladesh Agricultural Research Council was expected to have an enhanced role coordinating, prioritizing, monitoring and evaluating research activities; in addition to allocation of resources at the national level\. According to the ICR (para 49): "the amendment was approved by the Cabinet in December 2009 and passed by Parliament on March 4, 2012\." However, the full operationalizing of the amendment was not yet completed\. ï¬ The project promoted a demand-driven decentralized extension approach that was expected to be responsive to farmers' needs\. It also contributed to the development and dissemination of improved and new agriculture technologies, of which 48 were adopted by a total of 1\.9 million farmers\. In addition, it provided support to the Department of Agriculture Extension in revising and improving the National Agricultural Extension Policy\. The revised policy emphasized the adoption of demand-driven decentralized extension approach in all programs of Department of Agriculture Extension\. It also promoted low-cost high-impact, demand-responsive technology packages for accelerated agricultural growth in combination with differentiated targeting of agro-ecological areas as well as addressing challenges and opportunities for economically constrained areas\. However, the revised policy was still pending Government approval\. ï¬ The project promoted new and innovative approaches (with regards to Bangladesh) and institutions for agriculture research, extension, farmersâ group organizations\. The project also contributed to capacity building of national agriculture research organizations and introduced relevant legal and institutional reforms\. Based on the evidence provided, the achievement of this sub-objective is rated substantial; despite the need for more time to achieve the full impact of project support\. Sub-objective (ii): improve agricultural productivity\. Substantial\. Outputs The outputs mentioned above pertain to this outcome as well\. Outcome The adoption of improved technologies promoted by the project contributed to productivity improvements in project areas\. According to the summary of the Impact Study of the project (which included a total of 6,044 randomly selected sample farmers, covering 2,522 CIG farmers, 2,522 non-CIG farmers and 1000 control farmers) agriculture productivity in the project area, across farm sizes, has increased by 14% to 52% for crops, 54% to 65% for livestock and 60 to 76% for fisheries, as compared to 8% projected in PAD over the baseline values\. Productivity improvements varied by crop, for example, according to the ICR (p\. 41) in comparison to traditional technologies: rice yield improvements ranged from 13% to 29%, wheat 16%, lentil 26%, tomatoes 40%, banana 23% and dairy cows saw an improvement in milk production by 26%\. The body weight gain for most popular beef fattening rose by 71% for local cattle and 70% for cross-bred cattle\. Productivity of fish aquacultures improved by 193%\. The project also managed to minimize yield gap (the difference between the potential Yield in Farmersâ Field under ideal management conditions and the actual yield farmers get)\. The project promoted a set of farmer friendly technology elements known as Rice Yield Gap Minimization to bridge yield gaps\. Overall, for the three crops of paddy the yield gap was minimized from 1\.30 ton per ha to 0\.76 ton per ha (ICR, p\. 33)\. Sub-objective (iii): improve farm income\. Substantial\. Outputs The outputs mentioned under sub-objective (i) pertain to this outcome as well\. Supply Chain development Support ï¬ 20 producers' organizations were established and vertically integrating small and marginal farmers with agri-business enterprises along the supply chains (target achieved)\. These organizations covered 402 village level Common Interest Groups and helped farmers to reduce their post harvest loses and realize better prices through providing market information, trainings on post-harvest and marketing aspects\. ï¬ 32 new and improved post-harvest technologies were successfully demonstrated and disseminated by the project exceeding the target of 20\. These technologies included: improved sorting and grading, poly cap use in banana, use of gerbera cup, perforated rose cap, pulsing treatment, ice packaging of rose, use of trolley, harvesting tools, zero energy cooler, steeping technology in lemon, solar drier and modified atmospheric packaging in vegetables, fruits, and milk\. 21,810 farmers adopted these new and improved post harvest technologies\. ï¬ 25 Commodity Collection and Marketing Centers were developed and pilot tested by the project (target exceeded)\. These centers included facilities for washing, grading and in some cases storing produce\. They aimed to improve the marketing channels and links between traders and farmers, hence providing farmers with better prices for selling of their high value agricultural produce\. ï¬ 1,500 farmers, traders, and line agency officials received training in agri-business development, processing of flowers, herbals and honey products, contract farming systems, post-harvest handling, storage, packaging, and fish marketing\. Also, 16,700 client-days of training were organized among beneficiaries of supply chain component significantly exceeding their target of 10,000 client days of training\. Outcome The project pilot-tested new rural service organizations such as Commodity Collection and Marketing Centers and Farmersâ Information and Advice Centers\. The new and improved post harvest technologies promoted by the project helped reduce post-harvest loss of high value commodities by 5 to 18%; and helped floriculture farmers who adopted project promoted technologies to receive 60% higher price compared to non-adopters\. Also, agricultural products marketed through the project supported Commodity Collection and Marketing Centers gained 10 to 15% more price for their produce compared with local markets\. The project also contributed to an improvement in farm income mainly due to dissemination of new technologies and adoption of these by farmers\. Increase in household incomes for marginal farmers ranged from 47% to 135% compared to a target of 133%, while small farmers saw an increase that ranged from 31% to 92% compared to a target of 41%, medium farmers saw an increase that ranged from 23% to 77% compared to a target of 33%\. Also, the net household income of farmers using technologies promoted by the project increased compared to traditional farmers\. The increase varied by crop, for example carp farmers achieved a 99% increase, tomato 58%, cauliflower 68%, gerbera 57% and rice ranged from 18% to 59%\. All performance triggers required to move from Phase I to Phase II of the 15 year APL were satisfactorily fulfilled : (i) Amendment of Bangladesh Agricultural Research Council Act; (ii) Establishment of Agricultural Research Foundation; and (iii) Decentralization of planning and funding responsibilities for demand-led extension micro plans to the Upazilla level organization\. 5\. Efficiency: Economic and Financial Efficiency ex ante ï¬ By improving the effectiveness of the national agricultural technology system, the project was expected to generate a number of important direct economic benefits, over the short to medium term including: increased agricultural production, greater diversification and higher net farm incomes; strengthened research-extension-farmer-market linkages, and fostering public private partnerships which will increase the cost effectiveness of public handling of agricultural research and extension; increased participation and empowerment of women in agricultural production and processing; additional employment generation; improved food security, nutrition and health; positive impact on the balance of payments; and reduced poverty; improved understanding of consequences of under-funding of agricultural research institutionalizing the prioritization of agricultural research and extension projects; improved knowledge of the impact of different types of technologies and the distribution of benefits generated from agricultural research and extension; and capacity building in M&E and impact assessment of investments in agricultural research and extension\. ï¬ Financial analysis was confined to the impact on typical farming households of adopting improved technologies associated with genetic improvement of rice (the major crop of Bangladesh), freshwater shrimp production, dairy production and value addition of vegetables\. Increases in the net farm incomes, and labor requirements, due to adopting improved technologies were analyzed for landless and near landless, marginal and small farming households for typical farming systems\. Net farm incomes are conservatively estimated to increase in the range of 23% to 157%, and per unit labor use by an average 28%, which was expected to bring substantial financial gains to poor people\. ï¬ An economic analysis was done based on the expected increases in net value addition on the farms that would be directly assisted through the projectâs decentralized extension activities\. The economic rate of return (ERR) of the project, based on the productivity increases on farms directly assisted through the extension activities, was projected to be at least 34% and the Net Present Value (NPV) US$74 million\. The number of rural households directly benefiting was estimated at 330,000, a total of about 1\.65 million people\. No account was taken in the economic analyses of the medium to longer-term indirect benefits that would be expected to arise from new research funded through the project and that would generate new technologies in 5-10 years time, nor from the increased capacity of researchers and extension agents\. ex post ï¬ The Economic and Financial Analysis at completion focused mainly on returns to investments under component 2 (Support to Extension) and component 3 (Supply Chain Development)\.The analysis used farm models to estimate on-site incremental benefits as a result of project activities\. ï¬ It was assumed that initial farm-level benefits from research that were generated under the project were captured by the analysis of benefits from activities under component 2 although some of the research benefits would take longer to materialize\. ï¬ The Economic Analysis estimated the project's contribution to Bangladeshâs economy as a result of technology induced productivity enhancements and increases in net value addition on farms\. The Financial Analysis looks at net income increases for particular commodities and improved returns per family day of labor\. The analysis considered benefits accruing to farmers who directly received project support (20,000 members of Common Interest Groups established by the project)\. Broader benefits accruing to the 1\.51 million non-Common Interest Groups farmers in the project area were not included\. Adoption rate was estimated to be 30% by year 3 of implementation, rising to 70% in year 4 and close to 100% in year 5\. Economic Analysis included selected farm systems without supply chain activities (rice-based and rice with vegetables), and with supply chain activities, livestock in the form of dairy cattle rearing and fisheries in the form of carp cultures\. Average farm size was estimated at 0\.4 ha\. Depending on the commodity, the analysis assumed that farmers reap 75-100% of the possible benefits from improved technologies\. An Economic Rate of Return was estimated at 30% at a Net Present Value of US$79\.8 million\. It is worth noting that a 100% adoption rate over five years is optimistic against global experience\. ï¬ A sensitivity analysis was performed using two key variables affecting the project until the end of the analysis period: (i) falling output prices and (ii) reduced yields\. The analysis showed that project returns were negatively impacted the most with a 10% decrease in rice yields resulting in an ERR of 13% while a 20% price reduction of outputs (rice plus vegetables) dropped the ERR to 26%\. While this reveals that the ERR is very sensitive to rice yields, it also implies that the expanding high value crops such as vegetables are highly profitable\. ï¬ Cost effectiveness analysis showed that the estimated cost per farmer using the more decentralized project supported approach was approximately US$1\.5 compared to US$2\.1 for the centralized approach\. ï¬ The project also created a number of important externalities under components 1 and 2, which were not quantified because of the difficulty to assess in monetary terms the increased efficiency and sustainability of the research system through human capacity development and policy/legislative interventions\. Administrative and Institutional Efficiency ï¬ The project closed 12 months late\. The preparation and approval of Additional Financing took a considerable amount of time\. Preparation began in the second half of 2012, however, the Bank's approval was delayed until February 2014 and August 2014 for the Government's approval\. Eventually the Additional Financing was dropped due to "insufficient time to implement the planned activities" (ICR, para 89)\. ï¬ The project suffered from initial implementation delays stemming from slow recruitment of PMU staff and weak implementation capacities of participating agencies\. ï¬ The implementation of the Research Support Component could not start until December 2009 due to the failure to obtain timely approval for the enactment of the Bangladesh Agricultural Research Council act; which was a disbursement condition\. ï¬ Fielding the MTR mission was also later than originally planned\. Timely fielding of the MTR could have helped address implementation delays\. ï¬ About US$3\.00 million of IDA Credit was cancelled mainly because some activities related to Sponsored Public Goods Research grants, training and consulting services could not be completed as planned\. The ICR (para 23) stated that "savings resulted from cancellation were recommitted to the Country program\." ï¬ Procurement and contract management experienced delays at the beginning of implementation\. Efficiency is rated substantial on balance, despite some administrative and institutional weaknesses\. a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal Yes 34% 50% ICR estimate Yes 30% 57% * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Relevance of objectives was rated high while relevance of design was rated substantial\. The first sub-objective was rated substantial where the project promoted new and innovative approaches (with regards to Bangladesh) and institutions for agriculture research, extension, farmersâ group organizations that were expected to improve the effectiveness of the national agricultural technology system\. The second sub-objective was rated substantial given the productivity gains that resulted from the adoption of project-promoted improved technologies\. The third sub-objective was rated substantial given significant increments in farmers' incomes due to post harvest technologies promoted by the project; and better pricing through the project supported Commodity Collection and Marketing Centers\. Efficiency was rated substantial despite some administrative and institutional weaknesses\. a\. Outcome Rating: Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The project is phase 1 of a 15 year APL which is expected to provide sustainability to outcomes in the medium term\. Also, the Government was committed to new institutions supported by the project such as the Agricultural Research Foundation (KGF) where it agreed to funnel research funds through it\. According to the ICR (para 81) the majority of the research scientists and extension specialists trained under the project continue to perform their duties in the relevant institutions which bodes well for sustainability of outcomes\. However, according to the ICR (para 82) there are three areas of concern: ï¬ The institutional reforms promoted by the project need further support to deepen these reforms; and strengthen the governance of the technology system\. This should be through ensuring that the recommendations of the institutional and financial reforms studies completed under the project are/will be implemented\. ï¬ The Agricultural Research Foundation needs to strengthen its fiduciary aspects to be capable of handling its Endowment Fund\. ï¬ Hortex foundation needs to strengthen its collaborative partnerships with other institutions and line agencies to maximize its potential\. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: a\. Quality at entry: The Government of Bangladesh had requested assistance from the World Bank to increase public investment in agricultural research and to reform the technology system\. This would help the Government to achieve the objectives of the Poverty Reduction Strategy Paper (PRSP) including accelerating agricultural growth to increase rural income, reducing poverty, and improving food security\. ï¬ The World Bank agreed with the Government that a long-term programmatic approach would be most suitable to improve the effectiveness of the national agricultural technology system\. Therefore, an Adaptable Program Lending (APL) instrument was seen as the most appropriate lending instrument for this long-term program\. ï¬ The project was the first phase in a three phase APL\. Objectives were in line with Government priorities and the Bank's CAS at the time of preparation\. The project was designed to bring together research, extension and value chain development aspects\. Design also promoted institutional reforms including reorganizing Bangladesh Agriculture Research Council; and developing new models for research funding\. ï¬ Design benefitted from international and Bank experience in designing research and extension projects\. Notable among other experiences included in the design was supporting institutional reforms and institutional development to improve efficiency and effectiveness of the national agriculture technology system, ensuring adequate budgetary financing to meet the operational needs for agricultural research and extension; and including monitoring and evaluation of the impact (in addition to input and output) of agricultural research and extension activities\. ï¬ However, design under estimated the time needed for the enactment of Bangladesh Agricultural Research Council Act which was the disbursement condition of the Agriculture Research Component\. This contributed to implementation delays of the activities under the afore mentioned component\. Also, design underestimated the time needed to frame and implement institutional and financial reform rules to operationalize the amended Act\. Design also involved multiple implementation agencies which required a more robust coordination mechanism to ensure smooth implementation of activities\. ï¬ Seven risks were identified at the preparation stage, two were moderate, four substantial and one rated high\. Most notable were weak procurement capacity (high), the slow pace and depth of institutional reforms (substantial); and concerns that the credibility of the institution managing the competitive grants program may be widely challenged due to weak management (moderate)\. Appropriate mitigation measures were included in the design\. However, the risk associated with delay in amendments to the Bangladesh Agricultural Research Council Act was not foreseen at the preparation stage\. ï¬ While intensification can usually be expected to be accompanied by increased use of fertilizers and pesticides (in addition to improved seeds), the design team did not anticipate this increased chemical usage at the preparation stage\. The increased use of pesticides and chemical fertilizer observed during implementation prompted the team to change the environmental classification of the project from the initial C category to B\. ï¬ M&E suffered from some design weaknesses (see section 10a)\. Quality-at-Entry Rating: Moderately Satisfactory b\. Quality of supervision: The Bank team carried out 12 supervision support missions during project implementation\. The missions benefitted from the presence of a balanced skill mix to provide necessary support to the project team\. The supervision missions provided recommendations and technical advice to address issues that emerged during implementation\. The Bank team also addressed weaknesses in M&E design to better capture project achievements\. The project's Task Team Leaders were all country based\. This helped the TTLs maintain effective work relations with the implementing agencies\. In the post MTR period the team provided strong technical, managerial and fiduciary support which positively impacted implementation and achievements of the project\. The team also followed up on MTR recommendations to increase adoption rates among non Common Interest Group farmers\. That said, there were some shortcomings in Bank support including the delay in fielding MTR mission by one year\. Conducting the MTR on time could have resolved some issues that contributed to implementation delays\. Also, the approval of the Additional Financing was lengthy and ended up being dropped due to insufficient time to implement the planned activities\. The Bank should have carefully assessed the need for AF and the time needed for its approval\. Finally, the Bank team should have changed the project environmental category earlier rather than towards project completion\. Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: While the Government showed commitment during project preparation, there were several Government-related delays during implementation\. Most notable was the delayed approval of the Bangladesh Agricultural Research Council Act\. The Act was eventually enacted, but after causing considerable implementation delays\. There were also delays in approving the Development Project Proposal and the Revised Development Project Proposal\. In addition, the Government approval of the Additional Financing was delayed till August 2014 which resulted in dropping the Additional Financing completely due to insufficient time to implement the related activities\. Finally, there were also delays in appointing the Director of the Project Coordination Unit as well as other key project staff\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance: The project was implemented under two lead implementing agencies, the Ministry of Agriculture which housed the Project Coordination Unit; and the Ministry of Fisheries and Livestock\. The Ministry of Fisheries and Livestock closely coordinated its activities with the Ministry of Agriculture\. According to the ICR (para 93) it performed efficiently and delivered its key outputs as envisaged under the project\. ï¬ The Project Coordination Unit at the Ministry of Agriculture coordinated and facilitated the project implementation in collaboration with Project Implementation Units (PIUs) based at individual agencies located at: Department of Agriculture Extension, Department of Fisheries, Department of Livestock Services, Bangladesh Agricultural Research Council, Agriculture Research Foundation, and the Horticulture Export Development Foundation\. In total the project had six implementing agencies\. ï¬ The Project Coordination Unit coordinated project implementation among the six implementing agencies and maintained strategic communication with national level policy makers\. The Project Coordination Unit was supported by a national level Project Steering Committee which focused on higher level policy and enabling issues\. It was chaired by Secretary of the Ministry of Agriculture and Secretary of the Ministry of Fisheries and Livestock on alternate basis\. There was also a Project Management Committee to resolve coordination and other inter-agency operational issues\. ï¬ The Project Coordination Unit prepared good quality mission reports (ICR, para 92)\. However, project implementation performance was negatively impacted by slow appointments of key staff at the Project Coordination Unit as well as by the delays in taking action to process the Additional Financing\. There were also occasional delays in the submission of information from the implementing agencies to the project coordination unit\. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: While the Results Frame provided an adequate basis for assessing project outcomes, it suffered from some deficiencies including lack of clarity in the definition of the PDO and outcome monitoring indicators\. Also, in some cases quantitative targets were confusing; for example, the target for the increase in agricultural productivity was given a combined percentage increase for all three types of farmers without providing a clear methodology how they were combined\. The ICR (footnote #1) highlighted that there was an inconsistency between the key outcome indicators provided in the main text (PAD, page 8) and the Results Framework and Monitoring (PAD, Annex 3)\. Some deficiencies were addressed under the fourth restructuring (February 6, 2014) where three new indicators were introduced to capture the quantitative achievements related to new technologies adopted, newly established Commodity Collection and Marketing Centers, and Farmersâ Information and Advice Centers\. b\. M&E Implementation: The Project Coordination Unit was responsible for overall M&E activities\. The six implementing agencies (Bangladesh Agricultural Research Council, Agricultural Research Foundation, Department of Agriculture Extension, Department of Fisheries, Department of Livestock Services, and Hortex) each had its own M&E cell\. These M&E cells were expected to design specific M&E plans to monitor and evaluate the project activities and report progress on key performance indicators\. ï¬ Two independent assessments were carried out to review the implementation progress and assess project impacts\. These included a series of stakeholder workshops; and surveys were also carried out to obtain feedback from key beneficiaries\. ï¬ The implementation progress of M&E was reviewed by a five-member independent Experts Impact Assessment Team composed of experienced specialists in economics, rural development and rural institutions, representatives from farmersâ associations and the private sector\. The Impact Assessment Team also commissioned independent impact assessment studies\. Findings of the Team were reported to the Project Steering Committee\. ï¬ M&E implementation suffered from some shortcomings\. These included the inability of the implementation units (except at Bangladesh Agricultural Research Council) to develop their own Management Information Systems as were originally designed; lack of coordination between the M&E unit at Project Coordination Unit and M&E Cells of the implementing agencies; also the M&E Cells did not document project achievements and results more systematically; in addition M&E suffered from weak capacity of staff at the implementing agencies\. c\. M&E Utilization: The data generated by the M&E system and the independent impact assessment reports provided relevant information for assessing the project outcomes\. M&E Quality Rating: Modest 11\. Other Issues a\. Safeguards: The project was classified as a category C project (PAD, Annex 10)\. No Safeguard policies were triggered at the appraisal stage\. On March 4, 2014 (project closed December 31, 2014\. i\.e\. about ten months before project closed) the project went through a Level 1 restructuring where among other changes safeguard policies on Environmental Assessment (OP/BP 4\.01), Pest Management (OP 4\.09), and Indigenous Peoples (O\.P 4\.10) were all triggered; and the environmental category of the project was re-classified from C to B\. These changes were introduced after the Bank task team realized the risk of increased use of pesticides and chemical fertilizer and trial of new crops in the technology demonstrations involving crop, livestock, and fisheries (ICR, para 31)\. The safeguard policy on Indigenous Peoples (O\.P 4\.10) was triggered because the project area had some pockets with Indigenous People\. Environmental assessment (OP/BP 4\.01) and Pest Management (OP 4\.09)\. At the preparation stage an Environmental Management Framework (EMF) was developed as a proactive measure to minimize any likely adverse impact of legally allowed pesticides that may occur during storage, handling and use\. Also, certain items, which are likely to have adverse environmental implications were excluded from implementation and listed in the EMF\. The project adopted a process of environmental data collection and monitoring\. Also, a system for environmental screening of newly-constructed Commodity Collection and Marketing Centers was introduced, however, environmental screening was not introduced for other eligible micro-plans\. The positive impacts of the environmental management activities carried out under the project (in terms of increased usage of organic manure, and biogas thus saving a sizeable amount of urea, pesticides) were recorded by the environmental monitoring system established under the Department of Agriculture Extension, Department of Livestock Services, and Department of Fisheries\. The project also organized training for farmers on poultry litter and carcass management\. The project environmental monitoring data was regularly disclosed on the website for the general public\. In a further communication the project team confirmed that the project was in compliance with the Bank's safeguard policies\. Indigenous Peoples (O\.P 4\.10)\. In a further communication the project team explained that this safeguard policy was not implemented because after all the project activities were not implemented in areas with indigenous peoples\. b\. Fiduciary Compliance: Financial Management \. The Financial Management System at Project Coordination Unit and Implementing Agencies functioned adequately\. Regular quarterly and annual audit reports were compiled and consolidated on timely basis\. There was no pending audit issue for the project\. However, the Financial Management System of the project was complex due to the presence of six implementing agencies\. It sometimes ran into difficulties when it came to timely reporting and consolidation of financial reports from different accounting centers across the country, and incomplete fund reconciliation between Project Coordination Unit and the Implementing Agencies\. In a further communication during the preparation of this review, the project team confirmed that external audits were unqualified\. Procurement\. The procurement process and contract management experienced some initial delays\. About 50 procurement plans were prepared during the project implementation period, however, the consolidation of these into fewer numbers of packages would probably have resulted in more efficient execution\. Procurement management capacities at the Implementing Agencies suffered from weak capacities and high turnover among the procurement specialists; and the coordination of procurement activities between the Project Coordination Unit and the Implementing Agencies was challenging and required frequent attention and follow-up\. In a further communication during the preparation of this review, the project team stated that there were no incidence of misprocurement\. c\. Unintended Impacts (positive or negative): d\. Other: 12\. Ratings: ICR IEG Review Reason for Disagreement/Comments Outcome: Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome: Bank Performance: Moderately Moderately Satisfactory Satisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR: Satisfactory NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The following lessons are taken from the ICR with some adaptation of language: ï¬ Effective linkages between research -extension-farmers are critical to ensure technology transfer , institutional silos and lack of coordination incentives can be a constraint \. The project experience revealed that new productivity enhancing technologies developed by researchers could not always be quickly transferred to extension and onwards to farmers\. This was mainly due to organizational silos and lack of incentive systems in individual agencies\. There clearly continue to be opportunities to develop more effective and innovative approaches to strengthen the research-extension-farmers linkages\. ï¬ The focus of the research and extension service agendas needs to expand more towards agriculture commercialization, value chain, and agribusiness related areas which are fast emerging as promising areas of growth\. With ongoing transformation of farming towards greater commercialization, there is a fast emerging need to expand the research and extension agendas to also effectively cover post-harvest management and value-addition\. While enhancing farm-level productivity is desirable, more attention should be given to post-harvest handling of agricultural products\. ï¬ Thorough and realistic assessment is needed of the time and bureaucratic procedural requirements needed before deciding on Additional Financing to scale -up an ongoing project \. Bank teams and Government counterparts should assess the time and bureaucratic procedural requirements needed for obtaining Government approval, and anticipate potential delays and distractions that the processing of the AF itself could cause to the implementation of an on-going project\. Likewise, additional reform of Trust Fund procedures to streamline processing requirements would reduce the administrative burden on task teams and allow greater time to focus on implementation and results\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR provided thorough yet concise coverage of project activities\. It candidly reported on most project shortcomings\. It also included five lessons that reflected well the project's experience\. Discussion of outcomes was logical and based on the project's achievements\. However, the ICR did not report sufficiently on the sources of the data reported in the ICR and did not give enough indication of the methodology used to measure yield\. Also, the ICR could have provided more detail on safeguard and fiduciary compliance\. a\.Quality of ICR Rating : Satisfactory	REVIEW
P036414	ï»¿ ICRR 12975 Report Number : ICRR12975 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 09/30/2008 PROJ ID : P036414 Appraisal Actual Project Name : Guangxi Urban US$M ): Project Costs (US$M): 175 163\.5 Environment Project Country : China Loan/ Loan /Credit (US$M ): US$M): 92 77\.7 Sector Board : WAT US$M ): Cofinancing (US$M): 0 0 Sector (s): Sewerage (76%) Water supply (13%) Solid waste management (5%) Agro-industry (4%) General transportation sector (2%) Theme (s): Water resource management (25% - P) Pollution management and environmental health (25% - P) Access to urban services and housing (25% - P) Environmental policies and institutions (25% - P) L/C Number : C3097; L4348 Board Approval Date : 06/16/1998 Partners involved : Closing Date : 12/31/2004 12/31/2007 Evaluator : Panel Reviewer : Group Manager : Group : Kavita Mathur Roy Gilbert Monika Huppi IEGSG 2\. Project Objectives and Components: a\. Objectives: The overall objective of the project was to improve the environment of Nanning and Guilin and support sustainable economic growth and poverty alleviation in the Guangxi Region \. Specific objectives were to: (a) improve the quality of major water bodies, in particular Chaoyang Stream and the Yongjiang in Nanning, and the Lijiang and its tributaries in Guilin; 3 3 (b) regulate the flow of the Lijiang - increase the average dry season water flow of Lijiang from 30 m /sec to 35 m /sec ; (c) improve institutional and financial capacity for environmental protection, environmental services and water resource management; (d) pilot a participatory approach to environmental improvement in poor neighborhoods; and (e) implement pilot schemes for control of sugar refinery pollution \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): Original Components : Component 1\. Sewerage and Drainage in Nanning (Appraisal Cost US$64\.1 million; Actual Cost US$79\.9 million): cleaning up the Chaoyang Stream and building interceptors; building and improving main and secondary sewers and drains of about 70 km; building associated pumping stations; building a primary Sewage Treatment Plant to treat sewage collected by the new sewers with estimated capacity of 180ML/day; improving equipment and information systems for nightsoil management; and carrying out an action plan of regulatory enforcement for industries to comply with surface water discharge standards \. Component 2\. Sewerage and Solid Waste Management in Guilin (Appraisal Cost US$37\.6 million; Actual Cost US$45\.7 million): building about 30 km of primary and secondary sewers in built up areas of the city and Xicheng, an industrial suburb; building pumping stations to convey the sewage to existing sewage treatment plants; expanding an existing secondary sewage treatment plant by 25 ML/day; building a primary sewage treatment plant of up to 40 ML/day capacity in Xicheng, and oxidation ponds in suburban towns of Yangshuo, Xingping and Baisha; cleaning up and intercepting sewage from three lakes in the city; building a sanitary solid waste landfill of 500 ton/day capacity and a transfer station; and augmenting the fleet of solid waste trucks; carrying out an action plan to reduce industrial pollution in the city\. Component 3\. Small Area Improvement (Appraisal Cost US$7\.3 million; Actual Cost US$9\.2 million): building or improving tertiary sewers, drains, solid waste dumps, public toilets, and footpaths in up to 30 selected small areas with poor environmental quality in Nanning and Guilin \. Community participation in selection, implementation, and financing of the improvements\. Component 4\. Lijiang Flow Regulation (Appraisal Cost US$18\.0 million; Actual Cost US$23\.1 million): dredging of the Three Lakes; lining and extending 26 km of a canal from the Wulixia Reservoir to the Lijiang, including a hydro-power plant en route; forestation of about 2,000 hectares in the Wulixia catchment and along the Lijiang; and construction and repair of about 28 km of embankments along the Lijiang \. Component 5\. Sugar Refinery Pollution Abatement (Appraisal Cost US$4\.1 million; Actual Cost US$5\.0 million): provision of a sub-loan facility to finance treatment of highly polluting wastewater (stillage) in two sugar refineries, as a pilot\. Component 6\. Institutional Development (Appraisal Cost US$5\.4 million; Actual Cost US$6\.4 million): technical assistance, training, and equipment to improve environmental monitoring and enforcement by the Environmental Protection Bureau's of the Region, the Nanning Municipality, the Guilin Municipality, and the Guilin Prefecture; develop technical, financial, and management capabilities of sewerage and drainage management institutions in Nanning and Guilin; and help the implementing agencies carry out the project efficiently \. Revised Components : the project components were modified to meet planning requirements and to use cost savings (see section d below), following revisions were included : Component 1: (a) based on the State Environmental Protection Bureau directions, the wastewater treatment standard was increased from primary to secondary treatment; (b) the capacity of the sewage treatment plant was increased from 180,000 m3/day to 240,000 m3/day to accommodate larger flows; (c) the capacity of the storm water pumping station at Dakengkou was increased from 12 m3/sec to 24 m3/sec, to cater for a 50-year return flood, and without the facility for reverse pumping to refresh the Chaoyang Stream; (d) a separate pumping station was constructed with local funding to refresh the Chaoyang Stream; (e) secondary and tertiary sewer networks were increased by about 41 km utilizing loan savings; and, (f) the information system for septic tank management in Nanning was deleted as the responsibility was transferred to another government agency \. Component 2: (a) the Xicheng sewage treatment plant (30,000 m3/day) was constructed under a "Build Operate and Transfer" contract instead of the project; and (b) sewerage treatment plants in Yangshou and Xingping were constructed using State Bonds; and only one oxidation pond of 2,500 m3/d capacity was built in Baisha town \. Component 3:\. The number of improved areas was increased from 8 sites to 27 in Nanning and 4 in Guilin, covering about 180,000 people\. Component 4: An additional diversion channel was constructed from the Lijiang to provide water to farmers and villages en route, in response to local demands; and only one 0\.8 megawatt hydro power plant was constructed instead of the two 0\.5 megawatt plants earlier planned\. Component 5: Two pilots were implemented to demonstrate options for reducing pollution at small sugar refineries, but their replication did not take place as the Government decided to consolidate smaller sugar refineries \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost and Financing : The project was restructured in October 2004 to accommodate cost savings that arose due to: (a) over-estimation of costs (by about 30%) at appraisal, (b) financing of some project components by non-project resources raised through national bonds, and (c) improvements in procurement (for example employing procurement specialists to supervise procurement )\. Consequently, US$11\.9 million from the IBRD Loan was cancelled\. Additional cancellations of US$0\.23 million of the Loan and US$0\.56 million of the IDA Credit were made at project closing\. Borrower Contribution : The actual Borrower counterpart was US$ 85\.75 million, significantly higher than the US$ 76\.4 million planned\. This was due to the change in the Dollar -Yuan exchange rate from 8\.30 at appraisal to 7\.20 at loan closure, which increased the demand for counterpart funds \. Dates : The project closed on December 31, 2007 after a three-year delay\. Main factors contributing to the delay were: (i) weak and ineffective project management in the first three years of project implementation; (ii) lack of Government support in Guilin (i\.e\. preoccupation with a much larger infrastructure improvement program supported by the central government), which created a temporary shortage of counterpart funding; (iii) heavy floods in 2001 and 2006; (iv) protracted discussions with the Bank on the optimum size of the Jiangnan sewage treatment plant; and appropriate contracting procedure for the sewage treatment plant and the Dakengkou pumping station (i\.e\., turnkey or other); (v) long delays in the design preparation for the Nanning sewage treatment plant; and (vi) resettlement for the Chaoyang Stream works\. 3\. Relevance of Objectives & Design: The overall project development objectives and specific objectives were relevant, and very appropriate to address the environmental issues facing the two key cities of Nanning and Guilin and the Guangxi Region \. The 1997 Country Assistance Strategy (CAS) for China recognized urban environmental issues as important challenges for Chinese cities\. The Environment Strategy Paper provided considerable support for solid waste management and industrial pollution control\. The 2006 Country Partnership Strategy calls for managing resource scarcity and environmental challenges through expanding urban wastewater collection and treatment facilities \. The Bank strategy is to help mainstream environmental concerns into the development process; create a resource -saving society through better regulation, pricing and taxation of natural resources \. The project objectives of improving the quality of major water bodies, increasing the average dry season water flow of Lijiang, improving institutional and financial capacity for environmental protection, environmental services and water resource management, piloting participatory approach to environmental improvement in poor neighborhoods and reducing sugar industry pollution are substantially relevant to the government and Bank priorities reflected in the 2006 Country Partnership Strategy\. The design of the project including investments in sewage treatment plants in Nanning and Guilin, small area improvement investments and institutional development, key components that were substantially relevant for achieving the stated objectives \. 4\. Achievement of Objectives (Efficacy): (a) Water quality improvement : substantially achieved \. In Nanning, the water quality of Chaoyang Stream has been improved for surface water through cleaning up (i\.e\., dredging), wastewater interception, and water replenishment (through a dedicated clean water pumping station that has been operational since 2007)\. Also, the water quality in upstream of Yongjiang maintained at Class III, while the water quality of Yongjiang River as a whole has not experienced major improvement during project implementation, though pollution caused by its tributaries has been reduced \. In Guilin, the Lijiang maintained at Class II; and Taohuajiang, Xiadongjiang and the Three Lakes improved to Class III achieving the appraisal target (see table below)\. 3 Wastewater treatment rates of about 67% (440,000 m /d) and 81% (228,500 m3/d) were achieved in Nanning and Guilin, respectively, thereby improving water quality \. Moreover, 90% of solid waste generated in Guilin (about 500 tons/day) was collected and disposed in a satisfactory manner, thereby reducing pollution of land and water from this source\. Table: Water Quality Outcome Indicators Water Body Water Quality Classification Baseline (1996) Target Actual (2007) Nanning Yongjiang III-IV III III Chaoyang Stream >V V IV Guilin Lijiang III II II Three Lakes (Gui, Rong & Sha) III-IV III III Lijiang Tributaries Taohuajiang II IV III Xiaodong R >V III Nanxi R >V V Ningyaun R >V n/a (b) Lijiang flow regulation : substantially achieved \. The flow in the Lijiang river was increased from 30 m3/sec to 35 m3/sec in the dry season as intended in the appraisal report \. The water depth of 2\.5 meters was restored in the Three Lakes\. The Guilin Municipal Government established the Office for Integrated Construction and Management of the Lijiang Scenic Area, with responsibility for coordinating the quantity and quality of water in the Lijiang during the dry season\. Under this arrangement, the short -term objective of coordinating water uses, maintaining the necessary flow in the Lijiang, and replenishing the Three Lakes to maintain the minimum water depth required for boat traffic, was achieved\. However, the longer-term objective of comprehensive water resources management in the Lijiang basin was not achieved at Project closure \. (c) Improvement of institutional and financial capacity : substantially achieved \. Nanning Sewerage Company (NSC) and the Guilin Sewerage Company (GSC) established operating systems, employed qualified staff and prepared budgets to meet all operating requirements \. During project implementation, both NM and GM increased tariffs at a faster rate than stated in the SAR \. NSC was in compliance with the financial covenants throughout the Project and is fully autonomous\. GSC required government subsidies to meet a portion of its financing costs \. In 2008, NSC had a net surplus of Yuan 10 million and the GSC had a net deficit of Yuan 15\.2 million (d) Pilot a participatory approach to environmental improvement in poor neighborhoods : highly achieved \. Communities were involved in selection and implementation of neighborhood infrastructure in poor under -serviced areas\. Social workers were used to enhance participation \. In Nanning, about 77\.7 km of sewers and drains, local roads, 23\.4 km of water supply pipes, public toilets, and solid waste collection points in 27 poor un-serviced neighborhoods, serving about 140,000 residents (against 40,000 planned) were improved\. In Guilin, improvements were made in sewer and drainage networks, paved roads and foot paths, public toilets, garbage collection points, and street lights in four low income neighborhoods, serving about 40,000 residents in four sites\. These improvements have revitalized the neighborhoods and increased the income opportunities for residents, who were able to engage in trading activities, rent shop and residential space at enhanced rents\. (e) Implementation of the pilot schemes for control of sugar refinery pollution : achievement negligible \. Two pilots were constructed to treat stillage at two small sugar refineries, but replication did not take place due to the consolidation of small refineries\. Therefore, the intended outcome could not be realized \. 5\. Efficiency (not applicable to DPLs): The PAD reports an ERR of 21%\. The region confirms that the ERR calculation was not done and that the quoted ERR was from a project preparation report of a consultant \. At completion, the ICR did not estimate ERR because of "inadequate reference in the SAR to identify the detailed data sources to allow subproject re -evaluations"\. Instead, it listed indirect economic benefits such as improved public health, temporary as well as permanent job creation, increased property value and rentals, and improved tourism (in case of Guilin tourism revenues increased nearly threefold, from about US$ 0\.39 billion in 1998 to US$1\.1 billion in 2007)\. The ICR notes that the least cost solutions were selected by evaluating different options, including : primary or secondary treatment; staged construction of treatment capacity; utilization of existing treatment capacity rather than adding new capacity; alternative locations for facilities and alignments of pipelines; operating costs, etc \. Overall, project efficiency is rated substantial \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: Based on high relevance of project objectives to the CAS and Government priorities, and the achievement of project objectives with minor shortcomings, the outcome of the project is rated satisfactory \. a\. Outcome Rating : Satisfactory 7\. Rationale for Risk to Development Outcome Rating: Overall, the risk to development outcome is assessed as âNegligible to Lowâ because: (i) Both Nanning Sewerage Company and Guilin Sewerage Company have established systems, staff and budgets to meet all operating requirements into the foreseeable future and Nanning Sewerage Company is financially viable \. The risk for Guilin Sewerage Company is moderate as it required government subsidies to meet a portion of its financing costs due to low tariffs \. (ii) The ICR notes that Maintaining Water Quality in the Chaoyang Stream would be challenging as the dedicated pump station to refresh the stream did not work regularly in 2007 due to lack of adequate budget in the Nanning Water Resources Bureau\. However, the region confirmed that the Nanning Municipality now makesa budget provision to cover the operation of the Chaoyang Stream pumping station \. a\. Risk to Development Outcome Rating : Negligible to Low 8\. Assessment of Bank Performance: The project preparation was satisfactory and the Bank introduced a participatory development model for infrastructure provision in low income neighborhoods, a pioneering initiative for China \. The main shortcoming was that the monitoring indicators proved to be too complex to monitor, especially during the initial years of implementation\. Also, the Lijiang diversion channel did not foresee the demand for water by villages \. Relations with the client were somewhat difficult in the early years, because implementing agencies needed more convincing on improvements to detailed designs and related technical matters \. The transfer of task team leadership to an experienced national staff from the Beijing office helped to resolve outstanding issues and improve relations with the client\. The quality and intensity of supervision was satisfactory and the supervision missions worked closely with the Borrower to secure the autonomy of the sewerage companies \. at -Entry :Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Satisfactory c\. Overall Bank Performance :Satisfactory 9\. Assessment of Borrower Performance: The Guangxi Region government provided the necessary leadership and commitment to the project \. The resettlement in Nanning was handled satisfactorily under the project, and was recognized as a model for managing resettlement\. The Environment Management Plans were implemented satisfactorily during project implementation\. Compared to other Chinese cities, Nanning Municipality and Guilin Municipality supported the greater degree of autonomy of wastewater companies by allowing wastewater companies to retain all revenue without passing through Finance Bureau, own all sewerage assets, and implement tariff increases \. NSC, which was created at the start of the project showed excellent performance and is financially viable \. However, there were shortcomings which caused major delays in project implementation such as the weak and ineffective project management during the initial years, lack of Guilin Municipality support to the project which created a shortage of counterpart funding, and inadequate government support in Guilin for cost recovery for wastewater services (as discussed in section 2d above)\. Overall the Borrower Performance is rated Moderately Satisfactory \. a\. Government Performance :Satisfactory b\. Implementing Agency Performance :Moderately Satisfactory c\. Overall Borrower Performance :Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: M&E Design : At appraisal detailed output and outcome indicators for each component were listed and baseline data was provided\. Primary performance indicators measured : (i) water quality of the Yongjiang (Nanning), and Lijiang (Guilin); (ii) water quality of the Chaoyang Stream (Nanning) and the Three Lakes (Guilin); and (iii) flow in the 3 Lijiang to reach and maintain a flow of 35 m /sec, and a water depth of at least 2\.5 m in the Three Lakes\. Secondary indicators such as Biologival Oxygen Demand (BOD), nitrogen levels and suspended solids were also included \. Implementation : These indicators proved to be too complex to monitor especially during the initial years, because of weak institutional capacity\. However, the Environment Protection Bureau's collected water quality data and monitored key indicators\. These indicators were presented in the Environment Protection Bureau's quarterly progress reports\. The ICR notes that the quality of the water quality data is excellent \. Utilization : The ICR notes that M&E helped in identifying and addressing issues during implementation but it does not discuss these issues \. a\. M&E Quality Rating : Substantial 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Safeguards \. Environmental Assessment : The project was assigned as Category A because of the risk to the quality of Yong river water at the new discharge point of waste water collected from Nanning urban areas and the risk associated with the sludge that needed to be dredged from the Chaoyang river bed \. The Environmental Assessment and the Environmental Management Plan were prepared according to national policies and regulations and the Bank safeguard policies\. The Environmental Management Plan was implemented satisfactorily \. An additional Environmental Assessment was prepared when the capacity of the Nanning Sewage Treatment Plant was expanded \. Resettlement : At appraisal resettlement of 926 people was expected in Nanning along the Chaoyang stream \. A Resettlement Action Plan was prepared for the Chaoyang stream area in full consultation with the affected people and implemented in conformity with Bank and Government policies \. During implementation, a total of 1,450 persons were displaced for the works in Nanning and Guilin \. The largest resettlement for the Chaoyang Stream works (940 persons) was handled satisfactorily, for which Nanning received a national award \. The ICR notes that the resettlement activities complied with the Bank's OP /BP 4\.12 on involuntary resettlement\. Fiduciary : Financial management was satisfactory, and no significant issues arose during implementation \. Procurement was in accordance with Bank procedures \. However, there were a few cases where the Bank declined to finance contracts because the design or the method of contracting was not approved by the Bank; or quantities were in excess of those estimated at appraisal \. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Risk to Development Negligible to Low Negligible to Low Outcome : Bank Performance : Satisfactory Satisfactory Borrower Performance : Satisfactory Moderately The Borrower Performance is rated Satisfactory Moderately satisfactory because although the Government provided the necessary leadership and commitment to the project and the performance of NSC was excellent, there were shortcomings which caused major delays in project implementation such as the weak and ineffective project management during the initial years, lack of Guilin Municipality support to the project which created a shortage of counterpart funding, and inadequate government support in Guilin for cost recovery for wastewater services \. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: 1\. Improvements in collection and treatment of domestic wastewater alone are not sufficient to improve the water quality\. Complementary industrial pollution reduction programs are necessary to improve the quality of water bodies like the Chaoyang Stream and the Yongjiang in Nanning, and the Lijiang and its tributaries in Guilin \. 2\. While planning for water transmission for city uses through rural areas, it is worthwhile to consider the needs of local farmers and rural populations en route and to provide some benefits to them \. This will avoid at least initial opposition from local farmers towards construction of water transmission lines going through rural areas \. 3\. The introduction of new contracting methods, such as turnkey contracting, should be done only after model bidding documents are available, or after adjustments to standard documents have been thoroughly discussed and understood during project preparation \. 4\. Worker contracts need to have provisions for price escalation, as absence of such provisions may compromise the quality of works should unit costs of key imports rise \. 5\. Community participation in infrastructure planning, implementation and management is a viable even in rapidly growing cities as demonstrated by the small area improvement subcomponent \. 6\. The approval of ICB equipment contracts took a long time in China thus causing implementation delays \. This affects all World Bank-financed projects in China, and the Bank needs to improve this situation through policy dialogue with the central government \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR is generally satisfactory and gives a comprehensive account of project implementation \. However, there are a few minor shortcomings: (i) there is discrepancy in total project cost and component costs in the text and the Annex 2 table; (ii) it provides no estimation of ERR at completion; and (iii) under M&E section the ICR mentions that some PAD indicators proved to be too complex to monitor especially during the initial years, but does not indicate which ones were difficult to monitor\. a\.Quality of ICR Rating : Satisfactory	REVIEW
P036048	ï»¿ ICRR 12112 Report Number : ICRR12112 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 06/28/2005 PROJ ID : P036048 Appraisal Actual Project Name : Id - Coral Reef Project Costs 12\.8 13\.43 Management and US$M ) (US$M) Rehabilitation Country : Indonesia Loan/ Loan US$M ) 6\.9 /Credit (US$M) 6\.78 Sector (s): Board: RDV - General Cofinancing 4\.1 4\.07 education sector (37%), US$M ) (US$M) Sub-national government administration (26%), Central government administration (21%), Other social services (13%), Law and justice (3%) L/C Number : L4305 Board Approval 98 FY ) (FY) Partners involved : GEF Closing Date 10/31/2001 07/31/2004 Prepared by : Reviewed by : Group Manager : Group : George T\. K\. Pitman Fernando Manibog Alain A\. Barbu OEDSG 2\. Project Objectives and Components a\. Objectives The development objective of the Coral Reef Rehabilitation and Management Program (COREMAP) is to establish viable, operational, and institutionalized coral reef management systems in priority coral reef sites in Indonesia\. The program was designed to be implemented in three phases : Initiation (COREMAP I) over 3 years, Acceleration (COREMAP II) over the next 6 years and Institutionalization (COREMAP III) in the next 6 years\. This project is the COREMAP I whose primary objective was to establish a viable framework for management of national coral reef systems in Indonesia \. b\. Components Program Strategy and Management \. A strengthened COREMAP program policy, strategy, and action plan including evaluation of COREMAP I, preparation of COREMAP II, and a strengthened legal framework for coral reef management in Indonesia\. Planned US$2\.6 million, actual US$3\.25 million or 125%\. Public Awareness \. Undertake national and regional awareness and social marketing campaigns including public relations and dissemination\. Planned US$3\.6 million, actual US$3\.72 million or 103%\. Surveillance and Enforcement \. Establish a National Coral Reef surveillance and enforcement (S&E) system, develop operational manuals, undertake special workshops to define protective and destructive activities, provide training and test the S&E system at the national level and in three target provinces \. Planned 3\.7 million actual US$2\.09 million, or 118%\. Pilot Community -based Management in Two Sites \. Facilitate design, implementation and monitoring of reef management plans by communities in the Taka Bone Rate National Park in South Sulawesi and Lease Islands in Maluku\. Reef management plans included development of alternative income generation activities, and block grants/micro-credit to cover the incremental costs on implementing plans and induce matching investment in protective activities by communities \. Planned US$1\.8 million, actual US$2\.09 million or 116%\. c\. Comments on Project Cost, Financing and Dates The total cost overruns in component one were covered by the borrower \. The redistribution of funding among the other components utilized cost contingencies and thus overall GEF and Bank financing was as appraised allowing for exchange rate fluctuations \.The project closing date was extended three times and closed 34 months later than planned\. Major reasons for the extension were initial delays to field programs caused by ethnic conflict followed by further delays as a result of the decentralization of Indonesia's government administration from central and provincial to district level\. Within the project, further delays were caused by poor coordination and capacity constraints and difficulties in establishing technically viable community -based management activities\. 3\. Achievement of Relevant Objectives: The primary objective was substantially achieved with some shortcomings \. The projectâs relevance was substantial and its efficiency is high, and it was effective in establishing a viable framework for national coral reef management in Indonesia\. The project created the institutional framework needed to implement the program, including the national Project Management Office (PMO), district working groups, and village community groups \. Management responsibility was transferred from the Indonesian Institute of Sciences (LIPI) to the Department of Marine Affairs and Fisheries (DKP) thus firmly establishing government ownership, a transfer that is consistent with the decentralization strategy of the GOI, replicable as COREMAP expands, and adaptable to local customs and circumstances \. Most of a supportive legal framework have been drafted and the most important national level policy and strategy statements have been promulgated as a ministerial decree (September 17, 2004)\. At the district level two laws were passed defining permitted and prohibited activities, and reef zoning for conservation purposes \. Even so, several key pieces of legislation await approval\. Community based management (CBM) was implemented in two pilot sites, but the design needs to be substantially revised to ensure its sustainability for the long term and demonstrate its viability \. 4\. Significant Outcomes/Impacts: The legal framework for coral reef management was strengthened in Indonesia and the second phase (COREMAP II) was approved in May 2004\. Publicity and outreach campaigns successfully raised public awareness of the need to preserve coral reefs at all levels\. The campaign won the Golden Quill Award for Effective Communication from the International Association of Business Communicators \. In major urban areas awareness increased by 31 percentage points over the baseline of 39%\. The impact in coastal areas was even greater - 61 percentage points over a baseline of only 3%\. This increased participation in community discussion of marine resource management (from 25% to 45%), had a modest effect on increased adoption of reef -friendly fishing gear - 46% of fishermen with high exposure to the publicity used reef -friendly gear while only 39% of those modestly exposed did so \. Micro-enterprise activities as alternatives to reef fishing were very successful \. The number of community groups using micro-credit increased from 32 to 90, the original seed funds revolved at least once and grew from about US$21,500 to US$35,000 at the end of the project - and they continue to revolve \. Although a significant reduction in the level of illegal fishing activities is reported in the ICR the lack of control areas and a reliable conterfactual make these claims somewhat subjective \. In Take Bonerate there is a reported 85% reduction in illegal fishing\. Six villages have produced their own coral reef management plans that have been endorsed by the village heads and Village Councils\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): It was unrealistic to expect CBM to develop and produce useful lessons and guidelines over only three years - a much longer time frame was required\. The design of the monitoring, control and surveillance (MCS) system was inappropriate for the type of risks found to be present in the pilot areas \. The quantity and sophistication of the equipment procured far exceeds what was needed and its high cost of operation and maintenance is not sustainable - thus in COREMAP II the MCS approach will be scaled-down to enable greater local ownership \. Ideally CBM should have preceded implementation of MCS so that communities felt it was a viable management tool\. Instead, poor conceptualization and coordination allowed MCS to overtake CBM and it thus became resented as a "policing" activity rather than a supporting one \. This lack of phasing also reduced the program's effectiveness to reduce illegal fishing \. Government coordination and staffing was poor in the initial part of the project but somewhat improved after decentralization\. The Borrower was overloaded with management of the whole COREMAP program (that also involved the ADB and Aus AID) because there was no harmonization of donor approaches or procedures \. And this was made more difficult because each donor supported a number of different components spread over several geographic areas\. ( In the follow-on project, donors work in a vertically integrated manner in separate geographic areas )\. Monitoring and evaluation paid insufficient attention to developing a baseline \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: Conservation projects need to take a broad look at the various competing interests and incentive structures and develop a coherent approach \. Specifically, establishment of community management should lead introduction of enforcement measures to ensure local ownership \. Sufficient time must be allowed for community to internalize what is needed, and to reach agreement on and develop a common approach to reef and fisheries management\. Allowing communities to determine program targets that are realistic is often more appropriate than setting artificial and monitorable targets that do not yield any meaningful benefits to the community \. 8\. Assessment Recommended? Yes No Why? This project was among the first round of GEF projects dealing with biodiversity conservation \. In view of logistical difficulties regarding access to the project area, a PPAR was conducted in September 2003 in parallel with the final supervision and ICR preparation mission, 16 months before final project closure \. 9\. Comments on Quality of ICR: Satisfactory\. It updates the findings of OED's PPAR that was conducted before the project closed \.	REVIEW
P043310	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 25021 IMPLEMENTATION COMPLETION REPORT (IDA-28620) ON A CREDIT IN THE AMOUNT OF US$52\.51 MILLION TO INDIA FOR A COAL SECTOR ENVIRONMENTAL AND SOCIAL MITIGATION PROJECT APRIL 10, 2003 SASES South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective June30, 2002) Currency Unit = Rupee (Rs) Rs\. 1\.00 = US$ 0\.020 US$ 1\.00 = Rs\. 48\.86 FISCAL YEAR April 1 March 31 ABBREVIATIONS AND ACRONYMS CASS Chotanagpur Adivasi Sewa Samiti CCL Central Coalfields Ltd\. CD/R&R Community Development/Resettlement and Rehabilitation Officer CGM Chief General Manager CIL Coal India Ltd\. CMC Coordination and Monitoring Committee CMD Chairman cum Managing Director CSESMP Coal Sector Environmental and Social Mitigation Project CSRP Coal Sector Rehabilitation Project DEA Department of Economic Affairs, Ministry of Finance EMP Environmental Management Plan EPAP Project-Affected Person Entitled to Economic Rehabilitation Assistance GM General Manager GOI Government of India INTACH Indian National Trust of Art and Cultural Heritage IPDP Indigenous Peoples Development Plan JBIC Japan Bank for International Cooperation JEXIM Export-Import Bank of Japan MCL Mahanadi Coalfields Ltd\. MoC Ministry of Coal MoEF Ministry of Environment and Forests NCL Northern Coalfields Ltd\. NDO World Bank New Delhi Office NGO Non-Governmental Organization OBC Other Backward Castes PAF Project-Affected Family PAP Project-Affected Person PIC Public Information Center R&R Resettlement and Rehabilitation RAP Resettlement Action Plan SAR Staff Appraisal Report SC Scheduled Caste SECL South Eastern Coalfields Ltd\. ST Scheduled Tribe TISCO Tata Iron and Steel Company TOR Terms of Reference VWG Village Working Group WCL Western Coalfields Limited Vice President: Praful Patel Country Director: Michael F\. Carter Sector Director: Jeffrey Racki Task Team Leader/Task Manager: David Marsden INDIA COAL SECTOR ENVIRONMENTAL AND SOCIAL MITIGATION PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 6 5\. Major Factors Affecting Implementation and Outcome 19 6\. Sustainability 22 7\. Bank and Borrower Performance 24 8\. Lessons Learned 26 9\. Partner Comments 27 10\. Additional Information 29 Annex 1\. Key Performance Indicators/Log Frame Matrix 31 Annex 2\. Project Costs and Financing 33 Annex 3\. Economic Costs and Benefits 35 Annex 4\. Bank Inputs 38 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 41 Annex 6\. Ratings of Bank and Borrower Performance 42 Annex 7\. List of Supporting Documents 43 Annex 8\.Details of Inspection Panel 44 Annex 9\. Borrower's Evaluation Report 45 Annex 10\. Coal Sector Rehabilitation Project 50 Annex 11\. ESMP Implementation Status 54 Project ID: P043310 Project Name: COAL ENV & SOCIAL MITIGATION Team Leader: David J\. Marsden TL Unit: SASES ICR Type: Core ICR Report Date: June 11, 2004 1\. Project Data Name: COAL ENV & SOCIAL MITIGATION L/C/TF Number: IDA-28620 Country/Department: INDIA Region: South Asia Regional Office Sector/subsector: Mining and other extractive (87%); Other social services (13%) Theme: Pollution management and environmental health (P); Environmental policies and institutions (P); Other social development (P); Indigenous peoples (P) KEY DATES Original Revised/Actual PCD: 09/26/1995 Effective: 07/23/1996 Appraisal: 11/01/1995 MTR: 12/31/1998 02/12/1999 Approval: 05/16/1996 Closing: 06/30/2001 06/30/2002 Borrower/Implementing Agency: GOI/COAL INDIA Other Partners: STAFF Current At Appraisal Vice President: Praful C\. Patel Joseph Wood Country Director: Michael F\. Carter Heinz Vergin Sector Director: Jeffrey Racki Jean-Francois Bauer Team Leader at ICR: Asger Christensen Peter K\. Pollak ICR Primary Author: Asger Christensen; Samantha Forusz; Sati Achath; David J\. Marsden; Mohammad Hasan 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: U Sustainability: UN Institutional Development Impact: M Bank Performance: U Borrower Performance: U QAG (if available) ICR Quality at Entry: U Project at Risk at Any Time: Yes 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The Coal Sector Environmental and Social Mitigation Project (CSESMP) was designed as a free-standing project to mitigate impacts deriving from the investment component of the Coal Sector Rehabilitation Project (CSRP)\. It was separated from the CSRP on an experimental basis in order to give greater independent attention and adequate funding to social and environmental issues\. With hindsight this possibly reduced the leverage that might have been available if it had been supervised with the main investment program\. Once Coal India Ltd\. had received the proceedings from the main investment loan there was less incentive to prioritize social issues\. The development objective of CSESMP (project) was to assist Coal India Ltd\. (CIL) in making coal production more environmentally and socially sustainable\. This objective was to be achieved by: (i) enhancing Coal India's capacity to deal more effectively with environmental and social issues; (ii) implementing appropriate policies for environmental mitigation and resettlement and rehabilitation of people affected by coal projects and providing support to communities, in particular tribals, living in coal mining areas; and (iii) testing the effectiveness of these policies in the 25 coal mines that were slated to receive financial support under the CSRP\. The project objectives were reasonably clear, provided a timely response to India's reliance on coal as the most feasible energy source in the medium and long term, and were consistent with the needs of the coal sector to deal with the negative impacts arising from increased coal production\. However, the client's uneven commitment during project implementation meant, that the goal of enhanced institutional capacity leading to environmentally and socially sustainable coal production turned out not to be very realistic\. The project was consistent with the Bank's India Country Assistance Strategy (CAS), discussed by the Board on June 20, 1995\. This strategy emphasized continued Bank support for India on: (i) reform of policies in key sectors of its economy; (ii) rationalization of its energy policy, in particular the pricing policies for various energy resources; (iii) reform of public sector enterprises; (iv) enhancement of the social and environmental sustainability of the government's investment program; (v) improvement of environmental protection by strengthening of the capacity of various entities to deal more effectively with environmental issues and enforcing environmental legislation in India; (vi) increase of the role of beneficiaries and NGOs in resettlement and rehabilitation of project affected persons, and (vii) broad-based implementation of consultation and participation so as to enable affected people, in particular women, to participate more fully in the development process\. In addition to the support for capacity building and institutional change within CIL, the project gave the Bank an opportunity to assist CIL in the drafting of its policies on resettlement and rehabilitation, community development, and environmental management \. These policies reflected the requirements of the 1 Bank Group's Operational Directives on Environmental Assessments (OD 4\.01), Involuntary Resettlement (OD 4\.30) and Indigenous Peoples (OD 4\.20)\. The project envisioned the following social and environmental benefits that justified the implementation of this project on its own merits: l Social benefits: The project covered 25 open cast coal mines, and of these, 14 had Resettlement Action Plans (RAPs) while 24 had Indigenous Peoples Development Plans (IPDPs)\. The RAPs comprised (i) resettlement accompanied by compensation and relocation benefits of an estimated 10,500 project affected persons (PAPs), and (ii) economic rehabilitation assistance to achieve income restoration for 9,260 people\. The IPDPs aimed to improve the lives of about 186,000 people, of which around 56,900 were members of Scheduled Tribes, living in villages not affected - 2 - by land acquisition within a one kilometer radius around the project mines\. l Environmental benefits: Implementation of the Environmental Action Plans (EAPs) was envisioned to have a significant impact on Coal India's management of land and water resources, as well as its control of air and noise pollution\. These benefits included an upgrading of the general ecology of the mine areas and their surroundings through revegetation of degraded land, reclamation of external overburden dumps, use of overburden to backfill and reclaim mined out quarries, together with reductions in noise and dust levels, and reductions in the release of polluted effluents into rivers, water bodies, and aquifers\. The project also recognized and took into account the following three risk factors which could affect project implementation, namely: l Coal India's commitment to the project\. The main risk the project faced was a waning of Coal India's commitment to its implementation, in case Bank support for the CSRP failed to materialize within a reasonable time horizon\. Attempts to mitigate this risk involved significant attention to working closely with the client throughout project implementation\. l Implementation of Coal India's resettlement and rehabilitation policy\. Coal India's revised policy for resettlement and rehabilitation placed greater emphasis on assisting project-affected people in developing opportunities for self-employment\. This was a significant change from previous approaches and the Bank worked closely with CIL, offering advice on implementation and providing support through an intensive supervision effort\. l Maintenance of infrastructure in communities\. Experience had shown that the people who were to benefit from facilities such as schools, clinics, roads, wells, tanks, piped water, and street lighting made no efforts to maintain them, and as a result, many of these facilities fell quickly into disrepair\. To safeguard against this risk, Coal India provided support to Village Working Groups (under its Community Development Policy) to build up the commitment and capacity in the affected communities to maintain these facilities\. Bank supervision missions paid close attention to ensuring that communities contributed to the initial construction so that a greater sense of ownership would result in systematic maintenance\. The project was complex and very demanding on Coal India Ltd\. both in terms of scale and activities\. The 25 open-cast mines under the project were spread over five subsidiary companies in five (currently six) 2 states and consisted of a whole range of social and environmental mitigation activities\. The relative independence of the separate subsidiaries, together with the relatively weak capacity of the project management unit did not help the development of coordinated implementation arrangements\. 3\.2 Revised Objective: Not applicable 3\.3 Original Components: The project consisted of: (A) a capacity building component, (B) an investment component, and (C) a social remedial action component\. The two first components were directly related to and crucial for achievement of the project objectives, whereas the third involved retrofit social mitigation activities for previous Bank supported projects\. The capacity of the implementing agency CIL - was at the start of the - 3 - project very low regarding social and environmental mitigation activities, and support was provided to enhance its capacity during the implementation period with the help of a number of facilitating NGOs, staff training, and technical assistance from consultants\. CIL, however, had sufficient administrative and financial management capacity for project implementation\. (A) Capacity Building component (US$7\.3 million equivalent; 8\.7% of the project cost): This component provided funding for studies and training aimed at strengthening CIL's capacity at corporate headquarters, subsidiary headquarters, area, and mine levels to deal effectively with environmental and social issues, as well as for support by locally contracted NGOs for implementation of RAPs and IPDPs\. Training was provided for both environmental and social mitigation staff, and the social staff received repeated basic training on aspects of social mitigation and data management\. In addition, workshops for both environmental and social mitigation staff were held to exchange lessons learned\. A study on Strengthening of CIL's Environmental & Social Management Capacities formed the basis for an Institutional Strengthening Action Plan, which comprised development of technical manuals, training courses, and provision of staff training\. The findings of six technical studies linked to specific environmental mitigation activities were used to inform the design of these activities\. (B) Investment Component (US$76\.4 million equivalent; 90\.9% of the project cost)\. Implementation of Environmental Action Plans (EAPs) involved the bulk of the investment component budget, and comprised a range of activities to improve environmental management\. These included improved environmental monitoring, measures to bring environmental parameters for air, noise, and water in compliance with Indian environmental regulations, and measures to reduce hazard and risk from overburden (OB) dumps\. Social mitigation activities involved about 7% of the investment component budget, and comprised implementation of RAPs and IPDPs\. The RAPs comprised (i) resettlement accompanied by compensation and relocation benefits, and (ii) economic rehabilitation assistance to achieve income restoration\. The IPDPs were implemented in villages located within a one kilometer radius of the mines, but not affected by land acquisition\. Activities in particular villages were implemented as community development projects involving participatory planning by villagers, who also contributed towards the capital costs of community assets and were involved in arrangements for operation and maintenance\. (C) Social Remedial Action Component (US$0\.3 million equivalent; 0\.4% of the project cost)\. This component provided funds for the preparation and implementation of social remedial action programs for follow-up income restoration assistance to below-poverty-line PAPs affected under three coal mining projects that had received Bank support in the past\. 3 3\.4 Revised Components: Not applicable\. 3\.5 Quality at Entry: Unsatisfactory\. The project design predates the existence of the Quality Assurance Group (QAG), so there is no official assessment of the project's quality at entry\. However, the project design was reviewed with regard to applicable environmental and social safeguard policies by the environment and social divisions of the Asia Technical Department (ASTEN & ASTHR) and found to be in compliance\. The project objectives were consistent with the CAS and the government's priorities and met the critical needs of India's energy - 4 - sector\. In terms of particular project components, preparation of Resettlement Action Plans (RAPs) and Indigenous Peoples' Development Plans (IPDPs) was unsatisfactory\. Because the emphasis was placed on 'learning by doing', preparation focused on generic plans and failed to come to terms with the specifics of each location\. Certain critical issues that should have been dealt with during preparation were left for implementation\. This ultimately made implementation difficult\. During preparation there was an under-estimation of the complexities of undertaking resettlement and rehabilitation in a changed environment\. The Coal India Policy on Resettlement and Rehabilitation was agreed in 1994 and involved a radical departure from previous policies that provided guaranteed jobs for those resettled\. Following the cancellation of the investment project the Bank's leverage over the environmental and social agenda was considerably reduced\. This might have been more effectively taken account of during preparation\. Given the experimental nature of the project and the initial lack of institutional capacity within Coal India institutional strengthening and capacity building was to be part of project implementation\. With hindsight the project design might have been strengthened by (i) an institutional assessment to inform the identification of measures to enhance CIL's environmental and social capacity, (ii) the introduction in CIL's R&R Policy of other economic rehabilitation options as alternatives to mine jobs besides that of self-employment (e\.g\. land based income generation on reclaimed or unused mine land), and (iii) a description in more detail of the rehabilitation measures, so that support for self-employment would define an entitlement to a package comprising skills training, investment assistance, and assistance to establish market linkages\. However, whether a strengthening in either of these areas would have improved achievement of outcomes in a situation characterized by uneven client commitment, and limited managerial authority by CIL headquarters over the subsidiaries, is debatable\. During preparation of the project, the benefits, major risk factors, and lessons learned from other earlier projects in India were considered and incorporated into the project design\. The project was classified as a category A project for purposes of OD 4\.01, and accordingly CIL prepared an Environmental Impact Assessment which identified adverse impacts and the measures to mitigate these through Environmental Action Plans for the 25 mines under the project\. The quality of project design on environmental mitigation activities has been adequate to meet India's environmental regulation standards\. The quality of design for social mitigation activities constituted best practice with regard to the community development approach to IPDP implementation \. While the R&R Policy represented the state-of-the-art within the Bank at the time it 4 was developed, its lack of specificity on economic rehabilitation measures reflected a compromise between CIL and Bank positions, where detailed measures were expected to be developed during project implementation\. With hindsight Management might have given more attention during preparation to the complexities associated with the implementation of the R&R activities under the project\. The early/mid 1990s was a time when the Bank's attention to participatory processes was only just emerging\. The processes associated with the involvement of local communities were new and untested for both CIL and the Bank\. The particular interests of specific communities were not therefore adequately incorporated into RAPs and IPDPs\. This resulted in the production of rather indicative IPDPs to be further elaborated during implementation through consultation processes associated with the production of yearly plans\. The IPDPs did contain a balance between physical infrastructural provision, training opportunities and community activities\. Attention given to the priorities expressed by the beneficiaries meant a concentration on physical infrastructural provision\. The social scientists working on preparation noted the inadequacy of efforts to encourage meaningful participation, and the need to ensure feasible and workable income generation schemes\. With hindsight assumptions about the efforts required to shift institutional cultures were made by both Coal India and Management who had other overriding priorities at that time, as they focused on the - 5 - much larger Coal Sector Reform Project from which the CSESMP had been delinked\. Consultation and participation with a variety of stakeholders did take place during project preparation to address both social and environmental mitigation activities\. With hindsight this was not sufficient to understand the complexities of local conditions or to build effective alliances with local organizations that might have helped in diffusing tensions between the coal companies and local civil society\. It relied too much on the limited expertise that was available in the different subsidiaries, and on the interpretations by the officers in those subsidiaries of the situation on the ground\. Based on the mine specific general Resettlement Action Plans from 1994 and the Indigenous Peoples Development Plans from 1995, annual RAP and IPDP action plans were developed with some consultation with the target population\. In addition, the Bank interacted with a number of local and international NGOs interested in the CSRP and CSESMP during the course of project preparation and implementation\. In order to provide time for CIL to establish the required capacity for environmental and social mitigation, and to enable the Bank to assess the implementation progress prior to the negotiations for the CSRP, the CSESMP became effective in July 1996, nearly two years earlier than the CSRP\. To reinforce CIL's performance on environmental and social mitigation, the progress on mitigation activities was linked to the CSRP through a series of covenants (cross-conditionalities) in the CSRP Loan Agreement\. However, insufficient attention was given by Management to ensuring that CIL and its subsidiaries had adequate resources to deal with social and environmental issues during preparation\. Management overestimated or did not properly assess the implications of the complex design (25 geographically separated mine), the resistance of the institutional culture within the coalfields, and the political and social resistance to wider coal sector reforms\. During project preparation, alternative project designs were considered: The option to implement environmental and social mitigating action programs through a separate Environmental and Social Mitigation Fund for the coal industry was rejected, since it would have deprived Coal India of the incentive to build up its own capacity for dealing with environmental and social issues\. More specifically with regard to social mitigating actions, alternative designs were considered in the context of consultations during the preparation of CIL's R&R Policy and its Community Development Plan\. The design of the Environmental Action Plans was dictated by the need to meet the requirements of Indian laws and regulations as well as the Bank Group's Operational Directives in the most cost effective way\. The eventual separation of social and environment from the main investment project was done on an experimental basis\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Unsatisfactory\. The major outcomes and achievements of the project are as follows: Enhancing CIL's capacity to deal more effectively with environmental and social issues\. While the capacity of CIL to deal with environmental issues has improved, the enhancement of its capacity to deal with social issues has been less successful\. Capacity has been created within the project mines and subsidiaries with respect to environmental mitigation, the social mitigation capacity remains uneven and limited overall\. This is also the case at CIL's headquarters, where the environmental mitigation capacity has been enhanced, whereas capacity on social mitigation is inadequate to provide supervision and support for activities at the mine and subsidiary level as well as oversight of technical assistance (TA) activities\. While CIL did adopt an action plan for institutional strengthening with considerable delay, and - 6 - implementation of agreed TA to support implementation of this action plan has started, the action plan does not include a defined institutional structure for the corporation which will mainstream social mitigation\. Without such a structure that provides career prospects comparable to the rest of the corporation, the staff that have acquired experience regarding social mitigation are likely to seek transfers to other branches of CIL, and the capacity established during the project will be dissipated\. Implementing appropriate policies for environmental mitigation and resettlement and rehabilitation of people affected by coal projects and providing support to communities , in particular tribals, living in the coal mine areas\. As mentioned above, CIL has adopted the following corporate policies: an Environmental Policy, a Resettlement & Rehabilitation Policy, and a Community Development Plan for support to communities in the vicinity of the mines\. Policy reviews during implementation found that the Environmental Policy needed further strengthening regarding compliance monitoring through internal audits\. CIL's action plan for institutional strengthening includes staff training on such audits, but it remains unclear whether they will become an effective instrument to enhance compliance with environmental regulations\. The Community Development Plan has been found to be an effective policy framework for participatory community development activities, but has not been continued beyond project closure\. A corporate Community Development policy remains to be finalized\. The Resettlement & Rehabilitation (R&R) Policy has provided economic rehabilitation assistance as an entitlement for all adult Project Affected Persons (PAPs), and Resettlement Action Plans (RAPs) and an electronic PAP database has been introduced as a new planning and monitoring instrument\. While these elements represent an improvement upon earlier policies, implementation of economic rehabilitation assistance has been inadequate, the PAP database has not been maintained and used adequately, and the RAPs have not been used as a planning instrument in project mines after project closure\. Testing the effectiveness of these policies in the 25 coal mines that have been slated to receive financial support under the proposed CSRP\. With regard to the testing of the three policies, CIL has, with some delays, achieved positive results with regard to the implementation of Environmental Action Plans (EAPs) based on the Environmental Policy\. Under the capacity building component, six TA funded studies linked to specific environmental mitigation activities have been completed, and their findings used to inform the design of the activities\. Positive results have also been achieved with regard to implementation of IPDPs in 24 mines as community driven development projects\. The Indigenous Peoples Development Plans (IPDPs) have created a capacity among villagers to plan and implement joint community activities, have given voice to women and other vulnerable sections in village affairs, and have improved the relations between the project mines and the surrounding population\. The Resettlement Action Plans (RAPs) have been implemented in 14 mines with land acquisition of which ten have involved resettlement, and all 14 have involved economic rehabilitation assistance\. Coal India has completed relocation of the people affected by land acquisition for the mine expansion that has taken place during the project period\. However, it is not clear whether all the PAPs that have been relocated have also received the compensation and relocation benefits to which they are entitled\. Until it is established that these entitlements have been delivered, resettlement cannot be considered completed\. According to overall information given to the November 2003 supervision mission by CIL, resettlement under the project has been completed in all but one of the 10 affected mines\. The one mine site where resettlement is outstanding is Belpahar in Mahanadi Coalfields Ltd\. (MCL), where 29 families (or 12% of an estimated 374 families) remain to be resettled\. Figures for numbers of PAFs have fluctuated slightly over time, as additional entitlements have been identified, and as mine expansion plans have changed\. This has resulted in both reductions and increases in different mine sites and to problems of - 7 - definitively identifying those affected before and after the project\. According to CIL figures from the end of October 2003 approximately 406 families in MCL and 116 families in Central Coalfields Ltd\. (CCL) remain to be relocated but it is not clear how many of these are families affected under the project, or are subsequent additions\. The final status of delivery of compensation and relocation benefits will be determined following the supervision mission in June 2004\. With regard to economic rehabilitation, the RAPs were intended to introduce alternative instruments to that of mine jobs as additional compensation for loss of land, since this practice had contributed to an excessive labor force and economic losses\. However, following pressure from PAPs, mine jobs were provided in excess of the SAR target by 227%\. At the same time, implementation of the alternative economic rehabilitation instrument, namely income restoration through self-employment, has been based on a narrow interpretation of CIL's R&R Policy, which has restricted the attractiveness to the PAPs of the assistance offered and produced limited contributions to income restoration\. A determination of the final status of economic rehabilitation awaits verification from studies to be undertaken in the first half of 2004 of the 363 PAPs who reportedly suffered declines in their incomes over the project period\. 4\.2 Outputs by components: (A) Capacity Building Component\.(Output Rating: Unsatisfactory) A1\. Studies (Output Rating: Unsatisfactory) Study of Strengthening of CIL's Environmental and Social Management Capacities\. The study was scheduled to start within six months of project effectiveness, but was delayed by about three years, and a workshop on the draft final report on Strengthening of CIL's Environmental and Social Management Capability was held in October 2000\. While many of the recommendations on environment were taken up there was less progress on the social side\. A dispute remains between CIL and the consultants over payment for this study\. The main recommendations of the detailed study concerned environmental management together with environmental performance auditing and evaluation, mine planning and mine closure, social impact assessments, land acquisition and resettlement, and use of geographical information systems\. The issue of the institutional set-up for social mitigation activities covering both the 25 project mines and CIL at large was left vague in the consultant's report\. CIL drafted an Institutional Strengthening Action Plan by November 2000, which incorporated the key recommendations of the report, but left the issue of an institutional set-up for social and environmental mitigation activities unresolved\. A total of 25 environmental auditors, 100 environmental officers, and 75 social mitigation officers (resettlement and rehabilitation) will be trained under the TA\. Manuals and training modules have been developed for (i) Environmental management (ii) land acquisition and resettlement, (iii) mine planning; (iv) mine closure, (v) social impact assessments, (vi) Geographical Information System, and (vii) environmental performance auditing and evaluation, but it is not clear whether these are being used by the subsidiaries\. The ICR mission reviewed manuals and training modules for impact assessments and resettlement & rehabilitation prepared by the TA consultant and found them inadequate\. Guidance has been provided to the WBPD on the requirements that the consultant need to fulfill to produce adequate manuals and training modules on social issues\. At the wrap-up meeting with the Chairman, CIL, the mission was informed, that CIL will engage a qualified social scientist, who will work with mine staff to prepare new manuals and training materials\. The environmental manuals and training modules will be reviewed separately by the Bank\. Standardization of environmental monitoring: The study was submitted on time by September 1998\. The recommendations of the study are being implemented by external contracted agencies (the different State Pollution Control Boards), which undertake monitoring of air, noise, and water quality at the different - 8 - subsidiaries\. Ash disposal study: TOR for the study were revised so that it covered not only the 25 project mines, but all CIL mines within a 50 km radius of thermal power plants\. The study comprised 62 open cast mines, and was completed in April 2000\. Further assessments by CIL identified 14 of these mines as suitable for ash disposal, and two are currently used for ash disposal, while the suitability of five other mines are being further assessed\. CCL has offered voids in the Amlo and Bokaro open caste project to Bokaro Thermal Power Station\. Mahanadi Coalfields Ltd\. (MCL) has entered into an MOU with Hindustan Aluminium Company (HINDALCO) for disposal of fly ash in a disused quarry of Bharatpur South Project\. Northern Coalfields Ltd\. (NCL) is in discussion with Vindyachal Super Thermal Power Station (VSTPS) for disposal of fly ash in the abandoned Gorbi mine\. The process of identifying further mines for fly ash disposal continues\. Study of disposal of oil/grease and water from workshop effluent: The study was completed in September 1997\. Its findings were accepted by the Bank but not by CIL\. In September 1998 it was agreed that a consultant would by end November, 1998, review the design and performance of all existing disposal units and suggest modifications where required to ensure adherence to Indian effluent standards\. The Workshop Effluent Treatment Plants (ETPs) and oil and grease traps are working satisfactorily in all the projects\. In most of the installations the treated water is fully reused for vehicle washing, fire fighting or filling of mobile water sprinklers\. However, in some of the projects the siting of the ETP has made the installation of a reuse system difficult or very expensive\. Only in such projects the reuse percentage has continued to be nil or very low\. The sludge from the ETP is considered hazardous and treated by land farming method in most of the installations\. The Orissa State Pollution Control Board, however, has asked for a more sophisticated impervious lined system for disposal of the oily sludge and other oily used material such as oil filters\. Such an elaborate sludge disposal system has been installed in Ananta Project of MCL\. With some delays all planned 25 effluent treatment plants have been completed\. Study of bio-contamination of subsoil water from domestic effluent: The study was submitted on the due date of June 30, 1998\. It recommended the replacement of the existing septic tank/soak pit systems, which caused pollution of ground water, with centralized sewage treatment plants (STPs)\. All STPs were completed and commissioned by March 2001 Study of overburden dump safety and stability: The study was completed in November 1996\. It was reviewed by a panel composed of Indian and international experts, and its findings were rejected\. Eventually a revised study was produced, and an Overall Action Plan for OB Dump Safety and Stability was submitted in September 1998 and approved by the panel of experts and the Bank\. Implementation was completed by the project closing date\. Study to determine the suitability of top soils for use in overburden dump reclamation: A draft report was submitted to CIL in November 1997 and reviewed by a consultant\. The final report was submitted on time in May 1998 and approved by the Bank\. The study recommended that top soil should be stored separately and spread on reclaimed dumps to promote re-vegetation\. This is being carried out to varying degrees in different mines\. Study on lessons learned from implementation of IPDPs and RAPs: The study was submitted by the due date, and following Bank comments, the section on income restoration was revised, but found unsatisfactory\. The assessment of IPDP and RAP implementation was envisaged as a recurrent yearly activity in the SAR\. However, since the reports furnished by the consultant did not add any insights to those gained through regular supervision missions, it was agreed between CIL and the Bank to discontinue - 9 - this activity\. Midterm review of environmental policies: The study, which reviewed the progress in implementation of the Environmental Action Plans together with CIL's environmental policy, was available by the midterm review in February-March 1999\. Based on the findings of the study, the Bank suggested that CIL should update its environmental policies to include self-policing of environmental regulations and consider the creation of an internal audit unit\. While CIL's updated environmental policy formulated after the mid term review did not include these recommendations, CIL has subsequently introduced training of staff for environmental auditing as part of its Institutional Strengthening Action Plan\. Other studies included: (i) a strategy for income restoration drafted in 1998, (ii) market surveys which were conducted in 1998 in MCL, Central Coalfields Ltd\. (CCL) and South Eastern Coalfields Ltd\. (SECL) to form a basis for planning of income restoration activities through self employment, (iii) a diagnostic study in 1998 of income restoration in MCL of PAPs who had settled on land bought outside resettlement sites, (iv) a study in 2000 funded by a Dutch Trust Fund on the impact of mining on tiger and elephant habitats around project mines in Bihar (now Jharkand), (v) a hydro geological study in 2001 in NCL to assess the impact of coal mining on ground water in and around NCL , and (vi) a sample survey in May 5 2002 to verify the census of PAP incomes conducted in March 2002 by CIL to form the basis for an assessment of income restoration\. A study of the 363 PAPs who reported decreases in income levels between 1997 and 2002 is to be undertaken in the first half of 2004 and will be the basis for possible follow up work to restore incomes\. A2\. Training (Output Rating: Unsatisfactory) Workshops: A two-day workshop which included the participation of CIL and subsidiary management in addition to mine level mitigation officers, was held in Ranchi in Bihar in October 1997 to introduce the novel approaches to environmental and social mitigation introduced by the project\. At the closure of the project, a workshop to discuss lessons learned was held in June 2002 involving social and environmental mitigation staff together with the facilitating NGOs\. Environmental training: Training modules were developed in June 1998 and training was provided between 1998 and 2000 by a consultant to a total of 218 environmental staff\. 180 executives received training in 2002 and 2003 at 5 different training events\. Two of these one week events were held at the Indian Institute of Coal Management in Dhanbad after project closure\. They involved 66 executives being trained on Environmental issues\. Three further training events were held following project closure at the Indian School of Mines; a 2 week training program on environmental issues involving 62 participants; a one week training program on Environmental Audit involving 23 participants; an R&R training program over a two week period involving 29 participants\. Training for social mitigation staff: With assistance from the World Bank Institute, CIL developed in 1997 four training modules covering CIL's social mitigation policies, income restoration, participation, and computerized information management to build capacity among CIL and NGO staff assigned to the planning and implementation of IPDPs and RAPs\. The training was conducted between September 1997 and August 1998, and a second round of training was undertaken during 1999-2000 for newly assigned staff\. Additional follow-up training was provided on computerized information management to establish capacity to update and use the database on PAPs\. Moreover, workshops were held to discuss lessons learned among social mitigation staff from different mines within particular subsidiaries and among staff from all the subsidiaries\. - 10 - As part of CIL's Institutional Strengthening Action Plan (ISAP), the Indian School of Mines has from April 2002 developed manuals and training modules on environmental mitigation and auditing for staff from all CIL mines\. A workshop to discuss and disseminate lessons learned was held in February 2002 for environmental personnel\. The training program was completed by January 2003\. Since the closure of the project there has been minimal training for social mitigation/CD/R&R staff, nor opportunities to discuss experiences across subsidiaries and learn from best practices\. In April 2004 a workshop was held at Western Coalfields Ltd\. (WCL) to discuss experiences across subsidiaries on best practices in implementing R&R activities\. According to Coal India, manuals for dealing with R&R were finally distributed to all subsidiaries in June 2003\. The Bank was not asked to review them, and it is not clear to what extent they are being used by the subsidiaries\. An R&R training program over a two week period was conducted following project closure and involved 29 participants\. A3\. Facilitating NGOs (Output Rating: Satisfactory) In April 1997, 11 local NGOs were engaged by CIL to assist the mine level social mitigation staff with the planning and implementation of annual IPDPs and RAPs\. The number was subsequently reduced to ten, when CIL with the consent of the Bank terminated the contract of one of the facilitating NGOs in SECL\. After an initial learning period, which involved the sorting out of problems related to payments, collaboration between CIL and the facilitating NGOs improved substantially\. Most of the NGOs have performed well, and their involvement has been crucial for the implementation of the IPDPs, income restoration activities, and PAP censuses\. CIL terminated the contracts with all facilitating NGOs on the project closing date of June 30, 2002\. The Bank anticipates that some of the facilitating NGOs will be engaged in subsidiaries such as CCL where follow up work is required and where new socio-economic surveys are anticipated\. A4\. Monitoring (Output Rating: Unsatisfactory) The project has employed four different monitoring mechanism in addition to Bank supervision\. CIL has submitted quarterly progress reports throughout the project period\. From April 1997 to the closure of the project, a Project Implementation Supervision and Monitoring Consultant has been undertaking supervision of all project mines on a quarterly basis as a supplement to that by the Bank supervision team\. The team deployed by the consulting firm comprises two environmentalists and two social scientists, who conducted field visits as part of the preparation for their quarterly reporting\. Over time, as the consultant developed its capacity, the reporting became a useful tool for Bank missions\. A Social and Environmental Review Panel comprising two Indian and two international experts provided an independent assessment of CIL's policies and performance regarding environmental and social mitigation\. Between November 1997 and February 2001, the staff of the Review Panel conducted a total of seven field visits to project mines and submitted four reports on their findings \. The findings of the Panel as recorded in its four reports have 6 corresponded to and confirmed those of Bank supervision missions\. An electronic PAP database was planned as the primary monitoring tool for assessing RAP implementation progress, and the extent to which the PAPs have been able to restore their previous income levels\. To prepare for the ICR, a census of PAP income levels was conducted by CIL and the facilitating NGOs in April 2002\. An external consultant undertook a verification of this data on a sample basis during May 2002\. In order to support CIL in establishing the PAP database at the mine, subsidiary, and headquarters - 11 - level, extensive assistance has been provided by the Bank throughout the project period\. However, despite this support and the repeated training, CIL has not been able to fully utilize or maintain the PAP database\. Lack of verification of the data in the electronic database against original census data has meant, that the data in the PAP database have been corrupted to such an extent that an analysis on the status of economic rehabilitation could not be completed during the ICR mission as planned\. Verification and reconciliation of the data was carried out after project closure and is being used as a basis for a study of those who reported decreased incomes over the project period\. The results of this study will be used as a basis for determining any additional activities that will need to be undertaken to restore economic livelihoods of the 363 PAPs identified and complete economic rehabilitation under the project\. The results are expected by June 2004\. (B) Investment Component\. (Output Rating: Unsatisfactory) B1\. Resettlement Action Plans (Output Rating: Unsatisfactory) For the 14 mines with land acquisition, CIL submitted annual mine-specific RAPs for every calendar year from 1998 onwards\. Following Bank reviews, the revised annual RAPs were implemented by mine level CIL staff assisted by the facilitating NGOs\. Resettlement: By the project closing date, 82% of the Staff Appraisal Report (SAR) target PAFs had relocated\. The supervision mission in November 2003 received a further update on numbers of PAFs which indicates that 88% of that target had been reached\. The status in relation to the SAR target is as follows (see Annex 11a for mine specific data)\. All resettlement has been completed for those PAFs whose land was acquired during the project period\. Subsidiary PAFs to Relocation status Relocation Relocation status Relocation status Relocation status be by Nov\. 1999 status by Nov by Jan 2002 by June 30, 2002 by Oct 2003 resettled (PAFs) 2000 (PAFs) (PAFs) (PAFs) (PAFs) NCL 57 42 42 57 57 57 MCL 1,290 617 758 861 938 986 SECL 852 366 544 852 852 852 CCL 342 73 128 201 282 341 (+115) Total 2,541 1,098 1,472 1971 2072 (+58) 2236 In late 1999, CIL introduced as part of its R&R Policy a cash grant of Rs\.50,000 in lieu of a plot in a resettlement site, providing the PAPs with the option of choosing to resettle in a place of their own choice \. 7 The cash grant is provided in addition to the compensation for the house and house plot\. The cash grant has helped to reduce PAP resistance to resettlement, and since its introduction, 72% of the resettled PAFs have chosen this option instead of a plot in a resettlement site\. In the Parej East mine under CCL, the remaining caseload to be resettled is 117 PAFs of the original 290 PAFs\. However, a follow-up census of PAFs in 2002 identified an additional 115 PAFs (in the villages of Muslim Tola and Duru), increasing the total caseload to 405 PAFs\. Of the newly identified PAFs, 57 have already relocated with the cash grant of Rs 50,000 in addition to their house compensation\. The mine expansion plans would require the balance of the additional caseload (58 PAFs) to be relocated by March 2005 \. Resettlement required by the mine expansion undertaken until the project closing date has already 8 been completed\. - 12 - For the MCL mines of Jagannath, Bharatpur, Belpahar and Lakhanpur, contingency mine plans were developed in 1998 to cope with possible delays in resettlement of PAPs due to disputes mainly involving demands by the PAPs for additional mine jobs\. The contingency plans involved having mining operations bypass villages resisting resettlement, leaving a 300 meter gap between the quarry and the nearest habitation\. A joint CSRP/CSESMP mission reviewed these plans, and were satisfied that they would permit the continuation of orderly mine advances over at least the next 5 to 7 years, thus permitting additional time, as and if required, to resolve outstanding disputes raised by the PAPs\. Since then, provision of additional mine jobs and the introduction of the cash grant of Rs\. 50,000 have contributed towards overcoming the resistance in all the MCL mines except Belpahar\. The obligations relating to resettlement and rehabilitation as defined in the SAR comprise the projected caseload of PAPs created by land acquisition for mine expansion during the project period\. At the start of the project, most land required for mine expansion had already been acquired, but not yet taken into possession for the actual mine expansion\. Since the process of taking land already acquired into possession for mine expansion will continue for years beyond the project closing date in most of the mines, the SAR (p\.112) defined CIL's obligations relating to resettlement on the basis of an estimate of the PAFs that would be affected by the estimated amount of land acquired and/or physically taken into possession to enable the projected mine expansion during the project period\. However, the actual mine expansion till June 30, 2002, and the amount of land taken into possession for this expansion has turned out to be lower than projected during project preparation\. The total number of PAFs affected by the land acquired and/or taken into possession due to mine expansion within the project period is 1,989 PAFs\. For this caseload of PAFs, resettlement is completed\. The remaining 527 PAFs, comprising 469 PAFs from the SAR caseload plus the balance of 58 PAFs from the additional caseload identified in Parej East, have not been displaced by mine expansion during the project period\. Income restoration: As mentioned earlier in the section on monitoring of RAP implementation, an analysis of the extent to which economic rehabilitation for PAPs has taken place during the project period could not be completed during the ICR mission of October 2002 as planned\. A partial and preliminary income restoration analysis was conducted during the October 2002 supervision mission for three of the four subsidiaries (CCL, NCL, and SECL) comprising seven mines with RAPs and approximately 29% of all PAPs (see Annex 11b)\. The analysis was completed in May 2003, and the results from MCL were incorporated into the database (see Annex 11)\. Identification of CIL's remaining obligations and required follow-up measures will be determined once an analysis of the 363 PAPs who reported decreases in income over the project period is completed\. This expected by June 2004\. CIL's R&R Policy contains three instruments to support income restoration for PAPs, namely provision of (i) mine jobs to PAPs losing land above a defined threshold , (ii) jobs with contractors, and (iii) assistance 9 regarding non-land based self-employment through the provision of infrastructure, petty contracts and formation of cooperatives\. Of the total caseload of PAPs entitled to assistance for income restoration (9,183) , a total of 4,152 (45%) are earning an income as a result of the assistance provided\. The number 10 earning from mine jobs provided as compensation for land loss is 2,693 (28%), while 450 (4\.5%) have jobs with contractors, and 1,006 (10%) have incomes deriving from self-employment assistance\. Mine jobs have been provided in excess of the SAR target by 227%, primarily in MCL\. CIL's R&R Policy was intended to furnish alternative economic rehabilitation instruments to that of provision of mine jobs, since this practice had contributed to build up an excessive labor force and heavy economic losses \. 11 However, in MCL, demands by PAPs for mine jobs as a condition for resettling led to concessions by the subsidiary, so that a total of 1,996 mine jobs were provided instead of the projected 493 jobs (a excess of - 13 - 407%)\. While this practice has undoubtedly contributed to overall economic rehabilitation and household income security in MCL, it has also undermined the attractiveness of the assistance offered to PAPs for self-employment\. 4,829 PAPs provided income information in 1997 and in 2002\. Average individual incomes in 1997 were Rs\. 1,371\. In 2002 they were Rs\. 2,806\. The average individual increase in income was Rs\. 1,079 after adjusting for inflation\. The highest inflation adjusted increase in average individual income was Rs\. 2,256 in Samaleswari, and the lowest was Rs\. 337 in Kusmunda\. Of the 4,829 PAPs for whom both 1997 and 2002 income was available, 4,467 or 92\.5% were able to maintain or increase their incomes, while 363 (7\.5%) reported a decrease in income\. Of those who reported decreasing incomes, 125 (34%) were over 50 years of age, and 38 (10%) were women\. The average age of those who reported decreased incomes was 43, and the average inflation adjusted decreases was Rs\. 1,316\. The smallest reported loss was Rps\. 12\. Overall, the Parej East mine had the highest number of PAPs (73) who reported decreased incomes and NCL's Jhingurda, the least (4)\. According to the data available, 1,345 PAPs enrolled in training and 1,220 completed training\. 984 PAPs reported earnings related to the self-employment training (SE) they received\. The average income from this self-employment was Rs\. 747\. A decent secondary income, but not really sufficient for a primary income\. PAPs on Parej East reported the lowest SE incomes (Rs\. 330), while PAPs in Jagannath reported the highest (Rs\. 1,235)\. Proportionately, Jhingurda had the highest number of PAPs reporting earnings from SE (42%) while Gevra had the lowest (8%)\. The follow-up assistance planned in the 2002 annual RAPs, which comprised investment support and/or supplementary skills training plus support to establish market linkages for PAPs, who had received training but were not earning from the training received, has been largely ineffective\. The limited interest shown by PAPs in this follow-up assistance offered by the 2002 annual RAPs may be due to more attractive income opportunities established by the PAPs themselves independently of the project\. However, it also indicates that if self-employment is to be an effective means of income restoration, it has to be furnished as a package comprising skills training, investment support, and assistance to establish the required market linkages for raw materials and sales\. The provision of self-employment assistance as an integrated package has not been implemented consistently across project mines from the start, nor for all the different types of skills training provided\. With regard to overall income restoration, the results of the analysis of data on CCL, NCL, MCL and SECL from the PAP database indicate that during the project period, average monthly incomes of individual PAPs have increased by Rs\. 1,079, after adjusting for inflation\. However, the extent to which this increase in average incomes is related to the training for self-employment carried out under the project, or to the general economic growth of the mining area is not clear\. - 14 - Status of Economic Rehabilitation for NCL, MCL, CCL and SECL: 1997 2002 Subsidiary Total No\. of No\. of EPAPs Avg\. Avg\. Increase Number EPAPs Reporting Individual 1997 - 2002 of Reporting Income in Income Rs\./month14 EPAPs12 Income13 1997 & 2002 Rs\./month 1997 2002 1997 2002 1997 2002 NCL 256 245 256 245 245 824 2,128 1,105 CCL 745 653 715 648 648 947 2,010 836 SECL 1,983 1,658 1,768 1,620 1,620 1,257 2,388 721 MCL 7,230 6,627 4,109 2,316 2,316 2,454 4,699 1,656 All Projects 10,214 9,183 6,848 4,829 4,829 1,371 2,806 1,079 Note: IA = Inflation Adjusted For the four subsidiaries of NCL, MCL, CCL, and SECL, a total of 9,183 PAPs were identified in the updated 1997 census as eligible to receive assistance for economic rehabilitation under the project\. Among this group, the analysis of the 4,829 PAPs with income data for both 1997 and 2002, indicates that 92\.5% have been able to maintain or increase their incomes during the project period (after adjusting for inflation), and 7% are recorded as having experienced a decrease in the level of their pre-project incomes \. 15 An analysis was also conducted of the status of economic rehabilitation for women in NCL, MCL, CCL, and SECL, and for tribal populations \. 1,497 women provided income information in 1997 and in 2002\. 16 The average individual income for female PAPs was Rs\. 141 in 1997 and Rs\. 599 in 2002\. This indicates that, adjusting for inflation, the average individual increase in income was Rs\. 424\. The highest increases were reported in MCL (Rs\. 761) and the lowest in NCL (Rs\. 247)\. For female PAPs who reported income information in both years, 1,459 (98\.1%) reported that they were able to maintain or increase that income\. Only 38 (1\.9%) reported a decrease in income\. 729 female PAPs enrolled in training and 586 (80%) of these reported Self-employed income\. 1,456 tribal PAPs provided income information for both 1997 and 2002\. The average individual income for tribal PAPs was Rs\. 1,219 in 1997 and Rs\. 2,610 in 2002\. The average inflation adjusted increase was Rs\. 1,098\. The highest increase was recorded in MCL (Rs\. 1,999) and the lowest in NCL (Rs\. 555)\. Of the 1,456 tribal PAPs who provided information, 1,350 (92\.7%) were able to maintain or increase their incomes, while 106 (7\.3%) reported a decrease in income\. 389 (27\.1%) tribal PAPs reported income from self employment\. The average reported income from self employment was Rs\. 618, with the highest (Rs\. 951) in SECL and the lowest (Rs\.444) in CCL\. In CCL, the tribal population has been able to increase average individual incomes by Rs\. 732 per month\. Among the 261 tribal PAPs in CCL with income data for both 1997 and 2002, 70% have been able to increase their incomes, 20% have maintained their pre-project incomes, and 10% have experienced a decrease in income\. For those PAPs who reported decreases in income during the project period, an analysis is being undertaken of the reason(s) for the decrease and how they are currently being supported\. The results of this analysis, expected by June 2004, will determine what additional income restoration activities will need to be provided before economic rehabilitation under the project can be deemed to be completed\. - 15 - 2,831 PAP households (PAFs) provided income information in 1997 and 2,643 in 2002\. Average household income in 1997 was Rs\. 3,429, and in 2002 was Rs\. 7,391\. After adjusting for inflation this represents an average household increase of Rs\. 3,139\. The highest increase was Rs\. 7,503 in Belpahar and the lowest was Rs\. 888 in Dipka\. In 1997 the highest average household income was reported for Samaleswari, and the lowest (Rs\. 1,689 in Parej East\. In 2002 the highest average household income was Rs\. 13,864 in Belpahar and the lowest (Rs\. 3,268) was in Parej East\. Land based income restoration pilot: As an alternative to the self employment schemes defined in CIL's R&R Policy as the instrument to promote income restoration for PAPs not entitled to mine jobs, it was agreed during the midterm review mission in February/March 1999, that CIL would engage consultants to develop approaches for land based income generation on unused and reclaimed mine land in five pilot projects to test the technical feasibility and PAP interest regarding this (in CCL, MCL, SECL, and NCL)\. If successful, this new approach would supplement the current assistance to self-employment mandated by CIL's R&R Policy, and could constitute an effective mechanism to achieve economic rehabilitation of PAPs, most of whom are small farmers\. Eventually, CIL reduced the number of pilot projects, and only one was initiated in July 2001 in Dipka, SECL, with assistance from an NGO consultant\. The pilot involves 93 PAPs from three villages, who are engaged in cultivation on 37 ha together with dairy and fishery\. The results are encouraging, and the PAPs have formed a cooperative society, have managed to save Rs\. 67,000 from the income of the 2001-02 crop on a joint account, and the reported individual monthly incomes deriving from the pilot project were Rs\.814 in March 2002, and Rs\.920 in September 2002\. The efforts of the facilitating NGO helped to access funds from the Swiss Development Agency to start a dairy unit employing 5 EPAPs\. The project was revisited during the November 2003 supervision mission and it remains an approach that CIL is considering for other subsidiaries\. No precise updated income figures were collected but information obtained indicated that workers were receiving approximately Rs\. 40 per day in wages\. Review of CIL's R&R Policy: During the midterm review, it was agreed between CIL and the Bank, that CIL would constitute a committee by April 1999 to review CIL's R&R Policy \. A joint CIL/Bank 17 workshop to review and update the policy was scheduled for the November 1999 mission, then postponed till the March 2000 mission since the report from CIL's committee was not finalized, and eventually never held\. Instead, CIL introduced a revised R&R Policy in March 2000, which furnished the PAPs with additional options as follows: A one time infrastructural development grant of Rs\. 50,000 in lieu of a house plot in a resettlement site for displaced PAPs\. This payment is in addition to the compensation for loss of homestead land and house, and is calculated as the average value of the resettlement plot, the resettlement site infrastructure, plus the transition allowance (comprising a `shifting allowance' of Rs\. 2,000 and a `lump sum grant' of Rs\. 5,000)\. Monetary compensation in lieu of a mine job for land losers whose loss of land entitled them to mine employment\. The payment will be Rs\. 100,000 for the first acre of land, or pro-rata payment subject to a minimum of Rs\. 25,000\. For the 2nd and 3rd acre, the compensation will be 75,000, and Rs\. 50,000 on pro-rata basis for land above 3 acres\. This payment is in addition to land compensation\. The Bank had no objection to this strengthening of CIL's R&R Policy, but that changes and clarifications regarding entitlements and economic rehabilitation were required to make the policy consistent\. Some, but not all of the recommended modifications were adopted in the revised policy\. As a result, the revised R&R policy was not approved by the Bank\. However, CIL has continued to provide the one time infrastructural development grant of Rs\. 50,000 in lieu of a house plot in a resettlement, and the Bank has no objection to this measure, which provides the PAPs with an additional resettlement option\. - 16 - B2\. Indigenous Peoples Development Plans (Outout Rating: Satisfactory) For the 24 mines with neighboring villages that are not affected by land acquisition and located within a one kilometer radius of the leasehold of the mine, CIL submitted annual mine-specific IPDPs for every calendar year from 1998 onwards\. Following Bank reviews, the revised annual IPDPs were implemented by mine level CIL staff assisted by the facilitating NGOs\. A total of 172 villages have been covered by IPDP activities against an SAR target of 189 villages\. This change in the number of IPDP target villages is primarily caused by a merging for operational and planning purposes of smaller hamlets originally identified as independent target villages\. While designed to establish compliance with the Bank's Operational Directive 4\.20 on Indigenous Peoples, the IPDPs were not focused exclusively on the population from Scheduled Tribes in villages neighboring the project mines\. Since these villages contained a mixed population comprising Scheduled Tribes (STs), Scheduled Castes (SCs), Other Backward Castes (OBCs), and caste Hindus, an exclusive targeting of the STs would have been divisive\. Instead, the IPDPs were conceived as community development activities, which provided benefits to tribals and non-tribals alike\. The IPDPs developed during project preparation in 1995 were only considered indicative in terms of the actions described\. Subsequent project implementation was based on participatory planning of annual action plans by Village Working Groups (VWGs) nominated by the villagers and representing different sections of the beneficiary communities, together with cost contribution towards capital costs and maintenance of joint community assets, and community responsibility for operation and maintenance of such assets\. The VWGs had an average of 13 members\. The composition of the VWGs has largely corresponded to the population composition of the beneficiary communities, with the exception of CCL, where the proportion of VWG members from Scheduled Tribes was considerably higher than their proportion of the target population\. Although initially limited, women over time gained a stronger representation in the VWGs, and constituted around 30% of the members by the closure of the project\. The composition and role of the VWGs have contributed noticeably to give both women and other marginal groups a stronger voice in village affairs (Annex 11c)\. The IPDPs comprised three types of activities, namely (i) asset creation comprising joint village facilities including drinking water supply, public buildings such as school classrooms, and irrigation facilities, (ii) skills development such as book keeping, contract management, training for income generation, or adult literacy, and (iii) various community activities ranging from health awareness to plantation of wastelands\. In the 172 villages with annual IPDP action plans, a total of 721 joint community assets were created (averaging four per village), 883 skills development activities (averaging five per village), and 1,575 community activities (averaging nine per village) (Annex 11d)\. VWGs were involved as contractors in the civil works for community facilities\. The capacity established with regard to contract management has enabled some VWGs to execute small contracts for the Panchayats and/or the mines\. Income generation activities were undertaken in a total of 139 villages (81% of total)\. Altogether 4,545 persons were involved in this activity, with women constituting 49%\. A total of 198 Self Help Groups were formed, mainly with women members, and 95% of these were functioning by project closure\. Most of the Self Help Groups were organized around saving and credit schemes (93%)\. The annual IPDPs for 2002 comprised an exit strategy with added emphasis on arrangements to ensure the sustainability of VWGs, Self Help Groups, and maintenance of community assets\. In MCL, SECL, and WCL, the VWGs have agreed with the local Gram Panchayats that these would take over the community - 17 - assets for future maintenance\. Whether the Panchayats will be able and willing to manage this responsibility over the long term remains to be seen\. In Jharkand, where Panchayats do not exist, the VWGs formed in IPDP villages under CCL have established an apex organization to interact with local authorities regarding development assistance, but have not introduced any arrangements for collection of user charges or contributions towards maintenance costs from the beneficiaries\. Only in the IPDP villages under NCL where assets have not been transferred to Panchayats, and in some of the IPDP villages in SECL, has a system of user charges to cover expenditures related to maintenance of community assets been established (comprising 34% of all IPDP villages)\. By project closure, maintenance of community assets had been undertaken in 27% of the IPDP villages, giving cause for some optimism regarding sustainability\. (Annex 11e)\. B3\. Environmental Action Plans (Outut Tating: Satisfactory) Environmental monitoring is being carried out at all project mines by external agencies\. Data are collected on a fortnightly basis on (i) air quality at production sites, mine quarters, and surrounding villages, (ii) noise levels at production sites, mine quarters, and surrounding villages, (iii) water quality of treated effluent from workshop and mine effluent treatment facilities as well as sewage treatment plants, and (iv) drinking water quality at mine quarters and in neighboring villages\. The monitoring information is communicated to the respective State Pollution Control Boards that issue the annual Environmental Consent Letters, which are required for a continuation of mining\. Reclamation of over burden (OB) dumps: Based on studies and expert reviews, the number of OB dumps requiring reclamation was reduced from the original SAR estimate of 150 to 119 following the preparation of the "Overall Action Plan for OB dump Safety and Stability"\. The action plan was approved in August 1998 by a technical expert consultant from the Indian Institute of Technology (IIT), Kanpur and by the Bank\. The table below reflects the status and distribution of the 119 OB dumps identified in this Action Plan by subsidiary: Subsidiary Reclamation Active Dumps Already Ring Dumping under CSESMP Reclaimed* NCL 9 4 10 1 MCL 23 - - - WCL 21 - - - SECL 18 3 18 - CCL* 4 - 8 - Total 75 7 36 1 Not funded through the ESMP; Seven dumps done departmentally, One dump done departmentally Implementation of reclamation works on the 75 overburden dumps selected for reclamation work with CSESMP funding began between September 1999 and January 2001, and civil works were completed by December 2001 followed by plantation activities completed by the 2002 monsoon period (Annex 11f)\. Use of top soil: The recommendation by the study on the use of top soil in OB dump reclamation, that top soil be stored separately and then spread on reclaimed dumps, is not practiced in all mines\. However, all mines make use of top soil to promote the growth of vegetation on reclaimed OB dumps (Annex 11f)\. Instead of separate top soil storage, many mines practice what is termed "concurrent application of top soil"\. This practice involves that top soil when removed is immediately spread on OB dumps that have reached their planned height or on the portion of backfilled quarries (internal dumps) that are level with the surrounding area\. - 18 - Workshop and mine effluent treatment plants have been established in all 25 project mines\. In NCL and MCL, the mine and workshop effluent treatment facilities are integrated, while CCL, SECL, and NCL have separate treatment facilities for mine and workshop effluent (Annex 11g)\. Operation and maintenance is carried out by mine staff in all project mines\. It is attempted to achieve zero discharge of treated effluent water for all effluent treatment plants\. To date, this has only been fully achieved in 13 of the mines (see Annex 11g)\. The treated effluent water is primarily used for washing of vehicles, and spraying against dust on roads used for coal transport within the mine leasehold\. Sewage Treatment Plants (STPs): The recommendation of the study of bio-contamination of sub-soil water from domestic effluent required construction of 21 STPs, all of which are completed and functioning (Annex 11h)\. The Ministry of Environment & Forest guidelines which require fortnightly sampling are being followed in all subsidiaries\. Monitoring data on treated effluent water for July 2002 show that all STPs are within permissible limits, except one (Kusmunda, SECL, where Biochemical Oxygen Demands (BOD) values for May 2002 slightly exceeded the permissible limit, see Annex 11h)\. Operation and maintenance of all the STPs have been given on contract, with the exception of CCL where it is done departmentally\. In June 2001, it was agreed between CIL and the Bank that planning and physical arrangements should be made by August, 2001 for emergency and scheduled shutdowns of the domestic effluent treatment plants (DETPs)\. These measures are described in Annex 11h\. All mines are planning to use the treated effluent water for either spraying against dust within the mine area (as currently practiced in Samleswari, MCL), or to provide it for irrigation (as practiced in Jhingurda, NCL)\. Only in Parej East has the workforce objected to the use of treated effluent water for dust spraying since it is considered unclean\. Dust suppression: In response to the need for enhanced dust suppression measures in addition to those prescribed in the EMPs, a revised dust suppression plan was agreed between CIL and the Bank in August 1999\. The range of dust suppression measures implemented by different mines are described in Annex 11i\. While dust suppression has improved, monitoring data on Suspended Particulate Matter (SPM) continue to show values in excess of the permissible limit of 200 micro-gr/m3 for habitations for some mines \. 18 Significant contributing factors to excessive dust levels are coal transport by contractors using overloaded and uncovered trucks, badly maintained public and mine roads, and pay loader operated coal loading at rail sidings\. Only one subsidiary -WCL - has enforced the use of weighing stations to prevent overloading and the use of tarpaulins on trucks transporting coal\. However, the CIL mines are not the only source of dust pollution, and effective improvement of air quality will require a coordinated effort involving the Thermal Power Stations, local industries, non-CIL mines, and proper road maintenance by the relevant state authorities\. The need for such coordination was emphasized in the SAR and has been raised by previous supervision missions, but no progress has been reported by CIL on this\. Tree plantation: A target of plantation of 2\.68 million trees has been achieved, and in addition plantation of trees (and other vegetation including grasses) has been undertaken on reclaimed OB dumps (see Annex 11f and 11i)\. Impacts by mining on wildlife habitats: To assess the validity of concerns raised by external advocacy NGOs, a study was undertaken in 2000 to assess the impact of mining on tiger and elephant habitats around the three project mines under CCL in Bihar\. The study established that (a) the major changes involving a critical reduction in forest cover, wildlife habitats and migration routes took place long before the start of the Bank funded projects, and (b) by 1997, i\.e\. before the start of the CSRP, tiger sightings were no longer reported for the areas of the three Bank supported mines\. On this background, the Bank (and CIL) did not find it necessary to undertake any further activities related to this issue\. A stakeholder - 19 - workshop with participation by local environmental NGOs, the Forest Department, MoEF, CIL, and the Bank to discuss the methodology of the study was held in Delhi in March, 2000\. A second stakeholder workshop to discuss the findings and recommendations of the study was held in Ranchi in October, 2000\. (C) Social Remedial Action Component\. (Satisfactory) This component provided funds for the preparation and implementation of social remedial action programs for three coal mine projects that had received Bank support in the past: Dudhichua Coal Project in NCL, Jharia Coking Coal Project in BCCL, and the Coal Mining Quality Improvement Project which included Gevra mine in SECL\. CIL conducted three tracer studies for Gevra, Dudhichua and Block II in Jharia through independent consultants in 1994 and 1995 to identify below-poverty-line PAPs residing within a 5 kilometer radius of the mines, who required remedial assistance to restore their incomes\. In April 1997, at the request of the Bank, CIL had two of these studies verified (no below-poverty-line PAPs were identified for Block II in Jharia) by two independent NGO consultants\. The studies identified 10 PAPs in Dudhichua, and 87 in Gevra\. CIL has provided jobs with mine contractors to the 10 entitled PAPs in Dudhichua and to 7 in Gevra\. Apart from this, the efforts regarding income restoration by CIL have been largely ineffectual\. However, a census in 1998 by the Madhya Pradesh State authorities showed that all of the PAPs identified in the tracer study for Gevra now had incomes above the poverty line\. 4\.3 Net Present Value/Economic rate of return: In view of the close linkage between CSESMP and CSRP, quantification of the financial and economic benefits of the latter is used for this section and Section 4\.4 as was the case in the SAR for the CSESMP\. The combined CSRP/CSESMP project yielded a positive expected economic NPV of US$593 million, at 16% discount rate\. With the exception of CCL's KD\. Hesalong mine for which benefits could not be quantified, the investments in all the remaining 23 mines included in the project yielded economic rates of return in excess of 16% per year\. 4\.4 Financial rate of return: The overall financial rate of return (FRR) is estimated to be 55%\. The project as a whole yielded positive expected financial NPV of US$397 million, at 16% discount rate\. Four observations are noted: (i) The economic and financial NPVs are estimated to be lower than the expected values estimated at appraisal\. The main reasons are: less than anticipated increase in output and lower investments as a result of the cancellation of the uncommitted portion of the loan; higher then expected operating costs; and lower than anticipated grade of coal extracted in the case of a few mines e\.g\. Parej East\. (ii) Even though the economic and financial NPVs are lower than those estimated at appraisal, NPVs are still positive\. The reasons relate to the nature of the investment project: a large number of the mine sub-projects are characterized by investments with short gestation periods in profitable mines\. (iii) The difference between the economic and financial NPVs has decreased\. This is mainly due to the narrowing of the differential between the economic and the financial prices\. (iv) While investments in the specific coal mines supported under CSRP are financially and economically viable, the long-term sustainability of the Coal sector depends on factors well beyond - 20 - output increases such as:policy; regulatory and institutional reforms; , and a continued growth in the demand for coal in India\. The results of the financial and economic analysis of each of the 24 mine projects; and the underlying assumptions are presented in Annex 3\. 4\.5 Institutional development impact: Overall rating: Modest A World Bank Project Division (WBPD) was established at CIL headquarters to oversee preparation and implementation of the two Bank supported projects, and 25 officers responsible for RAP and IPDP implementation were posted at the project mines\. After CSRP approval, the WBPD was restructured into two separate units to improve project management\. In March 1997, CIL established a new cadre for environmental mitigation staff, and another for staff involved in resettlement and rehabilitation\. The capacity of the WBPD regarding social mitigation activities has remained limited throughout the project period, whereas that on environmental mitigation has been stronger\. The external consultants employed to provide support on socio-economic issues have not had the qualifications required to add value to implementation supervision or to review TA reports or annual RAPs and IPDPs, nor have they contributed to build the capacity of CIL staff in the WBPD\. At the closure of the project, the socio-economic consultant was terminated, and the WBPD has minimal staff with capacity to deal with social mitigation issues\. The organizational structure of CIL, which provides the subsidiaries with a large measure of autonomy vis-à-vis its headquarters, has limited the ability of the WBPD to provide the required direction on implementation of its corporate policies\. This has been particularly noticeable with regard to resettlement and rehabilitation, where implementation of actions agreed between CIL and the Bank to promote income restoration were subsequently left to the discretion of each subsidiary\. The establishment of the two new cadres during the project period did provide the expected organizational framework for an institutionalization of environmental and social mitigation capacity, which could furnish the basis for a utilization of lessons learned in project and non-project mines\. Both of the two new cadres encountered problems in attracting staff, more so the R&R cadre compared to the environmental cadre\. Few of the officers posted to the cadres have opted for permanent absorption into the cadre, since they did not view the new cadres as a career option equivalent to that of other cadres in CIL\. The primary reason for this has been, that the new cadres were not established as corporate entities, and that the number of posts at different grade levels was not defined and staffed, so that career prospects within the cadres remained uncertain\. CIL's Institutional Strengthening Action Plan from November 2000 does not resolve this issue\. Without a structure that provides career prospects comparable to the rest of the corporation, the staff that have acquired experience are likely to seek transfers to other branches of CIL, and the capacity established during the project will be dissipated\. Since the closure of the project a separate Environmental cadre has been established and more attention is being paid to these aspects of CIL's activities\. There are no plans to develop a separate R&R cadre and currently officers dealing with such issues are largely drawn from their parent Personnel cadre\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: - 21 - (i) Inspection Panel\. The project came under Inspection Panel investigation following a complaint letter regarding the Parej East mine in CCL from the Chotanagpur Adivasi Sewa Samiti (CASS) dated June 14, 2001\. The concerns in the Request for Inspection dealt exclusively with actions carried out under the project\. The Request alleged violations of Operational Directives 4\.01 on Environmental Assessment, 4\.20 on Indigenous Peoples, 4\.30 on Involuntary Resettlement, and 13\.05 on Project Supervision\. The Request also alleged violations of OPN 11\.03 on Management of Cultural Property in Bank-Financed Projects, and of BP 17\.50 on Disclosure of Operational Information\. A response from Bank Management was provided on July 19, 2002, and additional responses on follow-up questions from the Inspection Panel were provided in April and November 2002\. Progress on the production of the ICR was halted during the period of the investigation\. The final Inspection Panel report was submitted to the Board on November 25, 2002\. The Management Report and Recommendation in response to the Inspection Panel Investigation Report (No\.24000) was distributed on May 6, 2003\. The Inspection Panel's Report together with Management's Report and Recommendation were considered by the Executive Directors at a meeting on July 22, 2003\. Management proposed to continue supervising the project until June 2004\. The supervision effort would focus on economic rehabilitation of PAPs who had suffered a decrease in income, the settlement of claims for PAPs cultivating land under customary tenure, the provision of long term leases for PAP house plots in the resettlement site, and the disbursement of a subsistence allowance to entitled PAPs in Parej East\. (For details see Annex 8)\. (ii) Resettlement and issuing of ID cards were both delayed or incomplete in MCL due to resistance from PAPs, who were involved in court cases regarding the compensation allotted to them\. These PAPs had refused to receive ID cards, which listed their entitlements, since they believed that this would amount to an acceptance of the compensation they were challenging in court, and other PAPs not involved in the court cases had also adopted the same position\. In addition to the incomplete issuing of ID cards, the court cases and PAP resistance also resulted in delays in resettlement\. To cope with such delays, contingency mine plans were developed which meant that mining would bypass the villages resisting resettlement, leaving a 300 m gap between the quarry and the nearest habitation\. 5\.2 Factors generally subject to government control: (i) Submission of disbursement claims: Processing and submission by GOI of claims for reimbursement have been subject to significant delays\. (ii) Long term leases for house plots in resettlement sites: At the CSRP negotiations in July 1997, Government of India (GOI) made a commitment to provide long term leases for house plots in resettlement sites (para 38 in Minutes of CSRP Negotiations)\. However, even at project closure, land titles (Pattas) for house plots in resettlement sites on land acquired under the Coal Bearing Areas Act (CBAA) were not issued to PAPs by GOI\. Similarly, although commitments were made during project implementation, GOI did not issue a lease agreement providing user rights and security of tenure to PAPs involved in the land-based income restoration pilot project under implementation in SECL\. CIL was asked in November 2003 to again lobby the Ministry of Coal and the Law Ministry to seek resolution to this long-standing issue\. (ii) Compensation for land held under customary tenure: At the CSRP negotiations, GOI also made a commitment to ensure compensation for acquisition of land held under customary tenure (para 39 in Minutes of CSRP Negotiations)\. In the Parej East mine in CCL , where PAPs have claimed rights in land 19 held under customary tenure (Ghair Mazurva Khas (GMK) land) , authentication of such claims and - 22 - provision of compensation has been substantially delayed, and was not completed by project closure\. CIL/CCL were asked in November 2003 to further clarify and resolve any outstanding claims by PAFs in Parej East\. Information from CIL/CCL provided to this latest mission indicated that in Borwa Tola (Parej village) 26 cases were refered to the State Authorities\. GMK land has been authenticated and settled in favor of 13 PAFs, covering 27\.21 acres\. Authentication was rejected for 13 PAFs, covering 21\.85 acres\. 8 of these 13 PAFs have filed cases with the State Tribunal\. Compensation for 2 of the 13 PAFs is expected to be completed soon\. Compensation could not be paid to 2 PAFs because they did not turn up in payment camps and in the 1 remaining case there is a dispute over the name on the record\. In Duru (Kasmar) village 15 cases have been referred to the State Authorities\. GMK land has been authenticated and settled in favor of 9 PAFs covering 33\.27 acres\. Compensation for an additional 6 PAFs covering 10\.85 acres is currently under review and is expected to be completed soon\.An area of 28\.52 acres is presently not required for mining and the occupants will therefore not be disturbed\. 5\.3 Factors generally subject to implementing agency control: (i) Implementation\. Although the project became effective in July 1996, implementation began only in earnest towards the end of 1997\. Despite the steady incremental overall implementation progress since then, progress has been uneven across project mines, and CIL's commitment has remained problematic especially with regard to the two key areas of economic rehabilitation of PAPs, and institutional reform to enhance CIL's social management capabilities, despite some progress with environmental management capacity building\. Despite agreements between CIL headquarters and the individual subsidiaries, which linked adequate performance on environmental and social mitigation to continued investment funding from the CSRP loan, the WBPD was only given limited scope for providing the subsidiaries with direction on implementation of CIL's corporate policies\. (ii) Procurement: Across subsidiaries, the status of procurement was considerably behind schedule, due primarily to delays in finalizing plans for domestic effluent treatment plants and overburden dump reclamation activities\. (iii) Disbursement: The disbursement status was poor during most of project implementation\. Two factors that contributed to this have been CIL's late submission of Project/SOE audit reports for 1997 and 1998, which resulted in the suspension of disbursements in April 1999\. CIL submitted both audit reports to the Bank in November, 1999 and the suspension of disbursements was lifted in December 1999\. The second factor has been the procurement delays which continued to hinder disbursements\. (iv) Strengthening of CIL's Social and Environmental Management Capability has been curtailed by four factors: The study that should inform an institutional strengthening action plan was scheduled to start within six months of project effectiveness, but was delayed for about three years\. Terms of reference for the study were agreed in July 1997, but in September 1998, CIL requested revision of the original TOR involving a separation of the TOR for the study and implementation phases\. Selection of a consultant was delayed until February 1999\. Due to CIL's reluctance to issue the work order, the start of work was delayed until March 2000, and the study was completed by October 2000\. Based on the recommendations of the study, an Institutional Strengthening Action Plan was drafted by CIL by November 2000\. However, a dispute regarding interpretation of the consultancy contract and final payment blocked the extension of the contract with the original consultant, and a replacement was only engaged in April 2002\. This late start made it impossible to complete the TA activities related to the action plan by the project closing date \. 20 - 23 - The environmental and social cadres have not provided a viable organizational framework for an institutionalization of environmental and social mitigation capacity, and the Institutional Strengthening Action Plan does not address this issue nor does it provide an alternative organizational model likely to achieve this institutionalization and retain the capacity created during the project\. The continuation of the social mitigation policies is problematical\. The IPDP approach was discontinued at project closure, although elements of it may be revived with the new corporate Community Development Policy currently under discussion\. While RAPs may be used as a planning instrument in new mines, none of the 14 project mines with land acquisition have annual RAPs to deal with resettlement and rehabilitation beyond the project closing date\. The socio-economic consultants contracted to assist the WBPD were too few and did not have the required qualifications\. After project closure, the WBPD has discontinued hiring external socio-economic consultants, and currently has no in-house capacity in this area\. (v) Financial issues: A number of financial issues have slowed down project implementation: (a) whereas the agreed budget period for the annual IPDPs and RAPs was the calendar year, CIL initially approved IPDP and RAP budgets and released funds based on its own budget schedule from April 1 to March 31\. The result was delays in the start-up of activities, often as long as nine months, since approval of budgets by subsidiaries normally took a couple of months, after which the monsoon delayed start-up of construction activities until around October\. (b) Even though CIL increased the financial powers of Chief General Managers (up to Rs\. 200,000) and Project Officers (up to Rs\.100,000) in mid-1998, this strengthening of financial powers was in practice applied only to civil works, and not to other activities such as capacity building and training or community activities in IPDP villages\. The result was delays in the start-up activities and the resultant frustration on the part of the villagers\. (c) Both CCL and SECL experienced delays with regard to payments for work done and bills submitted by VWGs contracted to implement civil works because of the lack of timely flow of funds from subsidiary headquarters to the mines\. (vi) Environmental mitigation activities have often been completed behind schedule due to delays regarding (a) the TA studies intended to inform the mitigation activities, (b) the mitigation plans incorporating recommendations from the TA studies, and (c) bid evaluation and contractor selection\. Thus, delayed finalization of mitigation plans meant, that implementation of workshop and mine effluent treatment plants were completed about eight months late\. Delayed finalization of mitigation plans and lengthy contractor selection meant, that sewage treatment plants were completed about 21 months after the original target date\. Delays in the finalization of an acceptable study and an agreed mitigation plan for OB dump reclamation resulted in 9 to 13 months delays in the start-up of implementation\. (vii) Income restoration: Despite the information and consultation undertaken by NGOs and mine staff, entitled PAPs were very reluctant to join the income restoration schemes since they were skeptical regarding the commitment and ability of the mines to provide sustainable alternatives to jobs in the mines, and at the same time believed that their participation would jeopardize future prospects of getting a mine job\. CIL's implementation of income restoration through self-employment did not allay this skepticism, since the assistance for self-employment has not been consistently implemented as an integrated package (comprising skills training, investment support, and market linkages) in all project mines or for all the different types of skills training provided\. (viii) Land-based income generation: The agreement during the midterm review mission in - 24 - February/March 1999, that CIL would engage consultants to develop approaches for five pilot projects for land based income generation, constituted a positive step towards enhancing CIL's capacity to deal with economic rehabilitation of PAPs\. However, CIL's decision, as communicated in its letter of December 10, 1999, that pilot projects would only be started in SECL and MCL represented a first retraction of the original commitment\. Eventually, only one pilot project was started in SECL in July 2000\. While this pilot project represents a significant step towards exploring a potentially promising alternative option for economic rehabilitation of PAPs, the reduction in the number of pilots from five to one and the delayed start-up of the pilot have limited the usefulness of the initiative and excluded the possibility of generating lessons regarding its replicability within the project period\. 5\.4 Costs and financing: The total cost of the project was US$ 52\.51 million compared with the SAR estimate of US$84\.0 million\. The lower cost was due to the devaluation of Indian Rupees against US$, reduction in the volume of OB dump work, and a mathematical error in the SAR category for technical assistance\. There was also a reduction to the total project cost of approx\. $0\.9 million, resulting from a more realistic assessment of the cost of land acquisition\. Likewise, there was reduction in the actual award of contracts on technical assistance\. 6\. Sustainability 6\.1 Rationale for sustainability rating: The assessment of project sustainability below is based on the overall project status by the project closing date\. Since CIL's corporate structure provides its subsidiaries with a large measure of autonomy vis-à-vis its corporate headquarters, an assessment of the sustainability of different project components will have to be done at the corporate level and also, where relevant, at the level of the subsidiaries\. Capacity Building Component This component comprised different technical studies and TA linked to specific sub-components and included a study on Strengthening of CIL's Social and Environmental Management Capability to enhance CIL's institutional effectiveness in these areas\. As described above, initiation of the study and contracting of a consultant to provide the TA for implementation of CIL's Institutional Strengthening Action Plan was seriously delayed\. Moreover, the WBPD at CIL headquarters lacked the required capacity on social mitigation to guide the TA consultant, and provide support and supervision for staff at the subsidiary and mine level\. CIL has at present no defined institutional structure for officers working on social issues with clear staff roles, responsibilities, incentives and career prospects\. This lack of capacity and institutional framework renders problematical the enhancement of CIL's capacity to deal more effectively with social issues in a sustainable manner\. Since the end of the project period a separate cadre for staff dealing with Environmental issues has been established\. The absence of a defined guiding and oversight role for the WBPD vis-à-vis the subsidiaries and the very different social and political contexts in the different States has resulted in different strategies for individual subsidiaries with different implications regarding the sustainability of the environmental and social mitigation capacity established under the CSESMP\. As shown in the table below, the planned or actual application of lessons learned by different subsidiaries involve almost exclusively environmental mitigation activities\. The commitment to use lessons learned regarding social mitigation is low, and capacity has decreased since the contracts with the facilitating NGOs have been terminated at project closure\. - 25 - Non-CSE Non-CS Applicati SMP ESMP on of mines mines lessons learned (number of mines) Existing Planned Tot Mine Worksho Sewage OB RAPs IPDPs mines new al effluent p effluent treatment dump mines treatment treatment plants recla-m plants plants ation CCL 26 0 26 0 1 0 0 0 0 MCL 8 3 11 11 11 3 11 3 0 NCL 8 3 11 6 6 7 2 0 0 (integra- (integra- ted ted plants) plants) SECL 12 0 12 0 1 0 0 0 0 WCL 24 1 25 19 17 1 22 4 0 Total 78 7 85 30+6 30+6 11 35 7 0 The ICR mission's assessment of current capacity and the likelihood of this capacity being maintained or strengthened under existing conditions is provided below\. The most recent supervision mission of November 2003 finds no reason for changing this categorization\. NCL MCL CCL SECL WCL Environmenta Capacity Strong Medium Medium Strong Strong l Sustainabilit Highly Likely21 Likely Unlikely Likely Highly Likely22 y Social Capacity Weak Weak Weak Weak Medium Sustainabilit Unlikely Unlikely Unlikely Unlikely Likely y Investment Component On the investment side, CIL has achieved positive results with regard to the implementation of Environmental Action Plans and Indigenous Peoples Development Plans, whereas implementation of Resettlement Action Plans has been inadequate and may be incomplete\. The results of the analysis of - 26 - income restoration to be completed by June 2004 will determine whether this has been completed\. Sustainability of the different investment components vary both with regard to the components themselves, and for specific components in different subsidiaries\. With some variation across the subsidiaries, the different environmental mitigation sub-components are likely to be sustainable, as are most of the assets and self-help groups established through the IPDPs, whereas the resettlement site infrastructure, which is viewed by the PAPs as a CIL responsibility, and as a state responsibility by CIL, is already deteriorating\. In the context provided by overall economic growth, it is likely that the assistance from CIL for income restoration, albeit limited in scope, will be sustainable, as will that achieved independently of CIL by many PAPs\. The sustainability of the corporate policies, on which the investment activities have been based vary\. While the sustainability of the Environmental Policy appear likely, since it is recognized as a necessary means to achieve compliance with Indian environmental regulations, implementation of the two social mitigation policies is unlikely to be sustainable\. Without the commitment to develop a well defined staff structure at both the corporate and subsidiary level, and without the capacity at the headquarter level to provide quality training and supervision, the sustainability of CIL's R&R Policy as an instrument for adequate planning and implementation of RAPs seems unlikely\. Moreover, none of the 14 mines with RAPs have any follow-up planning in place to continue the annual RAPs implemented during the project period, and there are no plans to continue to use the electronic PAP database for monitoring of RAP implementation\. Sustainability of the IPDP policy (Community Development Plan) is unlikely in all subsidiaries, since they plan to abandon the community driven development (CDD) approach defined by this policy in favor of the pre-project top-down approach through `periferal development committees'\. CIL's draft Community Development Policy currently under consideration does combine some of the elements of the former IPDP policy but is unlikely to be as effective unless significant additional human resources are applied to its implementation\. Social Remedial Action Component An action plan was agreed between CIL and the Bank in June, 1997, regarding remedial income restoration assistance for below-poverty-line PAPs affected under previous Bank supported projects in Gevra, SECL, and Dudhichua, NCL\. Its implementation provided employment for the limited caseload in Dudhichua and for part of that in Gevra\. Since a census in 1998 by the Madhya Pradesh State authorities showed that all of the PAPs identified in the original tracer study for Gevra now had incomes above the poverty line, the component is likely to be sustainable\. Overall project sustainability Unlikely\. Despite the progress that has taken place particularly with regard to environmental mitigation, overall sustainability with regard to project outputs, policies and instruments (IPDPs, RAPs, and the PAP database), and capacity has not been achieved\. In the absence of a defined institutional structure for social mitigation, a commitment to continue to use the two social mitigation policies and the associated instruments, and capacity at the headquarter level to manage the social implementation dimensions of CIL's Institutional Strengthening Action Plan and provide the required supervision and guidance to staff at the mine and subsidiary levels, the capacity created and lessons learned during the project are unlikely to be sustainable\. 6\.2 Transition arrangement to regular operations: - 27 - Same as in Sec\. 6\.1 7\. Bank and Borrower Performance Bank 7\.1 Lending: Unsatisfactory\. The Bank's performance in the identification, preparation, and appraisal stages of the project was unsatisfactory\. The Bank did take into account the project's consistency with the government's development priorities and the Bank's CAS and had a team with a good skills mix\. The Bank had a consistently good working relationship with the client, Coal India Limited (CIL), during all stages of the project\. During preparation the Bank did not adequately assess the degree of political and social resistance to reforms and relied too much on government and CIL assurances of ability to implement and on their interpretations of ground realities\. The Bank also underestimated the difficulties of shifting the institutional culture of CIL given the complexities of actors and locations that the project was expected to reach\. Greater attention might have been given to securing changes in national legislation governing the transfer and ownership of land and rights governing compensation for those losing access to land held under customary tenure arrangements\. Greater attention might also have been given to securing 'buy in' at higher management levels to the different ways of doing business that the project was being designed to achieve\.With hindsight, the delinking of the Coal Sector Reform Project from the CSESMP created structural impediments to successful implementation that the supervision team had to grapple with throughout implementation\. During preparation and appraisal, the Bank did take into account for the project design the major relevant aspects such as technical, financial, economic, institutional issues relating to procurement and financial management, environmental, and consistency with the Bank's safeguard policies, but it overestimated the ability of CIL and its subsidiaries to build meaningful participatory processes that responded to the needs of diverse population groups and communities\. During appraisal, the Bank also assessed the project's risks and benefits\. Project design might have been strengthened by a comprehensive institutional assessment to identify measures to enhance CIL's environmental and social capacity, greater attention to issues surrounding rights to customary land, closer attention to the issue of long-term leases in houseplots in resettlement sites, the introduction of other economic rehabilitation options besides that of self-employment, and a detailed description of the selected economic rehabilitation measures\. Consultation and participation with a wide variety of stakeholders under the project for both social and environmental mitigation activities was a continuous process, and improved over time\. During the preparation phase consultations were limited and much was left to be worked out during the implementation phase\. With hindsight more attention might have been given to ensuring that the instruments for ensuring stakeholder involvement were in place prior to implementation\. There was some debate within the Bank about the need to advance project preparation quickly and the amount of time required to undertake meaningful consultations\. The participation of stakeholders in decision making processes was novel and experimental, both for the Bank and CIL at that time\. Arrangements for ensuring greater involvement by stakeholders was a theme emphasised by all Bank supervision missions to ensure that benefits reached PAPs and that their interests were taken into account\. At the beginning of implementation, in March 1995, a two day workshop was held in Kolkata, on `Income Restoration and Self Employment Alternatives' which included representatives from the project affected people\. In addition, a number of state government officials and a total of 41 NGOs participated\. Subsequent workshops were organized at the subsidiary level involving representatives from both the PAPs and NGOs\. One of the outcomes of these consultations was that PAPs were able to choose their plot in the resettlement site and the self-employment training - 28 - option which appealed to them\. 7\.2 Supervision: Satisfactory\. The Bank's performance during the implementation of the project was satisfactory\. Over the six years of project implementation, there were 26 supervision missions, with an average of more than four missions per year\. The Bank-Client relationship was cordial and productive\. Supervision teams included specialists in social development, environment, mining engineering, soil mechanics, financial analysis, resettlement and rehabilitation, energy economics, legal, procurement, and Bank operations\. Bank supervision of project implementation often included provision of technical assistance to the client\. Aide-Memoires were presented and discussed at the end of each mission at CIL headquarters in Kolkata, and in Delhi at MoC and DEA\. This alerted both CIL and the government to problems with project execution and suggested remedies in a timely manner\. The Form 590s and PSRs provided a realistic rating of the performance of the project both in terms of achievement of development objectives and project implementation\. The project supervision strived for a realistic assessment of the problems faced by the project, and tried to facilitate solutions that promoted improved implementation, achievement of project outcomes, and compliance with Bank policies\. Whenever delays in implementation occurred, the Bank assisted the client in defining concrete steps and a timetable for putting the program back on track\. External consultants were used for specific aspects of certain project components (see Section 4\.2)\. Over the life of the project, the Bank allocated sufficient resources to undertake the intense supervision required by the scale and complexity of the project's physical and institutional activities\. The resources allocated for project supervision were considerably above the average for the South Asia Region\. To ensure the autonomy of CSESMP supervision in relation to the CSRP, which was managed by the Energy Unit, the Bank placed the responsibility for task management and the associated supervision budget with the Social Development Unit\. There was continuity in membership of the supervision missions over the implementation period and the team displayed considerable professionalism and dedication to the achievement of success under complex and evolving circumstances\. As described above in the sub-section on Monitoring under Section 4\.2(A), from April 1997 till project closure a Project Implementation Supervision and Monitoring Consultant supplemented the supervision by the Bank team\. In addition, A Social and Environmental Review Panel comprising Indian and international experts provided an independent assessment of CIL's policies and performance regarding environmental and social mitigation\. In response to the Inspection Panel investigation and to complete activities identified during the ICR mission, the Bank has committed to continue monitoring of the project until at least June 2004\. The latest supervision mission took place in November 2003\. A further supervision mission is planned for early June 2004\. 7\.3 Overall Bank performance: Unsatisfactory\. Bank performance for Quality of Entry and for Development Outcomes is rated unsatisfactory\. Quality of supervision has been rated satisfactory\. Overall Bank performance is rated unsatisfactory\. Borrower - 29 - 7\.4 Preparation: Unsatisfactory\. Coal India's performance in the preparation of the project was satisfactory in terms of its practical support for project preparation\. However, Coal India did not display an adequate level of commitment to the objectives of the project, as evidenced by reluctance to include in CIL's R&R Policy a description in sufficient detail of economic rehabilitation measures, which could provide a clear guide to effective income restoration during implementation\. 7\.5 Government implementation performance: Unsatisfactory\. The government did not provide enough support for the success of the project\. It did not effect a solution regarding the commitments made during the CSRP negotiations to provide long term leases for house plots in resettlement sites and compensation for land held under customary tenure\. Nor did the government effect a solution to a commitment made during project implementation to establish security of tenure for the PAPs involved in the land based income generation pilot on reclaimed and unused mine land\. 7\.6 Implementing Agency: Unsatisfactory\. CIL's performance has been lacking in several respects\. (a) The staffing of the WBPD has been inadequate to provide the required supervision and guidance of social mitigation implementation at the subsidiary and mine level, maintain and use the PAP database for monitoring and planning of economic rehabilitation, and review consultant reports as well as the annual RAPs and IPDPs\. (b) The establishment of the environmental and social cadres was not followed up, during project implementation, by measures to mainstream these throughout the company\. At the same time, an alternative institutional framework that will ensure the retention of the capacity and lessons learned during the project did not exist at the end of the project period\. Subsequent steps to develop an Environment cadre have gone some way to addressing environmental concerns\. (c) Implementation of both environmental mitigation activities (e\.g\. workshop and mine effluent treatment plants, sewage treatment plants, and OB dump reclamation) and social mitigation activities related to resettlement and rehabilitation have suffered significant delays, as did procurement and disbursement\. (d) Implementation of economic rehabilitation has been uneven across project mines, falling short of the letter and spirit of CIL's R&R Policy\. Agreements reached between CIL and the Bank during implementation to strengthen economic rehabilitation measures have not been consistently executed\. With the cancellation of the main investment project the Bank lost some leverage in persuading CIL to take concerted action or improve its implementation (e) The continuation of the social mitigation policies is problematical as indicated by the abandoning by project closure of the IPDP approach, and the failure to develop RAPs to deal with resettlement and rehabilitation beyond the project period in the 14 project mines with land acquisition\. 7\.7 Overall Borrower performance: Unsatisfactory\. The overall performance of Coal India Limited was unsatisfactory\. 8\. Lessons Learned l The achievement of sustainable change in an organization with limited commitment and the size and complexity of Coal India Ltd\. cannot be expected within the standard project period of five years\. At the project design stage both the Bank and CIL were looking forward to a long term relationship and did not anticipate the eventual cancellation of the main investment loan for the Coal Sector Rehabilitation Project (CSRP)\. While the different subsidiaries agreed to the provisions outlined in schedule 9 of the Loan Agreement, the independence of the different subsidiaries mitigated against the - 30 - development of a strong central authority to implement and supervise changes\. In future agreements should be made directly with the implementing agencies, not simply with their parent holding companies\. l Mitigation activities that are implemented to establish compliance with national laws, and which are monitored by state agencies (such as those relating to environmental mitigation) have a higher likelihood of success than mitigation activities that are not subject to similar compliance requirements\. The Bank should be actively involved in improving the policy framework in key borrower countries\. l The planning and targets for organizational change need to be informed by a comprehensive and realistic institutional assessment undertaken as part of project preparation, which includes analysis of decision making (on planning, staffing, and release of funds), flows of information, incentives, and staff promotion criteria and avenues\. A more deliberate phasing of activities and more systematic learning from those activities as the project progresses should be built into project design\. l Issues requiring decisions by ministries other than those responsible for project implementation (e\.g\. the Law Ministry regarding decisions on security of tenure for plots in resettlement sites and mine land allocated for land based income generation) should be made conditions of appraisal, and not left to be resolved during project implementation\. l Safeguard policy frameworks agreed with the borrower need to be specific and detailed on the obligations of the Borrower regarding assistance and entitlements\. Determination of Borrower obligations cannot be left to decisions during project implementation\. Thus, CIL's R&R Policy would have benefited from more detailed description of the entitlements of PAPs for self-employment (i\.e\. effective self-employment assistance cannot consist only of skills training, but need to include investment assistance, and assistance to establish market linkages)\. l Effective income restoration for PAPs with a background as small farmers or landless laborers cannot be achieved by using as the primary instrument, assistance for self-employment as artisans, small businessmen and other non-land based activities\. In the case of the CSESMP, other instruments (besides the provision of mine jobs to land losers above a certain threshold) were required, and the success of the piloting of land based income generation on unused and reclaimed mine land provides one model for an alternative instrument\. The resettlement policy framework should offer as many options for income restoration as are feasible in a given context\. l Alternative resettlement options, which provided PAPs with a choice between a plot in a resettlement site and a cash grant enabling resettlement in a location selected by the PAPs, were introduced during project implementation, and have had a positive impact on overcoming PAP resistance to resettlement\. Such options should be part of the entitlements provided by a Resettlement Policy Framework at project design and should include as many options for income restoration as are feasible in a given context\. l Community development activities such as the IPDPs need to incorporate a clear time-bound exit strategy for external support, which enables an assessment of the performance of organizational arrangements to promote sustainability (e\.g\. collection of funds for maintenance of joint assets, management of joint assets by village working groups or transfer of assets to Panchayats, viability of self-help groups) at a stage, which still leaves time during the project period for follow-up actions where problems exist\. - 31 - l Effective improvement of air quality in a context with several polluting actors cannot be achieved solely by dust suppression measures implemented by the CIL mines, but will require a coordinated effort involving the Thermal Power Stations, local industries, non-CIL mines, together with proper road maintenance by the relevant state authorities\. l Clearer parameters at the outset for commissioned studies might have resulted in fewer delays in procurement, particularly for the effluent treatment study and the overburden dump study the results of which were initially rejected by respectively Coal India Ltd\. and the Bank\. l The separation of environmental and social issues from the main investment loan reduced the leverage that the Bank was able to exert over CIL to take action to change policy or improve implementation, particularly following the cancellation of the main investment loan\. In future, managing the safeguard risks of an investment should not be separated from the investments causing those risks; agreements should be made directly with the implementing agencies, not simply their parent holding companies\. l The development of an environmental awareness and of an environmental cadre in Coal India Ltd\., was easier than the development of a social cadre\. Attention to social issues requires a gradual evolutionary approach aligned more generally to shifts in overall institutional culture and future operations might wish to combine general training and capacity development in social issues for all senior management with the development of a particular cadre\. Care should be taken to ensure that such a cadre is offered the same sorts of career opportunities as others in the company\. l For future operations of this nature, the use of an external monitoring and review panel should be factored into investment lending\. This should be an integral part of country-wide safeguard capacity building and reflected in general policies and principles dealing with extractive industries\. l Project implementation units need to be strengthened, in particular with regard to skills required for the implementation of environmental and social action programs; Project Affected People (PAPs) must be informed about a project as soon as it is contemplated\. Staff trained in community relations need to keep the affected people fully informed about a project and ensure full participation of all socio-economic strata of affected communities; if resettlement is involved, the process of consultation with regard to rehabilitation options and the choice of resettlement sites needs to be substantially completed before start-up of a project; and environmental management needs to be built into the design of the coal mine (e\.g\. plans for backfilling of overburden and reclamation of land)\. 9\. Partner Comments (a) Borrower/implementing agency: Coal India's comments (i) Assessment of the Borrower: Coal India, through implementation of CSESMP, was able to create an organization in a structured manner, capable of taking up mitigation measures of the environmental and social impacts arising out of coal mining activities\. It is now in a position to implement the environmental laws of the country in a better manner\. The R&R issues are also being taken care of in a better manner\. Monitoring of environmental parameters in a standardized manner has been extended to the mines beyond CSESMP project mines\. Based on the experience in the CSESMP mines, CIL is now in a better position to extend similar activities to other mines\. Overall supervision of implementation and monitoring of environmental and social activities has also improved\. - 32 - (ii) Operational Experience: Overall implementation progress was initially slow and uneven and CIL's commitment remained problematic especially with regard to key areas of economic rehabilitation of PAPs, and institutional reform to enhance CIL's environmental and social management capabilities due to lack of experience in the field of social management\. Procedural delay in engaging facilitating NGOs also contributed to slow progress of the project at the initial stage\. Significant progress throughout 25 project mines began only in the first half of 2000\. Since then, CIL has demonstrated increasing commitment regarding both environmental and social mitigation and there was noticeable implementation progress thereafter\. Ranking the old external OB dumps, on the basis of hazard and risk involved and then formulating reclamation action plans for their safety and stability on a large scale, has been a new experience for Coal India\. While implementing the RAPs, in connection with resettlement and economic rehabilitation issues of the PAPs, Coal India encountered a lot of rough weather in the beginning\. It was a unique experience to identify training trades for the PAPs, who are basically tribal and/or depend solely on agriculture\. Further, organizing self-employment schemes for the PAPs was also a difficult task in the beginning\. The on-going land based income generating scheme taken up by Coal India in SECL on a pilot basis is a novel idea for economic rehabilitation of the PAPs, who are primarily familiar with agriculture\. Similarly, although Coal India has experience in doing Community Development activities, IPDP in the form it has been included in the CSESMP, is a new experience\. The response from the villagers and facilitation by the NGOs equipped Coal India with a unique experience\. Implementation of IPDPs has caused less interruption of the mining activities by the people around than normally experienced\. (iii) Project sustainability: The project was implemented successfully\. The sustainability of the system installed can be assessed from a number of observations: Social: The processes associated with the involvement of local communities were new and untested for both CIL and the Bank\. Therefore it took substantial time in the start up\. But subsequently, with the regular interaction with the local communities, it has taken proper shape\.The IPDP activities taken up in the villages are being pursued by the village working groups and the shelf-help groups in the IPDP villages even after the closure of the CSESMP\. This concept is being extended to other mines of WCL\. RAPs are being prepared for the new mines in compliance of the R&R policy of the company\. Facilitating NGOs are being engaged in subsidiaries for mitigation measures\. Environment: Environmental monitoring is undertaken in a standardized manner with regard to the parameters, frequency of monitoring, and methods of testing in all the mines of Coal India\. The dust suppression arrangements made and effluent treatment plants commissioned in the mines are working satisfactorily, and are being replicated in other mines beyond the ESMP project mines\. The environmental management division set in the company is functioning to carry on the systems established during CSESMP\. The three year action plan for institutional strengthening of Coal India is proving successful in enhancing its strength through training, implementing the Environment Management System (EMS) of ISO 14001, and installation of geographical information systems\. (iv) Lessons Learned: - 33 - 1\. Resettlement and rehabilitation of the PAPs has to be done keeping in view the customs, habits and culture of the people\. The resettlement sites need to be identified with participation of the PAPs\. It has been found that PAPs are more interested in getting the lump sum monetary compensation payment in lieu of plots in the resettlement sites\. 2\. It is necessary to have a permanent strength of personnel to deal with the environmental and social mitigation measures\. For inducing people to remain in this category of activities, some attraction is required to be generated in the form of career development\. 3\. Technical assistance greatly helped in formulating the action plans, particularly the involvement of a soil technologist in the area of OB dump reclamation, and of NGOs in case of implementation of RAPs and IPDPs\. 4\. Transparency regarding the mining project construction to the PAPs is very much necessary for getting full cooperation for physical acquisition of legally acquired land\. 5\. The PAPs dealt with in the project were mainly agricultural workers and mostly tribal\. To train them in other trades and then develop entrepreneurship to make them capable of self- earning was a tough job, particularly when they always dream of a comparatively high salaried mine job\. Thus, it was not possible to address the vast and complicated issues on social mitigation with complete success in the 25 geographically scattered open cast coal mines in such a short effective project period of three years time\. However, it was a very good objective which was started in a planned manner\. 6\. While organizing training for the PAPs on skill development, the trainee PAPs should be prioritized, so that only people interested in potential self employment are trained and not the people who are interested only for the stipend during the training days\. 7\. Success of self-employment schemes highly depends on arranging seed money for the people from banks, government schemes, etc\. 8\. Land based income generation schemes for the PAPs has huge scope in use of the reclaimed mine lands and utilization of the effluent from the sewage treatment plants for irrigation\. 9\. Community driven development program under IPDP is very useful and its sustainability depends on handing over the assets for operation and maintenance under proper supervision of the Panchayats\. 10\. Certain aspects like mine closure planning, and Social Impact Assessment should be properly built in the Environment Management Plan itself, including the cost estimate\. 11\. Creation of external OB dumps should be restricted to minimum as far as possible, and only during initial phase of box cutting in the opencast mines\. Then onwards, only back filling of over burden should be practiced for concurrent land reclamation\. A thought is required to be given in the EMP regarding the land use plan of the reclaimed land with further improvement for land based income generation activities\. (v) Evaluation of the Bank: The Bank rendered highly professional and competent advice and assistance from time to time in implementation of the project\. The Bank missions visited all the project mines in the subsidiaries adequate number of times to review the progress of implementation and gave necessary advice to address the weak areas\. During each visit, the World Bank officials held detailed discussions with the consultants and the staff at corporate, area and project mine levels\. Their suggestions and guidance during deliberation on mitigation of the environmental and specially the complex issues on social aspect helped the project achieve the objective largely\. Assistance of the Bank in helping Coal India to develop an organizational set up for environmental and social mitigation, and firming up different policies, and thus enhancing the capability of the company in dealing with the management of environmental and social issues, is highly appreciated\. The frequency of the Bank's supervision mission visit was quite high (average four per year)\. Beside Bank mission visit there were visits of (i) Supervision and Monitoring consultant and (ii) Social and Environment review panel\. High frequency of such visits affects the normal progress of activities, as gestation time for implementation as per supervision advice is very less\. - 34 - At times the approach of the Bank was bureaucratic in nature, lacking proper appreciation of the ground realities\. The difficulty in achieving the targeted income restoration figure on the background of Indian culture and habits needs to be understood and appreciated in a comprehensive manner\. (b) Cofinanciers: (c) Other partners (NGOs/private sector): 10\. Additional Information A\. Coal India obligations beyond the project closing date Not all CIL's commitments under the project were completed by project closure, and completion of these remaining activities beyond the project closing date constitutes an obligation on the part of Coal India Ltd\. The remaining activities are listed as follows: Complete economic rehabilitation activities to achieve income restoration for project affected persons (PAPs) found to have suffered an income decline; Complete delivery of compensation and relocation entitlements to all PAPs resettled under the project; Settle claims regarding land under customary tenure in Parej East mine, CCL; Finalize the PAP database as an instrument for analysis of income restoration; Provide PAPs in resettlement sites with long term leases to their house plots; Complete implementation of the Institutional Strengthening Action Plan\. While the list above identifies these obligations, a final determination of the precise requirements for completion of particular activities (e\.g\. economic rehabilitation, and delivery of resettlement entitlements) is dependent on additional information\. Subsequent supervision efforts following the closure of the project and Management's response to the Inspection Panel Report are aimed at ensuring the delivery of these commitments B\. ICR Team: Asger Christensen (Task Team Leader) Mohammad Hasan (Senior Social Development Specialist) Samanta Forusz (Social Development Specialist) Sati Achath (Consultant) C\. Endnotes 1\. These policies are the Resettlement and Rehabilitation Policy of Coal India, Coal India's Community Development Plan (for planning and implementation of Indigenous Peoples Development Plans), and Coal India's Corporate Environmental Policy\. 2\. Northern Coalfields Ltd (NCL) in Madhya Pradesh and Uttar Pradesh, Mahanadi Coalfields Ltd (MCL) in Orissa, Western Coalfields Ltd (WCL) in Maharashtra, Southeastern Coalfields Ltd (SECL) in Chattisgarh, and Central Coalfields Ltd (CCL) in Jharkhand\. 3\. The three mines were Dudhichua Coal Project in NCL, Jharia Coking Coal Project in Bharat Coking Coal Ltd, and the Coal Mining Quality Improvement Project which included Gevra mine in SECL\. 4\. CIL's Community Development Plan\. 5\. The study concluded that there was no significant impact on the ground water table by coal mining in NCL\. - 35 - 6\. The Review Panel has submitted four reports as follows: (1) October/November 1997; (2) June/July 1998; (3) May and August 1999, and (4) May 2000 7\. This grant is calculated as the average value of the resettlement plot, the resettlement site infrastructure, plus the transition allowance (comprising a `shifting allowance' of Rs\. 2,000 and a `lump sum grant' of Rs\. 5,000)\. 8\. CCL has no plan in place as a follow-up to the annual RAPs used during the project period regarding the resettlement envisaged by March 2003 9\. The threshold is two acres of irrigated land or three acres of non-irrigated land\. 10\. The SAR figure was 10,214\. The current figure represents the total number of PAPs entitled for income restoration assistance, minus those that have died since the 1997 PAP census (276) 11\. SAR, Annex 2\.4: Resettlement and Rehabilitation Policy of Coal India, p 59, para 2\. 12\. Excludes EPAPs who have died or migrated\.13\. Reported income was considered any amount which is equal to or greater than zero\.14\. After adjusting for Inflation\. 15\. All figures have been adjusted for inflation\. 16\. All figures have been adjusted for inflation\. 17\. The committee consisted of the CMDs of SECL, MCL and NCL with the CGM, CSESMP as member secretary\. 18\. Thus, monitoring data from the period between October 2000 to April 2001 show excess dust levels in 30 colonies and villages in 11 mines, data from October to December 2001 show 15 habitations with excess levels in 8 mines, and data from May to July 2002 show excess levels in 21 habitations in 11 mines\. The problem of excessive dust levels is found most consistently in all the three project mines in CCL, and in some MCL and WCL mines\. 19\. Ghair Mazurwa Khas (GMK) land was previously held by large landowners (zamindars), but was after independence either transferred to the cultivators or to the state\. 20\. A total of 25 environmental auditors, 100 environmental officers, and 75 social mitigation officers (resettlement and rehabilitation) will be trained under the TA\. Manuals and training modules will be developed for (i) Environmental management (ii) land acquisition and resettlement, (iii) mine planning; (iv) mine closure, (v) social impact assessments, (vi) Geographical Information System, and (vii) environmental performance auditing and evaluation\. It has been agreed between CIL and the Bank, that the components of the TA implemented before the project closing date would be funded under the CSESMP Credit, and TA activities extending beyond the closing date by CIL\. 21\. NCL has obtained an ISO 14001 certification on environmental management, and its environmental mitigation activities are being monitored by the State Pollution Control Board\. 22\. WCL has created an environmental cell at the subsidiary headquarters to coordinate and monitor planning of environmental mitigation activities in all mines under the subsidiary\. A budget is allocated for environmental mitigation, and a handbook on environmental management has been prepared\. WCL is also seeking an ISO 14001 certification for the Padmapur and Durgapur mines\. - 36 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate (a) Adoption of corporate policy in CIL for Continuation of policies in project mines and Environmental Policy likely to be continued in environmental and social aspects\. replication in non-project mines both project and non-project mines\. Community Development Plan (= IPDP Policy) will be discontinued\. Plans to apply the R&R Policy in 7 new non-project mines, but not in project mines\. Creation of separate environmental and Fully staffed and mainstreamed CD/R&R and environmental cadres in CIL\. environmental and social mitigation cadres Only the Environment cadre has been established as a corporate entity, the number of posts at different grade levels are not defined or fully staffed, and career prospects within the cadres remain uncertain\. Training of mines managers and CD/R&R Mine, subsidiary, and HQ level staff fully Despite repeated training, limited capacity at staff trained in regarding CIL policies, income mine and subsidiary levels, and absence of restoration, participation, and computerized capacity at HQ level to manage social information management (PAP database) dimensions of CIL's Inst\. Strengthening Action Plan and provide guidance to field staff\. Villages participating in IPDPs Revised target of 172 villages and hamlets 172 villages and hamlets assisted (merging of hamlets for planning and implementation purposes)\. PAPs incomes restored Improvement or at least restoration of Analysis of income restoration status ongoing pre-project incomes for PAPs Installation of dust suppression system\. Dust levels within permissible limits in all 25 Revised dust suppression plan implemented, project mines but dust levels still excessive in 21 habitations in 11 mines Construction of catch and garland drains, Completed as part of mine and integrated 100% drains to catch mine water, and settling effluent treatment plants ponds\. Construction of sewage treatment plants 21 operational sewage treatment plants 100% completion between Sept\. 2000 and March 2001 Reshaping overburden dumps for stability Completion of civil works and plantation Civil works and plantation activities on 75 OB and safety\. activities by 03/31/2001 dumps completed by 06/30/2002 Tree plantation for noise and dust 2\.68 million trees planted 100% suppression\. Vegetation of overburden dumps and Plantation on 75 OB dumps scheduled for Plantation undertaken on 75 reclaimed OB mined-out areas\. reclamation dumps of 2\.6 million trees Consultation with representatives of Continued consultation with project affected project-affected people, local communities people by CD/R&R officers on regular basis\. and NGOs No longer systematized as in processes for annual RAPs and IPDPs\. Consultations with local and international NGOs on issues raised by these\. Implementation of RAPs and IPDPs\. IPDPs implemented in 172 target villages in IPDPs implemented in 172 target villages\. 25 mines\. RAPs implemented in 14 mines RAP implementation requires verification on ensuring provision of resettlement provision of resettlement entitlements and entitlements and assistance for income outcome of income restoration restoration\. (i) Verification of the list of project-affected Continued updating of list of entitled PAPs in Updating of list of entitled PAPs in PAP people\. PAP database database (March 02: 9,938 (j) Photo ID cards issued in 14 mines\. All interested entitled PAPs ID cards issued to 8,376 PAPs Development of income-restoration strategy Self-employment assistance delivered as a Uneven delivery of assistance for package comprising training and assistance self-employment as integrated package\. for investments and market linkages\. Land Land based income generation piloted in one based income generation tested as mine supplementary instrument in 5 mines - 37 - Training and support for income restoration\. Effective self-employment assistance At project closure, of 9,938 entitled PAPs, provided as a package to interested PAPs 2,693 PAPs received mine jobs, 450 have who are not entitled to a mine job jobs with contractors, and 1,006 have incomes deriving from self-employment assistance Development of community infrastructure 172 villages and hamlets provided with IPDP assistance including community 829 community infrastructure activities infrastructure completed (average of 4\.8 activities per IPDP village (k) Carrying out of information campaign in 25 mines\. Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Installation of dust suppression system\. 100% 100% Construction of sewage treatment plants 100% completion of 21 STPs 100% completion of 21 STPs (STP) Reshaping overburden dumps for stability 100% completion of civil works and plantation 100% completion of civil works and plantation and safety\. activities on 75 OB dumps activities on 75 OB dumps Tree plantation for noise and dust 2\.68 million trees planted 100% suppression\. Vegetation of overburden dumps and mined Plantation of 2\.6 million trees on 75 OB 100% out areas dumps Consultation with representatives of project Conducted with PAPs for annual RAPs and affected people, local communities and IPDPs, and with NGOs on issues raised by NGOs these 1End of project - 38 - Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Land 2\.70 0\.22 8\.21 Civil Works 41\.70 35\.63 85\.45 Equipment,Materials and Vehicles 13\.00 9\.64 74\.16 Technical Assistance 6\.60 4\.43 67\.1 Miscellaneous 9\.60 2\.58 26\.91 Total Baseline Cost 73\.60 52\.50 Physical Contingencies 6\.80 Price Contingencies 3\.60 Total Project Costs 84\.00 52\.50 Total Financing Required 84\.00 52\.50 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 47\.23 1\.40 2\.94 51\.57 (0\.00) (42\.48) (1\.12) (0\.00) (43\.60) 2\. Goods 10\.12 4\.42 0\.33 0\.00 14\.87 (8\.02) (3\.50) (0\.27) (0\.00) (11\.79) 3\. Services 0\.00 0\.00 7\.34 0\.00 7\.34 (0\.00) (0\.00) (7\.34) (0\.00) (7\.34) 4\. Miscellaneous 0\.00 0\.00 0\.00 9\.95 9\.95 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 5\. Miscellaneous 0\.00 0\.00 0\.27 0\.00 0\.27 (0\.00) (0\.00) (0\.27) (0\.00) (0\.27) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 10\.12 51\.65 9\.34 12\.89 84\.00 (8\.02) (45\.98) (9\.00) (0\.00) (63\.00) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 0\.00 23\.39 11\.02 1\.21 35\.62 (0\.00) (20\.86) (7\.26) (0\.00) (28\.12) 2\. Goods 6\.85 1\.88 0\.00 0\.95 9\.68 (5\.60) (1\.75) (0\.00) (0\.00) (7\.34) 3\. Services 0\.82 2\.67 0\.00 0\.93 4\.42 (0\.00) (1\.03) (0\.00) (0\.00) (1\.03) - 39 - 4\. Miscellaneous 0\.00 0\.00 0\.00 2\.78 2\.78 (0\.00) (0\.00) (0\.00) (2\.78) (2\.78) 5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 7\.67 27\.94 11\.02 5\.87 52\.50 (5\.60) (23\.64) (7\.26) (2\.78) (39\.27) 1/Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Land 2\.94 0\.22 7\.5 Civil Works 43\.60 28\.12 7\.53 64\.5 Equipment & Materials 11\.52 7\.51 1\.81 65\.2 Vehicles 0\.27 0\.28 0\.04 103\.7 Technical Assistance: 6\.60 3\.36 1\.07 50\.9 Miscellaneous: 9\.60 2\.58 26\.9 - 40 - Annex 3\. Economic Costs and Benefits Economic and Financial Analysis of CSRP Present value of flows (USD million) Economic Analysis Financial Analysis Appraisal Latest Appraisal Latest Total (For 23 projects) Estimates Estimates Cost (PV) 1,129\.97 658\.27 1351\.57 712\.19 Benefit (PV) 2,692\.18 1,252\.73 2,260\.54 1,109\.48 Net Benefit (NVP) 1,562\.21 593\.46 908\.97 397\.28 Internal Rate of 57\.61% 55\.57% Return (IRR) Source: Coal India Limited Economic and Financial Analysis of Coal Sector Rehabilitation Project ( 24 Sub Projects) (US$ million) Company/mine Economic Analysis Financial Analysis Appraisal Latest Estimates Appraisal Latest Estimates NPV at 16% NPV at 16% NPV at 16% NPV at 16% CCL KD Hesalong 87\.7 n/a 36\.2 n/a Parej East 65\.58 19\.10 32\.6 6\.24 Rajrappa 116\.05 6\.72 81\.2 1\.26 MCL Ananta 64\.2 36\.82 49\.63 31\.72 Belpahar 9\.9 3\.66 6\.94 2\.40 Bharatpur 104\.6 63\.6 80\.65 57\.65 Jagannath 31\.8 10\.85 27\.05 9\.64 Lakhanpur 81\.8 23\.36 52\.04 19\.16 Samleswari 41\.5 11\.45 28\.90 8\.31 NCL Bina 28\.1 4\.91 7\.60 2\.35 Dudhichua 166\.8 50\.41 65\.90 7\.67 Jayant 102\.6 57\.41 41\.20 22\.86 Jhingurda 470\. 16\.22 23\.20 10\.77 Nigahi 122\.1 25\.31 43\.40 3\.91 SECL Dhanpuri 5\.70 1\.07 2\.10 1\.31 Dipka 204\.70 120\.58 107\.10 103\.21 Gevra 51\.70 31\.33 34\.50 26\.16 Kusmunda 70\.05 41\.72 45\.50 31\.48 Manikpur 13\.80 9\.67 8\.30 8\.06 - 41 - WCL Durgapur 50\.20 26\.26 44\.00 22\.22 Niljai 51\.20 8\.44 34\.10 4\.36 Padmapur 38\.10 8\.55 33\.60 6\.46 Sasti 28\.60 9\.33 17\.10 5\.27 Umrer 65\.90 6\.70 41\.80 4\.81 Total 1,649\.95 593\.47 944\.97 397\.28 Source : Coal India Ltd\. Assumptions underlying the financial and economic analysis Financial analysis Economic analysis Capital cost SAR SAR The capital cost is based on Coal India's and the mission's The financial costs were converted to economic costs by netting out estimates of cost components in sub-projects\. The capital costs duties and taxes, expressing the input content at c\.i\.f\. prices and include the investments envisaged in Coal Sector Environmental adjusting local cost components by applying the standard conversion And Social Mitigation Projects\. The cost estimates of equipment factor of 0\.8\. are based on the standard price list published by CMPDI every year\. This list is a compilation of information based on the latest purchases by Coal India\. However, in cases where no such purchases were made, budgeted prices from the suppliers formed ICR the basis of estimates\. The base month for the estimate is July The financial costs were converted to economic costs by netting out 1996\. The capital cost of individual sub-projects includes duties and taxes, expressing the input content at c\.i\.f\. prices and applicable taxes and duties and 10% physical contingency\. All adjusting local cost components by applying the standard conversion costs have been converted to their equivalent in 1996 US dollars\. factor of 0\.9\. ICR The capital costs from the beginning of the project in 1998 till March 2001 are based on actual expenditure incurred\. The investment beyond March 2001 is estimated either on the basis of actual contract prices or the current standard price list published by CMPDI\. The capital costs also include the investments envisaged in Coal Sector Environmental And Social Mitigation Projects\. The estimates of capital cost for individual subproject include applicable taxes and duties\. All costs have been converted to their equivalent in 2002 US Dollars\. Operating cost SAR SAR The operating costs are based on Coal India's estimates of the The cost was derived from the financial cost by excluding operating costs for each subproject\. These have been derived from all taxes and duties and a standard conversion factor of 0\.8 the schedule of additional coal production, overburden removal, was applied to the local cost component\. and deployment of the machines and take into account fixed and variable components of unit operating cost\. The unit operating cost estimates, i\.e\. cost/m3 are comparable with mines of similar nature currently in production in Coal India\. For replacement projects, however, the variable cost/incremental operating cost is company specific and are based on actual results of 1995-96\. These costs reflect the variable costs per m3in opencast mines of Coal India\. Interest on working capital is based on historical levels of working capital requirements equivalent to 4 months operating cash expenses\. ICR The operating costs till 2001 are actual and the unit cost estimates for future years are based on the actual cost prevailing in 2001\. Coal production SAR SAR For mines under construction and expansion mines, the expected For mines under construction and expansion mines, the expected increase of coal output was taken as the major benefit from the increase of coal output was taken as the major benefit from the subprojects\. For projects where replacement equipment is subprojects\. For projects where replacement equipment is proposed to proposed to be financed, the likely shortfall in coal output that be financed, the likely shortfall in coal output that would occur if would occur if equipment were not replaced was taken as the equipment were not replaced was taken as the major benefit\. The major benefit\. The assessment of the shortfall in production was assessment of the shortfall in production was based on the recent based on the prevailing average annual productivity of each type average annual productivity of each type of equipment in Coal India\. of equipment in Coal India\. ICR - 42 - ICR The coal production till 2001 is actual\. The estimates of incremental The coal production till 2001 is actual\. The estimates of production beyond 2001 are based on the technical assessment of the incremental production beyond 2001 are based on the technical planned deployment of equipment and the geo-mining characteristics assessment of the planned deployment of equipment and the of the mines\. The methodology adopted for the assessment of geo-mining characteristics of the mines\. The methodology incremental production is the same as the SAR\. adopted for the assessment of incremental production is the same as the SAR\. Coal price SAR SAR Expected revenues are based on ex-mine selling prices authorized Benefits were calculated on the basis of additional coal production, as of March 1997 and additional coal production attributable to valued in two ways\. First, at c\.i\.f\. import prices of coal at selected the investment in the project\. Revenues for Nigahi are based on Indian ports plus inland freight costs to consumers and adjusted for the price negotiated with NTPC\. equivalent heat values, less freight charges for delivery of coal from mine mouth to the same consumers\. Second, on the basis of long-run marginal cost, appropriately adjusted for quality, to reflect consumer's willingness to pay\. With the exception of two coking coal mines (Parej East and Rajrappa) and one non-coking coal mine (Umrer) producing high grade coal, incremental output of all other mines was valued at prices based on the long run marginal cost (LRMC)\. The methodology adapted is consistent with the one applied ICR at appraisal\. Actual selling prices till 2001 have been adopted\. The present ICR coal prices have been used in the estimates of cash inflow for Same as above each sub project Source: Coal India Ltd\. - 43 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 02/22/94 4 MISSION LEADER (1); SOCIALSCIENTIST (I); R&R SPECIALIST (2) 12/01/94 5 MISSION LEADER (1); R&R SPECIALIST (1); MINING ENGINEER (I); COUNTRY OFFICER (I); FINANCIAL ANALYST (I) 06/12/95 3 MISSION LEADER (1); MINING ENGINEER (I); OPERATION ANALYST (I) Appraisal/Negotiation 11/01/95 4 MISSION LEADER (1); SOCIAL SCIENTIST (1); MINING ENGINEER (I); FINANCIAL ANALYST (I) Supervision 08/26/96 9 MISSION LEADER S S (1);MININGENGINEER (I); PROCUREMENT (1); FINANCIALANALYST (I); ENVIRONMENTAL SPECIALIST (1); URBAN RESETTLEMENT SPECIALIST (I); OPRATIONSOFFICER (I); CONSULTANT (2) 02/11/1997 6 PROCUREMENT (1); S S ENVIRONMENTAL SPL\. (1); MISSION LEADER (1); NGO SPECIALIST (1); ANTHROPOLOGIST (2) 03/19/1997 3 SOCIAL DEV\. SPECIALISTS (2) CONSULTANT (I) 05/1/1997 3 SOCIAL DEV\. SPECIALISTS (1) 07/5/1997 ENVIRONMENTAL SPECIALIST (1); ANTHROPOLOGIST (1) 10/03/1997 4 PROCUREMENT (1); TASK U S MANAGER (1); ANTHROPOLOGIST (1); - 44 - PLANNING (1) 11/15/1997 8 PLANNING SPECIALIST(1); PROCUREMENT (1); ANTHROPOLOGY (1); PLANNING (1); TRAINING/ENVIRONMENT (1); SOCIAL DEVELOPMENT (1); COMMUNITY DEVELOPMENT (1); URBAN PLANNER (1) 12/17/1997 8 RECONSTRUCTN\./PLANNING U U (1); PROCUREMENT (1); ANTHROPOLOGY (1); PLANNING (1); TRAINING/ENVIRONMENT (1); SOCIAL DEVELOPMENT (1); COMMUNITY DEVELOPMENT (1); ENVIRONMENT (1) 02/28/1998 3 TEAM LEADER (1); SOCIAL U U DEVELOPMENT (1); ENVIRONMENT (1) 06/07/1998 3 TASK LEADER (1); SOCIAL U S DEVELOPMENT (1); ENVIRONMENT (1) 09/25/1998 5 TASK LEADER (1); SOCIAL S S DEVELOPMENT (2); ENVIRONMENT (1); SOIL SPECIALIST (1) 12/12/1998 2 SOCIAL DEVELOPMENT (2) U U 03/05/1999 5 ANTHROPOLOGIST (1); SOCIAL DEVELOPMENT SPECIALIST (2); (1); ENVIRONMENT (1); OPERATIONS OFFICER (I) 06/07/1999 3 TASK LEADER (1); U S ENVIRONMENTALIST (1); SOC\. DEV\. SPECIALIST (1) 11/21/1999 8 TASK LEADER (1); U U ENVIRONMENTALIST (1); OPERATIONS OFFICER (1); SOC\. DEVEL\. SPECIALIST (2); JBIC REPRESENTATIVE (1); MINING ENGINEER (1); PROCUREMENT SPECIALIST (1) 01/21/00 2 SOCIAL DEV\. SPECIALIST (1) CONSULTANT (I) - 45 - 03/15/2000 8 TASK LEADER (1); U U OPERATIONS OFFICER (1); SOCIAL DEVEL\. OFFICER (1); ENVIRONMENTALIST (1); JBIC CONSULTANT (2); JBIC REPRESENTATIVE (2) 06/15/2000 1 OPERATIONS OFFICER (1) U U 11/01/2000 3 TASK LEADER (1); S S OPERATIONS OFFICER (1); SR\. SOCIAL DEVL\. SPEC\. (1) 03/09/2001 2 TASK LEADER (1); SOC\. S S DEVEL\. SPECIALIST (1) 06/15/2001 4 TASK LEADER (1); S S OPERATIONS OFFICER (1); SR\. SOCIAL SPECIALIST (1); ENVIRONMENTALIST (1) 12/06/2001 2 TEAM LEADER (1); SOCIAL S U DEVELOPMENT SPE (1) ICR 02/15/2002 4 TEAM LEADER (1); OPERATIONS OFFICER (1); SR\. SOCIAL SCIENTIST (1); CONSULTANT (1) (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 19\.1 60\.5 Appraisal/Negotiation 26\.5 104\.0 Supervision 401\.48 1409\.8 ICR 18\.0 75\.0 Total 465\.08 1649\.3 - 46 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Social Safeguard Policies Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 47 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 48 - Annex 7\. List of Supporting Documents 1\. Aide Memoires, Back-to-Office Reports, and Project Status Reports; 2\. Project Progress Reports; 3\. Consultant Study Reports financed under the Project; 4\. Borrower's Evaluation Report dated November 22, 2002; and 5\. Staff Appraisal Report for Coal sector Environmental and Social Mitigation Project, dated April 24, 1996 (Report No\. 15405-IN) - 49 - Additional Annex 8\. Details of Inspection Panel The project came under Inspection Panel investigation following a complaint letter regarding the Parej East mine in CCL from the Chotanagpur Adivasi Sewa Samiti (CASS) dated June 14, 2001\. The concerns in the Request for Inspection dealt exclusively with actions carried out under the project\. The Request alleged violations of Operational Directives 4\.01 on Environmental Assessment, 4\.20 on Indigenous Peoples, 4\.30 on Involuntary Resettlement, and 13\.05 on Project Supervision\. The Request also alleged violations of OPN 11\.03 on Management of Cultural Property in Bank-Financed Projects, and of BP 17\.50 on Disclosure of Operational Information\. A response from Bank Management was provided on July 19, 2002, and additional responses on follow-up questions from the Inspection Panel were provided in April and November 2002\. The final Inspection Panel report was distributed on December 3, 2002\. Management Report and Recommendation in response to the Inspection Panel Investigation Report (No\.24000) was distributed on May 6, 2003\. The Inspection Panel's Report together with Management's Report and Recommendation were considered by the Executive Directors at a meeting on July 22, 2003\. Management proposed to continue supervising the project until June 2004\. The supervision effort focuses on economic rehabilitation of PAFs who had suffered a decrease in income, the settlement of claims for PAPs cultivating land under customary tenure, the provision of long term leases for PAP house plots in the resettlement site, and the disbursement of subsistence allowances in Parej East (CCL)\. (for further details see the Inspection Panel web page: www\.inspectionpanel\.org)\. - 50 - Additional Annex 9\. Borrower's Evaluation Report Coal India's Comments Formulation of policies Environmental Policy: Based on the experience in environmental management, Coal India felt the need to lay down policy guidelines for attaining a sustainable development\. Accordingly an Environmental Policy was formulated in July 1995 to be operative in all the subsidiaries of Coal India\. The Environmental Policy was subsequently reviewed during the mid-term review of the ESMP in 1999\. R&R Policy: Although a specific policy or law/Act on Social Mitigation and R&R issues is yet to be firmed up at the national level, Coal India with the assistance of World Bank experts prepared a corporate R&R policy after reviewing the existing policy in 1995\. The policy has been implemented in the ESMP mines and is in the process of implementation in other mines of the company\. Community Development Plan: Even though CIL already had a community development program for the benefit of the people living in the areas where the coal mines are established, in 1995 a more systematic Community Development Policy was formulated\. The IPDP was a new introduction in the existing Community Development plan with the aim to bring in an institutional framework and strategy for implementation of activities that would help the communities around the mines to improve their living standards\. The villagers were involved in identifying the IPDP activities within the budget allocated, and were also involves in the implementation of the activities and the subsequent operation and maintenance\. Organizational arrangements: A World Bank Project Division (WBPD) was established in 1996 at CIL headquarters to ensure implementation of the Bank supported projects\. Subsequently, the WBPD was restructured into two separate units to deal with CSRP and ESMP, each unit headed by a Chief General Manager (CGM)\. In the ESMP unit, the CGM was assisted by one General Manager (Environment), one General Manager (R&R) and other Environmental and CD/R&R Officers at the corporate level\. Similarly, at subsidiary level World Bank Project Divisions were also organized with one CGM assisted by GM (Env), GM (R&R) and other environment and R&R officers at corporate, Area and mine levels\. CIL introduced in 1999 measures to strengthen the financial powers of the Area and mine management to facilitate timely implementation\. Technical Assistance Technical Assistance consisted of several studies, which were used as a basis for the design of environmental and social mitigation activities, such as: (i) environmental monitoring at all project mines, (ii) improvement of air quality at production sites, mine quarters, and surrounding villages; (iii) reduction of noise levels at production sites, mine quarters, and surrounding villages; (iv) improvement of water quality of through establishment of facilities for treatment of effluent from workshops and mines as well as domestic effluents in sewage treatment plants; (v) monitoring of drinking water quality at mine quarters and in neighboring villages; and (vi) reclamation of 75 OB dumps, use of top soil to promote the growth of vegetation on reclaimed OB dumps, and plantation of 2\.68 million trees and other vegetation including grasses\. RAP Activities - 51 - Resettlement: Based on studies on assessment of resettlement & rehabilitation annual RAPs were prepared from 1998 and onwards with the help of the facilitating NGOs for 14 mines with land acquisition\. Relocation of land oustees was involved in 11 project mines (1 in NCL, 4 in MCL, 4 in SECL and 2 in CCL)\. Out of these, resettlement is completed in 7 mines as targeted in SAR\. In other four mines namely, Bharatpur, Lakhanpur & Belpahar in MCL and Parej East in CCL, relocation as targeted in SAR was not necessary since the mining did not progress as forecast, and fewer than anticipated had to be relocated\. By end of August 2003, 83% of the SAR PAF estimate were relocated, and per the mine expansion plans, 106% of the PAFs were relocated\. Issuing of ID cards: Issuing of ID cards with a specification of individual entitlements is complete except for some of the PAPs in MCL who refused to accept the cards due to on-going court cases regarding compensation\. Total number of ID cards issued in 14 mines were 8,416 (against the SAR estimated figure of 9,260 and EPAPs verified figure of 10,214) excluding the people out migrated, court cases and resistance to be photographed (due to demand for mine jobs)\. Rehabilitation: For economic rehabilitation of the EPAPs, a number of rehabilitation efforts were made\. Besides providing mine job to around 27% and jobs with contractors to 5% of the EPAPs, self-employment training was given to around 17%\. About 58% of the EPAPs trained for self employment have started earning on their own\. Some of the remaining EPAPs are either not interested in taking self employment training and start earning on their own (mostly women folks - housewives), or are old and not interested in earning and instead depend on income of other members of the family\. It has been experienced that it is a very tough job to develop enterpreneureship in the PAPs and to induce them for self-earning\. [lessons learned on this item is given at the end] Land based income generation (LBIG): A pilot project on LBIG was started in SECL in July 2000, where around 60 EPAPs are participating till date\. The scheme included training of the EPAPs, formation of Self Help Groups (SHG), making arrangement for water management and irrigation including soil and water conservation activities, use of green manure on OB dump reclaimed land, and construction of a site office\. The crops produced were paddy/wheat/vegetables, castor and gram, soybean and medicinal plants\. The scheme is proving to be a success in generating earning for the EPAPs\. [lessons learned on this item is given at the end] IPDP activities: IPDPs involving community development assistance were undertaken in 24 mines, and comprised villages not affected by land acquisition and located within a one kilometer radius around the mines\. The target groups under the IPDPs comprised the population of 172 villages\. About a third of the IPDP target group belonged to scheduled tribes who were generally settled in mixed villages among caste Hindus and scheduled caste Hindus\. The IPDPs were aimed at the community as a whole with particular emphasis on the poor and women\. The IPDPs were prepared with active participation of the VWGs and then reviewed by a Community Development Committee (CDC)\. The VWGs were being involved as contractors for the civil works that were taken up under IPDPs\. This, in fact, enhanced the capacity of the villagers to plan and implement community works and generated income during construction without compromising the construction quality\. Besides, this also brought in a sense of ownership of the assets created and help in taking up subsequent O&M of the assets\. [lessons learned on this item is given at the end] Engagement of facilitating NGOs: To help implement the RAPs and IPDPs, 10 facilitating NGOs were engaged in all the subprojects to work shoulder to shoulder along with the Coal India officials who did not have much of exposure on the subject\. [lessons learned on this item is given at the end] - 52 - Training Environmental training: In June 1998, Indian School of Mines (ISM), Dhanbad developed three modules on environmental training, covering 21 programs for providing training to senior management and executive officers\. The participants belonged to environmental as well as other cadres\. Total 218 officers attended the training, which was completed in July 2000\. In the second phase under the capacity building program, training was conducted for 200 executives under the Institutional Strengthening Action Plan (ISAP)\. The outputs of the contract comprised preparation of manuals, training modules, and training which will continue beyond the project closing date\. R&R training: CIL introduced from 1997 a four module training course for its social mitigation staff and for the staff of the facilitating NGOs\. The four training modules were (i) R&R and Community Development policies and implementation issues, (ii) income generation for PAPs, (iii) information management, and (iv) participatory management\. Workshops: Several workshops were conducted, which included a management retreat to discuss the pros and cons of the project; workshops in all the subsidiaries for inter-area interaction and dissemination of knowledge and experience; and on lessons learnt\. Engagement of Supervision Consultant and Environmental & Social Review Panel: A consultant was engaged as Supervision Consultant, for supervising implementation of the project to help support the Bank's supervision missions\. In addition, an expatriate Consultant group in collaboration with an Indian counter part formed a Environment & Social Review Panel to review the total implementation guided by OD 4\.30 and OD 4\.20 for the social aspects and OD 4\.01 for the environmental aspects up to the end of the project\. Cross conditionality linkages between ESMP & CSRP Under the CSRP agreement, the Bank had included a list of cross-conditionalities between CSRP & CSESMP\. All the cross-conditionalities were complied with under CSESMP\. Extension of the project closing date The project's closing date was extended by one year from June 30, 2001 to June 30, 2002 to enable CIL to progress towards the achievement of project outputs and objectives\. During the extended period, the following activities were taken up: (i) implementation of an innovative land based income restoration pilot project at SECL (Dipka OCP); (ii) relocation of the balance PAPs based on land acquired for mine expansion; (iii) implementation of the ISAP; and (iv) completion of the balance activities on OB dump reclamation and dust suppression\. Assessment of the Borrower Coal India, through implementation of ESMP, was able to create an organization in a structured manner, capable of taking up mitigation measures of the environmental and social impacts arising out of coal mining activities\. It is now in a position to implement the environmental laws of the country in a better manner\. The R&R issues are also being taken care of in a better manner\. Monitoring of environmental parameters in a standardized manner has been extended to the mines beyond ESMP project mines\. Based on the experience in the ESMP mines, CIL is now in a better position to extend similar activities to other mines\. Overall supervision of implementation and monitoring of environmental and social activities has - 53 - also improved\. Operational Experience Overall implementation progress was initially slow and uneven and CIL's commitment remained problematic especially with regard to key areas of economic rehabilitation of PAPs, and institutional reform to enhance CIL's environmental and social management capabilities due to lack of experience in the field of social management\. Procedural delay in engaging facilitating NGOs also contributed to slow progress of the project at the initial stage\. Significantly, progress throughout 25 project mines began only in the first half of 2000\. Since then CIL has demonstrated increasing commitment regarding both environmental and social mitigation and there was noticeable implementation progress thereafter\. Ranking the old external OB dumps, on the basis of hazard and risk involved in it and then formulating reclamation action plan for their safety and stability in a large scale, has been a new experience for Coal India\. While implementing the RAPs, in connection with resettlement and economic rehabilitation issues of the PAPs, Coal India encountered a lot of rough weather in the beginning\. It was a unique experience to identify training trades for the PAPs, who are basically tribal and/or depend solely on agriculture\. Further, organizing self-employment schemes for the PAPs was also a difficult task in the beginning\. The on-going LBIGS taken up by Coal India in SECL on pilot basis is a novel idea for economic rehabilitation of the PAPs who are familiar with agriculture\. Similarly, although Coal India has experience in doing Community Development activities, IPDP in the form it has been included in ESMP, is a new experience\. The response from the villagers and facilitation by the NGOs equipped Coal India with a unique experience\. Implementation of IPDPs has caused less interruption of the mining activities by the people around than normally experienced\. Project sustainability The project was implemented successfully\. The sustainability of the system installed can be assessed from a number of observations: Social: The IPDP activities taken up in the villages are being pursued by the VWGs and the SHGs in the IPDP villages even after the closure of ESMP\. This concept is being extended to other mines of WCL\. RAPs are being prepared for the new mines in compliance of the R&R policy of the company\. Environment: Environmental monitoring is undertaken in a standardized manner with regard to the parameters, frequency of monitoring, and methods of testing in all the mines of Coal India\. Dust suppression arrangements made and effluent treatment plants commissioned in the mines are working satisfactorily, and are being replicated in other mines beyond the ESMP project mines\. The environmental management division set in the company is functioning to carry on the systems established during ESMP\. The three year action plan for institutional strengthening of Coal India is proving successful in enhancing its strength through training, implementing the Environment Management System (EMS) of ISO 14001, and installation of GIS\. Lessons Learned\. Resettlement and rehabilitation of the PAPs has to be done keeping in view the customs, habits and culture of the people\. The resettlement sites need to be identified with participation of the PAPs\. It has - 54 - been found that PAPs are more interested in getting the lump sum monetary compensation payment in lieu of plots in the resettlement sites\. It is necessary to have a permanent strength of personnel to deal with the environmental and social mitigation measures\. For inducing people to remain in this category of activities, some attraction is required to be generated in the form of career development\. Technical assistance greatly helped in formulating the action plans, particularly the involvement of a soil technologist in the area of OB dump reclamation, and of NGOs in case of implementation of RAPs and IPDPs\. Transparency regarding the mining project construction to the PAPs is very much necessary for getting full cooperation for physical acquisition of legally acquired land\. The PAPs dealt with in the project were mainly agricultural workers and mostly tribal\. To train them in other trades and then develop entrepreneurship to make them capable of self- earning was a tough job, particularly when they always dream of a comparatively high salaried mine job\. Thus it was not possible to address the vast and complicated issues on social mitigation with complete success in the 25 geographically scattered open cast coal mines in such a short effective project period of three years time\. However, it was a very good objective started in a planned manner\. While organising training for the PAPs on skill development, the trainee EPAPs should be prioritized, so that only potential self employment interested people are trained and not the people who are interested only for the stipend during the training days\. Success of self-employment schemes highly depends on arranging seed money for the people frtom banks, government schemes, etc\. Land based income generation schemes for the PAPs has huge scope in use of the reclaimed mine lands and utilisation of the effluent from the sewage treatment plants\. Community driven development program under IPDP is very useful and its sustainability depends on handing over the assets for operation and maintenance under proper supervision of the Panchayats\. Certain aspects like mine closure planning, and Social Impact Assessment should be properly built in the Environment Management Plan itself, including the cost estimate\. Creation of external OB dumps should be restricted to minimum as far as possible, and only during initial phase of box cutting in the opencast mines\. Then onwards, only back filling of over burden should be practiced for concurrent land reclamation\. A thought is required to be given in the EMP regarding the land use plan of the reclaimed land with further improvement for land based income generation activities\. Evaluation of the Bank The Bank rendered highly professional and competent advice and assistance from time to time in implementation of the project\. The Bank missions visited all the project mines in the subsidiaries adequate number of times to review the progress of implementation and gave necessary advice to address the weak areas\. During each visit, the World Bank officials held detailed discussions with the consultants and the staff at corporate, area and project mine levels\. Their suggestions and guidance during deliberation on mitigation of the environmental and specially the complex issues on social aspect helped the project achieve the objective largely\. Assistance of the Bank in helping Coal India to develop an organizational set up for environmental and social mitigation and firming up different policies and thus enhancing the capability of the company in dealing with the management of environmental and social issues is highly appreciated\. At times the approach of the Bank was bureaucratic in nature, lacking proper appreciation of the ground realities\. The difficulty in achieving the targeted income restoration figure on the back ground of Indian culture and habits needs to be understood and appreciated in a comprehensive manner\. - 55 - Additional Annex 10\. Coal Sector Rehabilitation Project (Loan No\. 4226-IN) Project Development Objectives: The main project objectives are to support the market-oriented reforms India is undertaking in the coal sector and, specifically, to provide financial and technical support to Coal India's efforts to make itself commercially viable and self-sustaining\. Underpinning India's broad drive to achieve economic growth, the project also aims to increase domestic supplies of coal, by financing investment in the most profitable 24 opencast mines of Coal India, for the power sector and other industries until imports and production from private investments can fill the emerging supply gap\. Applicable Operational Directives: All environmental and social mitigation activities were handled under the CSESMP\. Board Approval: September 9, 1997; Date of Effectiveness: June 17, 1998 Original Closing Date: June 30, 2003; Revised Closing Date: None Date of Loan Cancellation: July 25, 2000 for IBRD Loan and January 21, 2001 for IDA Credit Subsidiary State Project Mines Northern Coalfields Ltd\. Uttar Pradesh 5 South-Eastern Coalfields Ltd\. Chhattisgarh 5 Mahanadi Coalfields Ltd\. Orissa 6 Central Coalfields Ltd\. Jharkand 3 Western Coalfields Ltd\. Maharashtra 5 Costs and financing: The total cost of the project was about US$649\.80 million, compared with the SAR estimate of US$1\.7 billion\. Of the Bank Loan amount of US$530 million, US$224\.40 million was disbursed and an amount of US$268\.70 million was cancelled on July 31, 2000\. About US$37 million remained open for disbursement under special commitments\. Out of the Credit amount of US$2\.0 million, US$1\.42 million was disbursed and the remaining US$0\.58 million cancelled on January 25, 2001\. JBIC provided co-financing of US$261\.30 million, and CIL contributed US$125\.78 million\. This was proportionately less than that planned due to the higher level of local procurement and savings in excise duties, reduced custom tariffs and CIL's disproportionate share of works which were either dropped or deferred\. Outcome/achievement of objective: The project's physical (investment) objective of increasing CIL coal production through rehabilitation and/or expansion of 24 mine sub-projects was, in aggregate, achieved ahead of schedule\. The physical targets for individual sub-projects varied, some well exceeding planned levels of coal production, while others are still building up to full output\. Another outcome of the project was the liberalization of pricing and distribution for all categories of coal in January 2000\. Accordingly, CIL has been free to set prices of deregulated coal according to the market forces, and the prices of washed coal (both Coking and Non Coking) are being fixed by the subsidiary companies\. Coal is also presently freely imported by anyone under open general license (OGL)\. The project facilitated CIL reforming and restructuring its operations to the extent that its subsidiaries - 56 - became largely financially independent and autonomous companies, improving their productivity; competing with each other; and fixing their own prices according to market demands\. The project also supported CIL's decision to do away with the existing systems of linkage/sponsorship and take a new policy initiative for non-core sector\. Subsidiary companies are also authorized to sell their entire quantity of coal and coal products after meeting the requirements of the core sector, to the non-core sector customers\. In addition, the project eliminated the automatic cross-subsidization of loss-making activities through Coal Price Regulation Account (CPRA) pricing mechanism between subsidiaries and even collieries as a natural consequence of coal price liberalization\. Owing to unsatisfactory performance on coal sector reform; a reversal of the policy of reducing import duties on coal; the financial deterioration beyond covenanted limits under the CSRP; and difficulties with economic rehabilitation and income restoration under the CSESMP, the Bank advised the Ministry of Coal (MOC) and CIL in January 2000 that it was considering applying legal remedies and moving towards suspension in the event that these issues were not addressed\. As the issues remained unresolved after extensive discussion, the Bank proposed two options to the government comprising: (i) if GOI could achieve compliance within a reasonable period of time with the covenanted actions under the two projects in the near term, the Bank would suspend the CSRP Loan, reinstating it when compliance was achieved; or (ii) if GOI assessed that compliance could not be achieved, they should request cancellation of the balance of the CSRP Loan\. In July 2000, GOI and CIL requested cancellation of the un-disbursed balance of the Loan and Credit\. The reasons and the background for such an outcome are described below: Sector Reform\. The amendment of the CMNA was an essential legislative measure to enable the participation of the private sector in the development of new non-captive coal mines and also in any divestment that CIL would undertake as part of the restructuring of its loss-making subsidiaries\. GOI in its Supplemental Letter to the CSRP Loan Agreement had committed itself to submit the draft amendment to the CMNA to Parliament by December 31, 1997\. Despite the Bank's repeated attempts to emphasize the importance of this amendment, there was inordinate delay on the part of the GOI to submit it to the Parliament\. The draft was finally submitted to the Parliament in April 2000, and was subsequently referred to the Standing Committee on Industry of Parliament and thereafter to the Standing Committee on Energy\. After project closure, the GOI however did continue its efforts to submit the bill to Parliament and was prepared to withstand intense trade union pressure to withdraw the bill and endured a three day general strike in December 2001\. Nonetheless, the difficulties in securing these reforms are apparent and further delays can be anticipated\. Regulatory Framework\. This important policy TA was designed to provide the critical foundation for coal sector reform to encourage the introduction of private sector interests in the coal sector and create enhanced competition between coal producers within India\. Although the detailed TOR and its underlying fundamental philosophies were agreed at loan negotiations and reflected in loan and credit agreements as a precursor to continuing Bank support to CIL, GOI showed limited interest in engaging with international/local consultants and played a minor role in the development of its findings and recommendations\. The study was completed well behind schedule due to procurement misunderstandings, delays and general lack of cooperation\. Even though DOC had agreed to submit a time-bound action plan for the implementation of a new regulatory framework by June 30, 2000, it was never submitted by DOC to the Bank\. Restructuring of BCCL and ECL\. Despite the initial capital restructuring, CIL failed to take the bold measures needed to restore the financial viability of its loss making subsidiaries, BCCL and ECL in spite of repeated representations by the Bank\. These together with CCL have now completely eroded their equity base and have all been referred to the BIFR for restructuring or closure under the - 57 - Sick Companies Act of 1985\. Despite various plans which remain under consideration by GOI/CIL and a 17% reduction in excess labor since 1998, these companies continue to drain scarce resources from other parts of the group and undermine CIL's ability to sustain its operations\. Lower than expected demand for coal\. Most of the expected additions to power generation capacity did not materialize due to the slow pace of the power sector reforms, and as a result, demand for coal began to decline\. In addition, a slow down in industrial demand combined with the availability of imported Indonesian coal at comparable or cheaper prices than domestic coal, especially in the coastal areas, affected the demand for coal from cement plants and other industrial users\. Consequently, the actual demand was only 311\.0 million tons in 1996/97 and 354\.3 million tons in 2001/02 compared with 332\.7 million tons and 513 million tons respectively in the SAR\. Likewise, while the SAR estimated the gap in coal supply would be 44\.0 million tons in 1996/97 and 128\.0 million tons in 2001/02, the actual gap for these years were only 15\.9 and 25\.46 million tons respectively\. In light of these developments, a downward revision of capital requirements due to outsourcing, better maintenance and operating performance, and savings realized on phase A procurements, CIL no longer needed external finance to support the procurement of equipment scheduled for the Phase B of the project\. Outputs by components: (A) Investment Component\. (Satisfactory)\. The objective of increasing coal production at the sub-projects by 13\.4 million tones per year to a level of 105\.95 in 2002 was achieved by end 2001 with an increased output of 17\.85 million tones and a total sub-project production of 112\.83 million tones coal\. The output of individual CIL subsidiary sub-projects was generally satisfactory (exceeding plan) although the 3 sub-projects at CCL are not expected to meet planned production targets until 2002/3\. It is evident that from 1996 2001 Coal India (CIL) successfully: increased production (by 31 million tons per year - 13%); reduced employment (by 87,000 workers -14%) and increased labor productivity (by 0\.5 tons per man shift 28%)\. These are substantial accomplishments and, despite more modest gains in the financial performance, the objectives of the investment component were realized by CIL\. Key consolidated statistics of CIL for the period 1996-2001 are given below: Actual Actual Actual Actual Actual Actual SAR 1996 1997 1998 1999 2000 2001 2001 Production Mill tons 237\.3 250\.6 260\.6 256\.5 260\.6 268\.1 289\.9 Coal Prices Rs/ton 441 530 588 600 629 652 739 Production Cost Rs/ton 442 497 545 573 617 726 504 Labor Cost Rs/ton 211 215 230 239 266 380 245 Profit/(loss) Rs billion (14\.1) 6\.9 14\.5 18\.0 11\.4 6\.1 25\.2 Employment # 000's 639 632 620 599 574 552 594 Productivity OMS 1\.8 1\.9 1\.9 2\.0 2\.1 2\.3 n/a - 58 - Capacity Utilization % n/a n/a 91\.9 88\.3 87\.5 85\.7 88\.3 Capital Expenditure Rs billion 15\.5 13\.3 16\.3 15\.9 28\.8 7\.6 35\.7 Debt Rs billion 61\.6 61\.4 55\.9 63\.6 70\.5 63\.2 61\.1 Equity Rs billion 49\.9 54\.2 59\.2 64\.3 61\.4 39\.4 117\.6 Receivables months 2\.4 2\.3 2\.6 3\.1 3\.0 3\.3 1\.4 Source: CIL Annual Reports WB Staff Appraisal Report (B)\. Technical Assistance and Training Component\. (Unsatisfactory)\. The project design provided for nine technical assistance/training sub-components (estimated cost US$14 million) covering policy, institutional development and project implementation\. The level and extent of TA/training was substantial by any project standards\. Generally speaking, the TOR for individual study programs was developed as a cooperative effort between Bank staff and GOI/CIL and the TA design was to a large extent appropriate\. With the loan cancellation coinciding approximately with the conclusion of the TA programs, Bank staff were unable, with the exception of the policy (legal/regulatory) study, to review the implementation of domestic/international consultant findings and recommendations\. Consequently, achievements realized by the TA could not be specified with any degree of certainty\. - 59 - Additional Annex 11\. ESMP Implementation Status Annex 11a CSESMP Overall Status of Resettlement Subsidiary & PAFs to be PAFs to be Resettled by Balance (as Expected date Mine resettled resettled as per June 30, per target) of completion mine expansion 2002 of plans by June 30, resettlement 02 In Outside Cash(c) Total Rs(a) Rs(b) NCL 57 57 57 43 -- 57 -- Completed Jhingurda 57 57 14 43 -- 57 -- Completed MCL 1290 812 188 282 468 938 352 Jagannath 436 436 14 176 246 436 -- Completed Bharatpur 308 243 90 8 198 296 12 Mine contingency plans(d) Lakhanpu 172 133 73 64 24 161 11 Mine contingency plans(d) Belpahar 374 45 11 34 45 329 Mine contingency plans(d) SECL 852 852 393 459 852 -- Completed Gevra 244 244 244 -- -- 244 -- Completed Dipka 575 575 116 459 575 -- Completed Kusmunda 33 33 33 -- -- 33 33 Completed CCL 342 225 67 15 143 225 117 KD Hesalong 52 52 50 2 -- 52 -- Completed Parej East(e) 290 173 17 13 143 173 117 March '05 (+115) (+57) (+57) (+58) Total 2541 1946 705 340 1070 2072 469(f) (+115) (+57) (+57) (+58) (a) Relocated to resettlement site\. (b) Relocated outside resettlement site and temporarily in mine quarters\. (c) Relocated to places of own choice with cash grant of Rs\. 50,000 in lieu of a plot in a resettlement site and transition allowance\. (d) For the MCL mines of Jagannath, Bharatpur, Belpahar and Lakhanpur, contingency mine plans were developed in 1998 to cope with possible delays in resettlement of PAPs due to disputes mainly involving PAP demands for additional mine jobs\. The contingency plans involved having mining operations bypass villages resisting resettlement, leaving a 300m gap between the quarry and the nearest habitation\. A joint CSRP/CSESMP mission reviewed these plans, and were satisfied that they would permit the continuation of orderly mine advances over at least the next 5 to 7 years, thus permitting additional time, as and if required, to resolve outstanding disputes raised by the PAPs\. Since then, provision of additional mine jobs and the introduction of the cash grant of Rs\. 50,000 have contributed towards overcoming the resistance in all the MCL mines except Belpahar (Aide Memoire for mission from August 31 to September 11, 1998, para 49)\. (e) Additional PAFs added to caseload in Muslim Tola and Duru villages: 115\. Of these, 57 PAFs have shifted to places of own choice with cash grant of Rs\. 50,000\. The balance of 58 PAFs are planned to be relocated by March 2005\. (f) The total caseload for resettlement beyond the project closing date is 527 PAFs consisting of the 469 PAFs from the SAR caseload plus the balance of 58 PAFs from the additional caseload identified in Parej East\. - 60 - Annex 11b CSESMP: Status of Economic Rehabilitation 1997 - 2002 Subsidiary Number No\. of No\. of Avg\. Avg\. Change in and Mine of EPAPs EPAPS Individual Increase Inflation EPAPs Reporting Reporting Income 1997 - Adjusted Income Income in Rs\./month 2002*** EPAP 1997 & 2002 Rs\./month Incomes 1997 to 2002 1997 2002 1997 2002 1997 2002 Increase De- Same crease NCL 256 245 256 245 245 824 2,128 1,105 178 4 63 Jhingurda 256 245 256 245 245 824 2,128 1,105 178 4 63 MCL 7,230 6,627 4,109 2,316 2,316 2,454 4,699 1,656 2,161 154 2 Ananta 432 424 232 176 176 3,041 4,635 865 147 28 1 Jagannath 1,674 1,601 698 514 514 2,706 4,725 1,369 478 36 0 Bharatpur 1,552 1,187 745 313 313 2,919 4,990 1,370 290 23 0 Lakhanpur 504 464 346 207 207 2,348 5,167 2,256 201 6 1 Samaleswari 989 925 691 463 463 2,098 4,430 1,829 422 41 0 Belpahar 2,079 2,036 1,397 643 643 1,614 4,248 2,246 623 20 0 CCL 745 653 715 648 648 947 2,010 836 432 79 137 KD 98 84 94 84 84 1,095 2,467 1,109 62 6 16 Hesalong Parej East 647 569 621 564 564 798 1,553 563 370 73 121 SECL 1,983 1,658 1,768 1,620 1,620 1,257 2,388 721 1,072 126 422 Bisrampur 506 443 477 443 443 1,132 2,713 769 315 12 116 Dhanpuri 153 130 139 130 130 916 1,786 650 85 25 20 Kusmunda 103 93 101 93 93 1,037 1,622 337 44 16 33 Gevra 466 413 418 402 402 1,235 2,978 1,447 257 37 108 Dipka 755 573 633 552 552 1,967 2,840 401 371 36 145 Total 10,214 9,183 6,848 4,829 4,829 1,371 2,806 1,079 3,843 363 624 - 61 - Annex 11c Subsidiary/ No\. of No of VWG members who are also or Block mine IPDP Village elected toGram members of Development Villages Working Panchayat or Gram Committee Group Block Panchayat or members Development Committee SC ST OBC& Total Women SC ST OBC& Total Women others as % of others as % of total total CCL 27 KDHesalong 4 Parej East 11 Rajrappa 12 MCL 27 1 2 7 10 40\.0 1 1 2 Belpahar 7 1 1 2 Lakhanpur 5 1 1 Samleswari 7 1 1 Bharatpur 5 1 1 2 Jaganath 3 2 4 6 60 NCL 50 1 8 9 11\.1 1 8 9 11\.1 Jhingurda 8 Bina 11 7 8 12\.5 1 8 8 12\.5 Dudhichua 5 Jayant 9 Nighai 17 1 1 1 1 SECL 46 7 30 45 81 17\.3 6 23 27 54 18\.5 Gevra 5 1 9 2 12 3 1 4 Dipka 3 5 2 7 14\.3 Kusmund 8 2 4 1 7 60\.0 2 4 1 7 60\.0 Manikpur 8 1 1 2 1 1 2 Dhanpur 6 1 Bisrampur 16 4 11 38 53 17\.0 4 15 24 43 14\.0 WCL 22 9 2 9 20 20\.0 9 2 9 20 15 Padmapur 6 2 2 1 5 2 1 5 Durgapur 6 4 4 8 37\.5 4 4 8 37\.5 Sasti 3 3 3 3 3 Niljai 3 3 3 3 3 Umrer 4 1 1 100\.0 2 1 1 100\.0 Total 172 18 34 69 120 192 16 26 45 79 164 - 62 - Annex 11d SubsidiaryTotal Asset VWG members Community / mine investment Creation elected toGram Activities 1998-2002 (No\. of (No\. of Panchayat or (Rs -,000) activities) activities) Block Development Committee Target Completed In Dropped Target Completed In Dropped Target Complet Dropped progress progress ed CCL 4430 118 105 13 106 98 8 241 227 14 KDHesalo 1656 30 29 1 26 23 3 39 37 2 ng Parej East 1783 45 42 3 49 48 1 146 134 12 Rajrappa 991 43 34 9 31 27 4 56 56 MCL 24003 265 248 17 248 214 34 241 219 22 Belpahar 6769 71 67 4 75 57 18 94 88 6 Lakhanpur 7796 42 40 2 53 47 6 41 37 4 Samleswar 3630 47 45 2 92 91 1 61 54 7 i Bharatpur 4018 64 62 2 16 8 8 37 33 4 Jaganath 1790 41 34 7 12 11 1 8 7 1 NCL 29345 118 116 1 1 404 404 710 710 Jhingurda 4412 20 19 40 40 144 144 Bina 8090 23 22 1 62 62 148 148 Dudhichu 3981 17 17 28 28 109 109 a Jayant 6447 30 30 76 76 105 105 Nighai 6415 28 28 198 198 204 204 SECL 41127 299 252 19 28 174 167 7 425 419 3 Gevra 4895 36 29 3 2 2 75 75 Dipka 4534 25 23 2 21 17 4 41 41 Kusmund 2118 25 24 1 41 40 1 50 44 3 Manikpur 7750 85 54 15 16 53 53 139 139 Dhanpur 5546 45 44 1 14 14 31 31 Bisrampur 16284 83 76 5 43 41 2 89 89 WCL 7844 111 108 3 369 363 6 1446 1382 58 Padmapur 1766 32 32 121 121 391 366 25 Durgapur 1903 22 21 1 111 111 338 320 18 Sasti 1308 29 27 2 45 39 6 167 150 9 Niljai 1974 19 19 49 49 233 230 3 Umrer 893 9 9 43 43 317 317 Total 106749 911 829 20 62 1301 1246 55 3063 2957 97 - 63 - Annex 11e Subsidiary/ Number of Investment in Community O & M O & M mine villages with community contribution arrangements undertaken IPDP community assets * assets (Rs-,000) Only Deduction Other (excluding Community Community Transfer of deduction from wages deduction from contribution in contribution, responsibili from wages plus cash wages) bank account, plus user ty to but no user charges Panchayat charges CCL 27 3462 27 3 3 KDHesalon 4 1343 4 1 NO 1 g Parej East 11 1173 11 NO Rajrappa 12 946 12 2 NO 2 MCL 27 21187 8 19 8 26 Belpahar 7 5799 7 Yes 7 Lakhanpur 5 7253 5 Yes 5 Samleswari 7 2966 7 Yes 7 Bharatpur 5 3724 5 5 Yes 5 Jaganath 3 1445 3 3 Yes 2 NCL 46 23131 10 36 46 4 Jhingurda 10 6742 10 NO Bina 5 3149 5 5 NO Dudhichua 9 5221 9 9 NO 4 Jayant 8 3274 8 8 NO Nighai 14 4745 14 SECL 45 32299 39 6 28 10 11 Gevra 5 4319 5 5 Yes 8 Dipka 3 4248 3 3 Yes 0 Kusmund 7 2128 7 4 3 Yes 3 Manikpur 8 7580 8 7 Yes 0 Dhanpur 6 5379 6 Yes 0 Bisrampur 16 16182 16 16 Yes 0 WCL 21 5735 21 Padmapur 6 1178 6 Yes Durgapur 6 1235 6 Yes Sasti 2 1419 2 Yes Niljai 3 1312 3 Yes Umrer 4 591 4 Yes Total 166 85814 45 965 25 39 56 44 - 64 - Annex 11f Subsidiary/ Number of Value of civil Award of Work Status of Plantation Application of top soil on OB dumps Mine OB dumps works (Rs civil works activities (no of -\.000) trees) CCL Parej East 1 174\.20 Aug\. 30, 2000 Completed 17,500 8,500 cu\.m used between 1999-01 on external dump\. Currently used on internal dump\. No storage\. KD Hesalong 1 - By CCL Completed 7,500 25,000 cu\.m used in 2001\. About 30,000 cu\.m stored\. Rajrappa 2 396\.00 June 15, 2000 Completed 115,000 20,000 cu\.m used\. NCL Nigahi 2 359,007\.00 Jan\. 16, 2001 Completed 205,000 Top soil layer is shallow, and is not stored\. For tree plantation, suitable soil and manure is used in the excavated pits where the trees are planted\. Jayant* 2 991,958\.00 Jan\. 16, 2001 Completed 244,700 Jhingurdah 2 191,174\.00 Jan\. 19, 2001 Completed 110,000 Dudhichua 2 190\.738\.00 Jan\. 16, 2001 Completed 338,000 Bina 1 482\.929\.00 Jan\. 12, 2001 Completed 100,000 SECL Dhanpuri 2 20,327\.00 Oct\. 17, 2000 Completed 113,000 Concurrent application of top soil** Gevra 3 175,270\.00 Oct 4, 2000 Completed 140,000 Top soil is stored\. Dipka 2 177,567\.00 Oct 4, 2000 Completed 60,000 175 million cu\.m stored\. Kusmunda 9 71,210\.00 Sept\. 25, 2000 Completed 100,000 Top soil is not stored\. Instead, suitable soil and manure is used\. Manikpur 2 59,098\.00 Oct\. 31, 2000 Completed 100,000 Top soil is not stored\. MCL Jagannath 4 94,487\.00 Oct\. 31, 2000 Completed 37,189 Concurrent application of top soil\. In addition, top soil has been mixed with other OB dump materials, which is held to provide better growth for mature trees, when their roots reach deeper\. Bharatpur 4 60,524\.00 Nov\. 30, 2000 Completed 58,270 Ananta 1 49,400\.00 Nov\. 23, 2000 Completed 15,800 Samleswari 6 7,800\.00 Sept\. 5, 2000 Completed 23,365 Lakhanpur 1 6,010\.00 Nov 14, 2000 Completed 11,267 Belpahar 7 10,510\.00 Nov 14, 2000 Completed 101,699 WCL \. Durgapur 5 12,027\.00 Sept\. 1999 Completed 139,000 Storage of top soil is practiced on a limited scale\. Mostly concurrent application of top soil\. Padmapur 6 7,048\.00 Sept\. 1999 Completed 143,000 Sasti 5 - By WCL Completed 136,600 Niljai 3 2,828\.00 Sept\. 1999 Completed 96,500 Umrer 2 - By WCL Completed 191,000 Notes: * Jayant 1 and 2 have been combined into one dump\. The changes were approved by the technical expert, IIT, Kanpur\. ** Concurrent application of top soil involves the immediate spreading of top soil when it is excavated on OB dumps that have reached their planned height or on the portion of backfilled quarrys (internal dumps) that are level with the surrounding area\. - 65 - Annex 11g Workshop Effluent Treatment Plants Subsidiary/ Mine Integrated treatment Use of discharges Monitoring results: April to July plant for mine and 2002 workshop? (Permissible limit: TSS: 100) CCL 1\. KD Hesalong No 100% is being reused for water spraying/vehicle washing TSS(100) high- July(246) 2\. Rajrappa No 100% is being reused for water spraying/vehicle washing TSS(100) high- June(120),July(140) 3\. Parej East No 100% is being reused for waterspraying/vehicle washing TSS(100) high- May(118) SECL 5\. Gevra No 96% is being reused for water spraying/vehicle washing Within permissible limits 6\. Dipka No 90% is being reused for water spraying/vehicle washing TSS excessive in April(126),May(176) 7\. Kusmunda No 94% is being reused for water spraying/vehicle washing TSS excessive in April(186) 8\. Manikpur No 90% is being reused for water spraying/vehicle washing Within permissible limits 9\. Dhanpuri No 92% is being reused for water spraying/vehicle washing Within permissible limits 10\. Bisrampur No 95% is being reused for water spraying/vehicle washing Within permissible limits WCL 11\. Durgapur No 100% is being reused for water spraying/vehicle washing Within permissible limits 12\. Padmapur No 100% is being reused for water spraying/vehicle washing Within permissible limits 13\. Sasti No 100% is being reused for water spraying/vehicle washing Within permissible limits 14\. Niljai No 100% is being reused for water spraying/vehicle washing Within permissible limits 15\. Umrer No 100% is being reused for water spraying/vehicle washing Within permissible limits NCL 16\. Dudhichua Yes 50% is being used for spraying, arrangement for using Within permissible limits the balance will be ready shortly\. 17\. Nigahi Yes 100% is being used for spraying\. Within permissible limits 18\. Jhingurda Yes 100% is being used for spraying\. TSS excessive in May(113),July(164) 19\. Bina Yes 60%, being used in spraying and deshaling plant, Within permissible limits arrangement for using the balance will be ready shortly\. 20\. Jayant Yes 40%, being used for spraying, arrangement for using the Within permissible limits balance will be ready shortly\. MCL 21\. Jagannath Yes 40%, being used in plantation area and chemical house\. Within permissible limits Rest of the effluent is being discharged in the paddy field on request from the villagers\. 22\. Ananta Yes 100%, being used for vehicle washing & dust Within permissible limits suppression\. 23\. Samaleswari Yes 100%, being used in spraying for dust Within permissible limits suppression in roads & CHP, for fire fighting in coal stocks and vehicle washing\. 24\. Bharatpur Yes 100%, being used for vehicle washing & dust Within permissible limits suppression\. 25\. Belpahar Yes System is being developed for reuse\. Within permissible limits 26\. Lakhanpur Yes 30%, being used for vehicle washing & dust Within permissible limits suppression\. - 66 - Annex 11h CSESMP: Sewage Treatment Plants Sewage Treatment Date of Number Capacity BOD BOD test TSS test TSS test Plants commis-sio of in ml/day test result: result: result: ning quarters result: July 2002 Dec\. 01 Oct\. 01 served Dec 01 1st 2nd 1st 2nd CCL Parej East Dec\. 2000 688 1\.0 6 8 7 445854 KD Hesalong Dec\. 2000 665 1\.0 6 9 7 489868 Rajrappa Dec\. 2000 1,860 1\.5 7 9 7 586458 MCL \. Samleswari Dec\. 2000 426 0\.5 20 (F) 12 16 92 (F)2618 Belpahar/Lakhanpur Sept\. 2000 2,258 1\.7 19 (F) 21 13 88 (F)1808 Jagannath Nov\. 2000 723 1\.0 22 (J) 19 17 58 (J)5260 Ananta Nov\. 2000 737 0\.5 18 (J) 20 23 106 (J)7935 NCL Nighai Sept\. 2000 2,442 2\.5 22 16 13 333241 Dudhichua II/Jayant Aug\. 2000 3,245 4\.0 26 16 18 374144 Jhingurda Aug\. 2000 1,185 1\.5 23 17 12 383832 Dudhichua I Aug\. 2000 1,736 2\.0 20 14 13 463832 Bina Sept\. 2000 2,337 2\.5 17 21 22 423632 SECL Bisrampur Feb\. 2001 2,223 1\.5 17 15 17 272426 Dhanpuri Feb\. 2001 1,042 1\.0 19 16 18 285862 Gevra/Dipka Feb\. 2001 4,505 3\.0 24 14 16 372638 Kusmunda March 01 2,267 2\.0 30 28 32 296456 Manikpur March 01 355 0\.5 40 14 12 326062 WCL Umrer Sept\. 2000 971 1\.0 18 19 20 421012 Sasti July 2000 599 1\.0 21 21 20 981618 Niljai Aug\. 2000 539 0\.5 12 16 15 501218 Durgapur/Padmapur Sept\. 2000 1,732 2\.5 13 20 18 96610 Permissible limits: BOD: 30; TSS: 100\. (J): Jan 02 test results\. (F): Feb 02 test results\. SECL figures from May 02, and WCL figures from June 02\. - 67 - Annex 11i CSESMP: Status of Dust Suppression Measures by June 30, 2002 Subsidiary Mobile Fixed Dust Black-top Plantation Avenue / mine sprinklers sprinkl extractors ping of other than plantation (Nos) ers in drills roads Avenue (Km) (Km) (Nos) (Km) (Ha) Target Actual Target Actual Target Actual Target Actual Target Actual Target Actual CCL 6 6 4\.3 4\.04 17 17 3 3 139 139 14\.1 14\.1 Parej East 2 2 0\.8 0\.54 2 2 10 10 KDHesalo 3 3 0\.5 0\.5 5 5 61 61 2\.6 2\.6 ng Rajrappa 1 1 3 3 10 10 3 3 68 68 11\.5 11\.5 MCL Belpahar 2 2 5 5 2\.2 2\.2 52 61\.5 8 8 Lakhanpu 2 2 6 6 5 5 56 57 6 52 r Samleswar 2 2 5 5 9 9 48 54 9\.5 11 i Bharatpur 2 2 5 5 6 6 41 55\.5 6 23 Jaganath 2 2 7 7 5\.5 5\.5 20 26\.52 3 2\.7 Ananta 2 2 8 8 3\.23 2\.43 32 30\.31 8 10 NCL Jhingurda 2 2 6 6 52 52 Bina 6 6 12 12 24 24 Dudhichu 6 6 3\.7 3\.7 12 12 1\.2 2\.4 112\.8 112\.8 a Jayant 8 8 4\.1 4\.1 18 18 7\.75 7\.75 18 18 Nighai 6 6 12 12 3 3 188 188 SECL Gevra 5 5 2 2 15 15 50 50 Dipka 4 4 1\.5 1\.5 8 8 9\.7 9\.7 47 47 6 6 Kusmund 2 2 2\.5 3\.2 8 8 6\.7 6\.7 8 8 Manikpur 2 2 1\.7 1\.7 11 11 \.95 \.95 50 50 Dhanpur 2 2 1\.5 1\.5 6 6 4\.35 4\.35 50 50 Bisrampur 2 2 7 7 4\.4 52 52 18 18 WCL 5 5 2\.25 2\.87 37 37 137\.48 137\.48 27 27 Padmapur 1 1 \.575 6 6 24\.4 24\.4 5 5 Durgapur 1 1 \.25 \.875 10 10 17\.2 17\.2 9\.5 9\.5 Sasti 1 1 \.75 \.5 6 6 38\.4 38\.4 4 4 Niljai 1 1 \.25 \.4 5 5 47\.08 47\.08 4 4 Umrer 1 1 1 \.52 10 10 10\.4 10\.4 4\.5 4\.5 * Actual as per site availability - 68 - - 69 -	REVIEW
P000930	ï»¿ ICRR 10718 Report Number : ICRR10718 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 08/10/2000 PROJ ID : P000930 Appraisal Actual Project Name : Livestock Project Costs 29\.06 not available US$M ) (US$M) Country : Ghana Loan /Credit (US$M) Loan/ US$M ) 22\.45 not available Sector (s): Livestock Cofinancing none none US$M ) (US$M) L/C Number : C2441 Board Approval 93 FY ) (FY) Partners involved : none Closing Date 12/31/1998 12/30/1999 Prepared by : Reviewed by : Group Manager : Group : 2\. Project Objectives and Components a\. Objectives The National Livestock Services Project was identified as part of Ghana's Medium Term Agricultural Development Strategy (MTADS)\. The accompanying program (MTADP) was to establish and support market -led growth in agriculture\. The primary project objective was to increase meat, egg and milk production, to raise producer incomes, particularly those of smallholders, and to reduce the financial burden on the Government of services it provides to the livestock sub sector\. b\. Components The project had six components : (a) Animal Health Control; (b) Feed Resource Development; (c) Livestock Water Supply; (d) Breed Improvement; (e) Pilot Dairy Development Scheme; (f) Institution Building\. c\. Comments on Project Cost, Financing and Dates As appraised total project cost was US $ 29\.06 million of which the IDA share was US $ 22\.45 million and the Government of Ghana share was US $ 5\.35 million\. Beneficiary contribution was to be US $ 1\.26 million\. The project closed one year behind schedule but there is no mention of the extension in the ICR \. 3\. Achievement of Relevant Objectives: Though the project was consistent with the Country Assistance Strategy and the government's priorities, the evidence given in the ICR is insufficient to make a conclusive judgment on the achievement of project objectives \. The ICR notes that "the project's future impact will be partial \." 4\. Significant Outcomes/Impacts: While there is no data the ICR indicates that the pilot dairy development scheme was satisfactory \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): While there is no data provided the ICR indicates the development of community health workers and privatization of veterinary services were largely unsuccessful \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Not Rated Not Rated The ICR rates outcome as partial which is not a formal ICR rating category and does not convey whether the ICR considers the project to be satisfactory or not \. Hence the ES interprets this rating as not rated \. The ES itself does not rate outcome as the evidence in the ICR is insufficient to make a conclusive judgment on project performance and outcome\. Institutional Dev \.: Not Rated The ES does not rate Institutional Development as the evidence in the ICR is insufficient to do so\. Sustainability : Likely Non-evaluable The ES does not rate sustainability as the evidence in the ICR is insufficient to do so\. Bank Performance : Satisfactory Not Rated The ES does not rate Bank Performance as the evidence in the ICR is insufficient to do so\. Borrower Perf \.: Not Rated The ICR does not make an unambiguous judgment on borrower performance\. In one place (under Principal Performance Ratings) it rates borrower performance as unsatisfactory but in the other (in the text) it rates it as satisfactory\. The ES does not rate Borrower Performance as the evidence in the ICR is insufficient to do so\. Quality of ICR : Unsatisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: (i) In the case of ambitious projects like the National Livestock Services Project (NLSP) that attempt to kick start a whole industry in the country by simultaneously addressing constraints on several fronts, a realistic time frame for addressing issues is essential \. The short duration of the NLSP project was exacerbated by initial implementation tardiness\. (ii) Inter donor co-ordination is essential to promote balanced development of the sector and to avoid unnecessary costs and coordination problems for the borrower \. In Ghana, MTADP was essentially viewed as a World Bank program by other donors which addressed issues of interest to them on an individual basis without supporting a comprehensive agricultural sector program; (iii) It is essential that similar activities supported by different Bank projects are also co -ordinated\. As an example both the Agricultural Sector Investment Project and the NLSP addressed the development of livestock water supply \. However it is not evident that such activities undertaken by two different Bank projects were part of a coordinated effort \. 8\. Assessment Recommended? Yes No Why? (i) To make another judgment on various aspects of project performance \. The evidence in the ICR is insufficient to make an evaluative judgment on project outcome, institutional development or sustainability \. (ii) The project is one of a package of 5 in the agricultural sector which would allow a useful sectoral overview \. 9\. Comments on Quality of ICR: The ICR for this project was produced as a package for five agricultural projects which have closed recently \. While it is commendable that the five ICRs in the sector were packaged together under a performance review report, this appears to have significantly short -changed the ICRs themselves \. The ICR for the current project is very weak for two main reasons: (i) the available evidence is insufficient to assess the performance of the project; (ii) the standard format for producing an ICR has not been followed \.	REVIEW
P043311	ï»¿ Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00003054 IMPLEMENTATION COMPLETION AND RESULTS REPORT OF AN IDA CREDIT IN THE AMOUNT OF US$124\.1 MILLION AND IDA GRANT IN THE AMOUNT OF US$34\.1 MILLION TO NEPAL FOR A NEPAL POWER DEVELOPMENT PROJECT May 29, 2018 Energy and Extractives Global Practice South Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective July 1, 2015) Currency Unit = Nepalese Rupees (NPR) US$1 = NPR 101\.0 US$1 = SDR 0\.713 FISCAL YEAR July 16âJuly 15 ABBREVIATIONS AND ACRONYMS AEPC Alternative Energy Promotion Center B-B Bharatpur-Bardaghat BTOR Back-to-Office Report CAS Country Assistance Strategy DDC District Development Committee DEF District Energy Fund DOED Department of Electricity Development EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return ESSD Environment and Social Studies Department FIRR Financial Internal Rate of Return GoN Government of Nepal H-B Hetauda-Bharatpur HH Households ICR Implementation Completion and Results Report ISN Interim Strategy Note ISR Implementation Status and Results Report K-D Khimti-Dhalkebar LRMC Long Range Marginal Cost MHVEP Micro-hydro Village Electrification Program MHP Micro-hydropower Plant NEA Nepal Electricity Authority NIETTP Nepal-India Electricity Transmission and Trade Project O&M Operation and Maintenance OMS Operational Manual State OP Operational Policy PDF Project Development Fund PDO Project Development Objective PDP Power Development Project PMC Project Management Consultant PMU Project Management Unit RAP Resettlement Action Plan REDP Rural Energy Development Program RERL Renewable Energy for Rural Livelihood ROW Right-of-Way TA Technical Assistance TL Transmission Line UNDP United Nations Development Programme VAT Valued Added Tax VCDP Vulnerable Community Development Plan VDC Village Development Committee Senior Global Practice Director: Riccardo Puliti Practice Manager: Demetrios Papathanasiou Project Team Leader Rabin Shrestha ICR Team Leader: Rabin Shrestha NEPAL Power Development Project CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives, and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 6 3\. Assessment of Outcomes\. 11 4\. Assessment of Risk to Development Outcome \. 15 5\. Assessment of Bank and Borrower Performance \. 16 6\. Lessons Learned \. 18 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 20 Annex 1\. Project Costs and Financing \. 21 Annex 2\. Outputs by Component \. 22 Annex 3\. Economic and Financial Analysis\. 25 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 28 Annex 5\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 30 Annex 6: Overall Rating of the Outcomes\. 34 Annex 7: Comments of Cofinanciers and Other Partners/Stakeholders \. 35 Annex 8: List of Supporting Documents\. 36 Annex 9: Map \. 37 A\. BASIC INFORMATION Nepal Power Country: Nepal Project Name: Development Project Project ID: L/C/TF Number(s): IDA-37660, IDA-46370, P043311 IDA-H0390, IDA-H5060 ICR Date: 05/08/2018 ICR Type: Core ICR Specific Investment NEPAL Financing Instrument: Borrower: Loan Original Total SDR 75\.13 million SDR 55\.20 million Disbursed Amount: Commitment: Revised Amount: SDR 75\.13 million Environmental Category: A Implementing Agencies: Nepal Electricity Authority Department of Electricity Development Alternative Energy Promotion Centre (AEPC) Co-financiers and Other External Partners: B\. KEY DATES Revised / Actual Process Date Process Original Date Date(s) Concept Review: 12/28/1995 Effectiveness: 03/25/2004 03/25/2004 02/15/2008 Appraisal: 07/08/1997 Restructuring(s): 06/18/2009 (AF) 12/21/2012 Approval: 05/22/2003 Mid-term Review: 06/08/2007 Closing: 06/30/2009 12/31/2013 C\. RATINGS SUMMARY C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Moderately Quality at Entry: Government: Unsatisfactory Satisfactory i Moderately Implementing Moderately Quality of Supervision: Satisfactory Agency/Agencies: Satisfactory Overall Bank Moderately Overall Borrower Moderately Performance: Satisfactory Performance: Satisfactory C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Moderately Project at any time Yes Quality at Entry (QEA): Satisfactory (Yes/No): Problem Project at any Quality of Supervision Moderately Yes time (Yes/No): (QSA): Satisfactory DO rating before Unsatisfactory Closing/Inactive status: D\. SECTOR AND THEME CODES Original Actual Major Sector/Sector Public Administration Central Government (Central Agencies) 2 2 Financial Sector SME Finance 3 3 (Historic)Health and other social services Other social services 3 3 Energy and Extractives Energy Transmission and Distribution 62 62 Renewable Energy Hydro 30 30 Major Theme/Theme/Sub Theme Environment and Natural Resource Management Climate change 25 25 Mitigation 25 25 Finance Financial Infrastructure and Access 7 7 MSME Finance 7 7 Private Sector Development Business Enabling Environment 24 24 ii Investment and Business Climate 24 24 Enterprise Development 7 7 MSME Development 7 7 Public Sector Management Public Administration 7 7 Transparency, Accountability and Good 7 7 Governance Public Finance Management 7 7 Public Expenditure Management 7 7 Urban and Rural Development Rural Development 25 25 Rural Infrastructure and service delivery 25 25 E\. BANK STAFF Positions At ICR At Approval Mieko Nishimizu Regional Vice President: Ethel Sennhauser (Acting) Kenichi Ohashi Country Director: Qimiao Fan Penelope J\. Brook Practice Manager: Demetrios Papathanasiou Mudassar Imran Task Team Leader(s): Rabin Shrestha ICR Team Leader: Rabin Shrestha ICR Primary Author: Barsha Pandey F\. RESULTS FRAMEWORK ANALYSIS Project Development Objectives (from Project Appraisal Document) The Project Development Objectives are to (a) develop Nepal's hydropower potential in an environmentally and socially sustainable manner so as to help meet electricity demand; (b) improve access of rural areas to electricity services; and (c) promote private participation in the power sector as a way to improve sector efficiency and to mobilize financing for the sector's investment requirements\. Revised Project Development Objectives (as approved by original approving authority) The Project Development Objectives are to increase access to electricity services in rural areas and improve quantum and efficiency of electricity supply\. (a) PDO Indicator(s) iii Indicator Baseline Value Original Target Formally Revised Actual Value Values (from Target Values Achieved at approval Completion or documents) Target Years Indicator 1: Number of additional house holds (HH) with access to electricity generated by micro-hydro schemes Value quantitative 0 30,000 74,000 88,934 or qualitative) Date achieved 04/25/2003 05/23/2003 05/18/2009 12/31/2013 Comments The achievement (120%) exceeds the target of 74, 000 HH\. (including % achievement) Indicator 2: Number of additional rural house holds with access to grid-connected electricity Value quantitative 0 17,000 65,000 37,451 or qualitative) Date achieved 04/23/2003 05/23/2003 05/18/2009 12/31/2013 Comments The targets (58%) are partially achieved\. (including % achievement) Indicator 3: Increased transmission capacity (MW) Value quantitative 0 1505\.06 500 0 or qualitative) Date achieved 02/05/2008 02/05/2008 12/21/2012 12/31/2013 Comments The line was not complete by the project closing date\. The Khimti-Dhalkebar (including % line is in operation since February 2017\. achievement) Indicator 4: Increased energy generation (GWh) Value quantitative 0 790 640 0 or qualitative) Date achieved 04/23/2003 05/23/2003 12/21/2012 12/31/2013 Comments The line was not complete by the project closing date\. The Khimti-Dhalkebar (including % line is in operation since February2017 achievement) Indicator 5: Reduced distribution losses in project-supported distribution centers outside Kathmandu Valley Value quantitative 28% Reduction in No revision Loss reduced by or qualitative) losses by 1\.6% 4\.74% Date achieved 02/05/2008 02/05/2008 05/18/2009 12/31/2013 Comments The outcome is achieved (296 %)\. (including % achievement) Indicator 6: Reduced distribution losses in project-supported distribution centers inside Kathmandu Valley iv Value quantitative 18\.8 Reduction in No revisions Loss reduced by or qualitative) losses by 6% 4% Date achieved 04/23/2003 05/23/2003 05/23/2003 12/31/2013 Comments The outcome is partially achieved (67%)\. (including % achievement) (b) Intermediate Outcome Indicator(s) Indicator Baseline Value Original Target Formally Revised Actual Value Values (from Target Values Achieved at approval Completion or documents) Target Years Indicator 1: Total kW capacity of new micro-hydro village schemes (off-grid) Value quantitative 0 1,400 1,400 8,497 or qualitative) Date achieved 04/23/2003 05/23/2003 05/18/2009 12/31/2013 Comments The outcome is fully achieved (over 100%)\. (including % achievement) Indicator 2: Km of distribution lines built Value quantitative 0 2,200 No revision 1,619 or qualitative) Date achieved 04/23/2003 05/23/2003 05/18/2009 12/31/2013 Comments The outcome is partially met (74%) \. (including % achievement) Indicator 3: Number of distribution centers rehabilitated\. Value quantitative 0 18 No revision 8 or qualitative) Date achieved 05/18/2009 05/18/2009 05/18/2009 12/31/2013 Comments Partially achieved (45%) the outcomes\. (including % achievement) G\. RATINGS OF PROJECT PERFORMANCE IN ISRs Actual Date ISR No\. DO IP Disbursements Archived (US$, millions) 0\.00 1 06/30/2003 Satisfactory Satisfactory 0\.00 2 12/19/2003 Satisfactory Unsatisfactory 0\.00 3 05/12/2004 Satisfactory Unsatisfactory v 0\.85 4 11/18/2004 Satisfactory Unsatisfactory 0\.89 5 05/27/2005 Satisfactory Unsatisfactory Moderately 3\.39 6 01/03/2006 Satisfactory Unsatisfactory Moderately 4\.82 7 07/18/2006 Satisfactory Unsatisfactory Moderately 10\.94 8 01/31/2007 Satisfactory Unsatisfactory Moderately 15\.55 9 08/27/2007 Satisfactory Unsatisfactory 18\.15 10 03/07/2008 Satisfactory Satisfactory 23\.82 11 09/29/2008 Satisfactory Satisfactory 27\.01 12 05/23/2009 Satisfactory Satisfactory 33\.37 13 11/29/2009 Satisfactory Satisfactory 38\.01 14 05/28/2010 Satisfactory Unsatisfactory Moderately 44\.50 15 12/12/2010 Unsatisfactory Satisfactory Moderately Moderately 56\.86 16 06/26/2011 Satisfactory Satisfactory Moderately Moderately 74\.91 17 01/03/2012 Unsatisfactory Unsatisfactory 103\.05 18 11/06/2012 Unsatisfactory Unsatisfactory Moderately Moderately 112\.92 19 06/19/2013 Unsatisfactory Unsatisfactory 114\.87 20 12/28/2013 Unsatisfactory Unsatisfactory 115\.78 21 01/19/2014 Unsatisfactory Unsatisfactory H\. RESTRUCTURING (IF ANY) Board ISR Ratings at Amount Reason for Approved Restructuring Disbursed at Restructuring Date(s) Restructuring and PDO Restructuring in DO IP Key Changes Made Change US$, millions Delay in project 02/15/2008 Y S MU 17\.52 implementation; allocate additional vi funds available due to SDR appreciation Additional financing (US$89\.2 million) was considered after getting a request from the Government of Nepal (GoN) to overcome 06/18/2009 Y S S 28\.23 the energy crisis situation of Nepal; PDO and key performance indicators were revised to accommodate the request of the GoN\. To drop activities and cancel the unutilized funds (US$42\.4 million) that have not been procured while 12/21/2012 N U U 106\.07 extending completion dates for the activities critical for development of the power sector of Nepal I\. DISBURSEMENT PROFILE vii The World Bank (P043311) 1\. Project Context, Development Objectives, and Design 1\.1 Context at Appraisal 1\. In 2003, only about 200,000 rural households (HH) of Nepal were electrified, leaving 3\.5 million rural HH without access to electricity\. The rate of electrification in Nepal was not sufficient to match the planned economic growth of the country\. The installed generation capacity was only 522 MW and the power sector was facing serious challenges and institutional problems, thus slowing down the overall development of the country\. Issues such as inconsistent and overlapping policies, regulations and operational functions of public institutions, existing inadequacies, inadequate institutional structure for power trade, and weak institutional support to improve electricity access to rural areas were observed\. 2\. To address these issues, the project was designed as an alternative to the traditional IDA strategy of investing in large hydro projects and associated transmission and distribution facilities with public resources and to provide access to energy services in rural areas by extending the national grid\. To address the challenges encountered in raising funds for large hydro projects and dealing with the environmental and social issues associated with such large projects, this project was designed to develop an alternative strategy aimed at mobilizing private and commercial funds for small- and medium-size hydro projects to provide access to rural areas\. A Project Development Fund (PDF) was proposed to be established under the project to catalyze private funding\. 3\. The project fitted well with the Country Assistance Strategy (CAS)1 goal of developing basic infrastructure to promote broad-based economic growth and improve resource utilization, particularly the sector strategy for increasing domestic power supply and facilitating private sector investments in power\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators 4\. The original PDOs were to (a) develop Nepal's hydropower potential in an environmentally and socially sustainable manner so as to help meet electricity demand; (b) improve access of rural areas to electricity services; and (c) promote private participation in the power sector as a way to improve sector efficiency and mobilize financing for the sectorâs investment requirements\. Key Performance Indicators 5\. The key project performance indicators were defined as follows: (a) Service coverage in rural areas and number of villages served would increase\. About 30,000 new HH will be electrified involving 125â150 new systems\. There would be sustained buildup of pipeline of schemes emerging from Village Development Committees (VDCs)\. (b) A pipeline of bankable projects would be developed through the PDF\. At least 12 private power projects were expected to come onstream by 2008\. 1 Country Assistance Strategy - Document no\. 18578-NP\. 1 The World Bank (P043311) (c) Transparent and objective processes for inviting investment offers for medium-size hydro projects would be adopted, thus achieving more competitive terms and conditions for private power purchases by the grid\. (d) One 220 kV transmission line (TL) and other smaller TLs and sub-TLs will be constructed, and the associated substations and distribution schemes will be expanded\. About 34,000 consumers, including 17,000 new consumers, will benefit through the distribution scheme\. (e) Financial efficiency of the Nepal Electricity Authority (NEA) would be improved\. This would be evidenced by a debt service coverage ratio of at least 1\.2, with 6 percent return on revenue and 90-day levels of accounts receivables and payables\. (f) Operational efficiency of the NEA would be improved by reduction of losses from 23\.4 percent to no more than 17 percent by 2007\. (g) The capacity of the Ministry of Population and Environment and Department of Electricity Development (DOED) to assess and monitor environmental and social impacts of hydropower projects would be improved\. 1\.3 Revised PDO and Key Indicators, and reasons/justification 6\. Due to delay in project implementation as a result of fragile environment in the country, the PDF component was moving very slowly\. The Government requested reallocation of the unutilized funds under PDF to the other two components\. The scope of the PDF component was reduced from investment support to technical assistance (TA)\. Due to this as well as the availability of additional funds from SDR appreciation, the project was restructured\. 2008 Restructuring 7\. Revised PDO\. Build capacity to manage the development of Nepalâs hydropower potential in a prudent and sustainable manner; increase access to electricity services in rural areas; and improve the quantum and efficiency of electricity supply\. Revised Key Performance Indicators 8\. The key specific project performance indicators are outlined as follows: (a) Additional hydropower projects identified for development and ready for contracting (three in number)\. (b) Number of additional rural HH with access to electricity generated by micro-hydro schemes\. About 44,000 (cumulative) new HH will be electrified\. (c) 80,000 additional HH will be electrified by grid-connected electricity\. (d) Reduction in transmission and distribution losses by 1\.5 percent in the districts where IDA- supported projects are implemented\. 2 The World Bank (P043311) 2009 Additional Financing 9\. Additional financing was considered after getting a request from the Government of Nepal (GoN) to overcome the energy crisis in Nepal\. In December 2008, the Government declared a ânational energy crisisâ and approved an Energy Crisis Management Action Plan\. The action plan included demand- and supply-side investments aimed at alleviating load shedding; the estimated cost of the short- and medium- term measures in the action plan was around NPR 15 billion (about US$195 million)\. The additional financing supported additional investments under the NEA component and scaled up activities under the Microhydro Village Electrification Component\. The additional investments included rehabilitation of generation assets, transmission and distribution strengthening, and TA funds for continued institutional strengthening, training, and execution of technical studies and other documentation associated with power sector development\. 10\. Revised PDO\. To increase access to electricity in rural areas and improve the quantum and efficiency of electricity supply\. Revised Key Performance Indicators 11\. The key specific project performance indicators are outlined as follows: (a) Number of rural HH with access to electricity generated by micro-hydro schemes\. About 74,000 (cumulative) new HH will be electrified\. (b) 65,000 HH will be electrified by grid-connected electricity\. Reduction in the transmission and distribution losses by 1\.5 percent in the districts where IDA-supported projects are implemented\. (c) Increased transmission capacity, 1,505\.60 MW\. (d) Increased generation capacity, 46\.4 MW\. (e) Increased energy generation, 790 GWh\. (f) Reduced transmission and distribution losses in project-supported nine distribution centers outside Kathmandu Valley by 1\.6 percent\. (g) Reduced distribution losses in nine distribution centers inside Kathmandu Valley by 6 percent\. 2012 Restructuring 12\. PDO remained unchanged\. The restructuring was carried out to cancel the unutilized funds of SDR 27\.76 million (US$42\.47 million) of the project by the closing date of December 31, 2012; extend the closing date for 12 months to allow for the disbursement of SDR 19\.37 million (US$29\.63 million) of project funds covering ongoing contracts; and revise the monitoring and evaluation (M&E) framework\. Revised Key Performance Indicators 3 The World Bank (P043311) 13\. The key performance indicators are outlined as follows: (a) Increased transmission capacity, 500 MW (b) Increased energy generation, 620 GWh (c) Other indicators remained unchanged 1\.4 Main Beneficiaries 14\. Original beneficiaries\. The main beneficiaries of the project at appraisal were about 30,000 rural HH to be provided with off-grid connections and 37,000 HH to be provided with grid connections (both existing and new consumers)\. 15\. Revised beneficiaries\. The main beneficiaries after two rounds of restructuring and additional financing were 74,000 rural HH to be provided with off-grid connections and 65,000 HH to be connected to grid (including rehabilitation and new connections)\. With rehabilitation of the thermal power plants, generation capacity of the NEA increased by 46\.4 MW, providing an increased energy generation of 620 GWh\. 1\.5 Original Components Part A\. The PDF Component (US$75 million: IDA Grant US$35 million, remaining US$40 million financed from developersâ equity and commercial banks, TA from IDA Grant of about US$2\.5 million) 16\. The PDF was a financing facility to be established by the Government under this project\. The PDF was expected to provide long-term financing for the private sector-led small- and medium-size hydropower developments in Nepal to overcome (a) the lack of sufficient debt financing for private sector hydropower projects, (b) inadequate tenors of available debt financing, and (c) the need to provide comfort to private investors willing to become involved in âfirst-timeâ projects through the World Bank involvement\. The fund was to be wholly owned and operated by the Government but with administrative management contracted out to a commercial bank\. Under this credit operation, the PDF was expected to finance small hydro schemes with an aggregate capacity of about 25 MW and one medium-size scheme of about 30 MW\. The PDF was to be managed by a fund administrator, which could be a private commercial bank operating in Nepal and to be selected by the Government through a competitive bidding process agreed with the World Bank\. The TA Grant from IDA was to finance the administratorâs fees, as well as the operating expenses associated with the PDF board during the initial years of operation of the PDF\. Once this capacity was developed, the fund was expected to become self-sustaining\. Part B\. Micro-Hydro Village Electrification (US$8\.9 million: IDA Grant US$5\.5 million, remaining financed by the United Nations Development Programme [UNDP], community contributions, District Development Committee [DDC] investments, and loans from the Agricultural Development Bank) 17\. This component was included to support the scaling-up of a community-based micro-hydro village electrification program (MHVEP) by developing about 2\.5â3\.0 MW of new micro-hydropower systems to serve some 30,000 new HH\. The project was expected to build on the successes achieved under the UNDP- financed Rural Energy Development Program (REDP) and extend electrification activities from the 15 districts currently served to another 10 districts\. Program implementation was planned to be 4 The World Bank (P043311) decentralized through the local government, DDCs, and VDCs and involved the formation of a micro-hydro functional group at each participating community\. The Alternative Energy Promotion Center (AEPC), which is the agency responsible for the promotion and development of alternative and renewable energy technologies in Nepal, was responsible for the overall management of this project component\. Further, through UNDP cofinancing, the existing REDP Project Support Unit was planned to be strengthened to support the increased level of micro-hydro system development envisaged\. Part C\. NEA Component (US$31 million: IDA Credit US$15\.4 million, IDA Grant US$15\.6 million, and TA Grant US$1\.6 million) 18\. This component involved investment support for the construction of a 220 kV double circuit TL (with one circuit strung initially) from Khimti power station to the existing 132 kV Dhalkebar substation\. Further transmission and sub-transmission investments were to be selected based on the NEAâs priority and the Least-Cost Investment Plan and the project eligibility criteria\. This was expected to include the financing of a 132 kV TL from Dhalkebar substation to Bhittamod on the Nepalese side of the border with India (joining the Indian grid at Sitamarhi substation in Bihar about 40 km from the Nepalese border) to facilitate cross-border power trade and the extension of 132 kV line bays at the associated substations\. Financing of the Dhalkebar to Bhittamod TL and the associated substation was contingent on the appropriate institutional, administrative, legal, social, and environmental arrangements, which would be acceptable to IDA, being put in place\. The IDA financing was for the supply and installation of equipment and materials and civil works for the extension of the NEAâs sub-transmission and distribution systems to rural areas and towns not electrified and rehabilitation and reinforcement of the NEAâs existing distribution systems in urban and semi-industrial centers\. The TLs were expected to enhance grid reliability and stability and reduce system losses\. The sub-transmission and distribution schemes were expected to improve access, quality, reliability, and operational efficiency of power supply to consumers\. Acquisition of spare parts and protection equipment was also included in the project\. The TA included several institution-building initiatives at the NEA\. These include strengthening of the NEAâs financial management, audit, and accounting systems\. The TA was also to support conducting of market studies to review opportunities for productive use of surplus energy, extension of service to rural areas, power wheeling, and associated pricing studies that would enhance opportunities for private sector participation in the power sector\. 1\.6 Revised Components Part A\. The PDF Component (US$1\.08 million: TA from IDA Grant) 19\. The restructuring in 2008 limited the scope of the PDF component and reduced it to TA activities only\. Meanwhile, the Kabeli-A hydropower plant, which was originally envisaged as the first private sector small hydropower project financed through the PDF, is now being supported by the World Bank as a stand- alone intervention\. Therefore, the PDF investment fund of the Power Development Project (PDP) was closed and only the TA activities remained under this component\. Part B\. Micro-Hydro Village Electrification (US$21\.5 million: IDA Grant US$21\.5 million) 20\. After restructuring in 2008 and 2012 and additional financing in 2009, the scope of the MHVEP component was increased due to successful implementation of the micro-hydro projects\. The target of electricity generation (off-grid) was scaled up to 8\.01 MW to serve 74,000 HH\. 5 The World Bank (P043311) Part C\. NEA Component (US$106\.69 million: IDA Credit US$83\.28 million and IDA Grant for TA estimated at US$1\.6 million) 21\. After restructuring in 2008 and 2012 and additional financing in 2009, several activities were added, but a few were dropped\. The activities started under the original project have been completed, except the Khimti-Dhalkebar (K-D) TLâwhere eight towers have been affected by right-of-way (ROW) difficulties that have not been resolved so far\. Of the activities initiated upon restructuring and additional financing, all activities are complete except the Hetauda-Bharatpur (H-B) and Bharatpur-Bardaghat (B-B) TLs, which have been delayed due to lack of adequate institutional processes for contract monitoring, delayed forest clearance, and delay in finalizing the transmission route alignment\. The Ramechhap Rural Electrification Project was dropped due to limited time availability for completion of the project and investigation of the procurement by the Commission for Investigation of Abuse of Authority of Nepal\. Similarly, the Kathmandu Valley Distribution System Rehabilitation Project is facing delays because of fraud in supply of transformer package, where aluminum-wound transformers were supplied against a tender specification of copper-wound transformers\. The case was investigated by the Commission for Investigation of Abuse of Authority and the World Bankâs Department of Institutional Integrity\. 1\.7 Other Significant Changes 22\. The H-B and B-B TLs were transferred to the Nepal-India Electricity Transmission and Trade Project (NIETTP) (P115767) as an additional financing\. The projects are under implementation\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design, and Quality at Entry 23\. The project was originally designed with the objective of developing a basic power infrastructure to promote broad-based economic growth and improve Nepalâs hydro resource utilization\. It was expected that the project would lead to an increase in domestic power supply and facilitate private sector investment in hydropower\. The project was appraised in 1997 and reappraised in 2001; the Board approval was finally given in 2003, and by then, the country was under strong political unrest\. Nepal went through a period of active insurgency and political instability, resulting in a frequent change of government during the project implementation period\. The project was designed including the lessons learned from the experience\. The participatory approach was basis of rural electrification program\. Nepal had been successfully implementing rural projects where communities were involved in the preparation\. Similarly, Nepalâs hydro sector needed transparency and competition in the selection of private independent power producers to ensure efficient pricing and raise credibility of the countryâs privatization program\. The project was designed to support establishment of a transparent process of inviting offers on an internationally competitive basis\. 24\. The risks at appraisal was appropriately assessed and various mitigation measures were proposed\. The overall risk rating at appraisal was considered as Substantial\. The project was under high risk because of the continued security situations in Nepal\. However, the PDF component was a failure because of weak institutional capacity of the newly created Power Development Fund Board, where all the members were part-time and no full-time staff were recruited\. Although the mitigation measures were identified, these did not materialize and thus this component had to be dropped after not being able to achieve the major objective of private sector participation in the power sector of Nepal\. It appears that the original project 6 The World Bank (P043311) design did not thoroughly examine the constraints to private sector participation in hydropower development\. The project, during preparation, was too optimistic on private sector response to the proposed PDF line of credit for hydropower development and, hence, somehow failed to capture the interest of private sector, which ultimately affected the implementation of the project\. 25\. The social and environmental aspects of the project were well assessed at the appraisal stage based on the available baseline information and considering the prevailing volatile political situation at that time\. Necessary studies such as the Environmental Management Plan, the Environmental Impact Assessment (EIA), and the Social Impact Assessment were also prepared for the project activities as required\. The implementation of these plans was challenging in the crisis period because of insurgency\. The MHVEP component was well designed and addressed specific needs of the local community\. The design of the sub project still provides a good model of community participation in renewable energy for the region as community participation was encouraged and project implementation was successful despite the difficult security situation in the country because of insurgency\. The NEA component was well designed considering the project objective; however, the project could not pursue the financial improvement plans for the NEA\. The Quality Assessment of the Lending Portfolio panel (Quality Assessment Group) also rated the quality of design Moderately Satisfactory in 2008\. 2\.2 Implementation 26\. Political instability in the country and lack of capacities in the counterpart organizations caused delays during the initial stage of project implementation\. However, later it was the NEAâs low capacity and too many ambitious objectives targeted by the project, with three implementing agencies having no proven ability to deliver such outcomes, that may have put the agencies in difficulties\. There are many factors that led to delays, such as unstable and turbulent political environment, inefficient staffing, immature private sector, and poor capacity of institution to accelerate implementation\. The World Bank has a fairly long engagement with the NEA and has found the NEAâs organizational structure and business processes to be cumbersome, leading to inefficient resource utilization and delayed decision making\. Some activities such as design are carried out repetitively for individual projects rather than being centralized\. There is lack of a coordinated approach between the major government stakeholders, which leads to delays in decision making\. Delays in procurement process, delays in awarding contracts, and lack of required technical skills are some of the major issues\. To address these constraints, the project was restructured twice, in 2008 and 2012, and the PDO and targets were revised\. However, the project could not disburse the expected target budget, even though there was improvement in disbursements after the restructuring\. 27\. The implementation modality adopted for the MHVEP clearly spelled out the roles and responsibilities of stakeholders from the grassroots to the central level\. With the UNDPâs TA, the Project Management Unit (PMU) successfully coordinated activities at the central, district, and community levels to implement the MHVEP\. 28\. Procurement and contract management\. The implementing agencies faced difficulty in both procurement and contract management, primarily because of poor capacity in procurement and contract management\. Lengthy procurement and delay in decision making to award the contracts also led to the poor performance of the project\. 7 The World Bank (P043311) 29\. For the MHVEP, the subsidy for micro-hydro projects based on the Renewable Energy Subsidy Policy of the GoN was channeled through the District Energy Fund (DEF) of the DDCs to each Community Energy Fund\. Procurement and contract management was done through Community Procurement Guidelines\. The DDC provided TA to the communities\. This approach enabled quick decision making and timely contracting between the communities and suppliers/installers\. 30\. Detailed design process\. There was an issue with the TL project preparation adopted by the NEA\. The route alignment survey ignored the social impacts, which later affected the implementation\. The detailed site survey was carried out by the engineering, procurement, and construction contractor, which increased the time line and sometimes also led to a change in line design\. Furthermore, the NEA did not possess its own tower designs; as a consequence, tower designs needed to be type tested in each and every contract, resulting in delays\. A detailed feasibility study of the micro-hydro project is carried out by the AEPCâs prequalified consulting firms\. The AEPCâs Technical Review Committee reviews each micro- hydropower plant (MHP)\. 31\. Construction supervision and contract management\. The NEA lacked adequate project management capacity, which led to protracted contracting and implementation periods\. Had the project design taken this into account, the provision of a Project Management Consultant (PMC) would have been included in the project TA component\. Further, the time lag between project planning and implementation was too long due to processes such as acquisition of license by the NEA for every project, approval of detailed estimate of each project by the ministry, and so on\. Because of the lag, the site conditions changed rapidly during implementation, leading to issues such as conflicts with communities, and significant contract variations, which the NEA was not able to handle efficiently\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization 32\. The project had designed quite a decent M&E system\. The implementing agencies were responsible to produce a set of periodic progress reports, including technical, procurement, and environmental and social updates in the report\. Similarly, financial monitoring reports were to be submitted on a trimester basis\. Apart from this, the midterm review was planned\. Detailed outputs and outcomes set out in the Project Appraisal Document for each component were monitored closely by the Project Management Offices\. The data on performance indicators were collected from the implementing agencies and incorporated in the semiannual progress reports\. In addition, the World Bank supervision teams carried out periodic missions and reported the relevant issues in the Implementation Status and Results Reports (ISRs) and Aide Memoires\. These M&E arrangements helped identify and address the implementation issues and take corrective actions necessary, such as restructuring and revising the PDO and indicators\. 2\.4 Safeguard and Fiduciary Compliance 33\. Social safeguards\. The implementation of social safeguards has been a challenge throughout the project, which resulted in an inspection panel case\. The project has completed safeguard activities, except compensation payment for a disputed area where the community refused the Resettlement Action Plan (RAP) assessed amount\. The project made all efforts including engaging an independent facilitator to hold consultations with the community to resolve the issue, but they refused to receive the offered compensation\. To resolve this issue, the project has transferred the outstanding compensation amount plus 10 percent into an escrow account and informed the community that this amount is available to them 8 The World Bank (P043311) when they decide to receive it\. Similarly, communities in the disputed section in Sindhuli have shown no interest in implementing remaining activities identified under the Vulnerable Community Development Plan (VCDP)\. Given these efforts, the RAP and VCDP implementation is considered completed\. 34\. The World Bankâs Inspection Panel received a request for inspection submitted by the affected people in Sindhuli district in the project area (K-D TL), which was registered on July 24, 2013\. The Inspection Panel recommended an investigation, and this was approved by the World Bank Board of Executive Directors\. The request raised various concerns related to the consideration of TL alternatives, compensation, alleged human rights violations by police, lack of adequate consideration for indigenous peoples, and consultation and disclosure\. The Inspection Panel submitted its Investigation Report to the Board on February 12, 2015\. The Inspection Panel findings indicated that there was considerable delay in (a) translation and disclosure of subproject-specific safeguard documents, (b) implementation of the RAP and the VCDP, and (c) implementation of agreed grievance mechanism\. It also found that the project violated Operational Policy (OP) 4\.12 on Involuntary Resettlement, Operational Manual Statement (OMS) 2\.20, Operational Derivative (OD) 4\.01, and OP/BP 4\.01 on Environmental Assessment, and OP 4\.10 and OP 4\.12 on Indigenous People\. On March 30, 2015, the management submitted its response to the Inspection Panelâs findings, including a detailed Management Action Plan\. 35\. Implementation of the Management Action Plan took two years to complete\. The first progress report to the Board on implementation of the Management Action Plan in response to the Inspection Panel Investigation Report was submitted on August 5, 2016, and the second progress report on August 30, 2017\. 36\. The necessary remedial actions outlined in the Management Action Plan are now considered complete and the details are provided in the following paragraphs\. 37\. Area where dispute arose\. The Sindhuli community where the Inspection Panel case arose involved a 3\.85 km section of the K-D TL\. The community had pressed for an alternative alignment or at least a much higher level of compensation than is usual for those affective by the TL ROW\. After a range of discussions, the Department of Roads agreed to acquire the land under the 3\.85 km length of ROW for a feeder road, compensating owners at 100 percent of the land value\. Out of 159 plots, 132 have been compensated, amounting to NPR 207\.8 million (92 percent of the total compensation for this section)\. The outstanding compensation cases involving 27 land plots include absentee owners or where legal disputes of property division among owners are pending\. In some instances, owners have not yet collected compensation amount although they have been repeatedly notified\. Funds for compensation (plus 10 percent contingency) for the remaining 27 plots have been deposited in Special Purpose Accounts\. Thus, this activity is considered complete\. 38\. Safeguards compliance on the remaining sections of K-D TL\. Compensation for land acquisition for Tower Pads have been paid for 98 percent of the land\. Out of the remaining 2 percent, five owners (authorized for receiving compensation) are yet to be traced and two owners have rejected the compensation amounts\. Similarly, payment for structures under the TL is complete in Dhanusa and Sindhuli districts, with only 4 percent of the compensation remaining in Ramechhap district where three owners are yet to demolish the structure to receive the full compensation\. They have received 50 percent compensation and the balance amounts will be paid once the structures are demolished\. The project has also completed all rehabilitation and resettlement payments\. In the case of the ROW, 82 percent of the ROW compensation has been paid\. The remaining compensation has not been disbursed due to various 9 The World Bank (P043311) reasons such as (a) absentee owners, (b) property disputes among family members, (c) legacy problems, (d) unclear Project Affected Families in the case of land ownership in Guthi (religious trust), and (e) the rate of compensation\. Sufficient funding for outstanding compensation (plus 10 percent contingency) has been deposited into Special Purpose Accounts at the District Administration Office in all the districts, including Sindhuli, where affected persons can collect it\. Therefore, this activity is considered complete\. 39\. The VCDPs have been completed for all districts, except for the disputed section of 3\.8 km in Sindhuli\. The independent facilitator, hired to conduct facilitated dialog in updating and implementing the VCDP in Sindhuli, concluded that the community is not interested in implementation of activities identified in the VCDP\. Two TLs, namely H-B and B-B TLs, that were ongoing at the time of PDP closing (December 31, 2013) have continued implementation under the ongoing NIETTP Additional Financing\. 40\. Environmental safeguards\. There has been no major issue in the micro-hydropower, rehabilitation of diesel, multifuel plants, and distribution system rehabilitation works\. Environmental issues were mainly related to the TL projects (K-D)\. Two EIAs were carried out, one for the K-D TL and the other for the Hetauda-Bharatpur-Bardaghat TL\. The H-B and B-B TLs were transferred to NIETTP projects and safeguards activities are supported by the NIETTP\. Baseline information and a specific Environmental Management Action Plan were updated during the early stage of implementation to reflect the final alignment of each TL, which is chosen after contractorâs survey\. The project engaged the NEAâs Environment and Social Studies Department (ESSD) for monitoring of the contractorâs performance, implementation of awareness and training activities, compensatory plantation for the trees lost, and updating the safeguards documents when needed\. The ESSD often came late on board, which affected timely monitoring and implementation of certain activities\. Monitoring of the contractorâs compliance and performance in the TL projects reported frequently that health and safety measures at work sites were generally inadequate\. 41\. Procurement and financial management\. The financial management performance of the project has been rated Moderately Unsatisfactory in the last ISR and is maintained with the same rating at the Implementation Completion and Results Report (ICR)\. 42\. The PDF component remained dysfunctional with the incurrence of only incremental operating expenses\. The intended hydro project could not materialize as planned, resulting in dissolution of the PDF board, and thus, this component could not be implemented\. The DOED submitted the financial monitoring reports only at the time of submitting the unaudited project account\. The audit reports from the DOED were received beyond the grace period at times\. The NEA component also lagged in project implementation at times and was not able to meet the covenants of the Financing Agreement\. There are challenges more at the entity level than at the project level at the NEA in relation to accounting, asset management, and internal controls as highlighted in the recurring audit observations\. Some of the examples of the deficient areas are lack of control registers and physical verification, inadequate supporting documents, lack of reconciliation of inter-unit transactions, unreconciled accounts/balances, unconfirmed debtors/creditors, inventory valuation not as per the standard, lack of budget monitoring, lack of accounting for foreign exchange gain/loss, and so on\. The NEA has not been able to implement the action plan to address the highlighted deficiencies\. The NEAâs entity financial statements have always been qualified while project accounts were qualified for FY2010/11 and FY2011/12 because of misuse of project assets and advances provided to contractors without certification for capital work in progress, respectively\. Efforts are under way to address the financial management challenges at the entity level 10 The World Bank (P043311) through the institutional development component, which will be implemented under the additionally financed NIETTP\. 43\. Regarding the AEPC, the major control deficiency noted was lack of district-level monitoring of expenditures\. The disbursements made to the DEF were not verified for actual expenditures made to the beneficiaries (subprojects) from the respective DEF\. This resulted in delay in disbursement from IDA because of inadequate supporting documents\. Also, the refund of NPR 86,463,620\.50 was requested to the AEPC for the payments made to 51 incomplete subprojects against the milestones not achieved as of the project closing date\. The AEPCâs audit reports were usually received within the grace period\. 2\.5 Post-Completion Operation/Next Phase 44\. Out of the various activities under the project, Pathlaiya substation, Chandranigahapur substation, rehabilitation of multifuel and diesel fuel plants, Kaligandaki model test project, and the distribution system rehabilitation project had been completed within the project completion time\. The K- D TL was completed after the project completion period (February 2017)\. The thermal plants (multifuel and diesel plant) are running satisfactorily\. The H-B and the B-B TL projects could not be completed by the project closing date of December 2013\. 45\. The AEPC had undertaken 36 additional MHPs with financial resources from the GoN after the project closing\. The additional funding from the GoN helped complete the MHPs construction post completion of the project\. Many of the MHPs constructed under the PDP have been registered as a carbon offset project with the United Nations Framework Convention on Climate Change on October 18, 2010\. The verification for the emission reductions was initiated and Certified Emission Reductions has been issued for eligible plants\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation Rating: Substantial 46\. The project was relevant to the countryâs needs (electricity access, private participation and financing, infrastructure development) when designed and made effective\. A World Bank-financed sector work on the power sector development strategy in 2001 identified the key power sector issues of Nepal that the project design addressed to a large extent\. The project supported the CAS goal of developing basic infrastructure to promote broad-based economic growth and improve resource utilization during the time of preparation\. The CAS sector strategy emphasized increasing domestic power supply and facilitating the private sector investments\. The MHVEP component, PDF, and loss reduction fitted well with the CAS goals of bringing resources closer to the beneficiaries and supporting decentralization and community-based projects\. 47\. The project remained consistent with the World Bankâs Interim Strategy Note (ISN) for Nepal (FY11â13)\. The ISN recognized the direct relationship between the years of underinvestment in infrastructure (particularly in the power sector) and the current low level of economic development\. The ISN articulated a role for IDA and International Finance Corporation in supporting new hydropower generation and associated investments in power sector infrastructure\. The project design addressed priority infrastructure needs and necessary institutional reforms\. 11 The World Bank (P043311) 48\. The project design was appropriate, but the implementation was unsatisfactory as it was delayed because of various reasons such as insufficient implementing agency capacity and rapidly evolving political and security environment within Nepal, among others\. In addition, because Nepal was facing chronic load shedding since 2003 when the PDP started, it could be debated that the project/subprojects could have been strategic to tackle the most critical problems that the energy sector faced; for example, storage type power plants to provide base load stability should have been included in the subproject\. 3\.2 Achievement of Project Development Objectives Rating: Modest 49\. The achievement of the revised PDO by the closing of the project was Modest\. The PDO was changed twice, in 2008 and 2009 (additional financing)\. The restructuring of the project in 2009 was a timely decision taken by the team\. The disbursement achieved by 2009 was only about 23 percent\. After revising the PDO, the disbursement of the project was over 77 percent\. There were two aspects of the PDO: (a) increase access to electricity in rural areas and (b) improve the quantum and efficiency of electricity supply\. The project was successful in achieving access to electricity (off-grid) to 88,934 HH in rural areas; improving quantum of electricity supply (generation capacity of 53\.4 MW); and achieving efficiency of electricity supply (against loss reduction target in nine distribution centers by 1\.6 percent, the project achieved 4\.74 percent of loss reductions)\. 50\. The team has provided lower ratings as out of several PDO-level indicators, only a few were achieved (see annex 2 for details of status of outcomes)\. The PDF line of credit was unsuccessful and failed in attracting the private sector to develop hydropower\. None of the TL contracts have been completed by the project closing date\. The underlying assumption for the success of the PDF line of credit and successful implementation of TL projects were an acceptable level of capacity of the private and public sectors\. The regulations and policies of the sector were too weak to attract the private sector\. 51\. However, the project was successful in achieving the following objectives\. The project has contributed in increasing generation capacity by 53\.4 MW against the target of 46\.4 MW\. The reduction in distribution losses in distribution centers (within Kathmandu Valley and outside Kathmandu Valley) was achieved for centers outside Kathmandu Valley only\. Aggregated targeted loss reduction in nine distribution centers in Kathmandu Valley was 6 percent, and by the end of the project, the losses were reduced by 3\.9 percent\. The project work has been carried out even after the closing date of the project\. Most of the activities taken through the additional financing in 2009 were not completed before the closing date of December 31, 2013\. The two incomplete TLs and installation of system integrators are continuing under an ongoing NIETTP and other incomplete project activities were managed by the GoN, resulting in a dismal picture of project performance\. 52\. However, the achievement of PDOs for the MHVEP component is Satisfactory\. Against the target of generating 8\.09 MW and benefitting 74,000 HH, the program has successfully completed generating 8\.497 MW and providing electricity access to 88,934 HH\. With increased financial resources from exchange rate gain and additional GoN subsidy, the AEPC supported the communities to install 36 more MHPs\. With all MHPs completed, there will be 357 projects with installed capacity of 9\.58 MW and benefitting 99,073 HH, developed with the MHVEP support\. Out of these MHPs, 43 plants with 930 kW capacity and benefitting 9,535 HH were built with the UNDPâs financial assistance\. 3\.3 Efficiency 12 The World Bank (P043311) Rating: Modest Economic Analysis 53\. The efficiency is rated Modest for the project\. The cost of achieving the project objectives was much lower than was envisaged during appraisal\. The project had allocated US$164 million during appraisal from IDA resources and cancelled cumulative of US$55 million from the project throughout the project period\. The project had disbursed over 80 percent over its lifetime\. With a project duration of over nine years, this amount could have been utilized more efficiently\. 54\. Based on the analysis carried out by the team, most of the components of the project were efficient, considering the reasonable costs involved in achieving the actual values of the PDO outcome indicators\. The monetary benefits arising out of the project have been estimated through an opportunity cost analysis\. For the TLs, project benefits were estimated using the wheeling charge\. Similarly, the loss reduction project benefits were calculated by the energy saving that the distribution centers observed after the rehabilitation of the distribution lines\. For the rural electrification process (grid and off-grid), consumer surplus per household was identified when compared to kerosene lamp for lighting purpose\. Table 1 shows the economic internal rate of return (EIRR) and the financial internal rate of return (FIRR) for the project subcomponents\. Table 1\. Rate of Return of the Project Subcomponents S\. No\. Project Component EIRR (%) FIRR (%) NPV (US$, millions) 1 K-D TL 17 12 4\.95 2 H-B TL 20 15 4\.44 3 B-B TL 21 16 4\.86 4 Distribution loss reduction inside Kathmandu Valley 32 23 17\.92 5 Distribution loss reduction outside Kathmandu Valley 48 35 22\.50 6 Rural electrification on-grid 39 â8 29\.60 7 Rural electrification off-grid (AEPC Component) 87 4 88\.50 55\. Appraisal-stage economic analysis\. The projectâs component and design changed significantly as compared to the appraisal stage\. Therefore, the economic analysis is not comparable to each project/subproject\. The rates of return of the pipeline of small hydro investments under the Power Development Fund were in the range of 30 to 33 percent\. The long run marginal cost of generation was used to value the electricity production from these investments\. The MHVEP component was estimated to yield an average economic rate of return of 10\.9 percent during appraisal\. The MHVEPâs economic returns are increased by the closing date\. 56\. Based on the extended time of the project completion, huge undisbursed amounts and incomplete activities, the efficiency is rated Modest, even after having good results for economic analysis\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory 13 The World Bank (P043311) 57\. Since the projectâs PDOs were revised twice, split evaluation approach was used to rate the overall outcome\. To assist in arriving at an overall outcome rating, separate outcome ratings (against original and revised project objectives) were weighted in proportion to the weight of actual disbursements made in the periods before and after approval of the revision\. Using this evaluation approach, the overall outcome rating is rated Moderately Unsatisfactory\. The disbursement achieved by 2008 (around US$17 million) was about 15 percent, 8 percent by 2009, and after the final restructuring over 77 percent of disbursement was achieved\. Similarly, project outcome was assessed against both the original and revised project objectives\. Based on this, the three PDOs (original PDO, Revised PDO [2008], and Revised PDO [2009]) were rated Highly Unsatisfactory, Unsatisfactory, and Moderately Satisfactory, respectively\. Refer to annex 6 for details of split rating approach used for the overall outcome\. 58\. The overall outcome rating is justified because most of the activities were delayed and faced many challenges\. The two restructuring were helpful and adjusted the design issue of the project\. Although, some of the outputs were not completed by the closing time, the targets of the key PDO outcomes were achieved\. The TL projects (H-B and B-B) are still under construction under the NIETTP\. The other components such as rehabilitation of diesel and multifuel plants and construction of Pathlaiya and Chandranigahapur stations performed satisfactorily and were completed within the given budget and time\. 3\.5 Overarching Themes, Other Outcomes and Impacts 59\. Relatively significant support from the World Bank for the TA projects achieved some benefits such as capacity building, income-generating activities, and institutional strengthening at the local level\. Similarly, the VCDP focused on some religious and historical heritage sites for conservation\. (a) Poverty Impacts, Gender Aspects, and Social Development 60\. The electricity generated from the MHP under the MHVEP component has helped in establishing more than 723 productive end users (individuals and communities)âthe agro-processing mills, carpentry, bakery, communication centers, and so on are the most popular end uses\. Renewable Energy for Rural Livelihood (RERL) supported the communities in Dhading district to install the irrigation systems by pumping water using electricity\. These systems are operating smoothly and have benefitted the involved HH through increased incomes\. 61\. Construction of MHPs generated employment opportunities for local people as laborers with payment for more than two months on average\. Even after the construction (or during power plantsâ operation stage), each MHP employed three people on average\. HH expenditures were reduced by shifting the lighting source from kerosene to electricity\. Rural people also could save more than one hour of their time and women have been using this saved time for household work and children for study\. 62\. After the installation of MHPs, about 1,200 jobs related to operation and management have been created in rural areas\. Moreover, taking advantage of access to electricity, local entrepreneurs have established over 677 microenterprises providing direct employment to at least two persons on average\. It has been observed that womenâs involvement in running such small-scale industries has also increased noticeably\. 14 The World Bank (P043311) 63\. Access to renewable energy systems has also helped reduce the time taken for collection of fuel wood and grain processing in the program villages\. The same study shows that on average, three hours is saved daily by villagers\. Similarly, the average walking distance to fetch clean drinking water has reduced from about 400 meters to 175 meters\. In addition, HH have saved expenditure up to 96 percent on kerosene and 30 percent on batteries\. Many families have made use of the time and money saved and initiated additional income-generating activities\. (b) Institutional Change/Strengthening 64\. The project helped train engineers and technical persons at many levels\. So far, the project has trained 3,362 persons on micro-hydro operation/management, house wiring, end-use skills, and so on\. The working modality of the MHVEP component helped train the AEPCâs human resources on institutional development initiatives such as formation of community organizations, functional groups, and cooperatives\. The project helped train over 2,200 people on the institutional development training\. 65\. The community-led development approach taken by the MHVEP has proved to be highly successful with regard to both service delivery and positive impacts on rural livelihood\. Even during insurgency, project implementation could go on as the beneficiaries themselves were involved in project identification, planning, construction, and operation and management\. The elaborate community mobilization package developed by the REDP/RERL has helped in this regard\. Involvement of local Governmental institutions in rural energy development, including micro-hydro, has helped build up the capacity of these institution\. 66\. Based on the field-level experiences, the REDP/RERL supported the AEPC to formulate the Rural Energy Policy in 2006\. The policy emphasizes mobilizing communities and local governments\. In line with the policy, the AEPC has supported the DDC of all 75 districts to establish energy and environment sections to institutionalize rural energy development activities\. (c) Other Unintended Outcomes and Impacts (positive or negative) 67\. Micro-hydro has also helped increase agriculture production with reliable water supply\. The MHPs are designed to maximize water use from head/tailrace canals and integrate them with irrigation\. In a couple of projects, the RERL has supported the communities to install lift irrigation using energy from the MHP\. With improved irrigation facilities, the income level of beneficiary communities engaged in production of high-value crops such as off-season vegetables has improved dramatically\. 4\. Assessment of Risk to Development Outcome Rating: Moderate 68\. The overall risk rating of the original project was Substantial, which was understated, particularly considering the political instability and the security conditions of the country\. In addition, some of the specific risks were understated, such as the NEAâs financial soundness and timely implementation of the transmission/distribution schemes\. 69\. The risk assessment for the restructured project was reasonable but missed analyzing the key residual risk on account of safeguard issuesâspecifically, land acquisition and ROW for TLs, which delayed the completion of all the TL projects\. The project outcomes are at high risk with the Government not being 15 The World Bank (P043311) able to solve the land acquisition issues for the TL projects\. The potential risks to the development outcomes for the current and future projects are summarized as follows: â¢ The delay in construction of the TLs results in constraining the import or export of energy from and to India, resulting in energy demand supply gap\. â¢ Local transmission and distribution bottlenecks impeding electricity supply to demand centres\. â¢ Operation and maintenance (O&M) of the micro-hydro is essential for sustainability of these plants\. The local communities and AEPC should maintain the O&M for proper functioning of the hydro plants\. 70\. However, the construction of H-B and B-B line is taken up under the ongoing NIETTP and is planned to be completed by 2019\. The project has adequate budget for its implementation as well as for the safeguard measures\. Considering all this, the risk to development outcome is rated Moderate\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 71\. The project design faced periodic shifts in the wake of changed country security conditions and global oil prices hike after the Board approval date to the implementation stage\. The project was appraised in 1997 and reappraised in 2001\. By the time the project went to the Board, Nepal was facing political unrest and a period of active insurgency, which was something beyond the control of the World Bank\. The risk assessment was not carried out properly given the political situation that resulted in difficulty in consultation with communities\. Similarly, assessment of the impact of insurgency should have been carried out to identify implementation risks\. All this led to a poor design of the project\. In a few years following the project approval, conditions prevailing were different from what it was in 2003\. By the end of 2006, rise in oil prices and increase in energy demand from neighboring countries spurred private investment in large-scale hydro projects\. Thus, the PDF component was stalled as it is mainly focused on small- and medium-scale hydropower projects\. The other two components were well designed and had a clear rationale\. The MHVEP component was designed very well and the community participation approach adopted proved to be effective in Nepal\. The task team tried to restructure the project three times to accommodate the changing context of Nepal\. (b) Quality of Supervision Rating: Moderately Satisfactory 72\. Given the nature and complexity of the project, the task team supervision effort was intense and highly supportive to the PMU and the implementing units, which helped develop a highly collaborative relationship between the NEA, the AEPC, and the World Bank\. This effort had the continuous support of the World Bank management, including numerous visits by senior officials to various sites\. The back-to- office reports (BTORs) were thorough and identified problems, issues, and proposed actions to resolve difficulties\. However, weakness was seen in financial performances and delays in submission of reports 16 The World Bank (P043311) by the NEA till the end of the project\. A clear lesson learned from the project is that, in case of weak capacity clients, it is more efficient to include a PMC under the TA component of the project\. This takes the intense supervision load off the World Bank team, but more importantly, it helps the utility build project management capacity by deploying a âshadowâ team with the consultant\. The utilityâs team can learn by doing, adopt the project monitoring processes, and then use the same for other projects\. The borrowerâs team was further supported with guidance from safeguards and fiduciary specialists from the World Bank\. 73\. Overall assessment of the quality of supervision\. Periodic supervision missions were carried out and Aide Memoires and BTORs were prepared and discussed during the wrap-up meeting\. The key issues were communicated to the respective ministries through periodic Management Letters from the Country Management Unit\. The findings of the mission were also recorded in the ISRs appropriately\. The overall quality of supervision was Moderately Satisfactory\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory 74\. Overall, World Bank performance is judged as Moderately Satisfactory based on justification provided earlier and feedback from the borrowerâs completion report\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 75\. The GoNâs performance is Moderately Satisfactory, as there was provision of necessary budget to meet shortfall of funds in operating expenditure as provided in the Legal Agreement\. (b) Implementing Agenciesâ Performance Rating: Moderately Satisfactory PDF Component: Unsatisfactory 76\. The performance of implementing agency was Unsatisfactory as the PDF board was not active for many years and had the following issues: â¢ Lack of dedicated full-time staff to carry out project activities â¢ Inability to hire PDF administrator for two years after project initiation â¢ Delay in procurement MHVEP Component: Satisfactory 77\. The planned investments were completed and the original target of 74,000 off-grid HH electrified was achieved\. However, with additional resources from the GoN, more MHP projects were completed by the program after the project closing\. NEA Component: Moderately Satisfactory 17 The World Bank (P043311) 78\. The performance of the NEA component was Moderately Satisfactory in many respects\. â¢ The subprojects, the rural electrification and loss reduction, successfully achieved the results\. â¢ The appointment of the project coordinator for the NEA component was helpful for a smooth coordination within the various department of the NEA\. â¢ Frequent changes in staff were significant contributors to the time lag to achieve the development objectives\. â¢ Environmental and social safeguard issues were not handled with diligence\. However, after increased efforts from the World Bank side on supervision, the NEAâs management cooperated well and tried resolving the issues\. (c) Justification of Rating for Overall Borrowerâs Performance Rating: Moderately Satisfactory 79\. Overall, the borrowerâs performance is judged as Moderately Satisfactory based on justification provided above for all the three implementing agencies\. 6\. Lessons Learned 80\. Political economy analysis\. Political risk assessment was not carried out in this project\. It should have been considered before investing in a country such as Nepal during the insurgency period\. The project cannot succeed without timely identification of the key issues constraining implementation and corrective action taken to resolve them\. This project had faced many challenges arising due to political instability and the project design should have been less ambitious\. 81\. Ingredients for a successful World Bank and borrower partnership\. Ingredients for successful projects are a continuing dialogue, understanding of policies and limitations of partners, making compromises where possible without imposing solutions, and taking a tough stand and following through, when necessary\. Many of these ingredients were found, and the project was able to achieve a few of its development objectives owing to good partnership, even though it faced many difficulties\. 82\. However, despite a good client relationship with the World Bank, the implementing agencies such as the NEA and the DOED, in particular, lacked capacity\. The willingness to implement sector reforms to improve the efficiency of service delivery and frequent change in leadership were significant factors for the projects not being able to deliver their outcomes\. 83\. Project design, readiness, and implementation\. Preparatory and implementation activities, including the preparation of feasibility reports, engineering designs, contract documents, and construction supervision, all proved challenging when dealing with the lengthy process of implementing agencies\. The implementing agencies have less experience in project preparation and the PMUs have less experience with the World Bank and international standards\. Further, support to ensure the quality of assessments, designs, and implementation standards is essential\. For example, the Environmental and Social Impact Assessment prepared for the K-D had a very weak alternative analysis, leading to social conflicts faced during the implementation of the project\. Specific readiness criteria for the projects in 18 The World Bank (P043311) Nepal should be defined and these criteria should be part of the project design process\. For example, the criteria, among others, should include detailed route survey, availability/acquisition of lands, permission for forest clearances, and so on\. If such criteria are not fulfilled at the time of effectiveness, then the project should anticipate delays in implementation and the time line should include such delays\. 84\. Similarly, the project was too ambitious in addressing the multiple issues faced by Nepalâs power sector, and it included everything from hydro and diesel generation to transmission and distribution to off-grid electrification\. Perhaps this was done to minimize transaction costs and because the approach involved three implementing agencies\. But this âChristmas treeâ design did not help the project\. 85\. Alternative approach for TL preparation and construction\. The current approach followed by the NEA where a single contractor is responsible for survey, alignment fixing, and construction is not working well\. There should be an alternative approach to fast-tracking construction of TLs, by awarding two contractsâfirst for survey and alignment fixing on the ground (followed by acquisition of tower footing land parcels, forest clearances) and second for construction\. This approach, however, needs to be timed well to minimize the gap between feasibility and construction phase\. 86\. Safeguards compliance and borrowerâs capacity\. The project faced many challenges while implementing the TL, including an inspection panel case\. It was learned through the process that capacity in environment and social risk mitigation and management is very weak within the NEA\. There was a lack of capacity to carry out many of the key safeguards functions, such as effective consultation and the implementation of resettlement and rehabilitation measures; there is also a need for a more scientific land valuation process based on the market principles\. Furthermore, there is a huge capacity gap in conflict prevention and management, leading to small issues growing into difficult disputes\. 87\. Community participation and micro-hydro program\. The community participation was effective and the MHVEP component did well\. It is evident that ensuring that communities participate from the planning stages in projects is beneficial for the project as well as to the locals\. However, there were a few things that could be improved and learned: (a) sustainable O&M of MHP projects is questionable due to the low load factor (or low tariff income) and increasing the end uses should be considered; (b) poor coordination between the NEA and AEPC, leading to a mismatch between grid and off-grid electrification programs; and (c) to scale up a MHP (or MHP program), private sector participation to the rural electrification project as a developer/investor is needed\. 88\. Project management\. One of critical reasons of the PDP failure was that the ownerâs engineer was not used in the project, although lack of the project management and technical knowledge of the NEA was obvious\. The NEA relied on the contractors for the field survey, alignments/locations of power facilities, technical design of facilities, construction planning, construction, quality control, safety management, and commissioning tests\. The NEA could not manage even the progress monitoring of the construction; the contractors did not submit weekly/monthly progress report since the NEA did not request them to do so\. As a result, the NEA could not detect problems in the project at the early stage; usually the NEA detected the problems long after the situation became worse\. Therefore, solutions took time and were costly (or caused delays in project completion and cost overrun)\. Capacity development on project monitoring/management to the NEA officers is a crucial issue for future projects\. Providing the PMC (or the ownerâs engineer) to the NEA would have helped in successful project implementation\. 19 The World Bank (P043311) 89\. Large number of procurement packages\. One of the reasons for slow disbursement was that procurement of transmission and distribution assets was spread across more than 80 packagesâ particularly in distribution\. Implementing agencies with low capacity should necessarily go in for turnkey packages with a PMC helping it in field-level implementation\. During World Bank missions, only scheme- wise review was carried out, which did not address the multiple contract-related issues being faced by the various project managers\. It was only during the last couple of years that a detailed monthly contract- wise review was started by the World Bank team, which expedited progress\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies: 90\. Issue 1: The World Bank did not issue commitment of payment in Renminbi (RMB) even if it allowed bidders to quote in that currency\. Because of this, it took almost nine months to establish the Letter of Credit\. â¢ Comment: This issue was rectified in future projects\. 91\. Issue 2: In the beginning, it was agreed that once the money is sent to the DEF, it was considered delivered and the World Bank reimbursed the money\. However, in September 2012, the World Bank changed its position and now the money is considered delivered only when it is released to the Community Energy Fund\. â¢ Comment: There was some confusion about the fund disbursement mechanism as it was not clearly mentioned in the Project Implementation Manual\. (b) Cofinanciers: Not applicable (c) Other partners and stakeholders: Not applicable 20 The World Bank (P043311) Annex 1\. Project Costs and Financing (a) Project Cost by Component (in US$ Million equivalent) Components Amount at Approval Actual at Project Closing Percentage of (US$, millions) including AF (US$, Approval millions) Component A (PDF) 77\.9 1\.1 n\.a\. Componenet B (MHVEP) 8\.9 22\.1 n\.a\. Component C (NEA) 37\.5 144\.9 n\.a\. IDC 9\.1 â â Total 133\.4 168\.1 n\.a\. (b) Financing Appraisal Actual/Latest Estimate Estimate Percentage of Source of Funds Appraisal (US$, millions) (US$, millions) Borrower 15\.10 - n\.a\. Local Communities 1\.10 1\.10 100\.00 IDA Credit 50\.40 33\.66 67\.00 IDA Credit (AF) 73\.7 38\.00 527\.00 IDA Grant 25\.20 23\.53 93\.00 IDA Grant (AF) 15\.5 11\.22 72\.00 Local Sources of Borrowing Country 2\.80 2\.8 100\.00 Sub-Borrowers 38\.00 - n\.a\. UN Development Programme 0\.80 0\.80 100\.00 21 The World Bank (P043311) Annex 2\. Outputs by Component 1\. Except for the PDF component of the project, most of the outputs were achieved with minor modifications in the scope of the subcomponents\. Project Component/Sub- Target Outcomes S\. No\. component NEA component 1 K-D 220 kV TL Project 188 towers 180 towers 2 Chandranigahapur 132 kV 132 kV substation of 30 MVA 132 kV substation of 30 MVA Substation Project capacity capacity 3 Distribution and Rural Distribution network expansion in 23,881 new HH connections; Electrification Project 5 districts additional 13,570 new HH connections Rehabilitation work in 3 districts New lines constructed Rural electrification in 3 districts 33 kV - 33 km System loss reduction by 1\.6% 11 kV - 250 km 0\.4 kV - 550 km Existing lines rehabilitated 11 kV - 50 km 0\.4 kV - 145 km System loss not evaluated Across the four packages, 174 distribution transformers have been installed\. Number of distribution centers under rehabilitation - 7 4 Institutional Strengthening Implementation of the ERP Procurement of ERP and system Project - 1 and 2 system integrator initiated 5 H-B 220 kV TL Project Installation of 73 km long 220 kV Tower design completed and double circuit line approved except for 9 multi-circuit towers\. 226 towers Foundation design approved for all the other towers except for the multi-circuit towers\. Two new substations - 132 kV 116 tower foundations completed (New Hetauda and New (4 in progress) Bharatpur) Bay extension work in 2 existing 58 towersâ erection completed (1 in substations (Old Hetauda and old progress) Bardaghat) Forest clearance 75% completed Land compensation rate had been decided by the compensation determination committee\. Now the project is preparing for distribution of compensation amount\. 22 The World Bank (P043311) Project Component/Sub- Target Outcomes S\. No\. component Substations - 70% work completed All the works to be completed by end of December 2015 if contractor works sincerely\. 6 Distribution System Capacity addition and 100% work completed Rehabilitation Project strengthening work of five substations (Khanar, Inaruwa, Rupani, Janakpur, and Haripur) Loss reduction in 9 distribution Loss reduced by 4\.74% centers by 1\.6% 5,100 new HH connections Number of distribution centers under rehabilitation - 9 7 B-B TL Project Installation of 74 km long 220 kV 50% land identification completed double circuit line 246 towers 5 foundations are completed\. Forest clearance is obtained - 4,000 trees were cut (target 28,000)\. 8 Pathlaiya 132 kV 132/11 kV station with 6 numbers 100% work completed Substation Project of 132 kV line-bays and 1 bus coupler, transformer bay 24 km of 11 kV distribution lines Replacement of old earth wire of 132 and 66 kV line by optical ground wire conductor from Pathlaiya to Birgunj and Simara 9 Rehabilitation of O&M package (turbine, generator, Rehabilitation of Kaligandaki âAâ has Kaligandaki âAâ and inlet valve spare parts) been financed by IDA as a separate Hydropower Project Procuring of one trash rack project and is under machine, modification of one implementation\. trash rack machine Repairing of turbines Supply and deliver of auxiliary parts 10 Rehabilitation of Multifuel Rehabilitate the plant and make it Rehabilitation completed on Power Plant fully operational (39 MW) December 2012 11 Rehabilitation of Hetauda Rehabilitate the plant and make it Rehabilitation completed on April Diesel Power Plant fully operational (14\.4 MW) 2012 12 Kathmandu Valley Distribution center rehabilitation Distribution System work in 9 districts Rehabilitation Project LOT 1 LOT 1 23 The World Bank (P043311) Project Component/Sub- Target Outcomes S\. No\. component Contract 1 Contract 1 400 V - 65 km 11 kV - 24 km 400 V - 54 km Poles - 1,097 Poles - 942 Contract 3 Contract 3 11 kV - 103 km 11 kV - 45 km 400 V - 304 km 400 V - 124 km Poles - 66,220 Poles - 6,000 Contract 4 Contract 4 11 kV - 116 km 11 kV - 90 km 400 V - 252 km 400 V - 252 km Poles - 4,400 Poles - 4,379 Distribution loss reduction target - Distribution loss reduced by 3\.9% 6% Number of distribution centers under rehabilitation - 8 No installation of a single transformer 13 Kaligandaki Model Test Testing work 100% work completed Project AEPC component 15 MHVEP Increased generation of 8,109 kW Installed generation capacity of 8,497 kW Increased new connections - Increased new connections - 74,000 88,934 Note: ERP = Enterprise Resource Planning\. 24 The World Bank (P043311) Annex 3\. Economic and Financial Analysis Scope of Analysis 1\. The economic and financial feasibility of the PDP is evaluated on the basis of the following analyses: â¢ Economic analysis of the project â¢ Financial analysis Economic Analysis Identification and Valuation of Economic Benefits 2\. Financial costs of the project have been estimated, including customs duty, taxes, and value added tax (VAT)\. The project costs are estimated based on the December 2013 U\.S\. dollar value\. Economic costs have been arrived at by removing custom duties, taxes, and VAT from the financial cost\. The exchange rate has been assumed to be NPR 100 per US$1\. 3\. The economic and financial analysis has been carried out for the TL projects: â¢ K-D 220 kV TL project â¢ H-B 220 kV TL project â¢ B-B 220 kV TL project 4\. Wheeling charge of US$0\.15 per kWh has been used for the analysis and it is assumed that the TL has capacity of 300 MW\. 5\. Similarly, for the loss reduction projects, the economic analysis was carried out considering the benefits as energy savings at the distribution centers after the loss reduction measures were carried out\. Long run marginal cost (LRMC) was considered to calculate benefit reaped by the loss reduction projects\. The LRMC of generation was taken as NPR 8\.3 per kWh\. 6\. Rural electrification project (grid and off-grid) connected 126,385 HH in total\. The benefits were calculated considering the newly electrified houses used kerosene lamps before getting electrified\. Consumer surplus was calculated as a benefit of the project\. 7\. The assumptions used in the analysis are listed in table 3\.1\. 25 The World Bank (P043311) Table 3\.1\. Assumptions Used in the Economic and Financial Analysis Discount rate 12% Life 25 years Exchange rate US$1 = NPR 100 Wheeling charge NPR 0\.15 per kWh Tariff rate NPR 7\.95 per kWh LRMC of generation NPR 8\.3 per kWh Minimum tariff rate NPR 4\.0 per kWh â¢ The project construction period was assumed to be one year and electricity generation would start from the beginning of 2015\. â¢ All costs and benefits are based on the December 2013 prices level expressed in U\.S\. dollar value and no price inflation is assumed, either in benefits or costs, over the period of analysis\. Base Case EIRR 8\. The benefits for the TLs are accrued by selling of the additional energy at wheeling charge of NPR 0\.15 per kWh\. The energy calculations consider transmission losses of 10 percent and load factor of 50 percent\. The results are summarized in table 3\.2\. Table 3\.2\. EIRR for Components of the Project Project Component EIRR (%) K-D TL 17 H-B TL 20 B-B TL 21 Distribution loss reduction inside Kathmandu Valley 32 Distribution loss reduction outside Kathmandu Valley 48 Rural electrification on-grid 39 Rural electrification off-grid (AEPC component) 87 Financial Analysis 9\. The financial analysis was carried out to assess the financial viability of the project considering all costs and benefits of the project at market price, including custom duties and taxes and VAT\. 10\. The financial benefit of the project is based on the NEA hydro independent power producer tariff rate for up to 25 MW (NPR 4\.80 per kWh for wet season and NPR 8\.40 per kWh for dry season) and average retail tariff rate of NPR 7\.95 per kWh for 2013\. Base Case FIRR 11\. Using the above assumption, the project-level FIRR was calculated\. The results are summarized in table 3\.3\. 26 The World Bank (P043311) Table 3\.3\. FIRR for the Components of the Project Project Component FIRR (%) K-D TL 12 H-B TL 15 B-B TL 16 Distribution loss reduction inside Kathmandu Valley 23 Distribution loss reduction outside Kathmandu Valley 35 Rural electrification on-grid â8 Rural electrification off-grid (AEPC component) 4 27 The World Bank (P043311) Annex 4\. Bank Lending and Implementation Support/Supervision Processes a) Task Team Members S\. No\. Name Title Responsibility/Specialty 1 Mudassar Imran Senior Energy Specialist Team leader 2 Michael Haney Senior Energy Specialist Team leader 3 Mikul Bhatia Senior Energy Specialist Team leader 4 Jie Tang Program Leader Team leader 5 Zarafshan H\. Khawaja Lead Social Development Specialist Safeguard policies 6 Bigyan B\. Pradhan Senior Financial Management Specialist Financial management 7 Judith K\. Plummer Consultant Energy planning 8 Pedro E\. Sanchez Lead Energy Specialist Energy planning 9 Sumith Pilapitiya Lead Environmental Specialist Environment 10 Chaohua Zhang Lead Social Development Specialist Safeguard policies 11 Ayse Cansiz Power Engineer Power system 12 Samantha L\. Forusz Program Manager â 13 Gulgoren A\. Cansiz Consultant Power system 14 Shyam Sundar Ranjitkar Senior Irrigation Specialist â 15 Sunita Gurung Program Assistant Program support 16 Md\. Iqbal Senior Energy Specialist Energy 17 Sunil Kumar Khosla Senior Energy Specialist Energy 18 Shaukat Javed Program Assistant Program support 19 Kiran R\. Baral Senior Procurement Specialist Procurement 20 Rajendra Dhoj Joshi Senior Education Specialist Hydropower 21 Sushil Kumar Bahl Consultant Procurement 22 Manoj Jain Senior Financial Management Specialist Financial management 23 Pradeep Kumar Shrestha Consultant Financial management 24 Rohit Mittal Senior Energy Specialist Energy planning 25 Ishwor Neupane Consultant Safeguard policies 26 Drona Raj Ghimire Environmental Specialist Environment 27 Parthapriya Ghosh Senior Social Development Specialist Safeguard policies 28 Silva Shrestha Water and Sanitation Specialist Water 29 Mudit Narain Energy Specialist Economic analysis 30 Rabin Shrestha Senior Energy Specialist and ICR TTL Energy planning 31 Pravin Karki Senior Hydropower Specialist Hydropower 32 Mohammad Anis Senior Energy Specialist Energy 33 Hydropower Chandrasekeren Subramaniam Principal Industry Specialist rehabilitation 34 Kavita Saraswat Senior Power Engineer Power engineer 28 The World Bank (P043311) S\. No\. Name Title Responsibility/Specialty 35 Shambhu Prasad Uprety Senior Procurement Specialist Procurement 36 Tomoyuki Yamashita Senior Energy Specialist Energy planning 37 Timila Shrestha Financial Management Specialist Financial management 38 Barsha Pandey Operations Analyst Energy 39 Namrata Tusuju Shrestha Consultant Energy b) Staff Time and Cost Stage of Project Cycle Staff Time and Cost (Bank Budget Only) No\. of Staff Weeks US$ (including travel and consultant costs) Lending 123 1,112,024 Supervision/ICR 536 2,095,653 Total 659 3,207,677 29 The World Bank (P043311) Annex 5\. Summary of Borrower's ICR and/or Comments on Draft ICR 1\. The following table presents the borrowerâs feedback on lessons learned and challenges faced on different project subcomponents: S\. Project Lessons Learned Challenges Faced No\. Subcomponent 1 B-B TL Project engineering must be adequately Uncertainty in acquiring ROW; uncertainty done\. Time lag between the project in getting permits from Government inception and actual implementation agencies such as forest permits and customs should be very short, such as 1 year\. permits\. Project implementation team must be carefully formed\. Social aspects must be diligently handled from the beginning of the project\. 2 Institutional A single person cannot do everything\. Lack of proper awareness and lack of Strengthening Good teamwork, project management, desired capacity in project management and Project and change management skills are basic change management skills\. The project elements to complete the project at the could not get appropriate achievement appropriate time, cost, and quality\. within the desired time frame\. 3 Kathmandu The lesson learned is that there should During the selection of the contractor at the Valley be less number of contracts with turnkey evaluation stage of the bid, there was Distribution basis approach\. external pressure to award the contract to a System nonresponsive bidder\. This has been Strengthening occurring due to various lots and packages\. Project 4 Distribution and The project area covered by the project During the implementation of the work, a Rural is near Kathmandu and has road access\. lot of local problems arose for stringing of Electrification The EIRR value for Lalitpur rural conductors and installation of poles and Project electrification was 7\.2, Dhading RE was cables\. Local development authorities are 7\.21, and Nuwakot RE was 9\.25\. In urban not providing support to the public during areas, it was more than 10\. Hence, the rehabilitation work\. project was viable and commenced\. All the contracts of the project were successfully completed\. During execution of contracts of works, the project faced a lot of problems; hence, the project was completed within the extended time granted by the World Bank\. The problems faced in the construction of the sub-TLs in urban areas of Dhading and Nuwakot districts were wisely solved by experienced engineers and project managers\. Overall, the project was successfully completed\. 5 Multifuel Project management as well as project Uncertainty in acquiring furnace oil from Powerplant engineering should be thoroughly Nepal Oil Corporation; unnecessary time Rehabilitation studied and formulated in a systematic spent in getting different approvals from Project manner\. Time lag between the project different authorities and customs permits; inception and actual implementation and lack of local skilled manpower 30 The World Bank (P043311) S\. Project Lessons Learned Challenges Faced No\. Subcomponent should be very short\. Teamwork is the key factor necessary to complete the project within the scheduled time\. 6 Hetauda Diesel Project management as well as project Supply of spare parts has been completed\. Plant engineering should be thoroughly The spare parts, as per the contract, arrived studied and formulated in a systematic at Kathmandu airport on BS\. 2067 Poush 28 manner\. Teamwork is the key factor (01/12/2011) but due to the decision for necessary to complete the project within approval of the budget for the custom duty, the scheduled time challenges faced\. the spare parts have been received at site on BS 2068/05/01 (AD 2011/08/18)\. After that, rehabilitation/overhauling of the machine started with in-house personnel from BS 2068/08/04 (AD 2011/011/20) to BS 2069/01/06 (AD 2012/04/18) and now all the machines are in running condition\. 7 K-D TL Project Project engineering must be adequate\. Uncertainty in acquiring ROW; uncertainty Time lag between the project inception in getting permits from government and actual implementation should be agencies such as forest permits very short, such as 1 year\. Social and environmental aspects must be diligently handled right from the beginning of the project\. 8 MHVEP â¢ Long-term support: The main lesson â¢ Timely completion: Many micro-hydro learned from implementation of the village electrification projects were not REDP/RERL, including the MHVEP, is completed on time due to many factors\. that the rural community is capable of Quadrupling of costs of certain imported organizing implementation and items due to both inflation and currency operation of advance technologies devaluation created the additional such as micro-hydropower projects\. challenge of meeting the project cost\. In They, however, need technical and the REDP/RERL model, the community has financial assistance not only during to mobilize both voluntary labor and project implementation but also later monetary resources\. As the project during operation and management\. coverage moved westward and northward â¢ Community mobilization: The most where the community, in general, is effective part of the REDP/RERL poorer, financial resources could not be approach is the mobilization of the generated locally and the project had to community for implementation and spend a long period looking for external operation of micro-hydropower support, thereby prolonging the project projects\. The elaborate community cycle\. mobilization package developed and â¢ Low manufacturing/installation capacity: used by the program ensured As there were several community ownership, mainstreamed projects/programs/organizations marginalized groups, empowered supporting micro-hydro development in women, helped build up the local Nepal during the implementation of the capacity, and institutionalized MHVEP, the capacity for fabrication of rural/renewable energy development turbines, penstock pipes, and so on and at the local level\. installation in the country was not enough â¢ Poverty alleviation: Promotion of to meet the demand\. renewable energy could be an effective 31 The World Bank (P043311) S\. Project Lessons Learned Challenges Faced No\. Subcomponent medium to enhance rural livelihood â¢ Conflict in communities: Installation of and alleviate poverty but will not MHP projects in Rukum district has been happen automatically\. Activities have delayed due to various conflicts and to be planned and budgeted for and uncertainties\. As Rukum was most well-targeted\. affected by the Maoist insurgency, the â¢ Sustainability: Sustainability of the situation in the district took a longer MHP depends on a number of factors period to come back to normal compared such as quality of the plant, income, to other less-affected districts\. Besides, management, conflicts within the more conflicts have been observed within community, natural calamities, and the communities in general in the post- extent of damages\. insurgency period than in pre-insurgency â¢ Extensive community mobilization is period, affecting timely and within-budget essential to create awareness, project completion\. establish institutions, mobilize â¢ Floods and landslides: Recent resources, build community-owned floods/landslides have not only damaged MHPs, operate and manage the some of the MHVEPs but also affected system, and promote productive use of transportation and installation works\. electricity\. The community mobilization Some villages were completely cut off, and process practiced by the REDP/RERL is proper road transportation is yet to be basically still relevant, but it requires restored\. substantial modification for larger â¢ Transition in the AEPC: In 2012, the AEPC projects and other renewable energy initiated the National Rural and systems\. Renewable Energy Program under the â¢ Social inclusion: The REDP/RERL single programmatic framework\. In this community mobilization gives priority approach, the District Energy and to mainstreaming marginalized groups\. Environment Section was mainly HH belonging to these groups form responsible for planning and monitoring their own community organizations rather than direct implementation\. This and have representation in micro- created uncertainties and led to high staff hydro functional groups\. The turnover, which affected project community as a whole is encouraged implementation\. to find solutions for inclusion of weaker â¢ Capacity of district staff: Low level of sections of the society in micro-hydro capacity of some district engineers and development and operation as some office assistants affected project members of the community may be so implementation\. Due to the limited poor that they are not able to provide budget, salaries of district-level staff could voluntary labor or cash contribution or not be increased and thus engineers and even afford the cost of service wires finance-related personnel having and house wiring\. Special provisions advanced qualifications could not be have to be made to support them\. The recruited or retained\. community has to be made aware that vulnerable HH such as extremely poor, dalits, janajatis, women-headed HH, and disabled persons require additional support, and their problems have to be incorporated while planning for installation and operation of energy systems\. 32 The World Bank (P043311) S\. Project Lessons Learned Challenges Faced No\. Subcomponent â¢ Collaboration and cooperation: In the project implementation approach adopted by the REDP/RERL for implementation of the MHVEP, a lot of organizations, agencies, institutions, and communities have to come together for successful completion of the projects\. From central-level line agencies to their district offices, district- and village-level elected bodies, private companies, nongovernmental organizations, the communities, and the project personnel have to work together for smooth and timely project completion\. The elaborate mechanism developed by the REDP before the launching of the PDP-funded MHVEP helped project implementation even during the insurgency period\. Participation, consultation, transparency, cooperation, and collaboration in all project activities helped realize the strong ownership feelings among all concerned stakeholders\. â¢ Innovation: A mechanism for continuous innovations and modifications in project implementation is required as the local context is different in each micro-hydro catchment area\. Both the local situation and the technological developments change from time to time, and the REDP/RERL was able to address the changing contexts with ease as the program design and implementation received regular feedback from the local sites\. The program was not only able to adopt new technological advancements but also function during the height of insurgency\. 33 The World Bank (P043311) Annex 6: Overall Rating of the Outcomes 1\. Formal approval was obtained for a change in the project objectives of a project with a loan of US$75\.6 million when almost US$17 million was disbursed by 2008\. It then went through two restructuring in 2008 and 2009 and changed the PDO twice\. In 2009, additional finance (US$89\.2 million) was added to the project\. It then performed well and closed with an additional US$98 million disbursed (US$42\.4 million was cancelled)\. Please see table 6\.1 for ratings and disbursed weight\. 2\. The ratings of the PDOs are based on performance of the PDO during the restructuring period\. The project outcome was assessed against both the original and revised project objectives\. Based on this, the three PDOs were rated Highly Unsatisfactory (Original PDO), Unsatisfactory (Revised PDO1), and Moderately Satisfactory (Revised PDO2), respectively\. To assist in arriving at an overall outcome rating, separate outcome ratings were weighted in proportion to the share of actual disbursements made in the periods before and after approval of the revision\. The overall outcome is rated Moderately Unsatisfactory\. Table 6\.1\. Ratings and Disbursed Weight Rating Rating Weight Weighted Final Rating Comments Value Disbursed Value (a) (b) (a x b) Against Highly 1 15% 0\.15 Original PDOs Unsatisfactory Against Unsatisfactory 2 8% 0\.16 Small Improvement Revised PDO1 Against Moderately 4 77% 3\.08 Significant Revised PDO2 Satisfactory improvement Overall 100% 3\.39 Overall 3 Moderately (Rounded) Unsatisfactory 34 The World Bank (P043311) Annex 7: Comments of Cofinanciers and Other Partners/Stakeholders Not Applicable 35 The World Bank (P043311) Annex 8: List of Supporting Documents Not Applicable 36 The World Bank (P043311) Annex 9: Map Not Applicable 37	REVIEW
P001544	ï»¿ Economic management and social action project Report No: ; Type: Report/Evaluation Memorandum ; Country: Madagascar; Region: Africa; Sector: Financial Sector Development; Major Sector: Finance; ProjectID: P001544 The Madagascar Economic Management and Social Action project (EMSAP), supported by Credit 1967-MAG for US$22 million equivalent, was approved in FY89\. The credit was closed on June 30, 1996, two years behind schedule, and US$0\.33 million was canceled\. Cofinancing was provided by Switzerland ($4\.75 million, fully disbursed), the UNDP (US$1 million, of US$3\.8 million planned) and UNICEF, WHO, France, Italy, and Japan (US$1\.8 million expected, but final figures are not available)\. The Implementation Completion Report (ICR) was prepared by the Africa Region, Country Department 8\. The Borrower's evaluation of the program is included as Appendix B\. EMSAP was a multisector technical assistance project designed to accompany a Public Sector Adjustment credit\. Its objectives were to: (i) initiate a program of emergency actions for the poorest and most vulnerable groups; (ii) improve the Governmentâs capacity to monitor economic and social conditions and design programs to respond to them; and (iii) strengthen key institutions responsible for management of the structural adjustment program\. The project had three major components: (i) a social action program that included malaria control, family planning, food security, studies on irrigation and smallholder livestock, a survey on targeted food distribution, job creation through labor-intensive construction and repair of rural roads, coordination of NGOs, and a redeployment program for employees of public enterprises; (ii) creation of a studies unit and a permanent household survey; and (iii) budget reform, reform of the office in charge of privatization, and establishment of a study fund to improve the economic and social data base, support adjustment policy, and develop social policies\. The project was reorganized in 1992, in response to confusion created by an excessive number of expenditure categories, slow procurement, and the lack of a central coordinating agency\. The number of expenditure categories was cut from 42 to 28, a national coordination bureau was established, and steps were taken to improve procurement procedures\. Supervision by the Bank, which had been highly decentralized, was moved to a new division, and eventually assigned to the field\. The Credit Agreement was amended in 1993 to increase the Bankâs share of financing for roads, in the light of problems with counterpart funds\. Despite the early difficulties, the project achieved a substantial share of its objectives\. The physical goals were mostly reached or exceeded: malaria control, family planning, cereal banks (food security), labor intensive road work, and coordination of NGOs\. Institutional development objectives were achieved in the areas of budget reform and establishment of the permanent household survey\. Sector policy objectives were either partially met or transferred to other projects (including privatization and redeployment) or, in a few cases, were unrealized (poultry farming, promotion of subsidized food through canteens)\. The study fund made it possible to carry out studies important to the Madagascar portfolio, including a participatory assessment of poverty, an evaluation of the socioeconomic impact of AIDS, a study of national accounts, a study of the restructuring of the water and electricity company, and an evaluation of the beneficiaries of the road works and redeployment programs\. Some studies planned under the first two components were not implemented\. The ICR rates project outcome as satisfactory, sustainability as likely, institutional development as substantial, and Bank performance as satisfactory\. OED concurs with these ratings\. Serious problems with both design and supervision in the early years of the project were overcome through restructuring of the project and of its task management\. Sustainability will, in the long run, depend on political and economic stability and on government commitment, including the timely allocation of funds for the new services and for the maintenance of rural roads\. The project's main lessons, as noted in the ICR, are that: (i) project design should be simple and manageable, particularly when institutional capacity is weak; (ii) greater participation by stakeholders would have made some of the objectives more realistic; (iii) rural roads rehabilitation should be accompanied by measures to ensure funding for maintenance; and (iv) privatization requires political will on the part of the Government , as well as a framework for the privatization process and mechanisms to ensure transparency\. The quality of the ICR is good; it gives a balanced picture of a complicated project that had a very mixed implementation experience\. No audit is planned\.	REVIEW
P000117	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 24379 IMPLEMENTATION COMPLETION REPORT (IDA-29240; PPFI-QO120) ON A CREDIT IN THE AMOUNT OF SDR 27\.5 MILLION (US$40\.0 MILLION EQUIVALENT) TO THE REPUBLIC OF BENIN FOR A TRANSPORT SECTOR INVESTMENT PROGRAM 06/24/2002 AFTTR/AFC13 Africa Region This (locument has a restricted distribution and may be used by recipients only in the performance of their officia duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective April 2002) Currency Unit CFAF CFAF 1 = USS 0\.0013 US$ I CFAF 7225 FISCAL YEAR January 01 December 31 ABBREVIATIONS AND ACRONYMS ANECA L'Association nationale des entreprises de construction et assimil&s (National Association for Const ion Enterprises and Affiliates) AGETUR Agence d'execution des travaux urbains (Urban Works Agency) BOAD Banque ouest africatine de developpment (West Africa Development Bank) CAS Country Assistance Strategy CFD Caisse fianqaise de developpement (French Bilateral Aid) CNCB Conseil national des chargeurs bu Benin (National Shippers Council) CNSR Conseil national de la s6curit6 routiere (National Council for Road Security) CINPR Conseil tecimique national (National Technical Council for Rural Roads) CUC Circonscripton urbaine de Cotonou (Cotonou Urban Cormmunity) DROA Direction des routes et ouvrages d'art (Roads and Works Departmt) DMT Direction du matdriel des travaux publics (Directorate of Public WoTrk Equipment) DIT Direction des tranworts terrestres (Road and Rail TrmspoTt Directorate) ERR Taux de rentabilite economique (Economnic Rate of Return) GDP Produit int6rieur brut (Gross Domestic Product) IDA Agence internationale de diveloppement (International Development Agency) IRR Taux de rentabilit6 interne (Interest Rate of Return) KfW Kredit fur Wiedaufbau (Geaman Bilateral Aid) MDP MinistEre du D6veloppement rumral (Ministry of Rural Development) MFE Ministre de rEconomie et des Finances (Ministry of Economy and Finance) MmT Minist6re des travaux publics et du tansport (Ministry of Public Works and Transport) NDF Fonds nordique de d6veloppement (Nordic Development Fund) NGO Organisation non gouvernementale (Nongovernmental Organiation) OCBN Organisation commune B6nin-Niger (B6nin-Niger Railway) PAC Port autonome de Cotonou (Benin Port Authority) PRSP Poramme de la lutte contre contre la pauvret6 sectorielle (Poverty Reduction and SecCtr Progrmn) QAG Groupe d'assrance de qualite (Quality Assurance Group) SAL Prets l'ajustement structurel (Stural Adjustment Lending) SAR Rapport devaluation (Staff Appraisal Report) SERHAU-SEM Soci6te d'Etudes rEgionales d'habitat et d'amdnagement wubain (Regional Habitat & Urban Dewelopment Studies Bureau) SLMTP Soci6t6 de location du mnatriel des travaux publics (Public Works Equipment Leasing Company) SME Petites et moyemmes entreprises (Small and Mediun Enterpie) SOBEMAP Soci6t6 b6ninoise de manuntention portuaire (Benin Cargo Handling compay) SOBEMAP Soci6te bnioise de ranuntention portuaire (Benin Cargo Handling company) TSS Strat6gie du secteur des transporW (Transport Sector Strategy) VicL President: Callisto E\. Madavo Country Direct Antoinette MC Ssyeh SectorManager\. Mmyone PleissFraissard Taslc Team Leader; Zaza MEnibanj a Project ID: P000117 Project Nanie: TRANSPORT SECTOR \. INVESTMENT PROGRAM Te7m Leader: Zaza Manitranja Ramandimbiarison TL Unit: AFTTR ICR Crpe: Core ICR Report Date: June 24\. 2002 1\. Project Data Name: TRANSPORT SECTOR INVESTMENT LICITF Number: IDA-29240; PROGRAM PPFI-QO120 CounytylDepartnment: BENIN Region: Africa Regional Office Sector/subsector: TH - Highways; TP - Ports & Waterways; TT - Transportation Adjustment; TY - Other Transportation KE Y DATES Original Revised/Actual PCD: 06/07/1993 Effective: 03/06/1997 03/06/1997 Appraisal: 03/23/1995 MTR: 05/05/2000 05/05/2000 Approval: 10131/1996 Closing: 12131/2001 12/31/2001 Borrowver/lImplementing Agency: GOVERNMENT/MTPT AND PAC Other Partners: STAFF Current At Appraisal Vice President: Callisto E\. Madavo Jean-Louis Sarbib Country Manager: Antoinette M\. Sayeh Theodore 0\. Ahlers Secror Manager: Maryvonne Plessis-Fraissard James Otis Wright Team Leader at ICR: Zaza Manitranja Benard N\. Peccoud Ramandimbiarison ICA Pri,nary Author: James Otis Wright The objectives of the project, as stated in the Staff Appraisal Report (SAR), were: (a) to safeguard the competitiveness of Benin's transport sector and of its- transit corridor dtrough open modal competition; (b) to improve governnent's capacity for planning, programming and managing transport sector investments; (c) to boost the allocation of resources to infrastructure maintenance; (d) to boost the recovery of infrastructure user charges; (e) to expand private sector participation in public works and maximize its impact on the creation of jobs for unskilled labor, (f) to build capacity in sector institutions and optimize human resource utilization; and (g) to protect the environment and improve road safety conditions\. While a more focused set of objectives would have been easier to monitor and evaluate, the objectives were supportive of the Country Assistance Strategy (CAS), discussed by the Board in June 1994, which stressed private sector development and poverty alleviation\. The SAR stated that the project would support these objectives by: (a) creating an enabling environment for the private sector through reduction of transport costs and privatization of transport operations; (b) supporting the provision of basic social services and improving road infrastructure, mainly rural, and urban transport management; and (c) supporting agricultural development by facilitating access to rural areas\. The Transport Sector Investment Project was included in the "base-case" lending program outlined in the CAS for Benin\. The project was also consistent with a 1995 Policy Framework Paper, which was to be inmplemented with the support of a third structural adjustment operation (SAL III)\. The objectives of that operation were: (a) to accelerate the rate of growth of real GDP; (b) to further reduce domestic and external imbalances to enable the country to be less dependent on foreign assistance; (c) to alleviate poverty and improve basic social services; (d) to rehabilitate social and physical infrastructure; and (e) to promote human resource development\. The IDA financed project was part of a broader Transport Sector Investment Program for 1996-2000, which was developed to implement the Transport Sector Strategy, which in turn was based on studies that had been carried out in 1992 through financing by the Ministry of Public Works and Transport (MTPT)\. The Transport Sector Strategy was presented to a donor round table meeting, and the results were issued in March 1994 by the Bank as a Transport Sector Strategy Report (12098-BEN) that covered issues relating to the principle modes of transport and set the framework for the program: * Roads\. Road fund receipts were insufficient to cover maintenance needs, and it was over staffed\. The Road Fund was to be changed to include user representatives, to limit financing to the maintenance of MTPT managed Roads, and to no longer cover payroll and operating costs\. Road Fund resources were to be increased by raising the government's contribution and contracting toll collection to private firms\. This was done in 1995\. Additional resources were to come from an extension of the road toll system with some residual paid by the national investrnent budget MTPT was to privatize road maintenance progressively, with Road and WoTks Departnent (DROA) focusing on staff management, cost recovery, data collection and procurement\. The govermment also was to improve road safety by increasing operator competence, vehicle inspection and urban traffic management\. -2- * Ports\. The Autonomous Port of Cotonou (PAC) was much less competitive in terms of transport facilitation a-nd operational productivity than ports in neighboring countries, which was exacting a high economic cost on Benin, and it was in poor financial condition\. These conditions were caused mainly to slow administrative procedures, slow customs clearance and lack of accountability\. The strategy called for restricting new investment and introducing cost accounting at PAC, improving the operations of the public sector Benin Cargo Handling Company (SOBEMAP), contracting some operations out, reducing bottlenecks to reduce delays, and nrviewing the activities of the Benin Maritime Navigation Company and the National Shippers C'ouncil (CNCB)\. * Rail and Air Sectors\. The government was establishing a "contract-plan" for the Railway Company (OCBN) to enhance competitiveness and financial independence\. It also agreed to establish an autonomous entity to manage airport operations with French bilateral assistance\. A\. total transport program of CFAF 247 billion (US$494 million) was agreed upon at appraisal in A\.pril 1995, but only 74% of the funding was confinned at that time\. Most of the funding from olther donors which was committed or under negotiation (CFAF 120\.5 billion; US$241 million) was to be focused on the roads sector, largely on paved road construction and rehabilitation\. Components to be financed by IDA were focused on the roads and port sectors (CFAF20\.03 biillion; US$40 million)\. IDA financing in the roads sector was largely focused on unpaved road rehabilitation, institutional strengthening and urban road improvements\. 3\.2 Revised Objective: The objectives were not revised\. 3\.3 Original Components: ID)A funds were to support: (a) Port Operations and Management for (US$ 5\.7 million)\. (i) Civil works to rationalize use of space within the port, in particular creating dedicated space outside the port compound for customs inspection of containers and for used car handling and repair and paving heavily trafficked surfaces; (ii) short-term technical assistance and training to the PAC for operational improvements using Portware software and training of port operators; (iii) short-term technical assistance for financial management and cost accounting improvements for updating the five-year pniority investment program and implementing the civil works component; (iv) short-term technical assistance to MTPT management for preparation of a port operation and facilitation strategy, and reform of user mechanisms; and (v) short-term technical assistance to port users and the Chamber of Commerce for information diffusion and user group start-up\. (b) Road Repair\. Maintenance\. Safety and Network Management (IJS$32\.1 million!\. (i) Priority civil works on MTPT's road network, including elimination of all unpaved network tnruble spots, involving about 1,066 kriis, of which 400 knms are damaged during the rainy season, repair of critical bridges and drainage works on about 850 kms, of priority unpaved roads, periodic maintenance (regravelling) on about 600 kms, DROA's office buildings upgrading, and -3- road safety improvements at frequent accident locations on the paved network; (ii) short-term assistance, training, studies and- equipment for key management improvements within M-TPT, including annual updating of the five year priority program; financial management, transport licensing, contract management, data collection on road operators and road conditions, personnel management; (iii) a traffic safety program including short-term technical assistance to the CNSR and MTPT for road and vehicle safety, supply of data processing equipment, setting procedures for eliminating high accident locations, improving rules for road and accident reporting and enforcing vehicle weight limits; (iv) private sector support to strengthen local civil works enterprises for road maintenance and spot improvements, including assistance to small and mnedium enterprises by an NGO, training and support to improve the regulatory environment and start-up of a public-private equipment pool; and (v) program management, including studies for annual updating of the five-year priority program, annual works audits, final engineering, preparation of bidding documents and works supervision\. (c) Rlural Road Rehabilitation and Management (US$3\.1 million?\. (i) Civil works to rehabilitate 300 Iam of rural roads in collaboration with local communities in Cobly, Adjohoun and Bamikora villages and three other areas, as a pilot for defining a rural road strategy; and (ii) introduction of a pilot, locally operated, rural road maintenance program by DROA with local committees, including assistance to DROA for developing and implementing new procedures for programming, management and financing of rural road maintenance and to local and intemational NGOs who lacked experience and would be strengthened to assist local committees in fund collection and volunteer mobilization\. (d) Urban Road Improvements and Traffic Management (US$3\.1 million)\. (i) Works to improve road safety and traffic conditions in Cotonou, including elimination of high accident and congested areas, 11 km of separate lanes for two-wheeled vehicles on the most heavily traveled road and renovation of the three main bus/truck stations, including improvement of their management; and (ii) equipment and vehicles for the new traffic management unit in the Municipality of Cotonou, short-term technical assistance for training for Cotonou's traffic management plan, studies for a bus/traffic management plan and its implementation and definition of a means for urban user participation in traffic planning through an NGO\. Technical Assistance in All Components IDA financed program components supported no full-time technical assistance\. Terms of reference were defined for specific tasks for short-term assignments, and local consultancies were specified wherever possible\. All of the port assistance (30 months) was to be external but 45 of the 125 months required for the road component were to be hired locally\. The IDA-assisted components were defined within a broader program that was being undertaken with parallel financing by eleven other donors\. Although close donor consultation was to be maintained during the project period, the IDA-assisted components were not directly linked to much of the other donor activity\. The components were consistent with the objectives that focused on improving capacity and resource mobilization and allocation, and private sector participation in Benin's transport sector\. -4- 1'he project design took into account lessons from previous projects (see Section 3\.4)\. However, it proved to be somewhat beyond-the capacity of the-implementing agencies, particularly the PAC\. Elecause of political and vested interests, the port component met resistance on policy changes and was implemented very slowly\. Implementation was delayed on the road maintenance component due to slow development and staffing in DROA and a restructuring of the MTPT as a n:sult of government changes in 1998\. These latter constraints delayed, but they did not prohibit the successful implementation of the project\. 3\.4 Revised Components: The components were not revised 3\.5 Quality at Entry: Griven the importance of the new policies-for the sector and for the eventual success of the IDA-assisted part of the project, specific changes in support of the strategy were requested as conditions for negotiations\. These included agreement on statutes enhancing the resources of the Road Fund and enabling staff restructuring and early retirement\. Agreements on restructuring and partial privatization of activities in the Port proved more difficult to obtain\. This ultimately delayed negotiations for the project until October 1996, but it brought about progress in sector policies\. Before negotiations the government provided the Bank with a policy statement\. In that note, it declared its commitment inter alia to cost recovery from road users, increased involvement of the private sector in road maintenance, increased management of rural roads by users and reform and partial privatization of a number of port functions\. The thorough policy discussion and demonstration of government commitment during preparation reduced the risk of failure for the rather ambitious agenda of the project\. Specific risks identified during preparation and dealt with in part through advance commitments were: (a) the ability of the Road Fund to collect adequate resources; (b) the slow restructuring of DROA; (c) uncertainty about the involvement of communities and NGOs in road maintenance; and (d) weak adherence of all parties to the program\. All of these factors eventually led to some implementation delays dluing the project period, but (a), (b), and (c) were identified early and could be dealt with during the early years of the project\. Weak adherence of MTPT and PAC to the objectives of the port component led to delays and were only resolved in part near the end of the project period\. A large amount of previous project experience in this sector, program development, donor coordination and detailed project preparation went into the preparation of this project\. IDA had supported improvements in Benin's transport sector since 1970 through four highway projects, three feeder road projects, one port project and one broader transport project\. Previous lessons from this experience were taken into account in the shaping of this project\. These lessons included: (a) road maintenance should be financed from user charges, not general taxation; (b) a broader sector strategy should be followed by all actors and donors; and (c) all users and operators should be involved to improve transport efficiency\. Studies were carried out beginning in 1992 with financing from an ongoing IDA-assisted project, by the Ministry of Public Works and Transport (MTPT) focusing on trade facilitation and improving the financing of transport\. Thlere was also a broad consultation of private and public sector stakeholders that led to the -5 Transport Strategy Report which was issued in March 1994 (see section 3\.1)\. The project was defined in great detail within the broader context of a donor-supported effort\. A large effort was made to be sure that all participants were fully aware of the details of the project and their own roles in implementation\. Given this detailed preparation process and the large consensus building effort with the governnent and the donor community, quality at entry is rated highly satisfactory\. 4\. Achievement of Objective and Outputs 4\.1 Oft come/achievement of objective: The project largely achieved its stated objectives: (a) The competitiveness of Benin's transport sector has been improved\. Rehabilitation and periodic maintenance on both paved and unpaved roads has improved\. The country is much closer to achieving a sustainable road system, and road conditions have substantially improved which have improved accessibility\. Maritime transport has been liberalized\. The National Shippers Council (CNSR) has been restructured in support of shippers, ceasing its intervention in cargo allocation\. Most donors now recognize that Benin has one of the most competitive transport sector (especially roads) in West Africa\. (b) The government's capacity for planning and managing transport sector investments has been enhanced\. The preparation process introduced an integrated approach for planning expenditure in the sector\. MTPT reorganized some of its departments and staffing and introduced an integrated approach for program planning and monitoring\. This included a transport information system\. A year after the project agreement was signed, road construction was being planned and maintenance was being programmed on a regular basis\. In 2000 and 2001 the project assisted MTPT/DROA to prepare its budget programs from FY01 to FY04, thus maintaining the system of programming and budgeting that was established during the preparation of this project\. A community based rural transport strategy has been tested, and an evaluation has been carried out on how to improve community participation in poor areas\. The improvement of port management was only partly achieved, but policy dialogue has been deepened\. (c) Resources have been increased for infrastructure management and user fees have been increased\. The Road Fund has exceeded performance objectives (resource mobilization over 100% of targets; settlement of contractors' bills within 15 days) over the five years of the project\. Road Fund resources were expected to reach 3,380 million by 1999, and this was reached in 2000\. (d) User charges for roads have increased\. The recovery of infrastructure charges has been increased, especially due to improvements in collections by the Road Fund (see Section 4\.5)\. (e) Pivate sector participation and unskilled employment have been increased\. Port authorities are undertaking a study of private sector participation in port management, and container handling activities, once a monopoly, have been liberalized with two private and one -6- public enterprises competing, which has led to improvements in quality and costs\. Force account iin DROA has-been dismantled and road maintenance works have been contracted out to the private sector\. A large amount of additional employment has been generated because of higher level of road maintenance afforded by increased Road Fund receipts\. (1) Capacity has been increased tn sccwr insltutuons\. The Roads and Works Department (]DROA) has been reorganized and its planning and management enhanced with more effective procedures, incentives, qualified staff and equipment required for network information and management\. A new salary structure is in place which includes a performance based incentive s:ystem\. Fifteen qualified engineers have been hired and trained in DROA\. The Road Fund has been restructured into an autonomous entity with much less staff and with adequate resources for road maintenance\. A competent team now manages the Road Fund (see Section 4\.5)\. While accounting has improved in PAC, other management and software improvements are delayed\. (g) The enviromnent has been protected and road safety improved\. Environmental mitigation measures agreed upon at appraisal were employed by DROA in road rehabilitation and maintenance, supporting the Environmental Action Plan of Benin: Improved urban traffic mrranagement has led to traffic management and safety in Cotonou\. A road safety program has been initiated (see Section 4\.2)\. The project achieved a high degree of success\. Under the roads component the system for financing, managing and maintaining the road network has been fundamentally reformed\. Urban roads and traffic management have been improved\. Progress was slower with regard to reforms irn the port\. Port operations have improved due to recent measures taken by its management, inlcluding the introduction of private sector participation, but progress was delayed by political and vested interests during most of the nroject period\. On balance, however outcome is satisfactory\. 4\.2 Outputs by components: (at) Port Operations and Management The ports component got off to a slow'start and positive results were not evident until the end of the project\. There were high levels of inefficiency and rent seeking among various actors in the port that MTPT was reluctant to address, which constrained reform efforts\. Recurrent maintenance and paving works were delayed and used car storage was cluttering the port\. Inputs of technical assistance for financial management and software development were often met with resistance\. There was a high turnover in port management dictated by political interests\. A Managing Director was appointed for the port in 1998, but corruption, security and internal management problems persisted\. In the end, although all the improvements in management efficiency were not achieved, there were some positive results: (i) civil works were completed in the port, some financed by BOAD, and a site was identified outside the port for a customs zone for used automobiles; (ii) technical assistance was provided to PAC to design the customs zone for used vehicles and supervise civil works; and (iii) new software for port management (CHRONOPORT) was installed, but the PORTWARE software necessary to feed information to it was only installed by some users\. With better information management revenues began to \.7\. improve\. However, some users, most notably customs and some unions, did not wish to use the system; Customs was under the Ministry of Finance and was not compelled-to conform\. Resistance also arose from within MTPT to the PORTWARE software; and (iv) the master plan for the Port of Cotonou was updated\. The Bank had to threaten credit suspension and to limit investment on the port component to bring about a government decision to adopt a new strategy aiming at privatizing port management operations\. The 1997 audit of PAC had a number of serious qualifications and some audits were submitted late\. This led to a threat of suspension by the Bank\. In the context of the discussions on port management, the inefficiency of the public freight handling company was raised\. Progress was made on this issue near the end of the project period and when in preparing a follow-on lending operation\. (b) Road Repair\. Maintenance\. Safety and Network Management' (i) Road repair and maintenance: DROA was slow to begin organizational changes, but its new organization was agreed to by mid-1997\. Additional professional staff were recruited\. There were initial difficulties with road works due to a lack of capacity among small and medium contractors who needed more highly trained professionals and equipment\. There was also a need to establish a system of local supervision\. A road data bank was put in place\. In the end, these systems were developed, and a new organization was put in place\. Action was taken to establish a system for equipment leasing, but this has not yielded much improvement\. In 1997 Road Fund receipts were 130% above estimate\. Technical assistance was set up to provide a road data bank\. Road rehabilitation and maintenance covered 2,084 kilometers in five sets of contracts, including elimination of critical points and upgrading and construction of bridges\. Works were carried out by a mix of small and medium local contractors and large local and international firms\. (ii) Road Safety: Technical assistance was provided to the Directorate of Land Transport (DTT) and the National Center for Road Security (CNSR)\. Technical assistance was also provided to improve the database on road security as well as to develop and implement a road safety policy\. Near the end of the project period contracts to be financed by NDF were agreed to with a consultant to help CNSR to launch a public awareness campaign on traffic safety and train the police in this regard\. This component suffered long delays in consultant procurement\. (iii) Support to small and medium enterprises (SMEs)\. This component progressed slowly due to problems with consultant recruitment and difficulties reaching agreements between the contractors' association (ANECA) and DROA\. Some training courses were arranged but only near the end of the project period\. The design of this component proved to be insufficient as it was based on inadequate premises cooperation with the contractors association\. (c) Rural Road Rehabilitation and Management This component was slow to be initiated and a smaller amount of rural roads were rehabilitated than planned\. A cell for rural roads was foTmed in DROA\. In 1998, and a National Council for Rural Roads (CTNPR) was established with a set of procedures and agreements to be used in working with local communities\. An international NGO and local NGOs were recruited to assist -8- vith the program, but some were not fully competent in this type of program\. The comununities selected were geographically spread which led to delays\. There were delays in setting up the management structure and because several communities could not raise the required counterpart finds\. The Bank suggested that communities provide labor as their contribution\. There were also delays in tendering and the work on five lots had to be re-tendered near the end of 2001 mnaking it impossible to include the work in the project\. Only about 50 of the planned 300 kilometers of rural roads were finished before the closing date\. The rest were to be financed from the government budget\. The overhead costs for the program were high, about 35% of investment\. Several communities provided labor, financial and material support, but in some cases community financial support did not reach the levels expected\. In spite of the difficulties with implementation, ex-post analysis in Banikoara, one of the regions to benefit from rural road improvement, has shown that positive results were achieved\. The study of the Banikoara region showed that after road improvement cotton production rose from about 29,000 tons in 1998-99 to 44,700 tons in 2001-02 due largely to the improved market access of the villages\. Corn, rice and sorghum also posted significant increases\. Access to health centers, schools, water points and markets was also improved\. Eighty-five,percent of the population expressed satisfaction with the present availability of motorized transport\. It should be noted, however, reforms were being made in the cotton sector at this time, and some of the inprovements could be attributable to this\. (d) Urban Road Improvements and Traffic Management A\. study on traffic management and required works and management studies began early in the p:roject period\. At the end of the project all the works and the capacity building activities were completed under contract by AGETUR\. These included: (i) Paving, drainage and a dedicated bicycle path were completed on Augustin Nicoue Avenue; (ii) a truck/bus station, access roads and parking lots were constructed\. However, some of these faicilities were not yet being managed by the concessionaire, as originally intended, because of a dispute between the CUC and the truckers' unions; (iii) eleven priority intersections were improved, including traffic management and signalization\. Consultants also trained members of the Cotonou Traffic Cell, DROA, the National Police, CNSR and AGETUR\. AGETUR managed separate contracts for the installation of signals and civil works that were finished in 2001\. 4\.3 Net Present Value/Economic rate of return: BEonomic analysis was undertaken on nine of the largest road sections in the project on an ex-ante and an ex-post basis (see Annex 3)\. IRRs calculated at appraisal ranged from 3% to 62%\. After implementation the rates of return ranged from 12\.1% to 85%, with the exception of two rmads which yielded a rate of return below 12%\. 4\.4 Financial rate of return: Financial rates of return were not possible in this type of project\. 4\.3 Institutional development impact: 9 ROADS: Road Fund: The Road Fund was restructured and given independent status while its activities were limited exclusively to road maintenance\. Most of its 821 employees were retired or moved to DROA, leaving it with II employees\. Before the project the Road Fund only accounted for 18% of the cost of road maintenance, leaving maintenance very dependent on the national budget\. During the project the road tax (taxe de voirie) was raised, tollbooths were consolidated and collections privatized\. The contribution from the national budget rose from CFA 600 million in 1997 to CFA 850 million in 2002\. Funding was thus guaranteed for recurrent and periodic maintenance\. This was a major achievement recognized by all donors and by the transport community in Benin\. DROA: DROA was restructured to reform the road maintenance system\. Force account work has remained limited at one-third of the total, the remainder going to private enterprises\. This gave an important impetus to the development of SMEs, but the impact on them was limited by their own constraints, such as equipment, organization, and skills\. Some 30 contracting firms came into being during the project period, but efforts to build their capacity through a cell in DROA had only limited impact, largely because of conflicts within the contractors' association which was contracted to manage the training program\. IDA provided support to the contractors and their professional association, but with little impact\. In the end, training for contractors were mounted directly by DROA\. Rural Roads: Some individual projects have had positive impacts, but the scale of the program has been limited\. NGOs have been involved in efforts to mobilize local populations in three regions (Cobly, Adjohoun and Banikoara)\. The approach was only successful in Banikoara\. The amount of counterpart funds raised from some communities was low in relation to the cost of road rehabilitation\. Efforts are being made to improve community mobilization and training and to reduce the costs of NGO participation in spite of several adjustments to accommodate this capacity\. This circumstance has led to delays\. Equipment Leasing (DMTP): The DMTP has been transformed into an Equipment Leasing Company (SLMTP)\. Now separated from DROA, DMTP has an insufficient stock of aging equipment\. Insufficient working capital and management have limited its operations\. PORT PORTWARE software had been connected to port users, including PAC, SOBEMAP and customs, but customs and port unions, supported by other vested interests, have resisted its use, which has constrained the improvement of port operations\. A study of a new location for a customs zone for used vehicles was undertaken, but the site has been changed, which will require a new study\. However, progress has been made in granting concessions for container handling to private operators\. In addition, the National Shippers Council (CNCB) has been restructured in support of shippers, ceasing its intervention in cargo allocation\. Finally, with IDA support, the Government has agreed to involve the private sector in port management and operations as the -10- Dnly way to improve the efficiency of the port While institutional development in the port has progressed more slowly, reorganization of the iroads sector has been fully implemented and is leading to an efficient road management and maintenance system\. Therefore institutional impact is rated satisfactory, with elements of highly satisfactory performance\. 5\. Major Factors Affecting Implementation and Outcome \.5\. F Factors outside the control oJ'government or implemnenting agency: ' Community participation for rural roads did not materialize as expected\. Some local communities lacked the resources and interest to participate\. ' Small and medium enterprises had limited financial and technical capacity- and did not perform as desired for road maintenance and rehabilitation\. As they gain experience and equipment this constraint is likely to be less in the future\. * The contractors association lacked the capacity and interest to manage the training program for local contractors\. Many of the contractors' expertise was in other types of development such as building or water supply\. * Some of the other donors had cumbersome approval procedures which delayed their participation\. S\.2 Factors generally subject to governmenl control: * The government was slow to make decisions regarding the port, both before and during the project\. There were three General Managers in the port during the project period\. The General Manager of the PAC was dismissed in November 1997 and not replaced for about six months\. This delayed important aspects of the policy dialogue until the end of the project\. * There were some early delays in the rural roads program as responsibilities between MTPT and MDR needed to be agreed to\. 5\.3 Factors generally subject to implementing agency control: * DROA was slow to begin its reorganization, which delayed the project\. However, by mid-1998 planning and programming at DROA were in place, works had been launched for the first two years and the Road Fund was operational\. * For some time, PAC management was unable to cope with inadequate administration, lack of safety, poor container handling, corruption and delays in civil works\. The restructuring of CNCB was delayed\. The failure to maintain and strengthen PORTWARE software greatly constrained management effectiveness\. The PAC audit for 1997 had important qualifications\. The state of the PAC accounts and audits and its hesitancy to introduce private sector participation and improve financial management caused IDA to theaten suspension in late 1999\. 5\.4 Costs andfinancing: The project cost was only US$32\.8 million of the US$45\.22 million estimated at appraisal (see Annex 2)\. This difference was largely due to shortfalls in the implementation of the ports and rural roads components which were not completed by the project completion date\. Part of the shortfall in US Dollars was-also due to the devaluation of the FCFA-during-the-project period\. 6\. Sustainability 6\.1 Rationale for sustainahilitv rating: Ports: Although a Port Authority and a Port Coordination Committee have been set up, the Authority exercises inadequate control and the Committee rarely decides on important issues\. Software for port management is not operational and the private sector has not become involved in port management\. These factors may constrain the sustainability of physical improvements made in the port\. The partial privatization of container management and the restructuring of the National Shippers Council (CNSB) in support of shippers should, however, somewhat mitigate the above constraints\. Sustainability of these limited improvements in the port is likely\. Roads: The restructuring of DROA and a change in the salary structure to include an incentive system has improved its efficiency\. The Road Fund has been restrctured with reduced staff\. Its funding includes resources to complement the limited fuel tax receipts which gives it sufficient resources to maintain the road system\. Training for small and medium contractors has not been successful through ANECA, but is being pursued by a cell in DROA\. DROA is now contracting most road maintenance to the private sector\. Sustainability is highly likely\. Rural Roads: A National Council for Rural Roads has been established to monitor and evaluate the pilot projects and follow up on their broader application in collaboration with DROA\. It has been recognized that in zones lacking cash crops beneficiaries cannot pay sufficient counterpart funds and, even when labor is taken into account, some funding from the government budget is likely to be necessary\. Sustainability is likely\. Urban Roads: A cell has been created in the Municipality of Cotonou to follow up on road improvement work by implementing a traffic management plan for the city\. Staff have been well trained and have proved to be efficient\. Sustainability is likely\. Especially given the improvements achieved under the project in the financing and management of road maintenance, the introduction of some private sector participation in the port and the interest and ability of the MOF and MTPT to proceed with a sector investment approach in the future, the project sustainability is rated likely\. 6\.2 Transifion arrangement to regular operations: The improved road funding and maintenance system put in place during the project should be able to maintain and extend the improvements in the road system\. While transition is less certain in the port, the privization of container handling and elimination of the CNCB should maintain some momentum in the improvement of port management\. All components of the project were not completed within by the closing date\. The remainder of - 12 - the project is expected to be financed from the government budget\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank had been involved in the transport sector in Benin since 1970\. Through this experience it became aware that a project-by-project approach was not having a sufficient enough impact on sustainability issues such as the lack of systematic maintenance and institutional support\. The Bank financed studies and prepared the Transport Sector Strategy Report which became the framework within which this project was developed\. Together with other donors and the Government of Benin, the Bank took the lead in formulating the broad Transport Sector Investment Program for 1996-2000, which became the framework within which this project was prepared (see section 3\. 1)\. It ensured that important policies and institutional improvements were in place before the project was negotiated\. Bank performance is rated highly satisfactory\. 7\.2 Supervision: There were eleven supervision missions during the project period\. Early during supervision, attainment of Development Objectives was downgraded to Unsatisfactory due to the situation in the port\. Problems in the port continued, but inputs of technical assistance were provided to upgrade PAC management and there was a warning to suspend disbursements due to qualified audits and lack of movement on institutional changes\. This led to improvements, especially in accounting, container handling and freight forwarding\. Technical support was provided in a timely manner to the borrower that kept the project on track in spite the negative effects of changes at the head of MTPT\. QAG has rated supervision satisfactory with many aspects considered Highly Satisfactory\. Supervision at the ICR stage is rated satisfactory\. !t3 Overall Bankperformance: EIspecially given the thorough job of policy analysis and consensus building among donors and the government and the aggressive follow-up on key issues such as road maintenance and financing and port efficiency, overall Bank performance is rated satisfactory\. Borroover 7\.4 Preparation: T he borrower was fully involved in project preparation\. It participated in the formulation of a strategy for the sector in collaboration with IDA and many other donors\. Important reforms and institutional changes were enacted before the project was negotiated and became effective\. Elorrower performance is rated satisfactory\. 7\.5 Government implementation perfonnance: For the roads component, MTPT provided support to the agency and to the important reforms in road maintenance brought about by the project\. Government support was less consistent in port - 13 - reformn, although initial steps were taken which may open opportunities for the future\. Government iniplemnentation performnance is rated satisfactory\. 7\.6 Implernenling Agency: The PAC was slow to enact meaningful policy changes, and difficult financial and auditing issues arose during the project, but some meaningful changes in cargo and container handling were made near the end of the project period\. More significant improvements were made in road maintenance funding through DROA with the reform of the road fund and the improved programming of maintenance\. The AGETUR and the Municipality of Cotonou implemented the road improvement and traffic management component well\. Implementation agency performance is rated satisfactory\. 7\.7 Overall Borrowerperfornmance: For the reasons stated above, overall Borrower performance is rated satisfactory\. 8\. Lessons Learned * Comprehensive policy analysis, consensus building and sector-wide institution building are important for obtaining lasting results\. Building polity consensus and donor support may take time, but it is worth while to ensure profound improvements\. * Improved management and privatization can be very difficult to achieve in the face of strong vested interests\. There were a number of studies and consultant reviews of the port, and successive missions raised the issue to the highest levels\. Only near the end of the project was significant progress made\. In these cases, strong persistence and follow-up during supervision can lead to results\. * Training of small roads contractors is important for this type of program, but difficult to achieve\. The original intention was to put the contractors' association in charge of training, but its capacity and interest to do so were not fully assessed\. The issue of training private contractors, especially in countries that traditionally lack this expertise, needs to be treated more vigorously from the beginning\. * Mobilizing local' counterpart funding for rural road rehabilitation is difficult in the poorest areas\. At the mid-term review it was decided to take only the local labor contribution into account, increase the contribution from the national budget in order to boost poverty alleviation and consider lowering the road standards\. Counterpart contributions are likely to be difficult to collect in areas lacking cash crops\. Success can be achieved by using resources from other sources and possibly by reducing standards\. * It is important for road maintenance systems to be promoted and helped to develop\. This is a multifaceted effort involving training of private contractors of all sizes and ensuring that they can have access to the necessary capital and equipment\. The success of AGETUR activities in Benin in this and previous projects has demonstrated how small contractors can be helped to develop in urban areas\. This project has begun to demonstrate how private contracting can be promoted for maintaining trunk and mral roads\. * In this project, the importance of an independent road fund has once again been demonstrated, corroborating the experience of other African countries\. - 14 - 9\. Partner Comments (a) Borrower/implententing agencl': Comments of the implementing agency: Credit no\. 2924-BEN became effective on March 6, 1997, exactly three months after signing\. This early progress led to high expectations for project implementation\. At the closing of the Credit on December 2001, it was evident that good results had been achieved\. However, all of the objectives had not been achieved\. Project closing was done under conditions that did not meet all the original expectations\. Actually, the Credit Agreement was closed without a clear means identified for finalizing the contracts under implementation and without continuing the remaining activities of the project which were still being financed under the,credit\. Requests made by MTPT were not successful\. The only exception proposed was to finalize the unfinished components from the national budget\. To accomplish this, it would have been necessary to have the non-disbursed amount of the MTPT credit in the national budget\. This situation was not in accordance to earlier agreements with the Bank\. The progranmmatic lending operation proposed between the Bank and MFE to cover this type of shortfall has not been initiated as discussed\. In principle, budgetary reform would be beneficial, but like any reform affecting behavior and culture, it needs lengthy preparation\. To move quickly without adequate preparation would be costly for the country\. To succeed, the reform must be flexible, progressive and adaptable\. It should not be dogmatic and harsh\. There is still time to reconsider the proposed method\. 'b) Cofinanciers: Cromments have been received from the Nordic Development Fund and incorporated into the report\. 1'c) Otiler partners (NGOs/private sector): ][0\. Additional Information - 15 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome I Impact Indicators: lndicatodUatrix Projected In bst PSR ActuaLatest Esimate Grwth of PAC balfic (2\.56 M tons by Year 2\.50M Adcieved 2000) Number of days to dear a cortair 30 28 level of RF resourcs (3,380 M CFAF by Objective met in 2000\. Adieved Year 1999): Level of RF routn mahiten expenses 5\.000 M CFAC Ahieved (2\.749 M CFAF by Year 2000) Yeafly kcm of roads regraveled/rehablilated on target on trget (about 300 km rehablitated and 500 km grave_e every year): % of roads in bad condibion (deease from 10% to be met 50 % In 1996 to 0 % by Year 2000) Km of feeder roads transferred to local ongoing 50 pagrters (300 km by Year 2000): Output Indicators: indicatoulatrix Projected in last PSR AcudlLatest Esdmate Pivate conaer handing company Privazation Liberaltion (3\. co anIes) Reforms of CNSB Autobnomus entit Ayh Operabonal fanal m angment system at Operaona and efficienl Not iprovwed\. fe Port Cordainer handing performance (contanrs 24 adiNeved by private entities\. Aceved\. However, SOBEMAP per hour) pefrmance stl amund 15 containers per hour Perfomance of the Port Fadiation (number 3 days 20 days of days In te port to dear a contaer) Growth-f the Port traffic AGR = 2\.6% 10-15% Por Debt rabo 35% 65 Coractn a toil mads mangement Road routine mainenancanfcng (100% 100% Achieved needs are covered)\. Colection rate of road fund resources 100% Aceved Road condiions (% in bad condidlon) 10% Acfieved Loca contractors deveopmen (numTber of 30 50 SMEs awarded) 1996 = 0, in road maintnance wotks Number of days to dear _cos' hvoices 30 days 23 Bid evaluation, sign of ntracts (number 50 -60 69 of days) Nwnber of rura communue (rnproved 6 6 acaess to) End of project - 16 - Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million A\. Port Operations and Management 5\.71 0\.99 17\.34 B\. Road Repair, Maintenance, Safety and Networkl 32\.10 28\.11 87\.57 Management C\. Rural Road Rehabilitation and Management 3\.08 0\.95 30\.84 D\. Urban Road Improvements and Traffic Management 4\.33 2\.33 53\.81 Total Baseline Cost 45\.22 32\.38 Total Project Costs 45\.22 32\.38 Total Financing Required 45\.22 32\.38 ProJect Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement Method' Expenditure Category TC8 NCB N\.B\.F\. Total Cost 1\. Works 20\.73 12\.45 0\.00 0\.00 33\.18 (17\.68) (10\.74) (0\.00) (0\.00) (28\.42) 2\. Goods 0\.72 0\.14 0\.10 0\.00 0\.96 (0\.61) (0\.12) (0\.09) (0\.00) (0\.82) 3\. Services 0\.00 0\.00 10\.99 0\.00 10\.99 ConsultancTes, NGOs, TA, (0\.00) (0\.00) (10\.67) (0\.00) (10\.67) Studies & Training 4\. Operating & 0\.00 0\.00 0\.09 0\.00 0\.09 Maintenance Costs (0\.00) (0\.00) (0\.09) (0\.00) (0\.09) Total 21\.45 12\.59 11\.18 0\.00 45\.22 ,_______________________ (18\.29) (10\.86) (10\.85) (0\.00) (40\.00) - 17- Project Costs by Procureme t Arrangements (ActualLatest Estimate) (US$ million equival nt) Procurement Method Expenditure Category ICB NCB OtherN\.B\.F\. Total Cost 1\. Works 8\.66 17\.25 0\.00 0\.00 25\.91 (6\.51) (15\.67) (0\.00) (0\.00) (22\.18) 2\. Goods 0\.48 0\.95 0\.00 0\.00 1\.43 (0\.41) (0\.90) (0\.00) (0\.00) (1\.31) 3\. Services 0\.89 0\.36 3\.68 0\.00 4\.93 Consultancies, NGOs, TA, (0\.89) (0\.36) (3\.65) (0\.00) (4\.90) Studies & Training 4\. Operating & 0\.00 0\.00 0\.11 0\.00 0\.11 Maintenance Costs 0 () (0\.00) (0\.1 1) (0\.00) (0\.1 1) Total 10\.03 18\.56 3\.79 0\.00 32\.38 _ _ _ (7\.81) (16\.93) (3\.76) (0\.00) (28\.50) PPF advance included under Services\. 'Figures in parenthesis are the amounts to be financed by the IDA Credit All costs include contingencies\. Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project\. and (ii) re-lending project funds to local govemment units\. Project Financing by C mponent (in US$ million equiv lent) Percentage of Appraisa Component Appraisal Estimate ActuaVLatest Estimate IDA GovL CoF\. IDA Govt\. CoF\. IDA Govt CoF\. A\. Port Operations and 5\.30 0\.41 0\.88 0\.05 16\.6 12\.2 Management B\. Road Repair, 27\.82 4\.29 24\.60 3\.57 2\.70 88\.4 83\.2 Maintenance, Safety and Network Management C\. Rural Road 2\.88 0\.20 0\.95 0\.05 33\.0 25\.0 Rehabilitation and Management D\. Urban Road 4\.01 0\.32 2\.07 0\.21 51\.6 65\.6 Improvements and Traffic Management -18- Annex 3\. Economic Costs and Benefits _ \. \. AC1IARASAL ESI DAUAL _ RO)AD SECTIONS REt_A NPV _KM COST COSTI KM TRAFFI Oa COSTr COST/ KM TRAFFIC iRI VALUE PEHUNCO-KEROU 72,641 342 0OO 000 4 708 085 40 6 15841 988 8 477 884 108 17 20 171,27 KEROU-LIMfI 25,947 94 000 000 3 622 769 43 3 104 248 10255 685 192 17,50 20 146,39 DEPARTEMENT- 41,55 94 000000 2 262 335 48 10 17 277 929 7 636 051 124 1,40 20 BANEKORA _ - BANiKOARA- 69,372 5030 000 7 250 764 86 71 545 627 9 536 205 26 52,70 15 2319,63 KANDI I_ _ FGIENE/UUU 42,35 465 000 000 10 979 929 16 -8 9459 008 20 530 319 50 -9,50 30 ZA1AN\.IGOLO 12,09 129 000 00 10 669 975 402 5 10418 215 9 133 020 449 66 15 _765,172 APRO-ADJOHOUN 24,96 200 00000 8 012 821 354 62 81 053 901 7 253 762 513 85 15 2,304,929 OIJAKUE-DJONUGOU 37 449000 0 12 135 135 162 3 438376185 11848005 296 12,1 15 N DALI-NIKUK 55 746 000 000 13 563 636 139 29 651640275 11848005 281 33,1 15 3,507,855 Unit: Cost is in FCFA; Traffic is TMJA; Residual value in %; NPV :Net Present value; -19 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Perfornnance Rating (e\.g\. 2 Economists, I FMS, etc\.) Implementation Development Month/ear Count Specialty Progress Obiective [dentification/Preparation 06/93 1 Highway Engineer 10/93 1 Highway Engineer 12/93 1 Highway Engineer I Urban Management Specialist I Financial Analyst 11/94 1 Highway Engineer I Urban Transport Specialist AppralsallNegotiatdon 03/95 1 Highway Engineer I Port Economist I Urban Transport Specialist I Principal Engineer I Municipal Finance Specialist I Road Economist I Financial Analyst 06195 1 Division Chief / Highway Engineer I Principal Engineer I Financial Analyst 11/95 1 Highway Engineer I Financial Analyst 01/96 1 Highway Engineer 08/96 I Highway Engineer Supervision 12/96 I Transport Planner S S 04/97 1 Transport Planner S HS 06/97 1 Transport Planner S S I Consultant 11/97 1 Transport Planner S S 04/98 1 Transport Planner S S 07/98 1 Sr\. Transport Planner S S 01/99 Update S S 06/99 1 Sr\. Transport Planner S S I Operations Officer 12/99 1 Sr\. Transport Planer S S I Operations Officer I Research Assistant (Intern) 05/0 1 Sr\. Transport Planner S S I Rural Transport Specialist I Research Assistant (Intem) 10/00 I Sr\. Transport Planner S S 02/01 1 Sr\. Transport Planner S S I Consultant - 20 - 06101 1 Sr\. Transport Planner S S I Rural Transport Specialist I Consultant 10/01 1 Sr\. Transport Planner S S I Highway Engineer ICR 04/02 1 Highway Engineer S S 2 Consultants S S I I Program Assistant (b) Staff: Stage of Project Cycle ActualLatest Estimate No\. Staff weeks US$ (000) Identification/Preparation 136\.6 364\.9 AppraisaVNegotiation 125\.1 505\.8 Supervision 104\.5 407\.4 ICR Total 367\.2 1,278\.1 * as of 06/17/2002 Supervision includes ICR mission\. -21 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating El Macro policies O H OSUOM O N * NA O Sector Policies * H O SU O M ON O NA O Physical * H O SUOM O N O NA n Financial O H * SU O M O N O NA n Institutional Development * H O SU O M 0 N 0 NA El Environmental OH * SUOM ON O NA Social El Poverty Reduction OH * SUOM ON O NA El Gender O H OSUOM ON * NA n Other (Please specify) O H OSUOM ON O NA E Private sector development 0 H O SU O M 0 N 0 NA E Public sector management * H O SU O M 0 N 0 NA El Other (Please specify) O H O SUOM O N O NA - 22 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 5\.1 Bankperformance Rating ] Lending OHS OS OU OHUL ] Supervision OHS OS OU OHU 0 Overall OHS OS O U O HU 4\.2 Borrowerperformance Rating [] Preparation -OHS OS O U O HU [] Government implementation performat\. O HS 0 S O U 0 HU [] Implementation agencyperformance O HS C s U O HU [ Overall OHS OS OCU O HU -23 - Annex 7\. List of Supporting Documents Staff Appraisal Report Development Credit Agreement Mission Aide memoires Government ICR Contributions (Rapport d'achevernent et Synthse du rapport d'achevement) -24 - X-IIVIR1\.IIG - N__ Report No\.: 24379 Type: ICR	REVIEW
P001723	ï»¿ ICRR 10261 Report Number : ICRR10261 ICR Review Operations Evaluation Department 1\. Project Data : OEDID : OEDID: C1998 Project ID : P001723 Project Name : Second Power Project Country : Mali Sector : Electric Power & Other Energy Adjustment L/C Number : C1998-ML Partners involved : AfDB, CCCE, CIDA, EIB, FAC, KfW, EDM Prepared by : Fernando Manibog, OEDST Reviewed by : Andres Liebenthal Group Manager : Alain Barbu Date Posted : 03/10/1999 2\. Project Objectives, Financing, Costs and Components : The project intended to support : (i) the institutional reform of the power sector, mainly by consolidating into Energie du Mali (EDM) the technical responsibility for the construction and operation of all power facilities; (ii) EDM's institutional strengthening through improvements in all aspects of its operations, and performance contracting between EDM and the Government with specific efficiency targets; (iii) physical investments in the 1989 to 1995 portion of the power sector investment program; and (iv) the development and implementation of a new household energy strategy\. The latest estimate for project cost is US$ 93\.9 million, of which the IDA and cofinancing portions are US$33\.0 million and US$60\.9 million respectively\. The project's two main components were in the electric power and household energy subsectors, which respectively included : (i) generation, transmission, distribution, physical plant, engineering services and system studies (which accounted for 99% of project costs); and (ii) the implementation of the recommendations of a household energy study that, during project appraisal, was still being carried out under the Energy Sector Management Assistance (ESMAP) Program\. A notional US$1 million was allocated for this future household energy component \. 3\. Achievement of Relevant Objectives : Most of the physical and broad institutional objectives were achieved, despite turbulent political conditions and a significant devaluation of the CFAF \. At the level of EDM, however, apart from some improvements in commercial operations and management capacity, the scope of desired financial and operational reforms was only marginally achieved\. The Government agreed to an action plan for EDM's financial recovery and the early preparation stages for EDM's future privatization are underway \. These initial actions, while positive, have not yet shown measurable results\. EDM's serious and continuing financial and operational weakness does not provide a basis for concluding that the project's institutional reform outcomes are likely to be sustainable \. 4\. Significant Achievements : The unification of the power sector helped address the fragmentation of sector development and functioning, and project investments yielded an economic rate of return of 14\.8%, which is only slight lower than the appraisal estimate of 15\.1%\. Physical targets, forecast rates of return, baseline institutional strengthening, the consolidation of sector responsibilities, and the preparation of a household energy strategy study were achieved \. The household energy study, which was financed by the Bank -managed Energy Sector Management Assistance Program, resulted in a Global Environmental Facility Project approved in June 1995\. 5\. Significant Shortcomings : During appraisal, the Bank underestimated the difficulty of transforming EDM into an operationally sound and financially viable enterprise; however, these issues were pursued seriously during supervision, culminating in the negotiation and partial implementation of financial restructuring plans for EDM \. In general, despite its stated commitment to power sector development, the Government was reluctant and late in implementing key, agreed actions\. In turn, this lack of vigor sent distorted signals to EDM's management, which likewise retrenched from actions to improve operations and financial results, as agreed during negotiations \. Although there were operational improvements in key areas and staff training, EDM's financial performance remains less than satisfactory (e\.g\., at the April 1998 ICR mission: 4\.5 months of consumer arrears instead of the covenanted 3 months, debt service coverage ratio of 1\.2 instead of 1\.5, and funds from internal sources at 14% instead of 20% of the agreed definition of capital expenditures)\. The April 1998 action plan to address these shortcomings will need to be monitored in order to ascertain EDM's transformation into a more effective institution, for which the key elements are : (i) the successful implementation of the the financial plan to restore and strengthen EDM's financial position, now underway with leverage from new operations, including sectoral reform as a condition for a debt reduction program; and (ii) the Government's planned privatization of EDM by the year 2000, for which the contract is being finalized to prepare the new legal framework and launch the privatization \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Marginally Satisfactory Institutional Dev \.: Partial Modest Sustainability : Likely Uncertain EDM remains operationally weak and in critical financial condition\. Tangible results still remain to be seen from the recent, initial actions for EDM's financial recovery and preparation for privatization \. Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Deficient Unsatisfactory Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : Enforcement is critical in performance contracts, but the lack of legal measures between the Government and the Government-owned company (EDM in this project) makes this type of contract an ineffective mechanism to improve the operational and financial performance of the state enterprise \. Flexibility and the capacity to adjust are important when a project is faced with political difficulties, economic problems, and other financial pressures, recently more of a global nature \. Significant benefits can still be achieved by reorienting and reengineering the project components, whille keeping in mind the project's core objectives \. 8\. Audit Recommended? Yes No Why? Institutional reform issues were not resolved during the ICR evaluation, and the follow -up being pursued through ongoing operations could offer strong lessons \. The household energy component, when analyzed in a cluster with similar efforts in other countries and regions, could also contribute lessons to a planned rural energy thematic study and revision of the energy sector strategy paper \. 9\. Comments on Quality of ICR : The ICR is of generally satisfactory quality, except for the following observations : (i) although the unification of the power sector is a significant achievement, there is inadequate evidence to substantiate an overall project sustainability rating of "likely", since there have been only partial improvements in EDM's operations and there is still so much to accomplish in EDM's financial rehabilitation; (ii) there is no discussion on lessons learned from donor coordination of a heavily cofinanced project; and (iii) there is a mismatch between the high profile given to the household energy component in the ICR's summary pages, and its minimal discussion in the main text, which is a lost opportunity to derive lessons from an important project achievement \. There are also minor presentational errors\.	REVIEW
P120313	Report No\.: 103063 PROJECT PERFORMANCE ASSESSMENT REPORT INDONESIA INDONESIA CLIMATE CHANGE DEVELOPMENT POLICY LOAN (IBRD- 71950) February 9, 2016 IEG Sustainable Development Independent Evaluation Group ii Currency Equivalents (annual averages) Currency Unit = Rupiah (IDR) 2010 US$ 1\.00 IDR 9009\.8 2011 US$ 1\.00 IDR 9067\.8 Abbreviations and Acronyms ADB Asian Development Bank AFD Agence Francais de Development AusAID Australian Agency for International Development BAPPENA Badan Perencanaan Pembangunan Nasional (National Development Planning Agency) BAU Business as usual BKMG Meteorology Climatology and Geophysics Agency CC Climate Change CCPL Climate Change Program Loan CEA Country Environment Analysis CFS Climate Field School Programs CGD Centre for Global Development CIF Climate Investment Fund CIFOR Center for International Forestry Research COF Confirmation of Parties CPS Country Partnership Strategy CTF Clean Technology Fund DDR Disaster Risk Reduction DFID Department of International Development DNPI National Council on Climate Change DPL Development Policy Loan ESMAP Energy Sector Management Assistance Program FCPF Forest Carbon Partnership Facility FIF Forest Investment Fund FIT Feed-in- Traffic FMU Forest Management Unit GHG Green House Gas GOI Government of Indonesia ICCCPL Indonesia Climate Change Policy Loan ICCSR Indonesia Climate Change Sectoral Roadmap ICCTF National Climate Change Trust Fund ICR Implementation Completion Report ICRAF World Agroforestry Center ICZM Integrated Coastal Zone Management IEG Independent Evaluation Group IFCA Indonesia Forest Climate Alliance INAGOOS Indonesian Global Ocean Observing System ISR Implementation Status and Results Report JICA Japanese International Cooperation Agency (JICA) LOI Letter of Intent LULUCF Land use, Land use change and Forestry M&E Monitoring and Evaluation iii MEMR Ministry of Energy and Mineral Resources MOA Ministry of Agriculture MOE Ministry of Environment MOF Ministry of Finance MOFR Ministry of Forestry MOHA Ministry of Home Affairs MOU Memorandum of Understanding MPW Ministry of Public Works NAMA Nationally Appropriate Mitigation Action NC4ND National Center for NAMA development PBB Performance Based Budgeting PD Program Document POLA Water Resource Management Patterns and Plans PPAR Project Performance Assessment Report REDD Reduced Emissions from Deforestation and Degradation RPJM Mid Term Development Plan SRI System for Rice Intensification UNDP United Nations Development Program UNFCCC United Nations Framework Convention on Climate Change WRI World Resources Institute WRM Water Resource Management Fiscal Year Government: January 1 â December 31 Director-General, Independent Evaluation : Ms\. Caroline Heider Director, IEG Financial, Private Sector & Sustainable Development : Mr\. Marvin Taylor-Dormond Acting Manager, IEG, Sustainable Development : Ms\. Midori Makino Task Manager : Mr\. Stephen Hutton iv Contents Principal Ratings \. vii Key Staff Responsible\. vii Preface\. ix Summary \. xi 1\. Background and Context\. 1 2\. Objectives, Design, and their Relevance \. 5 3\. Implementation \. 14 Implementation Experience \. 14 4\. Achievement of the Objectives \. 19 Objective 1: Support Government Efforts to Develop a Low-Carbon Growth Path \. 21 Objective 2: Support Government Efforts to Develop a Climate-Resilient Growth Path \. 35 5\. Ratings \. 41 Outcome \. 41 Risk to Development Outcome \. 43 Bank Performance \. 47 Borrower Performance \. 50 Monitoring and Evaluation \. 52 6\. Lessons \. 53 References \. 57 Annex A\. Basic Data Sheet \. 59 Annex B1\. Data tables \. 61 Annex B2\. Analysis of Environmental and Social Effects \. 70 Annex B3\. Parallel Technical Assistance Grants \. 74 Annex B4\. Indonesia 2020 emission reduction targets and policies \. 75 Annex C\. List of Persons Met \. 76 This report was prepared by John Redwood (Consultant), who assessed the project in August 2015\. The Consultant was supervised by Stephen Hutton (TTL)\. The report was peer reviewed by Varadarajan Atur and panel reviewed by John Eriksson\. Marie Charles and Vibhuti Narang Khanna provided administrative support\. v Tables Table 1: Policy Areas and Subareas in the Indonesia Climate Change DPL\. 10 Table 2: Financial Support for Indonesia CCPL by Year (US$ million) \. 19 Table 3: Indonesian Energy Subsidies (in Trillion Rupiah), 2007-2013 \. 25 Table 4: Greenhouse Gas Emissions in Indonesia, 2006-2014 (mtCO2e) \. 30 Table 5: Sources of Indonesiaâs Primary Energy Consumption (million tons of oil equivalent and percent of total) for Selected Years, 2005-2013\. \. 32 Table 6: Fossil Fuel Energy Production in Indonesia (million tons oil equivalent and percent of total) for Selected Years 2005-2013\. \. 34 Table 7: Status of Strategic and Master Water Management Plans, 2014 \. 36 vii Principal Ratings ICR* ICR Review* PPAR Outcome Moderately Satisfactory Moderately Moderately Unsatisfactory Unsatisfactory Risk to Moderate Moderate Moderate Development Outcome Bank Performance Moderately Satisfactory Moderately Satisfactory Moderately Satisfactory Borrower Moderately Satisfactory Moderately Moderately Performance Unsatisfactory Unsatisfactory * The Implementation Completion Report (ICR) is a self-evaluation by the responsible Bank department\. The ICR Review is an intermediate IEG product that seeks to independently verify the findings of the ICR\. Key Staff Responsible Division Chief/ Project Task Manager/Leader Sector Director Country Director Appraisal Timothy Brown Sonia Hammam Joachim von Amsberg Completion Timothy Brown George Soraya Stefan Koeberle viii IEG Mission: Improving World Bank Group development results through excellence in evaluation\. About this Report The Independent Evaluation Group assesses the programs and activities of the World Bank for two purposes: first, to ensure the integrity of the Bankâs self-evaluation process and to verify that the Bankâs work is producing the expected results, and second, to help develop improved directions, policies, and procedures through the dissemination of lessons drawn from experience\. As part of this work, IEG annually assesses 20-25 percent of the Bankâs lending operations through field work\. In selecting operations for assessment, preference is given to those that are innovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which Executive Directors or Bank management have requested assessments; and those that are likely to generate important lessons\. To prepare a Project Performance Assessment Report (PPAR), IEG staff examine project files and other documents, visit the borrowing country to discuss the operation with the government, and other in-country stakeholders, and interview Bank staff and other donor agency staff both at headquarters and in local offices as appropriate\. Each PPAR is subject to internal IEG peer review, Panel review, and management approval\. Once cleared internally, the PPAR is commented on by the responsible Bank department\. The PPAR is also sent to the borrower for review\. IEG incorporates both Bank and borrower comments as appropriate, and the borrowers' comments are attached to the document that is sent to the Bank's Board of Executive Directors\. After an assessment report has been sent to the Board, it is disclosed to the public\. About the IEG Rating System for Public Sector Evaluations IEGâs use of multiple evaluation methods offers both rigor and a necessary level of flexibility to ad apt to lending instrument, project design, or sectoral approach\. IEG evaluators all apply the same basic method to arrive at their project ratings\. Following is the definition and rating scale used for each evaluation criterion (additional information is available on the IEG website: http://worldbank\.org/ieg)\. Outcome: The extent to which the operationâs major relevant objectives were achieved, or are expected to be achieved, efficiently\. The rating has three dimensions: relevance, efficacy, and efficiency\. Relevance includes relevance of objectives and relevance of design\. Relevance of objectives is the extent to which the projectâs objectives are consistent with the countryâs current development priorities and with current Bank country and sectoral assistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, Country Assistance Strategies, Sector Strategy Papers, Operational Policies)\. Relevance of design is the extent to which the projectâs design is consistent with the stated objectives\. Efficacy is the extent to which the projectâs objectives were achieved, or are expected to be achieved, taking into account their relative importance\. Efficiency is the extent to which the project achieved, or is expected to achieve, a return higher than the opportunity cost of capital and benefits at least cost compared to alternatives\. The efficiency dimension generally is not applied to development policy operations\. Possible ratings for Outcome: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\. Risk to Development Outcome: The risk, at the time of evaluation, that development outcomes (or expected outcomes) will not be maintained (or realized)\. Possible ratings for Risk to Development Outcome: High, Significant, Moderate, Negligible to Low, Not Evaluable\. Bank Performance: The extent to which services provided by the Bank ensured quality at entry of the operation and supported effective implementation through appropriate supervision (including ensuring adequate transition arrangements for regular operation of supported activities after loan/credit closing, toward the achievement of development outcomes\. The rating has two dimensions: quality at entry and quality of supervision\. Possible ratings for Bank Performance: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\. Borrower Performance: The extent to which the borrower (including the government and implementing agency or agencies) ensured quality of preparation and implementation, and complied with covenants and agreements, toward the achievement of development outcomes\. The rating has two dimensions: government performance and implementing agency(ies) performance\. Possible ratings for Borrower Performance: Highly Satisfactory, Satisfactory, Moderately Satisfactory, Moderately Unsatisfactory, Unsatisfactory, Highly Unsatisfactory\. ix Preface This is the Project Performance Assessment Report (PPAR) for the Indonesia Climate Change Development Policy Loan (CCDPL)\. This was initially expected to be the first loan, for US$ 200 million, in a programmatic series of four CCDPLs, but it was the only one that was actually presented to the Board\. It was approved on May 25, 2010 and closed on December 31, 2010\. The loan was fully disbursed\. The report presents findings based on a review of the projectâs Implementation Completion and Results Report dated June 27, 2013, program documents, legal documents, and other relevant materials\. An IEG mission to Indonesia in August 2015 held discussions with World Bank country office staff, government officials, other development agencies, civil society organizations, and other project stakeholders (see Annex C)\. These included climate change, forestry, energy, water resource management, natural disaster management, marine and coastal management, and environmental specialists\. IEG met with senior past or present government officials in various key ministries, including Finance, Planning (BAPPENAS), Economic Coordination, Environment, and Forestry in Jakarta, as well as with senior scientists at two CGIAR centers, the Center for International Forestry Research (CIFOR) and the World Agroforestry Center (ICRAF) in Bogor\. Prior to the mission, IEG met with two former Country Directors, two former senior Jakarta-based Bank environmental staff, including the Task Team Leader at the time the CCDPL was appraised and closed, and a former Executive Director of CIFOR\. This program was selected for a PPAR for a number of reasons\. It represents one of the relatively few closed Development Policy Operations with climate change goals\. It was designed as the Bankâs first programmatic DPL series for this purpose, later followed by a similar set of operations for Vietnam, which was largely modeled upon it\. Thus, the reasons for its failure to proceed after the first loan was disbursed, based on a set of prior actions taken before it was approved, merits additional scrutiny\. The World Bankâs Implementation Completion and Results report focused on documenting outputs and policy changes, with relatively little assessment of the outcomes of policy reforms or on attribution to the World Bank operation\. The PPAR sought to update and expand the analysis in this regard\. It is also designed as a case study for the forthcoming IEG Learning Product on Development Policy Operations with environmental, including climate change, goals\. The contributions of all stakeholders, including World Bank staff in Washington DC and Jakarta, are gratefully acknowledged\. We are also grateful for support to the mission from Renata Simatupang in Indonesia\. Following standard IEG procedures, the draft PPAR was shared with relevant Government officials and agencies for their review and comment, but no comments were received\. x xi Summary Indonesia is the third largest emitter of greenhouse gases in the developing world after China and India\. These emissions stem largely from deforestation, peatland conversion, and associated fires, together with electricity generated by coal-fired power plants and the consumption of fossil fuels in the energy and transport sectors, also associated with high fuel subsidies and rapid urbanization\. Composed of over 13,000 islands, Indonesia is also one of the most vulnerable countries to the rising adverse impacts of global climate change, including extreme weather events â tropical storms and droughts â and sea level rise, particularly on account of the concentration of much of its population in lowland areas\. In recognition of this, the Government of Indonesia (GOI) hosted the 13th Conference of the Parties (COP) of the United Nations Framework Convention on Climate Change (UNFCCC) in Bali in December 2007, at which time it presented its National Action Plan for Addressing Climate Change\. In late 2009, the President pledged that the country would reduce its greenhouse gas (GHG) emissions by 26 percent by 2020\. Even prior to that, it signed an agreement with the Government of Japan that resulted in a multi-year policy-based loan to support Indonesian efforts to deal with climate change, based on the National Action Plan\. The French Government joined this initiative shortly thereafter, but even though the World Bank participated in some of the initial meetings and provided technical and analytical support for this program, it decided not to co-finance it during the first two years of its implementation\. The main reasons for this were because the agreed policy matrix was considered to be too fragmented and insufficiently ambitious with respect to forest governance and energy demand management (i\.e\., subsidy reduction)\. Once GOI agreed to incorporate more significant policy reforms in the areas of energy pricing (i\.e\., reduction of electricity subsidies) and forest governance, together with its pledge to substantially cut emissions, the Bank agreed to participate in the funding of the second phase of the ongoing climate change policy loan program together with the Japanese International Cooperation Agency (JICA) and the Agence Francais de Developpement (AFD) through an initial Development Policy Loan (DPL) of US$ 200 million, approved on May 25, 2010\. JICA and AFD had contributed US$ 300 and US$ 200 million, respectively in 2008, and each provided US$ 300 million both in 2009 and 2010\. This was expected to be the first of a four-loan programmatic series to support what the Bank denominated the Indonesia Climate Change (CC) DPL Program, whose objectives were to support GOI efforts to develop a low carbon, climate-resilient growth path\. A number of prior actions were recognized in three main policy areas -- mitigation, adaptation and disaster preparedness, and cross-sectoral and institutional issues â and eleven subareas to justify approval and disbursement of the first loan\. Four triggers and other âindicativeâ policy actions were agreed by the Government and the development partners for the second loan as well as tentative indicative actions for the third and fourth ones, expected to occur in 2011, 2012, and 2013, respectively\. For a variety of reasons, the CC DPL series did not extend past the initial loan (CC DPL-I), which was disbursed in September 2010 and closed three months later\. According to Government officials interviewed by IEG, the program failed to go forward because of a xii Presidential decision not to borrow for climate change, even though the resources transferred by the Bank and the Japanese and French Governments were for general budget support and were not used to support investments to address climate change per se\. This decision was reportedly taken in response to a âconsensusâ at the UNFCCC that developing countries should only receive grant money, rather than loans, to address climate change, although, in practice it was also a reflection of several other factors\. These factors included: (i) the loss of critical program âchampionsâ within the Indonesian Government when the Minister of Finance departed and other high level personnel changes occurred within the National Development Planning Agency, BAPPENAS, which was responsible for program coordination; (ii) the availability of budget support finance from alternative sources, including the Bank through other DPLs; and (iii) the near simultaneous offer by the Norwegian Government to provide up to US$ 1 billion in grant funding for implementation of Indonesiaâs incipient REDD (Reduction of Deforestation and Degradation) program, which was also being supported by the Climate Change DPL\. In addition, GOI had failed to meet two of the four triggers previously agreed for the second loan, while achievement of a third one (i\.e\., issuance of a presidential regulation formalizing the 26 percent reduction in GHG emissions, which did not occur until late September 2011) had been substantially delayed\. Due to these elements, only one of the four anticipated CC DPLs was presented to the Board\. The Japanese and French Governments also ceased their funding for the policy-based program after 2010, although the other development partners, especially JICA, continued to provide technical assistance grants to some of the line ministries responsible for implementing parts of the original program\. While one of the triggers for the second loan was met in a timely way, two others were not met in the form originally envisaged in the Program Document, and the fourth was delayed, while the experience with other indicative actions for planned operations two, three, and four was mixed\. Several of the expected results could not be assessed, because the needed baseline surveys were not carried out or the agency responsible for their monitoring discontinued collection of the required data, while others were only achieved in part\. Some results indicators, moreover, only partly reflected the policy actions that were to be taken\. While performance in some policy subareas, such as those related to renewable energy, water resource management, and natural disaster risk management, was generally positive, this was less true in others, especially those concerned with peatland conservation, REDD (now REDD+, which includes conservation, sustainable forest management, and enhancement of forest carbon stocks in addition to the reduction of deforestation and forest degradation -- REDD), and forest governance\. Nor was it possible to establish an inter-governmental fiscal transfer mechanism to provide incentives for local governments to take priority climate change actions, including the strengthening of forest management activities, which had been one of the triggers for the second loan\. As a result, even though the objectives of the CC DPL were â and continue to be -- highly relevant and its design was substantially relevant, its efficacy with regard to both its low carbon and its climate resilience objectives was only modest, and, its overall outcome, rated Moderately Unsatisfactory\. xiii More generally, available data suggest that Indonesiaâs GHG emissions have continued to rise in recent years, at least through 2012, due to persisting high rates of deforestation, peatland conversion, and fires, as well as growing fossil fuel-based energy consumption\. Electricity subsidies were finally reduced somewhat as of late 2013 and geothermal energy investments increased in part with financial support from the World Bank and the Clean Technology Fund (CTF)\. However, the share of renewables in Indonesiaâs energy mix remains very low (around 3 percent) and is expanding very slowly, as coal and oil continue to strongly predominate\. Forest and land use management also persist as major challenges, while REDD+ implementation has advanced very slowly and had very limited results on the ground to date\. Despite these broader considerations, the risk to the programâs actual development outcome is rated Moderate\. Bank performance in terms of quality at entry is rated Moderately Satisfactory as, despite its relevance, there were a number of shortcomings in program design and several of the triggers for the proposed second loan proved overly ambitious given the strong institutional and political economy constraints encountered by the program\. The latter included the frequent tendency of subnational governments to fail to implement central government decisions when they went against local vested economic and political interests, such as those related to peatland use, palm oil concessions, and curbing fires and deforestation, together with strong public resistance to cutting energy subsidies\. Quality of supervision, however, is rated Satisfactory, as the Bank, together with BAPPENAS and the other development partners, closely monitored and did everything it could to help the DPL series move forward in 2010- 11, but appropriately did not relax the previously agreed unmet triggers for the second loan\. On balance, however, Bank performance is rated Moderately Satisfactory\. Borrower performance is rated Moderately Unsatisfactory both at the Government and Implementing Agency levels\. While Government commitment in the Ministry of Finance and BAPPENAS was initially strong, it declined significantly after the changes in top level personnel, while commitment in the various line ministries and agencies involved in DPL implementation was uneven from the start and remained so throughout the brief life of the second phase of the program\. A joint evaluation by AFD and JICA, issued in June 2014, observed that even the additional technical assistance grants provided by these donors to some of the participating ministries proved to be an insufficient incentive for them to proactively implement some of their sector-specific policy obligations, while others were effectively impeded by uncooperative local governments, empowered by the countryâs recent decentralization\. The JICA-AFD evaluation, however, did not specifically assess the World Bankâs role\. The quality of Monitoring and Evaluation is rated Modest, as some indicators did not sufficiently demonstrate progress in the policy area they were related to, some indicators were not collected, and utilization was largely limited to project reporting\. Despite these frustrations, the Indonesia CC DPL experience provides a number of important lessons\. Among them are: ï Both a strong âchampionâ and broad institutional commitment are needed for DPL policy actions to be effectively implemented; it is, thus, important to fully understand the xiv incentives involved for the various government entities that are to be engaged in DPL implementation\. In this regard also it is essential to fully understand the potential political economy, as well as the institutional, constraints that can impede or delay policy implementation; this has implications for the up-front risk analysis and the DPL appraisal process more generally\. ï This is especially important in DPLs with environmental, including climate change objectives, which are inherently cross or multi-sectoral in nature, and, therefore, tend to depend on a broader range of participating institutions, both at the national and subnational levels, than single sector or macroeconomic/fiscal DPLs\. ï Programmatic DPLs can encounter many of the same development effectiveness obstacles, including varying and changing levels of government and/or implementing agency commitment and implementation delays, as investment loans\. ï DPLs for climate change and other complex development challenges are more effective as part of a broader targeted multi-instrument Bank assistance strategy, including the use of investment loans and technical assistance, as a way of ensuring greater Borrower interest and ownership and establishing a longer-term relationship and policy dialogue\. ï Even when a DPL is unsuccessful in terms of its own expected results, it may play a positive and strategically important role as part of an evolving longer-term Bank- Borrower partnership to help address an emerging complex development challenge such as climate change\. Marvin Taylor-Dormond Director- Financial, Private Sector Sustainable Development Evaluation 1 1\. Background and Context 1\.1 Between 1990 and 2010, Indonesia experienced rapid output growth, rising incomes, and improved living standards\. Inflation was under control and poverty levels fell, even though many people remained close to the poverty line\. Indonesia was less affected by the global financial crisis of 2008-09 than many other developing nations, and economic growth was returning to pre-crisis levels by 2010 when the programmatic series of Climate Change Development Policy Loans (CC DPL) was approved\. The economic outlook for the coming years was also good\. The Government of Indonesia (GOI) nonetheless still needed budget support from the Bank and other development partners\. Political and institutional reforms over the period were deemed generally successful, including greater decentralization of power to the provincial and local levels, although this also resulted in policy effectiveness constraints due to the ability of subnational governments to sometimes ignore or contradict central government mandates and regulations\. However, the incumbent President won a new term in 2009, ensuring central government policy consistency and good relations with the Bank (which have continued under the new administration that took office in October 2014), including, for the most part, with respect to climate change, if not timely and consistent policy implementation on the ground, as will be discussed below\. 1\.2 Despite Indonesiaâs positive economic performance and increasing political consolidation, a 2009 World Bank Development Policy Review observed that the country needed to build on this foundation to ensure that economic growth would continue to accelerate while also becoming more inclusive and sustainable\.1 Poor environmental management was found to be a persisting shortcoming\. In particular, stronger efforts were needed to improve forest management and governance and to reduce rural land, water, and coastal resource degradation, as well as to address urban pollution, flooding, congestion, and noise\. There was also a need to enhance local government capacity for development planning, sustainable land and other natural resource management, and to address the rising impacts associated with climate change\. These challenges were acknowledged in the countryâs comprehensive State of the Environment Report for 2012, whose Foreword by the then Minister of Environment affirmed that âmuch of Indonesiaâs environment is damaged and our natural resources are becoming increasingly depleted\.â2 1\.3 Recognizing both Indonesiaâs growing contribution and increasing vulnerability to global climate change, the GOI established a National Action Plan for Addressing Climate 1 World Bank, Indonesia: Development Policy Review, Jakarta, 2009\. 2 Ministry of Environment, State of the Environment Report of Indonesia: Pillars of the Environment, Jakarta, June 2013\. Foreword\. 2 Change in 20073 and hosted the 13th Conference of the Parties (COP) for the United Nations Framework Convention for Climate Change (UNFCCC) in Bali in December of that year\. The Bank played an instrumental role in helping the Government prepare for this highly visible conference, leading directly to its further engagement with GOI in relation to climate change, including its eventual decision to join the Japanese and French Governments in using development policy lending, among other forms of assistance, to support these efforts\. More recently, a National Priority Action Plan issued by the incoming administration in 2010 confirmed climate change and environmental management among the Governmentâs core development challenges\. This was reiterated in the National Mid-Term Development Plan for 2010-2014, which established priorities in relation to energy -- including greater use of renewable sources â the environment, and disaster risk management, the latter partly in response to the growing impacts of extreme weather events that were likely exacerbated by climate change\. 1\.4 With regard to Indonesiaâs rising greenhouse gas (GHG) emissions, as reiterated in its Second National Communication to the UNFCCC, issued in November 2010,4 rapid deforestation, illegal logging, and peat-land degradation were among the principal causes, together with rising fossil fuel (especially coal and oil) production and consumption, significant energy (both fuel and electricity) subsidies, increasing urbanization, and expansion of the national vehicle fleet (see the section on program relevance below for further details about the continuing importance of these sources)\. With respect to climate vulnerability, in turn, while Indonesia is expected to experience only modest temperature increases, there are likely to be significant alterations in wet and dry season precipitation, more intense rainfall, and a rise in the frequency and severity of extreme weather events, including both tropical storms and droughts\. These phenomena are expected to harm both food security and water resource availability and to intensify the incidence of both water- and vector-borne diseases, while sea level rise will threaten coastal zones and local livelihoods and ocean warming will harm marine biodiversity\. 1\.5 In response to these effects, in addition to the 2007 National Action Plan for Addressing Climate Change mentioned above, in 2008, GOI established the National Council on Climate Change (DNPI), chaired by the President and composed of members from fifteen ministries, to coordinate climate policy\. This was followed by creation of the National Climate Change Trust Fund (ICCTF) in 2009, several climate-related policy papers, and a low-carbon growth study, undertaken with the support of the World Bankâs Energy Sector Management Assistance Program (ESMAP), which was also helping to carry out similar studies in other large GHG-emitting developing countries including Brazil and Mexico, at the time\. In addition, BAPPENAS, the National Development Planning Agency, prepared a series of climate change sectoral âroadmaps,â likewise in 2009, and the Ministry of Environment finalized the countryâs aforementioned Second National Communication to the UNFCCC in 2010, roughly a decade after the first such report was issued\. With respect to GHG mitigation more specifically, the President committed Indonesia to a voluntary 26 3 See Ministry of Environment, National Action Plan Addressing Climate Change, Jakarta, and November 2007\. 4 Ministry of Environment, Second National Communication under the United Nations Framework Convention for Climate Change, Jakarta, November 2010\. 3 percent reduction of emissions below the projected business-as-usual (BAU) scenario by 2020 and a further reduction of up to 41 percent should sufficient international financial assistance be forthcoming\. Made initially at the G-20 Summit in September 2009 and reiterated at the 15th UNFCCC COP in Copenhagen in December of that year, this pledge was later formalized by a Presidential Regulation in September 2011\.5 Although delayed, this Regulation was also one of the four triggers for the proposed second CC DPL loan, which never went forward 1\.6 In mid-2007, the Japanese and Indonesian Governments agreed on a bilateral framework to help the latter address climate change\. In early 2008, Japan established a new financial mechanism to help developing nations mitigate and adapt to climate change\. Indonesia became the first country to use resources from this fund to help implement the bilateral agreement in part through what was denominated the Climate Change Program Loan (CCPL)\. The first phase of this program (2007-2009) was based on a policy matrix agreed by the two Governments derived from the National Climate Change Action Plan\. The Agence Francaise de Developpement (AFD) soon also joined this program and provided funding starting in 2008\. While the Bank participated in early discussions on the program6 and provided background documents, analysis,7 and other technical inputs,8 it decided not to co- finance the CCPL during its initial phase\.9 In addition to their policy-based funding, both the Japan International Cooperation Agency (JICA) and AFD extended parallel technical assistance grants to support GOI policy actions in the energy, forestry, and industrial sectors, as well as for program monitoring (especially by JICA) and supervision, about which more will also be said below\. Despite its 2008 decision not to provide financing, the Bank continued to participate with GOI (i\.e\., especially BAPPERNAS, the national planning agency, which was responsible for 5 See Republic of Indonesia, National Action Plan for Reducing Greenhouse Gas Emissions (RAN-GRK) and the associated Presidential Regulation No\. 61 of 2011, September 2011\. 6 The Bank identified climate change, together with disaster management, as an area for stepped-up engagement in its regional Environmental Strategy Note for Indonesia for 2008-2010, including the possibility of a stand- alone climate change DPL in partnership with Japan and the ADB (Asian Development Bank)\. It also issued a pre-concept note for a possible Bank CC DPL on February 15, 2008 with the objective (pg\. 3) of supporting âGOIâs efforts to prepare for the post-2012 global climate change regime\.â 7 The results of this analysis were reflected, inter alia, in an internal strategy paper for the forestry sector (see World Bank, Sustaining Indonesiaâs Forests: A Strategy for the World Bank, Jakarta, June 2006) and collaboration with six other development partners to draft a report on assistance to the forest sector in Indonesia in 2006 (see World Bank, et\. al\. Sustaining Economic Growth, Rural Livelihoods and Environmental Benefits: Strategic Options for Forest Assistance in Indonesia, World Bank, Jakarta, December 2006)\. 8 See descriptions in World Bank, Program Document for a Proposed Climate Change Development Policy Loan, April, 2010, (CC DP-I PD) pp\. 38, 96-97\. 9 According to Bank staff, the decision not to co-finance the CCPL at that time was primarily because the policy matrix did not contain sufficient reform elements in the critical areas of forest governance and energy subsidies\. When the financial crisis hit soon thereafter, the Government became more open to policy reforms in these areas and the Bank decided to provide financial, as well as technical, support, as indicated in a second pre- concept note issued in November 2009\. The Bank also saw this as an opportunity to support an activity led by another donor (i\.e\., Japan)\. 4 its coordination), JICA, AFD and later also the Asian Development Bank (ADB), in monitoring CCPL implementation during its initial years as well as in the planning activities for its second phase, expected to start in 2010\. According to the Program Document for CC DPL-I (PD), the Bank added value to this process âby sharpening the focus of the operation on a core set of key issues, elevating key policy issues to high level decision makers, and integrating assistance across a range of Bank lending and non-lending instruments, including climate finance\.â10 The most important high level decision makers referred to in the PD were in the Ministry of Finance, including the then Minister herself, who was highly supportive of both the initiative and the Bankâs participation, and senior officials in BAPPENAS\. 1\.7 IEG has reviewed the original JICA-AFD policy matrix for the CCPL for 2010, which contained a much larger number of specific activities, but gave much less attention to broader (and more politically sensitive) policy concerns, such as energy pricing and subsidy reduction, of which there is no mention, and forest governance, which was referred to only in terms of âimproved forest management,â than in the matrix eventually agreed for the CC DPL series with Bank financing\.11 The November 2009 pre-concept note for this operation highlighted some of the critical policy areas not included in the JICA-AFD matrix that this operation could help GOI address\. The Bank reportedly also increased the operationâs focus on adaptation, although the original JICA-AFD matrix included a substantial set of policy actions in this regard, including for water resource management, agriculture, disaster risk management, and the marine and fisheries sector\. Thus, the Bankâs incremental contribution in this regard is not clear and the main focus of the jointly financed CC DPL continued to be on mitigation, and especially on the main sources of GHG emissions, deforestation, peatland fires, and a fossil fuel-based energy sector, which were jointly responsible for more than three-fourths of the total in 2005, according to Indonesiaâs Second National Communication to the UNFCCC\. 1\.8 Finally, in addition to the analytical work cited above, at the time CC DPL-I was approved the Bank was supporting the Governmentâs climate change agenda through various other interventions, to some of which the final agreed policy action matrix was specifically linked\. These included, for example, development of a US$ 500 million geothermal investment project using a Bank-administered US$ 4 million GEF grant and preparation of a request for US$ 400 million of concessional financing from the Clean Technology Fund (CTF)\. They also included proposed grant support through the Forest Carbon Partnership Facility (FCPF) and the Forest Investment Fund (FIP), coordination of donor assistance for the Indonesia Forest Climate Alliance (IFCA), which helped develop the Governmentâs REDD (Reducing Deforestation and Forest Degradation) Platform in 2007,12 and a major technical assistance program for water management for climate change mitigation and 10 World Bank, CC DOL-I-PD, op\.cit, para 128, pg 38\. The Bank analytical pieces cited are a Country Environmental Analysis (CEA) entitled Investing in a More Sustainable Indonesia (World Bank 11 See, World Bank, Indonesia Policy Matrix for Climate Change Program Loan (GOJ-AFD Base), draft, Jakarta, November 25, 2009\. 12 World Bank, PD, op\. cit\., paras\. 136-139, pg\. 40\. 5 adaptive development in Indonesiaâs lowlands, known as WACLIMAD\.â13 Since that time, the Bank has provided considerable technical and operational support for Indonesiaâs participation in the UN-initiated REDD â now REDD+14 -- program, including in connection with the CC DPL\. In short, the CC DPL was only one of several Bank-assisted activities in relation to climate change mitigation, both on the energy and on the land use and forestry sides, and, to a lesser extent adaptation, prior, in parallel, and subsequent to the CC DPL operation\. 2\. Objectives, Design, and their Relevance Objectives 2\.1 There was no statement of program objectives in the Loan Agreement, dated June 23, 15 2010\. 2\.2 According to the Program Document (PD), the objective of CC DPL-I â and implicitly of the entire anticipated four-loan Bank programmatic CC DPL series â was âto support the Governmentâs efforts to develop a lower carbon, more climate-resilient growth path\.â Focusing on three areas â mitigation, adaptation and disaster preparedness, and institutional and cross-sectoral issues, the PD affirmed that the CC DPLs would help Indonesia prepare for the global climate change regime by establishing a favorable policy and institutional setting that could access climate finance opportunities and global markets and that its policy actions would benefit the country by providing incentives to improve governance, forest management, efficiency, competitiveness, and energy security\. Finally, it noted that the Bank operation would be âconsistent with and provide parallel financing for the Climate Change Policy Loan series, jointly financed by Japan and AFDâ and that, by contributing to this process, the Bank would add value âby linking reform efforts to the full range of engagements and investment instruments,â described elsewhere in the PD\. 2\.3 The GOIâs Letter of Development Policy, dated April 26, 2010, addressed to the heads of JICA, AFD, and the Bank, and signed by the Ministers of Development Planning and Finance indicated that the Government intended to make the ICCTF operational\. It also observed that this Fund, centered at BAPPENAS, would provide âa focal point for 13 This technical assistance project was implemented between March 2010 and February 2012 and focused on the coastal lowlands of Sumatra, Kalimantan, and Papua\. See Government of Indonesia/World Bank, Thematic Paper 10 â Water Management for Climate Change Mitigation and Adaptive Development in Lowlands , Technical Assistance WACLIMAD Summary Report, Jakarta, February 2012, for an overview of the results of this work\. 14 Initially, REDD was concerned only with reducing deforestation and forest degradation, but it was later expanded to include activities for conservation, sustainable forest management, and enhancement of forest carbon stocks\. 15 World Bank, Loan Agreement for the Indonesia Climate Change Development Policy Loan between the Republic of Indonesia and the International Bank for Reconstruction and Development, June 23, 2010\. 6 coordination and priority setting,â and that the Government would establish a GHG inventory as âan essential basis for planning, formulation and implementation of policies and monitoring of impacts as well as to design the national MRV [Monitoring, Reporting, and Verification] system,â16 although these actions were not part of the CC DPL per se\. 2\.4 In the absence of a statement of program objectives in the Legal Agreement, this project performance assessment report (PPAR) evaluates the CC DPL program against the objectives and expected results presented in the PD\. It considers the performance of the expected programmatic DPL series as a whole, even though only one of the originally anticipated four operations was approved\. Based in part on an evaluation mission undertaken in August 2015, this PPAR also provides an update of project performance and other information presented in the Implementation Completion and Results (ICR) Report, issued in June 2013, as well as in the desk-based ICR Review posted by IEG in March 2015\. Relevance of Objectives 2\.5 The objectives of the CC DPL series â to support Indonesian Government efforts to develop a low-carbon, climate-resilient growth path -- were and remain very relevant\. As concerns mitigation (i\.e\., low-carbon growth), the second phase of the CCPL program and the intended Bank CC DPL series focused on the three main sources of GHG emissions in Indonesia\. According to the Second National Communication to the UNFCCC, land use, land use change and forestry (LULUCF) -- mainly deforestation -- was responsible for 37\.7 percent of such emissions in 2005, the most recent year for which such official data were available, followed by peatland fires (25\.2 percent), the energy sector (20\.6 percent), waste (9\.3 percent), agriculture (4\.5 percent), and industrial processes (2\.7 percent)\.17 Given existing industrialization and urbanization trends and persisting energy subsidies, it was deemed likely that the energy sectorâs share of total emissions, including for vehicle use, would increase in the future 2\.6 This scenario continues to be the case and policy reform and institutional and investment responses to it are even more urgently needed than in 2010, as the draft Bank engagement note on climate change in Indonesia, dated July 2015, makes clear\. According to this source: 2\.7 Indonesia represents a critical player in global efforts to mitigate climate change\. Based on 2012 data, Indonesia is the sixth largest GHG emitter when land use, land use change and forestry (LULUCF) are counted\. The vast majority of total emissions come from forestry and land use changes\. The activities primarily responsible for these emissions are deforestation and peat degradation, most recently associated with the expansion of palm oil 16 Government of Indonesia, Letter of Development Policy, April 26, 2010, Annex 1 to the CC DPL-1 PD, pg\.2 17 Ministry of Environment, Second National Communication to UNFCCC, op\. cit\. Executive Summary, pg\. xi\. 7 plantations\. Most of these emissions stem from peat forest fires,18 which have important negative economic, health, and environmental impacts\.19 2\.8 As concerns the energy sector, the note observes that âIndonesiaâs current development pathway is expected to lead to significantly increased fossil fuel emissions, particularly due to expanded power generation, rising manufacturing, and rapid urbanization\.â This, in turn, is due primarily to the continuing predominance of coal and petroleum in the countryâs energy matrix and its slow uptake of renewables, which still account for a relatively low share of the total despite efforts aimed at boosting them\. Accordingly, âdespite an increase in feed-in tariffs,20 an update to the Geothermal Law to declassify geothermal energy as a mining activity, and pursuing public-private partnerships, geothermal uptake has been slow due to cost and risk of investment in the technology compared with power generation from fossil fuels\.â It also states that Indonesiaâs persisting fuel subsidies, which accounted for more than one-fifth of GOIâs budget in 2012, are a significant factor in impeding the competitiveness of renewable sources as well as an underlying factor behind the rapid growth in vehicle ownership and slow expansion of public transport options\. The note concludes that âin addition to being a fiscal burden, the subsidy disincentivizes (sic) investment in renewable energy and inadvertently adds to GHG emissions\.â On the mitigation side, therefore, the CC DPLâs proposed support for a low- carbon development path clearly remains very relevant both to the GOIâs and the Bankâs climate change-related priorities and agendas\. 2\.9 As concerns adaptation, Indonesia continues to be highly vulnerable to the impacts of both extreme weather events and sea level rise associated with climate change\. The PD for CC DPL-1 affirmed that more than 41 million Indonesians lived within ten meters above the average sea level and that coastal cities including Jakarta, Semarang, and Surabaya were of particular concern because of their high population densities\. It is estimated that annual GDP loss due to climate change in Indonesia could reach 2\.5 percent by 2100 as a result of the countryâs tropical climate, extensive coastlines, coastal population concentration, high dependence on agriculture and natural resources, and relatively low adaptive capacity\. One recent index of climate change adaptation capacity ranks Indonesia 153rd out of 192 countries when adjusted for GDP, a rating similar to those for Panama, Afghanistan, and Iran\.21 18 For more on the impact of recent peat forest fires, see World Bank, Indonesia Economic Quarterly: Hard Choices, July 2014, pp\. 22-28\. The smoke generated by peat fires have also strained relations with neighboring countries, particularly Malaysia and Singapore, which have complained to GOI about the resulting air pollution\. 19 World Bank, Draft Engagement Note: Climate Change and Indonesia, Jakarta, July 2015, pp\. 2-3\. The GHG emissions data cited in this report come from the World Resources Institute (WRI)\. In addition, the Note observed that âbeyond territorial emissions, Indonesiaâs coa stline and ocean territory act as major carbon sinks that are at risk of further exacerbating GHG emissions through their destruction (and are currently not included in national GHG accounting)\. 20 A âfeed-in tariffâ is a policy mechanism designed to acce lerate investment in renewable energy\. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology\. Rather than pay an equal amount for energy, users of technologies such as wind energy, are awarded a lower Kwh price\. 21 See University Notre Dame Global Adaptation Index (ND-GAIN)\. 8 2\.10 These concerns continue to be very salient, as the recent Bank draft engagement note stresses\. Among other observations, it affirms that âIndonesia is susceptible to all major climate change risks except cyclones, [namely] drought, floods, landslides, and sea-level rise\.â It likewise reiterates that the countryâs largest population centers are characterized by âhigh exposureâ to climate change impacts, both to inundation from flooding and salinization from sea level rise, affecting most of the population, and that failure to adapt to a changing climate most severely hurts the poor, including those dependent of forest and other natural resources for their livelihoods\.22 Increasing the countryâs resilience to the likely effects of climate change also continues to be a very relevant objective\. 2\.11 Finally, in relation to institutional and cross-sectoral issues, the GOIâs Letter of Development Policy acknowledged that climate change was one of the most difficult institutional areas for reform âgiven the centrality of policy choices and the breadth of institutions and sectors involved\.â It also recognized that local governments play a critical role in adapting to and mitigating climate change and that the Government intended to âevaluate options and design fiscal transfers to provide incentives for local government to take priority climate actions\.â23Adequate policy formulation, coordination, and implementation both across sectors within the central government and among the various levels of public administration are a persisting institutional challenge\. 2\.12 It can be concluded that the relevance of the objectives of the proposed CC DPL series was â and remains â high\. These priorities were emphasized in key GOI documents including the 2007 National Action Plan for Climate Change and the 2008 Development Response to Climate Change, as well as in the Second National Communication to the UNFCCC and the Medium-Term Development Plan (RPJM) for 2010-2014\. They were also reflected both in the Bankâs Country Partnership Strategy (CPS) for Indonesia for 2009-2012 and in the most recent one for Fiscal Years (FYs) 2013-2015\. The most recent CPS, for example, affirms that climate change is âa key threat to Indonesiaâs development, especially for the poor who are disproportionately affected\.â One of the four overlapping âengagement areasâ of this Strategy was labeled âpro-greenâ and subtitled âensuring sustainable development and improving disaster resilience\.â The CPS affirms, more specifically, that âdeforestation, flooding, and other environmental concerns have highlighted the importance of adapting to and mitigating climate change and managing natural resources in a sustainable manner\.â24 2\.13 The Bankâs commitment to support GOI efforts to strengthen its environmental management, including with respect to climate change, was likewise highlighted in the East Asia and Pacific Regionâs Engagement Strategy for Indonesia with respect to the environment and climate change that was issued in 2012\. With regard to climate change policy, this note emphasized the importance of âleveraging climate change as an entry point for environmentally-oriented policy reforms in the development planning process and moving 22 World Bank, Draft Engagement Note: Climate Change and Indonesia, op\. cit\. pp\. 6-7\. 23 Government of Indonesia, Letter of Development Policy, op\. cit\., pg\. 2\. 24 World Bank, FY 2013-2015 Country Partnership Strategy for Indonesia, Jakarta, December 13, 2012, pp\. 37- 41\. 9 toward green economy investments in the medium term\.â25 This has increasingly become occurred, building off the policy dialogue established in relation to the CC DPL\. 2\.14 GOI, through BAPPENAS, has recently requested Bank technical support to develop and implement a green growth strategy\. The Bank has already generated a number of key outputs in this regard\. A cross-sectoral âlandscapeâ approach to environmental management incorporating climate change mitigation and adaptation measures is now also under development by the Bank and is expected to have an impact on several future lending operations\. According to Bank staff interviewed by IEG, these and other new initiatives (on âblue carbonâ26 and the âblue economy,â27 for example) have their origins in the policy dialogue with the Government established in association with the CC DPL\. Based on these considerations the programâs objectives are rated Highly Relevant\. Design Policy Areas 2\.15 Program design is reflected in the prior policy actions recognized for CC DPL-1 (i\.e\., actions taken by the GOI before Board approval of this loan in May 2010) and the indicative ones tentatively proposed for CC DPLs-II (to be taken during 2010, for approval in 2011), III (2011-2012), and IV (2012-2013), as listed in the Program Document (PD) for the first of these operations\. These prior actions were expected to lay the groundwork for future indicative ones, also identified in the PD, that would extend and deepen the reforms during the rest of the second phase of the CCPL and Bank CC DPL series\. 2\.16 There were three general policy areas â mitigation, adaptation and disaster preparedness, and cross-sectoral and institutional issues, each with a number of subareas, as indicated in Table 1\. Prior actions for CC DPL 1 were recognized for all of these subareas as stated in the Loan Agreement and presented in Annex Tables 1-3\. In some instances, however, the links between policy actions and the indicators selected in the Results Framework were tenuous and the extent to which observed results could be attributed to specific CC DPL policy actions is unclear\. 25 World Bank, Environment and Climate Change: Investing in a More Sustainable Indonesia â EASIS Engagement Strategy Note 2012, Jakarta, 2012, pp\. 6-7\. 26 Blue carbon refers to the carbon captured by the world's oceans and coastal ecosystems\. The carbon captured by living organisms in oceans is stored in the form of biomass and sediments from mangroves, salt marshes and seagrasses, which are particularly important in Indonesia\. 27 The Bankâs blue economy initiative in Indonesia consists of four pillars: (i) food security and livelihoods from sustainable capture fisheries and aquaculture; (ii) conservation of critical marine and coastal habitats and biodiversity; (iii) pollution reduction; and (iv) integrated blue resource management, including through integrated coastal zone management (ICZM), integrated management of the marine environment, and marine spatial planning\. See World Bank, Draft Engagement Note: Climate Change and Indonesia, op\. cit\., pp\. 14-15\. 10 Table 1: Policy Areas and Subareas in the Indonesia Climate Change DPL Mitigation Adaptation and Cross-sectoral and Disaster Institutional Preparedness Land Use Change Energy Water Resources Mainstreaming Climate and Deforestation Sector Change in National Development Program Peatland Renewable Energy Agriculture Sector Policy Coordination and Conservation Development Financing for Climate Change REDD (REDD+) Energy Efficiency Disaster Risk Management Forest Management Energy Pricing Marine and Fisheries and Governance Sector 2\.17 As part of program design, the PD for CC DPL-I also identified the indicative policy actions for CC DPLs II (to be implemented in 2010), III (2011), and IV (2012), as well as the expected results of the series for each of the various policy subareas\. Four of the indicative policy actions for CC DPL-II, all of which are reproduced in Annex Tables 4-7, were considered to be particularly important by the Bank and, thus, were proposed as triggers for approval of the second loan in the series\. These were: (i) in the subarea of peatland conservation: coordination among ministries to control peatland emissions, implemented under the framework of a presidential regulation; (ii) in the subarea of forest management and governance: design inter-governmental transfer mechanism to finance and improve the incentives for local governments to strengthen forest management activities toward emissions reductions; (iii) in the subarea of renewable energy development: issue draft regulation to clarify the scheme of compensation for the incremental cost of geothermal electricity to off- taker; and (iv) in the subarea of mainstreaming climate change in the national development program: issue a presidential decree on the National Action Plan for the voluntary 26 percent GHG emission reduction, referring directly to formalization of the Presidentâs declared commitment in late 2009\. 2\.18 These proposed triggers referred to potentially significant but, in some cases, very ambitious policy reforms\. Thus, if achieved, they would indeed have constituted important steps forward\. It is noteworthy that all of the proposed triggers for CC DPL II were concerned with mitigation and not a single one with adaptation, reflecting an imbalance in project design\. More generally, however, aiming the DPLâs policy actions at the principal land use and forestry sources of GHG emissions and on key mitigation measures in the energy sector and towards strengthening climate resilience in the water resource and disaster risk management, agriculture, and marine and fisheries sectors reflects a focus on the most pertinent, if also some of the most challenging, areas that needed to be addressed by the GOI in order to adequately deal with climate change\. 11 Implementation Arrangements and Program Financing 2\.19 Implementation of the Bankâs CC DPL operations was expected to entail similar governance and monitoring arrangements as for the existing JICA-AFD-supported CCPL program\. Overall coordination and monitoring would be the responsibility of BAPPENAS and the various policy actions were to be implemented by the pertinent line ministries or agencies\. A Steering Committee composed of Director General or Deputy Director General level officials of the participating ministries would provide policy advice and liaise with the development partners regarding policy implementation\. A Technical Committee consisting of less senior officials would meet on a more frequent basis to monitor schedules and work plans, and make recommendations to the Steering Committee\. Implementation progress was to be reviewed on a quarterly basis by BAPPENAS, the other national institutions involved, and the development partners, including the Bank\.28 2\.20 The Borrower was the Republic of Indonesia and the single tranche US$ 200 million loan for CC DPL-1 was disbursed following the Bankâs standard procedures for development policy operations\. JICA and AFD provided US$ 300 million each for the same purpose in 2010, based on the same set of prior policy actions recognized by the Bank\. The Bank loan became effective on September 7, 2010, three weeks after the originally scheduled date, and closed, as planned, on December 30, 2010\. Monitoring and Evaluation Design 2\.21 An annex in the PD presented a Results Framework (Monitoring and Evaluation Matrix), which identified targets for 2012 and the corresponding 2009 or 2010 baseline values for all but one (energy pricing)29 of the policy subareas considered\.30 Annex Table 8 reproduces this information\. This matrix indicated that program results were projected for achievement within a multi-year time frame, consistent with anticipated implementation of the expected four single tranche loans based on donor-recognized prior actions taken by GOI in the immediately preceding years\. However, some of the indicators were not fully reflective of the policy objectives that they were intended to represent\. For example, in the case of REDD, while the selected indicator does refer to the number of demonstration sites, this does not, in and of itself, necessarily reflect an improvement in the regulatory framework\. Similarly, the number of forest crime cases brought to court does not necessarily demonstrate the existence of improved incentives for regional governments to address forest loss and degradation\. In the cases of renewable energy and energy efficiency, in turn, an increase in capacity under construction in terms of the former and improved ratios for the latter may not 28 World Bank, CC DPL-I PD, op\. cit\., paras\. 203-204, pg\. 62\. 29 This was presumably because this policy subarea was also associated with another ongoing Bank programmatic DPL series, for infrastructure development\. 30 World Bank, CC DPL-I PD, op\. cit\., Annex 3B, pp\. 86-87\. In some but not all cases, this annex also indicates the sources of the data on the results targets to be monitored (e\.g\., the World Wildlife Fund Forest Fire Monitoring Program in the case of peatland hotspots, the Ministry of Forestry in that of the REDD demonstration sites, and the Ministry of Energy and Mineral Resources in that of renewable energy capacity)\. 12 be just a consequence of improvements in the respective policy frameworks, but due to other factors (i\.e\., investments outside the DPL)\. 2\.22 Similar examples could be given for other policy areas and their associated indicators\. This inadequacy was acknowledged by the ICR, which observed that the Results Framework âcould have been more closely linked to policy triggers,â as well as âmore achievable in the time frame of the operation\.â31 In addition, in the case of the indicator for the policy objective to scale up actions to improve climate resilience in agriculture, the proposed baseline survey regarding farmersâ understanding of adaptation techniques was not undertaken, and, thus, the proposed 20 percent increase target over the baseline could not be assessed\. Furthermore, this, in and of itself, does not prove that actions to improve climate resilience in agriculture were in fact scaled up or that farmers were better prepared for climate change impacts, or that the program resulted in strengthened resilience to climate change impacts with respect to food production\. There was a similar problem with the proposed indicator for the policy actions whose objective was to establish systems and strategies to improve climate preparedness and resilience in the coastal/marine sector â i\.e\., the percentage of coastal communities that showed greater awareness and changed practices relative to the baseline in targeted communities\. Here too, the baseline value was never established\. 2\.23 Thus, there were a number of shortcomings with regard to the design of the Results and Monitoring Frameworks for CC PDL-I, which, unless they had been corrected in advance of the approval of the subsequent operations (which did not occur), would have applied to the CC DPL series as a whole\. The ICR was very forthcoming with respect to these deficiencies, indicating that: âthe matrix of actions was focused through dialogue to a fairly tight set of issues and performance indicators, at least for a complex and cross-cutting agendaâ¦A more focused and effective monitoring system, developed, owned and implemented by the Government, may have been better able to monitor policy outcomes and performance indicators\.â32 2\.24 Finally, as concerns program evaluation, beyond its reference to the aforementioned Annex, the Program Document only stated that the Bank would âwork closely with BAPPENAS and other agencies and development partners gathered in the Steering Committee of the pre-existing program loans to monitor and assess reform progress and impacts during the life of the programâ and that both monitoring and evaluation would be supported by âbudgetary, legislative and economic data provided by the authorities and 31 World Bank, Implementation Completion and Results Report (IBRD-7195-ID) on a Loan in the Amount of US$ 200\.0 Million to the Republic of Indonesia for the Climate Change Development Policy Loan , June 27, 2013 (hereafter CC DPL ICR), pp\. 8-9\. The specific example given with respect to the timing issue is that âmany actions might contribute indirectly to the GOIâs commitment to reduce GHG emissions by 26% by 2020, against business-as-usual projections, but these results may not be seen in 2012 or even 2015\.â 32 Ibid, pg\. 8\. It also noted that âthe CC DPL monitoring and evaluation framework was designed to provide feedback and adjust approaches on the overall climate policy reform agenda\. The technical meetings and sectoral engagements produced a rich understanding of the issues and challenges in a range of high priority areasâ¦But it also affirmed that âthe CCDPL monitoring was used mainly in response to reporting needs related to the program loan, though the information could also have been used to assess when and how policies were being implemented properly with good results and where more intervention mig ht be needed\.â 13 verified in official disclosures and regulations\.â It also affirmed that where baseline surveys were needed, the Bank would âwork with partners to mobilize the necessary resources\.â33 However, these surveys were not carried out, and except for tracking the results indicators for which data were available and drafting the ICR, no other evaluation activities were undertaken by the Borrower or the Bank, although JICA and AFD did carry out an evaluation, published in June 2014\. Relevance of Design 2\.25 The DPL series was intended to focus on the areas in which mitigation, adaptation, and mainstreaming efforts were most needed\. In the case of mitigation, this included emissions associated with both land use -- including peat lands -- land use, land use change, and forestry (LULUCF), which together had accounted for nearly two-thirds of Indonesiaâs total GHG emissions in 2005\. While they were indeed relevant areas for action, it is unlikely that the policy measures proposed (focused on reducing illegal timber extraction and promoting REDD through pilot demonstration projects) could have had a significant impact in terms of curbing deforestation\. In the energy sector, which was responsible for one-fifth of Indonesiaâs emissions, in turn, the emphasis on renewable energy, especially geothermal investments, and energy efficiency was appropriate, but the programâs actions with respect to energy pricing, particularly the reform of electricity tariffs, were unclear\.34 Although included in the policy matrix, no monitoring or results indicators were presented for energy pricing\. 2\.26 As concerns adaptation and disaster preparedness, the objectives with respect to water resource management, agriculture, disaster risk, and the marine and coastal sectors were pertinent\. The specific policy actions posed for water resource management and disaster risk reduction were significant, but the actions for both the agriculture and the marine and fisheries sectors seem to be less critical in terms of achieving the associated objectives, which were also quite general\. 2\.27 In the case of the cross-sectoral and institutional issues, supported policy actions while arguably of considerable importance, referred to actions either undertaken by the Government several years previously (publication of the National Action Plan Addressing Climate Change in 2007 and establishment of the National Council on Climate Change in 2008) or would have occurred independently of the CC DPL series due to Indonesiaâs existing obligations in relation to the UNFCCC\. 2\.28 While the program design was of relevance insofar as it recognized and sought to support policy actions regarding the most important climate change-related challenges faced by Indonesia, several significant policy areas, especially for improved peatland and forest governance and management and adjusting energy prices, were politically sensitive and posed considerable risks in terms of implementation\. The PD recognized this and indicated 33 World Bank, CC DPL-I, op\. cit\., par\. 205, pp\. 62-63\. 14 that progress could be either âintermittentâ or âslow,â35 as, in fact, would prove to be the case\. 2\.29 Furthermore, the Results and Monitoring Frameworks could have been better designed, both in terms of the specific cause and effect linkages between recognized prior and proposed indicative policy actions and expected outcomes and in relation to the nature and coverage of some of the monitoring indicators\. In addition, it is unlikely that implementation of the ICCTF and design of an inter-governmental transfer system, important as these undoubtedly are, would be sufficient in and of themselves to fully meet the objective of strengthening policy coordination and developing financing mechanisms to address climate change (i\.e\., while the financial side of this objective may be well covered by these actions, the policy coordination aspect is not)\. Nor is it clear how the actions proposed in connection with the objective of strengthening the knowledge base and legal basis for climate change action and linking these to the national budgeting and planning process would actually lead to that result\. 2\.30 Based on the considerations above, relevance of the design of the CC DPL operation is rated Substantial\. 3\. Implementation IMPLEMENTATION EXPERIENCE 3\.1 As indicated in para 2\.16 above and Annex Tables 4, 5 and 7, four triggers for approval of CC DPL-II were expected to be achieved during 2010-11, However, only two of these triggers were met and one of these occurred beyond the originally the anticipated time frame\. The Presidential decree on a National Action Plan for a 26 percent voluntary GHG emissions reduction was signed on September 26, 2011, but this represented a delay from the original plan\. The peat land conservation trigger required that coordination among ministries to control peat land emissions to be implemented under the framework of a presidential regulation, but while substantial progress has been made in dialogue and regulatory initiatives have been launched, inter-sectoral coordination and a stronger regulatory base has not yet been achieved\. 3\.2 According to Bank staff, as of early 2015 the presidential regulation still had not been issued and the partial measures taken by the Ministries of Public Works and Environment over the past few years to address this issue have been conflicting and ineffective\. The two relevant ministries have not been able to come up with a single harmonized set of regulations\.36 In addition, when the Water Resource Law was retracted in 2014, the marshland regulations also became defunct, while opposition to the peatland regulations last 35 World Bank, CC DPL I PD, op\. cit\., paras\. 216-217, pg\. 64\. Other key risks that were recognized in this document included: (i) coordination of GOIâs climate change national action plans; (ii) commitment to policy reform actions over the medium term; (iii) fiduciary and governance risks; and (iv) poverty and social impacts (i\.e\., the possibility that low income groups would not benefit from climate finance distribution mechanisms such as REDD+)\. 15 year resulted in postponement of its implementation\. The project team subsequently argued that the Government issued Regulation 71 in 2014 which set out holistic and comprehensive measures to prevent damage to peat land areas, including planning to protect and use peat land and maintain peat land functions, and the Indonesian Parliament ratified the ASAEN Agreement on Transboundary Haze Pollution the same year\.37 However, this does not correspond specifically to the harmonization of ministries, especially the Ministries of Public Works and Environment, with respect to peatland management, implemented under the framework of a presidential regulation foreseen in the Program Document, the ASEAN Agreement was most likely a response to international pressure regarding the transboundary impact of smoke caused by the continued burning of peat land and other forest areas and not the DPL, and, in any case, these actions did not occur until 2014, over three years after the DPL had closed\.38 3\.3 The trigger with regard to forest management and governance, in turn, was to design an inter-governmental transfer mechanism to improve the incentives for local governments to strengthen forest management with a view toward emissions reductions\. However, while the Ministry of Forestry has made efforts effort to improve forest management and governance through establishment of Forest Management Units and that the Ministry of Home Affairs and MOFR had issued regulations, norms, procedures, and technical standards the intergovernmental transfer mechanism has not been established\. In this regard, the project team has argued that a government transfer mechanism was established and budgeted to support Forest Management Units (FMUs) in 2011\. However, it is not clear that this is the intergovernmental mechanism referred to in the Program Document, which was expected to be established by the Ministry of Finance in 2011 (through a legal instrument to be determined)\. It does not appear that the Ministry of Finance established this the transfer mechanism or carried out the âengagement of local governments in a fiscal benefit sharing framework with clear and consistent incentivesâ for them to strengthen forest management and reduce emissions\. Emissions from forest burning in Indonesia have continued to rise since 2011 and it is unclear what positive impact the aforementioned FMUs have had in this regard, if any\. 3\.4 Finally, for the renewable energy trigger, the government has clarified the scheme of compensation for the incremental cost of geothermal electricity to off-takers\. This included a Presidential Regulation in 2010, which established a higher level of compensation for 37 According to the ASEAN website, the Governments of ten member countries signed this agreement in June 2002, which was the âfirst regional arrangement in the world that binds a group of contiguous states to tackle transboundary haze pollution resulting from land and forest fires\.â However, though the Agreement entered into force in November 2003, Indonesia, which is the principal haze producing country in the region, was the last of the ten signatories to ratify it (in September 2014)\. 38 The project team likewise emphasized to the establishment of the REDD+ agency in 2013 as well as the issuance of a Presidential Instruction regarding the establishment of a moratorium on new concessions for conversion of primary forests and peat lands in 2011, but neither of these activities refers to the above mentioned coordination between the Ministries of Public Works and Environment regarding peat land management\. The REDD+ agency was initially set up outside of either of these ministries in a unit directly under the Presidentâs office, but was subsequently demoted to a department within the reorganized Ministry of Environment and Forests in early 2015\. 16 geothermal energy and a subsequent regulation that required the national electricity company, PLN, to purchase geothermal power\. 3\.5 In part because several triggers for the second loan were not met during the projected time frame, the Government and the Bank âmutually decidedâ to suspend the CC DPL series after the first loan\. The other development partners followed suit, although this may have been driven primarily by the GOIâs decision to no longer borrow for climate change\. Various factors, in fact, appear to have played a role in this decision\. It was due in part to changes in senior management at the Ministry of Finance, soon after the first loan was approved, which led to âuncertainty in the appetite for development policy operations,â according to the ICR, together with changing responsibilities of key personnel at BAPPENAS, which âresulted in a shift in continuity of policy dialogue with key officials, if not the overall level of commitment to the aims of the CC DPL\.â39 According to Bank staff, a major factor in the Governmentâs decreasing commitment to the program was the change in Finance Ministers40 and top officials in BAPPENAS in 2010\. Bank staff confirmed that the loss of the programâs principal âchampionâ was a critical factor in the programâs inability to proceed beyond the first loan\. 3\.6 By early 2011, uncertainties were also expressed about the GOIâs need for continuing budget support through the CC DPL series, but this concern was in relation to its focus on climate change not on the use of DPLs per se\. In November 2011, the Bank approved its Eighth Development Policy Loan for US$ 400 million, in November 2012, it approved a US$ 100 million DPL for Financial Sector and Investment Climate Reform and Modernization and a US$ 100 million First Connectivity DPL, and in November 2013, the US$ 400 million Second Institutional, Tax Administration, Social and Investment DPL and the US$ 300 million Second Connectivity DPL\. So DPLs per se continued to be a significant part of Bank lending for Indonesia after 2010, just not for climate change\. 3\.7 According to BAPPENAS, the reason for the Governmentâs decision not to proceed with the second CC DPL loan was that the President had announced in a Cabinet meeting that borrowing for climate change was no longer acceptable given a âconsensusâ at the UNFCCC that developing countries should only receive grants to help address climate change\. This decision was made even though BAPPENAS reportedly explained that the resources transferred through the DPL were for general budget support and not for climate change investments per se\. Some government officials argued that the aforementioned âconsensusâ came about when the Japanese Government attempted to present its funding for the CCPL as part of its national contribution to reduce GHG emissions and this claim was rejected by UNFCCC\. 3\.8 Another element that appears to have influenced the Governmentâs decision not to continue with the CC DPL series was the offer by the Norwegian Government to provide US$ 1 billion in grants to support implementation of REDD+\. This was confirmed in a joint Letter of Intent (LOI) between the two Governments that was signed at around the same time 39 World Bank, CC DPL ICR, op\. cit\., pg\. 6\. 40 Some Bank staff argued that the incoming Finance Minister was unfamiliar with the use of DPLs and that this was a key factor in the decision not to continue with the series\. 17 as the first Bank CC DPL was approved (i\.e\., May 2010)\. The prospect of obtaining âfree moneyâ from the Norwegian Government, on which there had been no prior consultation with the Bank or attempt to harmonize with the CC DPL policy matrix, thus reportedly became a âdistractionâ within the GOI and effectively helped to derail the CC DPL\. 41 3\.9 In summary, several factors seem to have converged in the latter half of 2010 and early 2011 to halt the proposed four-year programmatic CC DPL series, several of which were unexpected at the time the first loan was appraised (April 2010) and occurred shortly after the loan was approved by the Board (May 2010) and the respective Loan Agreement signed (June 2010)\. These included the departure of the DPL seriesâ principal domestic âchampion,â the above mentioned âUNFCCC consensusâ that external assistance for climate change be grant-funded, and the US$ 1 billion Norwegian grant funding offer, all of which appear to have contributed to the Presidentâs decision to suspend borrowing for climate change\. However, the GOIâs failure to meet two of the four pre-agreed triggers and its delay in meeting a third one for the second loan undoubtedly also played a role\. Implementation and Utilization of Monitoring and Evaluation (M&E) 3\.10 The Program Document affirmed that, under the existing arrangements for the CCPL, which continued under CC DPL-I, progress on policy actions was monitored and reviewed quarterly by BAPPENAS, the implementing agencies, and the donors, with support from JICA\. An AFD forestry expert also participated in the monitoring team, and, together with the JICA experts, worked with the development partners to provide technical assistance to the implementing ministries in key policy areas\. Under these arrangements, the results of this monitoring process provided the basis for moving to the next yearâs loans and informed negotiations between GOI and the development partners\. 3\.11 Monitoring was used mainly in response to reporting needs\. However, the ICR stated that âthe information could also have been used to assess when and how policies were being implemented properly with good results and where more intervention might be needed,â42 suggesting that the Bank was not fully satisfied with the way monitoring findings were utilized\. In addition, baseline surveys were never carried out for two of the initial results indicators and one of the other expected monitoring information sources was later discontinued by the agency responsible for its collection, making it impossible to judge progress according to these initially proposed indicators\. 3\.12 The AFD/JICA joint evaluation gives considerable attention to the programâs monitoring activities\. Among its observations were that program monitoring was facilitated by a close working relationship among BAPPENAS, JICA, AFD and that the monitoring team collected information from documents provided by the line ministries and interviews with Government officials in charge of specific policy actions\. Based on the information collected, the monitoring team analyzed program achievements, obstacles, and challenges, 41 This LOI was reportedly negotiated directly between representatives of the Norwegian Government and the Presidentâs office, and even the Finance Ministry was unaware of it until after it had become a fait accompli\. 42 World Bank, CC DPL-I ICR, op\. cit\., pg\. 8\. 18 reported the results to the Steering Committee, and made recommendations on measures to overcome the obstacles, and potential areas for cooperation\. 3\.13 However, certain shortcomings -- which also reflected problems with program implementation more generally -- were also reported\. The joint evaluation concluded that, despite the accomplishments cited above, there was room to improve the monitoring process\. According to this evaluation, âchallenges were identified particularly at the initial stage of the program [as] regular monitoring activities and the technical committees could not gain sufficient commitment from the line ministries due to limited understanding among them of the objectives and the framework of the CCPL\.â The monitoring team also reportedly faced difficulty in collecting the latest information\. Furthermore, GOI ministries âcould not share details on policies and regulations that were undergoing development\.â43 3\.14 Program monitoring, in short, appears to have varied in its effectiveness and to have been of limited utility in terms of its contribution to ongoing program design, while ex-post assessment was limited to the ICR (2013) and the AFD/JICA joint evaluation (2014), which did not specifically consider the Bankâs inputs into this process\. Other than reporting on the uneven progress with respect to individual policy actions, GOI engagement, and especially that of the line ministries involved in program activities, there was little use of monitoring information\. Environmental and Social Impacts 3\.15 The Program Document suggests that the Bank went a good part of the way required by OP 8\.60 in terms of identifying âlikely significant impactsâ of the policy actions recognized for CC DPL-I and anticipated for the subsequent loans in this series\. However, it was not specific with regard to potential negative impacts associated with the actions taken -- or expected to be taken -- in the mitigation areas, including in the forestry/land use and energy sectors, or associated gaps in national and subnational capacity to address them\. It did explicitly refer to the CEA and other analytical work undertaken by the Bank and other development partners and identified systemic weaknesses in terms of the enforcement of environmental legislation and inconsistent regulatory frameworks between the national and local levels, noting further in that âprovinces and districts may issue regulations that contradict national legislation or regulations\.â However, it fell short in terms of indicating how the Government, with or without the Bankâs support, intended to address some of these issues (e\.g\., inadequate enforcement of environmental legislation and inconsistency between national and subnational laws and regulations)\. This risk, moreover, was not specifically identified in the main text of the PD, although it did refer to âfiduciary and governance risksâ more generally, specifically corruption and (unspecified) governance weaknesses that persisted as impediments to development\.44 A more detailed analysis of how potential environmental and social impacts were addressed in the PD is presented in Annex 2\. Financial Management 43 ADF/JICA, Joint Evaluation of ICCPL, op\. cit\., pg\. 69\. 44 Ibid, para\. 214, pg\. 64\. 19 3\.16 No issues regarding financial management of the loan proceeds of CC DPL-I were reported, and the single tranche first loan, which became effective on September 7, 2010 â roughly three weeks later than initially anticipated -- closed as scheduled on December 31, 2010\. As observed above, this was the first of an expected four DPL series, which, according to the loan program summary in the PD, were to involve similar amounts (i\.e\., US$ 200 million, presumably in 2011, 2012, and 2013)\. However, as also noted above, the Government and the Bank suspended the series after the first loan was disbursed\. 4\. Achievement of the Objectives 4\.1 This section assesses program efficacy in terms of the extent to which the dual objectives of the CC DPL series â i\.e\., provision of support to the Indonesian Governmentâs efforts to advance its climate change (i) mitigation (or move to a low-carbon growth path) and (ii) adaptation (or move to a more climate-resilient growth path) efforts -- were achieved\. Both observed program outputs and outcomes are considered in relation to the indicative actions and expected results for each of the policy subareas briefly described in section 2\. In numerous instances, however, desired outputs and outcomes have occurred beyond the timeframe of the Bankâs involvement (i\.e\., from 2009-2011) and/or insufficient information was presented in the ICR to permit a definitive judgment as to the achievement (or not) of desired program-related outcomes\. In others, data to assess policy subarea results in relation to the results indicators proposed in the PD are unavailable either because the necessary baseline studies were not conducted or because the pertinent Borrower agency discontinued collection of the pertinent information\. 4\.2 Determining the Bankâs specific contribution is particularly complicated in the present case because the CCPL program was ongoing for two years with substantial financial and technical support from JICA and AFD before the Bank decided to provide additional financing for the first year of the programâs expected second phase (2010-2013)\. The respective funding support for this program, which totaled nearly US$ 2 billion over the three year period, provided by the development partners is indicated in Table 2 below\. The Bankâs contribution (10\.5 percent of the total), even in 2010 (25 percent), was substantially less than that of the other two participating donors\. Had the program continued beyond 2010, the Asian Development Bank (ADB) was reportedly also planning to contribute financial resources and technical assistance\. Table 2: Financial Support for Indonesia CCPL by Year (US$ million) Year/Source JICA AFD World Bank Total 2008 300 200 - 500 2009 30045 300 - 600 2010 300 300 200 800 Total 900 800 200 1,900 Source: Joint JICA/AFD Evaluation 45 According to the AFD/JICA joint evaluation (op\. cit\., Table 4, pg\. 52), JICA also provided US$ 100 million under a linked Emergency Loan\. 20 4\.3 Parallel technical assistance grants to some participating ministries were provided by JICA and AFD, some of which extended beyond the life of the CCPL\. According to the ADF/JICA joint evaluation, BAPPENAS, in consultation with JICA and AFD, invited line ministries to submit requests for technical assistance related to climate change so as âto provide them with incentives\.â46 Thus, in addition to their support for program monitoring activities, this led to a large JICA technical assistance project (âProject of Capacity Development for Climate Change Strategies in Indonesiaâ), which reportedly further enhanced the relevance of the CCPL, as well as additional assistance from AFD, in response to demands from the line ministries\. The types of bilateral TA provided together with the recipient ministries are listed in Annex 3\. As a consequence of this support, determining what program results can be specifically attributed to the Bankâs inputs is even more difficult\. 4\.4 The above considerations notwithstanding, the Bank did contribute to this ongoing policy-based lending program in several ways\. The Bank helped to bring greater attention to the program on the part of key GOI officials, especially in the Ministry of Finance (MOF), including the then Minister herself, and BAPPENAS\. In short, the Bank had better access to these key central ministries, especially MOF, than the other participating development partners because of its historically strong (and reportedly very positive) engagement in the national macroeconomic and fiscal policy dialogue and through the use of past DPLs\. According to the former Bank Country Director at the time the CC DPL operation was being prepared, the Minister of Finance was particularly interested in its fiscal implications insofar as it would help to make additional public revenues available at a time of global economic crisis through the potential reduction of burdensome energy subsidies\. 4\.5 The Bank also helped to simplify and rationalize the original JICA-AFD policy action matrix, as well as to give more policy substance to it\. However, this proved to be a double- edged sword as it also made the matrix more risky and, in doing so, contributed to its being harder to implement given the political economy and institutional constraints that will be discussed further below\. It also meant that the possibility of achieving some of the more politically sensitive policy actions was very much dependent on the DPL series having a strong âchampionâ within the central government, which it subsequently lost when that Minister departed\. It also required firm buy-in from the ministries and agencies charged with program coordination and implementation\. Commitment by the former later diminished and that by the latter was never really secured, according to the JICA/AFD joint evaluation and government officials interviewed by IEG\. Actual accomplishments over the past half-decade in relation to the CC DPLs two main objectives and each of its specific indicative policy actions are considered below\. 46 The joint evaluation (Ibid, pg\. 52) also stated that âTA was not really aligned with the financial part of the CCPL\. The ICCPL disbursements were annual and the TA was multi-yearâ¦This non-alignment is puzzling, because it could be seen as a sign that the Donors are likely to disburse in any case, just to âjustifyâ the permanence of the TA\.â 21 Objective 1: Support Government Efforts to Develop a Low-Carbon Growth Path Outputs 4\.6 This objective was to be supported by all policy subareas of both the mitigation and the cross-sectoral and institutional agendas\. Specific outputs and outcomes associated with each subarea, including in relation to the triggers for the initially proposed second loan (see Annex Tables 4, 5 and 7 and the section on Implementation above), are briefly described in the ICR, for the most part with reference to the respective monitoring indicators contained in the Results Framework\. Additional and updated information in this regard was obtained during IEGâs August 2015 evaluation mission\. 4\.7 With respect to the first subarea under the land use, land use change and forestry (LULUCF) mitigation agenda, GOIâs issuance and initial implementation of a master plan for peatland rehabilitation in Central Kalimantan was âan opportunity to enhance policies for conserving peat from drainage, conversion and fire\.â The Government, however, did not meet the proposed trigger for CC DPL-II to coordinate ministries to control peatland emissions under the framework of presidential regulation, and there is a persisting need to harmonize regulations for peatland management between the Ministry of Environment and the Ministry of Public Works\. Neither Bank staff confirmed that neither issuance of the presidential regulation, nor achievement of key steps in a multi-sector policy dialogue toward establishing a legal framework for the National Strategy for lowlands, have yet occurred due largely to failure of the two aforementioned ministries to reach agreement\. 4\.8 As concerns the second LULUCF subarea, Reduced Emissions from Deforestation and Degradation (REDD+), more than thirty demonstration sites or activities were operating in Indonesia in 2010, greatly exceeding the programâs target for that year (8 sites), while plans for a REDD+ Agency and financing mechanism were in an âinterdepartmental review processâ and anticipated to lead to presidential approval\. However, it also acknowledged that âthis is a complex agenda and further progress, and possibly some setbacks, can be expected\.â47 But the ICR did not indicate whether a Ministerial Decree on the REDD+ Mechanism and Procedures to define the roles and responsibilities of government agencies, local communities, and the private sector in managing carbon assets, which was an indicative action for 2010, had been completed\. Nor did it state if establishment of a national carbon registry to track implementation of REDD+ activities and payments, an indicative action for 2011, or the assessment and development of a framework of forest fiscal management, including incentives for regional stakeholders, the one for 2012, had occurred\. 4\.9 The REDD+ agency, which, once finally established in the second half of 2014 and was directly linked to the Presidentâs office, has now been disbanded by the new administration that took office in October 2014 and placed within the new Ministry of Environment and Forestry, itself only established in January 2015, under the General 47 World Bank, CC DPL I ICR, op\. cit\., pg\. 12\. 22 Directorate for Climate Change\. In addition, according to Bank staff, even though some REDD+ regulations have been issued over the past few years, neither the proposed national registry to track implementation of REDD+ activities and payments nor a forest fiscal management framework, including incentives for regional stakeholders, have yet been established\. In short, except for the pilot demonstration sites, REDD+ activities have progressed more slowly than anticipated, and this has also affected implementation of the LOI between GOI and the Norwegian Governments with respect to REDD+\. 4\.10 The third LULUCF subarea was forest governance and management, which also featured an unmet trigger for CC DPL-II: to design an inter-governmental transfer mechanism to finance and improve the incentives for local governments to strengthen forest management activities\. There appears to have been greater success with respect to the other indicative action in this area for 2010, to implement and monitor performance of MOFRâs regulation (No\. 38/2009) on timber legality, although this has also taken longer than initially anticipated\. It was not possible to confirm achievement of the expected result for this policy area (i\.e\., the number of forest crime cases brought to court), however, because the necessary data source was discontinued by MOFR after 2009\. MOFR decrees 38/2009 and 68/2011 (although it is not clear what the provisions of the latter were), as well as the FLEGT-VPA [which refers to the Forest Law Enforcement, Governance, and Trade Facility and Voluntary Partnership Agreement] and a December 2012 MOU, represented âpositive steps toward stronger policy coordination and institutional strengthening for timber legality, monitoring, and forest sector enforcement\.â48 4\.11 FLEGTâs objective is to reduce illegal logging by strengthening sustainable and legal forest management, improving governance, and promoting trade in legally produced timber, for which an action plan was established by the European Union in 2003\. Indonesia was one of the first countries to negotiate such a Voluntary Agreement with the EU\. Its VPA activities are described on the FLEGT website as âdeveloping the systems needed to control, verify, and license illegal timber,â which would be used for âall commercial timber and timber products produced, processed, and purchased in Indonesia,â including exports to the EU\. Negotiations for this VPA started in March 2007\. It was agreed in May 2011, but only signed in September 2013, ratified in April 2014, and entered into force a month later\.49 The December 2012 Memorandum of Understanding (MOU) between the Ministries of Forestry and Environment, the Attorney Generalâs Office, the National Police, and other agencies was intended to coordinate efforts toward law enforcement related to crimes in the forest and peatland sectors\. 4\.12 Earlier progress with respect to the curbing of illegal timber extraction was mentioned in the ICR, which affirmed that GOI had issued decrees for assessing the capacity for oversight, certification, and monitoring in the National Standards Agency and âafter pilot testing with 11 firms, the timber legality system was implemented through 115 timber industries, 4 natural forest concessionaires, and 1 industrial timber plantation up to June 2011\.â It likewise mentioned efforts to establish âimproved rulesâ for Forest Management 48 World Bank, CC DPL-I ICR, op\. cit\., pg\. iv\. 49 See EUFLEGT Facility website on FLEGT-VPA in Indonesia\. 23 Units (FMUs)\.50 Thus, there appear to have been some advances with respect to forest governance and management, if considerably slower than expected, in relation to this very complicated issue even though the proposed trigger for CC DPL-II was not met and FMUs as such were not specifically mentioned either in the policy matrix or the Results Framework for CC DPL-I\. 4\.13 Turning to energy sector mitigation and starting with renewable energy development, in 2010, MEMR and BAPPENAS finished studies toward a policy framework for geothermal development, which included a risk mitigation mechanism and tender improvements\. The Government also established a 1\.16 trillion Rupiah fund for upstream exploration drilling, thereby meeting one of the indicative policy actions proposed for 2011 (i\.e\., continue to improve the policy framework to promote geothermal development and provide an exploration fund to mitigate upstream risk for eastern Indonesia)\. Subsequent MOF decrees had created a Geothermal Fund and appointed the Centre for Government Investment to manage it\. The trigger for CC DPL II regarding a draft regulation to clarify compensation for the incremental cost of geothermal energy to off-takers was also met, as was the indicative action to improve the policy framework for promoting geothermal development to facilitate arrangements and deals between developers and off-takers\. As a result, six new Power Purchase Agreements (PPAs) between PLN and independent producers for 435 Megawatts of geothermal power were signed by March 2011 and four others by October 2012\.51 In terms of the associated results indicator, installed geothermal power capacity expanded from 1,065 to 1,226 MW, or by 15 percent, over the 2009 baseline by December 31, 2011, while there were also non-quantified increases in hydro, mini-hydro, biomass, solar, and wind capacity, although the baseline figures for these sources were not presented\. 4\.14 This approach was reportedly also gradually expanded to other renewable sources\. Regulations in 2010 and 2011 allegedly âprovided incentives for renewable energy development and implemented value added taxes for fuel subsidiesâ while âfeed-in tariff rules for solar and wind were completed in 2012\.â Even though progress was made in this regard, the ICR did not indicate whether the other indicative actions â review the impact of Ministerial Regulation No\. 31/2009 and propose a new or revised regulation to promote renewable energy further and more effectively (2011) and draft and issue a regulation on improved framework for renewable energy (2012) â were met\. Bank staff informed IEG, however, that Ministerial Regulation 31/2009 was officially replaced by Ministerial Regulation 4/2014 on January 31, 2014, which covered electricity produced by sanitary landfills, biomass, and biogas\. But here too there was a significant delay in issuing this regulation in relation to the date originally anticipated, and it is not clear whether this improved the framework for renewable energy development more generally as had originally been hoped\. This notwithstanding, progress seems to have been made in this area\. 50 World Bank, CC DPL-I ICR, op\. cit\., pp\. 12-13\. FMUs are work units of local governments that can perform site-level forest management and medium-to-long term planning depending on the designated conservation, protection, and social functions of the forest\. 51 World Bank, CC DPL-I ICR, op\. cit, pg\. 13\. 24 4\.15 Furthermore, both the Bank and, with the Bankâs assistance, the Clean Technology Fund (CTF) have continued to support renewable energy production in Indonesia through a combined US$ 300 million in loans for the Geothermal Clean Energy Project, approved in July 2011\. This project was expected to partially finance development of power plants of some 110 MW and 40 MW at the Ulubelu and Lahendong geothermal fields in Java, respectively, together with construction of an above-ground steam field system\.52 Although its implementation has been delayed and its original closing date extended by four years for technical and operational reasons, this has been one of the more successful policy subareas of the CC DPL operation\. 4\.16 As concerns energy efficiency, results to date appear to have been somewhat less positive, as again it is not clear if the specific indicative actions for 2010 (i\.e\., prepare a master plan for energy conservation, including energy efficiency standards, energy audit program, with a M&E framework, fiscal incentives options, and industry energy conservation) and 2011 (implement this plan) were fully met as originally intended\. According to Bank staff, the draft of this master plan, as mandated by Government Regulation No\. 70/2009 and known as RIKEN, was never formally approved, although several sectoral regulations such as electricity saving, fuel saving, building the capacity of energy managers, and regulating the National Plan for Greenhouse Gas Emissions Reduction (RAN-GRK) were partially the result of this exercise\. Progress was nonetheless reported with respect to energy efficiency in the industrial sector and the associated results indicator -- energy efficiency improved by 5 percent in at least one key sector â was exceeded in the steel industry, where there was a 7 percent efficiency gain between April 2010 and December 2011\.53 4\.17 With regard to energy pricing, finally, the ICR was silent, and it is not known whether the indicative action for 2011 (implement actions based on the road map, including regulations) was, in fact, achieved\. The 2014 AFD/JICA evaluation, however, noted that the policy action in this area aimed at attaining the outcome target: âEnergy consumption is better controlled by a more cost-oriented pricing mechanism, contributing to reducing both GHG emissions and energy subsidies\.â Progress for the outcome target reported by this assessment included: (i) completion of the roadmap for energy subsidies in 2010, the proposed indicative action in the policy matrix for that year; and (ii) reduction of electricity subsidies in the 2012 State Budget by 20 trillion Rupiahs compared with that for 2011\. 4\.18 According to a presentation by the Ministry of Energy and Mineral Resources (MEMR) in late 2013,54 total energy subsidies, both for electricity and fuels, expanded significantly between 2007 and 2012, and were expected to fall only slightly in 2013\. In fact, as Table 3 shows, they increased very substantially between 2010 and 2012 after having 52 For details, see World Bank, Project Appraisal Document on a Proposed Loan of US$ 175 Million and a Proposed Loan for the Clean Technology Fund of US$ 125 Million to the Republic of Indonesia for a Geothermal Clean Energy Project, op\. cit\. Total project cost was estimated at appraisal at just under US$ 575 million (Table 2, pg\. 8)\. 53 World Bank, CC DPL-I ICR, op\. cit\., pp\. iv-v\. 54 This presentation entitled Policies and Programs on Energy Efficiency and Conservation in Indonesia was presented by the Energy Conservation Group of MEMR at a meeting in Tokyo in September-October 2013\. 25 dropped dramatically in 2009, with the US dollar equivalent of the total energy subsidies in 2012 being approximately US$ 32 billion\. The reasons for these changes are not clear but may have been largely a reflection of the global economic slowdown in 2008-2009 and Indonesiaâs recovery by 2011\. Thus, it is evident that policy actions with respect to energy pricing were not taken during the period when the CC DPL was operational\. Table 3: Indonesian Energy Subsidies (in Trillion Rupiah), 2007-2013 Subsidy 2007 2008 2009 2010 2011 2012 2013* Electricity Subsidy 37\.48 78\.58 53\.72 58\.10 93\.18 100\.2 99\.9 Fuel and LPG Subsidy 83\.94 142\.87 52\.82 82\.35 168\.17 211\.9 209\.9 Total Energy Subsidy 121\.42 221\.45 106\.54 140\.45 261\.35 312\.11 309\.8 *2013 National Budget Planning Revised Source: Ministry of Energy and Mineral Resources 4\.19 âThe two policy subareas for cross sectoral and institutional issues were also intended to contribute to the mitigation objective\. This was particularly the case for the mainstreaming climate change in the National Development Program subareas, which included the 2010 trigger for CC DPL-II involving issuance of the presidential decree on the National Action Plan (RAN-GRK) for voluntary 26 percent GHG emissions reduction\. This, in fact, did occur, but not until September 2011\. In addition to formalizing the Presidentâs earlier commitment, this Plan reportedly âspecified the necessary actions of line ministries and regional governments\.â55 The ICR did not report on progress with respect to the indicative actions for 2011 â draft provincial action plans for contributing to the 26 percent emission reduction objective and prepare a NAMA (Nationally Appropriate Mitigation Action) in accordance with the midterm development plan (RPJM) â and 2012 --incorporate climate change program into midterm development plans at the Kabupaten level\. However, Bank staff confirmed that provincial actions plans for contributing to the 26 percent emissions reduction target were drafted in 2012 and 2013 and that climate change programs are now being gradually incorporated into mid-term development plans at the Kabupaten level as they come up for revision\. The status of NAMA preparation could not be determined\. A NAMA framework study was nonetheless completed by BAPPENAS with the assistance of the German and French Governments,56 and a document entitled Indonesiaâs Framework for Nationally Appropriate Mitigation Actions was published in late 2013\.57 4\.20 The other policy subarea, Policy Coordination and Financing Scheme for Climate Change, is of relevance both to the mitigation and adaptation (i\.e\., Government efforts to develop a climate-resilient growth path) objectives, so the observations below refer to both of these priorities\. In terms of the financing of climate change projects through the ICCTF, this 55 World Bank, CC DPL-I ICR, op\. cit\., pg\. 16\. 56 See BAPPENAS, GIZ, and AFD, Development of the Indonesian NAMAs Framework: Background Study, Jakarta, no date\. Together with JICA, these institutional partners established the National Center for NAMA development (NC4ND) as a supporting body for NAMA development in Indonesia\. 57 BAPPENAS, Indonesiaâs Framework for Nationally Appropriate Mitigation Actions , Jakarta, November 2013\. 26 mechanism became operational in September 2010, and the Government subsequently funded US$ 4 million in projects submitted by the Ministries of Agriculture and Industry and the national Meteorological Agency, thereby meeting the indicative action for 2011 (i\.e\., continue to implement and support climate change projects under the ICTTF)\. The results indicator for this policy subarea â increased GOI actions related to the 26 percent emissions reduction plan â was also reportedly achieved, as the national budget allocated 15\.9 trillion Rupiah for mitigation actions contained in the National Action Plan for GHG Emission Reductions in 2012, which was nearly a 60 percent increase over the 10 trillion Rupiah target value for April 2011, and compares very favorably with the 1\.7 trillion Rupiah baseline allocation for climate change in 2009\. 4\.21 The operating procedures and trustee arrangements were formalized, in line with the applicable Presidential Regulations and the Government had received pledges of several billion dollars of climate assistance over a five year period (including US$ 400 million from the CTF and a billion dollars from Norway contingent upon actions described in the next paragraph), together with hundreds of millions in bilateral programs, which has reportedly âcontributed to awareness and capacity to access international climate finance\.â58 According to the ICCTF website, this Fund, for which the United Nations Development Program (UNDP) is still acting as interim manager, had received contributions of over US$ 8\.5 million from the United Kingdomâs Department of International Development (DFID) and the Australian Agency for International Development (AusAID) as of 2012\.59 The ICR, however, observed that only 60 percent of the target for April 2011 (9 million British pounds, or nearly US$ 14 million) had been received by ICCTF from DFID by 2012, thereby clearly under-achieving the target\.60 These contributions, primarily from the UK (US$ 19 million), but also much smaller amounts from Australia and Sweden, however, apparently had risen to more than US$ 20 million by September 2013, while more than US$ 8 million had been committed and US$ 4\.5 million disbursed from the Fund as of that time\.61 4\.22 The Norwegian pledge of support for REDD+ merits particular attention and has been the subject of a recent preliminary assessment by the Center for Global Development (CGD) in Washington, D\.C\.62 As observed above, in May 2010, the Governments of Norway and Indonesia entered into an agreement through which the former would provide up to US$ 1 billion for verified reductions in GHG emissions from deforestation\. The Agreement was expected to be implemented in three phases: (i) âpreparation,â in which the âbuilding blocksâ for a national REDD+ program would be established, including development of a strategy, capacity for monitoring emissions from deforestation, a financial mechanism for receiving payments for performance, and creation of a new agency reporting directly to the President to coordinate REDD+ activities; (ii) âtransformationâ in which the country would continue 58 World Bank, CC DPL-I ICR, op\. cit\., pg\. 17\. 59 ICCTF website, Finance and Performance\. 60 World Bank, CC DPL-I ICR, op\. cit\., pp vi-vii\. 61 See Indonesia Climate Change Trust Fund, Climate Funds Update, Heinrich Boll Stiftung (online) 62 See Frances Seymour, Nancy Birdsall, and William Savedoff, The Indonesia-Norway REDD+ Agreement: A Glass Half-Full, CGD Policy Paper 56, Washington D\.C\., February 2015, from which the following observations are drawn\. 27 phase one activities while implementing new policies, including a two-year moratorium on new forest exploitation licenses, enhanced law enforcement, and pilot programs in two provinces; and (iii) âcontribution for verified emissions reduction,â during which Norway would make annual payments for performance against a national reference level, building on experience in one or more pilot provinces\. US$ 200 million could be used for the first two phases and the balance for phase three\. As in the case of the ICCTF, the grant funds would be channeled through UNDP\. 4\.23 According to Center for Global Development (CDG), progress through the first three phases under the LOI between the Governments of Norway and Indonesia âproved uneven\.â A moratorium on new forest exploitation licenses was imposed in May 2011, nearly five months after initially promised but was ânarrowly crafted, limiting its potential impact on deforestation\.â It also took over three years to formally create the new REDD+ Agency, and its head was only appointed in December 2013\. This was due in good measure to resistance on the part of the Ministry of Forestry, which disagreed with establishment of the agency under the Presidentâs office\. This agency was then disbanded after the new administration took office in late 2014 and has now been placed under the Ministry of Environment and Forestry\. CDG reported that staff of the new agency were still âstruggling to surmount political, legal, and bureaucratic hurdles to making the financial mechanism operationalâ in November 2014\. In the meantime, analysis of satellite imagery published in late 2013 showed that deforestation had actually increased during the period that the Agreement had been in effect, and because no progress had been made in reducing forest-related emissions, no performance-based payments had yet been issued, and Norway has only released some US$ 50 million for the âpreparationâ and âearly transformationâ phases to date\. Thus, the inflow of grant funds from this source has been much slower than originally anticipated 4\.24 With respect to policy coordination, achievements likewise seem to have been less substantial and slower than originally hoped\. In terms of incentives for climate change action at the sub-national level\. MOF and BAPPENAS reportedly held discussions and undertook âtechnical studiesâ to improve the design of the Special Allocation Fund (DAK) in order to provide more explicit climate change-related incentives for sub-national governments, but this âproved difficult because of the cross sectoral nature of climate change and the sectoral nature of the existing DAK,â which involves 19 different sectors\. As interim measures, however, the Government increased the allocation for the forestry sector and MOFR issued technical guidelines for using the Forestry DAK to improve incentives for better forest management in line with climate change needs while the Finance Ministry continued analytical work on the issue\. This notwithstanding, according to Bank staff interviewed by IEG in August 2015, the Government has not succeeded in finalizing a fiscal transfer mechanism to provide incentives for local governments to take priority climate change actions, thereby failing to meet another important trigger for the proposed second DPL\. 4\.25 Also with respect to mitigation, even though the original design of the CC DPL operations did not contain a specific policy subarea for GHG measurement and monitoring or a corresponding results indicator, the ICR indicated that âin later periods, the GOI also wanted to record progress in developing a monitoring mechanism for carbon emissions and absorption through establishment of a National GHG Inventory System\.â It also noted that, after the Government submitted the Second National Communication to UNFCCC in 2011, it 28 issued Presidential Regulation (No\. 7/2011) making the Ministry of Environment responsible for developing this System with inputs from the line ministries\. In addition, work was reportedly occurring at the provincial and local levels to improve the data used for national and sub-national inventories and the Government hoped to have âestablished a solid foundation for GHG inventory preparation, in line with reporting requirements under the UNFCCCâ by 2014\. However, progress to date with respect to the development of this inventory is not known and, in any event, its results have not been made public\. Outcomes 4\.26 The ultimate desired outcome of Government efforts to develop a lower-carbon growth path is a reduction in Indonesiaâs greenhouse gas emissions\. In this regard, the CC DPL series appropriately focused on the three main sources of such emissions: (i) land use, land use change, and forestry (LULUCF); (ii) peatland fires; and (iii) the energy sector\. As noted in para\. 2\.5, LULUCF and peat fires together were responsible for more than three- fifths of the countryâs GHG emissions and the energy sector for more than 20 percent in 2005, thus together accounting for more than four-fifths of the total\. Energy-related emissions were expected to grow rapidly in the future, both as a result of the countryâs predominantly coal-based power generation and growing demand for fossil fuels by the transport sector resulting from increasing vehicle ownership and urbanization\.63 4\.27 Although delayed in relation to its originally expected issue date, as observed above, a Presidential Regulation for the National Action Plan for Greenhouse Emissions Reduction (RAN-GRK) was promulgated in September 2011, thereby formalizing the Presidentâs 2009 commitment that the country would voluntarily pursue a 26 percent reduction in its GHG emissions by 2020\.64 This Plan set specific targets for the forestry and peatland, energy, and other sectors and indicated the policies, strategies, and specific actions designed to achieve them\. Annex 4 reproduces the emissions reduction targets together with the associated policies and strategies to be pursued for forestry and peatlands and for the energy and transport sectors, respectively\. Comparing the two sets of targets, those using the countryâs own resources (i\.e\., the initial 26 percent reduction) were much more ambitious for the forestry and peatland sectors than for energy and transport, indicating the need for a higher level of international financing for the latter\.65 4\.28 Considering the overall objective to reduce GHG emissions and the means proposed for achieving this in RAN-GRK, which were also included among the policy subareas for the CC DPL series (i\.e\., stem deforestation, improve peatland management and forest governance, promote renewable energy and energy efficiency, etc\.), it is useful to ascertain what has happened since 2009 with respect to GHG emissions in Indonesia\. Official 63 World Bank, Indonesia CC DPL-I PD, op\. cit\. para 86, pg\. 27 stated that âindustrial use and electricity sector are both large sources of emissions, but emissions from power generation, and to a lesser extent, from transport, are growing most rapidly\.â 64 Republic of Indonesia, Presidential Regulation of the Republic of Indonesia No\. 61 Year 2011 on the National Action Plan for Greenhouse Gas Emissions Reduction , Jakarta, September 20, 2011, pg\. 1\. 65 Similar targets, policies, strategies, and actions were identified for the agricultural, industrial, and waste management sectors and the locations where the actions were expected to take place were also indicated\. 29 emissions data were last reported for 2005 in the Second National Communication to the UNFCCC, and, thus are now ten years old\. Even though the national GHG inventory is reportedly in the process of being updated, results have not been released\. However, there are indications that GHG emissions have continued to increase over the past decade in both the LULUCF (including peatlands) and energy sectors\. The World Resources Institute (WRI) has published data on the evolution of Indonesiaâs GHG emissions between 2005 and 2012 (the most recent year for which data are available) in million tons of CO2 equivalent (mtCO2e) that are reproduced in Table 4, including emissions due both to LULUCF and other (primarily energy) sources\. These data suggest that annual emissions have risen over this period with a progressive increase in non-LULUCF ones and variable, but nonetheless, occasionally substantial ones from land use and forestry sources, although the large jump between 2005 and 2006 is likely due to changes in the methodology of identifying such emissions\. 4\.29 As concerns LULUCF, emissions are closely associated with deforestation that also appears to have continued to rise over the past decade\. One source reports that âIndonesia lost 840,000 hectares of forest in 2012 and has also âgreatly under-reported how much primary rainforest it is cutting down, according to the Governmentâs former head of forestry data gathering,â noting further that âUN and Government figures have maintained that the country with the third biggest stretch of tropical forest after the Amazon and Congo was losing 310,000 hectares of forest a year between 2000 and 2005, increasing to 690,000 hectares annually from 2006 to 2010\.â66 And, as observed above, the Center for Global Development (CGD) has affirmed that ânew satellite imagery analysis published in November 2013 revealed that Indonesiaâs deforestation rate had actually been increasing during the period in which the [Indonesia-Norway REDD+] Agreement had been in effect rather than decreasing\.â67 According to CGD, âamong the key drivers of deforestation are commercial-scale expansion of plantations to produce palm oil and fast-growing timber for the pulp and paper industry\.â68 66 See The Guardian, Rate of Deforestation in Indonesia Overtakes Brazil, Says Study, June 29, 2014\. The study referred to was by Belinda Arunarwati Margono, Peter Potapov, Svetlana Turubanova, Fred Stolle, and Matthew Hansen, entitled Primary Forest Cover Loss in Indonesia 2010-12, and published in the online journal National Climate Change on the same date\. According to this source, the remote sensing data suggested that much of the additional deforestation came from the felling of primary forest in wetlands and government protected areas\. 67 Seymour, et\. al\., op\. cit\., pg\. 4\. Emphasis in the original\. 68 Ibid, pg\. 5\. Although these are also carbon sinks, they do not offset the amount of carbon released to the atmosphere as the result of deforestation and associated fires\. 30 Table 4: Greenhouse Gas Emissions in Indonesia, 2006-2014 (mtCO2e) Year With LULUCF Without LULUCF 2005 1,583\.83 626\.62 2006 1,967\.28 645\.92 2007 1,912\.41 665\.30 2008 1,902\.90 665\.39 2009 1,959\.49 687\.94 2010 1,928\.02 709\.28 2011 1,950\.71 722\.74 2012 1,981\.0 760\.81 Source: WRI CAIT 4\.30 Other factors underlying the continuing pressures on Indonesiaâs forests, according to CGD, are: (i) an economic growth model aligned with business as usual; (ii) a limited constituency for change; (iii) a problematic land tenure situation; and (iv) decentralized, confused and contested land use decision making together with broader national governance challenges and disappointment about the scale of financing pledged by international sources to help combat deforestation\. As concerns the first of these elements, CGD observes that the Governmentâs emission reduction targets âwere accompanied by another target: for 7 percent annual growth\.[but that] without fundamental change in Indonesiaâs political economy, a portion of that growth would likely be achieved at the expense of forests\.â Some government officials have emphasized that the Governmentâs highest priorities were for meeting its economic growth target, suggesting that climate-related concerns were of secondary importance\. In relation to the second, it states that âpublic understanding of global environmental issues is extremely limitedâ¦[and] those who benefit from and consume Indonesiaâs commercially exploited natural resources are mostly concentrated in Java, where they are insulated from the adverse social and environmental impacts of forest destruction,â such as the annual fires and smoke\. It likewise notes that âoverlaps in jurisdictional authority has led to confusion, uncertainty, conflict, and increased opportunities for corruption,â which, in turn, make âforest reform all the more difficult because it requires the alignment of political champions across national, provincial, and district levels\.â 69 4\.31 Another source published in July 2014, affirmed that Indonesia had reached the highest deforestation rate in the world and added that âresearchers at the University of Maryland said the country lost 15 million acres of forest â a common source of lumber for developers â between 2000 and 2012\.â It also cited an interview with a managing director at Climate Advisers who said that âdevelopers were moving into Indonesiaâs wetlands, including the countryâs peatland rainforests,â and noted that âIndonesiaâs carbon emissions are projected to get even higher this year, as El NiÃ±o, expected to hit in 2014, will make forests dry and susceptible to fires\.â70 Finally, it confirmed that âfires in Indonesiaâs forests 69 Seymour, et\. al, op\. cit\., pg\. 5-6\. It cites as an example of the latter that âdue to prevailing winds, the choking haze that annually closes airports and sends children to the hospital in Sumatra, Kalimantan, and even neighboring Singapore seldom affects Jakarta\.â 70 See also El NiÃ±o, Forest Fires and Haze in Indonesia Economic Quarterly: Hard Choices, World Bank, July 2014, op\. cit\., which also discussed the dynamics of peatland fires\. 31 and peat lands increased in March and were concentrated in areas managed by pulpwood, palm oil and logging companies\.â71 Scientists and researchers interviewed by IEG confirmed that there are signs that 2015 is likely to be an even more severe El NiÃ±o year, further increasing the risk of fires, which are caused by human intervention (i\.e\., deliberately set) rather than by lightning strikes or other natural causes,72 leading to further increases on greenhouse gas emissions\.73 4\.32 Thus, there is strong evidence that deforestation and associated forest fires have continued to rise in recent years despite the measures proscribed by the Government to reduce them, including those supported by the CC DPL operation\.74 This also appears to be the case in the peatlands as the result of the conversion of forested areas for oil palm plantations and other agricultural activities\. A recent blog from CIFOR entitled Forest News, for example, revealed that âscientists monitoring the amount of carbon accumulated in Indonesiaâs peatland forests over thousands of years have predicted that millions of tons of carbon dioxide could be released into the atmosphere if they continue to be cleared, drained, and burned for oil palm and agricultural plantations,â adding that âmore than 100,000 hectares of peatland forests are destroyed each year for oil palm and agricultural plantations\.â75 It can, thus, be concluded that the impact of the policy actions taken in connections with the CC DPL operation with respect to the mitigation of GHG emissions from land use and forestry sources, including peatlands, have been very limited to date despite the increase in the number of REDD+ demonstration sites\. 71 See, Xander Landen, Indonesia Reaches Highest Deforestation Rate in the World, PBS Newshour Science, July 6, 2014, pp\. 1-2\. A WRI blog by Ariana Alisjabana, Fred Stolle, and Belinda Margono, published on June 30, 2014 and entitled New Study Shows Indonesia Losing Primary Forest at Unprecedented Rates, likewise indicated that Indonesia ânow has the highest rate of loss of tropical forests in the worldâ¦\. [and] reiterated that âfrom 2000 to 2012, Indonesia has lost more than 6 million hectares of primary forest â an area half the size of England\.â (pg\. 1) 72 The fire risk is greater due to increased dryness of vegetation and soils, including in peatlands, in areas affected by El NiÃ±o\. See also Special Issue on Local to Global Perspectives on Forest and Land Fires in Southeast Asia, Mitigation and Adaptation Strategies for Global Change, edited by Daniel Murdiyarso and Louis Lebel, Volume 12, No, 1, 2007\. 73 According to an article on this yearâs El NiÃ±o in The Economist (August 22nd-28th 2015, pg\. 60), âif this yearâs El NiÃ±o is a whopper, Indonesia could dry up, hurting coffee harvests and palm oil production\. Its hydroelectric power might stall\. And forest fires across its parched landscape would add up to 2 billion tons of CO2 to the atmosphere (equivalent to 5 percent of worldwide human-related releases of the gas for the year)\. 74 WRIâs Global Forest Watch data do show an apparent decrease in deforestation in Indonesia in 2013 compared with 2012, but the reasons for this are unclear\. It also notes a very considerable increase in deforestation in 2009 compared with 2008 and in 2011 and 2012 compared with 2010, so at the very least it can be concluded that deforestation appears to vary considerably from one year to the next and most of this loss has occurred in Kalimantan and Sumatra\. 75 See Catriona Moss, Peatland Loss Could Emit 2,800 Yearsâ Worth of Carbon in an Evolutionary Eyeblink: Study, CIFOR Forest News, January 14, 2015\. A model was used to create a number of scenarios to predict the future impacts of forest clearing and peat burning for oil palm conversion\. It found that of the 3,300 tons of carbon per hectare stored in Indonesiaâs coastal peatland areas, up to half woul d be released into the atmosphere over the 100 years following conversion to oil palm plantations â the equivalent of 2,800 yearsâ worth of accumulated carbon\.â (pp\. 1-2) 32 4\.33 Turning to the energy sector, while the Bank- and CTF-supported investments to help expand Indonesiaâs geothermal energy generation capacity are steps in the right direction, it will still take a number of years for this additional capacity to come on line\. According to the most recent Implementation Status and Results (ISR) Report, the project has been restructured twice and the closing date extended from March 31, 2015 to December 31, 2018, due to significant implementation delays, while only 2 percent of the Bank loan (US$ 4\.1 million) and 18 percent of the CTF loan (US$ 22\.1 million) had been disbursed by June 17, 2015\.76 4\.34 Examining the evolution of the sources of energy consumed in Indonesia between 2005 and 2013, it is evident that energy consumption has risen as the national economy itself has grown over time\. Furthermore, while consumption of primary energy from hydroelectric plants and derived from other renewable sources has increased in absolute terms, their shares of total energy consumed in the country nevertheless remain very small, jointly accounting for just 3\.5 percent of the total in 2013\. Meanwhile, even though the shares of both oil and natural gas in national energy consumption have declined over this period, that of coal has risen substantially, from 21 percent in 2005 to nearly one-third of the total in 2013, as Table 5 below shows\. Table 5: Sources of Indonesiaâs Primary Energy Consumption (million tons of oil equivalent and percent of total) for Selected Years, 2005-2013\. Energy 2005 2009 2010 2011 2012 2013 2005 2009 2013 Source/Year Coal 25\.4 34\.6 41\.2 48\.9 50\.4 54\.4 21\.2 25\.7 32\.2 Oil 60\.7 61\.6 66\.4 72\.3 73\.2 73\.8 50\.6 45\.8 43\.7 Natural Gas 29\.9 33\.6 36\.3 33\.5 32\.2 34\.6 24\.9 25\.0 20\.5 Total Fossil Fuels 116\.0 129\.8 143\.9 154\.7 155\.8 162\.8 96\.7 96\.5 96\.4 Hydroelectricity 2\.4 2\.6 3\.9 2\.8 2\.9 3\.5 2\.0 1\.9 2\.1 Other Renewables 1\.5 2\.1 2\.1 2\.2 2\.2 2\.3 1\.3 1\.4 1\.4 Total 120\.0 134\.5 150\.0 159\.8 161\.0 168\.7 100\.0 100\.0 100\.0 Source: British Petroleum, Statistical Review of World Energy, June 2014 4\.35 These figures confirm the heavy predominance of fossil fuels in the current energy mix and reveal that much of the growth in renewables other than hydropower, in fact, occurred between 2005 and 2009\. It is likewise useful to compare Indonesiaâs coal, oil, and natural gas production with its domestic consumption of these fuels over the same period\. As indicated in Table 6, coal production expanded more than two and a half times between 2005 and 2013, while oil production fell and that of natural gas was at roughly the same level in absolute terms in 2012-13 as in 2005\. However, domestic coal production was substantially greater than national consumption throughout the period, as much of domestic output is 76 World Bank, Implementation Status and Results Report for Indonesia Clean Energy Investment Project, June 17\. 2015, pg\. 6 (pg\. 1)\. Bank staff clarified that the implementation delays were due primarily to technical and operational problems, including the discovery of less geothermal energy potential at one of the sites where project investments had initially been planned, leading to the need to find an alternative site\. 33 exported\. Not surprisingly, nearly a third (31\.5 percent) of Indonesiaâs total exports in terms of value in 2013 was comprised of oil and mineral fuels, presumably primarily coal\.77 77 Michigan State University, Indonesia Trade Statistics, Global Edge, 34 Table 6: Fossil Fuel Energy Production in Indonesia (million tons oil equivalent and percent of total) for Selected Years 2005-2013\. Energy 2005 2009 2010 2011 2012 2013 2005 2009 2013 Source/Year Coal 93\.9 157\.6 169\.2 217\.3 237\.4 258\.9 44\.4 58\.3 70\.9 Oil 53\.7 48\.2 48\.6 46\.3 44\.6 42\.7 25\.4 17\.8 11\.7 Natural Gas 64\.1 64\.7 73\.8 68\.3 64\.0 63\.4 30\.3 23\.9 17\.4 Total 211\.7 270\.5 291\.6 331\.9 346\.0 365\.0 100\.0 100\.0 100\.0 Source: British Petroleum, Statistical Review of World Energy, June 2014 4\.36 In short, coal and other fossil fuel production continues to be important for the Indonesian economy as well as for its balance of payments, and the participation of coal in fossil fuel production has grown very substantially over the past decade, accounting for more than 70 percent in 2013 compared with 44 percent in 2005\. There has been a similar pattern with respect to the use of coal for domestic energy consumption\. Thus, it is very likely that GHG emissions have followed a parallel upward track even if there have been some gains in terms of greater energy efficiency and increased production of renewables, as Table 4 above suggests\. Once the new Bank/CTF-supported geothermal plants become operational later in the decade, this situation is likely to improve somewhat but, as it generally takes a long time for a national energy matrix to change significantly, all indications are that fossil fuels will continue to dominate for the foreseeable future\. Thus, at least in the short and medium run, gains in terms of emissions reductions from energy (and transport) sources are also likely to be modest\. 4\.37 Thus as was the case with respect to mitigation of GHG emissions in the land use and forestry sectors, outcomes to date with respect to emission reductions in the energy sector in Indonesia have been limited\. Its dependence on fossil fuels remains extremely high\. Efforts to reduce both electricity and fuel subsidies have occurred only recently and, while moving in the right direction, appear to have had little impact on energy consumption to date\. REDD+ activities have also been substantially delayed and deforestation appears to continue at a high rate, while fires may become even more widespread in the foreseeable future as the result of the expected strong El NiÃ±o year\. Recent media reports indicate that smoke from increased burning in neighboring parts of Indonesia are currently again a significant problem for both Singapore and Malaysia\. Thus, land use and fires persist as important but largely unresolved challenges\. Together with the energy sector, they also remain likely growing sources of carbon emissions\. In this context, GOI actions to move to a low-carbon economy, including those supported by the CC DPL, have had only modest outcomes to date\. 35 Objective 2: Support Government Efforts to Develop a Climate-Resilient Growth Path Outputs 4\.38 This objective was to be supported by the four policy action subareas under the CC DPLâs adaptation agenda\. The first refers to the water resource sector\. According to the ICR, the Ministry of Public Works (MPW) continued to make progress on the strategic assessment of the water future of Java and prepared an action plan for priority interventions as part of the River Basin Strategic Water Plans, which would seem to meet the indicative action for 2010\. However, it did not specifically confirm that this action plan incorporated climate change, urbanization, economic development and food security, as the indicative actions also required\. On the other hand, it reported that 18 water councils were formed in as many provinces in 2010, thereby substantially exceeding the target of 12, and 8 River Basin Plans were approved by the MPW, also meeting the 2010 target in this respect\. It added that 4 more such plans were approved in 2011, as were draft master plans for two key (unidentified) river basins\. By June 2013, the number of water management plans (POLAs) had risen from the baseline of 3 in 2009 and 5 in 2010 to a 29 for basins under provincial authority and 13 for those under that of the national government\. These plans reportedly established âa uniform information baseline and adaptive management approaches that will help basin managers adapt to an uncertain future\.â78 But the ICR did not confirm whether the target of 12 Coordination Teams for water resource management in river basins (TKPSDA) also an indicative action for 2010 had been met, nor did it comment on achievements in relation to the indicative action for 2011 (i\.e\., to complete master plans for the Java River Basins that include climate change actions by enacting ministerial decree)\.79 4\.39 Government officials data confirm (see Table 7) that good progress has been made in terms of the number of strategic plans (POLAs) for central basins that have been finalized, but less so with respect to the more detailed master plans, the vast majority of which are either in process or have been drafted but not yet finalized\. Even so, as the results indicator for this policy area referred specifically to strategic water management plans in key river basins, it appears to have been achieved, making it another of the more successful policy areas supported by the CC DPL\. 78 World Bank, CC DPL-I ICR, op\. cit\., pg\. 15\. 79 According to the AFD/JICA evaluation (op\. cit\., pg\. 95), progress in this regard included: (i) strategic assessment of the future of water resources on Java island was conducted in 2010; (ii) provincial Water Resources Councils have been in place since 2010; (iii) integrated water resources management plans (POLA) incorporating climate change assessment have been developed for the national strategic river basins on Java island since 2008; and (iv) the River Basin Master Plans have been prepared since 2010\. 36 Table 7: Status of Strategic and Master Water Management Plans, 2014 Type of Plan Finalized Drafted In Process POLA/Strategic Plans 35 (central basins) 19 1 8 (provincial basins) 27 12 Rencana/Master Plans 2 (central basins) 17 24 1 (provincial basin) 2 - Note: Central government plans are for river basins that cross two or more provinces, while provincial basins are ones located entirely within a single province, and, thus, under provincial rather than central government authority\. Source: World Bank Water Resources and Irrigation Specialist, personal communication 4\.40 In relation to the agriculture sector, the Ministry of Agriculture (MOA) reportedly continued to strengthen and scale up efforts to improve the resilience of farm production and reduce drought risk and that the System for Rice Intensification (SRI) had been completed in 62 units in 16 districts in 8 provinces, while the Climate Field School had completed 261 units in 243 districts in 29 provinces by two MOA directorates\. These latter figures presumably refer to 2010, as the ICR also indicated that 599 units were completed in 2011 and that the guidance provided focused on pest and disease control measures and water management in non-irrigated areas\. However, the ICR rated performance in this sector under the CC DPL operation as only âmoderately satisfactoryâ and the baseline survey that was to be undertaken to assess the extent of farmersâ understanding and practice of adaptation techniques due to the Ministryâs actions was not carried out\. The ICR nonetheless argued that the associated objective (i\.e\., to scale up actions to improve climate resilience in agriculture) was âpartially achievedâ because Presidential Instruction No\. 5/2011 âobliges MOA and other GOI agencies (sic) mainstream climate smart agriculture practices, including support to farmersâ groups\.â80 However, it said nothing with respect to the other aspect of the indicative actions for this subarea, to enforce land development and management without burning as part of an overall plan based on MOA Decree No\. 26/2007 (2010) and to continue to make progress in this regard (2011)\. 4\.41 According to experts interviewed by IEG, enforcement of land development and management without burning has not occurred\. In fact, this is a persisting problem in Indonesia and is one of the causes of fires which often get out of control, thereby contributing significantly to GHG emissions\. In addition, there are a number of perverse incentives which actually stimulate and ârewardâ the proliferation of fires, including emergency funds made available to local governments to fight fires once they start\. Another factor complicating enforcement in this regard is the high degree of autonomy of provincial and local governments, which often pursue their own economic interests rather than complying with central regulations\. This is one of the principal âdownsidesâ of Indonesiaâs decentralization policies\. 4\.42 As concerns disaster risk management, progress was better\. Starting with a baseline of 5 provincial and 20 district disaster management agencies in 2009, by 2012 coverage had expanded to 33 provinces, representing 97 percent coverage, and branch offices in 400 80 World Bank, CC DPL-I ICR, op\. cit\., pg\. 15\. 37 districts (out of a total of 501, or a coverage of 80 percent), meeting the target\. Thirty-two agencies are now regularly budgeted regularly and operationalâ although capacity building was âongoing\.â81 Thus, the indicative action for 2010 was met, but the ICR did not confirm whether those initially proposed for 2011 (i\.e\., implement Disaster Risk Reduction (DRR) program activities according to the National Action Plan for DRR) and 2012 (implement comprehensive risk financing framework combining mechanisms, including reserve budget, stand-by financing, and weather derivatives) were also achieved\. 4\.43 Bank staff confirmed that implementation of the National Disaster Risk Reduction program activities is indeed occurring at the sectoral level (i\.e\., in the affected line ministries), and that the disaster management agencies were established in all of the provinces and some districts\. He also confirmed that some disaster risk financing mechanisms, including the reserve (on-call budget) and stand-by financing have been implemented, but that, to date, weather derivatives have not\. More generally, he noted that the Bank had established good relations with the natural disaster agency and financed several prior investment projects in this area, which contributed to the comparatively good performance of this policy area\. 4\.44 The fourth policy subarea related to improved climate resilience was for the marine and fisheries sector\. As in the case of agriculture, the baseline values for community awareness and climate preparedness practices in coastal areas were never determined and, thus, results in relation to this proposed indicator were not available\. The ICR nonetheless argued that the objective to establish systems and strategies to improve climate preparedness and resilience in the coastal/marine sector was âpartially achievedâ because the Ministry of Marine Affairs and Fisheries (MMAF) was ârunning the national âDevelopment of Resilient Coastal Villagesâ program in 22 districts throughout Indonesiaâ and that national strategy was being implemented âwith site-level activities\.â This Program was apparently completed in mid-2010 and a strategic plan for a âmodel coastal villageâ was finalized in 2011, while MMAF also finished a study on coastal vulnerability to sea level rise in Java, Bali, and West Sumatra in 2010\. In addition, the Ministry updated its Strategic Plan for Blue Carbon Research for 2011-2014 and released it for public review\.82 However, while the Indonesian Global Ocean Observing System (INAGOOS) Data Center and Secretariat was established by MMAF in Jakarta in 2010, the ICR did not comment on the proposed indicative actions for 2010 to develop a plan for climate resilient villages in 8 vulnerable districts on the north coast of Java, nor on the indicators for 2011-2012 involving the continuing implementation of the strategy for coastal community resilience to cope with climate change and implementation of the vulnerability to sea level rise in Java and Bali\. 4\.45 Bank staff confirmed that INAGOOS is fully operational and that a strategy had been developed for coastal community resilience to cope with climate change\. However, the extent to which this strategy has been implemented to date is not clear\.83 On the other hand, 81 World Bank, CC DPL-I ICR, op\. cit\., pg\. v-vi\. 82 Ibid, pg\. 16\. 83 According to a communication from a local Bank specialist, dated September 2, 2015, this question was discussed with a Planning Bureau official at the MMAF, who stated that it was difficult to say if this strategy had been implemented as such, as there were many relevant programs that were considered a part of or became 38 the Bank has now established a very good working relationship with the Ministry of Marine Affairs and Fisheries, particularly in connection with the two relatively new initiatives mentioned above that build directly from its earlier involvement with this Ministry in connection with its participation in the CC DPL\. 4\.46 Even though there were no associated indicative actions or results indicators, the ICR also reported on progress regarding climate forecasting and impact and vulnerability assessment, an area in which GOI and the development partners decided to add after the initial CC DPL period, according to this source\. It stated that, under this focal area, in addition to the 2010 establishment of INAGOOS mentioned in the previous paragraph, the Government took the following steps to strengthen the institutional framework and capacity for scientific research on adaptation: (i) the Meteorological Agency (BMKG) developed a climate change modeling program to assess impact and vulnerability, completed seven modelling scenarios, and a vulnerability assessment study in East, Central, and West Java; and (ii) MMAF published its strategic plan for INAGOOS for 2011-14 and it became part of the Regulation for RAN-GRK (i\.e\., for the National Plan for Reduction of Greenhouse Gas Emissions for 2010-2020, issued in June 2011)\.84 The ICR rated performance in this focal area as only âmoderately satisfactoryâ â the same rating as for CC DPL performance in relation to the marine and fisheries sector, climate resilient agriculture, peatland conservation, and forest management and governance â but it did not provide an explanation for this assessment\. 4\.47 Finally, it is noteworthy with respect to climate resilience that Indonesia published the Synthesis Report of the National Action Plan for Climate Change Adaptation (RAN-API) in November 2013\. This report was issued jointly by BAPPENAS, the Ministry of Environment, the National Council on Climate Change (DNPI), and BMKG\.85 The action plan considers changes in surface temperatures, rainfall, sea level rise, and weather and climate extreme events, based both on empirical observations and IPCC (International Panel on Climate Change) models and summarizes the level of climate change and associated public health risks in the country by region for: (i) decrease in water availability; (ii) floods; (iii) droughts; (iv) coastal inundation; (v) spread of dengue; (vi) spread of malaria; (vii) spread of diarrhea; (viii) decrease in rice production; and (ix) forest fires\. Considering economic, livelihoods, ecosystem, and âspecial areaâ resilience, the Synthesis Report for the Plan then outlines generic targets, strategies and clusters of actions for: (i) food security and energy security (economic); and (ii) health, settlement, and infrastructure (livelihoods); and (iii) urban areas and coastal and small island areas (special areas)\. While some of these areas were also the subject of resilience-related policy actions under the Bank-supported CC DPL operation (e\.g\., coastal ones), this Plan is considerably broader in scope and ambition\. an input to the National Strategy for Marine Affairs and Fisheries that included measures related to climate change\. 84 World Bank, CC DPL-I ICR, op\. cit\., pg\. 16\. 85 Republic of Indonesia, National Action Plan for Climate Change Adaptation (RAN-API): Synthesis Report, Jakarta, November 2013, pg\. 2\. 39 Outcomes 4\.48 Unlike the situation with regard to Government efforts to develop a low-carbon growth path, it is difficult at this juncture to assess outcomes of policy actions taken to date in terms of increased resilience to climate change in Indonesia, as these depend in part on the occurrence and localized effects of extreme weather events, including flooding and droughts, as well as gradual temperature and sea level rise, that affect water resources, agricultural production and productivity, and coastal areas, livelihoods, and marine ecosystems\. Many of the potential negative economic, social and environmental impacts of climate change, moreover, such as those due to increases in temperature, rainfall variability, and ocean warming, moreover, will occur very gradually over the long term and, thus, their true impacts are likely to be perceived only decades into the future\. 4\.49 The abovementioned constraints notwithstanding, the adaptation actions supported by the CC DPL operation were targeted on key areas of vulnerability and, particularly in the case of disaster risk management and coastal and marine protection, hold the potential to increase Indonesiaâs resilience to the adverse impacts of climate change, if sustained and expanded over time\. Similarly, those measures taken with respect to strengthening climate forecasting, vulnerability assessment, integrated water resource management (IWRM) at the river basin level and increasing the resilience of agricultural, especially rice production, are likely to be of importance in terms of enhancing future water and food security in the country, again assuming in the case of IWRM that the measures proposed in the various river basin plans are adequately implemented and climate-resilient agricultural approaches are well-disseminated and applied by farmers over time\. 4\.50 In all cases, however, the policy actions recognized and supported by the CC DPL constitute important first steps in terms of strengthening Indonesiaâs institutional capacity at the national and subnational, particularly provincial, levels to address the likely increasingly severe future impacts of global climate change, and the more recent National Action Plan for Climate Change Adaptation (RAN-API, if properly implemented, should further enhance the effectiveness of Indonesiaâs ongoing efforts in this regard\. But, as in the case of the CC DPLs policy actions for mitigation, outcomes in the short and medium term of those for adaptation are likely to be modest\. Other Program Impacts 4\.51 While the AFD/JICA joint evaluation did not seek to assess program performance in relation to the wider objectives/ultimate desired outcomes considered above, it did examine other aspects\. It indicated, for example, that the effect of the budget support program on changes in financing, national institutional arrangements, and government progress on mainstreaming climate change issues into policy were limited\. With respect to the programâs financial impact, more specifically, it concluded that âthe amounts of funding provided under the CCPL are small from a macroeconomic perspective (less than 0\.7% of the revenue of the GOI)\. Hence, the CCPL had very little direct effect on the efficiency of external funding as part of the national budget process\. Moreover, the GOIâs fiscal position was and remained sound\. Nevertheless, the disbursements of the CCPL at a time of crisis provided 40 some countercyclical support, which was a valuable input, without jeopardizing debt sustainability\.â On the other hand, it also noted that because the amount of budget support was not very significant in regard to the Governmentâs financial resources, âthis inevitably raises the issue of limited leverage regarding the orientation of climate change policy\.â86 4\.52 The joint evaluation noted that the CCPL contributed to identifying climate-change- related public expenditure, that climate change policies were now taken into consideration in Performance Based Budgeting (PBB), and that it led to publication of a GOI roadmap for dealing with the reduction in energy subsidies\. However, it also recognized that this took time and a decision about subsidies was not made until 2013\. Thus, in this important policy area, as in numerous others, implementation delays occurred, and intended program outputs did not materialize until several years after the Government and the development partners, including the Bank, decided to suspend the program as originally designed\. The joint evaluation concluded that it had only a âmoderate influenceâ on public financial management, in terms of resulting in better identification of climate-change-related expenditures\. 4\.53 As concerns the programâs policy consistency with and mainstreaming of Government priorities, the ADF/JICA evaluation found that the CCPL was designed taking into consideration the already advanced national strategy on climate change along the lines of the Donorsâ climate change approach\. Other pertinent effects were also generally deemed positive, as the following statements indicate: (i) the CCPL, due to its regular check-ups on performance and incentives for compliance in the form of renewed funding, is widely recognized among officials and agencies as having contributed to bringing the issue of climate change to the center of Government policy development and implementation; and (ii) the CCPL had an impact on the mainstreaming of climate change issues to the extent that it contributed to maintaining and crystallizing the climate change momentum sparked by the UNFCCC 13th Conference of the Parties in Bali\.87 4\.54 On the institutional side, results were also mixed\. On the one hand, according to the ADF/JICA joint assessment, âby enhancing the national information system, through the monitoring process and the strengthening of climate-change-related institutions, the CCPL had considerable influence on the quality of the climate change policy processes and their implementation\.â88 However, it also concluded that âinsufficient awareness and incentives for the line ministries highlighted that progress could be made in establishing a well- functioning framework for dialogue between ministriesâ and that there had been no âsignificant improvementâ in terms of civil society participation in national and subnational climate change policy formulation and implementation\. The ICR, in turn, indicates that one of the shortcomings associated with the program was the failure to communicate the 86 AFD/JICA, Joint Evaluation of CCPL, op\. cit\., pg\. 9\. 87 Ibid, pp\. 9-10\. 88 It also stated (pg\. 11) that âthrough its various committees, the CCPL created a framework for discussion focused on the GOIâs strategies on climate change, thus improving communication between the ministries and the Donors\.â 41 intentions of the DPL in relation to the need for borrowing and it concluded that âclear and open communication is needed for a strong partnership\.â89 4\.55 On the positive side, finally, it should be recognized that the Bankâs involvement in the CC DPL served as an important platform for stepping up and consolidating the policy dialogue with the Indonesian Government in relation to the GOIâs program to address climate change\. As the ICR points out, even though policy-based financing for the second phase of the Governmentâs climate change program did not extend beyond 2010, monitoring of the 2011 matrix by the development partners, including the Bank and ADB, continued beyond the life of the DPL itself, and a final steering committee meeting was organized by the Government in November 2012\.90 Bank staff highlighted the important role played by the CC DPL, despite its disappointing results, in terms of the Bankâs ongoing policy dialogue and lending/grant activities in support of the GOIâs climate change initiatives\. 5\. Ratings Outcome 5\.1 The relevance of objectives is rated High, as Indonesia is both a significant contributor to global greenhouse gas emissions and is highly vulnerable to the likely increasingly adverse impacts of climate change\. The quality of program design is rated Substantial\. The CC DPL series sought to help the Government address the major sources of GHG emissions, land use change, including forest and peat land conversion and burning, and the fossil fuel-dominated energy sector, enhance climate resilience in four key sectors, and further strengthen the countryâs institutional capacity to address mitigation and adaptation priorities\. In practice, however, several significant policy areas proved to be too ambitious given significant political economy and institutional constraints, together with unanticipated changes of top government officials and other exogenous factors\. In addition, the Results Framework could have been better designed, both in terms of the specific cause and effect linkages between recognized prior and proposed indicative policy actions and expected outcomes and in relation to the nature and coverage of some of the monitoring indicators\. 5\.2 The joint AFD/JICA evaluation concluded, moreover, that the comparatively small amount of funding involved in relation to the size of the Indonesian public sector budget meant the program possessed limited leverage with respect to climate change policy and government policy making more generally in a context in which economic growth was â and continues to be -- the highest priority\. On the other hand, given GOIâs subsequent decision not to borrow for climate change-related activities, it is unlikely that it would have been willing to accept larger loans for this purpose even if the resources, in fact, were still being used for general budget support\. While the Governmentâs inability to meet two of the initially agreed triggers for the second CC DPL in 2010-11, while a third one was delayed, undoubtedly clearly played a role from the Bankâs perspective, GOIâs reluctance to borrow 89 World Bank, CC DPL ICR, op\. cit\., pp\. 23-24\. 90 Ibid\. pg\. 9\. 42 for climate change is the official reason why it decided to suspend the proposed DPL series after just one operation\. 5\.3 Efficacy was assessed separately in terms of the extent to which the CC DPL operation was able to support Government efforts to develop a low carbon growth path and its efforts to develop a more climate-resilient growth path over the expected program implementation period, taking into account that only one of the initially anticipated four loans actually went forward\. The available evidence suggests that only limited progress has been made by the Government in recent years toward achieving a lower carbon and more climate-resilient growth path, although some positive steps (albeit with considerable delays in some instances) have been taken on both fronts\. For this reason, while IEG recognizes that in politically and economically sensitive areas such as curbing deforestation, altering the national energy mix, and reducing energy subsidies, transformative change is difficult and takes time, outcomes in relation to both CC DPL objectives to date are rated Modest\. In retrospect, given the challenging country institutional and governance context, a number of the policy subarea objectives, actions, and expected results were overly ambitious, even for a four year implementation period\. 5\.4 In addition, since the World Bankâs CC DPL series was suspended after the first loan, it is unlikely that the CC DPL-I operation, in and of itself, played a significant role in the progress achieved to date\. Both the Bank itself (e\.g\., through the subsequent Geothermal Clean Energy Project) and other donors, including UNDP and the Asian Development Bank (ADB), as well as AFD, JICA, the Government of Norway, and numerous other bilaterals, and Climate Investment Funds (CIFs), including the CTF and FIP, have also provided and/or pledged additional financial and/or technical assistance to Indonesia for climate change- related activities\. Thus, it becomes nearly impossible to attribute actual results on the ground to CC DPL-supported policy actions per se\. Furthermore, many of the achievements associated with the CC DPL series were, in fact, recognized prior actions that may be attributable in part to the existing CCPL program, co-financed by AFD and JICA, before the Bank formally decided to provide funding\. And unlike both JICA and AFD, the Bank did not provide parallel technical assistance grants to help boost incentives for line ministry participation in the program\. 5\.5 The AFD/JICA joint evaluation suggests that the effects of these additional TA grants were limited, observing that while âthe CCPL created a framework for discussion focused on the GOIâs climate change strategiesâ¦insufficient awareness and incentives for the line ministries, which sometimes resulted in underuse of technical assistance, highlighted that there was progress to be made in establishing a well-functioning framework for enabling political dialogue among the ministries\.â Elsewhere, it observed that âweak coordination between ministries might act as a significant obstacle to the mainstreaming of climate change policies\. In Indonesia, the low level of coordination between ministriesâ¦for instance, can be a significant impediment to the attainment of climate change targets\. This lack of coordination is mainly due to poor governance in some ministries\.â91 91 AFD/JICA, Joint Evaluation of CCPL, op\. cit\., pp\. 70, 82\. 43 5\.6 Thus, for a variety of reasons, the program as such had only moderate success with respect to the achievement of its ultimate objectives\. This is reflected in the ICRâs ratings for the programâs policy subareas, a number of which were considered only moderately satisfactory\. However, two of the policy subareas rated in the ICR (i\.e\., GHG measurement and monitoring and climate impact and vulnerability assessment) were not part of the original program design as presented in the PD for CC DPL-I\. Thus, there were no up-front objectives, proposed policy actions, monitoring indicators, or expected results against which achievements or shortfalls could be measured\. In addition, the ICR failed to rate â or even comment on â one area in the original policy matrix, energy pricing, in which progress during the implementation period of the DPL was limited\. 5\.7 The main difference between the self- and independent evaluations, however, is that the ICR rated each of the policy subareas and the overall operation, whereas IEG rates achievement in relation to the programâs stated objectives and does not rate performance of each of the individual policy subareas, although it does gauge progress and results in relation to each objective on a four point scale â High, Substantial, Modest, and Negligible\. In determining the overall outcome rating, moreover, IEG gives a heavier weight to efficacy than to relevance of objectives and design\. Thus, even though in the present case, relevance of objectives is High and relevance of design is Substantial, as efficacy for both objectives is rated Modest, the overall outcome rating is Moderately Unsatisfactory\. Risk to Development Outcome 5\.8 The ICR, which rated the risk to development outcome Moderate, highlighted three generic risks that were identified in relation to the Bankâs Indonesia portfolio as a whole in the CPS for 2013-2015: coordination, governance/corruption, and external shocks\. The first of these also adversely impacted implementation of some of the CC DPLs policy actions\. The ICR concluded that âweak coordination and entrenched organizational behaviors may undermine capacity to develop and implement complex institutional reforms\.â Elaborating on this, it added that high level government commitment to policy reform at the highest levels of government and in strategic, planning and budgeting documents remains strong, but the ability to deliver reforms across a wide agenda and multiple institutions continued to be weak and that âinstitutional rivalries undermine the capacity to craft and implement integrated policies across key sectors, including energy and land use\.â It concluded that the challenge remained large and that future success would require action across legal mandates and economic interests from forestry, agriculture, mining, land use and local governments\. It would also require âbuilding sustainability concerns and incentives into rapidly growing and profitable economic sectors, in particular palm oil plantations\.â92 Some of those interviewed by IEG in Jakarta suggested that this is starting to occur\. 5\.9 The statements above again point to the critical institutional and political economic challenges facing effective implementation of the GOIâs climate change policies both within 92 World Bank, ICR for CC DPL, op, cit\., pp\. 19-20\. On a more optimistic note, however, it added that âon the positive side, key agencies and reformers now advocate moving toward a greener, more sustainable development path, beyond the core climate agenda of mitigation and adaptation\. The next medium term development plan presents the opportunity to codify some key policies and programs for the longer term\.â 44 the central administration and at the subnational level\. While the policy framework has advanced since the CCPL ended, including with respect to adaptation with publication of the associated national action plan in late 2013, there has also been a change in presidential leadership as the result of the July elections and the administration that took office in October 2014\. The new administration seems to be giving less priority to the climate change policies set by the previous one, although it has introduced significant institutional changes including establishment of the new Ministry of Environment and Forestry and dismantling of the REDD+ agency that had finally been created in the latter half of 2014\. The effects of these changes as well as the extent to which the current administration will be better able to resist the strong economic and other pressures that appear to have limited results on the ground with respect to the reduction of GHG emissions in recent years, however, remain to be seen\. 5\.10 As also acknowledged in the ICR and elsewhere, the above cited institutional and political economy constraints, together with the often associated potential for corruption, have historically had an adverse effect on governance more generally in Indonesia\. Here again the ICR points to the root of the problem by affirming that âentrenched economic interests have the motivation and capacity to resist needed reformsâ and âaddressing climate change mitigation and adaptation will require actions that touch on key economic sectors, as well as increased awareness and implementation capacity at the local level\.â And it attempts to weigh both positive and negative elements in this regard: âon the positive side, there has been important progress on land use and forestry issues, particularly with the Governmentâs âOne Mapâ initiative and the recent two year extension of the moratorium on forest clearance licenses\. On the other hand, local officials and elites still collude to produce changes on the ground, even where national laws and policies are sound\.â 5\.11 The ICR provides a concrete example to illustrate the latter problem, the âcontinued unwillingness to enforce bans on the use of fire for land clearing,â and it affirmed that âalong with better coordination, the GOI will need better communication about the economic sustainability rationale for environmental and climate improvements, including the benefits and trade-offs for specific groups of stakeholders\.â93 CGD in its paper on the status of the Indonesia-Norway REDD+ Agreement also stressed the seriousness of the difficulties involved, observing that âIndonesiaâs political and economic development continues to be hobbled by weak governance and uneven application of the rule of law\.â It added that many government officials have colluded with private business interests to overlook environmental regulations when issuing permits or ignore violations and that concerns over ârampant corruptionâ in the national budget system led to the selection of UNDP as an initial channel for Norwegian funds under the Agreement as a way of addressing these fiduciary risks\.94 93 Ibid, pg\. 20\. It also affirmed in this connection that âdevelopment partners are increasingly supportingâ¦\.key ministries [particularly BAPPENAS and the Ministry of Finance] with integrated policy analysis, technical assistance and capacity development in this area\.â 94 Center for Global Development, op\. cit\., pg\. 6\. It also stated (pp\. 6-7) that âmany laws and policies can create perverse incentives\. For example, regulations governing oil palm plantations are designed to encourage exploitation by requiring the development of land designated for production within a given time period\. Consequently, license holders who voluntarily set aside forest areas with high conservation or carbon value may end up seeing those areas reallocated to others who are more dispos ed to forest clearance and conversion\.â 45 5\.12 As CGD observes, future progress in curbing deforestation and land conversion for productive, including palm oil, activities -- and thus to cut GHG emissions from LULUCF sources -- will depend both on strong government leadership at the top and the building of a broader political coalition to support conservation activities, as well as on stronger commitment and greater institutional capacity to implement and enforce constructive policies and regulations\. It also observes, however, that support for forest conservation has been limited to a ânarrow baseâ of national and international NGOs, academics, and entrepreneurs anticipating the creation of a forest carbon market, and âdoes not extend to parties represented in Parliament or across the bureaucracy\.â95 According to this source also, the Ministry of Forestry, whose power was previously âformidable and largely unchallenged,â was ânotorious for corrupt practices including issuing licenses and enforcement failures to benefit politically connected elites\.â96 Hopefully, the merger of this ministry with the former Ministry of Environment in early 2015 will lead these past practices to be curbed in the future, but the jury is still out\. 5\.13 The final generic risk to the development outcome of the CC DPL operation identified by the ICR concerned possible economic shocks to which Indonesia may continue to be vulnerable and which could threaten financing for climate change-related actions\.97 Climate finance in the country for 2008-2010 from both domestic and international98 sources reached an estimated total of US$ 951 million (in 2011 dollars) according to an independent report by the Climate Policy Institute, the Executive Summary of which was published in February 2014\. Observing that this sum was composed of US$ 627 million equivalent contributed through the Governmentâs budget, including resources initially received from international sources, and an additional US$ 324 million from external sources, the report stated that this figure fell below GOI estimates of the level of financing required to meet its 2020 emission reduction targets\. However, both domestic and international resources were expected to rise over the next few years âas comprehensive national policies on climate change mitigation (RAN-GRK) and adaptation (RAN-API) are fully implemented\.â99 5\.14 The above considerations suggest that, even though positive steps have been taken on the policy front in Indonesia with respect to climate change, results on the ground are still largely incipient and, thus, the risk to the development outcome of the Bankâs CC DPL operation and the larger multi-donor CCPL program may be significant, at least in the short and medium term\. This also appears to be the conclusion of the 2014 AFD/JICA joint 95 Ibid, pg\. 13\. 96 Ibid, pg\. 9\. 97 World Bank, ICR for CC DPL-I, op\. cit\., pg\. 20\. 98 Most of these resources came from bilateral sources, with the multilateral development banks and international climate funds accounting for only around 10 percent of the total\. Thus, the general budget support funds transferred through the CCPL are not included in the total\. 99 See Angela Falconer, Skye Glenday, Anja Rosenberg, and Jane Wilkinson, Landscape of Public Climate Finance in Indonesia, Climate Policy Institute, July 2014, pg\. 2\. This report also found that nearly 75 percent of domestic climate finance was for âessential âindirectâ activities, such as policy development, research and development, establishment of measuring, reporting, and verification systems and other enabling environmentsâ¦[which would] drive the future scale up and effective all ocation of finance by laying the foundation for âdirectâ mitigation projects\.â 46 evaluation, which stated that âthe outcomes and impacts of the climate change policies are still to be seen\. They are likely to come with a long time lag\. In the short run, the results are mixed in the sense that, overall, GHG emissions continued to increase, but there is no data allowing us to make a judgement regarding their evolution relative to the BaU (Business as Usual) scenario\. Furthermore, we also note that the GOI did not succeed in eliminating electricity subsidies immediately, but progress was made with regards to the CCPL target, namely the finalization of the roadmap for subsidy reduction\.â100 Finally, it affirmed that âthe fact that the GOI did not want to continue the CCPL as expected is troubling\. Even more troubling is the asymmetry: the GOI decided rather suddenly to stop\. At the same time, a growing number of Donors were ready to participate (JICA, AFD, then WB and finally ADB)\.â It went on to observe that âthis raises the question of how a CCPL should be managed, taking into consideration the evolving context, such as decreases in interest rates, the availability of foreign financing, the presence (or absence) of pressure exerted by international negotiations on climate change, the degree of influence of high-ranking Government officials opposed to the CCPL, etc\.â101 5\.15 Ultimately, the risk to achievement of the CC DPLâs development objectives will depend on: (i) the results of the ongoing international negotiations leading up to and the corresponding results of COP 21 for the UNFCCC to be held in Paris in December 2015; and, more importantly, (ii) how Indonesia responds to them\. This will be the case both with respect to its efforts to move to a lower carbon and to a more climate-resilient development path\. In this context, Indonesia submitted its Intended Nationally Determined Contribution (INDC) with respect to climate change on September 15, 2015\. This document outlines the countryâs proposed âtransition to a low carbon future by describing the enhanced actions and the necessary enabling environment during the 2015-2019 period that will lay the foundation for more ambitious goals beyond 2020\.â102 It essentially repeats prior Government commitments with regard to its GHG emissions targets (i\.e\., at least a 26 percent reduction in relation to BAU projections by 2020 and 29 percent by 2030, even in the absence of significant external funding) and adaptation challenges\.103 100 The Borrowerâs comments reproduced in the ICR, while indicating that the risk of project achievements not being maintained was âlowâ due to the âhigh visibility of climate cha nge and sustainability outcomes in national development documents including the RAN-GRK,â also included the affirmation that energy subsidies âremain a highly politicized issue requiring champions throughout the executive and legislative branches of Government\. Recently, there has been progress on this issue, with the Parliament approving a budget package (June 2013) to reduce fuel subsidies and provide cash handouts to cushion the impact on impoverished households\.â World Bank, ICR for CC DPL-I, op\. cit\., pg\. 25\. 101 AFD/JICA, Joint Evaluation of the ICCPL, op\. cit\., pg\. 113\. 102 Republic of Indonesia, Intended Nationally Determined Contribution, submission to UNFCCC, Jakarta, September 15, 2015, pg\. 1\. 103 Ibid, pg\. 4\. Interestingly, it also highlights that one of the âfoundational principlesâ underlying future government action is adoption of âa landscape approach, recognizing that climate change adaptation and mitigation efforts are inherently multi-sectoral in natureâ and affirming that âIndonesia takes an i ntegrated landscape-scale approach covering terrestrial, coastal and marine ecosystems, implemented through capacity building of sub-national jurisdictions\.â The Bank is currently actively helping the Government to develop this approach\. 47 5\.16 While some of the risks described above with respect to achievement of the programâs declared objectives in terms of helping the Government to develop a lower carbon, more climate-resilient growth path are substantial, risks to the specific development outcomes of the prior actions recognized by the Bank for approval of CC DPL-I and for those indicative actions for the proposed second, third, and fourth loans that were achieved (even though the loans themselves never went forward), albeit in numerous cases only after considerable delays, are Moderate\. Institutional advances over the past few years in areas such as river basin and natural disaster management and program-supported activities for geothermal energy, energy efficiency, and marine and coastal management seem likely to be sustained, although those with respect to REDD+, peatland management, and forest governance more generally are on much less solid ground, and continue to present major challenges for the Indonesian Government, as does achieving a significant âgreeningâ of its energy matrix despite donor assistance, including that of the Bank\. Bank Performance Quality at Entry 5\.17 Prior to engaging in the CC DPL operation, the Bank had carried out relevant analytical work including a Country Environmental Analysis (CEA) that focused in part on climate change, and even before that, had collaborated in a multi-development partner study of issues and constraints in the Indonesian forestry sector\. The CEA highlighted the need to give greater attention to adaptation and stressed the importance of reducing GHG emissions in both the land use and forestry and the energy sectors, priorities which were also clearly reflected in the CC DPL\.104 Through ESMAP, it had also helped the Government to undertake a low carbon development study\. Together with other pertinent documents and studies elaborated by the Government and other development partners, they provided strong analytical underpinnings for the proposed programmatic series, which was initially derived from the GOIâs 2007 National Action Plan for Addressing Climate Change\. As noted above, the Bankâs entry into the CCPL was an attempt to streamline and prioritize it to three pillars and eleven policy areas\. The ICR acknowledged, however, that even after this, the program touched on many issues and sectors and involved many agencies, but argued that âthis breadth reflected the climate change challenge in Indonesia, responded to the GOIâs requests for inclusion, and created entry points with sectors and ministries seen to be important in the long run, such as agriculture\.â On the other hand, it also admitted that âthis inclusive approach diluted the depth of analysis and dialogue that could be achieved and created monitoring challenges\.â105 104 See World Bank, investing in a More Sustainable Indonesia: Country Environmental Analysis, op\. cit\., especially Chapters 6, 7, and 8, which addressed each of these priorities in turn\. 105 World Bank, ICR for CC DPL-I, op\. cit\., pg\. 21\. It likewise observed that âseveral i ndividual ministries expressed their strong desire that their programs be included in the CCDPL in order to be recognized in relation to the high visibility climate change issue,â and that âin particular, the desire for balance between adaptation actions and mitigation actions led to inclusion of more sectors and more actions, some of which were less transformative\.â 48 5\.18 The Bankâs decision to provide funding for the CCPL in its third year was based on its assessment of the availability of a meaningful entry-point into forestry and energy sector issues\. But its late entry also created a need for âadjustments by the partners and GOI agencies in the selection and focus of policy actions [and] harmonization of the policy dialogue and interpretation of the results of the monitoring process were complicated by having more partners with different documentation requirements and approval processes\.â These difficulties are reflected in the Borrowerâs comments on Bank performance reproduced in the ICR, one of which was that âthe Bankâs entry and choice of policy actions could have been better synchronized with the existing policy matrix agreed for the CCPL,â suggesting that the GOI may have felt that the Bankâs push for more substantial policy reforms was overly ambitious\. Another pertinent Borrower observation was that âthere were challenges in the coordination of monitoring and evaluation efforts, given the difficulty of measuring policy achievements or setbacks across two M&E frameworks\.â106 5\.19 For these reasons, Bank performance in terms of quality at entry is rated Moderately Satisfactory\. In retrospect, despite the alleged âstreamlining,â the programâs policy agenda, while laudable, was nonetheless too ambitious given the institutional and political economy constraints highlighted above, including with respect to the limited incentives for more effective participation by the line ministries and the difficulties of effectively implementing central government policies at the subnational level when local governments frequently had differing priorities and incentives\. The first of these constraints was also identified in JICAâs comments on the draft ICR, specifically: âthe line ministries lacked clear incentive to actively participate in the CCPL and its monitoring and evaluation process, despite their having made good contributions to technical meetings in the inter-ministerial discussions and provided data for the policy matrix\.â107 5\.20 The AFD/JICA evaluation likewise included an important recommendation in this regard: âattention should be paid to the incentive structure for all entities involved in the policy dialogue (line ministries, local governments)\. Too much strain should be avoided when the action plans are implemented and the results monitored, reported, and verified\. Tangible benefits for those entities should be considered, including the provision of additional capacity building and technical assistance\.â108 In addition, even though this would have been difficult to anticipate and many pertinent risks were identified in the PD, the risk that the programmatic series might fail to proceed after the first loan was disbursed was not considered at the time of appraisal, and the Bank could have more systematically assessed Government ownership of the program at the line ministry level, as well as within the Ministry of Finance and BAPPENAS\. 106 World Bank, ICR for CC DPL-I, op\. cit\., pp\. 21, 25\. 107 The ICR (pg\. 26) also stated in this regard that âJICA flagged the need to examine the program loan incentive framework for line ministries as an important lesson from the process\.â 108 AFD/JICA, Joint Evaluation of ICCPL, op\. cit\., pg\. 119\. 49 Quality of Supervision 5\.21 The World Bank continued to participate in joint development partner-Government meetings through October 2012 in relation to implementation of the policy actions set out initially for the second phase of the CCPL even after the decision not to go forward with the second CC DPL was made\. The ICR affirmed that supervision was ârelatively continuous and involved regular meetings among the development partners and government counterparts [including] a few intensive joint missions [that] were scheduled around delegations visiting from the partnersâ headquarters officeâ¦[and] regular workshops and technical discussions convened by BAPPENAS around specific technical or policy issues of high concern\.â On the other hand, in rating Bank performance during supervision as Moderately Satisfactory, it also stated that âit would have been more effective for GOI officials to lead monitoring efforts with the line ministries/responsible agencies, rather than technical consultants [which]â¦would have provided more direct feedback from the policy actions (and challenges being faced) to the senior officials managing the CCDPL process on behalf of the GOI\.â109 5\.22 The Bank held firm in insisting that the triggers established for presentation of the proposed second loan for the programmatic series to the Board be complied with as initially anticipated\. Given the various reasons why the series did not go forward, it is difficult to imagine what more the Bank could have done to keep this set of operations alive\. This notwithstanding, it continued to provide assistance to key elements of the Governmentâs climate change agenda, the aforementioned Geothermal Project being just one example, together with its engagement in the management of a number of pertinent key Trust Fund- supported activities, including the REDD+ readiness activities, the WACLIMAD technical assistance project, and ongoing loans in the area of disaster risk management\.110 In addition to the various Carbon and Climate Investment Funds -- including the Forest Carbon Partnership Facility (FCPF)111 and the Forest Investment Program (FIP)112 as well as the CTF â since 2011 the Bank has also provided support to GOI to help develop market-based instruments for climate change mitigation through the Partnership for Market Readiness (PMR)\.113 Thus, despite the failure of the CC DPL series to go ahead, the Bank was assisting in parallel â and has continued to assist â GOI with key aspects of its climate change mitigation and adaptation agendas, both directly with its own resources and indirectly 109 World Bank, ICR for CC DPL-I, op\. cit\., pp\. 21-22\. Joint missions occurred at least once a year\. 110 The Bankâs FY 2013-15 Country Partnership for Indonesia, op\. cit\., pp\. 38-41 describes a number of these activities and associated results, including pertinent activities by IFC\. 111 A FCPF grant to Indonesia for just under US$ 3\.2 million was signed in June 2011 having four components: (i) analytical work; (ii) support to the REDD readiness process; (iii) assessment and measurement of GHG impacts of land use change; and (iv) regional data collection and capacity building\. 112 The first joint mission to Indonesia by the World Bank, Asian Development Bank, and IFC took place in July 2011 and the second one in December of that year\. Indonesiaâs FIP Investment Plan, was endorsed on November 5, 2012\. 113 Indonesia joined the Bank-administered PMR at the time of its organizational meeting in Bangkok in April 2011 and was awarded a US$ 350,000 preparation grant at the first Partnership Assembly (PA) meeting in Barcelona one month later\. A US$ 3 million implementation grant was approved at the seventh PA in Marrakesh in October 2013\. See Partnership for Market Readiness, Annual Report April 2013-2014, pp\. 10, 13\. 50 through its assistance with and/or administration of several innovative carbon and climate finance operations\. As a consequence, Bank quality of supervision is rated Satisfactory\. Overall Bank Performance 5\.23 Considering that Bank performance in terms of quality at entry is rated Moderately Satisfactory and that during supervision is rated Satisfactory, overall Bank performance is rated Moderately Satisfactory\. The present assessment agrees in part with the ICR that âthe CC DPL was strategically relevant and timely for the Government and the Bankâ and that the Bank âensured that the policy areas selected were supported by good analytical work and â together with development partners â helped to direct technical assistance to key areas as needed\.â114 The proposed DPL series was, indeed, strategically relevant and it was supported by good analytical work and technical assistance, although much of the latter was financed by the other participating donors\. However, in retrospect and for reasons that could not have been anticipated by the Bank in advance, its timing proved to be less fortunate\. This resulted in the inability to achieve, or delays in meeting, the agreed triggers for the second loan, ultimately contributing to discontinuation of the programmatic series\. While some of these risks were identified by the Bank at appraisal -- including coordination of GOIâs climate change national action plans and its commitment to policy reform actions over the medium run, together with âintermittentâ progress with respect to forest management and energy pricing115 -- their likelihood and potential seriousness due to the institutional and political economy constraints discussed earlier were underestimated\. Borrower Performance Government Performance 5\.24 Government counterparts were reportedly closely involved in âdefining the overall framework and adjusting the balance of actions across sectors, ensuring that it was not solely a mitigation programâ and âSteering Committee meetings provided a venue for senior officials and development partners to review progress and performance on agreed policy indicators\.â116 However, while commitment to the programâs objectives at the highest levels of national government was initially strong, changes in leadership in the Ministry of Finance and BAPPENAS soon after CC DPL-I was approved and coordination problems with less firmly committed line ministries and local governments adversely affected program implementation\. According to the project team, once there was an unexpected change in Finance Ministers, the DPL series lost a key âchampionâ and the leverage associated with this position in terms of the ability to induce line ministries to undertake the tasks assigned to them in the policy matrix\. 5\.25 The ICR also observed that âthe central agencies [i\.e\., the Ministry of Finance and BAPPENAS] steering the policy dialogue need[ed] to provide a more compelling rationale 114 World Bank, ICR for CC DPL-I, op\. cit\., pg\. 22\. 115 World Bank, CC DPL-I PD, op\. cit\., pg\. 64\. 116 World Bank, ICR for CC DPL-I, op\. cit\., pg\. 22\. 51 and incentives for the participation of line ministries that [were] charged with delivering program results\.â Three could also have been better integration and articulation of the link between GOIâs financing needs and the policy program\.117 Ultimately, most importantly in this regard, for this and other reasons, the Government decided not to continue the DPL series following disbursement of the first loan, thereby making it impossible for the planned multi-loan operation to fully achieve its objectives and many of its expected results in a timely way\. On balance, therefore, Government performance is rated Moderately Unsatisfactory\. Implementing Agency Performance 5\.26 Most of the participating agencies reportedly âvalued the convening process of the DPL as an opportunity to share information across sectors and learn about what other agencies were doing about climate change issues\.â But while some agencies looked toward the DPL process to âgain recognition and visibility for their programsâ and financial and/or technical support from donors others âresisted the idea of being coordinated or giving something up (policy advance) for little in return (budget resources)\.â However, the ICR also acknowledged that, while initially and in key decision meetings, ownership and commitment were visible at higher levels of Government, particularly the Ministry of Finance and BAPPENAS, but later and in more routine monitoring meetings and workshops, participation was at a lower level\. From this, it concludes that âlarge meetings of middle level officials were not an effective venue for addressing important cross cutting issues or bureaucratic/coordination challenges\.â118 As a result, implementing agency performance is also rated Moderately Unsatisfactory\. 5\.27 In addition to the above, some more general âstructuralâ problems also adversely affected implementing agency performance for which the development partners themselves were at least partly responsible\. According the AFD/JICA joint evaluation: In some cases, the government officials in charge were not even aware that the policy actions for which they were responsible were included in the Policy Matrix, and thus, of their obligation to monitor and report progress/attainments to the steering committees\. They were also confused and bothered by overlapping monitoring activities conducted by the various groups of development partners, including the CCPLâs requests for similar information\. Such unnecessary burden and confusion could have been minimized with better coordination and communication among the Donors to pursue effective monitoring activitiesâ¦\.The fact that the CCPL was carried out as a General Budget Support Program also created confusion among the line ministries: they did not receive the financial resources directly through the 117 Ibid, pp\. 22-23\. It added that âsometimes there were different signals from different quarters on the overall need for borrowing and the balance among partners\. Clearer communication of intentions regarding the policy program relative to the need for borrowing would have been helpful, particularly regarding the preparation and later cancellation of the follow-on operations\.â 118 Ibid, pg\. 23\. The ICR also stated in this regard that âalthou gh the aim of these meetings was to resolve difficult, cross-cutting, priority issues, some officials may have felt targeted in this setting to explain weak performance\.â 52 scheme, and thus the benefit to them was less tangible compared to project assistance\. It was natural for the line ministries to see the CCPL as a heavy burden, since they were repeatedly requested to provide information and to attend meetings\.119 Overall Borrower Performance 5\.28 On the basis of the observations above, overall Borrower performance is rated Moderately Unsatisfactory\. Despite a more positive rating and, while stating that âthe CC DPL served as a platform for bringing together a wide range of agencies that need to work together to address Indonesiaâs climate challenges,â the ICR itself is critical of the Governmentâs performance, observing that âthe GOI could have done more on communicating the aims of the program and the role of the policy operation to the responsible agencies,â as well as with the development partners, about its changing priorities regarding the CCDPL series\.120 In short, while Borrower commitment may have initially been strong in the two key central ministries, in addition to the coordination difficulties cited above, program ownership was weaker and more uneven among the line agencies responsible for implementing many of the policy actions agreed with the development partners, while even that of the Ministry of Finance and BAPPENAS declined significantly over time, perhaps as the need for additional budget support also diminished as well as due to personnel changes in key leadership positions\. Monitoring and Evaluation 5\.29 Design\. As noted above, some indicators were not fully reflective of the policy objectives that they intended to represent, and so failed to provide evidence of a results chain from the supported policy reform to the desired objectives\. Baseline surveys were not carried out for two indicators\. 5\.30 Implementation\. As noted above, there were difficulties in collecting data from line ministries, particularly on policies that were still in development\. In addition to the two indicators with no baseline, a third indicator was not used as the information source was discontinued\. 5\.31 Utilization\. The monitoring information was used mainly to respond to reporting requirements related to the DPL and apparently not to guide implementation decisions\. 5\.32 Consequently, the Quality of Monitoring and Evaluation is rated Modest\. 119 AFD/JICA, Joint Evaluation of ICCPL, op\. cit\., pp\. 69-70\. 120 World Bank, ICR for CC DPL-I, op\. cit\., pg\. 23\. 53 6\. Lessons 6\.1 Two of the lessons identified by the ICR are particularly important and with which this assessment fully agrees\. In addition, the present evaluation yields a number of other lessons, some of which also are of particular relevance for DPLs with environmental, including climate change, objectives\.The first lesson drawn by the ICR was that âchampions are needed, but institutional engagement too\.â 6\.2 The CC DPL experience clearly illustrates the importance of having both a strong âchampionâ and what can happen when, for whatever reasons, that person departs the scene and other leaders with less understanding of and/or commitment to the programâs policy objectives take command of key ministries or agencies\. It also reveals the importance of obtaining strong and consistent institutional buy-in from the other ministries and agencies involved\. The persisting nature of this challenge in Indonesia was stressed by government officials as securing the proactive commitment and participation of line ministries in the implementation of policy reforms included in DPLs continues to be a constraint\. Also relevant was the persisting difficulty of bringing other key government entities on board in terms of climate change versus economic growth priorities more specifically\. In short, both strong leadership and cross-the-board commitment to implementation of the specific actions contained in DPLs is essential for them to be fully successful in terms of their policy objectives, and this proved not to be the case in the present instance\. 6\.3 A related lesson, which is particularly relevant for DPLs with environmental, including climate change, objectives which are inherently multi- or cross-sectoral in nature is that obtaining sufficient institutional buy-in becomes even more difficult when more than one sector is involved\. This is especially the case when there are limited incentives for this to occur within the line ministries involved, as in most cases they receive no additional budgetary resources in order to carry out their assigned policy implementation tasks and where the tasks involved may not be very high, if present at all, among their own institutional or sectoral priorities\. 6\.4 The more general lesson that can be derived from the observation immediately above is the need to be fully aware of the incentives (or lack thereof) for policy action implementation among the various government agencies and levels of government involved in a DPL\. In a country like Indonesia where subnational governments have considerable autonomy and often go against specific central government policies and regulations with which they disagree by failing to implement or enforce them, this is a potentially significant constraint on the effectiveness of DPLs that require concrete actions, such as those associated with improved forest management and governance or prohibiting the use of fire for land clearing purposes, on the ground\. 6\.5 It also leads to another related lesson, the need to fully understand the political economy, as well as the institutional constraints, that are likely to affect the incentives perceived by different ministries and levels of government\. Again, the present experience illustrates the importance of this lesson both with respect to the underlying political and economic factors that are driving deforestation, peatland clearance, and the use of GHG- 54 emitting fires in large parts of Indonesia (particularly Kalimantan and Sumatra), as well as the reluctance â and associated delays â in the reduction of energy subsidies, despite its considerable potential benefits both in fiscal and environmental terms\. The impediments experienced to date in terms of effectively getting REDD+ off the ground in Indonesia despite the attractive prospect of obtaining access to US$ 1 billion in grants from the Norwegian Government for this purpose illustrates the difficulty of overcoming these constraints and also affected implementation of the REDD-related actions of the CC DPL\.121 6\.6 Understanding the political economy and institutional constraints is particularly important in order to determine how realistically implementable proposed DPL triggers and other indicative actions are likely to be\. This implies the need for comprehensive country knowledge and a broad and thorough risk analysis during appraisal\. In the present case, some of the risks were recognized but, in practice, underestimated, while others (e\.g\., some of the broader political economy ones mentioned above and the change in key program supporters on the government side) were not identified in the Program Document\. While not all risks can be anticipated, those associated with traditional institutional coordination and ownership problems, decentralization, and policy implementation constraints on the ground due to political and/or economic interests that are likely to oppose and effectively block such measures, can â and should â be identified and assessed as realistically as possible as part of the appraisal process\. Failure to do so can result in overly optimistic or ambitious triggers and policy actions as was clearly the case with the CC DPL series\. 6\.7 In short, another key lesson from this experience is that the Bank needs to be realistic in defining its policy objectives and targets for Climate Change (and other) DPLs\. The Bank was initially reluctant to financially support the JICA-ADF-led policy based operation for climate change in Indonesia, but decided to come in after the Government agreed to stronger policy measures regarding energy subsidies and forest governance\. However, these measures subsequently proved difficult to implement within the time frame expected to allow the operation to proceed beyond the first loan, and, thus, in practice, were too ambitious in light of the institutional and political economy constraints mentioned above\. Similarly, the assessment of program performance revealed that actions taken in some policy subareas were considerably more successful than others\. Progress across sectors was uneven, but was generally better in those areas such as renewable (i\.e\., geothermal) energy, water resource management, and disaster risk management in which the Bank was already providing support through other instruments and which were less politically contentious\. In other areas, such as energy pricing, forest governance, and the provision of a financial mechanism/incentives to induce better performance on the part of local governments, it was much weaker, again due 121 Similarly, Indonesiaâs strong continued reliance on fossil fuels, both for domestic energy consumption and, in the case of coal, for export purposes, means that the likelihood that it can and will significantly shift to renewables, including geothermal energy, in the foreseeable future remains very limited\. Energy efficiency improvements notwithstanding, the implications of all of the above elements in terms of generating a substantial decline in GHG emissions in Indonesia are not favorable\. In fact, together with deforestation, urbanization, and domestic fossil fuel consumption, such emissions appear to have increased since 2010 and are likely to continue to do so in the years ahead despite GOI efforts including with World Bank and other development partner support to reduce them\. 55 to the contextual impediments experienced and which the Bank appears to have underestimated\. 6\.8 A second and more positive lesson emphasized by the ICR that also merits further elaboration is that âpolicy based operations provide an important convening instrument\.â DPLs â particularly programmatic ones â indeed have considerable potential value as a convening instrument, and this is especially the case when key Finance and/or Planning Ministries take the lead in this regard (although this strong commitment to the operation needs to continue throughout the anticipated implementation period)\. As in the present case, they can also play a key role in helping to better coordinate and/or harmonize support from different development partners around a set of common objectives and agreed policy actions\. Bank staff affirmed that the joint government-development partner monitoring and planning meetings were particularly useful and this was also observed in the ADF/JICA joint evaluation\. However, once the series was suspended, donor coordination appears to have broken down and contacts among them have been less frequent and systematic since that time, at least as concerns helping the country to address climate change, even though this objective remains an institutional priority for most, if not all, of them in their current assistance to Indonesia\. 6\.9 This loss of convening power and associated policy dialogue both with key government ministries and other development partners points to yet another lesson that can be drawn from the CC DPL experience: the need for DPLs to be part of a broader engagement strategy with respect to a particular policy reform area involving multiple Bank instruments, including investment loans and technical assistance\. Bank staff stressed the importance of âtwinningâ DPLs with investment loans to ensure greater likelihood of their effectiveness\. In this context, the existence or prospect of Bank investment loans may serve as a positive incentive for ministries or agencies charged with implementing parts of a DPL\. This appears to have been the case in the renewable energy (i\.e\., geothermal energy) and disaster risk management areas of the CC DPL, which recorded some of the more successful policy actions in this DPL and are areas in which the Bank was providing (DRM) or expected to provide (geothermal) financing for investment projects at the time the series was initiated\. In contrast, the Bank had a more checkered past history in terms of lending in the forest sector and with the Forest Ministry even though it had undertaken considerable past analytical work on forest sustainability-related issues, both individually and with other development partners, including ADB, DFID, CIFOR, and ICRAF\. The powerful competing economic and political interests in the forest sector, as opposed to the relative absence of them in the renewable energy sector, explain much of the differences in performance in this regard\. 6\.10 A multi-instrument Bank engagement strategy around a specific emerging development challenge, such as helping a government to address climate change, also needs to have both a longer-term engagement and support institutional capacity building, neither of which can be effectively incorporated in DPLs, even programmatic ones, whose financial objectives are inherently short term\. Bank staff stressed the importance of establishing long- term relationships with the âbureaucracyâ and the need for capacity building as critical requirements for the effectiveness of Bank-supported development interventions generally, pointing out that DPLs are not the right instrument to achieve such objectives and should not 56 be expected to do so, especially in the case of Indonesia with which he was very familiar\. In short, the limitations as well as the advantages â primarily in financial terms (i\.e\. fast- disbursing general budget support, particularly in times of economic and/or fiscal crisis) but also secondarily on the policy front â of development policy finance operations need to be clearly understood and the instrument used appropriately and accordingly\. 6\.11 An additional lesson that can be drawn from the CC DPL experience is that multi- year programmatic DPLs are subject to many of the same risks and uncertainties as investment loans, even though they may have shorter implementation periods, as delays in carrying out policy actions can occur and government commitment can change dramatically over time\. In the present case, numerous policy actions, including one of the key triggers for the second loan were delayed, and some still have not been implemented\. In short, while programmatic DPLs, if implemented, have several clear advantages including a continuing âseat at the tableâ for the Bank in terms of policy dialogue in a particular area and the prospect of helping and/or inducing governments to move forward on a policy agenda of interest to the Bank, they are also subject to some of the same kinds of implementation problems, including unexpected external âshocks,â as other types of financing instruments\. 6\.12 Finally, even in cases, such as the present one, in which a DPL is unsuccessful (for whatever reason or combination of reasons) in terms of its specific policy objectives, it can nevertheless play a positive and strategically important role in terms of establishing, continuing, and/or advancing the Bankâs policy dialogue with and assistance to a Borrower in a given area, such as climate change, that can be manifested in the increasing use of other Bank instruments, including investment loans and TA, over time\. Various past and present Bank managers and operational staff who have worked, or are working on, Indonesia have highlighted the importance of the CC DPL in particular in terms of strengthening the Bankâs dialogue with the Ministry of Finance, BAPPENAS, and several line ministries in relation to climate change, which has led to numerous other engagements in this area both on the mitigation and adaptation sides over the past five years\. Those interviewed during the evaluation mission in the Ministry of Finance and BAPPENAS, as well as former high officials of the Ministry of Forestry and the Secretariat for the National Council on Climate Change, made essentially the same point when asked to identify the principal benefit of the CC DPL for the country\. Thus, while the CC DPL operation is rated Moderately Unsatisfactory, the Bankâs collaboration with the GOI in numerous areas related to climate change has blossomed in recent years and may be even more promising in the future\. In good measure, this is an outcome of the relationships and policy dialogue established in association with this incomplete programmatic DPL series\. 57 References Agence Francaise de Development and Japan International Cooperation Agency, Joint Evaluation: Indonesia Climate Change Programme Loan, 2014\. BAPPENAS, Indonesiaâs Framework for Nationally Appropriate Mitigation Actions, Jakarta, November 2013\. El NiÃ±o, Forest Fires and Haze in Indonesia Economic Quarterly: Hard Choices, World Bank, July 2014\. Government of Indonesia, Letter of Development Policy, April 26, 2010, Annex 1 to the CC DPL-I PD\. ICCTF website, Finance and Performance\. Interview with the Bank Task Team Leader for this operation in February 2015\. Michigan State University, Indonesia Trade Statistics, Global Edge\. Ministry of Environment, National Action Plan Addressing Climate Change, Jakarta, November 2007\. _______, Second National Communication to UNFCCC, op\. cit\. Executive Summary\. Acknowledgements and Preface, and Republic of Indonesia, Blueprint for Indonesia Climate Change Trust Fund, Acknowledgement, September 2009\. Ministry of Environment, Second National Communication under the United Nations Framework Convention for Climate Change, Jakarta, November 2010\. Ministry of Environment, State of the Environment Report of Indonesia: Pillars of the Environment, Jakarta, June 2013\. Republic of Indonesia, Intended Nationally Determined Contribution, submission to UNFCCC, Jakarta, September 15, 2015\. Republic of Indonesia, National Action Plan for Reducing Greenhouse Gas Emissions (RAN- GRK) and the associated Presidential Regulation No\. 61 of 2011, September 2011\. See Indonesia Climate Change Trust Fund, Climate Funds Update, Heinrich Boll Stiftung (online) See University Notre Dame Global Adaptation Index (ND-GAIN)\. Special Issue on Local to Global Perspectives on Forest and Land Fires in Southeast Asia, Mitigation and Adaptation Strategies for Global Change, edited by Daniel Murdiyarso and Louis Lebel, Volume 12, No, 1, 2007\. The AFD/JICA joint evaluation (op\. cit\., pg\. 91) confirmed that progress with respect to the Republic of Indonesia, Presidential Regulation of the Republic of Indonesia No\. 61 Year 2011 on the National Action Plan for Greenhouse Gas Emissions Reduction, Jakarta, September 20, 2011\. Water Management for Climate Change Mitigation and Adaptive Development in Lowlands, Technical Assistance WACLIMAD Summary Report, Jakarta, February 2012\. World Bank, 2015 Little Green Data Book, Washington D\.C\., 2015\. World Bank, CC DPL-I PD, op\. cit\., para\. 128, pg\. 38\. The Bank analytical pieces cited are a Country Environmental Analysis (CEA) entitled Investing in a More Sustainable Indonesia (World Bank report no 50762-ID Jakarta, October 2009 and the aforementioned ESMAP low Carbon Development Options Study\. ANNEX A 58 World Bank, Environment and Climate Change: Investing in a More Sustainable Indonesia â EASIS Engagement Strategy Note 2012, Jakarta, 2012\. World Bank, FY 2013-2015 Country Partnership Strategy for Indonesia, Jakarta, December 13, 2012\. World Bank, Implementation Status and Results Report for Indonesia Clean Energy Investment Project, June 17\. 2015 World Bank, Indonesia Policy Matrix for Climate Change Program Loan (GOJ-AFD Base), draft, Jakarta, November 25, 2009\. World Bank, Indonesia: Development Policy Review, Jakarta, 2009\. World Bank, Loan Agreement for the Indonesia Climate Change Development Policy Loan between the Republic of Indonesia and the International Bank for Reconstruction and Development, June 23, 2010\. World Bank, Program Document for a Proposed Climate Change Development Policy Loan, April, 2010, (CC DP-I PD)\. World Bank, Sustaining Indonesiaâs Forests: A Strategy for the World Bank, Jakarta, June 2006 and collaboration with six other development partners to draft a report on assistance to the forest sector in Indonesia in 2006 (see World Bank, et\. al\. Sustaining Economic Growth, Rural Livelihoods and Environmental Benefits: Strategic Options for Forest Assistance in Indonesia, World Bank, Jakarta, December 2006)\. Xander Landen, Indonesia Reaches Highest Deforestation Rate in the World, PBS Newshour Science, July 6, 2014\. 59 ANNEX A Annex A\. Basic Data Sheet INDONESIA CLIMATE CHANGE DEVELOPMENT POLICY LOAN (IBRD- 71950) Key Project Data (amounts in US$ million) Appraisal Actual or Actual as % of estimate current estimate appraisal estimate Total project costs 800\.00 800\.00 100\.00 Loan amount 200\.00 200\.00 100\.00 Cofinancing 600\.00 600\.00 100\.00 Cancellation - - - Cumulative Estimated and Actual Disbursements FY10 Appraisal estimate (US$M) 200 Actual (US$M) 200 Actual as % of appraisal 100% Date of final disbursement: June 30 2010 Project Dates Original Actual Initiating memorandum 12/15/2009 03/24/2010 Negotiations 05/05/2010 05/05/2010 Board approval 05/25/2010 05/25/2010 Signing 06/23/2010 Effectiveness 09/07/2010 Closing date 12/31/2010 Staff Time and Cost P120313 â Climate Change Development Policy Loan Staff Time and Cost (Bank Budget Only) No\. of staff weeks USD Thousands (including travel and consultant costs) FY10 59\.57 227,193\.76 Total: 59\.57 227,193\.76 ANNEX A 60 Task Team Members Name Title Unit Responsibility/Specialty P120313 Climate Change Development Policy Loan Sr\. Environmental Sr\. Environment Ahmad, Mubariq EASIS Specialist Specialist Lead Environmental Lead Environmental Ahmed, Kulsum ENV Specialist Specialist Amsberg, Joachim Von Country Director (2010) EACIF Country Director (2010) Sr\. Environmental Sr\. Environmental Brown, Timothy H\. Specialist / Task Team EASIS Specialist / TTL Leader Danuwidjojo, Marleyne Team Assistant EASIS Team Assistant Dharmajaya, R\. Cynthia Program Assistant EASIS Program Assistant Djaky, Jeannine Sr\. Program Assistant ENV Sr\. Program Assistant Feinstein, Charles M\. Sector Manager EASSD Sector Manager Sr\. Disaster Risk Sr\. Disaster Risk Gunawan, Iwan EASIS Management Specialist Management Specialist Hammam, Sonia Sector Manager (2010) EASSD Sector Manager (2010) Hanny, Fnu Program Assistant EASIS Program Assistant Sr\. Environmental Sr\. Environmental Heister, Johannes EASER Specialist Specialist Sr\. Infrastructure Sr\. Infrastructure Jayawardena, Migara EASID Specialist Specialist Jurgens, Emile Consultant EASIS Consultant Lead Environmental Lead Environmental Leitmann, Josef Lloyd EASSD Specialist Specialist Lemaistre, Paul Consultant EASIS Consultant Ostojic, Dejan R\. Lead Energy Specialist EASID Lead Energy Specialist Prabowo, Guntur Cahyo Consultant EASIS Consultant Sasmitawidjaja, Virza S\. Consultant EASIS Consultant Seppala, Juha Antti Jr\. Professional Officer EASIS Jr\. Professional Officer Kalevi Shetty, Shobha Sr\. Economist EASSD Sr\. Economist Siagian, Joseph Daulat Information Assistant SECPO Information Assistant Marsangap Sr\. Water Resources Sr\. Water Resources Van Hofwegen, Paulus EASID Specialist Specialist Wang, Xiaodong Sr\. Energy Specialist EASSD Sr\. Energy Specialist 61 Annex B1\. Data tables Annex Table 1\. Objectives and Prior Actions for Mitigation by Area and Subareas Area/Subarea Objective Prior Action Land Use Change and Forestry Sector Mitigation Peatland Conservation Improved policy coordination and Issued and began implementation of a master plan management of peat land\. on peat land rehabilitation in Central Kalimantan -- Ministry of Forestry (MOFR) Regulation No\. 33/2008\. Reduced Emissions from Deforestation and Degradation (REDD) Improve regulatory framework for Launched National Readiness Program for REDD REDD implementation and (September 2008) and established legal framework develop demonstration activities\. through MOFR Regulations No\. 68/2008 on Demonstration Activities and No\. 36/2009 on Commercial Carbon Forest Products; Initiated a REDD program with UN REDD support in October 2009 and Completed Participation Agreement with Forest Carbon Partnership Facility (FCPF) in November 2009\. Forest Management and Governance Improve basis for timber legality, Issued MOFR Regulation No\. 38/2009 on Timber strengthen institutions, and Legality Verification System to establish a national improve incentives for regional timber legality standard and a system for governments to address forest loss monitoring and verification to assist in reducing and degradation\. illegal logging and forest loss and degradation\. Energy Sector Mitigation Renewable Energy Development Improve policy framework to Issued Presidential Decree No 4/2010 which promote renewable energy assigns to the State Electricity Company (PLN) the development and investment\. acceleration of power plant development using renewable energy, coal and gas and mandates PLN to develop and purchase power from renewable energy sources;\. Issued Ministry of Energy and Mineral Resources (MEMR) Regulation No\. 32/2009 on Purchase Standard Price of Electricity Power by PLN from Geothermal Electricity Power Station (December 2009); Issued MEMR Regulation No\. 31/2009 on purchase price of electricity from renewable energy (November 2009) and Ministry of Finance (MOF) Regulation No\. 24/2010 on tax incentives for renewable energy development (January 2010)\. Energy Efficiency Improve policy framework to Issued Government Regulation No\. 70/2009 on promote energy efficiency Energy Conservation (December 2009)\. MEMR development and investment\. developed and implemented national system of energy audits for major firms in ley sectors\. Energy Pricing ANNEX B 62 Improve incentives for energy Non-exclusive indicator that also refers to reforms production and use\. under Infrastructure DPL 3, approved September 2009\. Annex Table 2\. Objectives and Prior Actions for Adaptation and Disaster Preparedness by Subarea\. Subarea Objective Prior Action Water Resources Sector Establish strategic water Issued Presidential Regulation No, 12/2008 on Water Resource management plans in key Councils\. The National Water Resource Council (NWRC) has river basins\. been established and met several times\. Prepared integrated water resource management plans (POLA) with climate change assessment in national strategic water basins in Java\. Agriculture Sector Scale up actions to Develop an irrigation asset management system\. Implemented improve climate resilience System for Rice Intensification (SRI) practice in target provinces\. in agriculture\. Implemented Climate Field School Program in target provinces\. Disaster Risk Management Scale up actions to Enacted Law No\. 24/2007 on Disaster Management and issued establish national disaster Presidential Regulation No\. 8/2008 establishing a National risk reduction (DRR) and Disaster Management Agency (BNPB)\. Finalized the National management system\. Action Plan for DRR (NAP-DRR 2010-12) in 2009 and formally launched it in February 2010\. GOI incorporated mainstreaming of DRR into Medium Term Development Plan (RPJMN) in January 2009\. Marine and Fisheries Sector Establish systems and GOI launched the National Plan of Action (NPOA) for the Coral strategies to improve Triangle Initiative (CTI) on coral reefs, fisheries and food in May climate preparedness and 2009\. GOI approved a roadmap of CTI actions for 2010-11 in resilience in the coastal November 2009\. and marine sector\. Annex Table 3\. Objectives and Prior Actions for Cross Sectoral and Institutional Issues by Subarea\. Subarea Objective Prior Action Mainstreaming Climate Change in the National Development Program Strengthen knowledge base GOI finalized the Second National Communication to and legal basis for climate UNFCCC, It submitted mitigation actions and commitments change action and link these under Copenhagen Accord (January 2010), updated to national budgeting and Development Planning Response to Climate Change in March planning process\. 2010, and finalized the Indonesia Climate Change Sectoral Roadmap (ICCSRM) in March 2010\. Policy Coordination and Financing Scheme for Climate Change Strengthen policy GOI issued the National Action Plan for Addressing Climate coordination and develop Change (November 2007), established a National Council on financing mechanisms for Climate Change by Presidential Decree No\. 46/2008 (July addressing climate change\. 2008) and launched the Indonesia Climate Change Trust Fund (October 2009)\. 63 ANNEX B Annex Table 4\. Indicative Actions and Expected Results for Land Use Change and Forestry Mitigation for CC DPLs II, III, and IV by Subarea (Triggers for CC DPL-II in bold)\. Subarea Indicative Actions for 2010 Indicative Actions Expected Results for 2011-12 Peatland Conservation Coordinate among ministries to 2011: Issue a The institutional and legal control peatland emissions, presidential regulation framework to conserve and implemented under the which indicates special restore peatland is improved, framework of presidential measures for peatland thus reducing conflicting regulation\. conservation and policies and improving peatland water coordination\. In the medium Implement key steps in multi- management to term, this will help to reduce a sector policy dialogue toward minimize carbon major source of GHG establishing a legal framework for emissions\. emissions\. the National Strategy for lowlands with the focus on balancing 2012: Implement actions development and conservation, based on presidential to considering peatlands as a major improve management of source of GHG emissions\. peatlands\. Reduced Emissions from Deforestation and Degradation (REDD) Complete the Ministerial Decree 2011: Establish a Rules for REDD activities will on Mechanism and Procedures of national registry of be clarified, allowing greater REDD by defining roles and REDD to track development and investment responsibilities of government implementation of in demonstration activities, agencies, local communities, and REDD activities and with equitable sharing of the private sector in managing payments in a national benefits\. In the medium term, carbon assets\. carbon registry\. this will contribute to reducing emissions from deforestation Conduct/implement at least 3 2012: Assess and and forest degradation\. REDD demonstration activities develop framework for and report results in specific forest fiscal locations and with specific management, including partners\. incentives for regional stakeholders\. Forest Management and Governance Implement and monitor 2011: Strengthen Forest governance and performance of GOI regulation on implementation of management are improved timber legality and assess capacity regulatory framework to through clearer institutional for oversight, certification and enhance ongoing means to address timber monitoring in national standards implementation of GOI legality and improved agency\. regulation on timber incentives for local legality by monitoring governments\. In the medium Design inter-governmental and evaluation\. term, this will help to reduce transfer mechanism to finance the deforestation rate and and improve the incentives for 2011: Formalize inter- improve the potential for local governments to strengthen governmental transfer REDD success\. forest management activities mechanism for local toward emissions reductions\. government forest management activities\. 2012: Evaluate and improve inter-govt\. ANNEX B 64 transfer mechanism to finance local government forest activities\. Annex Table 5\. Indicative Actions and Expected Results for Energy Sector Mitigation for CC DPLs II, III, and IV by Subarea (Trigger for CC DPL-II in bold)\. Subarea Indicative Actions for Indicative Actions for Expected Results 2010 2011-12 Renewable Energy Development Improve policy framework 2011: Continue to improve Improved and stable regulatory for promoting geothermal policy framework to framework for renewable development to facilitate promote geothermal energy development, with arrangements/deals between development and to provide appropriate risk and benefit developer and off-taker\. exploration fund to mitigate sharing, will contribute to upstream risk for eastern development of new Issue draft regulation to Indonesia\. geothermal projects and other clarify the scheme of renewable energy investments\. compensation for the 2011: Review the impact of In the medium term, this will incremental cost of MEMR Regulation No\. improve energy security and geothermal electricity to off- 31/2009 and propose new or reduce GHG emissions from taker\. revised regulation to electricity generation\. promote renewable energy development further and more effectively and draft (2011) then issue (2012) a regulation on improved framework for renewable energy development\. Energy Efficiency Prepare and master plan for 2011: Implement the Improved rules and incentives energy conservation including master plan of energy will encourage industries and energy efficiency standards, conservation (including manufacturers to undertake energy audit program with a energy efficiency standards, energy efficiency investments\. monitoring and evaluation energy audit program with In the medium term GHG (M&E) framework, fiscal an M&E framework, fiscal emissions will be reduced incentives options, and incentives options, and through enhanced energy industrial energy industry energy efficiency, focusing on energy conservation\. conservation)\. intensive sectors\. Energy Pricing Finalize a road map for 2011: Implement actions Prices will begin to reflect improving subsidy policy of based on the road map, economic and environmental electricity\. including regulations\. costs\. In medium term, this will provide incentives for energy conservation and development of alternative energy sources, contributing to GHG reductions\. 65 ANNEX B Annex Table 6\. Indicative Actions and Expected Results for Adaptation and Disaster Risk Preparedness for CC DPLs II, III, and IV by Subarea\. Subarea Indicative Actions for Indicative Actions Expected Results 2010 for 2011-12 Water Resources Sector Continue strategic assessment 2011: Complete master Water resource management will of the water future of Java plans for the Java River be improved through (prepare an action plan for Basins which include development of integrated plans priority interventions climate change and establishment of responsible incorporating climate change, adaptation measures, by institutions\. In medium term, urbanization, economic enacting ministerial contributes to ability to anticipate development, and food decree\. and respond to water-related security as integral part of climate risks (droughts and River Basin Strategic Water floods) and to resilience at the Management Plans and region/river basin level\. framework for River Basin Master Plans)\. Nationally, complete 12 provincial water resource councils 12 Coordination Teams for WRM in River Basins (TKPSDA), and 8 Integrated Water Resource Management Plans (POLAs)\. Agriculture Sector Evaluate performance, then 2011: Continue the 2010 Farmers better prepared for approve and scale up actions progress to improve and climate change impacts, with for adaptation in agriculture scale up actions for better sources and channels of including climate field school, adaptation in agriculture information\. In medium term, SRI, and to enforce land including climate field will strengthen resilience for development and management school, SRI, and to climate change impacts on food without burning as part of an enforce land production (floods, droughts, overall plan (based on development and pests) at the community/farm Ministry of Agriculture â management without level\. MOA â Decree No\. 26/2007)\. burning\. Disaster Risk Management Continue efforts to establish 2011: Implement DRR Institutional framework, capacity Local Disaster Management program activities and resources will be improved Agency (BPBDs) in all according to National for DRR and management\. provinces\. Action Plan for DRR\. Climate change adaptation issues (vulnerability, preparedness) will 2012: Implement be mainstreamed into policy, comprehensive risk budgeting and implementation for financing framework DRR and management\. combining mechanisms, including reserve (on- call) budget, stand-by financing, and weather derivatives\. Marine and Fisheries Sector ANNEX B 66 Finalize plans and budgets for 2011-2012: Continue Coastal and marine climate inception of the 5-year implementation of monitoring capacity will be implementation of the INAGOOS to provide improved\. Local community Indonesian Global Ocean information for marine resilience will be improved and Observing System adaptation plans\. provide a model for replication in (INAGOOS), an ocean other vulnerable areas\. In the monitoring program that 2011-2012: Implement medium term, strengthening the provides data about ocean and the strategy for coastal institutional and local capacity atmosphere interaction\. community resilience to for resilience and improved Develop a strategy for coastal cope with climate management in coastal areas will community resilience to cope change\. contribute to climate resilience\. with climate change, including a plan for climate resilient villages in 8 vulnerable districts on the north coast of Java, and implement a study on coastal vulnerability in relation to sea level rise in Java and Bali\. 67 ANNEX B Annex Table 7\. Indicative Actions and Expected Results for Cross Sectoral and Institutional Issues for CC DPLs II, III, and IV by Subarea\. (Trigger for CC DPL-II in bold) Subarea Indicative Indicative Actions Expected Results Actions for 2010 for 2011-12 Mainstreaming Climate Change in the National Development Program Issue a presidential 2011: Draft provincial Strengthened knowledge base, decree on National action plan for institutional framework, and legal basis Action Plan for contributing to 26% for implementation of both mitigation voluntary 26 percent emission reduction and adaptation programs\. This will GHG emission objective\. contribute to achievement of national reduction\. climate change objectives in the medium 2011: Prepare Nationally term\. Appropriate Mitigation Action (NAMA) in accordance with Mid Term Development Plan (PRJM) and ICCSR\. 2012: Incorporate climate change program into regional mid-term development plans (RPJMD) at Kabupaten level\. Policy Coordination and Financing Scheme for Climate Change Implement an 2011: Continue to Institutional mechanisms for innovative funding implement and support coordination of climate policy formation, mechanism for climate change projects budget allocation, and implementation climate change under the ICCTF\. will be improved\. The legal and through the institutional framework for financing for Indonesian Climate 2012: Finalize climate climate change action will be improved\. Change Trust Fund change inter- In the medium term, local governments (ICCTF)\. governmental will face more positive incentives to take transfer/incentives appropriate climate change actions and Design inter- mechanism for local fewer disincentives or policy distortions\. governmental fiscal government\. transfer mechanism to provide incentives for local government to take priority climate change actions\. ANNEX B 68 Annex Table 8\. Results Framework for CC DPL-I by Priority Action Area, 2010 Target and 2009 Baseline\. Priority Area Monitoring Indicator Target (2010) Baseline (2009/2010) Improve policy coordination Incidence of 10% reduced from Measured hotspots and management of peatland hotspots/clearing of peat baseline 2009: Indonesia: lands 73,800 Riau: 10,448 Improve regulatory framework Number of demonstration 8 REDD Demo 4 REDD Demo for REDD implementation and pilots in REDD projects Sites sites develop demonstration activities Improve basis for timber Number of forest crime cases 10% improvement Illegal logging legality, strengthen brought to court in cases brought cases: 2007= 278; institutions, and improve over 2007-2009 2008 = 171; 2009 = incentives for regional average 69 governments to address forest Encroachment loss and degradation cases: 2007 = 79; 2008 = 45; 2009 = 25 Improve policy framework to MW of capacity under 40% increase over 2009: 1065 MW promote renewable energy construction baseline installed investment and development Improve policy framework to Energy efficiency ratios Energy efficiency Steel: Electric Arc promote energy efficiency improved by 5% in Furnace: 700 development and investment at least one key kWh/t industrial sector Ceramics: 16\.6 GJ/t Tires: 8100 kcal/kg Cement: 800 kcal/kg clinker Glass: 12\.4 Gj/ton Establish strategic water Number of water 2012: 12 Plans 2009: 3 Plans management plans in key river management plans 2010: 5 Plans basins established Scale up actions to improve Percentage of farmers 20% increase over 2010: baseline will climate resilience in surveyed that show baseline in targeted be established agriculture understanding and practicing Kabupaten through survey of adaptation techniques Scale up actions to establish Number of provinces with 2012: 33 provincial 2009: 5 provincial national disaster risk reduction local disaster management agencies; 40 district agencies; 20 and management system agencies level agencies district level agencies Establish systems and Percentage of coastal 10% increase over 2010: baseline will strategies to improve climate communities that show baseline in 8 be established preparedness and resilience in greater awareness and districts on north through survey the coastal and marine sector changed practices relative to coast of Java baseline in target locations Strengthen knowledge base Increased financing for GOI 10 Trillion Rupiah 1\.736 Trillion and legal basis for climate actions related to the 26% for Ministerial Rupiah allocated change action and link these to emissions reduction plan proposed projects for 2009 national budgeting and (cumulative) planning processes 69 ANNEX B Strengthen policy coordination Funding for climate change 9 million pounds 0 funding through and develop financing projects through ICCTF (UK) pledged; 10% ICCTF in 2009 mechanisms for addressing disbursed climate change ANNEX B 70 Annex B2\. Analysis of Environmental and Social Effects The Program Document acknowledges that, while the CC DPL series was designed to help Indonesia reduce deforestation and forest degradation, promote renewable energy, and support better coordination among government institutions engaged in climate change planning, budgeting, and implementation, there were also some areas where environmental, social, and poverty issues could arise, mainly in relation to activities related to REDD+ and peatlands and indirectly through pricing reform for geothermal electricity\. With respect to the first two, it noted that the REDD framework being developed in Indonesia would ultimately need to develop mechanisms to avoid or mitigate negative environmental impacts and that for peat land rehabilitation and conservation in Central Kalimantan, the approaches needed to be carefully designed, applied according to best practice, and adapted to local and regional circumstances\. The possibility that low income groups would not benefit from climate finance mechanisms was also recognized in the PD as a potential social risk\.122 In the case of geothermal investments, the PD observed that individual power plants would need environmental impact assessments and mitigation plans\. It also stated that local government capacity for implementation continued to be weak, but could be âimproved and assisted for large investments, such as power plants\.â123 Presumably, the subsequent Bank/CTF Geothermal Energy Project was designed in part to help mitigate this risk for the specific investments supported by it\. An annex in the PD was dedicated to the topic of environmental assessment, which, inter alia, identified the documents consulted as part of a âquick analysisâ of the likelihood of significant environmental effects of the program\. These included the 2004 good practice note on environmental and natural resource aspects of DPLs, the 2008 Bank toolkit entitled Assessing the Environmental, Forest and Other Natural Resource Aspects of Development Policy Lending, and a document entitled Policy and Institutional Reform to Support Climate Change Adaptation and Mitigation in Development Programs\. For Indonesia specifically, they also included the aforementioned CEA (2009) and the report concerning strategic options in the forestry sector (2006), as well as a Ministry of Finance âgreen paperâ entitled Economic and Fiscal Policy Strategies for Climate Change Mitigation in Indonesia, also issued in 2009\. This annex generically considered the environmental impacts associated with each of the CC DPLsâ three major policy areas\. In the case of mitigation, it observed that policy measures to reduce deforestation and degradation through REDD and to improve peatland management and forest governance âhave potential for both negative and positive effects to the environment\.â Without being specific as to the possible negative impacts, the annex also 122 World Bank, CC DPL-I PD, op\. cit\., para 2\.18, pg\. 64\. The PD affirmed, however, that this risk could âbe mitigated through a combination of good design and transparencyâ and added that the impact of an increase in energy prices on the poor could be reduced by introducing a compensatory cash transfer program\. However, this was not done in connection with the CC DPL\. 123 Ibid, paras\. 194-198, pp\. 60-61\. 71 ANNEX B observed that âto enhance outcomes and improve the rule of law,â the CC DPL series proposed policy actions for forest governance and law enforcement to reduce illegal logging and use of fire in land conversion\. Concerning adaptation and disaster preparedness and affirming that Indonesia was âsusceptible to all major climate change risks (drought, floods, landslides, sea level rise) except cyclonesâ and that water management was a key adaptation issue, it argued that the proposed policy actions would have either a beneficial or neutral effect on the environment\. And, in the case of the third major policy area, it stated that, while national legislation concerning natural resource management and the environment was detailed and extensive, the regulatory framework was âoften overlapping and contradictory between central government and regional levelâ and that, âwithout strong enforcement from the cent ral government, or strong incentives driving local leadership to take a proactive role in conforming to national environmental legislation and regulation, success at the local level depends largely on the level of commitment or political will of the individual leadership\.â This frequent âdisconnectâ between central and local government policies and actions (or inaction) would subsequently prove to be an impediment to the CC DPLâs progress in the area of forest and peatland governance\. However, the policy actions in this area were also assessed as being âneutral\.â124 The annex also contained a table summarizing the âenvironmental reviewâ of the proposed CC DPL policy actions, which identified the potential positive and negative effects in the mitigation policy subareas, as reproduced in Annex Table 9\. This analysis followed the guidance provided in the World Bank toolkit cited above, and thus is an example of good practice\. However, some potential negative impacts, such as the possible increased use of fuelwood, as well as kerosene, in response to electricity tariff increases were not identified\. The ICR did not address the potential negative environmental impacts of the policy actions recognized for CC DPL-I or in relation to achievement of the triggers and other indicative actions prescribed for CC DPL-II and subsequent operations, including those identified in Annex Table 9\. However, this oversight is a common shortcoming of ICRs for development policy operations, as this is not presently required in such reports\.125 The same observation applies to poverty and social impacts, for which there was also a specific annex in the PD\.126 The general conclusion was that the programâs social and poverty impacts would generally be positive or neutral, but there was potential for negative effects related to REDD and geothermal energy development that needed to be addressed by GOI\. For this assessment, the Bank team consulted the good practice note entitled Using Poverty and Social Impact Analysis to Support Development Policy Operations and referred to the same Indonesia-specific documents utilized as part of the environmental assessment plus other Bank documents entitled Making the New Indonesia Work for the Poor (2006) and Developing a Market for REDD in Indonesia (2009)\. The annex stated that the CC DPL operations would 124 Ibid, pg\. 114\. 125 See, Independent Evaluation Group, Environmental and Social Risk Management in Development Policy Finance: A Learning Evaluation, forthcoming\. 126 This annex covered the following topics: (i) poverty reduction; (ii) human development outcomes; (iii) employment; (iv) participatory processes and consultations for GOI climate change agenda; and (v) social and poverty impacts of the CC DPL operations per se\. ANNEX B 72 support REDD readiness activities â financed with the aforementioned grant from the Bank- administered Forest Carbon Partnership Facility (FCPF)127 -- that included preparatory analysis, development of a regulatory framework, and identification of demonstration projects\. In addition, it observed that GOI was elaborating a Strategic Environmental and Social Assessment (SESA), which is also referred to in Annex Table 9, as it prepared for implementation of REDD strategy options\.128 It contained a Box further describing this assessment, which noted that this tool could be used to assess drivers of deforestation, assess REDD demonstration activities in specific localities, identify issues related to land and forest use raised by key stakeholders, and describe governance concerns such as the distribution of REDD revenues\.129 Annex Table 9\. Potential Positive and Negative Environmental Impacts of Proposed Indonesia CC DPL Program\. Policy Potential Negative Effects and Potential Positive Impacts Action Government Mitigation Capacity Improve Deforestation moves outside of areas designated ï¼ Deforestation rates decreased regulatory for REDD\. ï¼ REDD contributes to conservation of framework for biodiversity (e\.g\., tigers) REDD ï¼ Potential negative impacts and capacity ï¼ Concentrating on three provinces implementation development can be addressed through properly contributing over half of deforestation and develop applied best practices in consultative process, (Riau, Central Kalimantan, South demonstration design and compensation approaches\. Sumatra) can have significant effects\. activities ï¼ The ongoing development of REDD program is a focal point for efforts to address these issues\. ï¼ Indonesiaâs aim is to be responsive to the international REDD framework (with development partner support) offers a good chance that identified issues can be addressed responsibly (although resources could be a barrier)\. ï¼ GOI is undertaking a Strategic Environmental and Social Assessment that will help to develop the stakeholder assessments and strategic options to help in developing appropriate mitigation responses\. Improve policy Potential for PLN to increase tariffs for ï¼ Cleaner, lower emissions power framework to electricity, potentially leading to increase in generation promote kerosene use for cooking instead of electric ï¼ Promotion of clean domestic energy renewable stove\. ï¼ Reduced emissions of GHGs and energy conventional pollutants\. development ï¼ GOI has experience deploying a social safety and investment net program (unconditional cash transfer to poor) during the previous fuel subsidy cuts to mitigate rise of kerosene price\. 127 See also Readiness Preparation Project Proposal Note on a Proposed Grant of US$ 3\.6 Million to the Republic of Indonesia for REDD+ Preparation Support, Report No\. 61995 (with resources from the Forest Carbon Partnership Facility), no date (grant approved March 2011)\. 128 Terms of Reference for this SESA were found on line and a REDD Readiness Update for Indonesia issued by FCPF in March 2012 indicated that its ESMF would be implemented by âDKN [the National Forestry Council], an independent body that specializes in forest policy and consultations 129 World Bank, CC DPL-I PD, op\. cit\., pg\. 106\. 73 ANNEX B The annex affirmed that the potential for negative social/poverty outcomes depended on how a REDD scheme or potential peatland intervention is designed and implemented\. It stressed that more work was needed to harmonize regulations and incentives across departments and levels of government to ensure adequate approaches to REDD revenue distribution and fiscal balance within local governments and indicated that there was a lack of capacity among regional stakeholders to deal with the complex issues surrounding carbon trade, avoided deforestation, and monitoring pilot implementation\.130 On the more positive side, it observed that this capacity was being developed through an expanding range of donor and NGO programs and with active civil society participation\. 130 For a recent assessment of the social, including distributional, issues associated with REDD implementation, see Anthony Hall, Forests and Climate Change: The Social Dimensions of REDD in Latin America, Edward Elgar, Cheltenham, United Kingdom, 2012\. This examination applies equally to the Indonesian case\. See also CIFORâs publication edited by Arild Angelsen, Maria Brockhaus, William D\. Sunderlin, and Louis V\. Verchot, Analyzing REDD+: Challenges and Choices, Bogor, Indonesia, 2012, and country-specific Occasional and Working Papers by various authors regarding the REDD+ experience to date, including for Brazil, the Democratic Republic of Congo, Lao Peopleâs Democratic Republic, Papua New Guinea, Tanzania, and Vietnam, issued by CIFOR in 2013\. ANNEX B 74 Annex B3\. Parallel Technical Assistance Grants Four main TA programs were implemented by AFD (including financing of a McKinsey abatement curves study): ï Providing expertise in the forestry sector to BAPPENAS; ï Financing international expertise for the implementation of a scheme to reduce emissions of greenhouse gases (GHG) in the cement industry for the Ministry of Industry; ï Financing a feasibility study of a small-scale green carbon market so that small-scale forest plantations (mainly villages) can have access to a voluntary carbon market (voluntary buyers: individuals, NGOs, SMEs with a compensation policy, etc\.) for the Ministry of Forestry; and, ï Developing a tool for decision support in land-use planning (taking into account local development needs, the dynamics of forest resources, the risks of climate change, biodiversity) for the Ministry of Forestry\. The JICA Technical Assistance program was composed of three sub-projects: ï The Low-Carbon Development Strategy Project Integrating Mitigation and Adaptation Actions into National Development Planning (counterpart: BAPPENAS); ï Capacity development for vulnerability assessment (counterpart: Meteorology, Climatology and Geophysics Agency); and, ï Capacity development for developing national GHG inventories (counterpart: Ministry of Environment)\. The first sub-project above was considered to be the most important since it included support for the development of the National Action Plan on Greenhouse Gas Emissions Reduction (RAN-GRK), as well as for the Regional Action Plan for Greenhouse Gas Emissions Reduction (RAD-GRK)\. 75 ANNEX B Annex B4\. Indonesia 2020 emission reduction targets and policies Forestry and Peatlands: Target: 26 percent -- 0\.672 Gt of CO2e; 41 percent -- 1\.039 Gt of CO2e to be reduced Policies taken to support the RAN-GRK: ï Reduction of GHG and at the same time promote a safe environment, prevent disasters, absorb workforce, and increase stateâs and communityâs revenues\. ï Management of marsh water system and network in marsh areas\. ï Maintenance of marsh reclamation network (including existing peat lands)\. ï Enhancement of productivity and efficient production of peat lands with low emission and absorb CO2 optimally\. Strategies: ï Suppress the rate of deforestation and forest degradation to reduce GHG emissions\. ï Increase planting to increase GHG absorption\. ï Increase the efforts to secure forest areas from fires and illegal logging and apply sustainable forest management\. ï Conduct improvement of water system network and dividing blocks and stabilize water level elevation on marsh water system network\. ï Optimize land and water resources without deforestation ï Apply land management and agricultural farming technologies that have lowest GHG emissions and can absorb CO2 optimally\. Energy and Transport Sectors: Target: 26 percent â 0\.038 Gt of CO2e; 41 percent â 1\.056 Gt of CO2e Policies taken to support the RAN-GRK: ï Increased energy saving\. ï The use of cleaner fuels (fuel switching)\. ï Enhancement of new and renewable energy utilization\. ï Utilization of clean technologies for both power generation and transportation equipment\. ï Development of low emission, sustainable, and environmentally friendly national mass transport\. Strategies: ï Conserve the final [meaning?] energy through the application of cleaner and more efficient technologies and reduction in the consumption of non-renewable energy (fossil)\. ï Encourage the use of new and renewable energy in small and medium scales\. ï (Avoid) â reduce travel needs, particularly in cities (trip demand management), through land use management, reduced travel activity, and unnecessary distances\. ï (Shift) â shift from using private vehicles (transportation facilities with high energy consumption) to low-carbon transportation pattern, such as non-motorized, public, or water transportation facilities\. ï (Improve) â improve energy efficiency and carbon release reduction in motorized vehicles in transportation facilities\. 76 ANNEX C Annex C\. List of Persons Met In Washington World Bank Joachim von Amsberg, former Country Director (2007-2010) Stefan Koeberle, former Country Director (2010-2013) Josef Leitmann, former Environmental Coordinator in Jakarta and lead author of CEA Timothy Brown, Task Team Leader CC DPL Center for Global Development Frances Seymour, Senior Fellow and former Executive Director of CIFOR, Bogor In Jakarta World Bank Yogana Prasta, Operations Advisor George Soraya, Acting Practice Manager, Social, Urban, Rural, and Resilience Global Practice Werner Kornexl, Senior Environmental Specialist, former Environmental Coordinator Cary Ann Cadman, Senior Environmental Specialist, Environmental Coordinator A\.J\. Glauber, Senior Environmental Specialist, Landscape Management Coordinator Ina Binari Pranoto, Senior Environmental Specialist Mubariq Ahmad, Senior Environmental Specialist (former member of REDD+ Taskforce) Iwan Gunawan, Senior Disaster Risk Management Specialist Puguh Imanto, Energy Specialist Ilham Abla, Water Resources and Irrigation Specialist (retired) Anita Kendrick, Consultant, Climate Change and Environmental Specialist George Henry Stirrett, Consultant, Environmental Specialist Asian Development Bank Virza Sasmitawidjya, Climate Change Specialist (former environmental consultant to World Bank, JICA, and AFD) Government of Indonesia Ayu Sukorini, Director of Loans and Grants, Ministry of Finance Tor Tobibng, Deputy Director of Loans and Grants, Ministry of Finance Zandy A\. Kassat, Deputy Director of Multilateral Loans and Grants, Ministry of Finance Dewo Broto Joko Putranto, Director for Multilateral Foreign Funding, BAPPENAS Naily Chilmijati, Assistant Director for Environment, Coordinating Ministry of Economic Affairs (CMEA) Subejo, SE, MM\., Advisor to Assistant Director for Environment, CMEA M\. Aulia Putra Saragih, Public Policy Analyst of Deputy Assistant for Environment, CMEA Agus Purnomo, Managing Director, Sustainability & Strategic Stakeholder Engagement, GAD Agribusiness and Food and former Director of Secretariat of National Climate Change Council and official of the Ministry of Environment) 77 ANNEX C Wahjudi Wardojo, Senior Advisor for Terrestrial Policy, The Nature Conservancy and former Deputy Director General, Ministry of Forestry In Bogor Center for International Forestry Research (CIFOR) Lou Verchot, Head of Climate Change Unit (by telephone from Jakarta) Daniel Murdiyarso, Principal Scientist (former member of REDD+ Taskforce) World Agroforestry Center (ICRAF) Meine van Noordwijk, Chief Scientist and Professor of Agroforestry	REVIEW
P010273	Document of The World Bank FOR OFFICLAL USE ONLY Report No\. 14886 IMPLEMENTATION COMPLETION REPORT PAKISTAN PUNJAB AND SIND AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCR - PHASE II PROJECT (CREDIT 1762-PAK) JULY 20, 1995 Agriculture and Natural Resources Operations Division Country Department I South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their ofricial duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS Currency Unit = Pakistan Rupees (Rs) Appraisal Year (1986) Rs 16\.65 = US$1\.00 Completion Year (1994) Rs 30\.57 = US$1\.00 WEIGHTS AND MEASURES (Metric System) FISCAL YEAR OF BORROWER July I - June 30 ABBREVIATIONS AND ACRONYMS AO Agricultural Officer ATI Agricultural Training Institute ARF Adaptive Research Farm ARP-II Agricultural Research Project - Phase II CWD Communications and Works Department DA Department of Agriculture DCA Development Credit Agreement ECNEC Executive Conmmittee of National Economic Council FA Field Assistant GOP Government of Pakistan GOPun Government of Punjab GOS Government of Sindh IDA International Development Association M&E Monitoring and Evaluation PAR Performance Audit Report PC-l Planning Commission Form-1 PCR Project Completion Report PERI Punjab Economic Research Institute SA Stock Assistant SAR Staff Appraisal Report SMS Subject Matter Specialist SSMS Senior Subject Matter Specialist T&V Training and Visit System of Extension WEW Women Extension Workers GLOSSARY Kharif (Monsoon Season) Mid-April to Mid-October Rabi (Dry Season) Mid-October to Mid-April FOR OFFICIAL USE ONLY TABLE OF CONTENTS Preface Evaluation Summary \. PART I: PROJECT IMPLEMENTATION ASSESSMENT\.1 A\. Statement/Evaluation of Objectives \. 1 B\. Achievement of Objectives \. 1 C\. Project Implementation Record and Major Factors Affecting the Project \. 4 D\. Project Sustainability \. 7 E\. Bank Performance\. 7 F\. Borrower Performance\. 8 G\. Assessment of Outcome\. 9 H\. Future Development \. 9 I\. Key Lessons Learned \. 10 PART II: STATISTICAL TABLES \. 13 Table 1\. Summary of Assessments \. 13 Table 2\. Related Bank Loans/Credits \. 15 Table 3\. Project Timetable \. 16 Table 4\. Loan/Credit Disbursements: Cumulative Estimated and Actual \. \. 17 Table 5\. Key Indicators for Project Implementation \. 18 Table 6\. Key Indicators for Project Operation \. 19 Table 7\. Studies Included in Project \. 19 Table 8A\. Project Costs \. 20 Table 8B\. Project Financing \. 20 Table 9\. Economic Costs and Benefits \. 21 Table 10\. Status of Legal Covenants \. I \. 22 Table 11\. Bank Resources: Staff Inputs \. 24 Table 12\. Bank Resources: Missions \. 25 APPENDICES Appendix A: Mission's Aide Memoire Appendix B: Project Completion Report, Pakistan: Punjab Agricultural Extension and Adaptive Research Project Phase-II Appendix C: Implementation Completion Report (ICR) of Sindh Agricultural Extension and Adaptive Research Project Phase-II Appendix D: Comments from Government of Sindh on Final Draft ICR Appendix E: Comments from Government of Punjab on Final Draft ICR This document ha a restricted distribution and may be used by recipients only in the performance of thuir official dudes\. Its contents may not otherwise be disclosed wihout World Bank authorization\. IMPLEMENTATION COMPLETION REPORT PAKISTAN PUNJAB AND SIND AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCH - PHASE II PROJECT (Cr\. 1762-PAK) PREFACE 1\. This is the Implementation Completion Report (ICR) for the Punjab and Sind Agricultural Extension and Adaptive Research Project for which Credit 1762-PAK in the amount of SDR 35\.5 million (US$42\.1 million) was approved on February 24, 1987 and made effective on November 6, 1987\. The credit closing date was extended once, by one year, to June 30, 1994\. The credit account was kept open for four months beyond the closing date to allow submission of final withdrawal applications\. Total disbursements amounted to SDR 28\.88 million (81 % of original credit; equivalent to US$39\.74 million) and the unspent credit balance of SDR 6\.62 million was cancelled effective December 7, 1994\. 2\. This ICR was prepared by an FAO/World Bank Cooperative Program" mission which visited Pakistan in October 1994, and reviewed by the Agriculture and Natural Resources Operations Division, Country Department I, South Asia Region\. Preparation was based on material in the project files, field visits, and discussions with officials of the Punjab and Sindh Provincial Governments and Bank staff associated with the project\. Both provincial governments contributed to the preparation of the ICR by commenting on the mission's aide-memoires, arranging all field visits and meetings, and providing separate completion reports on the project\. " Messrs\. D\.A\. Ivory (mission leader, agronomist) and B\.J\. Gorddard (agricultural extension specialist, consultant)\. - iii - PAKISTAN PUNJAB AND SIND AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCH - PHASE II PROJECT (Cr\. 1762-PAK) EVALUATION SUMMARY Introduction 1\. Agricultural extension services in Pakistan are entirely within the provincial domain and vary considerably among provinces\. The IDA supported first-phase projects in three provinces (Punjab, Sindh and Balochistan) to reorganize and strengthen extension services and the adaptive research system in selected districts, in line with the "Training and Visit" (T&V) methodology\. These were the Punjab Extension and Agricultural Development Project (Cr\. 813-PAK), Sind Agricultural Extension and Adaptive Research Project (Cr\. 922-PAK), and Baluchistan Agricultural Extension and Adaptive Research Project (Cr\. 1533-PAK)\. Second phase projects were proposed for Punjab and Sindh to extend the T&V system to all districts\. A joint project - the subject of this report - was therefore developed for these two provinces\. Project Objectives 2\. The overall project objective was to achieve sustained increases in agricultural production in the project areas through effective transfer of technologies most suited to local agroclimatic conditions, and creating a sense of dedication and commitment in the provincial extension services by making all staff more accountable to specific assigned duties and objectives\. For this purpose, the project was to complete the strengthening and reorganization of extension services in Punjab and Sindh by extending the T&V system to the districts not covered by the first-phase projects, while consolidating the gains made in the districts covered by these projects and strengthening the adaptive research system\. The specific project objectives were clear and achievable, and the general objective was important to country, provincial and sector objectives and complemented the Bank's country assistance strategy\. 3\. Covenants\. Both the governments of Punjab (GOPun) and Sindh (GOS) had, by project closure, complied with all covenants of the Project Agreement, except for the transfer of all incremental staff positions to the non-development budget, and in the case of GOPun, payment of attendant salaries\. [See GOPun comment in Appendix E, item 3\.] Implementation Experience and Results 4\. The project is judged to have partially achieved its overall objective in both provinces\. Production and yield of most of the important crops increased significantly (para\. 5)"\. The extent to which these increases were attributable to the project could not be determined, but the project undoubtedly played a role in promoting new improved technologies\. Notwithstanding initial delays, the project achieved or exceeded the majority of the physical targets set in the SAR (PC-1), except for civil works and technical assistance (paras\. 12, 17 and 11, 18)\. [See GOPun comment in Appendix E, item 4\.] " References throughout the Evaluation Summary are to paragraphs of Part I\. - iv - 5\. Project Cost\. Of the total IDA Credit (SDR 35\.5 million), SDR 6\.62 million remained unspent on December 7, 1994 and were cancelled, due mainly to the depreciation of the Rupee against the SDR, and in the Punjab component, due to the deletion of 248 buildings from the civil works program and the underutilization of funds allocated for technical assistance (paras\. 16, 17 and 18)\. Total actual project cost was Rs 1,247\.77 million (about US$51\.12 million), 25% more than estimated at appraisal in Rupee terms, but 12% less in Dollar terms\. [See GOPun comment in Appendix E, item 5\.] Key Factors Relating to Achievement of Objectives 6\. T&V System\. The institution building objective of the T&V system was satisfactorily achieved in all districts in both provinces, although Punjab consultancies were limited and delayed\. A significant impact of the project has been the improvement of staff and contact farmer skills and knowledge\. However, Monitoring and Evaluation (M&E) reports indicate that regular contacts with farmers had been at an undesirably low level, with only about 30% of contact farmers being reached regularly\. With contact farmers only representing 7% of all farmers, these regular contacts were thus with only about 2% of all farmers\. Farmer interviews suggest that contact farmers had significantly higher crop yields than district averages and crop yields of farmers in the majority of villages not visited by Field Assistants (FAs)\. The project has experienced most of the well documented problems of the T&V system including high recurrent costs, poor staff qualifications and skills, weak linkages with research, lack of new messages, inequitable contact patterns with farmers, heavy management loads, poor supervision of FAs by Agricultural Officers (AOs), poor farmer contact by AOs and inflexibility (paras\. 6, 7, 10, 19, 20, 21, 25 and 26)\. [See GOPun comment in Appendix E, item 6\.] 7\. Training Institutes\. Agricultural Training Institutes have been strengthened and training halls established and equipped as scheduled\. These are operating satisfactorily with several encouraging signs of innovation and responsiveness to emerging demands such as training programs for women farmers and women extensionists (paras\. 8 and 22)\. 8\. Training\. A large amount of training has been provided for selected staff through participation in pre-service and in-service training, refresher courses, workshops, seminars and foreign training\. Generally, regular training programs were repetitive and lacking in substance and therefore need to be upgraded to meet current demands for improved knowledge and skills, but it is doubtful whether the present intensity of training for FAs and AOs is sustainable or essential (paras\. 9 and 22)\. Some training was delayed, particularly overseas training and workshop and seminar programs, and some not undertaken because of the cancelled technical assistance, such as M&E training, all of which affected project benefit and impact assessment\. [See GOPun comment in Appendix E, item 8\.1 9\. Adaptive Research\. The Adaptive Research Farms (ARFs) have been established in both provinces, despite shortfalls in adaptive research staffing\. However, the on-station focus of much of the research and the failure to develop essential linkages with extension and other research institutions are a cause for concern (paras\. 10 and 20)\. [See GOPun comment in Appendix E, item 9\.] 10\. Technical Assistance\. While the quality of consultancy inputs ranged from satisfactory to excellent, the level of inputs was well below targets in Punjab, and in both provinces inputs were seriously delayed and disrupted due to disputes between Government and consultants regarding liability to taxation (paras\. 11 and 18)\. Technical assistance was discontinued in Puniab, resulting in only 47% of planned inputs\. [See GOPun comment in Appendix E, item 10\.] 11\. Monitoring and Evaluation (M&E)\. Project monitoring and evaluation was carried out regularly and documented in bi-annual reports\. These reports would have been of greater value to - v - management if there had been more focus on evaluation, a problem which might have been overcome by appropriate technical assistance (paras\. 11 and 18)\. 12\. Civil Works and Vehicles\. Civil works implementation was seriously delayed in both provinces (paras\. 12 and 17), and several buildings are still not completed or handed over to the Departments of Agriculture (DAs; para\. 27)\. These delays had adverse effects on the operations of the ARFs, extension programs and training programs\. Despite procurement of vehicles, mobility of extension staff was identified as a continuing major constraint (paras\. 13 and 21)\. [See GOPun comment in Appendix E, item 12\.] 13\. Communications\. Excellent progress was made in developing mass media support for extension, and monitoring reveals a high level of penetration and satisfaction with these outputs, which are notable for their timing and targeting (para\. 14)\. 14\. External Constraints\. A number of external factors affected the impact of the project including a lack of production inputs (para\. 23) plus problems associated with irrigation, drainage, and adulteration of fertilizers and pesticides\. Security problems in Sindh also adversely affected the project for a period of more than three years (para\. 24)\. Performance of Association and Borrower 15\. Association Performance\. Supervision missions were reasonably regular and provided sound guidance and support to implementation\. The Resident Mission staff provided additional support between supervision missions, which was appreciated by both provincial governments (para\. 29)\. 16\. Borrower Performance\. Both provincial governments tried hard to complete the project on target, but problems arose due to some limitations in management, inter-departmental coordination and civil disturbances in Sindh\. Problems in both provinces also included: serious delays in the civil works program, procurement of replacement vehicles, and overseas training; shortfall in appointment of adaptive research staff; slow start of technical assistance; poor supervision of FAs by AOs; and poor farmer contact by AOs\. In Sindh, additional constraints were imposed by inadequate availability of counterpart funds and a lack of funds for operation and maintenance in Phase I areas (paras\. 30, 31, 32 and 33)\. Project Outcome Assessment 17\. Project outcome is assessed as satisfactory, since the project achieved most of its specific objectives\. In Punjab it is expected that further worthwhile development will be achieved without additional investment\. However, if modifications to the T&V system are not made, sustainability and impact on agricultural development would ultimately be affected\. In Sindh, there is some doubt that further worthwhile development will occur, unless sufficient budget is provided for operations, maintenance and replacement of capital items, and there is further investment in reorienting and developing the extension service (para\. 34)\. [See GOPun comment in Appendix E, item 17\.] Summary of Findings, Key Lessons Learned and Future Operations 18\. Important Findings: (a) The T&V extension system has been set up as planned, but has exhibited a number of serious deficiencies in operation\. (b) The low education level of FAs limits their capacity to provide comprehensive services which are responsive to farmers' needs\. [See GOPun comment in Appendix E, item 18\.ii\.] (c) Adaptive research has not been as effective as intended, - vi - especially in linking with and supporting extension\. [See GOPun comment in Appendix E, item 18\.iii\.] (d) Serious civil works implementation delays occurred in both provinces\. [See GOPun comment in Appendix E, item 18\.iv\.] (e) Good progress was made in both provinces in developing mass media materials for radio, television and print, to support extension\. 19\. Lessons Learned: (a) Project success is dependent on managerial capacity\. Management training early in the project can be a critical input\. (b) The T&V system must be substantially modified to make it more cost effective, more flexible and targeted, more equitable, less top-down, more participatory and responsive to its clientele\. Consideration should be given to prioritizing target groups and areas of investment, and to the role of the private sector and NGOs\. (c) The availability of trained human resources should determine the rate at which a program is developed\. Training methods and curricula need to be upgraded, and education programs for farmers should be expanded, including the recent, innovative courses for women farmers and extensionists\. (d) Within the extension system there should be more incentives and merit-based promotional opportunities for the front-line extension workers, and their basic knowledge and skills should be steadily upgraded\. (e) Proposed programs of civil works must be within the financial and managerial capacity of the implementing agency and the government must remain fully committed to implementing (completing) such a program within the proposed time- frame\. (f) Adaptive research should not duplicate research done by Research Institutes, should be demand-driven and emphasize the financial and economic viability of new technologies compared with current farmer practices\. (g) The importance of M&E, especially evaluation, in justifying budget support for extension has been reinforced\. 20\. Future Development: Both provincial DAs recognize the need to modify their extension services and have prepared extension strategy papers, which propose more sustainable extension systems, wider interaction with farmers, use of more modern communication systems and extension methodologies, more flexible allocation of staff resources, and a more participatory approach to defining problems and technological solutions (para\. 35)\. These have yet to be considered by the provincial governments\. [See GOPun comment in Appendix E, item 19\.] - 1 - IMPLEMENTATION COMPLETION REPORT PAKISTAN PUNJAB AND SIND AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCH - PHASE II PROJECT (Cr\. 1762-PAK) PART I: PROJECT IMPLEMENTATION ASSESSMENT A\. Statement/Evaluation of Objectives 1\. The overall project objective was to achieve sustained increases in agricultural production in the project areas through effective transfer of technologies most suited to local agroclimatic conditions, and creating a sense of dedication and commitment in the provincial extension services by making all staff more accountable to specific assigned duties and objectives\. For this purpose, the project was to complete the strengthening and reorganization of extension services in Punjab and Sindh provinces by extending the T&V system to all districts not covered by preceding IDA assisted projects (Punjab Extension and Agricultural Development Project, Cr\. 813-PAK; and Sind Agricultural Extension and Adaptive Research Project, Cr\. 922-PAK), while consolidating gains made in districts covered by the first-phase projects and strengthening the adaptive research system\. 2\. The specific project objectives included: (i) reorganization and strengthening of the agricultural extension and adaptive research activities in the 23 districts of Punjab and 8 districts of Sindh provinces not covered by the Phase I projects; (ii) maintaining and strengthening the agricultural extension and adaptive research activities in the five districts of Punjab and five districts of Sindh covered by the Phase I projects; (iii) strengthening the Agricultural Training Institutes; (iv) strengthening in-service and on-the-job training of extension staff; (v) establishing new Adaptive Research Farms and supplying appropriate equipment; (vi) establishing Demonstration Centers/Plots; (vii) providing offices, residences, and furniture for technical staff of Adaptive Research Farms, office and residential buildings for extension staff at district and tehsil/taluka levels, and training halls for extension staff and farmers; (viii) providing transport to improve staff mobility; and (ix) providing audio-visual equipment to improve communication capacity\. 3\. These specific project objectives were clear and achievable, and the overall project objective was important to country, provincial and sector objectives and complemented the Bank's country assistance strategy\. However, the project did not capture the role and needs of women farmers\. It also failed to involve various farming groups in the extension communication process\. B\. Achievement of Objectives 4\. Project design continued the emphasis of the first-phase projects (Cr\. 813-PAK and Cr\. 922- PAK) on physical and institutional changes to the extension and adaptive research systems\. The criteria adopted for judging project achievements were generally satisfactory for institutional and physical targets but not for quality and impact of extension on crop production and family incomes\. This restricted the effectiveness of the process and extent of transfer of relevant technologies to farmers and therefore the impact of the project\. 5\. In Punjab, annual average production increases were 5\.3% for wheat, 5\.0% for cotton and 3\.7% for sugarcane, but average rice production declined by 1\.2% per year\. For Sindh, annual average production increases for the Phase II districts were 1\.1% for wheat, 3\.6% for paddy and 14\.5% for sugarcane, while cotton production decreased by 4\.6% per year, due to significant area replacement by sugarcane\. Yield per unit area increased for all crops except rice in Punjab, which suffered an average annual decline of 3\.0%\. The decline in rice yield and production cannot be explained, but may be associated with increasing salinity\. The extent to which these increases in crop production and yields were attributable to the project cannot be determined precisely\. However, it is unlikelv that T&V had a significant impact on production as only about 2% of the farmers achieved production increases due to extension advice (see para\. 7)\. Notwithstanding initial delays, the project reached or exceeded the majority of the physical targets set in the SAR (PC-I) by the closing date, except for civil works and technical assistance (see paras\. 11 and 12)\. 6\. T&V System\. The T&V system was satisfactorily institutionalized in all districts in both provinces\. Progress in Sindh was slow prior to 1993, but thereafter improvement of the security situation, a change in senior management and high quality technical assistance inputs revitalized the project\. In Puniab, the increase in staff numbers exceeded project targets whilst in Sindh it was as scheduled\. Unfortunately, however, in Sindh a number of Senior Subject Matter Specialists (SSMSs) have recently transferred to Research Institutes of the Research Wing of the Department of Agriculture (DA) due to more attractive conditions provided under the Second Agricultural Research Project (ARP-II; Cr\. 2154-PAK)\. Significant vacancies are now also reported for Agricultural Officer (AO) positions in some districts of Sindh\. [See GOS comment in Appendix D\.] 7\. Internal and external reports on the project' suggest that the T&V system did not achieve widespread benefits to farmers in general\. M&E reports for both provinces indicated that the project had an impact on staff and "contact" farmer skills and knowledge, that "contact" farmers had achieved increases in production and income as a direct result of extension advice, and that there was some spillover of information to a limited number of "non-contact" farmers in the same villages\. Nevertheless, the M&E reports showed that while regular contacts with farmers and adoption of technology had occurred, this had been at an undesirably low level, with only about 30% of contact farmers being reached regularly by extension\. With contact farmers representing only 7% of all farmers, these regular contacts were thus with only about 2% of all farmers\. In addition, contact farmers were found to be unrepresentative with respect to area coverage and farmer categories\. Further, M&E surveys, including the final project evaluation study by the Punjab Economic Research Institute (PERI), have been unable to discern differences between "contact" and "non-contact" farmers in adoption of new technologies, with the possible exception of yield improvements for wheat and sugarcane by contact farmers\. This result is not surprising, however, as the sampling procedures used seemingly compared "contact" and "non- contact" farmers in villages where FAs were active, where it was clear that "non-contact" farmers often met with FAs on their own initiative\. While PERI found increases in fertilizer use, seeding rates and pesticide use, only a small proportion of farmers were found to be using recommended rates\. By contrast, ICR mission interviews with farmers in villages where FAs were not active (the majority of Evaluation Study of Punjab Agricultural Extension and Adaptive Research Project - II, Punjab Economic Research Institute, 1994; Extension Strategy Review Final Report, Department of Agricultural Extension, Sindh, December 1993; Future Agricultural Extension Strategy, Agriculture Department, Government of the Punjab, 1994; M&E Annual Reports for Governments of Punjab and Sindh\. villages) suggest that their crop yields and production techniques are inferior to those in contact villages\. This is supported by the fact that crop yields of contact farmers appear to be much higher than district averages\. 8\. Training Institutes\. Agricultural Training Institutes (ATI) have been strengthened and equipped as scheduled and are operating satisfactorily with several encouraging signs of innovation and responsiveness to emerging demands\. Problems with staff turnover have been corrected in both provinces\. The ATI at Dahgal, Punjab, is producing around 60 two-year-certificate holders per year\. Curricula for the Punjab ATIs were developed with technical assistance provided under the project and were generally appropriate and of good quality, but will need further inputs for the new women's courses, which will begin with a 12-month course for women FAs in 1995 (48 students)\. At Dahgal ATI, an inaugural course in nutrition has recently been completed for 72 women extension workers\. In Sindh, the ATIs, especially the one at Sakrand, have been very active in running short courses for farmers, and recently women farmers, in addition to routine in-service training for FAs, AOs and Subject Matter Specialists (SMSs)\. At Sakrand, about 80 FAs and 40 Stock Assistants (SAs) have been trained each year, and a further 60 FAs and 20 SAs at Gharichand ATI\. The excellent training resource that has been developed at Sakrand needs further strengthening to consolidate the ATI's position as the key provincial center for pre-service and in-service extension training\. The development of training programs for women extensionists and the construction of new training facilities for women under separate funding also bolster its potential as a major center for women's development\. 9\. Training\. Additional training halls were built and equipped as part of the civil works program to establish new district offices\. A large amount of staff training has been achieved in Puniab, including in-service and refresher courses (9,529 persons), workshops and seminars (244 persons) and foreign training (97 persons), and a small amount of farmer training\. In addition, regular fortnightly training was held for FAs and AOs\. A reasonable amount of staff training has been achieved in Sindh, including in-service and refresher courses (501 persons), workshops and seminars (780 persons, including 110 women) and foreign training (26 persons), plus regular fortnightly training for FAs and AOs\. However, some training was delayed in both provinces, particularly overseas training and workshop and seminar programs, thereby not achieving the full benefit to project implementation and management\. The training schedule for FAs in Phase I project areas in Sindh has already been changed to a monthly basis, and Phase II areas are expected to follow now that the project has been completed\. 10\. Adaptive Research\. The Adaptive Research Farms (ARFs) in Puniab are well organized, managed and maintained\. In Sindh, their management has been more problematic because they were established within a portion of large government farms mostly concerned with seed production and large areas given to tenant farming and managed by a Farm Superintendent\. The construction of buildings at Karror and D\.G\. Khan (Punjab) and at Pangrio (Sindh) has been completed, but at Pangrio the buildings have not been handed over to DA because they were not constructed according to specifications\. [See GOS comment in Appendix D\.] A considerable number of trials and demonstrations have been set up under the project\. The majority of trials, however, have been undertaken on ARFs, not in farmers' fields\. In general, trials and demonstrations have not been useful for fine-tuning new technologies and promoting proven technologies\. In Sindh, the adaptive research program was reorganized during the one- year extension of the project to include, for the first time, large numbers of trials in farmers' fields, and the relocation of many SSMSs to district locations\. 11\. Technical Assistance\. In Puniab, consultancy inputs were well below planned targets (47%), whereas in Sindh they exceeded planned targets (131 %), even though there was a suspension of about two years\. The Sindh consultancies (94 staff months) were beneficial to the development of project -4 - activities and included assistance to improve extension planning, adaptive research, information and communications, diagnostic surveys, monitoring and evaluation and development of future strategies for extension development\. The Puniab consultancies, although limited and delayed, appear to have been highly effective in management training, curriculum development, in-service training and extension planning\. Technical assistance was critically required to improve M&E activities, particularly evaluation, to support management decision making, better assess efficiency and effectiveness of the extension system and impact on agricultural production, and to improve feedback to adaptive research\. 12\. Civil Works\. The planned schedule was to complete all construction within the first two years of the project\. Serious implementation delays occurred in Punjab, with only 44% of the originally scheduled buildings completed by June 30, 1994, and another 40% near completion at that time\. During the project period, the number of buildings to be constructed in Punjab was reduced from 2,418 to 2,170\. In Sindh, civil works construction (819 units) was still not fully completed by the closing date (see Part II, Table 5)\. The delays in both provinces adversely affected project implementation and impact\. 13\. Vehicles\. Procurement of motorcycles and bicycles in Punjab was as scheduled, but procurement of 4-WD vehicles and pick-ups greatly exceeded targets (180%)\. In Sindh, procurement of 4-WD vehicles, cars, pick-ups, vans and motorcycles exceeded targets, while bicycle procurement was as scheduled\. Small 4-WD vehicles were preferred as they were cheaper, but their life expectancy is less and maintenance costs are higher\. The lack of mobility of extension staff, with the exception of field staff, continued to be a major problem due to insufficient maintenance\. 14\. Communications\. Excellent progress was made in both provinces in developing mass- media support for extension\. Communication capability has been improved by the purchase of professional equipment to produce audio-visual materials for farmers, extension and, in Puniab, research workers\. A wide range of materials for radio, television and print media has been produced, with about 40% cost recovery for periodicals\. Monitoring reveals a very high level of penetration and satisfaction with these programs, which are notable for their timing and targeting\. In Puniab, films and audio-visual aids were farmers' second preference among extension techniques, after regular extension meetings\. Production quality and content of the electronic and print materials have steadily improved, and are now of a high standard, with the use of simple, concise messages and clear impact points\. Both provinces are keen to extend the use of media vans\. C\. Project Implementation Record and Major Factors Affecting the Project 15\. The project partially achieved its overall objective in both provinces\. A number of factors"' contributed to delays in achieving physical targets, resulting in the need for a one-year extension of the project, which allowed physical targets to be met, with the exception of civil works, and technical assistance in Puniab\. 16\. Project Costs\. Of the total IDA credit of SDR 35\.5 million, SDR 6\.62 million remained unspent and were cancelled effective December 7, 1994\. This was due mainly to the depreciation of the Rupee against the SDR; and in Puniab, the deletion of 248 residential and service buildings from the civil works program and the underutilization of the funds allocated for technical assistance\. Total actual project cost was Rs 1,247\.77 million (about US$51\.117 million), which is 25% above the appraisal estimate in Rupee terms, but 12% below in Dollar terms\. The breakdown of costs and expenditures by " Mostly subject to government/implementing agencies control\. - 5 - province, as of June 30, 1994, was as follows: (a) Puniab\. Of the IDA credit allocated to GOPun (SDR 20\.92 million), SDR 5\.83 million were unspent\. Total project cost for the province was Rs 669\.73 million (US$27\.24 million), which exceeded the SAR estimate of Rs 625\.98 million (US$36\.75 million) by 7 % in Rupee terms, but was 26 % below in Dollar terms\. (b) Sin&\. Sindh had fully utilized its SDR 11\.73 million credit allocation, plus a part (SDR 0\.46 million) of the SDR 2\.85 million left unallocated in the DCA (Schedule 1)\. Total project cost for the province was Rs 578\.07 million (US$23\.88 million), which exceeded the SAR estimate of Rs 371\.36 million (US$21\.79 million) by 58% in Rupee terms and 10% in Dollar terms\. 17\. Civil Works\. The serious delays in the civil works program in Puniab, which ultimately led to a downward revision of targets, were due to a combination of factors\. These included: government procedural problems in preparation and approval of contracts; disbursement problems, even though special accounts had been established; rising building costs due to long delays in contract processing; and construction delays by contractors\. These delays had adverse effects on the operations of the adaptive research farms, extension and training programs\. In Sindh, security problems (para\. 24) and rising prices also adversely affected contractors' construction schedules, even though the civil works program was accelerated through appointment of a special project director within the Communications and Works Department (CWD) in 1991 to monitor and coordinate civil works\. There are still a number of buildings which are not completed according to original specifications and have not been handed over to DA due to factors beyond the control of the project\. Completing these civil works could be a problem as the group responsible for the civil works program under the project has been disbanded and presumably no further budget funds will be allocated this financial year\. The quality of construction of buildings in both provinces is only fair, as there was inadequate supervision during construction, and allocation of budget for maintenance of completed buildings already appears to be a problem\. 18\. Technical Assistance\. The underutilization of technical assistance was due to disagreements on payment of taxes between the Government of Pakistan (GOP) and the contracting agents which led to suspension of activities in both provinces\. In Punjab, the contract was suspended in January 1989 and finally cancelled in March 1993, with only one year of consultancy inputs achieved\. Technical inputs were planned to assist extension, training, adaptive research, information and communications, monitoring and evaluation, surveys and management activities\. Only limited technical assistance actually occurred in Punjab (47% of planned) for some of these components, with - notably - no assistance for the Monitoring and Evaluation units\. All the above activities would have benefitted from greater assistance than was achieved\. In Sindh, the consultants suspended work in September 1990, but resumed in April 1992\. The quality of their input was high and all parties have expressed their satisfaction with this work\. Of critical importance was the production of excellent reports on diagnostic surveys", adaptive research reorganization and strategy2', and extension strategy review3", which has set a clear direction for the future development of extension and adaptive research in Sindh\. 19\. Research-Extension Linkages\. The committees set up under the project (Agricultural Extension-Research Coordinating Conmmittees, Zonal Technical Committees, District Technical Committees) to improve coordination generally functioned as intended, but were clearly insufficient per Diagnostic Surveys Summary Report, Department of Agricultural Extension, Hyderabad, Sindh, February 1994\. 2/ Adaptive Research Reorganisation and Strategy Report, Department of Agriculture Extension, Hyderabad, Sindh, March 1994\. 3/ Extension Strategy Review Final Report, Department of Agriculture Extehsion, Hyderabad, Sindh, December 1993\. -6 - se to ensure close working relationships\. Linkages between agricultural extension, agricultural and livestock research, and soil and water research remain weak or non-existent\. Lack of strong involvement of the on-farm water management program was especially noticeable\. 20\. Adaptive Research\. The adaptive research system is not fully effective\. Trials and demonstrations are not planned, conducted and interpreted with the participation of farmers, and do not always compare new technologies with existing farmer practices\. Appropriate economic analyses have not yet been undertaken in Punjab, and economic analyses are totally absent in Sindh, and there has been little problem definition and analysis in a systems context\. In Sindh, the linkage between the ARFs and extension has failed to develop, and the quality and relevance of the trials is often poor\. Both ARFs in Sindh visited by the ICR mission (Pangrio, Phase II; and Oderolal, Phase I) were established as a small part of large existing government farms involved in seed production and farmed by tenants\. At these farms the effectiveness of the adaptive research programs appears compromised by budget funds being controlled by the Farm Superintendent and the competing needs of research and input supply for tenant farmers\. 21\. Extension\. The problems associated with implementation of the T&V system included: high recurrent costs; poor staff qualifications, skills and credibility, limiting their capacity to provide comprehensive services responsive to farmers' needs; weak linkages with research; lack of new messages tailored to local needs and circumstances, and insufficient emphasis on minor crops; inequitable contact pattern with farmers; heavy management loads; poor supervision; poor farmer contact by AOs; and inflexibility\. In Sindh, Phase I districts were severely disadvantaged compared to Phase II districts by lack of funding, which affected operation and management of both extension and adaptive research activities\. Lack of mobility of extension staff, except field staff, was a continuing major constraint, which is worsening as vehicles are not adequately repaired and replaced\. Present availability of transport is inadequate to sustain the T&V system, even at reduced intensity\. Program reviews in both provinces suggest that in order to reduce the high extension agent/farmer ratio and associated recurrent cost consideration be given to prioritizing target groups and areas for extension investment, and to the role of the private sector and NGOs\. 22\. Training\. Both provinces have maintained an intensive program of regular training under the T&V system, which was especially important because of the relatively low level of education and basic agricultural training of FAs\. But while 72% of FAs in Punjab considered training as relevant, 55% of AOs found it inadequate\. The programs are very costly to maintain, and their cost-effectiveness requires close monitoring as it is doubtful that the present intensity is sustainable or essential\. Training programs also tended to be repetitive\. Program reviews in both provinces" concluded that consideration should be given to (i) substantially improving education levels of extension workers and farmers, including women farmers; and (ii) monthly training which was more focused on technologies relevant to seasonal campaigns for local farmer groups\. Special in-service and overseas training also improved human resource development, although the training schedules were often delayed and too short\. 23\. Input Supplies\. There were a number of external factors which affected the impact of the project on agricultural production\. Farmers interviewed in all districts indicated that a chronic lack of sufficient and timely inputs, such as credit, fertilizers and good -quality seeds, were restricting their " Extension Strategy Review Final Report, Department of Agriculture Extension, Sindh, December 1993; and Future Agricultural Extension Strategy, Agriculture Department, Government of the Punjab, 1994\. adoption of recommended practices\. In addition, problems associated with irrigation, drainage, salinity and adulteration of fertilizers and pesticides affected production\. 24\. Civil Disturbances\. A law and order problem existed in Sindh from 1990 to 1993, which adversely affected the project as it was difficult for staff in a number of districts to carry out their duties\. Also, the Local Security Enforcement Agency commandeered project vehicles and buildings during this period\. D\. Project Sustainability 25\. In the short-term, it seems likely that GOPun will be able to maintain project achievements, in respect to major objectives and strategies, and the plans currently being formulated to ensure further improvements to extension services and adaptive research, but the situation in Sindh is more problematic (para\. 34)\. In both provinces DAs are experiencing temporary delays in the transfer of recurrent project costs to their non-development budgets\. [See GOS comment in Appendix D\.] 26\. More important is the long-term ability and willingness of GOPun and GOS to meet salary and other recurrent costs of a large extension service, the lack of which would seriously affect the sustainability of the T&V system as established, in both provinces\. Proposals to include women as AOs and Women Extension Workers (WEWs) will place further pressure on financial sustainability in the long term\. The consequences of budget constraints on extension activities are already becoming apparent: reduced farm visits and contact with farmers, fewer field demonstrations of new technologies and reduced number of adaptive research trials to test new technologies\. Limitations in mobility were the problem most often cited by extension staff\. In Sindh, high rates of staff transfer, apparently as policy, are leading to inefficiency in management and operations\. [See GOS comment in Appendix D\.] 27\. GOPun is committed to complete the buildings for which construction was commenced prior to the credit closing date\. There remains a building-deficit in Sindh, as a number of buildings have not yet been handed over to the DA, because they were not constructed according to the original specifications, or are in need of extensive renovation due to deterioration while occupied by the Security Forces\. [See GOS comment in Appendix D\.] E\. Association Performance 28\. The need for a follow-on to the Phase I projects was identified early\. However, preparation of the second-phase projects was prolonged\. While FAO/CP assisted GOS in project preparation, no external assistance was given to GOPun\. Ultimately, a joint project for both provinces was appraised\. There was thus a 2\.5 year gap between completion of the Phase I projects and effectiveness of the Phase II project\. During appraisal it was decided to cover all provincial districts in the project, including the districts supported by the Phase I projects\. However, continuation in a Phase II project of the concepts of (i) extension based on the standard T&V model, and (ii) ARFs as the centerpiece for adaptive research trials and technology testing, fine-tuning and promotion were serious design faults which should have been readdressed at appraisal\. By 1987 there was evidence from the Phase I projects and the T&V experience of other countries in Asia suggesting the need to modify the traditional T&V model\. In addition, it must have been apparent in setting up special farms (ARFs) for adaptive research that: most of the research would continue to be done on these farms; such research would be more applied than adaptive, and duplicate work at agricultural research institutes; most research would have no involvement of farmers; and research would be insufficiently relevant to the farm situation\. Also, input supply, which continues to be a problem, was not identified as a risk in the SAR\. 29\. IDA supervision missions were reasonably regular and provided sound guidance and support to implementation\. The Resident Mission staff provided additional support between supervision missions, which was appreciated by both provincial governments\. The project benefitted from the continuity of Resident Mission staff assigned to the project\. The Association actively supported GOS in its plan to revitalize the project after earlier disruptions\. F\. Borrower Performance 30\. Both GOPun and GOS were also not active enough in preparation of Phase 11, thus contributing to an unnecessarily long hiatus between this project and the two preceding projects\. The long delay between credit signing and effectiveness was due to delays in review and approval of the project by the Executive Committee of National Economic Council (ECNEC), and in the signing of consultants agreements\. In both provinces, the project was constrained by a shortfall in counterpart funds and usage of credit funds in the first year\. In Puniab, the Extension Wing of DA did a meritorious job in project implementation\. Problems cited by supervision missions which concerned performance in Punjab were: serious delays in the civil works program and procurement of replacement vehicles; slow start of technical assistance followed by cessation of inputs in January 1989; poor supervision of FAs by AOs; poor farmer contact by AOs; shortfall in appointment of adaptive research staff; and delayed overseas training\. In Sindh, the Extension Wing of DA did a fair job in project implementation, but its task had at times been seriously constrained by other departments of government\. Problems cited by supervision missions included: serious delays in the civil works program; slow initial appointment of new staff; severe constraints imposed by inadequate availability of counterpart funds; delays in procurement of vehicles; largely inefficient and ineffective extension and adaptive research activities; lack of funds for operation and maintenance in Phase I districts; delays in overseas training; and the civil unrest during 1990-93\. The project made much better progress from 1993 onwards, due in part to more dynamic leadership and managerial capacity\. 31\. The one-year extension of the credit closing date (from June 30, 1993 to June 30, 1994) was conditional on remedying the above implementation problems\. Subsequently, there was a rapid increase in activity and achievement of physical targets, indicating that the problems had been mostly managerial in both provinces, but also due to civil unrest in Sindh\. A request for a second extension was not approved by IDA because all components, except civil works, were expected to be substantially completed by end of first extension period\. The Association's request that emphasis be given to women in development issues and introduction of a private sector pilot extension program during the one-year credit extension was only minimally addressed, but women's involvement is lately receiving considerable attention\. 32\. Both provinces have conducted and published regular M&E studies for the past six years\. These reports were comprehensive and according to guidelines\. In Puniab, a number of project M&E studies was carried out by the M&E cell, while more formal studies were contracted out to PERI (para\. 7)\. Published internal reports, covering assessments of the T&V system and impact of the project on farmer practices were of fair quality, given the lack of experience and training of the officers involved and the absence of the planned technical assistance for M&E (which would have been very beneficial in addressing some of the shortcomings in evaluation analysis)\. In Sindh, it appears that management made much greater use of the M&E reports than in Puniab\. In both provinces, the reports would have been of greater value if there had been more focus on evaluation, with reports specifically aimed at: assisting management decisions on the effectiveness of the T&V system; assessing project impact on farm production practices; and providing guidance for adaptive research programs\. - 9 - 33\. During project implementation, both GOPun and GOS recognized some limitations in the T&V system but appeared constrained in making any changes\. During the one-year extension period, GOS prepared several key documents - Comprehensive Diagnostic Survey; Extension Strategy Review; Adaptive Research Reorganisation; and Training Course for Women - as guides to improve the extension system and to plan future projects\. An innovative measure of GOS to improve the relevance and value of the adaptive research program was to introduce the concept of Village Participatory Research Groups, but since this is a recent step it is too early to judge its impact\. Subsequent to project completion, GOPun prepared an agricultural extension strategy paper which proposes a number of modifications to improve the extension system\. G\. Assessment of Outcome 34\. The project's outcome in both Puniab and Sindh, in terms of the specific project objectives, is assessed as satisfactory\. In Puniab, it is expected that as a result of the project further worthwhile development will be achieved without additional investment\. However, if modifications to the T&V system are not made, budget constraints, lack of breadth of extension coverage, and lack of relevance of adaptive research would ultimately affect sustainability and impact on agricultural development\. Further project assistance in modifying the T&V system would obviously accelerate the move towards a more cost-effective, efficient and appropriately focused extension service\. In Sindh, there is some doubt that further worthwhile development will occur, unless sufficient budget is provided for operations, maintenance and replacement of capital items, and there is further investment in reorienting and developing the extension services\. H\. Future Development 35\. The Extension Wings of the DA in both provinces have had excellent task-force reviews of the present functioning of the T&V system, and a series of modifications have been proposed to improve working efficiency, effectiveness and approach of the extension services\. In both provinces, extensive modifications will need to be made to the original T&V methodology in the light of lessons learned under the project\. Strategy papers for development of extension services have been prepared for both provinces but have yet to be discussed by the provincial governments\. The Extension Wing in Sindh is presently preparing a PC-I proposal for a follow-on project\. The Bank has developed a Strategy for Sustainable Agricultural Growth in Pakistan" and identified the need for revising the notion of extension as a top-down supply-driven process\. The strategy report suggests that the service needs to be reduced in size and improved in quality\. Extension should concentrate more on participatory problem solving with farmers -- which means substantially improving education levels of farmers and extension agents\. The use of mass media should be expanded and the private sector and NGOs encouraged to increase their provision of extension services\. Regarding agricultural research, publicly funded research needs to stress growth-enhancing public goods, especially research on crop and resource management, where the major product is information (e\.g\., Integrated Pest Management), and poverty reduction\. Joint public-private research ventures should also be encouraged\. " Pakistan - A Strategy for Sustainable Agricultural Growth, Report No\. 13092-PAK, November 3, 1994\. - 10 - I\. Key Lessons Learned 36\. The following lessons can be drawn from the implementation and outcome of the project in the two provinces: (a) Project success is dependent on management's commitment, leadership, vision, technical expertise, managerial and organizational skills\. Management training early in the project can be a critical input (paras\. 6 and 11)\. (b) The low education level of FAs limits their capacity to provide comprehensive services which are responsive to farmers' needs (para\. 21)\. (c) The large number of personnel with limited capabilities was the result of adopting a staff- intensive program for a large area (para\. 6)\. In the future, an improved extension program (with its associated cost per operating unit) should only be expanded at the rate at which suitably trained staff become available to implement it efficiently\. (d) The T&V extension system must be modified to make it more cost effective, more flexible and targeted, more equitable to all farmers, less top-down, more participatory in the definition, testing and refinement of new technologies/on-farm practices, more rigorous in the diagnosis of constraints within the farming system and in the quantification of these issues and their feedback to management and research, more strongly linked with research, and more focused on farmer groups rather than on individual contact farmers (paras\. 7, 19 and 21)\. Consideration should also be given to prioritizing target groups and areas for extension investment, and to the role of the private sector and NGOs (para\. 21)\. (e) Within the extension system, there should be more incentives and merit-based promotional opportunities for front-line extension workers\. Their knowledge and skills should be steadily upgraded to meet future demand for a more analytical and responsive service\. More emphasis should be given to appointing women extension officers to ensure direct interaction and more specific advice for women farmers (paras\. 8 and 22)\. (f) Proposed civil works programs must be within the financial and managerial capacity of the implementing agency, and the government must be fully committed to such a program\. A specially appointed Director for project civil works is highly desirable where responsibility for civil works is outside the control of the implementing agency (para\. 17)\. (g) Adaptive research should: be concentrated on farmers' fields rather than on stations; not duplicate research done by Research Institutes; be demand-driven; and be designed to permit valid economic comparisons of new technologies with current farmer practices\. Close cooperation of farmers in all on-farm trials is important for effective adaptive research and extension-farmer-research linkages (paras\. 10 and 20)\. (h) Training programs and methods need to be upgraded, both technically and in the use of modern adult-learning methodologies\. Curricula for FAs and AOs need revision to include: a three-year pre-service diploma course rather than the current two-year certificate level training for FAs; training in extension methods, including group and communication skills and participatory methods; and training which places more emphasis on problem definition, - 11 - problem analysis, survey techniques, and M&E, including informal and self-reflective methods (para\. 22)\. (i) Farmer education programs should be expanded, including special programs for women farmers, emphasizing improved knowledge of basic principles and use of information in decision making, rather than providing general recipes (paras\. 9 and 22)\. (j) Locally produced, low-cost audio-visual materials used on radio and television, and use of print media, media vans and information centers have proved to be very effective in both provinces\. Media services require ongoing monitoring to ensure that they are reaching the target audience and that content remains relevant (para\. 14)\. (k) The importance of M&E, especially the use of appropriate evaluation procedures, to ensure efficient, effective and relevant extension services (and thereby justify budget support) has been reinforced\. It is clear that both provincial governments are demanding evidence of project impact, managerial competence and effectiveness, and sustainability of services as a condition of continued funding for extension (paras\. 11 and 32)\. - 13 - PART II: STATISTICAL TABLES Table 1: Summary of Assessments A\. Achievement of obiectives Substantial Partial NeEligible Not ADDlicable Macro policies i i7 El Sector policies E O ( F Financial objectives 7 K] El Institutional development ] [E] n] Physical objectives K] OI] E Poverty reduction El O7 K] Gender issues K] EO o] K Other social objectives El E 0 3 Environmental objectives K] K] Eo E7 Public sector management El 7O K] K] Private sector development n K] ] Other (human resources dev\.) [I E] F] B\. Proiect sustainability Likelv Unlikelv Uncertain (d) () (/) Highly C\. Bank Rerformance 'l satisfactory Satisfactory Deficient (/) (d) (V) Identification L K] Preparation assistance O [I Appraisal O K] Supervision K K]1 - 14 - Hi2hlv D\. Borrower Performance satisfactory Satisfactory Deficient (d) ()0 (e) Preparation O : F Implementation FI [7] EO Covenant compliance 71 0 E Operation (if applicable) K] [I] OI Highiv Highlv E\. Assessment of outcome satisfactory Satisfactory Unsatisfactorv unsatisfactory (11 (WI (V ( K] [71 K] O " For the purposes of Part II, "Bank" includes IDA; see World Bank Operational Manual, OP 13\.55 1 BP 13\.55\. - 15 - Table 2: Related Bank Loans/Credits Loan/credit title Purpose Year of Status approval Preceding operations 1\. Punjab Ext\. & Agric\. To introduce "Training & Visit" 1978 Closing date June Development (T&V) system of agricultural 1985; PAR (Cr\. 813-PAK) extension in five core districts of issued June 1988 Punjab Province\. 2\. Sind Agric\. Ext\. & Adap\. To introduce T&V system in five 1979 Closing date June Res\. core districts of Sind Province by 1985; PAR (Cr\. 922-PAK) increasing extension staff, providing issued June 1988 regular training and relevant production of messages for farmers and establishing research farms, two soil testing laboratories and pest scouting service in one district\. 3\. Agric\. Res\. I To strengthen Pakistan's agricultural 1981 Closing date (Cr\. 1158-PAK) research system by (a) supporting Dec\. 1987; PAR establishment of PARC (b) providing issued Dec\. 1990 technical assistance (c) staff training (d) research on crops, livestock, agricultural engineering and economics at NARC (e) contract research system for provincial institutes and (f) improving support services\. 4\. Baluchistan Agric\. Ext\. & To achieve increases in sustainable 1984 Closing date June Adap\. Res\. III agricultural production in four 1992; PCR (Cr\. 1533-PAK) districts of Baluchistan Province issued Apr\. 1994 through strengthening T&V system and widespread adoption of improved farming practices by farmers\. Following operations 1\. Agric\. Res\. II To improve and strengthen research 1990 On-going; (Cr\. 2154-PAK) capabilities in provinces; consolidate expected closing achievements under Agric\. Res\.I; date June 1998 support high priority research programs; and improve and strengthen research/extension linkages\. - 16 - Table 3: Project Timetable I ~~~~~~~Date actual/ Steps In project cycle Date planned latest estimate Identification (Executive Project Summary) October 1983" June/July 1984 21 Preparation November 1984 31 July 19854/ Appraisal Jan\./Feb\. 1986 Jan\./Feb\. 1986 Negotiations October 1986 November 1986 Letter of development policy (if applicable) n\.a\. n\.a\. Board presentation Jan\. 1987 Feb\. 24, 1987 Signing March 20, 1987 Effectiveness May 1987 Nov\. 6, 1987 First tranche release (if applicable) n\.a\. n\.a\. Midterm review (if applicable) n\.a\. n\.a\. Second (and third) tranche release (if applicable) n\.a\. n\.a\. Project completion December 31, 1992 n\.a\. Credit closing June 30, 1993 June 30, 1994 5/ )Originally considered as a Second Extension Services Project to cover Punjab, N\.W\. Frontier and Balochistan provinces, not Sindh Province\. IDA mission reviewed progress on preparation of Phase 11 project for Punjab during October 22-30, 1983\. 2/ Review of progress on concept clearance for Phase II projects for Punjab and Sindh\. 3/ FAO/CP produced Project Brief on Sind Agricultural Extension and Adaptive Research Project in February 1985\. 4/ Government of Punjab completed preparation\. 51 Requests for one year extension of closing date to June 30, 1994 were received from GOP on January 30, 1993 (Punjab component) and February 25, 1993 (Sind component) and agreed by IDA on June 28, 1993\. Subsequently, it was agreed to keep the credit account open for four months beyond the closing date to accommodate final disbursements\. - 17 - Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (SDR million) FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 Appraisal estimate 1\.69 5\.06 11\.81 20\.24 27\.83 32\.89 35\.50 Actual - Punjab 2\.61 3\.49 5\.77 8\.07 10\.86 12\.32 15\.09 - Sindh - 0\.70 2\.31 3\.41 6\.15 9\.30 11\.88 - Total - 2\.61 4\.19 8\.08 11\.49 17\.01 21\.62 26\.97 28\.88 Actual as % of estimate - 52 35 40 41 52 61 76 81 Date of final December 7, 1994 disbursement Comment: The final closing date was June 30, 1994\. The credit account was kept open until October 31, 1994, and the last disbursement was made on December 7, 1994\. The remaining credit balance of SDR 6\.62 million was cancelled as of that date\. - 18 - Table 5: Key Indicators for Project Implementation Item Unit Appraisal Target at Actual Percent Project Completion Achievement (06/94) A\. PUNJAB Staff Additions Management (grade 16 and above) No 179 174' 97 Field Assistants No 245 289 118 Staff Training 2 No 9,870 Buildings (offices, residences, service bldgs\.) No 2,4183 1,066' 444 Vehicles Procurement 4-WD, Cars, Pick-ups No 88 158 180 Motorcycles No 371 371 100 Bicycles No 1,934 1,934 100 Tractors No 5 5 100 Consultancy staff-month 38 18 47 B\. SINDH Staff Additions Management (grade 16 and above) No 85 132 155 Field Assistants No 292 292 100 Staff Training 2 No 1,307 Buildings (offices, residences, service bldgs\.) No 819 819' 100 Vehicles Procurement 4-WD, Cars, Pick-ups No 61 89 146 Motorcycles No 141 976 274 Bicycles No 1,053 1,053 100 Consultancy staff-month 72 94 131 While 174 new positions were sanctioned, 45 old positions were abolished, leaving a net gain of 129 sanctioned positions of grade 16 and above\. 2 No specific staff-month targets were set\. Number includes in-service and refresher courses (Punjab 9,529 persons; Sindh 501 persons), training in workshops/seminars (Punjab 244; Sindh 708); and foreign training (Punjab 97; Sindh 26)\. 3 Total number of buildings to be constructed was revised downwards to 2,170 during implementation\. 4 An additional 961 buildings in Punjab were near completion by June 30, 1994\. Their full completion raises the completion rate from 44% to over 80%\. 5 Construction of 84 boundary walls and 2 approach roads, and renovation of 5 buildings at ATI Sakrand were approved and completed by June 30, 1994, which is additional to the 819 buildings constructed\. On the other hand, a number of the 819 buildings were not completed according to the original specifications nor have they been handed over to DA (see Part I, para\. 27)\. - 19 - Table 6: Key Indicators for Project Operation (This table is not applicable to this project) Table 7: Studies Included in Project Purpose as defined Study at appraisal/redefined Status Impact of study Scheduled Studies 1\. Benchmark Survey of Pre-project analysis of the Studies completed Provided basis for Punjab Agricultural extension system, farmers comparison with final Extension & Adaptive knowledge and practices and PERI study Research Project-1l agricultural production in (1987-88) (SAR para\. project area in order to 4\.30) establish baseline indicators for project impact 2\. Evaluation study of Post-project analysis of Studies completed Useful for monitoring Punjab Agricultural impact on project inflows, performance and impact Extension and Adap- effectiveness of T&V of extension system tive Research Pro- extension system, knowledge under project ject-1l (1994) (SAR and performance of field para\. 4\.30) staff, farner knowledge and practices, agricultural production, etc\. Ad Hoc Studies 3\. Diagnostic Survey To define agroecological Studies completed Excellent basis for Report, Sindh zones within Sindh province planning future research Province to provide framework and and extension activities basis for all future research and extension activities 4\. Extension Strategy Taskforce used to review Studies completed Useful for planning Review, Sindh performance of Extension future development of Province Wing of DA and provide extension and project proposals for future assistance development 5\. Adaptive Research Taskforce used to review Studies completed A number of proposals Reorganisation and performance of adaptive for reorganization have Strategy Report, Sindh research activities in Sindh already been Province Province and provide implemented proposals for revitalising this section - 20 - Table 8A: Project Costs / Appraisal estimate (US$M) Actual/latest estimate (USSM) Item Local Foreign Local Foreign costs costs Total costs costs Total Civil Works 26\.06 15\.79 - 15\.79 Land Acquisition & 0\.67 0\.32 - 0\.32 Development Vehicles 3\.50 5\.24 - 5\.24 Equipment & Fumiture 3\.01 2\.33 - 2\.33 Technical Assistance 1\.82 0\.08 1\.27 1\.35 Training 1\.78 2\.42 0\.45 2\.87 Recurrent Costs 21\.52 23\.22 - 23\.22 Total Project Costs 46\.5 11\.9 58\.38 49\.32 1\.80 51\.12 Comments: 1\. GOS did not maintain records of project expenditure by component and therefore expenditure is presented by line item\. 2\. Breakdown of project costs by line item into foreign and local costs is not available from the SAR\. 3\. Taxes and duties estimated to be US$3\.3 million in the SAR; actual taxes and duties not available\. 4\. Total actual project costs in Rupees as of June 30, 1994, were Rs 1,247\.77, or 125% of the appraisal estimate of Rs 994\.5 1million\. Due to devaluation of the Pakistan Rupee against the US dollar, actual project costs in US dollars were US$51\.12 million, or 88% of the appraisal estimate of US$58\.4 million\. Actual project costs for Punjab Province as of June 30, 1994 were Rs 669\.7 million, or 107% of the appraisal estimate of Rs 625\.98million - US$27\.24 million or 74% of the appraisal estimate of US$36\.75 million\. Actual project costs for Sindh Province as of June 30,1994 were Rs 578\.07million or 156% of the appraisal estimate of Rs 371\.36 million - US$23\.88million or 110% of the appraisal estimate of US$21\.79 million\. Table SB: Project Financing / Appraisal estimate (US$M1 Actual/latest estimate (US$M) I/ Source Local Foreign Local Foreign costs costs Total costs costs Total IDA 30\.2 11\.9 42\.1 37\.94 1\.80 39\.74 Federal/Provincial 16\.3 - 16\.3 11\.38 - 11\.38 Governments TOTAL 46\.5 11\.9 58\.4 49\.32 1\.80 51\.12 1/ Estimated actual project financing in US$ at credit closure (December 7, 1994)\. / See GOPun comment in Appendix E, part C\. - 21 - Tabb 9: Ecsxomk Cods ad BeImus No net present value or economic rate of return was estmated, as such meases are not relevant for this type of project\. - 22 - Table 10: Status of Legal Covenants Agmt Section Covenant Status Original Revised Description of Covenant Comments Type FulfMment FulfIllment Date Date DCA 2\.02 (b) F OK Open Special Accounts\. DCA 3\.01 (a) F OK Provision of funds, etc\. DCA 4\.01 (a) F OK Maintain records and accounts for each implementing agency\. DCA 4\.01 (b) F OK Furnish to IDA audit reports within nine months from end of each fiscal year\. DCA 6\.01 (a) E OK Condition of ECNEC approval of project\. effectiveness DCA 6\.01 (b) M OK Condition of Appoint Project Director (Civil effectiveness Works) for each Province\. DCA 6\.01 (c) M OK Condition of Sign contracts for consultancy effectiveness services\. PROJ 2\.01 (a) E/F/M OK - - Provinces declare their conmmitment to project objectives (Schedule 2 DCA)\. PROJ 2\.01 (b) E/FIM OK - - Provinces to carry out the Project in accordance with implementation program set forth in Schedule 2 PROJ\. PROJ 2\.05 M OK - - Relieve extension staff of non- extension duties\. PROJ 2\.06 F/M OK - - Give incentive payments to instructors of ATIs\. PROJ 2\.07 M OK - - Punjab to train DOA accounting staff\. PROJ 2\.08 M/F ACT On project completion (a) Not fully complied with at operate and maintain the time of mission visit in extension services provided, October 1994\. and (b) make adequate budgetary allocations\. PROJ -Sch2 B\.5 M OK - Establish Project Coordinating and Monitoring Committees\. -Sch2 B\.6 M/T OK - Maintain existing Project Review Committees\. -Sch2 B\.7 M/T OK - Establish District Agricultural Advisory Committees\. -Sch2 C\.8 M/T OK - - Establish Zonal Technical Committees\. -Sch2 D\.9 M ACT - - Provinces to provide staff and Mobility hampered in Sindh vehicles according to an agreed Province as vehicles have schedule\. been taken by the law enforcement agencies\. - 23 - Agmt Section Covenant Status Original Revised Description of Covenant Comments Type Fulfillment Fulfillment Date Date -Sch2 D\.10 F OK - - Establish revolving funds for replacement of motorcycles and bicyles\. -Sch2 D\. II F OK - - Provinves to provide for and pay adequate travel/daily allowances to Project staff\. -Sch2 D\.12 F OK - - Provinces to provide adequate O&M funds for Project vehicles\. -Sch2 D\.13 (a) M OK 12/31/87 Provinces to undertake benchmark surveys\. -Sch2 D\.13 (b) M OK Beginning Provinces to furnish quarterly with quarter progress reports to IDA\. ending 09/87 Legend Covenant Type Status E - Economic ACT - Needs use of formal remedies to bnng about compliance F - Financial NYD - Not yet due M - Managerial OK - Covenant complied with T - Technical RVS - Needs to be revised - 24 - Table 11: Bank Resources: Staff Inputs Planned Revised Actual ' project cycle Weeks US$ Weeks Weeks US$ Through appraisal n\.a\. n\.a\. n\.a\. n\.a\. 29\.2 n\.a\. Appraisal - Board n\.a\. n\.a\. n\.a\. n\.a\. 55\.2 n\.a\. Board - effectiveness n\.a\. n\.a\. n\.a\. n\.a\. n\.a\. n\.a\. Supervision n\.a\. n\.a\. n\.a\. n\.a\. 124\.1 n\.a\. Completion n\.a\. n\.a\. n\.a\. n\.a\. 17\.3 n\.a\. TOTAL 225\.8 Data from COS\. Dollar budgeting was only introduced in FY94 and therefore costs are not available\. - 25 - Table 12: Bank Resources: Missions Performance rating Number Specialized hmplemen- Develop- Stage of Month/ of Days in staff skills tatlon ment Types of project cycle year persons field represented status objectives problems Through appraisal October 1983 7 8 n\.a\. - - - June/July 1984 1 4 n\.a\. - - November 1984 2 27 A,EC Jan\./Feb\. 1986 3 16 A,EC,T Appraisal through Board June 1986 1 3 EC approval 1 6 EC,A November 1986 Board approval through effectiveness Supervision February 1988 2 26 EC,A I I F January 1989 2 10 A,E 3 2 T,F (Sind) March 1989 2 9 A,E 2 2 M (Punjab) June 1989 2 5 AXE 3 2 F (Sind) March 1990 4 16 A,E(2),EC 3 3 T,F Nov\./Dec\. 1990 2 18 A,E 3 2 M,F,T Oct\./Nov\. 1991 2 14 A(2) 2 2 M,F,T July 1992 2 26 A,E 3 3 M,F,T February 1993 2 20 A,E 3 2 M,T June 1993 1 10 A 2 2 M,T Jan\./Feb\. 1994 2 20 A,E 2 2 M Completion October 1994 2 18 A,E 2 2 - A = Agriculturist; E = Extension Specialist; EC = Economist; T = Training Specialist\. Appendix A PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project (Phase II) Mission's Aide-Memoire A\. INTRODUCTION 1\. At the request of the World Bank, an FAO/CP Mission " visited Punjab and Sindh Provinces from 3-20 October 1994 to meet with officials of the Governments of Punjab (GOPun) and Sindh (GOS) concerned with the implementation of the above project and to obtain relevant information for the preparation of the Implementation Completion Report (ICR) for this project\. Meetings were held with the Secretaries of Agriculture, Directors General of Extension, staff of the Extension Wings, Planning and Development Departments, and other government officials\. Field visits were made to several districts in three project areas in both provinces\. New facilities constructed under the project were inspected and meetings were held with government officials and farmers in these districts\. 2\. The mission wishes to thank all GOPun and GOS staff involved in the meetings and field visits for giving generously of their time, information and assistance with the preparation of the ICR for this project\. Preliminary findings were presented and discussed at separate wrap-up meetings with GOPun and GOS on 12 and 19 October, 1994, respectively\. The views presented in this Aide-Memoire reflect those of the mission and have been amended to take into account points raised in wrap-up meetings with the GOPun, GOS and final wrap-up meeting with the Government of Pakistan in Islamabad on 21 October, 1994\. In the following sections, project implementation is reviewed separately for each province\. B\. PROJECT IMPLEMENTATION ASSESSMENT Statement/Evaluation of Objectives 3\. The project is the second IDA-assisted project designed to reorganize and strengthen agricultural extension services in both Punjab and Sindh Provinces\. The objective was to achieve sustained increases in agricultural production in project areas through effective transfer of technologies most suited to local agroclimatic conditions and creating a sense of dedication and commitment in the Extension services, by making all staff more accountable to specific assigned duties and objectives\. For this purpose the project was to complete the strengthening and reorganisation of Extension Services of Punjab and Sindh Provinces by extending the T&V system to all districts not covered by the Phase I projects in each province, while consolidating gains made in districts covered by the first-phase project and strengthening the adaptive research system\. 4\. The specific project objectives included: - reorganisation and strengthening of the Agricultural Extension and Adaptive Research Activities in the remaining 23 districts of Punjab and 8 districts of Sindh Provinces not covered by the Phase I project; " Messrs\. D\.A\. Ivory (mission leader) and B\.J\. Gorddard (extension specialist, consultant)\. PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire - strengthening the Agricultural Training Institutes; - strengthening in-service and on-job training of extension staff; - establishing new Adaptive Research Farms and supplying appropriate equipment; - establishing Demonstration Centres/Plots; - providing offices and residences, and furniture, for technical staff of Adaptive Research Farms, offices and residential buildings for extension staff at district and tehsil/taluka levels and training halls for in-service training of extension staff and for farmners; - providing transport to improve staff mobility; and - providing audio-visual equipment to improve communication capacity\. 5\. The objectives were clear and achievable, important to country, provincial and sector objectives and complemented the Bank's Country Assistance Strategy\. Achievement of Objectives Punjab Province 6\. Most of the above objectives were realised in Punjab Province\. During the course of the project, significant increases in crop production occurred\. Production increases for the major crops for the period 1986-89 compared to 1991-94, were 23 % for wheat, 25 % for cotton, 21% for paddy and 13% for sugarcane\. The extent to which this was attributable to the project cannot be determined, but discussions with selected farmers indicated that they had all benefitted from extension advice in increasing farm production and family incomes\. 7\. The T&V system was satisfactorily institutionalised and became operational in all districts and the project achieved or exceeded the majority of the physical targets set in the SAR (PC-1) by the end of the one-year extension to the project, but not by the original project completion date\. A significant impact of the project has been on staff and contact farmer skills and knowledge\. 8\. The increase in staff numbers under the project exceeded target increases, with staff increases resulting from the creation of new positions for adaptive research, training, extension supervision and field assistant staff\. 9\. Both the regular M&E reports and the surveys conducted by Punjab Economic Research Institute (PERI) indicated that while regular contacts with farmers and adoption of technologies had occurred, this had been at an undesirably low level\. This was not evidenced by the field mission, possibly due to the shortness of the field visits\. The inability of the survey to discern differences between contact and non-contact farmers in adoption of new technologies was not consistent with the observations of the mission and were possibly due to sampling difficulties\. 10\. A high level of staff training has been achieved, including in-service and refresher courses (9,529 persons), workshops and seminars (244 persons) and foreign training (97 persons)\. Some of this training was, however, considerably delayed, particularly overseas training, thereby not realising the full 2 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire benefit of this training to project implementation and management\. In addition, regular fortnightly training was held for Field Assistants (FAs)\. The cost-effectiveness of this training should be examined as it is doubtful that the present intensity of training is sustainable or essential\. 11\. The Adaptive Research Farms established under the two project phases are very well organized, managed and maintained\. A considerable number of on-farm trials and demonstrations have been set up under the project\. In general, trials and demonstrations have been beneficial for fine-tuning new technologies and promoting proven technologies\. These would be improved if trials and demonstrations always compared new technologies with existing farmer practices and appropriate economic analyses were undertaken\. 12\. Serious implementation delays occurred with civil works, with only 44% of buildings finally being completed by 30 June, 1994, with another 36% near completion at that time\. Consultancy inputs were also well below planned targets (47%)\. 13\. Procurement of motorcycles and bicycles was as scheduled, but procurement of 4-WD vehicles and pick-ups greatly exceeded targets (180%)\. Problems of mobility of field staff (FAs), was identified as a continuing major constraint and consideration must be given by the GOPun to providing credit for hire purchase of motorcycles by FAs\. 14\. Communication capability has been improved by the purchase of equipment to produce audio-visual materials for farmers and extension workers\. A wide range of materials for radio and television has been produced\. The production quality and content of printed materials for farmers has steadily improved with the use of clear impact points\. Sindh Province 15\. Most of the above objectives were also realised for Sindh Province\. During the course of the project, overall crop production increased for most of the important crops\. Production increases for the major crops for the period 1985-88 compared to 1991-94 for the Phase II districts, were 5% for wheat, 16% for paddy and 73% for sugarcane, while cotton production decreased by 8%\. The changes in production for sugarcane and cotton were strongly affected by increased area of sugarcane and consequent decreased area of cotton\. However, yield per unit area was increased for all crops\. The extent to which these increases in production were attributable to the project cannot be determined, but discussions with contact and associated farmers in villages where Field Assistants (FAs) were active, indicated that they had all benefitted from extension advice in increasing farm production and family incomes\. 16\. The project achieved or exceeded the majority of the physical targets set in the SAR (PC-1) by the scheduled project completion date, except for civil works, which were 89% completed\. However, the majority of these civil works were considerably delayed compared with project target of completing civil works within the first three years of the project\. These delays adversely affected project implementation and impact\. All civil works (819 units) were 'completed' (refer para\. 34) by the end of the one-year extension to the project\. 3 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire 17\. Incremental staff positions were filled as scheduled\. However, a number of Senior Subject Matter Specialists (SSMSs) have transferred to Research Institutes of the Research Wing of the Department of Agriculture (DA) due to more attractive conditions provided under the World bank sponsored Agricultural Research Project\. Significant staff vacancies were also reported for Agricultural Officer (AO) positions in some districts\. However, the situation is not clear because of the recent approval by the Federal Government to sanction a further 250 AO positions in Sindh Province\. 18\. The T&V system was satisfactorily institutionalised and became operational in all districts\. The regular M&E reports indicated that while regular contacts with farmers and adoption of technologies had occurred, this had been at an undesirably low level and only about 30% of farmers were being reached by extension\. Evidence from the Diagnostic Survey indicated that many of the extension messages were not sufficiently focused on problems and constraints experienced by farmers\. 19\. A reasonable level of staff training has been achieved, including in-service and refresher courses (501 persons), workshops and seminars (780 persons) and foreign training (26 persons)\. Some of this training was, however, considerably delayed, particularly overseas training and workshop and seminar programs, thereby not realising the full benefit of this training to project implementation and management\. In addition, regular fortnightly training was held for Field Assistants (FAs)\. It is noted that the training schedule for FAs in Phases I project areas has already changed to monthly training and Phase II areas would be expected to follow suit now that the project has finished\. 20\. The excellent training resource that has been developed at Sakrand needs to be further consolidated and strengthened, with the (possible) development of Sakrand as the key provincial centre for pre-service and in-service extension training\. The development of training programs for women extensionists is commended and has potential for expansion as a major centre for women's development\. 21\. The construction of buildings at the Pangrio Adaptive Research Farm (ARF) has been completed, but has not been handed over to the Department of Agriculture (DA) because the buildings have not been completed according to specifications\. No research staff are now located at this ARF\. The early project policy was only to conduct research trials on the ARFs\. Throughout Sindh Province, about 150 adaptive research trials were conducted each year on the ARFs during the latter years of the project\. This number was considerably increased during the 1993-94 rabi season with the reorganisation of adaptive research programs to include large numbers of trials in farmer fields with the relocation of many Senior Subject Matter Specialists (SSMSs) to district locations\. A total of 7,262 demonstrations were set up during the project\. The number of demonstrations during the last two years and on-farm trials in the last kharif season, however, have declined due to budget restrictions on operational expenses\. 22\. Consultancy inputs exceeded planned targets (131 %), even though consultancy inputs were suspended for about two years, due to problems associated with liability of consultants to taxes in Pakistan\. These consultancies (a total of 94 person months) were beneficial to the development of project activities and included assistance to improve extension planning, adaptive research, information and communications, diagnostic survey, monitoring and evaluation and development of future strategies for extension development\. 4 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire 23\. Procurement of 4-WD vehicles, cars, pick-ups, vans and bicycles was as scheduled\. Small 4-WD vehicles were preferred as they were cheaper, but their life is less and maintenance costs are higher\. Procurement of motorcycles, however, greatly exceeded targets\. This was a result of the identification of lack of mobility of field staff (FAs) being a continuing major constraint, even though many had received bicycles under the project, and the agreement of the GOS to provide hire purchase agreements for FAs to purchase 835 motorcycles during the one-year extension to the project\. 24\. Communication capability has been improved by the purchase of equipment to produce audio-visual materials for farmers and extension workers\. A wide range of materials for radio and television has been produced\. An excellent studio has been established for the production of audiovisual materials\. The production quality and content of printed and audio-visual materials for farmers has been very good\. Overall 25\. The design of the project is considered appropriate for achieving the desired objectives at the time of project planning and the criteria set for judging project achievements were found to be generally satisfactory\. Major Factors Affecting the Project Punjab Province 26\. Overall, the project was judged to have partially achieved its objectives in Punjab Province\. A number of factors contributed to delays in achieving physical targets during implementation, thus resulting in the need for a one-year extension to the project\. It was only due to this extension that most physical targets were met, with the notable exceptions of civil works and technical assistance\. 27\. Of the total IDA Credit (US$26\.53), US$6\.496 million remained unspent at 30 June, 1994, due to: the depreciation of the Rupee against the US dollar; the deletion of 480 residential and service buildings from the civil works program; and the under-utilization of the funds allocated for technical assistance\. Total project costs were Rs 669\.7 million (US$27\.242 million), which exceeded project estimates by only 7% in Rupee terms but was only 74% of estimated costs in Dollar terms\. A four- month extension has been given to 31 October, 1994 to complete disbursements of expenditure incurred before project closure\. 28\. The serious delays in the civil works program, which ultimately led to a downward revision of building targets, was due to a combination of factors, including: government procedural problems in preparation and approval of contracts; problems in disbursements of monies, even though special funds were established; rises in building costs due to inordinately long delays in contract processing; and delays in construction schedules by contractors\. These delays had adverse effects on the operations of the adaptive research farms, extension programs in local areas and on training programs\. 5 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire 29\. The under-utilization of technical assistance was due to disagreements on payment of taxes between the GOPun and the contracting agent which led to suspension of activities and then unilateral cancellation of the assistance contract, with only one year of consultancy inputs achieved\. While the consultancy inputs that did occur were beneficial to the training, and to a lesser extent the adaptive research programs, no technical assistance was provided to the Monitoring and Evaluation unit\. All three areas of assistance would have benefitted more from further follow-up assistance\. 30\. While the committees set up under the project to improve coordination generally functioned satisfactorily, linkages between agricultural extension, agricultural and livestock research and soil and water research and extension were not sufficiently strong\. 31\. There were a number of external factors which affected the impact of the project on increasing agricultural production\. Farmers interviewed in all districts indicated that lack of input resources, such as credit, fertilizers and good quality seeds, were restricting their adoption of recommended practices\. In addition, problems associated with irrigation, drainage, and adulteration of fertilizers and pesticides also affected production\. Sindh Province 32\. Overall, the project was judged to also have partially achieved its objectives in Sindh Province\. A number of factors contributed to delays in achieving physical targets during implementation, thus resulting in the need for a one-year extension to the project\. It was only due to this extension that all physical targets were met\. While the project has impacted favourably on farm production the degree of this impact has been constrained by a number of factors\. 33\. Of the total IDA Credit (US$15\.57), US$3\.526 million remained unspent at 30 June, 1994, due mainly to the depreciation of the Rupee against the US dollar\. Total project costs were Rs578\.066 million (estimated at US$23\.875 million), which was 58% above the original estimated base project costs of Rs366\.063 million (although two revisions of project costs were made during project implementation), but only 10% above total estimated costs in Dollar terms\. A four-month extension has been given to 31 October, 1994 to complete disbursements of expenditure incurred before project closure\. 34\. The serious delays in the civil works program were due to a combination of factors, including problems associated with site selection and government procedural problems in preparation, processing and approval of contract documents\. Security problems (see para\. 38) and rising prices also adversely affected contractors in constructing buildings\. These delays had adverse effects on the operations of the newly established adaptive research farm and extension programs in local areas\. The civil works program was accelerated through the establishment of a special project director within the Communications and Works Department (CWD) in 1991 to monitor the processing of civil works for this project\. At this time there are several buildings which are not completed according to the original specifications (for example, the Pangrio ARF and the district buildings at Dadu) and have not been handed over to the Department of Agriculture due to factors beyond the control of the Project\. A critical problem now exists in completing these civil works as the group responsible for the civil works program under the project has been disbanded and presumably no further appropriate budget has been allocated 6 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire in this financial year\. The quality of construction of buildings could only be considered fair, as there was inadequate supervision during construction, and maintenance of buildings already appears a problem (this is the responsibility of the CWD)\. 35\. Both Adaptive Research Farms (ARFs) visited by the mission (Pangrio, Phase II and Oderolal, Phase I) were established as a small part of large existing government farms involved in seed production and tenant farming\. The effectiveness of the adaptive research programs appears compromised by budget control being administered by the Farm Superintendent and the competing needs for funds for research and input supply for tenant farmers\. 36\. While the commnittees set up under the project to improve coordination generally functioned satisfactorily, linkages between agricultural extension, agricultural and livestock research and soil and water research and extension were not sufficiently strong\. 37\. There were a number of factors external to project interventions which affected the impact of the project on increasing agricultural production\. Farmers interviewed in all districts indicated that lack of input resources, such as credit, fertilizers and good quality seeds, were restricting their adoption of recommended practices\. In addition, problems associated with irrigation, drainage, and adulteration of fertilizers and pesticides also affected production\. 38\. A local law and order problem occurred in Sindh Province from 1991 to 1993 which adversely affected the project as it was difficult for staff in a number of districts to carry out their extension duties and additionally the Local Security Enforcement Agency commandeered project vehicles and buildings during this period\. Total Project Costs 39\. Of the total IDA Credit (US$42\.1 million), US$10\.022 million remained unspent at 30 June, 1994, due mainly to the depreciation of the Rupee against the US dollar, the deletion of 480 residential and service buildings from the civil works program; and the under-utilization of the funds allocated for technical assistance for the Punjab component\. Total project costs were Rs1,247\.766 million (estimated at US$51\.117 million), which was the same as the original estimated total project cost in Rupee terms, but only 88 % in Dollar terms\. A four-month extension has been given to 31 October, 1994 to complete disbursements of expenditure incurred before project closure\. Project Sustainability Punjab Province 40\. It is likely that the GOPun will be able to maintain the achievements generated, in relation to its major objectives and strategies and the plans currently being formulated to ensure further improvements to extension services and adaptive research\. The T&V system requires a substantial number of field staff\. To date incremental staff under the project have not been paid salaries for this 7 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire financial year, as they have not been transferred to the non-development budget, as required by the covenants of agreement of the project\. This places some uncertainty on the financial sustainability of the T&V system\. Proposals to include women as AOs and Women Extension Workers (WEWs) will place further pressure on financial sustainability\. Other sustainability issues relate to the apparent failure to include funding for maintenance and replacement of equipment in departmental budgets\. 41\. The GOPun is committed to complete the civil works program for those building units for which construction was commenced prior to the Credit closing date\. It would appear, however, that the GOPun is not generally convinced of the value of government investment in staff housing\. Where considerable budget constraints exist, it would seem more important to ensure an adequate level of vehicles and motorcycles, so that staff are able to carry out their duties adequately, than to invest in staff housing\. Limitations in staff mobility were the most often cited problems by extension staff, particularly in respect to FAs\. Sindh Province 42\. There is some doubt that the GOS will be able to maintain the level of achievements generated under the project\. The T&V system requires a substantial number of field staff\. While incremental staff employed under the project have been paid salaries for this financial year, they have not been transferred to the non-development budget, as required by the covenants of agreement of the project\. The more important aspect is, however, is the ability of the GOS to meet salary costs in the future\. In addition, operation and maintenance funds for extension activities are extremely limited and there is no funding for maintenance and replacement of capital items, such as vehicles and equipment, in departmental budgets\. This places considerable uncertainty on the financial sustainability of the T&V system\. Proposals to include additional women extension staff will place further pressure on financial sustainability\. 43\. The consequences of budget constraints on extension activities are already becoming apparent; reduced farm visits and contact with farmers, less field demonstrations of new technologies and reduced numbers of adaptive research trials to test new technologies\. Bank Performance 44\. There was an early identification of the need for a follow-on to the Phase I extension projects\. Preparation of second-phase projects were, however, very prolonged and little assistance was given by the Bank to this process; the FAO/CP ultimately assisted Sindh Province in project preparation but no external assistance was given to Punjab Province\. The Bank could have been more pro-active in accelerating preparation activities\. Ultimately, the project was appraised as a joint project for both Sindh and Punjab provinces\. There was thus a 2\.5 year lacuna between the completion of the Phase I projects and the effectiveness of the Phase 11 project\. During appraisal it was wisely decided to include all provincial districts in the project, including the districts supported by the Phase I project in each province\. 8 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire 45\. During implementation the Bank supervisory missions were reasonably regular and provided good guidance and support to implementation\. The local resident Bank staff also provided additional support between implementation missions, which was appreciated by the GOS\. The project was further advantaged by the continuity of resident Bank staff assigned to the project\. Borrower Performance Punjab Province 46\. The period of time associated with preparation, appraisal and effectiveness of the project was unnecessarily long, leaving a lacuna between the two extension projects\. The implementing agency did a meritorious job in project implementation\. However, some deficiencies in Borrower performance were apparent\. The long delay between credit negotiations and project effectiveness was due to 8 month delays in the review and approval of the project by the Executive Committee of National Economic Council (ECNEC) and in the signing of consultant agreements\. The project was constrained by a shortfall (26%) in provision of counterpart funds and usage of Credit (56%) in the first year\. Common problems cited by Bank supervision missions which concerned Borrower performance during implementation were: serious delays in civil works program, procurement of replacement vehicles; slow start with technical assistance followed by cessation of inputs beyond 1989; poor supervision of FAs by AOs; poor farmer contact by AOs; shortfall in appointment of adaptive research staff; and overseas training very delayed\. 47\. The request for extension of the project by one year was conditional on remedying the above implementation problems\. Subsequently, there was a rapid increase in activity and achievement of physical targets, indicating that the problems were mostly managerially based\. A request for a further (second) extension of the project was not supported because all components, except for civil works, were expected to be substantially completed by end of first extension\. The request by the Bank for emphasis to be given to women in development issues and introduction of a private sector pilot extension program during the one-year project extension was only minimally addressed\. 48\. Project monitoring and evaluation was carried out regularly, with two reports produced each year, covering assessments of the T&V system and impact of the project on farmer practices, respectively\. These reports were comprehensive and according to guidelines given\. Greater value would have been obtained from these reports if there had been a greater focus on evaluation, with report output being more specifically aimed at: assisting managerial decisions on the effectiveness of the T&V system; the impact of the project on changing farm production practices; and providing guidance for adaptive research programs\. Although technical assistance was scheduled to assist in the development of the M&E unit, this did not occur, but would have been very beneficial in assisting with overcoming some of the above shortcomings in evaluation analysis\. 49\. The design of the project was based on the T&V system advocated by the Bank at that time\. Since then, there has been considerable debate given to the modification of this design to ensure more sustainable financial viability, wider interaction with farmers, use of more modern communication 9 PAKISTAN: Punjab and Sind Agncultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire systems and extension methodologies, more flexible allocation of staff resources, and less top-down technology training which is more responsive to individual farmer needs\. During project implementation, the GOPun recognised some of these limitations in the T&V system but appeared constrained in making any changes\. However, subsequent to the completion of the project, the GOPun has prepared a future agricultural extension strategy which proposes a number of modifications to improve the extension system in any further project\. 50\. The GOPun had by project closure complied with all covenants of the Development Credit Agreement, except for the conversion of all incremental staff positions and attendant salaries to the non- development budget, which is implicit in Section 2\.08 of the Project Agreement\. Sindh Province 51\. The implementing agency (DA) has done a fair job in project implementation, but their task has at times been seriously constrained by other departments of government\. Some deficiencies in Borrower performance during project implementation are apparent from project documents\. Problems cited by Bank supervision missions which concerned Borrower performance during implementation were: serious delays in civil works program; slow initial appointment of new staff; severe constraints imposed by inadequate availability of counterpart funds; delays in procurement of vehicles; extension and adaptive research activities were often indicated to be largely inefficient and effective; poor supervision of FAs and AOs early in project; lack of funds for operation and maintenance in Phase I areas; and overseas training delayed\. 52\. The project made much better progress from 1993 onwards, due in part to more dynamic leadership and managerial capacity\. The request for extension of the project by one year was conditional on remedying many of the above implementation problems\. Subsequently, there was a rapid increase in activity and achievement of physical targets, indicating that the problems were mostly managerially based\. A request for a further (second) extension of the project was not supported because all components, except for civil works, were expected to be substantially completed by end of first extension\. 53\. Project monitoring and evaluation was carried out regularly, with two reports produced each year, covering assessments of the T&V system and impact of the project on farmer practices, respectively\. These reports were comprehensive and according to guidelines given\. Greater value would have been obtained from these reports if there had been a greater focus on evaluation, with report output being more specifically aimed at: assisting managerial decisions on the effectiveness of the T&V system; the impact of the project on changing farm production practices; and providing guidance for adaptive research programs\. 54\. The design of the project was based on the T&V system advocated by the Bank at that time\. Since then, there has been considerable debate given to the modification of this design to ensure more sustainable financial viability, wider interaction with farmers, use of more modern communication systems and extension methodologies, more flexible allocation of staff resources, and less top-down technology training which is more responsive to individual farmer needs\. During project implementation, the GOS recognised some of these limitations in the T&V system but appeared constrained in making any 10 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire changes\. However, during the one-year project extension phase, the GOS prepared several key documents, including a Comprehensive Diagnostic Survey, Extension Strategy Review, Adaptive Research Reorganisation and Training Course for Women, as guides to improve the extension system\. The GOS also introduced the concept of Village Participatory Research Groups to improve the relevance and value of new technologies, but as this is a recent innovation it is too early to judge its effectiveness\. 55\. The GOS furnished quarterly reports on project progress and provided the necessary project audits as required\. By project closure, the GOS had complied with all covenants of the Development Credit Agreement, except for the conversion of all incremental staff positions to the non-development budget, which is implicit in Section 2\.08 of the Project Agreement\. Assessment of Outcome 56\. The project's outcome in both Punjab and Sindh Provinces is assessed as satisfactory as the project achieved most of its major objectives\. In Punjab Province it is expected that as a result of the project, further worthwhile development results will be achieved without further investment\. In Sindh province, however, there is some doubt (refer para\. 41) that further worthwhile development results will occur, unless sufficient budget is provided for operations, maintenance and capital item replacement and that there is further investment in developing the extension services\. Future Development 57\. Consideration has been given by the Extension Wings of the Department of Agriculture in both provinces to the present functioning of the T&V system and a series of modifications have been proposed to improve the working efficiency, effectiveness and approach to extension services\. The World Bank has a concurrent mission in Pakistan which is considering the future Strategy for Sustainable Agricultural Growth in Pakistan\. Clearly this will have important implications to the design of future projects concerned with agricultural development\. Strategy papers for development of extension services under new projects have been prepared separately by the Extension Wings of the Agricultural Departments for both provinces but these have yet to be considered by the respective provincial governments\. The proposed modifications to the present extension systems include the following: Punjab Province - changing the focus of extension to farm families rather than individual farmers, with an increased coverage; - reducing the frequency of the training and visit schedule to allow better message preparation and more time for farmers to visit the extension agent; - placing more emphasis for M&E on evaluation and information generation for management; - inducting women into the extension service; 11 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire developing technologies for specific target farmer groups to ensure more direct applicability and adoption; appointing staff specialized in horticulture and soils adaptive research and development; enhancing and involving farmer organisation and Non-Government Organisations in agricultural development; increasing farmer training; establishing contract research grants to universities for post-graduate studies to enhance research-extension linkages; increasing organisational decentralisation to develop autonomy and more comprehensive coverage within regions; promotion of commercialisation in agricultural extension services; and rationalisation of the administrative structure in the Agricultural Department\. Sindh Province - changing the focus of extension to target groups in defined agro-ecological zones; - ensuring routine farmer contact for SMSs and AOs in addition to their training and supervisory roles; - develop a field service executed by a reduced number of better qualified and more technically competent field staff that could produce substantial savings - inducting women into the extension service; - improve effectiveness of Zonal Technical Committee pre-season and in-season workshops to ensure better research-extension linkages; - use farmer groups, mass media and mobile vans to increase coverage and cost-effectiveness; - use seasonal campaigns to disseminate the most important "key messages" through on-farm adoption plots, demonstrations and mass media services; - enhancing and involving farmer organisations, the private sector and Non-Government Organisations in agricultural development; Key Lessons Learnt 58\. There are a number of lessons to be drawn from the implementation and outcome of this project in the two provinces, including: project success is very dependent on management which has leadership, vision, technical expertise, managerial and organisational skills; the T&V extension system should be modified to make it more cost effective, more flexible, more equitable to all farmers, less top-down, more participatory in the definition, testing and refinement of new technologies/practices on-farm, more rigorous in the diagnosis of constraints within the farming system and in the quantification of these issues and their feedback to management and research, have stronger linkages with research, and be more targeted to farmer groups (landlords, foremen, tenants, owner-operators and women); 12 PAKISTAN: Punjab and Sind Agricultural Extension and Adaptive Research Project Implementation Completion Report Appendix A: Mission's Aide-Memoire within the T&V system there should be more incentives and promotional opportunities for the front-line extension workers and their base knowledge and skills should be comprehensive and of a reasonably high standard to meet the demand for more site specific advice and recommendations to farmers; adequate mobility of front-line extension workers to enable widespread interaction with farmers is an imperative to ensure viability of extension programs and previous investments in improvement of extension services; proposed programs of civil works must be within the financial and managerial capacity of the implementing agency and the government must be fully committed to such a program at appraisal; the present setup of the ARFs in Sindh Province is unsatisfactory and they should be separated financially and administratively from the seed production and tenant farms and the recent move to more on-farm adaptive research is supported; in both provinces adaptive research should be concentrated more on farmers' fields, should not duplicate research done by Research Institutes, should be demand-driven and should make valid economic comparisons of new technologies with current farmer practices; training programs need to be modified to upgrade teaching methods, using adult-learning principles, curricula require revision to include training in extension methods, including group and communication skills and participatory methods, and training for FAs should provide more emphasis on problem definition, problem analysis, survey techniques, monitoring and evaluation, including informal and self-reflective methods; training programs for farmers should be increased and their curricula should emphasize improve farmers' knowledge of basic production principles and decision making ability; and the capacity to produce locally a range of low-cost audio-visual materials, to utilize regular time-slots on radio and television for programs of interest to farmers and to set-up media vans and information centres for farmers, all provide very effective pathways of technology transfer to farmers; media services require ongoing monitoring to ensure that they are reaching the desired target audience and that content is relevant\. 13 Appendix B PROJECT COMPLETION REPORT PAKISTAN PUNJAB AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCH PROJECT PHASE-IH CREDIT NO\. 1762-PAK [ Punjab Component ] 2-10-1994 I PROJECT COMPLETION REPORT PAKISTAN PUNJAB AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCH PROJECT PHASE-II (Credit 1762-Pak) PREFACE 1\. This is the Project Implementation Completion Report (ICR) for the PAE&AR Project in Pakistan for which Credit 1762-Pak amounting to SDR 22\.53 million (US$ 26\.53 million) was approved on 20-3- 1987 and was made effective on 31-12-1987\. The Credit closing date was extended by one year i\.e\. from 30-6-1993 to 30-6-1994\. Total credit disbursement was 20\.03 million against the appraisal estimate of 26\.53 million US$\. 2\. The Evaluation Summary and Parts I and III of the ICR have been prepared on the basis of the data supplied by the Agriculture Department or available in the P&D Department\." This report primarily covers the Project Components/objectives and the targets viz-a-viz actual achievements\. The impact evaluation of the project is being prepared and would be released by the Punjab Economic Research Institute (PERI) shortly\. EVALUATION SUMMARY 3\. This project is the fourth Bank Group loan and credit for the Agricultural Sector in Pakistan\. It is in line with Government objectives to re-organize and strengthen Agriculture Extension Service to increase agricultural production in Punjab Province\. 1\. Implementation Experience: 4\. The objectives of strengthening and re-organization of Extension Services have largely been accomplished\. However, difficulties were encountered in getting the construction of buildings completed according to schedule because of frequent revisions in construction rates and in some cases the site/land acquisitionproblems\. Difficulties in establishing Adaptive Farm at D\.G Khan were faced because suitable land was not available\. Furthermore works at 480 sites could not be taken in hand due to aforementioned problems\. The Foreign consultants engaged under the project unilaterally stopped consultancy service and it ultimately resulted cancellation of the agreement w \.e\. 20-3-1993\. The consultants achievement was 46 percent\. 2\. Results: 5\. The physical and financial targets of the project were fully achieved for all the project component, except the building and consultancy components\. Perusal of the Table\. 1 reveals a net increase in production of major crops, when compared with the production figures of the base period\. Although Agricultural production is a function of a number of factors which interact and overlaps to help giving output\. However this increase in the production in the project area during the post project period (1986- 1994) can be attributed to the improvement in the diffusion of proved crop production technology\. More '/ Since the full report is 30 pages long, only the Preface, Evaluation Summary, and Summary of Assessments are attached\. The full report is available from Asia ISC\. SAIAN\. 2 precise inferences regarding the socio-economic impact of the project could, however be drawn on the basis the evaluation study being conducted by PERI\. 3\. Sustainabilitv: 6\. Sustainability of Agricultural Extension and Adaptive Research net work with huge recurring liabilities throughout the Punjab (keeping in view the increasing burden on the non-development side of the budget for Agriculture sector) would very much depend on the efficient/effective utilization of the existing staff and the other resources\. It would be imperative to delete the undesirable componnent and reduction of expenditures whereas possible\. We will have to find the ways and means to make the project sustainable\. It would become difficult to afford a dense net work of public sector\. Possibilities will have to be explored to mobilize the masses, NGOs, and the provision of the extension services on cost sharing between extensionists and farmers\. 4\. Findings and Lessons Learnt: 7\. Although the project has achieved its most of the physical/financial targets set for the strengthening and reorganization of extension and Adaptive Research Activities, yet desired results could not be accomplished in the areas of adoption rate of better technology and the linkages between extension and research\. The progress on the major component i\.e\. construction of civil works has been lagging behind the schedule and resulted in delay in completion of the project\. For the future projects, there is a need for improvement in the phasing of the project in such a way that during the initial phase of one two years, only nucleolus staff should be provided for arranging the infrastructure, machinery and equipment and other project activities be undertaken under the subsequent phases\. 8\. Due to the increasing number of development projects being transferred to the non-development side every year, it has become necessary to take in to account the recurring liabilities of the projects at the time of the formulation of the project\. There is a need for more active contribution of the farmers and N\.G\.Os in providing extension services\. 9\. The role of the World Bank authorities/missions in identification, formulation, financing, appraisal and supervision has been quite satisfactory\. However the client Department did not have had a good experience of foreign consultants in the present project\. 3 Sunnmary of Assessments A\. Achievement of obiectives Substantial Partial Neglieible Not Applicable Macro policies [7] Sector policies 7 E i o Financial objectives [O] G O Institutional development [7] Z ]D Physical objectives [7[ [j ]7 Poverty reduction [] I [IO Gender issues D 7 E E Other social objectives En] [7] [ O Environmental objectives n ] u o Public sector management 7 E] 0 Private sector development [n Eo o ] Other (human resources dev\.) En [7] ED Ei] B\. Proiect sustainabilitv Likely Unlikely Uncertain (1) (el (/) Highlv C\. Bank performance satisfactory Satisfactory Deficient (I) (/ (/) Identification [O li2 Preparation assistance EO EO Appraisal F3 L ] Supervision O EO Ol 4 HiRhlv D\. Borrower performance satisfactory Satisfactory Deficient (d) ('/ (/) Preparation [ [ I Implementation D 7 i Covenant compliance [D [7 ED Operation (if applicable) l 1 O HighlY Highlv E\. Assessment of outcome satisfactory Satisfactory Unsatisfactory unsatisfactory (4 (El (I ( ED I V I Appendix C GOVERNMENT OF SINDH AGRICULTURE & WILDLIFE DEPARTMENT IMPLEMENTATION COMPLETION REPORT (ICR) OF SINDH AGRICULTURE EXTENSION & ADAPTIVE RESEARCH PROJECT PHASE-IT (CREDIT-1762 PAK) [Sind Component 1 FOR WB/FAO ICR PREPARATION MISSION OCTOBER 13-20, 1994 DIRECTORATE GENERAL AGRICULTURE EXTENSION SINDH EHYDERABAD 1994 SINDH AGRICULTURE EXTENSION & ADAPTIVE RESEARCH PROJECT PHASE-II\. Sindh Agriculture Extension & Adaptive Research Project Phase-II was conceived as an extension of earlier project "Sindh Agriculture Extension & Adaptive Research Project" to remaining areas of the province\. World Bank assisted Sindh Agriculture Extension & Adaptive Research Project (Cr\. 922-Pak) was under implementation from July 1980 to June 1985 in five districts namely Hyderabad, Sanghar, Nawabshah, Sukkur and Larkana of Sindh Province\. Following were the main objectives of the project\. - Increasing production of agricultural crops, particularly of major crops by improving their unit area yield\. - Dissemination of improved production technology in small farmers so as to narrow down gap of knowledge between innovative progressive farmers and common farmers\. - Strengthening of Agriculture Extension Services and introduction of Training and Visit system to remaining districts of the province\. - Establishment of Directorate of Agriculture Training and strengthening of Agriculture Training Institute Sakrand for improved training facilities\. - Strengthening of Adaptive Research, Infornation, Monitoring and Evaluation components\. Project commenced from January, 1988 (1987-88) at a total cost of Rs\.366\.063 million (GOS Rs\. 105\.936 & IDA Rs\.260\.127 million, equivalent to 13\.155 million SDRs) for the period of 54 months\. Later in May 1991, project Pc-I was modified, extending project life upto June 30, 1993 with revised cost of Rs\.419\.970 million (GOS Rs\. 139\.483 and IDA Rs\.280\.487 equivalent to previously allocated 13\.155 million SDRs)\. During last year (1993) project Pc-I was again revised, extending project life upto June 30, 1994\. The revised estimated cost was 563\.632 million (GOS Rs\. 120\.956 million and IDA Rs\.442\.676 million equivalent to previously allocated 13\.155 million SDRs)\. Project successfully completed its scheduled development life on June 30, 1994\. Project Pc-IV has been prepared and submitted to govermnent for allowing to continue project activities on the non development side\. An estimated requirement of funds will be Rs\.82\.691 million annually, including 59\.867 million on O&M\. There have been significant progress in achievement of project objectives\. Training and Visit System of Agriculture Extension have been successfully introduced in whole of the province of Sindh\. The lowest level extension field staff i\.e\. Field Assistant has a fixed fortnightly schedule of field activities comprising of two days for training at training centres and six days for visit to contact farmers groups during a fortnight\. During training sessions, he receives training on the fortnightly messages and then he delivers and demonstrates it to contact farmers groups during his visit to them\. Besides this direct contact approach, agricultural information on seasonal and day to day issues is disseminated regularly through monthly Sindh Zarat, weekly Ahgd= progranmme of Pakistan Television Centre Karachi and daily Zari Pro rammes of Radio Pakistan Hyderabad and Khairpur Stations\. Further, agriculture extension information is also spread through sign & publicity boards, wall chalking along main roads & highways and through leaflets, posters, pamphlets etc\. Apart from above, demonstration plots are kept on farmer's fields to demonstrate impact of improved production technologies, crop varieties and cultural practices to farmers on their fields\. Special crop grow more campaigns, seminars and field days are arranged to make grower more and more aware of current issues and their solutions\. Research programmes addressing farners problems are basic requirement for effective extension services, realizing this fact\. Adaptive Research farms were established and adaptive research is being conducted to solve growers site specific problems\. Staff and farmer's training facilities have been strengthened considerably through the establishunent of Directorate of Agriculture Training and enhancement of facilities at Agriculture Training Institute Sakrand\. Similarly working of Information and Monitoring and Evaluation components have improved through the additional of project facilities to these components\. Project activities have produced its impact on over all agricultural production of the province as can be seen from following provincial area and production figures of major crops\. TABLE- I Area, Production & Yield per ha: of major crops in Sindh before and during the project\. Year Area Production Yield kg/Ha 'noo'ha '000 ' MT/Bales COTTON 1986-87 (BM) 638\.30 1304\.60 348\.00 1987-88 629\.60 1374\.50 371\.00 1988-89 564\.00 1108\.00 334\.00 1989-90 561\.30 1104\.00 334\.00 1990-91 536\.60 1125\.20 356\.00 1991-92 547\.60 1404\.00 436\.00 1992-93 397\.30 815\.90 349\.00 1993-94 594\.90 1517\.90 434\.00 Average\. 547\.33 1207\.07 373\.42 Change % (-)14\.25 (1 7\.48 7\.305 over BM\. SUGARCANE 1986-87 (BM) 182\.70 7906\.10 43\.30 1987-88 207\.10 9574\.80 46\.20 1988-89 247\.90 13110\.50 52\.90 1989-90 250\.70 12360\.00 49\.30 1990-91 253\.00 11155\.50 64\.68 1991-92 255\.20 14240\.40 55\.78 1992-93* 247\.90 13556\.80 54\.67 1993-94 265\.70 15421\.00 58\.04 Average 246\.78 12774\.14 54\.51 Change X 35\.07 61\.57 25\.89 over BM\. RICE 1986-87 (SM) 721\.00 1548\.50 2148\.00 1987-88 722\.00 1537\.00 2129\.00 1988-89 686\.00 1436\.00 2093\.00 1989-90 685\.00 1340\.00 2046\.00 1990-91 679\.80 1433\.40 2108\.00 1991-92 692\.30 1487\.50 2148\.00 1992-93* 568\.70 1272\.80 2238\.00 1993-94 702\.80 1954\.80 2781\.00 -3 - Year Area Production Yield kg/Ha 'OOO'ha '000' MT/Bales Average 676\.65 1494\.50 2220\.42 Change % (-) 6\.15 t-) 3\.49 3\.37 over SM\. WHEAT 1986-87 (BM) 1036\.00 2211\.50 2135\.00 1987-88 1025\.00 2180\.00 2127\.00 1988-89 1045\.00 2361\.00 2259\.00 1989-90 1045\.00 2131\.00 2039\.00 1990-91 1053\.50 2274\.50 2159\.00 1991-92 1058\.40 2365\.30 2235\.00 1992-93 1103\.70 2417\.90 2191\.00 1993-94* 1105\.50 2116\.60 1915\.00 Average 1062\.30 2263\.43 2132\.14 Change X 2\.54 2\.36 (-) 0\.13 over BM\. Year 1992-93 was not a normal year for kharif crop due to devastating torrential rains\. Considering 1986-87 as a bench mark (BM) year, it will be observed that area under cotton has continuously declined and so has production\. But now trend has changed and there have been increase in production to the tune of 100 and 200 bales during the year 1991-92 and 1993-94 respectively\. Similarly, yield per hectare has also increased from 348 Kg\. to 373\.42 Kg\., an increase of about 7\.31 percent\. Main cause for the decrease of area of cotton crop is heavy attack of pest to this crop\. Other important reason is establishment of sugar mills in cotton growing areas\. Thus, growers are shifting to sugarcane crop\. There have been a 35 percent increase in area of sugarcane crop since 1986-87\. Correspondingly, production has registered an increase of about 61\.57 percent and yield per hectare has grown to about 26 percent\. Area under rice crop has decreased to the extent of 6\.15% compared to year 1986-87\. This is again due to shifting to sugarcane crop particularly in lower Sindh\. However, production has declined to 3\.49 percent only; mainly because of improvement in yield per hectare, which has increased from 2148 Kg/h in 1986-87 to 2220\.42 Kg/h, an increase of about 3\.37 percent\. Wheat area is continuously increasing since 1987-88\. Increase being about 2\.54 percent over bench mark (1986-87)\. Similarly production has also increased to the extent of 2\.36 percent\. Production has been increasing since 1990-91\. Year 1993-94 was a exceptional year for wheat crop due to acute shortage of irrigation water during late growth and maturity period, which resulted in reduction in yield per hectare of the crop and over all decrease in production\. Other wise yield per hectare of wheat crop have also increased (1\.56%) over the bench mark year\. There has been improvement in the production of other crops also\. This clearly indicate that project has made impact on the agricultural productivity of the province\. Other physical achievements of the project are as follow: Staff Addition\. Through the project, following staff positions have been added in the provincial Agriculture Extension Services\. - 4 - TABLE-2 Staff Position\. Sr: Position\. PS Number Filled Vacant Total No: 1\. Director Trg: 19 1 1 - 1 2\. DD Information 18 1 1 - 1 3\. DD Training\. 18 1 1 - 1 4\. Vid:Prod:Officer 18 1 1 - 1 5\. System AnaLyst\. 18 1 1 - 1 6\. DD Agr:Ext\. 18 6 6 - 6 7\. SSMS\. 18 3 3 - 3 8\. ADA Ext\. 17S 8 8 - 8 9\. SMS\. 17S 14 14 - 14 10\. Sr:Instructor\. 17S 4 4 - 4 11\. AD (Radio Prog) 17S 2 2 - 2 12\. Asstt:Stat:Officer\. 17S 1 1 - 1 13\. Asstt:Dir:Trg: 17S 2 2 - 2 14\. Agri:Officer\. 17 42 42 - 42 15\. Information Officer\. 17 1 1 - 1 16\. Radio Prog:Officer\. 17 1 1 - 1 17\. Programmer\. 17 1 1 - 1 18\. Asstt:Trg:Officer\. 17 2 2 - 2 19\. Video Prog:Officer\. 17 1 1 - 1 20\. Research Officer\. 17 1 1 - 1 21\. Video Camera Man\. 16 2 2 - 2 22\. Video Technician\. 16 3 3 - 3 23\. Enumerators\. 16 3 3 - 3 24\. Office Supdt\. 16 17 17 17 25\. Statistical Investg: 16 13 13 13 26\. Stenographer\. 15 7 7 - 7 27\. Artist/Designer\. 13 2 2 - 2 28\. Stenotypist\. 12 15 15 - 15 29\. Photographer\. 12 2 2 - 2 30\. Office Assistant\. 11 24 24 - 24 31\. ELectrician\. 7 1 1 - 1 32\. Plumber\. 7 1 1 - 1 33\. Senior Clerk\. 7 10 10 - 10 34\. Inform:Van Operator\. 7 1 1 - 1 35\. Van Driver\. 6 2 2 - 2 36\. Van Operator\. 6 2 2 - 2 37\. Field Assistant\. 6 292 292 - 292 38\. Jr:Clerk/Pf:Rd: 5 22 22 - 22 39\. Jr:Clerk/typist\. 5 2 2 - 2 40\. Computing Clerk\. 5 3 3 - 3 41\. Inform:Van Driver\. 4 2 2 - 2 42\. Driver\. 4 41 41 - 41 43\. Tractor Driver\. 4 1 1 1 44\. Cook/Gardener\. 3 4 4 - 4 45\. Kitchen Helper\. 1 3 3 - 3 46\. NQ/HeLper/Watchman\. 1 43 43 - 43 47\. Beldar\. 1 44 44 - 44 Total: - 656 656 - 656 Civil Works\. Through this project 819 building units have been constructed all over the province\. The details are as follow: TABLE-3 Position of Civil WorIss\. Sr: BuiLding Completion year\. Total No: type\. --------------------------------------------------- Units\. 87 88 89 90 91 92 93 88 89 90 91 92 93 94 1\. DG Office\. - - - - - - - 1 2\. Trg:Unit\. - - - - - 1 - 1 3\. Trg:Centre\. - 2 3 10 3 - 2 20 4\. ADA Office\. - 2 4 8 3 - 3 20 5\. AO Office\. 3 2 3 11 15 9 3 U 6\. FA Office\. - 3 7 47 366 228 72 723 7\. ARF Complex\. - - - - - 1 - 1 8\. DDAE Resid: - 1 1 3 - 2 7 9\. Renov:of - - - - - - 5 5 build:2 ATI Sakrand\. 10\. Bound:Wall\. - - - - - - 84 84 11\. Approach - - - - - - 2 2 Roads\. Total: 3 10 18 79 387 239 174 910 Transgort Transport as listed below have been procured through the project: TABLE-4 Procurement of Trnsport\. Sr: Transport Year of Procurement\. Total No: type\. ------------ 86 87 88 89 90 91 92 93 87 88 89 90 91 92 93 94 1\. Car\. - 04 01 - - - - - 05 2\. Jeeps\. 12 15 11 03 - - - 41 3\. Pickups\. 09 - - - - 28 - - 37 4\. Micro Bus\. - 01 - 01 - - - 02 5\. Trg: Van\. - - 01 - 01 - - - 02 6\. Inform\.Van\. - - 01 - 01 - - 02 7\. Motorcycles\. 25 30 - 86 - - 835 - 976 S\. Sicyles\. 146 342 - 565 - - - 1053 Total: 180 389 18 97 571 28 835 - 2118 Maclbinar & Eaiu]ents\. Following machinary and equipment items for various project component have been procured: - 6 - TABLE-5 Procurement of Machinary and Equipment\. Sr: I t e m s: Year of Procurement\. Total No: -------------------- 86 87 88 89 90 91 92 93 87 88 89 90 91 92 93 94 1\. ATI Equip: 02 03 01 01 01 13 258 07 286 2\. ARF Equip: 17 - 18 01 03 529 04 - 572 3\. Trg:Equip: 90 37 16 38 06 203 57 - 447 4\. Media Equip: - 12 04 04 08 41 129 23 221 5\. Office Equip: 54 11 12 17 10 11 09 - 134 6\. Other Equip: - - - - 01 09 02 - 12 Total: 163 63 61 61 29 806 463 34 1672 Furmiture TABLE-6 Funiture procured\. Sr: Particulars Year wise procurement of Sets\. TotaL No: -------------------------- 86 87 88 89 90 91 92 93 87 88 89 90 91 92 93 94 1\. DG Office: 01 2\.5 - - - - 3\.5 2\. Trg:Centre: - 03 - 02 - 06 05 - 16 3\. DDA&ADA Office - 02 - - - 05 10 - 17 4\. AO Offices: - 5\.5 - - - 15\.5 15 - 36 5\. FA Offices: - 93 40 41 06 80 324 - 584 6\. ARF & PD (C&W) - - - - - 01 01 - 02 Total: 01 106 40 43 06 107\.5 355 - 658\.5 Technical Assistance Project provided service of foreign and local experts/ consultants on the discipline & period as given in the table\. TABLE-7 Procurement of Technical Assistance\. Sr: Subject: Man-Month Procurement No: 1\. Extension PLanning\. 38\.50 2\. Formal & informal training\. 13\.00 3\. Adaptive Research\. 19\.65 4\. Information\. 5\.00 5\. Monitoring and Evaluation\. 4\.00 6\. Survey\. 3\.50 7\. Farming system\. 3\.00 8\. Extension Strategy\. 0\.35 9\. Supervisory\. 3\.00 10\. Local\. 3\.00 Total: 94\.35 7a- Besides fortnight training of field staff, following trainings were conducted locally and overseas\. TABLE-8 Trainigs Sr: Subject: Number No: 1\. Overseas\. 26 2\. Inland: a) Short Courses: 205 b) Special: 167 c) ATI Sakrand: 120 3\. Consultants: 09 4\. Seminars/Workshops\. a) Lady Extension Workers & Farmers\. 110 b) Post Harvest Techniques\. 365 c) Water User's Associations\. 102 d) Demonstration & Exhibitions\. 203 Totat: 1307 Appendix D IMPLEMENTATION COMPLETION REPORT PAKISTAN PUNJAB AND SIND AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCH - PHASE II PROJECT (Cr\. 1762-PAK) COMMENTS FROM GOVERNMENT OF SINDH ON FINAL DRAFT ICR DIRECTORATE GENERAL, AGRICULTURE EXTENSION SINDH, HYDERABAD\. No\. DGAES\.T\.IV(161)/95/720 Hyderabad, dated: 6/6/95 To: The Section Officer (Ext), Agriculture & Wildlife Department, Government of Sindh, Karachi\. SUBJECT: PUNJAB & SINDH AGRICULTURE EXTENSION & ADAPTIVE RESEARCH PROJECT (CR\. 1762 PAK) IMPLEMENTATION COMPLETION REPORT (ICR) Ref'nce: Letter dated May 24, 1995\. Dr\. Rashed-ul-Qayyum, Project Advisor, World Bank Resident Mission in Pakistan through his letter dated May 24, 1995 (copy enclosed) has desired comments on the final draft "Implementation Completion Report"\. The final draft copy of "Implementation Completion Report" has been thoroughly reviewed and concluded that it does not require any comment\. However, clarification with regard to certain paras is submitted as under: Para-6 \. \.Unfortunately, however, in Sindh a number of Senior Subject Matter Specialists (SSMSs) have recently transferred to Research Institutes of the Research Wing of the Department of Agriculture (DA) due to more attractive conditions provided under the Second Agricultural Research Project (ARP-II; Cr\. 2154-PAK)\. Significant vacancies are now also reported for Agricultural Officer (AO) positions in some districts of Sindh\. Senior Subject Matter Specialists (SSMSs) belonging to Research Services have been taken back by the Research Wing to fill the existing vacancies under Research Services and not due to more attractive conditions provided and ARP-II Project\. Most vacant posts of SSMSs have been filled\. Para-10 \. The construction of buildings at Karror and D\.G\. Khan (Punjab) and at Pangrio (Sindh) has been completed, but at Pangrio the buildings have not been handed over to DA because they were not constructed according to specifications\. A considerable number of trials and demonstrations have been set up under the project\. The majority of trials, however, have been undertaken on ARFs, not in farmers' fields\. In general, trials and demonstrations have not been useful for fine-tuning new technologies and promoting proven technologies\. In Sindh, the adaptive research program was reorganized during the one-year extension of the project to include, for the first time, large numbers of trials in farmers' fields, and the relocation of many SSMSs to district locations\. The possession of buildings of Adaptive Research Farm Pangrio has been taken over by the Department\. All buildings are now in possession of Adaptive Research staff posted on the farm\. Para-25 In the short term, it seems likely that GOPun will be able to maintain project achievements, in respect to major objectives and strategies, and the plans currently being formulated to ensure further improvements to extension services and adaptive research, but the situation in Sindh is more problematic (para-34)\. In both provinces DAs are experiencing temporary delays in the transfer of recurrent project costs to their non-development budgets\. Project costs have been transferred to non development budget in Sindh\. Para-26 \. In Sindh, high rates of staff transfer, apparently as policy, are leading to inefficiency in management and operations\. Transfers of officials/officers are made whenever it becomes necessary in the interest of government work\. Recently, Government has imposed restriction on transfer of officers/officials prior to three years of service on a station\. Para-27 \. There remains a building-deficit in Sindh, as a number of buildings have not yet been handed over to the DA, because they were not constructed according to the original specifications, or are in need of extensive renovation due to deterioration while occupied by the Security Forces\. Matter regarding completion of under construction building/ renovation of buildings was taken up with C&W Department and they have promised for their completion\. You are requested that above clarifications may kindly be communicated to Dr\. Rashed-ul-Qayyum, Projects Advisor, World Bank Resident Mission in Pakistan at Islamabad latest by June 10, 1995 as desired by him\. DIRECTOR GENERAL AGRICULTURE EXTENSION SINDH HYDERABAD CC to: Dr\. Rashed-ul-Qayyum, Project Advisor, World Bank Resident Mission in Pakistan, PO Box No\. 1025, Islamabad\. Appendix E IMPLEMENTATION COMPLETION REPORT PAKISTAN PUNJAB AND SIND AGRICULTURAL EXTENSION AND ADAPTIVE RESEARCH - PHASE II PROJECT (Cr\. 1762-PAK) COMMENTS FROM GOVERNMENT OF PUNJAB ON FINAL DRAFT ICR No\. 1015)IDA-I/85- GOVERNMENT OF PAKISTAN , S nii MINISTRY OF FINANCE\. REVENUE & 4 m S S4,-A-12 jX l,&< ECONOMIC AFFAIRS MIC AFFAIRS & STATISTICS DIVISION i* (ECONOMIC AFFAIRS WING) _ _ ,/ \|s/411[kIwnahad, the 28th\. 4 \.* \. \. i9 Telearam: ECONOMIC Telex ECDIV: 05-634 SECTI O OFFICER PHONE: 826556: Subject:- PUNJAB AGRECULTURE EXTEN-SION AND ADAPTIVE RESEARCH PREJECT(IDA CREDIT NO\.1762-PAK)\. IMPLfliTATIErN CC%PLETIrN REPORT(ICR)\. Dear Mr\. Rashidul Qayyum, Please refer to the World Bank',Iq letter dated 18th May91995 on the above subject\. 2\. Please find enclosed a copy of the comments/views of Gnvt\. of Punjab mn the evaluation summary and project iMpla\.entatinn awsessment(implenentation completion report) for further necee-Pry action at your end\. With regards\. Yours sincerely, A4R MUNIR) Mr\. R-ghidul-Qayyum, Pr'oject -Adviver, World-B Bnk Resident Mission, I slamabad\. PARAWISE COMMENT/VIEWS ON EVALUATION SUMMARY AND PROJECT IMPLEMENTATION ASSESSMENT A\. EVALUATION SUMMARY\. Item No\. Comments 1\. Introduction 1\. Noted\. 2\. Project Objectives 2\. Noted\. 3\. Covenants\. 3\. The Government of Punjab has now The Government of Punjab had agreed and transferred all complied with all covenants of incremental staff positions to non- development credit agreement except development budget w\.e\. from for transfer of all incremental staff 1\.7\.1994\. positions to non-development budget\. 4\. Implementation Experience and a> Buildings: The C&W Department in Results\. view of initial implementation delays (funding problems) and subsequently The project undoubtedly played a because of frequent increase in role in promoting new improved construction rates remained behind technology\. Notwithstanding initial the schedule envisaged in PC-I\. On delays the project achieved and 30\.6\.1994 the position about exceeded the majority of physical buildings stood as under: targets set in SAR(PC-I) except for civil works and technical assistance\. Completed = 1066 Near completion = 874 Total 1940 To be constructed = 2170 b> Consultants: The consultants unilaterally stopped the consultancy due to income tax payment problem\. Later on in pursuit of the decision of Consultant Selection Committee, the contract was cancelled\. 5\. Proiect Cost\. 5\. The total IDA credit and the amount remained unspent as shown, Of the total IDA credit of 35\.5 covers both the Punjab and Sindh million SDR 6\.52 million remained province\. It does not specifically unspent on December 7, 1995 and were mention the amount of credit and cancelled due to depreciation of amount remained unspent for the rupee against the SDR\. Punjab component\. It needs clarification from the author of the report\. Contd \. P/2\. -: 2 6\. Key Factors Relating to Achievement of Obiectives\. T&V system: Objectives of T&V 6\. The author of the project report system satisfactorily achieved, has based upon the reports prepared consultancies were limited and by Monitoring and Evaluation unit\. delayed, regular contacts with The accuracy of data of M&E reports farmers undesirably low level, requires a careful examination of contact farmers have significantly sampling methodology\. higher crop yields than district average\. 7\. Traininq Institutes\. 7\. Noted\. ATIs strengthened, ttaining hall established and equipped\. These are operating satisfactorily\. 8\. Training\. 8\. The pre-service training to FAs is imparted in ATI\. A prescribed Regular training programmes were syllabus is followed\. The in-service repetitive and lacking in substance, training is disseminated according to need to be upgraded for meeting need of agricultural situation (Rabi current demands\. & Kharif)\. Overseas Training\. There was some administrative delay in finalizing the list of trainees\. However, officers approved by Government of Punjab/ Government of Pakistan for overseas training, received training in different educational institutes in U\.K\., USA, China, Philippines and Netherland\. 9\. Adaptive Research\. 9\. Research trials are laid out according to approved plan at A\.R\. A\.R\. Farms established\. Failure Farm and farmers field\. The A\.R\. to develop essential linkages with Staff maintains rapport with the Extension and other Research extension and other Institutes Institutions are a cause of concern\. regularly\. The Research Staff is also participating in preparing fortnightly technical messages for the training/refreshing the knowledge of field staff\. Contd \. P/3\. -: 3 :- 10\. Technical Assistance\. 10\. A foreign consultancy firm was engaged which deployed its Quality of consultancy inputs consultants according to schedule of ranged from satisfactory to the agreement\. But due to income tax excellent\. The level of inputs was problem the firm unilaterally stopped well below the target\. consultancy service after completing only 17\.5 man-months out of 38 man- months\. Therefore the target was not achieved\. 11\. Monitoring & Evaluation (M&E)\. 11\. Noted\. Monitoring & Evaluation of the project regular and documented by bi- annual reports\. 12\. Civil Works & Vehicles\. a> Civil Works: In view of frequent increase in construction rate the Civil works seriously delayed\. construction of buildings remained Several buildings were still not behind the schedule\. On the close of completed\. Despite procurement of the project (30\.6\.1994) the following vehicles mobility of extension staff situation regarding buildings was identified a major constraint\. emerged\. Total Buildings = 2170 Buildings Completed = 1066 Near Completion = 874 For the completion of buildings categorised as near completion (874), the C&W Department is determining the amount required\. After which G\.O\.Punjab will be approached to release the required funds and the buildings will be completed in due course of time\. b> Vehicles: During the last year of the project 70 vehicles were procured and supplied to Extension Staff\. 13\. Communication\. 13\. Noted\. Excellent progress made in developing mass-media\. Contd \. P/4\. 4 :4 14\. External Constraints\. 14\. Noted\. Number of external factors affected the impact of the project\. 15\. Bank Performance\. 15\. Noted\. Bank supervision missions were reasonably regular\. 16\. Borrower Performance\. 16\. Noted\. The implementation agencies tried hard to complete the project on target\. Problems like serious delay in civil works programme, procurement of replacement vehicles, overseas training, slow start of technical assistance\. 17\. Project Outcome Assessment\. 17\. Noted\. A future strategy suggesting improvement in present T&V Project outcome assessed as system for agriculture has been satisfactory\. Project achieved most prepared and is under process of of its specific objectives\. Further approval with the Government of the worthwhile development is expected to Punjab\. be achieved without additional investment\. If modifications to T&V system are not gained sustainability and impact on agriculture development would ultimately be affected\. 18\. Summary of Findings, Key Lessons Learned and Future Operation\. Important Findings:- i> Deficiencies in operation\. i> Noted\. ii> Low level of education of FAs ii> The A\.O\. who supervises the FAs limits their capacity to provide is a Graduate/Master Graduate in comprehensive services to farmers\. Agriculture\. He always guides the FAs in technical matters to meet the requirements of farmers\. The FAs are also having two years diploma in Agriculture\. Contd \. P/5\. - : 5 : iii> Weak linkage between Extension iii> The A\.R\. is maintaining liaison and A\.R\. with Extension staff to achieve the objectives successfully\. iv> Civil works implementation iv> The implementation delays in delays\. civil works were due to frequent increase in construc- tion rates of buildings\. v> Good progress was made in v> Noted\. developing mass-media to support extension\. Lessons Learned:- - Project success depends on managerial capacity, - Modification of T&V system to make it more cost effective, more flexible, more equitable, less top-down, more participatory, - Prioritizing role of private sector and NGOs, - Determining of availability of human resources, - Upgradation of training method and curricula, - Expansion of education ) Noted\. programme for farmers, - More incentives and promotional opportunities for frontline Extension worker, - Civil works programme must be within financial and managerial capacity, - A\.R\. should not duplicate research done by Research Institutes, - The importance of M&E, specially evaluation be reinforced\. 19\. Future Development\. 19\. A document of future Agriculture Strategy in Punjab is under process A need to modify extension of approval with the Government of services recognized and extension the Punjab\. strategy paper prepared\. This has yet to be considered by the Punjab Government\. Contd \. P/6\. -: 6 B\. PROJECT IMPLEMENTATION ASSESSMENT (PART-I)\. All the items under project implementation assessment have already been discussed under the aforementioned, Evaluation Summary\. C\. STATISTICAL TABLES (PART-II)\. Table No\. Title of Table Comments I> Summary of Assessments\. Agreed\. II> Related Bank Loans/Credits\. Agreed\. III> Project Timetable\. Agreed\. IV> Loan/Credit Disbursements: Agreed\. Cumulative Estimated and Actual (SDR millions)\. V\.7> Key Indicators for Project Agreed\. Implementation\. VI> Key Indicators for Project Agreed\. Operation\. VII> Studies Included in Project\. Agreed\. VIII> Al: Project Cost\. [ The figures reflected B]: Project Financing\. E in the table pertain Cto the Punjab & Sindh Provinces\. These need) a Province wise break (up\. IX> Economic Costs & Benefits\. Agreed\. X> Status of Legal Covenants\. Agreed\. XI> Bank Resources : Staff Inputs\. Agreed\. XII> Bank Resources : Missions\. Agreed\. - i t * _ ' 7 t ' 4 \| , _,, , ,, ; !::: - t; ::: 7--	REVIEW
P010200	ï»¿ Marsyangdi hydroelectric power project Report No: ; Type: Report/Evaluation Memorandum ; Country: Nepal; Region: South Asia; Sector: Electric Power & Other Energy Adjustment; Major Sector: Electric Power & Other Energy; ProjectID: P010200 Nepal: Marsyangdi Hydroelectric Power Project (Credit 1478- NEP) The Implementation Completion Report (ICR) on the Nepal Marsyangdi Hydroelectric Power Project (Credit 1478- NEP, approved in FY84) was prepared by the South Asia Regional Office and reviewed by the Operations Evaluation Department (OED)\. An IDA Credit in the amount of SDR 100\.6 million was approved on May 22, 1984, and closed on December 31, 1994, four and a half years after the original closing date\. Of the credit amount, SDR 75\.3 million were disbursed, and the remaining SDR 25\.3 million were canceled at the time of closing\. Cofinancing was provided by the German Kreditanstalt fâ r Wiederaufbau (KfW), the Asian Development Bank (ADB), the Saudi Fund for Development (SFD), and the Kuwait Fund for Arab Economic Development (KFAED)\. The ICR includes comments from the KfW, but not from the other cofinanciers or the Borrower\. The main objectives of the project were: (i) to meet the forecast power demand of Nepal in a least cost manner; and (ii) to help establish and strengthen the Nepal Electricity Authority (NEA), an autonomous public sector corporation which was created in 1985 through the amalgamation of a number of other public sector organizations involved in the power sector\. The project comprised: (a) the construction of the 69 MW Marsyangdi hydro power plant; and (b) a technical assistance program to strengthen the NEA in the areas of finances, accounting and auditing, plant maintenance, reduction of system losses, and training\. The project fully achieved its physical objective\. The Marsyangdi hydroelectric project was commissioned in 1990, only seven months behind the appraisal timetable, at a cost 20 percent lower than the appraisal estimate, and has significantly improved the reliability of power supply for NEA's 400,000 customers\. However, the outcome of resettlement was unsatisfactory since most of the 226 families affected by the project have been unable to purchase alternate land with the compensation provided, of which 41 families were still in need of rehabilitation\. A satisfactory resolution of this issue is being pursued by IDA with the Government\. Another issue is increased sedimentation and the threat of flooding from the outburst of an upstream glacier lake\. A catchment management plan financed under the project was completed and its implementation has become part of the Power Sector Efficiency Project (Credit 2347-NEP, approved in FY92)\. In regard to institutional strengthening, the project successfully supported the establishment of the NEA and, in comparison to its predecessors, its accounting and auditing has improved\. However, NEA's finances have not strengthened as fast as expected at appraisal (its rate of return on assets was only 1\.6 percent in 1994, vs\. an appraisal projection of 6 percent), major plant maintenance was delayed until after project completion, the loss reduction program fell short of the modest targets set at appraisal, the training program made only limited progress after a much-delayed start\. The economic rate of return of the project was reestimated as 6\.7 percent in the ICR, slightly higher that the 5\.9 percent estimated at appraisal (using tariffs which significantly understate the project's real economic benefits in terms of consumers' willingness to pay), mainly because of lower costs\. OED rates the outcome of the project as marginally satisfactory, its sustainability as uncertain, the institutional development impact as moderate, and the Bank's performance as unsatisfactory\. The ICR rates outcome as satisfactory, mainly because of the successful construction of the Marsyangdi plant in a difficult context\. However, given the highly unsatisfactory outcome of resettlement and the limited progress on institutional development a marginally satisfactory rating is more appropriate\. The ICR rates sustainability as likely\. Given NEA's continued weak financial performance, its failure to improve its operational performance (in relation to its predecessor organizations), its poor record with the maintenance of projects, as well as major unresolved issues in relation to sedimentation and the threat of a glacier lake outburst flood, OED believes that the long-term sustainability of the benefits of the project should more accurately be rated as uncertain\. The ICR rates institutional development impact as moderate, in agreement with OED\. The ICR rates the Bank's performance as satisfactory since the Bank carefully linked the processing of the operation to the development of a technically sound project\. However, since a satisfactory resettlement plan had not been prepared by the time of negotiations, as required by the guidelines, and the appraisal was overoptimistic in relation to the speed at which NEA's capabilities could develop, an unsatisfactory rating is considered more appropriate\. As indicated in the ICR, this project illustrates the fact that, in the infrastructure sectors, borrowers tend to own physical project components more clearly than institutional ones, because they usually request the Bank's assistance primarily to finance capital intensive facilities such as power plants\. To improve the long-term sustainability of the benefits of such projects, the Bank needs to pay greater attention to the Borrowers' ownership of the policy and institutional strengthening aspects, including resettlement management, of the implementing agencies\. The ICR is satisfactory\. It provides a well-organized discussion of the implementation experience of the project, identifies the appropriate lessons, contains good operational and financial indicators, and provides a detailed plan for future operation of the project\. However, it would have been useful for the ICR to have discussed in greater detail the risks posed by increased sedimentation, a glacier lake outburst flood, and the strategies for addressing these threats and the unresolved resettlement issue\. The project may be audited\.	REVIEW
P108654	Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005271 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-77780) ON A LOAN IN THE AMOUNT OF US$190 MILLION TO THE STATE OF PERNAMBUCO WITH THE GUARANTEE FROM THE FEDERATIVE REPUBLIC OF BRAZIL FOR A BRASIL PERNAMBUCO SUSTAINABLE WATER PROJECT (PROJETO DE SUSTENTABILIDADE HÃDRICA DO ESTADO DE PERNAMBUCO) April 30, 2021 Water Global Practice Latin America and the Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective April 08, 2021) Currency Unit = Reais (R$) R$ 5\.581100 = US$1\.0 US$0\.179176 = R$ 1\.0 FISCAL YEAR January 1 â December 31 Regional Vice President: Carlos Felipe Jaramillo Country Director: Paloma Anos Casero Regional Director: Anna Wellenstein Practice Manager: Rita E\. Cestti Task Team Leader: Jean-Martin Brault ICR Main Contributor: Berta Macheve The World Bank Brasil Pernambuco Sustainable Water Project (P108654) ABBREVIATIONS AND ACRONYMS APAC State Water Regulatory Agency (AgÃªncia Pernambucana de Ãgua e Clima) ARAP Abbreviated Resettlement Action Plan ARPE Pernambuco Multi-Sectoral Regulating Agency (AgÃªncia de RegulaÃ§Ã£o de Pernambuco) BOD Biochemical Oxygen Demand COMPESA Pernambuco State Water Supply and Sanitation Company CPF Country Partnership Framework CPRH State Agency for the Environment and Water Resources (AgÃªncia Estadual de Meio Ambiente e Recursos HÃdricos) DED Detailed Engineering Design DMA District Metered Areas EFA Economic and Financial Analysis EFO Externally Financed Output EIRR Economic Internal Rate of Return EMP Environmental Management Plan FIRR Financial Internal Rate of Return GDP Gross Domestic Product GoPE Government of Pernambuco ICR Implementation Completion and Results Report IEG Independent Evaluation Group IFR Interim Financial Report ITEP Pernambuco Institute of Technology (Instituto de Tecnologia de Pernambuco) l/s Liters per second M&E Monitoring and Evaluation MRR Metropolitan Region of Recife MTR Mid-Term Review NDB New Development Bank NPV Net Present Value NRW Non-Revenue Water OP Operational Procedures PAD Project Appraisal Document PBC Performance-Based Contract PCU Project Coordination Unit PDO Project Development Objective PIU Project Implementation Unit RAP Resettlement Action Plan RPF Resettlement Policy Framework SAA Water Supply System (sistema de abastecimento de Ã¡gua) SDEC State Secretariat for Economic Development SEINFRA Infrastructure and Water Resources Secretariat (Secretaria de Infraestrutura e Recursos HÃdricos) SES Sewerage System (sistema de esgotamento sanitÃ¡rio) SNISB National Information System of Dam Safety (Sistema Nacional de InformaÃ§Ãµes sobre SeguranÃ§a de Barragens) SRH State Secretariat of Water Resources TA Technical Assistance Page 1 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) ToC Theory of Change TOR Terms of Reference WRM Water Resources Management WSS Water Supply and Sanitation WWTP Wastewater Treatment Plant Page 2 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) TABLE OF CONTENTS DATA SHEET \. 4 I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 8 A\. CONTEXT AT APPRAISAL \.8 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION \. 12 II\. OUTCOME \. 16 A\. RELEVANCE OF PDOs \. 16 B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 17 C\. EFFICIENCY \. 25 D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 27 E\. OTHER OUTCOMES AND IMPACTS (IF ANY) \. 27 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 29 A\. KEY FACTORS DURING PREPARATION \. 29 B\. KEY FACTORS DURING IMPLEMENTATION \. 31 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 32 A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 32 B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 33 C\. BANK PERFORMANCE \. 36 D\. RISK TO DEVELOPMENT OUTCOME \. 37 V\. LESSONS AND RECOMMENDATIONS \. 38 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 40 ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 51 ANNEX 3\. PROJECT COST BY COMPONENT \. 53 ANNEX 4\. EFFICIENCY ANALYSIS \. 54 ANNEX 5\. REVISED THEORY OF CHANGE \. 64 ANNEX 6\. POST-CLOSING SAFEGUARD COMPLIANCE ACTION PLAN AND STATUS OF IMPLEMENTATION \. 65 ANNEX 7\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 66 ANNEX 8\. SUPPORTING DOCUMENTS \. 69 Page 3 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P108654 Brazil Pernambuco Sustainable Water Country Financing Instrument Brazil Investment Project Financing Original EA Category Revised EA Category Full Assessment (A) Full Assessment (A) Organizations Borrower Implementing Agency State Government of Pernambuco, State Secretariat of State of Pernambuco Planning and Management of Pernambuco - SEPLAG Project Development Objective (PDO) Original PDO The Project development objective is to improve sustainable water supply and sanitation services for the population residing in theCapibaribe river basin and MRR\. PDO as stated in the legal agreement The Project development objective is to improve sustainable water supply and sanitation services for the population residing in the Capibaribe river basin and MRR\. Page 4 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 190,000,000 190,000,000 190,000,000 IBRD-77780 Total 190,000,000 190,000,000 190,000,000 Non-World Bank Financing 0 0 0 Borrower/Recipient 220,000,000 340,200,000 243,082,131 Total 220,000,000 340,200,000 243,082,131 Total Project Cost 410,000,000 530,200,000 433,082,131 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 14-Jan-2010 15-Jun-2010 08-Apr-2013 30-Nov-2015 30-Mar-2020 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 17-Sep-2015 61\.15 Change in Implementing Agency Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Change in Financing Plan Reallocation between Disbursement Categories Change in Institutional Arrangements Change in Implementation Schedule 05-Sep-2017 126\.32 Change in Loan Closing Date(s) 14-Feb-2019 167\.75 Change in Results Framework Change in Loan Closing Date(s) KEY RATINGS Outcome Bank Performance M&E Quality Moderately Unsatisfactory Moderately Unsatisfactory Modest Page 5 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 21-Jun-2010 Moderately Satisfactory Moderately Satisfactory 0 02 21-Feb-2011 Moderately Satisfactory Moderately Satisfactory \.60 03 31-Jul-2011 Satisfactory Moderately Satisfactory 5\.15 04 04-Apr-2012 Satisfactory Moderately Unsatisfactory 5\.15 05 18-Nov-2012 Moderately Satisfactory Moderately Satisfactory 35\.15 06 09-Jul-2013 Moderately Satisfactory Moderately Unsatisfactory 35\.15 07 06-Mar-2014 Moderately Satisfactory Moderately Satisfactory 35\.15 08 15-Oct-2014 Moderately Satisfactory Moderately Satisfactory 61\.15 09 04-Apr-2015 Moderately Satisfactory Moderately Unsatisfactory 61\.15 10 17-Sep-2015 Moderately Satisfactory Moderately Satisfactory 61\.15 11 30-Mar-2016 Moderately Satisfactory Moderately Satisfactory 91\.15 12 27-Oct-2016 Moderately Satisfactory Moderately Satisfactory 100\.95 13 01-Jun-2017 Moderately Satisfactory Moderately Satisfactory 126\.32 14 27-Dec-2017 Satisfactory Moderately Satisfactory 138\.92 15 27-Jun-2018 Moderately Satisfactory Moderately Satisfactory 152\.75 16 21-Dec-2018 Moderately Satisfactory Moderately Satisfactory 167\.75 17 12-Apr-2019 Moderately Satisfactory Moderately Satisfactory 167\.75 18 29-Oct-2019 Moderately Satisfactory Moderately Satisfactory 188\.75 SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 5 Irrigation and Drainage 5 Page 6 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Water, Sanitation and Waste Management 95 Sanitation 60 Water Supply 20 Public Administration - Water, Sanitation and Waste 15 Management Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 0 Public Private Partnerships 10 Urban and Rural Development 0 Urban Development 50 Urban Infrastructure and Service Delivery 50 Environment and Natural Resource Management 0 Environmental Health and Pollution Management 30 Air quality management 10 Water Pollution 10 Soil Pollution 10 Water Resource Management 20 Water Institutions, Policies and Reform 20 ADM STAFF Role At Approval At ICR Regional Vice President: Pamela Cox Carlos Felipe Jaramillo Country Director: Makhtar Diop Paloma Anos Casero Director: Guangzhe Chen Anna Wellenstein Practice Manager: Guangzhe Chen Rita E\. Cestti Task Team Leader(s): Marcos T\. Abicalil Jean-Martin Brault Berta Adelaide Da Silva ICR Contributing Author: Macheve Page 7 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT AT APPRAISAL Context 1\. At the time of Project Appraisal in 2010, Brazil had undergone a rapid urbanization process, during which the urban share of the population had grown from 65\.4 percent to over 84\.3 percent over the course of the previous 30 years, making Brazil one of the most urbanized countries in the world\.1 The Gross Domestic Product (GDP) per capita had grown from US$1,229 in 1980 to US$11,237 in 2010 with industries and services contributing the most to total GDP\.2 However, in 2010, 25 percent of the population had lower than average income, set at about US$390 per month3\. Once at the forefront of the countryâs economic transformation, Brazilian cities were grappling with the problems of widespread informality, slums, rising crime and violence, inadequate service provision and environmental degradation\. 2\. The State of Pernambuco in northeastern Brazil with a territory of 98,311 km2 comprising 185 municipalities, had a population of 8\.8 million, 80 percent of which lived in urban areas4 at the time of Appraisal\. The Stateâs capital, Recife, and its metropolitan region, comprising 14 municipalities held a population of about 3\.7 million in 2010, making it the biggest urban agglomeration of the Northeast Region and the fifth in Brazil,5 producing about 2\.3 percent of Brazilâs GDP\. Although Pernambuco was experiencing growth rates slightly superior to the national average, it had lost ground over time to neighboring states, which had grown at higher rates\. 3\. Pernambuco is one of the driest states in Brazil with a per capita freshwater availability of 1,320 m3 per year on average, equivalent to 3\.5 percent of the national average per capita availability\.6 The hydrological regime of the State is highly variable with the presence of mostly intermittent rivers in the driest areas of the State (SertÃ£o and Agreste), where droughts associated with El NiÃ±o conditions are common\. In fact, while these semi-arid areas represent 89 percent of the Stateâs territory, they only count on about 20 percent of the water available for the State, with per capita water availability ranging from 400 m3 to 800 m3 per year, respectively\. The low water availability in the semi-arid regions of the State coupled with the high rate of urbanization and economic activity in the coastal regions placed the Stateâs available water resources under stress\. 4\. At Appraisal, despite high levels of coverage with about 91 percent of urban households connected to the public water supply network, service was unreliable and intermittent\. Of the 170 municipalities that were served by the Pernambuco State Water Supply and Sanitation Company (COMPESA), only 30 received water 24 hours per 1 https://data\.worldbank\.org/indicator/SP\.URB\.TOTL\.IN\.ZS?locations=BR 2 IEG CPSCR Review, CPS FY08-11, Report 65206\. 3 Instituto Brasileiro de Geografia e EstatÃstica, Indicadores Sociais Municipais 2010\. 4 Instituto Brasileiro de Geografia e EstatÃstica, Indicadores Sociais Municipais 2010\. 5 Instituto Brasileiro de Geografia e EstatÃstica 2010\. 6 David D\. White et all, CoâProducing Interdisciplinary Knowledge and Action for Sustainable Water Governance: Lessons from the Development of a Water Resources Decision Support System in Pernambuco, Brazil, October 2015\. Page 8 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) day\. Rationing was commonplace, even in the Metropolitan Region of Recife (MRR), where residents on average alternated between 24 hours with water supply and 28 hours without service\. 5\. In terms of sanitation, as of 2010, of the 170 municipalities served by COMPESA, only 20 had sewerage networks with an average coverage of about 20 percent,7 well below national and most regional averages\.8 This situation impacted not only the unserved population, presenting risks to public health, but also, indirectly, the served population as raw wastewater contributed to the pollution of water resources\. Some of the most important state water sources, located in the Capibaribe river basin and providing water to about 2\.6 million people, were receiving increasing biochemical oxygen demand (BOD) pollution loads due to untreated domestic sewage\. 6\. In 2008, the State of Pernambuco updated its Water Resources Management (WRM) Strategic Plan, which included the development of infrastructure to increase sustainable water supply and sanitation (WSS) service delivery up to year 2025\.9 The Strategic plan estimated that by 2018, investment of about US$1\.37 billion would be required for the construction of water supply and sewerage systems in all 12 sub-regions in the State, covering a population estimated at 12 million\. 7\. In order to alleviate the chronic shortages in water supply to the MRR and contribute to the Strategic Plan, the Government of Pernambuco (GoPE) had planned to expand and integrate the Pirapama water supply system into the MRR water supply structure and to invest in sewage collection and treatment\. Such investments were envisaged to reduce the pollution loads from untreated sewage within the Capibaribe river basin, the main source of water for the MRR and Agreste sub-regions, in the short to medium term\. Theory of Change (Results Chain) 8\. At Appraisal, the Project Appraisal Document (PAD) did not require a Theory of Change (ToC)\. However, an implicit ToC was created for this Implementation Completion and Results Report (ICR) (Table 1) using the information provided in the PAD regarding Project activities, outputs, intermediate outcomes and outcomes, as well as the Results Framework\. The Project was designed to support the GoPE in sustaining water resources and delivering improved WSS services in the MRR\. This implicit ToC was aligned with the long-term objectives of improving WRM and reaching universal access to WSS in urban areas\. 9\. The key assumptions for achieving the desired Project outcomes were: (i) the construction of a water supply conveyance system, establishment and isolation of hydraulic areas and metering districts, as well as the reduction of Non-Revenue Water (NRW) would lead to increased availability of water and reduction of population subject to rationing; (ii) the establishment of the State Water Regulatory Agency (AgÃªncia Pernambucana de Ãgua e Clima, APAC) would improve WRM; and (iii) the construction of wastewater systems for collection and treatment of wastewater in the Project area would lead to the reduction of BOD discharged into the environment and protection of water quality\. 7 Instituto Brasileiro de Geografia e EstatÃstica, Atlas de Saneamento: 2011, Diretoria de GeociÃªncias\. 8 These averages were 45 percent country-wide, 70 percent in Southeast Brazil, 35 percent in Center-Western Brazil and 30 percent in Southern Brazil\. 9 Plano EstratÃ©gico de Recursos HÃdricos e Saneamento, Governo de Pernambuco, abril de 2008\. Page 9 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Table 1: Original Theory of Change Components Activities Outputs Intermediate Outcomes Outcomes Component 1: Water Sector Management and Institutional Development Integrated Establishment of state water regulatory â¢ APAC is established and strengthened\. WRM agency; establishment and strengthening of â¢ User committees for water reservoirs river basin committees; preparation and are established\. dissemination of water resource plans; â¢ Water resources plans are prepared development of studies to improve the and disseminated\. efficiency and sustainability of groundwater â¢ Technical studies on groundwater and usage; modernization and expansion of the on the introduction of bulk water hydro-meteorological and water quality charges are completed monitoring network; and environmental â¢ APAC fully operational\. â¢ Stateâs hydro-meteorological and water rehabilitation works\. â¢ Bulk water charges quality monitoring systems modernized implemented\. and expanded\. â¢ User committees for Water Services Development of a water supply and sewerage â¢ Strategy for water supply and sewerage water reservoirs and services strategy for rural and small towns, services in rural areas and small towns implemented\. Infrastructure and pilot implementation; development of completed and available for pilot studies and instruments to support private implementation\. sector participation in irrigation\. â¢ Irrigation Public-Private Partnership model designed and available for implementation\. Project Capacity building of Borrower to carry out â¢ Borrowerâs staff responsible for Project Management overall Project implementation and implementation and monitoring monitoring\. trained and supported\. Sustainable WSS Component 2: Improving Efficiency in the Provision of Water Supply and Sanitation Services services for the Non-revenue Establishment and isolation of hydraulic areas â¢ Volume of water metered in hydraulic â¢ Reduction in the population water (NRW) and metering districts; improvement of zones identified\. percentage of residing in the metering and telemetry; update of the â¢ Water losses targeted by the NRW population subject to Capibaribe River technical database\. program reduced\. water rationing\. Basin and the â¢ Number of telemetry stations â¢ COMPESAâs index of MRR\. increased\. cash flow sufficiency â¢ Technical database updated\. improved\. Corporate Preparation of a corporate NRW program; â¢ COMPESA asset identified and Development inventory and valuation of COMPESA assets; registered\. development of water supply and wastewater â¢ Water supply and wastewater master master plans and studies for the physical and plans developed and approved\. operational integration of water supply â¢ Integrated MRR water supply systems systems in the MRR\. developed\. Component 3: Water Supply and Sanitation Service Expansion Pirapama Construction of the Pirapama water supply â¢ Pirapama Water Supply System Water Supply conveyance system; construction of â¢ Volume of water completed\. supplied to the MRR System conventional water treatment plant; construction of water reservoirs\. from the Pirapama Water Supply System Expansion of Construction and supervision of sewerage â¢ Household connections to wastewater increased\. Services works for the cities of Toritama, Limoeiro, collection networks\. â¢ Reduction of pollution Paudalho, Salgadinho; expansion of the â¢ Wastewater collection and treatment load discharged by VitÃ³ria de Santo AntÃ£o sewerage system; systems for Toritama, Limoeiro, municipalities targeted Preparation of regional and municipal water Paudalho, Salgadinho cities completed\. by the Projectâs and/or wastewater master plans and detailed â¢ Regional and municipal water supply wastewater engineering designs (DED) for priority and wastewater plans developed and investments\. projects\. DEDs ready for implementation\. Page 10 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Project Development Objective (PDO) 10\. As per the Loan Agreement, the stated PDO was to improve sustainable water supply and sanitation services for the population residing in the Capibaribe River Basin and the MRR\. This is consistent with the PDOâs statement in the PAD\. Key Expected Outcomes and Outcome Indicators 11\. According to the PAD, the key expected outcomes and outcome indicators were unpacked under two main objectives: â¢ PDO 1: Improve sustainable water supply services for the population in the project area\. The outcome indicator defined to measure this objective was âReduction in the percentage of served population subject to water rationing in the MRR from 88 percent in 2008 to 10 percent in 2015\.â â¢ PDO 2: Improve sanitation services for the population in the project area\. The outcome indicator defined to measure this objective was âReduction in the pollution load by 3,160 tons of BOD/year discharged by the municipalities targeted by the projectâs wastewater investments by 2015\.â Components 12\. The Project had three components that were implemented for the achievement of the PDO\. A brief description of the components is provided in the following paragraphs\.10 13\. Component 1: Water Sector Management and Institutional Development (At Appraisal: US$29 million; Actual: US$41\.51 million)\. This component aimed to contribute to the GoPEâs goal of long-term water security by strengthening the sectorâs institutional and regulatory frameworks as well as the stateâs capacity for integrated sector planning, policy and management\. The component was divided into the following three sub-components: (a) Integrated WRM\. This subcomponent aimed at strengthening the Borrowerâs water sector institutional and regulatory frameworks as well as its capacity for integrated water sector planning, policy and management through eight activities\. (b) Water Services and Infrastructure\. This subcomponent aimed at strengthening the Borrowerâs policy, regulatory framework, and institutional models for improving management and efficiency operation of water supply, sewerage and irrigated agricultureâs infrastructure and services through four activities\. In addition, this subcomponent aimed at developing rural water supply and sewerage strategies for the Agreste and SertÃ£o regions as well as operational plans for pilot implementation in selected areas\. (c) Project Management\. This subcomponent aimed at strengthening the Borrowerâs capacity for overall Project implementation and monitoring including support to the implementation of the Environmental Management Plan, Project information and communication activities, support to the State Secretariat of Water Resources (SRH)âs capacity for internal control of projects implemented, among others\. 14\. Component 2: Improving Efficiency in the Provision of Water Supply and Sanitation Services (At Appraisal: US$52 million; Actual: US$87\.29 million)\. This component aimed at increasing COMPESAâs operational and 10 As described in the Loan Agreement, Loan Number 7778-BR, pages 6-9\. Page 11 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) economic performance and improving its corporate governance and management\. The two main subcomponents were: (a) NRW Activities\. This subcomponent was designed to support the reduction of technical and commercial water losses and improve COMPESAâs services, sales and operational efficiency in selected areas of the MRR\. (b) Corporate Development\. This subcomponent aimed at providing technical assistance to support the implementation of selected activities of COMPESAâs strategic plan, with a focus on activities that could improve the utilityâs financial equilibrium and overall customer satisfaction, among others\. 15\. Component 3: Water Supply and Sanitation Service Expansion (At Appraisal: US$320 million; Actual: US$303\.81 million)\. This component intended to implement activities aimed at increasing the volume of water supplied to Project areas, expanding sewerage services in the cities located upstream of the main water supply reservoirs in the Capibaribe river basin, and improving the Stateâs capacity to leverage future investments by reviewing and preparing engineering designs for future priority water supply and sewerage systems\. The component was divided into the following two subcomponents: (a) Pirapama Water Supply System\. This subcomponent aimed at supporting the expansion and integration of the Pirapama Water Supply System through the construction of different elements of the system, such as a pumping station near the Pirapama dam, a bulk water pipeline, water reservoirs, among others\. (b) Expansion of Services\. This subcomponent aimed at supporting activities to protect and optimize the TapacurÃ¡, Carpina and Jucazinho water reservoirs through the reduction of water pollution and investments in the construction of priority sewerage systems as well as the preparation of master plans and engineering designs for priority water supply and wastewater systems\. B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION Revised PDOs and Outcome Targets 16\. While the PDO remained unchanged, the outcome indicator targets were revised during the third and last restructuring of February 2019\. The outcome target for PDO 1 indicator was scaled back: from 10 percent to 35 percent, leaving the formulation of the indicator as follows: Reduction in the percentage of served population subject to water rationing in the MRR from 88 percent in 2008 to 35 percent in 2019\.11 The outcome target for the PDO 2 indicator was also scaled back from 3,160 tons to 2,939 tons of BOD, leaving the formulation of the indicator as follows: Reduction in the pollution load by 2,939 tons of BOD/year discharged by the municipalities targeted by the projectâs wastewater investments by 2019\. Revised PDO Indicators 17\. At Project restructuring in February 2019, the intermediate indicator âState Water Regulatory Agency (APAC) is fully operationalâ was upgraded to an outcome indicator to improve the measurement of the sustainability aspects in the PDO 1 - Improve sustainable water supply services for the population in the project area\. 11 As per the PAD, the indicator was âReduction in the percentage of population subject to water rationing in the MRR from 88% in 2008 to 10% in 2015â\. During the various restructurings, the deadline for its achievement also changed\. Page 12 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Revised Components 18\. The Project components were revised during the first restructuring in September 2015\. Changes were as follows: (a) Component 1: Water Sector Management and Institutional Development\. Two activities related to the Agreste and SertÃ£o Pernambucano canal under Subcomponent 1B â Water Services infrastructure, were removed because the Federal Government was financing several studies to expand irrigation in the SÃ£o Francisco River basin outside the scope of the Project\. Activities removed were: âb) implementation of pilot projects to test the models developed, all such pilot projects selected by the Borrower and approved by the Bankâ and âd) carrying out of engineering, technical, social, environmental, finance, economic and legal studies and development of related instruments as needed for the preparation of a public-private partnership model or other model for involvement of the private sector for the construction, operation and maintenance of the SertÃ£o Pernambucano canal and its irrigated perimeter\.â Two new activities, aimed at studying water use potential of Pernambucoâs semi-arid region water reservoirs, including irrigation, were added: âa) carrying out of technical studies to evaluate the potential of multiple use of water in water infrastructure in the State Borrowerâs territoryâ and âb) staff training and dissemination activities and carrying out of selected studies including: a study for the development of an urban environmental plan for the Municipality of Toritama, studies for agricultural reuse of treated wastewater and on water quality and eutrophication control alternatives for the Carpina, TapacurÃ¡, Jucazinho, PoÃ§o Fundo and VÃ¡rzea do Una water supply reservoirs\.â Subcomponent 1C â Project Management, was changed to reflect the replacement of the implementing agency, the Secretary of Water Resources (SRH), by the State Secretariat for Economic Development (SDEC), and to include strengthening of COMPESA and SDEC in overall project implementation and monitoring, including support on implementation of the Environmental Management Plan, Project information and communication activities, and support for strengthening capacity for internal project control\. The remaining staff training and dissemination activities were transferred to Subcomponent 1B\. (b) Component 2: Water Sector Management and Institutional Development\. Given that COMPESA decided to directly contract out the inventory and valuation of assets and the water supply masters plans were replaced by development of detailed engineering designs to leverage future investments, the Subcomponent 2B â Corporate Development was entirely modified to provide technical assistance to COMPESA to improve its management and operational activities and to carry out studies\. (c) Component 3: Water Supply and Sanitation Service Expansion\. Activities under Subcomponent 3B â Expansion of Services were modified due to major delays in contracting the engineering designs for the initially agreed sewerage systems, namely Toritama, Limoeiro, Paudalho and Salgadinho\. As such, these project locations were replaced by Santa Cruz do Capibaribe and Surubim that had WWTPs engineering designs finalized and ready for bidding and implementation\. In addition, this subcomponent also changed to include works to improve water distribution in the MRR, particularly in the area of the low income hills of the city, where services are more affected by rationing and water infrastructure recovery was required to increase both water security and resilience\. Furthermore, this subcomponent also included preparation of engineering designs of sewerage systems in the urban areas of the municipalities of Limoeiro, Paudalho, Salgadinho, VitÃ³ria de Santo AntÃ£o and others\. Page 13 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Other Changes 19\. The Project was restructured three times, in September 2015, September 2017 and February 2019, all of which constituted level 2 restructurings\. The total loan amount remained unchanged throughout implementation, although there were changes in the scope of components as discussed in the Revised Components section\. The costs of the components also changed\. Counterpart funds increased from US$220 million to US$243 million at closing to accommodate the additional costs of completed works, which were higher than estimated at Appraisal\. The following paragraphs describe other Project changes corresponding to each of the three respective restructurings\. First Project restructuring, September 2015 20\. Extension of Project closing date from November 30, 2015 to September 30, 2017 (22-month extension)\. This change was required to allow for completion of several major Project activities due to unforeseen implementation delays and the need for adjustments to the Project activities plan and scope as defined in the Loan Agreement\. The implementation delays were due to, inter alia,12 (i) the need to replace initially agreed project locations, namely, the cities of Toritama, Limoeiro, Paudalho and Salgadinho, which didnât have WWTP DEDs ready for implementation, by the cities of Surubim and Santa Cruz do Capibaribe; ii) prioritization of works to support the Governmentâs emergency response following devastating floods in 2010/2011; and (iii) additional time required for contracting consultants\. 21\. Revisions to implementation arrangements\. The following revisions were made: (a) Replacement of the SRH by the SDEC\. This revision was necessary given that the SRH was eliminated by the State Government and initially replaced by the Secretariat of Infrastructure (SEINFRA) from December 30, 2013 to January 14, 2015, and then by SDEC, as of January 15, 2015\. The change in implementing entity did not impact the fiduciary performance under the Project\. (b) Removal of the Borrowerâs Institute of Technology\. The Instituto de Tecnologia de Pernambuco (ITEP) was removed as an implementing agency\. Activities were redistributed as follows: the modernization and expansion of the hydro-meteorological and water quality monitoring network was transferred to COMPESA, APAC and the environmental and water resources agency, AgÃªncia Estadual de Meio Ambiente e Recursos HÃdricos (CPRH)\. These entities were already part of the implementing agencies at Appraisal\. 22\. Changes to intermediate indicators\. Intermediate PDO indicators were revised as follows: (a) Model for private participation in the Canal do SertÃ£o Pernambucano defined\. This indicator was removed because the related activities were being carried out by the Federal Government outside the Project scope Nevertheless, bidding documents for the public-private partnership for the Canal do SertÃ£o Pernambucano were finalized and published by November 2014\. (b) Number of master plans for water supply and wastewater completed (modified)\. The indicator was modified to âCompletion of 5 (five) engineering designs for water supply systems (sistemas de abastecimento de Ã¡gua or SAA) and 12 (twelve) engineering designs for sewerage systems (sistemas de esgotamento sanitÃ¡rio or SES) in line with the needs of the State\. 12 See Restructuring Paper (Report No\.: RES15958) page 15 for additional details\. Page 14 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) (c) Formation and implementation of 11 (eleven) Reservoir Management Councils (new)\. This indicator was added to strengthen the monitoring of the integrated WRM subcomponent\. However, during project implementation, the indicator formulation was modified to âusers committees for water reservoirs are implemented\.â (d) Increase in the number of residential connections to wastewater collection services\. The target was increased from 33,060 to 52,580\. 23\. Other minor changes\. Other changes included: (a) Minor adjustments to update the consultant and procurement Bankâs guidelines\. (b) Reallocation of loan and counterpart resources among components and activities in accordance with scope adjustments\. (c) Modifications to the Results Framework to reflect the new closing dates (from November 30, 2015 to May 30, 2017)\. 24\. In sum, changes included in the first restructuring aimed at adjusting project activities following sector changes in the State of Pernambuco and identifying other municipalities in which engineering designs were ready for implementation to ensure that the PDO outcomes would be achieved\. Second Project restructuring, September 2017 25\. The second restructuring was requested to extend the closing date from September 30, 2017 to March 30, 2019 (18-month extension) and allow for the completion of ongoing works that had suffered delays in obtaining necessary licenses and environmental permits for the turnkey contracts and unexpected archeological/geological findings in the project areas\. As such, the Results Framework and implementation schedule were adjusted to accommodate the new closing date\. Third Project restructuring, February 2019 26\. The third restructuring was requested to extend the closing date from March 30, 2019 to March 30, 2020 (12- month extension)\. As in the case of the second restructuring, this was also meant to ensure completion of works that had been subject to unforeseen delays\. These were due to among other factors, slow progress in the implementation of activities, unforeseen floods and drought, as well as the use of innovative performance-based contracts (PBC) for NRW reduction which came with an increased preparation time and learning curve\. The Results Framework and implementation schedule were also adjusted to accommodate the new closing date\. 27\. As part of that restructuring, PDO 1 and PDO 2 targets were also modified and an intermediate indicator was upgraded to a PDO indicator, as indicated in paragraphs 16-17\. The target for the intermediate indicator on water losses was also increased from 565 to 650 liters/connection/day target, considered more realistic\. Postponing the delivery of the ICR 28\. Although the Project closed on March 30, 2020, there were a number of ongoing works, which the State agreed to complete using its own resources\. Similarly, as noted in Section IV\.B on safeguards, the State agreed to implement a Post-Closing Safeguards Action Plan to comply with pending safeguards actions\. For these reasons, the delivery of Page 15 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) the ICR was initially postponed by 4 months to October 30, 2020, but given delays in implementing the works and the Post-Closing Safeguards Action Plan caused by the COVID-19 pandemic, the delivery date was further postponed to April 30, 2021\. Rationale for Changes and Their Implication on the Original ToC 29\. As noted in paragraph 17, the major change which modified the original ToC was the upgrade of the intermediate indicator âState Water Regulatory Agency (APAC) is fully operationalâ to outcome indicator as part of the third restructuring in February 2019, see updated ToC on Annex 5\. This was to support measurement of the sustainability aspect of the PDO\.13 As such, the outcome indicators were increased from two to three, as discussed in Section I\.B\. II\. OUTCOME A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: High 30\. The PDO âto improve sustainable water supply and sanitation services for the population residing in the Capibaribe river basin and the MRRâ is fully aligned with the new federal WSS law and current GoPE priorities, and thus remains highly relevant\. Based on the Stateâs Water Resources and WSS Strategic Plan,14 one of the main priority areas for the current mandate is to increase availability and reliability of WSS services and to promote a sustainable environment\. This plan includes the following priority areas: (i) promote decentralized, democratic and participative management of water resources through institutional strengthening of the entities responsible for integrated WRM in the Capibaribe basin; (ii) stimulate the planning process and management of water demand through the implementation of water resources policies, promoting regular inventory, sustainable use, control and protection of water resources among users, particularly those from the MRR and the Capibaribe river basin; (iii) increase availability of water, particularly in the semi-arid regions, through actions to revitalize the water basins groups in the Capibaribe river and adequate technologies for use of water resources in different regions of the state; and (iv) build the required infrastructure for universal water supply and wastewater service delivery, promoting better quality of life for the state population\. Although the Strategic Plan dates back to 2008, this is still valid as most objectives are aimed at 2025\. In addition, the recently approved WSS Law15 or âLei do Saneamentoâ introduces important changes to the sector aiming to increase investments to reach universalization of WSS service provision\. Sustainable and efficient water use is a critical element of safe WSS service delivery, particularly during the current COVID-19 pandemic, with safe water, sanitation and hygienic conditions playing an essential role in preventing contagion and protecting human health\. 31\. Furthermore, the PDO aligns with Objective 3\.2 of the FY18-23 Country Partnership Framework (CPF),16 which aims at providing sustainable urban services\. As such, the Bank is committed to support the Government of Brazil in 13 The PAD acknowledges that to achieve sustainable access to water supply there is a need to work on the interface of WRM and WSS coordinated interventions It also acknowledges that improving WRM systems is the first big step towards more integrated planning and management of water resources in the State\. 14 Plano EstratÃ©gico de Recursos HÃdricos e Saneamento, Governo de Estado de Pernambuco, abril de 2008\. 15 Law NÂº 14\.026, July 15, 2020\. 16 FY18-23 Country Partnership Framework for Brazil, Report No\. 113259-BR, May 2017\. Page 16 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) seeking new models to support investment and improve the quality of urban infrastructure and improve the efficiency of service delivery, which includes continued investments in WSS to foster resilience against the increased variability of water supply\. In addition, under the same objective, the CPF highlights the challenges that many cities face in reducing water pollution and the need to improve the quality of the urban environment\. Therefore, the CPF aims at continuing the engagement in providing more inclusive and sustainable urban services, as well as continue to support the consolidation of existing efforts through a mix of ongoing and new investments at the municipal level\. B\. ACHIEVEMENT OF PDOs (EFFICACY) 32\. The efficacy is assessed by unpacking the PDO into two parts: PDO 1 to improve sustainable water supply services for the population in the Capibaribe river basin and the MRR; and PDO 2 to improve sanitation services for the population in the Capibaribe river basin and the MRR\. Since the target values of the major PDO outcome indicators were modified during project restructuring, efficacy is assessed both against the original targets and the revised targets\. The resulting efficacy ratings were then used in the split rating assessment to determine the overall outcome rating\. Assessment of Achievement of Each Objective/Outcome PDO 1: Improve sustainable water supply services for the population residing in the Capibaribe river basin and the MRR 33\. Based on the revised Results Framework and ToC (Annex 5), improvements in sustainable water supply services were to be achieved through: (i) integrated WRM and the establishment of APAC; and (ii) efficiency improvements and institutional strengthening of COMPESA\. Integrated WRM and the establishment of APAC 34\. By project completion, APAC had been established and become fully operational, and implementing activities contributing to integrated WRM in the State\. During project implementation, APAC carried out an evaluation of water resources management policies and instruments, including planning studies, allocation rules, and water rights\. In addition, a state-of-the art hydrometeorological monitoring and forecasting systems was established with on-line and real-time information and an effective flood early warning system was put into operation\. As such, APAC is fully equipped to carry out its responsibilities: (i) implementation of state policies on WRM and national policies on dam safety; (ii) monitoring hydrometeorological and weather forecast and climate at the state level; and (iii) prevention of, mitigation of and adaptation to effects of extreme climate change related events\. With regards to dam safety, the project has provided support to APAC for: (i) maintaining a cadaster of water storage dams under its jurisdiction in the State of Pernambuco; (ii) organizing and managing the data to be fed into the national dams database (Sistema Nacional de InformaÃ§Ãµes sobre SeguranÃ§a de Barragens, SNISB); (iii) assessing the risk category of every water storage dam in the state; and (iv) monitoring the infrastructure managerâs activities related to dam safety and process any non-conformities related to dam operation and safety\. 35\. During project implementation, APAC established 11 Reservoir Management Councils (Conselhos Gestores de ReservatÃ³rios de Agua) for three critical river basins, namely GarÃ§as (one council), Terra Nova (four councils) and BrÃgida (six councils), contributing to the reduction and mediation of water use conflicts and systematization of various proposals, such as the regulation of water and state legislation\. Such legislation has contributed to integrated WRM, through better planning of water withdrawals, water quality monitoring and improved planning and allocation Page 17 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) during extreme events\. APAC also contributed to the establishment of three new river basin committees and capacity building and strengthening of five existing committees17 in the State\. At Project closing, these eight committees had supported APAC in the preparation of bulk water charges, through consultation with water users, and in monitoring the river water levels, precipitation and water quality, among other tasks\. These activities contributed to improving WRM, which in turn supported the sustainability dimension of access to water supply services\. 36\. Although the bulk water charges were not approved during project implementation as planned at preparation, APAC completed studies for charging for the use of water in June 2018, and the following instruments were prepared: the Draft Law, Draft Decree, Resolution (technical part with the methodology), and a manual for adjustment of charges\. These instruments have been discussed with the basin management committees and submitted for discussion to the Legislative Assembly Committee at the GoPE level\. However, due to the COVID-19 pandemic, all legislation discussion has been halted and the bulk water charges Law is expected to be resubmitted once the Legislative Assembly Committee can reconvene for these discussions\. 37\. Concerning APACâs role in monitoring climate at the state level, regular meteorological bulletins are published on APACâs website (https://www\.apac\.pe\.gov\.br) on a daily basis and alerts are sent out to water users at the basin level whenever abnormal activities are observed\. For instance, in March, April and May 2020, various alerts were sent out to the population in urban areas living close to a river, for example in the Limoeiro (Capibaribe River), Cachoeira (Una River), and Caruaru (Ipojuca River) municipalities, among others\. In terms of water quality, it is monitored on a quarterly basis in 52 stations located in 13 water basins and the water quality results are shared with bulk water customers\. Advice is also provided based on the intended use\. Based on regular rainfall and basin water level monitoring, APAC has also issued drought maps and alerts to its customers (see an example on Figure 1)\. Figure 1: Snapshot of drought monitoring carried out by APAC in July 2020, where color coding indicates drought intensity, and âCâ and âLâ indicate short- and long-term impacts, respectively\. 17The basin committees are responsible for participating in the preparation and monitoring of the implementation of the water resources master plan, approve the classification on the use of water resources, constitute the first instance for conflict mediation and settlement, propose criteria and number of grants to the State Water Resources Council, and propose amounts to be charged for water use in the basin, when there is no Basin Agency, among others functions\. Page 18 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) 38\. As previously mentioned, the Project was affected by floods and droughts, which led to the implementation of emergency works to repair the Jucazinho dam and the Ipojuca water supply system, as well as the rehabilitation and improvement of the water supply distribution network in the neighborhood of Vila Sotave\. The Project also supported the hiring of consulting services to assess the Gatos, Panelas II, Barra de Guabiraba and Igarapeba flood contention dams, which had suffered considerable damage as a result of floods in 2017\. The emergency works not only supported improved drought and flood management, but also contributed to reducing water rationing in the MRR and the Capibaribe river basin by boosting water availability in the rehabilitated water supply systems\. 39\. Concerning dam safety, APAC had registered by project closing 317 dams in its cadaster, of which 190 had been subject to a physical inspection by APAC staff\.18 The outcomes of these inspections are published annually on the SNISB website, and for those dams that require attention, follow up actions are carried out by APAC to ensure that those are resolved\. As part of this cadaster and these inspections, APAC has been monitoring the five19 water supply and flood contention dams included in the Project scope, of which the Pirapama dam is classified as being at a high risk, mainly due to the lack of a dam safety plan and the risk associated with the current state of certain hydro- electromechanical equipment, the failure or prolonged maintenance of which could lead to water supply interruptions in the MRR in the medium-term\. To help mitigate this risk, as well as to ensure that the Project is in compliance with the Bankâs OP 4\.37 on the Safety of Dams, a Post-Closing Safeguards Action Plan (see Annex 6) was agreed upon with the Borrower and the Bank Team, and APAC has shown commitment in closely following up with COMPESA and the GoPE to ensure that dam safety plans are prepared and submitted for implementation, as can be seen in APACâs letter to COMPESA in Annex 8\.2\. In addition, a Dam Safety Department ( GerÃªncia de SeguranÃ§a de Barragens) was created at COMPESA around the time the Project closed, further strengthening the institutionalism of dam safety in the State of Pernambuco\. This department works closely with APAC to ensure that all dam-related issues, and not only those associated with the Project, are discussed on a regular basis to seek a resolution prior to the submission of the annual report to SNISB\. Efficiency improvements and institutional strengthening of COMPESA 40\. To strengthen and improve COMPESAâs efficiency in providing water supply services, the Project implemented water distribution zones in the southern part of the MRR by improving metering, restructuring primary distribution mains, and interconnecting the MRRâs distribution network, including the new Pirapama system built under the Project with counterpart funds\. A number of actions were put in place by COMPESA to reduce rationing across the MRR over the course of project implementation, including (i) improving the interconnection and redundancy of the MRRâs different networks, (ii) bringing in an additional 5\.13 m3/s of water to the MRR with the Pirapama system, (iii) greatly improving metering in the municipalities of Olinda and JaboatÃ£o,20 and (iv) the establishment of distribution zones in selected areas of the MRR\. Nevertheless, several areas in the MRR are still subject to rationing, mainly due to the fact that the Agreste subregion (northern area of the MRR) was subject to recurrent droughts over the course of project implementation\. These droughts reduced the water production capacity of the Agresteâs associated system (Jucazinho) from 1\.10 m3/s to 0\.55 m3/s, affecting roughly 350,000 people in the city of Caruaru\. To respond to this crisis, a large portion of the funds earmarked for NRW reduction had to be redirected to increasing the capacity of 18 On a regular basis, the entities responsible for dam management are required to carry out an inspection and submit the results to APAC, which then selects relevant dams for inspection by its staff\. 19 Pirapama (water supply), Gatos, Panelas II, Guabiraba and Igarapeba (flood contention)\. 20 Improvements in Olinda and JaboatÃ£o have led to an increase in the MRR ratio of macro-metering from 66\.13 percent in 2010 to 95\.25 percent in 2019, as well as of micro-metering from 74\.65 percent in 2010 to 86\.80 percent in 2019\. Page 19 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) another transmission system (Prata) from 0\.60 m3/s to 0\.97 m3/s, compensating to a certain extent for the gap left by the recurrent droughts in the Jucazinho system\. 41\. With the implementation of the efficiency improvements in the MRR, the reduction in the number of people subject to water rationing was partially achieved, reaching 49\.521 percent of the MRR population, representing 73 percent of the revised target as part of the 2019 restructuring and 49 percent of the target at Appraisal\. In total, about 815,000 people are currently not subject to rationing in the municipalities of Recife and JaboatÃ£o (see Table 2 for more details), mainly because of the increase in water production in the Pirapama system by 5\.13 m 3/s\. In addition, in Olinda, where most of the network sectorization works were carried out, roughly 88,68019 people (about 25 percent of the total population) had 24 hours per day water service by the end of December 2020\. It is important to note that in 2017, water rationing had decreased to 32 percent, reaching 97 percent of the target at the time (30 percent rationing)\. However, the severe droughts that the region had been experiencing worsened water availability, leading to an increase in the population subject to rationing\. 42\. Similarly, the reduction of NRW was also partially achieved, reaching 691 L/connection/day, representing 87 percent of the revised target22 and 69 percent of the target at Appraisal\. It is also important to note that by December 2013, the NRW target had been achieved, reaching 557 L/connection/day, which was lower than the project target of 565 L/connection/day, mainly due to increased water availability from the Pirapama dam, since the NRW activities had not yet started\. With the increase of water production capacity from the Pirapama system by 5\.13 m3/s, as well as network interconnections and redundancy works, and water loss reduction activities in the Olinda municipality, the Project boosted supply and water availability to match Recifeâs total water demand\. However, the severe droughts caused a dramatic reduction in surface and groundwater availability which could not be entirely offset by the addition of the Pirapama dam\. For instance, there was about a 40 percent reduction in water availability between 2013 and 2017 across seven dams of the MRR, against only a 20 percent gain in water availability provided by the Pirapama dam\.23 As such, the lack of water further exacerbated the need for water rationing during the last years of project implementation\. Table 2: Neighborhoods of the MRR benefitting from 24 hours per day water supply service as a result of the Project Neighborhood Number Supply before Supply after of the project the project people Cajueiro Seco, Massangana, Piedade, Candeias, Barra de Jangada, 140,000 SetÃºbal, Once every five 24 hours/day Ipsep, Boa Viagem, Santo AntÃ´nio, San Martin, Cordeiro, VÃ¡rzea, 525,000 days Recife, Santo Amaro, Boa Vista, Campo Grande, Arruda e Cordeiro 150,000 21 Based on the latest information provided by COMPESA in March 2021\. 22 This target was reduced from 565 L/connection/day to 650 L/connection/day during the third restructuring\. 23 The Botafogo dam decreased its volume stored from 26\.7 million m3/year in 2016 to 0 in 2018\. In 2019, it has only recovered less than 5 percent of the 2016 storage (5\.3 million m3/year)\. Similarly, the Jucazinho dam decreased its volume from 34\.0 m3/year in 2013 to 0 in 2018, and in 2019, it has recovered only 15 percent of its 2013 storage capacity (5\.3 million m3/year)\. Page 20 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) 43\. Based on the information provided by COMPESA in April 2021, an additional 1,185,00024 people from Olinda, JaboatÃ£o as well as from the low and high hill areas on the fringes of the Recife municipality have benefitted from additional water availability as a result of the Project, although that population is still subject to rationing\. Additional improvements in the water systems were also made in 14 other municipalities,25 and included repairs and installation of pumping stations as well as transmission mains\. With the improvements made in the distribution network, areas such as the Ibura26 locality have benefitted from reductions in water rationing, where in low altitude areas water is now supplied between 24 hours every day or every other day, compared to once a week before the Project\. Areas at a higher altitude are still subject to rationing, although it has improved from six hours a week to about 12 hours every 3 days, as presented in Table 3\. Table 3: Improvement of water supply provision in other localities in the MRR Locality Supply before the Project Supply following project completion Rio Doce Once every five days Four days a week Rio Doce Praias Once every five days 24 hours/day Jardim AtlÃ¢ntico Once every five days 24 hours/day Fragoso Once every five days Four days a week Casa Caiada Once every five days 24 hours/day Ouro Preto Once every five days Five days a week 44\. In addition, the Project financed the design and implementation of a NRW reduction PBC from 2016 to 2020 in Olinda (see Box 1 for details)\. Furthermore, COMPESA also sectorized and created loops in the network system to create redundancies, so that water can be supplied from different sectors in case shortages are observed\. These activities are still ongoing in Ibura and Distrito 8A and it is expected that by the end of 2021, an estimated 150,000 additional people will benefit from reduced water rationing\. 45\. Finally, seven out of the nine planned engineering designs for water supply systems have been prepared for the cities listed in Table 4 and are now awaiting final approval by COMPESA before execution\. These systems will potentially benefit a total of 790,566 people (2019 estimates)\. These systems are being considered for implementation by COMPESA through a loan from the New Development Bank (NDB) currently under preparation\. 46\. Table 4: List of water supply systems with DEDs completed under the Project City Population (2019 estimates) Abreu e Lima 99,990 Igarassu 117,019 ItamaracÃ¡ 26,258 Itapissuma 26,651 Paulista 331,774 Goiana 75,644 SÃ£o LourenÃ§o da Mata 113,230 Total 790,566 24 Figure estimated based on reports from COMPESA\. 25 Abreu e Lima, Igarassu, Paulista, Agrestina, Altinho, Cachoeirinha, Caruaru, Cumaru, Gameleira, Ibirajuba, Passira, Riacho das Almas and Santa Cruz do Capibaribe\. 26 This locality is not part of the Project area, but as a result of the improvements in water supply availability through the Pirapama water supply system, the quality of service provision in Ibura greatly improved\. Page 21 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Box 1: Olinda PBC in NRW reduction The Olinda PBC was implemented between 2018 and 2020 and included three phases: (i) a first phase focused on the designs and infrastructure/rehabilitation works (including in a UNESCO World Heritage site, requiring low-impact techniques), necessary to create a solid basis on which the NRW reduction actions could be rooted; (ii) a second phase focused on establishing the baselines for consumption and service pressure, as well as the District Metered Areas (DMAs)\. For these first two phases, the contractor was remunerated against progress and completion of the corresponding activities; and (iii) a third phase, also called the performance phase, aimed at improving service delivery (in terms of pressure and hours of service) and reducing water losses, with remuneration proportional to the volume of water recuperated\. The PBC contract generated some efficiency gains in terms of leakage with a 50 percent reduction in leaks between 2018 and 2020, and has so far led to the recuperation of over 42\.5 million m 3 of water that have been used in or transferred to other areas to alleviate rationing\. When benchmarked against other NRW reduction programs in utilities across Brazil, the Olinda PBC design (blue dot) was found to be successful in achieving its desired outcomes, in terms of the planned NRW reduction rate, as shown in Figure B1, although containing a heavier upfront infrastructure component (in terms of the necessary investments) compared with other utilities\. Figure B1 - Benchmarking of Olinda PBC: NRW reduction effectiveness PDO 2: Improve sanitation services for the population residing in the Capibaribe river basin and the MRR 47\. Project investments initially set out to achieve this outcome by reducing the pollution load discharged by the municipalities targeted under the Project by 3,160 tons of BOD/year at Appraisal, later reduced to 2,939 tons of BOD/year, as part of the 2019 restructuring\. The intermediate indicator regarding the residential connections to the sewerage network supported this outcome indicator, with a target increase from 8,169 in 2008 to 33,060 connections in 2015, later revised to 52,580 connections to be achieved in 2020, as part of the 2015 restructuring\. 48\. At project completion, the Surubim and Santa Cruz do Capibaribe sewerage networks and wastewater treatment plants (WWTPs) had been completed and were fully operational, however collecting and treating a lower amount of wastewater from those municipalities than initially planned\. As such, by December 2020, and based on actual Page 22 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) measurements at both WWTPs, 1,164\.01 tons of BOD/year had been removed (1,049\.36 tons of BOD/year in Santa Cruz do Capibaribe and 114\.65 tons of BOD/year in Surubim) reaching roughly 40 percent of the target set at restructuring and 37 percent of the target at Appraisal\. In parallel, the number of new residential wastewater connections achieved in December 2020 was 20,600 (3,600 connections in Surubim, 17,000 in Santa Cruz) for a total of 28,769, reaching about 55 percent of the target set at the 2015 restructuring and 87 percent of the target at Appraisal\. This represents an additional 70,04027 people benefitting from a safe wastewater connection, compared to 27,775 people at Appraisal\. 49\. It is however important to mention that the WWTPs have reached high levels of efficiency in terms of BOD removal, with 98\.0 percent in Santa Cruz do Capibaribe and 95\.2 percent in Surubim, largely surpassing the Federal Governmentâs requirements,28 in turn contributing to the sustainability of water resources, considering that their effluents are discharged into water bodies connected to the sources of water for other municipalities within the MRR, namely the three major water reservoirs of TapacurÃ¡, Carpina and Jucazinho\. 50\. After project closing, COMPESA presented to the Bank a household connection plan for Surubim and Santa Cruz do Capibaribe (see Annex 8\.1), which includes an additional 5,100 connections in Surubim and 14,143 in Santa-Cruz do Capibaribe for a total number of connections in these two cities of 34,743 (66 percent of the target)\. Based on actual water consumption, the associated total BOD expected to be removed would reach about 2,215 tons/year, roughly 75 percent of the target\. While the plan originally set a large portion of these connections to happen in May 2021, these have now been postponed to the end of 2022\. In addition, COMPESA has invested over 1\.75 billion reais (close to US$325 million) in expanding sanitation services in the MRR through a PPP since 2013, connecting 3,500 households in SÃ£o LourenÃ§o da Mata, as well as through the implementation of its public investment plan in VitÃ³ria de Santo AntÃ£o, connecting an additional 4,212 households\. While not directly linked to the two WWTPs financed under the project, these connections have further contributed to reducing the pollution load into the Capibaribe river basin over the course of project implementation\. 51\. There are two main reasons which explain the limited achievement of the PDO indicator related to improved sanitation services, namely: (i) the limited achievement in the number of households effectively connected to the network; and (ii) the severe droughts affecting the region and severely impacting water supply availability\. These are further detailed below\. 52\. Limited achievement on the number of connections\. In Surubim, the contractor was responsible for the construction of the WWTP, networks and household connections\. The latter were, however, severely impacted by construction delays and eventually only partially completed due to the common practice of completing households connections only after the WWTP has been built â given that the WWTP was completed towards the end of the Project, COMPESA ran out of time and resources to complete all of the originally planned connections\. Furthermore, there were also limited incentives for the contractor to advance in connecting households given the low payments associated with these items\. In Santa Cruz do Capibaribe, given that the collection system is combined and most households are connected to the drainage system which also collects wastewater, there was a limited number of connections expected to be installed under the Project except for those households that discharge their wastewater 27Based on reports submitted by COMPESA to the Bank in March 2021\. 28Federal Resolution No 430, of May 13, 2011, defines that at least 60 percent of the BOD should be removed from wastewater before it is discharged to the environment\. Page 23 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) directly into the Capibaribe river\. Similar to Surubim, the construction contractual incentives limited the installation of the referred connections\. 53\. In addition, the progress of construction works was severely affected and slowed down by delays in payments to consultants and contractors, due to the GoPEâs inability to transfer funds to executing agencies in a timely manner (see more details in Section III\.A)\. This in turn led to major delays in the construction of WWTPs, and subsequently in the finalization of all planned household connections\. Finally, the beginning of the COVID-19 pandemic further halted the construction of household connections to allocate resources to crisis response, at a time when these connection works were being ramped up and significant achievement was expected by the closing date\. 54\. Severe droughts affecting the region\. As a result of droughts, water consumption generally decreased across the MRR\. In addition, in Santa Cruz do Capibaribe, water consumption dropped from an average of 150\.0 L/person/day to 40\.0 L/person/day, while in Surubim it dropped from an average of 112\.5 L/person/day to 65\.0 L/person/day, resulting in limited wastewater flows being sent to the WWTPs\. 55\. In terms of sustainability, COMPESA has the required technical expertise, experience and human resources required to operate the newly constructed WWTPs\. As an example, although both WWTPs have been operating for less than two years, high levels of efficiency have been achieved, as discussed above\. Furthermore, financial sustainability is expected to be guaranteed with the collection of tariffs, particularly in the case of Surubim, where COMPESA has been active in sending notifications to customers on the legal requirements of paying tariffs once the network is made available (Federal Law 11\.445/2007)\. 56\. Finally, 15 (compared with a target of 14) DEDs for sewerage and wastewater systems were completed at project closing, potentially benefitting a total of 838,608 people (2019 estimates), as listed in Table 5 below\. Table 5: List of sewerage systems with completed DEDs under the Project City Population (2019 estimates) Limoeiro 56,250 Bom Conselho 48,554 Bonito 38,134 Salgadinho 10,919 Brejo da Madre de Deus 50,742 Feira Nova 22,131 Carpina 83,641 Pombos 27,091 Pesqueira 67,395 RibeirÃ£o 47,415 SÃ£o Bento do Una 59,504 Serra Talhada 86,350 Toritama 45,219 VitÃ³ria do Santo AntÃ£o 138,757 Paudalho 56,506 Total 838,608 Page 24 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Justification of Overall Efficacy Rating 57\. The overall efficacy against the revised outcome PDO targets at completion is rated Modest\. This is because although the PDO indicator related to integrated WRM and the establishment of APAC was fully achieved, the achievement on the reduction of water rationing in project areas was only partially achieved and the BOD reduction target was not met\. In addition, the revised household sewerage connection targets were not met (although the target at Appraisal was almost achieved) due to the severe drought events that have affected the region, and the COVID-19 pandemic that halted the construction of sewerage household connections\. Assessing the efficacy against the targets at Appraisal, the outcome is also rated Modest, since PDO 1 was partially achieved and achievements associated with PDO were negligible\. C\. EFFICIENCY 58\. On the basis of the development impact of the Project, the efficiency analysis at ICR was based on actual costs and benefits of the various interventions, comparing them with what was expected when the Project was approved\. Actual costs and benefits were transformed to constant 2009 prices, and the analysis used the same spreadsheet models used at Appraisal\. At Appraisal a discount rate of 10 percent was used\. The analysis at ICR was done using a 6 percent discount rate, which is currently used by the World Bank\.29 59\. Results of the efficiency analysis undertaken at the ICR stage, compared with those at Appraisal stage, are summarized in Table 6\. The Project as a whole is found to be economically viable\. Its Economic Internal Rate of Return (EIRR) at the ICR stage is estimated to be 9\.4 percent, above the 6 percent discount rate, and the Project thus generates a US$217 million Economic Net Present Value (ENPV)\. However, the Project is less economically viable than expected at Appraisal, when assessed using a 10 percent discount rate, resulting in a negative ENPV of US$23 million\. Nevertheless, the Projectâs 9\.4 percent EIRR estimated at ICR is a significant achievement, considering that implementation was impacted by floods and droughts, which also led to the allocation of project resources to attend these emergencies\. The EIRR compares positively with long term results obtained by well performing private sector companies represented in the Standard and Poor 500 (S&P 500)\. The S&P 500 companies generate on average an 8 percent per year long term return\.30 60\. Water supply investments focused on the reduction and control of NRW, expansion of production capacity and reduction of water rationing, were implemented with time and cost overruns that affected but did not impair their economic viability\. At the ICR stage, the associated EIRR is estimated to be 9\.6 percent, resulting in an US$211 million ENPV, when a 6 percent discount rate is considered\. However, an assessment using a 10 percent discount rate results in a negative ENPV of US$13\.4 million\. 61\. Sanitation investments focused on enabling access to sewerage services and pollution control experienced time and cost overruns which significantly affected, but did not impair, their economic viability\. At ICR, the associated EIRR is estimated at 7\.1 percent, just above the 6 percent discount rate, resulting in a US$5\.8 million ENPV\. However, when using a 10 percent discount rate, it results in a negative ENPV of US$9\.9 million\. Therefore, when using a discount rate of 6 percent, investments are found to be marginally economically viable, although below the opportunity cost when using a 10 percent discount rate\. 29 World Bank OPSPQ, May 2016\. Discounting Costs and Benefits in Economic Analysis of World Bank Projects\. 30 Siegel, Jeremy and Schwartz, Jeremy\. Feb 2006\. Long-Term Returns on the Original S&P 500 Companies\. Page 25 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Table 6: Comparison of the economic and financial analysis at Appraisal and ICR Parameter At Appraisal At ICR EIRR (%) 37\.1 9\.4 -Water supply service improvements (reduction of rationing and NRW) 39\.1 9\.6 -Sanitation service improvements (access and pollution control) 19\.0 7\.1 FIRR (%) 22\.7 6\.4 -Water supply service improvements (reduction of rationing and NRW) 24\.1 6\.5 -Sanitation service improvements (access and pollution control) 9\.3 2\.6 ENPV (US$ million) [10% discount rate at Appraisal and 6% discount rate at ICR] 766\.3 217\.0 -Water supply service improvements (reduction of rationing and NRW) 743\.0 211\.1 -Sanitation service improvements (access and pollution control) 23\.2 5\.9 FNPV (US$ million) [10% discount rate at Appraisal and 6% discount rate at ICR] 446\.3 29\.9 -Water supply service improvements (reduction of rationing and NRW) 448\.6 40\.2 -Sanitation service improvements (access and pollution control) -2\.3 -10\.3 Other indicators -Project cost overruns, market prices (%) - 5\.6 -Project cost overruns at constant 2009 prices (%) - -11\.0 -Time overrun (months) - 52 -Sensitivity analysis: EIRR +/- 10% rationing targets (%) - [8\.2 â 10\.5] -Sensitivity analysis: FIRR +/- 10% NRW targets (%) - [5\.8 â 7\.0] 62\. A sensitivity analysis was performed to assess the impact of activities currently being undertaken to further reduce NRW and rationing under the âSmart Urban Waterâ program funded by the United Kingdom Prosperity Fund (UKPF) as a completion/follow-up activity of the Project\. Ten percent overshooting/undershooting targets for water rationing based on outcomes of the UKPF-funded activities result in a range estimate between 8\.2 and 10\.5 percent for the project EIRR; i\.e\., in the event of undershooting rationing targets by ten percent, the EIRR will go as low as 8\.2 percent, which remains above the 6 percent rate of discount, but below the 10 percent discount rate\. 63\. From a financial analysis perspective, the Project as a whole is assessed to be marginally financially viable with a Financial Internal Rate of Return (FIRR) of 6\.4 percent\. Water supply investments are assessed to be marginally financially viable with an FIRR of 6\.5 percent, while sewerage investments are not financially viable at ICR stage with a 2\.6 percent FIRR\. The project-wide marginal financial viability is confirmed by a sensitivity analysis regarding overshooting/undershooting of NRW targets thanks to the UKPF funded activities, with a range estimate for the FIRR between 5\.8 and 7\.0 percent\. 64\. Design and Implementation efficiency\. The overall project design and implementation efficiency experienced some shortcomings\. Technical challenges for handling the integration of North-South into one single water supply system seem to have been underestimated at Appraisal\. The DEDs for implementation of the wastewater systems in four municipalities had not been completed when implementation started causing significant implementation delays and eventual change of beneficiaries for the sanitation component\. Also, a 5-year implementation schedule was very optimistic, which is related to the underestimation of technical challenges\. 65\. Assessment of Efficiency and Rating\. Efficiency is rated Modest\. This is because, although the results from the economic evaluation are positive when performing the assessment with a 6 percent discount rate, the economic evaluation generates negative results when using a 10 percent discount rate\. In addition, the Project had design and Page 26 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) implementation inefficiencies, underestimating technical challenges and implementation delays, leading to three extensions of the closing date\. Some of the delays were caused by circumstances beyond the control of the Project, i\.e\. devastating floods in 2010/2011 and recurrent droughts, which also resulted in changes to the scope of the Project to attend the emergencies\. Due of the influence of these factors and the results of the analysis, i\.e\. positive EIRR and ENPV, the efficiency is rated Modest\. D\. JUSTIFICATION OF OVERALL OUTCOME RATING 66\. The overall outcome is rated Moderately Unsatisfactory\. This is because, although the relevance is rated High, the Efficacy and Efficiency are rated Modest throughout project implementation mainly due to the limited achievement in terms of sanitation targets, with BOD reduction only reaching 40 percent of the revised target at restructuring\. In addition, delays observed in generating outcomes weight negatively against disbursements, as per the split rating presented in Table 7\. Table 7: Split Rating Evaluation Before restructuring After restructuring (Feb\. 2019) Relevance of Objectives High Efficacy: Modest Modest PDO1 Substantial Substantial PDO2 Negligible Modest Efficiency Modest Outcome rating Moderately Unsatisfactory Moderately Unsatisfactory Numerical rating 3 3 Amount disbursed (US$ millions) 167\.75 22\.25 Share of disbursement (%) 0\.88 0\.12 Weighted value of the outcome rating 2\.65 0\.36 Final outcome rating (2\.65+0\.36) = 3\.01 ï» 3 ï Moderately Unsatisfactory Note: Highly Unsatisfactory (1); Unsatisfactory (2); Moderately Unsatisfactory (3); Moderately Satisfactory (4); Satisfactory (5); Highly Satisfactory (6) E\. OTHER OUTCOMES AND IMPACTS (IF ANY) Gender 67\.Although no specific gender actions were originally included in the Project design, there were gender-related benefits\. Project activities benefitted about 1\.2 million women, representing 52\.6 percent of the total population in the 16 municipalities in the Project area, specifically in terms of the reduction in the time spent by women collecting water when faced with water rationing\. Before improvements with water district management and network connectivity improvements, households in localities such as Ibura, had water supply between 6 to 12 hours every 3 to 4 days, with extreme cases (households at higher altitude) of 6 hours per week, and women had to fetch water for domestic consumption on a regular basis\. With the increased water availability, although most households are still subject to rationing, water availability has significantly increased, with most neighborhoods having 24-hour water supply at least 3 to 4 days, which allows women to spend time on other activities\. In addition, about 30 percent of the members of basin and usersâ committees are women and their contribution has been perceived as fundamental in conflict resolution and in the management of the committees\. Page 27 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Institutional Strengthening 68\. Strengthening of APAC and committees\. The Project contributed to institutional strengthening by supporting the establishment of APAC and water reservoirs councils, which are now fully operational and contributing to integrated WRM and improved delivery of water supply services\. APAC has carried out regular training sessions for water basin committees and councils in the State, which enables them to mediate conflicts among water users\. In addition, APACâs oversight in the State has resulted in most dams being included in the SNISB system, and these dams are now regularly monitored\. 69\. Strengthening of COMPESA\. The Project built the capacity of COMPESA in NRW reduction, as part of which the utility gained an additional 284 L/connection/day, which allowed for the reduction of water rationing in the Olinda municipality and other areas of the MRR\. To further strengthen COMPESAâs efficiency in service delivery, the Smart Urban Water Externally-Financed Output (EFO) financed by the United Kingdom Prosperity Fund (UKPF) was developed to complement the Project, and brought technical assistance in NRW control and management from October 2018 to November 2019, in the form of trainings, interaction with innovative technology providers and diagnostics\. Synergies were created between the Project and the EFO in that the Olinda PBC financed under the Project helped design a new PBC in the MRR under the EFO, and the EFO provided a deeper understanding of COMPESAâs strengths and weaknesses in NRW management, as well as identified potential solutions to address NRW, both structurally and through behaviorally-informed interventions\. Both the Project and the EFO contributed to the creation of a Water Loss Committee within COMPESA, to serve as an institutional anchor for NRW reduction, creating an incentive for various departments to come together and tackle NRW as an organizational issue\. A follow- up trust-funded phase also financed by the UKPF is under way and is building on the achievements realized under the Project and the EFO to focus on bringing innovative approaches and equipment to further reduce water losses\. 70\. Implementation of new projects\. As mentioned in the outcome section, the NDB is currently preparing a new investment project which is to take advantage of the water supply and wastewater designs that were prepared under this Project\. In addition, the success of the Olinda PBC and the turnkey contract model implemented in Santa Cruz de Capibaribe will be replicated in this new project, which will consolidate COMPESAâs knowledge in implementing these innovative contracts\. Furthermore, based on the delays observed in connecting households to the wastewater system, COMPESA is looking at more efficient and innovative ways to implement sewerage contracts, in which priority to the construction of wastewater household connections is to be given\. Mobilizing Private Sector Financing 71\. COMPESAâs operation and maintenance costs, as well as a portion of its capital expenditures are currently financed by tariff revenues, and a significant part of the capital thus needs to be financed by grants/loans from either state or federal financing sources\. Current investment levels are critically below the required amounts to meet service demands for expansion and improvements, and with the current fiscal constraints affecting the State Government, as well as increasing investment needs, COMPESA needs to increase access to concessional and commercial financing, and capital markets\. Since 2018 and with improvements in its water supply systems, COMPESA has been able to borrow funds from local development banks (for example, Caixa Geral and Banco do Brasil) to further improve its network in the MRR and increase access to water supply\. These investments with funds from local banks are in early stages, and there is thus a need to further increase efficiency and expand this access to commercial financing\. In that sense, support was brought under the EFO to identify future scenarios to access medium- to long-term commercial Page 28 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) loans and the capital market\. This technical assistance provided critical financial expertise to COMPESA in the form of a global financial model, with investment plan scenarios, as well as recommendations for COMPESA to make an Initial Public Offering\. Poverty Reduction and Shared Prosperity 72\. Although the Project didnât have specific indicators targeting poor populations, several activities were implemented in municipalities with significant poverty rates\. For instance, as per the most recent statistics from the Brazilian Institute of Geography and Statistics, the overall poverty rate in the MRR is 63 percent, and, more specifically, project activities contributed to improved WSS services in municipalities with poverty incidences of 54 percent (JaboatÃ£o dos Guararapes), 53 percent (Olinda) and 40 percent (Surubim and Santa Cruz do Capibaribe)\. This amounts to a total of nearly 1\.2 million poor people with improved WSS services\. In addition, COMPESA is targeting poor communities in increasing the household wastewater connections and it is expected to reach about 5,000 people by December 2022\. Other Unintended Outcomes and Impacts Not applicable\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A\. KEY FACTORS DURING PREPARATION 73\. Soundness of background analysis and Project design\. At Appraisal, the Project was designed drawing on lessons learned from previous WRM and WSS projects, where low income households could not afford the cost and the payment of fees related to connecting to the sewerage network, which were issues the Project aimed to address\. In addition, the Project aimed to support a more comprehensive and participatory process of water resources planning and management by strengthening user participation and supporting the establishment of new institutional arrangements as well as a broader range of planning tools incorporating land use and water resources\. Furthermore, integrated WRM was also part of the component activities through the introduction of bulk water meters and charges, more effective enforcement of local laws in use of both surface and groundwater, modernization and expansion of hydrometeorological and water quality monitoring networks, as well as the installation of flood alert systems\. In addition, the Project was prepared considering the lessons from PROAGUA31, which demonstrated the need to work on the interface of WSS and WRM, as well as from REAGUA32, particularly its experience with output-based financing\. 74\. COMPESA implementation capacity\. While the project design included the use of innovative contracting approaches â such as turnkey for wastewater investments and results-based for NRW, limited efforts were made to 31 Brazil â Federal Water Resources Management Project (P100154)\. This project was a Bank approved project aimed at (i) promoting rational and sustainable use and participatory management of water resources in Brazil in general, and in the Northeast in particular and (ii) providing e reliable and sustainable access to water for domestic, agricultural, rural, municipal and other uses in priority river basins in the Northeast\. 32 Brazil Water Recovery Project in the State of SÃ£o Paulo (P106703), which aimed at increase clean water availability in the critical watersheds in the State of Sao Paulo\. Page 29 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) increase the understanding among COMPESAâs senior management of Bank procurement guidelines vis-Ã -the vis national procurement legislation\. 75\. Readiness for implementation\. The Project could have initially identified water systems with available engineering designs ready to implement in order to adopt the Projectâs gradual approach of starting with traditional procurement/contractual models and gradually moving towards more innovative ones\. The initial list of water supply systems did not include municipalities which had engineering designs ready for implementation\. Similarly, the initial list of sewerage and wastewater systems in the Toritama, Limoeiro, Paudalho and Salgadinho municipalities was very ambitious, which led to major delays in implementation and ultimately replacing them with other systems that had engineering designs closer to being ready for implementation (but which still needed revisions)\. 76\. Adequacy of the PDO, PDO indicators and Results Framework\. The PDO was adequate given the Project rationale and design justifications\. The Results Framework and PDO indicators designed to track progress were initially adequate and specific\. However, given that the Project included dimensions of sustainability and WRM, associated outcome and intermediate indicators could have been included\. For instance, on sustainability, apart from the indicator on cashflow, other indicators to monitor technical and environmental sustainability could have been included such as, volume of wastewater collected, quality of effluent from WWTP compared to the standards at state level, number of additional beneficiaries of water supply, among others\. On WRM, indicators such as the number of meteorological stations installed and functioning, flood and drought alert system installed and operational, as well as number or percentage of people trained and capable of communicating with the population when there is a flood and drought alert, could have been used\. The intermediate outcome of river basins committees established was only introduced as part of the first restructuring in September 2015\. 77\. Risk assessment\. At Appraisal, the risk was rated Moderate, recognizing some limitations that the implementing agencies had, and mitigation actions were put in place\. For instance, the technical risk was rated as Moderate as it acknowledged the limited experience that COMPESA had in operating WWTPs which could lead to a lower reduction in pollution loads\. As a mitigation measure, a technical assistance package was put in place to support the company in decision-making related to engineering designs, treatment technologies and reuse\. On fiduciary aspects, the implementing agencies had limited experience with World Bank procedures and mandatory trainings were put in place as mitigation measures to ensure that all procedures were to be well understood and followed\. In addition, even though the State of Pernambuco was known to be exposed to recurrent droughts â the last one being in 1998/1999, which had left the MRR population with 1 day of water services every 10 days, this hydrological risk was not considered in the project design or factored into the establishment of project targets\. 78\. Financial management and budget constraints during implementation\. At preparation, the Project did not include the need to have a separate designated account at the GoPE level, from which funds would be disbursed to pay for consultants, contractors, as well as for the salaries of the project implementation unit\. Instead, all Bank funds were transferred to the general GoPE account from where all disbursements were made\. As discussed in the PDO 2 efficacy section, this caused significant constraints in the timely payment of contractors and consultants which in turn led to delays in the implementation of project activities\. These financial issues were exacerbated during implementation when there was a budgetary freeze at the State Level from 2015 to 2017\. These budget constraints affected project implementation in 2015/16, causing lower implementation path in contracted works, as well as towards the end of project implementation in 2019/2020\. Page 30 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) B\. KEY FACTORS DURING IMPLEMENTATION 79\. Delays in the implementation of project works\. As mentioned in the section above, the lack of readiness in the engineering designs led to delays in the implementation of works, including the designs for Surubim and Santa Cruz do Capibaribe, which had to be updated as they had been finalized more than 10 years prior to project implementation\. 80\. Emergency works due to floods and droughts\. As mentioned in the efficacy section, emergency works were carried out to mitigate the effects of floods and droughts using part of the project proceeds, which was not initially anticipated\. In addition to the droughts, there were several delays in implementing the works due to slow progress during initial stages of implementation, floods events in 2010 and 2011 in response to which project funds were used, and a low capacity of the State to handle procurement processes and limited contract management capacity\. Although unforeseen, these works were within the project scope and contributed to the achievement of project outcomes\. 81\. Complementary efforts to support innovation\. Although the quantitative NRW reduction targets were not fully achieved under the project, the âSmart Urban Water â EFO 1395â implemented in Pernambuco from October 2018 to November 2019 with funds from the UKPF supported COMPESA in strengthening the institutional dimensions of NRW management\. As a result of this initiative, an evaluation of COMPESAâs water loss management approaches and capacity was performed, an innovation fair was organized to present the company with smart water technologies to reduce NRW, a PBC was designed to support NRW reduction in a new area of the MRR, and the concept of behavioral science was introduced as an alternative and complementary approach to tackling water losses with a strong involvement of the customers\. A trust-funded follow-up program under implementation is now using the baseline knowledge generated under the EFO to continue improving COMPESAâs NRW reduction and control capacity\. More details about this initiative are discussed in the âOther outcomes and impactsâ section of this report\. 82\. Mid-Term Review (MTR) of the Project (April 8, 2013)\. The Project was approved on January 2010 and became effective in June 2010\. At MTR, the project had been rated Moderately Unsatisfactory due to low disbursements (18 percent) and delayed procurement on the works packages caused by lack of detailed designs of the project sites, as previously discussed\. As such, at MTR, a level two project restructuring was proposed to adjust the project activities given that some were removed from the project33 and to extend the completion timeline\. 83\. Project restructuring and changes\. As previously discussed, the Project was restructured three times given the delays and challenges observed, particularly outside Project control\. While most changes were adequate and in line with circumstances, the task team could have revised the PDO outcomes and intermediate indicators during the earlier restructurings to ensure achievement of targets\. For instance, the PDO outcome indicator on BOD removal remained the same even with major delays in construction of the WWTPs, which only started operations towards the end of Project implementation\. Similarly, the wastewater household connections targets were not changed, hampering achievement of the PDO outcome target\. 33 These were: (i) A public private partnership on sanitation was considered redundant as it overlapped with activities already included in the project; (ii) actions related to SertÃ£o Pernambucano Canal, that were later included in financing from the Federal Government in the studies to expand irrigation in the SÃ£o Francisco River basin; and (iii) inventory and valuation of COMPESA assets which was directly contracted by COMPESA outside of the Project, among others\. Page 31 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) 84\. Exchange of experience with other wastewater utilities in Brazil\. Given the limited experience in designing sewerage systems and managing WWTPs, staff from COMPESA visited two municipalities in the State of Rio de Janeiro, namely Novo Friburgo and PetrÃ³polis, which counted on several WWTPs which had been in operation for more than 20 years\. During the visit, COMPESA staff learned about customer engagement, the different wastewater treatment technologies used, the operation of pumping stations, as well as the use of interceptor sewers with sanitary sewer overflow in times of heavy rains\. This latter aspect of the visit inspired COMPESA to test this approach at scale in the municipality of Santa Cruz do Capibaribe\. 85\. Although the Bank funds remained the same throughout the project implementation, there was an additional increase of about $23 million, in total project costs caused mainly by the additional costs in the implementation of the Pirapama dam works\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 86\. A results-based monitoring and evaluation (M&E) system was developed, to be implemented by COMPESA and other implementing agencies, to monitor and evaluate implementation progress and analyze results towards achieving the Project objectives under each component\. Based on the project activities, two PDO outcome indicators and eight intermediate indicators were selected to monitor the implementation of activities leading the achievement of the project outcomes\. While the PDO outcome and intermediate indicators selected at Appraisal were adequate to measure progress of the water rationing and sanitation activities, additional indicators could have been included to assess the sustainability of water supply services\. For instance, at Appraisal, only the index cash flow was included and monitored when time of supply and/or number of customers or neighborhoods that have certain hours or increase time of service could have been included\. 87\. The arrangements for data collection and reporting described in the PAD were elaborated in the Project Operational Manual\. In addition, while most indicators on WSS service delivery were to be monitored by COMPESA, few indicators were included to be monitored by APAC and the SRH\. The data collection, reporting and periodicity was very clearly defined and the instruments as well as responsibility was also well defined in the Results Framework\. Most indicators were expected to be achieved by the closing, except for the establishment and staffing of APAC which was expected to be achieved within two years after the project approval and given that legislation had been in place\. 88\. Although a new PDO outcome indicator was added at restructuring to monitor the progress on WRM, as discussed previously, the M&E could have benefitted from additional intermediate indicators to assess the achievement of the sustainability of service provision and integrated WRM\. M&E Implementation 89\. Regular monitoring was carried out using the Results Framework outcome and intermediate indicators, keeping track of progress of physical, procurement, financial, institutional, Environmental Management Plan (EMP) and Resettlement Action Plan (RAP)-related issues which were reported in the semi-annual progress reports\. M&E was implemented as expected in the PAD and as per the adjustments recommended as part of the restructurings\. Data on Page 32 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) the reduction of water rationing and on progress made on the increase in the number of connections was obtained from the reports prepared by COMPESA submitted before the supervision missions and with some spot observations by the Bank team\. A reliable flow of M&E information during the project implementation enabled the Bank team to assess the performance of project components and their potential sustainability\. 90\. The recording on the progress made to achieve the outcome and intermediate indicators could have been more consistent across the implementation period\. For instance, the number of water supply and wastewater engineering designs was not consistent and the discrepancies were not discussed in the restructuring papers (in some cases, a total of 10 designs was recorded, while in others, 21, for example)\. 91\. For wastewater-related indicators, due to major delays in construction works, there was no record on the progress on the volume of BOD removed or number of residential wastewater connections until the end of the project\. If volume of wastewater collected and treated had been included as an intermediate indicator, it may have been helped in recording progress when WWTPs start the commissioning phase\. M&E Utilization 92\. The information collected by COMPESA and other implementing agencies was utilized to determine project outputs and PDO achievement upon project closing\. The results captured through the M&E framework generally served as a tool for determining the need for project restructuring, which would ensure that most of the project outcomes would be achieved\. For instance, several adjustments were made on the project indicators, such as the target on the reduction the percentage of population subject to water rationing, which was increased, and the model for private participation in the Canal do SertÃ£o Pernambucano which was eliminated\. Justification of Overall Rating of Quality of M&E 93\. The overall rating of the M&E is rated Modest\. This is because, although the M&E system regularly captured the progress of project activities and the information collected was used as a tool to improve their execution during project implementation, the Results Framework was not designed to adequately capture the sustainability aspects of water supply and progress in sanitation interventions, and could have been strengthened with additional PDO-level and intermediate indicators\. B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 94\. The environmental and social safeguards triggered at Appraisal are listed in Table 8\. These were thoroughly monitored throughout the project implementation\. Details are provided in the following paragraphs\. Environmental safeguards 95\. Environmental compliance\. At project closing, no significant environmental impact had occurred in consequence of project activities\. Environmental safeguards performance ratings varied between Satisfactory and Moderately Satisfactory throughout implementation, but was downgraded to Unsatisfactory (OP 4\.01 â Environmental Assessment and OP 4\.37 â Safety of Dams) at project closing due to pending issues mainly related to the implementation of recommendations from the Dam Safety Panel for the Pirapama Dam, as well as unresolved safety issues related to the highly eroded slopes of the hills supporting the 5 water reservoirs constructed in Olinda, which represent significant risk to reservoir stability in the medium to long-term\. A Post-Closing Safeguards Action Plan was agreed upon with the Borrower to resolve all pending issues and is being closely monitored through monthly meetings\. Page 33 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) 96\. Safety of Dams\. The Borrower was unable to complete the implementation of six of the eight Safety Panel recommendations for the Pirapama Dam (counterpart works) within the Projectâs life, namely: (a) project to implement the installation of monitoring instrumentation; (b) project to repair the earth structure; (c) project to repair the compacted concrete structures; (d) project to repair the conventional concrete structures; (e) plan to bid and implement the necessary works; and (f) Dam Safety Plan, as well as the execution of all recommended works\. Even though COMPESA contracted the preparation of the designs for the recommended works before project closing, no product was delivered by the closing date\. The Project also funded the preparation of the reconstruction designs for the four flood contention dams (Igarapebas, Gatos, Panelas II and Barra do Guabiraba34), which were revised by dam specialists (although not as part of a formal Panel)\. The hiring of a Dam Safety Panel to provide advice both for Pirapama and the four flood contention dams is part of the Post-Closing Safeguards Action Plan agreed upon with the Borrower (see Annex 6)\. Table 8: Safeguards policies triggered Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4\.01) â Natural Habitats (OP/BP 4\.04) â Forests (OP/BP 4\.36) â Pest Management (OP 4\.09) â Physical Cultural Resources (OP/BP 4\.11) â Indigenous Peoples (OP/BP 4\.10) â Involuntary Resettlement (OP/BP 4\.12) â Safety of Dams (OP/BP 4\.37) â Projects on International Waterways (OP/BP 7\.50) â Projects in Disputed Areas (OP/BP 7\.60) â Social safeguards 97\. Social compliance\. Social safeguards performance ratings have remained in the satisfactory range for most of the projectâs life cycle, but were downgraded at project closing to Moderately Unsatisfactory because of pending issues related to the documentation of the payment of easement fees for 20 landholders affected by the works of the Pirangi-CamevÃ´ water main and the Surubim sanitation system\. The Post-Closing Safeguards Action Plan includes the provision of the evidence of payment of these easement fees and the preparation of the completion reports of the 4 Abbreviated Resettlement Action Plans (ARAPs)\. These are under implementation and closely monitored through monthly meetings with COMPESA\. 98\. The Project has, indeed, followed good practices related with social risk management, ensuring compliance with the requirements of OP 4\.12 and OP 4\.11 and promoting the engagement of key stakeholders\. In all works, a consultancy firm was hired to provide social assistance by: (i) mobilizing local communities and organizing committees of local representatives to oversee the progress of civil works; (ii) carrying out socioeconomic surveys and beneficiary satisfaction polls, communication, consultation and awareness raising campaigns; and (iii) operating a first-tier channel for grievance redressing (supplementing the channels offered by COMPESAâs official Ombudsman Office)\. 34 It is important to mention that construction works of these dams have not been finalized, particularly due to the floods\. These works will continue to be monitored as part of the Post-Closing Safeguards Action Plan\. Page 34 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Furthermore, sanitation works in the historical city of Olinda (a UNESCO World Heritage site), which required excavation works were exemplarily managed, including the hiring of archeological specialists and robust consultation mechanisms with key stakeholders\. Finally, the Project had a positive impact on COMPESAâs institutional capacity to manage social risks and impacts of its operation, including the creation of a Social Mobilization Managerial Unit in the structure of the agency\. 99\. Post-closing issues related to involuntary resettlement\. At project closing, the compensation payment processes related to the project's infrastructure (right of way) were still pending judgment, and there were a few gaps in documenting the processes and the related evidence\. All project activities complied with OP 4\.11\. Procurement 100\. Project implementation arrangements were comprehensive, but did not address implementation challenges, particularly on procurement issues, as it involved several implementing agencies, namely the GoP and COMPESA, as well as several secretariats and state agencies as beneficiaries\. Nevertheless, a Project Coordination Unit (PCU) based in the SRH was set to be responsible for overall procurement aspects under the operation and it was in charge of providing cross-support to all staff involved in the project\. During implementation, the government agencies had a well-functioning procurement team, with the relevant experience in procuring goods and services using Brazil law and rules on procurement, however with limited experience with Bank guidelines and no prior experience with processes to hire consulting services\. 101\. Despite initial challenges in applying the Bankâs policy, procurement had no major issues throughout the project and the Bankâs procurement rules were fully complied with\. The application of the Bankâs guidelines in the selection of consultants and firms seems to have had a positive impact on the quality of the service providers\. However, the turnover of high government officials in the secretariats caused difficulties, especially delays in definitions and preparing technical documents, such as TORs and Technical Specifications\. This affected the procurement of several project activities, particularly evident in the implementation of the projectâs technical assistance component\. Another aspect to be noted is the lengthy decision-making process in place for COMPESA's board of directors, which ultimately led to processes of hiring consultants in the technical assistance component being dropped after consultants had been selected and ready to sign contracts\. 102\. Overall, the policy advice and technical assistance provided by the World Bank team helped to strengthen institutional capacity\. By project closing, PCU staff had strengthened its capacity to perform procurement processes for all consulting activities, fiduciary responsibilities, planning, as well as M&E\. In addition, the project provided a number of trainings to key technical personnel on procurement and management, which is especially relevant for the GoP and beneficiaries in the context of few prior relevant experiences\. Financial management 103\. All Financial Management supervision missions were rated Satisfactory and Moderately Satisfactory throughout project life\. The internal control arrangements identified in the Financial Management Assessment were strengthened as its associated action plan suggested, including the allocation of a dedicated Financial Management Specialist within the PCU\. The Control Risk assessment was rated as Moderate, and E-FISCO, Pernambucoâs Financial Management Information System proved to be appropriate to account for project execution\. External audits were undertaken by private firms, due to a lack of human resources at the Subnational Supreme Audit Institution (TCE-PE)\. All audit reports Page 35 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) expressed unqualified/unmodified audit opinions\. All Interim Financial Reports (IFR) received during the life of the project were considered acceptable and were received on a relatively timely basis\. No cases of ineligible expenditures were identified or alleged cases of fraud and corruption during project implementation were recorded\. C\. BANK PERFORMANCE Quality at Entry 104\. The World Bankâs performance at entry was Moderately Satisfactory\. The Bank team supported the delivery of a substantially relevant and technically sound project, which closely aligned with the GoPEâs policies and strategies, as well as with the CPF\. The World Bank ensured that a team of specialists was mobilized to address all relevant project aspects, including technical aspects, social and environmental safeguards and M&E\. Moreover, the Bank team made an effort to design the project components, activities and Results Framework taking into consideration the lessons learned from previous projects\. 105\. On the safeguards and fiduciary aspects, the Bank team supported and revised all the documents prior to project approval\. For instance, a social analysis was carried out, a Resettlement Policy Framework (RPF) was prepared as well as a RAP for the Pirapama water system\. Similarly, recognizing the limitation that COMPESA had in working with Bank procedures, the Bank team conducted trainings to the implementing agencies to ensure a minimum knowledge baseline in that sense once the project was to be implemented\. 106\. The Bank team could, however, have supported the client in selecting systems that didnât require preparation of DEDs, as the inclusion of both water supply and wastewater systems that still required to be designed seemed ambitious in terms of implementation time and for the achievement of the PDO outcomes as originally planned\. In addition, the Bank team could have adequately identified this fact, as well as the hydrological risk, as part of the project risks and recommend mitigation measures\. Quality of Supervision 107\. The World Bankâs performance during implementation was Moderately Unsatisfactory\. The World Bank team was composed of an adequate number of team members, including technical, financial, environmental and social safeguards specialists that conducted regular implementation support missions and provided timely technical guidance to the local and the central implementing agencies\. Even though the project area was spread across various municipalities in the MRR the task team visited all project sites on a regular basis\. Recognizing the limited capacity of the implementing agencies, the World Bank team supported the client with procurement, fiduciary, and safeguards implementation through continued trainings and hands-on capacity building sessions\. In addition, Task Team Leader turnover was reduced to a minimum, as only two Bank staff led the Project from preparation to completion over a total of 10 years (from 2010 to 2020)\. 108\. Given the major delays and the ongoing drought situation that the Project faced during the implementation, the Bank team carried out three project restructurings that aimed not only at extending the project closing date but also at adjusting PDO outcome targets and intermediate indicators\. However, given the severity of the droughts which caused a significant reduction in water availability and more rationing, the Bank team could have carried out a project restructuring considering the climatic challenges and hydrological risks that the region was facing and revise the project outcomes and targets to reflect these challenges\. In addition, with the major delays in the construction of the WWTPs and the limited ability to increase the number of sewerage connections, the team could have also revised the Page 36 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) PDO outcome indicator on BOD reduction to better reflect the reality and incorporate the effect that droughts had had on water consumption\. Project restructurings thus had limited scope, apart from time extensions which led to a 10-year project implementation period and supervision costs of just over US$1 million\. 109\. Furthermore, the safeguards team closely supported the Borrower and COMPESA, particularly on the dam safety issues that were identified at initial stages of project implementation\. The team regularly visited project sites and spent a considerable amount of time ensuring that safeguards issues were regularly monitored, as well as supported the preparation of a detailed action plan for implementation by the Borrower and COMPESA before project closing\. However, due to factors that were beyond the Bank teamâs control, these actions were not fully implemented as previously discussed\. Justification of Overall Rating of Bank Performance 110\. The Bank performance is rated Moderately Unsatisfactory\. This is because, although the Bank team provided high-quality support during preparation to guide project design based on lessons learned, attempted to address in a timely manner the ongoing changes on project activities and was proactive in supporting the Borrower to achieve project outcomes, Bank team support during implementation fell short in terms of addressing the challenges that the Project was facing, particularly floods and droughts, which led to a limited achievement of project targets set both at Appraisal and at restructurings\. D\. RISK TO DEVELOPMENT OUTCOME 111\. Sustainability of water supply service delivery is at risk due to the incomplete implementation of dam safety activities in the Pirapama systemâs dam and reservoirs\. As discussed, the sustainability of water supply delivery in the MRR is subject to the completion of six out of the eight actions that were discussed and agreed upon with COMPESA\. For instance, in Pirapama dam, delays in replacement of hydromechanical equipment may risk the medium to long term project sustainability and lead to an increased population subject to water rationing\. To mitigate this risk, a Post-Closing Safeguards Action Plan was agreed with the Borrower and the Bank team will continue to monitor its implementation\. In addition, as part of APAC mandate, it will also continue to closely follow and enforce the implementation of this action plan\. 112\. The non-achievement of NRW targets may lead to an increase in the percentage of the population subject to rationing\. Although the population subject to water rationing has decreased, there are still a number of people in the project area that still donât get water services on a regular basis\. For instance, there are still people in the MRR that receive less than 48h of water every week, particularly in the higher areas of some of its municipalities\. To mitigate this risk, the Smart Urban Water trust-funded Program, an activity funded by the UKPF is being implemented in the MRR, and includes innovative approaches, such as research on water and sanitation customer behavior as well as focus on operational efficiency, particularly on improving water supply management and reducing water losses in the MRR\. This program will be implemented from 2020 to 2022 and is expected to continue to catalyze COMPESAâs capacity to further reduce water losses despite the lower availability of water due to droughts in the region\. 113\. Delays in approval of the bulk tariff charges for abstraction of raw water in the water basin\. While the associated study has been completed and ready for submission for the State Assemblyâs approval, the COVID-19 pandemic delayed this submission and by project closing, there was no firm prospects on a date for its approval\. Page 37 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) Although APAC and the basin committees receive funds from the state government, apart from supporting the control of water abstraction and use, the additional funds would further support the activities implemented by APAC and, most importantly, the users and basins committees that have been established\. 114\. Limited increase in the cashflow indicator due to droughts and the COVID-19 pandemic\. In addition to the drought that contributed to further water rationing, the pandemic and its associated lock down in Pernambuco led to important financial impacts on COMPESAâs operations (comparing the 12 months before and after COVID -19), including a reduction in the accumulated cash flow by 20\.3 percent, a reduction in the operating and net profit by 37\.0 percent, as well as the postponement of close to USD 10\.0 million of investments\. As noted, the cashflow target was not met at project closing and it may be further lowered as a result of these impacts, although it is also estimated that COMPESA may fully recover from these COVID-19-related impacts by the end of 2021\. V\. LESSONS AND RECOMMENDATIONS 115\. Readiness of engineering designs is crucial to meet PDO outcomes related to large infrastructure in a timely manner\. The PDO outcomes were expected to be met through the construction of water supply and wastewater systems that were still to be designed during project implementation\. However, due to delays in procuring consultancy firms and COMPESAâs long revision and approval process for engineering designs, no system was ready to be executed three years into implementation\. Even after replacing these original systems with others that were deemed more ready for implementation, designs were outdated and required additional time to be brought to readiness for bid\. Depending on the readiness of engineering designs, projects should thus either factor in longer project implementation periods or ensure that infrastructure sub-projects are indeed ready to be implemented\. Specific attention should be dedicated to revising the available designs during preparation and prior to setting out the PDO outcome targets\. 116\. Project implementation should focus on ensuring that sewerage household connections are installed in parallel to the construction of the WWTPs\. Similar to other wastewater projects, the installation of wastewater household connections was relegated to the end of the project timeline, i\.e\. after the construction of the WWTPs, which affected the achievement of the sanitation PDO outcome\. Connections should be mainstreamed during the construction of the sewerage network to ensure that WWTPs receive sufficient wastewater flows and that treatment objectives are met\. Alternative contract models with results-based or performance-based components could also be explored to incentive the installation of household connections in a timely manner to ensure that wastewater is effectively collected and treated\. 117\. Innovative approaches to design and build WSS systems efficiently should be incentivized to accelerate project implementation, ensuring that set outcomes are met\. As a corollary to the previous lesson, the Bank as well as COMPESA were quick to find innovative solutions for the construction of water supply and wastewater systems which were time and cost effective, including through design-build-operate contracts (referred to as the âturn-keyâ contract by project stakeholders) and PBCs\. Given the difficulties experienced by COMPESAâs teams in completing the in-house designs of water supply and wastewater projects, the design-build-operate contracting approach introduced with direct support from the Bank Team was tested with the Santa Cruz do Capibaribe sewerage system\. This allowed COMPESA to complete the project in a timely manner, with less contract amendments then through the classical approach of bidding for works with basic engineering designs, and COMPESA has mentioned that they are to adopt this turn-key approach for a number of upcoming water supply and sewerage works packages\. Similarly, the Page 38 of 72 The World Bank Brasil Pernambuco Sustainable Water Project (P108654) PBC approach used for the first time with the Olinda NRW reduction program is now being replicated and expanded to other municipalities under COMPESAâs management\. 118\. Funding to ensure safeguards compliance should be confirmed prior to project approval\. At Appraisal, the reinforcement of the Pirapama water supply system was expected to the executed with counterpart funds\. However, although those works were completed as planned, compliance with the safeguards policy of dam safety and the recommendations of the Dam Safety Panel was not met with the required budget from the utility\. Given the significant risk to sustainability of the expected outcomes as well as reputational risks, funding for safeguards activities should be ensured at the outset of project preparation\. In addition, in the case safeguards issues arise during project implementation, additional funding should be considered (through additional financing) to ensure that all safeguards actions are dully completed prior to project closing\. 119\. Vulnerabilities to climate change and other non-climatic stresses and shocks need to be better incorporated into project design and implementation support plans for water and sanitation investments\. The identification of the vulnerability of water systems to climate and other non-climatic uncertainties during project design should be accompanied by appropriate planning and project management mechanisms to enhance preparedness and response, but also to set realistic targets for project objectives, particularly in areas known to suffer from natural disasters such as droughts and floods\. In that sense, techniques for assessing the vulnerability of water systems to climate change and other non-climatic uncertainties could be integrated into implementation support tools to inform in a timely manner the need for restructuring and for adjusting targets as well as infrastructure component designs\. Project design could also allocate dedicated resources to monitoring and fast-response mechanisms for climate-related emergencies, such as Contingency Emergency Response Components or CERCs\. In addition, taking into account the hydrological risk associated with recurrent droughts into the design of infrastructure could for example lead to more flexible, robust, progressive and resilient approaches to planning and building water and wastewater systems, thus minimizing the impacts of reduced water or wastewater flows on their operation and on the costs (both capital and operating expenses) associated with these assets\. \. Page 39 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: Improve sustainable water supply for the population residing in the Recife Metropolitan Region Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reduction in the percentage Percentage 88\.00 10\.00 35\.00 49\.50 of population subject to water rationing in the MRR 31-Dec-2009 30-Sep-2015 28-Feb-2019 30-Apr-2021 from 88% in 2008 to 35% in 2019 Comments (achievements against targets): The target on reduction of population subject to water rationing was almost achieved, reaching 73%\. This target was not fully achieved due to major delays in construction works that occurred during the project implementation and reduction in water availability in the project areas due to severe droughts\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 40 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) State water regulatory Yes/No N Y Y Y agency (APAC) is fully operational\. 31-Jul-2009 30-Sep-2015 31-Mar-2020 30-Apr-2020 Comments (achievements against targets): The target on establishment of APAC was fully achieved as the agency is currently operational and fulfilling the functions for which it has been established\. Objective/Outcome: Reduction in the pollution load discharged the municipalities targeted by the project Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reduction of pollution load Metric ton 0\.00 3,160\.00 2,939\.78 1,164\.01 discharged by the municipalities targeted by the 12-Jul-2011 30-Sep-2015 30-Sep-2015 30-Apr-2021 projectâs wastewater investments from 0,0 tons in 2008 to 2\.949,78 tons of BOD/year in 2019 Comments (achievements against targets): The target on reduction of BOD pollution was closely achieved, reaching roughly 40 percent of the set target at restructuring and 37 percent of the target at appraisal\. This was mainly because of major delays in construction works, limited achievement in number of connections and limited volume of wastewater reaching the WWTPs\. Page 41 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) A\.2 Intermediate Results Indicators Component: Water Sector Management and Institutional Development Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Bulk water charges Yes/No N Y Y N implemented 12-Jul-2011 30-Sep-2015 31-Mar-2020 31-Mar-2020 Comments (achievements against targets): The target on implementation of bulk water charges has not been achieved, although the tariff studies and proposals have been completed and currently pending approval from the State Assembly\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Users committees for water Number 0\.00 11\.00 11\.00 11\.00 reservoirs are implemented 31-Dec-2008 07-Sep-2015 07-Sep-2015 31-Mar-2020 Comments (achievements against targets): The target on implementation of users committees has been fully achieved, with all committees functioning and working closely to APAC\. Component: Improving Efficiency in the Provision of Water Supply and Sanitation Services Page 42 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Water losses in the areas Cubic 975\.00 565\.00 650\.00 691\.00 targeted by the project's Meter(m3) non-revenue water program are reduced from 975 31-Dec-2009 30-Sep-2015 31-Mar-2020 30-Sep-2020 l/connection/d in 2008 to 650l/connection/day in 2019\. Comments (achievements against targets): The target on water losses reduction was almost achieved, reaching 87%\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion COMPESAâs index of cash Percentage 103\.80 115\.00 105\.00 102\.00 flow sufficiency improves from 103\.8% in2008 to 31-Dec-2008 30-Sep-2015 31-Mar-2020 31-Mar-2020 <105\.0% in 2019\. Comments (achievements against targets): The target on cash flow sufficiency of funds was almost fully achieved, reaching 97% of the revised target\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Page 43 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Number of water utilities Number 1\.00 1\.00 1\.00 1\.00 that the project is supporting 31-Dec-2009 14-Oct-2019 31-Oct-2019 14-Oct-2019 Comments (achievements against targets): The target on support of water utilities supported by the project was fully achieved\. Component: Water Supply and Sanitation Service Expansion Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase the number of Number 8,169\.00 33,060\.00 52,580\.00 28,769\.00 residential connections to wastewater collection 31-Dec-2008 30-Sep-2015 31-May-2017 30-Apr-2021 services from 8169 in 2008 to 52580 in 2019 in the municipalities of the Capibaribe river basin targeted by the project\. Comments (achievements against targets): The target on number of wastewater connections was underachieved, reaching about 55 percent of the target at restructuring (which had been set at 52,580) and 87 percent of the target at appraisal\. This was mainly because of the while the projects for connections have been completed, customers have not connected to the system\. Page 44 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of engineering Number 0\.00 14\.00 21\.00 22\.00 designs for water supply and for wastewater municipal 31-Dec-2008 14-Oct-2019 31-Mar-2020 30-Sep-2020 systems designs for water supply Number 0\.00 7\.00 9\.00 7\.00 municipal systems 30-Sep-2015 31-Mar-2020 31-Mar-2020 30-Sep-2020 designs for wastewater Number 0\.00 14\.00 14\.00 15\.00 municipal systems 30-Sep-2015 31-Mar-2020 31-Mar-2020 30-Sep-2020 Comments (achievements against targets): The target on engineering designs has been overachieved, with one additional design completed\. The design have been submitted for COMPESA final approval prior to execution\. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion An additional 5\.13 m3/s are Cubic 0\.00 5\.13 5\.13 5\.13 supplied to the MRR from Meter(m3) the Pirapama Water Supply System by the end of 2011\. 31-Dec-2009 14-Oct-2019 30-Sep-2015 30-Sep-2020 Page 45 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Comments (achievements against targets): The target on additional volume of water supply has been fully achieved, reaching 100%\. Page 46 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) B\. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Improve sustainable water supply services for the population residing in the Capibaribe river basin and MRR\. 1\. Reduction in the percentage of population subject to water Outcome Indicators rationing in the MRR from 88% in 2008 to 51% in April 2021 2\. State water regulatory agency (APAC) is fully operational 1\. Bulk water charges Law drafted 2\. Users committees for water reservoirs are implemented 3\. Water losses in the areas targeted by the project's non-revenue water program are reduced from 975 l/connection/d in 2008 Intermediate Results Indicators to 691l/connection/day in April 2021 4\. An additional 5\.13 m3/s are supplied to the MRR from the Pirapama Water Supply System by the end of 2011 5\. Number of water utilities that the project is supporting 6\. Designs of nine water supply municipal systems Component 1: 1\. Modernization and expansion of the Stateâs hydro-meteorological and water quality monitoring network 2\. Studies to improve water use regulation and improve water use regulation 3\. Update of the Annual State Water Resources Management Plans Key Outputs by Component 4\. Update of MRR hydrogeological plans (linked to the achievement of the Objective/Outcome 1) 5\. Development of institutional regulation and procedures related to water right use and monitoring 6\. Cadaster of the surface water users 7\. Modernization and expansion of hydro-meteorological network and water quality stations 8\. Creation of 11 usersâ committees for water reservoirs Page 47 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) 9\. Updating and complementing Water Resources Plans 10\. Aquifer studies designed to improve the efficiency and sustainability of the use of the water table and identification of exploitation potential of the aquifers of the sedimentary basins of Mirandiba, Carnaubeira da Penha, BetÃ¢nia and Cedro 11\. Modernization and expansion of the hydro-meteorological and water quality monitoring network, including installation platforms and satellites for collection of meteorological and hydro- meteorological data 12\. Basin Revitalization through diagnosis and consolidation of productive arrangements around the Environmental Protection Area of Santa Cruz and the Mata da Pimenteira State Park and elaboration of environmental, socioeconomic studies and mapping of priority areas for the creation of Conservation Units and Ecological Corridors in the Capibaribe River Basin 13\. Studies on management models of rural water supply and sanitation systems throughout the State of Pernambuco, based on diagnoses of the situation in municipalities and existing programs and projects 14\. Development of regulatory governance model and instruments in WSS and TORs for the development of a long-term business plan for the State of Pernambuco Regulator 15\. Development of management models for the use of water resources in the Capibaribe basin, including treated wastewater reuse, diagnosis and proposals for sewage treatment and destination of treated effluents; and pilot study of agricultural reuse of WWTP liquid effluents 16\. Emergency consultancy service for hydrological modeling and mapping of flood levels in the basins of Una, SirinhaÃ©m and MundaÃº rivers 17\. Development of environmental management plans Page 48 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Component 2: 1\. Establishment and isolation of hydraulic areas and of metering districts in the South Zone of the MRR 2\. Improvements to telemetry, electrical installations and equipment 3\. Automation system for pumping stations, reservoirs and wells in the North, East and West areas of Recife 4\. Corporate NRW program and plan 5\. Inventory and valuation of COMPESA assets as well as reports on physical and operational integration of water supply systems in the MRR 6\. Development of studies and proposals for integration and optimization of the MRR operations 7\. Development of COMPESA strategic plan 2016 â 2020 8\. Implementation of expansion works to improve water availability in low areas of MRR 9\. Replacement of several water supply system components, such as pipes, pumps, valves, etc\. 10\. Improvement of network maintenance in MRR aimed at meeting the growing water demand resulting from Piparama water system 11\. Acquisition of equipment such as hydraulic road crane, hydraulic wheeled backhoes, articulated hydraulic vehicle cranes, light trucks with double or additional cabin and bodywork, semi-heavy truck with tipper bucket, blades, plotters and GPS servers for COMPESA's datacenter Component 3: 1\. Expansion and integration of the Pirapama Water Supply System 2\. Recovery of water discharge in the Jucazinho water reservoir 3\. Preparation of regional and municipal water master plans and engineering designs for Priority Projects Page 49 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) 4\. Installation of 800 mm catchment siphon, in steel tubes, in the Jucazinho reservoir 5\. Emergency Services for structural recovery of the abstraction and pumping Station of raw water in Ipojuca Objective/Outcome 2: Improve sustainable sanitation services for the population residing in the Capibaribe river basin and MRR\. 1\. Reduction in the pollution load of 1,164\.01 tons of BOD/year Outcome Indicators discharged the municipalities targeted by the projectâs wastewater investments by April 2021 1\. Increase the number of residential connections to wastewater collection services from 8,169 in 2008 to 28,769 in April 2021 in the Intermediate Results Indicators municipalities of the Capibaribe river basin targeted by the project 2\. Number of water utilities that the project is supporting Component 3: 1\. Construction and supervision of sewerage works for the cities of Surubim and Santa Cruz do Capibaribe, including sewerage networks, pumping stations and wastewater treatment plants Key Outputs by Component 2\. Construction of 20,620 new household wastewater connections (linked to the achievement of the Objective/Outcome 2) 3\. Development of connection designs to increase wastewater household connections in Surubim and Santa Cruz do Capibaribe 4\. Preparation of 15 regional and municipal wastewater master plans and detailed engineering designs for Priority Projects Page 50 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A\. TASK TEAM MEMBERS Name Role Preparation Marcos Thadeu Abicalil Task Team Leader Luis Prada Procurement Specialist Susana Amaral Financial Management Specialist Paula Pini, Soraya MelgaÃ§o Social Specialist(s) Clarisse Dalacqua Environmental Specialist Marta Molares-Halberg Lead Counsel Daniele La Porta Geologist, Groundwater and Irrigation Specialist Jennifer Sara Sector Leader Julian Thornton Water Losses Specialist Karina Marcelino Program Assistant Lizmara Kirchner Water and Sanitation Specialist Luz Maria Gonzalez Economic and Financial Specialist Marcus Vinicius Silva Integrated Sanitation Specialist Manuel Schifler Senior Economist Martin Gambrill Senior Water Engineer Pedro Fontoura ET Temporary Waleska Pedrosa Program Assistant Wilson Rocha Sanitary Engineer Specialist Supervision/ICR Jean-Martin Brault Task Team Leader(s) Sinue Aliram De Souza, Efraim Jimenez Procurement Specialist(s) Susana Amaral Financial Management Specialist Alberto Coelho Gomes Costa Social Specialist Carla Zardo Procurement Team Catarina Isabel Portelo Counsel Agnes Velloso Environmental Specialist Page 51 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Michele Martins Procurement Team Paola Carvalho Costa Team Member B\. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No\. of staff weeks US$ (including travel and consultant costs) Preparation FY08 15\.568 72,265\.90 FY09 29\.848 167,479\.83 FY10 8\.990 42,989\.81 Total 54\.41 282,735\.54 Supervision/ICR FY10 4\.075 29,794\.73 FY11 9\.468 135,527\.11 FY12 12\.522 165,409\.33 FY13 16\.033 87,251\.48 FY14 19\.075 109,738\.67 FY15 21\.350 79,471\.36 FY16 15\.000 62,625\.24 FY17 12\.541 62,137\.53 FY18 12\.117 102,341\.58 FY19 10\.000 73,558\.41 FY20 13\.929 96,429\.59 Total 146\.11 1,004,285\.03 Page 52 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) ANNEX 3\. PROJECT COST BY COMPONENT Amount at Approval Actual at Project Percentage of Components (US$M) Closing (US$M) Approval 1 - Water Sector Management and Institutional 29\.00 41\.51 143 Development 2 - Improving Efficiency in the Provision of Water Supply 52\.00 87\.29 168 and Sanitation Services 3 - Water Supply and Sanitation Service 320\.0 303\.81 95 Expansion 4 â Contingencies and front-end fees 9\.00 0\.47 5 Total 410\.00 433\.08 106 Page 53 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) ANNEX 4\. EFFICIENCY ANALYSIS Introduction 1\. The project development objective was to improve sustainable water supply and sanitation services for the population residing in the Capibaribe river basin and MRR\. On the basis of this objective, the efficiency analysis for this ICR was based on actual costs and benefits of the various interventions\. They were compared with what was expected when the Project was approved\. Actual costs and benefits were transformed to constant 2009 prices, and the analysis used the same spreadsheet models used at Appraisal\. At Appraisal, a discount rate of 10 percent was used\. This analysis was done using a 6 percent discount rate, which is currently used by the World Bank guidelines on discount rates for economic analysis of projects35\. Such guidelines suggest the discount rate may be taken as twice the expected long-term average real per capita Gross Domestic Product (GDP) growth rate, which for the case of Brazil has been 1\.32 percent per year over the 1999-2019 period36; thus, a more realistic discount rate for appraising development projects in Brazil would be as low as 2\.64 percent\. Nevertheless, an assessment using a 10 percent discount rating was also carried out at ICR\. Summary of findings 2\. Results of the efficiency analysis undertaken at the ICR stage, compared with those at Appraisal, are summarized in the following table, for the project and for each component\. Table A4\.1 â Comparison of the economic and financial analysis at Appraisal and ICR 3\. Based on the above summary of results (details below), the Project as a whole is found to be economically 35 World Bank OPSPQ, May 2016\. Discounting Costs and Benefits in Economic Analysis of World Bank Projects\. http://intresources\.worldbank\.org/INTOPCS/Resources/380831-1360104418611/Discount_Rate_TechnicalNote\.pdf\. 36 Estimated using data from the http://api\.worldbank\.org/v2/en/country/BRA?downloadformat=excel\. Page 54 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) viable\. Its Economic Internal Rate of Return (EIRR) at the ICR stage is estimated to be 9\.4 percent, above the 6 percent discount rate, which results in a US$217 million Economic Net Present Value (ENPV)\. An assessment was also carried out considering a 10 percent discount rate, as per at Appraisal, and resulted in a negative ENPV of US$23\.3 million\. The Projectâs 9\.4 percent EIRR estimated at ICR is a significant achievement which compares positively with long term results obtained by well performing private sector companies represented in the Standard and Poor 500 (S&P 500)\. The S&P 500 companies generate on average an 8 percent per year long term return\.37 Water supply investments â Financial Analysis at Appraisal and at ICR stage 4\. At Appraisal\. The financial analysis assessed the impact of project activities on COMPESAâs NRW levels while increasing its water supply production capacity through the completion of the Pirapama waterworks\. For the without project (WOP) scenario, the average level of NRW in the Metropolitan Region of Recife (MRR) was expected to worsen significantly going from 59 percent in 2009 to 64 percent during the period 2015-2019, reaching as high as 76 percent during 2035-2038 (see Table A4\.2)\. A large increase in NRW was assumed because the Pirapama water works were going to increase production capacity from 10 to 15 m3/s by 2010/11, even without the Project, enabling COMPESA to supply more water through a distribution network with a high level of leaks, resulting in increased physical losses\. Under the with project (WP) scenario, leaks in the distribution networks were assumed to be fixed and NRW was assumed to improve going from 59 percent in 2009 down to 53 percent in 2011 and further down to 44 percent by the end of project implementation in 2014; thereafter, NRW was assumed to remain between 44 and 45 percent\. Table A4\.2: NRW and production assumptions, WOP and WP scenarios at Appraisal During project implementation Post project implementation period 2009 2010 2011 2012 2013 2014 2015-19 2020-24 2025-29 2030-34 2035-38 Average Non Revenue Water WOP 59% 60% 60% 61% 61% 62% 64% 67% 70% 73% 76% Average Non Revenue Water, WP 59% 60% 53% 53% 49% 44% 44% 44% 45% 45% 45% Production RMR, WOP (m3/sec) 10 10 13 14 14 14 14 14 14 14 14 Production the RMR WP (m3/sec) 10 10 13 14 13 11 12 12 13 13 14 Source: Spreadsheet used at Appraisal\. 5\. Water production in the WOP scenario was assumed to increase gradually from 10 to 14 m 3/s by 2012, and to be kept at that level\. In the WP scenario, water production was assumed to go up from about 10 to 14 m3/s by 2012 and then to go down to 11 m3/s at project completion because of improved control of physical losses\. Thereafter, over the course of the next ten years after project completion (2015-2024), the average production was expected to be 12 m3/s, to eventually reach an average of 14 m3/s by 2035-2038\. 6\. Unit operations and maintenance (O&M) costs in both WOP and WP scenarios were the same, R$0\.32/m3 (US$0\.14/m3)\. The average tariffs in the WOP and WP scenarios were also assumed to be the same, at R$2\.43/m3 (US$1\.06/m3) for water billed to customers\. Investment costs in the WOP scenario were assumed to be zero, and in the WP scenario, were as outlined in Table A4\.3\. 37 Siegel, Jeremy and Schwartz, Jeremy\. Feb 2006\. Long-Term Returns on the Original S&P 500 Companies\. Page 55 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Table A4\.3: Water supply investment costs, WP scenario at Appraisal Total 2009 2010 2011 2012 2013 2014 Total Investment costs, incl taxes, R$ million 165 288 288 82 0 0 823 Invest cost, inc taxes, US$ million 72 125 125 36 - - 358 Source: Spreadsheet used at Appraisal\. 7\. Based on the above information, at Appraisal, the financial analysis estimated a 24 percent Financial Internal Rate of Return (FIRR), and a R$1,032 million (US$449 million) Financial Net Present Value (FNPV)\. Note that such a high FIRR is the result of assuming that in the WOP scenario, NRW was going to worsen significantly (reaching 76 percent by 2035) while in the WP scenario, NRW was going to be reduced from 59 percent down to 44 percent by project completion in 2014\. 8\. At ICR stage\. The projection of NRW in the WOP scenario is maintained\. In the WP scenario, lowering NRW during project implementation has proven to be very difficult: by 2014, NRW was at 54 percent rather than at 44 percent as projected at Appraisal and by the end of the extended project implementation (2019), NRW was at 61 percent rather than at 44 percent projected at Appraisal (Table A4\.4)\. Table A4\.4: NRW during the extended project implementation period During project implementation 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Average NRW WOP, projected at appraisal 59% 60% 60% 61% 61% 62% 62% 63% 64% 64% 65% 65% Average NRW WP projected at appraisal 59% 60% 53% 53% 49% 44% 44% 44% 44% 44% 44% 44% Average NRW, WP actual 59% 61% 63% 61% 56% 54% 60% 61% 62% 61% 61% 59% Source: Spreadsheet used at Appraisal; information provided by COMPESA to estimate average NRW actual at ICR stage 9\. COMPESAâs explanation of the causes of persistently high NRW include high levels of average pressure and sectorization efforts falling short of the expected results\. Both issues are currently at the core of an activity funded by the United Kingdom Prosperity Fund (UKPF) to implement a âSmart Urban Water Programâ in the MRR with the objective of reducing NRW by introducing state of the art pressure management systems along with District Metered Areas (DMAs)\. COMPESA plans to implement these activities to reduce NRW in each of the operating management areas (GNMs) as shown in Table A4\.5, taking the MRRâs NRW from about 61 percent in 2019 to 37 percent by 2030\. Beyond 2030, NRW targets are kept at 37 percent\. COMPESA is also committed to completing DMAs in all of its MRRâs distribution network\. Page 56 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Table A4\.5: COMPESA âSmartâ Water Pressure Management System projections for water losses GNM GNM Centro GNM GNM GNM GNM GNM GNM weighted Supply to Estimated Year Centro Norte Norte 1 Norte 2 Leste Oeste Sul Centro Sul average Distr\. Network NRW l/conn/d l/conn/d l/conn/d l/conn/d l/conn/d l/conn/d l/conn/d l/conn/d l/conn/d l/conn/d percent 2019 1,313\.4 543\.6 407\.2 453\.8 815\.4 724\.2 750\.1 1,043\.2 695 1,134 61% 2020 1,213\.7 521\.8 392\.5 435\.7 760\.3 690\.9 715\.1 967\.7 673 1,142 59% 2021 1,130\.6 501\.0 381\.4 422\.2 714\.4 659\.3 682\.0 904\.8 639 1,149 56% 2022 1,060\.8 481\.4 372\.6 411\.3 675\.8 629\.3 650\.5 851\.9 609 1,156 53% 2023 1,001\.0 462\.9 364\.5 401\.4 642\.7 601\.0 620\.8 806\.6 583 1,163 50% 2024 947\.8 445\.4 356\.5 391\.6 613\.3 574\.4 592\.9 766\.3 558 1,169 48% 2025 897\.9 429\.1 348\.6 381\.9 585\.8 549\.4 566\.7 728\.6 535 1,175 46% 2026 851\.4 413\.8 340\.8 372\.4 560\.1 526\.1 542\.3 693\.3 513 1,181 43% 2027 808\.2 399\.6 333\.1 363\.0 536\.2 504\.5 519\.6 660\.6 493 1,187 42% 2028 768\.3 386\.5 325\.5 353\.7 514\.1 484\.5 498\.6 630\.4 474 1,193 40% 2029 731\.8 374\.5 318\.0 344\.5 493\.9 466\.2 479\.4 602\.7 457 1,198 38% 2030 698\.5 363\.6 310\.6 335\.5 475\.6 449\.6 461\.9 577\.6 441 1,203 37% Source: COMPESA, Jan 28, 2021 â Report for the Pernambuco Sustainable Water project\. Three last columns calculated by the ICR authors\. 10\. The expected results in Table A4\.5 can be seen as a contribution of the Project as without the investments undertaken by the Project, the planned outcomes of the UKPF Program would not be possible\. It is to be noted that the 43 percent original NRW project target will be achieved by 2026, 12 years later than expected\. Assumptions regarding design production capacity in the WP scenario materialized, as production capacity increased from 10 to 15 m3/s, thanks to the completion of the Pirapama waterworks in 2011\. 11\. Delays in implementation and investment costs\. Project implementation experienced significant time overruns, with restructurings extending closing dates twice, first to September 2017 and then to March 2020\. At constant 2009 prices, there was a cost underrun of about 7 percent; i\.e\., while the water supply investments under the Project were expected to be R$823 million, this figure was confirmed to be R$768 million at closing (Table A4\.6)\. Table A4\.6: Water supply investment costs upon project completion Investment costs, without taxes, R$ million 2009 0 2010 316 2011 2 2012 3 2013 9 2014 15 2015 16 2016 18 2017 32 2018 29 2019 27 2020 5 Total 472 Investment costs, incl taxes, R$ million 32 402 33 29 36 39 36 36 48 40 31 6 768 Invest cost, inc taxes, US$ million 14 175 15 13 16 17 16 16 21 17 14 3 334 Source: Information provided by COMPESA at ICR stage 12\. Unit O&M costs and tariffs during project implementation\. At constant 2009 prices, unit water supply O&M costs increase from R$0\.32/m3 (US$0\.14/m3) to an average R$0\.47/m3 (US$0\.20/m3) and the average water tariff went down from R$2\.43/m3 (US$1\.06/m3) to R$2\.25 (US$0\.98/m3)\. 13\. Based on the above assessment at ICR stage, a 6\.5 percent FIRR was estimated (compared with 24 percent at Appraisal) along with a negative R$384\.9 million (negative US$167\.4 million) FNPV, at 10 percent discount rate\. Lower FIRR and FNPV than those estimated at Appraisal are mainly the result of underachieving NRW targets, higher O&M costs, and lower tariffs during project implementation\. Using a 6 percent rate of discount, the FNPV goes up to US$40 million\. 14\. Sensitivity analysis\. Two scenarios are assumed for the sensitivity analysis, taking as a base case the targets proposed by UKPF-funded activities (last column in Table A4\.5)\. The first scenario assumes a sequential overachievement of targets, by one percent better than in the base case in the first year, 2 percent better than in Page 57 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) the base case during the second year and so on for up to 2030 when overachievement is 10 percentual points higher than the base case\. The second scenario assumes sequential underachievement of targets, by one percent worse than the base case in the first year, 2 percent worse than the base case during the second year, and so on for up to 2030 when the underachievement is ten percent worse than in the base case (see Table A4\.7)\. Beyond 2030, it is assumed that the performance achieved remains constant\. Table A4\.7: Overachievement and underachievement of NRW targets 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Overachievement of NRW targets 59% 54\.6% 50\.7% 47\.1% 43\.7% 40\.5% 37\.5% 34\.6% 31\.8% 29\.1% 26\.7% NRW targets sunder UK-PF 59% 55\.6% 52\.7% 50\.1% 47\.7% 45\.5% 43\.5% 41\.6% 39\.8% 38\.1% 36\.7% Underachievement of NRW targets 59% 56\.6% 54\.7% 53\.1% 51\.7% 50\.5% 49\.5% 48\.6% 47\.8% 47\.1% 46\.7% Source: Prepared by ICR authors for sensitivity analysis 15\. Under the first scenario, the FIRR goes from 6\.5 percent to 7\.1 percent (project-wide 7\.0 percent), indicating that a sequential improvement in achieving lower levels of NRW has an impact on the FIRR at the ICR stage compared with that at Appraisal\. Under the second scenario, the FIRR goes from 6\.5 percent down to 5\.9 percent (project-wide 5\.8 percent), indicating that a sequential underachievement has a limited impact on the FIRR at the ICR stage compared with that at Appraisal\. Such limited impact is the result of the overachievements (and underachievements) being on a very stretched time scale (2021 and beyond) compared to the year of the initial evaluation (2009)\. In reality, had COMPESA overachieved NRW targets, it would not only ârecover waterâ to reduce rationing but also its financial performance would improve dramatically, ensuring financial sustainability of the Project\. So, achieving a FIRR of 6\.5 percent with a possibility of overshooting to 7\.1 percent, or undershooting to 5\.9 percent, makes the water supply component marginally financially viable\. Water supply investments â Economic Analysis at Appraisal and at ICR stage 16\. At Appraisal\. The economic analysis assessed the development impact of the project activities on reducing rationing of water to populations in the MRR\. Benefits were estimated as the reduction of costs imposed to populations experiencing water service rationing in the MRR\. The reduction of such costs was estimated as the difference between the costs of water rationed in the WOP and WP scenarios\. For the WOP scenario, the average water rationing was expected to worsen going from 2\.86 m3/s (affecting 56 percent of the population) at the beginning of project implementation, to 3\.52 m3/s by 2014 (affecting 47 percent of the population) and to 6\.89 m3/s by 2038 (affecting 74 percent of the population)\. Under the WP scenario, water rationing was assumed to improve, just after the commissioning of the Piripama water works, and was expected to go from affecting 56 percent of the population in 2009 to 11 percent by the end of project implementation\. Beyond project implementation, rationing under the WP scenario was expected to worsen slightly going up to affect 17 percent of the population by 2038 which compares positively with the 56 percent at the onset of project implementation and with the 77 percent in the WOP scenario (Table A4\.8)\. Table A4\.8: Water supply rationing assumptions at Appraisal, WOP and WP scenarios During project implementation Post project implementation period 2009 2010 2011 2012 2013 2014 2015-19 2020-24 2025-29 2030-34 2035-38 Water rationing WOP, m3/sec 2\.86 2\.99 3\.12 3\.25 3\.38 3\.52 3\.92 4\.63 5\.38 6\.16 6\.89 Water rationing WP, m3/sec 2\.86 2\.99 0\.69 0\.73 0\.76 0\.79 0\.89 1\.06 1\.25 1\.44 1\.62 Percentage of population under rationing in RMR, WOP 56% 57% 43% 44% 46% 47% 51% 57% 63% 69% 74% Percentage of population under rationing in RMR, WP 56% 57% 10% 10% 10% 11% 12% 13% 15% 16% 17% Source: Spreadsheet of EFA at Appraisal, population under rationing estimated by ICR authors based on a 168 liters per capita per day consumption Page 58 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) 17\. Cost incurred by populations to confront rationing was assumed to amount to R$3\.05/m3 in both WOP and WP scenarios\. Investment costs in the WOP scenario were assumed to be zero, and in the WP scenario investment costs are as outlined in Table A4\.9, obtained by multiplying the financial investment costs (in Table A4\.3) by a conversion factor (0\.77) to obtain investment costs at economic prices\. O&M costs were assumed to be the same as the financial costs, at R$0\.32/m3\. The net incremental benefit was estimated by the difference, year by year, between the projections under the WP and WOP scenarios\. Table A4\.9: Economic investment costs, water supply activities 2009 2010 2011 2012 2013 2014 Total Investment costs, R$ million 127 221 221 63 0 0 633 Source: Spreadsheet used for the EFA at Appraisal 18\. Based on the above information, an EIRR of 39 percent was estimated at Appraisal, along with an ENPV of R$1,709 million (US$743 million)\. 19\. At ICR stage\. The projection of rationing in the WOP scenario was maintained; i\.e\., rationing was likely to worsen without the support of the Project, while in the WP scenario, the reduction of water rationing was not estimated at Appraisal, i\.e\., although the population experiencing rationing was reduced from 56 percent to 34 percent in 2014, and 48 percent in 2020, (see Table A4\.10), it is still higher compared with the 35 percent target set at restructuring (originally 11 percent at Appraisal)\. A critical factor impacting on the results was the drought that impacted the project area\. Without the project, rationing would have been more severe and alternative water sources would have been deployed\. For the period beyond project completion, rationing is assumed to improve in line with the expected improvements in controlling NRW, under the UKPF activities, as outlined in the previous section\. Ending of the drought would also play a positive role in reduction/ending of rationing\. The actual investment schedule, at economic prices, is presented in Table A4\.11\. Table A4\.10: Actual rationing over project implementation During project implementation 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Rationing of water in RMR 56% 56% 47% 41% 36% 34% 36% 34% 34% 38% 49% 48% Source: COMPESA information prepared for ICR Table A4\.11: Actual investment schedule, at economic prices 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Investment costs, R$ million 24\.4 309\.2 25\.7 22\.6 27\.9 30\.1 27\.6 27\.5 37\.1 30\.9 24\.1 4\.6 592 Investment costs, US$ million 10\.6 134\.4 11\.2 9\.8 12\.1 13\.1 12\.0 12\.0 16\.1 13\.4 10\.5 2\.0 257 Source: Obtained by multiplying financial investment costs in table 5 by economic conversion facto 0\.77 20\. Based on the above information collected at the ICR stage and using constant 2009 prices at Appraisal, the EIRR is re-estimated at 9\.6 percent\. The ENPV is re-estimated using as 6 percent discount rate at US$211 million (the ENPV at 10 percent rate of discount is lower, at negative US$13 million)\. Therefore, with a 9\.6 percent EIRR, the water supply component is found to be economically viable\. 21\. Sensitivity analysis\. As water availability is estimated to increase under the UKPF-funded activities, rationing will improve (i\.e\., less rationing) in the same timeframe stated in tables A4\.5 and A4\.6 for NRW, resulting in an improved EIRR\. If there is a 10 percent overshooting/undershooting of rationing targets over the period Page 59 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) 2020-2030, the range estimate for EIRR would be between 8\.4 and 10\.8 percent (8\.2 and 10\.5 percent project- wide), well above the 6 percent discount rate\. Under this sensitivity scenario, the water supply component is thus confirmed to be economically viable at the ICR stage\. Sanitation investments â Financial Analysis at Appraisal and at ICR stage 22\. At Appraisal\. The financial analysis assessed the impact of sanitation activities on COMPESAâs financial position\. The projection of benefits in the WOP and WP scenarios at Appraisal were estimated as the revenues for sewerage services billed by COMPESA based on m3/connection in the Projectâs areas of intervention, at a constant tariff of R$2\.49/m3\. In the WOP scenario, wastewater treatment capacity in the project area was expected to remain at 0\.04 m3/s serving about 8,169 connections up to 2024, and increasing to 0\.05 m3/sec by 2025\. In the WP scenario, the wastewater treatment capacity in the project area was expected to increase from 0\.04 m3/s in 2009 up to 0\.25 m3/s by 2014 and to 0\.32 m3/s by 2038\. The Appraisal projection of wastewater treated in the project area for the WOP and WP scenarios was as outlined in Table A4\.12\. Table A4\.12: Sewerage discharges for the WOP and WP scenarios During project implementation Post project implementation period 2009 2010 2011 2012 2013 2014 2015-19 2020-24 2025-29 2030-34 2035-38 Sewerage discharge treated, WOP (m3/sec) 0\.04 0\.04 0\.04 0\.04 0\.04 0\.04 0\.04 0\.04 0\.05 0\.05 0\.05 Sewerage discharge treated WP (m3/sec) 0\.04 0\.13 0\.20 0\.25 0\.25 0\.25 0\.26 0\.28 0\.29 0\.30 0\.32 BOD5 removal WP (metric tones/year) 440 1,511 2,290 2,892 2,921 3,160 3,304 3,473 3,650 3,836 4,012 Source: Spreadsheets used at Appraisal 23\. Table A4\.12 also includes the corresponding projection of BOD removal from wastewater treatment plants (WWTP) for the WP scenario, an outcome indicator in the Project Appraisal Document; i\.e\., the project was expected to increase BOD removal from about 440 metric tons (MT) per year in 2009 to 3,160 MT per year by 2014\. 24\. A sewerage tariff of R$2\.49/m3 was used to estimate financial benefits for the WOP and WP scenarios at Appraisal, based on m3/s service provision in Table A4\.12\. The projection of costs for the WOP scenario only included O&M at R$0\.92/m3, and that for the WP scenario includes the investment costs as outlined in Table A4\.13, plus the O&M costs of 0\.92/m3\. Table A4\.13: Sanitation investment costs 2009 2010 2011 2012 2013 2014 Total Investment costs, incl taxes, R$ million 12\.0 41\.9 41\.9 23\.9 - - 120 Investment costs, incl taxes, US$ million 5\.2 18\.2 18\.2 10\.4 - - 52 Source: EFA spreadsheets used at Appraisal 25\. Based on the above information, a 9\.3 percent FIRR was estimated at Appraisal, along with a negative FNPV of R$5\.3 million (US$ negative 2\.3 million), estimated using a 10 percent rate of discount\. The Project was thus marginally financially viable at Appraisal\. 26\. At ICR stage\. The WOP scenario projections for wastewater treatment were maintained as proposed at Appraisal\. For the WP scenario, protracted delays in project implementation and designation of new towns to benefit from the construction of WWTPs (Surubim and Santa Cruz do Capibaribe) resulted in delayed investments, postponed increases in wastewater treated and decreased BOD removal targets as part of a project restructuring Page 60 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) (2,929 MT/year rather than 3,160 MT/year)\. By 2019, only the Surubim WWTP had started operations and the Santa Cruz do Capibaribe WWTP entered into operation in 2020\. During project implementation, the WP scenario targets related to volumes of water treated, BOD removal and number of connections served by the WWTPs were therefore not achieved\. 27\. During the preparation of the ICR, COMPESA provided additional information regarding the projection of households to be connected to their respective WWTPs, as outlined in Table A4\.14\. Based on this information, a year by year projection of wastewater treated (m3/s), BOD removal (MT/year) and number of connections served beyond the project implementation period were calculated (see Table A4\.15)\. According to these results, the Project would achieve its revised target (BOD removal, 2,929 MT/year) by 2026\. Table A4\.14: WWTPs design capacity and projected number of connections WWTP Capacity Nomber of potential connections in WWTPs service area Unit 2019 2019 2020 2025 2030 2037 Surubim L/Sec 49\.7 2,292 3,467 10,574 13,648 17,837 Santa Cruz L/sec 360\.0 - 17,000 20,239 23,478 28,012 Capacidade total instalada L/Sec 409\.7 2,292 20,467 30,813 37,126 45,849 Source: COMPESA, based APE-SNIS, Project Contracts and Project Report, Report on complementary information â 26\.02\.2021 Table A4\.15: Projections for sewage discharge, BOD removal and number of connections 2019 2020 2021 2022 2023 2024 2025 2026-30 2031-35 2036-38 Sewerage discharge treated, WP (m3/sec) 0\.02 0\.16 0\.17 0\.18 0\.20 0\.20 0\.21 0\.22 0\.25 0\.27 BOD removal (MT/year) 242 2,157 2,272 2,393 2,663 2,731 2,799 3,004 3,345 3,621 Number of connections served 2,292 20,467 21,557 22,702 25,258 25,906 26,554 28,497 31,736 34,350 Source: COMPESA, Report on complementary information â 26\.02\.2021, Annex III 28\. To complete the information needed to estimate the financial indicators, operating costs were considered to be the same as those assumed at Appraisal and the investment schedule is as outlined in Table A4\.16\. Table A4\.16: Actual investment schedule 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Investment costs, incl taxes, WP, R$ million 0\.0 0\.0 1\.2 1\.0 10\.8 5\.8 8\.5 17\.6 21\.6 24\.9 25\.1 3\.2 119\.6 Investment costs, Incl taxes, WP, US$ million 0\.0 0\.0 0\.5 0\.4 4\.7 2\.5 3\.7 7\.7 9\.4 10\.8 10\.9 1\.4 52\.0 Source: Disbursement information provided by COMPESA 29\. Based on the above information, using the same tariffs and unit treatment costs as those at Appraisal, the FIRR was re-estimated at 2\.6 percent (significantly below the 6 percent discount rate) and the FNPV was re- estimated at negative US$10\.3 million at a 6 percent discount rate; using a 10 percent rate of discount, the FNPV is even lower, at negative US$12\.8 million\. With these figures, the sanitation investments are found to be not financially viable at the ICR stage\. Sanitation investments â Economic Analysis at Appraisal and at ICR stage 30\. At Appraisal\. The economic analysis assessed the impact of project activities on reducing the costs to the populations in the project area of not having access to sewerage services; i\.e\., the private costs incurred by households to dispose of their septage/fecal sludge through the construction of individual septic tanks, pit latrines, as well as the inconvenience imposed by the lack of services\. For the WOP scenario, costs imposed to populations in the project area for not having access to sewerage was expected to worsen going from R$26\.5 million at the Page 61 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) beginning of project implementation, to R$27\.9 million by 2014 and to 34\.8 million by 2038\. Under the WP scenario, costs imposed to the populations for not having access to sewerage services was assumed to decrease as the project activities provide them with connections to the sewerage network; i\.e\., they were expected to decrease from R$26\.5 million in 2009 to R$7\.9 million by 2014; thereafter they were expected to be below R$10 million\. As a result, the benefits of the sanitation project activities were estimated as the avoided costs outlined in Table A4\.17\. Table A4\.17: Costs associated with lack of access to sewerage and avoided costs During project implementation Post project implementation period 2009 2010 2011 2012 2013 2014 2015-19 2020-24 2025-29 2030-34 2035-38 Cost of not having access to sewerage, WOP, R$ million 26\.5 26\.8 27\.0 27\.3 27\.6 27\.9 28\.7 30\.2 31\.7 33\.3 34\.8 Cost of not having access to sewerage, WP, R$ million 26\.5 18\.2 12\.3 7\.7 7\.8 7\.9 8\.1 8\.5 9\.0 9\.4 9\.9 Estimated avoided cost (=benefits), R$ million 0\.0 8\.6 14\.8 19\.6 19\.8 20\.0 20\.6 21\.6 22\.7 23\.9 25\.0 Source: EFA analysis at Appraisal spreadsheet 31\. In terms of costs in the WOP scenario, investment costs were assumed to be zero and in the WP scenario, investment costs are as outlined in Table A4\.18, including costs financed by the Project and inhouse improvements financed by households\. In addition, unit operating costs for both the WOP and WP scenarios were assumed to be the same at R$0\.67/m3, while the service provided was the volumes of sewage treated in the WWTPs, as outlined in Table A4\.12\. Table A4\.18: Schedule of sanitation investment costs, economic prices, at Appraisal 2009 2010 2011 2012 2013 2014 Total Investment costs (project), R$ million 0\.0 9\.2 32\.2 32\.2 18\.4 0\.0 91\.9 Investment costs (households), R$ million 0\.0 0\.0 1\.4 1\.0 0\.8 0\.0 3\.3 Total investment cost WP, R$ million 0\.0 9\.2 33\.6 33\.2 19\.2 0\.0 95\.2 Source: EFA analysis at Appraisal spreadsheet 32\. With this information, a 19 percent EIRR was estimated at Appraisal, along with an ENPV of R$53\.5 million (US$23\.2 million), rendering the sanitation component economically viable\. 33\. At ICR stage\. The projection of costs imposed to the populations in the project area because of the lack of access to sewerage services in the WOP scenario was maintained\. In the WP scenario, the costs of not having access to sewerage services during project implementation did not decrease as expected, because investments were postponed and completed until the very end of the project implementation period, and sewerage infrastructure was therefore not in place\. The Surubim WWTP was starting operations in 2019, and one year later the Santa Cruz WWTP started operations; as a result, during project implementation only by 2020 benefits in the form of avoided costs started to materialize (see table A4\.19)\. Beyond project closing, the cost projections of not having access to sewerage in the WP scenario were assumed to decline gradually at the same rate as that estimated at Appraisal as WWTPs have been commissioned\. Table A4\.19: Costs associated with lack of access to sewerage services and avoided costs at ICR 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Cost of not having access to sewerage, WOP, R$ million 26\.5 26\.8 27\.0 27\.3 27\.6 27\.9 28\.1 28\.4 28\.7 29\.0 29\.3 29\.6 Cost of not having access to sewerage, WP, R$ million 26\.5 26\.8 27\.0 27\.3 27\.6 27\.9 28\.1 28\.4 28\.7 29\.0 29\.3 26\.5 Estimated avoided cost (=benefits), R$ million 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 3\.1 34\. The investment schedule was modified as outlined in Table A4\.20, experiencing a 52-month time overrun and a 1\.1 percent cost overrun at constant prices\. The same O&M costs as those at Appraisal were used at the ICR Page 62 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) stage\. Table A4\.20: Sanitation investment schedule at economic prices, at ICR 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Investment costs (project), R$ million 0\.0 0\.0 0\.9 0\.7 8\.3 4\.5 6\.5 13\.6 16\.6 19\.2 19\.3 2\.5 93\.0 Investment costs (households), R$ million 0\.0 0\.0 0\.0 0\.0 0\.0 0\.3 0\.2 0\.2 0\.5 0\.6 0\.7 0\.7 3\.3 Total investment cost WP, R$ million 0\.0 0\.0 0\.9 0\.8 8\.3 4\.8 6\.7 13\.8 17\.1 19\.8 20\.0 3\.2 96\.3 Total investment cost WP, US$ million 0\.0 0\.0 0\.4 0\.3 3\.6 2\.1 2\.9 6\.0 7\.4 8\.6 8\.7 1\.4 41\.5 35\. With the above information, the EIRR was re-estimated at 7\.1 percent, and using a 6 percent discount rate, the ENPV was estimated to be US$5\.9 million (negative US$9\.9 with a 10 percent discount rate)\. Hence, at ICR, the sanitation interventions are found to be marginally economically viable\. Water supply and sanitation investments analyzed together 36\. Economic viability\. When water supply and sanitation interventions are taken together, the project ICR stage EIRR was estimated to be 9\.4 percent, above the 6 percent discount rate, generating a 3\.4 percent excess return that resulted in an ENPV of US$217 million (ENPV is negative US$23 million with a discount rate of 10 percent)\. In addition, the sensitivity analysis to 10 percent overshooting/undershooting targets for water rationing based on outcomes of the UKPF-funded activities resulted in a range estimate between 8\.2 and 10\.5 percent for the project EIRR, above the 6 percent discount rate\. Therefore, the Project as a whole is found to be economically viable, although less economically than what was expected at Appraisal\. 37\. Financial viability\. The Project as a whole was found to be financially viable at Appraisal with a 22\.7 percent FIRR, while at the ICR stage, it is found to be marginally financially viable with a 6\.4 percent FIRR\. Marginal financial viability is confirmed by the sensitivity analysis regarding overshooting/undershooting of NRW targets of the UKPF-funded activities, with a range estimate for the FIRR between 5\.8 and 7\.0 percent\. Design and Implementation efficiency 38\. Overall Project design and implementation efficiency experienced some shortcomings\. Technical challenges for handling the integration of North-South into one single water supply system seem to have been underestimated at Appraisal\. The DEDs for implementation of the wastewater systems in four municipalities had not been completed when implementation started causing significant implementation delays and eventual change of beneficiaries for the sanitation component\. Also, a 5-year implementation schedule was very optimistic, which is related to the underestimation of technical challenges\. Assessment of Efficiency and Rating 39\. Assessment of Efficiency and Rating\. Efficiency is rated Modest\. This is because, although the results from the economic evaluation are positive when assessing with a 6 percent discount rate, at a 10 percent discount rate, as used at Appraisal, the evaluation economic evaluation is negative\. In addition, the Project had design and implementation inefficiencies, especially underestimation of technical challenges and implementation delays, leading to a 123-month implementation period and three extensions of the closing date\. Some of the delays were caused by circumstances beyond the control of the Project, i\.e\., devastating floods in 2010/2011 and recurrent droughts, which also resulted in changes to the scope of the Project to attend these emergencies\. Due to the influence of these factors and the results of the analysis, significantly positive EIRR and ENPV, the efficiency is rated Modest\. Page 63 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) ANNEX 5\. REVISED THEORY OF CHANGE Components Activities Outputs Intermediate Outcomes Outcomes Component 1: Water Sector Management and Institutional Development Integrated Establishment of water and climate â¢ APAC established, equipped, WRM agency; establishment and strengthening resourced and trained\. of river basin committees; preparation â¢ User committees for water and dissemination of water resource reservoirs established\. plans; development of studies to â¢ Water resources plans prepared, improve the efficiency and sustainability instruments and policies revised and of groundwater usage; modernization disseminated\. and expansion of the hydro- â¢ Technical studies on groundwater meteorological and water quality completed\. monitoring network; and environmental â¢ Stateâs hydro-meteorological and rehabilitation â¢ State water regulatory water quality monitoring systems agency strengthened\. modernized and expanded\. â¢ Bulk water charges Water Services Development of a water supply and â¢ Strategy for water supply and implemented\. and sewerage services strategy for rural and sewerage services in rural areas and Infrastructure small towns; development of studies to small towns completed and evaluate potential of multiple use of available for pilot implementation\. water in water infrastructure; and â¢ Irrigation Public-Private Partnership training, dissemination activities and model designed and available for development of selected studies\. implementation Project Capacity building of Borrower to carry â¢ Borrowerâs staff responsible for Management out overall project implementation and project implementation and State water monitoring monitoring trained and supported\. regulatory agency fully operational\. Component 2: Improving Efficiency in the Provision of Water Supply and Sanitation Services Sustainable WSS Non-revenue Establishment and isolation of hydraulic â¢ Volume of water metered in â¢ Reduction in the services for the water (NRW) area and metering districts; hydraulic zones identified percentage of population residing improvement of metering and telemetry; â¢ Number of telemetry stations population subject to in the Capibaribe update of the technical database increased water rationing\. River Basin and the â¢ Technical database updated\. â¢ Water losses targeted MRR\. Corporate Provision of technical assistance to â¢ COMPESAâs management and by the NRW program Development improve COMPESAâs management and operational functions strengthened\. reduced\. operational activities; development of â¢ Water supply and wastewater â¢ COMPESAâs index of engineering designs to prepare future master plans developed and cash flow sufficiency investments\. approved\. improved\. â¢ Integrated MRR water supply systems developed Component 3: Water Supply and Sanitation Service Expansion Pirapama Construction of the Pirapama water â¢ Pirapama Water Supply System Water Supply supply conveyance system; construction completed\. â¢ Volume of water System of conventional water treatment plant; supplied to the MRR construction of water reservoirs from the Pirapama Expansion of Construction and supervision of â¢ Number of residential connections Water Supply System Services wastewater works for Santa Cruz do to wastewater collection services increased\. Capibaribe and Surubim; improvements increased\. â¢ Reduction of pollution in water distribution in MRR and â¢ Wastewaterâs collection and load discharged by Capibarie rviver basin; recovery of treatment systems for Santa Cruz do municipalities targeted affected infrastructure; designs of Capibaribe and Surubim completed\. by the projectâs sewerage works for Limoeiro, Paudalho, â¢ Engineering designs for water wastewater Salgadinho and VitÃ³ria de Santo AntÃ£o\. supply and wastewater municipal investments\. systems completed\. Page 64 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) ANNEX 6\. POST-CLOSING SAFEGUARD COMPLIANCE ACTION PLAN AND STATUS OF IMPLEMENTATION Pending activities Status Expected completion date Corrective works for Pirapama The designs for corrective works are under preparation and Designs: December 2020 dam a strategy is still being discussed with the Bank to hire the Dam Safety Panel Corrective works: December 2021 Flood contention dams A strategy is still being discussed with the Bank to hire the December 202 Dam Safety Panel Erosion prevention in JordÃ£o Planting of seedlings to prevent erosion on surrounding Planting of seedlings: May 2021 Reservoir slopes is being initiated\. Works are under way to establish a recreational area in an effort to prevent further Recreational area: 30 Oct 2020 encroachment by irregular land occupation, and legal action is ongoing to reclaim invaded area at the bottom of the Reclaim invaded area: judicial slope, where illegal sand extraction was occurring action taken; timing of resolution threatening slope stability depends on the justice system\. Stabilization of Olinda slopes Consultant hired for preparation of the designs for slope November 2020 reservoir stabilization works Designs for slop stabilization completed February 2021 Completion of works on slope stabilization December 2021 Greenbelt planting and Selection of the company that will carry out the planting May 2021 maintenance in Santa Cruz do and maintenance of greenbelt and 10-hectare Capibaribe compensatory reforestation is underway Maintenance of the seedlings Contractor was hired in August 2020 and work in ongoing Contract is good for 36 months in Surubim wastewater with possibility of renewal\. treatment plant greenbelt Environmental compensation Bidding process to start in mid-October 2020; expected to Seedlings expected to be all (10 hectares reforestation) for be hired by January 2021\. Contract should have a 36-month planted by July 2021\. the Santa Cruz do Capibaribe duration, with possibility of renewal\. Actual planting of 10 Bank should monitor progress at sewerage system and hectares should take anywhere from 4 to 6 months, at least, least until July 2023\. maintenance of seedlings in and seedlings should be tended to for at least 2 years\. the WWTP greenbelt\. Pilot project on agriculture Procurement process for hiring a contractor for February 2021 reuse of effluent from sewage construction of the reuse facilities completed treatment from Facilities completed and ready for piloting July 2021 Rendeiras/Caruaru WWTP Page 65 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) ANNEX 7\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS Summary of the Borrowerâs ICR 1\. At project closing, an assessment of the project achievements was prepared by the Borrower, the Government of Pernambuco (GoPE) and submitted to the Bank\. Although the structure of the report is different from the ICR, aspects such as the theory of change (ToC) before and after restructuring, assessment of the achieved PDO objectives and indicators, project sustainability, social and environmental safeguards and conclusion and recommendations are included\. This annex summarizes these aspects and highlights new elements which can complement the ICR\. 2\. ToC\. The ToC at Appraisal is similar to the one presented in Section IA of this report and it was found to be very coherent and consistent, as the proposed interventions were properly structured, focused on the causes of the main problems and with expected outcomes compatible with the proposed actions\. In addition, the report emphasizes the fact that the ToC included not only sanitation services, but also water resources management (WRM), aiming at improving governance\. It was also noted that regional and local dimensions and considerations were also incorporated into the ToC, particularly the semi-arid character of part of the project area, as well as activities such as strengthening participatory management, for example by encouraging the creation of water management committees and councils which have an important role to play in preventing water use conflicts\. 3\. Project implementation\. The Borrowerâs ICR noted drawbacks in the execution of Components 2 and 3 under the responsibility of COMPESA, namely difficulties in meeting the deadlines associated with some activities, particularly in the evaluation of detailed engineering designs (DEDs), as well as in allocating sufficient and timely financial resources towards the Program's environmental sustainability, and the need to improve communication on project activities between COMPESA and the Project Management Unit\. On the delays in reviewing and approving DEDs, the Borrower noted that this was partly due to a shortage in technically trained personnel within COMPESA and that this capacity should be strengthened\. 4\. Factors affecting the achievement of the sanitation targets\. The Borrower provided an assessment of the achievement of the PDO-level indicators, with similar conclusions, as well as highlighting the following factors for the underachievement of the sanitation targets: a\. The unavailability of resources to proceed with the implementation of sewerage collection networks and residential connections to the networks, aggravated by the need to redefine the prioritization of the works after the outbreak of COVID-19, causing less organic load to reach the wastewater treatment plants (WWTPs); b\. Extreme climatic events - recurrent droughts - which, together with the awareness campaigns conducted by COMPESA on water rationing and conscious use of water in times of water scarcity, led to a reduction in water consumption and, therefore, in the sewage flows to the WWTPs\. For these reasons, these have yet to receive the pollution loads expected under the project; and 5\. Sanitation and poor beneficiaries\. The report notes that the project incorporated pro-poor measures, for example, covering the costs of connecting low-income households to the sewerage collection system and Page 66 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) encouraging beneficiaries from high poverty and vulnerable areas to connect to the sewerage network pay for services through the social tariff developed by COMPESA38\. Such actions made it possible for families in situation of high poverty to have access to basic sanitation services while maintaining a possibility of financial sustainability\. 6\. Institutional strengthening\. The Borrowerâs ICR also noted that the Project is leaving a significant legacy in terms of institutional change and strengthening at COMPESA, including the institutionalization of environmental issues within the company, as evidenced by the recent creation of a specific department for promoting and handling environmental issues and sustainable development, the Development and Sustainability Department (Diretoria de Desenvolvimento e Sustentabilidade)\. As a result, COMPESA is already incorporating several lessons learned from the Project into other ongoing and upcoming projects, for instance the âSmart Urban Waterâ UKPF- funded program\. 7\. Recommendations and lessons learned\. From the various recommendations raised in the report, the following are worth noting: a\. When considering large-scale sanitation projects, extended deadlines should be provided, being conservative in determining milestones\. A higher flexibility should be considered, particularly in the cases when the regional context shows uncertainties regarding water availability and/or historical propensity to extremes climatic events that may impact the time required for project execution; b\. In sanitation programs that involve WRM in semi-arid regions, efforts should be made to incorporate strategies that promote the creation of water management councils and committees, in the same way as was done in this Program, as they help to avoid conflicts over the use of water; c\. It is important that task teams and project implementing units dedicate time and effort into ensuring that households are connected to the sewerage system, so that when the WWTPs are in place there is enough influent going into the WWTPs and treatment objectives can be met\. It is noteworthy that social work is fundamental when residential connections are being made; d\. Given the significant risk to sustainability of the expected outcomes as well as reputational risks, funding for safeguards activities should be ensured at the beginning of project preparation\. In addition, in the case safeguards issues arising during project implementation, additional funding should be considered to ensure that all safeguards actions are dully completed prior to project closing; e\. Innovative approaches to designing and building water supply and sanitation systems efficiently should be incentivized to accelerate project implementation, ensuring that set outcomes are met\. It is also suggested that the contract model based on results should be adopted as a reference for future programs\. Comments by the Client on the Bank ICR 8\. The Borrower submitted comments to the ICR prepared by the Bank team, which are summarized below: a\. The Borrower stressed the importance of further highlighting the main factor which had a significant effect on the evaluation of project outcomes, namely the severe and recurrent droughts which led to 38COMPESA has developed a social tariff plan that aims to improve the accessibility of water services for low-income families\. Households benefit from the minimum rate reduced to R$7\.98 compared to the regular charge of R$19\.29 (59% subsidy)\. Membership for this program is subject to meeting certain eligibility criteria\. Page 67 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) water restrictions in the region, substantially limiting water supply to the MRR, despite the large investments and efforts carried out during project implementation; b\. The Borrower also wished to highlight efforts made by COMPESA in connecting additional households to the sewerage network in the Capibaribe River basin and MRR, in particular: (i) investments made under the Public Private Partnership with âBRK Ambientalâ in an amount of R$1\.76 billion over the course of 8 years, helping, amongst other achievements, to connect 3,500 new households in SÃ£o LourenÃ§o da Mata (increasing the total number of connections to 7,698 in the municipality) and contributing to a reduction in the BOD load of 460 ton BOD/year; and (ii) an increase of 4,212 connections in the municipality of VitÃ³ria do Santo AntÃ£o over the course of the last 10 years, reaching a total of 12,381, and contributing to a 750 ton BOD/year reduction\. There additional investments in sanitation infrastructure have greatly contributed to the reduction of BOD discharged in the Capibaribe river basin\. Page 68 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) ANNEX 8\. SUPPORTING DOCUMENTS Annex 8\.1 â COMPESA Plan to expand wastewater connections in Surubim and Santa Cruz do Capibaribe Page 69 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Page 70 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Annex 8\.2 â Letter from APAC to COMPESA requesting updates on the Pirapama dam Page 71 of 72 The World Bank Brasil Pernambuco Sustainable Water (P108654) Page 72 of 72	REVIEW
P120565	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) Report Number : ICRR0020044 1\. Project Data Project ID Project Name P120565 AF: Support Basic Pkg\. Health Services Country Practice Area(Lead) Afghanistan Health, Nutrition & Population L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) TF-95919 14-Mar-2013 17,900,000\.00 Bank Approval Date Closing Date (Actual) 23-Dec-2009 31-Dec-2014 IBRD/IDA (USD) Grants (USD) Original Commitment 0\.00 17,650,000\.00 Revised Commitment 0\.00 17,520,641\.50 Actual 0\.00 17,520,641\.50 Sector(s) Health(100%) Theme(s) Health system performance(40%):Child health(30%):Population and reproductive health(30%) Prepared by Reviewed by ICR Review Coordinator Group Katharina Ferl Judyth L\. Twigg Joy Behrens IEGHC (Unit 2) 2\. Project Objectives and Components a\. Objectives The project's objectives, as stated in the Financing Agreement of April 10, 2010 (p\. 4), were âto improve the health and nutritional status of the people of Afghanistan, with a greater focus on women and children by increasing accessibility and quality of the Basic Package of Health Services (BPHS) in the provinces of Balkh and Samangan and urban Kabul\.â This project did not have its own Project Appraisal Document, but instead was based on the Bankâs Strengthening Health Activities for the Rural Poor (SHARP) project (P112446), whose objectives were âto contribute to improving the health and nutritional status of the people of Afghanistan, with a greater focus on women and children and underserved areas of the country" (Emergency Project Paper, February 18, 2009, p\. 4)\. This project financed activities in three of the eleven provinces covered by the SHARP project\. Based on standard IEG practice and OPCS guidelines, this review is based on the objective Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) statement in the legal agreement\. b\. Were the project objectives/key associated outcome targets revised during implementation? No c\. Components The project consisted of three components: Component 1: Sustaining and strengthening Basic Package of Health Service (BPHS) delivery in rural areas (appraisal estimate US$13\.9 million, actual US$14\.9 million, 107\.1% of appraisal estimate): To finance the delivery of enhanced BPHS in the provinces of Balkh and Samangan, through sub-grants under performance-based partnership agreements (PPAs) between the Ministry of Public Health (MOPH) and implementing non-governmental organizations (NGOs); and to finance the expansion of health facilities by training community midwives and female community nurses\. Component 2: Piloting BPHS implementation in urban Kabul (appraisal estimate US$3\.5 million, actual US$2\.37 million, 68% of appraisal estimate): For analytical work to define the content and delivery modalities of BPHS in urban areas, and for implementation of BPHS in urban Kabul (through a pilot project to be implemented by an NGO under a PPA)\. Component 3: Implementation and Management Support to Ministry of Public Health (MOPH) (appraisal estimate US$0\.25 million, actual US$0\.25 million, 100% of appraisal estimate): To finance support to the MOPH for implementation, monitoring, and evaluation (M&E) of activities under the enhanced package of BPHS in the provinces of Balkh, Samangan, and urban Kabul\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: The project was estimated to cost US$17\.65 million\. Actual cost was US$17\.52 million (99\.3% of appraisal estimate), with US$0\.13 million undisbursed and therefore cancelled\. The ICR does not explain why US$0\.13 million remained undisbursed\. Financing: The project was financed by a Japan Social Development Fund Grant in the amount of US$17\.65 million\. This project was part of a larger health/nutrition project, Strengthening Health Activities for the Rural Poor (SHARP), financed by the International Development Agency (IDA), a Norwegian Trust Fund, the Japanese Social Development Fund (JSDF), and the Afghanistan Reconstruction Trust Fund (ARTF)\. The following activities were to be financed under SHARP: i) implementation of BPHS in the IDA- supported provinces, including retroactive financing for BPHS provision under a previous health project (IDA, JSDF, ARTF); ii) policy dialogue for BPHS (IDA); iii) support to MOPH, including the contracting of a third party for monitoring and evaluation (IDA and ARTF); and iv) a Results-Based Financing (RBF) pilot (Norwegian Trust Fund)\. The SHARP projectâs financing requirements were estimated to be US$126 million (Emergency Project Paper, p\. 8)\. Borrower Contribution: There was no planned contribution by the Borrower\. Dates: The project was restructured three times: â¢ March 13, 2013: closing date extended from March 14, 2013 to March 14, 2014, to allow for delays in procurement and in implementation of the urban Kabul component\. â¢ March 13, 2014: closing date extended from March 14, 2014 to September 15, 2014, to allow for: (i) continuing urban BPHS sub- grants; (ii) evaluating the urban BPHS pilot; and (iii) procuring and delivering equipment, drugs and other goods\. â¢ September 7, 2014; closing date extended from September 15, 2014 to December 31, 2014, to continue health services in urban Kabul until the MOPH finalized the next phase of support under the Bankâs current System Enhancement for Health Action in Transition Project (SEHAT)\. Also, this restructuring changed the implementation arrangements for urban Kabul BPHS to allow provision of services through public entities under the supervision of the MOPH instead of contracting out to NGOs as well as allow for consultant and training assistance to support this change\. This restructuring also reallocated US$1 million from component 2 (urban Kabul BPHS) to component 1 (BPHS in Balkh and Samangan)\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) 3\. Relevance of Objectives & Design a\. Relevance of Objectives High: The ICR noted progress in coverage of health services in the 10 years since the early 2000s, when Afghanistan was among the countries with the lowest coverage of preventive and curative health services\. However, safety issues due to the ongoing conflict made the delivery of health services particularly challenging\. The objectives of this project were highly relevant to the governmentâs Afghan National Development Strategy 2008, whose third pillar focuses on economic and social development, including improving human development and making progress towards the Millennium Development Goals\. The Ministry of Public Health (MOPH) developed a Basic Package of Health Services (BPHS) to integrate health-related nutrition interventions to address health problems\. The BPHS, in addition to the Essential Package of Hospital Services (EPHS), were the cornerstones of the National Health and Nutrition Sector Strategy (HNSS) for 2008-2013\. The objectives of this project were also in line with the HNSS, which aimed to: (i) reduce maternal and newborn mortality; (ii) reduce under-five mortality and improve child health; (iii) reduce the incidence of communicable diseases; (iv) reduce malnutrition; and (v) develop health systems\. Also, the project was in line with the Bankâs most recent Interim Strategy Note for Afghanistan (ISN, 2012-2014), which focused on three strategic objectives: i) building the legitimacy and capacity of institutions: ii) equitable service delivery; and iii) inclusive growth and jobs\. A main component of the equitable service delivery objective of the ISN was health, with focus on nutrition\. Rating High b\. Relevance of Design Substantial: The planned activities were logically and plausibly linked to achievement of the project objectives and support for the government to improve the health and nutritional status of the population, especially of women and children\. The BPHS included services for maternal and newborn health, child health and immunization, public nutrition, communicable disease treatment and control, mental health, disability services, and regular supply of essential drugs\. Activities particularly focusing on maternal and child health included increasing access to nutrition-related services, antenatal care visits, coverage with three doses of the diphtheria/tetanus/pertussis vaccine (DPT3) among children between the ages of 12 and 23 months, births attended by skilled attendants, and access to a basic package of health, nutrition or reproductive health services\. In 2010, the BPHS was revised to include additional interventions related to nutrition, mental health, disability, and prison health care\. The project design was innovative and included performance-based service provision through NGOs in an environment with growing insecurity, and a pilot for the delivery of an urban health model in Kabul\. The growing insecurity in the country was identified as an exogenous risk factor during project preparation, and the project addressed this challenge by using an independent third party for validation and performance measurement\. Rating Substantial 4\. Achievement of Objectives (Efficacy) PHREVISEDTBL Objective 1 Objective To improve the health status of the people of Afghanistan, with a greater focus on women and children by increasing accessibility and quality of the Basic Package of Health Services (BPHS) in the provinces of Balkh and Samangan and urban Kabul\. Rationale Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) Although the ICR follows the project results framework in treating "Improved Health and Nutritional Status," "Increased Access," and "Increased Quality" as outcomes, the project's primary objectives were improved health and nutritional status\. These are considered to be the objectives for purposes of this review\. "Increased Access" to health services and "Increased Quality" are understood better as outputs designed to lead to the outcome of "Improved Health and Nutritional Status\." The ICR reports on trends in relevant health and nutrition indicators over the project period\. For the most part, data are reported for Afghanistan as a whole\. The ICR does not provide information on specific activities that led to the outputs reported below\. NGOs were supported to deliver the BPHS\. At the second restructuring, it was decided to implement the urban Kabul BPHS by direct service provision through public entities under the supervision of the MOPH, rather than contracting out to NGOs\. The ICR does not provide health outcome data specifically for the three project provinces, nor does it discuss the extent to which the reported national-level outcomes can be attributed to project-financed activities in the three provinces\. Reported outputs for the three project provinces (twenty-two indicators comprising the Balanced Score Card for the BPHS) indicate that relative performance in two of these provinces fell dramatically during the project period (ICR, pp\. 29-42): for Balkh, from 3rd among 33 provinces in 2011-2012 to 24th of 34 in 2012-2013; and for Samagan, from 8th in 2011-2012 to 33rd in 2012-2013\. Relative performance in Kabul remained essentially stagnant, from a ranking of 32nd in 2011-2012 to 29th in 2012-2013\. As these results cover only one year, it is not possible to draw meaningful conclusions from them\. It is also not clear how these results relate to the ICR's information that the mean percentage score on the national monitoring checklist for quality of services increased in Balkh from 77% in 2011 to 87% in 2014, and in Samangan from 82% in 2011 to 89% in 2014\. Given these data, it is not clear that project-financed activities in these three provinces contributed significantly to the national-level improvement in outputs or outcomes reported in the ICR\. As a result, achievement of this objective is rated Modest\. Outputs (national-level data): â¢ The percentage of the population that could reach the nearest health facility rose from 60% in 2006 to 88\.4% in 2012\. There was no target for this indicator; it was added by the ICR author because the original indicator could not be evaluated due to lack of comparable data\. â¢ The number of health consultations per person per year increased from 0\.9 in 2009 to 1\.84 in 2014, surpassing the target of 1\.84\. â¢ The number of pregnant women receiving antenatal care during a visit to a health provider increased from 70,353 in 2009 to 127,440 in 2014, surpassing the target of 119,127\. â¢ Births attended by skilled attendants increased from 18\.9% in 2006 to 40% in 2014, surpassing the target of 28%\. â¢ Coverage of the diphtheria, tetanus and pertussis vaccine (three doses, DPT3) among children between 12 to 23 months of age increased from 34% (74,750 children) in 2009 to 46\.7% (102,671) in 2013, not achieving the target of 60% (142,963 children)\. Outputs (province-level data): â¢ 11 of 12 proposed structural reforms for health facilities were completed in Balkh and Samangan provinces as of September 2014\. â¢ The mean percentage score on the national monitoring checklist for quality of services increased in Balkh from 77% in 2011 to 87% in 2014, and in Samangan from 82% in 2011 to 89% in 2014\. â¢ In 2013, urban Kabul had 80 active health workers, not achieving the target of 660 health workers\. This indicator did not have a baseline\. â¢ The number of outpatient visits in urban Kabul increased from 614,118 in 2011 to 829,517 in 2013, surpassing the targeted 10% increase from the baseline\. â¢ The number of institutional deliveries in urban Kabul increased from 5,081 in 2011 to 5,244 in 2013, not achieving the target of a 10% increase from the baseline\. â¢ The number of new users of contraceptives in urban Kabul increased from 23,408 in 2011 to 24,904 in 2013, not achieving the target of a 10% increase from the baseline\. â¢ The number of children below the age of one year in urban Kabul receiving DPT3 decreased from 54,803 in 2011 to 49,390 in 2013, not achieving the target of a 10% increase from the baseline\. â¢ The number of pregnant women receiving at least one antenatal care visit in urban Kabul decreased from 40,929 in 2011 to 35,916 in 2013, not achieving the target of a 10% increase from the baseline\. â¢ Patient satisfaction with health facility visits in urban Kabul increased from 74% in 2011 to 87\.9% in 2013, surpassing the target of a 10% increase from the baseline\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) â¢ The equipment functionality index, which measures the presence of essential equipment in the health facility, decreased in urban Kabul from 69\.6 in 2011 to 64\.3 in 2013, not achieving the target of a 10% increase from the baseline\. â¢ The number of tuberculosis cases successfully treated in urban Kabul increased from 215 in 2011 to 319 in 2013, achieving the target of a 10% increase\. â¢ The drugs availability index, which measures the availability of essential drugs at health facilities, decreased in urban Kabul from 95% in 2011 to 92% in 2013, not achieving the targeted 10% increase from the baseline\. Outcomes (national-level; no province-specific data reported): â¢ The success rate for tuberculosis treatment increased from 85% in 2008 to 89% in 2014, almost achieving the target of 90%\. â¢ The score on a balanced score card assessing the quality of care in health facilities was 56 in 2014, not achieving the target of 60\. â¢ Between 2010 and 2013 the maternal mortality rate decreased from 500 to 400 deaths per 100,000 live births, and the under-five mortality rate decreased from 105 to 97 per 1,000 live births\. These indicators were not included in the Results Framework, but were added by the ICR author\. Rating Modest PHREVISEDTBL Objective 2 Objective To improve the nutritional status of the people of Afghanistan, with a greater focus on women and children by increasing accessibility and quality of the Basic Package of Health Services (BPHS) in the provinces of Balkh and Samangan and urban Kabul\. Rationale The ICR does not contain specific information on achievement of outcomes specific to the provinces named in the PDO\. The ICR (p\. 13) states that it is likely that the project contributed to national-level nutrition outcomes, but it also acknowledges that large-scale reductions in malnutrition could be attributable to overall improvements in the country's socioeconomic status\. The project team later provided additional information on nutrition activities and outcomes specific to Balkh and Samangan provinces, leading to a rating of Substantial for this objective\. Outputs: The ICR does not provide information on specific outputs in Balkh or Samangan provinces\. The ICR explains that NGOs were supported to deliver the BPHS, which included public nutrition as one of its seven critical elements, but the ICR does not contain further information on how the emphasis on nutrition was implemented\. The project team later added the following information specific to Balkh and Samangan provinces: Balkh and Samangan provinces ( Based on HMIS) 2010 2011 2012 2013 Number of children screened for nutrition status 395,6 484,5 488,8 293,283 78 84 32 Number of children with acute malnutrition 22,9 36,8 30,6 17,794 32 28 72 number of children with severe acute malnutrition admitted 500 958 627 872 number of children successfully treated 365 740 444 765 Percentage 73% 77% 71% 88% In urban Kabul, the number of children below the age of five receiving nutrition screening decreased from 119\.015 in 2011 to 115,370 in 2013, not achieving the target of a 10% increase\. Outcomes: Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) The percentage of children nation-wide below the age of five with chronic malnutrition decreased from 60\.5% in 2004 to 40\.9% in 2013\. This indicator was not included in the Results Framework and was added by the ICR author\. The project team also added that, nation- wide, the percentage of children under six months of age who were exclusively breast-fed increased from 78% in 2008 to 80% I 2013\. The additional data provided by the project team demonstrate that nutrition screening and treatment improved substantially in Balkh and Samangan provinces during the project period\. Rating Substantial 5\. Efficiency Substantial: Neither the PAD nor the ICR included a traditional economic analysis\. Instead, the ICR provides a qualitative analysis of international evidence of cost-effective health interventions\. Most health services included in the BPHS have a cost-effectiveness ratio of US$100 per Disability Adjusted Life Year (DALY) averted, which can be seen as highly cost-effective\. Also, in 2012 the MOPH conducted a cost analysis of the BPHS provided in all eleven provinces supported by the Bank under the SHARP project, estimating that the per capita expenditure for the BPHS ranged between US$1\.44 and US$4\.56, with an average of US$2\.50, depending on whether the services were delivered in a district hospital or health sub-center\. A study conducted in 2006-2007, which focused on different provinces mainly supported by USAID, estimated the average per capita cost of the BPHS in USAID-supported provinces at US$3\.78, higher than for those supported by the Bank\. This differential could be related to NGO contracts being set at the provincial level rather than contracts that support lower aggregates of the population\. The BPHS interventions were delivered by health workers, nurses, and midwives, providing for effective delivery of services at lower cost than by physicians (ICR, p\. 43)\. Also, the projectâs interventions covered most of the disease burden in the country, and the supported delivery modes were among the least expensive alternatives and most accessible to the poor\. However, there were minor shortcomings\. The procurement for the recruitment of NGOs experienced delays, as the government did not allow the renewal of contracts with performing NGOs under the previous project; according to the project team, however, these delays did not interrupt service delivery\. Also, the procurement process for the Kabul pilot was lengthy and inefficient, leading to implementation delays and extension of the project closing date by 1\.5 years\. The security situation in Afghanistan was, of course, extremely challenging\. Taking into account the cost-effectiveness of the BPHS and its delivery, Efficiency is rated Substantial\. Efficiency Rating Substantial a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) Coverage/Scope (%) 0 Appraisal 0 ï¨Not Applicable 0 ICR Estimate 0 ï¨Not Applicable Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome Relevance of objectives is rated High, given the health sector challenges Afghanistan was facing\. Relevance of design is rated Substantial, given the logical link of planned project activities to expected outcomes\. Achievement of the objective to improve the health status of the people of Afghanistan, with greater focus on women and children, is rated Modest due to lack of outcome data specific to Balkh and Samangan provinces, where the project was implemented\. Achievement of the objective to improve nutritional status is rated Substantial, based on results related to nutrition activities and outcomes in Balkh and Samangan provinces\. Efficiency is rated Substantial due to the cost-effectiveness of the Basic Package of Health Services and its delivery\. This review of the ICR suggests moderate shortcomings in the project's preparation and implementation, and therefore the Outcome is rated Moderately Satisfactory\. a\. Outcome Rating Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating Substantial: The security situation in Afghanistan remains volatile, which impedes hiring qualified staff and providing services\. Also, the provision of health services is highly dependent on donor financing\. Although external financial support will likely continue to be available in the medium term, eventually the government may have to mobilize its own resources\. The Afghan health care system continues to lack health- facility capacity as well as stewardship capacity, both of which can adversely affect health services\. Continued efforts to build capacity are critical to ensure the sustainability of already-made investments\. Furthermore, operational (bureaucratic) procedures intended to ensure transparency have prolonged processes and potentially created delays that can hamper continuous implementation of activities and thus erode sustainability\. a\. Risk to Development Outcome Rating Substantial 8\. Assessment of Bank Performance a\. Quality-at-Entry The ICR (pp\. 19-20) notes that the Bank team successfully prepared an Emergency Project and effectively used convening power to bring donors together\. The project incorporated lessons learned from other Bank projects and experience from the Bankâs previous engagement in Afghanistanâs health sector\. Those lessons included: i) the BPHS contributes to improving health outcomes and has a strong pro-poor focus; (ii) contracting with NGOs for delivery of services is a successful approach partly due to NGOs' flexibility, creativity, and ability to address identified problems; (iii) investing in M&E systems is critical for identifying and solving challenges, tracking progress, and obtaining evidence to design policies; (iv) testing new approaches in pilots and evaluating them carefully is an effective way of moving the health sector forward; (v) hiring local consultants to the MOPH that are competitively recruited and paid market salaries is important so that the Ministry can effectively carry out its stewardship function; and (vi) activities such as training midwives will have greater impact if expanded\. The Bank identified relevant risk factors such as the countryâs overall inherent risk and growing insecurity, disrupting the delivery of services in certain areas as well as hampering monitoring and evaluation of activities\. Additional identified risk factors were corruption, improper financial management, limited procurement capacity leading to delays in contracting of NGOs and the M&E agency, limited evaluation skills (especially for pharmaceutical goods) hampering the procurement process, and planned external funding not materializing as expected and the program therefore remaining partially unfunded\. {The ICR notes that} the Bank put adequate mitigation efforts in place\. However, the project's Results Framework did not include any indicator(s) on nutrition outcomes, and no plan was made to track outcome data specific to the provinces intended to be the focus of the project\. These two omissions constituted significant shortcomings, and therefore Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) Quality-at-Entry is rated Moderately Unsatisfactory\. According to the project team, the MOPH decision not to track province-specific outcome data was based on the anticipated high cost anticipated of collecting these data\. Without province-specific data, however, observation of relevant outcomes is very challenging\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision The Bank conducted regular, bi-annual supervision missions in cooperation with the SHARP project\. Implementation status reports were prepared in a timely manner and included information on implementation progress, challenges, and necessary actions\. At the beginning of the project, supervision focused primarily on operational issues such as contracting NGOs, while at a later stage the focus moved towards results, policies, and development issues\. The Bank team ensured continuous provision of the basic health care package while transitioning to a follow-on project, the System Enhancement for Health Action in Transition Project (SEHAT)\. The Bank team successfully restructured the project three times (see Section 2d)\. However, the Bank did not use any of the restructurings as an opportunity to add an indicator on nutrition outcomes in the projectâs Results Framework, or to add provisions for collecting outcome data specific to project provinces\. Also, the Bank did not sufficiently ensure successful implementation of the Environmental and Social Management Framework for safeguards (see Section 11a)\. Overall, these are considered significant shortcomings, and therefore Quality of Supervision is rated Moderately Unsatisfactory\. Quality of Supervision Rating Moderately Unsatisfactory Overall Bank Performance Rating Moderately Unsatisfactory 9\. Assessment of Borrower Performance a\. Government Performance The ICR (p\. 21) indicates that the government demonstrated commitment to achieving the projectâs development objectives\. The MOPH realigned its strategies, structure, and implementation modalities to create a supportive environment\. Also, the MOPH coordinated between development partners to ensure the alignment of funds and efforts\. However, the Environmental and Social Management Framework for safeguards was not fully implemented, as the MOPH was not clear on whose responsibility it was to do so\. In addition, the project experienced delays in procurement due to the governmentâs lengthy procurement procedures and its lack of capacity to move the process forward\. These moderate shortcomings lead to a Government Performance rating of Moderately Satisfactory\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance The project had several Implementing Agencies, with an average performance rating of Moderately Satisfactory\. Strengthening Mechanism (SM) and Kabul Provincial Public Heath Directorate (KPPHD): Moderately Unsatisfactory Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) It was planned that project activities for urban Kabul were to be implemented by various NGOs\. At the second restructuring, the MOPH assigned this responsibility to KPPHD with the support of the SM\. The SM is an approach for the implementation of BPHS by the MOPH where services are delivered directly by the MOPH in three provinces (Parwan, Panjsher and Kapisa) and urban Kabul\. There is a central unit (MOPH-SM office) staffed with skilled professionals (local consultants recruited on market rates) headed by a senior official\. This unit provides management and supervision support to the Provincial Health Officers, who are responsible for day-to-day implementation\. It also coordinates and takes the lead in working with the Bank\. While the SM was supposed to be providing only technical and coordination support, its responsibilities increased due to KPPHD's lack of implementation capacity and political authority\. However, insufficient coordination between the SM and KPPHD and high leadership turnover in both entities had a negative impact on data reporting and supervision at the facility level\. Even though coordination improved by the end of the project, KPPHD made logistical improvements, sub-committee meetings took place on a more regular basis, and a training for provincial health offices on important BPHS topics and project management was implemented, there was a lack of accountability and effective communication between these two entities\. Swedish Committee for Afghanistan (SCA) and Afghan Center for Training and Development (ACTD): Moderately Satisfactory SCA and ACTD implemented the BPHS in Samangan as joint ventures\. SCA was responsible for 60% and ACTD for 40% of project implementation in this province\. This partnership worked well and apparently did not experience coordination issues\. The SCA provided appropriate leadership, and ACTD delivered its outputs as envisaged\. In addition to project activities, NGOs implemented additional activities such as renovating health centers, building staff quarters, providing daycare for children of female staff, etc\. However, no mechanism was implemented to ensure the sustainability of these activities once the NGOs' contracts ended, with a potentially negative impact on the new NGO that was contracted under the follow-on SEHAT project\. Coordination of Humanitarian Assistance (CHA): Satisfactory The CHA was experienced in implementing projects in Afghanistan and was responsible for delivering services in the province of Balkh\. CHA had motivated staff who professionally dealt with local political leadership and changing security situations\. CHA also provided valuable inputs on how to improve the implementation of future projects across the province\. Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization a\. M&E Design The objectives were clearly specified (improved and nutritional status), but the project's key indicators tracked primarily output rather than outcome data\. The objective to improve the nutritional status of the population was not reflected in the indicators at all, and there were no provisions for collecting outcome-level data specific to the project provinces\. The Results Framework included three PDO indicators and four intermediate outcome indicators\. These indicators were measurable in terms of numbers and timing at the national level\. The Urban Kabul BPHS had its own 14 output indicators\. It was a significant weakness that there were no outcome data specific to the provinces covered by the project, as this shortcoming made it impossible to assess achievement of the project's objectives\. M&E activities were carried out by the MOPH under the SHARP project, which also conducted three health facility assessments, a national household survey, and two Results-Based Financing surveys\. The ICR author added one PDO indicator to measure chronic malnutrition of children under five years of age, and an intermediate outcome indicator on the mean percentage score on the national monitoring checklist for quality of services (the original indicator on the balanced score card could no longer be used because the methodology for data collection was changed during the project period)\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) b\. M&E Implementation Indicators in the Results Framework were measured on a regular basis through two different mechanisms\. Since the project co-financed the International Development Agency/Afghanistan Reconstruction Trust Fund grants under the SHARP project, which covered in total 11 provinces plus urban Kabul, a third-party firm was contracted for all M&E activities of the project, including conducting annual health facility assessments and household surveys and verification of Health Management Information System (HMIS) data\. Given the independent nature of the third party, the data were mostly reliable\. For example, the Balanced Score Report generated by the third party was the main reliable tool for the MOPH decision making process\. The HMIS was another important source of data for project monitoring\. The HMIS produced mostly information on health services utilization in each of the health facilities\. Since the HMIS is a self-reporting system, it had limitations\. However, the data were verified by the third party\. Overall, the majority of data were reasonably reliable and of satisfactory quality in the given context\. However, the implementation of M&E also faced a challenge in that there was no information from health facility surveys that was comparable across the project period, since the survey tool was revised in 2010\. It was planned that Johns Hopkins University would carry out a baseline survey, but that was cancelled to avoid duplication with a planned UNICEF Multi-Index Cluster Survey (MICS) for the same year\. However, the MICS was not finished in 2010 and had to be completed in 2011\. Of the 14 indicators for the Kabul pilot, data for 11 indicators were available\. In December 2014, an evaluation of the pilot was completed and achievement of objectives, key results, and lessons learned was assessed\. c\. M&E Utilization M&E was utilized to assess performance\. For example, when M&E found that performance was stagnant, supervision and monitoring were enhanced\. Data were also used to analyze the situation and development of national policy and strategic papers\. A Results-Based-Financing pilot, which was implemented in two provinces under this project, included a data audit of a sample of health care facilities in combination with community verification of patients who had received services according to provider records\. According to the NGOs participating in the pilot, these activities had a positive impact on the improvement of the quality of reporting\. The MOPH monitored and evaluated the urban Kabul BPHS pilot through the 11 indicators for which data were available\. Targets were set at a more or less constant 10% increase, similar as to what was done for the health metrics of the entire country\. However, while it was easy to achieve the target for some indicators, it represented a challenge for others\. In December 2014, the pilotâs achievement of proposed objectives, key results, and lessons learned was assessed\. M&E Quality Rating Modest 11\. Other Issues a\. Safeguards The Project was classified as environmental category âBâ\. An Environmental and Social Management Framework (ESMF) was developed and disclosed\. According to a legal covenant in the grant agreement, the MOPH had to prepare a comprehensive bio-medical waste management plan in the first four to six months after project effectiveness\. Even though the plan was prepared, its implementation was not fully completed, as the MOPH was not clear on who should implement the plan\. While the plan was prepared by the Directorate of Policy and Planning and the Directorate of Health Economics and Financing, it was to be implemented by the Directorate of Preventive Medicine\. Therefore, there was limited compliance with the safeguards plans\. No designated safeguards focal officer was hired as planned, and the unit responsible for the implementation of the ESMF left implementation to the services delivery unit and did not provide any technical leadership or oversight\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) Environmental Safeguards: Participating health facilities applied outdated waste management procedures\. Sharps and other medical waste were not consistently separated at the place of generation, or if this was done, no color coding and proper follow up took place\. Also, medical waste was often mixed with municipal waste, particularly in urban areas\. Social Safeguards: It was planned that local community development councils would be involved in the selection process for community health workers\. However, this was not the case in practice, and therefore the local community development councils provided little support to the community health workers program\. A complaint handling system was implemented at health care facilities\. However, its scope and reach was limited, and no records of complaints were kept\. b\. Fiduciary Compliance Financial Management The finance department within the MOPH was responsible for the financial management of the project\. It was equipped with sufficient staff, consisting of consultants who were hired exclusively for this project due to weak financial management capacity within the civil service\. External audits were conducted by the Supreme Audit Office of Afghanistan on an annual basis\. The audited financial statements were submitted in a timely manner\. The audit opinion was unqualified for the last two audits with no critical issues\. All prior year management letter observations were satisfactorily resolved\. Interim financial reports were submitted on a quarterly basis, sometimes with delays due to the difficulty of consolidating information on financial, procurement, and physical progress\. Annual audited financial statements were submitted regularly and on time except for fiscal year 2012\. All identified internal control issues were resolved by the MOPH satisfactorily\. No internal audit reports were conducted due to weak capacity in the internal audit department of the MOPH\. The flow of funds was mainly on time, and the project only experienced some delay at the beginning of the fiscal year due to the late approval of the new budget\. Procurement The procurement directorate within the MOPH was responsible for the procurement of goods and works and was supported by the Afghanistan Development and Reconstruction Services for SHARP\. Consultancy Services were procured by the Grants and Contract Management Unit within the MOPH\. The procurement rating for the project was Moderately Satisfactory throughout most of the implementation period, except in the first year when it was rated Moderately Unsatisfactory due to long delays in the procurement of NGO services for the BPHS\. The procurement process of the urban Kabul pilot experienced several challenges and delays\. Delays were due to a lack of procurement capacity within the government, weak management by the Kabul Provincial Public Health Directorate, complex procurement laws, and lengthy approval processes\. The project tried to procure goods through the government, which took over a year, and UNICEF, which also presented challenges\. Essential medicines ended up being borrowed in-kind to urban health facilities from the MOPH through the Kabul Provincial Public Health Directorate\. Before the project closed, the procurement process was completed\. c\. Unintended impacts (Positive or Negative) None reported\. d\. Other --- Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment High relevance of objectives and substantial relevance of design\. The achievement of the nutrition objective was substantial, but Outcome Satisfactory Moderately Satisfactory achievement of the health objective is rated modest due to lack of outcome data at the province level\. Efficiency was substantial\. Risk to Development Outcome Substantial Substantial --- The M&E framework did not provide for collection of outcome data specific to the project Bank Performance Moderately Satisfactory Moderately Unsatisfactory provinces, and there was inadequate attention to safeguard policies\. Borrower Performance Moderately Satisfactory Moderately Satisfactory --- Quality of ICR Modest --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons â¢ Contracting out services to NGOs instead of providing health services through the government might provide flexibility and agility necessary for project implementation in a challenging environment\. In this project, the NGOs operating in rural settings were much more successful than the SM-KPPHD management structure in the Kabul pilot\. While the government is responsible for oversight, stewardship and coordination, NGOs might have better abilities to operate in the field\. â¢ Providing a low-cost package of health services, contracting out services to NGOs, and collaborating closely with the government and development partners while gradually strengthening the governmentâs stewardship and service provision role is a good approach for health system strengthening in fragile and post-conflict countries\. â¢ It is critical for the assessment of a project to include indicators relevant to all of the project's objectives, and to collect data on those outcome indicators specific to the project's geographical areas\. 14\. Assessment Recommended? Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review AF: Support Basic Pkg\. Health Services (P120565) No 15\. Comments on Quality of ICR The ICR provides a good overview of project preparation and implementation and is consistent in its analysis\. Also, the ICR provides additional indicators that were not included in the Results Framework to measure achievement of the project objective on nutritional status\. However, it is a significant analytical shortcoming that the ICR does not report project outputs or outcomes for the provinces specific to the project and does not discuss the attribution questions raised by this missing information\. With this omission, attribution of observed national-level outcomes to project interventions is challenging\. Given this significant shortcoming, the ICR's quality is rated Modest\. a\. Quality of ICR Rating Modest	REVIEW
P107372	ï»¿ Document of The World Bank Report No: ICR00002421 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON A GRANT IN THE AMOUNT OF USD 27\.75 MILLION TO THE ISLAMIC REPUBLIC OF AFGHANISTAN FOR A JUSTICE SECTOR REFORM PROJECT June 28, 2012 Governance and Public Sector Unit Afghanistan South Asia Region Â Â CURRENCY EQUIVALENTS (Exchange Rate Effective June 28, 2012) Currency Unit = Afghani (Afn) US$ 1\.00 = AFN 51\.70 FISCAL YEAR: March 20-March 21 ABBREVIATIONS AND ACRONYMS AGO Attorney Generalâs Office MTR Mid-Term Review ARTF Afghanistan Reconstruction Trust NJP National Justice Program Fund CBR Capacity Building for Results NJSS National Justice Sector Facility Strategy CSMD Civil Services Management PAD Project Appraisal Document Directorate CSRP Civil Service Reform Project PAR Public Administration Reform FM Financial Management PARD Public Administration Reform Department GoA Government of the Islamic Republic of Afghanistan HRMD Human Resource Management P&G Pay and Grading Directorate I- Interim Afghanistan National PDOs Project Development ANDS Development Strategy Objectives IARCS Independent Administrative PSU Project Support Unit C Reform and Civil Service Commission IAB Independent Appointments Board PU Project Unit ICR Implementation Completion and PRR Priority Reform and Results Report Restructuring IDA International Development Association ITA International Technical Assistants RIMU Reform Implementation and Management Unit M&E Monitoring and Evaluation POC Project Oversight Committee MCP Management Capacity Program SC Supreme Court MoJ Ministry of Justice TA Technical Assistance MoF Ministry of Finance Â Â Vice President: Isabel M\. Guerrero Country Director: Robert Saum Sector Manager: Antonius Verheijen, Project Team Leader: Lubomira Beardsley ICR Team Leader: Satyendra Prasad Â Â Afghanistan Justice Sector Reform Program CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph MAP Contents Â 1\. Project Context, Development Objectives and Design \. 1Â 2\. Key factors affecting implementation and outcomes\. 6Â 3\. Assessment Outcomes \. 14Â 4\. Assessment of Risk to Development Outcome \. 23Â 5\. Assessment of Bank and Borrower Performance \. 24Â 6\. Lessons Learned\. 26Â 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 28Â Annex 1 Project Costs and Financing \. 31Â Annex 2\. Detailed Component Description \. 32Â Annex 3: Grant Preparation and Implementation Support/Supervision Processes \. 38Â Annex 4\. List of Individuals Interviewed during ICR \. 40Â Â Â Â Â Â Â Â A\. Basic Information AfghanistanÂ JudicialÂ Country:Â AfghanistanÂ ProjectÂ Name:Â ReformÂ ProjectÂ ProjectÂ ID:Â P107372Â L/C/TFÂ Number(s):Â TFâ?92160Â ICRÂ Date:Â 06/28/2012Â ICRÂ Type:Â CoreÂ ICRÂ LendingÂ Instrument:Â TALÂ Grantee:Â MINISTRYÂ OFÂ FINANCEÂ OriginalÂ TotalÂ USDÂ 27\.75MÂ DisbursedÂ Amount:Â USDÂ 17\.71MÂ Commitment:Â RevisedÂ Amount:Â USDÂ 20\.75MÂ Â Â EnvironmentalÂ Category:Â CÂ ImplementingÂ Agencies:Â Â Â MinistryÂ ofÂ JusticeÂ Â Â MoJ,Â AGOÂ andÂ SupremeÂ CourtÂ Â CofinanciersÂ andÂ OtherÂ ExternalÂ Partners:Â Â Â B\. Key Dates RevisedÂ /Â ActualÂ ProcessÂ DateÂ ProcessÂ OriginalÂ DateÂ Date(s)Â Â ConceptÂ Review:Â Â Effectiveness:Â Â Â Â Appraisal:Â 01/30/2008Â Restructuring(s):Â Â Â Â Approval:Â 05/19/2008Â Midâ?termÂ Review:Â Â Â Â Â Â Closing:Â 06/01/2017Â 06/01/2017Â Â C\. Ratings Summary C\.1Â PerformanceÂ RatingÂ byÂ ICRÂ Â Outcomes:Â ModeratelyÂ SatisfactoryÂ iÂ Â Â Â RiskÂ toÂ DevelopmentÂ Outcome:Â HighÂ Â BankÂ Performance:Â ModeratelyÂ SatisfactoryÂ Â GranteeÂ Performance:Â ModeratelyÂ UnsatisfactoryÂ Â Â C\.2Â Â DetailedÂ RatingsÂ ofÂ BankÂ andÂ BorrowerÂ PerformanceÂ (byÂ ICR)Â BankÂ Ratings Borrower RatingsÂ ModeratelyÂ QualityÂ atÂ Entry:Â Government:Â ModeratelyÂ Satisfactory UnsatisfactoryÂ ImplementingÂ ModeratelyÂ QualityÂ ofÂ Supervision:Â ModeratelyÂ Satisfactory Agency/Agencies:Â UnsatisfactoryÂ OverallÂ BankÂ OverallÂ BorrowerÂ ModeratelyÂ ModeratelyÂ Satisfactory Performance:Â Performance:Â UnsatisfactoryÂ Â C\.3Â QualityÂ atÂ EntryÂ andÂ ImplementationÂ PerformanceÂ Indicators ImplementationÂ QAGÂ AssessmentsÂ (ifÂ IndicatorsÂ RatingÂ Â PerformanceÂ any)Â Â PotentialÂ ProblemÂ ProjectÂ YesÂ QualityÂ atÂ EntryÂ (QEA): NoneÂ atÂ anyÂ timeÂ (Yes/No):Â Â ProblemÂ ProjectÂ atÂ anyÂ QualityÂ ofÂ SupervisionÂ YesÂ NoneÂ timeÂ (Yes/No):Â (QSA):Â Â DOÂ ratingÂ beforeÂ ModeratelyÂ Â Â Closing/InactiveÂ status:Â SatisfactoryÂ Â D\. Sector and Theme Codes Â OriginalÂ ActualÂ SectorÂ CodeÂ (asÂ %Â ofÂ totalÂ BankÂ financing)Â Â Â Â LawÂ andÂ justiceÂ 100Â 100Â Â Â iiÂ Â Â Â Â Â ThemeÂ CodeÂ (asÂ %Â ofÂ totalÂ BankÂ financing)Â Â Â Â JudicialÂ andÂ otherÂ disputeÂ resolutionÂ mechanismsÂ 33Â 33Â Â LegalÂ institutionsÂ forÂ aÂ marketÂ economyÂ 67Â 67Â Â E\. Bank Staff PositionsÂ AtÂ ICRÂ AtÂ ApprovalÂ Â ViceÂ President:Â IsabelÂ M\.Â GuerreroÂ PrafulÂ C\.Â PatelÂ Â CountryÂ Director:Â RobertÂ J\.Â SaumÂ AlastairÂ J\.Â McKechnieÂ Â SectorÂ Manager:Â AntoniusÂ VerheijenÂ AnthonyÂ G\.Â ToftÂ Â ProjectÂ TeamÂ Leader:Â SatyendraÂ PrasadÂ LubomiraÂ ZimanovaÂ BeardsleyÂ Â ICRÂ TeamÂ Leader:Â SatyendraÂ PrasadÂ Â Â ICRÂ PrimaryÂ Author:Â SatyendraÂ PrasadÂ Â Â Â F\. Results Framework Analysis Â Â Â Â Â ProjectÂ DevelopmentÂ ObjectivesÂ (fromÂ ProjectÂ AppraisalÂ Document) In line with the Afghan National Development Strategy and the National Justice Sector Strategy, the project's development objective is to strengthen a centralized state justice system and to increase access to justice for the Afghan people\. The project's immediate objective is to enhance the capacity of the justice sector institutions to deliver legal services\. RevisedÂ ProjectÂ DevelopmentÂ ObjectivesÂ (asÂ approvedÂ byÂ originalÂ approvingÂ authority)Â N/A iiiÂ Â Â Â (a)Â PDOÂ Indicator(s)Â Â OriginalÂ TargetÂ ActualÂ ValueÂ FormallyÂ ValuesÂ (fromÂ AchievedÂ atÂ IndicatorÂ BaselineÂ ValueÂ RevisedÂ TargetÂ approvalÂ CompletionÂ orÂ ValuesÂ documents)Â TargetÂ YearsÂ IndicatorÂ 1Â :Â Â AnÂ independentÂ CouncilÂ responsibleÂ forÂ judgesÂ operational AÂ short,Â andÂ midâ? termÂ HRÂ strategyÂ navigatingÂ theÂ transformationÂ ofÂ theÂ ValueÂ Â CourtÂ workforce;Â quantitativeÂ orÂ Â NoneÂ TheÂ HRMÂ Â Â NAÂ Qualitative)Â Â institutionalÂ systemÂ moreÂ independentÂ andÂ capableÂ (JudicialÂ Council);Â theÂ rewardÂ systemÂ forÂ judges\.Â DateÂ achievedÂ 05/17/2008Â 12/30/2011 12/30/2011Â CommentsÂ Â AÂ HighÂ JudicialÂ CouncilÂ supportedÂ byÂ theÂ HRÂ departmentÂ isÂ responsibleÂ forÂ HRM\.Â (incl\.Â %Â Â TheÂ CouncilÂ isÂ composedÂ byÂ theÂ judgesÂ ofÂ theÂ SCÂ only\.Â TheÂ SCÂ hasÂ resistedÂ reformsÂ targetingÂ HJCÂ orÂ judges\.Â achievement)Â Â IndicatorÂ 2Â :Â Â SkillsÂ ofÂ sittingÂ judgesÂ andÂ prosecutorsÂ reviewedÂ andÂ gapsÂ partiallyÂ filledÂ ValueÂ Â Â SkillsÂ ofÂ legalÂ professionalsÂ andÂ quantitativeÂ orÂ Â N/AÂ Â Â PartiallyÂ AchievedÂ otherÂ staffÂ Qualitative)Â Â increasedÂ DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â MOJÂ trainingÂ complete;Â AGOÂ andÂ SCÂ trainingÂ stillÂ atÂ proposalÂ stageÂ achievement)Â Â IndicatorÂ 3Â :Â Â TrainingÂ policiesÂ andÂ managementÂ capacityÂ improved\. ValueÂ Â N/AÂ HRMÂ capacityÂ toÂ Â Â PartiallyÂ completedÂ organizeÂ and/orÂ ivÂ Â Â quantitativeÂ orÂ Â provideÂ trainingÂ inÂ justiceÂ institutionsÂ Qualitative)Â Â improvedÂ DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â TrainingÂ assessmentÂ forÂ MOJÂ staffÂ partiallyÂ completed\.TrainingÂ managementÂ unitÂ isÂ operational\.SCÂ hasÂ madeÂ progressÂ inÂ implementingÂ thisÂ activity\.Â TheÂ AGOÂ hasÂ beganÂ (incl\.Â %Â Â theÂ preparationÂ ofÂ trainingÂ mapÂ andÂ developingÂ aÂ databaseÂ ofÂ skillÂ andÂ trainingÂ achievement)Â Â needs\.Â IndicatorÂ 4Â :Â Â LegalÂ librariesÂ inÂ MoJ,Â SCÂ andÂ AGOÂ andÂ theirÂ regionalÂ officesÂ areÂ operationalÂ 28Â provincialÂ Â CentralÂ libraryÂ inÂ ValueÂ Â librariesÂ andÂ 3Â MoJÂ andÂ SCÂ andÂ centralÂ librariesÂ localÂ librariesÂ inÂ quantitativeÂ orÂ Â N/AÂ Â Â establishedÂ 20Â courtsÂ (6),Â MoJÂ librariansÂ hiredÂ Qualitative)Â Â officesÂ (6)Â andÂ AGOÂ 100,000Â booksÂ officesÂ operational purchasedÂ DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â LibrariesÂ willÂ becomeÂ operationalÂ afterÂ trainingÂ ofÂ librariansÂ takesÂ placeÂ achievement)Â Â InternationalÂ conferenceÂ andÂ localÂ gatheringÂ ofÂ judgesÂ andÂ prosecutorsÂ areÂ IndicatorÂ 5Â :Â Â organizedÂ ValueÂ Â 2Â localÂ gatheringsÂ ofÂ JudgesÂ andÂ quantitativeÂ orÂ Â NoÂ BaselineÂ N/AÂ Â Â prosecutors\.Â 1Â International/nation Qualitative)Â Â alÂ conference\.Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â PartiallyÂ successful\.Â NationalÂ gatheringÂ ofÂ 350Â prosecutorsÂ organized\.Â achievement)Â Â ReviewÂ ofÂ designÂ ofÂ 28Â courtsÂ and/orÂ judgeâsÂ residences;Â 6Â MoJÂ regionalÂ officesÂ andÂ IndicatorÂ 6Â :Â Â 3Â AGOÂ regionalÂ officesÂ completedÂ TheÂ designsÂ ofÂ atÂ ValueÂ Â 24Â designsÂ ofÂ courtsÂ leastÂ 15Â NoÂ BaselineÂ Â Â andÂ officesÂ constructionÂ quantitativeÂ orÂ Â completed\.Â WaterÂ projectsÂ inÂ theÂ andÂ powerÂ utilitiesÂ provincesÂ preparedÂ vÂ Â Â Qualitative)Â Â forÂ implementation builtÂ forÂ AGDÂ HQ\.Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â ImplementationÂ successfulÂ thoughÂ noÂ newÂ constructionÂ projectÂ hasÂ beenÂ (incl\.Â %Â Â implemented\.Â achievement)Â Â IndicatorÂ 7Â :Â Â FiveÂ courts,Â MoJÂ andÂ AGOÂ officesÂ repaired\.Â ValueÂ Â quantitativeÂ orÂ Â NoÂ BaselineÂ N/AÂ Â Â N/AÂ Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â Â Â achievement)Â Â IndicatorÂ 8Â :Â Â InvestmentÂ fundsÂ forÂ coveringÂ maintenanceÂ costsÂ ofÂ facilitiesÂ andÂ carsÂ operationalÂ ValueÂ Â Â ImprovedÂ quantitativeÂ orÂ Â N/AÂ maintenanceÂ ofÂ Â Â N/AÂ currentÂ assetsÂ Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â 23Â courtÂ houses,officesÂ refurbished\.InvestmentÂ fundsÂ forÂ maintenanceÂ ofÂ facilitiesÂ (incl\.Â %Â Â spentÂ inÂ theÂ SC,AGO\.InvestmentÂ fundsÂ forÂ carsÂ wereÂ usedÂ toÂ secureÂ theirÂ titles;maintenanceÂ costsÂ beenÂ financedÂ byÂ theÂ regularÂ budgetÂ achievement)Â Â IndicatorÂ 9Â :Â Â VehiclesÂ deliveredÂ toÂ usersÂ andÂ used ValueÂ Â MobilityÂ andÂ safetyÂ AboutÂ 200Â vehiclesÂ ofÂ legalÂ quantitativeÂ orÂ Â N/AÂ Â Â procuredÂ andÂ professionalsÂ andÂ distributedÂ Qualitative)Â Â staffÂ (168Â vehicles)\. DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â 40Â courtsÂ equippedÂ andÂ furnishedÂ (incl\.Â %Â Â viÂ Â Â achievement)Â Â IndicatorÂ 10Â :Â Â 40Â courtsÂ equippedÂ andÂ furnishedÂ ValueÂ Â AboutÂ 40Â offices/courtsÂ quantitativeÂ orÂ Â NoÂ BaselineÂ Â Â CompletedÂ equipped/furnishâ? Qualitative)Â Â ed\.Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â Â Â achievement)Â Â IndicatorÂ 11Â :Â Â AssetÂ managementÂ capacityÂ inÂ theÂ SC,Â MoJÂ andÂ AGOÂ strengthenedÂ ConstructionÂ prioritiesÂ clear\.Â ValueÂ Â ConstructionÂ projectsÂ prioritizedÂ quantitativeÂ orÂ Â NoÂ BaselineÂ andÂ coordinated\.Â Â Â NAÂ CourtsÂ builtÂ inÂ Qualitative)Â Â complianceÂ withÂ securityÂ andÂ otherÂ standards\.Â DateÂ achievedÂ 05/17/2008Â 12/30/2011 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â CourtÂ DesignÂ StandardsÂ completed\.Â CapitalÂ investmentÂ planÂ cancelled\.Â achievement)Â Â IndicatorÂ 12Â :Â Â ICTÂ assessmentsÂ inÂ theÂ SC,Â MoJÂ andÂ AGOÂ completed\.Â ValueÂ Â UnderstandingÂ ofÂ ITÂ ITÂ assessmentÂ reportsÂ quantitativeÂ orÂ Â needsÂ inÂ theÂ JusticeÂ Â Â NAÂ preparedÂ byÂ donors\.Â sector\.Â Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â PartiallyÂ successful\.Â ITÂ assessmentÂ forÂ theÂ AGOÂ andÂ MoJÂ underÂ preparation\.Â achievement)Â Â IndicatorÂ 13Â :Â Â EmergencyÂ hardwareÂ installedÂ inÂ HQs\. viiÂ Â Â ValueÂ Â HQsÂ ofÂ allÂ JIsÂ meetÂ ITÂ assessmentÂ reportsÂ quantitativeÂ orÂ Â theirÂ urgentÂ ITÂ Â Â NAÂ preparedÂ byÂ donors\.Â needsÂ Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â TheÂ AGOÂ andÂ MOJÂ emergencyÂ packagesÂ procuredÂ andÂ deliveredÂ byÂ JulyÂ 2009;Â SCÂ (incl\.Â %Â Â packageÂ procuredÂ &Â deliveredÂ inÂ OctoberÂ 2009\.Â achievement)Â Â IndicatorÂ 14Â :Â Â NetworksÂ inÂ MoJÂ andÂ AGOÂ installedÂ ValueÂ Â ITÂ assessmentÂ NetworksÂ inÂ MoJÂ reportsÂ preparedÂ byÂ quantitativeÂ orÂ Â N/AÂ Â Â andÂ AGOÂ installedÂ donorsÂ andÂ BankÂ Qualitative)Â Â consultant\.Â DateÂ achievedÂ 05/17/2008Â 12/30/2011 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â MoJÂ completed\.Â AGOÂ willÂ installÂ itsÂ networkÂ uponÂ completionÂ ofÂ theÂ assessment\.Â achievement)Â Â IndicatorÂ 15Â :Â Â BaselineÂ assessmentÂ andÂ methodologyÂ forÂ M&EÂ ofÂ legalÂ aidÂ developed\.Â AÂ basicÂ reportingÂ systemÂ forÂ measuringÂ costsÂ andÂ qualityÂ ofÂ legalÂ ValueÂ Â aidÂ providedÂ toÂ NGOÂ andÂ donorÂ reportsÂ onÂ prisonÂ quantitativeÂ orÂ Â Â Â N/AÂ deliveryÂ ofÂ legalÂ aid\.Â populationÂ Qualitative)Â Â developedÂ andÂ relevantÂ dataÂ collectedÂ andÂ madeÂ accessibleÂ DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â UnderÂ preparationÂ (Â M&EÂ systemÂ willÂ beÂ introducedÂ basedÂ onÂ theÂ evaluationÂ reportÂ (incl\.Â %Â Â inÂ cooperationÂ withÂ ILF)Â achievement)Â Â IndicatorÂ 16Â :Â Â LegalÂ aidÂ officesÂ operationalÂ inÂ atÂ leastÂ 5Â provincesÂ viiiÂ Â Â ValueÂ Â 5Â legalÂ aidÂ 6Â legalÂ aidÂ officesÂ quantitativeÂ orÂ Â NoÂ BaselineÂ provincialÂ officesÂ Â Â operational;Â 20Â operationalÂ lawyersÂ hired\.Â Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â OfficesÂ operational\.Â MOJÂ subcontractingÂ ILFâsÂ 13Â officesÂ forÂ deliveryÂ ofÂ legalÂ aid\.Â achievement)Â Â IndicatorÂ 17Â :Â Â LawyersÂ andÂ paralegalsÂ trainedÂ ValueÂ Â PublicÂ defenders'Â andÂ paralegalsâÂ quantitativeÂ orÂ Â NoÂ BaselineÂ legalÂ skillÂ andÂ Â Â N/AÂ qualityÂ ofÂ serviceÂ Qualitative)Â Â improvedÂ DateÂ achievedÂ 05/17/2008Â 12/30/2011 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â ILFÂ toÂ trainÂ legalÂ aidÂ providersÂ andÂ paralegalsÂ byÂ NovemberÂ 2011\.Â achievement)Â Â IndicatorÂ 18Â :Â Â NumberÂ ofÂ casesÂ resolvedÂ with/byÂ legalÂ aidÂ increased\.Â ValueÂ Â MoJÂ surveyÂ ofÂ legalÂ LegalÂ aidÂ officesÂ quantitativeÂ orÂ Â Â Â N/AÂ needs/prioritiesÂ operationalÂ Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â StatisticsÂ unavailable\.Â achievement)Â Â IndicatorÂ 19Â :Â Â LegalÂ informationÂ disseminatedÂ andÂ broadcasted ThreeÂ provincialÂ ValueÂ Â legalÂ outreachÂ MOJÂ reportsÂ onÂ legalÂ officesÂ inÂ Kunduz,Â outreachÂ activities\.Â MOJÂ quantitativeÂ orÂ Â NangnharÂ andÂ Â Â N/AÂ surveyÂ ofÂ legalÂ Qualitative)Â Â needs/priorities\.Â BalkhÂ andÂ theÂ MOJÂ MediaÂ SupportÂ UnitÂ operational;Â AboutÂ ixÂ Â Â 40Â materialsÂ preparedÂ andÂ disseminated;Â 5Â TV/radioÂ showsÂ DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â OfficesÂ operational,Â materialsÂ developedÂ andÂ underÂ review\.Â achievement)Â Â CommunitiesÂ andÂ theirÂ leadersÂ educatedÂ inÂ substanceÂ andÂ inÂ accessingÂ legalÂ IndicatorÂ 20Â :Â Â information\.Â ValueÂ Â quantitativeÂ orÂ Â N/AÂ NAÂ Â Â N/AÂ Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â HasÂ notÂ beenÂ implemented\.Â achievement)Â Â IndicatorÂ 21Â :Â Â CentralÂ andÂ provincialÂ legalÂ librariesÂ operational ValueÂ Â quantitativeÂ orÂ Â N/AÂ N/AÂ Â Â N/AÂ Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â Â Â achievement)Â Â Â Â xÂ Â Â (b)Â IntermediateÂ OutcomeÂ Indicator(s)Â Â OriginalÂ TargetÂ ActualÂ ValueÂ FormallyÂ ValuesÂ (fromÂ AchievedÂ atÂ IndicatorÂ BaselineÂ ValueÂ RevisedÂ TargetÂ approvalÂ CompletionÂ orÂ ValuesÂ documents)Â TargetÂ YearsÂ AgreementÂ onÂ functionsÂ andÂ compositionÂ forÂ CouncilÂ ofÂ JudgesÂ reachedÂ andÂ actionÂ IndicatorÂ 1Â :Â Â planÂ forÂ itsÂ creationÂ prepared\.Â ValueÂ Â (quantitativeÂ Â N/AÂ NAÂ Â Â N/AÂ orÂ Qualitative)Â Â DateÂ achievedÂ 05/17/2008Â 12/30/2011Â Â 12/30/2011Â CommentsÂ Â (incl\.Â %Â Â HasÂ notÂ beenÂ achieved\.Â achievement)Â Â Â Â G\. Ratings of Project Performance in ISRs Â DateÂ ISRÂ Â ActualÂ Disbursements No\.Â DOÂ IPÂ ArchivedÂ (USDÂ millions)Â Â 1Â 12/31/2008Â SatisfactoryÂ SatisfactoryÂ 0\.40Â Â 2Â 06/29/2009Â ModeratelyÂ SatisfactoryÂ SatisfactoryÂ 0\.41Â Â 3Â 12/30/2009Â ModeratelyÂ SatisfactoryÂ ModeratelyÂ SatisfactoryÂ 1\.35Â Â 4Â 11/23/2010Â ModeratelyÂ Unsatisfactory ModeratelyÂ Unsatisfactory 6\.16 Â 5Â 06/26/2011Â ModeratelyÂ SatisfactoryÂ ModeratelyÂ SatisfactoryÂ 9\.71Â Â Â H\. Restructuring (if any) NotÂ ApplicableÂ xiÂ Â Â Â Â I\. Disbursement Profile xiiÂ Â Â 1\. Project Context, Development Objectives and Design 1\.1\. Context at Appraisal By 2002, years of conflict had eroded Afghanistanâs public sector and its justice institutions\. Although an administrative structure still existed in many parts of the country, only few senior staff remained in Kabul to manage relations with the provinces\. Decades of neglect meant that delivery of services had virtually collapsed by this time\. In the last decade, Afghanistan has been re-building the state, improving the overall institutional infrastructure, and improving the functionality of the state and its bodies\. The international community has provided significant assistance during the process of recovery\. However, recovery in the justice sector has been critically lagging\. Informal and formal institutions have coexisted through numerous changes in regime and periods of conflict, with varying levels of strength and stability\. The impact on state justice sector institutions of the Taliban Government was particularly adverse\. The challenges in rebuilding the sector have been particularly complex given the need to reconcile traditional and customary Afghan law, Sharia law, and the state legal systems\. In addition, citizens themselves have little confidence in the formal justice institutions and regard them as slow, ineffective and often corrupt1\. Although access to courts and legal assistance are rights enshrined in the Afghan constitution, for the majority of Afghans, particularly women, these rights are hardly exercised\. High illiteracy rate, particularly among the 85% of the population living in rural areas means that public awareness of legal rights is very low\. Legal information is very difficult to access, and the majority of people cannot afford court fees or the transportation costs for attending court\. Prevailing cultural practices also often prohibit women especially from seeking access to formal legal institutions\. Reports suggest that corruption remains rife, particularly in the institutions associated with delivering security and justice2\. While the Constitution guarantees legal representation and legal aid, the majority of citizens are unaware of their rights, and the state is ill-equipped to inform citizens of their rights and reach\. Citizens, therefore, tend to turn to informal and local institutions (shuras, jirgas, maliks) for legal matters, and the legitimacy of state institutions remains low\. As with other public institutions in Afghanistan, the institutional structures lack the human, financial and physical resources to perform at the desired level\. Staff in the justice sector often lack access to the basic facilities, transportation, legal texts and office space required to fulfil their roles\. Donor interest to support institution building and reforms in this complex sector also lagged behind other areas\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1 Transparency International: http://www\.transparency\.org/policy_research/surveys_indices/cpi/2010\. In 2005, Afghanistan ranked 117 out of 159 countries covered in Transparency Internationalâs Corruption Perception Index; a ranking that deteriorated further in subsequent years to 176 out of 178 countries\. 2 A 2010 UNODC survey shows that judicial and criminal justice officials were those most frequently reported to have taken a bribe\. 1Â Â Â 1\.2\. International Assistance and Governmentâs Justice Agenda Various activities have been supported to strengthen the Justice Sector by the international community\. However, this has not always been delivered in a coherent and coordinated manner\. In the last few years a significant number of judges (at different levels), prosecutors, Hoqooq officers and other officials have received legal training and been given opportunities to improve their legal and general knowledge\. Judicial facilities have been renovated and built in many areas, and work has been undertaken to improve basic case management systems and develop legal practices\. The US Government through USAID has supported the improvement and reform of the court administration and case management, as well as legal drafting\. Italy, Germany and again the US have supported legal education and training, especially for judges and prosecutors, and other judicial officials\. The UN Office on Drugs and Crime (UNODC) has provided training on juvenile justice, and European Commission has supported implementation of the Priority Reform and Restructuring Programme (PRR) and other basic HRM reforms across the JI institutions\. There were also a number of small scale and largely ad hoc donor financed initiatives to support the office management, computers and database management improvement\. While these activities have contributed to improving the quality and quantity of services delivered, the efforts have been undertaken on a piecemeal basis, leading to additional burden upon the Justice Institutions (JI) to coordinate these activities, and limited the degree to which synergies can be sought between these numerous interventions\. The NPP process is a mechanism to improve coordination across the sector institutions and across donors through the development of an overall strategy and action plan; however this process has been lagging and is yet to be finalised\. 1\.3\. Rationale for Bank Involvement in the Justice Sector A well-functioning justice sector is necessary for the rebuilding of the state, and above all in order to strengthen the trust of the population in state institutions, and the ability of the state to provide justice and security\. The central message of the 2011 World Development Report on âConflict, Security and Developmentâ, âis that strengthening legitimate institutions and governance to provide citizen security, justice and jobs is crucial to breaking the cycle of violenceâ? (2011, 2)\. The Bank had already supported programs in related areas, such as public administration, and state reform through sector programs\. An engagement in the justice sector could be seen as complimentary to these efforts, and one that was critical to the overall stability of the state\. Also significant was the overall reconstruction environment in Afghanistan\. The project was funded by the Afghanistan Reconstruction Trust Fund (ARTF) which is managed by the Bank\. The Bank had been subject to sustained requests by ARTF donors to take the lead on operational engagement in the justice sector because it was better placed to improve coherence in external support to the sector and viewed as being more capable of demonstrating quick impacts especially in the lead up to the first Presidential and Parliamentary elections\. The first justice sector intervention was clearly developed within this reconstruction context\. 2Â Â Â 1\.4\. Original Project Development Objectives (PDOs) and Key Indicators The PDO for the project was âto strengthen the centralised state justice system in Afghanistan and increase access to justice for the Afghan peopleâ\. The key indicators for progress in meeting the PDO included the following: 1) The number of improved justice facilities; 2) The number of people who receive legal services; 3) The number of qualified and properly trained justice professionals; 4) The number of legal professionals with increased access to adequate legal reference materials; 5) The extent of legal advice and representation provided by the stateâs legal aid programme; 6) The number of community leaders and other Afghan people reached through the legal awareness initiative; 7) Improved capacity of legal institutions to manage their human resources and assets, and 8) Progress in human resource reforms to lay the foundation for increasing salaries\. 1\.5\. Project Revision/Restructuring The project was extended in December 2009 when the Government of Afghanistan requested an extension of the closing date by 1\.5 years\. Through a further extension in June 2011, the project was extended for a further 6 month to December 2011\. At that point, US $7 million of the outstanding grant amount was also cancelled for the works that were assessed as unlikely to be completed within the project timeframe, and a new implementation schedule was developed in line with an Action Plan developed by the Government of Afghanistan\. The challenges of this period included a deteriorating security environment and the subsequent difficulty in attracting the interest of international experts and firms for project activities, as well as the withdrawal of assistance of some international partners\. However, the original project development objective as well as the results/indicators, the components, safeguards, institutional arrangements, financial or procurement related aspects of the project remained unchanged (Tier II Restructuring)\. The initial extension of project had been expected from the time that the original project was developed; the project closing date was scheduled to be extended in line with the closing date of the ARTF\. Although the project was designed as a two year program, it was initially intended to be closed on December 30, 2009\. This shortened timeframe for the project was selected in order to align the project with the closing date of the parent ARTF (TF 50576) of June 30, 2010\. A 6 month extension was anticipated from the outset\. When the extension was 3Â Â Â eventually granted, however, it was extended for an additional 18 months, bringing the project life to 3 years\. The subsequent extension undertaken in June 2011 was intended to provide an additional 6 months to complete on-going activities\. The June 2011 ISR recognised that three years was too ambitious a timeframe for the execution of the project\. It also allowed more time to the team to bridge the gap between the current operation and the follow on project\. 1\.6\. Project Beneficiaries The main beneficiary of the project was expected to be the Government of Afghanistan through its three justice institutions (JIs): the Ministry of Justice (MoJ), Supreme Court (SC) and the Attorney Generalâs Office (AGO)\. These institutions were expected to benefit through increased capacity to deliver their services\. In particular, MoJ was concerned with achieving better court administration and reducing the back-log of legal cases\. In addition, communities were expected to benefit from the project, most directly through its second component, âEmpowering the Peopleâ\. Citizens and legal professionals in a few targeted provinces were to benefit from legal libraries, easier and better access to legal information, and better representation before the courts\. 1\.7\. Original Components (as approved in the Original Proposal and Restructured Project) The Project was originally planned to focus on three components: Enhancing Capacity of the Justice Sector; Empowering the People, and Strengthening Implementation Capacity\. (i) Enhancing Capacity of Justice Sector (US$23\.6 million) The objective of the component was to strengthen the institutional operational capacity of the justice institutions through targeting of judges, prosecutors and other justice officials in Afghanistan focussing on (a) human capital; (b) physical infrastructure; and (c) information and communication technology\. (a) Human Capital\. i) Creation of independent decision-making bodies responsible for personnel management ii) Review of the selection and appointment policies and regulations for judges and prosecutors\. iii) Evaluation of the skills of âsittingâ? judges and prosecutors\. The purpose of the evaluation is to design and implement a requalification program\. iv) Implementation of the second phase of the Priority Reform and Restructuring (PRR) program which the SC and the AGO began in 2008\. Strengthening training management capacity 4Â Â Â v) Providing training vi) Creating legal libraries vii) Dissemination of Laws (b) Physical Infrastructure\. The Government of Afghanistan was expected to develop a Capital Investment Plan (CIP), which would provide a comprehensive listing of all the buildings that were to be renovated and/or built\. This included court design standards; designs for constructions projects (e\.g HQ of MoJ and SC); and rehabilitation and construction of offices and courts; procurement of cars and equipment (c) Information and Communication Technology\. Under this sub-component the project supported the development of ICT in the beneficiary institutions, including ICT assessments in MOJ and AGO\. (ii) Empowering People (US$2\.4 million) The objective of this sub-component was to empower the Afghan people through legal aid and education\. In order to be better managed the component was broken into two sub- components: (a) Legal Aid and (b) Legal Awareness\. (a) Legal Aid\. Under this sub-component the creation and financing of Legal Aid offices in the selected provinces took place\. The network of Legal Aid Offices was not only to provide legal advice and representation, if required, but also to collect data information on the services provided to the public\. This was planned as a pilot activity for Phase 1, which would be continued and expanded in Phase 2 if successful\. (b) Legal Awareness\. Legal awareness was supposed to provide information to communities regarding their legal rights and obligations under the civil, commercial and criminal law\. The focus here was three pilot provinces and a media office in Kabul\. The activities were (i) the creation and staffing of a small office of two to four people which will be supported by local consultants (legal professionals); (ii) organizing initial consultations with local community leaders and legal professionals to identify existing legal awareness initiatives and to define the priority themes for the trust-building and training activities; and (iii) developing trust-building and training materials (both material which had been developed under existing projects, as well as new materials)\. (iii) Strengthening Implementation Capacity (US$1\.75 mil\.) The objective of the third component was to build implementation capacity within the justice institutions (MoJ, SC and AGO), so they would, in time, be able to implement reforms and other activities without as much reliance on international support\. 1\.8\. Revised Components The two extensions to the project life did not involve any change to either the PDO or project components\. The final extension also involved the cancellation of the some of the outstanding grant amount (total USD 7 million)\. The grant cancellation affected a number of procurement 5Â Â Â packages across the project components that were unlikely to be implemented within the remaining timeframe, such as the HR reform for judges and Capital Investment Plan\. 2\. Key factors affecting implementation and outcomes 2\.1\. Project Preparation, Design and Quality at Entry The project identified reasonable goals and targets at the design stage, but the ambition to disburse US$27\.5 million within a short two-year time frame was unrealistic\. It is clear that the project design overestimated the available capacity in the implementing agencies, as well as the time it would take to source capacity (and the availability of such staff) from outside\. Consequently, the design underestimated the time required to implement the project\. For example, the original project envisaged that the Project Support Unit (PSU) would be established by November 2008 (within three months of implementation), whereas in practice it took more than a year to reach a basic level of capacity\. The task team were under intense pressure to deliver this project on an emergency basis, and to move forward without a project concept note (PCN)\. A concept note may have presented the opportunity to evaluate the feasibility of the proposal and the timeframes, and gain feedback from peers and others\. The Bank was responding to the demands of donors for an emergency intervention in this sector, and it was seen as imperative to begin the project well in advance of the national elections\. The political context placed the task team in a difficult position\. The trend of slow-starting implementation, however, was evident from the experiences in other ARTF projects that engaged in new sectors\. A longer time frame for implementation than the initial two years should have been allowed for, especially given that the project had a significant infrastructure component\. The project appraisal document (PAD) contained a brief but sound assessment of the social context, with an appropriate recognition of the complexity of the Afghan legal sector\. Given the paucity of data in the sector and limited experience in the sector even by other donors, the project had little to draw upon but demonstrated a strong understanding of the available information\. A major and complex challenge in the effort to build the Afghan legal system is the need to reconcile state, customary and sharia law (and regulations), in order to create a system that is compatible with the Islamic legal standards, respectful of human rights and appreciative of Afghan legal traditions\. The quality of analysis of the justice sector was high, outlining the major constraints to service delivery in the sector\. Due to the projectâs focus on the âcentralised institutionsâ, the document does not discuss in detail informal justice service delivery, such as through jirgas, shuras and maliks\. While a brief comparative discussion on the informal institutions that citizens turn to for justice services may have added depth to the analysis, the particular focus of the project and the paucity of data available means this would certainly have been a challenging task under the short preparation timeline\. A brief factual description of the three JI is followed by a general discussion of âHuman Capitalâ, âPhysical Infrastructure and ICTâ, and âAccess to Justice and Legal Awarenessâ, demonstrating sound research into the formal sector context and identifying relevant challenges\. The project 6Â Â Â document demonstrated clear recognition of and coherence with the broader National Justice Sector Strategy, and the objectives selected for the project reinforce the Governmentâs stated goals\. Bilateral donors have largely focused on legal education and improvement of the professional competencies of judges, mainly in the narrow area of human rights\. The Bankâs intervention went beyond this, by supporting the improvement of infrastructure, legal awareness and provision of assistance to the users of the justice system (sector) though the legal aid offices\. The project supported the Governmentâs obligation to provide appropriate legal representation to those who could not afford professional legal assistance/representation, and sought to connect both donors and the three JIs together\. The project can therefore be described as the first attempt to create a program of linked interventions across the justice sector\. Employing the ARTF as the funding mechanism contributed to the coherence and harmonisation that this approach could offer\. The JIs themselves showed an appreciation for this element of the project design, stating that it was valuable to have a project that linked the JIs together\. This approach ensured that key ARTF donors took a greater interest in the project and undertook specific measures to coordinate their support\. This element of increased cooperation between donors reflected a step change in donor behaviour in this sector\. Focusing on three clearly defined components: 1) Enhancing Capacity of Justice Sector Institutions; 2) Empowering the People and 3) Strengthening Implementation Capacity was an appropriate design in order to maintain a focussed approach\. The first and second components have three and two sub-components, respectively\. The aim of structuring the project in this manner was to facilitate more effective management of these complex activities, and the simplicity of the component structure contributed to this\. The Projectâs governance mechanism was well designed\. Interactions between counterparts and project team in the development stages of the project were frequent, however it seems that certain elements of the project design, such as HR reform, were still either poorly understood or weakly supported by the implementing agencies, as is often the case in other sectors in Afghanistan\. Counterparts to the project have indicated more discussion could have been undertaken to ensure all parts of the project were understood and agreed, which may be due to the highly concentrated timeline of the project preparation\. As a result certain elements, such as the joint Centre for Excellence that was planned under the project, could not be implemented and were eventually cancelled\. The risk assessment undertaken through the ORAF at the preparation phase was adequate\. It is worth noting that the risk assessment framework rightly cited the risk to implementation of the reforms, such as in HR, as high\. There was little appetite to implement this part of the project\. The mitigating measures noted against this risk, however, were too optimistic, by suggesting that packaging tangible activities such as infrastructure development with these more complex reforms under the same project might incentivise 7Â Â Â support for the whole package\. Without any financial link between the implementation of one set of activities and another, it is evident that the design allowed for more complex activities such as HR reforms to be sidelined by the implementing agencies, in favour of the âquick impactâ and âhigh visibilityâ activities such as the procurement of vehicles and construction\. Noteworthy also is that the assessment of risk to the project due to Institutional Capacity was only rated as substantial rather than high\. It is clear in retrospect that this was an underestimation of the risk, since capacity constraints meant that results were slower than hoped for over the initial two year timeframe for the project\. The related risk of weak capacity in implementation of Bank procurement and FM processes, however, was recognised as high\. The project noted that the ARDS would be a source of assistance to the PSU and PUs until capacity within the institutions was developed, and indeed, while there were delays to these processes, the ARDS did provide a critical source of procurement assistance for the initial years of the project\. The project was successful in linking the project and its outcomes to other related projects at the design stage\. The link to the now closed Civil Service Reform (IDA H-2970) was especially relevant\. Through the CSRP, human resources departments were established and the implementation of pay and grading reforms was initiated in justice institutions\. The CSRP activities both reinforced and gained momentum from activities under JSRP, for example through the establishment of Reform Implementation Management Units (RIMUs)\. In addition the project sought complementary support via the Management Capacity Program (MCP)\. The MCP program supported the recruitment of 2 senior staff at enhanced rates of pay\. The JIâs inability to utilize the MCP program to recruit larger numbers of qualified Afghans into technical and managerial positions reflected continuing weaknesses in its HR capabilities\. Therefore, the design stage would have benefitted from closer analysis of the stated risks to the project, a clearer understanding of available implementation capacity, and accounted for this through stronger mitigation measures and a longer timeframe over which to show results\. While the overall risk to the project was identified as Substantial, it is clear that the risks to the project were in fact High, particularly given the relative inexperience of both the Bank in this sector in Afghanistan, and the JIs in working with the Bank\. Consequently, the design could have requested stronger supervision arrangements especially on the operational side, which may have enabled the obstacles to implementation to have been addressed earlier in project execution\. 2\.2\. Implementation Despite difficulties of the context that have been noted, significant progress has been made to improve the delivery of legal aid services, improve legal awareness, build capacity of personnel, address some of the core infrastructure needs and establish a coordinated engagement in the sector over the life of the project\. The project implementation was slower than anticipated at the outset, but did eventually lead to the 8Â Â Â delivery of many tangible outputs in the sector\. Given the recognised challenges of operating in this sector, and the critical importance of the sector (WDR 2011), the incremental pace of change was recognised as understandable and worthy of a continued engagement, both through the extension of the implementation period to a total of 3\.5 years, and through a follow up engagement\. Financial disbursement was very low, particularly in the first year of implementation\. Between effectiveness and the MTR in October 2009, only US$0\.26 million had been disbursed, with an additional US$6 million committed to contracts and US$2 million under negotiation\. While actual disbursement was very low, the team had at this point developed sufficient capacity to negotiate and finalise contracts and implement the project components\. By end June 2011, disbursement levels had risen to 48% of the original grant amount, and at the close of the project (December 2011), over US$ 18\.2 million was disbursed or committed\. It is clear that the low disbursement rates are partly due to the fairly ambitious timeframe for the undertaking\. Regular reviews have noted problems with the procurement capacity, recruitment of PSU staff and lack of direct engagement of the JIs (MoJ, SC and AGO)\. The project documentâs capacity assessments noted that the JIs had experience only in procurement of small items\. The project team was also initially unfamiliar with Bank procurement methods, but benefitted from training delivered by the Bank team in this regard\. The project implementation partners also benefitted from cooperation and assistance from the MOEâs ARDS unit in completing larger contracts\. Over most of the lifetime of the project the overall rating of the project was âmoderately unsatisfactoryâ\. The elections, held in August 2009, led to a slow-down in implementation as counterparts shifted and a new Minister arrived in MoJ\. This rating improved in 2010 after the PSU became operational, and once counterparts became more familiar with the project and Bank procedures\. Cooperation between JIs: While bringing the JIs together under one project generated benefits in coordination, cooperation between the JIs was often weak\. The Project Units and JIs were slow implementing the project activities initially due to the unfamiliarity of World Bank processes, but subsequently also faced problems in generating the requisite commitment to operational processes across all three institutions at the same time\. Coordination was needed to finalise TORs, set bid opening dates and establish review committees, which did result in some delays to implementation\. While the project team should be recognised for linking the three institutions together in a cooperative and coordinated manner, this also created challenges\. However, supervision and support from the Bank team meant that the adverse impacts on the project were limited\. While there were issues at the operational level, the POC, comprising the Chief Justice, Minister of Justice, and the Attorney General, also met regularly through the life of the project, demonstrating a significant high level commitment to the project objectives\. After the second project extension, the decision to have the POC receive monthly updates on progress against the specified Action Plan was a catalyst for JI-led activity on the project\. Technical, procurement and financial management capacity developed slowly across 9Â Â Â the three institutions throughout the life of the project, but remained moderately unsatisfactory in the final ISR of the project\. PSU Staffing and Capacity Delays in the appointment of PSU/PU staff were a significant cause of the initial delays to project implementation\. It was more than 10 months into the project before the three coordinators for the JIs were in place, and delays in finding appropriate management staff and office space were noted in the ISR of late 2010: at this point, the project implementation capacity component was rated highly unsatisfactory\. The PSU Director that was hired early on in the project did not perform satisfactorily, and the search for a replacement was not effective, due in large part to the lack of strong candidates in the market\. An existing member of the team was selected to move into the role, and has been able to learn quickly and provide good leadership to the team\. Once in place, the heads of the PUs and PSU Director coordinated well with the ARDS and POC to move the project forward, and in subsequent reviews the rating for this component jumped to moderately satisfactory\. It is important to note that the Project Oversight Committee (POC) was established and became operational quickly after project approval\. It was charged with managing the project in the absence of the PSU, but capacity to initiate recruitment processes compliant with Bank policies was weak in the JIs, and both procurement and recruitment stalled in the first year of the project\. The AGO also underwent significant leadership changes in the early stages of the project, resulting in a lack of clarity regarding the focal point and responsibilities of the institution under the project\. Low capacity in the JIs has been a key constraint in the project, however there was some flexibility in the design of the project and the outcome indicators were modest, demonstrating an understanding of these limitations\. The JI counterparts admit that their inexperience of Bank processes and requirements initially slowed the implementation, but this has improved significantly over the course of the project\. As capacity has improved, so has the relationship and the cooperation between the Bank team and the JIs, and the results that the project can demonstrate\. To this end, the project met its objectives of laying the foundation for a more ambitious follow-on engagement, as these three years of mutual learning have developed a strong working relationship and implementation capacity that did not previously exist\. TA and Supervision The limited capacity of counterpart institutions added additional requirements for the Bankâs implementation support\. Given the complexity of the project, the inexperience of the counterparts and the fragility of the context, Bank supported efforts could have been strengthened at the initial stages of the project\. While the team worked well with the available resources, the presence of a broader team to engage on technical issues such as infrastructure and IT could have further strengthened the supervision team\. However, there are notable constraints to the size of supervision teams in Afghanistan which must also be acknowledged, including budget limitations, a lack of qualified, available consultants as well as limitations on movement, security restrictions and housing space for visiting missions\. 10Â Â Â Exogenous and Security Constraints Through the duration of the project the security situation in Afghanistan was deteriorating\. The MOJ itself was a target of some attacks (one of which resulted in over a dozen fatalities), and the situation in the provinces was also deteriorating\. However, despite these setbacks, many of the targeted results have been achieved\. The project was also successful in reaching out to citizens in the provinces, through the establishment of legal libraries, improvements to court buildings and the provision of professional legal aid\. Project implementation suffered again after the Mid-term Review (MTR) in October 2009, as elections in Afghanistan (August 2009) led to changes in the leadership of the JIs\. In this period, disbursement remained slow and the project rating fell from Moderately Satisfactory to Moderately Unsatisfactory\. However, this rating rebounded again following the completion of the elections\. 2\.3\. Monitoring and Evaluation (M&E): Design, Implementation and Utilisation The results framework given the short 2 year life of the project was appropriate and it focused on specific outputs\. However, the framework was weak in capturing progress of its more qualitative components, such as access to justice\. The target values for such indicators were broadly defined\. Insufficient capacity hindered the Project from identifying and capturing more nuanced outcomes such as service improvements arising from training and capacity building investments\. Baseline data collection was meant to take place under the project, but was not executed- due in part to the scope of the task and the low capacity to source and manage such a large consultancy, and also due to the limited availability of consultants for such work in Afghanistan\. Activities relating to infrastructure were monitored much better\. It was less clear whether the improvements to infrastructure had a subsequent impact on improving access to and the delivery of services\. However, improvements in physical and ICT infrastructure have provided an important platform for improved legal outreach in Phase 2 of the project\. Moreover, the M&E framework was weak with respect to access to justice elements\. The indicators capturing access to justice such as âNumber of cases resolved with/by legal aidâ? and âCommunities and their leaders educated in substance and in accessing legal informationâ? were not maintained over the project life\. According to the last ISR from June 2011, progress on these indicators was not recorded\. Learning from this experience, the follow-on project has instituted clearer and smarter targets that are in large part supported by baseline information\. Critically, it also provides support to the JIs to develop their monitoring and evaluation capabilities during the initial phase of the project\. 2\.4\. Safeguard and Fiduciary Compliance Despite poor public perceptions of corruption levels in JI noted above, no such irregularities have been noted in the project\. While capacity and internal audit 11Â Â Â arrangements could have been strengthened, supervision and project management arrangements have proven robust\. The project operated under the steadily improving Project Financial Management reforms under implementation by the Government of Afghanistan with World Bank assistance\. Under these reforms, proper records of grants received and disbursements through the designated account were maintained by the Ministry of Finance, Special Disbursement Unit (SDU) which was initially manual, and later migrated to Afghanistan Financial Management Information System (AFMIS)\. The funds flow to the project was timely\. Proper records of eligible expenditures for various components and activities were maintained by the implementing agencies â Ministry of Justice, Supreme Court and the Attorney Generalâs Office through a dedicated project support unit (PSU)\. The internal controls were adequate; however the internal audit arrangements were not satisfactory under the project\. Regular IFRs (Interim Financial Reports) in the agreed format were submitted during the life of the project\. Annual audited financial statements were submitted regularly though there was delay in the first year of project audit\. The audit opinion of the Control and Audit Office of Afghanistan was unqualified (clean) for all the three years\. The audit observations for prior years have been resolved\. There were unsubstantiated expenditures of US$37,961 reported in the SY1389 audit report; responses to the audit observations are awaited\. The Project closed in December 2011 and there is a grace period up to June 30, 2012\. The status of project disbursements up to June 28, 2012 is detailed below\. This includes all payments under the grant and no further payments are envisaged\. Components Disbursements (in eq USD) 1 - Enhancing Capacity of Justice Sector Institutions 13,822,311 2 - Empowering People 2,546,944 3 - Strengthening Implementation Capacity 1,785,979 SUB TOTAL 18,155,234 Less: Return of funds from provinces (116,256) TOTAL 18,038,977 12Â Â Â 2\.5\. Post-completion Operation/Next Phase The project has been successful in establishing an implementation structure and generating the necessary government interest to prepare a second phase\. The project was designed from the outset with the intention of âpreparing a foundation for a subsequent more robust and longer term ARTF-supported project (Phase 2)â\. The development of the Phase 2 project has been undertaken in close collaboration with the JIs and the project was approved by the Management Committee of the ARTF in May\. The decision to design this as two projects rather than to seek additional financing for Phase 1 was largely driven by the step change in scale of ambition and objectives of the second phase\. The implementation structures of Phase 1 have been sustained through a Project Preparation Grant (PPG) in order to avoid delays in making the project operational, and in order to retain the capacity and knowledge built under the first project\. It is evident that the second phase project will benefit from the well staffed PSU and PUs as well as the positive relationship with the JIs established during the first phase\. The JIs have also demonstrated increased capacity to engage with the Bank on project development, and expressed a strong commitment to the improved implementation of a second phase\. It is clear that the lessons of the Phase 1 project (some of which are noted below) have been reflected upon by the implementing agencies, and that there is now greater awareness of the actions required to ensure proper implementation\. The project will also benefit from an existing network of legal outreach offices that can be built upon, and designs/ design standards for JI buildings which can be taken forward to construction\. Additionally, the JIs now have a much clearer understanding of Bankâs requirements and of the governmentâs procurement and financial management processes\. Improving the JIâs understanding of these processes and developing their capabilities to use Government systems was an important achievement of phase1\. In this way, the project successfully helped to establish the foundations for a deeper and longer term engagement in the sector by the World Bank\. The Phase 2 draws upon the increased capacity and commitment to implementation in order to propose a more ambitious program of activities (US $85\.5 million), over a longer and more realistic timeframe of 5 years\. The transition to a 5 year project life overcomes an important constraint identified in this ICR to the successful implementation of phase 1\. The second phase goes a step further by preparing the key procurement packages during project preparation\. The project altogether targets more complex set of tasks such as HR reform and the completion of a CIP, but links these to clear benchmarks and associated financial incentives to meet these targets\. Consequently, under the second phase, a failure to execute these critical reform tasks will result in a reduction of the overall fund allocation for the project, particularly for more tangible items such as infrastructure and vehicles\. 13Â Â Â 3\. Assessment Outcomes 3\.1\. Relevance of Objectives, Design and Implementation The project objectives, while ambitious, were relevant and appropriate for the context\. The design and implementation, however, needed to be better planned given the complexity of the context and wider capacity constraints\. In the context of fragmented and limited donor interventions in the Afghanistan justice sector, the project approach of working through the ARTF, across the three JIs and in multiple areas was appropriate\. The objectives of increasing state capacity and access of citizens was also relevant in a context where the Government suffers from a distinct lack of legitimacy in the eyes of citizens, due to the lack of accessible legal services\. Justice is a particularly critical area in which raising the profile of state service delivery can have a substantial impact in the way the state is perceived\. The overall objectives of this project were âto strengthen a centralised state justice system and to increase access to justice for the Afghan peopleâ\. An immediate objective was to enhance the capacity of the justice sector intuitions to deliver legal services\. The project intended to do so by better human capital management, development and better management of physical infrastructure, and by increasing the skills of the justice sector employees\. The project document also stated that: The aim of this first project (Phase 1) is to implement a set of quick impact sub-projects, visible to the Afghan peopleâ\. Capacity building remains a critical obstacle to such service delivery\. While judges, prosecutors and other service delivery employees of the state are scarcely paid a living wage, and have little investment in terms of training, donors and NGOs circumnavigate these struggling establishments in order to provide legal services through parallel systems\. The rationale recognized the disconnect between state and citizen, as well as the low capacity starting point for the project, in the goal of achieving quick impact and high visibility gains through this initial engagement\. This would also be critical to building the relationships and experience needed to attempt a more ambitious Phase 2\. A focus on basic infrastructure and concrete, tangible outputs was also justified due to the extremely poor working conditions of many justice sector employees, and the real impediment to delivery of services that lack of access to vehicles, buildings and other basic materials pose\. With regard to design, it is clear that the goals could not be achieved within the short initial (2 year) time frame of the project, but stronger results were demonstrated over the total project period\. In terms of implementation, while access to justice may have increased over the period of active project implementation it is unclear that such increased access could have been sustained in the absence of costly project interventions, such as the arrangement with the Non-Governmental Organization, International Legal Foundation- Afghanistan, to help deliver legal aid services\. 3\.2\. Achievement of the Project Development Objectives 14Â Â Â The overarching project objectives were âto strengthen a centralised state justice system and to increase access to justice for the Afghan people\. The projectâs immediate objective is to enhance the capacity of the justice sector institutions to deliver legal services\. This will be achieved primarily through more strategic human capital and physical infrastructure management, increasing skills of justice sector professionals and enhancing the physical infrastructure used to deliver legal services\.â? The overarching project objectives were broad in scope and the project resources appear modest against them\. However, the PDO level indicators for the project limited this scope more clearly and were framed appropriately\. The project faced challenges to the achievement of capacity building elements of the PDO\. Implementation capacity was successfully built, and judges and prosecutors benefitted from conferences and trainings that also built capacity\. In this way, the project made important progress in this area\. However, some of the longer term activities for asset and HR management could not be implemented\. The Capital Investment Plan (CIP), HR reforms for judges and prosecutors, among others, were cancelled\. In each case, important external factors such as the increase in judges pay before the reforms were begun, and the lack of appropriate consultants for the CIP, contributed to the cancellation of these activities\. In addition, HR reforms enjoyed only weak support from implementing agencies\. These would have made the most critical contribution to improving human resource and asset management systems in the JIs\. On the other hand, significant visible improvements were made to infrastructure, facilities and outreach activities of the JIs\. With 38 JI buildings being rehabilitated, legal aid offices established, critically needed vehicles purchased enabling JI staff to undertake their work, and legal documents and information being made more readily available to professionals and citizens, the project did make significant progress towards its objectives despite the difficulties of the context\. Furthermore, the Project was designed with the view that a follow-on Phase 2 engagement would be required\. Phase 1 therefore focussed on a set of high and quick impact sub-projects, which would be visible to the Afghan people, and which would provide a basis for a deeper follow-on engagement\. Seen in this light, the project has made important headway in creating the necessary space for reform in the sector, and a platform through which donors, agencies and government can engage in a more coordinated manner\. The Bank has approved a follow- on engagement that deepens activities towards the objective of improving services and access\. The selected financing instrument of the ARTF allows for predictable medium term donor financing\. This takes account of the overall context in which reforms are going to be slow and will require engagements over a longer term\. Component 1: Enhancing Capacity of Justice Sector Institutions Given that the project focused on building the initial capacity of the Afghan judicial institutions to absorb more assistance, the first component of the project was by far the largest 15Â Â Â (85\.5 per cent of the total)\. It comprised three sub-components: Human Capital, Physical Infrastructure and Information and Communication Technology (ICT)\. (i) Human Capital The Capacity Building component has seen some success in achieving the planned outputs, but a number of activities under the component were not undertaken, and eventually cancelled under the restructuring in June 2011\. The governmentâs approach to developing capacity among civil servants across the JIs was the implementation of the Priority Reform and Restructuring (PRR) Program that was implemented across the Afghan Civil Service\. This reform enabled some key departments in the JIâs to recruit and retain staff through modest salary inducements\. From 2007, the Government began to implement the new civil service pay and grading framework\. This would define the structures of all institutions; confirm the new civil service staffing needs, and set in place a procedure for recruitment of permanent staff into posts at the new salary levels\. However, the application of PRR and P&G to prosecutors and judges has been an area of wide debate, since they have been granted independent status under the current Civil Servantâs Law\. While the project had hoped to forge a link between reforms in HRM for judges and pay increases, the Government took the decision to increase Judgeâs salary independent of any reform program in 2008\. Thus, the momentum for reform was to a large extent lost, and the complexity of the task of how to manage judges and prosecutors was a further cause for delays in addressing the matter\. For the civil service staff within the SC, the P&G reform was completed by the end of the (restructured) project\. Progress in the AGO progress has been slower, where only slightly over 50 per cent of P&G review was completed by the completion of the (restructured) Phase 1 of the project\. Although the results of these HR reforms- the establishment of two Reform Implementation Units (RIMUs), progress in P&G reform- have been modest and limited, some stability at the lower levels of the civil service has been achieved\. Individual posts and their responsibilities are better defined but critical shortages of professional and technical staff remains\. Other investments in human capital development included a 6 week training program for 90 judges at the Judicial Training Academy in Egypt\. 220 MoJ employees from across the provinces received training in core areas such as English, IT and procurement\. A National Conference of Prosecutors was supported\. These activities were described as very positive and valuable outputs by the JIs\. The conferences also attracted other stakeholders in the justice sector and provided an important platform for dialogue on justice sector issues\. Through the Physical infrastructure sub-component (investment and reconstruction of buildings), there have been significant tangible outputs\. 35 JI buildings have been rehabilitated both in the centre and the provinces\. The Capital Investment Plan (CIP) was not contracted under Phase 1 of the project, due to a lack of interest from appropriate 16Â Â Â international consultants\. This work will now be completed early in the follow on project\. After some apparent confusion about the concept and objectives of the activity, as well as problems with the joint procurement of buildings, the work on the âCentres of Excellenceâ was also cancelled from Phase 1 (US$ 0\.2 million)\. The SC successfully prepared design standards for court and administrative buildings\. The design standards are a contribution that may make a sustained impact, since the institution now has standard guidance with which to ensure that buildings meet international safety and quality standards\. The project has provided critically needed transportation (vehicles) for the senior judiciary officials\. The designs for an MOJ HQ and an SC HQ were completed, and the MOJ building will be constructed under the follow on project\. The designs for 6 provincial MOJ buildings were also drawn up\. The designs for 5 provincial AGO buildings were drawn up, but no construction was undertaken\. However, a new AGO office was provided with utilities and furnished, and this now also contains operational library facilities for all AGO staff\. In total 28 libraries have been established across Afghanistan and thus improved access to legal texts\. The 6 legal aid offices and 3 legal awareness offices were established, and advice provided has covered issues as diverse as adultery, theft and traffic cases\. In terms of outcomes, the project has improved the infrastructure for the provision of legal services and helped to improve access to justice\. The Information and Communication Technology (ICT) sub-component financed the development of the major ICT needs assessments for the JIs, including the requirements of the provincial justice institutions and networking for both levels\. Counterparts raised concerns about insufficient attention being given to progress on IT systems and networking facilities\. However, it was also clear during implementation that, while the AGO made repeated requests to donor projects for additional IT software and hardware, there was no mechanism for maintenance and support for these products\. Hence, many items remained unused or unmaintained\. Component 2: Empowering People This component was comprised of two sub-components, legal aid and legal awareness\. The target groups for this sub-component were community leaders and legal service providers\. The publication of legal texts helped to indirectly increase legal literacy\. The Legal Aid sub-component focused on the establishment of legal aid offices, through both physical investments and staffing capacity\. The project planned for 5 to 10 legal aid offices to be established and 6 were eventually set up\. At least 2000 applicants (out of which 1500 are representations and 500 are advice cases) received legal aid\. An additional 2600 cases were processed under the subcontracting arrangement with ILF-A and private lawyers\. Less was achieved in terms of data collection than on the supply of legal aid, but the project has nonetheless improved the information collection and flow in support of better decision- making\. 17Â Â Â The project succeeded in mobilising the MoJ to produce and disseminate Afghan laws, making them more accessible to the population\. Although it was not the objective of the project, legal advice has also improved the knowledge of those clients who may have decided to represent themselves before court\. MoJ has also contracted the International Legal Foundation-Afghanistan (ILF-A), an NGO to provide legal aid and advisory services in 13 provinces, which has had an immediate impact on the level of citizen access to legal services\. The Legal Awareness sub-component focused on supporting public confidence in the state justice system and on the promotion of knowledge and understanding of legal rights and obligations under civil, commercial and criminal law\. Particular attention was paid to the family law, in support of women as a vulnerable section of the population\. This sub- component was primarily delivered in collaboration with MoJ, in the provinces of Nangahar, Balkh and Kunduz as well as a media office in Kabul\. This was a pilot project that has proven successful\. Three legal awareness centres have been established\. In addition to development of legal libraries this has proven to be an appropriate approach in promotion of trust in state legal/judiciary system and strengthening of socio-legal aspects of legal system (legislation)\. Component 3: Strengthening Implementation Capacity The Strengthening Implementation Capacity component focused on building the implementation capacity within the target justice institutions, so that they over time can implement the reforms and further development without outside assistance\. The component supported further implementation of the National Justice Sector Strategy (NJSS), National Justice Programme (NJP) and the Project itself\. With the support of the project the beneficiary institutions (i\.e\. the Government of Afghanistan) established NJP management infrastructure, as well as the Projectâs governance and management bodies\. The links to the NPP implementation structures could have been strengthened, however this process has suffered due to the delays to the NPP process itself, and to decisions about how implementation of the NPP can be undertaken\. As noted above, there were considerable delays in commencing work on this component because of delays in recruitment of key project staff\. Training in international procurement and Bank project management was given to several local consultants in order to support the project implementation\. There was a large time lag between the project approval and the recruitment of an international procurement advisor, and the development of FM and procurement manuals was also severely delayed\. The table below summarizes the achievements against the PDO indicators\. Indicator Attainment The number of improved Overall, 38 courts and buildings rehabilitated justice sector facilities SC: 16 buildings 18Â Â Â AGO: 17 provincial and 3 central offices MOJ: HQ building and the Juvenile Detention Center The number of people who At least 2000 applicants (out of which 1500 are representations and 500 are received legal services advice cases) received legal aid\. An additional 2600 cases were processed under the subcontracting arrangement with ILF-A and private lawyers 19Â Â Â The number of qualified SC: A training program (6 week intensive course) for 90 judges by the and properly trained Egyptian Judiciary was completed\. judges MOJ: 220 MOJ employees across the provinces were trained in FM, Procurement, IT and English AGO: 20 AGO employees received IT training The number of legal A network of 28 provincial and 3 central libraries have been created\. professionals with SC: 10 new libraries established and functional\. The Central Judicial Library increased access to is functional and more than twenty professionals visit this library daily\. adequate legal reference materials AGO: 11 libraries are fully operational\. The total number of users is estimated at 1600 professionals annually\. MOJ: Central Library and 6 Provincial Libraries operational\. 20-30 legal professionals and MoJ staff utilize MoJ central library each day\. Between 5 and 10 provincial staff utilize each of the MoJâs 6 provincial libraries each day\. The extent of legal advice Legal representation & advice has involved broad range of cases e\.g\. and representation murder, terrorism, kidnapping, forgery and counterfeit, narcotics, theft, drinking and intoxication, violence against women, and traffic cases\. The provided by the recipient's most frequent cases are traffic cases, theft, and adultery\. See also indicator 2 legal aid program for quantitative summary\. The number of community Nangarhar: Around 700 brochures and 5 different handouts distributed\. leaders and others reached Kundoz: 1200 posters, 6000 brochures, 400 stickers, 1840 volumes of books, through legal awareness 300 issues of legal bimonthly have been made available by the Huqooq initiative Department of MoJ Balkh: 57 radio conferences, 35 workshops with elders, university students, youths in custody and others held; 700 brochures and 1221 posters distributed\. Meetings with around 230 village representatives and 260 tribal elders held; training for 250 schools completed\. Improved capacity of legal 1\. Infrastructure: institutions to manage 3 engineers supporting the infrastructure departments in each of the JIs; their responsibilities include: evaluation of offers; preparation of bid documents; their human resources and engineering designs & estimation of projects; developing a facilities assets database; monitoring of construction projects SC: developed standards for designs and prototypes for every type of building such as urban court, appeal court, primary court, and residential facilities etc for cold and warm climates\. AGO:A comprehensive IT assessment has been prepared 2\. Human Capital: AGO and SCâs RIMUs have assisted in capacity building for HRM; this includes creation HR databases, management of HRM staff, and assistance in P&G processes\. SC: Review of judges competencies conducted and HRM databases developed 20Â Â Â MOJ: training needs assessment completed SC and AGO: organized nationwide gathering of judges and prosecutors Progress in HR reforms to SC: HR reform for Judges: in 2008 the MOF increased salaries for judges\. In 2009 the SC reviewed performance of sitting judges and developed an HR lay the foundations for database\. increasing salaries The HR reform process for civil servants is in progress\. The RIMU was established and began work\. The eligibility review of SC departments was completed\. The HR department was staffed and trained; positions for the rest of department were advertised\. Critically, the P&G reform of the SC was completed AGO: now thatAGO HRD was staffed and trained, and an eligibility review of AGO prosecutors has been conducted\. 50% of P&G reform was completed\. Â Â Â 21Â Â Â Â 3\.3\. Efficiency Not applicable\. 3\.4\. Justification of the Overall Rating Overall Outcome Rating before Restructuring: Moderately Unsatisfactory\. Overall Outcome Rating after Restructuring: Satisfactory Weighted Overall Outcome Rating: Moderately Satisfactory The projectâs development objectives are an important element of the overall state rebuilding efforts underway in Afghanistan\. The importance of the PDO is further enhanced within the context of the transition to the new institutional arrangements post 2014\. A strong and robust justice system is necessary for the legitimacy of the state, and for economic development\. When JIs can resolve disputes, citizens are less likely to resort to informal sources of power to help them resolve conflicts\. Strong JIs therefore are important for conflict reduction and prevention\. In the case of Afghanistan, this is particularly critical, since anti-government groups gain social capital through the establishment of parallel âinsurgent justiceâ systems, which deliver quick justice to citizens\. In fragile, post-conflict states the focus on institutionalization of the justice system must be a priority\. In the Afghanistan context, rebuilding damaged infrastructure was clearly a necessary pre-condition for supporting the strengthening of formal institutions and building capacity\. The project itself also aimed for output focused, visible achievements in Phase 1 of the engagement in this difficult sector: in making an assessment about the pre and post restructuring weightings, the infrastructure element of the project has been therefore given a greater weight than the softer HR and capacity elements\. Although the project was designed to begin addressing these important issues, it was not clear from the outset that the Afghan judicial institutions fully appreciated the relative importance of the project with respect to this broader objective of state building\. Elections, the Kabul Conference and other high level political events, as well as changes in key personnel delayed the implementation process\. Critical elements of components in the original project were eventually dropped due to both internal and external factors, leaving a project that focused largely on quick-impact activities but with some important headway into service delivery improvements\. The focus upon tangible outcomes in itself was appropriate for this initial engagement in the sector, but greater analysis was needed of the JIs to ensure that more ambitious reforms were welcome, and to develop timelines that were achievable\. The problems in recruitment of key project staff demonstrate the need for more pro-active measures, and for more realistic planning for results\. Relocation of the TTL to Kabul was an appropriate decision for the Bank Management, however other decisions for management- such as how and when to undertake a follow up engagement suffered some delays\. The PDO indicators are considered balanced 22Â Â Â and relevant according to this ICR\. However, capacity limitations in the sector contributed to a lack of focus on the qualitative aspects of results achieved\. The restructuring of the project corrected the excessive ambition of the design, and allowed slightly more time for the completion of a more modest range of activities: that these activities were only cancelled in June 2011 indicates that action to reduce the scope of the project came rather late in the day, however, and this action could have been taken during the extension of the project in 2009\. While some of the larger and more complex activities were cancelled once the capacity limitations were better understood, a number of basic activities to build the physical and staffing capacity of the JIs were successfully undertaken through the project\. Libraries visited during the ICR are well functioning and staffed, and complementary outreach work has been undertaken to raise awareness about the value of these resources to increase demand\. Cars and vehicles supplied through the project, and the rehabilitation of many buildings also contribute to a highly visible and tangible improvement in the quality of Justice facilities available to staff and accessible by citizens\. Trainings for judges through well designed partnerships with relevant legal systems have also added to the quality of judgments\. Although this is undoubtedly difficult to measure, it is a base that can be developed further under the second phase to further increase the capacity of these critical staff\. Furthermore, it stands as evidence of a demand for such a project by all parties, above all the Government, and their commitment to implement it despite evident constraints\. Given that tangible output based activities were the fundamental focus of the project, and the progress that was demonstrated, the project was rated Moderately Satisfactory by the ICR\. 4\. Assessment of Risk to Development Outcome In a fragile context such as Afghanistan, the risks to development outcomes are substantial\. During project implementation, the rapidly deteriorating security situation affected access to the communities, the willingness of lawyers to staff provincial offices, and the fees that were sought by such staff also increased\. It also reduced the availability and willingness of international consultants to work on the project, and affects the sustainability of progress made in capacity building of JI staff\. As security conditions worsened, the ability of judges and legal aid staff to access the population and function were affected, limiting the gains of capacity increases\. During the project preparation phase, such a rapid deterioration of the security condition was not anticipated\. The sustainability of contracting lawyers at higher than government rates, or though arrangements with the relatively high cost NGO, ILF-A, is also highly questionable in the absence of on-going and extensive donor funding\. It is widely anticipated that support for the social infrastructure reforms will decrease post the Transition period (2014) and hence the issue of sustainability of the infrastructure results of this project is a serious problem\. A key issue that needed to be tackled early during project implementation is progressively increasing the O&M budget for the justice sector institutions for sustainability of the physical assets created through the program\. Without an increase in earmarking of funds for O&M expenditures, sustainability of the assets is at risk\. In the short term, this is mitigated by the successor project JSRP-II, but an improvement in planning and asset management capacity must be a seen as a priority for this follow-on project\. 23Â Â Â 5\. Assessment of Bank and Borrower Performance 5\.1\. Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory (b) Quality of Supervision Rating: Moderately Satisfactory (c) Overall Bank Performance Rating: Moderately Satisfactory Quality at Entry The project preparation team designed interventions to support clearly established sector needs\. The quality at entry was acceptable in terms of the selection of the component structures\. However, the design would have benefitted from a better assessment of the institutional capacity to implement the project, and stronger mitigation measures for the institutional weaknesses\. While restructuring corrected for some of these elements, the quality at entry could have been improved had the team been provided adequate opportunity to assess the capacity and political support for some of the activities, and indeed for the scope of activities in the proposed timeline\. The absence of a PCN stage review is evidence that this process was expedited to the detriment of the quality of the design\. The framing of the PDOs and the scope of ambition of the intervention overall was well constructed at entry and responded to a clearly expressed need for a Bank engagement\. Both the PDOs and the more concrete output indicators remained unchanged throughout the project\. The team rightly steered clear of supporting complex policy reforms which would have been far more difficult to achieve during the life of the project\. The project selected quick impact outcomes and through that laid the platform for deeper sector engagement in a more complex Phase 2\. However, implementation was far more difficult than anticipated and the expected results seemed ambitious for the initial 2 year timeframe\. Quality of Supervision The Bank task team was forthright in pointing out the problems that it faced in the implementation and demonstrated flexibility in adjusting the management arrangements and project life-span according to needs\. Not having a continuous presence in Kabul may have contributed to the slow start of the project, but the relocation of the TTL to Afghanistan clearly led to improved relationships across JIs and a sharper focus on resolving problems early\. It is clear that projects in conflict affected countries may suffer from a range of similar issues\. Supervision costs are high and logistically wrought with difficulties; the security environment often restricts movement to directly supervise activities and can limit the numbers of missions possible by consultants\. When available, consultant costs are high and quality is hard to assure due to the limited number of candidates willing to work in the 24Â Â Â country\. Costs of transportation and housing are also often much higher, and therefore the costs of increasing the supervision on a project can also be prohibitively high\. The overall supervision arrangements may have been strengthened with additional staff at the analyst and/or specialist level given the complexity of the project and sector, particularly at the initial stages\. Justification of Rating for Overall Bank Performance Overall the Bank performance was rated Moderately Satisfactory, given that more time should have been allowed to the project team to assess the context and develop the project, and due to the lack of data available to work with at the time of project development\. Due to external pressures, the project was developed on a contracted timescale\. The unrealistic timeframe for the project at the outset necessitated two extensions and a cancellation of a large portion of the allocated grant, but the team demonstrated a willingness to adapt to the realities of the sector\. Performance during supervision was Moderately Satisfactory, with support being provided to the JIs and PSU team throughout\. 5\.2\. Borrower Performance (a) Government Performance Rating: Moderately Satisfactory (b) Implementing Agency Performance Rating: Moderately Unsatisfactory (c) Overall Borrower Performance Rating: Moderately Unsatisfactory Government Performance The Project was to support NJP and NJSS, which articulated a strong vision for reform and better service delivery in the Justice Sector\. The preparation team was encouraged by the clear expression of Government commitment to justice sector reforms that were articulated in the NJSS\. The Governmentâs Independent Administrative Reform and Civil Service Commission supported the project and the JIs through the civil service reform agenda\. In the first year of implementation, as implementation stalled and wider political developments such as the elections came to the fore, the interest of heads of JIs dwindled concurrently\. During the Presidential and Parliamentary elections, the focus of JI senior leadership and the Government shifted away from technical and reform related issues\. This period also saw numerous personnel changes\. Although this was the first Bank project in the justice sector, a number of bilateral support programmes/projects had already been operational in the sector\. JI institutions had relied heavily on donor executed programs to finance investments\. As a result, it has little experience of using Government systems except for salaries and minor operational 25Â Â Â costs\. As the JIs became familiar with Governmentâs own FM and procurement systems, project implementation improved speedily and with it the interest of the political leadership\. Implementing Agency Performance The three justice institutions (MoJ, SC and AGO) were the Implementing Agencies, undertaken through the central PSU (based in MoJ) and PUs based in each of the JIs\. However, the Implementation Agency performance appeared to be affected by coordination problems between the JIs, a disconnect between heads of JI and the implementing units at least initially, and varying levels of commitment to project implementation over the life of the project\. There were major problems with PSU staffing\. By the end of the initial two year period, however, once the core implementation support team comprised of the PSU Director and PU heads was settled in place, their competence and project management skills grew quickly and the commitment to results increased correspondingly\. Implementation performance was also uneven across the three institutions, and while the project had split funds between the three institutions, implementation was slower in the AGO than the SC and MoJ (see MTR p3)\. Personnel changes in the lead assigned to manage the project, the shifting political context and sometimes weak levels of commitment to project activities contributed to this\. The management of national and international consultants was appropriate and no major shortcoming was reported\. However, there were difficulties in sourcing these consultants both due to inexperience in Bank processes, and the paucity of credible/interested candidates in Afghanistan\. Justification of Rating for Overall Recipient Performance A greater weight is given to the performance of the JIs in arriving at a rating for the overall recipient performance\. The overall Recipient performance has been rated as moderately unsatisfactory, given the slow pace of engagement, fluctuations in the degree of political commitment to the project, and the slow pace at which additional capacity was brought to the PSU\. 6\. Lessons Learned Â i\. The project reaffirmed the advantage of the ARTF as a funding mechanism that encourages programmatic, cross-sector approaches to reform and promotes cooperation among institutions\. Channelling resources through the budget was a critical factor in increasing Government ownership of reforms and increasing Governmentâs appetite for seeking on-budget development resources\. ii\. Client engagement in preparation of project, and adequate time and resources for project design, are critical\. The extent of client engagement in project preparation was also an important indicator of future success of the operation\. In post-conflict and fragile states, with typically very low internal capacity, the consultation on the project development is a strenuous exercise; however the political and symbolic elements in consultation and 26Â Â Â design process do pay off, in the end\. Political economy analysis may help improve the design by providing tactical insights into client commitment\. Even under emergency preparation context, a PCN is highly useful in helping to test the underlying assumptions about client commitment and realism of quick impact interventions\. iii\. A functioning implementation structure was critical to the success of the project\. Without an operational PSU and PU, the project was not able to perform, as the experience of the initial period of implementation under Phase 1 clearly showed\. A further lesson is on the role of the central PSU, which needs to maintain an oversight and coordinating role, with greater authority over FM and procurement handed to the JI PUs, in order to encourage ownership and improve disbursement rates\. Under the JSRP, it took many months to establish the implementation structure, which resulted in substantial delays to project disbursement even though this had improved towards the end of the project lifetime\. iv\. Also important in the Afghanistan context is the need to recognize that it takes time to recruit professionals with appropriate procurement, financial management and other project implementation related technical skills\. Even when staffs are recruited, it takes a period of dedicated training and development before they are able to function effectively and become capable of servicing the project\. Teams need to make realistic assessments of the pace at which professionals are recruited and brought up to speed in such a challenging and competitive market environment\. v\. The performance of the three JIs has been uneven with the MoJ being the strongest performer in a variety of project execution functions\. The main factors defining performance are the degree of âpolitical captureâ? and implementation capacity\. The uneven performance of the JIs suggests there is therefore a requirement for a âcustom designed approachâ? to future reforms\. This approach should consider the institutionsâ individual absorptive capacity, while also ensuring that no institution is excluded, as this would be sure to undermine progress in the sector overall\. An important lesson therefore is the need to assess carefully interest of the individual counterparts to specific project results and to the project outcomes as a whole and assess the quality of Government leadership of the project\. The commitment of actors across JI institutions to the project outcomes was over-estimated\. Project outcomes are a useful way of bringing the attention of counterparts to the actions needed to achieve them\. The analysis should encompass the sources of support for the proposed course of action, those who will oppose it, strategies to support the implementation over time, ownership of proposed changes and champions of change, quick wins, political considerations of success and failures\. Mechanisms that help to increase understanding and commitment of different institutions need to be creatively crafted as part of project design\. vi\. The project suffered also as a result of the slow implementation of the HR component in particular, due to a combination of factors such as the lack of an overall approach to HR reform in Afghanistan; an uncoordinated approach by the donors involved; and a lack of 27Â Â Â perceived incentives to implement reforms\. A key lesson is the need for project teams to understand the institutional context and the existing HR environment in which sector interventions are located\. Sector interventions that have an HR element need to work with and be integrated into Governmentâs on-going civil service reform programs\. vii\. Effective Monitoring and Evaluation (M&E) has been a challenge in the justice sector\. M&E in the sector has suffered from a lack of technical capacity at the implementation level and weak conceptual capacity at the policy-making level\. A lack of M&E strategy, including baseline data, to provide information has made it difficult for the GoA to assess properly the achievements and changes\. A key lesson therefore was the need for substantive frontloaded support to develop qualitative data collection tools and methods to ensure that project results are properly assessed\. viii\. The JIs were initially reluctant to engage international consultants in the implementation of project activities\. The high costs of foreign assistance, the presence of âfreeâ international advisors in the JIs (funded by bilateral programs), and concerns related to communication and cultural barriers were the likely reasons for this\. While greater reliance on local capacity (in and outside of the JIs) increases ownership of the reforms, it requires that the Bank helps fill capacity gaps by providing advisory support, necessitating intensive supervision by the Bank team (including continuity of input)\. Creating a more positive institutional environment for advisors to work in does take time\. Over the course of the Phase 1 implementation period, JIs only slowly realized the value of international assistance\. It is, however, important that the international assistance is of reasonable quality, is used selectively, and in combination with local expertise\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing Agencies Comments on the Implementation Completion Report (ICR) on Afghanistan Justice Sector Reform Project (AJSRP): These comments were compiled by Program Support Unit (PSU) of AJSRP with inputs from the Ministry of Justice (MOJ), Attorney Generalâs Office (AGO) and Supreme Court (SC)\. 1\. Assessment of the operationâs objective, design, implementation and operational experiences Operationâs objective: The project implementation was delayed given a number of uncertainties in the implementing environment\. The PSU was established and made operational only towards the end of the project whereby only one yearâs time was available to PSU for implementation\. Under these constraints, the goals of the project have been achieved to a significant extent\. The agreed objectives were important and vital ones for the state justice system\. Activities like âStrategic Management for HR & Infrastructureâ? helped to improve the 28Â Â Â skills of Justice sector professionals\. The project aimed to strengthen the centralized state justice system in Afghanistan and increase access to justice for the Afghan people\. The project responded to the requirements of the Justice Sector and enhanced the capacity of the justice institutions to deliver legal services\. Design: The project design was framed carefully and was realistic but the operational experiences showed that implementation was affected by poor planning and lack of expert personnel\. In spite of these, the project design enhanced the capacity of the justice institutions\. Indeed the Phase 1 project was designed in a way to establish an implementation structure and to build institutional capacity within justice institutions so that JIs could get ready for a follow on project with a much broader scope\. Considering this objective, this first project was fairly successful\. Implementation and operational experiences: Implementation and operational experiences involved learning about financial management, procurement, contract management, monitoring and evaluation and project management procedures and processes\. Moreover, implementation and operational experiences of the Phase 1 project served as an effective learning platform for the JIs to improve their internal and external coordination\. As it was the first ARTF project implemented by JIs, and there was an obvious lack of experience in implementing such projects\. The Justice Sector faced a lot of problems in the first two years of the project\. Gradually by âlearning by doingâ?, JI personnel increased their capacity and by the end of the project became familiar with World Bank processes that needed to be followed during implementation\. 2\. Assessment of the Outcomes of the Operation against the Agreed Objectives: The immediate objectives of the project were to enhance the capacity of the JIs to deliver legal services\. This was achieved to a large extent: ï The skills of justice sector professionals were improved; ï Justice sector facilities such as transportation and infrastructure were improved; ï Reforms in HR were initiated; and ï Legal professionals have increased access to adequate legal reference materials\. 3\. Borrowerâs own performance evaluation during preparation and implementation of the project: Initially the World Bank was provided with an optimistic picture of the borrowerâs implementation capacity\. During later evaluations, it was found that the government lacked core FM, procurement and project management, contract management, monitoring and evaluation capacities\. The JIs initially started operation of the project without a clear understanding of WB guidelines and procedures, but gradually gained a better understanding about WB guidelines and procedures\. 29Â Â Â 4\. Evaluation of the role of the World Bank displayed so far during implementation of the project: It could be considered as assisting the JI to improve implementation of the project\. For instance, the Bank requested the Government to take urgent actions to make the PSUâs operational\. The training programs that were facilitated by the Bank helped to increase the pace of implementation especially during last year\. On the other hand, the project implementation also faced some problems due to unrealistic expectations of the Bank\. 5\. Description of the proposed arrangements for future operation of the project: The proposed arrangements include strengthening of the implementation structure both quantitatively and qualitatively\. During the first phase two important manuals were prepared for the project: a\. The Procurement Manual b\. The Financial Management Manual The âOperation Manualâ? is under preparation\. It is expected that with these manuals in place the qualitative aspect of the implementation of the new project will be strengthened\. It has also been agreed between the Government and the World Bank that implementation units in the JIs will be strengthened and necessary provisions have been included in the Phase 2 procurement plan\. A detailed project procurement plan has been approved by the World Bank which covers the initial 18 months of the new\. (c) Bank Response on Borrower Comments The Borrower presents a realistic assessment of the problems faced during project implementation\. The borrowerâs frank assessment that developing financial management, procurement, contract management capacities occurs slowly is helpful especially in framing some of the start up capacity investments in the follow on project\. What is missing from this assessment however is a recognition that such capacities are likely to develop in an uneven manner across different institutions within the justice sector\. The borrower presents a clear understanding of the need to complete procurement packages in early phases of project cycle especially with regard to infrastructure components\. This lesson has been reflected during the preparation of the follow on project\. The most significant observation however was the confirmation by borrower that the initial project has laid a strong foundation for a follow on engagement\. This indicates that the original rationale for a two phase approach was a sound one\. 30Â Â Â Annex 1 Project Costs and Financing Â (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending FY08 51\.84 383\.13 Total: 51\.84 383\.13 Supervision/ICR FY09 30\.17 320\.75 FY10 42\.44 374\.21 FY11 9\.84 87\.15 FY12 6\.79 117\.99 Total: 89\.23 900\.12 Â Â Â Â Â Â 31Â Â Â Annex 2\. Detailed Component Description 1\. The project has two main components\. First, âEnhancing Capacity of Legal Institutionsâ? and second, âEmpowering the Peopleâ?\. The project also has a third Implementation Capacity component, which is designed to ensure smooth implementation of the project\. (i) Enhancing Capacity of Justice Institutions ($23\.6 million) 2\. The objective of this component is to enhance and/or enable the basic operations of justice institutions by investing in the skills of justice sector professionals and officials, and improving their working conditions\. The component has three subcomponents: (a) human capital; (b) physical infrastructure; and (c) information and communication technology\. These will, to a large extent, build on, complement and/or expand on ongoing GoA and donor activities\. (a) Human Capital ($5\.25 million) 3\. The reforms under this subcomponent seek to: (i) increase strategic alignment of human resource management (HRM) functions, capacity, and processes with justice sector business needs; (ii) intensify learning and training of the workforce; (iii) encourage professional affiliations; and (iv) provide the decision-makers (legal professionals) with opportunities to exchange experiences and views on subjects relevant to the development of a legal system in Afghanistan\. These reforms will also seek to increase the employment of, and/or the equal treatment of, women and those with physical disabilities\. Human Resource Management Reform ($1\.75 million) 4\. This subcomponent will finance technical assistance (TA) in the form of consultant services; study tours; and training to the SC and AGO to carry out HRM reforms for judges, prosecutors and civil servants\.3 Specific project activities include: ï Creation of independent decision-making bodies responsible for personnel management in the Supreme Court (SC) and Attorney General Office (AGO)\. (Judicial and Prosecutorial Councils)\.4 ï Review of the selection and appointment policies and regulations for judges and prosecutors\. The objective of the review is to develop recommendations for: strengthening competitive and merit-based elements of the process; improve quality of the induction training and learning for the candidates for judgeship and prosecutor ship; and to improve transparency of the allocation of judges and prosecutors to the courts and prosecutorsâ offices\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 3 This project activity does not include the MOJ which implements its civil service reform under the umbrella of PRR\. 4 This model is common in many countries in Europe, Latin America; but also in countries with Islamic Law such as Algeria; Egypt; Jordan; and Morocco\. 32Â Â Â ï Evaluation of the skills of âsittingâ? judges and prosecutors\. The purpose of the evaluation is to design and implement a requalification program\. ï Implementation of the second phase of the Priority Reform and Restructuring (PRR) program which the SC and the AGO began in 2008\. Support will be provided for two activities: (i) completion of the functional reviews and job descriptions for civil servants in the SC and AGO and pilot regional offices; and (ii) rolling out the program to around ten regional courts and offices\. The pilot offices will be selected by the SC and AGO at the commencement of project implementation\. Learning and Training ($3\.5 million) 5\. This subcomponent will finance TA in the form of consultant services, training, and goods to enhance the skills of the justice sector workforce, with a particular focus on female staff, and to improve their access to legal information\. Specific project activities include: ï Strengthening training management capacity in the SC, Ministry of Justice (MoJ) and AGO\. The activity aims to build the capacity of the training units in the Human Resources (HR) departments at the SC, MoJ, and AGO to develop, organize and coordinate education, learning and training programs for their staff\. A stock-taking study of previous and ongoing training programs will form part of this activity\. ï Providing training to judges, prosecutors, their support staff and MoJ officials and its regional staff\. Under this activity, some 1,000 judges, prosecutors, and their support staff and MoJ officials will receive training\. Whenever possible the project will continue with training programs which have been developed and implemented by the justice sector and involved donors\. Programs to enhance new skills such as legal analysis, computer proficiency, library management, court administration, and financial management will also be added\. When project implementation begins the SC, MoJ, and AGO will prepare the precise portfolio and timetable of training activities per each justice sub-sector (2 year-training plan)\. ï Creating legal libraries\. Three types of libraries will be supported through this activity\. First, the project will finance the completion of the Central Legal Library in the MoJ, which the Taqnin has started to assemble\.5 In addition, mid-sized libraries will be created in four provincial MoJ offices\. These libraries will be accessible to the staff of the provincial MoJ office of the MoJ, and to the regional and local administration, and if feasible, to the general public\. The project will also finance the creation of a number of small libraries containing core legal materials in courts and prosecutorâs offices\. The list of courts and offices where the libraries will be established will be prepared by the SC, MoJ, and AGO (against specific criteria) at the commencement of project implementation\. ï Dissemination of Laws\. This activity will support continued publication of the State Gazette and a collection of statutes, and their distribution to all state agencies, including all courts, all prosecution agencies, all state university law schools, all law schools in Afghanistan and the Wolesi Jirga\. It will also support development of an index to the legislation published in the State Gazette, and distribution thereof to the same agencies\. Finally the MOJ, under this component, will carry out a feasibility study for the creation of an internal print-shop to be used for the publication of laws Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 5 This will be coordinated with the INLTC law library management system\. Possible additional support for the MoJ Translation and Publication Unit will also be considered\. 33Â Â Â and regulations\. USAID is has been undertaking important work in this area for some time and the precise specifications of this project activity will be developed in close coordination with ongoing initiatives\. (b) Physical Infrastructure ($16\.9 million) 6\. With the investment and technical assistance provided under the subcomponent, the GoA will prepare and partially implement construction and repair of court and office facilities and judgesâ residences; equip new and existing courts and offices; and provide transportation for justice sector officials\. Capacity to manage physical assets will also be supported to sustain the progress achieved under this subcomponent\. Specific activities to be implemented under this component include: ï Design (or design review) of about 28 court and rehabilitation of about five buildings; design of about six regional offices of the MOJ; and design of and rehabilitation of three AGO offices\. The specific (regional) facilities will be selected by the SC, MoJ, and AGO at the commencement of project implementation based on a set of indicators such as workload, size of population served, security, potential as a center of excellence and other factors which determine the ability to complete construction in the given timeframe\. Design (or design review) will take account of the needs of female and disabled staff and clients\. In most of these cases the actual construction of the new facilities will take place during the second phase of the reform\. However, the implementation process will be organized such that (re)construction work on courts and other facilities can proceed as soon as appropriate conditions exist\. ï Design and extension of training facilities, administrative offices, and housing (dorm space) for trainees in the Independent National Legal Training Center\. ï Design of a new headquarters facility for the SC, the MoJ, and the AGO (in case of AGO the project will also finance (re)construction work)\. ï Creation of operating investment funds in the SC, MoJ, and AGO to finance maintenance costs associated with the existing facilities\. ï Preparation of an Investment Plan and Facility Standards\. The Capital Investment Plan will be based on a assessment of the current condition of the facilities (part of which is being conducted by another donor), and will produce an inventory of necessary new construction and rehabilitation works; criteria for prioritizing the necessary works taking into account building conditions and staffing and workload estimates; and an estimate of costs for the necessary works, including maintenance and operations\. The activity also includes funding to develop standards for model justice facilities, incorporating best international practices, lessons learned from bilateral work already undertaken by donors, and designs for new model provincial centers, to be built in the next phase of the ARTF project\. ï Purchase of 220 vehicles and their operating and maintenance costs for use by judges, prosecutors and their staff, and MoJ officials, throughout the country on a prioritized basis\. In addition to permitting staff to travel outside provincial cities, new vehicles will contribute to the security of the staff\. Selection criteria will be agreed upon commencement of the project\. ï Purchase of office equipment (including copiers, fax machines) and furniture for current and to-be-constructed facilities\. The lack of such equipment, even in current facilities, is repeated cited as a major detriment to the functioning of staff of the 34Â Â Â Justice institutions throughout the country\. It is anticipated that additional furniture and equipment will be purchased in the future phase of the ARTF project\. (iv) Information and Communication Technology ($1\.45 million) 7\. The subcomponent will finance an evaluation of the ICT needs and limited implementation of the ICT reform\. The project focus will be on case management, HRM, and performance monitoring and evaluation system\. First, an overall ICT plan for the justice sector and/or its sub-sectors (e\.g\. courts) with the basic data will be prepared by MoJ, and AGO with help from international experts\.6 The plan will be the road map for the overall design\. Second, a software solution will be modularized and implemented in a sequenced manner\. For each subsequent module it will be ensured that it will be compatible with previously developed modules\. To reduce operation and maintenance costs, any systems should be prepared as web-based systems which initially ârunâ? locally without a network connection\. With progress in the country and a more stable and affordable ICT infrastructure, such a system could be operated from a central server\. This will help to reduce the overall operation and maintenance costs\. 8\. The specific interventions include: ï Purchasing a minimal amount of hardware to meet emergency needs of the SC, MoJ and AGO ï âRapid Assessmentâ? for the offices of the MoJ, and the AGO will be prepared\. This rapid assessment will provide information on the current situation on the ground, possible interventions for the institutions and most of all an outline of the recurrent cost to make any intervention in the long run sustainable ï Under the project, MOJ and AGO will prepare a detailed network design for their respective buildings\. These designs will be implemented during the 24-month project period\. Hardware for the network will be purchased through the project\. (ii) Empowering the People ($2\.4 million) 9\. The objective of this component is to empower the Afghan people through legal aid and legal education\. There will be two subcomponents: (i) legal aid and (ii) legal awareness\. (a) Legal Aid ($1\.80 million) 10\. This subcomponent will provide TA assistance in the form of consultant services, and training, and investment (under the physical infrastructure subcomponent) to implement the first phase of a national legal aid program\. The MoJ has been working with international donors to draft a comprehensive set of policies for the legal aid system\. The proposed system Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 6 The SC will prepare its ICT plan under the USAID funded bilateral project 35Â Â Â includes a Legal Aid Department in the MoJ, the National Legal Aid Council, liaison officers and legal aid offices, and identified service providers, in the regions\. The proposed system of service providers includes employed lawyers and paralegals in legal aid offices, NGOs and legal clinics in law schools\. The legal aid system will require the cooperation of these institutions with the police, prosecutors, and judges\. 11\. This subcomponent will finance the creation and operation of five to ten legal aid offices in the regions selected by the MOJ against criteria such as size of population served; specific problems posed; security; potential as a center of excellence; and presence of related projects\. The support will include hiring and training staff, drafting operational manuals, and covering the operating costs of the offices\. In addition to day-to-day service provision, with a focus on services related to women and children, and coordinating service provision with other service providers, the office will be responsible for close monitoring and evaluation of demand for and supply of services\. This will include not only service provided by the offices, but also service provided by other service providers\. The data collected through the project will be used to prepare a report on legal aid provision which will serve to make recommendations for modifications of the system design and to prepare a plan for its roll out into other provinces and districts\. (b) Legal Awareness ($0\.60 million) 12\. This subcomponent will finance technical assistance in the form of consultant services and training to pilot a trust-building and legal awareness campaign in the Nanganhar province and its 21 districts\. The MOJ will supervise the project\. The specific activities to be financed include: (i) creation and staffing of a small office of two to four people which will be supported by local consultants (legal professionals); (ii) organizing initial consultations with the local community leaders and legal professionals to identify existing legal awareness initiatives and accordingly, define the priority themes for the trust-building and training activities; (iii) developing trust-building and training materials (the package will contain material which has been developed under existing projects, as well as new materials); (iv) conducting training sessions with male and female community and civil society leaders (about 500 people); and (iv) reaching out, to the population in close cooperation with the community leaders\. The office will work in close cooperation with legal aid office and its experience will feed into the assessment of legal demand\. The MOJ will, to the extent possible and appropriate, coordinate with related programs, such as the Ministry of Interiorâs Focused District Development program, the National Solidarity Program and the Provincial Justice Coordination Mechanism\. (iii) Strengthening Implementation Capacity ($1\.75 million) 13\. The objective of this component is to ensure efficient implementation of the project\. The component focused on building the implementation capacity within the target justice institutions, so that they over time can implement the reforms and further development without outside assistance\. The component supported further implementation of the National 36Â Â Â Justice Sector Strategy (NJSS), National Justice Programme (NJP) and the Project itself\. With the support of the project the beneficiary institutions (i\.e\. the Government of Afghanistan) established NJP management infrastructure, as well as the Projectâs governance and management bodies\. 37Â Â Â Annex 3: Grant Preparation and Implementation Support/Supervision Processes Responsibility/ Names Title Unit Specialty Lending/Grant Preparation Martin Endicott Consultant SBU Team Member Branka Farquharson Temporary SASFP Team Member Deepal Fernando Senior Procurement Specialist ECSO2 Team Member Beth Anne Hoffman Operations Analyst LEGEN Team Member Arun Kumar Kolsur Senior Procurement Specialist SARPS Team Member Hossai Mahak Aliffi Team Assistant SASEP Team Member Brenda Morata Paralegal LEGEM Team Member Andrea Maria Muto Consultant SASGP Team Member Asha Narayan FM Specialist SARFM Team Member Kenneth O\. Okpara Sr FM Specialist SARFM Team Member John C\. Sherman Consultant MNC05 Team Member Sylvana Q\. Sinha Consultant OPCRS Team Member Philip Gerald Thacker Consultant ECSPE Team Member Supervision/ICR Lubomira Zimanova Senior Counsel, TTL LEGJR TTL Beardsley Richard Nash Counsel LEGJR Team Member Deepal Fernando Senior Procurement Specialist ECSO2 Team Member Brenda Morata Paralegal LEGEM Team Member 38Â Â Â Philip Gerald Thacker Consultant ECSPE Team Member Sylvana Q\. Sinha Consultant OPCRS Team Member Satyendra Prasad Senior Governance Specialist SASGP TTL, ICR Samina Bhatia Consultant SASGP Team Member Asha Narayan Financial Management Specialist SARFM Team Member Zohra Farooq Financial Management Specialist SARFM Team Member Asif Ali Senior Procurement Specialist SARPS Team Member ICR Team Zeljko Sevic Consultant SASGP Member Program Mohammed Edreess Sahak Team Assistant SASEP Assistance 39Â Â Â Annex 4\. List of Individuals Interviewed during ICR 1\. Mr\. Hashemi, Acting Admin/Finance Deputy Minister â MOJ 2\. Mr\. Masood Sadaat, Project Unit Coordinator â MOJ 3\. Mr\. Hafizullah Aziz, Admin/Finance Director â AGO 4\. Mr\. Wasil Salarzai, Project Unit Coordinator â AGO 5\. Mr\. A\. Khalid Azizi, JSRP Project Director 6\. Mr\. Naqibullah, Project Unit Coordinator â SC 7\. Ms\. Asha Narayan- FM Specialist, World Bank 8\. Mr\. Toufiq Ahmed- Procurement Specialist, World Bank 9\. Ms\. Lubomira Beardsley, TTL, World Bank 10\. Mr\. Richard Nash, World Bank 40Â Â 60Â°E 65Â°E 70Â°E 75Â°E To U Z B E K I STA N Dushanbe hob Am uD ar y Murg a TA J I K I S TA N To Chardzhev To TAJ IK IS TA N To Ë Kulob To Shazud Dushanbe To Ë Qurghonteppa AFGHANISTAN TUR KM E N I S TA N Faisabad h Â¯ Â¯ JAWZJAN ndz Pya BALKH Â¯ KUNDUZ mi r Taloqan Â¯ Â¯ Pa Kunduz Kondoz Â¯ h Sheberghan Â¯ Mazar-e Â¯ SharÄ±f Â¯ TAKHAR Â¯ s BADAKHSHAN Saripul u Tirich Mir (7690 m) To Samangan Â¯ Baghlan Â¯ K Meymaneh Mary Â¯ SAMANGAN Â¯ BAGHLAN Â¯ YA Â¯ F A R YA B u ndu z I R d To SH Â¯o eQ J Chitral To SARIP UL SARIPUL y n 35Â°N Mashad Mor ghÂ¯ Da Â¯ ry a- Bazarak H PAiN Â¯ Â¯Â¯ NURISTAN ab P Â¯ B A D G H Â¯S I Â¸ Â¯ Mahmud-e RaqÄ± Â¯Â¯ Â¯ Â¯ Â¯ KAPISA Nuristan Â¯ Â¯ Â¯ 35Â°N a Bamyan Â¯ Â¯Â¯ Â¯ PARWAN Asadabad Â¯ Â¯ r o Qalâeh-ye Now Â¯ CharÄ±kar LAGHMAN Â¯Â¯ Â¯ KUNAR To p a e Â¯ R a n g Â¯ Â¯ m i s u s Mehtarlam Mardan Chaghcharan Â¯ B A M YA N KABUL KABUL Â¯ Â¯ Herat Â¯ Ä±rÂ¯d HarÂ¯ u Jalalabad Â¯Â¯ Â¯ PAK IS TAN WA R D A K Meydan Shahr Â¯ INDIA Â¯ Khyber Pass Â¯ LOGAR NANGARHAR H E R AT GHOR To Peshawar DAY KUNDI Pol-e âAlam Nili PAKTIA GhaznÄ± Â¯ GardÄ±z Â¯ us d an G H A Z NÂ¯ Ind ISLAMIC He lm I KOWST To Kowst Kohat 0 50 100 150 Kilometers REPUBLIC Sharan rah Â¯ Â¯ OF IRAN Fa Â¯ URUZGAN 0 50 100 Miles FA R A H TarÄ±n Kowt Â¯ ut Â¯r Ha Â¯ Farah Â¯ I Â¯ P A K TÂ¯K A Â¯ ZABUL Qalat Â¯ h KhÂ¯ s a nÂ¯ k a Tar Hamun-e Â¯ Â¯ SaberÄ± ËÂ¯ Â¯ Lashkar Gah Â¯ Arghandab Kandahar Â¯ To AFG H ANISTAN Zhob Dasht-I Margo PROVINCE CAPITALS Zaranj NATIONAL CAPITAL N Â¯M R O Z I Â¯ HILMAND Â¯ KANDAHAR RIVERS Helm To and Quetta MAIN ROADS 30Â°N Gowd-e RAILROADS Zereh IBRD 33358R1 30Â°N OCTOBER 2011 This map was produced by the Map Design Unit of The World Bank\. PROVINCE BOUNDARIES The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any INTERNATIONAL BOUNDARIES 60Â°E PA KI S TA N 65Â°E endorsement or acceptance of such boundaries\. 70Â°E	REVIEW
P112838	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) Report Number: ICRR0021790 1\. Project Data Project ID Project Name P112838 CN-Wuhan Second Urban Transport Country Practice Area(Lead) China Transport L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IBRD-78640 31-Dec-2015 100,000,000\.00 Bank Approval Date Closing Date (Actual) 30-Mar-2010 31-Aug-2018 IBRD/IDA (USD) Grants (USD) Original Commitment 100,000,000\.00 0\.00 Revised Commitment 100,000,000\.00 0\.00 Actual 100,000,000\.00 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Kavita Mathur Peter Nigel Freeman Victoria Alexeeva IEGSD (Unit 4) 2\. Project Objectives and Components DEVOBJ_TBL a\. Objectives The project development objective (PDO) was "to assist the Borrowerâs Municipality of Wuhan to enhance mobility for passenger trips within and to the central area of Wuhan in an environmentally sustainable, integrated and safe manner" (Loan Agreement page 5, and PAD para 14)\. b\. Were the project objectives/key associated outcome targets revised during implementation? Page 1 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) Yes Did the Board approve the revised objectives/key associated outcome targets? No c\. Will a split evaluation be undertaken? No d\. Components The project comprised five components\. Component 1\. Public Transport (appraisal cost US$44\.9 million, actual cost US$33\.9 million)\. This component would finance activities to strength the route rationalization and operations of the public transport including providing on-street priority to buses on key selected road corridors in Wuhan Municipality\. The component would also finance construction of public transport transfer terminals/interchanges to facilitate transfers from private to public transport modes and 'park and ride' for non-motorized vehicles and cars\. Component 2\. Road Safety (appraisal cost US$14\.5 million, actual cost US$10\.1 million)\. This component would assist in improving traffic management, safety, and mobility through traffic enforcement, education campaigns, and engineering measures including installation of additional traffic signals for vehicles, mid- block traffic signals for pedestrians, facilities for pedestrians and cyclists, and signs and markings in selected road corridors and the area within the Second Ring Road\. Component 3\. Road Improvement (appraisal cost US$434\.8 million, actual cost US$874\.1 million)\. This component would finance rehabilitation, upgrading, and construction of three key links of the urban road network of the Wuhan Municipality\. Component 4\. Travel Demand Management (appraisal cost US$4\.9 million, actual cost US$5\.1 million)\. This component would support the improvement of travel demand management (TDM) through the procurement of equipment; carrying out studies, training and capacity-building measures for the agency managing Wuhan's road and bridges\. Component 5\. Institutional Development and capacity building (appraisal cost US$4\.4 million, actual cost US$3\.7 million)\. This component would assist in strengthening the institutional capacity of Wuhan Municipality and development of an urban transport strategy, with particular focus on non- motorized transport (NMT), public transport integration, and transport issues related to urban-rural integration\. Note\. The appraisal cost does not include contingencies of US$51\.8 million, interest during construction US$55\.1 million and front-end-fee US$0\.25 million\. Revised Components The two restructurings dropped some activities and added some new ones (ICR para 14): Page 2 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) ï The Jiefang Avenue (in Hankou) public transport corridor was dropped because the municipality decided to turn the Avenue into a 15 km scenic road\. ï The Xinhua Lu/Youyi Lu (in Hankou) public transport corridor was dropped due to a lack of space to add a bus lane for the construction of a viaduct at the same site\. ï The Yingwu Avenue (in Hanyang) public transport corridor was dropped because it overlapped with the metro line\. ï The Hanyang Avenue public transport corridor was redesigned to enhance integration with the metro line and was extended from 5\.4 km to 11\.4 km\. ï Two public transport terminals were dropped (Gangdu Garden and the Jinyintan Park and Ride) due to land regulation issues and delays in counterpart funding for land acquisition and housing demolition\. ï There were changes in the five road safety corridors planned at appraisal\. Of the five, three were implemented (Hanyang, Xudong, and Heping), while one was replaced (Yanjiang by Baishazhou) and implemented\. Two were dropped at the first restructuring (Jiefang and Longyang) because of being superseded by urban construction\. ï Heping Avenue construction was reduced by 2\.7 km due to the impact of the metro construction\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost\. The actual project cost was US$926\.8 million, substantially higher than the appraisal estimate of US$610\.7 million\. The actual construction costs of the road sections were higher than initially estimated due to higher land acquisition and resettlement costs (which increased by 183\.6 percent), mostly because of the increase in real estate prices in Wuhan and in China in general\. Land acquisition and resettlement costs for the road improvement and public transport components represent 82 percent of the total project cost increase\. Financing\. The project was financed through an IBRD loan\. The appraisal and actual loan amount was US$100 million\. The loan was fully disbursed\. Co-financing\. There was no co-financing\. Borrower Contribution\. At appraisal, the Borrower was expected to contribute US$510\.7 million\. The actual Borrower contribution was US$826\.8 million\. As explained above, the construction cost of the road sections were higher than initially estimated, and the Borrower financed the cost overrun\. Dates\. The project was approved on March 30, 2010 and became effective on September 7, 2010\. The project was extended by 2 years and eight months and closed on August 31, 2018 compared to the original closing date of December 31, 2015\. The first restructuring in 2015 extended the closing date to August 31, 2017, and increased the percentage financed by the loan for civil works to 90 percent, from the previous 50 percent\. The loan agreement was amended to include the names of the public transport corridors, bus Page 3 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) terminals, and road safety corridors to be financed by the project\. For the institutional development component, the names of the studies were adjusted according to new priorities, that aligned with the preparation of the Wuhan Integrated Transport Development Project\. In August 2017, the second restructuring extended the closing date to August 31, 2018 to complete the project works\. The project team explained that the first extension of the closing date was because of the delays in securing enough counterpart funds to pay for the escalating resettlement costs and therefore the delay in resettlement and implementation of the Jiefang Avenue Extension\. The second extension of closing date was due to the slow implementation of resettlement in Huangpi District as well as delayed land acquisition and resettlement for the two public transport terminals\. Restructuring\. The project was restructured twice, the first on June 26, 2015 and second on August 30, 2017\. Both restructurings involved (a) change in results framework, (b) change in components and cost, (c) change in loan closing date, (d) reallocation between disbursement categories, and (e) change in implementation schedule\. Split assessment\. The PDOs remained unchanged, but there were changes to the outcome indicators as part of the restructurings (see section 9 below)\. However, a split assessment of the PDO will not be undertaken as the original outcome indicators were not measured during early implementation\. The ICR reports (para 69) that some of the original monitoring indicators were not easily measurable and the project management office was not able to gather data to evaluate and report on implementation progress\. As a result, reporting on this project was rather retrospective at the beginning\. In addition, the values of corridor- specific indicators (especially ridership) for the original design and subsequent implementation were not comparable because of the changes in the corridors selected\. 3\. Relevance of Objectives Rationale Alignment with Strategy: National Strategy\. The PDO was aligned with Chinaâs 13th Five Year Plan (FYP 2016â2020), which prioritizes a modern, integrated transport system strategy while achieving low carbon development\. The plan emphasizes the importance of building an efficient, intelligent, green, integrated, and interconnected infrastructure network to contribute to overall economic and social development (ICR para 20)\. The project objective of enhancing mobility for passenger trips within and to the central area of Wuhan in an environmentally sustainable, integrated and safe manner, is fully aligned with the 13th FYP and designed to help advance the national objectives through demonstration projects\. Local Strategy\. The PDO was aligned with Wuhan Municipality's 13th FYP, which is in line with the national strategy and focuses on developing a modern, smart, livable, and eco-friendly city with the efficient provision of public services\. The objectives are aligned with Wuhan Transport Strategy (2015), which seeks to increase a public transport modal split to at least 30%\. The objective of the strategy is to establish a comprehensive transport system characterized by rapid, safe, and convenient movement of people and Page 4 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) goods to minimize travel time and pollution and promote coordinated urban and rural transport development (ICR para 21)\. The Wuhan City had put forth a strong public transport improvement plan through investments in bus priority and metro system, and in the case of Jiefang Avenue, particular attention was paid to the integration of the road with the future elevated metro line (extension of existing Line 1) (PAD paras 2 and 52)\. This integration of metro and bus would enhance mobility and therefore is fully aligned with the PDO\. Bank Priorities\. The PDO remained relevant to the World Bank Groupâs China Country Partnership Strategy (CPS FY 13 - 16) during implementation, which focused on inter alia supporting greener growth\. The project especially supported Outcome 1\.3: Promoting Low-carbon Urban Transport by addressing the cityâs rapid motorization through shifting from cars to public transport and piloting of institutional and technological innovations such as traffic demand management and intelligent transport systems\. The PDO is also aligned with the World Bankâs Sustainable Mobility for All initiative that promotes equity, efficiency, safety, and green mobility\. There is no updated CPS at closure\. The 2017 Systematic Country Diagnostic identifies green growth as one of the priorities and notes that reduction in air pollution from vehicle emissions has been hampered by capacity constraints and organizational fragmentation\. Regarding public transportation, the SCD mentions that public transport's share of commuting in major cities is still low, at about 30 percent\. Wuhan city is not explicitly mentioned\. Country Context: Rapid urbanization in Chinese cities has resulted in traffic congestion, a higher level of traffic-related accidents and fatalities, and increasing air pollution and greenhouse gas emissions\. To address these problems, in October 2005, the Chinese government declared urban public transport development as a national priority\. The Wuhan Metropolitan Region is a city cluster formed by eight smaller cities within a 100 km radius of the core city\. Wuhan is Chinaâs eighth largest city, with a population of over 8 million (at appraisal in 2010)\. Wuhan is also one of the pilot cities for the Transit Metropolis Demonstration Initiative by the Ministry of Transport (MOT) that promotes strategies on public and non motorized transport, travel demand management, and transit-oriented development (ICR para 2)\. The project design took these initiatives into account\. Previous Sector Experience\. This project was the second urban transport project in Wuhan\. The first project was approved in March 2004 and completed in December 2010 and comprised investments in road construction and maintenance, traffic management and bus priority measures, for promoting an integrated urban transport system\. The project was expected to build on the achievements of the first project and continue to support Wuhan Municipality in implementing integrated public transport and road safety corridors with a package of intelligent transport system, road safety, traffic management, and road construction\. Rating Relevance TBL Rating Substantial 4\. Achievement of Objectives (Efficacy) Page 5 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) EFFICACY_TBL OBJECTIVE 1 Objective To assist the Borrowerâs Municipality of Wuhan to enhance mobility for passenger trips within and to the central area of Wuhan\. Rationale The theory of change for this objective is that the construction of public transport interchanges and bus terminals, rehabilitation and upgrading of key urban transport links in Wuhan, and the adoption of the Intelligent Transport System (ITS) innovations would enhance mobility within and to the central area of Wuhan\. Within Central Wuhan Outputs Within Central Wuhan, the project installed on-street priority for buses on two corridors (Heping Avenue and Hanyang Avenue) and constructed sidewalks, bike lanes, and bus lanes within the same right-of-way\. The project procured and installed a state-of-art area traffic signal system, which improved traffic flows\. Bus priority traffic signals reduced bus delays at the intersections, and the overhead cameras on bus priority lanes ensured buses' right-of-way during peak hours (ICR para 28)\. These ITS innovations contributed to the decrease in average bus travel times (see below in outcome section)\. The two bus terminals, San Jin Tan and Tian Shun Yuan were completed in December 2018 as targeted\. At the time of the writing of ICR, they were not operational\. The team informed IEG that they became operational (transferred to the bus company) on May 23, 2019\. The ICR reports that once these terminals become operational, they will serve eight bus routes with 194 buses thus improving service quality of bus transport (ICR para 27)\. Average daily public transport trips rose to 7\.3 million (4\.1 million bus trips per day and 3\.2 million metro trips per day), accounting for 61 percent of all motorized trips made by citizens in 2018, compared with 52\.8 percent in 2011\. Outcomes The project improved mobility within Wuhanâs central area through better public transport\. With the introduction of area traffic signal and bus priority signals and the separation of NMT, buses, and general traffic, buses are running faster (ICR para 27)\. On the Heping Avenue Section, the average bus travel time during peak hours was reduced by 5\.7%, from 35 to 33 minutes, which is less than the target of 14% (five-minute) reduction\. On Hanyang Avenue, the target of a 16\.7 percent (four-minute) reduction was achieved\. The ICR notes (para 29) that this is a modest reduction, because the construction of metro stations is blocking several lanes of traffic, including the bus priority lanes, in most sections of Heping Avenue and parts of Hanyang Avenue\. Once the metro stations are completed, a further reduction in travel times is expected\. Page 6 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) To central area of Wuhan Outputs The project rehabilitated and upgraded three roads sections linking peripheral towns to the central area of Wuhan\. A total of 13\.3 km of roads were constructed, slightly less than the target of 13\.65 km due to 360 m railway underpass on Jiefang Avenue\. These roads are (a) Shuidong Road (3\.4 km), Jiefang Avenue (Huangpu Road â Dijiao Garden Road) (9 km), and (c) Shuidong Section of the 2nd Ring Road (0\.89 km)\. The installation of river-crossing traffic monitoring systems on the Third Ring Road such as a video surveillance system, electronic information display boards, an automated weigh-in-motion system, and a trunk optical cable transmission system, supported the safety and smoothness of river-crossing traffic to central areas of Wuhan\. Outcomes Project interventions shortened the travel times (by car) of residents from peripheral towns to the central area of Wuhan\. ï Average peak-hour travel time on Jiefang Avenue (Huangpu Road to Dibian Road) was reduced by 33\.3% from 45 minutes (baseline) to 30 minutes in 2018 â exceeding the target of 35 minutes\. ï Average peak-hour travel time on JAE (Dibian Road to the Third Ring Road) was reduced by 54\.5% from 11 minutes (baseline) to 5 minutes in 2018, achieving the target\. The construction of the JAE has enhanced traffic connection between the downtown area and the Second Ring Road, Third Ring Road, and Huangpi District, thus relieving the pressure on through traffic (ICR para 34)\. ï Average peak-hour travel time on Shuidong Section of the Second Ring Road was reduced by 77\.3% from 22 minutes (baseline) to 5 minutes in 2018 â exceeding the target of 15 minutes\. The construction of the Shuidong Road relieved the river-crossing traffic flow of the Erqi Yangtze River Bridge at the south bank and shortened travel times from Linjiang Avenue on the Second Ring Road to the Heping Avenue area (ICR para 34)\. Rating Substantial OBJECTIVE 2 Objective To assist the Borrowerâs Municipality of Wuhan to enhance mobility for passenger trips within and to the central area of Wuhan in a safe manner\. Rationale Page 7 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) The theory of change for this objective is that project activities supporting road safety infrastructure and equipment; education and awareness of road safety; and enforcement on the project corridors would make the corridors safer\. Outputs ï Road safety improvements were undertaken on 28\.4 km of road safety corridors\. These included (a) 48 intersections with non-conflicting traffic signals for pedestrians (target was 38), (b) 17 unsignalized zebra crossings converted to signalize mid-block crossings (target was 9) (the project team explained that in China the cities are structured in large blocks with long distances between the intersections; pedestrians have a long walk to cross the street\. The project introduced signalized crossings in the middle of the block to allow pedestrians to cross the street in a safe and efficient manner), (c) 13\.3 km of roads (as targeted) were improved/constructed with physical separation between motorized and non-motorized vehicles; ï The project team informed IEG that the traffic safety education â termed the Road User Education (RUE) suffered from being too general during the project life cycle\. RUE campaigns and messages were unfocused and generally of minimal value (such as âDrive Safelyâ, âObey the Traffic Regulationsâ) and were not evaluated based on outcomes\. The RUE activities supported by the project were: (i) Equipment to upgrade the Traffic Radio Media and Broadcasting Center, run by the Wuhan Traffic Police, (ii) the publication in 2012 of a special issue of âTraffic Managementâ magazine, the journal of the Wuhan Traffic Police, showcasing the project and highlighting the enhanced approach to RUE, and (iii) RUE campaigns along the public transport and road safety Corridors including activities, equipment, materials; ï The project developed Wuhanâs Intelligent Transport Systems (ITS) through the procurement of equipment for the traffic control center; signalizing intersections, and mid-block pedestrian crossings; and ï The project financed the purchase of teaching materials for traffic safety and education and assisted in traffic safety education and awareness\. ï Regarding the enforcement of traffic safety, the project financed a range of CCTV (Closed Circuit Television) Monitoring and Enforcement Cameras (called E-police cameras), which collect data on traffic flows, congestion, traffic crashes and incidents, weather conditions, and traffic violations Outcomes The project team introduced the concept of physical channelization by the use of road markings, and mid- block signals over unsignalized zebra crossings, to enhance road safety\. The ICR reports (para 35) that the integration of road safety and public transport measures on the corridors, through the monitoring of illegal occupancy of bus lanes, a bus priority signal control system, bus lane signs, and road safety education and public awareness campaigns, contributed to increased traffic safety\. It should be noted that there was an increase in the fatality rate on two of the four corridors (Hanyang and Baishazhou Avenues) during the construction period (2015-17), but it had decreased substantially from 22 to 10 fatalities by the end of the project, exceeding the target of 18 (ICR para 36)\. Page 8 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) Rating Substantial OBJECTIVE 3 Objective To assist the Borrowerâs Municipality of Wuhan to enhance mobility for passenger trips within and to the central area of Wuhan in an environmentally sustainable manner\. Rationale The theory of change for this objective is that development of a public transport system and the introduction of the Intelligent Transport Systems (ITS) such as Area Traffic Control as well as the development of a strategy for environmentally friendly construction, maintenance and operation of urban transport infrastructure, would contribute to an environmentally sustainable urban transport system\. Outputs ï The project assisted the Wuhan Municipality in developing a strategy for environmentally friendly construction, maintenance and operation of urban transport infrastructure\. This manual was approved by the Project Management Office (PMO) in 2019\. ï A feasibility study on âtraffic congestion chargingâ was carried out\. The ICR notes (para 40) that this study lays the foundation for Wuhan Municipality to implement a traffic congestion charging policy, including measures and their possible impact on traffic congestion and the pricing policy for parking\. ï A non-motorized vehicle study was also carried out\. This study provided construction guidelines to standardize the planning, construction, and management of non-motorized vehicle transportation infrastructure in the main urban areas of Wuhan\. Outcomes The introduction of the Intelligent Transport Systems (ITS) such as Area Traffic Control, which automatically adjusts traffic signal timings based on real-time traffic data in combination with real-time bus passenger information, improved the capacity and quality of existing bus services as well as vehicle flow\. This in turn would reduce air pollution and cut GHG emissions (ICR para 38)\. The improvement in project corridors increased the public transport modal share from 31% in 2008 to 35% in 2018 on Hanyang Avenue (as targeted) and from 27% in 2008 to 31% on Heping Avenue during project implementation (as targeted)\. This is an important achievement as during this period the total number of private motor vehicles in Wuhan increased 0\.9 million to 3\.12 million (ICR para 29 and 31)\. The project had a strong demonstration effect\. Wuhan Municipality took the learning experience from the two project-financed bus corridors and implemented it in other corridors\. A total of 30 new bus lanes, for a total of 120 km, were opened to traffic in May 2016\. By November 2018, the number of bus lanes increased to 50, for Page 9 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) a total of 430 km (ICR para 30)\. All this investment in public transport is expected to contribute to urban transport in an environmentally sustainable manner\. Rating Substantial OBJECTIVE 4 Objective To assist the Borrowerâs Municipality of Wuhan to enhance mobility for passenger trips within and to the central area of Wuhan in an integrated manner\. Rationale The theory of change for this objective is that the physical integration of different modes of urban transport, such as metro, bus, and non-motorized transport would result in multi-modal integration\. ï The project assisted Wuhan Municipality in preparing a bus route optimization strategy that offered guidance to Wuhan Municipality on integrating bus routes with metro lines\. The strategy recommended placing bus stops close to metro stations to facilitate seamless transfers (ICR para 45)\. ï The project supported a series of workshops and seminars to bring together Chinese and international best practices related to public transport integration (ICR para 45)\. The ICR reports that on January 1, 2016, WMG formally implemented the âimplementation measures for preferential transfer of conventional public transportationâ to reduce citizensâ travel costs and introduce preferential fare payment methods (such as 20 percent discount for card transfer between modes, if paid by smart card)\. ï A study on the âInstitutional and Management Framework for Wuhanâs Urban Transport Integrationâ was prepared, as targeted\. The ICR (para 43) reports that the Bankâs follow-up Wuhan Integrated Transport Development Project will carry out part of its recommendations to contribute to implementation readiness and enhanced capacity in Wuhan for the integration of different transport modes with the support of ITS\. Rating Modest OVERALL EFF TBL OBJ_TBL OVERALL EFFICACY Rationale Page 10 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) The project substantially achieved its objective 'to assist the Borrowerâs Municipality of Wuhan to enhance mobility for passenger trips within and to the central area of Wuhan in an environmentally sustainable, integrated and safe manner"\. Overall Efficacy Rating Substantial 5\. Efficiency Economic Efficiency At appraisal, an economic analysis was conducted for physical investments\. Standard assumption of 12% discount rate and 20 years life cycle was used\. The benefits were (i) time savings for pedestrians, bicycle riders, and bus and car passengers; (ii) vehicle operating cost savings; (iii) savings in road accident costs; and (iv) avoided carbon emissions\. Overall ex-ante Economic Rate of Return (ERR) was 15\.3%\. Table 1 shows ERR for each component\. The ex-post ERR used the appraisal assumptions but accounted for the changes from two restructurings that changed the corridors; higher transaction costs of the project as well as current travel demand resulted in an ex-post ERR of 17\.3%\. The reason for the higher ex-post ERR is due to the road improvement component, which achieved better results compared to those anticipated at appraisal\. For example, the peak-hour travel time along the project roads is shorter than the target value, especially for the Shuidong Section of the Second Ring Road (see section 4)\. Table 1\. Economic Rate of Return by Component Ex-ante ERR Ex-post ERR Road Improvement 14\.8% 17\.1% Road Safety 25\.0% 28\.1% Public Transport 15\.6% 23\.3% Overall 15\.3% 17\.3% As discussed in section 2 b, three public transport corridors were cancelled\. These included (i) the Jiefang Avenue (in Hankou); (ii) the Xinhua Lu/Youyi Lu (in Hankou); (iii) the Yingwu Avenue (in Hanyang)\. Heping Avenue construction was reduced by 2\.7 km due to the impact of the metro construction\. Administrative Efficiency The road safety and traffic demand management components were completed on schedule\. However, roads improvements and public transport components faced cost overruns\. The construction cost of the road sections was significantly higher than initially estimated, due to higher land acquisition and resettlement costs (that increased by 183\.6 percent) mostly because of the increase in real estate prices in Wuhan and in China in general\. Land acquisition and resettlement costs for the road improvement and public transport components Page 11 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) represented 82 percent of the total project cost increase\. The project closed two years and eight months behind schedule\. Overall, the project efficiency is rated modest because project implementation suffered from significant delays and cancellation of some activities\. Efficiency Rating Modest a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) Coverage/Scope (%) 81\.00 Appraisal ï¼ 15\.30 ï¨ Not Applicable 95\.00 ICR Estimate ï¼ 17\.30 ï¨ Not Applicable Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome The project objectives were substantially relevant to the Bank strategy and country priorities\. The project substantially achieved its objective 'to assist the Borrowerâs Municipality of Wuhan to enhance mobility for passenger trips within and to the central area of Wuhan in an environmentally sustainable, integrated and safe manner"\. Efficiency was modest because project implementation suffered from significant delays and cancellation of some activities\. Overall, the outcome of the project is rated moderately satisfactory\. a\. Outcome Rating Moderately Satisfactory 7\. Risk to Development Outcome Government Ownership/ Commitment: This risk to the development outcome is low\. Wuhan Municipality is committed to a sustainable urban transport approach and this approach is being replicated in other corridors of the city\. The only concern is that the recommendations of the congestion and parking pricing study may not be implemented in the short term (paras 92 and 93)\. The ICR does not discuss the reasons\. The ICR notes (para 89) that the cooperation between the Bank, Wuhan Municipality, and the Project Management Office led to the preparation of the follow-on Wuhan Integrated Transport Development Project (WITDP)\. The continuation of Bank's engagement in Wuhan through WITDP is expected to have a positive Page 12 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) impact as WITDP is planning to implement the recommendations of some studies financed under this project\. For example, WITDP is supporting smart parking systems in Wuhan (ICR para 40) and is expected to further strengthen transport integration in Wuhan (ICR para 45)\. The WITDP will also support the improvement of municipal bus operations through the development of integrated ITS solutions (ICR para 93)\. Operations and Maintenance\. This risk to the development outcome is low\. The ICR reports (para 88) that the project management office and the project agencies have appropriate arrangements in place for operation and maintenance (O&M) of project-financed assets\. Wuhan Urban Management Committee is responsible for the maintenance and operation of the two public transport corridors: Heping Avenue and Hanyang Avenue\. The two bus terminals would be maintained and operated by the Wuhan Public Transport Group\. The Wuhan Traffic Management Bureau had formulated measures for maintenance and management of the electronic monitoring system and made specific provisions on the work content and examination of the results of electronic monitoring system maintenance\. 8\. Assessment of Bank Performance a\. Quality-at-Entry The project design was based on the technical studies completed under the previous Wuhan Urban Transport Project\. For example, the road safety component was the result of technical study that identified high risk corridors in and around the Second Ring Road\. The project introduced Intelligent Transport System and Integrated Corridor Management approaches\. The project preparation was highly participatory and enabled the city agencies to provide inputs in the project design\. This was important for the project design to gain the acceptance of the cityâs leadership (ICR para 84)\. However, there were some significant shortcomings: (a) there were weaknesses in M&E design (see section 9a); (b) the impact of metro expansion and resettlement requirement was not considered; and (c) at appraisal, the flooding risk relating to the breaching of the Zhanggong Dike by the Jiefang Avenue Extension was not anticipated (see section 10 a)\. Two restructurings were required, indicating several omissions during preparation, such as the impact of metro expansion and resettlement requirements\. The projectâs Results Framework was almost entirely revised during implementation (ICR para 85)\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision The ICR reports (para 86) that during implementation, the Bank closely monitored implementation progress through frequent supervision missions (27 missions over the eight years)\. At the mid-term review (MTR), the project was rated moderately unsatisfactory and the World Bank and the PMO started a dialogue on restructuring the project (ICR para 87)\. The task team took appropriate and timely actions such Page 13 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) as (a) conducted detailed analysis of the factors leading to the risk posed by flooding due to the breaching of the Zhanggong Dike and drafted a strategy to address this issue (see section 10 a); (b) restructured the project after the mid-term review, which led to the revision of the results framework; integration between bus and metro; and addition of special facilities for persons with disabilities in the corridor design, such as tactile paths and audible signals\. In addition, the Country Management Unit (CMU) and the Bank team worked to make the project politically relevant with the Mayor of Wuhan\. As a result, the mayor declared this project as one of his top three priorities and allocated sufficient counterpart funds\. The Bank responded adequately to the expansion of the metro network and adapted to facilitate efficient integration between bus services and the metro, with bus services serving as feeders connecting key residential, commercial, and other areas of interest near Hanyang Avenue with the metro system\. For the JAE Section, resettlement is still outstanding\. The Project Management Office and the World Bank agreed that resettlement monitoring will be undertaken every three months and that all families will be relocated to their new housing by June 2020\. The World Bank will monitor the progress and compliance with the resettlement as part of the ongoing Wuhan Integrated Transport Development Project (ICR para 79)\. The Bank team had good cooperation and working relationship with the project management office and Wuhan City authorities\. This led to the development of a follow-on project - Wuhan Integrated Transport Development Project, to build on the achievements of this project\. This project is currently under implementation\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Moderately Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The M&E framework was poorly designed\. The indicator such as âaverage bus ridership along the public transport corridorâ for PDO element 1 âenhance mobility within the central area of Wuhanâ suffered from poor attribution to the project\. For example, bus ridership was negatively affected by the new metro construction, and thus did not serve as a good indicator for enhanced mobility\. The indicator âmunicipal modal share of public transportâ was mismatched with the scope of the project, which focused on key corridors and not the entire urban area of Wuhan\. It was also not easily measurable by PMO\. The indicator âfatality reductionâ for PDO element 3 âin a safe mannerâ was too broad\. It should have included both the annual number of fatalities and the injuries on the corridors, to better evaluate road safety on the corridor\. Page 14 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) There were no indicators to measure the achievement of PDO element 4 âenvironmental mannerâ and PDO element 5 âin an integrated mannerâ\. Also, indicators on social aspects, such as the number of female beneficiaries or the presence of low-income groups along the corridors, were missing\. b\. M&E Implementation The ICR reports that some of the original monitoring indicators were not easily measurable and the PMO was not able to gather data to evaluate and report on implementation progress\. As a result, reporting on this project was rather retrospective at the beginning (ICR para 69)\. Two project restructurings in 2015 and 2017 revised the M&E framework significantly\. At the time of 2015 restructuring, two indicators were dropped: ï Average bus speed along public transport corridors was dropped because the majority of the public transport corridors were dropped or changed with respect to the original design and there was no record in the PAD or the project files on how exactly the original baselines were calculated (Project paper page 13)\. ï Average daily bus ridership along public transport corridors was dropped because the majority of the public transport corridors were dropped or changed with respect to the original design\. The bus service to the public transport corridors that remained became feeders to the metro lines (Project paper page 13)\. Two indicators were revised: ï The scope of a modal share indicator was changed from city wide to the targeted public transport corridors\. ï Peak hour travel time (in minutes) between two pairs of origin-destination points on the Shuidong Section of the second ring road was revised to measure âaverage peak hour travel time on Jiefang Avenue (Huangpu Lu/Dibian Lu) and on the Shuidong Section of the second ring road\. ï The indicator âaverage number of fatalities per year on four road safety corridorsâ was revised because two road safety corridors were dropped, and one corridor was added, which meant that the baseline had to be recalculated\. At the time of 2017 restructuring, following indicators were added: (a) Wuhan city develops an integrated public transport strategy; and (b) Wuhan City develops a strategy for an environmentally friendly construction, maintenance, and operation of urban mobility infrastructure\. The two restructurings improved the results framework considerably\. A dedicated M&E specialist was contracted to support the PMO to regularly report on the indicators\. In addition, Wuhan Urban Comprehensive Transport Planning and Design Research Institute was responsible for collecting and aggregating the results framework data for the project\. It provided biannual updates\. Page 15 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) c\. M&E Utilization The ICR does not provide evidence on M&E utilization\. It just mentions that the M&E system was used to track the progress of outputs and the achievement of outcomes (ICR para 70)\. M&E Quality Rating Modest 10\. Other Issues a\. Safeguards At appraisal, the project was classified as environment category B and two safeguards policies were triggered: environmental assessment OP/BP 4\.01 and Involuntary Resettlement (OP/BP 4\.12) Environmental assessment OP/BP 4\.01\. The construction activities were expected to have temporary negative environmental impacts such as construction noise, air-borne dust, loss of surface vegetation, water pollution and soil erosion, solid waste/spoil disposal, disturbance of traffic and social activities of the local community\. All relevant safeguards documents were prepared\. These included (a) Environmental Impact Assessment Report; (b) Environmental Management Plan for the road improvement component; and (c) Environmental Management Plan for the public transport component\. These documents adequately addressed these potential impacts and included mitigation measures (PAD paras 62 and 63)\. In August 2015, the Bank learned of a possible flooding risk related to the breaching of the Zhanggong Dike by the Jiefang Avenue Extension (JAE)\. This was not anticipated at appraisal\. Once the Bank was alerted, the Bank took appropriate actions and updated the Resettlement Action Plan (RAP), Environmental Impact Assessment, and Environmental Management Plan in 2016 (ICR para 73)\. The environmental safeguards monitoring was carried out by Wuhan Environmental Monitoring Center, which submitted 13 environmental monitoring reports to the World Bank\. Involuntary Resettlement (OP/BP 4\.12)\. At appraisal, it was estimated that 34\.5 hectares of collective land would be acquired from suburban villages and 13\.7 hectares of state-owned land would be acquired in urban areas (a total of 48\.2 hectares)\. Housing demolition would entail the relocation of 391 households with 1,486 people, 218 shops (with 556 employees), and 21 enterprises\. A Resettlement Action Plan (RAP) was prepared\. The RAPâs required independent monitoring of resettlement activities\. This was carried out by Wuhan Universityâs Center for Involuntary Resettlement Research and 16 external monitoring reports on resettlement were submitted to the Bank from January 2011 to July 2018\. Overall, the project affected 1,055 families (with 3,265 people) and 40 enterprises\. The project required 31 ha of land and nearly 300,000 m2 Page 16 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) of structures\. The ICR reports (para 78) that the Bankâs grievance redress mechanism did not receive any complaints from citizens\. By project closure, following resettlement activities were completed: ï All displaced families from the Shuidong Section received full compensation\. ï The resettlement works for Jiefang Avenue Section took over six years\. All displaced families was relocated satisfactorily to their new apartments\. For the JAE Section, resettlement is still outstanding\. The Project Management Office and the World Bank agreed that resettlement monitoring will be undertaken every three months and that all families will be relocated to their new housing by June 2020 (ICR para 79)\. The resettlement was delayed because the selected Nanhu Village resettlement site (in Huangpi District) was not only for the JAE section resettlement but also for the relocation of displaced families affected by the three large municipal-funded World Bank- supported projects in Huangpi District\. The land approval, design, and urban planning of the resettlement site were delayed for over three years because the Nanhu Village area was part of a new city called Yangtze River Eco-city\. The plant to treat wastewater from the new city was outstanding at project closure (ICR para 77)\. b\. Fiduciary Compliance Financial Management\. The ICR reports (para 80) that the financial management was satisfactory\. This project was the second urban transport project in Wuhan, and the Project Management Office (PMO) and the Project Implementation Units (PIUs) were familiar with the World Bankâs general financial management requirements and disbursement procedures\. There was some staff turnover in the financial team, but the key accountant remained the same throughout project implementation\. The interim financial reports and audit reports were submitted on time\. All audit reports were unqualified\. However, the auditors detected some internal controls issues in contract management, project management, and resettlement\. Procurement\. The ICR reports (para 82) that the procurement performance was satisfactory\. To further strengthen the procurement capacity of the PMO, a number of training courses were conducted\. Except for one contract, there were no procurement issues\. The contract SRD2\.4/SPT3\.2D received complaint concerning several restrictions on bid participation\. The Bank team explained that these were related to: (i) a website access card should be received from the Wuhan Construction Trading Construction website as a condition for registration of bidding; (ii) qualification and past experience review by the employer as a condition for registration of bidding; (iii) no detailed qualification requirements were provided in a published notice; (iv) a Bank guarantee is not an acceptable form of Bid security (cash only)\. The Bank found parts of this complaint to be valid and asked the PMO to modify the bidding documents, along with a bid opening extension\. The complaint was resolved to the satisfaction of the Bank (ICR para 83)\. c\. Unintended impacts (Positive or Negative) --- Page 17 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) d\. Other --- 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Outcome Moderately Satisfactory Satisfactory Moderately Bank Performance Moderately Satisfactory Satisfactory Quality of M&E Modest Modest Quality of ICR --- Substantial 12\. Lessons Following lessons are adapted from the ICR: ï Traffic Demand Management (TDM) measures are necessary to accommodate rapidly urbanizing environments such as reducing traffic congestion and lowering emissions\. In the short term, public transport must be made more attractive through the implementation of bus priority schemes and better modal integration\. However, in the longer term, more restrictive forms of TDM such as parking management, congestion charging, and driving restrictions that help reduce congestion need to be promoted\. ï An Integrated Corridor Management approach can improve service quality for all users in a selected corridor\. The project demonstrated that installing on-street priority for buses on two corridors and constructing sidewalks, bike lanes, and bus lanes within the same right-of-way improved mobility for citizens in Wuhan\. With the separation of NMT, buses, and general traffic, buses run faster with more passengers\. ï Lack of adequate synchronization of resettlement activities with civil works can cause significant time and cost overruns\. The demolition work for the JAE was seriously delayed by a lack of counterpart funds and land acquisition problems that led to the projectâs delay\. A high level of institutional involvement was necessary to provide these funds, which were only provided after the Deputy Mayor assigned strategic importance to the project along the Jiefang Avenue\. The PMO needs to have the experience and ability to deal with district governments, because close coordination coordination with them and an explicit division of responsibilities is also necessary\. 13\. Assessment Recommended? Yes Page 18 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Wuhan Second Urban Transport (P112838) ASSESSMENT_TABLE Please Explain The Bank has been continuously engaged in the urban transport sector in Wuhan The first project was approved in March 2004 and completed in December 2010; this project was approved in 2010, and the third project was approved in 2012\. The field assessment of this and the other two projects can provide important lessons on city-wide engagement in the urban transport sector\. 14\. Comments on Quality of ICR The ICR was thorough and provided evidence to support the narrative and the ratings\. The report followed the OPCS guidelines and was internally consistent\. The discussion on the theory of change was adequate\. Economic analysis was detailed and clearly represented\. The lessons were clear and based on evidence responding to specific experience and findings for the project\. There were some minor shortcomings\. At 35 pages, the report is lengthy\. The section on safeguards provided details but did not report whether the project was in compliance with the environmental and involuntary resettlement safeguards policies\. The discussion of the risk to the development outcome was weak\. For example, the section mentions that on the demand side,there is a risk that the recommendations of the congestion and parking pricing study may not be implemented in the short term (paras 92), however, the ICR does not provide the reasons\. The arrangements for operations and maintenance are discussed under quality of supervision rather than in the risk to development outcome section\. a\. Quality of ICR Rating Substantial Page 19 of 19	REVIEW
P042882	ï»¿ ICRR 11973 Report Number : ICRR11973 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 11/30/2004 PROJ ID : P042882 Appraisal Actual Project Name : Renewable Energy Small Project Costs 141\.0 0 Power Project US$M ) (US$M) Country : Indonesia Loan /Credit (US$M) Loan/ US$M ) 66\.4 0 Sector (s): Board: EMT - Renewable Cofinancing 4\.0 0 energy (96%), Central US$M ) (US$M) government administration (4%) L/C Number : L4198 Board Approval 97 FY) (FY) Partners involved : Global Environmental Closing Date 10/31/2001 07/15/1998 Facility Prepared by : Reviewed by : Group Manager : Group : Kavita Mathur George T\. K\. Pitman Alain A\. Barbu OEDSG 2\. Project Objectives and Components a\. Objectives The principal national objectives of the project were to: (i) facilitate private sector led development of small renewable power projects selling electricity to a State Electricity Corporation (PLN) grid on a commercially sustainable basis, within the framework of a least cost rural electrification strategy; (ii) promote environmentally sound energy resource development in Indonesia and reduce the energy sector's dependence on fossil fuels; and (iii) strengthen Indonesia's institutional capacity to sustain renewable energy development\. The global environmental objective was to mitigate emissions of CO2 in Indonesia through the development of renewable energy sources for power generation\. b\. Components There were two components: Investment Component: The projects would be owned and operated by private developers, who would sell their electricity to PLN under the published Small Power Purchase Tariff (PSKSK), and standardized power purchase contract\. The private sector developers would finance their investments with a combination of equity and credit from commercial banks of their choosing â the Participating Banks (PBs) â for up to 15 years\. The loans from the PBs to the developers would be at the prevailing interest rates for similar transactions, with the PBs taking responsibility for appraising developer requests for credit, and for bearing the commercial risk on the credit extended to a developer\. The PBs, in turn, would re-finance 70 percent of the credit extended to the developers from the IBRD credit made available to them at market rates, under onlending arrangements through the Government of Indonesia (GOI)\. Technical Assistance Component: This component would provide for project implementation support services, and institutional development\. A Project Support Group (PSG), reporting to the Director-General of Electricity and Energy Development (DGEED), would be established to assist the private project developers with, inter alia: (i) environmental review of their project to ensure compliance with World Bank requirements; (ii) implementation support in the form of limited technical advice to the project developers in the Project pipeline to facilitate the timely and proper implementation of the project; and (iii) pre-investment activities, including administering GEF grants of $100,000 per project for 15 projects to potential project developers to assist them with their pre-investment activities, such as pre-feasibility and feasibility studies; and (iv) provide regular progress reports for monitoring this component\. c\. Comments on Project Cost, Financing and Dates The project was approved on June 24, 1997 and signed on August 4, 1997\. It never became effective and was cancelled on July 15, 1998, at the request of the Borrower\. 3\. Achievement of Relevant Objectives: The financial and economic crisis that hit Indonesia in 1997 caused the project to be no longer viable\. The collapse of the financial sector and the liquidity crisis situation resulted in lack of private sector participation in the project\. 4\. Significant Outcomes/Impacts: None\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): None\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Not Rated Not Rated Institutional Dev \.: Not Rated Not Rated Sustainability : Not Rated Not Applicable Bank Performance : Not Rated Satisfactory Borrower Perf \.: Not Rated Satisfactory Quality of ICR : Unsatisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: A satisfactory business environment is necessary for success in a market development project\. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The Project Completion Note (PCN) gives a satisfactory account of the project background and the reasons why the loan never became effective\. However, the PCN was prepared six years after the borrower informed the Bank about its inability to execute the project and the loan was closed -- an unacceptably long delay\. Therefore, on this ground alone, the PCN is rated unsatisfactory\.	REVIEW
P067605	ï»¿ ICRR 12760 Report Number : ICRR12760 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 09/19/2007 PROJ ID : P067605 Appraisal Actual Project Name : Dz-urban Natural US$M ): Project Costs (US$M): 126\.93 168\.33 Hazard Vulnerability Country : Algeria Loan/ Loan /Credit (US$M ): US$M): 88\.45 10\.77 Sector Board : UD US$M ): Cofinancing (US$M): Sector (s): Other social services (70%) Flood protection (20%) Central government administration (9%) Forestry (1%) Theme (s): Access to urban services and housing (34% - P) Natural disaster management (33% - P) Water resource management (33% - P) L/C Number : L7139 Board Approval Date : 08/08/2002 Partners involved : Closing Date : 02/28/2007 02/28/2007 Evaluator : Panel Reviewer : Group Manager : Group : Anna Amato Ronald S\. Parker Alain A\. Barbu IEGSG 2\. Project Objectives and Components: a\. Objectives: To assist the Government of Algeria to respond to floods by (i) strengthening its national capacity for disaster management; and (ii) reducing urban vulnerability to natural hazards \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The final cost of each component is not available as the government is still implementing the project, but the final amount disbursed by IBRD is shown \. (1) Disaster Management Capacity Building \. Appraisal Estimate: US$9\.55 million; Actual IBRD disbursement: US$3\.2 million\. Training and equipment purchase for key disaster management agencies; development of an integrated early warning system; and studies on floods and vulnerability \. (2) Emergency Physical Works \.Appraisal Estimate: US$114\.9 million; Actual IBRD Disbursement: US$6\.91 million\. a\. Construction of ten flood retention basins, and other drainage and sewerage infrastructure b\. Reforestation in the Massif of Bouzareah c\. Construction of 5,000 rental homes and related social facilities for flood victims or those who occupy sites prone to natural disasters\. (3) Project Management \. Appraisal Estimate: US$0\.61 million; Actual IBRD Disbursement: US$0\.17 million\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: In February 2006, due to vastly increased oil revenues, the government of Algeria requested the cancellation of US$77\.68 million from the loan, thus reducing it from US$ 88\.45 million to US$10\.77 million\.This was in line with the government's decision to reduce its external debt burden \. Although this was three years into the project, there had been a slow start and not much had been disbursed \. The Government recognized the value added of Bank support, particularly its technical and institutional advice, and decided to continue with the project as originally defined, but opted to use its own resources for the infrastructure components of the project, which constituted the bulk of the project costs\. The ICR does not make clear how much was actually disbursed \. Two numbers are given and yet a third can be derived by adding amounts shown for each component \. 3\. Relevance of Objectives & Design: The major flooding disaster in northern Algeria i n November 2001 was used to justify an Emergency Recovery Loan\. However, none of the project activities were emergency in nature, and the implementation time estimated at appraisal was four and a half years, which is 18 months longer than ERL guidelines allowed at that time \. The flood disaster did bring to prominence the strong need for a reduction in the vulnerability of the urban population to fut ure disasters, which is the focus of this project \. The project objectives are in line with the i nterim CAS of the time, which included a focus on low-income housing, illegal residential construction and urban services \. Algeria is a disaster-prone country and the Bank has supported post -disaster projects in the past, but neither the Bank nor the Government had previously developed a strategy for hazard reduction \. The consequences of the November 2001 floods highlighted the vulnerability of Algeria's main cities and the need to develop such a strategy \. No indicators were provided at the time of project approval, but the subsequent implementation manual included both intermediate and final indicators \. Of these 6 indicators, all but one seem related to the objectives \. Quality at Entry was reviewed by the Bank's Quality Assessment Group as marginally satisfactory because the housing component proposed carried a high risk -- recent Bank experience in the Algeria housing sector had been unsatisfactory\. QAG also concluded that the ERL designation should not imply lessened conceptual rigor \. The project objectives of hazard reduction, better disaster management, housing and resettlement have continuing relevance to the country's current situation and CAS \. 4\. Achievement of Objectives (Efficacy): Strengthening disaster management capacity \. This objective was substantially met\. All five activities planned to meet this objective -- 3 studies, the installation of an early warning system, and strengthening of three agencies through training and better equipment -- were completed\. Reducing urban vulnerability to natural hazards \. The bulk of the physical infrastructure activities planned to meet this objective have been financed by the government, so even though the Bank lending is complete, some of these government-financed components are not yet completed \. Based on those that are done and the quality of those that are underway, this objective has been modestly achieved\. Reforestation of 600 hectares was targeted, but only 150 ha have been planted, and maintenance of these reforested areas is inadequate \. Only 4,000 of the 5,000 planned housing units have been constructed \. As foreseen by QAG, this housing component has been difficult to implement \. The bidding documents have been finalized for the flood storage basins, drainage structures, and embankments in the Oued Koriche watershed and Bouzareah massif that had been planned for this project, but they haven't yet been built\. 5\. Efficiency (not applicable to DPLs): Since this was an ERL, no ERR was prepared \. However, since the project involved construction of new infrastructure (not replacing infrastructure damaged by the recent flooding ), some efforts could have been made to do some form of cost/benefit analysis for those parts of the project \. The ICR does note that improving prevention and mitigation of natural disasters is significantly less costly that reconstruction after damages are incurred \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The project was very relevant to the needs of the country both in 2002 and in the present\. Many important activities were completed which have shown their usefulness in reducing hazard risk, raising awareness and capacity to deal with natural disasters\. Unfortunately, the second objective of reducing urban vulnerability to natural hazards was not completely achieved\. There were significant delays due to staff recruitment and unfamiliarity with Bank procedures\. The decision of the Algerian government to greatly reduce the amount of the loan did not appear to have an impact on project outcome, besides perhaps lengthening the implementation period\. a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: There was concern that the commitment of the authorities to the project âs objectives would diminish once the immediate consequences of the disaster had been taken care o f\. However, coordination among agencies in charge of mitigating the impact of natural disasters is now well established and is likely to stay that way \. This is partly due to the area continuing to experience disasters (especially in the wilaya of Algiers which has had both floods and earthquakes)\. These events have highlighted the importance of disaster preparedness for local authorities \. One cause for continuing concern is that relocation of people out of urban areas vulnerable to flooding is still ongoing and, unfortunately, this component has experienced difficulty and delays \. Also, there is a risk that the areas reforested under the project will not be maintained, as the re cord for doing so has been poor \. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: Overall preparation was well thought out and highly relevant to a hazard -prone country in need of greater investment in disaster preparedness and prevention \. Lessons learned from the implementation of the previous Ain-Temouchent operation were fully incorporated into the project implementation arrangements \. The main risk, as noted by QAG, was the lack of measures to mitigate the risks inherent in the housing component \. During the first year of project implementation, supervision was inadequate in view of the serious weaknesses in the institutional arrangements\. Long delays in responding to no -objection requests contributed to slow implementation\. There were no performance indicators upon approval, though these were added in an implementation manual and were used in the final ICR \. at -Entry :Moderately Satisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Moderately Satisfactory c\. Overall Bank Performance :Moderately Satisfactory 9\. Assessment of Borrower Performance: The performance of the Borrower is rated as moderately satisfactory because of the delays in project implementation\.The most important impact of the project has probably been the sensitization of the national and local authorities to the need for reducing risks related to natural disasters through better preparedness and improved management of urban areas \. Weak capacity in the Project Management Unit (PMU) continued to be a problem throughout project implementation \. a\. Government Performance :Moderately Satisfactory b\. Implementing Agency Performance :Moderately Satisfactory c\. Overall Borrower Performance :Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: No performance indicators were provided at the time of project approval \. However, a project implementation manual provided a number of indicators, mostly concerning the physical aspects of the project, and these indicators were included in the ICR\. The manual discussed activities required for establishing early warning systems, but did not provide any indicator to assess their sustainability \. Without information on how the costs of ongoing operation will be met, and/or whether key stakeholders are responding as anticipated and are now properly trained, it is difficult to appreciate the sustainability of this project achievement \. The manual also could have provided an indicator for identification of at-risk areas (which were the focus of two extensive studies financed by the project ),and on integration of risk analysis in the planning system and the regulatory framework \. a\. M&E Quality Rating : Modest 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): 1\. The preparation and implementation of the resettlement plan was prepared in close association with the population concerned with a principle of avoiding involuntary resettlement \. The living standards of the targeted population are expected to be substantially improved \. 2\. Following recruitment of procurement and financial management specialists, fiduciary issues were appropriately addressed\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome : Bank Performance : Moderately Moderately Satisfactory Satisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: 1\. To hasten disbursement and implementation for projects respondin g to natural disasters, standard bidding documents and TORs for rapid recruitment of consultants and contractors should be prepared and made available to agencies concerned\. 2\. In the event that disaster prevention activities prove successful in pilot areas, provisions should exist to at least document the experience and disseminate it --if it is not possible to finance their wider application to adjoining areas (with the same vulnerabilities)\. Preventive measures undertaken to protect urban areas in the Algiers metropolitan area need to be extended to other cities, and the seeds for doing so could have been provided for in this project\. 3\. Supporting local governments both financially and through capacity building is key to effective preparedness for, and prevention of, natural disasters \. 4\. For hazard prevention projects in countries without a disaster management strategy, it is important to document at-risk areas and whether risk analysis has been integrated effectively into the planning system and regulatory framework 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: This ICR is satisfactory, but only marginally so \. There were a number of problems with it: 1\. The financial statements (Annex 1) were incorrectly filled in, and incomplete \. It is not clear from the ICR how much money the Bank actually disbursed \. Three different numbers are given \. 2\. Most of the Lessons were not derived from project experience \. 3\. It is not clear from the ICR what the Bank money was specifically spent on \. 4\. Given that the Bank and Borrower continued to collaborate on this project, event though the bulk of the loan was cancelled, the ICR could have described the successes and failures of the post -closing period\. a\.Quality of ICR Rating : Satisfactory	REVIEW
P087140	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) Report Number : ICRR0021624 1\. Project Data Project ID Project Name NP:Agriculture Commercialization & P087140 Trade Country Practice Area(Lead) Additional Financing Nepal Agriculture P128304 L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IDA-46030,IDA-51800,IDA- 30-Jun-2015 45,834,946\.02 H4860,IDA-H8130 Bank Approval Date Closing Date (Actual) 04-Jun-2009 30-Jun-2018 IBRD/IDA (USD) Grants (USD) Original Commitment 20,000,000\.00 0\.00 Revised Commitment 51,667,446\.02 0\.00 Actual 45,834,946\.02 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Ranga Rajan Vibecke Dixon Christopher David Nelson IEGSD (Unit 4) Krishnamani 2\. Project Objectives and Components a\. Objectives The Project Development Objective (PDO) as stated in (Financing Agreement (Schedule 1, page 4); "To improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains in selected districts in the Recipient's territory by: (i) helping farmer groups and cooperatives engage in profitable market-oriented production and improved access to markets through the provision of technology and information services and critical public infrastructure and linkages to agribusiness; (ii) Page 1 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) creating and strengthening industry-wide partnerships along the value chain, thus forging linkages between producers, traders, processors, and other stakeholders; (iii) reducing existing obstacles to agriculture and food trade thereby increasing the ability of farmers and agribusiness to respond to Sanitary and Phytosanitary (SPS) and food-quality standards to meet domestic and international market requirements"\. The PDO as stated in the Project Appraisal Document (PAD, page 5) was similar and stated that the project was to be implemented in a total of 25 districts (out of the 75 districts in Nepal)\. The PDO was modified with the Additional Financing (AF) to remove the restriction on the number of districts to be covered (that is, the project coverage was expanded to the whole country)\. b\. Were the project objectives/key associated outcome targets revised during implementation? No PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? No d\. Components There were three components (PAD, pages 6 to 8)\. The revised estimate after AF and the actual cost are from the Implementation Completion and Results (ICR) Report (pages 9-10)\. One\. Agriculture and Rural Business Development\. Appraisal estimate US$19\.92 million\. Estimate with AF US$45\.04 million\. Actual cost US$27\.65 million\. This component financed demand-based sub- projects proposed by farmer groups, agribusiness and other value-chain participants through matching grants\. Activities included: (i) providing pre-investment advisory support for helping farmers prepare sub- project proposals and business plans for grant financing; (ii) financing approved subprojects in technology support and market infrastructure; and (iii) agribusiness development by agro enterprises, commodity associations and cooperatives engaged in developing commodity value chains\. This component was split into two sub-components during the project restructuring (discussed below)\. One: Commodity value chain development with the matching grant scheme; and, two: Institutional development for enhanced competitiveness\. These activities were added: (i) rehabilitation of six agricultural commodity markets and 10 agriculture/Livestock service centers damaged during the 2015 earthquake; and, (ii) establishing an agribusiness innovation center\. Two\. Support for sanitary and phytosanitary facilities and food quality management\. Appraisal estimate US$2\.35 million\. Estimate with AF US$5\.39 million\. Actual cost US$4\.97 million\. This component aimed at strengthening the sanitary and phytosanitary services (SPS) for improving food quality management systems\. Activities included: (i) food quality and safety enhancing activities through improving laboratory and certification facilities; and (ii) capacity building measures for meeting food safety and quality standards\. Page 2 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) Three\. Project Management and Monitoring and Evaluation\. Appraisal estimate US$4\.28 million\. Estimate with AF US$9\.57 million\. Actual cost US$13\.18 million\. This component provided support for project management and monitoring and evaluation and reporting\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project cost\. The appraisal estimate was US$24\.50 million\. Revised estimate with AF US$64\.50 million\. The actual project cost was US$45\.83 million\. Project financing\. The project was financed by an IDA credit of US$20\.00 million\. AF of US$40\.00 was approved on February 2013\. With this the total credit for the project was US$60\.00 million\. Amount disbursed US$45\.83 million\. About US$11\.00 million was cancelled (discussed in section 5)\. Borrower contribution\. The contribution from the government was estimated at US$0\.73 million and contribution from beneficiaries was estimated at US$5\.82 million\. There was no contribution from either the government or from the beneficiaries\. Dates\. The original project was approved on June 4, 2009 and became effective on November 13, 2009 and was to close on June 30, 2015\. The following changes were made with the AF that was approved on February 13, 2013: (i) The original project was to be implemented in 25 districts (out of the total 75 districts)\. This restriction on the number of districts was removed; (ii) Some indicator targets were scaled up, as the targets had already been met; (iii) Two core indicators - the number of direct project beneficiaries (gender disaggregated) were added; (iv) Given the geographic expansion of the project, Project Regional Implementation Support teams were to be established in five regions; (v) The modalities of the Matching Grant Scheme were changed\. As originally envisioned, the grant was to be provided as an upfront installment for a portion of the grant\. To mitigate the observed risk of grants being used by beneficiaries for purposes not stated in the Grant Agreement, henceforth the grant was to be disbursed in three installments, after satisfactory completion of agreed milestones: (vi) A Micro Grant Window targeted at smallholder farmers was introduced\. This window featured a simplified selection process, quicker disbursement modalities and capped at US$10,000 per beneficiary; and (vii) Following a request from the Ministry of Agricultural Development for supporting the Integrated Pest Management agenda, six Rapid Bioassay Pest Residue laboratories were to be set up\. These changes were made through the Level 2 project restructuring on June 29, 2015\. (i) some activities were added to component one activities (described in section 2d); (ii) the results framework was modified and one indicator was dropped (discussed in section 9b); and\. (ii) the closing date for the original project was extended by 18 months to December 31, 2016\. The second Level 2 restructuring on June 6, 2018 cancelled the undisbursed amount of US$11\.00 million from the AF\. The project closed on June 30, 2018, three years (36 moths) after the original closing date\. Page 3 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) 3\. Relevance of Objectives Rationale The PDO was consistent with the government of Nepalâs priorities\. The agricultural sector contributed about 33 percent of Gross Domestic Product and 66 percent of rural population, depended on the sector for their livelihoods\. The incidence of poverty was disproportionately high within the country, with 35 percent of the rural population classified as poor (compared to 10 percent in urban areas)\. At appraisal, the PDOs were relevant to the governmentâs strategy articulated in the Three-Year Interim Plan for 2007-2010\. The strategy highlighted the need for developing market linkages and commercialization of agriculture (away from subsistence farming)\. The strategy also emphasized the role of co-operatives, private sector and local bodies for developing the sector\. The government's Agricultural Perspective Plan for 1995-2015 period, identified the challenges facing the sector\. These included: (i) the need for diversification, given that 82 percent of cultivated land was used for only growing basic staple grains; (ii) lack of marketing channels and infrastructure; and (iii) insufficient incentives for improving farm management techniques\. The PDO was well-aligned with the Bank strategy for Nepal\. At appraisal, the second pillar of the Interim Strategy Note for 2009-2011, highlighted the need for laying the foundation for sustainable and inclusive economic growth\. The first pillar of the Interim Strategy Note for 2012-2013 underscored the need for enhancing connectivity for growth\. The second pillar Country Partnership Strategy for 2014-2018 highlighted the need for increasing inclusive growth through, among other things, increasing agricultural productivity and commercialization of the sector\. The PDO was fully aligned with the Banks Maximizing Finance for Development Agenda, a new corporate priority, central to the CPF\. The second focus area of the current Country Partnership Framework for 2019-2023 underscored the need for private sector led jobs for improving income opportunities\. Rating High 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective To improve the competitiveness of smallholder farmers in selected commodity value chains in the selected districts\. Rationale Page 4 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) Theory of change\. Capacity building activities to farmer groups and other value chain participants for preparing sub-project proposals and business plans coupled with matching grants for constructing market infrastructure, aimed at providing the required infrastructure for developing the agricultural sector\. These activities, with technical assistance to farm-level activities, post-harvest management and processing techniques, aimed at improving the competitiveness of small holder farmers in the local, regional and global markets and thereby aid in the commercialization of agriculture\. Outputs (ICR\. page 16\. pages 56 - 62)\. These outputs were largely realized or exceeded the targets\. â¢ The Matching Grant Scheme supported 1,223 demand-driven sub projects, in 62 districts out of the 75 districts in Nepal\. This exceeded the target of 700 sub-projects\. The sub projects supported under the project were mainly in the vegetables, meat and dairy value chains\. The scheme supported infrastructure investments aimed at boosting agricultural yields and processing of agricultural commodities in 43 value chains\. Assets acquired under the scheme included 3,685 tunnel houses, 1,432 animal sheds, 436 fish ponds, 257 storehouses, 175 collection centers, 109 tractors, 98 urine/manure/compound pits, 86 farm vehicles, 31 biogas plants and 400 other machines (such as, generators and milking machines)\. About 40 percent of matching grants were micro-grants for small farmers\. â¢ 81 percent of sub-projects were fully operational six months after completion of their completion report\. This exceeded the target of 70\. â¢ 172 staff of the state agencies were trained annually in laboratory analysis, exceeding the target of 60\. This included training 75 staff of the Department of Food Technology and Quality (target 16), 56 staff of the District Livestock Services Office (target 41) and 41 staff of the Department of Agriculture (target 40)\. â¢ 16,172 samples were analyzed annually by the state agencies, exceeding the target of 13,777\. This included 6,783 samples by the Department of Food Technology and Quality (target 6,039), 646 samples by the District Livestock Services Office (original and revised target 510 and 140) and 7,099 by the Department of Food Technology and Quality (target 6018)\. â¢ 97 percent of the samples analyzed by the state agencies met minimum quality standards, exceeding the target of 94 percent\. This included, 97 percent by the Department of Agriculture, slightly short of the target of 99 percent, 100 percent by the District Livestock Services Office (target 90 percent) and 95 percent by the Department of Food Technology and Quality, as targeted\. â¢ A total of 386 Inspection services were provided annually to grant recipients by the state agencies at project closure\. This was slightly short of the target of 405\. This included, 151 Inspection services by the Department of Food Technology and Quality (target 160), 161 by the District Livestock Services Office (target 180) and 74 by the Department of Agriculture (target 65)\. This outputs was below the target\. â¢ 301 additional stalls were available at the commodity markets rehabilitated by the project\. This was short of the original target of 410\. Outcomes (ICR pages 15 and 53)\. The increase in yield of selected commodity value chains were as follows; Page 5 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) â¢ The yield of tomatoes increased from 52 metric tons at the baseline to 90 metric tons at project closure, exceeding the target of 66 metric tons\. â¢ The yield of cauliflower increased from 13 metric tons at the baseline to 24 metric tons, exceeding the target of 17 metric tons\. â¢ The yield of wheat increased from 2\.40 metric tons at the baseline to 2\.95 metric tons\. This was slightly short of the target of three metric tons\. â¢ The yield of rice increased from 3\.20 metric tons at the baseline to 3\.97 metric tons\. This was slightly short of the target of 4 metric tons\. â¢ Milk production increased from 2,381 liters at the baseline to 3,238 liters, exceeding the target of 2,976 liters\. â¢ 100, 592 people (such as, members of cooperatives and producer associations, farmer groups, individual farmers and small and medium agribusiness enterprises), benefitted from project activities at closure\. This was short of the target of 150,000 beneficiaries\. â¢ 45\.60 percent of beneficiaries were women\. This exceeded the target of 45 percent\. Rating Substantial PHREVDELTBL PHEFFICACYTBL Objective 2 Objective To improve the competitiveness of the agribusiness sector in selected commodity value chains\. Rationale Theory of change\. Capacity building activities to agribusiness organizations for preparing value chain sub- project proposals and matching grants for investments in production and processing and establishment of Nepal Agribusiness innovation center were aimed at improving the marketing of agricultural products\. Activities such as laboratory and certification facilities for SPS were aimed at increasing compliance with food quality and safety standards\. The outcomes of these post farm-gate activities together with farm-level activities described above, were expected to contribute to the long-term development outcome of boosting farmers' incomes and thereby reducing rural poverty\. Outputs\. (ICR pages 18-19 and page 54)\. In addition to the outputs described above, the following outputs were also relevant for this objective: â¢ The Nepal Agribusiness Innovation Center was established to support innovation\. growth and competitiveness of agribusiness, as targeted\. The mandate of this center was to nurture start-ups and small Page 6 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) and medium sized enterprises in the agribusiness sector\. 1,079 clients received services from the center at closure\. This exceeded the target of 1,000\. â¢ Six Rapid Bioassay Pesticides Residue laboratories were established across Nepal (one in each province) and training was provided to the staff on the use of the equipment\. (There were no targets for this indicator)\. The following activities were not completed at project closure: â¢ The fumigation chamber and post-quarantine facility were not operational by project closure\. â¢ Only 27 agri-food subprojects supported by the project (out of 40) had either received or submitted a formal request for the required Food License at project closure\. Outcomes\. The outcomes of these activities, which focused on supporting post-farm gate segments of the agricultural value chain, were as follows: â¢ The production of parchment coffee increased from 126 tons a year at the baseline to 180 tons a year, exceeding the target of 176 tons a year\. â¢ The production of ginger increased from 930 tons a year at the baseline to 2,364 tons a year, exceeding the target of 1,302 tons a year\. â¢ The production of honey increased from 103 tons a year at the baseline to 380 tons a year, exceeding the target of 144 tons a year\. â¢ The milk production increased from 2,381 liters at the baseline to 3,237\.80 liters, exceeding the target of 2,976 liters\. Rating Substantial PHREVDELTBL PHOVRLEFFRATTBL Rationale Outcomes were for the most part realized\. Overall Efficacy Rating Substantial PHREVISEDTBL 5\. Efficiency The expected benefits of selected value chains were to come from: (i) operating efficiency at farm level; (ii) value-addition at the farm gate level and at the post-farm level, due to greater integration between Page 7 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) smallholder farmers, traders and processors along the value chain; (iii) increase in market access and reduction in economic losses, due to improvements in national capacity for meeting SPS standards for food quality\. Economic analysis\. A traditional economic analysis was not conducted at appraisal, since the main portion of the project cost was for financing demand-driven subprojects (PAD, paragraphs 69-70)\. However, an economic analysis was undertaken at appraisal for what were expected to become the 'typical' subprojects (small road to market connection, a collection center for fresh produce marketing and a smallholder irrigation system)\. The Economic Internal Rate of Return for these activities ranged between 14 percent and 36 percent\. The EIRR at closure was not comparable to the ex ante EIRR, since the subprojects that were eventually financed were different from the typical subprojects (ICR, paragraph 39)\. An ex post analysis was conducted for activities associated with agriculture value chain (vegetables, meat processing, milk production, dairy processing, fishery, goats, cereal seeds, poultry broiler, poultry layer, potato seeds and animal feed) (ICR, paragraph 41), accounting for about 75 percent of the project cost\. The Net Present Value of these investments was estimated at Nepalese Rupees 725,000 at 12 percent discount rate and the ex post EIRR was 19 percent\. Administrative and Operational inefficiencies\. There were implementation delays due to a combination of factors such as: (i) procurement delays and not sufficient diligence by the Project Management Team to monitor agreed annual progress plans: (ii) delays for commencing technical assistance activities (the technical support group and the regional technical support group did not start their assignment until one and two years, which meant that calls for proposals were managed by the Project Management Team without technical assistance); (iii) poor coordination between the Technical Support Group at the National level and the five Regional Technical Support Groups\. These delays were exacerbated by external factors such as the earthquakes in April and May 2015 and extended disruptions at the border with India over a six-month period from September 2015\. These delays contributed to the non-completion of project activities (discussed in section four)\. The amount of AF approved for the project was well beyond the absorptive capacity of the country and this resulted in a cancellation of 18 percent (US$11\.00 million) of the total IDA credit (US$60\.00 million)\. The expected outreach of the project in terms of direct project beneficiaries was only 67 percent of the target\. In view of the operational inefficiencies, efficiency is rated as Modest\. Efficiency Rating Modest a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) Coverage/Scope (%) 0 Appraisal 0 ï¨Not Applicable Page 8 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) 75\.00 ICR Estimate ï¼ 19\.00 ï¨Not Applicable Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome Relevance of the PDO to the government and Bank strategy is High\. Efficacy of the objectives - to improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains - is rated as Substantial, as the objectives were for substantially achieved\. Efficiency is rated as Modest, in view of the administrative and operational inefficiencies during implementation\. a\. Outcome Rating Moderately Satisfactory 7\. Risk to Development Outcome Technical risk\. Some activities such as the fumigation center and commodity markets were not complete when the project closed\. Also, though the Nepal Agribusiness Innovation Center was operational when the project closed, it is unclear whether there would be adequate financing for operating the center in the coming years\. Institutional risk\. It is not clear if there is adequate institutional capacity to ensure the sustainability of investments made under the project, with regard to meeting SPS measures for enforcing food quality standards\. 8\. Assessment of Bank Performance a\. Quality-at-Entry The implementation arrangements were appropriate, with the Project Management Team housed in the Ministry of Agriculture Development - the agency in charge of implementing the project (PAD, paragraph 43)\. Several risks were identified at appraisal, including risks associated with political instability and frequent breakdown of law and order, inadequate understanding of government departments on fostering public-private partnerships and fiduciary risks\. Mitigation measures incorporated at design, included greater role in decision-making to communities, organized farmer groups and private sector, consultations with institutions in the private sector to create viable partnerships and close monitoring and external audit ( PAD, paragraphs 63-65)\. Appropriate arrangements were made at appraisal for safeguards and fiduciary compliance (discussed in section 10)\. Page 9 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) There were significant drawbacks at design\. First, although the PDOs aimed at improving the competitiveness of smallholder farmers through farm-level activities, there was little or no follow-up in terms of activities, such as agricultural advisory services for smallholder farmers (ICR, paragraph 27)\. There was a disconnect between farm-level sub-project activities and activities aimed at supporting the government agencies in implementing SPS measures for food quality standards\. This issue was resolved only in the latter years of the project, with the Project Management Team and the respective departments (Department of Agriculture, Department of Food Technology and Quality Control and the Department of Livestock Services), conducting subproject inspections (ICR, paragraph 78)\. The project overestimated the absorptive capacity in the country context\. The original project was to be implemented in 25 districts\. Following the Mid-Term Review (MTR) in August 2012, AF of twice the original amount (US$40\.00 million) was approved to expand the geographic scope of the project to all districts in Nepal\. The AF was approved when the overall disbursement under the original project was slow and three years into implementation, disbursement represented less than a quarter (24 percent) of the original credit (ICR, paragraph 71)\. At closure, despite an extension to the project closing date, more than US$11\.00 million of the credit had to be cancelled and over 250 subprojects (representing 18 percent of all grant agreements signed) were not completed as planned\. There were minor shortcomings in M&E design (discussed in section 9a)\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision Supervision missions were held twice a year, with18 supervision missions over a nine-year project implementation period\. The Bank team also provided support to the project management team through technical missions (ICR, paragraph 22)\. The missions included systematic visits to project implementation sites and engagement with stakeholders\. The team was proactive in responding to challenges such as, taking preventive measures to prevent the risk of grants being used by beneficiaries for purposes other than those stated in the grant agreement, by changing the modalities of grant financing (from upfront disbursement of the grant to disbursements in three installments, subject to satisfactory completion of agreed milestones)\. The team introduced micro grants, with simplified selection process and quicker disbursement modalities to smallholder farmers and micro entrepreneurs, in response to the Borrower's concern that the project would be perceived as primarily benefitting larger farmers (ICR, paragraph 18)\. Bank supervision flagged areas that needed attention from the project management team, such as: (i) ensuring that the agricultural commodity markets were begun only after the requirements had been met (such as, consultations with stakeholders and completion of environmental studies; (ii) ensuring that funds provided to matching grant beneficiaries in excess of milestones were fully recovered; and (iii) ensuring compliance of agri-food subprojects with the Page 10 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) requirements of the Food Law (ICR, paragraph 97)\. The ICR provides no information on the continuity of leadership\. Quality of Supervision Rating Moderately Satisfactory Overall Bank Performance Rating Moderately Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The original two key outcome indicators (a) increase in productivity (measured as value added per unit of input) in the production of selected commodity value chains and (b) the increase in the volume of marketable agricultural products passing through the value chain), were appropriate for monitoring performance\. The third indicator (c) increase in the sales of commodities supported by the project, was inappropriate, given attribution issues\. Indicators for the number of direct project beneficiaries and the share of women beneficiaries was added during implementation\. The Project Management Team was in charge of monitoring project performance\. The team was expected to work closely with the Monitoring and Evaluation division of the Ministry of Agricultural Development\. The Monitoring and Evaluation also envisioned development of a management information system facility for maintaining the database of the system (PAD, paragraph 60)\. Given that the PDO aimed at improving the competitiveness of smallholder farmers, there were no intermediate indicators aimed at monitoring activities pertaining to farm-level activities\. b\. M&E Implementation The indicator pertaining to the increase in the sales of commodities supported by the project was dropped\. A core indicator - the direct project beneficiaries disaggregated by gender, was added\. A live web-based Monitoring and Evaluation system was launched in 2016\. This system enabled field level data entry with smartphone and allowed for real time, user-developed reporting at Project Management Team level (ICR, paragraph 85)\. The ICR (paragraph 22) notes that the results framework was regularly updated with data collected by the Project Regional Implementation Support team and the Project Management Team, with panel data for the main indicators and the validation of data was strengthened by the findings of the Independent Assessment of the Matching Grant Scheme\. During implementation, a detailed glossary of Page 11 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) indicators was also developed after the second Mid-Term Review\. The ICR (paragraph 82) notes that this glossary helped in facilitating technical discussions on indicators\. c\. M&E Utilization The data was mainly used for monitoring project performance\. The ICR (paragraph 86) notes that the project also experimented with direct entry of data at field level with smartphones, although this feature of the Monitoring Information System was not fully scaled up\. M&E Quality Rating Substantial 10\. Other Issues a\. Safeguards The project was classified as a Category B project\. Four safeguard policies were triggered: Environmental Assessment (OP 4\.01); Pest Management (OP 4\.09); Involuntary Resettlement (OP/ BP 4\.12); and Indigenous People (OP/ BP 4\.10)\. Environmental assessment, Pest management and Indigenous People safeguards\. The adverse environmental impacts expected at appraisal, included adverse impacts on land due to land degradation and deficiency in soil nutrients, localized air and odor pollution, water pollution due to mismanagement of wastes from processing units, chemical pollution impacts due to improper use of chemical pesticides and fertilizers and health and occupation safety issues due to use of chemicals (PAD, page 95)\. An Integrated Environmental and Social Management Framework (ESMF) was prepared at appraisal (PAD, paragraph 77)\. The safeguards on indigenous people was triggered, as the project covered areas with significant indigenous peoples (referred to as Janajatis)\. The ESMF provided a framework for preparing an Integrated Nutrient and Pest Management Plan (PAD, page 9)\. The ESMF included a strategy for addressing issues associated with indigenous peoples and their participation in project activities\. The ICR (paragraph 90) notes that as per ESMF requirements, all sub-projects were subject to an environmental and social screening during implementation\. The ICR (paragraph 91) notes that compliance with environmental and pest management safeguards was satisfactory during implementation\. Involuntary resettlement\. A Resettlement and Rehabilitation policy framework was developed to address resettlement issues at appraisal (PAD, paragraph 14)\. The ICR (paragraph 90) notes that a grievance and redressal mechanism was developed in 2017\. According to the clarifications provided by the team, there were no resettlement issues during implementation\. Page 12 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) b\. Fiduciary Compliance Financial management\. A financial management assessment conducted at appraisal, concluded that financial management risk was High, due to the weak implementation capacity (PAD, page 59)\. This risk was to be mitigated through close monitoring by the Project Management Team and external financial audits\. The ICR (paragraph 93) notes that there was compliance with financial management\. Audited project accounts were submitted within the grace period and the auditors provided unqualified audit opinions\. Procurement management\. An assessment of the procurement management capacity of the implementing agency conducted at appraisal and risk mitigation measures were incorporated at design (PAD, pages 69- 71)\. A procurement plan was developed (PAD, page 72)\. The ICR (paragraph 92) notes that procurement management was mostly satisfactory, except for one significant issue when the implementing agency, against the recommendation of the Project Evaluation Committee awarded a contract to the third-ranked candidate (while negotiations with the top-ranked candidate was still on-going)\. Consequently, the Bank declared mis-procurement\. c\. Unintended impacts (Positive or Negative) --- d\. Other --- 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Outcome Moderately Satisfactory --- Satisfactory Moderately Bank Performance Moderately Satisfactory --- Satisfactory The ICR also rates Quality of Quality of M&E High Substantial M&E Substantial (para 88, page 36)\. Quality of ICR Substantial --- 12\. Lessons Page 13 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) The ICR (pages 40-41) draws these lessons from the experience of implementing this project, with some adaptation of language\. (1) A careful assessment of both investments at the farm level and off-farm level investments is required at design for designing projects on agricultural markets\. Although this project aimed at commercialization of agriculture, activities pertaining to fam-level investments (such as through agricultural extension services) were lacking\. (2) A careful consideration of the absorptive capacity in the country context is required prior to scaling up project activities\. In the case of this project, an AF of double the original amount was approved for increasing the geographical scope of the project at a time when more than 75 percent of the original credit was yet to be disbursed\. The operationalization of the AF proved to be difficult, as provisions for scaling up project activities had not been made in a timely manner and no human resources strategy had been adopted to cater to the additional needs\. (3) Matching Grant schemes can be an effective instrument for reaching out to smallholder farmers and agribusiness small and medium sized enterprises\. This can be particularly useful in countries where the commercial banking system is unable to cater to the needs of smallholder farmers and small and medium sized enterprises\. 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR is clear and clearly provides a good exposition of the issues during implementation\. The discussion of the matching grant scheme is clear and the ICR candidly acknowledges the problems associated with the lack of absorptive capacity in the country context\. It also clearly discusses the ways the supervision team addressed the issues that rose during implementation\. The ICR draws reasonably good lessons from the experience of implementing this project\. The ICR could have provided more information on the continuity of leadership during the lifetime of the project\. The ICR is unduly long (with the main text of the ICR at 44 pages, almost three times the length of the recommended text) and could have benefitted from better editing\. a\. Quality of ICR Rating Substantial Page 14 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review NP:Agriculture Commercialization & Trade (P087140) Page 15 of 15	REVIEW
P065466	ï»¿ ICRR 12764 Report Number : ICRR12764 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 09/26/2007 PROJ ID : P065466 Appraisal Actual Project Name : Court & Bankruptcy US$M ): Project Costs (US$M): 7\.0 5\.791 Administration Project (lil) Country : Croatia Loan/ US$M): Loan /Credit (US$M): 5\.0 4\.879 Sector Board : PS Cofinancing (US$M ): US$M): 2\.0 0\.912 Sector (s): Law and justice (100%) Theme (s): Personal and property rights (20% - P) Legal services (20% - P) Legal institutions for a market economy (20% - P) Law reform (20% - P) Judicial and other dispute resolution mechanisms (20% - P) L/C Number : L4613 Board Approval Date : 06/13/2001 Partners involved : USAID Closing Date : 07/31/2005 01/31/2007 Evaluator : Panel Reviewer : Group Manager : Group : Sarwat Jahan Gita Gopal Jaime Jaramillo IEGCR 2\. Project Objectives and Components: a\. Objectives: The objective was to assist the Government of Croatia in advancing orderly insolvency proceedings by modernizing selected commercial courts and increasing professionalism and competence of judges and bankruptcy trustees \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): The Court and Bankruptcy Administration Project (CBAP) comprised of the following five core components and a secondary component covering project management : Component A\. Commercial Court Administration and Case Management Model : This component would support the design of an effective court and case management model and its implementation in six pilot courts : commercial courts in Zagreb, Split, Rijeka, Osjek and Varazdin, and the High Commercial Court in Zagreb \. The implementation of the model in the pilot courts was expected to decrease the commercial case backlog, particularly in the Zagreb court, where the case backlog is the largest, and rationalize, automate and ultimately speed up court proceedings \. Cost: Estimated â US$3\.75 m\.; Actual â US$4\.203 m\. Component B\. Legal Information System: This component was to provide for the creation of an automated and networked legal information system in the pilot courts accessible to the trustees and bankruptcy professionals \. Starting with bankruptcy-related laws and court decisions, the system was to include mainly the full text of laws, international treaties, and relevant court rulings and precedents, and would have full text -based search and retrieval capacity\. The index was to be designed to permit the inclusion of relevant rulings of bankruptcy cases from nearby countries, such as Germany and /or Austria\. Access to international law would also be facilitated \. Cost: Estimated â US$0\.52 m\.; Actual â US$0\.479 m\. Component C\. Regulatory Framework for Trustees and Administrators : The regulatory system was to : (i) build capacity in the Ministry of Justice to license the trustees and administrators; (ii) provide incentives for creating an independent regulatory body for trustees and administrators under the umbrella of the Chamber of Commerce; and (iii) assist in preparing of the rules, procedures and standards for selection, performance monitoring and evaluation, education and training, remuneration and other benefits of trustees and administrators \. Cost: Estimated â US$0\.43 m\.; Actual â US$0\.072 m\. Component D\. Upgrading Skills of Bankruptcy Professionals : This component was to provide ad -hoc intensive training of sitting judges from all commercial courts, including bankruptcy specialists /experts (approximately 140 judges)\. Training would be predominantly aimed at strengthening judges â understanding of the business environment but would also provide the opportunity for professionals to enhance their understanding of the legal and institutional aspects of bankruptcy proceedings \. Similarly, about 80 trustees and administrators selected in 2000 were to be trained\. Cost: Estimated â US$0\.83 m\.; Actual â US$0\.046 m\. Component E\. Insolvency and Legal Services Framework : This component was to finance studies and surveys aimed at better understanding the legal and institutional framework of the bankruptcy administration and commercial courts\. Cost: Estimated â US$0\.13 m\.; Actual - US$0\.00 m\. Component F\. Project Management: This component would provide to the Project Management Unit in the Ministry of Justice training, procurement advice, audit services and project management /coordination\. Cost: Estimated â US$0\.38 m\.; Actual â US$0\.941m\. The components of the project were revised in May 2003 when the Bank signed a Memorandum of Cooperation with USAID, EU and the Ministry of Justice \. This merged the project's Component A (commercial court administration and case management model) with USAIDâs ongoing Municipal Court Information System initiative and EU âs court automation support resulting in a single comprehensive Integrated Information System (ICSM)\. ICSM was a tool used for introducing new court and case management procedures in courts, automating a number of court functions, introducing standardized documented and procedural requirements and improving performance monitoring \. The scope of Component A had expanded to include general judicial courts while focus on Components C, D and E had significantly diminished\. However, adjustments to the project components were not explicitly formalized through Board approval\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: 1\. Closing Date and Extension: The project closed on 01/31/2007, having been extended once \. The extension was a result of (i) the initial slow implementation due to the lack of Borrower capacity as well as low Borrower commitment ; and (ii) the delay in designing the functional specifications for Integrated Information System (ICSM)\. 2\. Project Cost and Financing: The actual project cost was US$ 5\.791m\. out of which IBRD financed US$4\.879 m\. including a front end fee of US$ 0\.05 m\. Components C and D had less than 20 percent disbursement since they were partially implemented while Component E had no disbursement as it was dropped \. The funds saved were reallocated to cover: (i) a 12 percent cost increase in Component A since the scope of this component had expanded; and (ii) doubling of the project management cost due to the 1\.5-year extension of the project \. 3\. Co-financing: The project was co-financed by USAID through its contribution of US$ 0\.912 m\. 3\. Relevance of Objectives & Design: Relevance of Objective: The objective of the project was relevant since there were over 1 million pending court cases in 1998 of which 90 percent were in commercial courts\. It continues to be relevant and has gained importance as the development of a sound judicial system is at the center stage of Croatia's accession to EU \. The objective was also fully consistent with the Bank's strategy of (i) increasing the efficiency of the public sector through improving commercial court performance ; (ii) improving governance by creating an adequate legal and institutional environment for bankruptcy proceedings; (iii) reducing corruption by introducing transparent working procedures and increasing accountability of court employees; and (iv) creating conditions for a competitive business environment by providing exit mechanisms for insolvent enterprises \. Relevance of Design:The design of the initial project was moderately relevant \. It was correct to target commercial court administration and use a small intervention like LIL \. The design, however, had underestimated the challenge of coordinating activities among many ministries and the problem of sustaining effective champions of reforms within a multi-institutional sector across inevitable political cycles \. It also lacked a sound results framework with time bound targets and strong M&E indicators \. There were no baseline data and the key performance indicators were difficult to measure\. In retrospect, the Bank should also have designed an integrated project with other donors to avoid the duplication in the procedural innovations \. 4\. Achievement of Objectives (Efficacy): The project had a single objective - to advance orderly insolvency proceedings by modernizing selected commercial courts and increasing professionalism and competence of judges and bankruptcy trustees \. For the purpose of this review, the overall objective is broken into two sub-objects: I\. Modernizing Selected Commercial Courts : Modest\. Components A and B provided support to modernize selected commercial courts but achievement was modest due to the following reasons: (i) Software for the Integrated Case Management System was developed but was installed in only one Commercial Court in Split (and one Municipal Court in Pula)\. Installation of the system in the other pilot commercial courts have yet to take place as well as the training of judges and court personnel in the use of the new system; (ii) A legal information system was developed and installed in the High Commercial Court website \. As a result, 95 percent of the judges in High Commercial Courts are using computers in everyday work, up from only 30 percent two years ago\. Judicial practice is now available to everyone through this website \. II\. Increasing Professionalism and Competence of Judges and Bankruptcy Trustees : Negligible\. Components C, D and E provided inputs to increase professionalism of court employees but achievement was negligible because: (i) training in bankruptcy and insolvency had not been given to judges, trustees or administrators although international experts were contracted to provide an assessment of judiciary training needs and design an education program; (ii) a regulatory framework for trustees and administrators was not established as planned although international experts were contracted to help in its design; and (iii) the insolvency and legal services framework was dropped after the mid-term review and thereby did not provide any input to better understand the legal and institutional framework of the bankruptcy administration and commercial courts \. In summary, selected commercial courts were partially modernized but there are no indicators linking this achievement to the reduction of backlogs in bankruptcy cases \. Professionalism and competence of court employees were not increased through this project since the envisaged training was not delivered and the relevant frameworks not established\. The project had only a marginal contribution in achieving the overall objective of advancing orderly insolvency proceedings in Croatia \. 5\. Efficiency (not applicable to DPLs): No efficiency rating was calculated for the project since this is not required for a LIL \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re -estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The overall outcome is rated moderately unsatisfactory \. The project had produced significant outputs -- development of ICMS software, design of High Commercial Court webpage, supply of IT equipment to judges --but adequate data were not collected to show the outcomes associated with the project \. Backlog in overall court system declined by 60 percent in 2007\. However, the ICR candidly admits that this outcome cannot be solely attributed to CBAP since a broader policy engagement in the judicial system was in place of which CBAP was an element \. The ICR also states that Bankruptcy case inflow declined significantly (from nearly 30,000 in 2001 to 1,100 in 2005), but does not explain how this outcome is linked to CBAP \. However, increase in case resolution (from 7,663 to 12,504 in 2003) does point to improved case proceedings \. Court user survey indicated that court users are relatively satisfied with various aspects of courts and their work (the average rating was 3\.3, although the range of scale is not given )\. However, more than 40 percent of users stated that the court proceedings were still conducted with unnecessary delays\. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: The only modicum of success this project had was in the modernization of the commercial courts through the development of the ICMS software and the legal information system \. The risk to this achievement is rated as negligible to low because: (i) a follow-on Judicial Reform project will be implemented (pending Board approval); (ii) the request for the follow-on project attests to government's interest in sustaining the outcomes; and (iii) given the judicial system's high profile in Croatia's EU Accession dialogue, it is likely that these outcomes will be maintained even if the internal political climate changes \. a\. Risk to Development Outcome Rating : Negligible to Low 8\. Assessment of Bank Performance: Quality at Entry: This was the first LIL in the ECA region focusing on bankruptcies \. It was extensively prepared and the preparation process engaged a broad set of stakeholders (i\.e\., Ministry of Justice, judges of pilot courts, the Bar Association, the Chamber of Commerce etc \.) However quality at entry is not rated satisfactory because there was inadequate donor coordination at entry \. The Bank should have been aware of the on -going projects in the judicial sector funded by other donors and could have designed an integrated project to avoid duplication \. Quality of Supervision: Bank supervision had consistently flagged problematic issues such as financial management of the project, staffing of capable project managers, weakness of the technical expertise of the Ministry of Justice etc\., and actively sought to mitigate these problems \. It also actively worked to accommodate the client's shift in project goals \. However, the absence of an updated M&E framework with revised /strengthened performance indicators after the signing of the Memorandum of Cooperation in 2003 was a notable deficiency of supervision\. This contributed to the drifting of Components C, D and E \. a\. Ensuring Quality -at-at-Entry :Moderately Satisfactory b\. Quality of Supervision :Moderately Unsatisfactory c\. Overall Bank Performance :Moderately Satisfactory 9\. Assessment of Borrower Performance: The performance of the Borrower significantly differed before and after the October 2003 elections\. Prior to the elections there was little perceptible Borrower commitment and a very weak implementation capacity which resulted in almost no disbursements \. After the elections a new team led by a dynamic new Minister championed the reforms in the judicial sector \. Borrower commitment also significantly improved after reforms in the judicial sector were identified as an important criteria to gain accession to EU \. As a result CBAP achieved forward momentum and after mid-2004 the ISRs upgraded the implementation of the project from unsatisfactory to satisfactory\. Although not all goals were reached, the Borrower was able to use the CBAP to implement the Integrated Court Management System software and eventually lay the groundwork for broader judicial reforms in the future\. Due to the strides in implementation after the election, overall Borrower performance is rated moderately satisfactory\. a\. Government Performance :Moderately Satisfactory b\. Implementing Agency Performance :Moderately Satisfactory c\. Overall Borrower Performance :Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: The original M&E framework was well aligned to the initial project design with its focus on modernizing commercial courts and resolving bankruptcy proceedings \. However, no change was brought to the M&E framework when the focus of the project shifted in 2003 towards a broad-based case management system for the whole judicial system \. The M&E framework should have been updated and the performance /monitoring indicators recalibrated given the expanded scope of the project \. This would have presented an opportunity to take stock of the extent of the shift in the project goals and activities as well as contributed to the disciplined implementation of the revised activities \. a\. M&E Quality Rating : Negligible 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): The ICR does not raise any safeguard issues \. Procurement never was a problem area and the ISRs gave a satisfactory rating throughout the span of the project for compliance with procurement schedules \. Reason for 12\. 12\. Ratings : ICR IEG Review Disagreement /Comments Outcome : Moderately Moderately See section 6\. Satisfactory Unsatisfactory Risk to Development Negligible to Low Negligible to Low Outcome : Bank Performance : Moderately Moderately Bank performance is rated moderately Satisfactory Satisfactory satisfactory but marginally so \. See section 8\. Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: Successful implementation of any project is possible only when the Borrower demonstrates ownership \. Project objectives and components may change during the course of a loan \. Without explicitly revising the objectives/components through Board approval, confusion and uncertainty regarding the focus of the project may arise\. In cases where the objectives /components are revised as the project progresses, M&E framework should be updated \. Otherwise, the relevance of the M&E framework may be diminished \. Consultation with partner donors is essential from the very beginning of project design to avoid duplication of projects or project components, especially when multiple donors are involved in one sector \. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR gives a fair and systematic account of the project \. It was very candid in its assessment of the project's actual contribution to outcomes \. It also pointed out the shortcomings of the Bank by not modifying the objectives and components as well as updating the M&E framework as the project progressed \. However, the ICR could have (i) explained why Board approval was not formally sought to change the objectives and components; (ii) included the legal information system component in the project development indicators; (iii) included more details about the cost structure; and (iv) explained how the objectives of the project were related to CAS objectives \. a\.Quality of ICR Rating : Satisfactory	REVIEW
P064672	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 22423 IMPLEMENTATION COMPLETION REPORT (IDA-26890; IDA-26891) ONA CREDIT IN THE AMOUNT OF SDRs 23\.1 MILLION (US$34\.0 MILLION EQUIVALENT) AND A SUPPLEMENTAL CREDIT IN THE AMOUNT OF SDRs 9\.6 MILLION (US$13\.2 MILLION EQUIVALENT) TO THE REPUBLIC OF NICARAGUA FOR A BASIC EDUCATION PROJECT August 10, 2001 Human Development Sector Management Unit Central America Country Management Unit Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective June 20, 2001) Currency Unit = Nicaragua Cordoba (C$) C$1\.0 = US$ 0\.08 US$ 1\.0 = C$ 13\.21 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy FISE Fondo de Inversion Social (Social Investment Emergency Fund) IDA International Development Association ICR Implementation Completion Report LSMS Living Standards Measurement Study MECD Ministry of Education, Culture and Sports MED Ministry of Education NERA Nucleo Educacional Rural Autonomo (Autonomous Rural Education Group) SAR Staff Appraisal Report SIMCEP School Maintenance Program UNESCO United Nations Education Scientific and Cultural Organization Vice President: David de Ferranti Country Manager/Director: Donna Dowsett-Coirolo Sector Manager/Director: Xavier Coil Task Team Leader/Task Manager: Robin Hom FOR OFFICIAL USE ONLY NICARAGUA Basic Education Project CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 10 6\. Sustainability 13 7\. Bank and Borrower Performance 13 8\. Lessons Learned 14 9\. Partner Comments 15 10\. Additional Infornation 23 Annex 1\. Key Performance Indicators/Log Frame Matrix 24 Annex 2\. Project Costs and Financing 27 Annex 3\. Economic Costs and Benefits 28 Annex 4\. Bank Inputs 29 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 31 Annex 6\. Ratings of Bank and Borrower Performance 32 Annex 7\. List of Supporting Documents 33 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. Project ID: P007783 Project Name: Basic Education Project Team Leader: Robin S\. Horn TL Unit: LCSHE ICR Type: Core ICR Report Date: August 10, 2001 1\. Project Data Name: Basic Education Project L/C/TFNumber\. IDA-26890; IDA-26891 Country/Department: NICARAGUA Region: Latin America and Caribbean Region Sector/subsector: EP - Primary Education KEY DATES Original Revised/Actual PCD: 01/13/1994 Effective: 06/16/1995 05/12/1995 Appraisal: 09/01/1994 MTR: 01/31/1997 01/31/1997 Approval: 03/16/1995 Closing: 12/31/1999 12/31/2000 Borrower/Implementing Agency: REPUBLIC OF NICARAGUA/MINISTRY OF EDUCATION Other Partners: STAFF Current At Appraisal Vice President: David De Ferranti Shahid Javed Burki Country Manager: D-M Dowsett-Coirolo D-M Dowsett-Coirolo Sector Manager: Xavier Coll K\. Woo Lee Team Leader at ICR: Robin Horn Manuel Vera ICR Primary Author: Amber Gove 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN-Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S S Project at Risk at Any Time: No 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The objective of the Basic Education Project (Aprende), as defined in the Staff Appraisal Report (SAR), was to improve the efficiency, quality and equity of basic education in Nicaragua (pre-primary and grades I to 6) by reducing repetition and dropout rates, and enhancing student academic achievement\. The Project focused primarily on pre-primary and primary education, where the vast majority of students come from poor segments of the population\. The Project's objective was consistent with and relevant to Government and IDA priorities and strategies in education, as agreed in the Country Assistance Strategy (CAS) discussed on June 21, 1994\. The CAS emphasized four key aspects of Nicaragua's development challenge: (a) reviving growth; (b) reforming the public sector and strengthening institutional capacity; (c) alleviating poverty and investing in human capital; and (d) improving environmental and natural resource management\. Aprende focused primarily on the second and third of these goals, with a long-term goal of reviving growth through investment in human capital\. Project objectives were clear and demanding of the Ministry of Education, Culture and Sports (MECD)\. Likewise, the scope of the Project was both broad and ambitious\. Aprende's designers expected the Project to yield dramatic improvements in terms of school and student performance, and in terms of the MECD's institutional capacity, all within in a very short time frame\. Moreover, risks associated with achieving Project objectives were significant given that school decentralization was a completely new model in Nicaragua, and one that has not always been able to guarantee improvements in student performance when implemented by other countries\. 3\.2 Revised Objective: Following the October/November 1998 devastation of Hurricane Mitch, IDA assisted the Government in the preparation, and then quickly approved an emergency supplementary credit in January 1999 in order to boost the financing of the Aprende Project by an additional 30 percent\. At the time, only about US$ 8\.19 million remained undisbursed in the credit account and the additional funding was needed to accomplish the Project's original objectives in vein of the devastation caused by Hurricane Mitch\. The purpose of the amnendment was to support Nicaragua's education system recover from the effects of the hurricane\. The objectives specified in the SAR remained unchanged, although the Memorandum and Recommendation of the President (December 21, 1998) accompanying the supplemental credit agreement summarized the Project objectives as to: "Improve the efficiency and quality of basic education by reducing repetition and dropout rates, enhancing student academic achievement and providing satisfactory learning environment; and to support decentralization of school system to involve the community in school management and mobilize additional resources to provide performance incentives to teachers\." 3\.3 Original Components: Ratinsz Component Cost US$ S SCHOOL DECENTRALIZATION 11,300,000\.00 HS EDUCATIONAL MATERIALS 12,000,000\.00 S PRESCHOOL EDUCATION 6,000,000\.00 S INFRASTRUCTURE 8,500,000\.00 S PROJECT ADMINISTRATION 1,500,000\.00 -2 - The Project objectives were to be achieved through the decentralization of education management, development and distribution of educational materials, especially textbooks; expansion and improvement of non-formal pre-primary education; and rehabilitation, replacement, and repair of inadequate school facilities\. The total Project costs (including contingencies, excluding supplemental credit) were estimated at US$39\.3 million equivalent, divided among the Project components as follows: (a) School Decentralization (US$ 11\.3 million) with the objective of strengthening school autonomy, to support administrative decentralization of public primary and secondary schools by providing for training, technical assistance, equipment at the central and local levels, the establishment of a maintenance program for decentralized municipal councils to undertake minor school repairs, and performance incentives for primary teachers; (b) Educational Materials (US$12\.0 million) to provide for publication, printing and distribution of textbooks at the elementary school level; (c) Pre-Primary Education (US$6\.0 million) to provide for the expansion of non-formal pre-primary education for the one year preceding the primary school level; (d) Infrastructure (US$8\.5 million) to provide for: (i) the rehabilitation, or replacement, of dilapidated and inadequate primary school buildings; and (ii) the installation of basic sanitary services in all primary schools; and (e) Project Administration costs totaling approximately US$1\.5 million\. 3\.4 Revised Components: As mentioned above, an amendment to the original credit agreement was approved in January, 1999 that provided supplemental financing in the amount of SDRs 9\.6 million (US$13\.2 million equivalent), with US$7\.5 million equivalent for infrastructure, US$3\.0 million equivalent for a "back to school package" targeted to children displaced from their homes due to the destruction caused by the hurricane, and US$2\.7 million for other educational materials and consultants' services\. The supplemental credit modified the specific Project description of the Educational Materials and Infrastructure components\. Under the materials component, subcomponents were added in order to distribute materials to students impacted by the hurricane and allow for departments to make supervision and outreach visits to schools\. These included: (a) educational materials and supplies, and back-to-school packages for students consisting of a uniform, exercise books, pencils and pens, rulers and erasers (Mochila Escolar) in areas affected by Hurricane Mitch; and (b) about 10 four wheel-drive vehicles to support outreach activities and strengthen MECD's capacity to supervise hurricane-related reconstruction efforts\. The changes to the infrastructure component mainly ensured that the component focused new resources on schools affected by Mitch\. Implementation of the school infrastructure component was done mostly through an agreement with the Nicaragua Social Investment Fund (FISE)\. The original school infrastructure component was to rehabilitate approximately 600 schools and replace an additional 180\. By - 3- reprogramming schools to serve areas affected by Hurricane Mitch, and by adding an additional $7\.6 million to the component, 300 schools in the hurnicane-affected areas would be rehabilitated and/or replaced (some of which had already been rehabilitated under the original credit)\. The modified component also allowed for greater flexibility in implementation, especially in those areas affected by Hurricane Mitch\. 3\.5 Quality at Entry: Satisfactory\. The overall rating for the Basic Education Project is satisfactory\. Early in project implementation (March 1997), the Project was the subject of a review by a Quality at Entry Assessment Group\. The panel rated the operation as fully satisfactory because of its strength in concept, objectives and approach\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Satisfactory\. Project objectives of improving the efficiency, quality and equity of basic education were to be achieved through the reduction in the repetition and dropout rates, and enhancement of student academic achievement Although it is notoriously difficult to assess the impact of Project activities on learning and student flow outcomes, it is possible to describe trends in learning without attributing these outcomes directly to the Project Improvements in repetition, dropout, and promotion rates for the first grade and overall completion rates are shown in the following figures\. Nicaragua has not yet developed a national assessment system, though plans are currently underway as part of the follow-on Project\. For this reason, student flow indicators are used as a (admittedly poor) proxy for academic achievement\. Nicaragua has seen improvements across all student flow indicators in recent years, a change which can be partially attributed to the promotion policy established for the first through third grades in 1993\. Figure 1 shows a significant decline in first grade repetition rates during the three year period from credit effectiveness to the end of 1998 (from 23 percent in 1995 to 7\.5 percent in 1998)\. Concurrent improvements in promotion rates are also indicated in the table\. Changes in dropout rates have been less consistent over the Project lifetime, beginning at 21 percent in 1995, increasing to 24 percent in 1997, and declining again to 22 percent in 1998\. 4 - Figure 1\. First Grade Student Flows, 1990-1998 80 70 - 60 - _ 50- 40- a\.i 30 - _ _ 20 10 - 0 , \. \. 1990 1991 1992 1993 1994 1995 1996 1997 1998 - Repetition n Dropout -- Promotion\| Source: MECD, Education for All 2000 Report Figure 2 presents primary education completion rates from 1990-1998\. These completion rates provide a measure of system efficiency as they compare, within a given cohort, the number of children who entered first grade with the number of children who successfully completed the primary cycle\. These rates reveal steady gains over the Project lifetime\. In 1995, 26 percent of children finished the primary cycle, rising to 29 percent in 1998\. Figure 2\. Primary Education Completion Rates, 1990-1998 35- 30 - /; 25- E20 - 4f 15 - 10 - 1990 1991 1992 1993 1994 1995 1996 1997 1998 -- Total + Female Male Source: MECD, Education for All 2000 Report Evaluation Results: Autonomous Schools and Community Preschools\. The Aprende Project developed and conducted two longitudinal studies, evaluating the impact of Project activities in those areas that were considered both controversial and innovative\. - 5- Results of the Evaluation of School Autonomy\. Principal findings of the autonomy study of a sample of approximately 220 schools, conducted by the MECD's Departnent of Evaluation, are as follows: (a) There is a significant and positive relationship between the number of years that a primary autonomous school has possessed autonomous status and mathematics achievement\. A similar, and stronger relationship applies to Spanish in secondary autonomous schools\. One caveat to this result is a possible self-selection bias, especially during the first few years of the program\. That is, schools that elected to participate in the autonomy program may have benefited from additional leadership or other factors than otherwise similar schools\. (b) Longitudinal results reveal decreasing repetition rates in all types of schools, although statistically significant only in (i) Autonomous Rural Education Groups (NERAs) offering primary instruction (from 9\.4 percent in 1996 to 3 percent in 1999), (ii) secondary autonomous schools (from 7\.9 percent in 1996 and to 5 percent in 1999), and (iii) centralized secondary schools (from 10\.1 percent in 1996 to 2\.8 percent in 1999)\. (c) As part of the evaluation, achievement tests were given to a cohort of students in each subgroup of schools, the results of which are presented in Table 1\. Both primary and secondary autonomous schools recorded significant improvements in Spanish achievement results\. Table 1: Mean Spanish and Mathematics Results, 1996 and 1998 PRIMARY 1996 1998 Autonomous Spanish 31\.94 34\.71 Math 43\.82 45\.31 NERA Spanish 31\.79 31\.40 Math 43\.95 44\.55 Centralized Spanish 31\.84 32\.10 Math 46\.97 46\.20 SECONDARY _ Autonomous Spanish 37\.64 36\.71 Math 35\.04 32\.70 Centralized Spanish 35\.85 34\.76 _Math 34\.10 32\.52 Source: MECD (2000) Results of the Evaluation of Preschools\. Results from the longitudinal preschool study are also very positive\. In a sample of more than 1,000 public school students, preschool attendance had a positive and significant effect on promotion rates in later grades\. Castro, V\. (1999) "Evaluaci6n de Impacto del Programa de Preescolares Comunitarios Tercera Fase: 1999" Managua Nicaragua: Proyecto Aprende (Processed)\. The study, conducted over a period of three years, demonstrated that there is a positive and significant impact on the socio-affective and cognitive development of students that were enrolled in communuity preschools\. Additional findings included: - 6 - (a) Preschool appears to have an equalizing effect between children of different socioeconomic levels\. Results indicated that the effect of attending preschool on cognitive development was much higher for children of lower socio-economic class\. For children from poorer families, the effect of preschool eclipsed the effect of mother's education on test scores\. (b) Preschool attendance appears to have a significant and positive irnpact on test results for girls and students living in rural areas, as measured by a cognitive evaluation\. These results are presented in greater detail in Table 2, below\. Of students in rural areas, 91\.5 percent of children scored "normal" on the evaluation of their cognitive abilities, compared with 86\.3 percent of those that did not attend preschool\. For girls, 89\.5 percent of preschoolers but only 83\.6 percent of others scored at the normal level\. Table 2\. Cognitive Test Results by Subgroup, 1998 (Percent) Pre- Other Pre- Other Pre- Other Prescho Other school Urban school Rural school Girls ol Boys Boys Urban Rural Girls Normal 85\.7 83\.5 91\.5 86\.3 89\.5 83\.6 89\.7 87\.0 Needs 8\.2 10\.7 8\.5 7\.4 8\.5 7\.5 8\.3 9\.3 Inprovement Deficient 6\.1 5\.8 - 6\.4 2\.0 8\.9 2\.1 3\.7 TOTAL 100 100 100 100 100 100 100 100 Source: Castro (1999) (Bold indicates significant results)\. The results of these evaluations provide a positive assessment of autonomous schools and preschools supported by the Project\. In both cases, significant positive results demonstrate the effectiveness of these interventions in improving academic performance and student flow indicators of disadvantaged children\. The findings of studies provide positive feedback that preschool education and autonomous schools are effective policies\. 4\.2 Outputs by components: The original Project design was heavily skewed toward decentralization in terms of expected outputs\. Project outputs discussed here are those following the revision to the Project description under the amendment to the Credit Agreement following Hurricane Mitch\. Decentralization Component: Satisfactory\. The principal objective of the decentralization component was to consolidate and improve the financial and institutional mechanisms to support the school autonomy model, and to expand the autonomous school experience to a greater number of primary schools\. These efforts were to be supported by restructuring the supervision system to a service-oriented system that would both promote the autonomy process and provide technical assistance to school staff to help them adopt and implement autonomous control\. Despite the change in the government in 1998, implementation of this component advanced steadily and rapidly throughout Project implementation\. By Project close, the number of autonomous schools established by the Ministry exceeded expectations by a factor of ten (see Annex 1)\. -7- The decentralization component was comprised of institutional strengthening of both MECD and local levels, especially in the areas of supervision and administration, information management and monitoring systems, and social awareness campaigns\. Teacher performance incentives and a decentralized school maintenance program were also included under this component\. The implementation record of these subcomponents is mixed, with the degree of success seemingly inversely related to the centralized nature of the institution\. Overall, institutional strengthening has produced relatively less of an impact at the ministry level than had been hoped\. In particular, during the implementation period of the Project, the MECD had not succeeded in restructuring the existing supervision system into a school technical assistance program to strengthen and support schools and school autonomy\. The establishment of a revamped supervision system is only now making substantial progress under the follow-up Project, Aprende 2\. Similarly, the information and monitoring systems had not yet been fully established during the Project implementation period, but is being addressed in the follow-on Project\. Substantial and sustainable improvement in institutional capacity may require greater efforts from within the MECD, including the introduction of feedback systems, clearer alignment of goals, and the establishment of incentive mechanisms\. These changes are extremely difficult to achieve in the short term, especially in such a complex institution as MECD\. Evaluations of school decentralization irn Nicaragua are consistent with the above summary\. As pointed out in the preceding paragraph, the MECD was less able than the schools themselves to transform its institutional structure and staffing arrangements in such a way as to effectively absorb and support the school autonomy model\. Nonetheless, as mentioned above, the MECD successfully made many schools autonomous--the numbers are impressive\. By June 2001, thirty nine percent of all public primary schools were autonomous, corresponding to 63 percent of public primary students, and 57 percent of the primary teachers\. At the secondary level, 51 percent are autonomous, corresponding to 86 percent of students and 83 percent of teachers\. Combining primary and secondary schools, 40 percent of public schools are autonomous, corresponding to 68 percent of public school students, and 62 percent of public schoolteachers\. As of July 2001, another 995 schools have become autonomous, after a two year delay in their conversion\. According to the MECD, the biggest constraint regarding this conversion is the lack of additional funding to transfer to the schools\. Evaluation Component: Satisfactory\. One area in which the MECD has made substantial progress is its rapid integration of a culture of educational evaluation\. The MECD has developed a relatively strong capacity in evaluation thanks to the Aprende Project, enabling the institution to conduct a sophisticated longitudinal evaluation of the autonomous schools program, measuring changes in areas as diverse as parent participation, student achievement, and teacher perceptions (as described under Project outcomes, above)\. In preparation for the follow-on Project, MECD officials initiated the development of the first national student perfornance evaluation, using criterion-referenced items, linked to the national curriculum\. These efforts have been especially challenging, as it is difficult to recruit and retain individuals trained in education evaluation (which is not offered as an option for study in any of Nicaragua's universities)\. An additional, and more serious challenge is that the MECD is not yet accustomed to the use of evaluation as a mechanism for improving education policy and practice\. Instead, evaluation is seen more as a mechanism for supporting or rejecting policies\. Further progress on using evaluation results to improve policy and practice may occur only when MECD officials become more receptive to the value of evaluation\. Teacher performance incentives and the school maintenance program --both decentralized programs-- have seen positive results\. Teacher performance incentives have been distributed to 9,306 teachers in 1,754 schools\. One caveat to this success is the ratio of local contributions to those of MECD\. At Project signing - 8 - it was envisaged that the community, when possible, would assume responsibility for the payment of teacher incentives\. Complementary funds from MECD would be proportioned in accordance with a poverty map (with communities of high poverty levels receiving more funds)\. During implementation it was quickly discovered that most communities, independent of poverty level, were either unable or unwilling to finance teacher incentives; in many communities MECD contributions represented the entirety of the teacher incentive\. The autonomous school maintenance and rehabilitation program (SIMCEP), executed under the direction of the School Infrastructure Component, underwent significant changes during implementation\. As originally programmed, some 222 autonomous schools were to receive a transfer (not to exceed US$10,000) to conduct repairs in conjunction with their community\. By Project closing, 243 schools had participated in the decentralized school maintenance program\. Under the supplementary credit, SIMCEP was allocated an additional 163 schools that would undergo rehabilitation or whose classrooms would be replaced in areas affected by Hurricane Mitch\. In a recent evaluation, one international expert noted that SIMCEP was extremely effective in ensuring quality construction (equivalent to that of govermment agencies) within established time frames\. More importantly, he noted, the model had "achieved substantial integration of the community in the process and met the expectations of families and officials at various levels\." Zihiiga Wager, A\. (2000) "Mision de Supervision de Componente de Infraestructura del MECD" (Ayuda Memoria, 27 de Octubre 2000)\. Under the supplementary credit, SIMCEP rehabilitated or replaced 413 classroom structures, exceeding Project goals by 150 percent\. Educational Materials Component: Satisfactory\. Nicaragua's first international acquisition of textbooks for national distribution was ultimately successful despite a steep learning curve\. In total, more than 4\.7 million books and 4\.3 million workbooks were produced and distributed (see Annex 1)\. A National Congress of Teachers reviewed and approved the new textbooks, noting the appropriateness of the materials and their relation to the national curriculum\. MECD also trained 26,000 teachers in the use of the new textbooks\. Results from the school autonomy evaluation support the hypothesis that nearly all students have received and are using textbooks\. In a sample of schools in 1998, 95 percent of public primary schools students reported that they had received their textbooks\. MECD (2000) "Estudio Longitudinal del Impacto de Autonomia Escolar" Managua Nicaragua: Proyecto Aprende\. Under the supplementary credit two additional subcomponents were added to this component\. In an effort to make the transition back to school less difficult for families impacted by Hurricane Mitch, MECD acquired and distributed a backpack filled with school materials including pencils, notebooks and school uniforms to approximately 137,000 students\. Unfortunately, protracted delays in the bidding process and the lack of an effective distribution system contributed to a delivery date nearly two years after Hurricane Mitch\. Factors that contributed to this delay are discussed later in the report\. In addition, the MECD acquired ten vehicles to support school reconstruction and supervision efforts\. Expansion of Pre-primary Education Component: Highly Satisfactory\. The establishment of a community pre-school program has been extremely successful\. Pre-school enrollments exceeded SAR targets in nearly every category\. As of Project closing, some 93,000 students were enrolled in 4,130 community preschools\. Training for 4,540 volunteer teachers was conducted by 194 trainers, while some 40,000 parents (the only outcome to fall short of the original target--see Annex 1) became members of their community preschool council\. The strategic decision to expand and make quality improvements to an existing model of community preschools substantially contributed to the success of the component\. Currently, community preschool enrollments account for more than half of all preschool enrollments, representing significant improvements in education equity and access\. -9- Infrastructure Component: Unsatisfactory\. Citing lessons learned in previous projects with the Social Investment Fund (FISE), Project designers emphasized the importance of working with a "small specialized agency in efficiently undertaking a large number of dispersed and small infrastructure operations\." By Project closing, Aprende was phasing out of major new construction activities because FISE was responding to the demand for new schools directly, and in ways that did not require the involvement of the Aprende Project\. Simultaneously, Aprende focused increasingly on the decentralized school-based small-scale maintenance and rehabilitation of schools, an activity that built on and strengthened school autonomy\. Consequently, FISE's role in Project implementation was modified\. FISE was originally responsible for the construction of 415 classrooms and the rehabilitation of 735 classrooms and 3,890 school bathrooms\. Start-up of these activities was slowed by inadequate or outdated school survey information and poor communication between the MECD and FISE\. With the approval of the emergency supplemental credit, the scope of the construction and rehabilitation for FISE was modified to include the following: 170 schools (not classrooms), including bathrooms, from the original list, to be constructed; 10 schools, including bathrooms, from the original list, to be rehabilitated; and 152 schools to be replaced or fully rehabilitated in the hurricane-affected areas\. Of this total of 332 schools, only 198 schools, or 60 percent, were completed\. In greater detail, FISE rebuilt 168 out of the revised list of 170 schools, rehabilitated (including bathrooms) 7 of the revised list of 10 schools, and rebuilt 23 out of the reprogrammed list of 152 schools in areas affected by Mitch\. The apparent mismatch between the limited, but focused demands of the Aprende Project for school reconstruction, and the much broader responsibilities of a semi-autonomous government agency responsible for providing infrastructure across a wide range of sectors in response to locally-determined needs could not be overcome in time to produce a more desirable outcome\. In addition, FISE's need to respond broadly to evolving and critical demands for reconstruction in hurricaine-affected regions, compounded by extremely difficult access and supply links, made the achievement of the reprogrammed school construction goals much more challenging than anticipated during the preparation of the supplemental credit\. The unsatisfactory rating of this component can be largely attributed to the percentage completion of the reprogrammed goals (60 percent), and not to the quality of the works executed by FISE or under the SIMCEP model\. 4\.3 Net Present Value/Economic rate of return: N/A 4\.4 Financial rate of return: N/A 4\.5 Institutional development impact: Institutional Development Impact: Modest\. As discussed above, institutional development impact varied by component\. With regard to the decentralization component, schools readily integrated the changes required to operate effectively under autonomous guidelines\. Managers and staff in municipal education offices, in Department education offices, as well as in the MECD itself have had more difficulty adapting their roles and the responsibilities of their units to support school autonomy\. In contrast, MECD successfully integrated education evaluation, school-managed maintenance, competitive acquisition of educational materials, and pre-primary educational planning and implementation\. Therefore, overall rating for institutional development impact is considered modest\. -10- 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: (a) Persistent Levels of Poverty and Low Levels of Development\. In the decade of the 1990s, Nicaragua made extensive efforts to reduce civil violence, establish macroeconomic stability, and restore growth\. Despite laudable successes on many fronts, poverty in Nicaragua continues to be pervasive and acute\. About half of the population lives in poverty, and about 17 percent live in extreme poverty\. While positive growth rates since 1993 have helped reduce the rate of poverty, a continued rapid growth of population has undercut these gains, and there are actually more people living in poverty today than in 1993\. Thus, Nicaragua remains one of the poorest countries in Latin America\. The difficult econornic situation and high levels of poverty that persist in Nicaragua limit the impact of Project activities\. In an environment where about 20 percent of children under 5 are chronically malnourished or stunted, and a large percentage of all children do not have the minimum number of calories recommended by UNESCO, it is especially difficult to produce a quick impact from education investments, and a substantial challenge to yield sustainable change\. (b) Devastation Wrought by Hurricane Mitch\. The impact of Hurricane Mitch was devastating to the economic development of the country in general and education infrastructure in particular\. Officials estimate that the hurricane caused more than 2,000 deaths, the destruction of 20,000 homes and reconstruction costs of approximately US$500 million\. Nearly 216 schools were completely destroyed, while some 296 schools were damaged and required repairs before their communities could use them\. Some 300,000 textbooks were lost, while MECD estimated that damages to the education sector alone exceeded US$51 million\. Furthermore, the impact of the disaster on social networks, communities and families was extremely high\. The subsequent migration of families in search of housing and shelter caused major disruptions in the school year for thousands of students\. (c) Limited Implementation Experience in Education\. Nearly twenty years passed between the approval of the prior Project in Nicaragua and the commencement of Aprende\. Consequently, this Project was faced with the same learning process confronting any new borrower\. At Project signing, IDA had only recently begun financing new operations in Nicaragua: only three projects, including that of FISE, were under implementation\. With few exceptions, MECD and Project staff possessed little knowledge of IDA practices and procedures, requiring intensive training and longer than expected delays in the initial stages of implementation\. Two aspects of Project implementation-disbursement and procurement--may have been affected by this lack of experience in the management of an IDA-financed Project\. First, Project implementation was somewhat compromised due to cash flow problems\. Causes for cash flow problems sometimes resulted from the Borrower's difficulty in preparing disbursement applications in strict accordance with IDA's policy\. Consequently, applications were placed on hold for many days by the Association seeking corrections, clarifications, or additional documentation\. In other cases, a lack of necessary documentation justifying expenditures, arguably confusing IDA no-objection letters, problems with the special account conciliations, or with the use of the special account may have also contributed to disbursement delays\. Procurement delays also affected Project performance\. On various occasions, especially during the initial years of Project implementation, procurement documents prepared by the Project Implementation Unit for the Association's review for adherence to international procurement guidelines were returned for additional information or for correction\. From the point of view of the Borrower, the prior review process could have benefitted from better technical assistance and support\. On the other hand, the Association often saw the problem more as a consequence of the implementation unit not following appropriate procedures\. - 11 - Nonetheless, improved collaboration and communication during the final years of Project execution resulted in substantial improvement in procurement planning and implementation, and an efficient implementation of the corresponding procurement activities\. 5\.2 Factors generally subject to government control: Absence of a Legal Foundation for Education and School Autonomy\. The absence of a formal legal base for both education and school autonomy does not allow the MECD to have full legal authority and support in implementation of its reform agenda\. In conjunction with the more pressing problem of financial difficulty of assuring transfers to additional schools, this absence of legal authority has restricted MECD's ability to expand autonomous schools to meet demand\. After being on the waiting list to be converted to autonomous status for over two years, 995 centers were converted in July, for a total of 2,932 autonomous schools\. 5\.3 Factors generally subject to implementing agency control: (a) Turnover of Ministry Personnel\. Since Project effectiveness there have been three Ministers of Education, six vice ministers, and dozens of senior staff replacements\. While change per se does not necessarily imply negative outcomes, the uncertainty of personnel, delays in bringing new staff up to speed, and lack of institutional memory can have a negative impact on Project implementation\. On the other hand, the MECD demonstrated strong support for the Project, as reflected in the relative permanence of Project staff, which in turn resulted in a good Project implementation\. (b) Inadequate Distribution System\. The challenges of distribution of books and materials became apparent a number of times during Project implementation\. In the absence of a reliable mail service and an adequate transport and infrastructure, distribution of materials is often insufficient to ensure that schools receive, in a timely manner, the materials needed to support student learning\. 5\.4 Costs andfinancing: Implementation and Disbursement\. With the exception of the supplemental credit provided to finance an additional US$13\.2 million in project costs due to the destruction to the education sector, there were no significant changes to the costs and financing of the Project\. The following figure depicts estimated and actual disbursements during the Project lifetime\. Figure 3\. Project Disbursement, Estimated and Actual FY1995 to FY2001 35 30 25- 0 == 20 - E a a a a a a a a a a a a tn tD C r-\. r- c co a D) CD a a aa aa al o~) 0) (n 0 a) o> ( o CD CD CD CD CD CD CD CD ~~~~~~CD 4 0 1 0 0 - - - t tN N ClN Planned \. - - - - Actual to-date - 12 - 6\. Sustainability 6\.1 Rationale for sustainability rating: Likely\. The sustainability of project objectives is due to: popular support for the autonomy and preschool models, success of the school maintenance program in involving the community, and the continued support under the follow-up project\. Community Support for School Autonomy\. As demonstrated by the more than 800 schools that waited over two years for the MECD's approval to become autonomous, as well as evaluations of community support, it is clear that the autonomy model has grown beyond the expectation of its designers\. Parent participation rates are high, with frequency of school visits by parents approaching the levels of private schools\. Reformers increasingly recognize that improving school quality requires examination of the salient issues of teacher incentives, parent participation, and school-based innovation\. Furthermore, given the relatively low cost and speedy implementation of SIMCEP projects, it is likely that the MECD will absorb the community infrastructure projects into standard operations as a way to make small repairs to schools\. Community Demand for Preschools\. The rapid growth rates and widespread support for community preschools promises continued expansion of the program, so long as the MECD is willing to provide incentives for preschool teachers\. Given the relatively low cost and high returns (as measured by the success of the program on multiple indicators, described in previous sections), MECD's continued support of the program is highly likely\. 6\.2 Transition arrangement to regular operations: Prior to completion of the Basic Education Project, the Government began discussions for a follow-on Project that would build on lessons\. Implementation of Aprende 2 is well underway, and design of the Project has been significantly influenced by lessons learned under the first Project\. The autonomy and preschool evaluations have deepened the analysis of lessons learned and suggested improvements to how MECD can be successful through innovative, locally driven programs\. Having established a precedent for quality research, the Project is consolidating its efforts in evaluation and the use of evaluation results in policy formation\. The existence of a follow-on project should assure continued support of program activities and integration of successful activities into the line operations of the MECD\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: IDA Performance - Lending\. (Satisfactory)\. The project was hailed as being innovative and appropriate to the country's needs, while reflecting lessons learned from earlier projects\. Project designers used LSMS and other data to assess local conditions and needs\. Targets, with the exception of FISE results, were reasonable yet challenging to the Government\. Comments to this effect can be found in the quality assessment at entry report\. 7\.2 Supervision: (Satisfactory)\. Although the project experienced some delays in disbursement, there were no adverse effects on the achievement of the project targets\. In addition, despite three changes in World Bank task management during project implementation, continuity at the Project Implementation Unit, ensured a good transition and no implementation delays\. - 13- 7\.3 Overall Bankperformance: Overall IDA Performance\. (Satisfactory)\. Largely due to the good design and achievable, notwithstanding ambitious targets for the Project, the overall rating for IDA performnance is satisfactory\. Borrower 7\.4 Preparation: (Satisfactory)\. Borrower commitment to achieving project outcome and outputs was clear from the beginning of project design, as indicated by the Quality Assurance Group's review\. 7\.5 Government implementation performance: (Satisfactory)\. Despite a number of challenges to implementation, including the impact of Hurnicane Mitch on school infrastructure, pedagogic inputs, and distribution routes, the MECD demonstrated satisfactory performance and commitment to the Project\. Education was given a high priority by the two government administrations active during Project implementation, and the selection of a core team of permanent project staff was crucial to implementation success\. The success of the project hinges largely on the MECD's emphasis on attacking the basic problems of the primary education system, while promoting increased community and civil society participation in improving outcomes for all children\. 7\.6 Implementing Agency: (Satisfactory)\. Early implementation of the Project by Aprende staff was tempered by a relatively steep learning curve, as described above\. As experience was gained, implementation progress improved throughout the life of the Project, with successful completion of nearly all project targets\. Efficient and timely execution of Project activities was commendable\. 7\.7 Overall Borrowerperformance: (Satisfactory)\. Performance was adequate throughout the lifetime of the project\. 8\. Lessons Learned The following lessons can be drawn from the Project experience: i Worldng Directly with Communities\. One of the principal lessons drawn from the Aprende Project is the success of collaborative efforts with communities, as demonstrated in both the autonomous school and community preschool projects\. Components that involved the community were executed quickly and with quality results\. By contrast, implementation and other delays arose primarily in those areas where extensive inter-agency cooperation was required (as is the case of FISE)\. Aprende 2 builds upon these lessons learned, consolidating both the autonomous school and preschool expenences\. * Client-Oriented Processes and Practice\. Efficient project implementation is facilitated by realistic, clearly defined, and agreed rules and timeframes for procurement\. When priority and close collaboration is conferred between the Bank and the Client for time-bound delivery of perishable-type products such as textbooks and other education materials (that need to arrive on time for the school year), the result is successful implementation and beneficiary satisfaction\. - 14 - * Emergency Operations and Standard Procurement Procedures\. In those cases where urgent procurement of goods, works, or services is required, such as in an emergency operation (i\.e\., the supplemental credit following Hurricane Mitch), staff from the Bank and the client should draft procurement documents as a single team\. The difficulty associated with the relatively delayed procurement of the mochila escolar (over 18 months between defining need to purchase the mochilas and their actual delivery to the children) is a clear example of the need to create a more integrated Bank/Borrower team to streamline procurement\. The success of the SIMCEP and other components is remarkable\. * Continuity of Project Implementation Unit\. Through two elected governments, and several changes in MECD, the Government of Nicaragua maintained in place the same key Project Implementation Unit staff, including the Project Manager\. This continuity proved to be an extremely valuable asset to project implementation, communication with the Bank, and ultimately assured the government's ability to achieve Project objectives\. 9\. Partner Comments (a) Borrower/implementing agency: I\.- BACKGROUND At the beginning of the nineties, within the framework of profound economic and social changes, the Government of Nicaragua started an educational reform aimed at considerably improving the quality of the education\. To this effect, the Government of Nicaragua requested the support of the International Development Association through a credit for the education sector that would respond to the needs of the country in regards to basic education\. On March 16, 1995, the Board of Directors of the International Development Association approved a Development Credit for the Basic Education Project and, on March 17, 1995, a Development Credit Agreement No\. 2689-NI was signed for an amount of Special Drawings Rights 23\.1 millions, equivalent to U\.S\. Dollars 34\.0 millions in order to finance the Basic Education Project in Nicaragua\. The project would have an implementation period of four years\. During the 1995-1998 period, the Project was implemented according to the planned program; however, at the end of October 1998, Hurricane Mitch devastated a great part of the country and the Government of Nicaragua asked the international community for help in order to face the national reconstruction\. In this respect, the Board of Directors of the International Development Association authorized a Supplementary Credit on January 7, 1999 in the sum of Special Drawing Rights 9\.6 millions, equivalent to US Dollars 13\.2 millions in order to support the school reconstruction process\. The Amendment to the Credit Agreement was signed on January 19, 1999 and once the conditions were fulfilled, the said increase came into force on June 1, 1999\. II\.- PROJECT OBJECTIVES The general objective planned for the Project was to improve the efficiency, quality and equity of the basic education in Nicaragua through the reduction of the rates of repetition and desertion and the improvement of the academic performance of the students\. The Project was - 15- aimed at the preschool and primary levels where the great majority of students come from the poorest sectors of the population\. The Project would reach its objectives through the educational decentralization, the development and distribution of educational material, especially of textbooks, the expansion of non formal preschool education and the rehabilitation and replacement of the physical infrastructure\. It is important to point out that the Project aimed its performance throughout the implementation period on the basis of the objectives and achievements originally set out in the design of the Project\. III\.- PROJECT ACHIEVEMENTS I \. Achievement of Objectives At the end of the implementation period, it can be asserted that the Project reached the objectives planned in its design thus improving the efficiency, quality and fairness of the basic education through the reduction of the rates of desertion and repetition and an improvement in the academic performance of the students\. Despite that there are not enough studies and that the country still does not have an evaluation system, some elements are found that could support the previous assertion\. According to the MECD data, the rate of repetition in the first grade was reduced from 23% in 1995 to 7\.5% in 1998\. Likewise, the rate of completion of the primary education improved during the implementation period of the Project\. In 1995, 26% of the students that entered in first grade finished their primary education; that rate increased to 29% in 1998\. 2\. Ouputs The Basic Education Project achieved to finalize the implementation of the first stage, thus attaining the goals set out in its design\. Educational Decentralization\. Within this component, the Project supported the MECD in the consolidation of the school autonomy process\. In this sense, at the end of the Project, a total of 1,927 centers were incorporated into the school autonomy, of which, a total of 1,781 were primary centers and the remaining 156 were secondary centers\. One of the main supports given by the Project in order to strengthen the execution of the model is the training, which is of vital importance for an adequate performance of the decentralization process\. In this sense, Aprende financed a total of 139 training courses, with the attendance of 9,619 participants including MECD staff at central, departmental and municipal levels as well as members of the School Directory Council and parents\. On the other hand, the institutional capacity of the MECD was strengthened through the specialized technical assistance services equivalent to 121 months/consultants in key matters related to the educational decentralization\. - 16 - With the aim at the consolidation of the decentralization process and, at the same time, at the improvement of the attendance and punctuality of primary teachers and at the retention of students, the Project gave performance incentives to the teachers of autonomous primary schools, where parents had an active participation in the control of the attendance and punctuality of their children's teachers\. At the end of the Project, a total of 9,306 teachers were incorporated to this incentive system\. As support to a suitable model on behalf of all the actors involved, the Project developed a diffusion and communication campaign with the assistance of specialized consultants on this matter\. The component also included a decentralized system for the repair of primary school centers where the one responsible of the execution was the school council itself, implementing minor repair works undeT the Primary School Improvement System (SIMCEP)\. Under this system, 243 corrective maintenance projects were implemented, improving the conditions of 1,639 classrooms housing 98,352 children\. As a consequence of the highly satisfactory results obtained during this execution, the World Bank authorized the implementation of a pilot scheme for works of greater magnitude comprising the total replacement of three school centers with a maximum of four classrooms, with positive results that allowed the expansion of the attention scheme of the SIMCEP\. Within the emergent actions of infrastructure in order to face the school reconstruction after Hurricane Mitch, which guaranteed the start of the 1999 school cycle with the less possible delay, APRENDE, through the SIMCEP, carried out 410 rehabilitation and replacement projects in the affected schools equivalent to 1,580 classrooms serving 60,000 children; in addition, 27,000 sets of tables and chairs were acquired for primary school students and 700 sets of tables and chairs for teachers allowed the replacement of the ruined furniture\. In order to deeply learn the development of the decentralization process, an assessment of the said process was carried out with a longitudinal study of three phases, comprising three complementary aspects: i) a quantitative type assessment with data collected through a school/home survey to principals, parents, teachers, members of the consultative and executive councils and to the students; ii) a qualitative type assessment through focal groups and open interviews to members of the educational community such as parents, teachers, members of the councils and principals; and iii) the application of tests in order to measure the academic performance in Mathematics and Spanish of fourth grade students and third year students in secondary schools\. Likewise, the Project has supported the initial training of the Evaluation Department team of the MECD in regards to: i) quantitative assessment; ii) qualitative assessment and iii) the preparation of academic performance tests\. Educational Material\. In 1993, the MECD started a development process of improved curricular documents and, in 1994, it carried out the curricular transformation bringing profound changes in the educational conception of the institution\. These efforts were translated into a new curricular conception thus requiring new textbooks that would respond to the said changes\. - 17 - In this respect, the Project funded activities that contributed to the improvement of the learning and teaching techniques providing 4,778,700 textbooks, 4,319,100 exercise books and 158,500 educational guide books for 750,000 students and for 26,000 teachers of public schools and subsidized regular primary schools, multigrade schools and adult schools of the rural and urban areas throughout the country\. Likewise, technical and financial support was given to the training of teachers and technicians in the handling and use of the didactic complex and to the training given to the MECD staff in regards to reception, control and follow up distribution of text books\. Expansion of preschool education\. Within the Preschool component, the Project managed to considerably consolidate and expand the non formal model of preschool education: the community preschools\. At the beginning of APRENDE, a total of 24,057 children were registered in community preschools; in 1999, an enrollment of 93,000 children was reached between the ages of 3 and 6 in marginal rural and urban areas of the country\. These children attended 4,130 centers and were looked after by 4,540 voluntary teachers\. One of the basic features of the Project through this component was the training of voluntary teachers, itinerant trainees and MECD technicians\. In this way, a total of 1,680 events were organized with an attendance of more than 30,000 participants\. The contents developed during the training were: use and handling of curricular documents, language development in children younger than six years, production of material with environmental resources, game methodology, participation of families and community in the development of educational, planning and evaluation programs, meetings with parents, community participation and strengthening of teaching practices\. All these aspects contributed in such a way that teachers would have a greater control of the child's attention in the classrooms\. As support to the training capacity, the Project delivered incentives to 173 itinerant trainees and to 139 municipal technicians in order to guarantee the direct advice in the classrooms and the follow up of different tasks developed by the teachers\. The trainees and technicians made 37,000 visits to voluntary teachers\. With the Project, the design, reproduction and distribution of a total of 706,737 printed material such as manuals, textbook guides, exercise books, flip charts and plate illustrations were funded and delivered during the execution of this component\. A total of 3,921 packages of durable material and 21,361 packages of consumable material for teachers and children were delivered to the centers during the execution of the Project\. It also funded the purchase of 3,366 sets of furniture in order to improve the conditions in the preschools and to facilitate the development of activities and the organization of the work with the children\. During the execution of the Project, a total of 4,540 voluntary teachers received a monthly incentive\. This action served as a means to encourage their continuance and, at the same time, to recognize the work carried out by them\. - 18 - In support to the development of the model, the Project funded the technical assistance through national consultants specialized in matters of evaluation and follow up, training and community participation\. As from 1998, a research began on the impact of community preschools in regards to the development of the children\. The objective of this study was to leam more on the impact that community preschools had on the comprehensive development of boys and girls attending the schools and those who did not have any type of education\. Physical Infrastructure\. Through APRENDE, the replacement, rehabilitation and maintenance of primary school centers were carried out together with the supply of sanitation and extemal works, providing the adequate environment that allows better levels of assimilation and learning of the students\. To this effect, the Project included interventions developed through an executor or purchasing agent, the Social Investment Fund for Emergencies (FISE), in charge of carrying out all the necessary duties of the MECD\. Although it is true that the Project started in 1995, the infrastructure works could not be implemented then, but until the second year because of the need to adapt the tasks of the Project to the plans and procedures of the implementation applied by FISE\. In all, 591 classrooms were given attention of the 175 projects for the replacement and rehabilitation of schools which benefited 23,640 children in the following Departments: Boaco, Carazo, Chinandega, Chontales, Esteli, Jinotega, Le6n, Madriz, Managua, Masaya, Matagalpa, Nueva Segovia, Rivas, Zelaya Central, Zelaya Norte\. As part of the school reconstruction tasks after the passing of Hurricane Mitch, a total of 23 projects were given attention with 87 classrooms and approximately 3,480 children\. IV\.- Borrower's Performance Assessment The design and execution of the Basic Education Project is the first attempt of the educational sector in Nicaragua after 18 years of the execution of the last project financed by the World Bank in this sector\. Considering the economic, political, social and institutional conditions at the beginning of the 1990s in Nicaragua, this Project was a tremendous challenge for the country and particularly for the MECD\. 1\. Challenges encountered\. The main challenges encountered by the MECD in the execution of the Project are shown below: (a) To implement a decentralization model without the support of a previous legal base that would facilitate the creation of all the implementation plans made the tasks of the MECD significantly difficult because it did not count with an absolute legal authority and with the support in the reform process during the execution\. Notwithstanding the foregoing, the enthusiasm found in the educational community allowed the model to consolidate\. - 19- (b) The MECD had to cover a greater learning curve than the one normally required by a borrower with previous experience\. In this sense, and with few exceptions, the staff involved in the implementation of the Project did not have a profound knowledge of the procedures demanded by the World Bank for this type of project\. However, with the exception of a few delays in the execution of the initial stage, the MECD managed to surpasses these limitations and implemented the Project in a satisfactory manner\. (c) The distribution of textbooks and other educational material required an efficient distribution system that would allow all beneficiaries (near 750,000 students) to have the complete set of materials in an opportune way\. The MECD, with serious shortage of resources, had problems in this sense causing delays in some of the delivery procedures as well as with mistakes in controlling the said material\. (d) The community preschool, a model of non formal education, was selected by the MECD in order to have access to the poorest sectors in this educational level\. Due to its features, this model is based on the organization of the community and on the voluntary work of its members\. In order to keep this model working, a strong promotional work is required as well as other incentive alternatives\. A way of recognition should also be found in order to encourage voluntary teachers\. The MECD managed to establish a greater stability of the model and, in general terms, a greater continuance of the voluntary teachers in the program\. 2\. Performance Assessment\. Based on the results and achievements of the Project, it can be asserted that the performance of the MECD, and specifically of the Coordinating Unit, during the evolution and implementation of the Project has been satisfactory\. At component level, the execution of the Education Decentralization was also satisfactory despite the difficulties encountered by the lack of a legal base and the test of the different alternatives of the model, going from a municipal level to the school autonomy\. In relation to the Educational Material component, a satisfactory performance is observed throughout the process, with the exception of some efrors in the distribution system of the materials\. In regards to the Expansion of the Preschool Education component, it can be asserted that the performance was highly satisfactory, both through the operation of the model and through the impact that it had on the beneficiaries\. The Infrastructure component is the less satisfactory due to the fact that, on the one hand, the design did not take into consideration the incompatibility of the FISE mandates, and on the other, the implementation of a project by another govemnment entity\. In relation to the administrative and financial aspects of the Project, the performance of the MECD has been satisfactory, both at the operational level and in regards to the transparency which has been backed up by the external audits carried out\. Likewise, the procurement aspects show a satisfactory performance, except in regards to the procurement of school packages of basic educational material and other materials, which faced serious delays and problems 3\. Lessons learned\. It is worth mentioning, on the one hand, that the main lesson learned through the Project is the outstanding participation of the community in the education program\. The foregoing is clearly reflected in the results of the school autonomy and in the way that the academic performance was increased insofar as the parents were involved in the education of their children\. Likewise, the SIMCEP, which mainly lies on the participation of the School Executive Councils, showed a highly efficient execution\. On the other hand, the - 20 - model of community preschools, based on the direct participation of the community and on the voluntaxy work of its members, also showed a highly satisfactory performance\. It is also worth mentioning as a lesson learned, the need to count with a well established framework for the intervention of projects funded by the World Bank in regards to emergencies caused by natural disasters\. The foregoing was highlighted with the school reconstruction as a result of the passing of Hurricane Mitch, in which punctual interventions with flexible contracting contributed to the objectives planned\. Nonetheless, the procurement of goods such as the school packages of basic educational material were distributed a year and a half after the disaster\. VI\.- PERFORMANCE ASSESSMENT OF THE WORLD BANK In general terms, it can be asserted that the performance of the World Bank throughout the evolution and execution process of the Project was satisfactory\. The impressions of the Borrower for each stage of the process are detailed below\. 1\. Preparation and design\. The performance is considered satisfactory due to the fact that World Bank officers had an intensive participation in the process, and the results of the design responded to all the requirements of the education sector in those days\. In this sense, the Bank team motivated the local team to work with clear and relevant objectives and to design the most adequate components in order to achieve the said objectives\. As it was mentioned above, a problem that can be pointed out is the infrastructure component in the design process, which did not consider the situation that could rise when trying to combine the action of FISE, which has a wider horizon when planning, with a short term project with different mandates\. 2\. Supervision\. The performance of the World Bank in the supervision stage was satisfactory\. Notwithstanding the foregoing, the MECD felt the need to have a closer participation of the Bank team at the beginning of the Project, although this situation did not cause major problems\. Likewise, the change of three Task Managers in the execution of the Project did not affect significantly the implementation of the Project The MECD, however, points out the problems in the specific area of procurement, in which the lack of attention to the needs of the Borrower on behalf of the Bank's procurement staff and the way of handling the problem in this respect was not satisfactory\. On the other hand, in some cases, the overload of work in the disbursement area of the Bank resulted in delays which affected the execution of the Project\. - 21 - MONITORING INDICATORS TOTAL COMPONENT UNIT PROGRAMMED EXECUTED % 1\. Decentralization Municipal Educational Councils Municipality 117 10 9% Autonomous Centers Center 165 1,937 1,173\.94% Technical Assistance to MED Person/ 58 121 208% Month Personnel Training Event 167 139 83% Incentives to Teachers Teacher 2,916 9,306 319% Maintenance Programs of Project 222 243 109% Schools 2\. Educational Materials Textbooks Thousand 2,533 4,778 188% Exercise books Thousand 4,750 4,319 91% Guide books Thousand 16 158 987% Technical Assistance Person/ 67 86 128% month 3\. Expansion of Preschool Education Children's Registration Person 76,900 86,000 120% Parent's Registration Person 74,900 35,000 53% Community Teachers Person! 2,701 4,200 168% year Community Centers Center 2,196 3,700 188% Personnel Training Event 1,250 1,110 134% International Consultants Person/ 16 5 31% - 22 - Month Local Consultants Person/ 66 123 193% Month Itinerant Trainees Person 145 134 119% Teacher's Manuals Unit 3,596 6,765 200% Plate illustrations for parents Unit 211,751 454,800 214% Manual and guides for parents Unit 3,216 60,841 1,891% Manual for Itinerant trainees Unit 200 308 154% Supervision Manuals Unit 200 13,200 8,928% Introductory exercise books Package 174,000 165,726 95% Consumable Materials Package 6,792 21,361 314% Durable Materials Package 3,000 3,921 130% Furiture for centers Set 2,196 3,366 153% 4\. Infrastructure Replacement of classrooms Unit 415 514 123% Rehabilitation of classrooms Unit 735 77 10% Furniture for classrooms Classroom 1,150 591 51% Rehabilitation of sanitation Unit 3,890 175 4% services (b) Cofinanciers: (c) Other partners fNGOs/private sector): 10\. Additional Information Additional information is included in the Borrower Completion Report, in which detailed descriptions of the output for each component are included\. The ICR' analysis benefited substantially from the Borrower documents as well as extensive collaboration with Project staff in the elaboration of this document\. For additional documentation, please consult Annex 7, which includes those documents in the project file\. - 23 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: IndicatorlMatrix Projected In last PSR ActualULatest Estimate Improved Efficiency Improved Increased Quality Increased Increased Equity Unknown Reduced Repetition Rates Reduced Reduced Dropout Rates Unknown Enhanced Student A_hievement Unknown Output Indicators: IndJcator/Matrix Projected in last PSR Actual/Latest Estimate MUNICIPAL EDUCATION COUNCILS: 117 10 Municipal Education Councils 10 Municipal Education Councils formed, Municipal Education Councils to be formed because the model was changed\. and trained AUTONOMOUS SCHOOLS: 165 schools 1,937 Autonomous Centers 1,937 schools became Autonomous Centers under autonomous school model MECD TECHNICAL ASSISTANCE: 58 121 Consultant/Months 121 ConsultantMonths provided technical Consultant/Months provided technical assistance to MECD to assume its new assistance to the MECD in its new roll functions at the central and departmental levels STAFF TRAINING: 167 events providing 139 workshops conducted 139 events were held to support MECD staff managerial training for local school council members and central and departmental MECD staff TEACHER INCENTIVES: 2,916 primary 9,306 teachers receiving incentives 9,306 primary teachers received performance teachers received performance Incentives incentives to encourage continuos and regular attendance SCHOOL MAINTENANCE PROGRAM: 222 243 repair projects 243 projects were financed to repair the Projects for autonomous schools physical plant by SIMCEP\. maintenance\. This program will finance small repairs to the physical plan\. TEXTBOOKS: 2,5 million textbooks to be 3,069,000 textbooks purchased and 4,778,000 textbooks distributed\. Books of acquired and distributed distributed Mathematics, Spanish, Natural Science\. EXERCISE BOOKS, 4,7 million exercises 4,319,000 exercise books distributed 4,319,000 exercises books printed and books printed and distributed distributed TEXT GUIDES, 16,000 text guides printed 74,000 text guides distrbuted 74,000 text guides printed and distributed and distributed TECHNICAL ASSISTANCE, 67 86 consultants/months for technical 86 consultants/months for technical consultant/months for technical assistance assistance assistance CHILDREN ENROLLED, 76,900 children 86,000 children enrolled 86,000 children enrolled in pre-primary enrolled in pre-primary education education\. Target expanded by improving the educatonal content of existing community children centers PARENTS ENROLLED, 74,900 parents 35,000 parents enrolled 35,000 parents enrolled enrolled COMMUNITY EDUCATORS, 2,701 4,200 community educators enrolled 4,200 community educators enrolled in the - 24 - community teachers attended pre-prnmary program community centers COMMUNITY CENTERS 2,196 community 3,700 community centers overthe entre 3,700 community centers over the entire centers country country STAFF TRAINING 1,250 training events 1,110 training events 1,110 training events INTERNATIONAL TRAINERS, 16 5 intemational consultants 5 intemational consultants intemational consultants LOCAL CONSULTANTS 66 national 123 national consultants 123 national consultants consultants ITINERANT TRAINERS: 145 itnerant 134 itinerant trainers 134 tinerant trainers trainers to train community educators EDUCATOR MANUALS: 3,596 printed and 6,765 educator manuals pnnted and 6,765 educator manuals printed and distributed educator manuals for community distributed distributed educators PARENT GUIDES: 211,751 parent guides to 454,800 parent guides prdnted and distributed 454,800 parent guides printed and distributed promote parents involvement in children educational development activities PARENT COMMITTEE GUIDES: 3,216 59,841 parent committee guides printed and 60,841 parent committee guides printed and parent committee guides distributed distributed ITINERANT TRAINER MANUALS: 200 308 itinerant trainer manuals 308 itinerant trainer manuals itinerant trainer manuals SUPERVISION MANUALS: 200 manuals 13,200 manuals printed and distributed for 13,200 manuals printed and distributed for printed and distributed to support supervision supervision supervision activities CHILDREN'S READINESS PACKAGES: 165,726 packages for reading beginners 165,726 packages for reading beginners 174,000 packages for reading start-up CONSUMABLE MATERIALS: 6,792 21,361 consumable materials packages 21,361 consumable materials packages packages of consumable materials for using distributed distributed in the classroom DURABLE MATERIALS: 3,000 durable 3,921 durable materials distributed to be 3,921 durable materials distributed to be materials to be distributed used by prewprimary children used by prprimary children FURNITURE FOR CENTERS: 2,196 3,366 fumiture sets distributed for using in 3,366 fumiture sets distributed for using in funiture sets to be distributed to community community pre-primary centers community pre-primary centers centers CLASSROOM REPLACEMENT: 415 418 classroom replacements 435 cassrooms were replaced over the classrooms to be replaced over the country country CLASSROOM REHABILITATION: 735 77 classrooms to be rehablitated 77 classrooms rehabilitated classroom rehabilitations to be performed CLASSROOM FURNITURE: 1,150 to be 591 dassrooms equipped with fumiture 591 classrooms equipped with fumiture equipped SANITARY SERVICES REHABILITATION: 150 sanitary services mhabilitated 175 sanitary services rehabilitated 3,890 sanitary services to be rehabilitated End of project - 25 - Annex 2\. Project Costs and Financing Proiect Cost by Component (in US$ million equivalent) Appraisal ActuaUlLatest Percentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million School Decentralization 11\.30 13\.71 121 Educational Materials 12\.00 16\.40 137 Expansion of Pre-Primary Education 6\.00 7\.00 117 Infrastructure 8\.50 15\.35 181 Administration 1\.50 2\.60 173 Total Baseline Cost 39\.30 55\.06 Total Project Costs 39\.30 55\.06 Total Financing Required 39\.30 55\.06 Note: Amounts include Supplemental Loan following Hurricane Mitch\. Data for "Actual/Latest Estimate" column provided by MECD in June 2001\. Project Financing by Component (in US$ million equivalent) - \. \. \. Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate IDA Govt CoF\. ]IDA Govt CoF\. IDA Govt\. CoF\. Institutional Strengthening 0\.80 0\.00 0\.80 0\.00 100\.0 0\.0 of MED Institutional Strengthening 1\.60 0\.10 0\.80 0\.00 50\.0 0\.0 at the local level Teacher Performance 2\.40 2\.30 1\.50 1\.20 62\.5 52\.2 Incenffves Decentralized School 2\.40 0\.30 7\.30 1\.00 304\.2 333\.3 Maintenance Program Support Systems 1\.40 0\.00 1\.11 0\.00 79\.3 0\.0 Educational Materials 11\.50 0\.50 16\.10 0\.30 140\.0 60\.0 Expansion of Pre-Primary 4\.80 1\.20 6\.20 0\.80 129\.2 66\.7 Education Infrastructure 7\.60 0\.90 13\.82 1\.53 181\.8 170\.0 Administration 1\.50 0\.00 2\.20 0\.40 146\.7 0\.0 Total 34\.00 5\.30 49\.83 5\.23 146\.6 98\.7 Note: Amounts include Supplemental Loan following Hurricane Mitch emergency amendment\. Data for "Actual/Latest Estimate" column provided by MECD in June 2001\. - 26 - Annex 3\. Economic Costs and Benefits An economic analysis was not conducted for this project\. - 27 - Annex 4\. Bank Inputs Missons _ Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, I FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 4/1994 S S S S Appraisal/Negotiation 9/1994 Supervision 11/1995 2 Task Manager/Education HS HS Specialist/Pre-school Specialist 03/1996 6 Task Manager/lnfrastructure HS HS Specialist/Economist/Educator/ Procurement Spec\./Pre-school Specialist 05/1996 1 Educator S HS 07/1996 1 Educator S S 01/1997 2 Sr\. Educator/Procurement U S Specialist 01/1997 2 Sr\. Educator/Procurement S S Specialist 05/1997 4 Task Manager/ Infrastructure / S S Procurement & Finance SpecialisV Infrastructure 09/1997 3 Task Manager/Procurement S S Specialist/Infrastructure 0/1998 2 Task Manager/Education S S Specialist 05/1998 3 Task Manager/Education S S Specialist/Pre-school Education Specialist 11/1998 2 Economist/Task Manager/ S S Operations Officer 02/1999 10 Task Manager/ Operations S S Officer/Procurement Spec\./ FMS/Architect/1 Pre-school Specialist' 2 Economists/2 Education Specialists 05/1999 4 Task Manager/Operations S S Assistant/Procurement Specialist/FMS ICR 10/2000 2 Task Manager/Operations S S Officer -28 - (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 63\.4 126,742 Appraisal/Negotiation 38\.9 73,719 Supervision 298\.0 695,824 ICR 5\.3 16,646 Total 405\.6 912,931 - 29 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA-Not Applicable) Rating OMacro policies O H OSUOM O N * NA ISector Policies O H SUOM ON O NA F Physical O H OSUOM O N O NA F Financial O H OSUOM O N O NA X Institutional Development O H O SU O M 0 N 0 NA OEnvironmental O H OSUOM O N NA Social Z Poverty Reduction O H SUOM O N O NA 3 Gender O H OSUOM O N NA 0 Other (Please specify) O H OSUOM ON * NA O Private sector development 0 H O SU O M 0 N * NA F Public sector management 0 H O SU O M 0 N 0 NA OI Other (Please specify) O H OSUOM O N * NA -30- Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bankperformance Rating F Lending OHS *S OU OHU FE Supervision OHS Os O u O HU N Overall OHS OS O u O HU 6\.2 Borrowerperformance Rating M Preparation OHS Ss Ou O HU E Government implementation performance O HS O S 0 U 0 HU Z Implementation agencyperformance O HS O S 0 U 0 HU Z Overall OHS OS 0 U O HU - 31 - Annex 7\. List of Supporting Documents 1\. Arcia, G\. and Belli, H\. (1999) "Rebuilding the Social Contract: School Autonomy in Nicaragua" LCSHD Paper Series #40\. Washington DC: The World Bank\. 2\. Castro, V\. (1999) "Evaluaci6n de Impacto del Programa de Preescolares Comunitarios tercera fase: 1999" Managua Nicaragua: Proyecto Aprende (Processed)\. 3\. Gershberg, A\. (1997) "Reform Carts and Legislative Horses: Education 'Decentralization' Processes in Mexico and Nicaragua\." The New School for Social Research\. 4\. MECD (2000) "Estudio Longitudinal del Impacto de Autonomia Escolar" Managua Nicaragua: Proyecto Aprende (Draft-Processed)\. 5\. Zuniga Wager, A\. (2000) "Misi6n de Supervisi6n de Componente de Infiaestructura del MECD" (Ayuda Memoria, 27 de Octubre 2000) - 32 -	REVIEW
P055232	Document of The World Bank Report No: ICR0000862 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-71760) ON A LOAN IN THE AMOUNT OF (US$52\.5 MILLION) TO THE REPUBLIC OF PERU FOR A RURAL EDUCATION PROJECT IN SUPPORT OF THE FIRST PHASE OF THE RURAL EDUCATION PROGRAM June 25, 2008 Human Development Sector Management Unit Bolivia, Ecuador, Peru and Venezuela Country Management Unit Latin America and the Caribbean Regional Office CURRENCY EQUIVALENTS (Exchange Rate Effective June 25, 2008) Currency Unit = Peruvian Nuevo Sol (PEN) 1\.00 = US$ 0\.33 US$ 1\.00 = PEN 3\.00 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS APAFA Parents Association (Asociación de Padres de Familia) APL Adaptable Program Lending CAS Country Assistance Strategy CEI Initial Education Centers for 3-5 year-old children (Centros de Educación Inicial) COMPFE Comisión de Coordinación y Administración para la Ejecución de Proyectos con Financiamiento Externo del Ministerio de Educación also known as the PCU CONEI Institutional School Council (Consejo Educativo Institucional) CPS Country Partnership Strategy DfID United Kingdom's Department for International Development DRE Regional Education Directorates (Dirección Regional de Educación) DGPM General Director of Public Sector Multi-Annual Programming (Dirección General de Programación Multianual) ESMED Secondary Distance Education Model (Educación Secundaria con Metodología a Distancia) FMRs Financial Management Reports FONCODES National Social Development and Compensation Fund (Fondo Nacional de Compensación y Desarrollo Social) GOP Government of Peru ICR Implementation Completion and Results Report IDB Inter American Development Bank ISR Implementation Status Results and Reports LA Loan Agreement MED Ministry of Education (Ministerio de Educación) MEF Ministry of Economy and Finance (Ministerio de Economía y Finanzas) PAD Project Appraisal Document PCN Project Concept Note PCU Project Coordination Unit PDO Project Developmental Objectives PEAR Rural Education Project (Proyecto de Educación en Areas Rurales) PEI Institucional Educational Project (Proyecto Educativo Institucional) POA Annual Operational Plan (Plan Operativo Anual) PHRD Japan Policy and Human Resources Development PRONAMACHCSNational Program for Hidrological Basin Management and Soil Conservation (Programa Nacional de Manejo de Cuencas y Conservación de Suelos) PSRL Programmatic Social Reform Loan QAG Quality Assurance Group QEA Quality at Entry Assessment REACT DPL Results and Accountability Development Policy Loan TTIs Teacher Training Institutions PRONOEI Non Formal Inicial Education for 3-5 year-old children (Programa No Escolarizado de Educación Inicial) SINEACE National Educational Assessment and Certification System (Sistema Nacional de Acreditación y Certificación Educativa) SNIP National Public Investment System (Sistema Nacional de Inversión Pública) TTL Task Team Leader UGEL Local Educational Management Units (Unidad de Gestión Educativa Local) USAID United States Agency for International Development Vice President: Pamela Cox Country Director: Carlos Felipe Jaramillo Sector Director: Evangeline Javier Sector Manager: Eduardo Velez-Bustillo Project Team Leader: Livia Benavides ICR Team Leader: Livia Benavides ICR Primary Author: Juan Prawda COUNTRY RURAL EDUCATION PROJECT IN SUPPORT OF THE FIRST PHASE OF THE RURAL EDUCATION PROGRAM CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design\. 1 2\. Key Factors Affecting Implementation and Outcomes \. 13 3\. Assessment of Outcomes\. 20 4\. Assessment of Risk to Development Outcome\. 27 5\. Assessment of Bank and Borrower Performance \. 27 6\. Lessons Learned \. 36 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 38 Annex 1\. Project Costs and Financing\. 39 Annex 2\. Outputs by Component \. 41 Annex 3\. Economic and Financial Analysis\. 47 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 49 Annex 5\. Beneficiary Survey Results\. 52 Annex 6\. Stakeholder Workshop Report and Results\. 53 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 54 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 55 Annex 9\. List of Supporting Documents \. 56 MAP A\. Basic Information Country: Peru Project Name: Rural Education Project Project ID: P055232 L/C/TF Number(s): IBRD-71760 ICR Date: 06/26/2008 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: APL Borrower: PERU Original Total USD 52\.5M Disbursed Amount: USD 29\.0M Commitment: Environmental Category: C Implementing Agencies: Ministerio de Educacion Cofinanciers and Other External Partners: B\. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 11/28/2001 Effectiveness: 04/15/2004 04/15/2004 Appraisal: 04/02/2002 Restructuring(s): Approval: 05/29/2003 Mid-term Review: 10/16/2006 12/01/2006 Closing: 12/31/2007 12/31/2007 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Moderately Unsatisfactory Government: Unsatisfactory Quality of Supervision:Moderately Implementing Moderately Unsatisfactory Agency/Agencies: Unsatisfactory Overall Bank Moderately Overall Borrower Moderately Performance: Unsatisfactory Performance: Unsatisfactory C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Performance Indicators (if any) Rating Potential Problem Project Yes Quality at Entry Satisfactory i at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Unsatisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 20 16 Pre-primary education 20 6 Primary education 20 71 Secondary education 20 5 Tertiary education 20 2 Theme Code (Primary/Secondary) Education for all Primary Primary Indigenous peoples Secondary Secondary Rural services and infrastructure Secondary Secondary E\. Bank Staff Positions At ICR At Approval Vice President: Pamela Cox David de Ferranti Country Director: Carlos Felipe Jaramillo Marcelo Giugale Sector Manager: Eduardo Velez Bustillo Marito H\. Garcia Project Team Leader: Livia M\. Benavides Livia M\. Benavides ICR Team Leader: Livia M\. Benavides ICR Primary Author: Juan Prawda F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Program will support the Peruvian government's objective of improving the quality and equity of basic education through focused investments in rural areas with the lowest education indicators and through systemic reforms of teacher policy and education management\. This Project is the first one of a three-phase APL\. Under Phase I, financing would be provided to support the implementation of key reforms of teaching and system ii management, initiate the investments in rural school infrastructure and quality enhancements, and pilot and evaluate alternative models of distance education at the secondary level\. Specifically, the Project will: (a) expand access to formal and non- formal initial and pre-school programs in rural areas; (b) pilot and evaluate three different modalities of distance education in 116 secondary schools in the targeted rural areas; (c) improve primary school quality in rural areas through specially designed professional development programs for rural teachers focused on multigrade and bilingual education, distribution of improved learning materials, and rehabilitation of infrastructure where needed; and (d) raise sector efficiency through the implementation of the first phase of teacher policy reforms, restructuring of regional offices, initiating a decentralization process leading to more autonomous schools, with community voice in management, and organizing rural school support network\. To monitor quality and guide corrective strategies, the new national system of student assessment would be strengthened\. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 1 : Percentage of 11 year-old children enrolled in sixth grade or higher in rural areas increases by 0\.6 percentage points\. Value 37\.08% (rural) 41\.70% (rural) quantitative or 44\.27% (project area) 37\.66% 50\.21% Qualitative) (project area) Date achieved 12/01/2003 12/01/2007 12/31/2007 Comments (incl\. % 770% (rural) achievement) 990% (project area) Indicator 2 : Percentage of 11 year-old children enrolled in grades 5 and lower will not increase Value quantitative or 67\.1% 67\.1% (or less) NA Qualitative) Date achieved 12/01/2003 12/31/2007 12/31/2007 Comments (incl\. % Data not available achievement) Indicator 3 : Rural 11 year-old children who do not go to school decreases by 0\.7 percentage points Value quantitative or 7\.41% 6\.71% 3\.87% iii Qualitative) Date achieved 12/01/2003 12/31/2007 12/31/2007 Comments (incl\. % -505% achievement) Indicator 4 : 375,000 children received bilingual materials and their teachers trained Value quantitative or 0 375,000 239,520 Qualitative) Date achieved 12/31/2003 12/31/2007 12/31/2007 Comments (incl\. % 68% achievement) Indicator 5 : Rural pre-school coverage (0-2 years) increases Value quantitative or 1% 4\.7% NA Qualitative) Date achieved 12/01/2003 12/31/2007 12/31/2007 Comments (incl\. % Data not available achievement) Indicator 6 : Rural pre-school coverage (3-5 years) increases by 5\.5 percentage points Value quantitative or 48\.09% 53\.59% 54\.79% Qualitative) Date achieved 12/01/2003 12/31/2007 12/31/2007 Comments (incl\. % 122% achievement) Indicator 7 : Secondary school gross enrollment ratio in rural areas increases by 8 percentage points Value quantitative or 71,39% 79\.39% 77\.74% Qualitative) Date achieved 12/01/2003 12/31/2007 12/31/2007 Comments (incl\. % 79% achievement) Indicator 8 : Secondary school coverage at grade 1 for 12 or less year-old youngsters in rural areas increases by 3\.3 percentage points Value 37\.08% (rural) 41\.70% (rural) quantitative or 44\.27% (PEAR districts) 40\.3% (rural) 50\.21% (PEAR Qualitative) districts) Date achieved 12/01/2003 12/31/2007 12/31/2007 Comments (incl\. % 140% (rural) achievement) 180% (PEAR districts) iv Indicator 9 : Learning outcomes of children in target Project Areas showed improvement on national assessment at the primary level Value quantitative or2\.3% (language) NA Qualitative) 1\.3% (math) Date achieved 12/01/2004 12/31/2007 Comments The preliminary findings of the new learning assessment measurement to be (incl\. % administered end of 2008 will allow some comparisons with the baseline data achievement) for the treated as well as for the control groups\. (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Number of teachers trained in the use of bilingual materials\. Value (quantitative 0 15,000 13,952 or Qualitative) Date achieved 01/01/2004 12/01/2007 12/31/2007 Comments (incl\. % 93% achievement) Indicator 2 : Number of teachers trained in the use of multigrade methodology and materials\. Value (quantitative 0 3,800 1,513 or Qualitative) Date achieved 01/01/2004 12/01/2007 12/31/2007 Comments (incl\. % 93% achievement) Indicator 3 : Number of classrooms refurbished and/or built in Project areas\. Value (quantitative 0 1,900 293 or Qualitative) Date achieved 01/01/2004 12/01/2007 12/31/2007 Comments (incl\. % 15% achievement) Indicator 4 : Number of PEI's (Educational Strategic Plan) with CONEI-RED (Network councils) approval\. Value (quantitative 0 300 0 or Qualitative) Date achieved 01/01/2004 12/01/2007 12/31/2007 Comments (incl\. % 0% v achievement) Indicator 5 : Percentage of municipal networks with at least eight coordination meetings per year\. Value (quantitative 0 70 0 or Qualitative) Date achieved 01/01/2004 12/01/2007 12/31/2007 Comments (incl\. % 0% achievement) G\. Ratings of Project Performance in ISRs Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 06/23/2003 Satisfactory Satisfactory 0\.00 2 12/22/2003 Satisfactory Satisfactory 0\.00 3 06/08/2004 Satisfactory Satisfactory 0\.53 4 11/10/2004 Satisfactory Satisfactory 2\.38 5 04/29/2005 Moderately Satisfactory Moderately Unsatisfactory 4\.01 6 09/06/2005 Moderately Satisfactory Moderately Unsatisfactory 6\.94 7 06/06/2006 Moderately Satisfactory Moderately Unsatisfactory 13\.93 8 06/07/2006 Moderately Satisfactory Moderately Satisfactory 14\.67 9 12/27/2006 Moderately Satisfactory Moderately Satisfactory 19\.41 10 05/18/2007 Moderately Satisfactory Moderately Satisfactory 22\.15 11 06/29/2007 Moderately Satisfactory Moderately Unsatisfactory 22\.93 12 10/19/2007 Moderately Satisfactory Moderately Unsatisfactory 25\.25 13 12/21/2007 Moderately Unsatisfactory Unsatisfactory 26\.49 H\. Restructuring (if any) Not Applicable vi I\. Disbursement Profile vii 1\. Project Context, Development Objectives and Design (this section is descriptive, taken from other docjuments, e\.g\., PAD/ISR, not evaluative) 1\.1 Context at Appraisal (brief summary of country and sector background, rationale for Bank assistance) At the time of project preparation (2003), 28 percent of Peru's population lived in rural areas, characterized by poverty, cultural diversity, geographic dispersion and inaccessibility to public services, such as education and health\. About 90 percent of the rural population lived in clusters of less than 500 inhabitants; 60 percent were poor, 37 percent were below the extreme ("food-only") poverty line and a third spoke one of Peru's 42 indigenous languages\. Social indicators for these populations were also much below those for urban population: (i) rural women averaged only 4\.9 years of education as compared to 9\.1 years for urban women; and (ii) infant mortality rate was 58 per 1,000 life births in rural areas as compared to 32 per 1,000 life births in urban areas\. Although Peru had done an impressive job over the previous last two decades in achieving universal access to primary schooling, average schooling attainment and student learning were sharply lower in rural than in urban areas\. While gross enrollment rates of about 93 percent were similar for rural and urban areas in (2003), on-time completion rates in rural primary schools were 20 percent as compared to 57 percent in urban areas\. This was a result of high repetition and dropout rates in rural areas (dropout rates in rural areas were 10\.1 percent, far higher than 2\.1 percent in urban areas) as well as late entry into the system (23\.4 percent of poor rural children entering first grade of primary school were over-aged as compared to 14\.2 percent in urban areas; an estimated 63 percent of Quechua-speaking children attending primary school were over-aged)\. A 1996 national learning assessment of children in the fourth grade found that only 38\.5 percent of rural school children mastered at least 9 out of 14 basic competencies, compared to 63\.5 percent of urban school children\. Findings of the 2001 learning assessment showed that children in multi-grade schools in rural areas performed well below those in multi-teacher schools in urban areas, and that Quechua- and Aymara- speaking children scored worst of all, performing in the bottom 1% of the distribution of reading comprehension scores\. Issues\. The Project attempted to address the following three key relevant issues underpinning the above-mentioned disparities in the educational sector: (a) low education access in rural areas; (b) low quality of rural schools; and (c) dysfunctional education management system\. (a) At the time of project preparation (2003) Peru displayed low coverage in both pre- school and initial education as well as in secondary education in rural areas\. Exposure to early childhood development programs (mainly through non-formal childcare and parent training) and to formal pre-school education has been shown worldwide to stimulate early brain development, avoid malnutrition and stunting, boost primary school readiness and subsequent learning attainment, especially among economically disadvantaged poor and 1 indigenous children, such as those living in rural areas\. Despite the fact that one year of pre-school education was (and continues to be) mandatory in Peru, in 2003 only 56 percent of rural 3-5 year old children had access to pre-schooling, compared to 67 percent in urban areas\. At the time, the Government of Peru (GOP) had not yet developed an overall strategy for mainstreaming pre-school access in rural areas or supporting the delivery of non-formal initial education programs to target population\. The net enrollment rate in secondary education in rural areas was 28 percent in 2003 as compared to 57 percent in urban areas\. Peru's extremely low population density and poor roads and transportation in most rural areas made expansion of secondary education using traditional face-to-face instructional models prohibitively expensive and thus favored the implementation of distance-learning education models\. According to the 2001 national learning evaluation, where secondary schools did exist in rural areas, quality was usually lower than that of urban schools\. (b) The low quality of rural schools was linked to: (i) low effective time on task (hours of instruction) by teachers; (ii) ill-adapted curriculum and teaching methods; and (iii) poor teacher quality and motivation\. About 90 percent of rural primary schools in the country were small multi-grade schools in isolated communities having difficulties in attracting and retaining well-prepared teachers because of the prevailing harsh physical and environmental living conditions\. Teacher housing in these communities was often rudimentary, if it existed at all, prompting many teachers to leave their schools for distant towns on the weekend, running the risk of not arriving back on time for class, or having to leave before the end of the school-week, because of limited transportation\. In addition, teachers had to leave their schools several times a month to collect their paycheck and needed teaching supplies for the school in the provincial capital city, attend training sessions and comply with administrative procedures, forcing them to leave classrooms unattended at least several days per month\. These factors, combined with high student absenteeism linked to families' need for children's labor, contributed to very low effective hours of instruction during the school calendar year in rural areas between an average of 200 to 250 hours per year as compared with the nationally mandated 900 hours during the school calendar year\. Teachers in multi-grade rural schools, usually were not trained in multi-grade teaching methods, and thus found it difficult to adapt and implement the existing primary curriculum\. In addition, students in rural areas lacked the self-paced instructional materials that were considered essential for effective teaching and learning in multi-grade settings\. Finally, the centralized teacher deployment system in existence at the time of project preparation failed to ensure that teachers could speak the local language and be able to deliver bilingual education in the early grades of primary schools in rural areas\. While the formal level of qualifications of Peru's teaching force is high, with some 95 percent of teachers holding tertiary education degrees, their average teaching performance is considered quite low as compared with other countries of similar level of income\. The following are key issues underpinning low teacher motivation and performance in the rural areas: (i) mismatch between supply and demand causing an 2 oversupply of teachers in urban areas and a deficit in the rural areas; (ii) unregulated low quality pre-service teacher preparation; (iii) low and unclear standards for entry into the teaching profession; (iv) low pay and inadequate incentives; (v) duality of treatment between appointed and contracted teachers; and (vi) poor teacher deployment and supervision\. Peru is a country with very limited formal employment opportunities and also limited opportunities for secondary graduates to study at the tertiary level\. Thus, despite unattractive pay, because of the unconditional, rigid stability attached to tenured status, the teaching profession became an opportunity to easily enter the job market, with full- life tenure, through an accessible training\. As a result, there was a massive and growing oversupply of teachers\. In 2001, some 270,000 teachers were employed, while another 80,000 had a title but no position\. The pre-service teacher training system produced between 15,000 and 20,000 graduates a year against needs of about 4,000\. As mentioned before, while on the aggregate there was an oversupply of teachers in urban areas for primary level, ironically there were at the same time shortages in specific categories (pre- school, multi-grade, secondary and bilingual education)\. There was an absence of an accreditation and quality certification system regulating the entire public and private pre-service teacher training institutions in the country (53 universities with faculties of education and 400 Higher Institutes of Pedagogy, 250 of which were private)\. This unregulated proliferation of, by and-large, low-quality training programs had produced a dramatic increase of badly trained teachers\. In addition, the disparities and deficiencies in teacher preparation were not corrected at entry into the teaching profession through rigorous and sound certification procedures prior to appointment\. Hiring of new teachers was not based on formal teaching standards and rigorous procedures\. Notwithstanding that recruitment tests were introduced in 1998, these were not criterion-based and did not evaluate the pedagogical ability, methodological skills, interpersonal and team skills as well as the community orientation of the candidates\. The average teacher salary in Peru at the lending phase was approximately 1\.6 times of the gross domestic product per capita compared to a multiple of 2 to 4 times in similar countries\. This was low pay, even after adjusting for average hours of work, which were less in Peru than in other Latin American countries, and less for teachers than for other professions in the country\. As a result, about 57 percent of the teaching force had taken up a second job further eroding the already limited time on task teachers could dedicate to their schools\. The salary structure existing at that time was fragmented and opaque, hardly designed to promote quality, generate motivation or produce results\. Most important, the allocation for rural areas and hardship posts was not only insufficient, but also portable, instead of being tied to the job position\. In addition, some teachers had permanent appointment status, while others worked under fixed term contracts\. The fact that there was no relationship between teachers' qualifications and employment status had been a constant source of teacher lack of motivation and discontent\. Finally, the centralized teacher deployment system had not ensured an appropriate allocation of teachers based on their language skills and/or their previous teaching experience\. 3 Accordingly, many inexperienced teachers were posted to rural schools, while others lacking language skills other than Spanish were posted to Quechua and Aymara, as well as other areas speaking other indigenous languages\. (c) The difficulties in the education management system were mainly manifested by: (i) an inefficient administration; (ii) a deficient school supervision and support; and (iii) low accountability of school performance\. The central Ministry of Education (MED) shared the responsibilities for nationwide provision of educational services (from pre-school to tertiary education) with 24 Regional Education Directorates (DRE), which varied considerably in terms of geographic size, school system development and student population, ranging from Lima with over 2\.1 million students to Madre de Dios, with less than 29,000 students\. A director headed each DRE\. Between the DREs and the schools level, there were 268 sub-regional offices known as Local Educational Management Units (UGELs) entrusted with administrative oversight, some of which also had a budgetary authority\. The MED was heavily centralized and inefficient\. Top-down initiatives emanated regularly from the central level with little concern for prioritization, avoiding duplication and losing implementation effect in the cascade-type delivery by the time they reached the schools\. At the DRE there was little autonomy for decision making as well as accountability for the performance of schools in their region\. Data on school performance and student learning was not organized and monitored at the DRE level, and DREs were neither rewarded nor sanctioned for their progress in improving educational indicators over time\. System-wide, there was a lack of focus on the school level for attaining results\. For example, at the time of project preparation there was not yet in place a standardized system of student assessment to track learning outcomes\. There were also clear problems at the UGEL level, which were marked by confusing geographic and functional demarcation of responsibilities, inadequate staffing and equipment for them to carry out their duties and low valued added to their schools under their responsibility\. There was no systematic school-level development planning at the school level\. Plans, where they existed, were not resourced, nor were they used as an instrument to hold schools accountable for implementing proposed improvements, especially in the learning dimension\. Schools did not have budgetary autonomy, and could not even undertake minor purchases or repairs\. Parents were invited to serve on Parents Association (Asociación de Padres de Familia, APAFAs) basically designed to collect money to benefit the school with additional inputs, such as inter-alia, infrastructure and fungible materials\. Finally, communication and access problems made contact between rural schools, regional education offices and the MED sporadic to non-existent\. In a case study carried out during 2000, rural schools reported less than one supervision visit per year\. Government's Strategy\. Prior to the identification of this project, the GOP launched an effort to bring together all the key stakeholders from political, religious, civil society and government organizations in order to agree on key state policies, especially in the social sector\. The result was the establishment of a social pact within the framework of a National Agreement setting, which established under its second objective the key policy to provide universal access to free quality public education\. Specific sub-policies under 4 this major one included Early Childhood Development, Rural Education, Teacher Development and Strengthening the Quality and Relevance of Basic Education through greater school autonomy\. Under these key policies, the GOP aimed at reducing the large disparities in schooling access and completion between rural and urban areas to achieve a substantial increase in the quality and efficiency of the education system overall\. The GOP determined that a holistic approach was necessary to address the issues described above and designed the following mutually reinforcing strategies: (i) improvement in education coverage and quality in the rural areas where 28 percent of Peru's population lived; (ii) increase in the quality of teacher preparation and in-service training through the introduction of teacher standards, teacher career path, continuous training and incentives mechanisms; (iii) overhaul of the education system management to increase accountability for results through decentralization, clarified governmental attributions and responsibilities and better measurement of outcomes so that actors at all levels could be held accountable for results; (iv) education for democracy and intercultural sensitivity through curriculum modifications and stronger emphasis in bilingual education; (v) indigenous peoples strategy to address one third of the national population speaking one of Peru's 42 indigenous languages; and (vi) demand-driven interventions to complement the traditional supply-driven interventions\. Accordingly, the GOP and the World Bank (Bank) agreed on a ten-year Adaptable Program Loan (APL), to be carried out in three phases lasting four (Phase I 2004-2007), three (Phase II 2008-2010) and three (Phase III 2011-2013) years respectively, to help design evaluate and implement these policies and institutional reforms and allocate the needed financial, human and physical investment (more detail on the other two phases of the proposed APL is provided in section 5\.1(a) of this Implementation Completion and Results Report - ICR)\. Rationale for Bank's Assistance\. The rationale for the Bank's assistance was argued on the basis of the Bank's extensive experience in supporting projects in rural education, with strong multi-grade, bilingual and intercultural components\. In addition, the Bank preparation team made the case concerning the Bank's wide experience with decentralization programs where local communities played an important role in the setting and implementation of social policies\. The experience gained by the Bank in Central America, Brazil and Colombia in these areas was seen as instrumental in assisting MED's efforts in developing quality education in rural areas in a more decentralized and effective fashion\. Finally, the Bank had already been working extensively with the GOP in the early implementation of the proposed reforms set for in the National Agreement\. The proposed Project was tied to previous Bank-financed investments in the education sector in Peru, some closed and some under preparation while others were still ongoing investments at the time of Board approval : (i) the Programmatic Social Reform Loans (PSRL I, Loan 4615-PE and II Loan 4678-PE, under preparation) promoting education policy reform through the development of the new teacher career structure and the piloting of a rural teacher incentive program, as well as providing the first steps towards decentralization and community participation; (ii) the Primary Education Quality Project (Loan 3826-PE, closed) to support expansion of access and improvement of education 5 quality for the poor; (iii) the FONCODES II Second Social Development and Compensation Fund Project(Loan 4068-PE, closed) to support infrastructure in rural areas; (iv) the National Program for Hidrological Basin Management and Soil Conservation (Programa Nacional de Manejo de Cuencas y Conservación de Suelos, PRONAMACHCS) (Loan 4130-PE, ongoing) to promote rural development; (v) the Basic Health and Nutrition Project (Loan 3701-PE, closed) and Health Reform Project (Loan 4527-PE, ongoing) to promote rural health; and (vi) the Rural Roads Project, under preparation\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) The Rural Education Project (Project) known in Spanish as Proyecto de Educación en Áreas Rurales (PEAR) was intended to be the first phase of a ten-year Program aimed at improving the quality and equity of basic education through cost-effective investments and systemic reforms of teacher quality and education management\. According to Section A\.2 and Annex 1 of the Project Appraisal Document (PAD) dated April 30, 2003 and Schedule 2 to the Loan Agreement (LA) dated December 5, 2003, the objectives of the Project (the first phase of the long-term Program) were to: (a) expand access in priority rural areas to early childhood development and pre-school programs and secondary school; (b) improve primary education quality in rural areas through teacher professional development, provision of multi-grade and bilingual education materials and rehabilitation of infrastructure where needed; and (c) improve efficiency system-wide by introducing a major reform of teacher policy and system management\. The following key outcome indicators (appearing in Section A\.3 and Annex 1 to the PAD), were agreed with the GOP at the Loan approval stage\. For the long-term ten-year Program, outside the scope of the Project, the agreed outcome indicators were: (a) primary completion rates aiming to reach 97 percent by 2013; (b) rural initial education coverage for 0-2 year-olds increased from 1 to 9\.7 percent by 2013 and net pre-school coverage for 3-5 year-old children increased from 58\.9 to 81 percent by 2013; (c) secondary school gross enrollment rate in rural areas increased from 37 to 55\.5 percent and rural secondary school coverage in grade 5 for youngsters less than 16 years old increased from 8\.8 to 16\.6 by 2013; and (d) Peru's performance on national standardized learning assessments improved\. For Phase I (2004-2007), the Project being assessed in this ICR, the agreed key performance (outcome) indicators and targets were: Percentage of 11 year-old children enrolled in sixth grade or higher in rural areas increased from 27\.6 to 28\.2 percent; Percentage of 11 year-old children enrolled in grades 5 and lower will not increase beyond 67\.1 percent; Rural 11 year-old children who do not go to school decreased from 5\.3 to 4\.6 percent; 375,000 children received bilingual materials and their teachers trained; Rural pre-school coverage (0-2 years) increased from 1 to 4\.7 percent; 6 Rural pre-school coverage (3-5 years) increased from 58\.9 to 64\.4 percent; Secondary school gross enrollment ratio in rural areas increased from 37 percent to 45 percent; Secondary school coverage at grade 1 for 12 or less year-old youngsters in rural areas increased from 8\.8 to 12\.1 percent; and Learning outcomes of children in target Project Areas1 showed improvement on national assessment at the primary level\. In addition, the following trigger indicators were agreed with GOP to graduate to Phase II of the APL (Section B\.4 of the PAD): Twenty five percent of teachers working in the Project Area undergo performance evaluation; No less than 3,000 teachers in rural areas under incentive scheme; About 3,040 teachers in rural areas trained in multi-grade methodology (which represent 80 percent of the total universe in Project Area estimated in 3,800 teachers) and all rural schools in Project Area provided with quality learning materials; About 7,500 primary bilingual teachers in the country (which represent 50 percent of the total universe estimated in 15,000 teachers) trained in dual language instruction and redeployed in line with their acquired skills; Assessment of teacher training programs carried out satisfactorily; Under the framework of the management capacity build-up at the school level, about 250 Institutional School Councils (Consejos Educativos Institucionales - CONEIs) established in an equal number of rural schools and operating according to current regulations; and At least 200 networks operating with the networked Institutional School Councils under approved Educational Institutional Projects (Proyectos Educativos Institucionales PEIs)\. Annex 1 of the PAD also includes an extensive list of output indicators for each component agreed for Phase I as well as preliminary outcome indicators for Phases II and III of the APL and agreed triggers to graduate to Phase III\. All these indicators are not listed in this section of the ICR\. However, Section 3\.2 and Annex 2 of the ICR account for the status on the achievement of the agreed triggers for the first phase as well as for the implementation performance of each Project Components including the status of some of their corresponding outputs at the time of the closing of the Loan\. 1 According to Article I, Section 1\.01(r) of the LA, "Project Areas" meant that originally the project comprised the Regions of Amazonas, Ancash, Ayacucho, Cajamarca, Cusco, Huancavelica, Loreto, Piura, Puno, San Martin and Ucayali, and any other Department that may be acceptable to the Bank in addition to, or in substitution of, the above Regions \. 7 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification PDO and key outcome and output indicators were not formally revised during project implementation\. As further explained in Sections 2\.3 and 3\.2 of the ICR, some of the key outcome and output indicators included in the PAD were slightly modified in the ISRs and are included in the ICR data sheet\. These changes were implemented in order to reflect the new methodology used by the Statistics Unit in MED to estimate efficiency indicators\. 1\.4 Main Beneficiaries, (original and revised, briefly describe the "primary target group" identified in the PAD and as captured in the PDO, as well as any other individuals and organizations expected to benefit from the project) Section C3 of the PAD stated that the Project would benefit rural children of all school ages through increased coverage and quality of education\. With respect to the expanding access to be financed by the Project, the non-formal and formal pre-school education aimed at benefiting 30,000 children 0-2 years old in rural areas, including a large proportion of indigenous children and 38,000 additional children 3-5 years-old in pre- school programs of which 11,000 would represent increased coverage financed by the Project\. In addition, the distance secondary education program was expected to benefit approximately 5,000 rural students in 116 schools\. With respect to the quality interventions to be financed by the Project, the continuous teacher training was aimed at benefiting 1,500 teacher trainers in public sector non- university training institutions as well as 3,800 teachers in the Project area working in multi-grade schools and 15,000 bilingual teachers nationwide\. In addition, 330,000 rural children in the Project Area and 375,000 indigenous children nationwide were expected to benefit from all the quality-related interventions (provision of learning materials including bilingual educational materials and improved teaching practices)\. Finally, about 1,900 classrooms in poor rural areas were expected to benefit from rehabilitation or substitution of infrastructure to be financed by the Project\. With respect to the reform of teacher policy and education management, the increased school autonomy and the networks supported by the Project were expected to benefit about 3,180 schools by allowing teachers and local communities to carry out local planning and receiving closer and more frequent support from itinerant teacher support groups\. Finally, the Project was expected to restructure the 24 DREs and to strengthen the statistical and student assessment systems\. 1\.5 Original Components (as approved) The following three components were included in the Project's original design as fully explained in Section C\.1 and Annex 2 to the PAD and in Schedule 2 to the LA (more 8 detail on the implementation of these components and their outputs is provided in Section 3\.2 and Annex 2 to the ICR): Component A Expanding Education Access for Rural Children (Total Cost US$10\.54 million; US$6\.97 million from the Loan)\. This component, representing about 11 percent of the total loan, aimed at financing access to quality: (i) initial (for 0-2 year- old children) and pre-school education (for 3-5 year-old children) costing about US$2\.71 million; and (ii) secondary distance education costing about US$7\.83 million\. Activities under this component included, inter-alia: (a) carrying out baseline studies on rural families' upbringing practices as well as other studies related to pre-school and indigenous education; (b) design of alternative service delivery models for both initial and secondary education; (c) preparation, publication and distribution of manuals and training modules for facilitators of the initial modality (Animadoras), teacher coordinators and parents; (d) production and dissemination of audiovisual educational materials; (e) selection and procurement of other educational materials as well as improvement and procurement of existing learning materials; (f) in-service teacher training; (g) creation and delivery of pedagogical support mechanisms; (h) development of community programs; and (i) the carrying out of several evaluation studies including assessments of alternative initial education, integral care delivery models and secondary distance education\. Component B Improving Quality in Rural Primary Schools (Total Cost US$63\.58 million; US$32\.05 million from the Loan)\. This core component, representing about 68 percent of the total loan, aimed at financing: (i) continuous teacher training systems costing about US$24\.86 million; (ii) curricular adjustment and provision of educational and communications materials costing about US$9\.09 million; and (iii) rehabilitation and equipping of rural schools costing about US$29\.63 million\. Activities under this component included, inter-alia: (a) a redefinition of the pre-service teacher training curriculum and adoption of new training and performance standards; (b) establishment of accreditation system for the Teacher Training Institutions (TTIs); (c) training for masters trainers at the TTIs; (d) provision of access to updated educational information and best national and international practices through the financing of competitive TTI's innovation initiatives; (e) establishment of in-service teacher training modules focusing on multi-grade methodologies and bilingual education; (f) developing social marketing activities designed to promote teachers' professional standing among the educational community and society at large; (g) evaluation of the revised pre-and in- service teacher training programs including a baseline study; (h) design, validation, acquisition and provision of educational and communicational materials to support multi- grade methodologies and bilingual education; (i) carrying out studies on systematization of knowledge, practices and histories of indigenous peoples for curriculum diversification as well as on ethnographic issues related to classroom work, children's games and use of free time; (j) rehabilitation and equipping of approximately 1,900 classrooms and 1,500 complementary facilities in the Project Area; and (k) provision of preventive maintenance of the classrooms and complementary facilities rehabilitated under the Project\. 9 Component C Reform of Teacher Policy and Educational Management (Total Cost US$20\.08 million; US$12\.86 million from the Loan)\. This component, representing about 21 percent of the total loan, aimed at financing: (i) a Teacher Policy Reform costing about US$1\.6 million; (ii) a Reform of Educational Management costing about US$6\.94 million; (iii) a School Development Fund costing about US$1\.76 million; (iv) a National Assessment System costing about US$4\.61 million; (v) Strategic Analysis and Policy-oriented Research costing about US$2\.82 million; and (vi) Project Management costing about US$1\.83 million\. Activities under this component included, inter-alia: (a) the design and implementation in the Project Areas of a teacher career development system; (b) development and dissemination of guidelines, operating manuals, software and other instruments to share information on the teacher career development system; (c) establishment of six Amauta Centers ; (d) upgrading the teacher management information system as well as 2 refurbishing of the statistical system to ensure timely collection, processing and analysis of educational data and validation of school networks; (e) carrying out of national and local workshops to involve teachers and other members of the educational community of the policy reform pursued by the Project; (f) establishing, training and monitoring Institutional School Councils and School Network Councils; (g) designing, implementing and disseminating school network institutional development plans, including participatory planning, management, monitoring and evaluation instruments; (h) establishment and evaluation of rural school networks; (i) developing and disseminating the concept of educational community involving a variety of stakeholders; (j) incorporating community initiatives into the operation of Institutional School Councils, School Networks Councils and the design of school network institutional development plans; (k) designing, establishing and operating of a school development fund, to finance the design and implementation of improvement programs developed and managed by schools and school networks in the Project Areas; (l) developing and administering in 2004 a series of national and census-based learning assessments in language, mathematics, communication skills, citizenship education and social skills for primary and secondary education students; (m) carrying out longitudinal studies, school effectiveness studies, teacher career development studies, decentralization and school autonomy studies, demand-driven incentives studies, classroom intercultural related studies and other related institutional research; and (n) the management of the Project by a Project Coordinating Unit (PCU) including the required annual audits and impact evaluation studies\. 2The "Amauta Centers" established by the Project were conceived as a pro-active and demand-driven teachers professional development centers aimed at: (i) planning, coordinating, monitoring and evaluating regional in-service teacher training activities; (ii) organizing regional in-service teacher training demand expressed by schools and school networks and help identify teacher training institutions able to address such demands; and (iii) providing technical assistance to schools, school networks and MED regional and district offices\. 10 Table 1 shows the original Project costs and all sources of funding as they appear in Section C\.1 of the PAD\. Table 1\. Original expected costs and sources of financing at appraisal Components Total indicative Bank financing GOP % financed by Costs (US$M) counterpart the Bank (US$M) (US$M) (2)/(1) (1) (2) (3) 1\. Expanding Education Access for Rural children 1\.1 Access to quality initial and 2\.71 1\.45 1\.26 53\.5 pre-school education 1\.2 Secondary distance education 7\.83 5\.52 2\.31 70\.5 2\. Improving the quality in rural schools 2\.1 Continuous teacher 24\.86 15\.74 9\.12 63\.3 development systems 2\.2 Curricular adjustment and 9\.09 3\.45 5\.64 37\.9 provision of educational materials 2\.3 Rehabilitation and equipping 29\.63 12\.86 16\.77 43\.4 of rural schools\. 3\. Reform of teacher policy and education management 3\.1 Teacher policy studies 1\.60 1\.25 0\.35 78\.1 3\.2 Reform of education 6\.94 5\.26 1\.68 75\.8 management 3\.3 School development fund 1\.76 0\.07 1\.69 0\.04 3\.4 National assessment system 4\.61 2\.75 1\.86 59\.6 3\.5 Strategic analysis and policy- 2\.82 2\.26 0\.56 80\.1 oriented research 3\.6 Project Management 1\.83 1\.37 0\.46 74\.9 Total project costs 93\.68 51\.98 41\.7 55\.5 Front-end-fee 0\.52 0\.52 0\.00 100\.0 Total financing required 94\.20 52\.50 41\.7 55\.7 1\.6 Revised Components Components were not formally revised, though the GOP and the Bank had agreed in early 2007 to proceed with the restructuring of the Project\. The restructuring would have been aimed to simplify the original project design, including the cancellation of five sub- components, and the extension of 18 months to the loan's closing date\. MEF decided, late in 2007 not to extend the Project\. Likely reasons for this decision included poor project implementation performance, weak managerial and implementation capacity and unclear political commitment of MED, as well as an overall political mandate to reduce externally-funded loans\. Thus, the original components were not revised during Project 11 implementation\. Section 2\.3 of the ICR describes in more detail the reasons for restructuring and the restructuring proposal\. 1\.7 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) No other significant changes to the original project design were made during project implementation\. Still, there were certain actions that resulted in some changes in Project implementation strategy\. In June 2005 MED redesigned the implementation strategy\. This new strategy called for project activities to be phased in, targeting initially few specific places before launching their scaling up\. This strategy arose in response to the fact that the various pilots that were expected to take place during the lending phase did not occur and had to be implemented at the beginning of the Project\. The LA experienced two minor and simple administrative-type amendments: (a) the first, approved by the Bank on May 26, 2005 and countersigned by the GOP on June 17, 2005, allowing the Director General of Public Credit of the Ministry of Economy and Finance of the GOP to sign loan-related withdrawal applications; and (b) the second, approved by the Bank on August 30, 2005 and countersigned by the GOP on September 13, 2005, eliminating the FONCODES Special Account that was originally opened for the rehabilitation of school infrastructure in rural areas and allowing transfers to this institution to occur through the MED Special Account\. The second amendment came about by the absorption of FONCODES into the Ministry of Women and Social Development during the implementation cycle, thus legally impeding FONCODES to execute project-related funds that were part of MED's budget\. During the mid-term review, the Bank and the GOP agreed that project restructuring was necessary\. Although the restructuring did not occur, MED started implementing some of the changes in mid-2007\. The purpose of the restructuring, which would have included an 18-month extension, would be to: (i) reduce the number of sub-components from 11 to 6; (ii) replace targets for outcome and output indicators with more modest, but achievable targets; and (iii) focus the geographical scope of project implementation\. The proposed restructuring was to emphasize initial education, multi-grade and bilingual intercultural education in rural areas and the strengthening of in-service teacher training for the above- mentioned levels and modalities of education\. Alongside, a request to cancel about US$12 million of the outstanding loan was going to be made with the extension\. While actively participating in the early restructuring discussions, at the end, MEF did not support the extension based on their concerns with respect to: (i) the weak financial, managerial and physical performance record shown by MED since the Loan effectiveness; and (ii) the perception that MED would not be able to implement the Project in the absence of a solid administrative infrastructure\. As a result, the GOP and the Bank decided not to proceed with the second phase of the APL scheme considered at appraisal\. 12 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their mitigations identified, and adequacy of participatory processes, as applicable) This and the following sections in the ICR were written based on: (i) a thorough review of the Project files; and (ii) the findings of an ICR field mission carried out in May 2008 which including a visit to the Region of Cusco, which was one of the Regions that received the greatest amount of support from the Project\. The Project was subjected to a formal Quality at Entry Assessment (QEA) carried out on July 15, 2003, about two months after Board approval\. The QEA rated the preparation cycle as satisfactory\. On the other hand, this ICR rates Quality at Entry as moderately unsatisfactory, based on current best quality at entry practices recommended in Bank guidelines, which were not in place at the time of Project appraisal\. A summary of the ICR's assessment on these topics follows, while section 5\.1 (a) of this ICR provides more detail on this assessment\. The strategic relevance and approach selected by the Bank team was the correct one based on the extensive sector work underpinning the Project design\. Nonetheless, the great complexity associated to the holistic nature of the design imposed a series of challenges for the implementation, coordination and monitoring of activities that should be taken into account for further Bank operations of this type on behalf of efficiency, efficacy, impact and sustainability\. The selection of an APL as the financial instrument to gradually achieve GOP's education sector medium-term vision derived from the national consultation process was also a correct decision by the Bank team\. The Project's lending files attest to client orientation through effective policy dialogue with the GOP and an extensive consultation process ensuring in the process GOP's ownership of the Project design\. With the constant changes of Governments, the Bank team and the regional management rightly waited until the new Government provided clear signs of its full support of the Project, and thus, this explains the long time it took to prepare this operation\. Preparation took approximately four and a half years, from late 1998 until May 2003, when the Project was approved by the Board\. During this period, there was political turmoil, resulting in the re-reelection and subsequent resignation of Mr\. Fujimori (2000), a Transition Government (November 2000-July 2001) that did not want to commit to medium-term initiatives, and the elected Government of Mr\. Toledo (starting in July 2001)\. Once the Toledo Government showed interest and commitment, the preparation process on the Government side required that the Project be appraised under the National Public Investment System (Sistema Nacional de Inversión Pública, SNIP)\. Given the rigidities and requirements embodied in the SNIP, this process took more than a year to conclude\. 13 There is evidence of effective partnership by the Bank team through the development of good working relationships with other donor agencies, in particular the Inter-American Development Bank (IDB) and the United Kingdom's Department for International Development (DFID)\. The Bank team ensured compliance with Bank's safeguard policies, in particular with the environmental and indigenous people guidelines\. With respect to the risk assessments, the PAD did not mention any risk of newly trained and upgraded teacher demanding higher pay and the impact that this would have on the sustainability of the Project\. The Bank team included lessons learned from the Social Development and Compensation Fund (FONCODES, Ln\.4068-PE, closed) and the Primary Education Project (Ln\. 3826- PE, closed)\. The ICR detects four quality-at-entry shortcomings associated to initial assumptions that were not met\. First, although the approaches included in the Project design were well- tested and technically proven effective elsewhere, the Project design was overly ambitious covering too many fronts thus hindering implementation performance, especially in the context of the high centralization and managerial weaknesses of MED\. Second, as a direct consequence of the complexity of the project design (in terms of components, sub-components and activities), the implementation strategy was not well defined, thus lacking a critical route that would have allowed the technical team to visualize priorities and to update them during the implementation cycle\. Third, the original targets set at the time of appraisal resulted too ambitious given the weak capacity of the MED\. Finally, notwithstanding the institutional capacity building assessment done by the Bank team during the lending cycle, the ICR detects additional shortcomings in this assessment (further explained in more detail in section 5\.1(a) of the ICR) leading to the conclusion that implementation readiness conditions were not fully present at the time of Board approval\. Weighting the above strengths and weaknesses in the preparation stage of the lending cycle, in particular the over ambitious design and the lack of implementation readiness at the time of Board approval, the ICR ranks the Quality at Entry of this Project as moderately unsatisfactory\. 2\.2 Implementation (including any project changes/restructuring, mid-term review, Project at Risk status, and actions taken, as applicable) This section provides the key factors and events through the project implementation cycle that contributed to its achievements and shortcomings\. While there were no factors beyond government control there were three areas where events and decisions at the government level significantly jeopardized project implementation\. While the National Agreement and the ample consultation process carried out during the preparation phase raised the need to target social programs, particularly in education and health, to rural and indigenous populations, frequent changes in high-level decision 14 makers and technical staff meant that priorities with respect to policies and strategies changed\. The current government's education policies are now focused on teacher development reforms through evaluation, strengthening the quality-at-entry of prospective teachers into the educational system and training\. Moreover, the focus on the development of new pedagogical and management models appropriate to the rural context lost priority\. Thus, decision related to rural and bilingual education as well as for community participation and network support took extremely long times to come to closure, if any, and the technical staff working on these activities did not feel supported in their own decision-making process\. This Project was the first one in the social sectors to be subject to the SNIP, thus paying the price of working in the context of a highly rigid, still untested, assessment norms\. The SNIP required that any changes implemented by the Project be previously approved by the Dirección General de Programación Multianual (DGPM)\. The proposed restructuring required an elaborate process, including supply-demand and cost-benefit analyses\. The preparation of the required documents for the restructuring took about one year (starting after the mid-term review in December 2006)\. The length of this process can be attributed to the weak capacities of the MED team to undertake the Project analyses required by the SNIP, in light of a very small team carrying out a very difficult task with extremely complex requirements\. Furthermore, organizational changes within MED essentially short circuit its project implementation capacity\. As part of a national policy and law on merging of programs aimed at achieving greater efficiency in public sector management, a national directive was issued on August 30, 2007, ordering the merging of the PCU in the Administrative Office (Oficina General de Administración) of MED\. Despite the repeated warnings made by the Bank supervision team with respect to the need to revise the administrative processes prior to proceeding with the restructuring that had been agreed in principle with the Bank3, MED enacted the merging without having in place the appropriate transferring mechanisms\. The PCU legally ceased to exist as such, and the Project came to a complete stop\. With this measure, the GOP failed to comply with articles 3\.03 (a) (ii) and (b) of the LA with respect to maintaining a PCU, staffed by core professional staff in numbers and with the experience and qualifications acceptable to the Bank, throughout the entire implementation cycle\. In addition to the above-mentioned areas at the government level, three other factors at the project level negatively affected implementation\. First, administrative and technical readiness conditions were not met as agreed, resulting in implementation delays\. Effectiveness conditions, including establishment of the steering committee, approval of the operations manual, and signing of the MED-FONCODES agreement took longer than originally expected, thus the very slow start up lasting practically until the end of 2005\. 3The Bank team discussed the implications of these changes with MED during the mission of June 2007 and followed-up with a workshop led by the Financial Management Specialists where Bank policies on fiduciary responsibilities were discussed\. 15 In addition, project design was built on the commitment from MED to allocate adequate resources to develop and initiate validation of the initial, multi-grade and secondary education models\. This commitment was not met, and piloting actually occurred during the first two years after effectiveness\. Second, the design assumed that MED had the capacity to effectively implement the Project, given the satisfactory implementation record shown on the previous Bank- financed project\. Thus, the previous implementation design was used, consisting of a small PCU that would manage project funds and carry out the planning and coordination of the Project\. Technical staff would be stationed either in the technical directorates within MED or in the regions\. These assumptions were not met, and the Project's design resulted to be extremely complex given the current managerial, fiduciary and technical limitations shown by the centralized and weak managerial capacities of MED\. To counter the difficulties in project management, MED established a cumbersome coordination structure4 which did not operate well and did not resolve the problems\. Throughout the implementation phase, activities were not well articulated (specifically between the pedagogical-related activities and the institutional-related interventions), and role confusion was pervasive\.5 Third, in the context of the decentralization process at the time, which attributed new responsibilities to the Regional Governments, the Project design assumed that Regional Education Directorates would take on a very active role in the implementation process\. Thus, the Project was expected to strengthen technical and management skills in the Regions, which would have a fluid communication with MED, in order to implement centrally issued policies\. Nonetheless, in practice, such coordination was either poor or inexistent\. The modus operandi of MED was based on direct communication with Local Educational Management Units and prioritized logistics instead of technical aspects\. This was evidenced during the field visit to Cusco in which several authorities expressed their uneasiness about how the implementation process had actually been conducted "in the field" following the path Lima - Canas (local level) with no coordination with Cusco (regional level)\. 4 An Executive Committee (Comité Directivo) with seven members was established in March 2004 by Ministerial Resolution overseeing and Administrative Committee for the Project (Comité de Gerencia) also established by Ministerial Resolution in October 2004 and including nine members\. In addition, under the context of ensuring more participation of key areas of the MED and other important stakeholders outside the MED, a third layer of decision making was established the Operational Committee\. These three layers of decision-making significantly delayed project implementation\. 5 This was notorious in the interaction of the central authorities of the MED with its more decentralized administrative units in the field (DREs and UGELs)\. 16 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization The Project's monitoring and evaluation scheme was not ready at the time of Board Approval\. The baseline was provided in September 2006, more than three years after the approval of the loan and more than two years after the project launching and the effectiveness of the LA\. Some output indicators, very few as compared to the original list included in the PAD, were first reported in the Implementation Status Results and Report seventh (June 6, 2006), while also few outcome indicators were first reported in the ninth ISR (December 12, 2006), one year before closing the loan\. At the time the ISRs were introduced in the Bank as the official format to communicate supervision findings (much after the date of the Board approval), a directive was issued to limit the number of outcome indicators to no more than four or five\. Therefore, the task team leader was encouraged to select "tracer" indicators to be reported in the ISRs, and thus, the number of outcome and output indicators reported in the ISRs is smaller to that in the PAD\. The indicators not reported in the ISRs were continuously included in the quarterly Financial Management Reports (FMRs) sent to the Bank\. According to the ISRs, the quality of the information on outcomes and outputs provided by the GOP was qualified as fair\. Prior to the implementation of the Project, MED did not have a monitoring and evaluation system in place\. Thus, the Project facilitated the opportunity to design, validate and implement an information platform that was expected to be up-scaled at the sector-level\. Still, the Project's effort in this area raised awareness among MED officers and staff about the importance of generating high-quality data for making informed outcome-oriented decisions\. During the field visit to Cusco, the team observed that, while monitoring exercises were actively promoted by project staff from Lima, local actors indicated that there were several challenges around this issue\. Among them, there are four that deserve attention: (i) emphasis of monitoring as a "checklist of activities" (inputs and outputs) rather than focusing on outcomes; (ii) lack of a minimum set of clear, understandable and timely indicators that could locally orient the monitoring process and the involvement of relevant actors; (iii) insufficient support from regional and local education staff associated to a limited capacity to comply with this role given the lack of experience and/or human resources; and (iv) focus of monitoring exercises as a control mechanism instead than as an opportunity to locally provide feedback and readjust targets\. The Bank team insisted, both during project preparation and implementation, on independent evaluations of the pilots being tested in initial and secondary levels\. Despite the insistence of the Bank supervision teams to ensure a results-based project, MED did not contract rigorous evaluation studies of these pilots to be conducted during the implementation cycle, beyond the excellent work conducted to establish a comprehensive 17 baseline data6\. The Project was key for MED to administer the standardized learning assessment of 2004 and use the findings to fine-tune project activities\. Notwithstanding the activities financed by the Project to strengthen the national learning assessment system, a decision was taken by MED not to conduct, during 2007, a new assessment to update the information collected in 20047\. The reason for this decision was that MED gave priority to the implementation of the second census-based student learning assessment for second graders and bilingual fourth graders administered in December 20078\. The results of a Project impact or outcome evaluation study and/or new learning assessment information to compare with the 2004 findings were not available at the time of preparation of this ICR\. Therefore, it has not been possible to establish that the few outcome gains indicated in the data sheet of the ICR are a direct result of the interventions of the PEAR (more on this in Section 3\.2 of the ICR)\. 2\.4 Safeguard and Fiduciary Compliance (focusing on issues and their resolution, as applicable) The implementation readiness condition with respect to the procurement of goods, services and civil works to be financed under the loan were not present at the time of Board Approval\. The procurement capacity assessment undertaken during the lending cycle identified some procurement-related issues that were not appropriately addressed by the GOP prior to effectiveness\. No approved final Project's Operational Manual was available at this time, although a draft had been discussed with the Bank\. There was a preliminary draft of a first-year procurement plan that was discussed during appraisal but was not included in the Board package\. Finally, the fact that the PCU lacked appropriate capacity to carry out these activities following Bank guidelines and procedures at the time of loan effectiveness, contributed to implementation delays\. This Project was subjected to three ex-post Procurement Reviews that were carried out in June 2005, April 2006 and November 2006\. Some of the findings of these reviews were: (i) lack of formal status and inability to make decisions caused the PCU, in practice, to 6 This baseline study pioneers work done in the social sectors in Peru, in particular in the education sector\. It includes very rich and useful information concerning, inter-alia: (i) net enrollment rates for different age groups; (ii) internal efficiency data with respect to completion rates, dropout rates, repetition rates in primary and secondary levels; (iii) enrollment data by educational levels and modalities; (iv) number of teachers and school principals by educational level and modality; (v) learning assessment outcomes; and (vi) other information related to school community participation\. The above information was collected for a comparable control group as well as for the treatment group\. Once the preliminary findings of the 2008 learning assessment are made available, comparisons between schools benefited by the Project with respect to schools in the control group could be made\. 7 The assessment has been postponed for 2008\. Funds have been already allocated under the national budget\. 8 Most likely, the preliminary findings of these assessments would be made available in the second semester of 2008, after this ICR has been submitted to the Board\. 18 rely heavily on approvals and procurement-related decision made at different levels of the MED (including the General Administrative Office, the Legal Department and the Secretariat General) generating, in turn, lengthy and heavy acquisition and selection processes (on average, twice as long as the time set for in the Operational Manual); (ii) the PCU lacked appropriate procurement-related capacity to follow through the Bank's guidelines and procedures effectively and in a timely manner, a situation that worsened with the continuous turnover of key personnel at both, the PCU and the MED; (iii) duplication due to unnecessary reviews and approvals caused by confused roles, cumbersome coordination mechanisms and accountability channels making the existing administrative arrangements in place not efficient nor conducive to expeditious and timely decisions; and (iv) inappropriate filing system\. These additional processes not only did not add value for ensuring more effective controls, as intended, but to a large extent, explain the reasons for major delays and inefficiencies present in the low implementation progress rate achieved in the first two years after loan effectiveness\. The review of the FMRs submitted by GOP from the third quarter of 2004 to the third quarter of 2007 showed that: (i) overall, the FMRs prepared and furnished to the Bank complied with Section 4\.02(a) to the LA but were, often incomplete and, by and large, submitted to the Bank with delay outside the 45 day period after the end of each subsequent quarter; (ii) weak planning, budgeting and accounting processes led to a debilitated financial management oversight of Project execution by the PCU; (iii) deviations with respect to expected physical and financial targets were not sufficiently explained; and (iv) the PCU did not follow-up appropriately the corrective measures agreed upon with the Bank\. Audit reports were submitted to the Bank on time\. Even though the auditors found that the MED complied with the terms of the agreement and the applicable laws and regulations, some exception to the compliances of the clauses were identified, including: (i) the Operations Manual was not updated on a timely basis, (ii) the Project suffered continuous delays in submittal of the Annual Operational Plan (POA) for the Bank's approval, (iii) project progress reports and FMRs were also sent to the Bank after the agreed deadlines, (iv) transfers for an amount of S/\.6,136,570 made to FONCODES in 2005 were not registered as an advance account (cuenta pendiente de rendición) in the Balance Sheet, requiring further monitoring by the Bank's FM team\. In addition, the Auditor's Management Letter identified some deficiencies with respect to the internal control process: (i) procurement process documents were not adequately supported and did not keep a sequence; (ii) Annual Procurement Plans experienced several modifications without appropriate approval; (iii) the Operations Manual was never updated to reflect changes in the PCU; (iv) some consultants services were incorrectly registered under Category 5-Operational Costs and some training events were registered under Category 3-Consultant Services; and (v) cash advances that were not utilized by consultants were only reimbursed to the Project between 6 and 88 days after contracts were completed\. 19 Given the above, in addition to supervision mission findings, the procurement and financial management were rated unsatisfactory (U) in the last ISR (13)\. The indigenous peoples plan was appropriately implemented, albeit at a slower pace as anticipated and was also subject to weak support from the decision-making levels in the MED\. Although an evaluation was not made, a spot check showed that FONCODES' environmental guidelines were used and, overall, there were no significant environmental impacts\. 2\.5 Post-completion Operation/Next Phase (including transition arrangement to post-completion operation of investments financed by present operation, Operation & Maintenance arrangements, sustaining reforms and institutional capacity, and next phase/follow-up operation, if applicable) Despite the decision taken by the GOP and the Bank not to proceed with the second phase of the proposed APL, the Borrower is technically, institutionally and financially sustaining some of the activities financed by the Project, although at a low pace\. First, the validated pedagogical innovations in initial, multi-grade education, bilingual and intercultural education are being gradually scaled up by the MED, including the corresponding teacher training and the acquisition of learning materials\. Second, the strengthened national assessment system will undertake a learning assessment measurement and produce the preliminary findings of the Student Census Learning Assessment for second-graders and bilingual fourth graders in the second semester of 2008\. Third, the teacher policy reform is progressing, albeit at a slower pace than expected\. The Peruvian Congress just approved the Laws corresponding to the establishment of the Teaching Professional Development Career (Carrera Magisterial) and the National Educational Assessment and Certification System (Sistema Nacional de Acreditación y Certificación Educativa, SINEACE)\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) At the lending stage\. The Project design was consistent with the Country Assistance Strategy (CAS) for Peru (Report 24205-PE), discussed by the Board on August 19, 2002, covering the period until December 2006\. The Project was aligned with the overall CAS objective of supporting the GOP's strategy for poverty reduction focusing on competitiveness and employment generation, access to basic social services (health, education and culture) and creating a public administration that served the people\. That CAS aimed at promoting the recovery of growth by investing in education, which was thought to be the key to raising productivity, especially for the poor, whose only asset was their human capital\. 20 The Project was expected to contribute to macroeconomic stability by improving the efficiency of social spending, in this case, through investments in the education sector in rural and indigenous areas of greatest poverty, helping, as a consequence, to mitigate the negative impact of the economic slowdown on the poor\. The long-term ten-year program, for which the Project constituted the first four-year phase, was thought to explicitly: (a) support the development of more efficient institutions in the education sector by strengthening accountability and streamlining regional administration; and (b) strengthen stakeholder voice in education by decentralizing managerial decision-making processes to the school-level councils involving parents and other key community members\. Current GOP's policy and Bank strategy\. The current Country Partnership Strategy (CPS) for the Republic of Peru (Report 37913-PE) dated December 19, 2006 discussed the direction of future Bank support to help the new administration of President Alan Garcia achieve its goals of poverty reduction, decreased inequality and more effective and responsive governance\. The CPS describes the proposed support corresponding to the Bank's fiscal years 2007-11 grouped into a combination of activities, referred to as clusters that together aim to contribute to the achievement of the envisaged outcomes\. The CPS includes six clusters, two of them directly related to the PDOs of the Project: (i) promoting and developing a new social contract in education, health and nutrition; and (ii) modernizing state institutions\. Under the first cluster mentioned-above, Bank support would be geared to continue financing interventions aimed at improving the quality of education as a way to raise the basic standards in the educational levels, especially among the poorest segments of the population\. It would also support the key policy changes needed to develop this results orientation in the social sectors (education included) and to support the decentralization of education and health programs to the municipalities\. Under the second cluster, the focus would include, inter-alia, interventions to strengthen public sector management and assist in the process of decentralization, including the one envisaged for the MED\. As per the above, the Project's PDO currently continues to be highly relevant\. 3\.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes, with details on outputs in Annex 2) This section summarizes progress in terms of the PDO outcomes and output indicators\. Annex 2 provides further details on the achievements of the Project's outputs by component while Section 3\.3\. and Annex 3 present the efficiency and economic analysis\. Assessment of PDO Outcome Achievements\. Achievement of the PDOs are rated moderately unsatisfactory for the following reasons: The PAD included indicators for all three levels of schooling, initial, primary and secondary\. There were three efficiency indicators for primary (see table below) which aimed at monitoring desertion as well as overage children, two key problems found in 21 rural areas\. In addition, there was a specific indicator aimed at bilingual schools\. This indicator was expected to be modified once the data on indigenous bi-lingual population was measured\. Unfortunately, the 2005 census did not include the question on language spoken at home and the data for the 2007 census is still not available\. The situation for secondary education is similar to that for primary, that is, there are two indicators aiming at measuring overall enrollment and overage children\.9\. All PDO indicators (see Table 2), where available, showed an improvement, often meeting the target or surpassing it\. This is the case for: (i) percentage of 11 year-old children enrolled in sixth grade or higher in rural areas which increased by 0\.6 percentage points; (ii) rural 11 year-old children who do not go to school which decreased by 0\.7 percentage points, (iii) rural pre-school coverage (3-5 years) which increased by 5\.5 percentage points; and (iv) secondary school coverage at grade 1 for 12 or less year-old youngsters in rural areas which increased by 3\.3 percentage points\. While it is possible that the Project did contribute to this improvement in these indicators, but it is impossible to determine attribution, particularly given that output indicators did not reach the intended targets (see section below)\. Table 2 Achievement of PDO Indicators10 Indicator* Baseline Target Actual Percentage of 11 year-old children enrolled in sixth grade or 37\.08% (rural) 37\.66% 41\.70% (rural) higher in rural areas increases by 0\.6 percentage points 44\.27% (project 50\.21% area) (project area) Percentage of 11 year-old children enrolled in grades 5 and lower 67\.1% 67\.1% (or NA will not increase less) Rural 11 year-old children who do not go to school decreases by 7\.41% 6\.71% 3\.87% 0\.7 percentage points 375,000 children received bilingual materials and their teachers 0 375,000 239,520 trained Rural pre-school coverage (0-2 years) increases 1% 4\.7% NA Rural pre-school coverage (3-5 years) increases by 5\.5 percentage 48\.09% 53\.59% 54\.79% points Secondary school gross enrollment ratio in rural areas increases by 71,39% 79\.39% 77\.74% 8 percentage points 9 The preliminary findings of the new learning assessment measurement to be administered during 2008 will allow some comparisons with the baseline data for the treated as well as for the control groups\. 10 Note that baseline indicators are different from those in the PAD\. The reason for this is that the baseline study recommended the use of different sources of data\. The original baseline numbers were calculated using the national student census as denominator and population projections from INEI, based on the 1993 census\. These projections, as compared to the data from the 2005 census, showed to be inaccurate\. Thus, baseline data used as denominator the data from the latter census\. Baseline data are for 2004, actual data for 2007, unless otherwise indicated\. 22 Indicator* Baseline Target Actual Secondary school coverage at grade 1 for 12 or less year-old 37\.08% (rural) 40\.3% 41\.70% (rural) youngsters in rural areas increases by 3\.3 percentage points 44\.27% (PEAR 50\.21% (PEAR districts) districts) Learning outcomes of children in target Project Areas11 showed 2\.3% (language) increases NA improvement on national assessment at the primary level 1\.3% (math) None of the triggers to graduate to the second phase (included in section 1\.2 of the ICR) were complied by the GOP\. Assessment of the intermediate output indicators\. Table 3 below shows the output indicators for the various interventions under the project\. As per the discussion that follows, outputs were only partially attained, and, thus, achievement of expected results of the Project's components is rated as moderately unsatisfactory\. The data shows that MED made some advances in project implementation and that, assuming an adequate management structure, outputs and results could have been achieved if the Loan's closing date and project implementation would have been extended for some of the components\. In particular, the bilingual education program showed significant progress, both in teacher training (71 percent of the initial target) as well as materials (95 percent)\. Also, the multigrade model validation was completed, and was ready to be brought to scale (39 percent of the target teachers were already trained)\. Although the national learning assessment shows as having achieved only one of two sample based tests in the Project area, the learning assessment unit carried out, instead, a census based reading-comprehension test in December 2006 and a second one in December 2007 which included, in addition to reading-comprehension, a math test for second graders\. The Bank agreed with MED that these census-based tests could potentially have a much greater impact in school accountability and improvement\. On the other hand, implementation of other activities fell significantly short of the original targets\. In particular, initial and secondary education validation of pedagogical models, which were supposed to occur during the preparation phase, took a significant amount of time to implement and, thus, were never brought up to scale\. As a result of the difficulties in FONCODES, which was responsible for rehabilitation of infrastructure, only 27 percent of the target was achieved\. In the case of the third component, Reform of Teacher Policy and Education Management, some progress was made in training CONEI 11 According to Article I, Section 1\.01(r) of the LA, "Project Areas" meant that originally the project comprised the Regions of Amazonas, Ancash, Ayacucho, Cajamarca, Cusco, Huancavelica, Loreto, Piura, Puno, San Martin and Ucayali, and any other Department that may be acceptable to the Bank in addition to, or in substitution of, the above Regions \. 23 members, but this progress was not sufficient to ensure the development of the school development plans (PEI), the main instrument for school-level improvement\. Table 3\. Other output indicators Sub- Output Unit PAD target Status as of Achievement Component December (%) 2007 0-2 year-olds Children 30,000 1,877 6 enrolled 3-5 year-olds Children 38,000 4,225 11 Initial enrolled Learning materials Texts 200,000 109,500 55 distributed Secondary Enrollment Students 5,000 879 18 Learning materials Distributed 50,000 28,018 35 distributed materials In-service teacher training institutions Institutions 21 0 0 Continuous in- restructured service teacher using new training curricula Teachers trained at these Teachers 1,200 0 0 institutions Teachers trained for Teachers 1,000 362 36 initial education (0-2) Teachers trained for pre- Teachers 1,000 374 37 school education (3-5) Teachers trained in Teachers 3,800 1,513 40 multi-grade methodology Teachers trained for Teachers 15,000 13,952 93 bilingual education Centros Amauta Centers 6 3 50 functioning Curriculum Bilingual and materials learning Sets of 1,800,00 1,712,140 95 materials materials distributed 24 Sub- Output Unit PAD target Status as of Achievement Component December (%) 2007 Curriculum Validated and materials models for Validated multi-grade model 1 1 100 and bilingual education Infrastructure Classrooms rehabilitated or Classrooms 1,900 293 15 substituted Teacher reform Teachers under the new Teachers 3,000 1,160 39 incentive system School PEIs being improvement financed under PEIs being 100 0 0 fund this fund implemented Support Networks 290 96 33 Institutional networks Strengthening CONEIs CONEIs 3,000 1,231 41 established CONEI Persons 10,000 7,647 76 members trained National Learning Administration learning assessment of a learning assessment measurement assessment test in Project areas on a sample 1 1 100 basis in the Project area 3\.3 Efficiency (Net Present Value/Economic Rate of Return, cost effectiveness, e\.g\., unit rate norms, least cost, and comparisons; and Financial Rate of Return) Data quality and limited implementation precluded a substantial economic analysis to be carried out\. The Project may have had some impact on greater efficiency in children graduating from primary schools in rural areas\. Still, the data was not sufficiently accurate to draw solid conclusions with respect to Project efficiency\. 3\.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency) Rating: Moderately Unsatisfactory Given the partial achievement of outcome and output indicators with respect to the targets originally established for the project, the relevance of the PDOs, and the Project efficiency, overall outcome is rated as moderately unsatisfactory\. 25 3\.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above) (a) Poverty Impacts, Gender Aspects, and Social Development Poverty impacts are likely not significant given that the Project's overall outcome is rated as moderately unsatisfactory and with high risk to sustainability (see below) due to the under achievement of results\. Still, part of the expected target group, particularly the indigenous-bilingual population did benefit from the Project\. Given that the final evaluation has not been delivered, it is impossible to state whether the partial achievement of results could have a lasting impact on poverty, gender and overall social development\. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development) The Project had a low impact in improving the efficiency and effectiveness of the MED\. Some processes were improved as a result of the Project, particularly in the pedagogical area\. For example, MED established internal review procedures requiring the units responsible for bilingual education teacher training and basic education (the latter being the regulatory entity responsible for curriculum development and implementation) to coordinate activities so that they would be aligned with the curriculum and they would be articulated in the field\. The Project also contributed to the improvement of the statistical system, particularly in the area of quality control and in the development of the GIS which has been critical for other interventions in MED, including the census-based student evaluations\. Finally, the Project supported the student assessment system, thus ensuring that results become an integral part of the decision making process in MED\. On the other hand, MED's relationship with regional management units (DRE and UGEL) was haphazard and depended mostly on the good will of the parties involved\. The project did not achieve its original objective of strengthening deconcentrated offices to provide support to the schools or the autonomy of schools\. (c) Other Unintended Outcomes and Impacts (positive or negative) Not applicable\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for Core ICR, required for ILI, details in annexes) Not applicable\. 26 4\. Assessment of Risk to Development Outcome Rating: Substantial Risk There is a substantial risk to development outcomes\. As per the above assessment of development outcomes above, it is not clear that the few achievements in outcomes will all be sustained\. While bilingual education interventions are expected to continue, thanks mainly to indigenous stakeholder demands, financing may not be sufficient to ensure coverage of all targeted beneficiaries\. Given the weakness shown by the regional offices (DRE and UGEL), interventions at the local level are not expected to be sustained in time and the validated models face significant risk of not being brought to scale\. On the other hand, progress made under the student performance and statistical system units continue to be fully supported and funded and sustainability is highly likely\. In addition, the initial education model is expected to be implemented under an upcoming IDB-financed project\. The Bank is currently working with the Education sector, but under a different focus and thus, specific Project outcomes are not being directly supported\. The current CPS includes continued involvement with the Education sector through a DPL program and investment loans (both for basic and tertiary education)\. The REACT DPL program is under way; the first loan has been signed and the second is under preparation\. The DPL program includes support to the education sector in areas relevant to actions under the Project, but with a focus on the overall accountability of the primary education system\. This support does not particularly focus on rural areas and the specific intervention models needed for that context\. The Bank recently launched the preparation of the tertiary education loan, while the GOP has not yet requested the Bank to start preparing the basic education project\. 5\. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues) 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry (i\.e\., performance through lending phase) Rating: Moderately Unsatisfactory Preparation took about four years between identification and Board presentation\. The political instability in the country caused by Fujimori's re-reelection in July 2000 and resignation in September 2000, followed by a transitional government which had as its mandate ensuring open and transparent elections, and the election of Alejandro Toledo, who took office in July 2001, made it necessary for the Bank to wait about 2\.5 years between the identification (August 1999) and the Project Concept Note (PCN) management review meeting (11-28-01), when GOP commitment could be confirmed\. 27 As recorded by the Quality Assurance Group (QAG), this wait resulted in a prudent and correct decision by the Bank to ensure GOP's ownership of the project design\. The Bank was ready to submit the Project to the Board in June 2002, but MED was not able to proceed as it had to meet the requirements imposed by the National Public Investment System (the country's appraisal system)\. Thus, approval by the Board occurred on May 29, 2003\. As a result, preparation costs amounted to about US$1,117,516 (US$669,241 from three PHRD grants and the rest from the Bank's operational budget)\. The lending cycle included a total of seven missions from identification to appraisal in April 2002\. An eighth mission was carried out between appraisal and negotiations, in early April 2003, negotiations finally took place on April 21-22, 2003\. The Bank provided effective project preparation support to the GOP through a highly qualified and experienced core Bank team\. When specific technical issues required attention, the Bank team drew on senior expertise from across the Bank and from outside the Bank\. There was only one Country Office-based task team leader assigned to this operation from the very beginning (identification) to Board approval thus providing a welcomed continuity in the lending cycle\. As shown in Annex 4 of the ICR, a significant number of professionals were involved in the preparation cycle\. Despite all this, as already mentioned in Section 2\.1, the ICR rated the quality at entry of this Project as moderately unsatisfactory\. What follows is a more detailed explanation on the reasons of this rating, highlighting the strengths as well as the shortfalls emerging from the assessment carried out on the Project's lending cycle file along the dimensions appearing in bold\. Strategic relevance and approach\. The Project was underpinned by very good sector work highlighting the relevant issues in need to be urgently addressed in the education sector\. An APL was agreed as the financial instrument for this operations based on the following rationale: (i) MED had a clear medium-term vision derived from the national consultation process of where it wanted the education sector to be ten years hence and was highly committed to achieve it; (ii) it allow MED to start "small" and gradually proceed to a scaling-up process based on prior assessment of ongoing experiences financed in the early stages; and (iii) it required a functional monitoring of agreed outcomes and outputs as well a accomplishments of agreed triggers as a disciplined way of proceeding with subsequent phases of the long-term operation\. Thus, the first phase of the APL aimed at setting the right policies in pre and in-service teacher training and management of the education sector in a more decentralized fashion, allowing for learning from the development and piloting of project activities in early childhood development, increased access in pre-school education in rural areas, multi-grade teaching in rural areas, bilingual and intercultural education and untested secondary distance education\. The second phase of the proposed APL aimed at fine-tuning activities and scale-up those that proved to be cost-effective\. The third and final phase, aimed at consolidating the Program, after careful assessment of the experiences financed during the previous two phases\. 28 Level of GOP's ownership and client orientation\. The country's education and governance priorities at the time of the lending cycle were appropriately integrated in the Project design\. With the changes of Governments between November 2000 and July 2001, the Bank team and the regional management rightly waited until the new Government provided clear signs of its full support of the Project\. The preparation involved extensive consultations within the country\. The Project design was largely underpinned on the results of the 2001 national consultation on education emerging from the implementation by the GOP of the social pact framed under the National Agreement\. A 24 member National Commission was created to lead the process and over 300,000 individuals throughout the country expressed their opinions, demands and expectations on the following six major topics, which were included in the Project: tomorrow's skills, school learning, extra-school learning, school management, education priorities and financing and education information and evaluation\. The findings and recommendations of this massive consultation effort published as Las Voces del País (the Voices of the Country) and included a Proposal for a National Agreement on Education\. The team demonstrated a rich understanding of the political and social context as well as of the issues and risks faced at the national level, but more particularly, in the rural and indigenous regions of the country\. Partnerships\. The team developed good working relationships with other donor agencies, in particular with the: (i) IDB, which co-financed a large chunk of the required civil works as well as the PCU12; (ii) DfID, which piloted activities to strengthen capacity for school management and provided the design and materials for the project, and (iii) GTZ, which participated the discussion on teacher development and provided technical assistance in the development of the Centros Amauta\. The above attest to a history of extensive and successful consultation among the various external-funding agencies and is a good example of the harmonization efforts sought later on by the 2004 Paris Declaration13\. Outcome and output indicators\. The stated developmental objectives were appropriate\. However, due to the complexity of the Project's design involving three components and 11 sub-components, there were too many outcome and output indicators included in Annex 1 of the PAD making it difficult to monitor\. As it turned out during the implementation cycle, some of these indicators were not monitored in a timely manner\. (see section 2\.3 of the ICR concerning Monitoring and Evaluation)\. 12 This ICR does not assess the physical and financial performance of the IDB parallel loan for this Project, although it provides in some sections of the report some related information\. 13 The 2005 Paris High-Level Forum on Aid Effectiveness approved a set of principles to improve the effectiveness of donor assistance\. Agreement was reached by 60 partner countries, 30 donor countries, and 30 development agencies, including the World Bank to adhere, when possible to: (i) country ownership; (ii) harmonization of fiduciary practices; (iii) alignment with country-led development priorities; (iv) managing for development results; and (v) mutual accountability for the use of aid\. 29 Technical, financial and economic aspects\. While recognizing that the approaches included in the Project's design were well-tested elsewhere and proven effective, the Project design was overly ambitious covering too many fronts early and preschool education, primary education and secondary education in rural areas, bilingual and intercultural education, pre and in-service teacher reform, learning assessment, community participation and management efficiency\. As became evident during the implementation cycle, it took a considerable amount of time to get implementation going and the implementation performance as recorded by the ISRs was at the end rated unsatisfactory\. This observation is even more striking in a context of the high centralization as well as institutional and implementation capacity weaknesses of MED\. Implementation arrangements\. Despite the institutional capacity building assessment done by the Bank team during the lending cycle, the following shortcomings were identified, leading to the conclusion that implementation readiness conditions were not fully present at the time of Board approval and thus partially delayed by about one year project implementation after effectiveness and the first GOP and Bank disbursements to the Special Account: (a) The inclusion of effectiveness conditions resulted in delayed project launching\. The LA included three conditions: (i) the project Steering Committee (Comité Directivo) with membership structure and responsibilities satisfactory to the Bank; (ii) a subsidiary agreement between FONCODES and MED, addressing pending matters with respect to the financial coordination between these two institutions including the mechanisms to consolidate the project accounts, financial reports, the Financial Management Reports, audit and other control functions; and (iii) the project Operational Manual14, although a preliminary draft existed at the time of Board approval\. Current good practices in the Bank point to the fact that no conditions of effectiveness are desirable beyond the legal opinion of the country\. Furthermore, nowadays, to complete an appraisal the Bank recommends that an Operational Manual, satisfactory to the Bank, is agreed with the Borrower; (b) The pedagogical models corresponding to the different pilots in initial education and secondary education were not ready\. The assumption made during the Project's design was that during the lending cycle the MED was going to pilot and validate these pedagogical initiatives, and then, at appraisal, discuss with the Bank the findings of their validation assessment and agree with the Bank on specific activities to fine tune and scale 14 The Project's Operation Manual was supposed to include, inter-alia: (i) the Project's institutional setup, organizations and functions of the PCU; (ii) disbursement, accounting, auditing and reporting procedures; (iii) procurement responsibilities, procedures and internal controls; (iv) monitoring and evaluation plans for the project; and (v) procedures for identification, preparation, approval, execution and supervision of infrastructure sub-projects to be financed under the loan, environmental assessment procedures and a list of non-eligible civil was not available works\. 30 up these innovations during the implementation phase\. MED did not carry out the agreed pilots so that, effectively, they became part of implementation\. (c) Project management and implementation conditions were not set\. (i) despite having carried out a procurement capacity assessment, the Board package also lacked a first-year procurement plan, which current procedures in the Bank require to completing the appraisal phase; (ii) no baseline data for the proposed outcome and output indicators was available and the corresponding monitoring and evaluation system was not in place\. The Bank team argued that the available information to construct a baseline at the time of Board approval was not reliable, thus a specific tailored-made study was contracted producing the excellent baseline in 2006\. Having an agreed baseline is nowadays considered as a recommended practice by Bank management to complete the appraisal phase; and (iii) according to the Project's files, the PCU manager was not appointed prior to the Board approval\. Compliance with Bank's safeguard policies\. A set of appropriate environmental guidelines was prepared for the design, evaluation and supervision of the project's civil works\. In addition an appropriate Indigenous Communities Strategy was prepared and integrated into the different Projects components\. Risk assessments\. The Project design did not take into account the risk that the Government would have a significant change in policy towards teacher policy in terms of implementing the teacher career reform\. Unfortunately, soon after board approval, a massive teacher strike resulted in the GOP deciding to postpone the approval of the teacher reforms\. As a result, rural teacher incentives were not implemented institutionally (they remained as a pilot), and retention of these teachers became a sustainability risk\. Lessons learned\. The Bank team included lessons learned from the FONCODES Project (Loan 4068-PE, closed) and the Primary Education Project (Loan 3826-PE, also closed) as part of this Project's design\. In sum, although the Project was prepared according to Bank standards of that time, the Bank should have aimed at a much simpler project design and ultimately evaluated whether to go with the Project, given that there were critical unresolved issues that were not met during project preparation\. Furthermore, weighting the relevant achievements and shortfalls of the Bank team at the lending stage in accordance with today's good standard practices in the Bank, in particular the over-ambitious design and the lack of implementation readiness conditions described above, ICR rates the Bank performance at the lending stage as moderately unsatisfactory\. 31 (b) Quality of Supervision (including of fiduciary and safeguards policies) Rating: Moderately Unsatisfactory As previously mentioned, the Project had only one Task Team Leader (TTL) from identification to the closing of the Loan, thus providing continuity to the entire lending and implementation\. The fact that the TTL was stationed in Lima, Peru also provided an effective and timely supervision of this Project, as well as just-in-time support to the client\. After the launching of the Project in January 2004, PEAR was subjected to ten field supervision missions, including a Mid-term Review conducted at the end of November 2006, three ex-post Procurement Review missions (June 2005, May 2006 and November 2006) as well as quarterly Financial Management Reports (from July 2004 up to September 2007)\. In addition, there were 13 ISRs archived in the Project Portal\. There was an average of between two to three supervision missions per year during the four-year implementation cycle after the Project launching\. The fact that there are 13 ISRs seems to indicate that these were updated, on average, at least three times per year\. Supervision missions included an adequate skill-mix to carry out their envisaged terms of reference\. By and large, the reporting in the ISRs was realistic\. The only exception is with the Moderately Satisfactory (MS) ratings for the PDO in the ISRs number 10, 11 and 12 corresponding to 2007, a rating that was not consistent with the story reflected in the corresponding Aide-Memoires\. Furthermore, the slim quantitative data presented in these ISRs suggests that the Project was far away from reaching the proposed PDOs\. The findings of each supervision mission were conveyed to Bank management clearly and in a straightforward fashion, including the accomplishments as well as the implementation shortcomings and potential risks assessed by the Bank team\. The Bank supervision teams followed-up on commitments made by the GOP on previous missions and the findings reported accordingly in the ISRs\. The Bank was supportive to ensure a prompt and effective implementation process, facilitating an induction workshop for key stakeholders at the MED on August 30, 2003, just after Board approval, and a launching workshop in January 2004, about four months before Loan effectiveness\. The team supervision missions consistently voiced their concern regarding MED's refusal to follow up on GOP's policy on decentralization with respect to the publicly- financed social services, including education\. Decisions were taken at the higher echelon of MED without consultation with the Regional and/or Local Management Unit (DRE and UGEL)\. There were continuous discussions during the various Bank supervision missions to have a focus on results, including the carrying out of an impact evaluation study and other related assessment and monitoring studies by MED\. Still, the only comprehensive evaluation was the baseline study carried out in 2006\. One of the reasons for the absence of evaluations was the fact that model validations took much longer than expected\. 32 The Bank team worked closely with counterparts towards the restructuring and extension of the Project\. During more than one year, the Bank met periodically with MED teams, and subsequently with MEF to discuss both the content and the process for restructuring\. An agreement was reached with MED, whereby the Project would have been simplified significantly\. Unfortunately the negotiations with MEF were not successful and the Project closed as per the specified date in the LA\. Despite the effort to provide technical assistance as well as to carry out overall supervision responsibilities for the Project, it is evident that the Bank did not address sufficiently the implementation challenges faced by the Government\. In particular, given the complex design, the Bank should have negotiated more emphatically with the Government on the restructuring process, precluding the implementation of the proposed changes made by MED until the Project was fully restructured, as recommended during the mid-term evaluation\. Weighting the above, Bank supervision performance is considered as moderately unsatisfactory\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory Based on the above lending and supervision observations and ratings, the ICR rates the overall Bank performance as moderately unsatisfactory\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Unsatisfactory Rating at the lending stage: Moderately Unsatisfactory As mentioned above, preparation took about four years and preparation costs were also high (as compared to average preparation costs in the education sector in LAC)\. Project preparation activities were mainly financed by three Japan Policy and Human Resources Development (PHRD) grants (TF025935 which was Bank executed, TF025902 and TF026867, which were both GOP executed)\. The first two PHRD grants were approved on February 16, 1999, started to be utilized about a year later (February 9, 2002) and closed two and half years later (June 16, 2002)\. The third PHRD grant was approved on June 29, 2001, started to be utilized 6 months later and closed on April 17, 2003\. The documented expenditures in consultants (mostly for rural education, early childhood education, secondary distance education, use of new educational technologies, infrastructure, monitoring and evaluation) and project-related studies against these three grants amounted to about US$669,241\. 33 The time and cost overruns during the lending cycle were a reflection of the volatile political situation in Peru, which resulted in two longish interruptions in project preparation\. The political uncertainty caused by the resignation of President Fujimori in September 2000, the subsequent appointment of an interim government by the Peruvian Congress and the election of President Toledo that followed in July 2001 considerably slowed down the pace of the lending process, in particular the formal review of the PCN by Bank Management that took place 27 months after the identification mission\. The second interruption occurred between appraisal and negotiations (April 2002 and April 2003)\. This delay was caused by recent approval of the SNIP, which introduced extensive project appraisal requirements, demanding about 12 months for MED to achieve\. The SNIP does not allow the GOP to negotiate a loan before the project is declared viable\. These political events also brought many changes in the MED, in particular in the offices of the Minister and of the Vice-Minister for Pedagogical Management and all of its Directors (for Initial, Primary and Secondary in rural areas and Bilingual and Intercultural Education), which constituted the key technical counterparts during the lending cycle\. Just in the lending cycle (from identification in August 1999 to Board approval in May 2003), the Bank team had to deal with six different Ministers of Education, whose average tenure, except the first one15, was about one year16\. The arrival of new teams at the MED's and the frequent turnover of key high-level management had a significant negative impact on the early stages of project preparation as each new team needed to assimilate the project's proposed ethos and the Bank's procedures in implementing its loans\. Ironically, when some of these new teams were ready to be utilized at their full capacity to complete the project preparation, new resignations took place in a framework of constant turnover of key political and technical personnel at the MED\. Although during the early stages of project preparation the Bank team interacted with a highly qualified technical counterpart that was involved in the implementation of the previous Bank-financed project in education (Primary Education Quality, Loan 3826 15 The lending cycle started under the Ministerial tenure of Domingo Palermo Cabrejos (1996 1999), which was also heading the MED during the satisfactory implementation of the previous Bank-financed project in education (Primary Education Project; Ln\. 3826-PE)\. It was under the leadership of this Minister that the highly qualified technical counterpart cadre in the MED initiated the Project design through an effective policy dialogue with the Bank team\. This technical group was also familiar with the Bank's financial and procurement procedures\. Unfortunately, with the arrival of new Ministers (see next footnote), this technical group was gradually dismantled and replaced with staff, that not only resisted to buy into the proposed project design, but they were also not familiar with Bank procedures\. 16 After the departure of Minister Palermo, the MED was headed by the following 5 Ministers during the entire lending cycle: (a) Felipe Ignacio García Escudero (November 1999- July 2000); (b) Federico Salas Guevara (July 2000- November 2000); (c) Marcial Rubio Correa (November 2000- July 2001); (d) Nicolás Lynch Gamero (July 2001-June 2002); and (e) Gerardo Ayzanoa del Carpio (June 2002-May 2003)\. 34 PE), this team was gradually replaced during the volatile political years of 2000 and 2001 with other MED staff not necessarily familiar with Bank operations and not at the same skill competency than the previous one\. For example, the Project files attest to the lack of capacity within the MED to effectively link the pedagogical dimension with the technical aspects of the secondary distance education\. MED teams responsible for the various components tended to work in isolation, precluding the needed articulation among project components\. The Project's files also reflect a concern raised by the Bank team that detected the lack of sufficient skilled personnel at the MED to undertake project implementation activities\. Rating at the implementation stage: Moderately Unsatisfactory The same changing phenomena observed in MED during the lending cycle was mirrored during the implementation phase\. Since Board approval until the closing of the Loan, four Ministers headed the MED, with an average tenure of about 15 months17\. Each change meant changes along the hierarchical chain of command thus considerably slowing down project implementation\. Appointments of higher-level technical staff associated to the Project's implementation were mostly based on political, rather than skill and experience criteria\. There was also a radical change of policy of the current administration with respect to its support to the decentralization effort and the bilingual and intercultural education, limiting political support to the Project during the last year of the implementation cycle\. In addition, the requirements for inclusion of the Project in the national budget were changed in 2003, having an impact on the initial disbursements and counterpart allocations to the project\. Finally, there were instances during the project implementation cycle that GOP did not comply with the Covenants in the Loan Agreement\. In particular, Covenant 3\.08(b) concerning the timely furnishing to the Bank on progress reports on the execution of the Project was often complied with significant delay\. In addition, during the last phase of the Project's implementation, the Covenant requiring that the Borrower maintain an adequately staffed PCU, was not met\. Rating: For all of the above reasons, the ICR rates the Borrower performance at implementation as moderately unsatisfactory\. Overall Rating of Borrower's Performance is rated moderately unsatisfactory\. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory MED, through is mainline Directorates and the PCU became the implementing agency of this Project\. Along the changes of Ministers of Education, the PCU also experienced a 17Gerardo Ayzanoa del Carpio (June 2002- May 2003), Carlos Malpica Faustor (May 2003-February 2004), Javier Sota Nadal (February 2004-July 2006) and José Antonio Chang Escobedo (July 2006 present)\. 35 change of coordinators\. A total of five PCU coordinators18, with an average tenure of about one year, attempted, quite unsuccessfully, to manage Project activities from Board approval in May 2003 to the closing of the Loan in December 31, 2007\. The same issues described above concerning the arrival of new teams at the MED, was reflected in the PCU\. Besides, it took some time after loan effectiveness to have the PCU fully staffed, not necessarily with qualified staff\. The PCU, had difficulties in establishing a strategic vision in their undertaking of their managerial and executive tasks\. They lacked, by and large, leadership and clarity as to how to make policies happen and displayed a weak implementation capacity\. The lack of managerial strategy was, for example, manifested and perceived in the field where regional authorities and school members complained that Project consultants arrived to carry out their own tasks without prior coordination\. The Bank supervision reports consistently attested to the insufficient or non-existent internal coordination of the PCU\. Despite the heavy and cumbersome coordination mechanism put in place in MED, effective accountability mechanisms were still lacking\. The ex-post procurement assessment findings and recommendations took a considerable amount of time to be appropriately addressed by MED and the PCU\. Likewise with the financial supervision recommendations, which were not timely followed up by the MED and the PCU, to the point that the last ISRs rated the fiduciary aspects of the Project as unsatisfactory\. For the above reasons, the ICR rates the implementing agency performance of moderately unsatisfactory\. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory Weighing the ratings of the Borrower at the lending and implementation phases, with the ratings of the implementing agency, the ICR rates the overall Borrower performance as moderately unsatisfactory\. 6\. Lessons Learned (both project-specific and of wide general application) (a) Assessment of sector policy, commitment and capacities is critical for the selection of the appropriate lending instrument\. This Project was designed as the 18The first one lasting from 2002 to 2003; the second from 2003 to 2005; the third from 2005 to 2006; the fourth from 2006 to 2007; and the last one just recently appointed in 2007\. 36 first phase of an Adaptable Program Loan (APL)\. APLs support a long term vision and depend on the compliance of agreed "triggers" linked to the medium term sector policies\. This instrument is relevant when institutions are strong and have a track record of consistency for a period of time that goes beyond that expected for the project itself\. While this Project was designed during a period when the Ministry of Education had shown continuity in its policies, the frequent changes in Ministers and the subsequent changes in vision were not foreseen\. Thus, this type of lending instrument was not appropriate for such a highly uncertain context where the continuity of the sector policy framework was not in place\. In such cases, selecting a Sector Investment Loan might have been more effective\. (b) Ensuring that sector data is reliable and timely facilitates sustaining an efficient monitoring and evaluation system\. High quality information at the start of a project is a prerequisite for designing a sound monitoring platform that allows monitoring targets throughout the process and make adjustments, if necessary\. Additionally, baseline data is key for conducting an impact evaluation to assess change overtime\. One of the main challenges faced by this Project was the lack of reliable data during the design\. Thus, the Ministry had to use inaccurate demographic projections and home survey data, for lack of adequate administrative institutional data\. The baseline data for the Project was made available only in mid-2006 providing evidence that some of the estimated baseline data, at the time of appraisal, was not accurate\. Unfortunately, the Ministry did not show sufficient interest nor the capacity to undertake an impact evaluation study beyond the 2004 National Learning Assessment and the 2007 Student Census, so that the outcomes could not be measured\. (c) Validating and evaluating pilot experiences prior to scaling-up is critical when models have not been previously tested\. Piloting allows the researcher to test procedures and assumptions that can later on be readjusted, if necessary, to scale up\. This Project was originally conceived as an opportunity to finance the design and implementation of a series of pilots to test pedagogical and school management models in rural areas which had been implemented successfully in other countries\. Still, given that the Peruvian context was different, piloting was deemed necessary, to assess the design, prior to scaling up\. In practice, the delayed launching of these pilots let to a rush towards scaling up prior to the completion of the evaluation cycle\. Thus, several issues remained unanswered including the interconnection among pilot activities, as well as the identification of conditions for their generalization and the definition of the evaluation criteria for the models\. All this worked against the successful implementation and sustainability of the Project\. (d) While the use of institutional administrative and fiduciary institutions is desirable, capacity needs to be assessed prior to its use for project implementation\. The potential for sustainability is greater when institutional administrative systems are used\. However, if capacity is weak, the potential for project failure is very large\. This was the case for this Project, where the policy was implemented de facto without appropriate assessment and with no strengthening plan\. Thus, streamlining 37 into sectoral administrative systems needs to be phased, ensuring adequate capacity for implementation and accountability\. (e) Political commitment, support and ownership are key conditions for success\. Political support is linked to decision-making about human and financial resources allocation to ensure adequate implementation of a project\. In the case of this Project, the frequent changes in ministers (there were six different Ministers, whose average tenure, was about one year) and the consequent changes of Directors and Project Managers, resulted in reduced ownership of the project and changes in priorities\. As a result, the higher levels of the Ministry did not prioritize the Project and human resource allocation weakened with time\. Even though the Bank team discussed the Project with all new incoming teams, the vision of improving rural education was lost for other priorities brought by the new administrations\. Thus, political risk is critical for Project implementation\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The Ministries of Education and Finance submitted comments to the draft ICR\. While both agree that Project implementation did not lead to the desired results, they do not fully agree on the underlying causes\. Both agree that design was much too complex\. But, the Ministry of Education also argued that the context changed significantly between preparation and implementation\. Furthermore, MED suggested that the evaluation should have been carried out against the new targets proposed under the proposed restructured Project\. Given Bank evaluation guidelines, this was not possible, as the restructuring process did not officially occur\. On the other hand, MEF argued that, once problems in Project design were found, implementation should have stopped in those areas to be restructured, and redesign be carried out under new rigorous diagnostic studies\. While this is desirable technically, it runs counter to the agreed timing for Project implementation\. (b) Cofinanciers Not applicable (c) Other partners and stakeholders (e\.g\. NGOs/private sector/civil society) Not applicable 38 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Estimate Actual/Latest Components Percentage of (USD millions) Estimate (USD millions) Appraisal 1\. Expanding Education Access for Rural children 1\.1 Access to quality initial and preschool education 2\.71 3\.11 114 1\.2 Secondary distance education 7\.83 2\.87 37 2\. Improving the quality in rural schools 2\.1 Continuous teacher development systems 24\.86 14\.81 60 2\.2 Curricular adjustment and provision of educational materials 9\.09 5\.28 58 2\.3 Rehabilitation and equipping of rural schools\. 29\.63 14\.70 50 3\. Reform of teacher policy and education management 3\.1 Teacher policy studies 1\.60 0\.88 57 3\.2 Reform of education management 6\.94 7\.55 109 3\.3 School development fund 1\.76 0\.02 1 3\.4 National assessment system 4\.61 3\.94 85 3\.5 Strategic analysis and policy-oriented research 2\.82 0\.90 32 3\.6 Project Management 1\.83 2\.69 147 Total Baseline Cost 93\.68 Physical Contingencies 0\.00 0\.00 0\.00 Price Contingencies 0\.00 0\.00 0\.00 Total project costs 93\.68 56\.75 61 Front-end-fee 0\.52 0\.52 100\.00 Front-end fee IBRD 0\.00 0\.00 0\.00 Total 94\.20 57\.27 61 39 (b) Financing Appraisal Actual/Latest Source of Funds Type of Estimate Estimate Percentage of Cofinancing (USD (USD Appraisal millions) millions) IBRD 52\.5 28\.98 55 GOP Counterpart 28\.84 17\.63 61 IDB Parallel 12\.86 10\.66 83 Total 94\.2 57\.27 61 40 Annex 2\. Outputs by Component This section describes the outputs of each of the three components including all sources of financing\. The assessment is primarily based on the quarterly FMRs, the November 2006 mid-term review report and the note that was prepared by the Bank in mid-2007 justifying the possibility of extending the closing of the loan by 18 months and restructuring (significantly simplifying) the project design\. Two cost tables are presented to substantiate the story provided in the ICR: (a) the documented expenditure by component and by source of financing at appraisal and at the time of closing the Loan; and (b) the documented expenditure by category and by source of financing at appraisal and at the time of closing the Loan\. Component A Expanding Education Access for Rural Children\. According to Table 6 below, this component estimated to cost about US$10\.56 million (US$6\.99 million from the Loan and US$3\.56 million from GOP), ended up documenting expenditures amounting to US$5\.98 million (US$3\.22 million from the Loan and US$2\.76 million from GOP), 57 percent of the total estimated at appraisal\. This financial shortfall is explained by the limited expansion in access for rural children achieved during project implementation as compared to the original targets set at appraisal for reasons described below\. Component A was implemented in 57 districts in 7 of the original 11 Regions included in the Project Area (Amazonas, Ayacucho, Cusco, Huancavelica, Piura, Puno and San Martin)\. It financed the piloting and validation of three models for initial education for 0- 2 year-old children and the strengthening of another two existing preschool education models for 3-5 year-old children (the Centros de Educación Inicial CEIs -and the Programas No Escolarizados de Educación Inicial - PRONOEI)\. Alongside the validation of these pedagogical models, the project also financed the alignment of in- service teacher training, the provision of appropriate learning materials for children, parents and teachers and the training of parents\. After validations of these models, they were gradually scaled up benefiting about 1,875 children in the age-group 0-2 years-old, including their families\. This Component also financed the strengthening of 59 CEIs and 141 PRONOEIs benefiting 4,225 children in the 3-5 year-old age-cohort\. These accomplishments fell significantly short with respect to the original targets set for in the PAD of benefiting 30,000 children in the 0-2 age-cohort and another 11,000 children in the 3-5 year-old range\. Assumptions made at the preparation phase with respect to the provision of initial education models in rural areas, which did not match reality during implementation, partially explain this shortfall19\. This caused the need for 19The model required more on-site support that originally planned in the design, which in turn required the hiring of more qualified consultants in the MED's technical team\. The assumptions made on the expected demand of parents willing to enroll into the program did not materialize either\. Lack of local capacity to implement the delivery models also contributed to the delays\. 41 additional fine-tuning of the delivery model, thus further delaying implementation and therefore, limiting the expected financial and physical progress of this activity under Component A\. The above efforts entailed the training of about 362 staff and facilitators in all the initial and preschool services financed by the Project as well as the provision of about 109,500 sets of learning materials and training modules (against 200,000 sets included as a target in the PAD)\. The Project also financed the replacement of 10 classrooms in 5 CEIs\. Component A also financed the launching and validation of the secondary distance education model (Educación Secundaria con Metodología a Distancia ESMED) benefiting 875 students (against the original target of 5,000 set in the PAD)\. This component financed the acquisition and distribution of about 28,018 textbooks including other learning materials and educational videos (against the original target of 50,000 set in the PAD)\. It also financed the training of 40 teachers and 20 school principals involved in the delivery of ESMED\. Rating component A\. This Component fell short of its envisaged physical and financial targets, and is thus rated moderately unsatisfactory\. IDB is currently preparing an initial education project which is expected to bring to scale the validated models under this project\. However, the SNIP appraisal period is resulting very extensive and political commitment appears doubtful\. The secondary education model is not expected to continue as it has not been validated\. Component B Improving Quality in Rural Primary Schools\. According to Table 4 below, this core component estimated to cost about US$63\.59 million (US$32\.07 million from the Loan and US$31\.52 million from GOP), ended up documenting expenditures amounting to US$34\.79 million (US$15\.78 million from the Loan and US$19\.01 million from GOP), 55 percent of the total estimated at appraisal\. This financial shortfall is also explained by the deficit in achieving the original targets set at appraisal (fully described below)\. Component B financed the establishment of in-service teacher training modules focusing on multi-grade methodologies and bilingual and intercultural education including a review of the curriculum, training, development and acquisition of learning materials and rehabilitation and construction of classrooms\. The bilingual and intercultural activities were mainstreamed into other related activities (like multi-grade, teacher training, development and procurement of learning materials) during Project implementation\. Accordingly: (i) a multi-grade teaching model was validated and provided to 10,711 children in 222 schools including the training of 448 teachers; (ii) a bilingual intercultural pedagogical strategy was defined, validated and applied benefiting 239,250 children including the training of 1,976 initial and 11,976 primary bilingual intercultural teachers; (iii) a total of 374 Spanish speaking teachers in initial education and 1,513 in primary education were trained; (iv) a total of 1\.7 million working books in 15 ethnic languages were distributed, not necessarily on a timely fashion, benefiting about 94,580 children; (v) a total of 293 classrooms were rehabilitated; and (vi) school and other type of 42 furniture was provided to 717 classrooms and 196 local administrative offices in the education sector\. These achievements fell short of the original targets included in the PAD, namely: (a) continuous teacher training to be provided to 3,800 teachers in the Project area working in multi-grade schools and 15,000 bilingual teachers nationwide; (b) 330,000 rural children in the Project Area and 375,000 indigenous children nationwide to benefit from all the quality-related interventions (provision of learning materials including bilingual educational materials and improved teaching practices); (c) a total of 1\.8 million working books to be distributed to multi-grade and bilingual schools; and (d) equipping, rehabilitating and substituting of 1,900 classrooms and 1,500 complementary facilities in the Project Area\. This component also did not achieve the original design objective and required adjustments during the implementation cycle, in particular with respect to the multi-grade strategy\. In addition, despite the multiple recommendations made by the Bank supervision missions, MED was not able to connect and enrich the ongoing multi-grade and bilingual interventions financed by the Project with lessons learned from other similar ongoing experiences in the country provided by some non-governmental organizations (such as TAREA, APRENDES, a USAID financed project, CEPROSI, ADEAS Qullana, etc) and elsewhere in the region, like "Escuela Nueva" in Colombia and Guatemala\. With respect to the infrastructure sub-component, delays in implementation were caused both by exogenous and endogenous problems\. Changes in national legislation made it impossible for the Bank to deposit the funds directly to FONCODES forcing an amendment that would allow MED to make the transfers to FONCODES\. In addition, there were problems with change in the unit costs due to rapid devaluation of the dollar, climatologically conditions, like rain, partly explain the construction delays\. Finally, FONCODES was severely weakened when it was transferred to MIMDES and had difficulties meeting its side of the contract\. Rating component B\. Despite this Component fell short of its envisaged physical and financial targets, it is being rated moderately satisfactory because it achieved the validation of a multi-grade 20 and bilingual bicultural pedagogical strategies and corresponding in-service teacher training as well as provision of appropriate learning materials, which are currently being technically, institutionally and financially sustained and expanded by the GOP with their own resources, albeit to a lesser extent than would have occurred under the Project\. Further to this, the Project contributed to the curriculum development and implementation of the bilingual education program at the initial level\. Previously, initial education children received their education in Spanish regardless of their mother tongue or the language of schooling they would receive at the primary level\. 20Still with possibilities to improve by incorporating good practices and lessons learned from other multi- grade approaches utilized in other countries\. 43 Component C Reform of Teacher Policy and Educational Management\. This component was originally estimated to cost about US$19\.53 million (US$ 12\.96 million from the Loan and US$ 6\.57 million from GOP), ended up documenting expenditures amounting to US$15\.98 million (US$9\.46 million from the Loan and US$6\.52 million from GOP), 82 percent of the total estimated at appraisal\. With respect to the Teacher Policy Reform, this Component financed: (i) the development of a plan to strengthen 16 pre-service teacher-training institutions that will be implemented during 2008; (ii) the assessment and implementation of revised curriculums for pre-service teacher development in the specialties of primary education, bilingual and intercultural education, art and initial education; and (iii) the implementation of 3 out of 6 Centros Amauta\. The teacher career development system envisaged in the original design was not implemented during the project cycle as the forthcoming National Educational Assessment and Certification System (Sistema Nacional de Acreditación y Certificación Educativa, SINEACE) is soon to be launched\. With respect to the national assessment system, this Component financed activities of the Unidad de Medición de la Calidad Educativa and the Unidad de Estadística Educativa\. The former implemented several activities under the Project: (i) the learning measurement undertaken in 2004 and (ii) the Student Census Learning Assessment for second graders and bilingual fourth graders administered in December 2007, whose preliminary findings will be made available in the second semester of 2008\. Additionally, the Unit implemented several other research, dissemination and training-related activities such as: (i) Dissemination of the 2004 learning assessment through workshops at local level and training, (ii) dissemination of the school self-assessment kit, (iii) longitudinal study to track learning outcomes in a cohort, (iv) teacher research context based on the 2004 learning assessment results, (v) implementation of the Communication learning assessment for native language-speaking communities Shipibo-Conibo and Quechua Ayacucho-Chanka, (vi) implementation of the SERCE-LLECE evaluation, (vii) pre-pilot study for the 2007 learning assessment (that included Initial level), and (viii) a qualitative study on school efficacy\. In addition, the Unidad de Estadística Educativa worked on the expansion of geo-referenced educational models, the design of spatial accessibility protocols and indicators, the reconfiguration of Rural School Networks and the database that provided input for the School Linguistic Map in coordination with the Dirección Nacional de Educación Bilingüe, Intercultural y Rural\. The Unit also coordinated the study on Demand and Supply of Secondary Education in Rural Areas that generated updated information on this subject\. With respect to the establishment, training and monitoring of School Councils and School Network Councils, this Component benefited 96 educational networks and established 1,231 CONEIs aimed at empowering the communities and democratize the decision making at the school level\. This training program was designed and implemented using the model validated by DFID\. This effort included the training of 7,647 School Council and School Network Council members\. However, the tangible benefits and impact these councils and networks had in improving community participation and social control of 44 the schools are negligible, to the point that these activities were not any longer incorporated in the restructuring proposal\. In addition, the targets achieved are below the ones set at appraisal - 3,000 CONEIs to be established and 10,000 people to be trained\. The Component also financed activities to strengthen nine lower level education administrative units (DRE y UGEL), with no visible improvement on the management effectiveness and efficiency of the MED\. The School Development Fund to finance the design and implementation of improvement programs developed and managed by schools and school networks in the Project Areas was never implemented Finally, the subcomponent on Strategic Analysis and Policy-oriented Research financed the implementation of the baseline study under the supervision of the PCU's Monitoring and Evaluation Unit\. This component gets a mixed rating\. The strengthening of the national assessment system is rated satisfactory and is considered by the ICR as one of the best achievements of this project\. It is however unfortunate for the purposes of the ICR assessment that the MED decided to postpone the new learning assessment to 2008 instead of the original date of 2007 thus preventing gathering key data to measure if there were learning improvements in the Project Area\. The teacher policy reform is rated as moderately satisfactory, as the conducive environment to implement the proposed improvements was set but the actual implementation of these recommendations just barely got off the ground at the time of closing the loan\. The efforts to improve community participation in the education sector through the School Councils and School Council Networks is rated unsatisfactory because, despite the limited achievements with respect to the original targets, their impact in improving community participation and social control is neither visible nor measurable\. Finally, the School Development Fund is rated highly unsatisfactory because it never was implemented\. Weighting the above, the implementation of this Component is rated as moderately satisfactory\. Table 4: Documented expenditures by component and by source at appraisal and closing of the Credit (in US$ millions) Component At the time of appraisal At the time of Credit closing Percentages IBRD GOP Total IBRD GOP Total (1) (2) (3) (4) (5) (6) (4)/(1) (5)/(2) (6)/(3) Component A\. 6\.99 3\.56 10\.56 3\.22 2\.76 5\.98 46 78 57 Component B\. 32\.07 31\.52 63\.59 15\.78 19\.01 34\.29 49 60 55 Component C\. 12\.91 6\.62 19\.53 9\.46 6\.52 15\.98 73 98 82 Total project 51\.98 41\.70 93\.68 28\.46 28\.29 56\.75 55 68 61 costs Front-end fee 0\.52 0\.00 0\.52 0\.52 0\.00 0\.52 100 NA 100 Total 52\.50 41\.70 94\.20 28\.98 28\.29 57\.27 55 68 61 According to Table 4, the total project cost estimated at appraisal was US$94\.2 million equivalent, corresponding US$52\.5 million equivalent from the Bank (55 percent of the total) and US$41\.7 million equivalent from the GOP (44 percent of the total)\. At the time of the closing of the Loan, the total documented expenditure amounted to US$57\.27 45 million equivalent (61 percent of the appraised total), corresponding US$328\.98 million equivalent from the Bank (55 percent of the appraised total) and US$328\.29 million equivalent from the GOP (68 percent of the appraised total)\. Table 5: Documented expenditures by category and by source at appraisal and closing of the Loan (in US$ millions) Category of At the time of appraisal At the time of Loan closing Percentages Expenditure IBRD GOP Total IBRD GOP Total (1) (2) (3) (4) (5) (6) (4)/(1) (5)/(2) (6)/(3) Infrastructure 6\.80 2\.91 9\.71 2\.41 10\.76 13\.17 35 370 136 Goods 6\.60 1\.65 8\.25 1\.97 0\.48 2\.45 30 29 30 Consultants 14\.67 3\.66 18\.34 14\.82 3\.54 18\.36 101 97 100 Training 12\.50 7\.34 19\.84 5\.02 2\.94 7\.96 40 40 40 Operating 9\.40 26\.13 35\.5 4\.22 10\.57 14\.79 45 40 42 costs Unallocated 2\.00 2\.00 0\.00 0\.000 Front-end fee 0\.52 0\.52 0\.52 0\.525 100 100 Total 52\.50 41\.70 94\.20 28\.98 28\.29 57\.27 55 68 61 According to Table 5 above, the project underperformed with respect to the expected, acquisition of goods and training set at appraisal\. It did, however, reach the consultant financial target\. The above is an indication of that training was carried out, but using mainly consultants as opposed to the original design that proposed more workshops and follow-up strategies\. 46 Annex 3\. Economic and Financial Analysis (including assumptions in the analysis) Estimation of economic rates of return (ERR) was not possible\. Increase in the average number of school years in the target areas could not be calculated with the available survey data\. Improvement in the educational outcomes could not be calculated as the 2007 student assessment was not carried out\. Without this information, it was not possible to estimate increase in beneficiary productivity and future salaries\. As a formal ERR could not be estimated, actual costs were compared with the outcomes of the project for the primary education interventions\. In the case of initial education, there was no available data that would allow for the comparison before and after the project\. On the other hand, the analysis for the secondary education interventions was not relevant since the secondary distance education program was carried out as a pilot only in X schools\. Costs The total Project investments were US$ 61\.05 million (US$ 30\.56 million Bank-financed, and US$ 30\.49 million financed by the GOP and the IDB), representing 64\.8 percent of the amount estimated at appraisal\. Investments linked to primary education expenditures amounted to US$ 54\.67 million\. Benefits The primary school enrollment increased during the implementation period for both the rural areas and the whole national territory (with the increase being higher in rural areas)\. From 2003 to 2007, the net coverage rate of primary education either increased or remained with no significant changes every year (see Table 6)\. Table 6 Net coverage rate for primary education1 (confidence intervals) Year National Rural 90\.47 89\.38 2003 ( 89\.47 91\.48 ) ( 87\.79 90\.96 ) 89\.82 88\.17 2004 ( 88\.78 90\.87 ) ( 86\.37 89\.97 ) 90\.66 91\.77 2005 ( 89\.58 91\.75 ) ( 90\.36 93\.17 ) 92\.52 91\.51 2006 ( 91\.62 93\.42 ) ( 90\.00 93\.03 ) 92\.66 93\.09 2007 ( 91\.95 93\.37 ) ( 92\.03 94\.16 ) Source: National Household Surveys 2003-2004 47 An analysis of the distribution of the primary school students by age shows that there was an increase of the percentage of children that attend their corresponding grade\. This increase has been much higher in the districts were PEAR was carried out than in the national average\. Table 7 Percentage of enrollment at the appropriate age 2004 2005 2006 Variation 2004-2006 (%) Grade National PEAR PEAR PEAR PEAR districts National districts National districts National districts 1 69\.29 63\.18 69\.49 62\.90 71\.57 65\.48 3\.28 3\.65 2 57\.11 45\.96 56\.24 48\.22 59\.28 48\.78 3\.80 6\.15 3 50\.87 36\.49 51\.34 38\.80 52\.11 41\.72 2\.44 14\.33 4 48\.58 34\.69 48\.80 34\.82 50\.32 38\.68 3\.58 11\.50 5 45\.91 32\.26 46\.91 34\.28 48\.11 34\.10 4\.80 5\.71 6 45\.94 33\.67 45\.97 32\.37 48\.12 36\.09 4\.74 7\.20 1-6 53\.10 41\.58 53\.22 42\.54 54\.95 44\.57 3\.48 7\.21 Source: School Census 2004-2006 The fact that more children are attending school at the appropriate age for grade level shows that students are completing the primary school faster\. This means that students remain less years in the school\. This reduction of the number of years that children enroll in primary school, lead to savings for the government and the families, since the government will have to finance less average years of education per student and the families will have to spend less money sending their children to school during a shorter period\. Unfortunately, the exact amount of the savings cannot be calculated because the short analysis period\. 48 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty Lending Livia Benavides SeniorSocial Sector Specialist LCSHH Task team leader Keisgner Alfaro Senior Procurement Specialist LCOPR Procurement Fabiola Altimari Legal Specialist Consultant Legal issues Mission logistical Ana Maria Arteaga Staff Assistance LCSHD support Barbara Bruns Institutional Reform Specialist HDNED Education reforms Virginia Cachay Cost specialist Consultant Cost tables Jorge Cavero Procurement Specialist Consultant Procurement Daniel Cotlear Sector Leader LCSHD Bank management Ernesto Cuadra Senior Education Specialist ECSHD Peer reviewer Santiago Cueto Education Specialist Consultant Education Francoise Delannoy Education Specialist Consultant Teacher reform Pedagogy, teacher David Harding Education Specialist LCSHD training Antonio Gomes Pereira Education Specialist Consultant Teacher training World Links Peru Jorge Gutierrez Technical Education Specialist WBIHD program Gabriela Falconi Program Assistant LCSHD Drafting of PAD Veronica Jarrin Language Program Assistant LCSHD Operation support Educational Peter Knight Information Technology Specialist Consultant technology Luis Enrique Lopez Rural Education Specialist Consultant Bilingual education Ramiro Lopez Rural Education Specialist Consultant Education networks Financial Patricia McKenzie Financial Management Specialist LCOFM management Isabella Micali Drossos Senior Legal Counsel LEGLA Negotiations Secondary distance Michael Moore Distance Education Specialist Consultant education Xiomara Morel Senior Finance Officer LOAG1 Disbursements Ruth Moya Bilingual education specialist Consultant Bilingual education Paud Murphy Senior Education specialist AFTH1 PCN Peer reviewer Julie B\. Nannucci Language Program Assistant LCSHD Operation support Institutional Cristina Pareja Education Management Specialist Consultant strengthening Carlos Rojas Senior Education Specialist LCSHD Rural education Financial Ana Karina Rozas Junior Professional LCSHD management Jaime Saavedra Education Economist Consultant Economic analysis Eleanor Schreiber Senior Operations Officer LCSHD Education policy 49 Civil works and Luis Secco Infrastructure Specialist Consultant equipment Aide Memoire Isabel Segovia Education Consultant coordinator Financial Paul Sisk Financial Management Specialist LCOFM management External peer Maria Teresa Tato Education Specialist Consultant reviewer Cecilia Thorne Education Materials Specialist Consultant Learning materials David Varela Legal Counsel LEGLA Loan agreement Mission logistical Nelly Vergara Project Assistant LCSHD support Luisa Yesquen Language Program Assistant LCSHD Operation support Gender and Alfonso Zarzar Social Sector Specialist LCSES indigenous issues Civil works and Alberto Zuñiga Infrastructure Specialist Consultant equipment Supervision/ICR Livia Benavides Senior Social Sector Specialist LCSHD Task team leader Keisgner Alfaro Senior Procurement Specialist LCOPR Procurement Patricia Alvarez Operations Officer LCSHD Implementation Erika Bazan Operational Assistant LCSHD Logistical support Monitoring and Erik Bloom Human Develop\. Economist LCSHD evaluation Daniel Cotlear Sector Leader LCSHD Bank management Financial Nocolas Drossos Financial Management Specialist Consultant management Antonio Gomes Pereira Education Specialist Consultant Teacher training Financial Nelly Ikeda Financial Management Specialist LCOFM management Luis Enrique Lopez Rural Education Specialist Consultant Bilingual education Financial Patricia McKenzie Financial Management Specialist LCOFM management Institutional Aldo Ortiz Implementation Specialist Consultant arrangements Carmen Osorio Junior Professional Associate LCSHD Operations support Institutional Cristina Pareja Education Management Specialist Consultant strengthening Carlos Rojas Senior Education Specialis LCSHD Rural education Financial Ana Karina Rozas Junior Professional Associate LCSHD management Civil works and Luis Secco Infrastructure Specialist Consultant equipmentg Financial Luis Schwarz Financial Management Specialist LCOFM management Monitoring and Sergei Soares Education Economist LCSHD evaluation Overall supervision Cynthia Vainstein Summer Intern LCSHD support Silvana Vargas Monitoring-evaluation specialist Consultant Monitoring and 50 evaluation Eduardo Velez Bustillo Sector Manager LCSHD Bank management Evelyn Villatoro Procurement Specialist LCOPR Procurement Luisa Yesquen Language Program Assistant LCSHD Operation support Gender and Alfonso Zarzar Social Sector Specialist LCSES indigenous issues (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle No\. of staff weeks USD Thousands (including travel and consultant costs) Lending FY98 0\.00 FY99 1\.71 FY00 19 74\.69 FY01 8 17\.92 FY02 41 264\.64 FY03 10 45\.36 FY04 0\.00 FY05 0\.00 FY06 0\.00 FY07 0\.00 FY08 0\.00 Total: 78 404\.32 Supervision/ICR FY98 0\.00 FY99 0\.00 FY00 0\.17 FY01 0\.00 FY02 0\.00 FY03 12 41\.54 FY04 25 94\.78 FY05 24 80\.64 FY06 26 89\.95 FY07 39 138\.74 FY08 22 46\.91 Total: 148 492\.73 51 Annex 5\. Beneficiary Survey Results (if any) Not applicable 52 Annex 6\. Stakeholder Workshop Report and Results (if any) Not applicable 53 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR The Ministry of Education sent its Project Completion Report to the Bank on April 8, 2008\. Additionally, the Ministry of Education submitted comments to the draft ICR and updated data on June 19, 2008\. The Ministry of Finance submitted separate comments on June 20, 2008\. Both sets of comments have been included in this final version of the Bank's ICR\. A copy of the Project Completion Report and of the comments are available in the Project file\. 54 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders Not applicable 55 Annex 9\. List of Supporting Documents Bank preparation documents Peru Country Assistance Strategy (CAS), discussed by the Board July 22, 1997 (Report 97-161)\. Preparation Mission Terms of Reference, Aide-Memoire, and Back-to-Office Report\. The World Bank\. August 11, 1999\. Preparation Mission Terms of Reference, Aide-Memoire, and Back-to-Office Report\. The World Bank\. November 5, 1999\. Identification Mission Terms of Reference, Aide-Memoire, and Back-to-Office Report\. The World Bank\. October 1, 2001\. Pre-appraisal Mission Terms of Reference, Aide-Memoire, and Back-to-Office Report\. The World Bank\. March 5, 2002\. Appraisal Mission Terms of Reference, Aide-Memoire, and Back-to-Office Report\. The World Bank\. May 08, 2002\. Pre-negotiations Mission Terms of Reference, Aide-Memoire, and Back-to-Office Report\. The World Bank\. May 7, 2003\. Project Concept Document (PCD), The World Bank, October 19, 2001\. Project Appraisal Document (PAD), Report No 23843-PE\. The World Bank, April 30,2003\. Agreed Minutes of Negotiations\. The World Bank\. April 25, 2003\. Bank project implementation documents Loan Agreement 7176-PE\. The World Bank\. Conformed copy December5, 2003\. Amendment to the Loan Agreements\. September 13, 2005 (Cancellation of the Special Account) Statement of Mission Objectives, Aide-Memoires, Back-to-Office Reports, Management Letters, Project Status Reports (PSRs) and Implementation Status and Results (ISRs) of all the Supervision Mission\.s Bank and Borrower other project implementation-related documents Project Implementation Plan (2003 2005) Quarterly FMRs Annual FM audits Ex-post Procurement Audits Annual Project Implementation Reports (2004, 2005, 2006) PEAR Final Evaluation (April, 2007)\. Operations Manual Comments from MED to Draft ICR (June 19, 2008) Comments from MEF to Draft ICR (June 20, 2008) 56	REVIEW
P042400	ï»¿ ICRR 11881 Report Number : ICRR11881 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 07/28/2004 PROJ ID : P042400 Appraisal Actual Project Name : Second Financial And Project Costs 50\.31 50\.31 Enterprise Sector US$M ) (US$M) Adjustment Loan Country : Macedonia Loan /Credit (US$M) Loan/ US$M ) 50\.31 50\.31 Sector (s): Board: FSP - Banking Cofinancing (47%), General industry US$M ) (US$M) and trade sector (20%), Central government administration (13%), Payment systems securities clearance and settleme (13%), Law and justice (7%) L/C Number : C3442; L7041 Board Approval 01 FY ) (FY) Partners involved : Closing Date 12/31/2002 12/31/2003 Prepared by : Reviewed by : Group Manager : Group : Michael R\. Lav Emily S\. Andrews Kyle Peters OEDCR 2\. Project Objectives and Components a\. Objectives 1\. Strengthen the health of the banking system and improve the quality of bank intermediation \. 2\. improve the private sector business enabling environment \. 3\. resolve, through privatization /financial restructuring or closure, the universe of large loss making enterprises that crowd out private sector growth \. b\. Components 1\. Financial Sector Regulatory and Supervisory Framework component to upgrade the legal framework, including : (a) modernizing bank legislation; (b) reforming the bank-owned, weakly funded Deposit Insurance Scheme; (iii) strengthening National Bank of the Republic of Macedonia (NBRM) regulations; (iv) strengthening NBRM enforcement actions, and (v) supporting proactive resolution of problem banks and failed banks \. 2\. Financial System Infrastructure Development component focused on creating a properly regulated and smoothly functioning banking system, including: (a) reform of the Payment Operations Bureau (ZPP); (b) creation of effective pledge restriction mechanisms; and (c) creation of a Central Securities Depository /Central Share Registry (CSD/CSR) and a Delivery-versus Payment (DVP)-based securities clearing and settlement scheme \. 3\. Business Environment Reform component which supported efforts to : (a) streamline private enterprise entry and the FDI regime; (b) strengthened legal framework for enforcement of creditors' and shareholders' rights, and (c) build institutions to support an effective accounting and auditing profession \. 4\. Enterprise Sector Reform to support : (a) the resolution of approximately 30 large loss-making enterprises that were partially or fully socially or state -owned, or for which the Government was a large creditor on account of overdue claims; (b) the rationalization of government support policy for the enterprise sector by creating a declining fiscal cap mechanism, and (c) the resolution of the assets of the Bank Rehabilitation Agency (BRA)\. c\. Comments on Project Cost, Financing and Dates The project cost US$ 50\.31 million financed by an IBRD loan of US$ 30\.31 million and an IDA credit for US $20 million (SDRs 15\.2 million), in three tranches\. The project was appraised in June, 2000, approved by the Board on December 14, 2000, made effective on December 20, 2000, and closed on December 31, 2003, one year behind schedule\. 3\. Achievement of Relevant Objectives: 1\. Financial Sector Regulatory and Supervisory Framework \. (a) A new law prepared by Government with Bank assistance was adopted by Parliament in July 2000 which (i) introduced definitions, allowable activities and prudential regulations more in line with EU Banking Sector directives, IAS and Basle capital rules; (ii) strengthened bank corporate governance; and (iii) introduced efficient problem bank and bank failure resolution mechanisms \. This law was assessed as satisfactory by the 2003 Financial Sector Assessment Program (FSAP)\. (b) A new Deposit Insurance Scheme Law was adopted by Parliament in July 2000\. (c) NBRM prudential regulations were upgraded in line with best international practice and enforcement was strengthened through improved on -site inspections and off-site monitoring, as well as the system and practice of loan loss provisioning by the banks \. The NBRM has started to prepare a banking system -wide Compliance Report; (d) Government implemented reforms to address issues related to problem and failed banks, including (i) a detailed manual of rules and criteria as developed to govern the transfer of banks into the problem bank unit, (ii) diagnostic studies were completed for four large banks (with some assistance provided by the Netherlands ) to help NBRM determine the financial condition of the banks, and NBRM developed tailor made corrective action programs for all four banks \. Three of the four banks implemented reforms as foreseen, while the fourth (Makedonska Banka) reached satisfactory compliance with after some 6 months delay\. 2\. Financial System Infrastructure Development \. (a) Financial System Infrastructure Development is being addressed through implementation of a program to : (i) reform ZPP; (ii) develop of effective movable and immovable collateral registration systems; (iii) creation of a Central Securities Depository / Central Share Registry (CSD) and A Delivery versus Payment (DVP)-based securities clearing and settlement system, and (iv) Creation of Central Securities Depository (CSD) and DVP-based Security Clearance and Settlement System \. All joint stock companies have transferred their share registers into the new CSD \. 3\. Business Environment Reform\. (a) Private Enterprise Entry and the FDI Regime\. Simplified registration forms were developed with 8 days limit for government acceptance/rejection\. A new company law was drafted by Government and approved by the Parliament \. (b) Creditors' and Shareholders' Rights\. (i) Parliament adopted amendments to the Bankruptcy Law and the Law on Pledges which have simplified and accelerated bankruptcy and collateral foreclosure proceedings and closed loopholes used by debtors to delay creditor actions \. (ii) A new mortgage law was enacted by Parliament \. (iii) The new moveable pledge register is operating and a new immovable pledge register is being established \. (iv) Parliament adopted a new law for both movable and immovable collateral which provided workable and sufficiently clear rules for the creation and termination of pledges and pledge priority over movable and immovable assets \. (c) Supporting an effective Auditing and Accounting profession \. (i) A new Self Regulatory Organization (SRO) for chartered accountants and auditors was established which will determine minimum professional education standards, organize and administer professional training, determine minimum ethical standards, and carry out disciplinary proceedings including revocation of SRO membership \. (ii) Although the measures in (i) above met project conditionality, it appeared (as reported by the Reports on the Observance of Standards and Codes (ROSC) that existing government laws might impede implementation, so a new law is being drafted and reviewed to incorporate the findings of and address the concerns in the ROSC \. 4\. Enterprise Sector Reform\. (a) Government has formally resolved all 24 enterprises that were identified in the Minutes of Negotiations as well as an additional 8 enterprises; the 1999 total losses of these 32 enterprises were equivalent to 2\.04 percent of GDP\. Redundant workers are receiving severance pay and other benefits supported by the Bank's Social Support Project \. (b) Rationalization of government support policy for the enterprise sector \. (i) Government has adopted a declining fiscal cap for discretionary assistance to enterprises, which has declined by from 1999 to 2003 by 67 percent, exceeding the agreed target of a 50 percent reduction\. (c) Resolution of the Assets of the BRA \. Parliament has set a three-year sunset provision for the renamed BRA which is now called the Asset Management Agency (AMA) to emphasize its sole role of asset management rather than bank rehabilitation \. The sunset was reached in March, 2004, after which remaining assets were transferred to the Ministry of Finance and the AMA ceased to exist \. 4\. Significant Outcomes/Impacts: Socially and State-owned enterprises (or enterprises with substantial arrears to the government ) were terminated for which losses had accounted for over 2 percent of GDP\. Bank lending increased as a percentage of GDP from 12-13 percent for 1998-2002 to 15 percent in 2003, while deposits increased from the equivalent of an average or 22 percent of GDP during that time to 28 percent (although in one year, 2001, deposits had reached the equivalent of 30 percent of GDP)\. State ownership of the banking sector (excluding state-owned foreign banks) declined from an average of about 15 percent of total assets for 2000-2002 to 1\.8 percent of total assets in 2003\. Bank lending to households increased substantially, almost tripling from 1999-2000 to 2003 (in nominal terms), while lending to the corporate sector increased modestly \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Highly Satisfactory The project met virtually all stated objectives and surpassed some such as in SOE sector reform\. The reforms supported by the project have substantially changed the enterprise and financial sectors\. While the project's closing date was delayed by one year, this was due to military conflict\. Institutional Dev \.: High High Sustainability : Highly Likely Highly Likely Bank Performance : Satisfactory Highly Satisfactory The Bank effectively supported implementation leading to an outcome rating of highly satisfactory \. A number of instances cited in the PSRs demonstrate the Bank foresaw emerging problems and proposed effective solutions to keep the program on track\. Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: 1\. Projects design and quality at entry are substantially enhanced by drawing lessons from the shortcomings of past projects\. This project benefitted by developing specific measurable triggers for tranche release, and focussing clearly on priority issues, based on the lessons and shortcomings of previous Bank -supported enterprise and financial sector reforms in Macedonia \. 2\. Coordinated donor support can be very useful in providing technical assistance\. 3\. Social mitigation (in this case supplied through a separate Bank operation ) can play a crucial role in developing ownership and broad support for adjustment operations \. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The ICR is concisely written but contains a great deal of material, including extra tables on financial sector performance which are very useful \. The government's contribution is also quite good \. The only oversight concerns Annex 2, the tables on project costs and financing, which are not completely filled out, but which do not convey very much information for an adjustment loan \.	REVIEW
P002970	Document of the World Bank Report No: ICR0000907 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-32670 IDA-3267A) ON A CREDIT IN THE AMOUNT OF SDR 67\.2 MILLION (US$ 90\.98 MILLION EQUIVALENT) TO THE REPUBLIC OF UGANDA FOR A ROAD DEVELOPMENT PROGRAM PHASE 1 January 15, 2009 Africa Transport Sector Country Department AFCE1 Africa Regional Office CURRENCY EQUIVALENTS (Exchange Rate Effective June 30, 2008) Currency Unit = Uganda Shillings (UGX) SDR1\.00 = US$ 1\.57 US$ 1\.00 = 1,635 UGX FISCAL YEAR July 1 June 30 ABBREVIATIONS AND ACRONYMS AfDB African Development Bank APL Adaptable Program Loan CAS Country Assistance Strategy DANIDA Danish International Development Association DCA Development Credit Agreement DP Development Partners DUCAR District, Urban and Community Access Roads DUCARIP District, urban and community access road investment plan EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return ELU Environnemental Liaison Unit FM Financial Management GOU Government of Uganda HDM Highway Design and Maintenance Model ICR Implementation Completion and Results Report IDA International Development Association ISR Implementation Status Report LODP Letter of Development Policy MC Management Committee M&E Monitoring and Evaluation MOFPED Ministry of Finance, Planning and Economic Development MOWT Ministry of Works, Transport and Communications (July 1, 2006 to date NEMA National Environmental Management Authority NGO Non Governmental Organizations NPV Net Present Value PEAP Poverty Eradication Action Plan PDO Project Development Objective QAG Quality Assurance Group QAE Quality at Entry QAS Quality of Supervision RAFU Road Agency Formation Unit RDP Road Development Project RDPP1,2,3,4 Road Development Project Phase 1,2,3,4 RF Road Fund RSDP Road Sector Development Program RSISTAP Road Sector Institutional Support Technical Assistance Project SIL Sector Investment Loan SDR Special Drawing Rights TA Technical Advisors TAERA Transitional Arrangement for the Establishment of a Road Agency TSIREP Transport Sector Investment and Recurrent Expenditure Plan TOR Terms of Reference TYDRIP Ten year district road investment plan UNRA Uganda National Roads Authority VOC Vehicle Operation Costs Vice President: Obiageli Katryn Ezekwesili Country Director: John Murray McIntire Sector Manager: C\. Sanjivi Rajasingham Project Team Leader: Labite Victorio Ocaya ICR Team Leader: Dieter E\. Schelling REPUBLIC OF UGANDA ROAD DEVELOPMENT PROGRAM PHASE 1 CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Profile 1\. Project Context, Development Objectives and Design\.1 2\. Key Factors Affecting Implementation and Outcomes\.5 3\. Assessment of Outcomes \.10 4\. Assessment of Risk to Development Outcome\.13 5\. Assessment of Bank and Borrower Performance\.14 6\. Lessons Learned\.17 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\.19 Annex 1\. Project Costs and Financing\.20 Annex 2\. Outputs by Component\.21 Annex 3\. Economic and Financial Analysis \.29 Annex 4: Bank Lending and Implementation Support/Supervision Processes\.34 Annex 5\. Summary of Borrower's ICR \.36 Annex 6\. List of Supporting Documents\.46 MAP\.47 A\. Basic Information UG-Roads Dev APL Country: Uganda Project Name: (FY99) Project ID: P002970 L/C/TF Number(s): IDA-32670,IDA-3267A ICR Date: 01/28/2009 ICR Type: Core ICR Lending Instrument: APL Borrower: GOVERNMENT Original Total XDR 67\.2M Disbursed Amount: XDR 67\.2M Commitment: Environmental Category: B Implementing Agencies: Ministry of Works and Transport of Uganda Cofinanciers and Other External Partners: B\. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/15/1998 Effectiveness: 02/01/2000 Appraisal: 03/05/1999 Restructuring(s): Approval: 06/29/1999 Mid-term Review: 10/18/2002 Closing: 12/31/2004 06/30/2008 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Unsatisfactory Government: Moderately Satisfactory Quality of Supervision: Moderately SatisfactoryImplementing Agency/Agencies: Moderately Satisfactory Overall Bank Overall Borrower Performance: Moderately SatisfactoryPerformance: Moderately Satisfactory C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Performance Indicators (if any) Rating Potential Problem Project Yes Quality at Entry None i at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 3 3 Roads and highways 97 97 Theme Code (Primary/Secondary) Rural services and infrastructure Primary Primary E\. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo Country Director: John McIntire James W\. Adams Sector Manager: C\. Sanjivi Rajasingham Yusupha B\. Crookes Project Team Leader: Labite Victorio Ocaya Yitzhak A\. Kamhi ICR Team Leader: Dieter E\. Schelling ICR Primary Author: Subhash C\. Seth F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The primary objective of the project was to improve access to rural and economically productive areas and to build up road sector planning and management capability in the country\. This was to be achieved by: (i) the conduct of sector policy and management studies; and (ii) upgrading of about 275 km of main roads\. Key performance indicators are: (i) increased agricultural and industrial activity: (ii) increased traffic growth; (iii) reduced average travel time on main roads; and (iv) reduced transport and vehicle operating costs\. Revised Project Development Objectives (as approved by original approving authority) ii (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 1 : Reduction in average travel time on main roads compared to baseline\. 1\. Pakwach- About 2\.5 hours Nebbi-Arua road: travelling time on the average travel the Pakwachi- 1\. Pakwach-Nebbi-Arua: time is expected to Nebbi-Arua road 1999, travel time was an be reduced by 50% and 3\.5 hours on Value average of 5 hours at EOP\. the Busunju-Kiboga quantitative or (26km/h average speed) 2\. Busunju- Not revised Hoima road at an Qualitative) 2\. Busunju-Kiboga- Kiboga-Hoima average speed of Hoima: In 1999, travel road: the average 50 km/hour for bus time on was an average of travel time is (including 7 hours (21 km/h)\. expected to be stoppages)\. reduced by 50% Hence,travel time EOP\. has been reduced by half\. Date achieved 06/30/1999 12/31/2004 12/31/2006 06/30/2008 Comments (incl\. % 100% achieved by revised closing date\. achievement) Indicator 2 : Reduction in transport and vehicle operating costs compared to baseline\. Vehicle operating Values obtained from costs have been Value MOWT for the year 2001 20% reduction reduced for an quantitative or give a VOC of USD expected by revised average vehicle to Qualitative) 0\.352/veh-km for an completion of civil Not 0\.224/veh-km in average vehicle\. works\. 2006, hence VOC was reduced by 36%\. Date achieved 07/01/2001 12/31/2004 12/31/2006 06/30/2008 Comments (incl\. % 100% achieved by revised closing date\. achievement) Indicator 3 : Increased agricultural and industrial activity reflected in increased traffic growth\. Traffic increased by Traffic data at design in an average of 7 terms of ADT was: times the base value Value 1\. Pakwach-Nebbi road: Twofold increase at the revised quantitative or 161 by original closing Not revised closing date\. Traffic Qualitative) 2\. Nebbi-Arua: 136 date of Credit\. data at completion 3\. Busunju-Kiboga: 490 in terms of ADT 4\. Kiboga-Hoima: 334 were: Pakwach- Nebbi: 1745; Nebbi-Arua: 1719; iii Busunju-Kiboga: 1479;Kiboga- Hoima: 1104\. Date achieved 11/24/1998 12/31/2004 12/31/2006 06/30/2008 Comments While not all the increase in traffic can be attributed to the improved road (incl\. % condition\. it can be taken as a good proxy for increased agricultural activity\. achievement) This indicator has been achieved substantially above 100% by the revised closing date\. Indicator 4 : RAFU functioning by December 1999: This was a condition of effectiveness of the credit Value RAFU functioning RAFU functioning quantitative or Only Director and top by effectiveness of Not revised by effectiveness of Qualitative) management in place\. the Credit\. the Credit\. Date achieved 06/30/1999 02/01/2000 12/31/2006 02/01/2000 Comments (incl\. % 100% achieved as planned\. achievement) (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Upgrading of two high priority roads: (a) Busunju-Kiboga-Hoima, 145 km; (b) Indicator 1 : Pakwach-Nebbi-Arua, 130 km; and (c) a third road, Kawempe-Kafu road, 166 km, was added for resealing using savings after amendment of the credit in September 2005\. (a) 275 km The feasibility study and 275 km upgraded upgraded from Value engineering design of the from gravel to gravel to paved (quantitative 2 roads (a) & (b) were paved Not revised (bituminous) or Qualitative) completed to start the (bituminous) standard; and (b) tendering process\. standard\. resealing of Kawempe-Kafu road\. Date achieved 06/30/1999 12/31/2004 12/31/2006 06/30/2008 Comments While the Pakwach-Arua 2 lots were completed ahead of schedule, the 2 (incl\. % contracts on Busunju-Kiboga-Hoima were substantially delayed\. Due to savings achievement) it was possible to reseal an additional 166 km\. Achieved 100%, however with delay\. Sector policy and management studies: (a) Transport Sector Strategy Study Indicator 2 : (b) Road Sector Environmental Policy & Management Study (c) Road Management and Financing Study (d) Study on the Establishment of RAFU Value TORs for all the studies (quantitative were prepared and Completed Not revised Completed or Qualitative) accepted by the Bank\. iv Date achieved 06/30/1999 12/31/2006 12/31/2006 12/31/2004 Comments (incl\. % 100% achieved by the original closing date\. achievement) Indicator 3 : Review/Update of the District, Urban and Community Roads Rehabilitation and Maintenance Stategy Value TOR of the strategy study (quantitative were prepared and Completed Not revised Completed or Qualitative) accepted by the Bank\. Date achieved 06/30/1999 12/31/2004 12/31/2006 12/31/2004 Comments (incl\. % 100% achieved by original closing date\. achievement) G\. Ratings of Project Performance in ISRs Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 12/21/1999 Satisfactory Satisfactory 0\.00 2 04/20/2000 Satisfactory Satisfactory 3\.91 3 11/27/2000 Satisfactory Satisfactory 3\.91 4 05/29/2001 Satisfactory Satisfactory 4\.15 5 12/19/2001 Satisfactory Satisfactory 11\.01 6 04/26/2002 Satisfactory Satisfactory 13\.32 7 06/13/2002 Satisfactory Satisfactory 16\.13 8 09/30/2002 Satisfactory Satisfactory 20\.84 9 11/25/2002 Satisfactory Satisfactory 23\.28 10 03/31/2003 Satisfactory Satisfactory 25\.50 11 08/06/2003 Satisfactory Satisfactory 29\.84 12 12/23/2003 Satisfactory Satisfactory 34\.43 13 04/26/2004 Satisfactory Satisfactory 41\.87 14 09/09/2004 Satisfactory Unsatisfactory 43\.39 15 12/15/2004 Satisfactory Unsatisfactory 44\.73 16 01/26/2005 Satisfactory Unsatisfactory 45\.84 17 04/09/2005 Satisfactory Moderately Unsatisfactory 47\.05 18 11/29/2005 Moderately Satisfactory Moderately Unsatisfactory 48\.88 19 06/20/2006 Moderately Satisfactory Unsatisfactory 54\.12 20 11/30/2006 Satisfactory Satisfactory 59\.39 21 06/05/2007 Satisfactory Satisfactory 68\.81 22 12/12/2007 Satisfactory Satisfactory 80\.73 23 06/02/2008 Satisfactory Satisfactory 91\.20 v H\. Restructuring (if any) Not Applicable I\. Disbursement Profile vi 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. The Government of Uganda (GOU) presented its sector policy, roads strategy and 10- year 1997/8-2006/7) Road Sector Development Program (RSDP) at a donor's conference held in Paris on November 20, 1996\. The estimated cost of RSDP was US$1\.5 billion for main roads\. In addition, there was a need for feeder roads to be improved at an estimated cost of US$300 million in partnership with local governments and consistent with the then approved decentralization policy\. The Bank and the other development partners reviewed RSDP and after consultation will all key stakeholders, decided that the program was feasible and that they would support it\. However, to ensure its successful implementation, it was critical for the Ministry of Works and Transport (MOWT)1 to carry out restructuring of the road administration, strengthen environmental management and prepare engineering design and bidding documents for the high priority roads included in the RSDP\. Prior to preparing a project to support the implementation of RSDP, the Bank first approved the US$30 million Road Sector Institutional Support and Technical Assistance Project (RSISTAP) in March 1997, which aimed at assisting to implement institutional reforms in the road sector, and helped to prepare design and bidding document for the improvement of high priority roads of RSDP\. RSISTAP was followed by a four phased Adaptable Program Loan (APL) in support of RSDP, and the Road Development Program Phase 1 (RDPP1) was first in these series\. 2\. As an effectiveness condition of RSISTAP, the government created within MOWT an "arms-length" Road Agency Formation Unit (RAFU) in September 1998, to take over the management of large contracts from MOWT, while road maintenance remained with MOWT\. In the Letter of Development Policy (LODP) of May 1999, the government committed that RAFU would be a transitional institutional set up and that it would be transformed into a fully-fledged autonomous road agency/authority by 2002\. However, this took much longer than expected\. Eventually, the Uganda National Road Authority (UNRA) Bill was passed by parliament in May 2006\. UNRA was established in January 2007, and became operational on July 1, 2008\. RDDP1 was therefore prepared, implemented and closed by the former RAFU\. 3\. The overriding goal of the government's road sector strategy was to promote efficient, reliable and affordable transport services to facilitate agricultural development, industrial production, trade, tourism, social development and administrative services\. The road sector strategy also emphasized the promotion of an active private sector in the provision of transport services through deregulation and privatization\. The design of RDPP1 was consistent with the World Bank Group's Country Assistance Strategy (CAS), which was discussed at the Board on May 20, 1997\. RDPP1 was part of IDA's operational program, which was designed to reduce poverty through a medium term strategy focused on private sector led growth\. Lowering transport costs and improving reliability of access to infrastructure were key elements to facilitate business development\. 1 At project appraisal the name of the Ministry was Ministry of Works, Housing and Communication 1 4\. Financing of the 10-year RSDP (US$1\.5 billion) was as follows: GOU US$769 million; EU US$249 million; IDA US$450 million (of which US$269 million under the proposed APL and the remainder under the then ongoing Bank's Transport Rehabilitation Project (TRP - Cr\. 2587-UG) and RSISTAP (Cr\. 2987-UG)); and (iv) the balance of US$32 million from other development partners\. The indicative size and the implementation period for all the four phases as agreed at appraisal in June 1999, and their status at the project closing of RDPP1 on June 30, 2008, is as follows: APL Indicative Financing Plan and Actual Financing Plan and Phases Implementation Period Implementation Period at Project Appraisal at Project Closing Amount Start Date Completion Amount Effective Date Completion (US$ m) Date (US$ m) Date Phase I 90\.98 Nov\. 1999 June 2004 90\.98 Feb 1, 2000 June 30, 2008 Phase II 65\.06 June 2000 June 2005 64\.52 April 11, 2002 June 30, 2008 Phase III 86\.70 Nov\. 2000 Oct\. 2006 107\.60 June 23, 2005 Dec\. 31, 2009 Phase IV* 26\.25 Feb\. 2002 Dec\. 2006 0\.00 N/A N/A * Phase IV of the APL was planned to finance District Roads\. While the RDPP1 credit helped to update the country's rural road strategy, in the meantime it has been agreed between GOU and DP that District Roads are being financed through the budget while DP finance should focus on the upgrading of the primary trunk roads\. Therefore the phase IV of the APL will not be necessary\. RDP Phase IV is therefore being dropped and instead the proposed Transport Improvement Project is being launched\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 5\. The objective of the Road Development Program, Phase 1 Project (the Project) was to improve access to rural areas and economically productive areas and to gradually build up road sector planning and management capability\. The Project included: (i) upgrading of two high priority main roads; (ii) studies targeting the strengthening of road sector management; and (iii) preparation of a basis for an efficient feeder road financing and management system which will enable the government and donors to actively support development and maintenance of feeder roads\. The Project would, in addition, include a number of institutional and management measures that will be tested and adjusted as the Program expands\. The measures were related to (i) effective performance of the newly established administrative set-up (RAFU); and (ii) the establishment of milestones for efficient contract management and administration\. 6\. The key performance indicators were: (i) increased industrial and agricultural activity; (ii) increased traffic growth; (iii) reduced average travel time on main roads; and (iv) reduced transport and vehicle operating costs\. Improvement and integration of the national road network under the program would be subject to an appraisal process aimed at evaluating its technical feasibility and economic viability, as well as to learn from previous phases\. Trigger indicators have been defined in Attachment 2 of Annex 1 of the PAD in order to assess readiness for implementation, early identification of risks, and implementation of corrective measures before undertaking subsequent phases of the program\. 2 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and Reasons/Justification 7\. There was no change in the PDO\. However, indicators were realigned in the process of project implementation and extensions of credit closing dates as follows (see data sheet): (A) PDO Indicators: Reduction in average travel time on main roads compared to baseline\. Reduction in transport and vehicle operating costs compared to baseline\. Increased agricultural and industry activity reflected in increased traffic growth\. RAFU functioning by December 1999\. (B) Intermediate Outcome Indicators: Upgrading of two highest priority roads: (i) Busunju-Kiboga-Hoima 145 Km; (ii) Karuma- Pakwach-Nebbi-Arua (Section Pakawach-Arua 130 km); and (iii) resealing of Kawempe- Kafu road (166 km); Transport Sector Strategy Study completed; Road Sector Environmental Policy & Management Study completed; Road Management and Financing Study completed; Study on the Establishment of RAFU completed; and District Urban and Community Access Roads Rehabilitation and Maintenance Strategy updated\. 1\.4 Main Beneficiaries 8\. The primary target group or main beneficiary of the project were road users, the MOWT, RAFU (now UNRA), and local governments\. RDPP1 supported upgrading and rehabilitation of priority roads, carrying out of sector policy and management studies, creation of UNRA and external auditing\. The road upgrading and rehabilitation works led to substantial savings in vehicle operating costs and travel time on the two high priority roads\. RDPP1 also supported a review of transport sector strategy and laid the foundation for updating the rural roads strategy, leading to development of the ten-year district road investment plan (TYDRIP), and the ten-year district, urban and community access roads investment plan (DUCARIP)\. TYDRIP and DUCARIP are currently under implementation with support from other DP\. Improvement and timely maintenance of district roads benefitted farmers, traders and rural population through increasing agriculture produce, and contributed to improved delivery of social services in the rural areas\. Since the improved road projects were part of a comprehensive countrywide road investment strategy, RDPP1 contributed to foster economic growth and poverty alleviation through improvement in market integration and accessibility\. The sector study on road management and financing assisted to rationalize road sector management and creation of a Road Fund dedicated to fund road maintenance\. The main beneficiaries identified at project appraisal remained the same during project implementation\. 3 1\.5 Original Components (as approved) 9\. The overriding goal of the Project was to improve access to rural areas and economically productive areas and to enhance the Borrower's road sector planning and management capacity\. The Project comprised of the following components: Component 1: Upgrading of main roads from gravel to bituminous standards: Upgrading of the following two priority roads from gravel to bituminous standards: (i) Pakwach-Nebbi-Arua road (130 km) through two contracts (C001 and C002); and (ii) Busunju--Kiboga-Hoima road (145 km) through two contracts (C005 and C006)\. Earlier, GOU and the African Development Bank (AfDB) financed consulting services to carry out feasibility studies and detailed engineering design on these roads\. Under RSISTAP, IDA financed consulting services for updating the economic feasibility analysis, carrying out final engineering design, EIA and their mitigation plans and preparation of bidding documents\. The studies determined that upgrading the two gravel roads was economically viable\. Component 2: Consulting services for supervision of the civil works: This component comprised consultants' services for supervision of civil works included under component one\. The TORs for these services were agreed between the Bank and MOWT\. The services included the required expertise for the supervision of civil works and the environment and social impact mitigation measures\. Component 3: Sector policy and management studies: This component was financed under the PPF of RDPP1 and included consulting services for carrying out a number of sector policy and management studies, listed below: (i) Transport sector strategy review; (ii) Review and update of the 1992 rural roads strategy; (iii) Road sector environmental policy and management assessment; (iv) Study on establishment of RAFU; and (v) Road management and financing study\. Component 4: External audit services: This component included a provision for hiring external auditors to prepare the audit reports of the project accounts, statements of expenditure, and institutional accounts\. 1\.6 Revised Components: 10\. The project components were not revised\. However, a new road was introduced under component one to utilize credit savings estimated at US$20 million\. The savings were due to: (i) the gain in value of the SDR against the Dollar from 1SDR=US$1\.35 (November 1999) to 1SDR=US$1\.47 (August 2005); (ii) the relatively large unallocated amount of SDR12\.77 million to allow for physical and price contingencies that was not fully utilized during implementation; and (iii) lower bids compared to the engineer's estimates\. To utilize the savings, the government recommended, and IDA, agreed to include the resealing and rehabilitation of Kawempe-Kafu road (166 km) which was constructed in the late 1960's and was in critical condition needing urgent repairs\. Inclusion of this road in the credit was based on the following key criteria: (i) the road connects the capital city to the recently completed Karuma-Pakwach-Arua road and gateway to north western Uganda, thus fulfilling the objectives of the project; (ii) the road forms 4 part of the Kampala-Gulu-Nimule road, the main transport corridor to Juba, South Sudan; (iii) the road is the main transport corridor to poor areas of the country where accessibility improvement could greatly facilitate local economic and social development; (iv) the road section had high traffic growth; and (v) engineering design was ready and the proposed road works were expected to be completed by the extended closing date\. 1\.7 Scope and Scale 11\. The project had planned to upgrade 275 km of main roads\. On account of credit savings, the scope of upgrading works was increased to 441 km\. 1\.8 Other significant Changes 12\. On September 26, 2005, the DCA was amended to increase IDA financing to 100 percent in order to cope with the problems that the Borrower was facing with the provision of counterpart funding\. 1\.9 Implementation Schedule 13\. The original project closing date was December 31, 2004\. On October 29, 2004, the government requested an extension of three years, but IDA agreed to extend the credit by two years until December 31, 2006\. On November 14, 2006, the government requested for an extension by further 18 months until June 30, 2008\. The main reason for the first extension was to allow for the completion of the delayed rehabilitation of Busunju-Kiboga road (contract C005) and Kiboga-Hoima road (contract C006)\. The second extension was again for the above, but also to allow for the use of savings of the credit for the resealing and rehabilitation of Kawempe Luwero (contract C015A) and Luwero-Kafu roads (contract C015B)\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 14\. The project design addressed the following key sector issues: (i) supporting the establishment of an autonomous road agency; (ii) enhancing road sector program management and project implementation capabilities through carrying out several sector policy and management studies; (iii) expanding coverage of the feeder road network; and (iv) improving the country's overall road network condition through providing resources for upgrading of main roads in rural areas\. During preparation, the team considered the following strategic choices: (a) to maintain the institutional set up of MOWT, or (as chosen) to prepare for the preparation of an autonomous and user financed Road Agency, while at interim the program would be implemented by the Road Agency Formation Unit (RAFU); (b) to proceed with a Sector Investment Loan (SIL) that would cover both institutional and physical investments, or (as chosen) to opt for a technical assistance credit (RSISTAP) to promote institutional change followed by an Adaptable Program Loan (APL) focusing on the physical investments; (c) to proceed with financing road programs from annual budget allocations or to explore additional finance (as done through studies under this credit) through user charges and private sector 5 finance; and (d) to implement a joint national and district roads program, or separate them under different programs, taking into account the fact that district roads need to be implemented in a decentralized manner through the local government authorities\. Eventually it was decided to implement the road improvement program through a four phased APL with (RDP) phases one to three focusing on national roads implemented by RAFU/UNRA (including a portion of district roads that would be upgraded to national roads under RDP Phase 3) while RDP Phase 4 would focus on supporting a district roads program to be implemented through the local government authorities\. 15\. At project entry the government showed strong commitment by signing a LODP with an overriding goal of promoting affordable, efficient and reliable transport services as a means of facilitating economic development\. With the LODP, the government provided an overall review of its medium term strategy for the transport sector\. The project design was also consistent with the government's Poverty Eradication Action Plan, which identified critical areas that required substantial budget expenditures\. The RDP Phase 1 supported the improvement of main roads in rural areas as being directly related to increasing rural income and supporting the private sector\. 16\. A risk analysis was carried out and mitigation measures were identified\. The key risks from outputs to objective assumed to be: (i) projected level of agricultural and industrial production will not be increased; (ii) Uganda road agency will not be established and fully operational as scheduled; (iii) adequate budgets will not be released; (iv) appropriate financing arrangements will not be approved by GOU and agreed with road users; and (v) annual main road maintenance program will not be implemented as scheduled\. Mitigation measures were defined, but were not linked to concrete milestones or taken up as triggers for subsequent phases of the APL\. Overall risk rating was assessed as "modest", which in hindsight seems too low\. 17\. The project was not subjected to a Quality Assurance Group (QAG) review at entry\. 2\.2 Implementation 18\. The Bank approved the project on June 29, 1999\. The DCA was signed on November 22, 1999, and the credit became effective on February 1, 2000, after meeting the following effectiveness conditions: (i) the Borrower established the project account and deposited therein the initial deposit; (ii) the Borrower provided sufficient budget in its three-year rolling TSIREP for payment of counterpart funds; and (iii) RAFU adopted a financial management and accounting system satisfactory to IDA\. The project was initially designed to finance four large civil works contracts\. As the contracted amount for the four contracts was below the PAD estimates, the credit was amended in September 2005 to utilize the savings and the unallocated amount, estimated at US$20 million, on two contracts for rehabilitation/resealing of the 166 km Kawempe-Kafu road\. 19\. A Mid-Term Review (MTR) took place on October 18, 2002 and the key finding was that due to procurement delays (contracts were awarded about 16 months after effectiveness) the project would require an extension of the credit closing date by two years\. RAFU was to monitor the performance of the contracts and advise the Bank of the actions needed to be taken for each contract and whether the full two years extension would be needed\. 6 20\. Despite procurement delays the first two contracts (contracts C001 and C002) were completed within the time allotted in the contract, well before project closing, and within budget\. Implementation of sector policy and management studies also proceeded well and was completed on schedule\. The other two contracts (C005 and C006) experienced substantial delays\. At the end of October 2002, it was realized that the contractor on site was not the contractor who had signed the contract\. The Bank then advised that all payments be suspended until the Borrower clarifies the legal status of the replacement contractor\. The Borrower clarified that the replacement contractor was a subsidiary of a parent company under which the main contractor was awarded the two contracts, that it had existed for a long time and had the same shareholders, assets, staff, etc\. and that it had sufficient financial strength to complete the works, and that a "Hive-Across Agreement" was signed by the two firms so that the replacement contractor could execute the contracts\. 21\. In the opinion of the Attorney General of Uganda, this was acceptable in accordance with British Law under which the two companies were registered and, hence, there was no breach of contract\. Thus, the possibility of termination was shelved and the client instead requested for a no-objection to sign a "Deeds of Novation" to empower the replacement contractor to execute the contracts based on the legal opinion provided by the Attorney General of Uganda, dated October 31, 2002\. The Bank's condition for acceptance of the government's recommendation was based on an in-depth assessment of the replacement contractor's capacity to complete the works, carried out by an independent consultant in March 2003\. The consultant's assessment report verified that the replacement contractor had the capacity to continue and complete the works\. After clarification of the contractor's financial status, a decision from the Bank in regard to the no-objection to the "Deeds of Novation" was made and the no-objection letter was issued on June 2, 2003\. 22\. The entire process involved thorough consultations with the RPA and LEGAF\. The ensuing hiatus resulted in substantial delays\. Further delays were experienced due to difficulties the contractor had in meeting its obligations of cash flow, poor design, leading to variation orders to improve road safety, strength of shoulders and redesign of overdesigned hydraulic structures\. Thus, the rating of project implementation performance which was satisfactory until September 2004 became unsatisfactory\. Subsequently, the Bank commissioned a consultant to carry out an independent review of the contractor's ability to perform and complete the works\. The consultant's findings were that the contractor was facing financial difficulties and recommended that the client should either (i) persuade the contractor to assign one or both the contracts or (ii) terminate and expel the contractor from one or both the contracts and rebid for the balance of work\. Further, a financial management consultant commissioned by the Bank confirmed the contractor's weak financial capability\. Based on the consultants' recommendations, several correspondences were exchanged between the Bank and GOU with a view to ensuring that in the event of termination: (i) a new contractor is procured to take over as the old contractor vacates the site; and (ii) GOU would ensure that the proposed termination would not result in legal/contractual impasse to the project\. It was agreed that GOU should first seek the advice of a contract (claims) expert and the opinion of the Solicitor General of Uganda before commencement of the termination process\. An international construction lawyer commissioned by the government to advice on the matter submitted his report on February 26, 7 2006\. His findings were that there was a history of differences between the client and the contractor over the legitimacy of claims and advised that government would be unlikely to succeed in terminating the contracts on the grounds of the contractor's default\. Subsequently, the Solicitor General of Uganda recommended an amicable settlement of the disputes as provided for in the dispute resolution clauses of the contract rather than termination and possible arbitration\. The approach was accepted by the Government and the Bank as the most practical way forward\. 23\. During the IDA mission of August 2006, a tight action plan was agreed upon to get the project back to satisfactory status by October 15, 2006\. This action plan included the following: (i) settlement of the outstanding claims based on the Engineer's assessment; (ii) payment by GOU of the outstanding amounts due to the contractor from other contracts; (iii) rapid settlement of outstanding variation orders; (iv) setting of clear physical milestones that needed to be achieved by October 15, 2006; and (v) any other action necessary to ensure that adequate cash is available per the agreed work plan\. The Bank's October 2006 mission confirmed that the actions had been implemented as planned, including settlement of claims and issuance of outstanding variation orders\. Thus, in October 2006, the project was declared satisfactory again\. Based on this, GOU requested for extension of the closing date of the project from December 31, 2006 to June 30, 2008\. At closure of the credit, the additional project for rehabilitation of Kawempe- Kafu road was also implemented with US$ 19\.85 million disbursed\. 24\. The project was not subjected to a QAG review of the quality of supervision\. 2\.2\.1 Major Factors Affecting Implementation Factors outside the control of the GOU or implementing agencies: 25\. During project implementation there were intermittent periods when fuel supplies to Uganda were curtailed which affected the performance of the civil works contracts\. These included a breakdown of the refinery in Mombasa, interruption of the pipeline to Kisumu, and the political crisis in Kenya end 2007 to early 2008\. Factors generally subject to government control 26\. Lack of Counterpart Funding: The project was designed to provide for 25 percent counterpart funding on the civil works component and 20 percent on consultants' services\. However, government had difficulties in providing the counterpart funding and this affected the performance of contractors\. At the request of government, the credit was amended in September 2005 to allow for 100 percent financing of all components\. Factors generally subject to the implementing agency's control 27\. Decision making on issues related to variations and assessment of contractor's claims was slow, mainly due to lack of capacity of the implementing agency\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 8 28\. M&E Design: At project appraisal, the key performance indicators were designed as part of project design summary to monitor the project performance at several levels: CAS goal; program purpose; PDO for RDPP1; and outputs from each component\. During project implementation, it was agreed with management that increasing volume of agricultural, commercial and industrial goods could best be reflected in the increased traffic volumes\. The improved road network led to reduction in travel time and vehicle operating costs\. While no specific indicators were designed to assess the contribution of this to poverty reduction, information provided by the Uganda Bureau of Statistics shows a trend of poverty reduction with improvement of the road network\. 29\. M&E Implementation: The project design summary prepared at project appraisal was not modified during project implementation to take into account the two project extensions approved for three years and six months\. RAFU had a monitoring officer who prepared a quarterly report on the performance of all projects managed by them\. 30\. M&E Utilization: In hindsight it is felt that the M&E system was not adequately used to monitor project implementation delays and to act on such delays\. 2\.4 Safeguard and Fiduciary Compliance 31\. Procurement: At project appraisal, all procurement arrangements including procurement plan and procurement methods were discussed and agreed consistent with the World Bank (WB) guidelines\. The project included mainly procurement of large civil works contracts that needed pre-qualification of contractors and selection of consultants for supervision of the contracts\. The procurement capacity assessment called for the establishment of a procurement unit at RAFU and its strengthening through TA and training\. This was, however, not made a condition of credit effectiveness, and it took some time to take effect, and as a result, at the initial stages of the project, the quality of procurement documentation was not up to standard and causing procurement delays\. 32\. Financial Management: There was a separate Finance and Administration Division, in RAFU that was responsible for all aspects of financial management\. A well documented Financial Management Manual was developed\. The manual outlines internal control procedures as well as financial reporting arrangements for the funding received from the GOU budget and the WB and other donors\. Effective July 2001, the accounting system was fully computerized based on a double entry accounting system\. The ratings of the Financial Management (FM) in the implementation status reports (ISRs) were satisfactory\. The quality of the financial management reports in general was good\. Satisfactory audit reports were received on a timely basis, which were reviewed by the Bank and the comments sent to the Borrower\. FM issues were identified and appropriate recommendations made\. RAFU did not have an internal audit unit as it was considered to be an organ of MOWT which had an internal audit unit\. 33\. Environment: At appraisal the project was considered as a category "B" project\. Environmental Impact Assessments (EIA) were carried out for each road as part of the detailed feasibility studies: (i) to prepare a comprehensive investigation delineating any environmental 9 impacts of the proposed road works; (ii) to describe and quantify these impacts; (iii) to draw up feasible mitigation measures for minimizing, eliminating, or offsetting any adverse effects; and (iv) to recommend the most appropriate mitigation and/or enhancement measures\. An Environmental Liaison Unit (ELU) was established in MOWT to monitor the activities of not only road projects but all environmental issues relating to infrastructure projects under the jurisdiction of the ministry\. ELU was formed in April 2001 and it has three environmental specialists\. ELU works in collaboration with the National Environmental Management Authority (NEMA) and follows the recommendations of the road sector environmental policy and management study report completed earlier in the project\. ELU ensures that all road projects have NEMA approval prior to start of their implementation\. On the side of RAFU technical assistance was deployed to build up its capacity to deal with environmental matters\. 34\. Social Assessment: Social Assessment for the physical components was conducted prior to appraisal in conjunction with the EIA for the roads selected for upgrading\. The EIA team included social and environmental scientists providing a multi-disciplinary approach to preparing the EIA\. Socioeconomic data were collected and analyzed from each of the areas where the roads were planned to be improved\. The social analysis included analysis of the temporary and localized microeconomic impacts resulting from construction activities, as well as the potential for involuntary resettlement and quantification of the number of dwellings to be removed\. Furthermore, all the civil works contract documents contained safeguards for HIV/AIDS & environmental issues with provisions for payment through items in the bills of quantities\. An HIV performance assessment was carried out and its recommendations were as follows: (i) appoint a social coordinator within RAFU/UNRA; (ii) ensure HIV programs are integrated within the National HIV response; and (iii) capacity building amongst management and staff on the importance of addressing issues relating to HIV/AIDS is required\. 2\.5 Post-completion Operation/Next Phase 35\. RDP was designed as a seven-year APL program to be implemented in four phases with a considerable overlap of the phases\. Triggers for RDPP2 and RDPP3 were identical, as follows: (i) RAFU key personnel in place and effectively handling the implementation process; (ii) administrative arrangements permit effective and timely approval and implementation; (iii) the monitoring and evaluation system permits follow-up of project implementation and assessment of project objectives achievement; (iv) sub-projects meet economic, social, and environmental eligibility criteria; (v) evidence of adequate implementation of environmental mitigation measures designed in the Phase I; (vi) design documentation prepared and contract documents ready for bidding; (vii) procurement specialist in place and procurement unit established within RAFU\. RDPP2 was approved by Board on July 3, 2001, only 17 months after the effectiveness of RDPP1, and RDDP3 was approved on September 2, 2004\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 36\. The project design was relevant to the country's development priorities and the needs in the road sector\. The project objectives were clear, relevant and important to improve sector 10 policy and strengthening road management\. The project components had a good linkage with the project objectives\. The project also contributed to the Bank's CAS strategic outcomes of lowering transport cost, improving reliability of access to infrastructure services\. The project objectives were also in line with the government's LODP and the country's (1998) PEAP, which targeted the provision of efficient and reliable transport services, increasing agricultural production, and enhancing linkages with neighboring countries, stimulating economic growth and promoting security in the country\. 3\.2 Achievement of Project Development Objectives 37\. The Project's overriding objective of improving accesses to rural and economically productive areas and to gradually build up road sector planning and management capability was substantially achieved on account of the following accomplishments: (i) improved accesses to rural areas through upgrading to bituminous standards of the main roads of (a) Busunju-Hoima (145 km), which connects the capital city to the district headquarters of Kiboga and Hoima in western Uganda and (b) Pakwach-Nebbi-Arua Road (130 km) which connects the capital city to the district headquarters of Nebbi and Arua in north western Uganda; (ii) completion of sector policy and management studies and implementing its recommendations (see Annex 2 Table 3); and (iii) hiring of external auditors to prepare the audit reports\. In addition, the project had three specific objectives and the status of their achievement was as follows at project closure\. 38\. The first specific objective of upgrading two priority roads: Pakwach-Nebbi-Arua (contracts C001 and C002) and BusunjuKiboga-Hoima (contracts C005 and C006) in western and northwestern Uganda respectively on which 95 percent of the project resources (including supervision) were spent was achieved, however with substantial delays\. By adding the rehabilitation of the Kawempe-Kafu road (166 km), the project delivered 441 km of improved main roads against the 275 km planned at appraisal\. With these improvements, the project succeeded to achieve the planned indicators of reducing travel time on Busunju- Hoima road from 7 hours at a speed of 21km/hour in 1999 to 3\.5 hours at an average speed of 50 km/hour for a bus (including stoppages) in year 2008, and on Pakwach- Arua road from 5 hours at a speed of 26 km/hour in 1999 to 2\.5 hours at an average speed of 50 km/hour for bus (including stoppages) in year 2006\. On the improved roads the vehicle operating costs have also been reduced for an average vehicle (bus) from US$0\.352/veh-km in 2002 to US$0\.224/veh-km in 2006\. The increase in agricultural and industrial activities is clearly evident from increase in traffic volumes (see Annex 3, Table 1 (b))\. 39\. The second specific objective of studies financed through the Project Preparation Facility (PPF) and targeting the strengthening of road sector management on which 2\.7 percent of the project resources were spent was largely achieved as all the following five policy and sector management studies have been completed: (i) transport sector strategy review; (ii) review and update of the rural roads strategy which formed the basis for government's policy on national, district and urban roads; (iii) road sector environmental policy and management assessment, recommendations of which led to the establishment of an Environmental Liaison Unit in MOWT; (iv) study on establishment of RAFU which led to production of the report in July 1998 called, "Transitional Arrangements for the Establishment of a Road Agency," which was the basis for the preparation of the framework for the operations of RAFU; and (v) road management 11 and financing study\. The government reviewed the findings of the studies and developed action plans to implement their recommendations\. The key actions were as follows: (i) a white paper on rural road strategy was developed in 2001; (ii) ELU was established within the Ministry; UNRA Bill passed by Parliament in May 2006 and became fully operational in July 2008; (iii) to ensure sustainable financing of maintenance of the roads, the RF bill was passed by Cabinet on May 17, 2007, by Parliament on June 19, 2008 and preparations are being made to make it fully operational by July 2009\. The detailed outcomes for all the policy and management studies are given in Annex 2, Table 3\. 40\. The project's third specific objective of reviewing and updating the 1992 rural roads financing and management strategy was also achieved as the government succeeded to develop a white paper on district, urban and community access roads (DUCAR) strategy\. The paper also provided the basic input for the district, urban and community roads investment plan (DUCARIP) which is now supported by several stakeholders from the government, civil society, non governmental organizations (NGOs), and development partners (DPs) including DANIDA, AfDB and IDA\. 3\.3 Efficiency 41\. At project appraisal an economic analysis for investment on all project roads was carried out using the Highway Design and Maintenance Model (HDM III) and the consolidated EIRR was estimated at 19 percent\. The team also carried out sensitivity analysis based on alteration of economic costs (+20 percent) and average daily traffic (-20 percent)\. The analysis was performed using @risk software and was reassessed using the Crystal Ball model\. Re-estimation results as shown in Annex 3, Table 3, indicate that the consolidated EIRR at completion was 21\.1 percent\. 3\.4 Justification of Overall Outcome Rating Rating: Satisfactory 42\. The primary objective of the project was to improve access to rural and economically productive areas and to build up road sector planning and management capability in the country\. This was successfully achieved by improving 441 kilometers of roads (more than originally planned) on which the average travel time decreased by more than 50 percent, vehicle operating cost decreased by 36 percent, traffic increased an average of seven times, and the consolidated EIRR was found to be 21\.1 percent\. The project also supported a series of studies which eventually led to the successful creation of the UNRA and passing of the RF bill\. Despite the delay of the implementation of the project by 3\.5 years, mainly due to the delayed implementation of two civil works contracts, the overall outcome rating is assessed as satisfactory\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 43\. The project had no specific poverty, gender or social development related objectives\. 12 (b) Institutional Change/Strengthening 44\. During the implementation phase the following institutional changes were made: (i) an ELU was established in April 2001 within MOWT and its objective was to provide coordination with NEMA\. (ii) for the overall coordination of RSDP, a steering committee was established in the MOFPED in September 1998\. (iii) parliament passed UNRA bill in May 2006\. UNRA was formally established by appointment of the Board in January 2007\. The CEO was appointed on November 1, 2007\. Following the appointment of its key staff, it became fully operational on July 1, 2008\. (iv) a road fund bill was passed by parliament on June 18, 2008\. (c) Other Unintended Outcomes and Impacts (positive or negative) 45\. There are no unintended outcomes or impacts (positive or negative)\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 46\. Under Component 3 for sector policy and management studies and using the PPF, RDPP1 included a provision of organizing workshops and seminars through which all stakeholders were invited to discuss the recommendations from the various studies\. The following workshops were organized: (i) November 20, 1996, a donor's conference was held in Paris and the GOU's 10-year (1996/7- 2006/7) road program, RSDP was endorsed\. (ii) January 1998, a stakeholder's workshop was held in Kampala to review the expected Transitional Arrangement for the Establishment of a Road Agency (TAERA) study report and recommendations\. (iii) March 3, 2002, a stakeholder's workshop was held in Kampala to discuss the road agency study\. (iv) April 23-24, 2002, a stakeholder's workshop was held in Kampala to discuss an update of the GOU's first 10-year (1996/7-2006/7) road sector development program (RSDP1)\. (v) June 28, 2005, a stakeholder's workshop was held in Kampala to review the performance of the transport sector\. (vi) October 16-19, 2006 a joint transport sector review meeting was held in Kampala to review performance of the sector\. 4\. Assessment of Risk to Development Outcome 13 Rating: Moderate 47\. Given that UNRA is now fully operational and the Road Fund is being created, the risks to the development outcomes are considered moderate\. UNRA has taken over the maintenance function on national roads from MOWT with speed and efficiency\. Though UNRA is a new agency, it has experienced and professional staff recruited through competitive selection mostly from its predecessor RAFU\. It also was in a position to take over existing and well tested management systems from RAFU\. Even though, as has been experienced in many other countries, policy reversals are possible and sector stakeholders need to remain vigilant\. UNRA and the RF need to keep building capacity, adopt new ways of managing road networks (for example output based approaches), and need to be in a position to retain high quality staff\. For example, it will be important that both UNRA and the RF become members of the African Associations of Road Agencies and Road Funds, in order to participate in regional and international knowledge exchange\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory 48\. The project design was relevant, appropriate and responsive to the client's needs as it supported the government's 10-year (1996/7-2006/7) RSDP\. RSDP was ready for implementation and the government requested for Bank's support, but the Bank correctly advised the government to prepare first a technical assistance (TA) project with a specific focus on strengthening management capacity, reviewing sector priorities, and implementing policy and institutional reforms\. The Bank's assessment of the lack of institutional capacity and its proposed ameliorative measures were correct\. The overall risk at project appraisal of RDPP1 was assessed as "modest", while in hindsight a "significant" rating would have been more appropriate, and a comprehensive risk mitigation plan to follow up during project implementation was not designed and discussed with the borrower\. Also it would have been appropriate to make the establishment of a procurement unit at RAFU with an assessed capacity an effectiveness condition\. These were some of the reasons why the project had to be extended by a total of 3 years and 6 months\. 49\. During project preparation an intense process of information sharing and consultation took place with the donor community who also supported the project\. In the framework of the RSDP, two joint technical meetings took place in Uganda in April and October, 1996\. Donors' comments were systematically taken into account, leading to their endorsement of the RSDP during a Donor's Conference held in Paris in November 1996, back-to-back with the Consultative Group Meeting\. This was followed by bi-annual meetings organized by GOU to discuss progress in implementing the RSDP and updating of its physical and financial targets\. The Bank added value through providing worldwide experience gained through managing the Road Maintenance Initiative (RMI) in Africa\. The GOU and donor community acknowledged the Bank's leadership role during preparation of the RSDP\. The Bank responded to the 14 Government's request by being flexible and preparing quick delivery through PPF and a technical assistance credit RSISTAP\. 50\. At the same time, the benefit of using the APL instrument for the project outcome was not realised as several APLs were being executed in parallel, making it difficult to apply experience from a previous phase, and triggers were not linked to sector reform\. At the time the program was being developed for Uganda, however, the APL instrument was a pilot and the concept of triggers for subsequent operations was being conceptualized and developed\. Both RDPP1 and RDPP2 were specifically reviewed by OPCS, given that APLs were still new and operational guidelines were evolving\. Nonetheless the design which allowed simultaneous implementation of two or more phases overloaded the system and did not allow adequately for application of lessons learnt between phases\. In retrospect, triggers that would have forced stricter sequencing of the APL phases would have focussed attention on the two non-performing contracts much earlier and perhaps speeded resolution\. The quality at entry is therefore rated as Moderately Unsatisfactory\. (b) Quality of Supervision Rating: Moderately Satisfactory 51\. A Project Implementation Plan (PIP) was prepared and it provided a good basis for the project supervision\. The skills mix of the Bank supervision team was well balanced and the Bank team provided good guidance to the government\. The Bank team maintained a strategic vision on institutional development during the project implementation\. The supervision team worked closely with the client to push forward the agreed agenda of institutional reform, and provided guidance on other issues such as creating a RF, strengthening contract management and enhancing donor collaboration in the road sector\. The quality of the financial management was found to be satisfactory and consistent with the Bank guidelines\. The supervision aide-memoires for the most part of the implementation phase were extensive and provided highlights on the key issues, thus providing prompt information to the client and Bank management\. During the period when progress in implementation was slow due to poor performance of two large contracts, the team received good guidance from RPM, Sector Manager and Country Office Manager\. 52\. There was significant involvement of the Bank's team to resolve day to day problems\. From the strategic standpoint, the Bank was highly responsive in recognizing the problems and providing space and time for their resolution\. During the period when progress in implementation was slow due to poor performance of two large contracts, the team took proactive actions to resource external consultants to carry out investigations and advise on necessary measures to be taken\. Details of the recommendations and actions taken are described in paragraphs 22 and 23 above\. As the Bank team was supervising two projects and ten (10) contracts simultaneously, and with six of the contracts facing various problems, the issues on contracts 005 and 006 ended up dragging on for too long\. Overall, therefore, the Bank's supervision performance is rated as moderately satisfactory\. (c) Justification of Rating for Overall Bank Performance 15 Rating: Moderately Satisfactory 53\. The preparation team does seem to have followed all processes, and was proactive and consulted with OPCS closely in putting the APL\. From that standpoint the project was prepared well\. With hindsight however, it is clear that there were two issues in the process that led to difficulties\. One was that there was a lot of pressure at that time to lend large volumes to Uganda and secondly the principle of sequencing APL phases had not been firmly built into the practice of APL design\. These two factors led to a large overhang of committed funds with insufficient absorptive capacity in the embryonic implementing agency\. Hence, despite the moderately unsatisfactory rating of the Quality at Entry, due to the fact that the Bank team eventually managed to help the client to sort out implementation problems (particularly with contracts C005 and C006), the overall rating for the Bank's performance is assessed as moderately satisfactory\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 54\. The government showed commitment in implementing the institutional reforms\. UNRA became fully operational in July 2008, though it took ten years to realize this objective\. In addition, as recommended by the sector financing and management study, the government finally decided, after long delays, to set up a RF to enhance financial sustainability of road maintenance\. The RF Bill was approved by the Parliament on June 19, 2008 and the President assented to it on August 31, 2008\. Furthermore, the government is in the process of approving a policy for improved vehicle inspection\. In order to monitor performance of the transport sector, government has convened, on an annual basis, a Joint Transport Sector Review Workshop (JTSR), the last of which was held on October 28-31, 2008\. Despite the government agreement of providing counterparts funds in a timely fashion, there were delays in releasing of counterparts funds during the years 2002/3, 2003/4 and 2004/5\. As a result, payments to contractors were delayed and by May 2005, the government owed contractors an amount of UGX 4\.7 billion as unpaid interim certificates and associated interest on account of delayed payment\. The Government made every possible effort to prepare a supplementary budget, but the problem remained, until, at the Borrower's request, the credit was amended on September 26, 2005 to increase the disbursement percentage of the remaining civil works to 100 percent\. Taking into account the time taken in setting up of UNRA and the late delivery of counterpart funding, the Borrower's performance is rated as moderately satisfactory\. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 55\. RAFU was the key implementing agency for the RDPP1 project and its Management Committee (MC) was responsible for monitoring and providing advisory services\. The MC comprised the Minister, MOWT (Chairman), the Permanent Secretary, Engineer-in- Chief/Director of Engineering and the Director of RAFU\. The head of the RAFU desk in 16 MOWT, financed by DANIDA, served as a secretary to the MC and acted in a liaison role between RAFU and MOWT\. To ensure efficiency, RAFU appointed highly qualified core staff in the engineering, finance and administration divisions\. The staff was engaged on one year, renewable, performance based contract\. However, it was a big challenge for RAFU to recruit experienced and qualified staff, due to scarcity of skilled personnel in the country\. As of September 30, 2002, RAFU had 66 staff (including support staff) against the established 94 positions\. Lack of qualified and experienced staff in procurement and contract management was one of the reasons for delay in the implementation of some of the road upgrading contracts\. However, compared to the prior procurement and contract management performance of the MOWT, RAFU managed to cut implementation time by half\. 56\. The two large civil works contracts (005 and 006) under the component for upgrading main roads had serious problems due to contractor internal issues related to change of ownership but also due to lack of rapid settlement of claims by RAFU\. To enhance contracts management, the Bank advised RAFU to introduce tight quality control measures in handling procurement and contract management functions\. Subsequently, the formation of teams comprising of foreign and national professionals to handle procurement and contracts management helped considerably in improving the performance of RAFU\. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory 57\. The government showed commitment to continue with the institutional reforms in the road sector\. The implementing agency, MOWT delegated much of the project management responsibilities to the newly established RAFU\. Most of the professionals, who have been working in RAFU for the last seven years, have now been selected to join UNRA\. Taking into account that RAFU's procurement and contract management performance was not optimal, and the initial lack of counterpart funding from the Borrower, the overall performance of the government and the implementing agency is rated as "moderately satisfactory"\. 6\. Lessons Learned 58\. APL instrument: APL phases should be executed sequential and not simultaneous to allow the learning of lessons from one phase to the next\. This was one of the first projects that made use of the APL instrument\. The ICR team feels that the experience of using this instrument is mixed at best\. The various phases were designed to be implemented in parallel\. This made it impossible to draw lessons from the implementation experience of the previous phase\. Triggers for phases 2 and 3 were identical and were not tied to the sector reform agenda\. The APL instrument has in fact evolved over time to deal with this concern, whereby phases are sequential, not simultaneous, and best practice today requires that triggers are clearly set out to initiate each subsequent intervention\. The ICR for RDPP2, which closed at the same time as this credit, elaborates further on this issue\. 59\. Policy and institutional reforms: UNRA took long to implement\. It would have been advisable to set intermediate triggers in the APL to help accelerate the creation of UNRA\. The 17 policy and institutional reforms to transform the ministry's road agency (RAFU) to an autonomous road authority (UNRA) have taken much more time than the anticipated three and half years at project appraisal\. While the time needed for the societal decision making process to create UNRA clearly has been underestimated, it also seems that, having created RAFU (whose salaries were paid from the RSISTAP technical assistance credit), was a disincentive to rapidly move towards the more comprehensive and autonomous UNRA\. The existence of UNRA was a trigger only for phase 4 of the APL\. It would have been helpful to have set intermediate triggers, such as the preparation of an acceptable bill towards the establishment of UNRA, for earlier phases of the APL\. 60\. Technical Assistance: Future TAs should have clear objectives of building local capacity with measurable outputs in a specified time\. When RAFU was created in 1998, its head and other key staff were expatriate staff appointed under the project funded TA program\. The involvement of the TAs was slowly phased out as the capability of national professionals was developed to manage the activities of the sector\. In 2004 a Ugandan national professional with a good performance record was appointed as the Director of RAFU, thus replacing an expatriate staff and this has proven to be effective\. However, the skill transfer to local staff was not very effective and took a long time\. In designing a technical assistance program, it is critical to evaluate the knowledge, skills, talents and competencies of national professionals so as to optimally tailor the program for them\. 61\. Review of Design and Contracts Documents: Designs should be thoroughly reviewed before tendering\. One of the reasons for delay in completion of the civil works contracts was that shortcomings in engineering design were observed during contract implementation\. These shortcomings should have been addressed earlier during project preparation\. It is therefore recommended that the implementing agencies should provide enough resources to review engineering design thoroughly prior to launching of the procurement process\. If necessary, it may be advisable to engage an independent consultant to review the design\. 62\. Lack of Counterpart Funding: Capacity of Borrower to finance counterpart funding must be carefully assessed during project preparation\. Non-payment of counterpart funding has dire consequences on performance in the sector\. First, it reduces the output of contractors, leading to time extensions with associated costs\. Second, a history of counterpart payment delays can reduce the number of bidders willing to bid\. This usually reduces competition and may lead to collusion amongst the reduced number of bidders\. It is therefore important to realistically analyze the Borrower's capacity to finance counterpart funding, and to decide to either finance 100% of all components (this, however, was not an option at the time of the preparation of this credit due to the unwillingness of the Bank at that time to finance taxes) or to move to a sector wide program whereby co-financiers (government and other DP) each finance part of the overall program\. 63\. Risk Assessment and Results Framework: Well designed risk assessment and results frameworks are crucial for project success\. Both risk assessment and results framework of the project lacked depth and stringency\. As a result the monitoring of the achievement of the development objectives and implementation progress was less than satisfactory\. It is for good measure that the Bank nowadays puts much more emphasis on the establishment of a thorough risk assessment and a coherent results framework with baselines and measurable indicators\. 18 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies N/A (b) Co-financiers N/A (c) Other partners and stakeholders N/A (e\.g\. NGOs/private sector/civil society) 19 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Estimate Actual Percentage of Components (USD millions) (USD millions) Appraisal 1\.Upgrading of main roads to 109\.39 106\.78 98% bitumen standard 2\. Construction supervision 7\.65 10\.12 132% 3\. Sector Policies and Management 2\.50 2\.48 99% Studies (financed under PPF) 4\. External auditing services 0\.40 1\.61 403% Total Project Cost 119\.94 120\.99 101% (b) Financing Appraisal Estimate Actual Percentage of Source of Funds (USD millions) (USD millions) Appraisal Borrower 28\.96 28\.66 99% IDA 90\.98 92\.33 101% Total Project Costs 119\.94 120\.99 101% 20 Annex 2\. Outputs by Component Table 1: Comparison of Activities Proposed at Appraisal and Outputs Achieved at Project Completion No\. Name of Component Activities Agreed at Output Achieved at Project Percent Remarks Appraisal/through Completion Amendments 1\. Upgrading of Main Upgrading to bitumen standard Road upgraded to Class II bitumen 100% Upgrading works successfully Roads from Graved to of Busunju Kiboga Hoima standard\. executed with a 3\.5 year delay in Bituminous Standards road (145 Km)\. implementation\. Upgrading to bitumen standard Road upgraded to Class II bitumen of the Arua Nebbi Packwach 100% standard\. road (130 Km) 2\. Consulting Services Consultant Services for The execution of the road 100% Supervision services were for the Supervision of Construction Supervision for the upgrading works fully supervised\. adequately undertaken as evidenced the Civil Works Upgrading of Busunju Hoima by the quality of the executed works road\. The execution of the road 100% Consultant Services for upgrading works fully supervised\. Construction Supervision for the Upgrading of Arua Nebbi Packwach road\. 3 Sector Policy and Transport Sector Review: Review Final Transport Sector Review 100% Report recommendations currently Management Studies the existing transport policy Study Report was submitted and guiding government policy of framework and strategies for accepted by Government\. national, district and urban roads\. various modes, and recommend appropriate strategies\. Road Sector Environment Policy Study undertaken and final report 100% Environmental Unit has been and Management Assessment: submitted by consultant was established and is fully operational\. Review the environment aspects accepted by Government\. of RSDP with respect to (i) the adequacy of the current national system of environment policies 21 No\. Name of Component Activities Agreed at Output Achieved at Project Percent Remarks Appraisal/through Completion Amendments and regulations (ii) the capability of MOWH and NEMA to commission and implement future environmental assessments of road rehabilitation projects (iii) identify programs and organize training in Environmental assessment techniques, and (iv) access local consultant capability and training needs relevant to environmental assessment\. Review and Update of Rural Road Strategy (MOLG): Based on the Study findings, Review GOU's Rural feeder Study successfully undertaken and Government has prepared a draft 100% roads rehabilitation and final report submitted by final version of the "White Paper" maintenance strategy of 1992 in Consultant was accepted by outlining its policy, strategy and the light of the progress made in Government\. financing mechanisms for the development, operation and the decentralization process and creation of 44 districts\. (ii) management of the feeder road review experience gain in network in the country\. implementation of various feeder roads projects Study on the establishment of the Road Agency Formation (RAFU): (i) Design precise 100% Based on the study, Government The Study was successfully organizational arrangements for produced a report in July 1998 implemented and the final report the creation and operation of the called, "Transitional Arrangements submitted by the Consultant was unit of RAFU, (ii) Review the for the Establishment of a Road accepted by Government\. quality the funding requirements Agency," which was the basis for the of the operation of the Units preparation of the framework for the during the transitional period\. operation of RAFU\. The modalities have also formed the basis of the operations of UNRA\. Road Management and Financing Study (i) To review 100% the institutional arraignment for The findings of the report have 22 No\. Name of Component Activities Agreed at Output Achieved at Project Percent Remarks Appraisal/through Completion Amendments the institutional arraignment for Road Agency Study was formed the basis for the the management and financing of successfully undertaken and the establishment of UNRA and the roads\. Consultant's final report accepted Road Fund\. by Government\. (ii) To analyze current budgetary constraints for road program and financing and to recommend alternative sources of funds\. 4 External Audit Hire external auditors to prepare External Auditors were engaged 100% Audit reports delivered on time and Services the audit reports of the projects, and the project was audit in were found acceptable statement of expenditures and accordance with the terms of the institutional accounts\. credit agreement\. Table 2: Comparison of Performance Indicators agreed in Project Design Summary at Project Appraisal in June 1999 and Project Completion in June 2008 Hierarchy of Objectives Planned Outputs at Appraisal Achieved Outputs at Project Remarks Percent (June 1999) Completion (June 2008) Achieved To improve access to rural & Upgrading of two highest priority roads, The two roads were upgraded to Reduction in average travel time on 100% economically productive areas & to Busunju-Kiboga-Hoima (145 km) and bitumen standard main roads, and in transport and build up road sector planning and Pakwach-Nebbi-Arua (130 km) by June vehicle operating cost compared to management capability 2004, baseline Consulting services for construction Construction well supervised 100% supervision Studies: (i) Transport Sector Strategy Review i) Study completed Transport sector strategies updated\. 100% (ii) Road Sector Environmental Policy ii) Assessment completed Environmental and safety 100% and Mgmt\. Assessment management system established and implemented (iii) Study on the Establishment of iii) Study completed RAFU established and functioned 100% 23 Hierarchy of Objectives Planned Outputs at Appraisal Achieved Outputs at Project Remarks Percent (June 1999) Completion (June 2008) Achieved RAFU fully\. (iv) Road Management and Financing\. iv) Study completed Financial Management Systems 100% developed (v) Review and update of Rural Roads v) Study completed White paper on GOU policy and 100% Strategy\. strategy on feeder roads provided 100% vi) Qualified specialists in place Audit reports delivered on time and (vi) External audit services for annual financial audit were acceptable 24 Table 3: Status of Action taken on Completion of Sector Policy and Management studies S/N Title of the Study Objective of the Study Key Findings of the Study Recommendation of the Action taken by the Comments Study Government 1\. Transport Sector To review the existing transport Absence of traffic and road Introduce planned long-term Long term planned Strategy Review\. policy frame work and strategy condition data, particularly maintenance strategies road maintenance for various modes, and with regard to district, urban designed to preserve the strategies under recommend appropriate and community roads which is existing infrastructure in a implementation\. strategies\. an impediment to strategy steady state in perpetuity\. Policy for the development and rational Establish an autonomous promotion of the planning of road works\. public sector Road Agency local contracting Lack of clear policy on for the planning, industry under strategy for development of programming and preparation\. district, urban and rural roads\. management of road works on the strategic core District Units being Institutional capacity network\. re-equipped\. constraints\. Lack of working construction plant and equipment at district and urban levels\. i) Invest US$65 million/year 2\. Review and Update To review of GOU's rural feeder Inadequate investment for the over seven years to improve White paper on GOU of Rural Road roads rehabilitation and rehabilitation and maintenance the condition of the district policy and strategy Strategy (MOLG)\. maintenance strategy of 1992 in of district roads\. and urban road network\. on feeder roads has the light of the progress made in Lack of strategies to develop been prepared\. the decentralization process and the local contracting industry\. ii) Provide equipment and creation of 44 districts\. support services to the districts\. To review experience gained in implementation of various feeder iii) Develop a strategy of roads projects\. contracting out maintenance and rehabilitation work and the development of local contractors\. 25 S/N Title of the Study Objective of the Study Key Findings of the Study Recommendation of the Action taken by the Comments Study Government 3\. Road Sector To review the environmental EIA Guidelines not tied into Review the EIA guidelines EIA Guidelines have MOWT's capacity Environmental aspects of the RSDP\. road project development and tie them in to the road been reviewed and to manage EIA Policy and cycle\. project development cycle\. improved matters has been Management accordingly\. enhanced\. To review the capability of the Lack of an Environment Establish an Environment Assessment\. MOWT to commission, facilitate Management Unit with the Management Unit with An Environment and implement future Ministry of Works and MOWT\. Management Unit environmental assessments of Transport\. has been established road rehabilitation project\. within MOWT and is fully operational\. Establish an autonomous RAFU was The establishment 4\. Study on the Design precise organizational institution where staff established and took of RAFU greatly establishment of arrangements for the creation would operate on over the management improved the the Road Agency and operation of RAFU performance based of the Road Sector management of Formation Unit Review the quality and funding contracts\. Development road development requirements of operation of the Program\. projects but at the Units in the transitional period\. procurement and implementation stages\. 5\. Road Management Review the institutional Road maintenance funding Establishment of a Road Creation of a Road Act establishing the and Financing arrangement for the management severely inadequate through Fund\. Fund to be funded Road Fund became Study\. and financing of roads\. Government sub-ventures from road user effective from 31 Analyze current budgetary from the consolidated account\. charges August 2008\. constraints for road program and financing and to recommend alternative sources of funds\. 26 Table 4: Comparison of Cost & Duration of Civil Works Contract at Project Start and Completion No\. Project Length Original Actual Cost Unit Cost Start Original Actual Percent Remark (km) Contract Contract Increase USD/km Date completion completion delayed Price Price % date date (US$m) (US$ m) 1\. Serious delays were Busunju- 68\.9 15\.72 21\.30 36 309,144 17/07/01 2/01/04 12/12/07 140% experienced due to hiving Kiboga across of the contract; poor Road design; performance of the contractor and poor contracts management\. Works completed within the budget\. 2\. Serious delays were Kiboga- 76 19\.59 26\.55 36 349,342 9/07/01 12/07/04 30/06/08 200% experienced due to hiving Hoima across of the contract; poor Road design; performance of the contractor and poor contracts management\. Works completed within the budget\. 3\. Works completed ahead of Arua 76 24\.18 19\.65 (19) 258,553 1/08/01 31/07/04 3/11/03 - schedule and within Nebbi budget\. Road 4\. Works completed ahead of Nebbi 53\.7 12\.87 12\.86 0 239,479 15/07/01 14/07/04 10/06/04 - schedule and within Packwach budget\. Road 27 Table 5: Comparison of Cost & Duration of Consultancy Services Contract at Project Start and Completion No\. Project Length Original Actual Cost Unit Start Original Actual Percent Remark (km) Contract Cont\. Increase Cost Date completion completion delayed Price USD Price % USD date date (m) USD (m) (m) A\. Supervision Services for Civil Works Contract 1 Busunju-Kiboga 68\.9 1\.30 3\.22 148 0\.05 Jul 01 Jan 04 Dec 07 140% Delayed Road completion due to slow progress by Contractor 2 Kiboga-Hoima 76 1\.46 2\.15 47 0\.03 Jul 01 Jul 04 Jun 08 200% Delayed Road completion due to slow progress by Contractor 3 Arua Nebbi 76 1\.61 1\.01 (37) 0\.01 1/08/01 31/07/04 3/11/03 - Works Road completed ahead of schedule 4 Nebbi 53\.7 1\.46 1\.59 9 0\.03 5/07/01 14/07/04 10/06/04 - Works Packwach Road completed ahead of schedule B\. Sector Policy and Management Studies (PPF financed) 1 Transport Sector 0\.32* 0\.32* 14/06/99 12/06/01 Strategy 2 Road Sector 0\.36* 0\.36* Sept\. 98 April 1999 Environmental Policy and Management 3 Study on the 0\.46* 0\.46* Aug\. 97 April 1998 Establishment of RAFU Road 0\.54* 0\.54* 4 12/09/99 14/03/01 Management and Financing Review of the 0\.10* 0\.10* 5 8/11/98 4/02/00 Rural Roads Strategy *Since these were PPF financed studies that commenced prior to appraisal, no appraisal estimates are available, and "original" and "actual" amounts are the same\. 28 Annex 3\. Economic and Financial Analysis 1\. Introduction 1\. Economic re-estimation was carried out by comparing the costs and benefits of the "with project" and "without project" cases\. In the "without project" case, the 275 kilometer (km) road (Arua- Nebbi, Pakwach-Nebbi, Busunju-Kiboga and Kiboga-Hoima) sections would have remained as gravel roads with relatively higher vehicle operating costs (VOC) and lower speeds\. With the Project, the four roads have been upgraded to bitumen standard, resulting in improved road condition, reduced VOC, and higher speeds\. 2\. The re-estimation compared the annual streams of economic capital and operating costs and benefits using the Highway Development and Management Model Version 4 (HDM4), adjusted for the conditions of the RDPP1 project areas\. The analysis period is 20 years; covering the construction period and post construction period\. Costs include construction costs, construction supervision costs and post construction maintenance costs\. Benefits include: reduction in vehicle operating costs, travel time savings and boosting of agricultural potential in the project areas\. The analysis used economic figures adjusted to exclude taxes/duties using the same Standard Conversion Factor (0\.83) used at appraisal\. 2\. Objective of the Economic Re-Estimation 3\. The main objective of this economic re-estimation is to determine the extent to which the economic indicators (NPV and EIRR) estimated at appraisal stage have been realised at project completion for all the four RDDP1 roads\. Re-estimation has used Traffic results from Traffic counts carried out by consultants engaged by the Ministry of Works and Transport (MOWT) in the second quarter of 2008\. The traffic results used were carried out for 7 days i\.e\. 12 hour traffic counts, with some days of 24 hour traffic counts on the project roads\. The traffic data is summarized in Table 3\.1 as part of key economic appraisal parameters\. 3 Input Parameters for the Economic Re-estimation 4\. For the re-estimation exercise, Highway Development and Management (HDM-4) was used, while HDM-3 was used at appraisal stage\. Major inputs used in the re-estimation are briefly described\. 3\.1 Costs 5\. The investment costs of the Projects were based on actual costs for construction and construction supervision at the completion of each road project\. With the Project, routine and periodic maintenance costs were estimated on the basis of maintaining an international roughness index (IRI) value of less than 4 over the remainder of the analysis period\. This would require routine maintenance of $1,000 and $2,000 (financial cost) per km every year for DBST and AC respectively, and periodic maintenance of $10,500 per km every 7 years\. 29 6\. The table below provides the key economic re-estimation parameters used by this analysis for RDPP1 Projects: Table 1(a): Key Economic re-estimation parameters for RDPP1 Projects A\. PROJECTS COSTS Project Cost on Completion Economic Cost Financial Cost Project (US$/km) (US$/km) Period Length Road (km) 1998 2008 2008 SCF 1\. Nebbi-Arua 76 269,000 225,629 271,842 0\.83 2001-2003 2\. Pakwach-Nebbi 54 306,000 223,342 269,087 0\.83 2001-2004 3\. Busunju-Kiboga 69 275,000 295,379 355,878 0\.83 2001-2007 4\. Kiboga-Hoima 76 350,000 313,435 377,632 0\.83 2001-2008 Table 1 (b): Key Economic re-estimation parameters for RDPP1 Projects Annual Cost Stream (%) Year 1 Year 2 Year 3 Year 4 Year 5 1\. Nebbi-Arua 22 37 38 1\.1 1\.7 2\. Pakwach-Nebbi 15 25 35 15 10 3\. Busunju-Kiboga 19 12 18 18 33 4\. Kiboga-Hoima 20 13 9 18 41 Start Year 2001 Analysis Period 20 yrs Discount Rate 12% Salvage value 10% Base Options: Do Minimum (i) Maintain Gravel Road (with a total length of 265km) Regravelling when gravel thickness less than equal 50mm Grading every 365 days Routine maintenance Alternative Options Upgrading of Nebbi-Arua and Pakwach-Nebbi, roads to bitumen (Double Bitumen Surface Treatment) standard in 2001; Upgrading of Busunju-Kiboga and Kiboga-Hoima roads to bitumen (Asphalt Concrete surface) standard with in 2001; Maintain Paved/ Rehabilitated Roads from 2013 onwards\. 30 Table 1 (b): Key Economic re-estimation parameters (contd\.) B\. TRAFFIC Traffic growth rates 10 %: the first 10 years, and Taking into 7\.5 % thereafter\. consideration forecasts at appraisal and actual growth rates between appraisal and completion\. Motorized Traffic in 2007 & 2008 Motorized Traffic (ADT) Motorized Traffic (weighted average ADT) Project Completion (ADT) at Year Appraisal (1998) 1\. Nebbi-Arua 2008 1,719 136 2\. Pakwach-Nebbi 2008 1,745 161 3\. Busunju-Kiboga 2008 1,479 490 4\. Kiboga-Hoima 2008 1,104 334 Note: Increase in Traffic in % is in Table 2\.4 of this report Table 1 (c): Key Economic re-estimation parameters for RDPP1 Projects Some of the Assumptions used during the feasibility Generated Traffic studies have been applied as follows: 1\. Generated traffic: Actual generated traffic based on traffic counts carried out in 2008 has been used\. Notes For purposes of HDM-4 Analysis, Annual Cost streams have been taken for a maximum of 5 years (for consistence with the model) even if some projects such as Busunju-Kiboga and Kiboga-Hoima were implemented for a period of more than five years i\.e\. between 2001 and 2007-2008\. 31 7\. The traffic composition in percentage terms derived from the 2008 traffic counts that were used in this economic re-estimation are indicated in table 2 below: Table 2: Traffic Composition in percentage (RDPP1 Projects) Vehicle Road Section Arua- Pakwach- Busunju- Kiboga- Nebbi Nebbi Kiboga Hoima Road No\. 1 2 3 4 Cars Special Hire Taxis 7 23 12 23 Pickups / Vans / 4WD 18 13 16 15 Minibuses 2 19 21 14 Medium Buses / Coasters 0 0 1 1 Buses 2 2 1 1 Single Unit Truck (Dynas / Tractors) 5 4 12 11 Single Unit Truck (Medium) 13 8 10 9 Truck Trailers and Semi Trailers 7 4 1 1 Motorcycles 46 27 26 25 4\. Analytical Approaches 8\. The analytical method used in this evaluation: Analysis by Project: where all individual road sections were analyzed jointly\. The above analysis considered: Motorized Traffic, Non Motorized Transport (NMT) and Induced Agricultural Benefits (exogenous benefits)\. 5\. Outputs of the HDM-4 Economic Re-estimation 9\. Table 3 below provides a tabulation of the re-estimation results for RDDP1 roads jointly\. Table 3: RDPP1 Output Economic Indicators from Re-estimation compared to Economic Indicators at Appraisal (1998) Output Economic Indicators Road Development Project Phase 1 (RDPP1) 1998 2008 NPV (m US$) 69 38\.7 EIRR (%) 19 21\.1 32 6\. Conclusion 10\. The Economic re-estimation was carried out to establish the extent to which economic indicators (NPV and EIRR) of each of the project roads under RDPP1 compare with the economic indicators at appraisal\. Re-estimation results as shown in Table 3 indicate that the consolidated Net Present Value (NPV) for all RDPP1 roads at project completion in 2008 is (US$ 38\.7million) as compared to the consolidated NPV of (US$ 69 million) at appraisal in 1998\. Similarly, the consolidated Economic Internal Rate of Return (EIRR) at completion is 21\.1% which is higher than the consolidated EIRR at appraisal of 19%\. 11\. From the re-estimation results, it is concluded that the projected positive economic results arising out of upgrading RDPP1 roads to bitumen standard have been realized, though lower than estimated at appraisal in respect to the NPV\. Timely maintenance of the upgraded roads coupled with effective axle load control will ensure that full economic benefits are realized during the remaining life of RDPP1 roads\. 33 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team Members Responsibility/ Names Title Unit Specialty C\. Sanjivi Rajasingham Sector Manager AFTTR Sector Manager Anil S\. Bhandari Sr\. Adviser AFTTR Country Management Team Yitzhak A\. Kamhi Consultant AFTTR TTL from 04/1997-11/2003 Stephen J\. Brushett Lead Transport Specialist LCSTR TTL from 11/2003-03/2005 Supee Teravaninthorn Program Coordinator AFTTR TTL from 03/2005-08/2006 Dieter E\. Schelling Lead Transport Specialist AFTTR TTL from 08/2006-05/2007 Labite Victorio Ocaya Senior Highway Engineer AFTTR TTL since 05/2007 Subhash C\. Seth Consultant AFTTR ICR Primary Author Fang Xu Economist AFTTR Assistance with ICR Nina Chee Sr\. Environmental Spec\. AFTEN Environment Jocelyne O\. Do Sacramento Operations Analyst AFTTR HIV/AIDS Olav E\. Ellevset Sr\. Transport\. Specialist AFTTR Road Management Jonas Hermanson Transport\. Specialist AFTTR Assistance with ICR Nina Jones Program Assistant AFTTR Team Assistant HQ Mustapha Benmaamar Sr\. Transport\. Specialist AFTTR Assistance with ICR Agnes Kaye Program Assistant AFMUG Team Assistant UG Antoine V\. Lema Consultant AFTTR Safeguard Mary Consolate Muduuli Operations Officer AFMUG Assistance with ICR Grace Nakuya Musoke Procurement Specialist AFTPC Procurement Munanura Harriet Nannyonjo Sr\. Education Spec\. AFTH1 Assistance with ICR Elizabeth Ninan Young Professional YPP Assistance with ICR Peter Okwero Sr\. Health Spec\. AFTH1 Social Aspects Richard Olowo Sr\. Procurement Spec\. AFTPC Procurement Kristine Schwebach Operations Analyst AFTCS Environment Farida Khan Operational Analyst AFTTR Portfolio Sr\. Financial Management Patrick Piker Umah Tete AFTFM Financial Management Special Desta Wolde Woldeargey Temporary AFTTR Assistance with ICR 34 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending FY91 1 1\.28 FY92 1 1\.09 FY93 27 94\.33 FY94 39 135\.64 FY95 34 119\.32 FY96 51 179\.52 FY97 4 14\.05 Total: 157 545\.23 Supervision/ICR FY97 31 97\.97 FY98 27 85\.63 FY99 23 75\.16 FY00 23 73\.44 FY01 22 52\.70 FY02 25 75\.64 FY03 17 121\.04 FY04 17 56\.58 FY05 18 35\.65 FY06 19 121\.04 FY07 15 0\.00 FY08 13 0\.00 Total: 169 794\.97 35 Annex 5\. Summary of Borrower's ICR 1\.0 INTRODUCTION 1\. The Government of Uganda in its efforts to enhance economic development, elimination of poverty and promotion of regional integration, developed a 10-Year Road Sector Development Program (RSDP) which initially ran from 1997/8 to 2006/7 but rolled over to the second phase namely the Road Sector Development Program 2 running from 2007/08 to 2011/15\. 2\. The objectives of the RSDP were (i) to provide an efficient, safe and sustainable road network in support of market integration and poverty alleviation; (ii) to improve the managerial and operational efficiency of road administration; and (iii) to develop the domestic construction industry\. In support of the implementation of the RSDP and in order to achieve the intended development objectives, Government in 1999 approach the International Development association for funding support which was offered under the Road Development Program Phase 1 project in the amount of SDR 67\.2 million (US$ 90\.98 million equivalent)\. 3\. The Development Credit Agreement for the project was signed on 22 November 1999 with the original credit closing date of 31 December 2004\. However, due to contractual problems and the poor performance of the Consultants and Contractors on two of the projects namely Busunju Kiboga and Kiboga - Hoima, resulting in slow progress of the works, the credit was extended to 31 December 2006 to allow the completion of the civil works\. Towards completion of the project, it was noted that the project had realised some cost savings and in order to utilise the surplus funds, it was agreed that additional works be undertaken on the Kawempe Kafu which was in a poor condition\. The works comprised resealing and rehabilitation of this road section and as a consequence, the credit closure date was further extended to 30 June 2008 to allow for the completion of the additional works\. 4\. This report is the borrower's contribution to the Implementation Completion Report (ICR) for the Road Development Program Phase 1 Project\. The report gives an overall view of the project achievements and failures throughout all the project cycle\. Furthermore, performance and output indicators are given under the different Annexes to the report\. 1\.1 PROJECT OBJECTIVES 5\. The objective of the Project was to improve access to rural areas and economically productive areas and to gradually build up road sector planning and management capability\. 6\. Consequently, it was envisaged that the project would contribute to the following: i) Increased industrial and agricultural activities; ii) Increased traffic growth; iii) Reduced travel times; iv) Reduced transport rates and vehicle operating costs over the main road network\. 36 1\.2 PROJECT COMPONENTS 7\. The project components comprised the following; 1\.2\.1 Original Components 8\. The original project objectives were to be achieved through the following components: a) Component 1: Upgrading of main roads from graved to bituminous standards: This component comprised the following: i) Upgrading of from gravel to bituminous standards of the Busunju--Kiboga-Hoima road (145 km); and ii) Upgrading of from gravel to bituminous standards Pakwach-Arua (130 km)\. b) Component 2: Consulting Services for the supervision of the civil works: This component comprised provision of consultant's services for the supervision of civil works included under component 1\. c) Component 3: Sector policy and Management studies: This component was financed under PPF of RDPP1 and included consulting services for carrying out a number of sector policy and management studies, listed below: i) Transport sector review study; ii) Review and update of rural road strategy iii) Road sector environmental policy and management assessment; iv) Study on establishment of RAFU v) Road management and financing study\. d) Component 4: External audit services: This component was for the engagement of external auditors to prepare the audit reports of the project accounts, statement of expenditures, and institutional accounts\. 1\.2\.2 Revised Project Components: 9\. The original project components were not revised, however under the component 1 for the upgrading of main roads, the resealing and rehabilitation of about 166 km of the Kawempe - Kafu road was added where savings from Component 1 i\.e\. upgrading of main roads amounting to US$24\.5m were utilized\. 1\.2\.3 Other significant changes i) On September 26, 2005, DCA was amended to include the provision that the proceeds of the Credit may be withdrawn to pay taxes levied by the Borrower on the goods and services financed under the Credit\. Accordingly the disbursement 37 percentages were increased for civil works from 75 percent to 100 percent, and for consulting services from 80 percent to 100 percent\. ii) The project planned to improve 275 km of main roads, and on account of saving in the Credit, the scope the improvement was increased to 441 km\. iii) The original project closing date was December 31, 2004\. On October 29, 2004, the government requested an extension of three years, but IDA agreed to extend by two years until December 31, 2006\. On November 14, 2006, the government requested an extension by further 18 months until June 30, 2008 which was approved by the Bank\. 10\. The main reason for the first extension was to enable the completion of the upgrading of Busunju-Kiboga road and Kiboga- Hoima road\. The second extension was also necessitated to allow for the utilization of the savings under component 1 to reseal and rehabilitate the Kawempe Luwero Kafu road\. 1\.3 PROJECT COSTS 1\.3\.1 Original IDA financing Allocations 11\. The allocation of the credit proceeds amounting to SDR 67\.2 million (US$90\.98 million) were originally as follows: Busunju Kiboga Hoima (including supervision) : US$36\.71 m Arua Pakwach ((incl\. construction supervision) : US$32\.90 m External Auditing Services : US$0\.32 m PPF Studies: : US$2\.50 m 1\.3\.2 Amendments and Re-allocations 12\. The following were the amendments to the original IDA allocations: COMPONENT ORIGINAL ALLOCATION REVISED ALLOCATION (US$ million) (US$ million) Upgrading of Main roads to bitumen 64\.85 54\.27 standard Construction Supervision 4\.76 4\.67 External Auditing Services 0\.32 0\.32 Project Preparation facility Studies 2\.50 2\.50 Unallocated 18\.55 29\.22 TOTAL 90\.98 90\.98 38 1\.4 PROJECT IMPLEMENTATION 1\.4\.1 Project Implementation Schedule 13\. The project implementation scheduled is shown in Table 1 below Table 1: Procurement Implementation Schedule ACTIVITY ORIGINAL ACTUAL/REVISED Credit Negotiations June 1999 June 1999 Original Credit Amount USD 90\.98 million USD 90\.98 million Credit signature date 22 Nov\. 1999 22 Nov\. 1999 Credit Effectiveness date 1 February 2000 1 February 2000 Credit closure date 31 Dec 2004 30 June 2008 Component A\. Main Roads Upgrading i) Busunju - Hoima May 1998 Dec 1999 Selection of Consultants Jun-Sept 1998 2001 Selection of Contractors Aug 2001 2001 (MoWT) Construction works July 2001 July 2001 Commencement Completion Feb 2004 Dec 2007 o Busunju Kiboga July 2004 June 2008 o Kiboga - Hoima ii) Arua - Nebbi May 1998 Dec 1999 Selection of Consultants Jun-Sept 1998 2001 Selection of Contractors Construction works Aug 2001 Aug 2001 Commencement Jul 2004 Nov 2003 Completion iii) Nebbi - Pakwach May 1998 Dec 1999 Selection of Consultants Jun-Sept 1998 2001 Selection of Contractors Construction works Jul 2001 Jul 2001 Commencement July 2004 June 2004 Completion 1\.4\.2 Financial Performance 39 14\. A summary of the financial status at project closure is shown in Table 2\. Table 2: Financial Status at Closure Project Cost By Appraisal Estimate Revised Estimates Actual Expenditure Component US$ million US$ million US$ million IDA GOU TOTAL IDA GOU TOTAL IDA GOU TOTAL Main Road Upgrading Busunju Kiboga 17\.93 5\.98 23\.91 11\.79 3\.93 15\.72 18\.21 3\.09 21\.30 Kiboga - Hoima 16\.26 5\.42 21\.68 14\.69 4\.90 19\.59 21\.55 5\.00 26\.55 Arua Nebbi 17\.93 5\.98 23\.91 18\.14 6\.04 24\.18 14\.10 5\.55 19\.65 Nebbi Pakwach 12\.73 4\.24 16\.97 9\.65 3\.22 12\.87 9\.79 3\.08 12\.86 Kawempe - Luwero 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 7\.58 5\.67 13\.25 Luwero - Kafu 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 10\.25 2\.91 13\.16 Sub-total 64\.85 21\.62 86\.47 54\.27 18\.09 72\.36 81\.48 25\.30 106\.78 Consultancy Services Construction Supervision Busunju Kiboga 1\.34 0\.48 1\.82 1\.04 0\.26 1\.30 2\.48 0\.74 3\.22 Kiboga - Hoima 1\.18 0\.23 1\.41 1\.17 0\.29 1\.46 1\.66 0\.49 2\.15 Arua Nebbi 1\.31 0\.35 1\.66 1\.29 0\.32 1\.61 0\.73 0\.28 1\.01 Nebbi Pakwach 0\.93 0\.23 1\.16 1\.17 0\.29 1\.46 0\.93 0\.66 1\.59 Kawempe - Luwero 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 0\.61 0\.13 0\.74 Luwero - Kafu 0\.00 0\.00 0\.00 0\.00 0\.00 0\.00 1\.41 0\.00 1\.41 Sub-Total 4\.76 1\.29 6\.05 4\.67 1\.16 5\.83 7\.82 2\.30 10\.12 PPF - Studies 2\.50 0\.00 2\.50 2\.50 0\.00 2\.50 1\.91 0\.57 2\.48 External Auditing 0\.32 0\.00 0\.32 0\.32 0\.08 0\.40 1\.12 0\.49 1\.61 Services Sub-total 2\.82 0\.00 2\.82 2\.82 0\.08 2\.90 3\.03 1\.06 4\.09 Unallocated 18\.55 6\.05 24\.60 29\.22 9\.63 38\.85 0\.00 0\.00 0\.00 TOTAL PROJECT 90\.98 28\.96 119\.94 90\.98 28\.96 119\.94 92\.33 28\.66 120\.99 COST 40 1\.5 ACHIEVEMENT OF PROJECT, IMPLEMENTATION AND FINANCIAL OBJECTIVES 1\.5\.1 Overall Assessment 15\. Although the project was initially scheduled to be completed by completed by 31 December 2004, this was not possible because of the subsequent contractual problems on one of the main roads and the need to execute additional works on the Kawempe Kafu road\. The credit closure date was, in consultation with the Bank, extended to 30 June 2008\. 16\. The Project Development Objectives at appraisal were to improve access to rural areas and economically productive areas and to gradually build up road sector planning and management capability\. Consequently, the performance indicators for the achievement of these objectives are; Reduction in average travel time on main roads compared to baseline\. Reduction in transport and vehicle operating costs compared to baseline\. Increased agricultural and industry activity which is best reflected in increased traffic growth\. 17\. However, despite the extension of the credit closure date, the project performance was satisfactory and overall, the project objectives achieved as explained below: 1\.5\.2 Achievement of project and Implementation Objectives 18\. Part A: Upgrading of Main Roads i) Upgrading of Busunju Kiboga Hoima road (145 Km) The road was upgraded under two contracts namely Busunju Kiboga and Busunju Hoima sections\. The road was originally gravel surfaced and have been upgraded to class II bitumen standard with asphalt concrete surfacing\. a) Busunju Kiboga 19\. The upgrading works was successfully completed and as a consequence the improved road has reduced travel times, brought the framers nearer to major commercial centers and has as consequence contributed to poverty reduction and improved leaving standards\. b) Kiboga Hoima 20\. The upgrading works was successfully completed and as a consequence the improved road has reduced travel times, brought the framers nearer to major commercial centers and has as consequence contributed to poverty reduction and improved leaving standards\., ii) Upgrading of Pakwach - Nebbi Arua road 21\. The road was upgraded under two separate contracts, namely: Pakwach-Nebi (Contract C001) and Arua Nebbi (Contract C002) and were supervised by two separate consultants\. 41 22\. The road was upgraded to class II bitumen standard with a 6\.0m carriageway width and 1\.5 m wide shoulders\. Also provided on this road was an efficient drainage infrastructure and road safety improvement\. The construction works were completed within cost and 8 months ahead of scheduled completion time\. 23\. This intervention has resulted in the opening up access to the northern region which was initially inaccessible due to the poor road condition at the time\. Consequently the improved condition of the road has contributed to the reduction in travel times as well as vehicle operating costs which has triggered economic development in that region of the country\. These benefits are evidenced by the increased in traffic along the project and numerous commercial business establishments that are coming up along the road\. Part B: Sector Policy and Management Studies i) Study for the Review and update of rural road (District, Urban & Community Roads Rehabilitation and Maintenance)strategy 24\. The assignment was undertaken at the cost of US$ 0\.104 million and a contract signed on 8 October 1998\. The study commenced in November 1998 a final report submitted on 4 February 2000\. The main objectives of the study were to: (i) review the 1992 Strategy Document in light of new government policies, and identify new and potential constraints and functional deficiencies which have existed or are likely to exist and which have not been completely addressed or implemented in the 1992 Action Plan; (ii) explore new strategies and elaborate on the new operational framework, which also includes urban and community access roads; (iii) develop realistic medium-to-long term strategies which identify responsibilities, appropriate institutional set-ups, resources, time frame, etc\. for implementation\. 25\. The consultant addressed the issues and made recommendations on the following aspects regarding district and urban roads: (i) rehabilitation and maintenance needs and benefits, where the consultant recommends investing US$65 million/year over seven years to improve the condition of the district and urban road network to less than 15 percent in poor and bad condition, and the community access roads to less than 50 percent in poor and bad condition; (ii) strategies in terms of (a) institutions, (b) funding, (c) human resources capacity, execution policy, (d) equipment and support services, (e) planning and programs, (f) community and access roads, and (g) urban roads; and (iii) government policies, in, among other things, (a) the Decentralization Policy (Local Government Act of 1997), (b) the strategy of contracting out maintenance and rehabilitation work and the development of local contractors, and (c) the use of labor-based technology\. 26\. As a result of the study findings, and data obtained from the Transport Sector Strategy Review and Rural Roads Strategy Review, the Government, in October 2002, prepared a "White Paper" outlining its policy, strategy and financing mechanisms for the development, operation and management of the feeder road network in the country\. The policy is in the process of being implemented\. 42 ii) The Transport Sector Strategy Study\. 27\. The study was undertaken at the cost of US$ 0\.321 million and the contract signed firm was signed on June 7, 1999\. The study commenced on June 14, 1999 and the consultants made a presentation of their final report at the end of October 1999\. The Final Report submitted June 12, 2001 was approved and is now forming the basis for Government policy on national, district and urban roads\. iii) Study for Road Sector Environmental Policy and Management 28\. The Study was undertaken at the cost of US$ 0\.363 million and a contract was signed on 12 August 1998\. The study commenced in September 1998 and the consultants submitted their final report in April 1999\. The study also included, at IDA's request, a review of resettlement policy and proposed possible improvements\. In addition, the study recommended setting up an Environment Unit either in MOWHC or in RAFU\. Government has accepted this recommendation of the study and the Environmental Unit has been established and this has enhanced the Ministry's capacity to ably manage environmental issues on road upgrading and maintenance assignments\. iv) Study for the establishment of RAFU 29\. The Study was undertaken at the cost of US$ 0\.455 million and a contract was signed on 11 July 1997\. The study was completed by end-April 1998 and Government accepted its findings\. As a consequence and basing on the study findings, Government produced its own report in July 1998 which was named the "Transitional Arrangements for the Establishment of a Road Agency," The has accordingly been the basis for the preparation of the framework for the operation of RAFU and subsequently UNRA and this is all aimed at improving road management\. v) Study for Road Management and Financing 30\. The study was undertaken at the cost of US$ 0\.535 million and a contract signed on 20 August 1998\. The study commenced on 13 September 1999 and the consultant's Final Report was submitted 14 March 2001 and has been accepted by Government\. 31\. Implementation of the report recommendations is on going one of which is the establishment of a Road Fund for which an act of parliament has been enacted\. 1\.6 BANK AND BORROWER PERFORMANCE 32\. The major factors that affected the project were: 1\.6\.1 BANK PERFORMANCE 33\. The performance of the bank during project identification, preparation and appraisal was generally satisfactory\. The Bank's performance is summarized below; 43 a) Project Identification 34\. The Identification Mission worked closely with Government officials during the field inspections\. The establishment of the position of a Highway Engineer in the Uganda resident mission further enhanced the project identification process\. This arrangement resulted in well- conceived project concepts\. Failure to complete some of the project components on time was a result of factors that emerged during project implementation and could not have been reasonably anticipated\. The Bank's performance on identification can be rated as successful\. b) Project Preparation 35\. At the project preparation stage, the worked closely with the borrower and the Government's transport sector development objectives as enshrined in the RSDP were taken into account\. c) Project Appraisal 36\. The project was prepared in 1998 and appraised in June 1999 taking into consideration the country's transport sector development strategy\. d) Project Monitoring 37\. The Bank's monitoring system was satisfactory and this was reflected through the periodic visits to the various sites by the Banks' supervision mission where good guidance was given\. 1\.6\.2 BORROWERS PERFORMANCE 38\. With the establishment of RAFU, the borrower was able to ensure a smooth implementation of the project and accordingly the performance can be considered satisfactory\. Furthermore, the borrower managed to appoint capable and qualified personnel to manage the respective project components and this resulted in the successful implementation of most of the selected project components\. 39\. In general, the Borrowers performance was moderately satisfactory as problems were experienced in the availability of counterpart funding\. Because of this, GOU requested and the Bank effected an amendment to the Credit to allow for 100% financing of all components\. 1\.6\.3 PROJECT SUSTAINABILITY 40\. The sustainability of the facilities procured under the project and the realization of the project objectives has been generally achieved\. Government formed the Road Agency Formation Unit (RAFU) which later culminated in the establishment of the Uganda National Roads Authority (UNRA), and this has resulted in time lost in the procurement cycle as well as enhancing the efficient implementation and management of road development projects\. 44 41\. With regard to improved road maintenance interventions, Government is in the process of establishing the Road Fund with the main objective of having timely and adequate road maintenance funding\. This follows the coming into force of the Road Fund Act which became effective 31 August 2008\. 1\.6\.4 LESSONS LEARNED 1) Need to verify the contractor's and consultant's legal status before commencement of the works 2) Need to closely monitor that advance payment is used for mobilization and procurement of materials for the project 3) Need for the review of the design by an independent consultant 4) Review of the clause on variation of price 1\. 7 FUTURE OPERATIONS 42\. The government has established the Uganda National Roads Authority which will ensure the proper functionality and maintenance of roads and bridges along the country's road network\. Furthermore, Government will continue to further enhance effective supervision and maintenance of road infrastructure including the associated structures and as consequence a Road Fund will soon be operational for purposes of having fully committed road maintenance funds\. The Act establishing the Road Fund became effective on August, 31 2008\. 45 Annex 6\. List of Supporting Documents 1\. Project Appraisal Documents for: (i) Road Development Program, Phase I Project June 3, 1999 (ii) Road Develop Program, Phase II Project June 7, 2001 (iii) Road Development Program, Phase III Project August 9, 2004 2\. Development Credit Agreements for: (i) Road Development Program Phase I Project November 22, 1999 (ii) Road Develop Program, Phase II Project August 16, 2001 (iii) Road Development Program, Phase III February 23, 2005\. 3\. Aide-memoire, implementation status reports and project progress reports\. 4\. Country Assistance Strategy 5\. Project Implementation Plan 6\. Executive Agency Implementation Policy Framework and Implementation Strategy, March 2000 7\. Uganda National Road Authority Act, June 8, 2006 8\. Consultants' Study Reports: (i) Transitional Institutional Reforms for the Establishment of Road Agency, June 1998 (ii) Road Agency Study, March 2002 46 IBRD 30275R UGANDA ROAD WORKS EXECUTED UNDER THE ROAD DEVELOPMENT PROGRAM PHASE 1 ROADS DESIGNED UNDER RSISTAP UGANDA AND UPGRADED UNDER RDPP1 PAVED ROADS PERIODIC MAINTENANCE WORKS GRAVEL ROADS DONE UNDER RDPP1 DISTRICT CAPITALS ROADS DESIGNED UNDER RSISTAP AND UPGRADED UNDER OTHER NATIONAL CAPITAL PHASES OF RDP RIVERS ROAD WORKS DESIGNED UNDER INTERNATIONAL BOUNDARIES RSISTAP BUT DROPPED DUE TO LOW RATES OF RETURN Source: Uganda National Road Authority (UNRA)\. 30°E 32°E This map was produced by the Map Design Unit of The World Bank\. 0 25 50 75 100 Kilometers S U D A N The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries\. 0 25 50 75 Miles To To JubaJuba To To 4°N FaradjeFaradje 4°N MoyoMoyo K E N Y A Yumbe umbe KaabongKaabong KobokoKoboko AdjumaniAdjumani KitgumKitgum MarachaMaracha Nile AruaArua Albert KotidoKotido To To LodwarLodwar KilakKilak GuluGulu AbimAbim MorotoMoroto DEM\. REP\. DEM\. REP Olwiyo NebbiNebbi Pakwach Nile OF CONGO OF CONGO Victoria Karuma OyamOyam LiraLira BulisaBulisa 2°N ApacApac AmuriaAmuria KatakwiKatakwi NakapiripiritNakapiripirit 2°N To To DokoloDokolo Beni Beni KaberamaidoKaberamaido AlbertHoimaHoima MasindiMasindi AmolatarAmolatar SorotiSoroti KumiKumi KapchorwaKapchorwa Lake NakasongolaNakasongola SironkoSironko PallisaPallisa BukwoBukwo BudakaBudaka MbaleMbale To To KibogaKiboga KamuliKamuli BuniaBunia KaliroKaliro FortFor KibaleKibale LuweroLuwero ButalejaButaleja BubuloBubulo BundibugyoBundibugyo PortalPortal NakasekeNakaseke Wobulenzi BusikiBusiki KyenjojoKyenjojo KayungaKayunga MubendeMubende Tororo ororo Zirobwe To To Busunju Wakiso akiso IgangaIganga BugiriBugiri NakuruNakuru Gayaza MityanaMityana BusiaBusia MukonoMukono JinjaJinja Kilembe KamwengeKamwenge MpigiMpigi KAMPALAKAMPALA KaseseKasese To To KisumuKisumu Mpondwe 0° SembabuleSembabule 0° Katunguru IbandaIbanda Lake MasakaMasaka Edward KiruhuraKiruhura KalangalaKalangala To To BushenyiBushenyi K E N Y A BeniBeni MbararaMbarara IsingiroIsingiro RakaiRakai KanunguKanunguRukungiriRukungiri NtungamoNtungamo Lake Victoria KisoroKisoro KabaleKabale amoGomaGoT TANZANIA ANZANIA To To To To TANZANIA ANZANIA KigaliKigali NyakanaziNyakanazi RWANDA RWANDA 32°E 34°E SEPTEMBER 2008	REVIEW
P005896	Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 14683 IMPLEMENTATION COMPLETION REPORT THE REPUBLIC OF YEMEN EMERGENCY FLOOD RECONSTRUCTION PROJECT (CREDIT 2073-YDR) JUNE 27, 1995 Private Sector Development and Infrastructure Division Country Department II Middle East and North Mrica Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. REPUBLIC OF YEMEN CURRENCY EQUIVALENTS' Currency Unit = Yemeni Rial (YR) YR1 = 100 Fils Exchange Rates Duty Exchange Rate YR 18\.00 = US$ (1994) Official Exchange Rate YR 9\.76 = US$ 1 (1987-89) YR 12\.01 = US$ 1 (1990) YR 12\.00 = US$ 1 (1991-March 1995) YR 50\.00 = US$ 1 (April 1995-present) LIST OF ABBREVIATIONS CTB Central Tender Board ERU Emergency Reconstruction Unit (the Project Implementation Unit) FAO Food and Agriculture Organization FEPMP Flood Emergency Preparedness and Mitigation Program Study FRP Flood Reconstruction Program (Government's Program) HCFRC High Committee for Flood Relief Coordination ICR Implementation Completion Report MPD Ministry of Planning and Development PDRY People's Democratic Republic of Yemen (former South Yemen) ROY Republic of Yemen (North and South Yemen) SDR Special Drawing Rights SOD Sector Operations Division (IDA) UNDP United Nations Development Programme UNDRO United Nations Disaster Relief Organization YAR Yemen Arab Republic (former North Yemen) GOVERNMENT FISCAL YEAR January 1 - December 31 Prior to unification, May 1990, the official currency unit in the former People's Democratic Republic of Yemen was the Yemeni Dinar (YD)\. After unification the official unit in the Republic of Yemen is the Yemeni Rial (YR)\. FOR OFFICIAL USE ONLY TABLE OF CONTENTS Page No\. PREFACE\. i EVALUATION SUMMARY \.ii PART I Project Implementation Assessment Introduction \. Project Objectives\. 2 Achievement of Objectives\. 3 Implementation Record and Major Factors Affecting the Project\. 5 Sustainability \.6 IDA Performance\. 6 Borrower Performance\. 7 Assessment of Outcome\. 8 Key Lessons Learned\. 8 PART II Statistical Annexes Table 1: Summary of Assessments \.10 Table 2: Related Bank Loans/Credits \.11 Table 3: Project Timetable \.12 Table 4: Loan Disbursements: Cumulative Estimated and Actual \.13 Table 5: Key Indicators for Project Physical Implementation \.14 Table 6: Studies Included in Project \.15 Table 7: Project's Components Financed by the Credit \.16 Table\.8A: Project Costs - Local Currency \.17 Table 8B: Project Costs - Foreign Currency \.18 Table 8C: Project Financing \. 19 Table 8D: Credit Categories \. 20 Table 9: Status of Legal Covenants \.21 Table 10: Compliance with Operational Manual Statements \.23 Table 11: Bank Resources: Staff Inputs \.24 Table 12: Bank Resources : Missions \.25 Appendices A\. Supervision/Completion Mission of March/April 1995 Aide-Memoire B\. Borrower's Final Evaluation Report on the Project (not yet received) C\. Map IBRD 27077: YEMEN-Flood Reconstruction Project This documenS has a restricted distribution and may be used by recipients only in the performance of their \| ofricial duties\. Its contenis may not otherwise be disclosed wiLhout World Bank authorization\. IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN EMERGENCY FLOOD RECONSTRUCTION PROJECT (CREDIT 2073-YDR) Preface 1\. This is the Implementation Completion Report (ICR) for the Emergency Flood Reconstruction Project in the Republic of Yemen, for which Credit 2073-YDR in the amount of SDR 7\.9 million (US$10\.0 million equivalent) was approved on December 12, 1989, and was made effective on May 7, 1990\. The Credit was made to the former People's Democratic Republic of Yemen (PDRY)\.2 2\. The credit was closed on December 31, 1994, compared with the original closing date of December 31, 1992\. Final disbursement is expected to take place on July 13, 1995, at which time a balance of SDRO\.051 million (US$0\.081 million equivalent) will be cancelled\. 3\. The ICR was prepared by Suhail Jme'an (Task Manager) and Josephine Masanque (Financial Analyst), Private Sector Development and Infrastructure Division of the Middle East and North Africa Region and reviewed by Alastair J\. McKechnie (Division Chief) and Gianni Brizzi (Project Advisor)\. The beneficiary agencies were the Ministry of Construction, Housing and Urban Planning, the Ministry of Education, the Ministry of Agriculture and Water Resources, and the Ministry of Health\. The implementing agency, the Emergency Reconstruction Unit (ERU), contributed on behalf of the Borrower, the Governrment of Yemen, to the preparation of the ICR by presenting its viewpoints on different matters and events, preparing its own evaluation of project preparation and implementation (enclosed as Appendix A), and commenting on the draft ICR\. 4\. Preparation of this ICR began during IDA's April/May 1994 supervision/completion mission, which was aborted by the civil strife\. The next mission took place in March 1995\. The ICR is based on material in the project file and on information provided by ERU\. 2/ In May 1990, the People's Democratic Republic of Yemen (PDRY) and the Yemen Arab Republic (YAR) united into the Republic of Yemen (ROY)\. IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN YEMEN EMERGENCY FLOOD RECONSTRUCTION PROJECT (CREDIT 2073-YDR) Evaluation Summary Introduction 1\. Torrential rains resulting in catastrophic flash flooding occurred during the period from March 18 to April 3, 1989, in the Republic of Yemen, severely affecting urban and rural communities in various southern governorates\. The flooding was unusually severe, having an occurrence of once every 50 years\. Apart from the loss of human life and ensuing suffering and deprivation, the rains and flooding caused considerable physical damage and interrupted economic activity in the affected areas\. The total direct damages were estimated at US$162 million, or about 13 percent of gross domestic product of the former People's Democratic Republic of Yemen\. 2\. The project's principal focus was to provide for the emergency rehabilitation and reconstruction of vital infrastructure in housing, education, agriculture and health sectors which was damaged or destroyed by the torrential rains and flooding\. The project was designed with due consideration to the main lesson learned from a previous Roads Flood Rehabilitation project in 1982, by ensuring that adequate institutional arrangements were in place at the outset\. Before appraisal, the groundwork was thoroughly prepared: a comprehensive damage assessment was completed, a Flood Reconstruction Plan (FRP) was fornulated, and robust institutional arrangements were already set up\. These arrangements included the creation of the High Committee for Flood Relief Coordination and the Emergency Reconstruction Unit, and national and sectoral coordinators representing the ministries involved in project execution were also appointed with clear responsibilities\. Project Objectives 3\. The project objectives supported the Government's FRP objectives and comprised of the following: (i) to help restore the country's essential economic infrastructure destroyed or damaged by the heavy rains and ensuing wide spread flooding; (ii) to reduce human deprivation and suffering of the flooding victims through restoration of social services and shelter; (iii) to strengthen institutional capacity to manage disaster recovery programs and develop future programs to mitigate the country's vulnerability to floods; and Evaluation Summary iii (iv) to serve as a catalyst for donor financing and coordination of the flood-damage reconstruction effort\. These objectives were clearly relevant given the extent and widespread damage sustained\. 4\. The project financed a self-contained portion of the most urgent components of the Government's FRP and consisted of providing materials, equipment and civil works for: (i) the construction of low-cost housing to replace totally destroyed housing; (ii) the rehabilitation and equipping of damaged schools, hospital and health centers; (iii) the rehabilitation of flood protection and irrigation structures\. Technical assistance \.cluded improving flood preparedness and management operations\. Implementation Experience and Results 5\. During project implementation the country went through a series of difficult and often overwhelming circumstances: starting with the unification of the People's Democratic Republic of (the former South) Yemen and the Yemen Arab Republic (the former North) in May 1990 shortly after launching the project followed by the Gulf War in 1991 and its aftermath in 1992, the severe flooding in February 1993 and finally the civil war in 1994\. Because of these events it was necessary to extend the project completion date by 24 months\. Despite all the shocks, the project was successfully implemented with good quality work largely because of the perseverance and exceptional efforts of the ERU and continued Government support\., The project provides a testimony to strong project ownership\. It should also be recorded that the project implementation rating remained above average relative to the overall Yemeni Portfolio during that period\. 6\. Project cost (US$14\.75) was very close to the appraisal estimate (US$15\.36) but the foreign cost component was rather higher than estimated due to greater expenditures on additional equipment and materials (Tables 8A,B and D) to compensate for the damages causee by the February 1993 floods\. 7\. The overall assessment of the project is considered to be highly satisfactory\. There is no doubt that considerable benefits have accrued from the restoration of the basic essential services destroyed or damaged by the floods\. iv Evaluation Summary The essential lessons that come out from the successful experience of this project are: (i) Principally, the strength and competence of the project implementation unit, ERU, coupled with continued Government support were able to surmount difficult conditions\. (ii) Adequate front-end arrangements and preparation --including a thorough damage assessment and robust institutional arrangements-- ensured that project objective were very relevant to the Government needs\. (iii) Clarity and simplicity of project design assured that all parties involved had a crystal-clear understanding of objectives and selection criteria\. (iv) Flexibility and responsiveness of IDA to Borrower needs during project implementation maintained a high level of goodwill between the two sides\. IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN EMERGENCY FLOOD RECONSTRUCTION PROJECT (CREDIT 2073-YDR) PART I Project Implementation Assessment 1\. Introduction 1\.1 Torrential rains resulting in catastrophic flash flooding occurred during the period from March 18 to April 3, 1989, in the Republic of Yemen\. The flooding was unusually severe, having an occurrence of once every 50 years in key urban and agricultural areas\. The flash flooding resulted in significant human suffering and caused physical damage to basic infrastructure\. The most severely affected areas were the urban and rural communities in the Hadramout, Shabwa and Al-Mahara Governorates\. Areas affected to a lesser extent were located in the Governorates of Abyan, Lahij, and Aden\. 1\.2 The total direct damages were estimated at about US$162 million, or about 13 percent of gross domestic product\.3 In monetary terms, most of the damage affected the housing sector, accounting for US$90 million or about 56 percent of total damages\. The flooding caused the death of at least 23 persons and damaged or destroyed 4,200 houses, leaving around 30,000 people homeless\. Ten schools were completely destroyed, 443 others sustained damage, and many were occupied by homeless families\. As a result many students were deprived of normal school attendance\. Essential health services were also interrupted and portions of the highway system were damaged\. An estimated US$24 million of damages occurred in the irrigation sub- sector\. Many flood control structures were destroyed endangering rural communities and jeopardizing crop production\. In addition, about 6 percent of total annual agricultural production4 was destroyed, 5,500 animals were lost, and about 20,000 hectares of arable iand in the country suffered serious erosion\. 1\.3 Emergency relief efforts began almost immediately after the flooding with assistance from the United Nations Disaster Relief Organization (UNDRO) and coordinated by UNDP\. Many other donors, including international, regional, governmental and non-governmental organizations, provided assistance towards the immediate relief needs of the flood victims through the provision of food, medicines, blankets and temporary shelter, as well as emergency medical relief, amounting to US$6 million\. Those efforts were successful and prevented the potential outbreak of epidemics\. 3/ Percentage refers to the former People's Democratic Republic of Yemen's gross domestic product prior to the unification of the Republic of Yemen\. 4/ Percentage refers to the total annual agricultural production of the former People's Democratic Republic of Yemen prior to the May 1990 unification of the Republic of Yemen\. 2 Implementation Completion Report 1\.4 The Government, in collaboration with the Food and Agriculture Organization (FAO), the UNDP and IDA, undertook an assessment of overall flood damage, and subsequently formulated a Flood Reconstruction Program (FRP) with objectives to reduce human deprivation and suffering through restoration of social services and shelter restore the country's agricultural productive capacity and essential economic infrastructure destroyed by the flood\. The Government's approach to the FRP was pragmatic\. In March 1989, the Government created a High Committee for Flood Relief Coordination (HCFRC) headed by the Deputy Prime Minister to coordinated with donors all flood disaster relief activities and oversee general execution of the reconstruction program\. 2\. Project Objectives 2\.1 The objectives of the project were articulated to reinforce the Government's above stated objectives\. The project objectives, in the order of priority, were outlined as the following: (i) to help restore the country's essential economic infrastructure destroyed or damaged by the heavy rains and ensuing wide spread flooding; (ii) to reduce human deprivation and suffering of the flooding victims through restoration of social services and shelter; (iii) to strengthen institutional capacity to manage disaster recovery programs and develop future programs to mitigate the country's vulnerability to floods; and (iv) to serve as a catalyst for donor financing and coordination of the flood-damage reconstruction effort\. 2\.2 These objectives were clearly relevant given the extent and widespread damage sustained\. In support of the above objectives, the project called for financing the provision of materials, equipment and civil works for a self-contained portion of the most urgent components of the Government's overall FRP estimated at about US$105 million in 1989\. 2\.3 These urgent components were broadly identified as the following: (i) construction of low-cost basic-housing units to replace totally destroyed housing; (ii) rehabilitation and equipping of damaged schools; (iii) rehabilitation of flood protection and irrigation structures in Wadi Hassan; Implementation Completion Report 3 (iv) rehabilitation of damaged regional hospitals, health centers, health units and replacement of destroyed medical equipment; and, (v) technical assistance for: (a) a flood emergency preparedness and mitigation program (FEPMP) study; and (b) the provision of technical experts to assist the Emergency Reconstruction Unit' (ERU) and the technical ministries in such areas as contract management, construction supervision and monitoring of project execution\. Details of the above components are listed in Table 7\. 2\.4 The prioritization and selection of specific rehabilitation and reconstruction works among and within the various sector-components, mentioned above, to be financed under the project, were systematically carried out on the basis of a comprehensive set of eligibility criteria' negotiated and agreed with the Government\. These criteria were stated unambiguously and were clearly understood by all parties and remained unchanged through out project implementation\. This process insulated the selection process from undue external interference and proved to be highly effective and efficient in allocating funds among competing components\. 3\. Achievement of Objectives Physical Implementation 3\.1 All the physical components of the project, except for one contract', were successfully completed with good quality despite a backdrop of a series of disruptive events (outlined in para\. 4\. 1)\. It is apparent that value has been received in relation to the costs incurred and that strenuous efforts have been made under each individual contract to utilize the allocated resources to maximum advantage, and to ensure that in every case value for money was obtained\. The following paragraphs summarize the activities carried out with respect to the urgent components identified above: 5/ The ERU was set up as the implementation unit for the project\. The head of the unit was also the Project Director and National Emergency Project Coordinator who reported to the Ministry of Planning and Development and the HCFRC\. 6/ The selection criteria were outlined in Annex 11 of the Memorandum and Recommendation of the President, Report No\. P-5146-YDR, November 8, 1989\. 7/ A contract for the rehabilitation of Aboud Secondary School\. The contractor stopped work because of financial problems\. The work is about 60% complete\. The Government has initiated legal proceedings against the contractor to complete the remaining works\. 4 Implementation Completion Report Construction of Low-Cost Housing 3\.2 A total of 300 low-cost units in three locations were completed and distributed to eligible beneficiaries whose eligibility was determined according to agreed criteria (see footnote 6)\. All units were designed so that they remain strictly affordable to eligible families that lost their homes to the floods\. The total cost of this component was about YR74\.84 million (US$5\.80 million)\. Rehabilitation of and Equipping of Damaged Schools 3\.3 A total of 12 schools serving 11 thousand students and spread over 3 southern governorates were rehabilitated and were also equipped with furniture\. The total costs of the rehabilitation and furniture were US$3\.01 million and US$0\.37 million respectively\. The UNDP also financed additional school furniture for about US$0\.54 million as part of the its support to the Government's flood reconstruction efforts\. Rehabilitation of Flood Protection and Irrigation Structures in Wadi Hassan 3\.4 The completed components comprised of civil works for rebuilding destroyed flood controls in Wadi Hassan\. These included: (i) the construction of earthworks embankments and gabion protection to train flows within the Wadi bed, and prevent erosion of valuable agricultural land; and, (ii) the reconstruction and other measures to improve conditions at canal heads\. All the civil works were financed by the Government at a cost of about US$0\.28 million, while the procurement of spare parts and gabions were financed under this Credit at a cost of US$0\.60 million\. Rehabilitation of Damaged Health Facilities 3\.5 A total of 13 health facilities were rehabilitated (5 major regional hospitals, 3 health centers and 5 health units) and were also equipped with medical equipment\. These health facilities essentially formed the primary network that provided vital access to basic health care for the residents of four southern governorates\. The total costs of rehabilitation and medical equipment were US$1\.48 million and US$0\.77 million respectively\. Implementation Completion Report S Technical Assistance 3\.6 Although funds for the FEPMP study (US$0\.83 million) were cancelled from the Credit, on January 1, 1993, after drawn out deliberations (see para\. 4\.2), there were, however, positive signs that the Government was able to secure grant funding from the Arab Fund to finance the study\. Unfortunately, the civil war delayed the start of the study\. In preparation for the study, a team of local experts started laying the groundwork towards identifying and collecting the necessary data on areas prone to flooding\. Unfortunately, the civil war delayed on the start of the study\. 3\.7 The other component of the technical assistance was setting up the ERU whose main tasks were to coordinate and manage current and future flood relief programs\. This component was financed by a UNDP grant with a total of US$1\.1 million\.8 During the first year the ERU had one expatriate advisor, but later it was run entirely, and very competently, by local staff for the remainder of the project\. Procurement of Additional Equipment 3\.8 Given the urgent need to restore essential services disrupted by the February 1993 devastating floods, the Government requested, and IDA agreed, that the remaining funds under the Credit, about US$1\.20 million, be utilized to purchase equipment for this purpose\. These funds were essentially the result of about 10 percent depreciation of the US$ relative to the SDR9 during project implementation, between 1989 and 1993\. Details of this equipment are listed in Table 7\. 4\. Implementation Record and Major Factors Affecting the Project 4\.1 The implementation record of this project was adversely influenced by a series of difficult and often overwhelming circumstances: starting with the unification of the People's Democratic Republic of (the former South) Yemen and the Yemen Arab Republic (the former North) in May 1990 shortly after launching the project followed by the Gulf War in 1991 and its aftermath in 1992, the severe flooding in February 1993 and finally the civil war in 1994\. Because of these events it was necessary to extend the project completion date by 24 months\. By keeping the Credit open, remaining funds (para\. 3\.8) were effectively used to mitigate the negative impacts of these events\. Despite all the odds, the project was successfully implemented through the perseverance and exceptional efforts of the ERU and continued Government support\. The project provides a testimony to strong project ownership\. 8/ Final amount was unavailable, however, ERU estimate was about US$1\.06 million\. 9/ In 1989, 1 SDR was equivalent to US$1\.28, while in 1993, it was equivalent to US$1\.42 (source: International Financial Statistics, IMF)\. 6 Implementation Completion Report 4\.2 The unification had, by far, the largest and lasting delay-impact on project implementation (refer Table 4)\. Generally, delays were attributable to the resulting organizational and administrative changes: widespread staff changes in the project management teams --3 of the 4 sectoral coordinators for housing, health and agriculture-- were reassigned new posts in the unified Government\. Availability of local counterpart funds was also severely strained by such staff reassignments and adoption of new procedural arrangements and regulations\. Furthermore, the dissolution of the Central Tender Board (CTB) in Aden, while simultaneously compacting power with the CTB in Sana'a, left a backlog of unawarded contracts that had to be rebid, adding further delays\. Over-centralization of decision-making at the newly consolidated CTB, proved to be unwieldy especially when the award of the FEPMP study was dismissed at the last minute on the grounds that the study was not justified despite earlier Government approval\. 5\. Project Sustainability 5\.1 Sustainability of the physical components implemented in relation to the major objectives above, is considered very likely provided that sufficient annual budget allocations are appropriated to maintain the rehabilitated facilities\. The constructed low-cost houses are all occupied and well-maintained by their owners\. Loss of records during the civil war, however, has delayed the process of cost recovery\. Sustainability of institutional capacity gains also seem likely\. The institutional capacity of the Government to manage disaster recovery efforts has benefited greatly from the experience gained under this project\. The Government's swift response to the February 1993 floods by mobilizing internal and external resources in aid of the emergency efforts demonstrated the strengthened capacity to respond to such emergencies\. The ERU's Project Director, who is also the National Emergency Coordinator, continues to play a major role in coordinating other ongoing emergency activities\. Technical assistance, funded by UNDP, had positive impact on building up and strengthening project management\. Furthermore, experience gained through this project has been transmitted to other sector ministries through staff secondment to the ERU\. 5\.2 Overall sustainability would be further bolstered once a proper national framework for flood emergency response is in place after completing the FEPMP study, whose start was unfortunately delayed by the recent civil war (para\. 3\.6)\. 6\. IDA Performance 6\.1 The performance of IDA throughout the project cycle is rated highly satisfactory\. From the onset of project identification, efforts by several Sector Operations Divisions10 (SOD) were I0/ SODs involved were Infrastructure, Population and Human Resources and Agriculture\. Implementation Completion Report 7 collaborative to ensure maximum effectiveness of their combined emergency-aid efforts\. Such efforts included joint missions, reallocation of about US$9 million in IDA proceeds from ongoing operations to meet a portion of the total financial requirements of the Government's FRP not included in this Credit (mainly highways and roads rehabilitation)\. 6\.2 Praise for project design simplicity and flexibility is shared between IDA and the Government\. The organizational setup for the reconstruction effort proved very effective and enduring\. The ERU had the overall responsibility for coordinating and monitoring of project implementation within the larger context of the FRP\. The ERU reported directly to the Deputy Minister of Planning and Development (MPD) and had direct access to the highest level of the Government through the HCFRC (headed by the Deputy Prime Minister) (para\. 1\.4)\. This setup proved invaluable on several occasions during difficult times\. Other specific day-to-day activities were delegated to the sectoral coordinators within the respective sectoral ministries\. 6\.3 Moreover, IDA played a role by informally mobilizing potential donors to leverage the funds from this Credit\. Contributions made specifically towards this emergency-aid effort included: (i) US$2\.0 million grant from the Islamic Development Bank for the construction and equipping of two schools and a health center including construction supervision; and (ii) US$1\.1 million grant from UNDP for technical assistance to support the implementation of this Credit\. Other more general contributions included US$15 million from Saudi Arabia aimed at rehabilitation and new construction of infrastructure in the southern governorates\. 6\.4 Overall, IDA demonstrated a good deal of goodwill, responsiveness and sufficient flexibility in its actions and response to the Borrower's needs during the difficult circumstances which the project went through\. A highlight of such actions included: (i) reallocating funds from the Credit for procurement of additional equipment (para\. 3\.8); (ii) extending the closing date of the Credit by a total of 24 months because of difficult country conditions (para\. 4\.1); (iii) authorizing the use of more expeditious procurement procedures such as Local Competitive Bidding and International Shopping within prescribed ceilings; and (iv) keeping the Credit accounts open six months beyond the closing date to accommodate difficulties encountered by the Borrower in processing the necessary paper-work as a direct consequence of the recent civil war\. 7\. Borrower Performance 7\.1 Borrower performance was highly satisfactory\. The implementation record was also satisfactory considering the difficult circumstances experienced and remained above average relative to the overall Yemeni portfolio\. Covenant compliance record was satisfactory, and all reporting requirements and audits were complete, timely and of good quality\. 7\.2 The benefits of the Borrower's active participation during project preparation and design enhanced sense of project ownership\. Sponsorship and effective collaboration by the MPD were 8 Implementation Completion Report instrumental to facilitate project implementation throughout the whole project cycle\. It should also be recorded that the dedication and high professional competence of the ERU leadership and other sectoral ministries' staff involved were responsible for the satisfactory completion of the project despite the tremendously difficult circumstances\. 7\.3 The Borrower extended all efforts to provide IDA with any necessary information requested\. It should also be recorded that IDA/Borrower relations were consistently good throughout the project\. 8\. Assessment of Outcome 8\.1 The overall assessment of the project is considered to be highly satisfactory\. There is no doubt that considerable benefits have accrued from the restoration of the basic essential services destroyed or damaged by the 1989 and 1993 floods\. It is still early, though, to assess the accrued economic benefits since any positive impact cannot be separated and may possibly be overshadowed by damages from the civil war\. 9\. Key Lessons Learned 9\.1 Despite adverse country conditions during project implementation, the successful completion of this project, in retrospect, hinged on the following key factors: (i) Collaborative participation between the Borrower's agencies and IDA at the outset of project identification and design proved fruitful and also enhanced the concept of ownership\. (ii) Project design was simple and flexible\. Objectives and selection criteria were unambiguous, clearly stated and well understood by all\. (iii) The strength and competence of the local team charged with managing and coordinating project implementation was an essential ingredient to ensure a successful project\. (iv) Flexibility and responsiveness of IDA's actions to Borrower needs during project implementation maintained a high level of goodwill between the two sides\. (v) IDA's comparative ability to mobilize other donor support proved invaluable\. Furthermore, coordination with other participating donors creates synergy and cannot be more emphasized\. Implementation Completion Report 9 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN EMERGENCY FLOOD RECONSTRUCTION PROJECT (CREDIT 2073-YDR) PART II Statistical Annexes Table 1: Summary of Assessments Table 2: Related Bank Loans/Credits Table 3: Project Timetable Table 4: Loan Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Physical Implementation Table 6: Studies Included in Project Table 7: Project's Components Financed by the Credit Table 8A: Project Costs - Local Currency Table 8B: Project Costs - Foreign Currency Table 8C: Project Financing Table 8D: Credit Categories Table 9: Status of Legal Covenants Table 10: Compliance with Operational Manual Statements Table 11: Bank Resources: Staff Inputs Table 12: Bank Resources: Missions 10 Implementation Completion Report Table 1: Summary of Assessments Not Substantial Partial Negligible Applicable A\. Achievement of objectives Macroeconomic policies / Sector policies / Financial objectives / Institutional development / Physical objectives / Poverty reduction , Gender concems , Other social objectives / Environmental objectives / Public sector management / Private sector development , Other Not Substantial Partial Negligible Applicable B\. Project sustainability / Highlv C\. Bank performance satisfactory Satisfactory Deficient Identification / Preparation / Appraisal , Supervision / D\. Borrower performance satisfactory Satisfactory Deficient Preparation / Implementation / Covenant compliance / Operation / Highly satisfactory Satisfactory Unsatisfactory unsatisfactory E\. Assessment of outcome / Implementation Completion Report 11 Table 2: Related Bank Loans/Credits 1 1 ~~~~~~~~~~~~~Approval Loan/Credit Title \| Purpose T (Mo\.yr) Status 1\. Roads Flood Reconstruction In March 1982, severe rains and flash flooding caused, inter 10/82 Closed in (Credit 1295; US$7\.0 million alia, major damage to key sections of the highway network 12/84 equivalent) and to bridges located in the Abyan and Aden Govemorates\. In order to assist the Government in its reconstruction effon, an IDA credit of SDR6\.3 million (US$7\.0 million equivalent) was approved in October 1982 for the Roads Flood Reconstruction Project\. The Project Performance Audit Report No\. 7311 dated June 24, 1988, noted that the project objectives were met despite initial delays in establishing the construction unit under the project\. The main lesson leamed was to ensure that adequate institutional arrangements for project implementation are effectively put in place at the outset\. 2\. Taiz Flood Disaster (Credit Provide the most needed flood control structures to protect 06/90 Scheduled 2160; US$15\.00 million property and infrastructure minimize disruptions to the local to close in equivalent) economy and reduce risks to human life\. Promote 12/98 implementation of a project cost recovery mechanism at a municipal level and a national policy for municipal resource mobilization\. Provide institutional strengthening of the Ministry of Housing and Urban Planning and municipal branch offices\. 3\. Emergency Recovery (Credit The project is designed to support key components of the 06/91 Scheduled 2258; US$33\.0 million Govemment's Emergency Recovery Program (ERP) in to close in equivalent) response to mass Yemeni retumees after the Gulf War\. The 12/95 primary project focus is meeting immediate needs of retumees in the areas of: essential social services, agricultural production, housing sites and transportation infrastructure\. Further, the project provides a framework for mobilizing bilateral and other multilateral support for the ERP\. 12 Implementation Completion Report Table 3: Project Timetable Date actual/latest Steps in project cycle Date planned estimate Identification 05/89 05/89 Preparation 06/89 05/89 Pre-appraisal N/A N/A Appraisal 09/90 09/89 Negotiations 10/89 10/89 Board Presentation 12/89 12/89 Signing 12/89 12/89 Effectiveness 02/90 05/90 Project Completion 01/92 01/95" Loan Closing 12/92 l2/9421 Notes: N/A: Not applicable\. 1/ Physical works components were completed by 12/93, while procurement of goods were completed by 01/95\. 2/ Original Closing Date extended three times to 12/31/94\. Implementation Completion Report 13 Table 4: Credit Disbursements: Cumulative Estimated and Actual (US$ millions) \| FY90 ( FY91 I FY92 I FY93 I FY94 \|FY95 Appraisal estimates 1\.50 4\.70 8\.10 10\.00 10\.00 10\.00 Actual 0 1\.00 4\.33 7\.74 8\.65 10\.15 Actual as percentage of estimates 0% 21% 53% 77% 87% 101% Expected date of final July 13, 1995 disbursement Notes: (1) Approved amount (December 1989) was SDR 7\.9 million (US$10\.0 million equivalent)\. (2) SDR 0\.6 million were cancelled from the Credit on January 1, 1993\. (3) Total disbursed amount (July 13, 1995) is expected to be SDR 7\.24 million (US$10\.15 miillion equivalent) after the final disbursement\. (4) Undisbursed amount is expected to be SDR 0\.051 million (US$0\.081 million equivalent) after final disbursement\. Credit Disbursement Profile 12\.00 \.- 10\.00 0~ eC /IA- 8\.00 Unification followed / D by Gulf War r z z - - Appraisal Estimate c 6\.00 - ~ / / /1 Civil War Actual 600 E Typical All-Regions IDA Emergency \.F 4\.00 1 F Reconstruction Credit \. 1> / / F~~~~ebruary 1993 Flood , 2\.00 E 0 \.0 0 I I I I I I I I I I a C - ) c'i C ) em CO ,- Nt i 0) 0) 0 u ) a) 0) 0') a) 0) a) CD C o ( N in N in C tn C in _ O _ 0 - 0 0 _ Quarters 14 Implementation Completion Report Table 5: Key Indicators for Project Physical Implementation Commencement Completion (month/year) (month/year) Project Components Govemorate Appraisal Appraisal Estimate Actual Estimate" Actual Civil Works: 1\. Housing Sector: 1\. Constniction of 70 houses Shabwa 05/90 11/90 12/92 2\. Construction of 180 houses Hadramout 06/90 11/90 12/92 3\. Construction of 50 houses Al-Mahara 07/90 10/90 N/A 11\. Agriculture Sector: 1\. Rehabilitation of Wadi Hassan Abyan 05/90 01/90 09/93 111\. Education Sector: Rehabilitation of 12 Schools 1\. 23 October Unity School Aden 05/90 07/91 09/92 2\. Aboud Secondary School Aden 05/90 07/91 41 3\. Lutfi Secondary School Aden 05/90 09/92 N/A 4\. Hashem Abdulla Unity School Aden 05/90 09/92 10/93 5\. Shayef Unity School Lahij 05/90 06/92 05/93 6\. Nageeb Unity School Lahij 05/90 06/91 07/93 7\. Al-Oudy Unity School Lahij 05/90 09/91 07/93 8\. Teachers Training Center Shabwa 05/90 07/91 02/92 9\. Nisab Unity School Shabwa 05/90 07/91 11/91 10\. Goal Raida Unity School Shabwa 05/90 07/91 03/92 11\. Omaiq Unity School Shabwa 05/90 07/91 02/92 12\. 30 November Unity School Shabwa 05/90 07/91 07/93 IV\. Health Sector: Rehabilitation of: I \. Sayoun Hospital Hadramout 04/90 11/90 07/93 2\. Tarim Health Centre Hadramout 08/90 11/90 07/93 3\. Shibam Health Center Hadramout 08/90 01/90 07/93 4\. Al Garya Health Unit Hadramout 11/90 11/90 07/93 5\. Tibi Health Unity Hadramout 11/90 11/90 07/93 6\. Mishta Health Unity Hadramout 11/90 11/90 07/93 7\. Gail Omer Health Unit Hadramout 11/90 11/90 07/93 8\. Al-Shihir Hospital Hadramout 04/90 11/91 07/93 9\. Sayhout Health Center Al-Mahara 08/90 04/92 07/93 10\. Mirat Health Unit Lahij 11/90 05/91 07/91 11\. Al-Nasr Hospital Lahij 04/90 06/91 07/93" 12\. Modya Hospital Abyan 04/90 11/92 09/93 13\. Azzan Hospital Shabwa 04/90 12/92 07/93 Notes: N/A: Not available\. 3/ Appraisal completion dates are estimated before 12/93 for all components\. 4/ Contractor stopped work because of financial problems\. The work is about 60% complete and the Government has initiated legal proceedings to complete the remaining works\. 5/ Contract was rebid in 01/92 after death of contractor\. Implementation Completion Report 15 Table 6: Studies Included in Project Purpose as Defined at Study Appraisal/Redefined Status Impact of Study Flood Emergency To recommend administrative IDA cancelled the sum of SDR N/A Preparedness and Mitigation and engineering measures and 600,000 allocated for the study Program Study to introduce policy framework effective December 31, 1992, for flood disaster preparedness due to the Government's and prevention\. unwillingness to utilize the credit for the study\. Grant funding, however, was subsequently secured for the study, but start was delayed by the recent civil war\. Notes: N/A: Not applicable\. 16 Implementation Completion Report Table 7: Project's ComponentsFinanced under the Credit Components identified as apprasatl Compoatents completed under dse Project Civil Works: Civil Works: L Housing Sector I\. Housine Sector: I\. Conrstruction of 70 housa I\. Construction of 70 houses 2\. Construction of 180 houses 2\. Constrauction of 180 houses 3\. Construction of 50 houses 3\. Construction of 50 houses IL Agriculture Sector: 11\. Agriculture Sector: 1\. RehabilitAtion of Wadi HMsasn 1\. Rehabilitation of Wadi Hassan 111\. Education Sector: Ill\. Education Sector: Rehabilitation of 12 Schools Rehabilitation of 12 Schools 1\. 23 October Unity School 1\. 23 October Unity School 2\. Aboud Secondary SchooI 2\. Aboud Secondary School 3\. Lutfi Secondary School 3\. Lutfi Secondary School 4\. Hashem Abdulla Unity School 4\. Hashem Abdulla Unity School 5\. Shayef Unity School 5\. Shayef Unity School 6\. Nageeb Unity School 6\. Nageeb Unity School 7\. AI-Oudy Unity School 7\. Al-Oudy Unity School 8\. Teachers Training Center 8\. Teachers Training Center 9\. Nisab Unity School 9\. Nisab Unity School 10\. Goal Raida Unity School 10\. Goal Raids Unity School 11\. Omaiq Unity School 11\. Omaiq Unity School 12\. 30 November Unity Schtool 12\. 30 November Unity School IV\. Heasth Sector: IV\. Health Sector: Rehabilitation of: Rehabilitation of: 1\. Sayoun Hospital 1\. Sayoun Hospital 2\. Tarim Health Centre 2\. Taim Health Centre 3\. Shibam Health Center 3\. Shibam Health Certer 4\. Al Garyst Health Unit 4\. Al Garya Health Unit 5\. Tibi Health Unity 5\. Tibi Health Unity 6\. Mishta Health Unity 6\. Miahta Health Unity 7\. Gail Omer Health Unit 7\. Gail Omer Health Unit B\. Al-Shihir Hcupital 8\. Al-Shihir Hospital 9\. Sayhout Health Center 9\. Sayhout Health Center 10\. Mirat Health Unit 10\. Mirat Health Unit 11\. Al-Naur Hospital 11\. Al-Nasr Hospital 12\. Modya Hospital 12\. Modya Hospital 13\. Azzan Hospital 13\. Azzan Hospital Goods & Equipntent: Goods & Equipment: (includes additional Equipment to 1 Agriculture Sector compensate for the 02/93 Floods) 1\. Gabions\. 1\. Agriculture Sector: 2\. Spare Parts 1\. Gabions 2\. Spare Parts IL Health Sector: I1 Health Sector: 3\. Medical Equipment 1\. Medical Equipment Ill\. Housing Sector: 1\. 2 Jetting Tankers 2\. 5 Jetting Tankers/Cesspool Emptiers IV\. Power Sector: 1\. 10 contracts for LV andl RV overhead cables, fuses, transformers and joint materials V\. Education Secor: 1\. School Furniture Technical Assistatwne Technical Assistanue: 1\. UNDP TA 1\. UNDP TA 2\. FEPMP Study Implementation Completion Report 17 Table 8A: Project Costs in Local Currency (all values in current thousand currency units) Appraisal Estimates6/ Actual Cost7/ Local Foreign \|Total Local \|Foreign \|Total Project Components YR YR YR YR YR YR Civil Works: 1\. Housing 43\.74 36\.04 79\.78 22\.45 52\.39 74\.84 2\. Education 9\.14 7\.54 16\.68 12\.07 28\.16 40\.23 3\. Health 6\.86 5\.24 12\.10 5\.88 13\.72 19\.61 4\. Agriculture 7\.83 0\.33 8\.16 3\.38 0\.00 3\.38 Sub-total 67\.58 49\.14 116\.72 43\.78 94\.27 138\.06 Equipment: 1\. Housing 0\.17 2\.01 2\.19 0\.00 2\.49 2\.49 2\. Education 8/ 0\.00 0\.00 0\.00 0\.00 4\.45 4\.45 3\. Health 0\.61 6\.89 7\.50 0\.00 9\.29 9\.29 4\. Agriculture 0\.53 4\.53 5\.06 0\.00 7\.22 7\.22 5\. Additional8i 0\.00 0\.00 0\.00 0\.00 14\.37 14\.37 Sub-total 1\.32 13\.43 14\.75 0\.00 37\.82 37\.82 Technical Assistance: 1\. UNDP TA 3\.59 6\.55 10\.14 4\.68 13\.68 18\.36 2\. FEPMP Study 3\.26 4\.91 8\.18 0\.00 0\.00 0\.00 Sub-total 6\.86 11\.47 18\.32 4\.68 13\.68 18\.36 Grand Total 75\.75 74\.04 149\.79 48\.46 145\.78 192\.24 6/ During appraisal the exchange rates were 1 YD = 2\.8952 US$ and 1 US$ = 9\.7600 YR\. 7/ For project expenditures the exchange rate varied between 1 US$ =9\.76 YR to 18\.00 YR\. 8/ Additional goods and equipment are listed in Table 7\. 18 Imlplementation Completion Report Table 8B: Project Costs in Foreign Currency (all values in current thousand currency units) Appraisal Estimates7/ Actual Cost"' Local Foreig n Total Local Foreig n Total Prioect ('omponents tJS$ LUS$ IUS$ US$ LIS$ UM Civil \Works: i lOU siIlg 4\.50 3\.68 8\.18 1\.74 4\.0)6 5\.8() 2\. Edki ition 0\.95 0\.78 1\.72 0\.90 2\.11 3\.01 3 Hle\.Atfu 0\.67 l)\.54 1\.22 0\.44 1\.04 t\.48 4\. Agriculture (\.81 0\.03 0\.84 0\.28 (1\.0() 0\.28 Sub-total 6\.93 5\.04 11\.97 3\.37 7\.21 10\.58 Eqgoippincot: I Hlou[sinig 0\.02 0\.19 0\.21 o\.0() 0\.21 0\.21 2\. Education "/ (0\.0( 0\.00 (\.()0 (1\.00 (0\.37 0\.37 3\. HeAth (0()7 0\.65 0\.72 0\.00 0\.77 0\.77 I 4\. Aericiltire 0\.06 0\.55 0\.61 0\.00 0\.60 0\.60 5 Additional' ' 0\.00 (O\.00 0\.00 0\.00 1\.20 1\.20 Sub-total 0\.15 1\.39 1\.54 ()\.00 3\.15 3\.15 1\.1 ;niLaI Assistance\. j l'NDP TA 0\.36 o\.66 1\.02 0\.26 0\.76 1\.02 \. 'EPpMP Study 0\.34 0\.50 (1\.83 0\.0() 0\.00 0\.00 Sub-total 0\.69 1\.16 1\.85 0\.26 li76 1\.02 Crand Total 7\.77 7\.59 15\.36 3\.63 11\.12 14\.75 9! During Appraisal the exchange rates were IYD = 2\.8952 US$ and 1 US$ = 9\.7600 YR\. to, During Appraisal the exchange rates were IYD = 2\.8952 US$ and I US$ = 9\.7600 YR\. ,i' See footnote 8\. Implementation Completion Report 19 Table 8C: Project Financing (all values in current million currency units) Appraisal Estimates \|Actual Cost '2! Local Foreign Total Local Foreign Total costs costs costs costsl Project Componients US$ US$ U3S$ (Mc US$ US$ UiS$ sh 1\. Govermment 4\.40 0 4\.40 29 3\.28 0\.30 3\.58 24 2\. IDA 3\.10 6\.90 10\.00 65 0\.09 10\.06 110\.15, 6 9 3\. UNDP 0\.30 6\.70 1\.00 6 0\.26 0\.7O,6 10 2 \| Total 7\.80 7\.60 15\.40 100 3\.63 11\.12 14\.75 12/ Estimates made since data were difficult to reconcile and incomplete\. 13! Estimates since ftnal disbursement expected to take place on July 13, 1995\. 20 Implementation Completion Report Table 8D: Credit Categories (all values in current million currency units) l Appraisal Estimate \|Actual Loan Category US$ Equivalent Etma US$ Equivalent ] 1\. Civil Works 7\.20 72 7\.00 69 2\. Materials & equipment 1\.00 10 3\.15 31 3\. Consultant services 0\.80 8 0\.00 0 4\. Unallocated 1\.00 10 0\.00 0 5\. Fund 0\.00 0 0\.00 0 Total 10\.00 100 10\.15 100 Implementation Completion Report 21 Table 9: Status of Legal Covenants Agreement: Credit Agreement Section: 3\.01(b)(i) & 5\.01(a) Covenant Class: 5 Status: C Original Fulfillment Date: 10/31/89 Revised Fulfillment Date: 11/30/89 Description of Covenant: Borrower to establish an emergency reconstruction unit, and assign to said unit a national reconstruction coordinator\. 4 sector coordinators and technical support staff\. Comments: Special Condition of Effectiveness\. \. Agreement: Credit Agreement Section: 3\.01(d) Covenant Class: 10 Status: SOON Original Fulfillment Date: 02/28/92 Revised Fulfillment Date: Description of Covenant: Borrower to carry out a study to develop flood preparedness and mitigation program under TORs acceptable to IDA\. Comments: IDA cancelled SDR600,000 earmarked for the study effective 12/31/93\. However, Government subsequently secured Grant funding from Arab Fund\. Start up date for the study was delayed by civil war\. \. Agreement: Credit Agreement Section: 3\.01(e) Covenant Class: 9 Status: C Original Fulfillment Date: Revised Fulfillment Date: Description of Covenant: Borrower to cause the emergency reconstruction unit to prepare and furnish to Borrower and IDA quarterly progress report\. Comments: \. Agreement: Credit Agreement Section: 3\.03 Covenant Class: 5 Status: C Original Fulfillment Date: 01/31/92 Revised Fulfillment Date: 12/31/92 Description of Covenant: Borrower to select each beneficiary to receive a new low-cost housing unit on the basis of eligibility criteria; and each beneficiary will be required to pay to the Borrower the equivalent of at least 15% of monthly income of beneficiary's family income until total cost of housing unit is paid in full\. Comments: Beneficiary selection was carried out according to the agreed eligibility criteria\. Despite Government's commitment to cost recovery, recent civil strife, however, has delayed the process\. \. Agreement: Credit Agreement Section: 3\.04 Covenant Class: 5 Status: C Original Fulfillment Date: 02/28/90 Revised Fulfillment Date: Description of Covenant: Borrower to select rehabilitation works to be carried out under Part A of the Project on the basis of criteria acceptable to IDA\. Comments: Rehabilitation works for all four sectors (health, education, housing and agriculture) have been selected and approved by IDA\. 22 Implementation Completion Report Table 9\. Status of Legal Covenants (Cont'd) Agreement: Cedit Agreement Section: 3\.05 Covenant Class: 5 Status: C Original Fulfillment Date: Revised Fulfillment Date: Description of Covenant: Borrower to review with IDA, not later than December I of each year, on the basis of progress reports prepared by Borrower and an annual action plan: (a) progress made in implementation of Project; and (b) the multi-sectoral investment program and financing plan for the Project during the next calendar year\. Comments: The second UNDP/IDA/Government Tripartite Review to discuss the status of project implementation was held in Sana'a on August 2\. 1992\. UNDP has extended the closing date of their project by one year and a half, to December 31, 1993\. \.I\. Agreement: Credit Agreement Section: 3\.06(a) & (b) Covenant Class: 10 Status: SOON Original Fulfillment Date: 06/90 Revised Fulfillment Date: Description of Covenant: Borrower to select consultants to carry out flood preparedness and mitigation study, which should be completed no later than 1/1/92\. Comments: IDA cancelled funds for this study effective 12/31/92\. Govemment, however, has subsequently reactivated interest in the study after securing $500,000 of grant funding from the Arab Fund\. \. Agreement: Credit Agreement Section: 3\.06(c) Covenant Class: 10 Status: NYD Original Fulfillment Date: 03/92 Revised Fulfillment Date: Description of Covenant: Based on conclusions and recommendations of flood preparedness and mitigation study, and IDA comtnents thereon, Borrower to commence implementation of such study\. Comments: The Government has secured $500,000 of grant funds from the Arab Fund to finance the study\. The start of the study was delayed by civil war\. \. Agreement: Credit Agreement Section: 5\.01 (b) Covenant Class: 5 Status: C Original Fulfillment Date: 12/89 Revised Fulfillment Date: 02/90 Description of Covenant: UNDP Grant Assessment to be executed on behalf of Borrower and UNDP\. Comments: Special condition of effectiveness which has been met\. \. Implementation Completion Report 23 Table 10: Compliance with Operational Manual Statements Note: There is no evidence of non-comnpliance\. 24 Implementation Completion Report Table 11: Bank Resources: Staff Inputs (in Staffweeks) FStage of Project Cycle Planned Revised J Actual Through appraisal 22\.0 26\.0 25\.8 Appraisal-Board 28\.0 31\.0 30\.9 Board-Effectiveness 4\.0 9\.0 8\.3 Supervision 60\.0 59\.0 55\.8 Completion 8\.0 8\.0 4\.014/ Total 122\.0 133\.0 124\.8 14/ Estimate\. Implementation Completion Report 25 Table 12: Bank Missions T I ~~~~~~~~~~Rating Month! No\. of Days in Imp\. \| Devt\. Special- Mission 1Year staff field Status Inipact ization Types of problems 7hrough appraisal: 05/89 2 12 CO/EC/FA Reconnaissance Mission #1 Appraisal-Board: 09/89 6 20 CE/EC/FA Appraisal Mission (2) /HE/IE Board-Effectiveness: 02/90 2 7 1 1 FA/HE Mission #1 Effectiveness- Completion: Supervision Mission #1 05/90 2 8 1 1 IE/HE Mission #2 08/90 1 20 2 2 FA Lack of counterpart Mission #3 03/91 1 21 2 2 IE funds Mission #4 05/91 2 15 2 2 FA/HE Mission #5 10/91 3 16 2 2 FA/IS/AS Mission #6 03/92 1 7 2 1 FA Mission #7 07/92 3 15 2 1 AS/FA/IS Mission #8 10/92 2 12 2 1 FA (2) Mission #9 05/93 1 2 2 1 HS Mission #10 10/93 2 13 1 1 FA/HE Mission #11 05/94 1 14 1 1 FA Completion: Mission #1 03/95 1 3 HS HS FA Notes: HS = Highly Satisfactory AS = Agricultural Specialist CE = Inst\. Adviser/Civil Engineer CO = Country Officer EC = Economist FA = Financial Analyst HE = Housing/Education/Health Specialist IE = Irrigation Engineer 26 Appendix IMPLEMENTATION COMPLETION REPORT REPUBLIC OF YEMEN EMERGENCY FLOOD RECONSTRUCTION PROJECT (CREDIT 2073-YDR) APPENDICES Appendix A: Supervision/Completion Mission of March/April 1995 Aide-Memoire\. Appendix B: Borrower's Final Evaluation Report on the Project (not received yet)\. Appendix C: Map - IBRD 27077 Appendix 27 APPENDIX A (Aide Memoire - pages 28-33) 28 Appendix REPUBLIC OF YEMEN EMERGENCY FLOOD RECONSTRUCTION PROJECT (CREDIT 2073-YDR) Aide Memoire 1\. This Aide Memoire provides a summary of the latest implementation status of the Emergency Flood Reconstruction Project (Credit 2073-YDR), and the findings and recommendations of the IDA mission which supervised this project from March 27, 1995 to March 30, 1995 prior to drafting of the Implementation Completion Report (ICR)\. IDA was represented by Mr\. Suhail Jme'an, Task Manager, and Ms\. Josephine Masanque, who joined the mission from Tarim on March 29, 1995\. Mr\. Alastair McKechnie, Division Chief, joined the mission briefly while in Aden\. The mission wishes to express its gratitude to Mr\. Abdulla Abaddan, Deputy Minister for Planning and Development, the Ministry of Planning, Aden Branch (MPDAB)and Dr\. Kamal Abdul Rahim, National Coordinator and Project Director, for his assistance and hospitality extended to the mission\. The IDA mission discussed the findings and conclusions of this Aide Memoire with Messrs\. Abadda\. and Kamal Abdul Rahim\. Meetings also took place at the conclusion of the mission in Sana'a with Dr\. Jaffer Hamed, Deputy Minister of Planning and Development, Sana'a, to review the findings of the mission and proposed actions to be taken\. Phya4cal Implementation 2\. At the conclusion of the Credit, all the physical components of the project were satisfactorily completed, handed-over to the relevant government agencies before June 30, 1994, and since then have been operational with the exception of rehabilitation of Abboud Secondary School, Aden, where the contractor has not performed due to financial dufficulty\. This contract is about 58% complete\. The mission was informed that the Project Unit intends to terminate the contract for non-performance and peruse the contractor through the legal channels\. Status of Disbursement and Procurement 3\. This project recently went through difficult circumstances; soon after the previous supervision mission (November 1993) and after the approval of the closing date of the Credit to 'June 30, 1994, the Project Director left after completing his contract term at a time when most works contracts were at or nearing completion\. During that time final claims from contractors for completed works were not processed and no arrangements for the payment of retention monies against bank guarantees were made\. Shortly after the formal appointment of the new Project Director (March 1994), the war broke out\. Because of extensive looting during the war, it took long time after for the Project Unit to reassemble all the necessary documentation for the preparation of withdrawal applications (WA) for disbursement against works that were completed and handed-over prior to the closing date of June Appendix 29 2/3 Aide Memoire March 30, 1995 30, 1994\. Annex 1 attached describes in details the outstanding balances owed (retention monies) to various contractors totalling YR 4\.9 million (US$ 0\.27 million)\. IDA's share of this would be YR 4\.018 (US$ 0\.223 million)\. The mission recommends that IDA favorably consider disbursing against these contracts given the preceding difficult circumstances\. 4\. Regarding the additional procurement of: (i) electrical equipment and materials; (ii) three sewage jetting tankers and two cesspool emptier tankers; and, (iii) school furniture to compensate for the damages inflicted by the February 1993 floods, all the contracts were delivered prior to designated closing date of December 31, 1994 and subsequently distributed and fully operational, except for one contract (see Annex 2 for details)\. The material under this contract (procurement of Low-Voltage Cables) was delivered to Hodeidah Port on 'January 12, 1995, from Jeddah Port, Saudi Arabia, after its designated closing date of December 31, 1994\. Although the goods were ready for shipment by early -November 1994, but because of the deteriorating political and military situation at the Yemeni-Saudi boarder there were no vessels going to Yemen\. The mission expressed understanding and would recommend that management favorably consider disbursing against this contract in view of the events\. 5\. The other pending procurement issue includes the procurement of two sewage jetting tankers, which arrived to the Port of Hodeidah during the war and for which the Government of Yemen agreed that the supplier receive direct payment from IDA for 90% of the value of the goods against shipping documents and the remaining 10% will be paid against delivery and acceptance documents\. The mission was informed that up till now the two trucks have not been delivered to the proper authorities despite clearance from Hodeidah Port\. Several formal requests by the Project Unit to the supplier to deliver the two trucks were not successful\. The mission expressed strong concern and raised the matter with the MPD (both in Aden and Sana'a) and urged that they instruct the supplier to live up to his contractual obligation\. Inability of the Government to force the supplier would otherwise be considered in breach of Section 3\.01 of the Credit Agreement\. Other Matters 6\. The mission was given a copy of the audited statement for 1993 the project accounts which were reviewed and deemed satisfactory\. The mission was also given supporting documents needed for the preparation of the Implementation Completion Report (ICR)\. 7\. The preparation of the ICR was discussed with the Project Director and a copy of recently completed ICR was also provided The following action plan was agreed to: 30 Appendix 3/3 Aide Memoire March 30, 1995 (1) IDA will draft Parts I and II and review them with the Borrower and other donor0 by the middle or May 1993\. (2) The Project Dircutor will draft tnw Borrower's Final Evaluation Report on the Project and send it to IDA for review by end of May 1995\. (3) The 1CR will be fin4lized and issued by June 30, 1995\. 8\. It waa agreed that the mission wQuld also follow-up in Sana'a on the issues'of the training under the UNDP-financed component and the availability of the grant funding for the Flood Preparedness and Mitigation Study in Sana's\. 9\. The following lists dooumsnts receiVed by the misuions (1) 1993 audited project accountS\. (2) An offioial letter from the project unit requesting COCA to prepare the 1994 audited project accounts\. (3) Official beneficiary list for the 50 houses in Ghaida, \.1Mahara Governorate\. (4) tLiat of furniture distribution to damaged schools\. (5) Quarterly Progreso Report #15 for the period ending in June 30, 1994\. (6) List of the medical equipment Supplied by UNICEF and their distribution to area hospitals (7j Documents indicating that goods under Special Commitment t000013 were ready for shipment from Jeddah Port in late November 1994\. Proparad and signed in Aden, Republic of Yemen April 2, 1995\. Tk ah \. age r Dr Kamal Abdul Rahim /t/ s- IDA aI National Project Coordinator and Project Director Smerqency Reconstruction Unr\.t Appendix 31 Annex 1 Page 1 of 3 Details of works contracts comRleted before June 30\. 1994 with remaining outstanding balances 1\. The following paragraphs describe details of various contracts for which all works were completed prior to the closing date of June 30, 1994, and for which the ERU is requesting payments by IDA for the retention monies of 5% owed to the contractors: 1\. The contract for the construction of 180 houses at Al- Shihir (by Messrs\. Bakerman and Basibaa): all works were completed and handed-over in December 1993\. According to the ERU records, the contractor was still owed YR 1,824,034 as a balance of the 5% retention money of YR 3,624,034 to be financed by IDA\. It is understood that the contractor was al4ready partially paid YR 1,800,000 from the Special account (chk # 049904)\. However the ERU could not settle the balance due still owed as the SA did not have enough funds\. 2\. Similarly, the contract for the construction of 70 -houses at Mafa'a (by same Messrs\. Bakerman and Basibaa): all works were completed and handed-over in February 1994\. The 5% retention money owed by IDA (70% of the total retention amount)is YR 1,042,678\. 3\. The contract for the construction of 50 houses at Al- Ghaida (by Messrs\. Public Corporation, Al-Mahara): all works were completed and handed-over\. Outstanding balance is YR 1,258,279 related to claims for additional work and retention money, IDA's share of this is YR 880,795\. The ERU agreed to provide documentation to support the additional works\. 4\. Regarding the schools rehabilitation contracts listed below, all the monies owed by IDA are retention monies for works completed and handed-over before June 30, 1994: 32 Appendix Annex 1 Page 2 of 3 School Name Total Retention (Contractor) retention in owed by IDA YR in YR Shayef Unity 173,180 121,226 (Ali Al-Hamid) Al-Oudy Unity 76,400 53,480 (Public Corporation) Goal Raida Unity 354,350 248,045 t(Abdulla Kharma) Hashim Abdulla 130,388 91,272 Unity (Electro Services & Contracting) Lutfi Secondary 259,342 181,539 (Electro Services & Contracting) l It should be add here that for the Hashim School the amount above includes, in addition to the retention money, an amount of YR 84,594 for progress payment request f2 which was not paid at the time as the SA did not have sufficient funds\. 5\. Regarding the Hospitals/Health centers rehabilitation contracts listed below, all the monies owed by IIAA are retention monies for works completed and handed-over before June 30, 1994: Hospital Name Total Retention (Contractor) retention in owed by IDA YR in YR Al-Nasr 324,832 227,382 (Al-Sayed Zain and Moh'md al- Iby) Modya see note 183,557 (Ali Banafa) below Mirath Health 3,156 2,209 Center (Ali Ghaleb) Azzan 60,823 42,576 (Moh'md Banafa) I_I Appendix 33 Annex 1 Page 3 of 3 It should also be mentioned that for the Modya Hospital, all works were completed and handed-over to the relevant government entity in September 1993\. Subsequently, the contractor was paid 30% of the 5% retention money of which IDA's share was YR 78,667 for the SA\. However, the contractor is still owed by IDA a balance of YR 183,557\. 2\. Regarding the Special Commitment G00013 for the procurement of Low-Voltage Cables from Saudi Arabia, the materials were ready for shipment in late 1994 but the supplier was apparently unable to ship, although material was stored in Jeddah Port, (evidenced by extending the effectiveness of the LC) because of the political and military skirmishes along the Saudi-Yemeni boarder\. 34 Appendix APPENDIX B (NOT YET RECEIVED) Appendix 35 APPENDIX C (Map - page 36) IBRD 27077 42 43 U 45 AU 47 A8 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~19 O\. 5\. 152 - 53\. M4\. FLOOD RECONSTRUCTION PROJECT s A U D I A R A B I A MAJO9 1989 FLOOD AF9ECTD AREA5 - MN ROADS -- a - HoJSRN0 uLN1 CINSTWCIED - SECONDArY ROADS 7 SCHOOLS REHABILTATED 4 INTERNATA14AI AJR9OTS , M A N C HOSPITALS REKAZLTATED SEA P' \.S S\. cc HEALTH uNrYS/CENERS REHANILTATED W AD CEI,m \ r - REHAELITAT1ON 0F WAD KASSAN PiCMNCE CENIERS MI\. 5h~~~~~\.q~~\.q I ~4-6 Wk- A\. \. \.1\.W\. NATI094AL CAI9TAL 17~ - GC G_ VERNO 5ATE IWUNDAJ ES v-\. ~~i\. ***\.\.*****T%ONA BaIE ALMAHARA ' 7' < SAADAH _-6 ~~~ ~~~, \. S~~~~~~~I~1 __ \ AL JAWA LF A6 AHJJAH I \.-t MOI\.oaA I HADRAMOUT 13- - ASS V N A+ ~~~~~~~~~jA 8A MHODE\.iD 4 ,SH BWA-) ,\. AJ ~ ~ ~ ~ AE -~~~~~~~~~~~~~~~~~DA -\. A )Xb,Ai S G U L F O F A D E N js\. IBAdD d\. I 1\. \ tX z $TAt 7 i - 0 2j5 50 75 1001 u >, a \.- o; «o ' :o_ I,Socotr 3\.~~~~~~~ LLN 1995 I MA:L tI M Report No: 14683 Type: ICR	REVIEW
P001755	ï»¿ ICRR 11638 Report Number : ICRR11638 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/25/2003 PROJ ID : P001755 Appraisal Actual Project Name : Agricultural Trading And Project Costs 6\.90 5\.14 Process Promotion Pilot US$M ) (US$M) Project Country : Mali Loan/ Loan US$M ) 6\.0 /Credit (US$M) 5\.08 Sector (s): Board: RDV - Agricultural Cofinancing 0\.10 0\.49 marketing and trade (94%), US$M ) (US$M) Central government administration (4%), General finance sector (2%) L/C Number : C2737; CP921 Board Approval 95 FY ) (FY) Partners involved : Canadian NGO (CECI), Closing Date 03/31/2001 12/31/2002 CIDA (Canada), Japanese Government Prepared by : Reviewed by : Group Manager : Group : Nalini B\. Kumar John R\. Heath Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The project was a five-year pilot that was to address key sectoral constraints to private investment in agricultural processing and marketing, focus on capacity building and transfer of know -how to the private sector through information networks, training, specialized technical assistance and study tours \. The project's development objectives were to : a) enhance the technical and managerial skills of private entrepreneurs in the agricultural trading and processing sub-sectors; b) demonstrate the feasibility of alternative export channels and expand the use of low -cost processing and storage technologies; (c) help entrepreneurs identify and access new markets for their products; d) facilitate the development of business relations between private agricultural trading /processing enterprises and formal and informal financial institutions; e) help the Chambers of Agriculture and professional association increase their capacity to deliver demand -driven support services to private entrepreneurs \. The project objectives were not revised during implementation \. b\. Components The project had four components : a) Decentralized support in Sikasso, Segou and Mopti Regions (base cost US $ 2,500,000, 48 percent of actual costs) ; b) Support packages to sub -sectoral professional associations (base cost US $ 1,438,000, 27 percent of actual costs); c)Agency management and agricultural processing and marketing information exchange network; (base cost US $ 1,084,000, 21 percent of actual costs); and d) Access to credit (base cost US $ 93,000 1\.8 percent of actual costs)\. The project components also did not change during implementation \. c\. Comments on Project Cost, Financing and Dates The project was appraised in November 1994, approved in June 1995 and became effective in April 1996\. Mid term review (MTR) took place in September 1998 and the project closed in December 2002, 20 months behind schedule\. Total project costs at appraisal were US$ 6\.9 million of which the IDA share was to be US $ 6 million, the Canadian NGO CECI was to contribute US $ 0\.1 million and the government and beneficiaries, US $ 0\.80 million\. Actual project costs were US $ 5\.14 million of which the IDA share was US $ 5\.08 million, Government and beneficiaries contributed US $ 0\.06 million, the Canadian NGO CECI contributed US $ 0\.09 million\. In addition CIDA (Canada) and the Japanese government provided US $ 0\.3 million and US $ 0\.1 million respectively\. CIDA and the Japanese contributions were not originally included in project costs \. 3\. Achievement of Relevant Objectives: The project was an ambitious pilot operation \. It is reported to have achieved most of its objectives though it is difficult for the Evaluation Summary (ES) to actually assess how far each of the specific development and long term objectives were achieved because of the inadequate M&E \. 4\. Significant Outcomes/Impacts: The project provided significant promotional and technical assistance to producers, traders and exporters by organizing marketing campaigns and agricultural fairs \. It also helped establish quality standards and market databases; It helped create favorable conditions for the strengthening of a significant number of professional associations; Outputs of potatoes, onions and tomatoes are reported to have increased; It demonstrated the feasibility of alternative export methods, particularly for mangoes and assisted merchants in identifying new markets; It successfully catalyzed new partnerships between private entrepreneurs and financial institutions; It strengthened the Chambers of Agriculture providing them with the capacity to launch commercial activities in the three regions; 5\. Significant Shortcomings (including non-compliance with safeguard policies): Project monitoring and evaluation became operational only two months before project ended; The accumulated information, studies and comprehensive documentation were not made available to the beneficiaries for various reasons like unoperational websites, lack of distribution of studies etc \.; Though the agribusiness entrepreneurs' associations were created they are not fully operational as they lack business plans and financial resources; The project failed to finance construction and rehabilitation of wholesale market facilities, a critical need in all the three regions; There was lack of coordination between project and other related activities going on in the field supported by other projects and agencies; 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Satisfactory [the ICR's 4-point scale does not allow for a "moderately sat\." rating]\. OED rates a project as moderately satisfactory when it is expected to achieve most of its relevant objectives but with significant shortcomings\. The shortcomings noted under section 5 are significant\. Institutional Dev \.: Modest Modest Sustainability : Likely Likely Bank Performance : Satisfactory Unsatisfactory The ICR itself rates the Bank's overall performance as marginally satisfactory \. The ES downgrades it to unsatisfactory for several reasons: (i) the project had several design weaknesses as noted by the ICR para 3\.5; (ii) the project faced several risks and strong monitoring was to play a critical role in the management of these risks\. The Bank should have taken adequate steps to ensure that monitoring and evaluation became operational particularly since this was a pilot operation; (iii) the Bank should have given more attention to clarifying the institutional interface between the Government and the APCAM (Assembly of the Chambers of Agriculture) which was entrusted with the task of project execution; (iv) the Bank should have been more vigilant and ensured adequate financial management of the project; Borrower Perf \.: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: The ICR has two important lesson on monitoring and adequate beneficiary participation which are repeated here : First, close monitoring of a project through an independent body is vital to its execution \. Second, beneficiaries need to be involved in the planning and execution of project activities \. The ES adds the following lessons : (i) In projects with a clear poverty alleviation objective, development objectives should be framed at least partly in terms of poverty alleviation \. This should be done in a way that is monitorable and should be backed up in design by a monitoring and evaluation system capable of measuring poverty impact \. (ii) Building the partnerships between the private sector and financial institutions is just the first step \. More time and resources are needed to strengthen and consolidate gains so that their sustainability over the long run is assured \. 8\. Assessment Recommended? Yes No Why? (i) To verify the outcome, sustainability and institutional development impact; (ii) to provide input for the upcoming CAE on Mali\. 9\. Comments on Quality of ICR: The ICR is rated satisfactory but has three significant shortcomings : (i) It is not clear to the reader how the ICR Annex 1 table 3\.1 on key performance indicators is related to Table 5 in the appraisal report\. The indicators do not match; (ii) It is not clear why the aide memoire for the MTR has been attached to the ICR \. The aide memoire for the ICR mission would have been more relevant \. Moreover it would have been helpful if the Aide memoire and the borrower's contribution to the ICR were available in English; and, (iii) the ICR does not explain why CIDA and Japanese government funds were included when they were not originally included in project costs;	REVIEW
P001730	ï»¿ ICRR 12217 Report Number : ICRR12217 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/06/2005 PROJ ID :P001730 Appraisal Actual Project Name :Mali Transport Project Project Costs 305\.7 529\.5 US$M ) (US$M) Country :Mali Loan/ US$M ) Loan /Credit (US$M) 65 59\.5 Sector (s):Roads ): and highways; US$M ) Cofinancing (US$M) 192\.9 374\.5 Railways; General transportation sector L/C Number :C2617 FY ) Board Approval (FY) 94 Partners involved : BOAD, FAD, FED, IsDB, Closing Date 06/30/2001 12/31/2004 OPES, Canada, France, Germany Evaluator : Panel Reviewer : Group Manager : Group : Kavita Mathur Ridley Nelson Alain A\. Barbu OEDSG 2\. Project Objectives and Components a\. Objectives The IDA project was a portion of a larger multi-donor sector program\. The objectives of the program and project were to: (a) strengthen the sector management and performance through reorganization and local capacity building; (b) restructure the transport sector's parastatals; (c) modify the regulatory and institutional framework in order to promote increased private sector participation in provision of services and the execution of works; (d) rehabilitate and maintain a priority network of transport infrastructure; and (e) improve the transport operations efficiency and reduce transport costs\. b\. Components (or Key Conditions in the case of Adjustment Loans ): The program had the following four components: (a) capacity building and training component (appraisal US$5\.6 million, to be fully financed by IDA, actual US$11\.4 million, IDA US$4\.5 million) focusing on support for the implementation of sector policy measures, the modernization of sector administration, the reorganization of transport services, and in particular the liberalization of the transport industry, the reorganization of road maintenance institutions, work methods and resources allocation mechanisms, the restructuring of public enterprises and the improvement of the efficiency of international transport corridors\. (b) road component (appraisal US$208 million, IDA contribution US$40 million, actual US$462\.5 million, IDA US$44\.2 million) focusing on (i) routine maintenance of a priority network of 9,000 km; (ii) periodic maintenance of 778 km of paved roads, 818 km of earth roads and 615 km of classified tracks, and rehabilitation of 383 km of paved roads, 857 km of earth roads and 660 km of classified tracks in the north\. The IDA project was to finance periodic maintenance/rehabilitation of 413 km of paved roads and 188 km of earth roads; (iii) the improvement of 500 km of rural tracks outside the main agricultural areas, and the purchase of four ferries to serve zones that lack reliable road access\. The IDA project was to finance 123 km of rural tracks and the procurement of two ferries; (iv) the implementation of specific works to improve the environment and safety along selected project roads; (v) the improvement of Bamako's main urban road system; (vi) technical studies and supervision; and (vii) the purchase of equipment for routine road maintenance\. (c) railway component (appraisal US$32\.5 million, IDA contribution US$ 10\.2 million, actual US$31\.6 million, IDA US$10\.8 million) focusing on (i) studies, supervision of works and technical assistance to improve traffic organization and set up new bodies to facilitate technical and commercial integration of international freight and passenger services with the Senegal railways (SNCS); (ii) execution of the first tranche of a 10-year track rehabilitation program, and the transfer of the freight terminal from Bamako to Korofina, (iii) improvement of the telecommunication system, (iii) purchase of three medium capacity locomotives and rehabilitation of equipment; and (iv) rehabilitation of logistical equipment\. The IDA project was to finance studies and technical assistance, construction of the Bamako-Korofina terminal and the acquisition of ballast for the track rehabilitation program\. (d) airport component (appraisal US$7\.8 million, to be fully financed by other donors, actual US$23\.9 million) to finance (i) installation of safety equipment at the Timbuktu airport; (ii) improvements in the Bamako airport consisting of building a fence around the airport; and (iii) technical studies for possible future investment programs for airports in case of an acceptable rate of return and favorable macro-economic context\. c\. Comments on Project Cost, Financing, Borrower Contribution, and Dates The initial program/project costs were estimated at US$305\.7 million\. At the end of December 2001, the projectâs initial closing date, financing obtained was US$ 473\.4 million\. As of December 2004, the actual projectâs closing date, project financing amounted to US$ 529\.5 million\. The additional US$ 56\.1 million obtained between 2001 and 2004 came from the Government (US$ 19\.7 million) to finance routine maintenance and the fence of the Bamako-SÃ©nou airport and from FED and AFD (US$ 36\.4 million) to finance periodic maintenance and rehabilitation of roads\. All cofinancing was to be on parallel basis, with each participating institution managing its own subprojects in accordance with its respective rules\. The project closed after a 3\.5 years delay because of the following reasons: (i) delays in the implementation of the physical investment component; (ii) to continue technical assistance services to the Government in support of the concessioning process; and (iii) to make available project resources to the concessionaire after the concessioning process was completed\. 3\. Relevance of Objectives & Design : The Program was designed around the Government's five year (1994-98) program of sectoral reforms contained in the Declaration of General Transport Sector Policy (DGTSP) which aimed at improving the sector efficiency in order to reduce transport costs, help the Malian economy (especially the competitiveness of exports) and stimulate the development of agriculture\. The project objectives were in line with the DGTSPâs objectives for the whole sector\. The project objectives remained relevant to the Country Assistance Strategies (CAS) (1998 and 2003) that were adopted during the project implementation period\. Issues highlighted were high costs of transportation and the need to integrate with West African States, reduce the states role and create conditions for increased private sector participation\. The development of basic infrastructure and productive sectors was the prerequisite Growth Pillar #3 in 2003 CAS\. The Bank intended to invest in the transport infrastructure as it considered it the driver of growth\. The project's institutional role was well designed\. The project preparation gave priority to policy dialogue and comprehensive set of policy reforms were agreed on with the Government\. 4\. Achievement of Objectives (Efficacy) : (a) Strengthen the sector management and performance through reorganization and local capacity building: Substantially Achieved\. The National Department of Highway (DNR) was restructured in 2002 to focus on planning of road works as opposed to the execution of works\. A second generation Road Fund was set up in 2000 and became operational in 2002\. A privately operated Control Center for vehicle inspection was established in 1995\. As a result, the annual number of cars subject to technical control significantly increased, 69,988 cars were inspected in 2004 compared to appraisal estimate of 8,000 at the time of appraisal\. The capacity of local contractors was strengthened through training offered under the project\. This facilitated the transition from road maintenance by force account to execution by contract\. The capacity of local staff in programming of road maintenance was also strengthened\. The Ministry of Equipmentâs training center (CPTP) was restructured into the National Training Institute for equipment and Transport (INFET) in 2001 to introduce commercial-type management and provide private-oriented training\. INFET provided training on road maintenance management, planning and execution, road safety, procurement and disbursement procedures to 625 trainees of which 350 from the private sector\. (b) Restructure the transport sector's parastatals: Partially Achieved\. A Public International Railway Company (SETI) was created but then liquidated because of coordination problems with the Malian and Senegalese railway companies\. The Governments of Mali and Senegal decided then to privatize the railway operations and to dissolve Mali Railways (RCFM)\. A Concessionaire was selected in February 2003 and the concession agreement was signed on September 29, 2003\. The concessionaire started its operations on October 1st, 2003\. Malian Navigation Company (COMANAV) was restructured in 1994, as planned in the DGPST\. The public works equipment leasing company was privatized into SLMTP (SociÃ©tÃ© de Location de MatÃ©riel des Transports publics) that was dissolved briefly after its creation because of managerial problems and the obsolete condition of equipment transferred from the public works department\. Air Mali was liquidated in 2003\. The Government launched twice a procedure to privatize the management of Malian airports but both procedures failed\. (c) Modify the regulatory and institutional framework in order to promote increased private sector participation in provision of services and the execution of works: Substantially Achieved\. The creation of the Road Fund provided a framework which promoted private sector participation in the execution of road works\. Since 2003, all road maintenance works are being executed by contract\. The target of 75 percent of road maintenance works executed by contract as defined in the project appraisal document is exceeded\. A Contracting Agency for Road Maintenance (AGEROUTE) was created\. The railway operations were privatized\. The vehicle inspection activities have been contracted out to a private contractor, Mali Technic System since 1995\. (d) Rehabilitate and maintain a priority network of transport infrastructure: Partially Achieved\. The project exceeded the targets for periodic maintenance - 2,173 km actual versus 2,211 km planned\. However, the targets for rehabilitation were not met - 1,056 km actual versus 1,900 km planned)\. A 2002 assessment of the road network condition found that 59 percent of paved roads, 69 percent of earth roads and 10 percent of tracks were in good to passable condition\. This compares to 88 percent, 53 percent and 52 percent in 1995\. There has been improvement in the condition of earth roads, however, the condition of paved roads and tracks decline largely as a result of insufficient resources allocated to their maintenance\. For tracks, resources were allocated on an ad-hoc manner to respond to emergency situations\. For paved roads, although budget resources allocated to routine maintenance were in line with targets agreed at appraisal, they remained insufficient compared to the needs until 2003 when they almost doubled\. Also, most donorsâ resources were allocated to paving of new roads resulting in lack of resources for periodic maintenance\. The ICR notes that based on reclassification of the network in 2004, 82 percent of paved roads and 34 percent of earth roads and tracks are in good, fair or passable condition\. This improvement appears to be mainly due to reclassification of the network and not due to major improvement of the network\. (e) Improve the transport operations efficiency and reduce transport costs: Partially Achieved\. As a result from the railway concession, railway traffic has increased to 465,000 tons in 2004 compared to 250,000 tons in 2003 and 2002, and 300,000 tons in 2001\. Rail tariffs being lower than road tariffs, and if this tendency remains, this increase in rail traffic contributes to reduce transport costs for shippers\. Delivery time for vehicles license has decreased from one month to two weeks\. The road transport cost on the whole network globally increased by a total 7 percent during the project period\. 5\. Efficiency : Economic Rate of Return of 35\.4% was achieved versus 28% at appraisal for the road component\. The ex-post ERR may be a little optimistic given the actual data on the deterioration reported recently\. The economic rate of return of the rail component was estimated at 23% at appraisal\. In view of the fact that RCFM was liquidated and railway operations were transferred to a private concessionaire, the actual rate of return was not calculated\. 6\. M&E Design, Implementation, & Utilization: No impact indicators were defined at project preparation\. However, during the preparation of a Medium Term Expenditure Framework, including a Public Expenditure Review for the transport sector, the Bank started a discussion with the Government on impact indicators of the transport programs\. Some measures were taken to improve data collection and analysis\. In 2002, a road data bank was set up in the Highway Department\. Later (in 2002) a Road Statistics Service (replacing the Road Data Bank) was set up in the National Highway Directorate to collect and analyze data on road condition\. In 2004, data on road condition were available for 12,576 km of roads, compared to 6,000 km at appraisal\. Also, the collection of data accidents in Bamako has improved since a database on accidents (BAAC, Bulletin dâAnalyse des Accidents Corporels) was put in place in 1997\. 7\. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative): The project was classified as a "B" project with limited possible environmental effects\. The Environmental Action Plan adopted by the Government in the DGTSP covered the key environmental actions to be taken\. During supervision, compliance with safeguards on environment is rated satisfactory but the overall safeguard management is rated unsatisfactory\. A transport environmental unit was created in the department of Sanitation and Control of Pollution and Nuisance in the Ministry in charge of Environment in 2003\. However, environmental measures implemented under the project were not monitored by the Government\. Capacity was not built to sustain environmental management\. Although environmental measures included in road contracts were implemented, there is no evidence that beneficiaries were consulted\. 8\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Satisfactory [The ICR's 4-point scale does not allow for a moderately satisfactory rating]\. Three project objectives (out of five) were partially achieved\. These include: rehabilitation and maintenance of a priority network of transport infrastructure, the restructuring of the transport sector's parastatals, and improving the efficiency of transport operations and reducing transport costs\. Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely The overall project sustainability is rated likely\. However, the sustainability of road investments is likely provided: (a) the government is able to raise road user charges (through increase in tolls), and (b) there is no proportional reduction in public funding for roads in coming years\. Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness \. 9\. Lessons: At appraisal, the Bank should take into account the differences in the pace of preparation of reform and investment sub-components to avoid implementation delays\. The project experienced significant delays during its first two years of implementation because even though significant progress was made towards sector reforms, the engineering studies and bidding documents were not available at the time of the Board approval\. Where projects that are financed by a large number of donors, the Government should assume leadership to coordinate the activities of the donors\. Also, as disbursement reporting is different from a donor to another, it might be useful to set up a coordinating unit in the Ministry of Transport to ensure monitoring of all donors activities, using specific procedures agreed upon by all donors\. Training should not last only as long as donorsâ resources are available but the Government should dedicate specific funds for training to ensure its sustainability\. Performance monitoring indicators along with baseline data are an important means of assessing project achievements and outcome\. Therefore, it is important to design performance indicators that are easy to monitor and to carry out systematically the mid-term review in order to timely assess the progress during implementation and to undertake the necessary corrective measures\. For successful privatization, among other things understanding the commercial viability of enterprise to be privatized is important\. 10\. Assessment Recommended? Yes No 11\. Comments on Quality of ICR: The ICR is well presented and covers most issues in an objective manner\.	REVIEW
P084604	ï»¿ ICRR 13791 Report Number : ICRR13791 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 05/01/2014 Country : Serbia Project ID : P084604 Appraisal Actual Project Name : Danube River US$M ): Project Costs (US$M): 22\.14 20\.73 Enterprise Pollution Reduction Gef Project (serbia) L/C Number : Loan /Credit (US$M): Loan/ US$M ): 22\.14 20\.01 Sector Board : Environment US$M): Cofinancing (US$M ): 7\.98 11\.39 Cofinanciers : Swedish Int'l Dev\. Board Approval Date : 05/12/2005 Coop\. Agency(SIDA); Closing Date : 03/31/2010 04/30/2011 Embassy of the Netherlands; (and local communities?) Sector (s): General agriculture fishing and forestry sector (40%); Central government administration (30%); Agricultural extension and research (20%); Agro-industry (10%) Theme (s): Pollution management and environmental health (50% - P); Environmental policies and institutions (25% - S); Rural policies and institutions (25% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Richard C\. Worden William R\. Sutton Christopher David IEGPS1 Nelson 2\. Project Objectives and Components: a\. Objectives: The objective of the project, as stated in the Grant Agreement (TF-054908) under Schedule 2 (p\.20), was: âto reduce nutrient flows (nitrogen and phosphorus) into bodies of water connected to the Danube River from selected Republic of Serbia enterprises \.â? The statement of the project development objective found in the Project Appraisal Document (PAD, p\.7), was: â that EU [European Union] acquis compliant measures for reducing agricultural nutrient pollution in the Danube River are adopted in selected ROS [Republic of Serbia] enterprises\.â? The PAD (p\.vi) also quotes the Grant Agreement statement of the PDO in a reference to Section B \.2, Annex 3 without specifying the names of the two nutrients\. The global environment objective (GEO) of the project is identical to the PDO as stated in the Grant Agreement, except that it does not specify the two nutrients by name \. The definition of the PDO as stated in the Grant Agreement will be used to assess the project in this ICR Review since it is the legally binding document \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: 1: Support to Policy and Regulatory Reform (estimated cost at appraisal: US$0\.22 million (m); actual cost: US$0\.50m)\. \. Strengthen the policy and regulatory framework that regulates nutrient run -off and discharges from livestock farms and slaughterhouses, in line with the European Union âs Nitrate Directive\. This component was revised on July 30, 2009 to focus on developing a strategy and action plan to transpose the Directive into local legislation (in-depth explanation provided in Section 4)\. 2: Investment in Nutrient Reduction (in water bodies ) (estimated cost: US$17\.69m; actual cost: US$18\.16m)\. Comprised of four sub-components: (a) investments in manure management in livestock farms; (b) investments in slaughterhouse animal waste management; (c) establishment of a Training and Information Center (TIC) for proper nutrient, manure and slaughterhouse waste management and training of inspectors; and (d) support to local advisory units to raise awareness among farmers and slaughterhouses of proper nutrient /manure and animal waste management practices \. Sub-component 2(a) was revised on November 9, 2007 to reduce the required 50-year design life of structures to a design life of 20 years to reduce costs, increased grant co -funding and the maximum contribution of GEF grants to demonstration farms, and expanded the geographical scope of project support aimed at increasing the pool of eligible and interested farmers and accelerating implementation \. Sub-component 2(b) was revised three times\. On February 20, 2008 meat-processing plants were added as beneficiary enterprises along with slaughterhouses and livestock farms since meat processing enterprises emit significant quantities of nutrient and other pollutants into the Danube \. On July 14, 2008 three state-owned rendering facilities were added as project beneficiaries and provided with collection and processing equipment to improve collection, temporary storage and processing of high -risk animal wastes\. On July 14, 2008 the percentage of grants supporting investments to slaughterhouses and meat processing plants was increased from 30% to 40% to provide greater incentives to undertake such investments \. On this same date (July 14, 2008), sub-component 2(c) was revised to significantly enlarge the target group of beneficiaries receiving training on nutrient management and other good agricultural practices in seven public agricultural high schools located in the demonstration areas \. 3: Water and Soil Quality Monitoring, Public Awareness Raising, and Replication Strategy (estimated cost: US$1\.26m; actual cost: US$0\.67m)\. \. There were three sub-components: (i) to assess the impact of the project interventions on water and soil quality in the Serbian Danube Basin; (ii) increase local communities, enterprises and policy-makersâ awareness of water pollution from livestock farms and slaughterhouses, and inform them of improvements made through the project; and (iii) devise a strategy to replicate the project interventions in other parts of the Danube River Basin in Serbia and beyond \. 4: Project Management and Project Impact Monitoring (estimated cost: US$0\.64m; actual cost: US$1\.40m)\. Support project management, including project coordination and administration, procurement, financial management and reporting, and carry out project results and outcome monitoring \. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost: The total estimated cost of the project at appraisal was US$ 22\.14m\. Actual expenditures were US$20\.73m, or 94 percent of this estimated amount \. Approximately US$460,000 of unpaid goods and services were outstanding at project closing, and US$ 588,000 of GEF and SIDA grant funds were cancelled \. Financing : This was a stand-alone Global Environment Facility (GEF) project financed with a GEF Grant of US$8\.62m (estimated at US$9\.02m)\. A co-financing grant from the Swedish International Development Agency (SIDA) for US$5\.46m (39% above the estimate of US$3\.93m) was pooled with the GEF grant without any specific earmarks, and a parallel grant from the European Agency for Reconstruction for US$ 1\.3m was used to procure several pieces of laboratory equipment for the Hydro -meteorological Service\. Finally, the Embassy of the Netherlands provided US$100,000 of co-financing to provide technical support and a study tour in Holland of similar livestock farms and slaughterhouses \. Borrower Contribution : There was a small expected counterpart contribution of US$ 0\.60 million; actual counterpart funding amounted to US$ 0\.57 million\. (Local communities contributed US$ 5\.92 million out of an estimated US$8\.46 million, or 70 percent, contribution at appraisal \. Dates: Dates The project became effective on December 15, 2005\. The Mid-Term Review was conducted on schedule in February 2008\. The project was extended twice : once on March 12, 2010 for nine months from March 31, 2010 until December 31, 2010, and then again on November 29, 2010 to extend the project for four months until April 30, 2011\. The Grant Agreement (GA) was restructured on the following occasions : â¢ On November 9, 2007 the Bank agreed to change the amounts and percentage of subsidies provided to livestock farms and slaughterhouses through project sub -grants in an amendment to the GA\. â¢ On February 20, 2008 the Bank agreed to amend all relevant sections and schedules of the GA to expand the universe of project beneficiaries to include meat -processing plants\. â¢ On July 22, 2008 in three separate amendments to the GA, the Bank agreed to procure equipment for three rendering plants, to pay for works and buy equipment for seven agricultural high schools in the project area, and to increase the grant funding for slaughterhouses and meat processing plants from 30 to 40 percent\. â¢ On July 30, 2009 the GA was amended to revise policy and regulatory reforms to focus on developing a Code of Good Agricultural Practices (CoGAP), and to develop a strategy and action plan to codify the EU âs Nitrate Directive into Serbian law\. â¢ On April 29, 2011 project proceeds were reallocated between project components to fully utilize remaining funds in the grant just prior to project closure \. â¢ Finally, on April 29, 2011 (the day before the project closed ), a final reallocation of both GEF and SIDA trust funds was made to redirect grant proceeds towards categories to complete project activities and finalize project payments\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: The Relevance of Objectives is rated as substantial \. The Country Assistance Strategy (CAS) for FY 2005 - 2007 did not emphasize environmental sustainability as an important issue among any of the three âpillarsâ? of the Bankâs strategy\. The CAS of 2005-2007 (p\. 18) barely mentioned agricultural pollution reduction or pollution of surface and groundwater sources by industrial, municipal, and agricultural sources under the âEnvironmental management and protectionâ? section of the second pillar to âCreate a larger, more dynamic Private Sector â? in the Strategy\. However, the Country Partnership Strategy for fiscal years 2008-2011 (in effect at the time of the project âs closing) explicitly mentioned the project under the sub -heading of âStrengthened Environmental Management â? of the third Priority of âManaging Disaster Risks and Promoting Environmentally Friendly Development â? (Annex 1, p\.36), consistent with Serbiaâs goal of eventual EU integration \. This included meeting EUâs Nitrate Directive requirements that encompass reducing nutrient -laden wastes discharged into receiving water bodies to EU standards\. The projectâs objective was also aligned with the priorities under Serbia âs Rural Development Program (NRDP) for 2011-2013\. Furthermore, the Governmentâs commitment to meeting its legal obligations under international agreements to protect the Sava River (in December 2002)and Danube River (it ratified the Danube Convention in 2004) was demonstrated by its efforts to support national implementing agencies in achieving changes in sectoral policies and activities to address trans -boundary degradation of specific water bodies in a coordinated, coherent manner \. The project also helped Serbia fulfill the goals of Operational Program (OP) 8 under the GEFâs International Waters Focal Area, and its commitments to the GEF BlackSea and Danube Basin Strategic Partnership on Nutrient Reduction \. b\. Relevance of Design: The Relevance of Design is rated as substantial\. The objective was clear, and the design of the project linking the expected outputs and intermediate outcomes to achieve it was logical and comprehensive \. Each one of the four project components and their planned activities addressed various aspects of the challenge posed by effluent discharges heavily contaminated with nutrients (and other suspended solid wastes) from livestock farms and slaughterhouses, and later amended to include meat processing and rendering plants \. And they were consistent with the three main concerns listed under the âKey Issues, Root Causes, and Threatsâ? (PAD, pp\.2-5) and the Governmentâs response of: (i) updating the legal / regulatory framework and making its enforcement capabilities credible, (ii) providing subsidized grants to environmentally-friendly agricultural practices, and (iii) reforming the countryâs agricultural advisory services to targeted groups\. Finally, the causal chain between inputs (funding and proposed activities), and outputs leading toward the projectâs objective was sound and realistic\. Structurally, it was decided to posit project activities and responsibilities with various Government entities \. Thus, project components dealing with agriculture were to be implemented by the ministry or agency in charge of agriculture (Ministry of Agriculture, Forestry and Water Management, MAFWM ) to ensure mainstreaming with agricultural policies, while soil and water quality monitoring would be carried out by the Soil Science Institute (SSI) and Hydro-meteorological Service (HMS)\. The Institute for Animal Husbandry was responsible for establishing the Training and Information Center (TIC) as part of its agricultural research and outreach work while the Ministry of Science and Environment was responsible for conducting targeted public awareness activities; and the Serbian EPA was responsible for storing, utilizing and reporting all water quality data generated by the project\.This institutional complexity is seen as having been a design weakness since âContinuing implementation challenges â? due to ineffectual inter-governmental coordination was noted by both the ICR (p\.11), and in IEGâs CASCR Review of Serbia (p\.2) for fiscal years 2008 to 2011 as an âunderestimatedâ? risk\. This design flaw would contribute to significant delays during the first three years of project implementation \. Finally, the TIC was intended to serve as a national knowledge resource base, accreditation and training center for trainers, extension agents, and students of technical schools, as well as for managers of livestock farms, slaughterhouses, and meat processing plants \. While far-sighted and useful in terms of strengthening agricultural advisory services and supporting the sustained use of environmentally -friendly agricultural practices in the future, the TIC (whose estimated and actual costs were not disclosed in the ICR ) was likely more extensive than what was needed to reduce nutrient loading levels from agro -industrial non-point sources\. 4\. Achievement of Objectives (Efficacy): The objective of the project was : âto reduce nutrient flows (nitrogen and phosphorus) into bodies of water connected to the Danube River from selected Republic of Serbia enterprises \.â? Rating : modest \. The PAD (p\.7) set forth several key indicators for measuring the achievement of its PDO and GEO (since these were identical)\.These included annual reductions of Nitrogen due to project interventions on 60 livestock farms (280 tons/year) and four slaughterhouses (150 tons/year) estimated at 430 tons\. This was a modest goal given that total nutrient loadings from livestock farms alone in Serbia was estimated to be around 16,000 tons per year (no such figures were given for phosphorous ), and that there were 240 slaughterhouses in Vojvodina alone, just one of five project intervention areas in Serbia with the highest concentrations of such installations \. Project interventions were expected to âsubstantiallyâ? decrease point (referring to meat-processing and rendering plants as well as slaughterhouses in this case ) and non-point sources (meaning livestock farms) of nitrogen and phosphorus (N&P) pollution loadings into water bodies connected to the Danube River from the participating enterprises (ibid)\. The only quantitative figures that are provided come from a sample of 100 livestock farms where annual âavoided lossesâ? of N&P were provided in a study conducted by ADAS UK Ltd (ADAS, 2011), which estimated avoided losses from these livestock farms at 172\.7 tons N and 23\.1 tons P (p\.3)\. This is far below the target set at 280 tons/year for N reductions on pig and cow farms \. This does not include N losses from the three point sources, nor was there a target set for P losses \. In terms of percentage reduction of N&P losses, it was stated that a â100% reductionâ? was achieved from three of the four pathways identified in the report \. However, this calculation did not include the nearly 96 tons/year of avoided losses from properly spreading manure on farmland due to the âlack of pre- and post-project farm practice informationâ? (ibid)\. Thus, it is not possible with the information provided to estimate the percentage reduction from the largest source (representing 56%) of total N flows, nor of the percentage reduction of P since no estimate of its total flow was provided (i\.e\., 23\.1 tons of P divided by an unknown denominator )\. In addition, no figures are provided of reduced N&P flows from the three project point sources : slaughterhouses, meat-processing and rendering plants, although some qualitative assertions were made regarding the contribution of these activities to reduce leakage into soil and groundwater leading eventually to targeted surface water bodies in project restructuring documents \. A number of other GEO Indicators and Intermediate Outcome Indicators were met or exceeded, while a few others fell short\. While these other indicators contributed to the PDO /GEO indirectly, none of them bore as directly on achieving the project âs objective as the reductions of N&P flow outcomes \. Most of the other indicators were outputs rather than outcomes, such as the number of farms awarded project sub -grants, establishing a Training and Information Center (TIC) for environmentally friendly agricultural practices and training certain numbers of relevant stakeholders, or transposing an EU Nitrate Directive into national law in Serbia (even though the exact form of its translation into Serbian national law was not specified, and in fact was amended to remove any reference to a specific legal instrument )\. Given the incomplete information provided in the ICR and in supporting project documents, it is only possible to state that the project made modest progress toward achieving its objective \. 5\. Efficiency: The efficiency of the project is rated modest for several reasons\. Most importantly, the objective of the second component (Demonstration Investment in Nutrient Reduction ), by far the largest of the project âs four components (US$18\.16 million out of US$20\.73 million, or 88% of total project expenditures ), was to demonstrate cost-effective methods by which livestock farms and slaughterhouses could reduce nutrient run -off and discharges into the Danube River and its tributaries \. These investments were supported through sub -grants made to farms and slaughterhouses meeting pre -established eligibility and selection criteria \. First, the annual reduction of Nitrogen (N) expected from project interventions on 60 large livestock farms and four slaughterhouses was estimated at 280 and 150 tons of N, respectively, for a total annual reduction of 430 tons\. A cost-effectiveness (C/E) study was undertaken for livestock farms only at project completion\. The estimated total reduction of N over the life of the project was estimated at 293\.5 tons (ADAS, p\.3) with a C/E ratio of roughly US$18 per kilogram (kg) N and US$105 / kg of phosphorous (P) reduction achieved\. This compared well to other similar agricultural pollution reduction project in the Danube River / Black Sea region, such as in Romania where communal manure management costs were US$ 30-40/ kg, or in Polandâs Rural Environmental Protection Project where C /E ratios ranged from US$18\.50 â $24\.80/ kg N reduction\. However, it was much higher than the C/E ratio for Moldovaâs Agricultural Pollution Control Project where the C /E figures were US$5\.96 per kg N reduction at individual project -supported (RISP APCP) farms, but much lower (US$3\.79/kg N) for three piloted âcommunity manure platformsâ? serving multiple livestock farmers simultaneously\. The corresponding C/E ratios for P were: US$5\.69/kg P and US$3\.36/kg P reduced (Moldovaâs Agricultural Pollution Control Project ICR, p \.25), much lower than the projectâs C/E ratio for P of US$85\.32 per kg of P reduction achieved\. Secondly, reduction targets for slaughterhouses were later dropped when the effluents from one slaughterhouse (Yuhor AD) were connected to a wastewater collection and treatment system (primary-treatment only), and small containers for collecting animal by -products were provided at two others (one of which also had the construction of a manure cement âpadâ? paid for by the project)\. Thus, figures for actual reductions of N at slaughterhouses were not provided in the ICR (since there was effectively no reduction in nutrients from them ), nor was the total number of slaughterhouses located along the Danube River and its tributaries provided (with one exception: it was noted that there are 240 slaughterhouses in one of the five project intervention areas of Vojvodina )\. These figures are needed if one wishes to contextualize the magnitude of the problem or the logical extension of the replication strategy required to extrapolate to the larger universe of slaughterhouses adversely affecting water quality\. The same holds true for meat processing and rendering plants \. No targets were set, and no figures of reductions were provided for meat processing plants since â[T]here were no nutrient discharge reducing investments [made] at the rendering plantsâ? (communications with Bank project staff, Oct \. 8, 2013)\. Thus, project expenditures were made on activities that did not contribute to the achievement of the PDO, making them superfluous and inefficient \. Operationally, the Project had three major restructurings, seven amendments to the GEF Grant Agreement (including two extensions of the closing date ), and four amendments to the Letter Agreement with SIDA \. The costs for two of the four project components (#1 and #4) were double their estimates at appraisal, while just over half the estimated total for Component 3 (Water and Soil Quality Monitoring, Public Awareness Raising, and Replication Strategy) was actually spent, even though its significance given the comments above should have been apparent\. In sum, the project appears to have had only a modest impact on reducing overall nutrient flows from entering the Danube River or its tributaries, which came at a high cost relative to other similar projects in the region, nor did it provide a cost-effective model that was either politically or economically viable to replicate on a larger scale\. Operationally, it was beset by âsevereâ? implementation delays and challenges, and was frequently restructured and extended through amendments that inefficiently used project time, effort, and resources \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re -estimated value at evaluation : re- Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The Relevance of Objectives was rated substantial due to its direct contribution to the Bank âs CPS with Serbia at the time of project closure, which helped Serbia meet its technical and legal requirements to achieve equivalent water quality standards for accession to the EU, and its commitments under the GEF âs Black Sea and Danube Basin Strategic Partnership on Nutrient Reduction \. Relevance of Design was also rated Substantial due to the logical causal links in the Results Framework between inputs, outputs, and expected outcomes in achieving the projectâs objective, which was clearly stated and measurable \. The projectâs efficacy in achieving its narrowly stated nutrient reduction targets for selected Serbian enterprises was rated modest due to incomplete information provided about reductions in nutrients (N&P) achieved\. Efficiency was also rated modest because project investments did not demonstrate cost -effective methods for achieving reductions in nutrient discharges nor was the project implemented efficiently and experienced multiple delays, grant amendments, and extensions\. Overall, the project had significant shortcomings \. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: The most compelling reason cited in the ICR for the Government continuing to provide financial and technical support to livestock farms and other meat processing industries was the possibility of sanctions for infringement of the EUâs Nitrate Directive\. While reductions achieved on livestock farms may be replicated elsewhere in Serbia (although no evidence of this was provided in the ICR ), there is no compelling reason to expect an increase in the Governmentâs interest or financial ability to make expensive investments in wastewater treatment plants or to require in-situ treatment options (such as anaerobic digestors or special pre -treatment facilities for agro-industrial wastes) for slaughterhouses, meat-processing or rendering plants since the demonstration effect of cost-effective project interventions was not convincingly made, as evidenced by the lack of follow -up of the National Replication Strategy\. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: a\. Quality at entry: The strategic relevance and design of the project by the Bank âs project team complemented and built upon a dozen other nutrient reduction Bank projects located elsewhere in the Black Sea and Danube River basin region\.The Bank staff complied with social and environmental due diligence requirements by conducting environmental and social assessments to determine which safeguard policies to trigger, and to identify Serbian training needs to comply with Bank financial management, procurement, and disbursement procedures\. A financial feasibility study undertaken at appraisal on the ability of recipients to pay for nutrient reduction investments was used to set the levels of grant support needed, which were fine -tuned later during implementation\. However, the quality of the Bank âs performance at entry was seriously flawed by its failure to establish an adequate baseline for both target nutrients (N&P) across all targeted point and non -point sources of contamination into the Danube River Basin within the M&E system \. This was a major shortcoming because it precluded the projectâs ability to adequately measure the achievement of the PDO /GEO\. The Bank also shared responsibility with the Government for not having done a better job of identifying local regulatory standards and processes (e\.g\., building code requirements, construction permits and licenses, and wastewater treatment standards ) that might block or impede project progress \. And the Bankâs performance may have benefitted from having designed a simpler institutional structure to minimize the coordination required among the half-dozen different Government implementing partners involved \. at -Entry Rating : Quality -at- Moderately Unsatisfactory b\. Quality of supervision: The Bank acted creatively in responding to low disbursement rates by increasing the levels of subsidies provided to livestock farmers, slaughterhouses, and meat processing industries to attract more interest among potential project beneficiaries \. This also applied to the decision made in mid -2008 to extend project subsidies to meat processing and rendering plants, and agricultural extension training services to seven agricultural technical training schools located in project areas \. Bank project staff also complied with fiduciary requirements and safeguards policies, and conducted 15 supervision missions during the five years of project implementation, submitting Aides Memoires and ISRs with appropriate GEO and IP ratings \. However, there were three flaws with the Bank âs performance during supervision \. First, the initially low disbursement rate (15 percent by the time of the MTR in early 2008 when it was targeted to be 50 percent) should have been flagged earlier, and solutions developed more rapidly in response \. Second, the Bank should have dealt more proactively to mitigate implementation delays caused by unclear or unspecified local regulatory permitting and licensing requirements and procedures \. Most importantly, the Bank undertook some additional activities with limited relevance to the PDO while dropping others with obvious impacts on nutrient levels in the Danube River and its tributaries \. In addition, the project did not gather the required information to fully measure the achievement of its project objective, especially once specific targets for percentage reduction in N&P loadings were included in the Results Framework \. Quality of Supervision Rating : Moderately Unsatisfactory Overall Bank Performance Rating : Moderately Unsatisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: The Governmentâs commitment to the projectâs objective was demonstrated by the fact that it met its financial obligations to the project (95\.6%), and through its ratification of the Danube Convention in 2004\. In addition, the Ministry of Finance provided a substantial in -kind contribution through tax exemptions on goods and services (worth over US$2\.4 million)\.The Government passed the Law on Environmental Protection and several new laws on environmental assessments and pollution prevention and control (IPPC)\. And it established the inter-ministerial Project Technical Advisory Committee (PTAC) to provide strategic direction and oversight for the project; approve annual work programs,procurement plans, and sub -project selections; ensure coordination of project activities among different Government agencies; and oversee project monitoring, evaluation and reporting (MRV) activities\. Government Performance Rating Satisfactory b\. Implementing Agency Performance: The Project Implementation Unit (PIU) within the Ministry of Agriculture, Forestry and Water Management (MAFWM) performed its operational functions well, and complied with Bank fiduciary controls and reporting requirements\. The PIU and Local (Agricultural) Advisory Units (LAUs) were praised for the high quality of support they provided, according to the beneficiary survey (ICR, Annex 5)\. The Ministry succeeded in attracting additional co-financing from the Swedish International Development Agency (SIDA) to support further nutrient reduction sub -grants under Component 2\. However, difficulties in obtaining municipal building and operating permits and licenses caused delays in project implementation and disbursement of sub -grants\. In addition, a turbulent political environment also had an adverse impact on implementation, and there were seven different Ministers of MAFWM over the five-year life of the project, each time requiring the project to bring him up to speed on the status of project implementation\.And the need to have Ministerial approval of contracts signed by the Minister caused delays that resulted in missed construction seasons and US$ 588,000 in unused grant funds being returned to the GEF (US$400,000) and SIDA (US$188,000)\. These approvals should have been delegated to lower levels of MAFWM management\. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The design of the M&E system was fundamentally flawed in the sense that it did not require the collection of adequate baseline data to measure achievement with the PDO /GEO\. For example, there was a âlack of pre- and post-project farm practice informationâ? on nitrogen flows caused by improper manure -spreading practices, even though this pathway represented over half of total nitrogen flows from livestock farms \. Later, when new industries (meat processing and rendering plants ) were added to the projectâs targeted beneficiaries, the M&E design does not appear to have incorporated the need to gather baseline information on their nutrient flows \. b\. M&E Implementation: The collection of indicators was inadequate to measure progress toward achieving the PDO / GEO\. The slow selection of demonstration livestock farms meant that an insufficient number of measurements could be observed to be conclusive about percentage reductions of nutrient flows, and baseline values were missing for point-sources of nutrient pollution into the Danube and its tributaries \. Monitoring data was collected by various agencies (soil contamination data by the SSI or water quality monitoring data by the HMS ), and reported back to the PIU, which in turn forwarded to the Bank, SIDA, and the GEF \. c\. M&E Utilization: The utilization of M&E data was not proactive in several important instances, nor were gaps in the data that would be required to measure the degree of achievement of the PDO /GEO identified and rectified\. Monitoring data was not utilized as quickly as it should have been, such as with the slow rate of disbursements of investment sub-grants under Component 2\. The expansion of beneficiary industries was not coordinated with the need to gather baseline data on them or to set targets and monitor progress toward them by the project staff \. The projectâs response to resolving bureaucratic hurdles (e\.g\., local licensing and permitting issues, planned construction design lifetimes of 50 years, or overly stringent water quality standards established for wastewater treatment plants) that were impeding project implementation was also slow \. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: An Environmental Assessment (EA) was conducted prior to the start of the project, and concluded that the project would result in a number of positive environmental impacts and public health benefits \. The EA screened the project, which was classified as a âCategory Bâ? project due to potential worker safety issues associated with handing of wastewat er or sludge and construction activities under Component 2 on livestock farms and in slaughterhouses\. An Environmental Management Plan (EMP) was devised outlining mitigation and monitoring measures along with institutional responsibilities \. Based on an initial Social Impacts Assessment and Stakeholder Plan study in 2004, no social safeguard policies were triggered by the project \. There were no instances of non -compliance with the EA safeguard policy (OP 4\.01), which was rated as satisfactory throughout the project âs life, and new activities added to the project did not raise the environmental category of the Project or trigger any other safeguard policies \. b\. Fiduciary Compliance: The ICR (pp\.13-14) stated that the projectâs financial management arrangements were satisfactory throughout implementation, that financial covenants of the Grant Agreement were adequately complied with, and that internal controls and accounting procedures were in place \. It added that âMinor issuesâ? regarding the appropriate use of accounting software and internal controls to ensure the quality of financial information raised in the Mid-Term Review were quickly resolved \. All annual project audits were unqualified, with one exception that was promptly addressed related to insufficient documentation of counterpart funding and weak internal controls \. In terms of procurement, those activities were carried out by a procurement specialist in the PIU (later augmented by trained specialists in the LAUs ), who focused on helping to guide farmers and other stakeholders through the complex equipment and construction tendering processes \. Annual procurement pre-reviews were carried out and a post-review in 2007 found that procurement procedures had been followed in accordance with Grant Agreement requirements\. As mentioned earlier, disbursements lagged badly in the first three years of project implementation from 2006 until 2009, as shown in the Disbursement Profile of Section I (Eye) of the Basic Data Sheet of the ICR, when changes made by the PIU and the Bank to the subsidy rates and additional assistance provided for sub-grants applications finally began to accelerate the disbursement rate of Component 2 sub-grants\. c\. Unintended Impacts (positive or negative): None\. d\. Other: None apparent\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately While the projectâs relevance was Unsatisfactory substantial, the data provided on achieving the PDO/GEO was inadequate with large gaps on the reductions of nutrient flows, and project implementation suffered delays and frequent amendments\. Risk to Development Moderate Significant Few tangible results were achieved that Outcome : would demonstrate cost-effective or viable alternatives will be replicated elsewhere, or that Government support to replicate and extend project activities will be forthcoming\. Bank Performance : Moderately Moderately The lack of baseline data and Satisfactory Unsatisfactory monitoring coverage of phosphorous and point sources of contamination was a major flaw\. Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: â¢ Importance of gathering adequate data to measure progress toward achieving the PDO is critical \. This project did not gather sufficient information through the M&E system to accurately and comprehensively measure the reductions in nitrogen and phosphorous flows from all selected sources (point and non-point) to receiving water bodies that was required in order to measure the achievement of its PDO \. â¢ Early discovery of potential technical, bureaucratic, financial or social acceptance problems impeding implementation and achievement of project objectives can occur through mock trial runs of project activities during preparation as a way to prompt pre -emptive mitigation approaches or strategies to resolve them quickly \. The ICR noted that better preparation of the technical and bureaucratic (local licensing and permitting processes) aspects of planned project interventions would likely have resulted in smoother implementation\. It also stated that had âmockâ? procurement actions been carried out prior to project effectiveness, the lack of qualified construction contractors to perform such work would have been identified quickly as a serious constraint to the successful conclusion of tendering processes to obtain their services \. Such âtrial runsâ? of planned project activities can help identify unanticipated or unplanned exigencies that might arise later during project implementation, leading to pre -emptive changes in the roll-out of those activities or to developing new approaches or strategies to deal with such potential problems \. â¢ Maintaining flexibility and an adaptive management approach during implementation is important to adjust the project âs activities in response to unexpected exigencies and changing circumstances \. The ICR also noted that the complement to good preparation based on the detailed analysis of all potential impediments is the need to flexibly adapt the project âs orientation, activities, or intended beneficiary base in order to fully realize its potential and reach project targets and objectives \. â¢ Training and resources to comply with Bank fiduciary procedures and reporting requirements need to be accurately assessed in preparation and appraisal \. Projects frequently experience problems and delays implementing complicated Bank financial management, procurement and disbursement procedures \. They also appear to encounter difficulties meeting Bank requirements for reporting implementation status and progress toward achieving the project âs objectives\. This project was certainly a case in point of those difficulties\. Therefore, it appears that more training of local implementing agency staff or the secondment of experienced staff or consultants well -versed in those matters might help avoid those problems from arising or at least minimize their impact\. 14\. Assessment Recommended? Yes No Why? To verify the ratings and document lessons \. 15\. Comments on Quality of ICR: The ICR was well-organized and covered all the required fields of information \. The analysis was internally consistent and presented in a concise manner \. The ICR was candid about difficulties encountered and provided sound ideas for preventing those problems or handling them better in the future \. However, the efficacy section was not sufficiently outcome oriented, weaknesses in the M&E system and the Bank âs failure to remedy them were overlooked, and the overly optimistic assessment of the project's risk to development rating was not supported by sufficient evidence \. a\.Quality of ICR Rating : Satisfactory	REVIEW
P003518	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 22319 IMPLEMENTATION COMPLETION REPORT (CPL-35300; SCPD-3530S) ONA LOAN IN THE AMOUNT OF US$240 MILLION TO THE PEOPLE'S REPUBLIC OF CHINA FOR A GUANGDONG PROVINCIAL HIGHWAY PROJECT June 11, 2001 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective December 6, 2000) Currency Unit = Yuan (Y) Y 1\.00 = US$ 0\.12 US$ 1\.00 = Y 8\.30 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BMS - Bridge Management System DF - Diversion Factor EA - Environmental Assessment E&M - Electrical and Mechanical EIRR - Economic Internal Rate of Return ENPV - Economic Net Present Value FKE - Foshan-Kaiping Expressway GP - Guangdong Province GPCD - Guangdong Provincial Communications Department GPFC - Guangdong Provincial Freeway Company GPED - Guangdong Province Expressway Development Company GPHAB - Guangdong Province Highway Administration Bureau HAB - Highway Administration Bureau ICB - International Competitive Bidding ICR - Implementation Completion Report LTE - Longgang-Tanxi Expressway MOC - Ministry of Communications NCB - National Competitive Bidding PAP - Project Affected People PHAB - Provincial Highway Administration Bureau RDB - Road Data Base RIP - Road Improvement Program PMS - Pavement Management System SAR - Staff Appraisal Report SPC - State Planning Commission VOC - Vehicle Operating Cost Vice President: Jemal-ud-din Kassum Country Manager/Director: Yukon Huang Sector Manager/Director: Jitendra N\. Bajpai Task Team Leader/Task Manager: Michel Bellier FOR OFFICIAL USE ONLY CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 3 5\. Major Factors Affecting Implementation and Outcome 8 6\. Sustainability 9 7\. Bank and Borrower Performance 10 8\. Lessons Learned 12 9\. Partner Comments 14 10\. Additional Information 21 Annex 1\. Key Performance Indicators/Log Frame Matrix 22 Annex 2\. Project Costs and Financing 23 Annex 3\. Economic Costs and Benefits 25 Annex 4\. Bank Inputs 46 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 49 Annex 6\. Ratings of Bank and Borrower Performance 50 Annex 7\. List of Supporting Documents 51 Annex 8\. Beneficiary Survey Results 52 Annex 9\. Stakeholder Workshop Results 53 Annex 10\. Securitization Operations 55 Maps IBRD23927R: Guangdong Province Highway Project IBRD 23928R: Foshan-Kaiping and Longgang-Tanxi Highway This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. Project ID: P003518 Project Name: GUANGDONG PROV\. TRANSPORT Team Leader: Michel Bellier TL Unit: EASTR ICR Type: Intensive Learning Model (ILM) of ICR Report Date: June 26, 2001 1\. Project Data Name: GUANGDONG PROV\. TRANSPORT L/C/TFNumber: CPL-35300; SCPD-3530S CountryIDepartment: CHINA Region: East Asia and Pacific Region Sector/subsector: TH - Highways KEY DATES Original Revised/Actual PCD: 10/28/89 Effective: 03/16/93 03/24/93 Appraisal: 02/13/92 MTR: Approval: 11/17/92 Closing: 06/30/99 06/30/2000 Borrower/lmplementing Agency: PRC/GUANGDONG PROVINCIAL COMMUNICATIONS DEPARTMENT (GPCD) Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautam Kaji Country Manager: Yukon Huang Shahid Javed Burki Sector Manager: Jitendra N\. Bajpai Daud Ahmad Team Leader at ICR: Michel Bellier Stephen Stares ICR Primary Author: Jacques G\. Yenny; Hank Yen 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: HL Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: No 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The objectives of the project were the following: (i) relieve congestion in two major traffic corridors (Foshan-Kaiping and Longgang-Tanxi); (ii) improve other national and provincial roads carrying substantial volumes of traffic; (iii) promote the transfer of highway technology through training and provision of equipment; (iv) develop institutional capability in highway design, planning and prioritization; and (v) support reforms of the highway financing system in Guangdong Province\. The objectives were clear and in line with the sector assistance strategy and the Government of China request to the Bank for continuous assistance in the highway subsector\. In February/March 1990, the Bank undertook, jointly with the State Planning Commission (SPC) and the Ministry of Communications (MOC), a screening mission to make preliminary assessment of nine highways which had been proposed to the Bank for financing\. Two of the nine highways were located in Guangdong Province (GP), and the mission concluded that they were among the highest priority of the screened projects in terns of the expected economic and first year rates of return, and should forn the basis for a provincial highway project for Bank financing\. 3\.2 Revised Objective: Project Objectives were not revised\. 3\.3 Original Components: Component Cost Rating CONSTRUCTION OF HIGH GRADE HIGHWAYS $594,000,000\.00 S ROAD IMPROVEMENT PROGRAM $119,000,000\.00 S PROCUREMENT OF EQUIPMENT $15,200,000\.00 S CONSTRUCTION SUPERVISION $14,500,000\.00 S HIGHWAY FINANCE STUDY $300,000\.00 S ROAD SAFETY PILOT PROGRAM $400,000\.00 S ROAD DATA BANK/PAVEMENT MANAGEMENT $200,000\.00 S SYSTEM STAFF TRAINING $2,500,000\.00 S LAND ACQUISITION/RESETTLEMENT $49,500,000\.00 S Since the implementing agency was a first-time executing agency for a Bank project, there was a risk in implementing the major highway components of the project in a timely manner\. However, the preparation of the project was assisted by the Bank's experience in previous provincial projects and by the more active involvement of MOC\. -2 - 3\.4 Revised Components: The components were not revised\. 3\.5 Quality at Entry: The quality at entry was satisfactory\. The objectives were consistent with Government priorities and the Bank's sector strategy\. Design and technical specifications were reviewed by Bank staff with the assistance of foreign consultants under a grant fund from the Danish Trust Fund\. Because of the difficult subsoil conditions on the two highways, two test embankments were built in advance of the main works to investigate the extent and timing of necessary soft soil treatments\. Safeguard policies on environment and resettlement were followed by the province and found satisfactory\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Despite some minor shortcomings during implementation, the project outcome is considered satisfactory and its objectives have been met\. The two major highways, the Foshan-Kaiping Expressway (FKE) and the Longgang-Tanxi Expressway (LTE) were both opened to traffic in December 1996, as scheduled\. The objective of reducing congestion in the corridors has been met with traffic on the highways taking from 27 to 67% of the total corridor traffic in 1999\. Furthermore, the economic benefits are considered sustainable, without any predictable elements of risk, as traffic has been growing rapidly since opening\. The rural Road Improvement Program (RIP) has had a very beneficial impact on the local communities served by the improved roads\. These roads have provided immediate and substantial benefits to the affected communities by connecting remote areas to major centers\. Increasing traffic and easier transport of local produce have enhanced the living standards of the populations served by the roads, according to evidence gathered by the Borrower\. The re-estimated ERR confirms the expected level of viability of the investments made and highlights the high priority of investing in areas with economic potential but with poor road infrastructure\. The impact of technology transfer through training is not easy to measure due to difficulties in defining baseline parameters\. However, the training overseas and the study tours provided a satisfactory level of exposure to new concepts and incentives for adoption in the Chinese environment The acquisition of experience and technology transfer through acquisition of modem equipment for operation and maintenance of the Guangdong provincial highway network contributed to ensure that the Guangdong highways are adequately maintained\. Institutional capabilities for planning and investment prioritization were developed through the successful introduction of road data base (RDB) and pavement and bridge management system (PMS and BMS) programs for the core arterial road network of the province\. This was achieved through the adoption of the Chinese RDB, PMS and BMS programs, which were developed for nationwide application\. All three management systems were in first stage operation by July 2000\. There is still more development work to be done until these three systems can be integrated and used efficiently on both the provincial and city level for programming annual maintenance expenditures\. Regarding reform of the highway financing system in the province, a study financed by the project was completed early on\. The results were somewhat theoretical and attempts to seek trust funds to - 3 - continue studying the matter were not successful\. However, Guangdong province then proceeded with an innovative form of financing by securitizing the revenues of one of the project highways through share issues\. In fact, because of the favorable prospects for continued strong economic activity in the influence area of the FKE, the Guangdong Provincial Government was able to raise RMB 484 million (US$62 million) in 1996 and RMB 528 million (US$65 million) in 1997 through the issuance of shares by GPED, securitized by revenues from the Highway (details in section 8\.1), and issued on the Shenzhen stock exchange\. 4\.2 Outputs by components: Construction of High-Grade Highways Civil Works\. Both the FKE and the LTE were successfully completed and opened to traffic on schedule in December 1996\. Because of the pressure to complete the work on time, construction quality was an issue through the first years of construction, but eventually improved\. The effect of settlement at the approaches to bridges have been well repaired and maintenance of both highways since opening to traffic has been good with repairs to infrastructure normally completed within 48 hours in emergency cases only, such as collapsed slopes\. Electrical and Mechanical Works (E&M!\. The two supply and install contracts for these works were delayed for a number of reasons described more fully in section 5\.3\. As a result, the loan closing date was extended by one year to June 30, 2000\. Fortunately, the delays had no substantive adverse effect on the operation of the two highways\. Traffic has been using the highways since December 1996, and tolls were collected using temporary toll collection facilities\. Environmental Protection\. Crossing fairly urbanized areas, the two highways did not affect ecologically sensitive areas and it was judged that with appropriate actions, the project would not have an adverse environmental impact\. The environmental assessment (EA) report specified measures related to social disruption, air quality, noise control, water management, control of traffic, operation of quarries and waste disposal\. The engineering design and technical specifications incorporated the mitigating measures required during implementation\. During the construction of the highway, no adverse environmental problems emerged\. Noise barriers were erected, shrubs planted in the median and slopes protected with shrubs, grass and trees\. All the planting appears to be well protected, healthy and well tended and efforts are being made to landscape pockets of land along the highways\. The overall impression is environmentally and aesthetically pleasing\. Noise monitoring continued since the opening of the roads and the installation of an additional 212 m\. of noise barriers along the FKE was decided\. The only problem is that illegal residential construction very close to the highways, particularly the FKE continues to plague the Expressway Authority\. Despite efforts by both FKE and LTE, they have been unable to persuade local governments to address the problem\. Land Acquisition and Resettlement\. Land acquisition, demolition of structures and relocation of utilities took somewhat longer than expected, particularly along the urban sections of the FKE\. Resettlement action plans prepared for the two highways were implemented well and completed by February 1999\. -4 - Road Improvement Program (RIP) Civil Works\. The original RIP comprised 86 subprojects with a total length of 1,260 km\. The implementation of the program was to be phased with subproject packages prepared according to agreed criteria and procedures, and submitted to the Bank for approval\. Projects were eventually grouped into three packages totaling 41 subprojects executed under 77 contracts\. They were all completed by the end of 1997\. The quality of construction has been good\. Environmental Protection\. Supervision missions have reported from selected field surveys of roads improved under the RIP that all roads were well constructed with proper drainage, pedestrian crossing facilities, etc\.; that the drains were well maintained; that the grassed shoulders were well cared for; and that the local highway bureaus had carried extensive planting along the highways\. As a result, the effect was striking and environmentally pleasing\. Along some roads, the incidence of dust pollution, compared to the original dirt roads, had dropped so much that farmers reported 30 percent increases in crop yield\. Resettlement\. The Resettlement Action Plans for the RIP were not as thorough as those for the two highways\. The Provincial Highway Administration Bureau (PHAB) delegated resettlement responsibilities to county administrations and they were carried out by the Township Land Bureaus according to local policies and local understanding of laws and regulation\. Compensation rates were therefore low except for housing\. However, since the RIP component consisted mostly of upgrading of existing roads, the impact of resettlement was generally low\. Local administrations and project affected people (PAP) were eager to have RIP projects in their communities due to the expected benefits to the community and the individuals\. Supervision missions found that there was a general improvement of livelihoods of the affected communities and PAP due to the projects and that no lasting negative impact of resettlement were encountered\. Equipment\. Equipment to be purchased under the project was to assist construction supervision and the general development of highway activities, in particular maintenance, in the province at large\. The procurement of equipment went smoothly and was completed in October 1997\. Highway Finance Study\. The study was completed by the Xian Institute of Highways and GPCD's Science Research Institute and the World Bank Finance Office in December 1992\. It was reviewed in Guangdong by two British consultants in April/May 1993\. It was subsequently reviewed in the Bank and discussed during supervision missions\. A revised draft was completed in September 1994\. The report proposed 7 sources of financing with 19 methods of mobilizing such financing\. The methods were not described in detail and the recommendations were theoretical\. The Bank recommended that GPCD should develop some of the recommendations in a practical way and GPCD discussed five possible measures with the provincial authorities, but no concrete result was achieved\. Then in 1996, GPCD innovated with the securitization of the FKE and share issues in Shenzhen, to mobilize funds from foreign and domestic investors\. Road Safety Pilot Program\. The Highway Administration Bureau (HAB) took some time to prepare a detailed implermentation program for this component\. In fact, by mid-1995, some 40% of the black spots, originally identified and agreed as part of the program, had already been improved outside the program\. A new program was - 5 - submitted to the Bank at the end of 1995 and implementation started in 1996\. Implementation was slower than expected due to a shortage of local funds and generally a lack of commitment from the HAB\. Nevertheless, by mid-1998, all activities planned to remedy black spots were completed\. Since then, no accidents have been reported at any of these locations\. Road safety was discussed at meetings of the provincial Highway Traffic Engineering Association\. Also in 1995, the HAB established a road safety unit and the staff of this unit has been actively cooperating with the police since then\. More recently, the province has launched a Road Safety Information Campaign on TV and mass media to increase awareness about the road safety situation, help change the attitude toward safety and improve road user behavior\. Road Data Bank/Pavement Management System\. In October 1994, HAB received equipment for the RDB/PMS financed by the project\. Canadian trust fund consultants visited Guangdong and other provinces with similar Bank financed components in early 1995 to assist with program start-up\. By early 1996, there was a good deployment of the PMS to most cities in the Province\. However, the system is limited to asphalt paved roads; but, in Guangdong province, many roads have a concrete surface and the Province is interested to develop a similar system for concrete roads\. A Bridge Management System (BMS) was introduced also, which now covers all bridges with more than 10 m\. length on national and provincial roads (except expressways and rural roads)\. The implementation of the RDB started in 1997 and already has data for some 4,000 km of main roads and 700 km of expressways\. Data collection for county roads has been completed and is being integrated in the system\. More work remains to integrate the three systems so that the whole set becomes an efficient planning tool\. Training\. Training under the project has been successfully completed\. The number of persons trained overseas exceeds the number agreed at appraisal\. The number trained domestically is somewhat less than originally planned, but with a greater number of man-months of training, as it was decided to send fewer people over longer periods\. The training program covered many subjects, with a concentration on management of maintenance on other projects, expressway operation, and highway planning and design\. 4\.3 Net Present Value/Economic rate of return: Foshan-Kaiping Expressway The Economic Intemal Rate of Retum (EIRR) on the FKE is estimated to be 14\.7% versus the SAR estimate of 21\.4%, and the Economic Net Present Value (ENPV), at discount rate of 12%, is estimated to be Y 971 million versus Y 1,881 million\. The recalculated EIRR and ENPV are lower than anticipated at appraisal mainly because of significant increases in the project costs\. While the 1999 traffic levels already exceeded forecasts by more than 50%, this was not enough to compensate for the increase in costs in the economic evaluation\. The detailed economic analysis is in Annex 3\. Longgang-Tanxi Expressway (LTE) The EIRR for the LTE is estimated to be 14\.8% versus the SAR estimate of 27\.8%, and the ENPV, at discount rate of 12%, is estimated to be Y 1,062 million versus Y 3,841 million\. The recalculated EIRR and ENPV are lower than anticipated at appraisal mainly because of significant increases in the project costs\. As with the FKE, in 1999 traffic levels exceeded SAR forecasts by 50 to 100%, depending on the section, but not by enough to compensate for the increase in costs in the economic - 6 - evaluation\. The detailed economic analysis is in Annex 3\. Road Improvement Program (RIP) The EIRR for the RIP as a whole is estimated at 42%\. At appraisal, the economic analysis covered only a first package of 24 roads sections\. The EIRR for this first package was estimated at 55%\. During the project's implementation, the total RIP eventually improved 41 road sections\. The total economic cost of RIP also increased from Y 293 million to Y 1\.1 billion, at December 2000 prices\. Since the project scope analyzed by this ICR and that of the SAR are substantially different, the returns cannot be compared directly\. Details are in Annex 3\. EIRR and NPV for the total project The EIRR and ENPV for the total project is estimated to be 17\.7% and Y 4\.52 billion, respectively, compared with 30% and Y 6\.69 billion estimated in the SAR\. 4\.4 Financial rate of return: The financial evaluation of the project is comprised of two types of analyses\. The first one is for the revenue eaming highways; and the second for the non-revenue earning roads\. The two toll roads, FKE and LTE, are the only revenue earning roads in the project\. The total cost of these two highways accounts for about 88 percent of total project cost\. There is no revenue from the roads improved under the RIP, and the second type analysis focuses on the impact of the 41 road components under RIP on the finances of GPCD\. There was no financial evaluation of the project in the SAR\. The detailed financial analysis is in Annex 3\. Revenue Earning Entity In December 1996, GPCD established two separate highway companies to operate the two new highways\. The toll charges are the main revenue for the companies, and they are strictly controlled by the government\. The net profit after tax is not expected to be high because of the rigid toll rates control and the project cost over run\. Since FKE and LTE are operated as separate legal entities, there is no financial obligation between these two entities\. The financial analysis has been done separately for each company\. The FIRR to total investment on FKE and LTE are estimated at 5\.7% and 4\.5%, respectively\. The FNPV is estimated to be Y 91 million for FKE and Y -504 million for LTE\. Non-revenue Earning Entity All components under RIP are toll free\. Since there is no revenue for RIP, the financial evaluation focuses on the impact of the program future operating expenses on the financial situation of GPCD\. The analysis shows that the financial risks of not having enough revenues for supporting the maintenance of these roads would be minimal\. The maintenance expenditures on these roads will constitute only a small fraction of GPCD budgets\. Based on GPCD expenditures plan, the sum of the total maintenance expenditure required for RIP roads is less than 0\.6% of the total maintenance expenditure of GPCD during the 9th and 10th FYP\. These low financial requirements indicate a low financial risk that funds would be insufficient for the future maintenance of the project components\. 4\.5 Institutional development impact: Within the project, measures were taken to strengthen GPCD and its relevant institutions\. The -7 - experience with competitive bidding and having works done by contract rather than force account has been successfully integrated and all new construction and major maintenance works in the province are now done by contract\. The project introduced Guangdong Provincial Communications Department (GPCD), Guangdong Provincial Freeway Company (GPFC), Guangdong Province Expressway Development Company (GPED), Guangdong Province Highway Administration Bureau (GPHAB) and the county highway departments to prequalification of contractors and competitive bidding for the first time in GP\. While all expressway contracts for civil works and E&M works were under ICB, all RIP components were under NCB\. GPCD and its sister organizations reported repeatedly to Bank supervision rnissions that Bank's requirement for competitive selection of civil works contractors helped improve construction quality, cost control, timeliness of contract completion and reduced opportunities for fraud and corruption\. Contractor prequalification and competitive bidding is now the rule in GP for highway construction, including non-Bank financed projects\. GPCD leadership has further reported to Bank missions that NCB procedures now applied in GP under provincial and county highway departments to eliminate unsuitable contractors from bidding, thus leading to longer contract sizes, more transparency, improved quality of works and lower construction costs\. The staff training program financed by the project was successful and has been described above\. Since 1996, some provinces including Guangdong have recognized the value of expressways with growing traffic volumes and toll revenues\. The Chinese authorities found that, through the securitization of existing highway assets, they were able to raise large sums of new capital from foreign and local investors\. The FKE was first securitized in 1996\. Details are in section 8\. 1\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: Although contractors were prequalifled under the ICB procedures, some of the awarded local contractors lacked experience in carrying out major highway works of comparable magnitude and complexity\. Their managerial skills were inadequate and their material and financial resources stretched\. Quality was a constant problem and the Bank continuously insisted that the supervision team tighten quality control\. Contractors on the FKE were generally better than those on the LTE\. The construction supervision inputs were at the level estimated at appraisal, totaling about 229 person-month by foreign engineers and 10,800 man-month by domestic supervisors\. The foreign engineering personnel helped establish the framework and procedures for the supervisory work and trained the GPCD staff, local engineers and technicians\. Such training was not only a significant means of technology transfer but also an essential measure for trying to ensure effective control of the quality of expressway construction with adequately trained personnel\. The performance of the supervision team was generally satisfactory and construction quality gradually improved\. 5\.2 Factors generally subject to government control: On contracts in urban areas, land acquisition, resettlement, demolition of structures and relocation of utilities proceeded slower than anticipated\. The problem was less on rural sections\. The delay in providing the work sites combined with the difficult start up for a number of contractors, for reasons given above, resulted in the civil works falling behind schedule in the first two years\. Also more soft soils were encountered than anticipated and numerous design changes had to be made (section 5\.4)\. This could have been avoided by further investigations at the design stage\. There existed the phenomenon of catching up with the progress, despite exhortations of supervision missions to put quality first\. As a result, some repairs became necessary shortly after opening to traffic\. 5\.3 Factors generally subject to implementing agency control: - 8- The one-year project completion delay was predominantly due to the delay in the preparation, procurement and implementation of the E&M works\. Together with the Zhejiang project (effective six months earlier than Guangdong) these were the first highway projects in China to include, from the early project preparation stage, all the required E&M facilities needed for operating the expressway, including: tolling, traffic monitoring, telecommunications and lighting\. Bidding for the E&M contracts was originally scheduled to be completed in May 1995, with supply and installation to be completed in December 1996 when the roads were to open for traffic\. However, because the Employer primarily focused on the timely completion of the civil works and lacked experience with the type of E&M works required for expressway operations, the formulation and design of this component was delayed\. The bidding documents were issued only in November 1996, and further delays were encountered during ICB procurement procedures, so that the two E&M contracts for FKE and LTE were awarded in July and September 1998, respectively\. Part of the delay resulted from the Bank's introduction of the two stage bidding method, which had not been used in China before and was controversial\. The quality of implementation appears good and works were completed by the closing date of the project\. However, the liability period of both ICB contracts will only occur later\. 5\.4 Costs andfinancing: The final costs of the two expressways were substantially higher than the bid prices\. Total costs increased by 86% for FKE and 114% for LTE\. The largest factor contributing to the cost increase was the large number of variation orders, of which there were over 1,200 on FKE, accounting for 45% of the cost increase, and almost 1,300 on LTE, accounting for 80% of the cost increase\. The rest of the cost increase is due to adjustment of exchange rate, price escalation and various other factors\. The reasons for the large number of variations included: a) changes in design due to worse than expected soil conditions (such as piles on some bridges, foundations of other bridges and new sections of soft soils), change in pavement structures, etc\.; b) changes due to the booming local development, as about five years had passed between the design and the start of construction, this implied replacing embankments by viaducts to limit resettlement and adding new expressway crossings to maintain local communications; c) changes in construction methods drawing on experience gained since the original design was made; and d) effects of the typhoons requiring more slope protection, additional drainage and support for a better landscape\. The Bank required GPCD to submit the justification of these variation orders on a contract by contract basis\. GPCD's report was audited by the Bank and no objection was granted for variation orders fitting within the amount of financing available in the loan\. There were no changes in disbursement rates\. The Bank stayed involved in expressway construction until its end\. The costs of other components were more in line with appraisal estimates\. In the four fiscal years (FY94 to FY98), loan disbursements were either in line or ahead of the SAR forecast\. However, because of the delay in procuring the E&M works, disbursements slowed down as the project was extended by one year\. 6\. Sustainability 6\.1 Rationale for sustainability rating: During construction of the expressways, soil settlements and other construction problems were noticed and, to a large extent, immediately rectified\. Since then, required repairs and maintenance are being done promptly\. The operating rights granted to the public-private expressway development company provide incentives for the provision of a high level of service to road users, including adequate routine and -9- periodic maintenance\. The rapidly increasing traffic ensures sustainability of the project benefits\. The sustainability of the Road Improvement Program under the project depends upon subsequent adequate routine and periodic maintenance of the roads\. The management of maintenance of these roads is the responsibility of counties that have to rely on local revenues for the additional capital and recurring expenditures for the roads\. Prospects for sustainability are high since high density rural populations exert strong pressures on county road departments to maintain all sections upgraded under the RIP\. The equipment for maintenance and operation of highways procured under the project should provide adequate long-term service, since sufficient stock of essential spares have been purchased and naintenance facilities have been provided\. The lessons and knowledge learned from the staff training program are expected to be disseminated within the provincial institutions involved, and have a long-term influence on provincial road administration and management methods and highway-specific technology\. The methodology of the pavement evaluation and the application of the Chinese RDB, PMS and BMS programs have been deployed in all parts of the province that have asphalt roads\. It is expected that, with the regularly collected input data and the full integration of the three components, the system will provide the necessary output information to help make better investment decisions for road imnprovement and maintenance\. 6\.2 Transition arrangement to regular operations: In 1996, part of the equity of the FKE was transferred to the Guangdong Province Expressway Development Company (GPED), prior to the opening of the expressway\. There has been no particular problem in operating the two expressways since their opening to traffic\. As mentioned above, the two expressways were operated in the first three years before installation of permanent E&M equipment and tolls had been collected with temporary facilities\. With the completion of E&M equipment installation by mid year 2000 on FKE and LTE, all mechanical, electrical and electronic facilities are now operated on a permanent basis\. Toll revenue leakage during the initial three years after opening of FKE and LTE was estimated to be in the order of 3-5%\. 7\. Bank and Borrower Performance Bank 7\. Lending: The project was identified in a joint mission of the Bank and Govemment officials (section 3\.1)\. The intensity of Bank resources during preparation was above average; about 566 person-days were spent on field preparation (missions) from the identification through appraisal stages of the project\. The major risk identified during appraisal was a delay in the completion of the expressways and the quality of construction due to the difficult subsoil conditions along the project corridors\. To counter this risk, two test embankments were built in advance of the main works to identify the extent and timing of soft soil treatment required\. Furthermore, the institutional capacity of the implementing agency was considered to be a risk, since the implementing agency was a first-time borrower of Bank funds\. To mitigate this risk, the project was designed with the assistance of foreign experts, prequalification of contractors was made particularly stringent, and supervision arrangements were carefully formulated to ensure regular monitoring and effective quality control\. In spite of these well identified issues, it was difficult to obtain an adequate quality in the early stages of the project due to lack of attention to construction quality and pressures to - 10 - open the highway early\. 7\.2 Supervision: The Bank mounted 11 supervision missions during 1992-2000, which is on average just slightly more than one mission per year\. Continuity of staffing on the project was generally achieved, with only one change in project manager during construction, in 1995\. The skill mix of missions was adequate and responsive to the need of the customer, in particular to review the applications for issuing shares for the FKE expressway\. Resettlement and environment specialists participated in most supervision missions from the early stages of supervision\. Specialized reviews were provided by the resettlement specialist who also conducted interviews of project affected persons several years after they had been resettled\. Environmental specialists followed the project not only during the construction but also during operation of the two expressways\. Since those were already opened to traffic at the end of 1996, they had a rare chance to monitor impacts, such as noise, for over three years until the project closing date\. The Bank has shown flexibility in dealing with the many change orders mentioned in section 5\.4\. Regarding procurement, the Bank's insistence to use two stage bidding for the E&M works created problems for the borrower, since this had not been expected\. It added substantial time to the procurement of this component of the project and had been reversed to one stage bidding, including prequalification for the follow-up project\. In response to the Borrower's request to extend the loan closing date, the Bank concluded that a one-year extension of the project was reasonable for completing the still outstanding E&M works\. Finally it gave three no objections to the sale and transfer of shares for the FKE\. 7\.3 Overall Bank performance\. Despite the one year delay in implementing parts of the project, the overall Bank perfonmance is considered to be satisfactory\. It should be recognized that the development of the provincial expressway network was in its early stages at the beginning of the 1990s and that GPCD was a first-time Bank borrower, not familiar with international business practices and FIDIC conditions of bidding, contracting and supervising major civil works\. Borrower 7\.4 Preparation: GPCD's preparation of the project was reasonable, considering the limited base of technical and managerial experience in developing large scale, complex highway projects\. The experience under this project highlighted several deficiencies in the Chinese planning and preparation process, such as improper cost estimating methods; minimizing the technical complexity of the project; and not anticipating the difficulties of procuring major works, including timely land acquisition\. 7\.5 Government implementation performance: The Government was fully committed to the project, even pushing the pace of construction of the expressways beyond prudent practice\. Counterpart funds were provided on time, except for the road safety component\. However, the process for obtaining internal clearances for bidding documents and evaluation reports was slower than expected, due to the cumbersome internal process involving both provincial and central government agencies\. 7\.6 Implementing Agency: GPCD demonstrated strong commitment and effort to achieve the project's objectives, including both the physical objectives such as construction of the FKE and LTE and the RIP, and the institutional - 11 - development objectives in road management (RDB/PMS/BMS) and staff training\. Despite the problems encountered by contractors from time to time on account of a shortage of material supplies, lack of financial resources and contract administration skills, the Employer was able to help overcome such difficulties with the support of the supervision units\. Since the experience with the supply and installation work of modem traffic monitoring, telecommunications and tolling systems in China was very limited in the early 1 990s, it is understandable that the Employer had problems in designing and procuring the proper E&M works for the two expressways\. 7\.7 Overall Borrower performance: The Borrower has complied substantially with the conditionalities of the loan and project agreements\. The Bank's procedures and requirements were substantially followed\. The cooperation between the Borrower and the Bank was cordial throughout preparation, appraisal and implementation of the project\. Consequently, the overall Borrower's performance is rated as satisfactory\. 8\. Lessons Learned 8\.1 Securitization of Bankfinanced assets This is the most innovative aspect of the project, described in detail in Annex 10\. Main steps were as follows: 3 Realizing that their ambitious plan to develop a network of expressways in the province could not be achieved with budgetary allocations and domestic and foreign borrowing alone, the provincial authorities established in 1993 a new financing vehicle, the Guangdong Provincial Expressway Development Shareholding Company (GPED)\. The company was established to help mobilize foreign and domestic equity capital for highway construction\. 3 In May 1996, MOF requested the Bank's no objection (given promptly in June 1996) for Guangdong's issuance of B shares on the Shenzhen Stock Exchange for overseas investors in order to mobilize additional counterpart funding of RMB 484 million (US$62 million) to fund the construction of FKE\. Proceeds were applied up to RMB 334 million to that purpose, with GPED having acquired a 25% operating interest in the expressway\. * A second operation was undertaken by GPFC and GPED in 1997, following approval by the Bank, with a RMB 528 million (US$65 million) share issue by GPED on the Shenzhen A share market, of which RMB 413, 550,000\.00 (US$49,680,000\.00) were applied to the acquisition from GPFC of an additional 10% participation in FKE\. * Finally, Bank approval was sought again in February 1999 for the acquisition by GPED of another 16% ownership interest in FKE\. Securitization operations contributed significantly to the financing of FKE without any liability to sovereign or sub-sovereign agencies for the repayment, since the funds raised through these transactions were in effect leveraged by the future traffic stream on FKE\. They were completed with no effect on Bank policies regarding loan implementation, enhanced development objectives, and had the effect of involving the private sector in toll roads operations\. They also offer a number of valuable lessons and experiences for the refinement and possible future application of this financing technique, on the following aspects: * Efforts to securitize existing revenue-producing assets such as toll roads with the involvement of credible international institutions, such as the World Bank, will continue to be an important capital-raising device for the country\. * The level of project preparation and due diligence normally required by the Bank for leveraging its - 12 - assets in the financial markets provides a needed level of security to commercial financial institutions and investors in China who would otherwise look to an established policy framework, which at present is still in the formative stages\. The Guangdong experience illustrates the need for a close relationship between a thorough review of the transaction by the Bank and the timing established by the sponsoring agency and its underwriters to take the offering to market\. * Exposure to the requirements of private investors was also a strong incentive for GPED to consistently strengthen management and compliance with strict financial standards, thereby improving the quality and efficiency of toll road operation\. * An option to consider in the future is the issuance of fixed price bonds which are securitized by existing assets and priced at a rate and term in the credit markets, which may be preferable to the volatility which has characterized most equity markets around the world\. 8\.2 Relevant design of the expressway As discussed above, substantial cost overruns were encountered in the construction of FKE and LTE\. A more in-depth preparation of the project, comprising detailed soil investigations in the technically difficult sections during engineering feasibility studies and prior to procurement of civil works, would be cost effective in securing the technical design and selecting suitable construction methods\. Monitoring construction implementation The soil settlement problem needing further remedial works has already been mentioned\. Since the problem had been identified during project preparation, the monitoring of embankment settlement rate should have been more strictly enforced, and pavement work should have been delayed until the settlement reached more stable condition\. 8\.3 Preparation and Execution of E&M Works for the Two Expressways The one-year delay of the completion of the project is mostly attributable to the delay in the E&M works (section 5\.3)\. Sinilar delays occurred under other Bank-financed highway projects being implemented in the early 1990s and the Bank now ensures that: the bidding documents and engineering designs for E&M works are completed more or less at the same time as those for the civil works contracts; and the tendering activities commence at least two years before the civil works are expected to be completed\. 8\.4 Road Improvement Program The GPHAB had tentatively identified 86 subprojects for inclusion in the RIP, some of which were located in the less developed areas of the Province\. The Bank's supervision missions visited a number of road sections built and improved under the project and confirmed that the significant expected benefits were accrued and the living standard of the population along the corridors improved\. People living in the corridors directly expressed their appreciation to the Bank for its support and involvement in the poverty targeted projects\. More involvement in construction and rehabilitation of lower class roads, which would directly help remote communities to alleviate poverty, should be encouraged in the Bank's future lending program\. - 13- 9\. Partner Comments (a) Borrower/implementing agency: 9\.1 General (Contribution from GPCD) The Guangdong Provincial Highway Project was pre-appraised by World Bank in November 1991, and appraised in March 1992\. The Loan Negotiation was held in Washington D\.C\. in September 1992, the UD$ 240 million Loan agreement and the Project Agreement were signed on December 26, 1992, and the Loan was declared effective on March 16, 1993\. The original loan closing date was June 30, 1999, but it was extended to June 30, 2000\. All tasks referred to in the Staff Appraisal Report, Loan Agreement and Project Agreement have been completed around the extended closing date\. 9\.2 Project Implementation ( Contribution from GPCD) In addition to the description of all project components and the general data on project implementation, which are covered in the Project QR No\. 28 submitted to the Bank on July 5, 2000, some additional information are given as follows: * Since FKE and LTE were opened to traffic at the end of 1996, traffic flow and toll revenue have increased steadily\. Traffic grew by 138\.6% on FKE and 134\.5% on LTE between 1997 and 2000, while toll revenue increased by 142\.0% and 145\.4%\. * As there is no mainline toll station located between the Guangzhou-Foshan Expressway (GFE) and FKE, since the extension and reconstruction of the E&M equipment on GFE have been delayed, the main netting function of the two expressways cannot yet be implemented\. The completion of Contract EKOS regarding E&M works is expected by June 2001\. * The main Zhangcha complex, under Contract FK06 on annex works, has been completed by the end of 2000\. * All loan amounts have been completely withdrawn and settled by October 2000\. 9\.3 Assessment of the Work ( Contribution from GPCD) Assessment of the work by the Bank Since the Bank project identification mission visited Guangdong in November 1989, many rnissions were sent to carry out, in close cooperation with SPC, MOC, GPPC, GPCD and GPWBO, project preparation, pre-appraisal and appraisaL\. Subsequently, once the project implementation commenced, the Bank's supervision missions visited Guangdong at least once a year\. The most recent mission discussed the lessons that can be drawn from the project\. For years, the Bank's missions, composed of specialists in various fields, have completed numerous and fruitful tasks during their visits to Guangdong to identify, prepare the project, and promote its successful implementation\. All these results were recorded in the mission Aide Memoires, which were confirmed by the Bank management, and won high opinion from the - 14 - project Owner at all levels\. The project Staff Appraisal Report, which is based on the findings of the Bank's appraisal Mission headed by Mr\. Steven Stares, Senior Transport Specialist, described and evaluated in details all the project components; it forms an essential element of the project documentation and for the on-going project post-appraisal\. During project preparation, the Bank assisted the project Owner to secure a grant from the Bank Consultant Trust Fund that financed consultant's services\. An expert team was hired from Kampsax/DRD to review, in close collaboration with HSDI I, GHDI and ITC, the final design and the bid documentation of the FKE and LTE in July 1992\. As the Bank-financed projects possess international, governmental, bilateral, reciprocal and cooperative features, the Bank missions carried out an effective project management throughout its implementation, in close cooperation with the project Owner and strictly in accordance with the terms of the Loan and Project Agreements and other relevant documents\. The project Owner extends his general satisfaction to the Bank arrangements, methods and procedures, and to the results of the selection and employment of consultants, the procurement of works and of equipment under each project component\. The Bank supported and assisted the project Owner in the conduct of a study about highway financing methods in Guangdong, which reached the objectives assigned by a TOR outlined in the SAR\. In addition, the Bank paid a particular attention to the innovative securitizations of assets carried out by GPED through the issue of A and B shares, and assisted in the organization of a dedicated workshop\. The workshop conclusions are annexed to the ILICR\. The Bank also paid high attention to the Road Improvement Program and Road Safety Pilot Program and supervised their implementation\. The Bank supported these programs to further promote the strengthening of and improvements in the Guangdong highway system, as forecasted in the SAR\. Those improvements were very beneficial to the economics of the mountainous areas and to the people affected\. The Bank provided its assistance to the procurement of equipment and instruments, the training program, the development and improvement of the Road Data Bank and Pavement Management System, and to their extension province-wide as a main supplemental tool used for project identification and for the prioritization of the RIP program\. Since major variations and cost increases in expressway civil works and delays in the completion of expressway E&M works were incurred during project implementation, the Bank, in coordination with the project Owner and domestic governmental authorities, took timely measures to approve an adjustment of the amount of the Loan, and to extend the Loan closing date in order to ensure a smooth completion of the whole project\. Assessment of the work by the Owner Since the project Owner was for the first time an executing agency and lacked experience in a Bank-financed highway project in Guangdong, he was prone to risks and difficulties in implementing the major highway components of the project in a timely manner\. However, the project implementation was assisted by the Bank and by domestic experience in previous Bank-financed highway projects\. SPC and MOC in the Central Government, and the Provincial Government extended a vigorous support to the project\. To ensure a timely completion of the project preparation, of its appraisal and implementation, the project Owner (GPCD) took a series of measures as follows: - 15- The World Bank Finance Office was founded in May 1991 as a united project management organization under the direction of GPCD\. The executing organizations and procurement agencies were organized in accordance with project components\. GPFC was the executing organization for the construction and management of FKE and LTE, and it was made responsible for reporting, disbursement, financing and auditing under the project\. GPHAB was the executing organization of the RIP / RSPP program and responsible for the development of the RDB / PMS\. The technical assistance regarding the highway financing and the staff training program were directly executed by divisions of GPCD\. CITC was designated by GPFC as its procurement agency for ICB civil works contracts under FKE and LTE\. CMC-ITC was designated by GPFC as its procurement agency for the ICB E&M works contracts of FKE and LTE and for the ICB equipment contracts under the project\. During the project preparation and appraisal, domestic procedures fell behind the Bank's progress\. In order to catch up and ensure simultaneous progress, the project Owner, under the leadership of ministerial and provincial government levels, worked out a meticulously organized schedule satisfying the procedural requirements of both the govemrnents and the Bank\. It included the expedition of the project formulation approval, the review and approval of feasibility study reports and preliminary designs, the review and approval of engineering and bid documentation as well as the provision of numerous data and information needed by the Bank, particularly to conform to some new requirements on EA, EAP and RAP\. By putting it into effect for each scheduled activity and in close collaboration with each partner, all the early stage works of the two key expressway project components and the first package of RIP sub-projects were finished and finalized within 2 years or less, keeping pace with the procedural requirements of Bank's project preparation and appraisal \. The expressway project component was constructed in conformity with the state bidding system and used the international FIDIC contract model for the first time in Guangdong\. The Employer's representatives (the FKE and LTE construction Preparation Offices), authorized by the Employer (GPFC), executed the Employer's obligations strictly in accordance with the contract terms; they also carried out land acquisition and resettlement, local coordination, fund raising, variations, payment, EAP's actions, etc\. They provided a favorable construction climate for Contractors and, in coordination with the Engineer, supervised and controlled the progress, quality, safety and costs of contracted works\. In spite of a delay in land acquisition and of damages suffered from a typhoon 3 years since commencement, the FKE and LTE mainlines were completed and opened to trial traffic in December 1996 with the support on every aspect and joint efforts of Contractors\. Subsequently, after the other works, mainly the FK05 and FK07 E&M works, were basically completed, GPFC sent their completion reports to the Bank via WBFO, GPCD in March 2000\. GPFC and the EO prepared and sent the completion report for civil construction of FKE and LTE to the Bank earlier in January 1997\. Finally, MOC conducted the final acceptance of both expressways in January 2000\. Moreover, all programmed RIP sub-projects were completed by the end of 1998\. After final acceptance, the results for the highway strengthening and improvement in Guangdong were found to be satisfactory and consistent with the SAR\. The work quality, assessed through final acceptance, was also generally satisfactory\. Environmental protection and environmental monitoring The project Owner prepared an Environmental Action Plan (EAP) for both FKE and LTE in January 1991, which specified the measures required for mitigating the potential adverse effects on the environment during the construction and operation of the expressway, and the organizational and monitoring arrangements\. Prior to Loan negotiation, the executing summaries of these EAPs were reviewed and approved by the SEAP and the Bank\. GPHAB also prepared a sectoral EAP for the RIP sub-projects, - 16 - specifying the environmental protection measures to be taken by sector during the construction and operation of sub-projects\. These EAPs were completely executed throughout the project implementation\. After project launching, GPFC established its Environmental Protection Division (EPD) and branch EPDs with the FKE and LTE Construction Preparation Offices in March 1993\. It staffed them with professional and concurrent-posted personnel\. All the residential supervision offices under the Engineer Office were also staffed with concurrent-posted environmental supervisors\. The Environmental Monitoring Station, under EPD, GPFC was responsible for the environmental monitoring during the expressway construction, and the routine environmental monitoring during their operation was conducted directly by the Central Lab, GPFC\. GPHAB, in cooperation with the environmental protection authorities of the affected counties, was responsible for the supervision and monitoring of the EAPs on the implemented sub-projects; the environmental supervisors of the construction supervision units conducted on-the-spot supervision\. During the final acceptance, the verification of environment protection works was carried out with the local environmental protection authorities\. As the construction and operation of FKE and LTE had a noise impact on the expressway surroundings, the Bank environmental supervision mission requested the owner to undertake a noise evaluation and forecast on selected sensitive locations, by using a noise model recommended by a Bank mission in July 1996\. The measures to mitigate the adverse effects were taken into consideration according to the results of the evaluation\. Through the follow-up routine monitoring at the eight monitoring locations selected after adjustment, appropriate mitigating measures were taken when results fell beyond the standards, in line with the local reality and potentialities\. SEPA conducted and approved the final acceptance of the environmental protection works of LTE and FKE in August 1998 and December 1999\. The Bank environmental supervision mission made an on-the-spot inspection of some RIP's sub-projects and extended its satisfactory assessment to completed environmental protection works\. Resettlement According to the policies and procedural requirements regarding land acquisition and resettlement, specified by the Government and the Bank, the project Owner prepared a Resettlement Action Plan (RAP) for FKE, LTE and the RIP during project appraisal, and deternined the land and crop compensation and resettlement subsidy payment, established a land acquisition and resettlement organization as well as the general and independent monitoring of the project\. The Resettlement Office, GPFC and the RIP authority under GPHAB separately signed agreements on land acquisition, house relocation and resettlement with the local construction headquarter\. The annual resettlement report and social independent monitoring reports submitted to the Bank during years 1993-1998 and many site visits made by the Bank supervision missions indicated that the implementation of these RAPs has generally improved the living standards of the project-affected people, or at least restored them\. The land acquisition and relocation compensation payments were granted to the affected persons, households and units through different channels\. Highway financing technical assistance and staff training In order to prepare and implement an updated highway financing system in Guangdong, as outlined in the TOR of the highway financing TA, the project Owner in coordination with the Xi'an Highway Transport University and TECN ECON consultant conducted a study program stressing the current status of highway financing in Guangdong\. As a result of the study, four effective financing methods, such as the issuance of stocks or bonds, the establishment of an overseas financing window, the transfer of operational rights, and BOTs were selected from nineteen exiting possible financing sources, to be further explored and implemented\. Through an evaluation by experts and the Bank, the completed study report has reached the initial objectives\. Regarding staff training, the project Owner prepared a series of training programs including general and construction supervision training at the stage of project appraisal\. Apart from the construction supervision training which was essentially implemented according to the construction supervision consulting service contracts, the overseas study tours and training program were adjusted - 17- annually through a rolling 2-year training plan and were successfully executed in coordination with the TCU of MOC\. As compared with the original program, the overseas study tours and training increased both in terms of number of trainees and person-months; fewer people were trained in the domestic training program but the number of person-months exceeded what was planned\. The completed training has generally reached the forecasted objectives\. Trainees acquired abroad a much updated knowledge and management experience, which was of major importance for raising the highway construction level in Guangdong\. Project equipment procurement According to the procedural requirements specified by the domestic authority and the Bank, the project Owner arranged the procurement method and schedule for the main equipment procurement list according to provisions prepared at appraisal, and an adjusted list was confirmed by the Bank\. GPFC established an equipment procurement team, in cooperation with GPHAB, to be responsible for the procurement of project equipment; it was completed and put in use by October 1997\. Expressway operation\. maintenance and management As early as the trial traffic opening of FKE and LTE, the project Owner established GPFKE Co\., Ltd to be responsible for the toll collection, loan repayment, operation, maintenance and management of FKE\. Two expressway construction preparation offices were organized, and GPFC established the Shenzhen-Shantou (West section) Administration Division to be responsible for the routine tolling surveillance of LTE\. Both expressway authorities set up and staffed expressway administration and maintenance teams to ensure the routine on-the-duty patrol, rescue and maintenance\. The project Owner strictly followed the Loan and Project Agreements and relevant documents\. All records and reports (including annual project audit reports, project quarterly reports, expressway construction monthly reports and summary reports as well as other reports and statements as required for various project components) were adequately prepared\. Assessment of the work by the supervision engineers To ensure that project management and contractual management was made strictly according to the procedural requirements specified by domestic authorities and the Bank, the project Owner organized a Chinese / foreign joint supervision team for the construction of FKE and LTE\. The foreign consultant was selected in a short list approved by the Bank in accordance with the "Guideline for the use of Consultants"\. Through procedural evaluation, the project Owner selected LBII, U\.S\.A\. to form a Joint Supervision Team with the Guangdong Communications Research Institute responsible, which carried out a 3-level (EO-ERO-REO) supervision of construction\. Each contract was staffed with on-duty qualified senior resident engineers and stand-by supervision engineers\. The EROs under EO were made responsible for contract management and quality, progress and cost control as well as for the supervision of environmental protection during construction\. Through the practice of JST, positive and promoting initiatives were taken with a view to modemize the management of expressway construction and standardize behaviors of all parties to the contract through studying, digesting and applying FIDIC's terms and conditions\. Imnediately after the commencement of FKE and LTE, the EO and EROs ran at-the-post-training courses on the use of CPM\. GPFC, in collaboration with the EO, successively carried out a computer supported management training for Primavera (P3) software (latest edition) aiming at channeling current contract management with computer support\. Moreover, as required by MOF and the Bank in the new SBD, the project Owner authority - 18- assigned capable supervision engineers, recommended by the domestic registered consultants, to the E&M works of the FKE and LTE\. Similarly, the project Owner authority assigned qualified professional engineers to the supervision of contracts for expressway annex area works approved by the Government and the Bank\. GPHAB established a special EO for the implementation of the RIP and RSPP\. Considering that RIP sub-projects were spread over a province-wide area, each sub-project established at city level a supervision team and staffed its team leader with a concurrent-posted Engineer's representative assigned by the EO\. For minor sub-projects, only a supervision engineer was directly responsible for the supervision of works\. Through the use of this supervision system, the contractual management and quality, progress and cost control of the contracted works under the RIP and RSPP were found to be effective\. Assessment of the work by the Contractors All the contractors, successfully selected through strict prequalifications and open competitive bidding procedures, generally followed the contracting terms and conditions, took initiative actions to deliver quality works, progress construction, and set up a cost guarantee system; they paid attention to set up their prestige and image\. Particularly, the FIDIC's terms and conditions attach the same level of imnportance to the obligations and responsibilities of the Employer, Engineer and Contractor\. The Contractors were encouraged to assume and enhance the risk management of construction works, according to their previous construction experience, site real situation, existing resources and market prices, and achieved their new experience\. 9\.4 Conclusions Project benefits The expressway construction project component comprises two key highway projects in Guangdong\. FKE is an extension of the existing Guangzhou-Foshan Expressway, passing through Nanhai, Shunde and Heshan cities\. LTE is the west section of the Shenzhen-Shantou coastal expressway, linking two Special Economic Zones in Shenzhen and Shantou\. Both FKE and LTE are part of the Tongjiang-Sanya National Expressway and this expressway corridors are going through an extremely rapid economic development\. The completion of both expressways has a promoting and pilot role in the formation of the future key frame of national and Guangdong provincial expressways\. It helped to improve the investment climate and to mitigate the traffic congestion along the exit passage in west Guangdong and the Guangzhou-Shantou highway in east Guangdong, as well as to promote the region economic and social development in the Pearl Delta, west and east Guangdong, and even in the whole province\. The project benefits mainly include: (a) average VOC savings due to improved standards and a shorter distance; (b) time savings through relieved congestion on existing roads; and (c) lower accident rates and costs due to the betterment of traffic safety facilities\. Moreover, the completion of the RIP and RSPP brought major improvements to the existing highway network structure\. Similarly, the project benefits include VOC and time savings, as well as benefits from traffic generated by the upgrading and rehabilitation of roads icluded in sub-projects\. Many identified safety blackspots were improved\. These sub-projects have benefited millions of people spread over 10 cities, 24 mountainous area counties (regions) and 72 townships in Guangdong; they played an important role in improving the economics of mountainous areas\. - 19- Experience and lessons With common efforts by all participants involved\. the completed Guangdong Provincial Highway Project has achieved remarkable results\. They encompass the emergence of numerous well-trained qualified managing and technical personnel, through project practice, learning, digesting and introduction of updated experience in intemational modem highway construction and management\. It is a major contribution to the future development of the expressway and highway system in Guangdong\. The following experience and lessons are proposed as reference for the preparation, launching and implementation of similar projects: * Early preparation works on the projects should be conducted in a more in-depth manner\. The cost estimates from both the engineering feasibility study and the preliminary design need to be adequate enough and avoid missing major works items; that resulted in major variations and cost increases as well as caused construction funds to go beyond control\. * Ensuring a better construction climate for project construction and improving a closer and more cooperative relationship with local govemments and authorities along the expressway and highway corridors would be a reliable guarantee for the successful implementation of the project and the completion of land acquisition and resettlement tasks\. * The application of the Bank's Procurement Guidelines and FIDIC's terms and conditions need to be in line with the concrete situations of the project Owner's country and province as well as with the project reality\. Further improvement may be made, such as enhancing prequalifications, implementing suitable bid evaluation methods, rationalizing bid package, excluding lowest bid price bid, strengthening performance supervision, etc\. - The Bank-financed highway project benefited from equitable interest rate, longer repayment and grace periods, as well as other preferential conditions\. However, the procurernent time was generally longer than forecasted due to more procedural management links and other circumstances\. This would increase the so-called additional hidden costs disbursed for the project\. The hidden costs problem has raised the project Owner's concem\. But, it is a complicated problem and requires objective analysis by project participants in order to solve or improve it, through a close coordination aiming at ensuring that project benefits are achieved as forecasted at appraisal\. Reference documents: 1\. "Staff Appraisal Report", (October 1992), Transport Operations Division, Country Department n, East Asia and Pacific Regional Office, the World Bank\. 2\. "Quarterly Report No\. 28" (Final), (July 2000), Guangdong Provincial Freeway Company, Guangdong Provincial Admninistration Highway Bureau, the World Bank Finance Office, GPCD\. 3\. ""Completion Report on Civil Construction of the FKE and LTE", (January 1997), GPFC, EO of the FKE and LTE\. 4\. "Completion Report on E&M Works of the FKE", (March 2000), Foshan-Kaiping Expressway Preparation Office, GPFC 5\. "Completion Report on E&M Works of the LTF', (March 2000), Shenzhen-Shantou Expressway Preparation Office, GPFC (b) Cofinanciers: N/A (c) Other partners (NGOs/private sector): - 20 - N/A 10\. Additional Information - 21 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome I Impact Indicators: _ _\. _,_,,_,_\._\._\. In~IcatrIMtri Prcte inlast PR c/ts smt Not identified in detail at appraisal Output Indicators: L IndIcatortrI r ojeted in last PSR X tit/1a7\.tEsti ,iit \. Not identified in detail at appraisal End of project - 22 - Annex 2\. Project Costs and Financing Proect Cost by Component (in US$ million equivalent) ___ Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million Foshan-Kaiping Highway 227\.52 330\.47 145 Longgang-Tanxi Highway 244\.03 425\.62 174 Road Improvement Program 96\.74 119\.07 123 Road Safety Pilot Program 0\.40 0\.57 143 Supervision of Construction 11\.44 18\.66 163 Equipment 13\.78 14\.04 102 Staff Training/Technical Assistance 2\.18 2\.82 129 Land Acquisition and Resettlement 49\.46 89\.23 180 Total Baseline Cost 645\.55 1000\.48 Physical Contingencies 58\.01 Price Contingencies 91\.56 37\.96 42 Total Project Costs 795\.12 1038\.44 Total Financing Required 795\.12 1038\.44 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) l ~~~~~~~~~Procurement Method Expenditure Category ICa NCB Other N\.B\.F\. Total Cost 1\. Works 511\.09 119\.58 66\.48 0\.00 697\.15 (152\.32) (36\.04) (20\.08) (0\.00) (208\.44) 2\. Goods 25\.40 0\.00 5\.96 0\.00 31\.36 (19\.83) (0\.00) (5\.48) (0\.00) (25\.31) 3\. Services 0\.00 0\.00 17\.16 0\.00 17\.16 (0\.00) (0\.00) (6\.25) (0\.00) (6\.25) 4\. Miscellaneous 0\.00 0\.00 0\.00 49\.46 49\.46 Land Acquisition (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 536\.49 119\.58 89\.60 49\.46 795\.13 __________ (172\.15) (36\.04) (31\.81) (0\.00) (240\.00) - 23 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1\. Works 606\.06 225\.85 72\.44 0\.00 904\.35 (190\.97) (10\.80) (22\.84) (0\.00) (224\.61) 2\. Goods 13\.57 0\.00 9\.81 0\.00 23\.38\. (6\.04) (0\.00) (4\.37) (0\.00) (10\.41) 3\. Services 0\.00 0\.00 21\.48 0\.00 21\.48 (0\.00) (0\.00) (4\.98) (0\.00) (4\.98) 4\. Miscellaneous 0\.00 0\.00 0\.00 89\.23 89\.23 Land Acquisition (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 619\.63 225\.85 103\.73 89\.23 1038\.44 (197\.01) (10\.80) (32\.19) (0\.00) (240\.00 Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. D Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by C_mponent (in US$ million equivalent) _______________ 100glk i ____ 6CoP0 \. I1UI GLfiS o \. CoP\. 3aufiik Got CP Major Highway Civil 144\.41 314\.12 178\.28 550\.78 123\.5 175\.3 Works E & M works 9\.11 3\.91 9\.20 17\.82 101\.0 455\.8 RIP Civil Works 30\.68 66\.07 36\.93 82\.14 120\.4 124\.3 Road Safety Civil Works 0\.15 0\.25 0\.18 0\.38 120\.0 152\.0 Major Highway 3\.65 6\.64 3\.34 13\.89 91\.5 209\.2 Supervision RIP Supervision 0\.00 1\.15 1\.43 0\.0 124\.3 Equipment 12\.72 1\.06 10\.41 3\.63 81\.8 342\.5 Training and TA 1\.64 0\.54 1\.64 1\.18 100\.0 218\.5 Contingencies 37\.64 11\.92 37\.96 0\.0 318\.5 Land and Resettlement 0\.00 49\.46 89\.23 0\.0 180\.4 -24 - Annex 3\. Economic Costs and Benefits Preface 1\. The economic evaluation of the project covers the following two components: (a) construction of the 80 km Foshan - Kaiping Highway (FKE) and the 146 km Longgang - Tanxi Highway (LTE); and (b) a Road Improvement Program (RIP) for the upgrading and rehabilitation of national and provincial highways in the province\. 2\. The economic analysis is based on the re-evaluation of data on traffic, operational performance, costs and benefits of project components\. The methodology used was similar to that employed in the SAR and is summarized as follows: (a) capital investment and maintenance costs were revised to reflect December 2000 prices and are included in the cost streams; (b) the benefit streams, also in December 2000 prices, consist of savings in vehicle operating costs, ship operation costs, reduced traffic congestion on existing routes, and enhanced road safety; and (c) a project life of 20 years has been assumed and the capital investment period for all components was from 1992 to 2000, depending on the construction phases\. 3\. During the project's preparation, it was understood that the selection of road sections to be improved under the RIP (from Phase II to Phase V) would be finalized during the project implementation\. The economic analyses for these components are included in the ICR\. 4\. This Attachment is comprised of four parts\. Part I is the economic evaluations of FKE and LTE; Part II is the econornic evaluations of the 41 national and provincial roads and bridges under the RIP; Part III is the overall economic evaluation of the project, including probabilistic risk analysis, and; Part IV is the financial evaluation of the project\. PART 1: FOSHAN - KAIPING HIGHWAY AND LONGGANG - TANXI HIGHWAY 5\. As in the SAR, the highways were divided into a total of five sections for economic evaluation\. Length of the Length of the New Old Road (kIn) Highway (km) FKE: Section 1: Foshan - Heshan 40\.5 40\.0 Section 2: Heshan - Shuikou (Kaiping) 54\.6 40\.0 Subtotal 95\.1 80\.0 LTE: Section 1: Longgang - Baiyun 72\.0 54\.6 Section2: Baiyun-Hounman 55\.0 41\.4 Section 3: Houman- Tanxi 63\.0 50\.6 Subtotal 190\.0 146\.6 - 25 - Highway Corridor Traffic 6\. The opening year of the highway was in 1997\. The highway corridor traffic in 1997 and its distribution between the old and the new highways are presented in the following table, indicating SAR forecast and actual traffic census data\. NUMBER OF MOTORIZED VEHICLES PER DAY FOR 1997 The Old Road The New Hishwav Total Corridor Diversion AADT PCU AADT PCU AADT PCU Factor (DF) (1) (2) (3) (4) (5)=(1+3) (6)=(2+4) (7)=(4)/(6) SAR Foshau- Kaiping Highway l\. Foshan- Heshan -- 18,900 -- 12\.700 - 31,600 40\.2% 2\. Heshan- Shuikou (Kaiping) -- 6,300 -- 8,600 -- 14,900 57\.7% Longgang- Tanxi Highway 1\. Longgang- Baiyun -- 11,200 -- 10\.100 -- 21,300 47\.4% 2\. Baiyun- Houmen -- 11,800 -- 7,300 -- 19,100 38\.2% 3\. Houman- Tanxi -- 12\.300 -- 6,500 -- 18,800 34\.6% ICR Foshan- Kaiping Highway 1\. Foshan- Heshan 53,960 63,503 20,302 25,427 74,262 88,930 28\.6% 2\. Heshan- Shuikou (Kaiping) 4,184 5,797 9,278 11,756 13,462 17,553 67\.0% Longgang- Tanxi Highway 1\.Longgang-Baiyun 8,232 12,603 10,453 13,544 18,685 26,147 51\.8% 2\. Baiyun- Houmen 8,252 12,452 10,025 13,056 18,277 25,508 51\.2% 3\.Houman-Tanxi 5,686 8,455 7,197 9,207 12,883 17,662 52\.1% Ratios (ICR/SAR) Foshan- Kaiping Highway 1\.Foshan-Heshan -- 236\.0% -- 100\.2% -- 181\.4% -- 2\. Heshan- Shuikou (Kaiping) -- -8\.0% -- 36\.7% - 17\.8% -- Longgang- Tanxi Highway 1\. Longgang- Baiyun -- 12\.5% -- 34\.1% -- 22\.8% -- 2\. Baiyun- Houmen -- 5\.5% -- 78\.8% -- 33\.5% -- 3\.Houman-Tanxi -- -31\.3% -- 41\.6% -- -6\.1% -- Sources: GPCD and the Bank staff\. 7\. As shown above, the 1997 total traffic in the highway corridor (i\.e\., the sum of traffic on the parallel sections of the existing arterial road and on the new highway) on the two sections of FK corridor was higher than the SAR's forecast, and exceeded it by between 17\.8% and 18 1%\. In the LT corridor, the actual traffic in the first two sections exceeded the forecasts by 23 and 34 percent\. However, in the third section, it was 6% less than forecasted\. The traffic distribution in the corridor (i\.e\. between the existing arterial road and the new highway), shows that, except for section 1 of FKE, in the first opening year traffic diversion to the new road was higher than projected in the SAR\. 8\. Except for section 2 of FKE, the diversion factor (DF) has been increasing for all the five sections of the two highways over the three years of operation (1997 to 1999)\. The latest records show that the DF ratio for FKE has increased from about 29 - 67 percent to 31- 60 percent\. For LTE, it has increased from about 52 percent to around 65 percent\. The trend on DF ratio indicates that more and more road users in these highway corridors choose the new highways as their preferred route\. - 26 - Traffic Projection 9\. The actual records confirm that the expected buildup of traffic on a new highway, particularly when it operates as a toll facility, is gradual in the early years, then the diversion of traffic accelerates\. Therefore, the long term traffic growth rates on the two new highways are estimated to be slightly higher than the SAR's forecast\. The traffic projections by section are summarized as follows: TRAFFIC FORECAST COMPARISON FOR THE NEW HIGHWAY BY SECTIONS Foshan- Kaini P- Hinhwav Lonm mn- Tanxi Hie wav 1\. Foshan- 2\. Heshan- 1\. Longgang- 2\. Baiyun- 3\. Houman- Heshan Shuikou Baiyun Houmen Tanxi (Kaiping) I Total\| Total \| Total Total Total AADTI PCU AADT I PCU AADT PCU AADT PCU AADTI PCU SAR 1997 -- 12,700 -- 8,600 -- 10,100 -- 7,300 -- 6,500 1998 -- 13,450 -- 9,140 -- 10,714 -- 7,760 -- 6,902 1999 -- 14,245 -- 9,714 -- 11,366 -- 8,249 -- 7,328 2000 -- 15,086 -- 10,324 -- 12,058 -- 8,768 -- 7,781 2005 -- 20,100 -- 14,000 -- 16,200 - 11,900 -- 10,500 2007 -- 22,059 -- 15,352 -- 17,753 -- 13,026 -- 11,507 2015 -- 32,000 -- 22,200 -- 25,600 -- 18,700 -- 16,600 2017 -- 35,119 -- 24,344 -- 28,053 -- 20,469 -- 18\.192 Average growth p\.a\. 1999-2017 - 5\.1% -- 5\.2% - 5\.1% -- 5\.2% 5\.2% ICR 1997 20,302 25,427 9,278 11,756 10,453 13,544 10,025 13,056 7,197 9,207 1998 22,502 28,182 10,285 13,033 12,947 16,642 12,879 16,922 9,608 12,520 1999 25,875 32,406 11,827 14,986 13,693 17,415 13,382 17,267 9,803 12,638 2000 29,731 37,236 13,588 17,218 14,654 18,704 14,477 18,794 10,589 13,728 2005 43,181 53,468 18,756 23,502 20,378 26,077 21,191 27,592 16,226 21,097 2007 50,133 61,794 21,337 26,617 23,251 29,784 24,680 32,173 19,246 25,053 2015 84,063 102,968 33,031 40,920 35,239 45,334 40,654 53,254 34,145 44,660 2017 95,659 116,988 36,844 45,565 39,100 50,354 46,056 60,404 39,407 51,604 Average growth p\.a\. 1999-2017 7\.5% 7\.4% 6\.5% 6\.4% 6\.0% 6\.1% 7\.1% 7\.2% 8\.0% 8\.1% Sources: GPCD and the Bank staff\. 10\. From 1997 - 1999, actual traffic data have been used\. For subsequent years, the following growth rates have been assumed: (a) the normal traffic growth forecast of the new highway is estimated to be within a range of 4\.5 percent to 8\.5 percent between 2000 - 2007, depending on the type of vehicles and sections of the two roads\. Between 2007 - 2017, the growth rate is assumed to be in the range of 3\.0 percent to 7\.5 percent; and (b) it is assumed that there is no generated traffic\. These estimates are more conservative than the hypothesis retained by GPFC in a report based on results from traffic forecasts originally prepared by Scott Wilson Ltd\. (Hong Kong) and submitted to the Bank\. As an example, in this ILICR a 7\.5% pa traffic growth is assumed during the 2000-2005 period, whereas GPFC's report retains an average of 8% pa\. - 27 - Economic Costs 11\. Financial construction costs have been converted to economic costs by shadow pricing for each of the input items\. The overall economic cost of the project, at constant December 2000 prices, is 100\.5 percent higher than the SAR estimates\. Hiihwav Economic Cost Comparison (million Yuan) SAR ICR ICR] SAR (Dec\. 1991) (Dec\. 2000) (Dec\. 2000) (in %) FKH: 1\. Foshan- Heshan 1,399\.00 1,540\.57 2,994\.08 94\.3 2\. Heshan- Shuikou (Kaiping) 464\.00 510\.95 819\.76 60\.4 Subtotal 1,863\.00 2,051\.52 3\.813\.84 85\.9 LTH: 1\. Longgang- Baiyun 600\.00 664\.07 1,703\.91 184\.0 2\. Baiyun- Homan 606\.00 670\.71 1,291\.24 113\.1 3\. Homan- Tanxi 730\.00 807\.96 1,599\.46 119\.1 Subtotal 1,936\.00 2\.142\.74 4,594\.61 114\.4 Total 3,799\.00 4,194\.26 8,468\.45 100\.5 Sources: GPCD and the Bank staff\. Economic Benefits 12\. The economic analysis includes the benefits derived from (a) Vehicle Operating Costs savings (summarized below), (b) time savings from relieved congestion on the existing roads, and (c) lower accident costs\. The benefits resulting from the lower level of congestion were quantified\. The value of passenger time savings was estimated at Y 1\.0 per passenger-hour, based on an updated value from a recent report on feasibility study methodology for highways in China (Rust PPK, Australia Feasibility Study methodology Report, March 1996)\. The same source was used for vehicle accident rates on different classes of road\. Economic Vehicle Operating Costs (Yuan per km, Dec\. 2000 prices) ---Good- - ---Fair----- - ---Poor---- Flat Hill Mount\. Flat Hill Mount\. Flat Hill Mount\. Car 0\.598 0\.624 0\.644 0\.684 0\.711 0\.731 0\.885 0\.912 0\.932 Medium bus 1\.201 1\.395 1\.563 1\.480 1\.695 1\.870 1\.951 2\.139 2\.314 Large bus 2\.601 3\.172 3\.680 3\.194 3\.847 4\.383 3\.870 4\.499 5\.035 Smalltruck 1\.069 1\.336 1\.536 1\.261 1\.541 1\.751 1\.541 1\.786 2\.031 Medium truck 1\.355 1\.670 1\.985 1\.543 1\.897 2\.219 1\.864 2\.218 2\.572 Largetruck 1\.950 2\.389 2\.828 2\.206 2\.681 3\.100 2\.625 3\.100 3\.547 Tractor/trailer 2\.941 3\.879 4\.690 3\.334 4\.339 5\.186 3\.969 4\.922 5\.795 Sources: GPCD and the Bank staff\. - 28 - Sample of Economic Vehicle Operating Cost Calculation (Yuan per 1,000 veh\.-km\. Dec\. 2000 prices) Medium Large Small Medium Large Trailer/ Car Bus Bus Truck truck Truck Container The New ExDresswav Fuel 253 338 672 460 563 609 672 Tires 21 35 130 50 130 480 1,073 Maintenance 223 311 638 466 529 562 646 Crew 10 22 25 22 22 22 25 Depreciation 41 120 279 71 111 277 525 Subtotal 548 826 1,744 1\.069 1\.355 1\.950 2,941 Time value of passengers 50 375 857 Total 598 1,\.201 2\.601 1,069 1355 1,950 2\.941 The Existine Road Fuel 276 383 788 575 653 693 798 Tires 25 40 149 55 140 540 1,188 Maintenance 248 345 709 518 588 624 718 Crew 15 34 38 34 38 41 47 Depreciation 45 133 310 79 124 308 583 Subtotal 609 935 1g94 1,261 1\.543 2,206 3\.334 Time value of passengers 75 545 1,200 Total 684 1\.480 3\.194 1\.261 1\.543 2,206 3,334 Sources: GPCD and the Bank staff\. Economic Evaluation and Sensitivity Analysis 13\. The economic Internal Rate of the Return (EIRR) on the two highways is estimated to be about 15 percent, which is much lower than the 25 percent estimated in the SAR\. The lower EIRR is primarily the result of the 100 percent project cost overruns\. Total cost and benefit streams, EIRR and Net Present Value (NPV) for FKE and LTE are presented as follows\. EIRR (in %) and NPV (12%\. Y million) Summary The SAR The ICR FKH LTH Total FKH LTH Total EIRR 21\.4 27\.8 25\.1 14\.7 14\.8 14\.8 NPV 1,881\.3/ 1 3,840\.9/ 1 5\.722\.2 971\.1 1\.061\.8 2,032\.9 /_1: NPV has been updated to 2000 prices to take into account foreign and domestic inflation\. 14\. Besides the basic traffic growth scenario, two traffic growth alternatives have also been considered: e\.g\., a lower traffic growth projection (25 percent lower than the basic traffic) and a higher traffic growth projection (25 percent higher than the basic traffic growth)\. The traffic growth and annual average growth rate under these two scenarios are as follows: - 29 - THE HIGHWAY TRAFFIC FORECAST SCENARIOS (AADT) FKE LTE Section 1 Section 2 Section 1 Section 2 Section 3 The Low Traffic Proiection: 1999 25,78511,82 7 13,693 13,382 9,803 2007 42,53818 ,074 19,701 20,946 16,357 2017 64,03724,56 5 26,059 30,821 26,466 Average growth per year 1999-2017 5\.2% 4\.1% 3\.6% 4\.7% 5\.7% The Hieh Traffic Projection: 1999 25,875 11,827 13,693 13,382 9,803 2007 58,863 25,092 27,339 28,971 22,559 2017 141,579 54,742 58,126 68,189 58,134 Average growth per year 1999-2017 9\.9% 8\.9% 8\.4% 9\.5% 10\.4% 15\. The overall EIRR and NPV for the different traffic growth scenarios are summarized in the following table\. It shows that even with the lower traffic projection, the overall EIRR would be 12\.8 percent\. The high traffic growth scenario The low traffic growth scenario Best estimate of EIRR 16\.3% 12\.8% NPV (12%, Y million) 3,659\.2 514\.4 Sensitivity Analysis 16\. The EIRRs summarized below show the effects of possible changes in assumptions made in the evaluation\. Since the costs of operation and maintenance of FKE and LTE are a relatively smnall portion of the investment, any variation in these costs would have a minimnum discernible impact on the EIRR\. The impact of changes in traffic volumes was studied under the two traffic growth scenarios discussed in paras\. 14 and 15 above\. The results of the sensitivity tests show that the reduction in VOC savings by 25 percent has the greatest impact while the reduction in road congestion has the least impact on the EIRR\. SENSITIVITY ANALYSIS EIRR (in %) NPV(12%, Y million) VOC savings reduced by 25% 12\.0 (0\.3) Passenger time savings reduced to zero 12\.5 334\.2 Congestion savings reduced to zero 14\.4 1,741\.2 Total benefits reduced by 20% 12\.4 287\.1 PART II: ROAD IMPROVEMENT PROGRAM (RIP) Background and Traffic 17\. In the SAR, the Road Improvement Program (RIP) was designed to be implemented in three parts, of which the first one comprised a total of 24 components (total 374\.8 kmn)\. During implementation, the RIP components were changed to 41 components into three packages (total 556\.4 km)\. The main purpose of the RIP was to repave existing roads or bridges in Guangdong province\. - 30 - 18\. The first package (1993) covered the rehabilitation of nine roads and two bridges\. The second package consisted of two groups\. Group 1 (1994) covered the rehabilitation of twelve roads and Group 2 (1995-1997) covered the rehabilitation of ten roads and two bridges\. The third package (1996-1997) covered the rehabilitation of six roads\. Since all the components under RIP are located in the same province, the economic development and traffic pattems are quite similar for each road\. Based on the actual traffic growth since project appraisal, the following assumptions have been made in economic analyses regarding future traffic growth for most of the roads: 3\.5\. percent per year for motor vehicles and 2\.5 percent for tractors during 1998-2000, and 1 percent during the next ten years\. By comparison, the projection on SAR's vehicle traffic growth was 8\.0 per year between 1996-2000, reduced to 5 percent per year thereafter\. The tractor traffic was assumed to grow at 2 percent until 2000 and grow no further thereafter\. Economic Costs 19\. Financial construction costs have been converted to economic costs\. Just as for FKE and LTE, All input items have been evaluated to constant December, 2000 economic costs\. Given the overall effect of shadow-pricing the financial cost of the sub-components, the economic cost is 12\.1 percent higher than the financial cost\. 20\. Due to the major changes in project components (par\. 17), the total actual economic cost of RIP in December 2000 constant prices is about 2\.76 times higher than the SAR's estimate\. RIP PROJECT COST COMPARISON (YUAN MILLION) Estimate (Yuan million)Ac tual (Yuan million) December 1991 pnices Dec\. 2000 Financial Dec\. 2000 (B)/(A) Financial Economic Economic (A) (Current) Economic (B) (in %) Total 229\.8 265\.5 293\.1 /-a 988\.30 1,102\.8 +276\.2 /_a: Economic cost (1991 constant prices), has been updated to 2000 constant prices to take into account foreign and domestic inflation\. Economic Benefits 21\. The economic analysis applies the methodology used in the SAR, i\.e it is based primarily on benefits derived from: (a) VOC savings due to shorter distances (if applicable), (b) VOC savings due to normal traffic, and (c) benefits from generated traffic\. 22\. As a result of the project, the classifications of all 41 sub-components (roads, bridges and tunnels) were upgraded\. The better pavements reduces VOC and yields the major portion of the project benefits\. Generated traffic was assumed to be 5 percent of the normal traffic ( versus 10% assumed in the SAR)\. In addition, the better paved roads or bridges increase vehicle speed and reduce congestion\. These benefits have been qualified also as part of operating cost savings\. Economic Evaluation 23\. The EIRRs, for the three packages, range from 28\.5 percent to 61\.2 percent\. The overall EIRR for the RIP is 42\.3 percent\. The detailed summary of these results is as follows: - 31 - EIRR AND NPV OF THE RIP EIRR (in %) NPV (12%\. Yuan million) The SAR The ICR The SAR The ICR The First Package -- 55\.0 -- 614\.6 The Second Package Group I -- 28\.5 -- 496\.5 Group 2 -- 37\.5 -- 796\.9 The Third Package -- 61\.2 -- 1,544\.1 Total RIP 55\.0 42\.3 940\.8 / a 2\.793\.1 /La: NPV was Y 871\.9 million at 1991 prices and updated to 2000 prices to take into account foreign and domestic inflation\. PART HII: THE OVERALL ECONOMIC EVALUATION OF THE PROJECT Overall Economic Internal Rate of Return (EIRR) 24\. The overall EIRR of the project (including FKE, LTE and RIP) is 17\.7 percent and the NPV is about 4\.5 billion Yuan\. In the SAR, the overall EIRR of the project was 30 percent and the NPV about 6\.7 billion Yuan\. The SAR The ICR EIRR NPV /_a EIRR NPV/_a Foshan - Shuikou (Kaiping) Highway 21\.4% 1,881\.7 /_b 14\.7% 971\.1 Longgang - Tanxi Highway 27\.8% 3,840\.8 Lb 14\.8% 1,061\.8 Total Highways 25\.1 5,722\.5 14\.8% 2\.032\.9 Road Improvement Program 55\.0% 962\.6 Lb 42\.3% 2,790\.1 Total Project 30\.0% 6\.685\.1 17\.7% 4\.524\.0 /_a: Million Yuan, discount rate 12%\. /_b: NPV was urdated to 2000 prices to take into account foreign and domestic inflation\. The Project Risks 25\. Although the overall EIRR of the project is still good and most sub-components under RIP also show very robust results, the EIRRs for the two major highways are below the SAR estimates due to the large amount of cost overruns (para\. 11)\. It is suggested that Guangdong should in the future better estimate and control construction costs\. Probabilistic Risk Analysis for Economic Evaluation of FKE and LTE 26\. To determiine the degree of project uncertainty, a probabilistic risk analysis was carried out by using Monte Carlo techniques\. In a Monte Carlo analysis, each uncertain factor is allowed to vary at random (between set lirnits) and all uncertain factors are allowed to change simultaneously\. Monte Carlo simulation provides probability distributions of the potential outcomes of decisions\. By analyzing these distributions, we can assess the risk associated with making various decisions (or probabilistic risk analysis)\. The product of the analysis is a judgment on the possible range of the decision variables, and on the likelihood of each value within this range\. 27\. For the RIP component, its high EIRR and low capital investment (the sum of capital cost for 41 - 32 - roads and bridges under RIP constitute only about 11\.3 percent of the total project capital investment), reveal that there is a low risk of uncertainty in the re-estimated EIRR\. The probabilistic risk analysis for the project is focused on the construction of the two highways (FKE and LTE)\. The factors with the most uncertainty associated with the economic evaluation of FKE and LTE have been identified as follows: (a) traffic growth rate, (b) traffic diversion to the new highways, and (c) value of vehicle operating costs\. The results of the probabilistic risk analysis for the five sections of the two highways show that the EIRR for the most likely scenario is 14\.5 %\. In the worst case scenario of the analysis the EIRR is 10\.5% and 18\.3% in the best case scenario\. The standard error of the mean is 0\.2 %\. The results of Monte Carlo test and probabilistic analyses are surmmarized as follows: Summary of Probabilistic Risk Analysis Range of EIRR Most likely EIRR Standard error of the mean FKH: 1\. Foshan-Heshan 7\.2%-15\.8% 11\.7% 0\.3% 2\. Heshan - Shuikou (Kaiping) 20\.1% - 26\.8% 23\.5% 0\.2% Subtotal 10\.8% - 18\.5% 14\.8% 0\.3% LTH: 1\. Longgang- Baiyun 11\.4% - 18\.9% 15\.3% 0\.2% 2\. Baiyun-Houman 12\.2%- 19\.7% 16\.1% 0\.2% 3\. Houman-Tanxi 8\.3% - 16\.1% 12\.4% 0\.3% Subtotal 10\.6%-18\.2% 14\.6% 0\.2% Total 10\.5% - 18\.3% 14\.5% 0\.2% PART IV: FINANCIAL EVALUATION Preface 28\. The financial evaluation of the project is comprised of two sections\. Section 1 regards the revenue earning entity; and Section II is for the non-revenue eaming entity\. FKE and LTE are toll roads and the only two roads in the project which generates revenues (they account for 88 percent of total project cost); there is no revenue from the 41 sub components of the RIP\. The financial cost of capital is based on the weighted average cost of the various sources of funds: a) for FKE, the weighted average is 5\.5% (23% of the funding comes from the world Bank at a cost of 7% and 77% are local financing costing 5%/O), b) for LTE, the weighted average is 6\.0% (20% from the Bank at 7%, 20% from local banks at 7\.2% and the rest at 5%)\. There was no financial evaluation of the project carried out in the SAR\. Section I: THE FINANCIAL EVALUATION OF FKE AND LTE The Highway Companies and the Toils 29\. In December 1996, GPCD set up FKE and LTE as two highway operating companies\. These companies are responsible for the day to day management, the operation, maintenance, and development of the highways\. They also bear all financial obligations including the repayment of the debts\. The main financial revenue of the companies is the toll income from the road users, but the toll charges are strictly controlled by the government\. Therefore, the toll charges have been assuned to increase once every three years (10 percent or average 3\.2 percent p\.a\.), which is lower than the estimated 5 percent domestic general price escalation\. This is also a more conservative assumption than GPFC forecasts of a 27\.6% increase every 5 years (5% pa)\. Financial forecast - 33 - 30\. Revenue: The toll is charged on the basis of vehicle size and distance traveled\. The current toll charges are as follows: Toil CharLes L/a Small Medium Large Small Medium Large Tractor car bus bus truck truck truck - trailer Yuan! veh-km 0\.450 0\.900 1\.462 0\.450 0\.900 1\.462 2\.138 /La: Motorcycle and extra large truck ( > 20 ton) are Y 0\.225 and Y 2\.138, respectively\. 31\. Costs: The operating revenue and cost forecasts (the income statement ) are calculated on the bases of the current practice of the toll road\. For operating revenue with associated traffic and costs, please see page 1 of 3, Table 1 and Table 2\. For annual capital investment and cash flow statement, please see page 2 of 3, Table 1 and Table 2\. The balance sheet statement is presented in page 3 of 3 in Table 1 and Table 2\. The detail financial assumptions, please see Table 3\. 32\. Profitabilitv: As a consequence of our more conservative estimates of traffic growth and toll increases in the future, the revenue estimated in 2005 by GPFC is about 1/3 higher than the figure retained in this ILICR, and the net cash flow is about 25% higher this same year ($ 60 million vs $ 48 million)\. 33\. Under these assumptions it is expected that LTE would not be able until 2002 to generate enough cash flow to cover its operating expenses and the repayment of the loan\. However this situation is expected to improve from 2002 for FKE and 2003 for LTE, and both companies would have enough cash reserves to cover the losses from the early years' operations\. Since GPCD has converted almost all construction costs as a loan to the FKE company, the equity of the FKE company is relatively low compared with its debt\. The high debt! equity ratio also dilutes the financial leverage of the company, and based on the current repayment schedule of the loan it would not recover before 2008\. For the LTE company, a large amount of long term debts also caused the high debt! equity ratio in 1997 and 1998\. In 1999, GPCD converted about Y 1\.4 billion domestic loan (or 47% of total long term debts) to equity\. As a result, the financial leverage of the company has turned to a very health condition since 1999\. 34\. Financial Rate of Return\. The results of the financial evaluation shows that the FIRR on equity would be 5\.6 percent for FKE and 3\.4 percent for LTE\. The FIRR for the entire project investment is expected to be 5\.6 percent for FKE and 4\.4 percent for LTE\. 35\. Financial Probabilistic Risk Analysis\. The three most uncertain factors which may affect the financial evaluation have been identified: (a) traffic growth rate, (b) growth of toll rates, and (c) increase in operating costs\. The result of a financial probabilistic analysis reveals that (a) the most likely FIRR on equity would be 5\.6 percent for FKE and 3\.4 percent for LTE, (b) the most likely FIRR on total project investment would be 5\.6 percent for FKE and 4\.4 percent for LTE\. The details for FRR and NPV in the worst and best cases are summarized as follows: - 34 - Summary of Financial Probabilistic Risk Analysis On Equity Total Project Most Std\. Most Std\. Range of FIRR Likely EIRR Range of FIRR Likely EIRR & NPV FIRR of The & NPV FIRR & of fte & NPV Mean NPV Mean FKE: FIRR (in 0%) 4\.3 - 6\.5 5\.6 0\.1% 4\.7 - 6\.3 5\.6 0% NPV (5\.5%, Y million) -301\.2 - 303\.9 16\.1 17\.9 -275\.2 - 329\.9 42\.2 17\.9 LTE: FIRR(in%) 109-4\.9 3\.4 0\.1% 3\.1-5\.7 4\.4 0\.1% NPV (6\.0%, Y million) -1,140\.3 - -366\.3 -782\.6 21\.8 -904\.4- -130\.4 -546\.7 21\.8 Section II: THE FINANCIAL IMPLICATION OF RIP FOR GPCD BUDGET 36\. This section analyses the impact of this program on the overall GPCD road budget, to ascertain that it will have no adverse effect on the construction and maintenance of the provincial road network\. 37\. GPCD has provided its financial plan of overall revenues and expenditures for the Ninth Five Year Plan (9th FYP, 1996 - 2000) and the 10th FYP (2001 - 2005)\. Based on the provincial highway development plan, GPCD has acquired sufficient funds to cover new roads construction and the maintenance of its existing road network\. In addition, the higher self-financing ratio (road maintenance fee and provincial and local government authorities) of GPCD clearly ensures the future maintenance of RIP\. In 1999, the latest actual data, revealed that about 74 percent of GPCD's total revenue are generated within the province\. Detailed information on sources of funds and expenditures for 1996 - 2005 are shown in Table 4 of this Attachment\. 38\. Given the increases in the length of the provincial road network every year, GPCD also reserved the additional resources needed for the maintenance of the existing road networks and the preservation of the quality of road service\. During the 9th FYP and the 10th FYP, despite the continuous increases in road network, the average unit road maintenance expenditures were constant at about 32,000 Yuan/Ian\. 39\. The financial risks of a lack of the revenues needed to support the RIP road maintenance would be minimal, as the expenditures on these activities constitute only a small fraction of GPCD flow of funds\. Based on GPCD plan, the maintenance expenditures on RIP are less than 0\.6 percent of the overall road maintenance expenditures in the province during the 9th and 10th FYP\. These low financing ratios indicate that the project presents modest financial risk regarding the availability of counterpart funds for the future maintenance of the project components\. Figures are summarized as follows: GPCD: Maintenance Expenditures (million Yuan) 9 FYP IOUIFYP Total RIP maintenance (a) 0\.84 0\.92 Total GPCD Maintenance Expenditures (b) 153\.00 163\.00 Ratios (a)/(b) 0\.5% 0\.6% - 35 - Table 1: Guangdong: Foshan - Kaiping Highway Project Income Statement - The Expressway Company (million Yuan, year ending 31, December) Page I of3 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Traffic (million Veh\.-km) 431\.86 478\.70 550\.45 632\.46 679\.15 729\.35 783\.35 841\.43 903\.89 971\.11 Operating Revenue 227\.64 260\.16 288\.20 320\.00 346\.37 371\.97 399\.51 471\.20 506\.18 543\.82 Operating Costs: WorldngCosts/_l 31\.30 39\.34 43\.15 47\.47 83\.93 55\.18 59\.27 69\.91 75\.10 260\.16 Depreciation 21\.14 37\.52 55\.37 108\.57 109\.96 110\.10 110\.25 110\.42 110\.60 110\.79 Subtotal 52\.44 76\.86 98\.52 156\.04 193\.89 165\.28 169\.52 180\.33 185\.70 370\.95 OperatingTaxes 1\.36 14\.31 15\.87 17\.60 19\.05 20\.46 21\.97 25\.92 27\.84 29\.91 Operating Profit 173\.84 168\.99 173\.81 146\.36 133\.43 186\.23 208\.02 264\.95 292\.64 142\.96 Less: Financial expenses: IBRD - - - - - - - - - - Domestic 270\.62 243\.83 160\.58 138\.46 144\.00 137\.00 130\.00 122\.00 115\.00 124\.49 Subtotal 270\.62 243\.83 160\.58 138\.46 144\.00 137\.00 130\.00 122\.00 115\.00 124\.49 Net Revenue (96\.78) (74\.84) 13\.23 7\.90 (10\.571 49\.23 78\.02 142\.95 1\.64 18\.47 Add: Non operating income - 12\.95 5\.34 7\.75 8\.14 8\.55 8\.98 9\.43 9\.90 10\.40 Less: Nonoperatingexpenditure 2\.04 4\.08 0\.16 0\.10 0\.10 0\.10 0\.10 0\.10 0\.10 0\.10 Profit Before Taxes (98\.82) (65\.97) 18\.41 15\.55 (2\.53) 57\.68 86\.90 152\.28 187\.44 28\.77 Income tax - - - - - 19\.03 28\.68 50\.25 61\.86 9\.50 Other payments - - - - - - - - NetProfitAfterTaxes (98\.82) (65\.97) 18\.41 15\.55 (2\.53) 38\.65 58\.22 102\.03 125\.58 19\.27 Operating ratio 23\.0 29\.5 34\.2 48\.8 56\.0 44\.4 42\.4 38\.3 36\.7 68\.2 The expressway opened in Dec\. 8, 1996\. Actual: 1997-1999\. Best estimates: 2000\. Forecast: 2001-2006 LI: Assumption was made 1\.5 times for medium maintenance (every 5 year) and 3\.0 times for major maintenance (every 10 years)\. The details are in Table 3\. - 36 - Table 1: Guangdong: Foshan - Kaiping Highway Project Sources and Applications of Funds- The Expressway Company (million Yuan, year ending 31, December) Page 2 of 3 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sources: Net profits - (98\.82) (65\.97) 18\.41 15\.55 (2\.53) 38\.65 58\.22 102\.03 125\.58 19\.27 Depreciation - - - - 21\.14 37\.52 55\.37 108\.57 109\.96 110\.10 110\.25 110\.42 110\.60 110:79 State contribution 3\.01 15\.21 24\.90 37\.13 75\.65 - - - - - - - - Provincial contribution 48\.76 246\.22 403\.01 600\.82 1,224\.04 Borrowing: IBRD 16\.04 81\.00 132\.58 197\.66 402\.69 Ll - Others - - - - - - 22\.02 - - - - - - - - Total 67 8 342\.43 5 1\.702\.38 (77\.681 (6\.43 73\.78 112 107\.43 148\.75 16847 212\.45 236\.18 130\.06 Am,lcadtlsns: Capital expenditure 67\.81 342\.43 560\.49 835\.61 1,702\.38 - - 28\.16 2\.00 2\.10 2\.21 2\.32 2\.44 2\.56 2\.69 Other investment - - - - - - - 39\.88 146\.76 - - - - - - Loan repayments: IBRD Domestic - - - - - - - - - 100\.00 100\.00 100\.00 100\.00 100\.00 100\.00 Others - - - - - - Change w/capital - (12\.53) (9\.54) (15\.50) (0\.59) (4\.61) (4\.96) (12\.91) (6\.30) (6\.76) Total 67\.81 342\.3 560\.49 835\.61 1\.702\.38 (12\.53) 58\.50 133\.26 101\.51 97\.60 97\.36 89\.53 96\.26 95\.93 Net Funds Flow (-- 77,68) 6\.10 15\.28 (2 5\.92 51\.15 71\.11 122\.92 139\.92 34\.13 Open balance 95\.44 17\.76 23\.86 39\.14 30\.00 35\.92 87\.07 158\.18 281\.10 421\.02 Closing balance - - - - 17\.76 23\.86 39\.14 30\.00 35\.92 87\.07 158\.18 281\.10 421\.02 455\.16 DmS Cover 1\.1 1\.5 1\.7 2\.1 2\.4 1\.3 Actual: 1997-1999\. Estimates: 2000\. Forecast: 2001-2006 -37 - Table 1: Guangdong: Foshan - Kaiping Highway Project Balance Sheet- The Expressway Company (million Yuan, year ending 31, December) Page 3 of 3 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Assets: Fixed Assets At cost 2,887\.50 3,386\.43 3,509\.26 3,540\.64 3,542\.74 3,544\.95 3,547\.27 3,549\.71 3,552\.27 3,554\.96 Less: Depreciation 21\.14 58\.66 114\.01 222\.58 332\.54 442\.64 552\.89 663\.31 773\.91 884\.70 Net fixed assets 2\.866\.36 3327\.773\.39525 3318\.06 3\.2 3102\.31 2,994\.382\.886\.40 2\.778\.36 2,670\.2 Current Assets Cash 17\.76 23\.86 39\.14 30\.00 35\.92 87\.07 158\.18 281\.10 421\.02 455\.16 Inventory 0\.65 - - - - - - - - - Account receivable 24\.02 35\.18 5\.82 6\.46 6\.93 7\.44 7\.99 9\.42 10\.12 10\.88 Subtotal 42\.43 59\.04 44\.96 36\.46 42\.85 94\.51 166\.17 290\.52 431\.14 466\.04 Other assets 462\.73 120\.25 19\.09 20\.00 20\.78 22\.32 23\.97 28\.27 30\.37 32\.63 Total Assets 3,371\.52 3,507\.06 3,459\.30 3,374\.52 3,273\.83 3,219\.14 3,184\.52 3,205\.19 3,239\.87 3,168\.93 Liabilities & Equity State funds- Equity 1,009\.18 943\.20 961\.62 977\.17 975\.21 1,015\.38 1,075\.22 1,181\.48 1,309\.12 1,330\.63 L/T loans: IBRD - - - - - - - - - - Domestic 2,313\.11 2,485\.86 2,445\.33 2,328\.86 2,229\.00 2,129\.00 2,029\.00 1,929\.00 1,829\.00 1,729\.00 Subtotal 2,313\.11 2,485\.86 2,445\.33 2,328\.86 2\.229\.00 2\.129\.00 2,029\.00 1\.929\.00 1,829\.0 1,729\.00 Current Liabilities 48\.85 71\.89 52\.07 68\.21 69\.27 74\.39 79\.90 94\.24 101\.24 108\.76 Other Liabilities 0\.38 6\.11 0\.28 0\.28 0\.35 0\.37 0\.40 0\.47 0\.51 0\.54 Total Liabilities & Equity 3,371\.52 3,507\.06 3,459\.30 3,374\.52 3,273\.83 3,219\.14 3,184\.52 3,205\.19 3,239\.87 3,168\.93 Current ratio 0\.9 0\.8 0\.9 0\.5 0\.6 1\.3 2\.1 3\.1 4\.3 4\.3 Debt:equityratio 70/30 73/27 72/28 71/29 70/30 68/32 66/34 63/37 60/40 58/42 Actual: 1997-1999\. Best estimates: 2000\. Forecast: 2001-2006 - 38 - Table 2: Guangdong: Longgang- Tanxi Highway Project Income Statement - The Expressway Company (million Yuan, year ending 31, December) Page 1 of 3 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Traffic (million Veh\.-km) 492\.57 629\.87 655\.90 706\.12 760\.74 819\.62 883\.09 951\.60 1,025\.45 1,105\.27 Operating Revenue(a) 235\.53 305\.69 328\.39 345\.35 380\.37 409\.81 441\.55 523\.38 564\.00 607\.90 Operating Costs: WorkingCosts LI 31\.14 38\.06 30\.59 38\.61 63\.81 46\.67 51\.00 55\.55 60\.33 196\.03 Depreciation 171\.54 194\.02 198\.27 205\.27 215\.50 226\.93 226\.86 232\.52 238\.61 245\.12 Subtotal(b) 202\.68 232\.08 228\.86 243\.88 279\.31 273\.60 277\.86 288\.07 298\.94 441\.15 OperatingTaxes - 5\.30 24\.00 18\.99 20\.92 22\.54 24\.29 28\.79 31\.02 33\.43 Operating Profit 32\.85 68\.31 75\.53 82\.48 80\.14 113\.67 139\.40 206\.52 234\.04 133\.32 Add: Profit transfer 3\.16 4\.13 0\.41 4\.00 4\.41 4\.75 5\.12 6\.07 6\.54 7\.05 Less: Management expenses 11\.61 20\.16 24\.17 25\.38 26\.65 27\.98 29\.38 30\.85 32\.39 34\.01 Financial expenses: IBRD 43\.84 52\.99 63\.43 64\.40 66\.62 63\.17 59\.45 55\.59 51\.12 40\.28 Domestic 112\.72 141\.04 34\.24 22\.82 24\.20 19\.08 12\.10 10\.00 2\.57 - Subtotal 156\.56 194\.03 97\.67 87\.22 90\.82 82\.25 71\.55 65\.59 53\.69 40\.28 NetRevenue (132\.16) (141\.75) (45\.90) (26\.12) (32\.92) 8\.19 43\.59 116\.15 154\.50 66\.08 Add: fnvestment income - - - - - - - - - - Other income - - Non operating income 0\.01 0\.03 Less: Non operating expenditure 0\.11 0\.03 ProfitBeforeTaxes (132\.26) (141\.75) (45\.90) (26\.12) (3292) 8\.19 43\.59 116\.15 154\.50 66\.08 Income tax - - - Other payments - - - NetProfitAfterTaxes (132\.26) (141\.75) (45\.90) (26\.12! (32\.92) 8\.19 43\.59 116\.15 154\.50 66\.08 Operating ratio (b/a) 86\.1 75\.9 69\.7 70\.6 73\.4 66\.8 62\.9 55\.0 53\.0 72\.6 Actual: 1997-1999\. Estimates: 2000\. Forecast: 2001-2006 Il: Assumption was made 1\.5 times for medium maintenance (every 5 year) and 3\.0 times for major maintenance (every 10 years)\. The details are in Table 3\. - 39 - Table 2: Guangdong: Longgang- Tanxi Highway Project Sources and Applications of Funds- The Expressway Company (million Yuan, year ending 31, December) Pose 2 of 3 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sources: Net proftts (132\.26) (141\.75) (45\.90) (26\.12) (32\.92) 8\.19 43\.59 116\.15 154\.50 66\.08- Depreciaton - \. - - 171\.54 194\.02 198\.27 205\.27 215\.50 226\.93 226\.86 232\.52 238\.61 245\.12 State contribution 3\.35 13\.73 19\.91 31\.86 94\.05 - \. - - - - - - Provincial contribution 46\.09 188\.78 273\.62 437\.91 1\.292\.63 - - - - - - - Borrowing: IBRD 17\.08 69\.98 101\.43 162\.34 356\.91 84\.65 16\.88 20\.75 Local - - 538\.44 255\.00 - 80\.00 Others - - - - - 69\.00 59\.88 -- - - - - Total 6652 27224 394\.96 632\.11 L743\.59 646\.72 451Q 169\.25 279\.90 I182 235B2 2704 348\.67 3 9 311 L AmsnUcations: Capital expenditure 66\.52 272\.49 394\.96 632\.11 1,743\.59 520\.73 342\.51 125\.75 43\.11 67\.89 47\.53 49\.90 52\.40 55\.02 Other investment \. Loan repayments: IBRD - - - - - 15\.29 32\.33 34\.88 37\.57 40\.48 43\.63 47\.00 50\.65 68\.17 Domestic - - - - - 74\.00 65\.00 147\.00 228\.00 76\.00 83\.50 109\.00 89\.00 9\.00 Others , 7\.53 - - - - Change wI capital - - - - - - (30\.60) (71\.56) 50\.00 (13\.06) (12\.14) (13\.06) (33\.72) (16\.73) (18\.08) Total 66\.52 222 94\.% 62\.1 159 60\.2 322 233\.52 22\. 42 172\.15 11 22 1251 Not Funds F1l MA: 22M (64,2 132\.398) 218\.6 55\.2 = 1649 97\.2 9 260 Open balance - - - - 11\.16 55\.62 115\.22 50\.95 17\.97 56\.93 112\.32 195\.67 392\.16 689\.95 Closing balance - - \. - 55\.62 115\.22 50\.95 17\.97 56\.93 112\.32 195\.67 392\.16 689\.95 896\.04 D/S Cover 0\.5 0\.7 0\.8 0\.7 1\.6 1\.9 1\.8 2\.6 6\.6 4\.6 Actual: 1997-1999\. Estimates: 2000\. Forecast: 2001-2006 -40 - Table 2: Guangdong: Longgang- Tanxi Highway Project Balance Sheet- The Expressway Company (million Yuan, year ending 31, December) Page 3 of 3 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Asset,: Fixed Assets At cost 3,430\.96 3\.967\.14 4,105\.39 4,105\.39 4,148\.50 4,216\.39 4,263\.92 4,313\.82 4,366\.22 4,421\.24 Less: Depreciation 171\.55 369\.77 563\.80 769\.07 984\.57 1,211\.50 1,438\.36 1,670\.88 1,909\.49 2,154\.61 Net fixed assets 3,259\.41 3,597\.37 3541\.59 3,336\.3 3\.163\.9 3\.04\.8 2,825\.56 2,642\.99 2\.456\.73 2,266\.63 Work -in -process 265\.56 16\.77 - - - - - - - - Subtotal 3\.52497 3,614\.14 3,541\.59 332 3 3163\.93 3\.004\.89 2,825\.5 2,642\.9 2\.456\.73 2\.266\.63 Current Assets Cash 55\.62 115\.22 50\.95 17\.97 56\.93 112\.32 195\.67 392\.16 689\.95 896\.04 Inventory 10\.00 12\.00 14\.00 16\.00 18\.27 19\.68 21\.21 25\.14 27\.09 29\.20 Account receivable 130\.74 114\.27 36\.00 46\.64 53\.25 57\.37 61\.82 73\.27 78\.96 85\.11 Subtotal 196\.36 241\.49 100\.95 80\.61 128\.45 189\.37 278\.70 490\.57 796\.00 1,010\.35 Other assets - - - - - - - - - Total Assets 3,721\.33 3,855\.63 3,642\.54 3,416\.93 3,292\.38 3,194\.26 3,104\.26 3,133\.51 3,252\.73 3,276\.98 Liabilities & Eouitv State funds-Equity 761\.24 619\.48 1,961\.99 1\.931\.43 1,886\.14 1,883\.92 1,898\.86 2,031\.64 2,262\.49 2,320\.05 LUT loans: IBRD 997\.35 982\.06 949\.73 914\.85 811\.52 773\.95 733\.47 689\.84 642\.84 592\.19 Domestic 1,730\.52 2,005\.74 477\.45 350\.21 366\.50 290\.50 207\.00 98\.00 9\.00 - Subtotal 2727\.87 2\.987\.80 1,427\.18 1,265\.06 ,178\.02 1\.064\.45 940\.47 787\.84 651\.84 592\.19 Current Liabilities 232\.22 248\.35 243\.64 206\.28 228\.22 245\.89 264\.93 314\.03 338\.40 364\.74 Total Liabiliffes & Equity 3,721\.33 3,855\.63 3,642\.54 3,416\.93 3,292\.38 3,194\.26 3,104\.26 3,133\.51 3,252\.73 3,276\.98 Current ratIo 0\.8 1\.0 OA 0\.4 0\.6 0\.8 1\.1 1\.6 2\.4 2\.8 Debt:equityratio 80/20 84/16 46/54 43/57 43/57 41/59 39/61 35/65 30/70 29/71 In 1999, GPCD has converted about Y 1\.40 billion domestic long term loan to equity\. Actual: 1997-1999\. Estimates: 2000\. Forecast: 2001-2006 - 41 - Table 3: Guangdong: Foshan - Kaiping Highway Project Assumptions for the Financial Forecasts Page 1 of 2 1 Traffic: Small Medium Large Small Medium Large Tractor- Car Bus Bus Truck Truck Truck Trailer Total Section 1\. Foshan- Heshan 1997 7,454 3,509 338 4,970 2,339 1,351 341 20,302 1998 8,262 3,889 375 5,508 2,593 1,498 377 22,502 1999 9,500 4,472 431 6,334 2,982 1,722 434 25,875 2000 10,916 5,138 495 7,278 3,426 1,979 499 29,731 2007 19,323 7,984 769 12,883 5,324 3,075 775 50,133 2017 38,011 13,005 1,253 25,343 10,473 6,049 1,525 95,659 Section 2\. Heshan- Shuikou (Kaiping) 1997 3,149 1,915 150 2,099 1,277 600 88 9,278 1998 3,491 2,123 166 2,327 1,415 664 99 10,285 1999 4,014 2,441 191 2,676 1,628 764 113 11,827 2000 4,612 2,805 219 3,074 1,870 878 130 13,588 2007 7,652 4,080 319 5,100 2,720 1,277 189 21,337 2017 13,704 6,039 472 9,133 4,871 2,287 338 36,844 2\. Tariffincrease 10% everythreyears\. Small Medium Large Small Medium Large Tractor- Car bus Bus truck truck truck Trailer YN-km 0\.450 0\.900 1\.462 0\.450 0\.900 1\.462 2\.138 3\. Ooramtit Costs and Based on the actual figures, including operating and depreciation, increase Management expenses: 5% every year\. 4\. OQcratini Taxes: 5\.5% of total revenue (including business tax, city tax and education levy)\. 5\. Income Tax Rate: 33\.0% after the fifth positive profit year\. 6\. Maintenance Routine: Based on the actual figures and increase 5% annually\. Medium: 1\.5 times of total working cost for every five years\. Major 3\.0 times of total working cost for every ten years\. 7\. Desreciation- Based on: (a) civil works (annual traffic density), (b) housing (30 years) and (c) equipment (8 years)\. - 42 - Table 3: Guangdong: Longgang- Tanxi Highway Project Assumptions for the Financial Forecasts Page 2 of 2 1\. Traffic: Small Medium Large Small Medium Large Tractor- Car Bus Bus Truck Truck Truck Trailer Total Section 1\. Longgang- Baiyun 1997 3,712 1,720 178 2,474 1,146 710 513 10,453 1998 4,608 2,222 200 3,073 1,480 805 559 12,947 1999 4,951 2,400 175 3,302 1,602 697 566 13,693 2000 5,153 2,741 192 3,436 1,829 764 539 14,654 2007 8,008 4,547 298 5,339 3,034 1,187 838 23,251 2017 13,044 8,143 485 8,697 5,433 1,933 1,365 39,100 Section 2\. Baiyun- Houmen 1997 3,262 2,104 139 2,173 1,403 555 389 10,025 1998 3,816 3,176 178 2,543 2,116 712 338 12,879 1999 4,222 3,129 169 2,813 2,085 674 290 13,382 2000 4,394 3,572 184 2,928 2,381 741 277 14,477 2007 7,290 6,323 305 4,858 4,215 1,229 460 24,680 2017 13,055 12,438 546 8,700 8,292 2,201 824 46,056 Section 3\. Houman- Tanxi 1997 2,475 1,426 88 1,651 952 350 255 7,197 1998 2,968 2,260 124 1,980 1,507 498 271 9,608 1999 3,134 2,247 118 2,088 1,497 467 252 9,803 2000 3,261 2,564 128 2,174 1,709 511 242 10,589 2007 5,772 4\.840 227 3,848 3,226 905 428 19,246 2017 11,354 10,449 447 7,570 6,965 1,780 842 39,407 2\. Tariff: Increase 10% every three years\. Small Medium Large Small Medium LargeT ractor- Car bus Bus truck truck truck Trailer YN-km 0\.450 0\.900 1\.462 0\.450 0\.900 1\.462 2\.138 3\. Operating Costs and Based on the actual figures, including operating and depreciation, increase Manazement expenses: 5% every year\. 4\. Oweratine Taxes: 5\.5% Of total revenue (inciuding business tax, city tax and education levy)\. 5\. Income Tax Rate: 33\.0% After the fifth positive profit year\. 6\. Maintenance: Routine: Based on the actual figures and increase 5% annually\. Medium: 1\.5 times of routine maintenance for every five years\. Major: 3\.0 times of routine maintenance for every ten years\. 7\. Depreciation: 30 Years straight-line method\. - 43 - Table 4: Guangdong Province: Highway Revenues and Expenditures during the Ninth Five Year Plan (Yuan 100 million) Page I of 2 1996 1997 1998 1999 2000Total Revenues I Road maintenance fee 44\.0 41\.0 47\.0 47\.0 46\.0 225\.0 2 MOC subsidy 5\.0 5\.0 5\.0 5\.0 5\.0 25\.0 3 Provincial allocation 23\.0 22\.0 25\.0 25\.0 25\.0 120\.0 4 Domestic loans 30\.0 28\.0 32\.0 33\.0 32\.0 155\.0 5 Foreign loans 19\.0 18\.0 20\.0 20\.0 20\.0 97\.0 6 Local financial allocation 85\.0 81\.0 91\.0 93\.0 90\.0 440\.0 Total 206\.0 195\.0 220\.0 223\.0 218\.0 1\.062\. Expenditures: I New construction and rehabilitation 153\.5 147\.0 173\.0 167\.5 159\.0 800\.0 2 Maintenance 30\.5 28\.0 27\.5 32\.5 34\.5 153\.0 3 Others 22\.0 20\.0 19\.5 23\.0 24\.5 109\.0 Total 206\.0 195\.0 220\.0 223\.0 218\.0 1062\.0 Total Road Network (Ian) -(a) 89,631 91,862 92,960 94,070 95,200 -- Average annual increase -- 2\.5% 1\.2% 1\.2% 1\.2% 1\.5% Total maintenance expenditure (100 million Yuan) -(b) 30\.50 28\.00 27\.50 32\.50 34\.50 30\.60 Average unit maint\. expenditure ('000 Ylkm)- (b)/(a) 34 30 30 35 36 33 Average annual increase -- -10\.4% -2\.9% 16\.8% 4\.9% 2\.1% Actual :1996-1998; estimates: 1999-2000\. - 44 - Table 4: Guangdong Province: Highway Revenues and Expenditures during the Tenth Five Year Plan (Yuan 100 million) Page 2 of 2 2001 2002 2003 2004 2005 Total Revenues I Road maintenance fee 48\.0 50\.0 50\.0 51\.0 51\.0 250\.0 2 MOC subsidy 3\.0 4\.0 4\.0 4\.0 3\.0 18\.0 3 Provincial allocation 29\.0 30\.0 30\.0 30\.0 31\.0 150\.0 4 Domestic loans 31\.0 32\.0 32\.0 33\.0 32\.0 160\.0 5 Foreign loans 15\.0 16\.0 16\.0 16\.0 17\.0 80\.0 6 Local financial allocation 78\.0 78\.0 79\.0 81\.0 84\.0 400\.0 Total 204\.0 210\.0 211\.0 215\.0 218\.0 1\.058\.0 Expeditures: I New construction and rehabilitation 144\.0 148\.0 149\.0 152\.0 153\.0 746\.0 2 Maintenance 31\.0 32\.0 32\.0 33\.0 35\.0 163\.0 3 Others 29\.0 30\.0 30\.0 30\.0 30\.0 149\.0 Total 204\.0 210\.0 211\.0 215\.0 218\.0 1,058\.0 Total Road Network (km) -(a) 96,140 97,090 98,050 99,020 100,000 - Average annual increase -- 1\.00/0 1\.0% 1\.0% 1\.0% 1\.0% Total maintenance expenditure (100 million Yuan) -(b) 31\.00 32\.00 32\.00 33\.00 35\.00 32\.60 Average unit maint\. expenditure ('000 Y/km)- (b)/(a) 32 33 33 33 35 33 Average annual increase -- 2\.2% -1\.0% 2\.1% 5\.0% 2\.1% - 45 - Annex 4\. Bank Inputs (a) Missions: Stagef of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, I FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 9/88 4 1 Transport Planner, 1 Transport Specialist, and 2 Transport Economists 10/89 3 1 Transport Planner, 1 Transport Specialist, and 1 Transport Economist 3/90 1 1 Transport Specialist 6/90 4 1 Transport Planner, 1 Highway Engineer, 1 Transport Specialist, and I Transport Economist 1/91 1 Engineer 3/91 4 1 Transport Specialist, 2 Highway Engineers, and 1 Operations Officer 7/91 6 2 Transport Specialists, 1 Transport Planner, 1 Highway Engineer, 1 Resettlement Expert, and 1 Operations Officer 11/91 7 2 Transport Specialists, 1 Transport Planner, 1 Environmental Specialist, 1 Resettlement Specialist, 1 Highway Maintenance Equipment Engineer and I Engineer Appraisal/Negotiation 3/92 7 2 Transport Specialists, 1 Transport Planner, 1 Environment Specialist, 1 Resettlement Specialist, 1 Road Safety Specialist, and I Operations Officer 8/92 5 2 Transport Specialists, I Transport Planner, 1 Procurement Engineer, and I Operations Officer 11/92 1 1 Transport Specialist Supervision 8/93 4 2 Transport Specialists, I HS S Environment Specialist, and I Operations Officer - 46 - 5/94 4 1 Transport Specialist, I HS S Resettlement Specialist, I Financial Specialist and 1 Road Improvement Program Specialist 10/94 6 1 Transport Specialist, 1 HS S Environment Specialist, 1 Resettlement Specialist, I Road Improvement Program Specialist, I Financial Specialist, and I Training Specialist 7/95 6 1 Transport Specialist, 1 HS S Training Specialist, I Highway Engineer, I Environment Specialist, I Resettlement Specialist, and I Road Improvement Program Specialist 5/96 5 1 Transport Specialist, I S S Highway Engineer, I Institutional and Traffic Safety Specialist, 1 Road Improvement Program Specialist, and I Resettlement Specialist 5/97 5 1 Transport Specialist, I S S Institutional and Traffic Safety Specialist, 1 Highway Engineer, 1 Private Highway Finance Specialist and 1 Road Improvement Program Specialist 10/97 1 1 Procurement Engineer 11/97 1 1 Environment Specialist 4/98 6 1 Transport Specialist, I S S Highway Engineer, 1 Institutional and Traffic Safety Specialist, 1 Environmental Specialist, I Resettlement Specialist, and I Operations Officer 3/99 2 1 Procurement Engineer, and I S S Highway Engineer 7/99 3 1 Transport Specialist, I S S Institutional and Traffic Safety Specialist, and I Resettlement Specialist 8/99 1 1 Resettlement Specialist 11/99 6 1 Transport Specialist, I S S Highway Engineer, I Institutional and Traffic Safety Specialist, 1 Resettlement Specialist, and 2 Environmental Specialists - 47 - ICR 06/01 3 2 Transport Specialists,, and I1 Research Analyst (b) Staff: Stage of Project Cycle Actualaest Estimate No\. Staff weeks US$ '000 Identification/Preparation 63\.0 198\.0 Appraisal/Negotiation 56\.5 178\.5 Supervision 100\.1 379\.0 ICR 11\.0 62\.5 Total 230\.6 818\.0 - 48 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Z Macro policies O H OSUOM O N * NA M Sector Policies O H OSUOM O N * NA I Physical * H OSUOM O N O NA M Financial O H SUOM O N O NA Z Institutional Development 0 H SU O M 0 N 0 NA IEnvironmental O H * SU O M O N O NA Social I Poverty Reduction O H SUOM O N O NA Gender O H OSUOM O N NA M Other (Please specifv) O H SUOM O N O NA R&R Z Private sector development 0 H O SU O M 0 N 0 NA M Public sector management 0 H SU O M 0 N 0 NA El Other (Please specify) O H OSUOM O N O NA - 49 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bankperformance Rating I Lending OHS OS OU OHU * Supervision OHS OS OU OHU F Overall OHS OS O U O HU 6\.2 Borrowerperformance Rating Preparation OHS OS O U O HU I Government implementation performance O HS O S 0 U 0 HU X Implementation agency performance O HS O S 0 U 0 HU f Overall OHS OS O U O HU - 50 - Annex 7\. List of Supporting Documents World Bank, Staff Appraisal Report, Guangdong Provincial Highway Project, October 20, 1992 Guangdong Provincial Highway Administration Bureau, Environmental Action Plan, June 1994 Guangdong Provincial Highway Administration Bureau, Implementation Report, June 1994 Guangdong Provincial Freeway Co\., Completion Report on Civil Construction of the (1) Foshan-Kaiping Expressway (FKE); and (2) Longgang-Tanxi Expressway (LTE), January 1997 Guangdong Provincial Freeway Co\., Completion Reports on E&M Works on: (1) Foshan-Kaiping Expressway fFKE); and (2) Longgang-Tanxi Expressway (LTE), March 31, 2000 - 51 - Annex 8\. Beneficiary Survey Results No Beneficiary Survey was undertaken\. - 52 - Annex 9\. Stakeholder Workshop Results A seminar was jointly organized on March 21, 2001 by Guangdong Provincial Communication Department and the Bank to discuss results achieved with the securitization of toll road assets financed by the Bank under the Guangdong Provincial Highway Project and the lessons that can be drawn\. This seminar was attended by 38 persons, from various units of Guangdong Province Communication Department and Finance Bureau, GPFC, GPED, Ernst and Young, Goldsun Law Firm and GF Securities\. Results achieved with securitization operations Securitization operations performed by GPED through two share issues and a share allotment raised around RMB 1\.8 billion on the Shenzhen stock market and from initial shareholders in the company\. They attracted more than 50 foreign investors, and many domestic investors\. They occurred in a second phase of the implementation of the Guangdong Provincial Highway Project, after the Province, through GPFC, financed and constructed the project with World Bank's support\. Project assets transferred by GPFC to GPED were evaluated by financial experts to avoid underestimating them\. Since securitization proceeds were applied to road investments, directly by GPED or through the reallocation by GPFC of funds recovered from GPED as a counterpart to the transfer of ownership in expressway companies, securitization proved a successful way to speed up the development of expressways in Guangdong Province\. Hence social benefits expected from the project could be achieved\. These operations supported Guangdong Province policy to develop roads by "borrowing loans for road construction and collecting tolls for loan repayment"\. As a general matter, a proper and favorable toll road policy towards poor mountainous areas in Guangdong Province has helped those areas to improve their communication network and lay foundations for addressing poverty issues\. Guangdong Province took great care to ensure that all transactions complied with Bank loan agreement\. To that purpose, GPFC's ownership in Fokai Expressway remains at 49 percent and its capacity to repay the loan from its own resources was not impaired\. When both share issues were decided, the equity market was considered by GPFC to be a less expensive source of funds than the bond market, given financial market conditions at that time\. Performances of A and B shares on stock exchange compare favorably with those of shares issued by the other 15 Chinese toll road companies that are listed\. The average rate of return for investors in GPED is also in line with returns achieved by all these companies\. Lessons that can be drawn Opening GPED capital to private investors was a strong incentive to better management and compliance with stricter financial standards, and it improved the efficiency and the quality of toll road operation by GPED\. Bank support to the construction of securitized assets was a very positive element in investors' interest in GPED shares\. Their primary motive for investing was nevertheless the quality of the company assets\. GPED's track record as an independent company prior to share issues was also instrumental\. Domestic interest in GPED shares shows that toll road shares may be assets prized by domestic financial investors\. On these grounds, Guangdong Province is keen to use again securitization as a means for completing funding of the expressway network through GPED, its main financing vehicle for expressway development\. To satisfy investors criteria and ensure an effective return in the short term, priority will be given to high quality assets and projects already opened to traffic or close to completion\. - 53 - Bank's tirnely answer to requests for clearance is important to avoid delaying securitization operations, as their success is dependent on often volatile market conditions\. On the other hand, early information of the Bank on the principle and structure of a securitization operation would ensure that its views can be taken into consideration in the design stage of a transaction\. - 54 - Additional Annex 10\.Securitization Operations Introduction The experience in Guangdong Province with highway asset securitization since 1996 has contributed greatly to the acceptance of this financing technique by other provinces in China, and particularly in the highway sector\. In the last 15 years, China has raised over USS4\.5 billion for toll roads in over 80 joint venture transactions involving the issuance of shares by some 15 domestic and foreign toll road companies\. Bank-financed assets have been used to successfully complete a total of $2\.5 billion of equity financings, or 56% of the total capital raised\. The review by the Bank of requests by Guangdong Province for no-objection to the securitization of Guangdong Provincial Highway project assets indicates general support for the concept of leveraging Bank-financed assets for the mobilization of new capital\. As the internal evaluation process evolved in the Bank, it is clear that Bank policies and standards were refined and several major criteria were developed as the result of time and experience\. Guidelines were formalized in a capital mobilization guidance in December 1997 and have since been applied in several transport and power transactions by the Bank\. Background of securitization transactions The Guangdong Provincial Highway Project was approved by the Bank in 1992 and implemented by the province beginning March 1993\. Its objectives are to increase significantly the expressway capacity of the province through the construction and expansion of several arterials, including the Longgang-Tanxi Expressway (LTE) and the Fokai Expressway, both of which are principal traffic corridors serving Guangzhou\. Among various elements of its financing, was a $240 nillion Bank loan for expansion and completion of several major highway projects, including the Foshan-Kaiping Expressway (FKE)\. Capital Structure of the FKE Project Source of Funding Capital Amount Project Share GPFC $192 million 47\.8% Debt Equity GPED $110 million 27\.3% B share proceeds $65 million Internal cash flow $45 million World Bank $100 million 24\.9% Grand Total $402 million The Province implemented this project through the Guangdong Provincial Freeway Company (GPFC), which is a 100% state-owned and Province-controlled entity, along with the Guangdong Provincial Expressway Development Company (GPED)\. GPFC was established in 1985 by provincial authorities for the purpose of development, construction, and operations and maintenance of all expressways in the province, along with certain highways and bridges, excluding those in Guangzhou and Shenzhen\. From its inception, GPFC received an exclusive license to enter into joint ventures and to award concessions to other investors, including GPED, for the development of expressways and bridges in the province\. Ownership of GPFC is held entirely by the - 55 - Guangdong Provincial Communications Department (GPCD)\. Since 1994, GPFC has implemented 20 bridge and expressway projects, totaling approximately RMB 12,362 million or approximately US$1\.5 billion\. In early 2001, GPFC established GPC Group Enterprises, Ltd\. to assume all admninistrative and management responsibility for its various shareholding investments, including GPED and the Fokai Expressway Company\. In 1993, GPED was established by GPFC under the name of Guangdong Foshan-Kaiping Expressway Shareholding Company Ltd\. At the time of registration, the new company was capitalized with equity by GPFC through the transfer of a 75% equity interest in the Guangfo Company, which operates the Guangfo Expressway, along with a 100% interest in the Jiujiang Bridge\. In June 1993, the company was renamed Guangdong Provincial Expressway Development Co\. Ltd (GPED), to be used primarily as a financing utility for JV projects in the province\. GPED is largely a developmental and financing arm of GPFC, with a resident technical staff, led by General Manager and separate Board of Directors, all of whom are affiliated with GPCD, as the senior provincial agency\. This group of agencies collectively has a considerable capacity for the plarming, design, and execution of major highway projects, perhaps greater than any other province in China\. Since 1996, GPED has raised RMB 1\.8 billion (US$212 million) in three separate share listings\. In total, these offerings attracted over 50 foreign investors\. As a key element of the Guangdong Provincial Highway Project, the Fokai Expressway Company (FEC), jointly owned by GPFC (Initially 75%) and GPED (Initially 25%) undertook the rehabilitation and expansion of the Foshan-Kaiping Expressway\. FEC was granted a concession by the province to collect tolls on the Fokai Expressway for a 30 year-period\. The expressway subsequently opened to traffic in 1997\. The following diagram describes the current arrangement among Guangdong provincial agencies for ownership of GPED and the Fokai Expressway Company\. The chart illustrates ownership levels following completion of B and A share listings by GPED and after completion of the acquisition from GPFC of additional shares in FEC, which gives GPED majority ownership of the expressway\. GPFC holds now a 49% ownership share in FEC, the remaining 51% equity position being held by GPED\. Organization of Guangdong Provincial Highway Agencies (2001) Guangdong Provincial \|Cornmunication Dept\. 100% World Bank Legal Persons Shares Foreign Investors loan invested A Shares Staff haresJ Bhares Guangdong Provincia in Fokai I Freeway Company by GPFC 13\.02% 17\.56% 0\.42% 39% 49% Guangdong Provincial xpressway Co\., Ltd\. 120% 175% 100% 51% _ Dianbai- Guangfiu Expressway Jiujiang Guangdong Fokai Zhanjiang Co\., Ltd\. Bridge Expressway Co\., Ltd\. 56 - GPED's Growth and Development As noted in the following table, GPED has experienced consistent growth in revenues and net income over the past five years, while continuing to build its asset base at an average increase of 20% per year while limiting long-term liabilities, and most importantly for investors, report solid growth in earnings per share\. Financial Performance of GPED 1995-2000 (mil\. RMB) Description 1995 1996 1997 1998 1999 2000 Operating Income 221 216 231 258 251 Net Income 127\.0 137 144 147 293 135 Total Assets 1,205 1,802 1,907 2,586 3,057 3,791 Total Liabilities 130 173 245 325 605 423 Net Assets Per 3\.70 2\.50 2\.96 3\.21 4\.02 Share Earnings/Share 0\.28 0\.38 0\.22 0\.19 0\.38 0\.16 Year-end B Share 3\.54 3\.00 2\.66 1\.30 Price (HKD) Year-end A Share 5\.41 6\.15 Price (RMB) I I l_l As discussed later, the price of GPED's publicly-traded shares has fluctuated far less in the domestic A share market than among foreign investors in the B share market on the Shenzhen exchange\. To a great extent, however, the stability or growth which the company's shares have experienced over time may be related more to the ownership structure of its equity capital than fundamentals in the market\. Although a publicly-traded company, GPED is effectively closely-held\. This results from a high percentage of shares authorized, but which are non-tradable (60\.42%), GPFC's ownership of 39% of GPED's total shares outstanding, and finally to a large concentration of shares held by several foreign investors, led by IJM Overseas Ventures of Malaysia\. As further illustration of the closely held nature of GPED's ownership, the following summary of major shareholders indicates that a few overseas investors, along with a number of provincial entities, effectively control the company's equity\. - 57 - Top Ten Shareholders (February 2001) No\. Name Number of Ratio % Shares Held (mil\.) I Guangdong Provincial Freeway Company (GPFC) 298\.13 39\.01 2 IJM Overseas Ventures Sdn, Bhd\. 115\.41 15\.10 3 DBS Nominees Private) Ltd\. 26\.58 3\.48 4 Keepel Bank Nominees Pte\. Ltd\. 15\.95 2\.09 5 Keepel Securities Nominees Pte\. Ltd\. 15\.26 2\.00 6 Guangdong Yue-cai Trust & Investment Company 9\.38 1\.23 7 Economic United Corporation, Siqian Town, 3\.45 0\.45 Xinhui City 8 Foreign Economic Industrial & Development 2\.81 0\.37 Company, Shunde City 9 Hu ing Groups, Nanhai City 2\.49 0\.33 10 Transport Development Company, Shunde City 2\.34 0\.31 \._____ Total 491\.8 64\.37 Unlike many publicly-traded companies in the U\.S\. and developed financial markets of Western Europe and East Asia, GPED's equity base, primarily through management's actions, has experienced limited volatility in the capital markets\. As the company's financial performance indicates, GPED has achieved a high level of shareholder value, even through the Asian Financial Crisis\. Performance of the Foshan-Kaiping Expressway The Foshan-Kaiping Expressway was initiated as an extension of the Guangfo Expressway\. The corridor is approximately 80 km\. Fokai opened to traffic in December 1996, with full operation commencing in 1997\. Collection of toll revenues increased from $1\.3 million on opening to $2\.15 million six months later in May 1997\. Average daily traffic nearly tripled from 11,648 vehicles in 1997 to 30,957 vehicles in the year 2000\. According to GPED, the Fokai Expressway Company generated a net IRR of 19\.01% on invested capital in 1999\. The current and projected financial performance of the expressway is reflected in the following table\. - 58 - Foshan-Kaiping Highway Project Current and Projected Performance (1997-2006) (USD mil\.) Category 1997 2000 2003 2006 Traffic (niil\. veh\.-km) 431\.86 632\.46 783\.35 971\.11 Operating Revenue 27\.43 38\.55 48\.13 65\.52 Operating Profit 20\.94 17\.63 25\.06 17\.22 Repayment of Domestic Loans 32\.60 16\.68 15\.66 15\.00 Net Profit after Taxes (11\.91) 1\.87 7\.01 2\.32 Source: World Bank ILICR Results reflect major pavement works expected in 2006\. Analysis of GPED's Securitization Transactions The intention at the outset of GPED's entry to the equity market was to raise sufficient capital to effectively complete the Fokai Expressway in December1996 and to eventually acquire majority control from GPFC of the Fokai Expressway Company\. The following diagram illustrates GPFC's majority ownership in GPED and the Fokai Expressway prior to the B share offering\. GPFC/GPED Shareholding Relationship - Prior to B Share Listing l \| ~~~~~~~~~into Fokai by GPFC 64\.56% _75% Guangdong Provincial Expressway Development Co\., Ltd\. 25% Guangdong Fokai Expressway Co\., Ltd\. B Share Offering GPED's first public offering was completed with the issuance of 135 million B shares on the Shenzhen Stock Exchange Approval by the World Bank of GPED's no-objection request was granted on June 26, 1996, and shortly thereafter, the financing was completed in Shenzhen\. Shares were issued at a price of HK$3\.54 per share, raising RMB 484 million (around $ 62 million)\. The lead underwriter for this offering was China Securities Co\. Ltd\., a mainland firm, who received substantial support in the international financial markets by BA Asia Ltd\., a Hong Kong-based subsidiary of Bank of America\. - 59 - The listing of B shares by GPED diluted GPFC's ownership in the company to a level of 44\.88%, but without affecting the ownership structure of the Fokai Expressway\. Proceeds were applied up to RMB 334 million to fund construction of Fokai Expressway, and the remaining in the expansion of another project, the Guangfo Expressway\. A Share Offerings Guangdong authorities advised the Bank in 1997 of GPED's intention to issue 100 million A shares in Shenzhen to domestic investors to support completion of the Fokai Expressway and to undertake several new projects\. GPED originally advised the Bank that it wished to acquire a majority interest in the Fokai Expressway through the acquisition of an additional 26% of ownership from GPFC\. Provincial authorities later modified this plan with a request to acquire a 10% ownership interest from GPFC, and another 16% at a later time\. A formal request for no-objection was submitted to the Bank, which approved the transactions on September 25\. The public offering was completed in Shenzhen with the issuance of 100 million A shares by GPED in January 1998 for RMB 5\.41 per share\. Net proceeds of the share offering totaled approximately RMB 528 million (US$65 million), which was equivalent to the capital raised two years earlier in the B share listing\. Of this amount, approximately US$49\.68 million was paid to GPFC by GPED for the acquisition of an additional 10% interest in Fokai and the balance was again used by GPED for investment in the expansion of the Guangfo Expressway with GPFC\. Funds received by GPFC from GPED were used to assist in the completion of the 105-km Dianbai-Zhanjiang Expressway, also a joint venture with GPED\. The A share listing diluted GPFC's ownership of Fokai to 65% and its equity position in GPED to a level of 39%\. In August 2000, GPED exercised its right to issue "allotment shares" on the Shenzhen A share exchange\. This offering raised net proceeds of RMB 797 million (US$ 96\.02 million)\. Proceeds of the issue were used to purchase a 33% interest in the Shenzhen-Hui Yuan Expressway and a 30% share of the Guanghi Expressway, under construction, among other projects\. Transfer of Majority Ownership in FKE In February 1999, approximately one year after completion of the A share offering and GPED's acquisition of a 35% ownership share in Fokai, GPED requested the Bank's no-objection to the acquisition of an additional 16% ownership interest, which would effectively give it majority control of the expressway\. In documents presented to the Bank, GPED estimated that the value of the 16% ownership transfer would amount to RMB 660 million (US$ 79\.5 million)\. GPED proposed to fund the purchase from RMB 600 million from intemal sources and the remaining RMB 60 million from commercial bank loans\. GPED's estimate was consistent with a value of RMB 4\.1 billion (US$ 494 million) assigned to the entire Fokai Expressway Company, as estimated by an independent firm selected by the province\. The broad valuation was based on the replacement cost of the 80-km expressway and expected future cash flows, with no subsidy accruing to the private sector, as a result of the share transfer\. The Bank conducted a detailed analysis of GPED's ownership structure following the proposed share transfer, with particular interest in the capacity of the Fokai Expressway to continue to generate sufficient monies to repay the $100 million FKE construction loan\. There was also a detailed review of the legal implications involved for the Bank in effectively agreeing to the assignment of a 51% - 60 - ownership interest in Fokai to GPED\. These various issues were evaluated and ultimately resolved by the Bank, and its no-objection letter was issued on August 9, 2000\. Completion of the transaction is pending final approval by the government\. As noted below, the transfer will ultimately result in 49% ownership of the Fokai Expressway by GPFC\. In addition GPFC holds a 39% share of GPED - the new majority owner of FEC\. GPFC/GPED Shareholding Relationship - After all share issues and share transfers Guangdong Provincial Freeway Co\.] l 390/o 49% Guangdong Provincial Expressway Development Co\., Ltd\. j 51%/ 15,% Guangdong Fokai Expressway Co\., Ltd\. Evolution of share values The following table illustrates the price perfonnance of GPED's B shares since issuance in 1996 and reflects the volatility which has characterized the global financial markets in the last several years\. Share price levels dropped to HK$1\.30 in May 1999, reaching a high of HK$3\.84 in August 2000\. The 30-day average closing price of the stock in February 2001 was HK$3\.3 1\. Since 1996, GPED's B shares have closely tracked the movement of the market index\. See the chart below\. - 61 - GPED B Share PriceISZE Index 5 150 4 x I 3 - i;1=\.E\.N7 ; 100 0 1 0j s 3- ar 0 0 1996 1997 1998 1999 2000 2001 The domestic holders of A share securities have experienced significant appreciation in the value of their shares since issuance in 1998\. The price of GPED's A shares increased to RMB 9\.44 in December 1999, and through 2000, while the foreign markets where experiencing highly volatile movements, the share price climbed steadily, finally peaking at a level exceeding RMB 20\.00 in mid-May\. Since June 2000, the share price has remained in the range of RMB13\.50-14\.50, last closing in February 2001 at a 30-day average of RMB 13\.55\. It appears that GPED's A share performance reflects general market trends occurring in China and as well the company's financial performance during the 1998-99 period\. The following chart indicates that through 1999 and half of 2000, GPED's A shares outperformed the market, only recently lagging the A share index\. GPED A Share PricISZE Index 20 700 m 15^ =5iM _00 x tfn 5 0B ,S6,@,4 V' , $:$t-R=, 7 r 200 0~~~~~~~ 4M0 000ty-- 0000 00S 00 Shr 4 C 0- 4 f Q \.O 1998 1999 2000 2001 At the start of 2001, there were 15 domestic road and bridge companies listed in the market, including ten on domestic exchanges and five in Hong Kong\. GPED's financial performance compares favorably - 62 - with nine other listed companies on the mainland\. In 1999, GPED reported earnings per share of RMB 0\.39 compared to the average of RMB 0\.35\. GPED's return on net assets in 1999 was 11\.95% compared to an average of 10\.76% of the ten listed companies\. Impact of the transactions on the project funded by the Bank Borrower and Implementing Agency The funds raised through securitization transactions in the Shenzhen market were in effect leveraged by the future traffic stream on Fokai Expressway \. These operations contributed significantly to the accomplishment of the project's development objectives\. As a result GPFC, as the project implementing agency, was able to offset a shortage in counterpart funds for completion of the Fokai Expressway\. Through an increasing share of ownership in Fokai, GPED also established a larger base of toll revenues for implementation of future highway projects in the province\. In the first transaction, the 1996 B share offering, most of the proceeds were reinvested by GPED in the construction of the Fokai Expressway to fund cost increases\. The remaining was applied to the expansion of another expressway project, (Guangfo Expressway)\. GPED utilized $50 million of the $65 million proceeds from the January 1998 A share offering to purchase an additional 10% equity share of the Fokai from GPFC\. Purchase of the additional interest in Fokai entitled GPED to receive additional toll revenues from Fokai on an ongoing basis, in order to further its construction program, and if necessary, to leverage new capital\. The remaining was again invested in other expressway projects\. Funds received by GPFC were in turn used to complete the Dianbai-Zhanjiang Expressway with GPED\. Since the initial B share offering by GPED in 1996 and subsequent A share listing in 1998, the company's network of toll expressways and involvement in joint ventures has grown four-fold\. Through 1999 it has generated steadily increasing gross revenues and net income\. The financial capacity of GPED to borrow funds in the domestic markets on the strength of its balance sheet and project revenues is also well evident\. Following the A share listing and the acquisition of an additional equity interest in Fokai, the company was able to secure an RMB 1\.5 billion line of credit from the Communications Bank of China\. More recently, GPED sold the toll collection rights to the Jiujiang Bridge, of which it owns 100%, to the Fokai Expressway Company for $35 million\. These funds will be used by GPED for new highway projects\. Clearly, the agency's experience in the securitization of revenues for fundraising purposes is now quite mature\. GPED has also invested in the following five projects under construction: a) Guanghui Expressway (30%); b) Puhui Expressway (25%); c) Tangtang-Taihe Section of South Jingzhu Expressway (25%); d) Xiaotang-Gantang Section of North Jingzhu Expressway (10%); and e) Guangzhao Expressway (25%)\. All of these projects are part of the National Trunk Highway System or national and provincial road system\. GPCD and GPFC have considerable financial resources of their own, largely as the result of project revenues, taxes, and user fees and charges\. These agencies, however, do rely on GPED, and other provincial affiliates, as a joint venture partner and a creditworthy source of capital, both as the result of ongoing cash flows and ability to access commercial banks and the capital markets for funds as needed\. - 63 - Loan commitments and legal issues The securitized financings were completed with no effect on Bank policies regarding loan implementation\. Regarding borrower's commitments, the Bank was given assurances by Guangdong authorities and the Ministry of Finance that the Fokai Expressway Company would have the right to operate the expressway, the obligation to maintain it, and the capacity to remit sufficient revenues to GPFC to repay the Bank loan\. Such assurances were viewed by the Bank as legal underpinning for a 30-year concession agreement granted to the Fokai Expressway Company to collect toll revenues in this corridor\. The Fokai Company is obligated and has an incentive to operate and maintain the expressway efficiently\. loan, and if necessary, to use funds from other sources\. To the question of whether or not 49% ownership of Fokai by GPFC would compromise the Bank's position as the primary lender to the project, intemal analysis by Bank in 1999 concluded that GPCD/GPFC would continue to exercise effective control of GPED after the share transfer\. The sensitivity analysis conducted by GPED when requesting no-objection for purchase of a 16% interest in Fokai also revealed that coverage ratios for the $11 million annual Bank debt service requirement would exceed 1\.5 times even with a 20% reduction in toll revenues\. Further, GPFC provided assurances to the Bank that it would secure funds from other available sources to repay the Bank and to support the operation and maintenance of the expressway in accordance with the loan and project agreements, under any foreseeable future economic circumstances affecting the project\. The asset securitization transactions were carried out with the approval and under the supervision of the China Securities Regulatory Commnission and the Shenzhen Stock Exchange\. Regulations and disclosure requirements of both entities were well understood by GPED, its underwriters, and bond counsel, and complied with in Offering Memorandums and related financing documents\. The securitization transactions involved only the issuance of equity shares in GPED, without the involvement of commercial lenders, debt securities, or bondholders\. As such, there are no financing covenants applicable to the operation and maintenance of GPED's facilities\. All provisions in the Bank's project and loan agreements with GPFC are fully protected and remain enforceable, including an August 2000 amendment which requires Bank approval for any modifications to the toll collection agreement between the province and Fokai Expressway Company\. The securitizations were successfully completed in the equity markets without any liability to sovereign or sub-sovereign agencies for repayment\. The risks and rewards of the share offerings were allocated to the purchasers of the A and B share securities\. Bank Policies The securitizations were successfully completed in the equity markets without any liability to sovereign or sub-sovereign agencies for repayment\. The risks and rewards of the share offerings were allocated to the purchasers of the A and B share securities\. Development objectives have been enhanced through securitization transactions which have been completed in a transparent manner and in the absence of special interests in the transactions\. There appears indeed to be no subsidy to the private sector as a result of the securitization financings\. Rather, asset securitization by GPED has had the effect of involving the private sector in its operations, which is consistent with the Bank's policy of promoting greater access by private entities to public commercial ventures\. The table above synthesizes the impact of securitization transactions along considerations identified in the Bank' initial evaluation of such operations\. - 64 - Issues Considerations Developme tal Financial Policy Lega Project Level - Were Project No Did implementing Yes - Had Implementing No objectives undermined? Agency retains Agency legal change - Does implementing Yes financial capacity capacity to carry out agency retained and viability to the project? technical and carry out project? - Was Implementing No institutional capacities agency bound by to carry out the project? implementation\. - Was there continued Yes related covenants? commitment to project? - Where changes in No proiect scope required? _ Country-Level - Were transactions Yes -Did country Yes consistent with receives fair country's development value? agenda - Were transactions Yes - Was country's No equitable for country? financial standing - Were proceeds used Yes adversely affected? for development purposes? \. Was there adequate Yes transparency? - Were other No, supported development projects in fact _ undermined? Institutional - Was likelihood of No - Were Bank resources No - Has Bank contractual No sovereign default used for private gain ? privity with to IBRD - Were proceeds from No implementing agency? increased? transaction used for - Was there a breach No - Was non Yes purpose inconsistent of covenant? sovereign with Bank mandate? - Was there Yes borrower able to - Was there No compliance with IBRF repay IBRD loan misrepresen-tation re: articles? Bank in public offering - Was IBRD's No documentation? negative pledge - Did adequate and Un- triggered? timely information flow sufficient - Did transaction No to Bask impact on cofinanciers - Was Bank's ability to Yes and potential supervise retained? contractual liabilities - Were Bank consents Yes under supply sought? contracts? - Compliance with NA Bank's environmental policies? -A ppropriate partners? Yes _ Lessons Learned and Future Directions The securitization transactions which are part of the Guangdong Highway Project offer a number of valuable lessons and experiences for the refinement and possible future application of this financing technique in China\. The principal issues and subjects can be addressed as follows: Bank's approach of securitization operations\. Alternatives to share issues At the time a shortage in counterpart funding for the Fokai expansion appeared, the Hong Kong and Chinese mainland equity markets were highly liquid and accessible by mainland companies, with only a few highway share listings\. A combination of these factors helped drive an intense level of interest by international investors in such stocks, primarily for speculative near-term price appreciation\. The securities market in China is still in the developmental stage, with investor demand which is greater than the supply of shares\. GPFC viewed the equity market in 1996 as providing the cheapest possible capital for the project, particularly in view of a limited domestic debt market, with interest rates in the range of 20%\. There - 65 - was very little possibility at that time for a long-term debt issue in the international capital markets, given central government restrictions on debt issues by sub-sovereign entities, and the fear of RMB devaluation and the likely negative impact on foreign-denominated debt serviced from revenues in local currency\. The province further believed that the ability to forgo repayment of debt during expressway operation was beneficial to the Fokai project and GPED shareholders\. Since 1996, GPED has paid dividends of RMB 357 mnillion (US$43 million) to shareholders\. Alternative options available to GPFC in 1996 possibly consisted of borrowing funds from the central government to meet counterpart funding requirements, or to shift budget resources from other projects to the Fokai Expressway\. The company could also have solicited private investors, typically a Hong Kong developer, for the needed capital, in return for an operating concession\. Finally, GPFC could have utilized the local ITIC as a conduit to the intemational market for funds\. The decision-making process in the province on these various financing options is not known\. Guangdong Province, most likely with the advice of its investment bankers, decided to utilize GPED as a share issuer, and to strengthen the company's balance sheet with revenue-producing expressway assets and the implicit endorsement of the World Bank, to secure funds as quickly and cheaply as possible\. Since 1996, China's domestic markets have matured to the point where infrastructure debt financing is now available through mainland commercial banks on terms which are often more competitive than in the international markets\. China's commercial banks are also in a position to purchase project bonds issued by such companies as GPED, which is aided by the absence of long-term debt on the company's balance sheet\. In certain cases for provincial entities, the country's banks are also willing to take project risk on the underlying strength of project revenues, similar to limited recourse financing\. In the mid- I 990s, China's debt markets were without the capacity to offer borrowers such incentives\. However, the inherit risks in start-up toll roads and other infrastructure projects without a contractual fee structure or predictable revenue stream will likely continue to make third party capital scarce for project sponsors\. This is true in China which has a large unmet demand for essential public facilities and a growing but still immature capital market without a legal and policy framework which is yet conducive to the needs of foreign lenders and international investors\. It means that efforts to securitize existing revenue-producing assets such as toll roads with the involvement of credible intemational institutions, such as the World Bank, will continue to be an important capital-raising device for the country\. The level of project preparation and due diligence normally required by the Bank for leveraging its assets in the financial markets provides a needed level of security to commercial financial institutions and investors in China who would otherwise look to an established policy framework, which at present is still in the formative stages\. Exposure to the requirements of private investors was also a strong incentive for GPED to consistently strengthen management and compliance with strict financial standards, thereby improving the quality and efficiency of toll road operation\. Value added by securitization of Bank-financed assets add value to issuers and purchasers ofpublic securities Guangdong's experience in the equity markets over the past five years would indicate that the success of any particular offering can be impacted by variables far beyond project economics\. In the case of highway stocks, for example, there are now at least ten major entities listed on the Hong Kong, Shenzhen, and Shanghai exchanges, who are effectively competing in the secondary market for investment\. In addition, the globalization of securities markets which has occurred since GPED's 1996 B share offering adds a level of volatility and uncertainty which can greatly impact trading decisions which ultimately affect the value of listed companies, without consideration to their earnings performance\. - 66 - Asset securitization may have little impact on the stock price or earnings performance of a particular company, but it does offer investors a measure of comfort with IPOs and start-up ventures\. Experience has proven, however, in GPED's case that the involvement of World Bank-financed assets has had minimal impact, if any, on long-term price fluctuations in tradable stock and nowhere is this more evident than in the price performance of GPED's A and B shares over the past several years\. Internal Bank review The December 1997 capital mobilization guidance approved by the World Bank Board establishes a comprehensive set of policies and standards to be considered by task managers in developing transactions with Bank-financed assets\. China's provinces originate much of their expressway construction and financing requirements with oversight by SDPC, the Ministry of Communications, and the Ministry of Finance\. These agencies, along with the China Securities Regulatory Commission, also approve the issuance of equity shares by expressway development companies, which are established at the provincial level\. In most cases, the Bank has not been involved in the fonnation of provincial plans for new construction or the financing strategy until these plans reach a high level of maturity in the government\. The Guangdong experience illustrates the need for a close relationship between a thorough review of the transaction by the Bank and the timing established by the sponsoring agency and its underwriters to take the offering to market\. This involves a close partnership between the Bank, the province, and central agencies and Ministries, from the conceptual stage of the transaction through the process of deciding how and when to incorporate Bank-financed assets, so as to maximize their contribution to the sponsor' s development objectives and benefits to the public\. In the B share offering by GPED, the Bank was made aware of the timning of this transaction rather late in the preparation of the offering\. There was little timne available for the Bank to help structure the transaction in the face of pressure from Guangdong authorities and its underwriters to quickly approve the no-objection request\. The process may have been less frantic and perhaps more effective had the Bank been involved much earlier in discussions with GPED and its underwriters\. Expansion of asset securitization to support the issuance of debt securities in the capital markets Global experience in established financial markets reveals that long-term debt securities and commercial bank loans will ultimately be a far cheaper form of infrastructure finance than equity investment, which frequently demands a return of 15%-20% in a developing country environment\. Equity holders of GPED's B shares originally anticipated that the momentum of the market would carry the value of the shares to a level sufficient for their needs\. In the absence of a forward moving market for most of the last three years, the company's B shares languished at levels well below their HK$3\.45 opening price\. The sluggishness of the market during this time effectively precluded the issuance of additional B shares by GPED at a price which fairly reflected the company's performance and outlook\. Payment of generous dividends which may have influenced share value, but at the expense of GPED's capital program, could have hampered the development objectives of the project\. An option to consider in the future is the issuance of fixed price bonds which are securitized by existing assets and priced at a rate and term in the credit markets, which may be preferable to the volatility which has characterized most equity markets around the world\. - 67 - Conclusion The use of Bank assets in Guangdong Province for GPED's initial share offerings in 1996 and 1998 served as an example of how Bank resources can be used to leverage new capital in the public markets, apart from the Bank's role as a traditional lender for the development of new infrastructure\. GPED's B share offering was the first of its type for China's provinces, and helped set the stage with institutional and retail investors, along with securities regulators, for similar share financings by at least four other provinces in Hong Kong and on the mainland from 1996 onward\. Subsequent transactions in Zhejiang and Sichuan Provinces, using Bank-financed assets, were in part modeled on GPED's transactions\. The country's experience and record of success with securitizations for toll road development is unique in the world\. Asset securitization by GPED has in fact enhanced and hastened the highway development program in Guangdong Province, supporting the govermment's policy to develop roads by "borrowing loans for road construction and collecting tolls for loan repayment\." The agency's share listings secured new capital from extemal sources while encouraging the involvement of the private financial markets\. These financings are in contrast to commercial bank loans and the involvement of multilateral lenders, who require sovereign guarantees of repayment\. Without the benefit of the Fokai Expressway as part of GPED's initial public offering and the implicit endorsement of this transaction by the World Bank, it is without question that the company's B shares could not have been as favorably priced by the underwriter\. The shares were sold at a price-earnings (P-E) ratio of ten times 1995 earnings, compared to an average P-E ratio of seven times on the Shenzhen B Share Exchange\. The offering was also more than two times oversubscribed by investors\. Through GPED, Guangdong Province is willing to consider securitization in the future as a potential means of completing the funding base needed to improve the expressway network\. Given GPED's understanding of investor criteria, priority will be given to high- quality assets and projects already open to traffic or close to completion, in order to provide an adequate return to investors in the short term - 68 - - 69 - <;,< '\. :: \| i ' L / 2\ ' 'to t g o; FUJIAN 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~BR2327 FEEATO HUN a MONC> GOLIA 21RORATP Y-g N - N '; ---- it fll o i d1 BlJ ifi @ PRCT14\.~~~~~~~~~~~~~~~~~~~l~ \ W PliEFECIUEiiSOliNDARIE5~~~~~~~~~~~~~~~~~~~~~~~~~~ 111¢ i2> 1115 0 \| I ; : \| i i - JUNE21Xi~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ JA X ) ) 0 X -''~~~~ PRaviNCEWNPZH A OEN -\. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~RUSSIAN 1R39R ~~~~~ \ \ UN HU F~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~EDERATON Din9h~~~~~~~~~~~~~~~~~~ ~~CHINA / FU~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ONGOLIA FRDENIN GUANGDONG PROVINCE HIGHWAY PROJECT - X'~~ ANZHOU FEhe~~~~, - FOSHAN-KAIPING AND LONGGANG-TANXI HIGHWAY s nyu L~~~~~~~~~~~~~~~~~~~~~ROPOSED PROJECT \.4 ~\.ZHA >NG SEBRCE Goo\.m,HIGHWAYCONSTRUCTION -, Georning SEDGE - 'I\. -, E~~~~~~~~~~~~~~~~~~~~~~~~~RIDGES v ~ ~ ~ ~ ~ ~ a~ c~- TUNELS H~-~ -CINTERCHANGES T6I 4 XIAT e n- EXISTING EPRSSWAY ' 4 i Heche,I9 kn6n ~~~~~~~~~~~~~~~~~~~~~~~~~~~NATIONAL ROADS RE -- i, necrieng '-'-00' PIEEEINES~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~P -'PROV NCE ROADS N ~~- ~~-"'S\.-'F "~~~'"''~~- ---- ~ COUNTY ROADS IlTUINAN '' '-\.IAGI shn RAILo C _) ------ XROADS 0 ~EIA - $Eqion X,nIBu4 55 ~~~~~~~ ZhSTgEI,E,R 0 ~~~~PROVINCE CAPITAL 'c\. F4\.5 -AN ) - SHOE ~ ~ ~~~~~'- - - - ~9SPREFECTURE BOUNDARIES Shoikou 14 J' \~~~~~~~~~~~{, - - ~~~~~~~PROVINCE BOUNDARY GUANGXI 030'~"''' NG* M1ACAO Sh =-,-F AVOd y\.TpUT ,,T~U4E Xinxu FJTORETER I ingc I ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ I* ' 1 PIT2CIEi ~~~~~~~~~~~~Renshon J Chihi LIN /Longgang lwfeng~~~~~~~~~~~~~~~~~~~~~~~~~~~iln 'Pngshan ~ HENZHEN Dc4ya Bay ~~~ 'a~0 Don9yong laihu *OflTIORYEU ~~~~~~~' ) ~Yanzlso 0~ Hongr Hagi Ba - JUNE 2001	REVIEW
P009877	ï»¿ ICRR 10654 Report Number : ICRR10654 ICR Review Operations Evaluation Department 1\. Project Data : Date Posted : 08/03/2000 PROJ ID : OEDID : C2241 P009877 OEDID: Appraisal Actual Project Name : Dam Safety US$M ) Project Costs (US$M) 196\.8 115\.2 Country : India Loan/ US$M ) Loan /Credit (US$M) 153 87\.5 Sector, Major Sect \.: Natural Resources US$M ) Cofinancing (US$M) Management, Environment L/C Number : C2241; L3325 FY ) Board Approval (FY) 91 Partners involved : Closing Date 09/30/1997 09/30/1999 Prepared by : Reviewed by : Group Manager : Group : George T\. K\. Pitman John R\. Heath Ridley Nelson OEDST 2\. Project Objectives and Components a\. Objectives To improve the safety of selected dams within Project States through (a) remedial works, (b) installation of basic safety facilities, and (c) strengthening institutions of the central government and the project states responsible for assuring dam safety\. The participating states were Madhya Pradesh, Orissa \. Rajasthan, and Tamil Nadu\. b\. Components (1) institutional strengthening of central and state water management institutions through assignment of staff, training, TA, provision of equipment and consultant support ($3 million)\. (2) reviewing the existing flood forecasting facilities in one or more selected interstate river basins and exploring the possibility of improving such facilities ($10\.7 million) (4) TA to the state Dam Safety Committees to be established in each state; institutional strengthening of state Dam Safety Organizations, Departments of Irrigation and Departments of Water Resources (as applicable) through additional staff, TA, training, provision of equipment and consultants ($9 million) (5) improvement of basic dam safety related facilities (telecommunications equipment, real time hydrologic data acquisition equipment, dam safety monitoring equipment, power backup systems, access roads and other means ) at an unspecified number of dam sites selected by the project states (427 million) (6) remedial works at 33 named dams (or alternative/additional higher priority dams) selected in accordance with criteria established by the state's Dam Safety Committee ($147 million) c\. Comments on Project Cost, Financing and Dates $69\.6 million or 45% of the Loan/Credit was canceled despite a two year extension \. $23 million was canceled in June 1995\. A further $27\.2 million was canceled July 1997, $10\.4 million September 1998 and $9 million in February 2000\. Significant depreciation of Indian Rupee over the life of the project (from Rs 18\.6 to Rs 42\.5 = $1\.00) accounted for much of the cancellation \. Overall project cost was 56% of SAR estimates in terms of $ and 93% in terms of Rs\. The project was restructured twice due to slower than planned progress \. This was mainly through reduction in the scope of component (6) that accounted for 75% or project cost\. 3\. Achievement of Relevant Objectives : The relevant objectives were partially achieved \. Remedial works and installation of basic safety facilities appear to meet the poorly defined SAR targets (the doubt about targets is discussed in the ICR )\. Institutional development and strengthening was achieved in 75% of the target states\. 4\. Significant Outcomes /Impacts : This was the first World Bank project devoted entirely to dam safety and put the issue on India's development agenda\. Globally, India has the third largest number of dams ( 3,600) after the USA and China\. Thus the project was highly relevant\. In three of the four states there was substantial institutional strengthening that set up dam safety organizations and the Center played an active role in this process \. Probably the most significant impact was the final ICR workshop that aired many of the dam safety criteria and implementation issues in a forum of 58 participants who represented center and state governments, NGOs, beneficiaries, consultants and contractors \. The consensus developed at this workshop provides strong guidance to government of the scope and type of future support required to ensure long term dam safety in India - it emphasized development of a cost -benefit approach\. It also raised the level of the debate about maintaining investment to maintain the integrity of dams as well as new investment to reduce environmental risks\. Dam Safety Inspection and Evaluation Systems were introduced into the four participating states that had a total of 947 large dams\. 128 large dams were subject to a hydrology review (compared with the SAR target of 170), and 49 to structural review (SAR target was 44)\. Over 1,500 large dams (compared with an SAR target of 947) were inspected for potential hazards and 81 (compared with the SAR target of 147) were subject to more detailed investigation and 55 were short-listed for remedial work (the same as the SAR target)\. 33 large dams in four states (60% of SAR targets) were fully rehabilitated to meet interim dam safety criteria and another 16 remain partially completed\. Access roads were provided to 181 dams, hydrological instrumentation to 172, communication systems to 148, and standby generators to 103\. 5\. Significant Shortcomings (including non -compliance with safeguard policies ): 1\. There is a lack of distinction between investments for improved design to upgrade dam safety per se and investments induced by inadequate and deferred maintenance that threaten dam safety \. It is impossible to tell from the ICR how much of the credit went into deferred maintenance \. 2\. Poor appraisal ignored or downplayed well known systemic institutional issues of the water sector in India that slowed implementation\. These include: uneven coordination between center and states, overlapping and hence unclear lines of authority, lack of enabling regulatory framework for the new national /state safeguard policy, and establishment norms and processes that frustrated specialized staffing for the project \. 3\. Cost-benefit assessment of dam safety was only just developing as the project was implemented \. Accordingly, there was no means to select the most efficient investment opportunities (although this is now being redressed)\. There are still fundamental differences among central and state agencies on criteria to judge dam safety: 63% of the ICR workshop participants thought that the current norms for deciding the design flood need to be changed, and 53% thought that the progress with flood forecasting was not satisfactory \. 4\. Environmental impact assessment absent (non-compliance with OP 4\.01)\. 5\. Only 28% of stakeholders at the ICR workshop thought the project had fully achieved its objectives while 60% thought achievements were partial \. 6\. Dam safety in states' planning/budgeting process is still beset with problems \. 61% of the 58 participants at the ICR workshop stated that dam safety, though important, is not a first charge on budget \. Similarly 79% of participants said that O&M funds for dam maintenance were not based on dam inspection /investigation reports but were either token provisions or based on ad hoc norms per ha (of irrigated area)\. 7\. Institutional strengthening efforts are seriously undermined by frequent staff rotations \. Only 18% of 58 participants at the ICR workshop thought that adequate training had been given to more than half of the staff responsible for dam safety\. And 52% of responding participants thought that training given only marginally enhanced the quality of the execution of the work \. 8\. Only 20% of ICR workshop participants thought that the state Dam Safety Organizations would be maintained at full complement once the project was completed \. Overall, slightly more than half of participants (52%) thought that states were not in a position to sustain the dam safety program \. 9\. Implementation was impeded by the center's delay in allocation of Bank funds, state's slow build up of essential staffing, inadequate prior design, and procurement /contract problems\. As a result, project restructuring eliminated 15 dams from the remedial list and ejected Tamil Nadu state from the project because of inadequate progress on institutional development \. 10\. There was little progress towards improving flood forecasting on an interstate river basin \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Marginally Satisfactory Physical objectives partly achieved \. There are still an unanswered question about deferred maintenance and sustainable funding for dam safety efforts \. Institutional Dev \.: Substantial Modest One state (25% of the project) dropped out of the program due to poor institutional performance (even though it has received extensive Bank assistance for reform through the WRCP project)\. Still coordination issues; dam safety criteria not yet finalized; binding regulatory environment absent; dam safety subject to tunnel vision \. Sustainability : Likely Uncertain Inadequate budgets and rotation of trained staff\. There is still too much emphasis on further Bank support to ensure future of dam safety efforts \. Bank Performance : Satisfactory Satisfactory Deficient appraisal was more than compensated by supervision that improved markedly in the last three years of the project\. Borrower Perf \.: Satisfactory Satisfactory This is on the generous side : OED believes, on balance, that the good performance in the Center and among Maharasthra, Orissa and Rajasthan compensates for the lamentable performance of Tamil Nadu\. Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : Future dam safety projects must aim at developing efficient investment allocation criteria that include benefit-cost analysis covering evaluation of population, economic assets and other resources potentially at risk\. Dam safety projects must discriminate between investments needed to maintain structural integrity (i\.e\. deferred maintenance and the institutional issues that raises ) and investments for new works to lower the environmental risk and improve flood forecasting and conveyance capacity \. Innovative projects need thorough preparation, particularly of new institutions and organizations, and should be piloted first over 2-3 years before embarking on a major investment project \. State's performance is only likely to improve when disbursement is linked to performance - this suggests that India may benefit from APL-type projects\. Client satisfaction with Bank's performance does not mean that the Bank is effective in inducing sustainable reform, new institutions and higher levels of efficiency In-country ICR workshops provide invaluable feedback, information and raise awareness of development issues - they should be standard for all ICRs \. 8\. Audit Recommended? Yes No 9\. Comments on Quality of ICR : Satisfactory\. The feedback from ICR workshop conducted as part of the Intensive Learning Implementation Completion Report was extremely useful \. It provides good insight into design and implementation issues affecting this project and will, hopefully, enable better design of similar projects in India \. Borrowers' comments were good but a little self-serving\.	REVIEW
P106216	Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004868 IMPLEMENTATION COMPLETION AND RESULTS REPORT IDA 45440-BN and IDA 53320-BN ON A CREDIT IN THE AMOUNT OF SDR 135\.9 MILLION AND US$205\.8 MILLION EQUIVALENT TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR THE BANGLADESH - HIGHER EDUCATION QUALITY ENHANCEMENT PROJECT ( P106216 ) June 21, 2019 Education Global Practice South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective May 1, 2019) Currency Unit = Bangladeshi Taka (BDT) BDT 84\.385 = US$1 US$1\.383 = SDR 1 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS ACB Accreditation Council Bangladesh AIF Academic Innovation Fund BAC Bangladesh Accreditation Council BdREN Bangladesh Research and Education Network CAS Country Assistance Strategy CPF Country Partnership Framework EIRR Economic Internal Rate of Return EOP End of Project FabLab Fabrication Laboratory FM Financial Management GDP Gross Domestic Product GoB Government of Bangladesh HE Higher Education HEAT Higher Education Acceleration and Transformation Project HEMIS Higher Education Management Information System HEQEP Higher Education Quality Enhancement Project HEQEPU Higher Education Quality Enhancement Project Unit ICR Implementation Completion and Results Report ICT Information and Communications Technology IPF Investment Project Financing ISR Implementation Status and Results Report IQAC Institutional Quality Assurance Cell IRR Internal Rate of Return M&E Monitoring and Evaluation MEU Monitoring and Evaluation Unit MoE Ministry of Education MTBF Medium-Term Budgetary Framework MTR Midterm Review OM Operations Manual PCR Project Completion Report PDO Project Development Objective PMIS Project Management Information System PRSP Poverty Reduction Strategy Paper QA Quality Assurance QAAC Quality Assurance and Accreditation Council of Bangladesh QAU Quality Assurance Unit SAC Self-assessment Committee SAR Self-assessment Report UGC University Grants Commission Regional Vice President: Hartwig Schaefer Country Director: Robert Saum (Acting) Senior Global Practice Director: Jaime Saavedra Chanduvi Practice Manager: Mario Cristian Aedo Inostroza Task Team Leader(s): Mokhlesur Rahman, Shiro Nakata ICR Main Contributor: Peter Darvas, Jason Robert Johnston TABLE OF CONTENTS DATA SHEET \. 1 I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 5 A\. CONTEXT AT APPRAISAL \. 5 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) \. 12 II\. OUTCOME \. 16 A\. RELEVANCE OF PDOs \. 16 B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 17 C\. EFFICIENCY\. 24 D\. JUSTIFICATION OF OVERALL OUTCOME RATING\. 24 E\. OTHER OUTCOMES AND IMPACTS (IF ANY) \. 25 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 26 A\. KEY FACTORS DURING PREPARATION \. 26 B\. KEY FACTORS DURING IMPLEMENTATION \. 27 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 28 A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 28 B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 30 C\. BANK PERFORMANCE \. 31 D\. RISK TO DEVELOPMENT OUTCOME \. 32 V\. LESSONS LEARNED AND RECOMMENDATIONS \. 33 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 35 ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 46 ANNEX 3\. PROJECT COST BY COMPONENT \. 49 ANNEX 4\. EFFICIENCY ANALYSIS \. 50 ANNEX 5\. BORROWERâS COMMENTS & SUMMARY OF BORROWERâS ICR \. 54 ANNEX 6\. SUPPORTING DOCUMENTS \. 61 ANNEX 7\. SUMMARY OF FINDINGS OF BENEFICIARY WORKSHOP \. 62 ANNEX 8\. SUMMARY OF KEY FINDINGS: (1) FINAL ROUND SATISFACTION SURVEY [INCL\. METHODOLOGY]; (2) GRADUATE TRACKING SURVEY; (3) FINAL IMPACT ASSESSMENT \. 64 ANNEX 9\. SUMMARY OF AIF SUB-PROJECTS \. 69 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name Bangladesh - Higher Education Quality Enhancement P106216 Project Country Financing Instrument Bangladesh Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency People's Republic of Bangladesh Ministry of Education, University Grants Commission Project Development Objective (PDO) Original PDO The main objective of the project is to improve the quality and relevance of the teaching and research environment in highereducation institutions through encouraging both innovation and accountability within universities and by enhancing the technicaland institutional capacity of the higher education sector\. Page 1 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 81,000,000 80,812,964 82,861,705 IDA-45440 125,000,000 125,000,000 113,564,828 IDA-53320 Total 206,000,000 205,812,964 196,426,533 Non-World Bank Financing 0 0 0 Borrower/Recipient 10,500,000 21,300,000 20,400,000 Total 10,500,000 21,300,000 20,400,000 Total Project Cost 216,500,000 227,112,964 216,826,533 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 17-Mar-2009 13-May-2009 08-Jan-2012 31-Dec-2013 31-Dec-2018 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 10-Jan-2013 54\.49 Change in Results Framework Change in Loan Closing Date(s) Reallocation between Disbursement Categories 03-Nov-2013 76\.02 Reallocation between Disbursement Categories 03-Dec-2013 76\.02 Additional Financing KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial Page 2 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 24-Jun-2009 Satisfactory Satisfactory 0 02 23-Dec-2009 Moderately Satisfactory Moderately Satisfactory 2\.15 03 23-Jun-2010 Satisfactory Moderately Satisfactory 3\.69 04 01-Jan-2011 Satisfactory Moderately Satisfactory 8\.12 05 18-Jul-2011 Moderately Satisfactory Moderately Satisfactory 15\.86 06 23-Jan-2012 Moderately Satisfactory Moderately Satisfactory 19\.74 07 28-Apr-2012 Moderately Satisfactory Moderately Unsatisfactory 24\.50 08 23-Sep-2012 Moderately Satisfactory Moderately Satisfactory 36\.92 09 31-May-2013 Satisfactory Satisfactory 58\.18 10 12-Dec-2013 Satisfactory Satisfactory 76\.02 11 13-Apr-2014 Satisfactory Moderately Satisfactory 77\.95 12 07-Oct-2014 Satisfactory Moderately Satisfactory 95\.49 13 18-Feb-2015 Moderately Satisfactory Moderately Satisfactory 97\.17 14 14-Aug-2015 Moderately Satisfactory Moderately Satisfactory 121\.35 15 01-Mar-2016 Moderately Satisfactory Moderately Satisfactory 131\.34 16 12-Sep-2016 Satisfactory Moderately Satisfactory 151\.43 17 15-Feb-2017 Satisfactory Moderately Satisfactory 151\.43 18 31-Aug-2017 Satisfactory Moderately Satisfactory 183\.98 19 09-Mar-2018 Satisfactory Satisfactory 184\.03 20 10-Sep-2018 Satisfactory Satisfactory 196\.43 Page 3 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) SECTORS AND THEMES Sectors Major Sector/Sector (%) Education 100 Public Administration - Education 5 Tertiary Education 95 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Human Development and Gender 100 Education 100 Access to Education 25 Science and Technology 25 Teachers 25 Standards, Curriculum and Textbooks 25 ADM STAFF Role At Approval At ICR Regional Vice President: Isabel M\. Guerrero Hartwig Schafer Country Director: Xian Zhu Robert J\. Saum Senior Global Practice Director: Michal J\. Rutkowski Jaime Saavedra Chanduvi Practice Manager: Amit Dar Mario Cristian Aedo Inostroza Mokhlesur Rahman, Shiro Task Team Leader(s): Benoit Millot, Subrata S\. Dhar Nakata ICR Contributing Author: Peter Darvas Page 4 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT AT APPRAISAL Context 1\. Country context\. At the time of appraisal, Bangladesh had a population of 145 million people and a per capita gross national income of US$599 (provisional in 2007â2008), and recorded impressive progress in poverty reduction and a number of human development outcomes\. Per capita gross domestic product growth was above 5 percent from the early 2000s, while headcount poverty declined from 59 percent in 1991 to 40 percent in 2005\. Gross primary school enrollment rate at the time was around 90 percent, secondary school enrollment doubled from the time of independence, and the gender parity target of the Millennium Development Goals was achieved both at primary1 and secondary education levels\. 2\. Sector context\. The Ministry of Education (MoE) has the overall responsibility for policy formulation, strategic leadership, and preparation of budget for public funding in higher education\. Within the MoE, the University Grants Commission (UGC) was commissioned in 1973 to oversee all universities, and as the intermediary between the Government and the universities, to regulate the university affairs\. At the time of appraisal there were 81 universities (30 of them public and 51 private) that provided four types of higher education in the country: (a) general education; (b) science, technology, and engineering education; (c) agricultural education; and (d) medical education\. The public and private universities accounted for 17 percent of total enrollments in higher education\. 3\. Higher education at the time of project design was beset with several deeply rooted and intertwined challenges\. These challenges included underprepared incoming university students due to low quality of basic education, limited access to higher-level institutions, low level of research and research capacity, weak governance and management practices, weak sector planning and monitoring capacity, inadequate funding level and mechanisms, and politicization of the sector\. In view of these challenges, the Government prepared the Higher Education Strategic Plan 2006â2026, which was fully homegrown with participation of front-line academics from both public and private universities and representatives from think tanks and the private sector\. The plan signaled a strong commitment by the Government to the development of higher education, identifying challenges and recommendations for addressing challenges in the sector\. 4\. Rationale for World Bank support\. Higher education is a necessary ingredient of Bangladeshâs strategy to energize the economic environment and to boost the investment climate, and this strategy constituted the first pillar of the World Bankâs FY2006â2009 Country Assistance Strategy (CAS)\. The Government was determined to support the implementation of the Strategic Plan and to accelerate reforms in the higher education sector\. As part of the plan, the World Bankâs persistent support to primary and secondary education was understood to be complemented by parallel support to higher education\. The substantial support needed at the lower levelsâfew other development partners have demonstrated an interest and/or the capacity to intervene in the complex higher education sectorâleft the World Bank 1 In Bangladesh, primary level consists of Grades 1â5, while secondary level consists of Grades 6â10\. Page 5 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) and its vast knowledge of the sector to fill the gap\. The World Bank also brought extensive technical and operational experience in implementing innovation funds for promoting research and innovation, institutional capacity building, and improved governance in higher education through projects in over 20 countries, including South Asia Region countries such as India and Sri Lanka at the time\.2 5\. The proposed operation was designed to finance initiatives to revamp universitiesâ quality, relevance, governance, and management, as acceptable to the academic community\. The Higher Education Quality Enhancement Project (HEQEP) was the first large project in the higher education sector supported by any development partner in Bangladesh\. Thus, most lessons incorporated in the HEQEP were the result of experience gained by the World Bank in its support of higher education in other countries\. The project was deliberately designed to be a low reform-intensive project avoiding controversial measures\. Once sufficient progress was demonstrated under this operation, it was anticipated that opportunities and consensus for pursuing reforms in higher education will arise\. The HEQEP would become the first building block of long-term support and pave the way for more systemic changes of a wider coverage when circumstances allow\. By building up the strategic planning capacity of the UGC, the project was expected to foster the development of sound and analytically grounded reforms in the future\. Theory of Change (Results Chain) 6\. Figure 1 illustrates the Theory of Change for the HEQEP, which has been constructed considering the activities, outputs, and outcomes under both the original financing and additional financing (AF)\. The HEQEPâs development outcomes would ultimately contribute to achievement of the national and sector development priorities in improving the quality of higher education and contributing to the development of a knowledge economy\. The project aimed to achieve two main objectives: first, to improve the quality and relevance of teaching in higher education institutes (HEIs) and second, to improve the research environment of HEIs\. 7\. To achieve the objective of improving the quality and relevance of teaching in HEIs, the project encompassed the following set of critical activities: (a) provision of Academic Innovation Funds (AIFs) on a competitive basis for upgrading teaching-learning facilities, conducting self-assessments, and implementing university-wide developments (for example campus networks and library automation); (b) building institutional capacity of the UGC and universities through the development of the Higher Education Management Information System (HEMIS) and professional development opportunities for UGC and university faculty and staff; (c) establishment of the Bangladesh Research and Education Network (BdREN) and the UGC Digital Library to improve the quality of Internet connectivity and improve access to e-resources respectively at universities; and (d) introduction of a quality assurance (QA) mechanism at the national level through enactment of the Bangladesh Accreditation Act and at the institutional level through establishment of the Institutional Quality Assurance Cells (IQACs) at the universities\. These activities would improve teaching-learning quality of higher education, and enhance institutional capacity at the central and institutional levels contributing to the objective of improving the quality and relevance of teaching in the HEIs\. 2 Saint, W\. 2006\. âInnovation Funds for Higher Education; A Userâs Guide for World Bank Projects\.â Page 6 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) 8\. To achieve the objective of improving the research environment of HEIs, the project provided a competitive AIF to enhance research capabilities at the universities\. The AIF-supported research areas included upgradation of research labs and provision of modern equipment; research capacity-building training; enrollment of postgraduate students including doctoral students; and university-industry collaboration in research\. These activities would enhance the research capabilities and promote research in the universities\. Page 7 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Figure 1\. Theory of Change for the HEQEP Activity Intermediate Results Outcomes Improvement in teaching-learning and Improved research environment through quality and utilization of AIF-funded subprojects relevance of teaching in Doctoral-level enrollment under AIF HEIs AIFs for upgrading teaching-learning facilities, subprojects conducting self-assessments, implementing research projects and activities for university- Percentage of 39 eligible universities wide development completed at least one self-assessment Improved sub-project research environment The mechanism for university-industry in HEIs collaboration piloted and evaluated National HEMIS operational and annual i\. Development of the HEMIS reports produced using HEMIS ii\. Professional development opportunities for UGC and university faculty and staff Strengthened institutional capacity at UGC and universities Improved quality and i\. Establishment of BdREN for improved Improved access to Internet in BdREN relevance of connectivity connected universities teaching in ii\. Establishment of UGC Digital Library for HEIs provision of e-resources Improved utilization of e-resources using UGC Digital Library i\. Enactment of the Bangladesh Accreditation QA is introduced at national and Act institutional level ii\. Establishment of IQACs at universities Page 8 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Project Development Objectives (PDO) 9\. The objective of the project is to improve the quality and relevance of the teaching and research environment in higher education institutions through encouraging both innovation and accountability within universities and by enhancing the technical and institutional capacity of the higher education sector\. Key Expected Outcomes and Outcome Indicators 10\. As per the original Project Appraisal Document, the PDO has two key objectives which were measured by the following three outcome indicators: Objective 1: Improve the quality and relevance of teaching in higher education institutions (a) Increased level of satisfaction of students and faculty staff regarding the quality of teaching and research environment, and of employers regarding the relevance of teaching and research programs (b) Proportion of students and faculty staff with access to advanced Internet connectivity\. Objective 2: Improve the research environment in higher education institutions (a) Institutionalization of a competitive funding mechanism for teaching and research through increased allocation in the Medium-Term Budgetary Framework (MTBF)\. Components 11\. Component 1: Promoting Academic Innovation (Estimated: US$93\.2 million of which IDA US$89\.3 million; Actual: US$116\.12 million)\. The component focused on establishing the enabling conditions to enhance the quality and relevance of teaching, learning, and research in universities and introducing an efficient instrument for the allocation of additional public funds to universities with an emphasis on innovation and accountability\. This component aimed to instill changes within the academic community to invigorate teaching, improve learning, and boost research, in areas of priorities for national development, relying on demand from this community\. It also aspired to rationalize resource allocation by setting up a mechanism based on performance rather than inputs\. The approach is to reward academic units that demonstrated vision, innovation, and discipline, instead of imposing rules in a top-down mode\. Additional objectives of this component were to infuse universities with project management, procurement, and financial management (FM) capacity, and to identify and nurture leaders within the higher education sector\. 12\. To achieve the objectives, the AIF was designed to improve the quality of academic activities and outcomes, to promote and implement departmental or programmatic self-assessment exercises, to encourage cross-disciplinary or interinstitutional academic collaboration, and to promote the use of modern communication technologies\. The participating universities were grouped into three categories according to characteristics such as enrollment, type, and capacity to ensure a level playing field for universities\. AIF resources were to be made available as a grant for all eligible public and private Page 9 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) universities on a competitive basis\. At the time of appraisal, the Government of Bangladesh (GoB) determined that any intervention to improve quality and relevance of university education should include private universities, which comprised two-thirds of all university students\. Participation of universities in the project was expected to be voluntary; the principles of the program included strict impartiality and transparency regarding selection criteria and procedures, and public disclosure of the decisions\. The AIF process was led by the higher education communityâfrom proposal writing to evaluation to implementationâwhich built strong ownership and garnered acceptance\. These key features were built in the AIF design to yield expected results\. Once subprojects were selected, they would be implemented with the support of AIF resources through three competitive windows geared toward improvement of teaching and learning, enhancement of research capabilities, and implementation of university-wide innovations\. 13\. Departments of the universities, institutes, affiliated centers, universities themselves, and any of their combinations were to be eligible to compete for the funds, subject to compliance with clear and objective criteria\. Independent Area Review Panels were to evaluate the proposals based on well- defined criteria\. The AIF funds were to be administered based on the agreed procedures in the Operations Manual (OM)\. The AIF financing was intended for a variety of expenditures such as faculty staff training, academic collaboration, procurement of goods and services, and small renovation and refurbishing of lecture/study rooms, laboratories, and workshops\. There were three specific windows for the AIF use: (a) teaching-learning facilities, (b) research capabilities, and (c) university-wide innovation\. Through the AIF, eight fabrication laboratories (FabLabs) were also established in selected universities\. After the AF, another window was introduced under university-industry collaboration\. Because the AIF was a demand- side intervention, only non-eligible expenditures were comprehensively listed in the OM, and thus apart from the ones listed all activities contributing to the achievement of expected results and measurable impact were eligible\. 14\. Component 2: Building Institutional Capacity (Estimated: US$8\.5 million of which IDA US$7\.1 million; Actual: US$6\.80 million)\. The objective of this component was to reinforce the strategic and institutional capacity of the sector, both at the central level and at the level of higher education institutions (HEIs)\. The component included the following subcomponents: (a) improving the strategic capacity of UGC and (b) strengthening universitiesâ institutional capacity\. The catalytic of this component was to bring the needed supply-side support to improve the efficiency of universities and higher education authorities\. It was designed to allow the first component to yield its full benefit and to facilitate the formation of positive externalities\. â¢ Subcomponent 2\.1 - Improving the Strategic Capacity of UGC\. This subcomponent aimed to endow the UGC with the human and information resources needed to steer the higher education sector, and to bestow the commission with the capacity to strategize the future development of the sector\. To this end, the project aimed to support capacity building for strategic planning in the higher education sector, develop a HEMIS, and upgrade the UGCâs management capacity\. â¢ Subcomponent 2\.2 - Strengthening the Institutional Capacity of Universities\. The objectives of this subcomponent were to increase awareness about the AIF among the key stakeholders through appropriate media and communication campaigns\. These campaigns were to focus on academic innovation and institutional capacity enhancement, Page 10 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) strengthening institutional capacity for preparation and evaluation of AIF proposals, and implementing and managing subprojects for AIF-eligible public and private universities\. 15\. Component 3: Raising the Connectivity Capacity of the Higher Education Sector (Estimated: US$84\.9\.0 million of which IDA US$71\.5 million; Actual: US$45\.91 million)\. The objective of this component was to de-silo Bangladeshâs universities and integrate them into the globalized world of knowledge\. The main activity was intended to establish a BdREN and to facilitate access to the repository of global knowledge through connection to a digital library\. 16\. The project supported the creation of the BdREN, a high-performance Information and Communications Technology (ICT) network providing connectivity among education and research institutions in both public and private sectors to enable academics, scientists, and researchers engaged in higher education and research to communicate with peers within the country\. The network supports geographically dispersed academics, scientists, and researchers with reliable access to high-end computing, simulation tools, and datasets, and was designed to relate to other regional and transcontinental research and education networks, linking faculty and students of Bangladesh to the global academic community and learning resources\. At the time of appraisal, some 20 universities and research institutions in Bangladesh were provided subscriptions to digital resources but only in a limited way and with poor connectivity\. To address this situation, the HEQEP was to facilitate access to the global repository of knowledge through subscription to a digital library on behalf of the participating universities by forming a consortium and to work closely with the BdREN\. 17\. Component 4: Establishment of Quality Assurance Mechanism at the Institutional Level (Estimated: US$37\.0 million of which IDA US$27\.0 million; Actual: IDA US$15\.83 million)\. Component 4 was new under the AF\. The objective of the component was to ensure quality of higher education in Bangladesh through the establishment of QA mechanisms at the national and institutional levels\. â¢ Subcomponent 4\.1 - Establishment of QA Mechanism at the National Level\. The objective of this subcomponent was to provide funds for the establishment of a national QA mechanismâto establish the Quality Assurance and Accreditation Council for Bangladesh (QAAC)\. The project supported strengthening of the Quality Assurance Unit (QAU), which was designed to oversee the establishment of the IQAC at the university level\. The QAU was to serve as the temporary council until the formation of what would become the Accreditation Council Bangladesh (ACB)\. The component was designed to finance staffing, hardware, and software (including staff development) necessary for the QAU to be implemented by the Higher Education Quality Enhancement Project Unit (HEQEPU) and provide technical assistance in the areas of QA\. 18\. Component 5: Project Management, Communication, Monitoring and Evaluation (Estimated: US$14\.4 million of which IDA US$11 million; Actual: US$16\.43 million)\. The overall responsibility for the project was charged to the UGC which was the implementing agency\. A Project Management Unit (HEQEPU) was established at the UGC to ensure smooth project implementation, led by the full-time Project Director\. The HEQEPU was designed to be staffed with technical, procurement, and FM staff and its primary functions were to plan, manage, implement, and coordinate activities under the proposed project\. A Monitoring and Evaluation Unit (MEU) was set up to systematically document all project inputs, processes, outputs, and outcomes and link project interventions with outcomes to indicate the extent of Page 11 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) progress and achievement of objectives\. The project supported the unit in charge of M&E and was accountable for the technical assistance needed to perform M&E activities\. 19\. A set of core indicators for measuring inputs, processes, outputs, and outcomes, with baseline and target values, were developed to measure the impact of the project\. A comprehensive and integrated data monitoring system was to be put in place to ensure that all project inputs, process, outputs, and outcomes were monitored from the very inception of the project\. Consultants were to be procured for the third-party effectiveness evaluation\. In addition to the evaluation built into the continuing monitoring of the project activities, a satisfaction survey was to be carried out targeting students, faculties, and employers of the AIF beneficiary institutes/departments to assess how the direct beneficiaries value the interventions under the AIF during three times of the project life\. An effectiveness evaluation was designed to be carried out to focus on the outputs of the interventions and was designed to include a detailed baseline survey and follow-up surveys to measure the effectiveness of project interventions\. During implementation, HEQEPU M&E conducted effectiveness studies on each activity as part of an impact assessment\. B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) Revised PDOs and Outcome Targets 20\. The projectâs development objective was not changed during the project period\. Revised PDO Indicators 21\. In January 2013, there was a level 2 restructuring with changes in PDO indicators and targets\. The restructuring involved a revision of the PDO indicators to better align with the restructured project activities, ensure realism of end of project targets, and streamline the overall Results Framework\. Four changes to be made to the PDO outcomes are (a) reduced target under outcome indicator 1 (improvement of satisfaction of students, faculty, and employers) from 20 percent to 10 percent to increase the realism of targets; (b) revision of outcome indicator 2 (institutionalization of competitive funding) to a measurable target as the MTBF did not include a budget head for competitive funding; (c) revision to outcome indicator 3 (proportion of students and faculty with access to advanced Internet connectivity) to a new measure tracking the number of universities connected to the BdREN; and (d) a core indicator on beneficiaries is added as outcome indicator 4\. 22\. On December 13, 2013, an AF of US$125 million was approved\. The outcome indicators were revised to reflect the expanded project scope supported through the AF through new indicators while the existing ones were made more ambitious\. The revised Results Framework included two additional PDO-level indicators to measure new activity on QA and to track outcomes of AIF-supported research activities\. These two new outcome indicators were PDO 5 - Number of IQAC established and produce self-assessment based on the established framework and PDO 6 - Number of academic publications produced by beneficiaries of AIF subprojects\. 23\. The PDO indicator on âNumber of universities (public and private) connected to BdRENâ was moved to the intermediate outcome level indicator\. This was because PDO 3 tracked utilization of Page 12 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) BdREN, which made it a better outcome level measure of the objective to improving teaching-learning in the universities\. Additionally, PDO indicator 1, which tracked satisfaction levels, was revised with increased targets to reflect the expanded scope of activities, expected to now have more impact on raising the level of satisfactions of students, teachers, and beneficiaries\. The target for total beneficiary number under PDO indicator 4 was also increased to reflect the expanded coverage and scope of the AF\. 24\. During the AF, the changes in the Results Framework were mainly refinement of the outcome indicators to capture new and expanded activities\. The increased targets under PDO indicator 1 and PDO indicator 4 were higher than the targets set under the original design\. Hence, the overall revisions in the PDO indicators did not unfavorably impact the scope or ambition of the project\. Table 1\. Revisions to the Results Framework: Project Development Outcome Indicators # Indicator Name Changes during Restructuring PDO Indicators 1 Increased level of satisfaction of students and faculty (a) Targets were revised downwards from 20% staff regarding the quality of teaching and research increase to 10% increase to align with expected environment, and of employers regarding the project outcomes in January 2013 restructuring; relevance of teaching and research programs (%) - and (b) Targets were later revised upward to 21 % five-point scale increase for students, 38% increase for faculty, and (a) Student Satisfaction Surveys 40% increase for employers\. (b) Faculty Satisfaction Surveys (c) Employer Satisfaction Surveys 2 Number of academic publications produced by Added during the AF/restructuring in December beneficiaries of AIF subprojects 2013 3 All research and teaching and learning funds under Original indicator âInstitutionalization of a UGC are distributed using an identified set of rules competitive funding mechanism for teaching and based on transparency and competition\. research through an increased allocation in the Medium-Term Budgetary Framework (MTBF) [%]â replaced by current PDO indicator 3 4 Number of direct beneficiaries of the project (of which females [%]) - Direct beneficiaries defined by students and teachers of AIF subprojects and the BdREN 5 Monthly average volume of inbound Original Indicator âNumber of universities (public education/research data traffic in BdREN and private) connected to BdRENâ was converted to intermediate indicator and replaced by current PDO indicator 5 6 Number of IQAC established and produce self- Added during the AF/restructuring in December assessment based on the established framework 2013 Table 2\. Revisions to the Results Framework: Intermediate Outcome Indicators Page 13 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) # Indicator Name Changes during Restructuring Intermediate Indicators 1 Teaching and Learning Original PDO Indicator âTeaching and Learning\. Percentage of fund utilization by teaching and Proportion of subprojects implemented according to learning subprojects (Window 1); Rounds 1â3 the plan [%]â was replaced by intermediate outcome indicator 1 2 Research Original PDO Indicator âResearch\. Proportion of Percentage of fund utilization by research subprojects implemented according to the plan [%]â subprojects (Window 2); Rounds 1â3 was replaced by intermediate outcome indicator 2 3 Percentage increase (cumulative) in doctoral level Original PDO Indicator âPercentage increase in enrollment (%) under AIF subprojects doctoral level enrollment [%]â was clarified and reconfigured into intermediate outcome indicator 3 4 Percentage of 39 eligible universities completed No change\. at least one self-assessment sub-project [%] 5 The mechanism for university-industry Added during the AF/restructuring in December 2013 collaboration piloted and evaluated\. 6 National HEMIS is in place and operational at Original intermediate outcome indicator âNumber of UGC analytical studies carried out for updating Higher Education Strategyâ replaced by intermediate outcome indicator 6 7 Proportion of institutions covered under No change awareness campaign (%) 8 Number of universities (public and private) Original indicator âProportion of students and faculty connected to BdREN staff with access to advanced internet connectivity [%]â was moved from PDO and converted to intermediate indicator 9 Number ('000) of online journal title accessed Original indicator âNumber of online journal title and downloaded using UGC Digital Library on subscriptions (â000) through the UGC Digital Libraryâ average per (month) was updated to reflect increased target and measure output 10 QA Unit is fully functional and operational No change 11 HEQEP Unit is fully functional and operational No change 12 Completion of baseline survey, follow-up survey Original intermediate outcome âCompletion of at midterm and endline survey, and tracer studies baseline survey, follow-up survey at mid-term and end-line surveyâ revised to reflect additional tracer studies Revised Components and Scope 25\. The original scope of the project was extended under the AF while the PDO remained the same throughout the projectâs life\. The original project had four components: 1 - Promoting Academic Innovation; 2 - Building Institutional Capacity; 3 - Raising Connectivity of the Higher Education Sector; and 4 - Project Management and M&E\. The AF added financing to the four original components and a new Component 4 on Establishment of Quality Assurance Mechanism at the Institutional Level\. The following Page 14 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) specific changes were made to the project design as part of the AF: (a) Component 1\. The AF would finance a third round of the AIF which included a new additional window named âInnovation Fundâ to support stronger university-industry links\. (b) Component 2\. A scale-up of activities that were designed to support the capacity building in higher education including (i) improving the strategic capacity of the UGC; (ii) strengthening the institutional capacity of the universities; and (iii) supporting local, international, and online intellectual property/patent training\. The scaled-up activities under this component complemented the expanded activities under Component 1 to ensure success of the AIF activities through enhanced capacity at various levels of the higher education system\. (c) Component 3\. A scale-up of activities to use full potential of the connectivity facilities including (i) strengthening and scaling up its management structure including technical and management competencies of BdREN staff and fully supporting all the services up to field level; (ii) expanding the network and its services to ensure BdREN's optimal utilization at the selected universities (campus network, video conference facility, and so on); (iii) ensuring good governance and strong ownership by the stakeholders, including acquiring high-quality connectivity to provide cost-effective connectivity to the educational institutions\. (d) Component 4\. A new component added on establishment of QA mechanisms at the national and institutional levels\. Under the AIF, self-assessments were conducted in several universities which laid the foundation for introduction of QA in the higher education system in Bangladesh\. Under the AF, this component was designed to support (i) strengthening of the UGCâs QAU and establishment of the QAAC and (ii) establishment of IQACs at the universities\. (e) Component 5\. With the expanded scope of the project, this component was also scaled up accordingly to enhance communication and monitoring and evaluation (M&E) activities\. Other Changes 26\. In addition to the changes to the Results Framework, the original credit closing date was extended from December 31, 2013, to October 31, 2015 under the first restructuring, and then to December 31, 2018, under the AF restructuring\. The reason for closing date extension was because of the initial delays in the implementation of the AIF and other project activities such as improving strategic planning capacity of the UGC and establishment of the BdREN\. Key project activities were at the time new to the sector and ambitious in their nature and required significant mindset changes and a lot of learning by doing, both of which are time consuming\. In particular, careful selections of the AIF competitive grant from a large number of subproject proposals required a substantial amount of time especially in the first two rounds\. Delays in the implementation of the BdREN, due in part to growing pains that come with corralling disparate universities into a single network, necessitated extended time for implementation\. Connecting universities all around the country including laying fiber optic cables and ensuring connectivity required permission and logistical coordination across different levels and agencies\. Thereafter, the project closing date was extended once again through the AF restructuring reflecting the extended scope of the project\. Page 15 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) 27\. Reallocation\. Under the January 2013 restructuring, SDR 4\.5 million was reallocated to Component 3 (Raising the Connectivity Capacity of the Higher Education Sector) from other components to meet additional funding needs for establishment of the BdREN\. Specifically, SDR 3\.8 million from Component 1, SDR 0\.35 million from Component 2, and SDR 0\.34 million from Component 4 were reallocated to Component 3\. Rationale for Changes and Their Implication on the Original Theory of Change 28\. The modifications at the restructurings in January 2013 and December 2013 did not affect the Theory of Change but were enacted to build on the successful implementation of reforms under the original project and expand the successful reforms in the areas of quality enhancement of higher education, research and innovation, and governance\. By the time of the restructuring and the AF in December 2013, the pace of implementation had been rapid and the project showed progress against outcomes and intermediate outcome indicators, including (a) increased satisfaction in all key stakeholders (students, faculty, and employers), based on midterm satisfaction surveys; (b) accelerated fund utilization by the subprojects under the AIF-based technical assistance and training provided by the UGC and the project unit; (ci) competitive funding process proceeded according to schedule; (d) access to the BdREN increased to 12 percent of students and 18 percent of faculty members (compared to 0 percent at baseline); and (d) the digital library was at that point established and fully operational in 34 universities\. II\. OUTCOME A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 29\. Relevance of PDOs is rated as High as the PDO\. The objectives of the project have remained highly relevant to Bangladeshâs long-term objective of developing the human capital and of sustaining economic growth and poverty reduction\. 30\. The objectives of the project were well aligned with Bangladeshâs Seventh Five-Year Plan (FY2016âFY2020), which had an overarching theme of âAccelerating Growth, Empowering Citizensâ3\. Aligned with the United Nationsâ Sustainable Development Goals, the Seventh Five-Year Plan aimed to develop strategies, policies, and institutions to accelerate inclusive growth, reduce poverty, empower citizens, and promote sustainable development\. One of the pillars of the plan included education as a part of the overarching goal of human resource development\. Under the plan, the GoB endeavors to improve the human capital base such that it will be ready to respond to a growing and changing economy, with Bangladesh asserting its role in the global economy\. The Seventh Five-Year Plan placed a greater emphasis on secondary and higher education than in earlier plans, including vocational and technical education for developing skills needed for employment and modern life\. At the time of the planâs development, enrollment in Bangladeshi higher education expanded at an annual average pace of 12 percent, from 1 million in FY2005 to 2\.2 million in FY2012, owing to the improved graduation at the secondary level and growing share of private sector delivery of higher education\. 3 Seventh Five-Year Plan âAccelerating Growth, Empowering Citizensâ FY2016âFY2020, Bangladesh, 2016\. Page 16 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) 31\. The GoB recognized human development as an input to the goal of inclusive and shared economic growth and poverty alleviation, with education as a primary component of human development along with health\. Couched within that, the Government considered4 university education as the engine of growth for economic and social development of a nation, as it instills the skills and technical expertise from which economic and social development spring forth\. The HEQEP was included in a review of key initiatives taken in higher education since the Sixth Five-Year Plan5\. The plan noted that further projects will be taken up with regard to QA and accreditation owing to the progress made under the HEQEP and the continuing need to improve quality in higher education\. The BdREN was to be further developed during the Seventh Five-Year Plan as part of Government policy of establishing Digital Bangladesh, empowered to adapt to rapid change in the sector at the national and global levels\. 32\. The project is aligned with the Country Partnership Framework (CPF) updated for the period of FY2016-FY2020\.6 Higher education figured prominently in the second social inclusion focus area, along with growth and climate and environmental management in the CPF\. The HEQEP directly supported the social inclusion focus area, which aimed to consolidate the equity and access gains in health and education, address the next generation of challenges related to quality, strengthen higher education and skills development, expand social protection coverage, and improve rural livelihood opportunities\. The CPFâs second objective included improved quality in education, to which the HEQEP directly contributed by design as part of the World Bank Groupâs overall support focus on quality and relevance of education as an important priority\. B\. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome 33\. The efficacy of the PDO is overall rated Substantial\. Achievement of the PDOs is assessed for efficacy against two outcomes: (a) Improve the quality and relevance of teaching in HEIs (b) Improve the research environment in HEIs 34\. The HEQEPâs outcomes were measured through 6 PDO-level indicators and 12 intermediate indicators\. Overall, the achievements in the PDO-level indicators and intermediate indicators point to high performance and strong impact of the project interventions\. As discussed earlier, though the target for the PDO indicator 1 âsatisfaction levelâ was revised downward in January 2013 restructuring, it was revised upward during the AF restructuring in December 2013 after the pace of implementation improved, while new indicators were added and the existing ones were made more ambitious\. By the project closure, all PDO indicators were met or exceeded, except for a sub-indicator of level of satisfaction of students, which was narrowly missed\. Moreover, 10 out of the 12 intermediate indicators were met or exceeded the target\. 4 See National Education Policy 2011\. 5 Sixth Five-Year Plan âAccelerating Growth and Reducing Povertyâ FY2011âFY2015, Bangladesh\. 6 Country Partnership Framework, Bangladesh, FY2016âFY2020, 2016\. Page 17 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) 35\. The HEQEP took an innovative approach of using satisfaction ratings to track improvements in quality and relevance of education to overcome inherent difficulties of measurement of quality of higher education services\. Assessing quality and relevance of higher education directly is known to be difficult due to complex and diverse nature of higher education institutions and programs\. High-level cognitive skills development of students are also extremely difficult to capture quantitatively\. The project used an innovative way to use a set of satisfaction surveys that allows triangulation of responses and tracking changes over time by obtaining satisfaction ratings from three different key stakeholders at three different times of the project cycle\. Faculty members would be best positioned to identify improvements in teaching and researching environment, while employers would be able to evaluate relevance of graduatesâ knowledge and skills, hence relevance of education\. The standardized methodology of the projectâs three rounds of satisfaction surveys allowed reliable tracking of changes over time in satisfaction ratings\. (a) Improve the quality and relevance of teaching in HEIs 36\. The PDO indicator of the beneficiary satisfaction indicates high satisfaction among faculty members and employers about quality and relevance of education and research environment\. Satisfaction levels of different stakeholders about quality and relevance of education and research environment were measured through PDO indicator 1 (Increased level of satisfaction of students and faculty staff regarding the quality of teaching and research environment, and of employers regarding the relevance of teaching and research programs)\. It indicates significant improvements in satisfaction levels among these stakeholders especially for faculty members and employers (table 3)\. Table 3\. Satisfaction Levels of Different Stakeholders (PDO indicator 1) Achieved Achieved Improvement Baseline EOP Targets at the AF at Completion during Project Students 3\.3 3\.6 3\.7 4\.0 0\.4 Faculty 2\.9 3\.8 4\.0 4\.0 1\.1 Employer 3\.0 3\.9 4\.1 4\.2 1\.1 Note: EOP = End of project\. 37\. Satisfaction levels increased substantially over the project life, though it did not reach the target; beneficiaries are particularly satisfied with key aspects of the teaching and learning environment that were supported by the project\. Satisfaction levels of faculty members and employers improved more than one point in the five-point Likert scale and achieved or almost achieved the EOP targets\. These are significant hikes in this type of measurement and it speaks of substantial improvements in the assessments of stakeholders about quality of education and research environment (especially for faculty members) and relevance of education (especially for employers)\. The endline satisfaction survey particularly finds high levels of satisfaction among teachers regarding access to online journals and e- resources, quality of Internet, and availability of modern lab equipment and facilities, which were supported by the project\. The HEQEP supported upgradation of labs through AIF funding as well as access to high-speed Internet connectivity through both the BdREN and campus network development\. The UGC Digital Library provided access to over 30,000 e-resources, including high-quality journals, in more than 80 public and private universities\. These project-supported activities would have contributed to an improved teaching-learning environment and higher satisfaction levels among teachers, especially those in AIF-supported departments\. Page 18 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) 38\. The HEQEP contributed to the outcome of improved quality and relevance of teaching in HEIs through AIF subprojects focused on enhancing the teaching skills of staff, modernizing curricula, providing modern teaching tools, and improving the educational infrastructure\.7 AIF funding was used to enhance professional skills of academics to provide innovative and quality teaching environment for students\. The curricula were updated in 103 programs to be more student-centered and develop competencies in multiple disciplines, including higher-order cognitive and soft skills development\.8These efforts would have contributed to graduates enhancing important job-specific skills, as the survey finds employers of graduates of AIF beneficiary departments reported being satisfied with the quality of graduate skills in decision making, computer skills, and problem solving skills, among others\. 39\. The AIF subprojects enabled the universities to enhance facilities and equipment for teaching and learning, improve teaching contents, and train teachers through in-country and overseas trainings, leading to substantial improvement in quality of education in universities\. Under Round 1â3 AIFs, curriculum was updated in more than 450 programs, more than 400 classrooms were renovated, and around 400 laboratories were upgraded with state-of-the art technologies\. Furthermore, around 1,100 in-country trainings and more than 210 overseas trainings were organized to train teachers with academic skills\. Classrooms were much more digitized as more than 300 classrooms were furnished with digital boards and more than 500 multimedia screens were installed\. It is evident that all these investments in the teaching and learning environment significantly contributed to improvement of quality and relevance of education in universities in Bangladesh\. In addition, around 17,000 latest books and over 1,200 journals were provided to departments\. Figure 2\. Major Investment Results of AIF for Teaching And Learning 1200 1000 800 600 400 200 0 Overseas Training establishment by SP Curriculum updated Computer labs Multimedia Screen White/Digital Board No\. of Training Held renovated/modernizâ¦ established/revamped established Purchased Laboratories Classrooms Website Source: 16th Semi-Annual Monitoring Report of the HEQEP\. 7 As per the final HEQEP Project Completion Report (PCR), some of the outputs generated by AIF subprojects for improving the quality and relevance of teaching include the following: (a) 27,051 students and staff have received training, (b) 15,350 ICT equipment for teaching installed across 38 universities, (c) 2,955 office equipment added to universities, (d) 41,184 books and journals have been procured for offices/libraries, (e) 1,653 classrooms/labs/offices renovated and furnished, (f) 41,184 books and journals added to libraries, (g) 12,012 faculty have received training in various disciplines, (h) 618 masterâs program students given the chance to pursue advanced study and research, (i) 9 libraries modernized and automated with modern library management system, (j) 517 faculty have received training from international universities, and (k) 103 curricula updated\. 8 For example, the Independent University Bangladesh used the AIF to establish the Center for Cognitive Skills Enhancement that aims to build higher-order cognitive skills through engaging undergraduate students in logic, rationalization, problem solving, and decision-making experiences using digital tools such as games and apps as well as active learning experience such as research activities\. Page 19 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Table 4\. Feedback from AIF Subprojects on Improvement in Quality and Relevance of Education Quality and Relevance of Teaching and Learning Quality of Research â¢ Increased interactive classroom â¢ Increased number of quality research, â¢ Provided technology-based teaching-learning researchers, publications, research-based, â¢ Provided evidence-based knowledge degrees, research opportunity, research issues â¢ Produced knowledge-based skilled generation â¢ Installed software and equipment for research â¢ Increased access to huge literature for research Infrastructure Development Making Good Digital Connectivity â¢ Established digital labs, FabLabs â¢ Established inter and intra departments network â¢ Established language labs to check research work â¢ Renovated labs â¢ Provided Internet and Wi-Fi facilities for students â¢ Renovated classrooms with multimedia, air and teachers conditioning, and good furniture â¢ Established a cluster computer â¢ Replaced old instruments by new instruments â¢ Digitalization of library connected with renowned â¢ Renovated library with IT equipment and publishers software â¢ Developed a digital database Source: Final Impact Assessment of HEQEP 2018\. 40\. Faculty members are best positioned to assess the quality of the teaching and research environment as they are directly engaged in these activities and witness changes over time within a department or university\. Employers are best positioned to assess the relevance of education as they possess firsthand understanding about the kind of knowledge and skills that university graduates bring with them when joining their firm and also they observe over time changes in the quality of fresh university graduates in entry-level jobs\. Improved satisfaction levels among these two key stakeholders are particularly evident in satisfaction surveys, which are highly indicative of enhanced quality and relevance of teaching-learning and research\. On the other hand, satisfaction level of students showed a somewhat modest improvement of 0\.4 points and missed the EOP target by 0\.3 points\. This gap is likely a result of two factors\. First, student cohorts to be sampled were, by nature of the survey, always new cohorts who have had only a few years in university\. As new cohorts develop their expectation based on the relatively recent situation at the time of their joining the university, they thus can only make relatively short-term comparisons about improvements in the learning environment\. As such their satisfaction levels are more likely to be modest compared to faculty members and employers who tend to base their perception on much longer-term comparisons\. Furthermore, it is also possible that undergraduate students have limited research activities and thus did not directly benefit from improvements in the research environment where the project made a lot of investment\. 41\. The HEQEP successfully supported the operationalization of and capacity development for a transparent competitive funding mechanism for teaching and learning and for research and innovation funding\. The AIFâs adherence to a transparent and competitive process was tracked in PDO indicator 2: All research and teaching and learning funds under the UGC are distributed using an identified set of rules based on transparency and competition\. At the baseline, the funding mechanism was not competitive and yet to be fully established\. As of the restructuring in December 2013, the UGC had commenced design of the competitive funding program\. By closing, the competitive funding mechanism was revamped and implemented, meeting the final target\. The evaluation study commissioned by the project found that âfund allocations of AIF Window-1 (Teaching & Learning) and Window-2 (Research) of Round 1, 2, 3 and 4 of AIF were made following transparent procedures as per Operations Manual and Page 20 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) maintaining competitive selection procedure by the renowned experts and competent authority\. Moreover, similar procedure was used for awarding QA and BdREN subprojects\.â The UGC has demonstrated fully developed capacity for handling the new competitive funding mechanism\. Through four rounds of the innovation fund, the UGC provided competitive funding to as many as 439 subprojects across 38 public and private universities\. For intermediate indicator 1 on the percentage of fund utilization by teaching and learning subprojects, no baseline was set\. At restructuring, Round 1 had reached 93 percent fund utilization, and Round 2 had reached 33 percent fund utilization\. At project closure, all rounds had reached 100 percent utilization, meeting the targets\. Intermediate indicator 5 on the mechanism for university-industry collaboration was piloted and evaluated\. The evaluation finds that the university-industry collaboration was effective in developing âproducts which were knowledge creating, eco-friendly as well as beneficial for mass people\. At the same time, those products had long term value for income generating and creating job opportunities\.â9 42\. The project successfully boosted the expansion and utilization of a broadband academic digital network and resources through establishment of the BdREN and UGC Digital Library; however, the take-up may have been slower than expected\. PDO indicator 3 (Monthly average volume of inbound education/research data traffic in BdREN) measured the progress of usage of the BdREN\. By the time of the AF, the monthly volume of research data traffic had increase from a baseline of 0 TB to over 10 TB of data\. At the time of project closure, this indicator had greatly exceeded the target of 100 TB and achieved the monthly average usage of 1,362 TB\. This was achieved through both the connectivity expansion of the network to 40 universities and constant improvement in the quality of connectivity such as minimized downtime\. Another measure of quality of education and research was establishment of the e-library system, UGC Digital Library\. A fully functional e-library platform has been established with subscription to 3,000+ e-journals from ACM, Emerald, JSTOR, and IEEE, and nine e-book providers\. A total of 84 universities (34 public, 46 private, 1 international, 1 research institute, and 2 training institutions) signed membership agreements for the e-journals and currently there are 34 e-journal user institutions\. For the intermediate indicator 9 on the number ('000) of online journal titles accessed and downloaded using UGC Digital Library, the baseline at the time of appraisal was 0\. By the time of restructuring, the project had 12,000 journals downloaded in the digital library, against the target of 25,000 journals\. The target set for the end of project was then increased to 37,000 journals\. The project did not meet this target, however, and by project closure only 24,300 journal titles could be accessed\. This slower-than-expected take-up of UGC Digital Library services can be attributed to (a) inadequate awareness on UGC Digital Library services and (b) higher demand than anticipated in additional types of journal subscriptions by faculty and researchers, which could not be brought under UGC Digital Library provision within project life\. 43\. To ensure consistent and universally adopted QA across the affected HEIs, a functional QA system at the central and institutional levels has been established under the project\. PDO indicator 5 (number of IQAC established and produce self-assessment based on the established framework) was added at restructuring\. Before introduction of the QA component in the AF, self-assessments were 9Some areas where these subprojects have contributed to developing new technology for commercialization purpose of research outcomes include: low-cost method for detecting breast cancer; developing inexpensive livestock and poultry vaccines; developing quality vaccination for animals; software development; developing a soil testing kit to make able farmers to test their soil in low cost, time, and energy to increase the fertility of soil in the country; holding heat efficiently; designing chip for fabrication; and methods for deriving environment friendly biocomposites and biofuel from agricultural waste\. Page 21 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) supported under the AIF activity for 39 eligible universities\. The HEQEP surpassed its EOP target of having 50 percent of 39 eligible universities complete at least one self-assessment of a subproject and reaching 126 percent at end line\.10 44\. Under the AF, IQACs were the mechanisms to be set up in beneficiary universities to oversee university-wide QA\. At the time of restructuring and AF, a formal institution-level QA system was largely absent in the higher education system in Bangladesh\. By project closure, 69 QA cells had been set up, exceeding the target of 15, in 28 public and 41 private universities\. Moreover, self-assessment committees (SACs) have also been formed and the selected 810 entities completed self-assessment reports (SARs), which are essential elements of institutional QA activities\. In addition, 17 (25 percent) IQACs have submitted institutional improvement plans based on the SARs and institutional consultation process\. At the central level, the QAU was created within the organizational structure of the UGC with the objective of promoting a quality culture within the HEIs in Bangladesh ensuring good practices and governance\. The QAU has accomplished a range of QA outcomes\. It drafted Bangladesh Accreditation Council Act (BAC Act 2017) in detail which was passed in the National Parliament in March 2017\. The BAC is established as a statutory autonomous entity for accreditation of universities and programs and will be a key cornerstone of the higher education system of the country\. The QAU also drafted the National Qualifications Framework of Bangladesh that was commissioned in the National Parliament in 2017\. This national qualification framework is a milestone document that provides the foundation of an accreditation process in the country for the first time\. It went further beyond its stipulated role to prepare 796 outcome-based education curricula based on the results and requests from self-assessment exercise\. (b) Improve the research environment in HEIs 45\. The HEQEP was highly successful in achieving the outcome of improving the research environment in Bangladesh higher education both in terms of generation of research outputs and nurturing of future academic researchers\. Measurement of the quality of research affected by the projected was based on PDO indicator 6, the number of academic publications produced by beneficiaries of AIF subprojects\. By December 2013, 65 academic papers had been published by AIF recipients\. At project closure, over 778 academic publications were produced by beneficiaries, significantly overachieving the target of 150 publications by 518 percent, which demonstrates the results of the HEQEPâs efforts to promote a research culture in the universities\. In addition, research outcomes were measured by intermediate indicator 2, percentage of fund utilization by research subprojects (Window 2)\. At restructuring, Round 1 had reached 79 percent fund utilization, and Window 2 had reached 33 percent fund utilization\. At project closure, all rounds had reached 100 percent utilization, meeting the targets\. Indicator 3 measured the percentage increase (cumulative) in doctoral level enrollment (%) under AIF subprojects\. At restructuring, doctoral level enrollment had reached 41 percent increase from the baseline\. By project closure, this indicator far exceeded the project target of 100 percent increase and reached a 368 percent increase\. 46\. The HEQEP contributed to the improvement of research quality through funding activities focused on enhancing the research facilities and equipment, honing specialized knowledge, promoting university-industry collaboration, and establishing high-quality PhD programs\. One of the âgame changingâ activity of the AIF was to promote university-industry collaboration with the aim to help 10 Exceeds 100 percent due to the additional schools in the numerator by the time of the AF in 2013\. Page 22 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) develop and commercialize research innovations\. Through this activity, eight subprojects were awarded the grant, whereby the industry provided technical knowledge and shared facility services, thus effectively promoting industry partnerships in universities which was severely lacking in the Bangladesh higher education sector\. An effectiveness study was conducted to assess the efficacy of the AIF window on university-industry collaboration, which found this activity to have supported the development of products and innovations with high potential to positively impact the lives of the masses (see annex 8 for details of the findings)\.11 47\. Subprojects also set out to improve research capacity at an institutional level, and provide necessary equipment and supplies needed for research\. Professional orientation to research and requisite environments were to be couched in the development of high-quality PhD programs that would be connected to HEIs across Bangladesh and to research institutions across the globe\. Guiding the development of these programs and the work of their faculty and students would be strengthened by cooperation between industry and academia, the two representing demand and supply of the results of scientific research\. 48\. Overall, AIF grants financed subprojects to modernize the research facilities and equipment and to enhance the skills and capacities of academic professionals toward establishing environments oriented toward fundamental and applied research\. The outputs related to improving the research environment were the following, among others: (a) 13,494 lab equipment have been procured (b) 170 PhD students enrolled (c) 819 articles published in peer-reviewed journals (d) 181 papers have been published on conference proceedings (e) 200 instances of collaboration opportunities have been established (f) 10 patents were filed Justification of Overall Efficacy Rating 49\. The overall efficacy rating is Substantial\. By the end of the project, all six PDO indicators had met or exceeded their targets, except for one sub-indicator of satisfaction level of students\. By project closure, 10 of the 12 intermediate indicators had been met\. Though two of the intermediate indicators, number of universities (public and private) connected to BdREN and number ('000) of online journal titles accessed and downloaded using UGC Digital Library on average per month were not met, both indicators had reached roughly 66 percent of their targets\. Studies by the project confirm that the quality of teaching and learning and research environment has been substantially improved owing to a large number of investments made in AIF beneficiary departments as well as other project interventions\. Considering these significant achievements and the shortfall of one of sub-indicators of a PDO-level 11 SRGB\. 2018\. âFinal Assessment of HEQEP 2018\.â Page 23 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) indicator, the overall efficacy rating is Substantial\. C\. EFFICIENCY Assessment of Efficiency and Rating 50\. The efficiency of the HEQEP is rated Substantial following high economic returns and efficiency in project design, which was to some extent hampered due to challenges and delays faced in the early stage of implementation during the project life\. 51\. Economic analysis\. The economic analysis at appraisal and at the AF indicated healthy high returns on investment for the HEQEP\. At project appraisal, the economic internal rate of return (EIRR) was estimated to be 17\.9 percent based on expected benefits from increase in higher education completers and future earnings\. The updated EIRR for the AF component also showed a higher return and sound investment at 20\.8 percent\. This Implementation Completion and Results Report (ICR) conducted a cost- benefit analysis using the same approach, which reveals a positive net present value of US$728 million and an internal rate of return (IRR) of 52\.8 percent, much higher than that at appraisal and the AF\. A boon to the project outcome was high returns to higher education in Bangladesh and high growth in university enrollment during the HEQEP implementation period\. The detailed economic analysis is provided in annex 4\. 52\. Efficiency in design and implementation aspects\. The use of specialized partners and expertise and the leveraging of digital tools for project coordination and data collection boosted efficiency in the implementation of project activities\. The international partnership with Kent University was critical for availing highly technical expertise needed for the design and establishment of the BdREN in 38 universities across the country\. The use of international technical experts in areas of QA, intellectual property rights, and patenting of research innovations helped the UGC and the HEQEP to successfully implement first- time activities in areas of QA and university-industry collaboration leading to innovation and patenting at the universities\. Without support from these specialized entities with substantial expertise, it would have been challenging for the UGC and the HEQEP to effectively introduce and implement these project activities\. In addition, the project design leveraged digital tools to reduce transaction costs in coordination and data collection from the universities\. The use of a Project Management Information System (PMIS) helped the Project Management Unit to collect subproject progress reports biannually from more than 300 subprojects under the AIF activities\. In addition, the HEMIS system provided a web-based platform for the UGC to collect data from 89 universities on time\. 53\. The project suffered from some initial delays in the implementation of the AIF and other activities such as improving the strategic planning capacity of the UGC and establishment of the BdREN\. This initial delay necessitated the extension of the closing date by 22 months\. After the restructuring, the proactive steps taken by the MoE and UGC (as discussed earlier) helped address constraining issues and expedite the implementation of these activities, making up for the initial delays\. D\. JUSTIFICATION OF OVERALL OUTCOME RATING 54\. The overall outcome is Satisfactory based on High rating for relevance, Substantial rating for efficacy, and Substantial rating for efficiency\. The project has delivered or overdelivered the majority of Page 24 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) development outcomes and outputs\. Considering the ambitious nature of most of the project-supported reform actions, the initial struggle in implementation progress and a few insignificant missed targets do not dampen the achievement of development outcomes of the project\. E\. OTHER OUTCOMES AND IMPACTS (IF ANY) Institutional Strengthening 55\. The HEQEP helped introduce important institutional capacities both at the level of the UGC and the MoE and for universities as well\. The UGCâs capacities were strengthened for FM, procurement, and managing the BdREN\. The AIF was established as a competitive funding organization and related capacities were established for most universities\. Bangladesh higher educationâs QA system was strengthened by creating the IQACs\. Furthermore, capacity of the UGC/MoE and universities was strengthened by the project through the following activities: â¢ UGC and MoE o Capacity for strategic planning and policy formulation through development of the higher education sector strategic plan and commissioning of a number of studies such as admission policy, tracer study, and satisfaction surveys o Capacity for QA through establishment of a QAU at the UGC which helped develop the BAC Act and manage IQAC subprojects â¢ Universities and their faculty o Development of proposals, proposal evaluation as peer reviewers/proposal evaluation panels o Introduction of QA and self-assessment culture o Improvement of the project management capacity of universities and faculty members by AIF subprojects, which led to the strengthening of accountability mechanism Mobilizing Private Sector Financing 56\. The project mobilized private sector financing through university-industry research collaboration\. The AIF Window 4 for funding industry-research collaboration had a mechanism to mandate the contribution of industry partners through financial and in-kind contributions such as human resources and equipment\. Poverty Reduction and Shared Prosperity 57\. The project was designed with the recognition from the Poverty Reduction Strategy Paper (PRSP) 2005 that higher education lacked the relevance to reduce high unemployment and underemployment among graduates\. The GoB aimed to improve the quality of higher education and research in areas such as ICT and biotechnology, which was viewed as key to economic growth\. Apart Page 25 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) from the goal of the projectâs objective to improve the quality and relevance of higher education, the project did not specifically target disadvantaged students\. However, the economic and financial analysis calculated a 15 percent wage increase with the projectâs impactâa conservative estimate that accounts for economic uncertainty in the future\. While disadvantaged students were not targeted by design, those students attaining higher education will see a greater return on their future potential wages than without the project intervention\. Transformation of Culture, Attitude, and Mindset in Higher Education Sector 58\. It is noteworthy that the culture and mindset of higher education stakeholders in Bangladesh went through significant transformation in terms of research and QA\. The research grants not only provided the necessary resources for researchers to purchase lab equipment but also changed institutional attitudes toward research and its purpose\. The fact that university professors now think about and are concerned about intellectual property rights issues and see patenting as a real possibility, represents a sea change in how both individual faculty members and university administrators today think about research\. Moreover, the introduction of QA mechanisms through the AF too has resulted in significant changes in attitude toward QA centrally and at the institution level\. The majority of participating universities have all established these cells and staffed them, and as of the final year, the resources needed to support these structures are derived from the national budget\. Gender 59\. The HEQEP address some aspects of gender especially through reducing knowledge gaps on the outcomes of female university graduates\.12 The HEQEP was given credit for incorporating gender into the Results Framework and in reporting gender outcomes in the analytical studies conducted\. Under the HEQEP, around 35 percent of beneficiaries were female students and teachers (around 119,000 females) who benefited from AIF or BdREN activities, also surpassing the project target of female beneficiaries of 28\.5 percent\. Additionally, the various studies conducted under the HEQEP, including the satisfaction survey and the graduate tracer study reported gender-disaggregated results\. The university graduate tracer study for the first time provided insights on the employability and job market outcomes of female graduates, which has been critical to inform steps needed to improve their employability and inform the follow-up operation in higher education\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A\. KEY FACTORS DURING PREPARATION 60\. The HEQEP was designed with well-aligned objectives and a well-informed choice of interventions to support\. The project was built out of the US$100 million provided to higher education under the FY2006âFY2009 CAS that noted the need to develop a clear overall strategy for the future of the system, which includes both public and private universities and a strategy for the long-term public and private funding of higher education\. The design of the project was in synergy with the MoEâs Strategic 12No gender review was conducted at the time of approval of the original project\. However, during the AF in FY2014, the project was assessed as gender informed, meaning preparation of the HEQEP included analysis conducted on gender parity in the sector\. Page 26 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Plan for Higher Education 2006â2016, which ensured the Governmentâs commitment to pursue activities and reforms aimed at enhancing the quality of teaching, learning, and research in higher education\. 61\. Appropriate choice of lending instrument\. The selection of Investment Project Financing (IPF) (then known as a Sector Investment Loan) to finance the HEQEP using an IDA credit was deemed appropriate during preparation because of the Governmentâs determination to support the implementation of the Strategic Plan and its commitment to accelerate reforms in the higher education sector which prompted readiness for a project in the sector rather than extensive policy reform\. A Development Policy Credit was considered but abandoned as an IPF was deemed better suited to a project designed around piloting innovations in the higher education sector\. The proposed operation will select initiatives with the potential to revamp universitiesâ quality, relevance, and governance\. As previously stated, the project was designed as a deliberately low reform-intensive project to avoid controversial measures and proceed with implementing the subsector strategy\. B\. KEY FACTORS DURING IMPLEMENTATION 62\. While the project was completed satisfactorily, it was beset with issues that required restructuring and proactive management to mitigate\. As noted earlier, this was the World Bankâs first intervention in the higher education sector, and by design, the HEQEP was innovative and focused on significant reforms that are feasible for the political environment during the implementation period to ensure a strong start to World Bank engagement with the higher education sector in Bangladesh\. Though the team placed the mitigation measures in design, issues related to capacity of the MoE, UGC, and HEIs were not inadequately mitigated by design alone\. Delays in capacity building in UGC and in the HEQEPU in hiring planned staff to carry out functions necessary for implementing the AIF and BdREN delayed implementation progress at key junctures\. In addition, procurement delays early on within the first year of effectiveness delayed implementation progress\. Through proactive restructuring and coordination between the GoB and the World Bank, the project design and implementation were deemed adequately girded for the AF that expanded the project investment to 2\.5 times the original loan amount\. 63\. As mentioned previously, as early as implementation launch in 2009, the project was beset with procurement issues, beginning with a quickly outdated procurement plan and key procurement items delayed for six months due to the HEQEPUâs failure to hire requisite procurement specialists\. Despite issues with the quality of the procurement plan in the first two years of implementation, implementation progressed with moderate satisfaction\. However, by the midterm review (MTR), the project faced significant procurement and overall staffing issues, specifically a lack of procurement specialists and necessary staff in the UGC to implement the HEMIS\. The BdREN Unit in the UGC faced chronic delays in staffing, thus precluding implementation and capacity building in the unit, and therefore stalling overall implementation of the BdREN, the campus network, and the digital library, threatening the viability of the component altogether\. Implementation progress was downgraded to Moderately Unsatisfactory due to the issues above as well as slow institutionalization of the AIF mechanism, weak project leadership, and an unfinalized OM\. By the MTR, the World Bank team and Project Implementation Unit (PIU) developed a plan for restructuring, to include adjustments to components in line with agreed actions to improve implementation performance\. 64\. The concerted effort to address staffing and procurement issues turned around implementation performance markedly in the period following the MTR\. Addressing these issues contributed to Page 27 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) considerable progress in the AIF subprojectsâ implementation\. With staffing issues addressed following restructuring, the implementation of the BdREN, a component plagued with significant issues for the first three years of implementation showed signs of progress\. Delays in reporting aside, the new strong fiduciary teams contributed to a turnaround in implementation performance and progress toward meeting the development objective\. Interim assessments and the desire by the GoB and the World Bank team to capitalize on the potential for a successful first intervention in the sector prompted a call for an AF, which was prepared and approved in 2013\. 65\. Despite commendable action to set the HEQEP on the right path, the second half of implementation was not without problems as elections and political unrest slowed implementation, particularly affecting procurement processes\. Gains made in FM were negatively affected by delayed, inaccurate, and ineligible financial reporting in the year following restructuring and the AF\. Delays and lack of documentation led to a downgrade in M&E progress as well\. Issues related to ineligible expenditures, a resurfacing of hiring needs, and a slowdown in field-level fiduciary support threatened progress made since restructuring and the AF\. Though fiduciary issues were never fully mitigated, they were addressed and implementation progress on the AIF and BdREN proceeded satisfactorily until project closure, efficiently satisfying the PDO\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 66\. The projectâs M&E was straightforward and well defined\. The M&E was designed to monitor and provide a means of reporting on progress toward meeting the PDO and the intermediate results indicators in the Results Framework and tracking implementation progress\. Key to M&E in the project design was the design of the MEU to support planning, monitoring, and evaluation of the performance of the project and the sector beyond project implementation\. The MEU was developed to collect, process, and disseminate data related to HEQEP implementation\. Substantively, the MEU was tasked to prepare monitoring reports on the HEQEP, conduct validation surveys on AIF-financed projects, and conduct the satisfaction and tracers studies, which were integral to monitoring progress toward and outcomes of the PDO\. The PMIS was developed to store and aid in the processing of HEQEP data\. In addition, M&E staff were hired in the UGC and the HEQEPU to use HEMIS and other means to measure progress toward the PDO and intermediate indicators\. 67\. The Results Framework was proactively revised at each instance of restructuring to enable better measurement of achievement of project outcome and output\. As mentioned earlier, at the time of restructuring in January 2013, PDO indicator 2 was considered immeasurable without a budget head for competitive funding\. PDO indicator 3 âNumber of universities (public and private) connected to BdRENâ was revised to better measure the target and subsequently moved to the intermediate outcome level because it was found to be a more appropriate measurement of outcome by design\. It was replaced by PDO indicator 3 âMonthly average volume of inbound education/research data traffic in BdRENâ to better monitor the outcomes of the BdREN\. Page 28 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) M&E Implementation 68\. Throughout implementation, the PDO results indicators and the intermediate results indicators were systematically measured and reported\. The MEU under the HEQEPU was responsible for designing, organizing, and managing the M&E activities during implementation of the project\. The M&E has provided regular and timely progress reports on component-wise activity on a semiannual basis\. The MEU produced 17 semiannual synthesis reports that discussed in detail the project progress, implementation issues, and possible solutions\. These reports also updated on critical areas of World Bank monitoring requirements including compliance with environmental and social safeguards, citizen engagement, and governance and accountability status\. The Results Framework was updated regularly and included in the semiannual progress reporting by the MEU\. 69\. The reporting was supported through the PMIS, developed under the HEQEP to support subproject coordination and field-level data collection\. Based on PMIS template, data were collected biannually for 300+ subprojects across different universities, which fed into the consolidated Project Semiannual Progress Reports\. By 2018, the MEU arranged the PMIS workshop for 342 participants and conducted training for 68 participants comprising supporting staff and entrepreneurs\. 70\. The MEU also conducted six studies to evaluate and assess the project activities, while contributing to knowledge generation in the sector\. These studies include (a) three rounds of satisfaction surveys, (b) a project interim impact assessment, (c) the first university graduate tracer study, and (d) a project impact assessment, including study on effectiveness of Window 4 AIF subprojects\. These evaluations were conducted by third-party research firms that ensured the reliability of the data and findings\. Intermediate indicator 12 specifically tracked implementation of all the surveys and studies by the MEU\. The project overachieved on that indicator by completing six studies against the target of five studies\. 71\. In addition to the changes in the Results Framework deemed necessary during the two rounds of restructuring, there were changes to the collection and reporting of data that were addressed during restructuring\. The HEMIS was designed to collect, store, process, and disseminate data related to education management and academics including aspects of student performance, curricula, lectures, alumni, academic staff, studentsâ social affairs, and so on\. The HEMIS system, designed to be implemented as part of UGC capacity building and data collection, was to have two components: the National-HEMIS and University-HEMIS to be developed at selected universities\. However, by the time of restructuring in January 2013, delays in progress due to lacking capacity earlier in implementation led to the University- HEMIS being dropped, leaving only the National-HEMIS as the repository for HEQEP-relevant data\. M&E Utilization 72\. Utilization of M&E data and reporting was actively pursued to inform project and sector strategy and operations during the implementation\. The MEU handled M&E of all project activities and for the preparation and dissemination of semiannual monitoring reports on the whole project, conducting a 20 percent validation survey on the AIF subprojects\. The 17 semiannual reports were submitted regularly and timely before each implementation support mission which helped focus the discussion between the MoE and World Bank on key implementation challenges and possible solutions\. The MEU also produced midterm reports under both the original financing and the AF, which facilitated the discussions and Page 29 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) decision making on next steps of the project operations\. Additionally, the studies and evaluations conducted also informed the MoEâs current Strategic Plan for Higher Education 2018â2030 and also the design of the next higher education operation in the sector\. 73\. At the sector level, a National-HEMIS was developed under the project to support annual reporting of the status of universities on various areas of interest (such as student enrollments and seat capacity, teacher numbers, research publications, and budgeting)\. The data from the HEMIS were used to produce annual reports and were published on the HEMIS and UGC website\. 74\. As noted previously, the project supported sector M&E through a university-level HEMIS to be implemented in each participating institution, but lack of capacity called for reoriented priorities\. This and the notable revisions to the Results Framework hampered the utilization of the M&E system and processes earlier in the implementation period\. Adjustments at restructuring corrected lingering concerns and fostered a strong M&E system throughout the remaining life of the project\. Justification of Overall Rating of Quality of M&E 75\. The overall rating for M&E is Substantial\. The project has effectively implemented its M&E plan and used monitoring information for project management\. It produced several effectiveness assessments covering key project activities and undertook important studies targeting students and graduates through satisfaction surveys and graduate tracer studies which were the first such attempts in Bangladeshâs higher education sector\. At the same time, there is still some way to go to strengthen the M&E capacity of the higher education system\. For instance, the UGCâs HEMIS still needs improvement especially for allowing dynamic reporting mechanism\. Monitoring of research activities through bibliometric studies would have been excellent knowledge to inform future efforts for strengthening research and innovation\. Graduate tracking surveys, though undertaken once, would need to be regularized\. Considering these potentially achievable M&E capacity enhancement actions under the project, the quality of M&E is rated Substantial\. B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 76\. Environment and social safeguards\. The project was rated Category B\. The project did not require land acquisition, cause the displacement of people (regardless of title to land) from private or public lands, or have any adverse impacts on livelihoods\. As such OP 4\.12 Involuntary Resettlement was not triggered\. A social assessment during appraisal concluded that the project interventions will have positive impacts on stakeholders of higher education including any ethnic minority groups in Bangladesh who may be beneficiaries of the project\. Based on this finding OP 4\.10 Indigenous Peoples was triggered for the project and a Social Management Framework had been prepared\. 77\. At the time of restructuring in December 2013, the environmental safeguards were rated âsatisfactoryâ based on the due diligence demonstrated by the implementing agency in the previous year of environmental safeguard implementation\. Due to the potential environmental impacts from relatively limited scale and magnitude of the infrastructure renovation/refurbishing/extension works and academic research output, the project retained its Category B for the AF\. 78\. FM\. Through the life of the project, FM performance transited between Satisfactory and Moderately Satisfactory, with a few instances of downgrading to Moderately Unsatisfactory\. After the Page 30 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) first round of restructuring, inconsistencies in expenditure reporting prompted the downgrade in FM from Satisfactory to Moderately Satisfactory\. In 2014, the year following restructuring and the AF, delays in submitting acceptable and accurate internal unaudited financial reports, ineligible expenditures, unresolved auditing observations, and delays in hiring auditor staff and an FM analyst prompted the first downgrade from Moderately Satisfactory to Moderately Unsatisfactory\. The following year, FM was downgraded to Moderately Unsatisfactory again after setbacks in the preceding issues (which had been upgraded from Moderately Unsatisfactory to Moderately Satisfactory)\. Staffing of FM specialists both at the project and within the QAU continued to face delays\. By 2017 and as project closure neared, FM issues had largely been addressed\. However, delays and incomplete data that plagued the project since the first downgrade remained, albeit with close monitoring and eventual delivery of agreed products\. These issues improved until project closure, which prompted a Moderately Satisfactory for FM over the final year and half of the implementation period\. 79\. Procurement\. Procurement was rated Moderately Satisfactory throughout much of the period of project implementation\. From the first supervision mission, procurement was downgraded from the default Satisfactory to Moderately Satisfactory due to scheduled procurement actions up to that time being delayed by six months\. In addition, a procurement officer had yet to be hired\. Procurement delays continued to hamper implementation but progressed sufficiently to remain Moderately Satisfactory\. However, by 2015, mass protests and blockades had affected procurement processes for the implementation of the AIF subprojects\. The political unrest had also delayed procurement necessary for implementing BdREN infrastructure\. These developments prompted a downgrade to Moderately Unsatisfactory in the 12th mission in June 2015\. As agreed with the HEQEPU, actions were taken to build capacity in the procurement team to address these issues, including strengthening inventory management, streamlining BdREN connectivity under central procurement, and taking prompt actions on procurement plans\. The actions taken in the period following prompted an upgrade in rating to Moderately Satisfactory that remained until project closure\. C\. BANK PERFORMANCE Quality at Entry 80\. At the time of appraisal, the team worked closely with the GoB to ensure alignment with Bangladeshâs PRSP13 and FY2006âFY2009 CAS\.14 The design of the operation was straightforward and focused on improving the quality of higher education through innovation to utilize scarce resources in the sector to better prepare students and HEIs to meet the needs of a globalized economy\. The project was designed to be strategically relevant, referring directly to the pillars of Bangladeshâs development strategy\. Project design was deliberately selective about the initial set of reforms and to build capacity within the sector so that the project will build the foundation for reforms to revamp the higher education sector in the medium and longer term\. Key social and environmental aspects of design were clear and without issue during implementation\. Fiduciary aspects and implementation arrangements, including M&E, were prepared such that significant issues did not arise during implementation due to design limitations but due to issues of capacity beyond capacity-building arrangements\. Risk assessment was 13 Government of Peopleâs Republic of Bangladesh\. 2005\. âUnlocking the Potential: National Strategy for Accelerated Poverty Reduction\.â 14 World Bank\. 2006\. Country Assistance Strategy for the Peopleâs Republic of Bangladesh - FY06-09\. Report No\. 35193 Page 31 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) candid at appraisal, noting capacity risk, with mitigation measures put in place to address them accordingly\. Thus, the rating for quality at entry is Satisfactory\. Quality of Supervision 81\. The quality of supervision was rated Satisfactory\. There were 18 World Bank review and implementation support missions conducted from December 2009 to December 2018\. Furthermore, there was a strong and effective presence of the country-based team for daily implementation support and guidance\. The World Bank team comprised a good mix of skills and expertise with the co-TTL based in Dhaka, which provided active and timely support to the HEQEPU as it implemented the project\. Supervision missions were conducted twice each calendar year, including two dedicated MTR support missions in 2012 and 2016\. As noted earlier, from the very first support mission, the World Bank team recognized impediments to implementation progress and actively engaged with the HEQEPU to develop action plans and time lines\. In almost every case in which a set of issues were identified during the support mission, there was improvement in mitigating issues by the following mission\. Following each support mission, the World Bank team prepared Aide Memoires noting changes in project performance ratings, progress toward PDOs and implementation progress, as well as updates on fiduciary and M&E\. Component-level status updates were featured in every Aide Memoire, each ending in a detailed summary of agreed-upon actions for the implementing units\. Agreed actions were then closely followed up and assisted by the country-based World Bank team members including a dedicated consultant who provided effective and consistent day-to-day operational support and technical assistance\. Implementation Status and Results Reports (ISRs) were also prepared summarizing performance ratings and implementation status and key decisions undertaken\. These materials informed the preparation of the ICR, providing a repository of knowledge from which to map out the life of the project, to assess quality of decision and design, and upon which to draw lessons and develop recommendations\. 82\. As referenced previously, procurement and FM issues cropped up and contributed most to risks to implementation progress and even to achieving development objectives at certain points during the projectâs life\. The World Bank team and the HEQEPU developed action plans to address each item and the World Bank team supported the implementation units to improve capacity as needed in areas of weakness\. A detailed MTR led to an interim assessment and two restructurings to concurrently course correct and build upon positive developments\. Unforeseen circumstances such as political unrest and chronic fiduciary issues threatened implementation progress and were addressed by the HEQEPU with support from the World Bank team\. Justification of Overall Rating of Bank Performance 83\. The World Bankâs performance was Satisfactory\. Based on the review of quality at entry, quality of supervision, and the World Bankâs proactiveness in initiation of the two restructurings, the World Bankâs performance was satisfactory\. D\. RISK TO DEVELOPMENT OUTCOME 84\. The risk to sustaining the development outcome is low based on the significant large number of products, facilities, and services that may be threatened without the auspices of active implementation of a discreet project\. A significant budget is needed for sustained and sustainable use of Page 32 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) the services and products innovated by the HEQEP\. As noted previously, the HEQEPU prepared a sustainability plan to ensure sustainable support of the products/results of the project and a necessary provision was incorporated into the sustainability plan\. On behalf of the UGC, the HEQEPU prepared a strategic plan related to sustainability of all project initiatives (short term, medium term, and long term) and appropriate budget allocation was set to make HEQEP results (output, products, goods, and services) sustainable\. The significant capacity-building efforts throughout the life of the project represent the extent to which the HEQEP invested in the MoE and the recipient institutions to sustain and build upon the results of the project\. A financial arrangement for sustaining key activities of the project has been put in place\. An endowment fund of BDT 80 crore (US$10 million) has been released to the BdREN Trust\. Another set of endowment fund is set aside for the BAC\. The UGC created a dedicated budget line for IQAC activities at public universities\. Every AIF subproject had included a sustainability plan for maintenance of their equipment and facilities as necessary\. 85\. A number of factors do collectively reduce the risk that the development outcomes may not be sustained\. As the HEQEP drew to a close in December 2018, the Chairman of the UGC created the BdREN Trust of 11 members consisting of representatives from higher education, UGC, MoE, and others to continue operation and maintain the BdREN\. In terms of the QA mechanisms innovated by the project, the BAC Act 2017 was passed on March 7, 2017, created an undergirding legal framework for accreditation and QA across all HEIs in Bangladesh\. Learning from the experience with capacity and technical expertise issues in the UGC during the implementation of the HEQEP, the new Higher Education Acceleration and Transformation Project (HEAT) (P168961) currently under preparation will be designed to adequately fill personnel needs based on clearly-defined terms of references\. In addition, training will be available to the UGC, other implementing partners, and national universities as soon as practical, to close gaps in expertise and to ensure effective implementation of subprojects\. V\. LESSONS LEARNED AND RECOMMENDATIONS Lesson 1: Invest in higher education Recommendation (a) The HEQEP revealed significant untapped potential of research capacity in the country\. As the projectâs high efficiency demonstrates, interventions in higher education can have a significant impact on wage growth among other positive returns on education\. (b) Undertake substantial investment for introducing blended online programs to match with the global trends of higher education\. Lesson 2: Transparent and rigorous peer review-based screening and selection process for awarding of competitive grants improves legitimacy and sustainability of the process Recommendation (a) Broaden and deepen the use of the competitive grant system for a range of institution-based improvement activities, while maintaining the rigorous peer review process\. Page 33 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) (b) Strengthen the central capacity for progress monitoring and results accountability of grant- supported activities by introducing a functioning PMIS\. Lesson 3: Ensure capacity building to ensure lasting gains attributable to project Recommendation (a) Invest in substantial capacity development for establishing an institutional QA system and development of quality culture\. (b) Link gains in research environment and attract talent by investing in capacity development for intellectual property among academics\. (c) Rigorously review sustainability plan for grant-supported subprojects after project completion, which can guide implementation and ensure an enabling environment going forward\. (d) Employ tracer studies to track project achievement and measure knowledge gains\. Lesson 4: Competitive grants instill autonomy in HEIs Recommendation (a) Provide effectiveness and versatility of competitive grant mechanism in supporting autonomous HEIs, which can make a difference in grant success\. Lesson 5: Strong project implementation mechanisms needed to assure requisite fiduciary capacity Recommendation (a) Build a strong project implementation setup to develop fiduciary capacity of grant beneficiaries and to monitor the implementation of grant-supported projects: (b) Provide prudent project design and selectivity of critical reforms for successful implementation of reforms and project activities in the context of a highly politicized higher education sector and the new engagements\. \. Page 34 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: Promoting Academic Innovation Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increased level of satisfaction Text Student- 3\.3 Student â 3\.6 (10%) Student - 4\.0 (21%) Student - 3\.7 (12%) of students and faculty staff Faculty - 2\.9 Faculty â 3\.2 (10%) Faculty - 4\.0 (38%) Faculty - 4\.0 (38%) regarding the quality of Employer â 3\.3 (10%) Employer - 4\.2 (40%) Employer - 4\.1 (37%) teaching and research Employer - 3\.0 environment, and of 31-Mar-2009 30-Oct-2015 31-Dec-2018 31-Dec-2018 employers regarding the relevance of teaching and research programs Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of academic Number 65\.00 150\.00 778\.00 publications produced by beneficiaries of AIF 30-Nov-2013 31-Dec-2018 31-Dec-2018 subprojects Page 35 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Comments (achievements against targets): Objective/Outcome: Building Institutional Capacity Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion All research and teaching and Text Funding is not Revamped Revamped learning funds under UGC are competitive competitive funding competitive funding distributed using an mechanism mechanism identified set of rules based implemented\. implemented\. on transparency and competition 31-Mar-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 30000\.00 47000\.00 360000\.00 564615\.00 30-Nov-2013 31-Dec-2018 31-Dec-2018 31-Dec-2018 Female beneficiaries Percentage 28\.50 28\.50 35\.00 30-Jun-2018 Comments (achievements against targets): Objective/Outcome: Raising Connectivity in Higher Education Sector Page 36 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Monthly average volume of Text 10 TB 100 TB 1,362 TB inbound education/ research data traffic in BdREN 30-Nov-2013 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Objective/Outcome: Establishing Quality Assurance Mechanisms Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of IQAC established Number 0\.00 15\.00 69\.00 and produce self-assessment based on the established 30-Nov-2013 31-Dec-2018 31-Dec-2018 framework Comments (achievements against targets): A\.2 Intermediate Results Indicators Component: Component 1: Promoting Academic Innovation Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Teaching and Learning Text Round 1: 0, Round 2:0, Round 1: 100% Round 1: 100% Percentage of fund Round 3: 0 Page 37 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) utilization by teaching and Round 2: 100% Round 2: 100% learning sub-projects Round 3: 100% Round 3: 100% (Window 1): (i) Round 1, (ii) Round 2, (iii)Round 3 31-Mar-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentage of fund Text Round 1: 0, Round 2:0, Round 1: 100% Round 1: 100% utilization by research sub- Round 3: 0 Round 2: 100% Round 2: 100% projects (Window 2): (i) Round 1, (ii) Round 2, (iii) Round 3: 100% Round 3: 100% Round 3 31-Mar-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentage increase Percentage 0\.00 15\.00 100\.00 368\.00 (cumulative) in doctoral level enrollment [%] under AIF 31-Mar-2009 30-Oct-2015 31-Dec-2018 31-Dec-2018 sub-projects Comments (achievements against targets): Page 38 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Percentage of 39 eligible Percentage 0\.00 50\.00 126\.00 universities completed at least one self-assessment 31-Mar-2009 31-Dec-2018 31-Dec-2018 sub-project [%] Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion The mechanism for Text The mechanism for A study conducted to Assessment study was university-industry university-industry assess the conducted collaboration piloted and collaboration does not effectiveness of W4 evaluated exist\. 30-Nov-2013 03-Dec-2018 31-Dec-2018 Comments (achievements against targets): Component: Component 2: Building Institutional Capacity Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion National HEMIS is in place Text National HEMIS does Annual Statistical 6th Annual Statistical and operational at UGC not exist\. Report published Report was published Page 39 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) 31-Mar-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Proportion of institutions Percentage 0\.00 100\.00 100\.00 covered under awareness campaign [%] 31-Mar-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Component: Component 3: Raising the Connectivity Capacity of the Higher Education Sector Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of universities Number 0\.00 60\.00 40\.00 (public and private) connected to BdREN 31-Mar-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number (â000) of online Number 0\.00 37\.00 24\.30 Page 40 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) journal title accessed and 31-Mar-2009 31-Dec-2018 31-Dec-2018 downloaded using UGC Digital Library on average per month) Comments (achievements against targets): Component: Component 4: Establishing Quality Assurance Mechanism Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion QA Unit is fully functional Text No QA unit exists QA Unit established, QA Unit established, and operational and draft Qualification and draft Qualification Framework finalized, Framework finalized, and QA docs finalized and QA docs finalized 31-Mar-2009 31-Dec-2018 31-Dec-2018 Comments (achievements against targets): Component: Component 5: Project Management, Communication, Monitoring and Evaluation Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion HEQEP Unit is fully functional Text 0 1 1 and operational 31-Mar-2009 31-Dec-2018 31-Dec-2018 Page 41 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Comments (achievements against targets): Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Completion of baseline Number 0\.00 3\.00 5\.00 6\.00 survey, follow-up survey at mid-term and end-line 31-Mar-2009 30-Oct-2015 31-Dec-2018 31-Dec-2018 survey Comments (achievements against targets): Page 42 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) B\. KEY OUTPUTS Improve the quality and relevance of teaching in HEIs 1\. Increased level of satisfaction of students and faculty staff regarding the quality of teaching and research environment, and of employers regarding the relevance of teaching and research programs: (a) Student Satisfaction Surveys; (b) Faculty Satisfaction Survey; (c) Employer Satisfaction Surveys 2\. All research and teaching and learning funds under UGC are Outcome Indicators distributed using an identified set of rules based on transparency and competition 3\. Direct project beneficiaries, of which female beneficiaries 4\. Monthly average volume of inbound education/research data traffic in BdREN 5\. Number of IQAC established and produce self-assessment based on the established framework 1\. Teaching and Learning: Percentage of fund utilization by teaching and learning subprojects (Window 1)\. 2\. The mechanism for university-industry collaboration piloted and evaluated\. 3\. Number ('000) of online journal titles accessed and downloaded using UGC Digital Library on average per month Intermediate Results Indicators 4\. Percentage of 39 eligible universities completed at least one self- assessment subproject 5\. National HEMIS is in place and operational at UGC\. 6\. Proportion of institutions covered under awareness campaign (%) 7\. Number of universities (public and private) connected to BdREN 8\. QA Unit is fully functional and operational 9\. HEQEP Unit is fully functional and operational Page 43 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) 10\. Completion of baseline survey, follow-up survey at mid-term and end-line survey, and tracer studies 1\. 27,051 students and staff have received training 2\. 15,350 IT equipment procured/installed in 38 universities 3\. 2,955 office equipment added to universities 4\. 41,184 books and journals have been procured for offices/libraries 5\. 1,653 classrooms/labs/offices renovated and furnished 6\. 41,184 books and journals added to libraries Key Outputs 7\. 12,012 faculty have received training on various disciplines (linked to the achievement of the Objective/Outcome 1) 8\. 618 masterâs program student enrolled in the subprojects 9\. 9 libraries modernized and automated with modern library management software 10\. 517 faculty have received training from national and international universities 11\. 103 curricula updated Improve the research environment in HEIs 1\. Number of academic publications produced by beneficiaries of AIF subprojects 2\. Increased level of satisfaction of students and faculty staff regarding the quality of teaching and research environment, and of employers regarding the relevance of teaching and research programs: (a) Student Satisfaction Surveys; (b) Faculty Satisfaction Outcome Indicators Survey; (c) Employer Satisfaction Surveys 3\. All research and teaching and learning funds under UGC are distributed using an identified set of rules based on transparency and competition 4\. Direct project beneficiaries, of which female beneficiaries 5\. Monthly average volume of inbound education/research data traffic in BdREN Page 44 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) 6\. Number of IQAC established and produce self-assessment based on the established framework 1\. Percentage of fund utilization by research subprojects (Window 2) 2\. Percentage increase (cumulative) in doctoral level enrollment (%)under AIF subprojects 3\. Percentage of 39 eligible universities completed at least one self- assessment subproject 4\. National HEMIS is in place and operational at UGC Intermediate Results Indicators 5\. Proportion of institutions covered under awareness campaign 6\. Number of universities (public and private) connected to BdREN 7\. QA Unit is fully functional and operational 8\. HEQEP Unit is fully functional and operational 9\. Completion of baseline survey, follow-up survey at mid-term and end-line survey, and tracer studies 1\. 13,494 lab equipment have been procured 2\.170 PhD students enrolled Key Outputs 3\. 819 articles published in peer-reviewed journals (linked to the achievement of the Objective/Outcome 2) 4\. 181 papers have been published on conference proceedings 5\. 200 instances of collaboration opportunities have been established Page 45 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A\. TASK TEAM MEMBERS Name Role Preparation Benoit Millot Lead Education Specialist (co-TTL) Subrata Dhar Senior Operations Officer (co-TTL) Yoko Nagashima Education Specialist Syed Rashed Al-Zayed Research Analyst Mokhlesur Rahman Team Member Burhanuddin Ahmed FM Specialist Marghoob Bin Hussein Procurement Specialist Sachiko Kataoka Education Economist Lianqin Wang Education Specialist Michael Foley Team Member Tenzin Dolma Norbhu ICT Specialist Shakil Ahmed Ferdausi Environmental Specialist Fabio Pittaluga Social Development Specialist Kishor Uprety Senior Counsel Vikram Raghavan Senior Counsel Chau-Ching Shen Financial Officer Nazma Sultana Team Member Bertha Mburugu Team Member Ricardo Reich Team Member Hena Mukherjee Team Member Nusrat Jahan Team Member Hon Chan Chai Team Member Supervision/ICR Mokhlesur Rahman, Shiro Nakata Task Team Leader(s) Arafat Istiaque, Ishtiak Siddique Procurement Specialist(s) Mohammad Reaz Uddin Chowdhury FM Specialist Nazma Sultana Team Member Yoko Nagashima Team Member Page 46 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Name Role Muhammad Asahabur Rahman Team Member Sabah Moyeen Social Safeguards Specialist Nadia Sharmin Environmental Safeguards Specialist Tashmina Rahman Team Member Shourov Kumar Sharma Team Member Rex Joseph Quiah Team Member 1\. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No\. of staff weeks US$ (including travel and consultant costs) Preparation FY07 0 4,567\.28 FY08 67\.782 383,319\.20 FY09 71\.057 330,952\.43 FY10 0 44\.28 Total 138\.84 718,883\.19 Supervision/ICR FY09 8\.400 62,809\.06 FY10 46\.948 292,992\.60 FY11 59\.280 288,285\.81 FY12 76\.467 494,850\.42 FY13 83\.815 571,427\.36 FY14 35\.950 114,379\.84 FY15 39\.548 164,243\.05 FY16 2\.649 57,986\.51 FY17 9\.523 95,515\.34 FY18 26\.304 135,559\.04 Page 47 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) FY19 30\.544 163,715\.87 Total 419\.43 2,441,764\.90 Page 48 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 3\. PROJECT COST BY COMPONENT Actual at Project Amount at Approval Components Closing (US$, Percentage of Approval (US$, millions) millions) Promoting Academic 48\.10 116\.12 241\.4 Innovation Building Institutional 4\.10 6\.8 165\.9 Capacity Raising the Connectivity 26\.50 45\.91 173\.2 Capacity of the Higher Education Sector Establishment of Quality 0 15\.83 \. Assurance Mechanism at the Institutional Level Project Management, 2\.3 16\.43 714\.2 Communication, and Monitoring and Evaluation Total 81\.00 201 248 Page 49 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 4\. EFFICIENCY ANALYSIS 1\. The economic analysis presents detailed costs and benefits accrued from the project so that a comprehensive cost-benefit analysis (consideration of all major costs and benefits) and IRR (the interest rate at which net present values of both costs and benefits are equal to zero) can be undertaken\. Sensitivity analysis, where changes in the underlying parameters (such as changes in the number of beneficiaries and quality enhancement of education as a result of the HEQEP) affect anticipated outcomes, is also done\. This economic analysis of the HEQEP assesses ex post costs and benefits associated with the program\. The methodology outlined below explains how the ex post estimation of benefits and costs accrued from the HEQEP should be viewed against a counterfactual where the GoB would continue without support from IDA\. 2\. To the extent possible, the approach and assumptions made during the ex ante economic analyses in 2009 and 2013 are largely followed here\. For example, the economic analysis does not assess realized benefits and costs related to the program using a âcounterfactualâ identification approach where the additional cost is compared with the additional benefits accrued from the HEQEP, which is done in many IDA-funded projects, because the earlier ex ante economic analysis did not use that approach\. In cases where the assumptions are different from ex ante analyses, the assumptions are explicitly highlighted\. Benefits 3\. The assumptions made on benefits are described in this section\. 4\. Benefits coverage\. During the project preparation phase, it was assumed that all public universities and 40 percent of private universities will be eligible for the HEQEP, and that the proportion of eligible total university graduates benefiting from the project were estimated to be 20 percent\. These assumptions are maintained here as well\. 5\. Wage premium\. Wage premiums refer to the additional benefits for all HEQEP graduates during the project phase\. Because the quality of education is assumed to have been enhanced by the exposure to the HEQEP, it is expected that the labor market has absorbed the skill improvement of HEQEP graduates and the wage rate increased as a result\. The wage differential in the presence of the HEQEP was assumed to be 10 percent higher than in the absence of the HEQEP during the initial program preparation, but was increased to 15 percent during the AF phase partly because, in the Enterprise Skills Survey conducted in 2012 by the World Bank, the wage differential in the entry-level salaries between those who secured first division (highest performing group) and those who secured second division (second highest performing group) in the examinations for university graduates was 20 percent\. In this analysis, the conservative 10 percent was used during the original phase\. The sensitivity analysis below will delve further into this assumption\. 6\. Enrollment growth projection\. Though not exactly an assumption for this ex post economic analysis as such, the enrollment growth projections during the original phase and AF phase were important considerations that were made as the benefits depended greatly on enrollment figures\. In the original phase, the enrollment growth rate projection was assumed to be 2â3\.5 percent while it was increased to 5\.21 percent during the AF phase\. The actual average enrollment rate was much higher than 5\.21 percent, the implications of which will be discussed below\. Page 50 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Costs 7\. There are two costs to consider: IDA funding and GoB counterpart funding, which also includes contributions from the participating private universities\. The total project cost was US$238\.1 million, US$206 million of which was from IDA and US$32\.1 million was from the GoB\. 8\. A discount rate of 12 percent is used in this analysis to find the present value of future costs and benefits\. This is consistent with the findings of World Bank (2016), which suggests that many researchers recommend discount rates between 8 percent and 12 percent for developing countries\. Since the higher the discount rate, the lower the present value of the future earnings, a higher discount rate is used so that our benefits assumption is on the conservative side\. Economic rate of return 9\. Using the above assumptions, the cost-benefit analysis shows that the present value of net benefits is positive (US$728 million), and that the programâs IRR is 52\.8 percent, which is significantly higher than the discount rate (12 percent)\. Though this IRR is high, this could be interpreted as a lower bound estimate, as positive externalities associated with enhanced education quality and equity arising from a healthier, better educated and equitable/inclusive society have not been included in the analysis\. In addition, increased enrollment caused by improved higher education quality and less dropouts or quicker graduation are not factored in the calculation\. 10\. The ex ante economic analysis conducted during the original phase estimated the IRR to be 17\.9 percent while it was updated to 20\.8 percent during the AF phase where assumptions on enrollment growth rate and wage increase were modified (World Bank 2013)\. Had they not updated these parameters, the estimated IRR would have been 49\.1 percent without the AF and 69\.9 percent with the AF\. 11\. This unusually high IRR is partly also a result of significantly higher wage rates for those with higher education\. The annual wages by education level from 2005, 2010, and 2016 are provided in table 4\.1\. It shows that the average annual wage for workers with higher education was 51 percent higher than wages for workers with secondary education completion in 2010\. This figure increased to 55 percent in 2016\. Table 4\.1\. Average Annual Wage by Education Level Education Level 2005 2010 2016 Average annual wage in nominal Taka No schooling 22,643 40,979 81,057 Primary level completed 31,588 49,471 101,804 Secondary level completed 67,184 114,839 182,782 Higher education completed 101,482 173,715 284,055 Average annual wage in 2016 Taka No schooling 49,815 62,288 81,057 Primary level completed 69,494 75,196 101,804 Secondary level completed 147,805 174,555 182,782 Page 51 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) Education Level 2005 2010 2016 Higher education completed 223,260 264,047 284,055 Source: Bhatta et al\. (2019) based on Household Income Expenditure Survey (HEIS) data\. 12\. A closely related topic is the returns to higher education which has been consistently high in Bangladesh (World Bank 2018)\. The rate of returns to an additional year of education in different levels for years 2005, 2010, and 2016 are provided in table 4\.2\. It shows that rate of returns to additional years in primary and secondary levels are decreasing over time, but the rate of returns to higher-level education has been consistently over 20 percent in 2005, 2010, and 2016\. The finding on returns to higher education being the highest is also consistent with the estimates in Montenegro and Patrinos (2014) that compared returns to schooling globally\. Table 4\.2\. Rate of Return to Additional Year of Education at Different Levels in Bangladesh Level 2005 (%) 2010 (%) 2016 (%) Primary (Grades 1â5) 7\.5 5\.5 4\.0 Secondary (Grades 6â12) 6\.8 5\.4 4\.6 Higher (Bachelors and above) 20\.5 22\.8 20\.5 Source: World Bank 2018\. 13\. Another reason for the high IRR is the unexpected large growth in university enrollment during the HEQEP period\. For example, the total enrollment in public and private universities was 387,433 in 2009 while this figure jumped to 856,726 in 2017 (BANBEIS 2018)\. The average increase in enrollment was 11\.1 percent between 2009 and 2017, while the ex ante economic analysis expected growth to be half that percentage (5\.21 percent) for the AF and 2â3\.5 percent during the original program preparation phase\.15 Robustness/Sensitivity Analysis 14\. Given the way ex ante economic analysis was conducted, the wage premium and proportion of university students who are beneficiaries play central roles in the calculation of the IRR\.16 As discussed earlier, the base case for the wage premium for all eligible graduates is 10 percent and 20 percent of the eligible university graduates (all public universities and 40 percent of private universities) are eligible\. Table 4\.3 shows what happens to IRR when wage premium and proportion of beneficiaries are changed\. Table 4\.3\. Sensitivity Analysis for the Cost-Benefit Analysis for the HEQEP Wage Increase/Premium Low (5%) Base (10%) High (15%) Beneficiaries Low (10%) 20\.4% 33\.7% 44\.1% Base (20%) 33\.2% 52\.8% 66\.5% High (25%) 39\.2% 60\.5% 77\.0% 15\. The IRR is as low as 20\.4 percent and as high as 77\.0 percent when certain parameters are 15 The growth rate in enrollments has decreased significantly since 2014 though; the enrollment rate has increased by 5\.7 percent from 2014 onwards, while it was 20\.7 percent before that\. 16 The wage rate of university graduates and university enrollments also play major roles in IRR, but these figures are calculated using actual figures\. Page 52 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) changed\. For example, when the wage premium decreases to 5 percent and proportion of beneficiaries are assumed unchanged, the IRR decreases to 33\.2 percent\. If the wage premium decreases to 5 percent and proportion of beneficiaries also decreases to 10 percent, the IRR is 20\.4 percent\. On the other hand, when both the wage premium is increased to 15 percent and the proportion of beneficiaries is increased to 25 percent, the IRR would increase to 77\.0 percent\. It can be said that because the enrollment increased drastically during the HEQEP period, the wage increase may have been lower (5 percent)\. In that case, the IRR is 33\.2 percent\. Conclusion 16\. The economic analysis suggests that the HEQEP was, ex post, a sound investment decision\. The cost-benefit analysis shows that the present value of net benefits is positive (US$728 million), and that the programâs IRR is 52\.8 percent, which is higher than the discount rate\. The major driving force for this high IRR is the huge increase in the enrollment rates for higher education, the much higher wage rate obtained by university graduates, and the quality premium assumed for those exposed to the HEQEP\. Reference BANBEIS (2018)\. âBangladesh Education Statistics Report 2018\.â Ministry of Education, Government of the Peopleâs Republic of Bangladesh\. Bhatta, S\. D\., Genoni, M\. E\., Sharma, U\., Khaltarkhuu, B\. E\., Maratou-Kolias, L\., and Asaduzzaman, T\. M\. (2019)\. âBangladesh education sector public expenditure review\.â Washington D\.C\.: World Bank\. Montenegro, C\.E\., and Patrinos, H\.A\. (2014)\. Comparable Estimates of Returns to Schooling Around the World\. The World Bank Group\. Wold Bank (2018)\. âBangladesh Tertiary Education Sector Review: Skills and Innovation for Growth\.â Washington D\.C\.: World Bank\. World Bank (2016)\. âDiscounting Costs and Benefits in Economic Analysis of World Bank Projects\.â OPSPQ\. World Bank (2013)\. âProject paper on a proposed additional credit in the amount of SDR 81\.5 million (US$125 million equivalent) and project restructuring to the Peopleâs Republic of Bangladesh for the Higher Education Quality Enhancement Project\.â Washington D\.C\.: World Bank\. World Bank (2009)\. âBangladesh - Higher Education Quality Enhancement Project Project Appraisal Document\.â Washington D\.C\.: World Bank\. Page 53 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 5\. BORROWERâS COMMENTS & SUMMARY OF BORROWERâS ICR BORROWERâS COMMENTS ON THE BANK ICR UGC Response to HEQEP ICR Dear Mr\. Shiro Nakata and Mr\. Mokhlesur Rahman, Many thanks to World Bank Education Team for sharing the HEQEP ICR\. I am immensely pleased to see the excellent documentation of the background, inception, implementation, and achievements of the project\. I am also impressed to know the remarkable impact the project has created in the higher education sector of Bangladesh\. Response of UGC with regard to HEQEP ICR is reflected in the following paragraphs: HEQEP has contributed enormously to the improvement of universitiesâ teaching-learning infrastructure, university-wide facilities and promoted a culture of research through the competitive fund-awarding instrument known as Academic Innovation Fund (AIF) that awarded 439 subprojects to 28 public and 10 private universities in four rounds\. AIF provided funds to universities that equipped laboratories with state-of-the-art scientific instruments that generated cutting edge research by the faculties\. Using newly established science labs under AIF subprojects 249 students have enrolled in postgraduate research programs of which 98 have completed PhD, 203 Masters and 21 MPhil programs\. A total of 115 research articles have also been published in international scientific journals\. Under Window 4 of AIF university researchers have been successful in laying down the foundation of innovation ecosystem\. Ten innovation fund subprojects having started in June 2015 demonstrated ground-breaking success in various fields implying that our scientists can make it if provided with world class lab facilities\. They came up with innovations that created global impact on production of chemical, pharmaceutical, genetic engineering, bovine vaccine, microchip design products at industrial scale\. All these intellectual properties would also be commercially protected through patenting at the international and local level\. In the meantime one technology âEarly detection of cancer using lon-linear opticsâ invented by the researchers of Shahjalal University of Science & Technology funded by AIF has been submitted for US patenting\. More applications for US patents are expected to be submitted by Chattogram and Khulna University researchers soon\. Automation of library and digitization of rare manuscripts and PhD theses were also accomplished under hEQEP\. Bangladesh Research and Education Network (BdREN) established under HEQEP strengthened universitiesâ academic and research efficiency through a high speed internet connectivity and campus network in all public universities\. Virtual classrooms have also been established in every public university that facilitated the faculties, researchers and students across the county to participate in real time interactive lectures\. BdREN has established a dedicated data centre with high performance computing and large volume data storage facilities\. Apart from this BdREN has been providing state of the art services to all member universities\. To promote quality education and research UGC Digital Library (UDL) has been established under HEQEP that has been providing access to electronic books and journals to the academia\. At present UDL has been Page 54 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) providing access of 34,100 e-resources to 90 universities both public and private through 13 major publishers\. The project has also provided RemoteXes and Discovery Tools to subscribing universities to facilitate use of contents\. Under the capacity building component of the project above 5000 faculty including 200+UGC officials have undertaken in-country and overseas training on project management, M&E, proposal evaluation and financial management including procurement\. I am pleased to mention that the project established âHigher Education Management Information Systemâ (HEMIS) to collect data on academic, finance and institutional management from all universities and administer the sector with an on-line real time data base\. This has created a unique facility for the stake- holders, policy makers and peers to get access to the information\. HEQEP introduced for the first time Quality Assurance mechanism in the country that laid the ground for the establishment of Bangladesh Accreditation Council\. Institutional Quality Assurance Cells have been established in 69 universities and 800 self-assessment sub-projects of study programs have been undertaken\. The project also facilitated establishment of Bangladesh Accreditation Council (BAC) and the National Qualifications Framework (NQF)\. The BAC shall implement the procedures and practices of accreditation of programs and institutions against the benchmark of NQF\. This would take the quality of higher education in the country to the next level and would promote internationalization of higher education\. Further, the Project supported updating of the Strategic Plan for Higher Education 2006-2026\. Based on this UGC has produced a new Strategic Plan for Higher Education (SPHE) 2018-2030 in August 2018\. This plan provides the road map and an implementation plan for the countryâs higher education for the next 15 years that would introduce major reforms in planning, governance, quality enhancement, management, financing, research, access and equity and achieving ICT parity\. It appears the ICR captures the whole story of HEQEP with all of its dimensions and I feel delighted to endorse the ICR and its statements\. In conclusion I would like to reiterate that UGC has successfully implemented HEQEP and that the transformation brought about in the higher education sector of Bangladesh must not end\. The impetus and the momentum generated by the Project should continue to augment more reforms and changes in this sector in order to attain a respectable position in the world\. The UGC and the higher education community strongly feel that a successor project should be on board and that the upcoming HEAT project with higher financial contribution from the World Bank will reflect the aspirations of the higher education community\. We desperately look forward to seeing the successful beginning of HEAT and being the implementing agency UGC would inevitably engage itself to make it another success story\. Prof\. Dr\. Md\. Akhtar Hossain, Member, University Grants Commission Page 55 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) SUMMARY OF BORROWERâS ICR Government of the Peopleâs Republic of Bangladesh, Ministry of Planning, Implementation Monitoring and Evaluation Division, Project Completion Report: IMED 04/2003 (Revised) Summary Bangladeshâs Ministry of Planningâs Implementation Monitoring and Evaluation Division commissioned a project completion report (PCR) to summarize HEQEPâs implementation and assess achievement of project objectives and outputs by component\. In addition, the PCR analyzed the impact of the project and factors that present risk to sustainability, and those that would arrest those risks and ensure maintenance of project outcomes\. Items of work Target (as per PP) Actual Progress Reasons for (as per PP) Comp\. Financial Physical Financial Physical deviation (Â±) (Quantity) (Quantity) 1 2 3 4 5 6 7 1\.Promoting Academic 1 7,762\.00 37\.78% 7,364\.68 95% Innovation: 2\. Building Institutional 2 716\.93 3\.49% Capacity of Tertiary Education Sector\. 3\. Raising the Connectivity 3 7,487\.80 36\.45% Capacity of the Higher Education Sector 4\. Establishment of Quality 4 3,166\.35 15\.41% Assurance Mechanism 5\.Project Management & 5 1,409\.95 6\.86% 512\.64 36% Communication, and Monitoring and Evaluation Total 20,543\.04 100% Achievement of Objectives by Component Component 1: Promoting Academic Innovation\. The objectives of this component were to establish enabling conditions to improve the quality and relevance of teaching, learning and research and to introduce an efficient instrument for the allocation of public funds with emphasis on innovation and accountability\. Its broad objectives are to produce advanced human capital in the form of highly skilled university graduates who would move the country towards higher productivity, economic growth and sustainable development\. Amongst many other achievements during the HEQEPâs tenure, 442 AIF sub-projects were awarded to 38 Page 56 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) universities, among which 439 have been completed\. Fund utilization rate was very high at 95\.71% of the contract value and 98\.25% of the disbursed amount\. Across eligible universities, thirty-eight (38) out of 41 public universities and 10 private universities have received AIF sub-projects\. Much of the projects involved enhancement of infrastructure and the procurement of technology, including 15,229 IT equipment have been procured and installed in 38 universities\. In addition, 2,877 office equipment and 13,945 pieces of lab equipment were installed in eligible universities\. 1,601 classrooms/laboratories/offices were renovated and furnished with modern teaching and learning IT equipment\. In addition to modern technology, classic education materials such as 40,828 books and journals were procured and added to libraries and offices\. Training and seminar for capacity building of HEI faculty were a considerable part of AIF funding as 11,476 Faculty members received training on various disciplines and 295 received fellowships from the sub-projects\. By project closure, 1,713 Workshop/seminar have organized, where total number of participants were 105,215\. Increased educational achievement and research production exemplify the success of HEQEP as 570 students have completed MS/MPhil degree under the sub-projects\. In addition, 84 doctoral students completed their PhD degrees\. Further, 158 doctoral students received fellowships under AIF financing\. These advanced graduates have demonstrated their productivity and the improved quality of research in Bangladeshâs HEIâs as 776 papers were published in peer-reviewed journals and 605 books/chapter have published and addition 666 papers were published in conference proceedings as of the last year of implementation\. Capacity building beyond workshops is shown in the 501 faculty members who received training from different universities and research institutions of abroad and the 26,689 students and staff who have received training across Bangladesh\. Of the total who received training, 76 staff and graduate students attained training abroad\. Component 2: Building Institutional Capacity The objective of this component was to reinforce the management capacity of the sector, both at the central level and at the level of Higher Education Institutions (HEIs) including sub-components related to strengthening the strategic capacity of UGC; and (ii) Enhancing the institutional capacity of the universities and (iii) Intellectual Property Literacy Capacity building of UGC and HEIs included laying out a strategy for the higher education sector and laying the foundation for improved management of the university system going forward\. A primary output of the component included UGCâs publishing the Strategic Plan for Higher Education 2018 â 2030\. During HEQEPâs implementation, 120 UGC officials received training from different universities and research institutions of abroad\. In addition, the UGC developed the web-based HEMIS system, which is hosted and actively operational\. Through this and related systems, information related to higher education is available online\. Component 3: Raising the Connectivity Capacity of the Higher Education Sector The objective of this component was to integrate universities in the world of global knowledge\. The primary output of the component was the establishment of the BdREN and the expansion of the digital library\. Under component 3 of HEQEP, the implementation team established the nation-wide BdREN Network with state-of-the-art technology and latest equipment\. BdREN was then connected to regional networks Page 57 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) across Asia\. To ensure connectivity and optimal user experience, BdREN leased Optical fiber from Power Grid Company of Bangladesh (PGCB) and deployed 405km+ of underground optical fiber access loop by HDD method from PGCB-SS to Universities/institutes\. Transmission and backbone networks were established to assure connectivity\. Universities received broadband internet, TEIN/global research bandwidth and University-to-University intranet service combinedly from BdREN at a very low cost; this and all ICR services would be maintained by dedicated ICT cells in impacted universities\. Component 4: Establishment of Quality Assurance Mechanism Component 4 focused on ensuring quality of higher education in Bangladesh through the establishment of QA mechanisms and quality assurance cells at the national and institutional levels respectively and promoting a quality culture within the HEIs in Bangladesh ensuring good practices and governance\. With the establishment of QA mechanisms across participating universities came the QA framework, standards and requirements for the HEIs\. To found QA processes and culture, operation manuals and other QA documents and templates were prepared under this component\. HEI management was urged to adopt QA mechanism to establish IQACâs in their respective institutions\. Overall 69 IQACs were established\. Awareness raising of the IQACâs and the wider QA agenda was built around workshops on QA related activities and capacity building workshops and provided technical assistance\. Capacity on the new QA cells centered on curriculum workshops and trainings on mentoring, monitoring and evaluating QA practices and processes\. Component-5\. Project Management & Communication, and Monitoring and Evaluation The objective of component was to ensure the proper implementation, management and monitoring & evaluation of the project\. Component 5 was particularly productive over the life of HEQEP, publishing materials that informed projection implementation and served reporting needs\. The HEQEPU published the HEQEP Newsletter, âSix years of HEQEPâ a video documentary on achievements of HEQEP, published IP policy and the operation manual establishing the TTO and the Strategic Plan for Higher Education 2018 â 2030, and assessed the Achievements of Round -1 AIF Subprojects\. The achievements of the sub-projects were published in newspapers and digital media, including on the newly established HEQEP website (http://www\.heqep-ugc\.gov\.bd/)\. A key resource for project implementation progress monitoring was the Project Management Information System (PMIS), established under this component\. Publications utilizing PMIS data included the preparation of 18 Semi-annual Monitoring Report, five (5) 20% validation surveys, necessary updates of the Results Framework Matrix of HEQEP, five (5) Environmental Impact Status Reports for AIF sub-projects, the (Governance and Accountability Action Plan) for HEQEP and informed the preparation of Safeguards guidelines and informed reporting on citizen engagement and satisfaction surveys\. To raise awareness of HEQEP and maximize the scope of its achievements, HEQEPU coordinated training and workshops\. As an achievement of financed sub-projects, the HEQEPU arranged a Press Conference on Cancer Detection Technology and conducted National Workshop on achievements of HEQEP at Bangabandhu International\. To maximize the impact of reformed IP processes the International Workshop on IP Technology in Pune, India was arranged, and experts were brought into assist inventors in patenting Page 58 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) their technology\. Lastly, awareness raising through procured materials, advertisements in the traditional media and social media helped spread the word about HEQEP and its successes\. Project Impact Direct Impact The overall education and research environment of the sub-project implementing universities/entities have enhanced due to HEQEP\. Classrooms and labs have been enriched with the addition of state-of-the- art research and educational equipment/machineries, teaching-learning devices, IT facilities, furniture and relevant renovation\. Due to the research environments in impacted HEIâs, the number of enrollment and graduation of the MS, MPhil and doctoral students have reached to a significant level\. Due to the quality research outcomes, a good number of papers have published in the reviewed journals\. Training and workshops have been arranged for teachers, staff or students to improve human resource skills\. The addition of IT equipment and network infrastructure has opened the scope of being connected and updated the university community with the global knowledge domain\. The introduction of the integrated educational management software as well as the national e-Government Procurement (e-GP) portal in the universities contributed to a shift toward e-Governance and transparency\. The incorporation of specialized software and a library automation system, in some universities, has brought a significant change in the learning and research atmosphere\. A cultural shift in academia has begun as a direct result of HEQEP\. Several attempts of patenting research outcomes of the HEQEP sub-projects have brought an improved outlook for researchers in universities throughout the country\. Change in mindset about further change\. Improved information management has resulted from more organized documentation per the reforms brought about with HEQEP\. Ultimately, the success of HEQEP and the sustainability of its impacts result in a positive change of mindset of stakeholders & QA experts as noted in their feedback\. Sustainability Institutional and financial sustainability were built into the design of the AI through mainstreaming the institutions created to operate the AIF and through incremental budgetary allocations to the MTBF\. The MBTF competitive fund was expected to be either pure continuation of the AIF or the merging of the latter with the recently created Academic Research Fund, or a combination of the two\. Efforts to ensure the sustainability of BdREN is two-pronged: (i) the creation of an independent Trust is expected to guarantee institutional sustainability; and (ii) a combination of increased budgetary allocations, subscriptions from HEIs, and the introduction of a cost-sharing scheme with end users is expected to promote financial sustainability (mostly associated with maintenance & operational costs, and replacement costs)\. The fiscal sustainability of the Project depends on the willingness of GoB to meet recurrent costs associated with the Project\. This willingness will be linked to longer term reforms to diversify sources of funds higher education, and in particular with the introduction of some cost-sharing mechanisms between beneficiaries of the AIF and BdREN users\. The capacity building activities under Component 2 as relates to strategy and policy development is expected to contribute to the development of options and initiatives to continue beyond project closure\. Page 59 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) The PCR recommended ongoing support and capacity building to ensure sustainability of HEQEP activities going forward\. For instance, support from the top management of HEIs for closer coordination with UGC and working toward increasing uptake by faculty members, staff and resource persons involved in QA (CETL type institutions) will improve sustainability\. In addition, dedicated resources for strengthen existing IQACs and adopting institutional human resource policies related to QA and accreditation may come an endowment fund or other trust organizations to defray fiscal burdens\. The PCR also notes that absorbing BdREN project Engineers into the BdREN Trust Organization and the establishment of Campus Network infrastructure for creating the BdREN service demand in full stack to the academicians and researchers would help improve demand reduce service disruption\. Page 60 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 6\. SUPPORTING DOCUMENTS Government of Peopleâs Republic of Bangladesh\. 2011\. National Education Policy 2010\. https://reliefweb\.int/sites/reliefweb\.int/files/resources/02\.National-Education-Policy-2010-English\.pdf Government of Peopleâs Republic of Bangladesh\. 2016\. Seventh Five-Year Plan Accelerating Growth, Empowering Citizens FY2016-FY2020\. http://www\.lged\.gov\.bd/UploadedDocument/UnitPublication/1/361/7th_FYP_18_02_2016\.pdf Government of Peopleâs Republic of Bangladesh\. Sixth Five-Year Plan Accelerating Growth and Reducing Poverty FY2011-FY2015\. https://policy\.asiapacificenergy\.org/sites/default/files/Sixth%20Five%20Year%20Plan-%20Accelerating% 20Growth%20and%20Reducing%20Poverty\.pdf Government of Peopleâs Republic of Bangladesh\. University Grants Commission\. 2006\. Strategic plan for higher education in Bangladesh: 2006-2026\. Government of Peopleâs Republic of Bangladesh\. University Grants Commission\. 2006\. Strategic plan for higher education in Bangladesh: 2018-2030\. Government of Peopleâs Republic of Bangladesh\. 2005\. Unlocking the Potential: National Strategy for Accelerated Poverty Reduction\. https://www\.imf\.org/external/pubs/ft/scr/2005/cr05410\.pdf Saint, W\. 2006\. âInnovation Funds for Higher Education; A Userâs Guide for World Bank Projects\. http://siteresources\.worldbank\.org/EDUCATION/Resources/278200-1099079877269/547664- 1099079956815/ED_WPS1_Innovation_Fund_Guide_May06\.pdf SRG Bangladesh Limited (SRGB)\. 2018\. Final Impact Assessment of HEQEP 2018 Final Report\. World Bank\. Aides-memoire and Implementation Status Reports 2009 â 2018\. http://projects\.worldbank\.org/P106216/higher-education-quality-enhancement- project?lang=en&tab=documents&subTab=projectDocuments World Bank\. 2009\. Bangladesh â Higher Education Quality Enhancement Project, Project Appraisal Document\. http://documents\.worldbank\.org/curated/en/126981467998483226/pdf/448270PAD0BD0P101Official0 Use0Only1\.pdf World Bank\. 2006\. Country Assistance Strategy for the Peopleâs Republic of Bangladesh - FY06-09, Report No\. 35193\. http://documents\.worldbank\.org/curated/en/247241468205460449/pdf/351930rev0corr\.pdf World Bank\. 2016\. Bangladesh - Country Partnership Framework for the Period FY2016-FY2020\. Washington, DC: World Bank Group\. http://documents\.worldbank\.org/curated/en/362231468185032193/pdf/103723-REVISED-PUBLIC-IDA- R2016-0041\.pdf Page 61 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 7\. Summary of Findings of Beneficiary Workshop Beneficiary Workshops were held at project closure on December 26, 2018, inviting faculties and students from beneficiary institutions for AIF, QA, and BdREN/UDL components to receive feedback from beneficiaries on benefits and challenges of the project\. Outcomes and challenges from the perspective of AIF beneficiaries and IQAC cells were discussed\. AIF-subprojects financed under windows 1 and 2 yielded results in lab development\. AIF window 1 established a specialized training center training center in postgraduate medical research that resulted in the training of 3 groups (2 groups of surgeons and 1 group of students) with a total of 362 people (target of 240)\. The final year students of Bangabandhu Sheikh Mujib Medical University (BSMMU) are using this center facility, including international students of the institution\. In addition, AIF financing lead to the development of 8 FabLabs with 6 of them having been registered with the FabLab network\. Lab Development under AIF window-2 yielded steel and metal rolling labs which benefited 15 to 20 students and led to the publication of 15 to 20 articles as a result of the work\. Roughly 200 people, including faculty and students utilize the labs\. As HEQEP progressed through the different windows of financing, a degree of sophistication improved as well, including the development of genetic diseases diagnostics and intellectual property\. Under AIF window 3, the Technology Transfer Office (TTO) established the office, improved the officeâs IT readiness and developed dedicated skills teams in Intellectual Property (IP) for the benefit of researchers\. The office processes IP applications and developed an IP policy for BUET and formed an IP steering committee\. The TTO convened workshops that included participants of 400 teachers and students and provided training on IP to faculties in Bangladesh and abroad\. The project also demonstrated the potential for collaboration between academic institutions in Bangladesh and institutions abroad as part of improving the relevance of learning and research in the former through training undertaken by students and faculty in Queensland University in Australia\. AIF support under window 4 added the development of a diagnostic kit for treatable genetic diseases\. Merging the AIF support to the development IP capability, the project expected two (2) patents to come from the Invention Disclosure Form being submitted for one already\. The project also has several papers under review\. AIF supported three (3) PhD students; the diagnostic lab supports the active work programs of 5-6 people as hundreds of samples are analyzed\. However, industry partnership is lacking under this initiative as funding for collaboration has come up short; only one (1) PhD student from the partner organization is involved\. AIF beneficiaries identified challenges with procurement, sustainability, and government processes that hinger the success of AIF-supported projects\. Beneficiaries noted that the procurement process is onerous with bottlenecks stemming from centralized procurement processes\. Revisions to the budget due to changes in specification require approval and reapproval up and down the business process\. Concerns of sustainability of results of AIF stems lacking clarity in resources available for the projects developed under the different windows\. Beneficiaries worry that if support is withdrawn then patent efforts will diminish due to financing needs\. The awarding of projects going forward need to be centered on sustainability plans\. Equipment and software already procured under HEQEP require maintenance and without the AIF may be difficult to sustain\. In addition to uncertain resources for facility improvements, onerous procurement processes may lead to an unsustainable backlog\. To alleviate these issues, beneficiaries suggested dedicated units for lab maintenance in the UGC\. Awareness raising of the benefits of Fablabs Page 62 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) will help in engendering broad support thereby improving their chances for sustained support going forward\. Discussions with faculty of a number of HEIâs regarding the IQACs established in their universities confirmed their positive impacts and demonstrated concerns with incentives and sustainability of the quality assurance in HEIs going forward\. Representatives noted the improvement of pedagogy in their university after the introduction of the IQAC and commended the campus-wide focus on quality assurance\. Student uptake of the assessment is ongoing\. Faculty interest in quality assurance is high but that students appear less enthusiastic\. Training has been key to improved uptake of IQAC and spreading the word on quality assurance\. Workshops and seminars related to quality assurance have been sector- specific in some cases, including a mental health seminar that incorporates quality assurance elements\. Curricula have also been updated to reflect an enhanced focus on quality assurance\. Course filing and documentation and IQAC administration reflect a growing inclusion of quality assurance in growing areas of participating campuses\. Slow student update of quality assurance may be due to a number of factors, including adjustment to a new system\. Representatives noted that students have been slow to adopt the QA-infused curricula or other aspects of quality assurance the affected HEIâs due to the adjustment involved\. Students are moving from traditional makeup of the higher education experience to the new system, and adjustment amongst the other obligations of student life may be contributing to their hesitation\. This has led to slow uptake of quality assurance relative faculty in the same institutions\. Students exhibited confusion over what the IQACs did and how its work was to be incorporated into their coursework and campus life\. Representatives also believed that lack quality in teaching and research environments in universities, particularly public universities, may have contributed to difficulty in attaining student buy-in to the QA systems newly in place with HEQEP\. In addition to the challenges with student support for IQACs and QA in general, representatives of the universities in the workshop expressed concern over sustainability and bureaucratic process, among others, presenting challenges to the spread of IQACs across the higher education sector\. Representatives at the workshop widely viewed bureaucratic processes in UGC as a prime contributor to delays in the work of IQACs\. In addition to this, resource constraints and unknown sources of funding for IQACs going forward contribute to concerns of sustainability of the IQACs as universities work through the process of internalizing QA broadly\. Participants expressed the need to address limitations in the implementation improvement and fiduciary plans as guidelines were not clear\. Though faculty support for QA is high the incentive structure and remuneration for facilitators are lacking, sophisticated KPIs and other incentives may improve faculty motivation for QA where needed\. As a related point, faculty working on QA could be involved in an accreditation process and training per international standards would improve the reputation of IQACs within and across universities\. Page 63 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 8\. Summary of Key Findings: (1) Final Round Satisfaction Survey [incl\. methodology]; (2) Graduate Tracking Survey; (3) Final Impact Assessment The following are summaries of the Borrowerâs âFinal Round Satisfaction Survey of Higher Education Quality Enhancement Project (HEQEP)â; âTracer Study of Graduates of Universities in Bangladeshâ; âand âFinal Impact Assessment of HEQEP 2018\.â Final Round Satisfaction Survey of Higher Education Quality Enhancement Project (HEQEP) The Government of Bangladesh commissioned a Final Round Satisfaction Survey (FRSS) among students, faculties and employers of the AIF institutes/departments to assess the satisfaction level of the stakeholders at project closure\. The study assessed the direct beneficiariesâ perception of the value of the interventions under HEQEP, with specific focus on the AIF sub-projections\. The FRSS found that incorporating technologies under the AIF sub-projects improved the learning environment, enhanced facultyâs abilities to teach more advanced concepts to students, and improved interactions between students and teachers\. In addition, sustained support to ensure the availability of funding is key to maintaining the positive benefits of HEQEP\. The teaching and learning environment have improved significantly under HEQEP\. With the financial support of HEQEP, researchers have greater freedom to conduct research and have the resources to disseminate their findings, and defend their work, among wider audiences â nationally and globally\. The surveyed largely found that AIF-sponsored studies were the impetus behind capacity building in the impacted institutions with HEQEP playing a crucial role in rejuvenating the research environment\. The projects under the AIF envigored the atmosphere for research in public universities\. Technologies developed and introduced under the AIF was perceived as enhancing the teaching and research environment\. Faculty members in AIF departments were found to have higher satisfaction levels overall, especially when compared with peers in the control group\. Faculty members showed greater satisfaction with AIF- financed departments and noted that the AIF support improved the quality of infrastructure in their departments\. The AIF support for infrastructure and materials was deemed as having improved the overall quality and availability of teaching equipment and facilities and contributed to improved satisfaction in these areas compared to the control group\. Faculty were particularly impressed with the availability of online teaching and learning materials, and books and journal, specifically as they related to HEQEP components like the BdREN\. Overall, the teaching and learning environment from the perspective of AIF faculty was positive and much appreciated\. Students in AIF -financed institutions were surveyed as being more satisfied than peers who did not receive AIF funding\. Their assessment of the impact of AIF was weighted more heavily than the others, since the key determinant of education quality is student achievement\. Students in AIF departments did not survey higher survey satisfaction across a number of common indicators of pedagogy (such as quality of instruction), but AIF departments were found to more effectively use technology in instruction\. AIF student spent more time in average in laboratory or advances research settings and reported more access to digital library resources than non-AIF students, both directly attributable to HEQEP\. AIF support was used towards the improvement of facilities in the financed departments, so this is a welcome, if not Page 64 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) surprising development\. And the AIF financing also proved widely known by project closure as nearly 3/4 of all surveyed non-AIF students were aware of AIF financing; up to 85% of students in AIF departments were aware their units were receiving AIF support\. Employers were surveyed and were found satisfied with key skills of the AIF graduates\. Graduate employment is one of the main objectives of completing higher education, and 75 employers of the graduates of AIF departments were surveyed\. These employers were spread across different sectors of the economy\. In particular, customer service skills, critical thinking and analytical skills, communication in English, advanced computer skill and willingness to learn were rated highly\. Overall, employers were satisfied with the quality of the graduates of AIF subproject institutions\. Though the surveyed viewed the AIF sub-projects as having near universal positive impact on the teaching and research environments, sustainability was an ever-present concern\. Improving the teaching and research environment requires making the qualitative changes that require sustained resources and dedication\. Faculty members nevertheless sought to underscore the value of infrastructural and technological changes under the AIF have moved the needle in the right direction\. Final Satisfaction Survey Methodology The final satisfaction survey employed both quantitative and qualitative research in surveying students, faculty, and employers\. The approach included a (1) questionnaire, (2) focus group discussions (FGDs) as well as (3) key informant interviews (KIIs) and (4) detailed interviews to assess the satisfaction of the key demographics with the HEQEP\. During HEQEP, 37 universities received AIF grants\. Analysts chose to keep one-third of the 100 department-sample as control, randomly choosing 67 AIF departments and 33 non-AIF receiving departments\. The universities were chosen to be representative across 8 administrative divisions of the country\. Of the total departments sampled, 17 were in private universities that received AIF in the first 3 rounds; all 9 private universities were sampled given the feasible possible\. In total, the study team surveyed 2,116 students from AIF departments and 987 students from non-AIF departments\. For the qualitative survey, students, employers and faculty were assessed for satisfaction using focus group discussion (FGD), key informant interview (KII) and/or in-depth interviews\. A part of the survey, 3 focus group discussion and 4 in-depth interviews of students and faculty from public universities were conducted, and 2 FGDs and 4 in-depth interviews of students and faculty from private universities, and 1 FGD and 2 in-depth interviews of students from agricultural or technical universities\. These FGDs and interviews were supplemented by 4 in-depth interviews of staff members from public and private universities, and 2 interviews of faculty of agricultural / technical universities\. Interviews were conducted by trained enumerators utilizing a structured questionnaire, overseen by supervisors who reported to the survey team\. The survey team made random site visits to assure quality in application of the survey\. Follow-up visits were conducted as needed following the selection, interview, data collection and analysis, to gather data on areas lacking a fuller picture\. In enumerating the responses of the survey, a 5-point Likert scale was employed for data collection and analysis\. This method allowed for relative ease of assessment and interpretation, especially for Page 65 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) respondents and enumerators\. It also allowed for the use of parametric and econometric analysis, including the least square method\. Analysts employed the simple t distribution to compare mean responses between sampled groups and disaggregated data as needed\. By contrast, parametric analysis was used to compare mean of outcome responses between the AIF and non-AIF groups sampled, but parametric tests were limited primary to assessing differences for easy interpretation\. Tracer Study of Graduates of Universities in Bangladesh The students in the institutes that received direct support under HEQEP were the ultimate focus of the development objective of HEQEP and their employability was the primary measure of the success of the project\. To assess the employability of students impacted by HEQEP, two rounds of quantitative tracer studies of university students and graduates were undertaken with a special focus on the impact of AIF support\. The use of the tracer studies informed stakeholders of the current status of the graduates and institutional performance, allowing for assessment of HEQEPâs impact\. The results of the tracer study offer stakeholders assessment of the possible scope of improvement of the project and underscore next steps for AIF\. The analysis of the tracer studies found that that AIF projects were effective in improving skills, job search prospects, and employability, per the responses of current students and graduates\. The top two effective facilities were establishment/renovation of a lab and establishment of multimedia facilities, as reported by students\. The top three AIF supported facilities as per all employed graduates were the establishment of multimedia, facilities for effective teaching, and classroom renovation\. The AIF supported facilities also keep a role in institutional quality as responded by institute heads\. The top elements of AIF supported investment are updated curriculum, laboratory establishment/ renovation, and internet facilities\. The study assessed the effectiveness of AIF in improving the quality of education and the attainment of skills and employability\. The majority of students found the AIF facilities to be effective\. Of the employed graduates who were surveyed, the vast major found the AIF facilities to be effective in improving skills and job search\. Respondents noted that the facilities they found most effective were related to multimedia, pedagogy support, and classroom renovation\. Heads of department and institutions and program managers found he AIF to be effective in improving institutional quality and student employability\. A majority of respondents reported that AIF-supported facilities effective in improving institutional quality in their departments or institutions more widely\. Most department heads said that the AIF -financed facilities were considered effective in improving skill and employability of students\. Surveyed heads of departments and institutions found that AIF-improved facilities were mostly effective in improving skills and employability of students\. These respondents considered the establishment of new labs and the renovation of research labs, updated curricula and classroom renovation were the most welcome and effective AIF-supported inputs\. Students from AIF-supported institutions reported a high rate of unemployment (38 percent) among all university graduates in Bangladesh\. The average duration of unemployment is less than a year (around 10 months)\. The study also showed that private university graduates have a higher chance of getting a job than public university graduates\. Private university graduatesâ family income is higher than public university graduatesâ family income\. Parents of private university graduates have higher educational Page 66 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) qualification than parents of public university graduates so future efforts will likely need to focus on public universities or support for admitting students from lower socio-economic backgrounds into private universities\. The tracer study found that there is a considerable lack of academia-private industry collaboration\. Less than half of surveyed employers maintain collaboration with universities and even less in any sort of sustained way\. However, from the academic institution side, most mentioned maintaining some kind of relationship with industries\. The private universities were found more active in maintaining industry linkage compared to public universities and variation in industry linkage depends on the departments to which respondents belonged\. From the university perspective, respondents noted that the channels with most collaboration included reviewing and updating curriculum, student internship coordination, and workplace visits\. Employers responded that professional networking with faculty and student recruitment were the avenues with the greatest amount of collaboration\. Final Impact Assessment of HEQEP 2018 The Final Impact Assessment of HEQEP was commissioned by the Borrower to assess the impact of HEQEP on enhancing the quality and relevance of higher education in Bangladesh and whether the project achieved its objectives\. The assessment reviewed the implementation progress toward achieving the HEQEPâs PDO and outlined achievements by component\. In addition, the impacts of each component were measured by project design, relevance, effectiveness, implementation efficiency, impact, learning and sustainability\. The assessment found that HEQEP accomplished varying innovative activities under its components over its life, providing inventors with foundational support and strengthening university- industry partnerships\. The assessment provided recommendations for HEQEPâs key stakeholders, including the UGC, university authorities and sub-project managers and suggested a way forward that promotes closer partnership between universities, GoB, and the private sector\. By component, HEQEP proved innovative and successful in improving the relevance of research and education in Bangladesh\. In component 1, design was considered appropriate and relevant improve quality teaching and learning, though the assessment concluded that time constraints limit review of both design and effectiveness\. Nevertheless, impacts were clear as modernized facilities and curricula amongst other inputs in HEQEP were key to the projectâs success were the numerous opportunities of knowledge management that assured a circle of learning throughout implementation\. Component 3 on BdREN, Campus Network, Campus E-Presence, and Digital library, was found to be well-designed and effective, but the extension of these developments is needed to ensure sustainable results\. The Digital Libraries in particular are as yet less familiar to students and faculty, suggesting additional training and communications needed to spread the word\. The QA entities implemented under the component were found to be useful in building capacity for quality assurance and peer assessment in academia in Bangladesh\. Each component was assessed through end-line evaluations which allowed the assessment to explore the effectiveness of HEQEP\. Inputs from sub-project managers, faculty and department chairs were used to assess the effectiveness from the perspective of key stakeholders\. Under component 1, respondents promoted their projects as innovative and remarked on how new the projects were in Bangladesh, if not in other development contexts elsewhere\. Projects were considered well-designed overall, but there in Page 67 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) some cases there was confusion on the achievement of project objectives\. Ample funding for AIF sub- projects was considered a strength of beneficiaries but following the project schedule and time constraint for procurement place undesired pressure on the team was considered by respondents to be a weakness of the AIF component\. Awardees reported that their subprojects contributed to teaching and learning as teachers and students have become more interactive in classrooms, teachers use technology in the classrooms (e\.g\. multimedia), students take help of technology or software (e\.g\. FabLab, software in lab) in learning or doing assignments or projects, get easy and quick access to information, books, and journals in digital library, and also get new and in-depth knowledge through research, evidence and practical learning\. Reflections on the effectiveness from awardees was positive and though the value for money was difficult to measure, the structure of the AIF did enforce transparent procurement practices which was appreciated by participants\. HEQEP was an innovative program developing quality in teaching-learning and engaging a significant number of students and teachers in conducting research and enhancing the quality of higher education sector in Bangladesh\. The surveys showed that those projects that got the most support and cooperation of their highest authority fared the best, presenting a lesson to UGC and the Universities to ally more closely to achieve sustainable and quality higher education at the higher education sector\. Page 68 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) ANNEX 9\. Summary of AIF sub-projects Success stories of AIF subprojects (adapted from Final Impact Assessment of HEQEP 2018, Annex IV) As mentioned earlier, a total 442 (3 subprojects abandoned in the stage of commencement) have been implemented in total 38 universities (public 28, and private 10) for enhancing teaching-learning and research in higher education\. These projects had wide ranges of focus\. A few, among those sub-projects, are widely considered as success stories under HEQEP project\. However, the following were a few success stories with numerous publications which signify more academic and monetary prospects of the subprojects considering the investment: â¢ Five Livestock and Poultry vaccines developed by BAU and ready for commercialization\. (Professor M\. Bahanur Rahman, Department of Microbiology and Hygiene, BAU) â¢ Research beats the environmental effects on coastal agriculture (Crop cultivation technique avert ill effects on environment on coastal agriculture) (Professor Dr\. M\. A\. Halim and Professor Dr\. Habibur Rahman Pramanik, Department of Crop Botany, BAU)\. â¢ Genetic Research facilities and Patent Care services in the BSMMU\. (Professor Laila ArjuanBanu, Department of Genetic Research and Molecular Biology, BBSMMU) â¢ Discovery of Novel plant growth promoting bacterial strains from the native environment (Professor Dr\. Md\. Tofazzal Islam, Department of Biotechnology, BSMMU) â¢ A new Mechanical Characterization Laboratory for earthquake resistance measurement for building materials (Dr\. Md\. Aminul Islam, Department of Materials and Matallurgical Engineering, BUET) â¢ Mechanical Engineers of human heart: BUET embarks upon Biomedical Engineering (Professor A\. B\. M\. Taufique Hasan, Department of Mechanical Engineering< BUET) â¢ Modernizing BUET central library: to shape the way students learn and enjoy reading in the 21st century (DR\. S\. M\. Mahbubur Rahman, Professor, Department of Electrical and Electronic Engineering, BUET) â¢ Air quality monitoring center in the University of Dhaka (Professor Dr\. Shahid Akhtar Hossain, Department of Soil, Water and Environment, DU) â¢ Combating foot and mouth disease in Bangladesh (Professor Dr\. Md\. Anwar Hossain, Department of Microbiology, DU) â¢ Novel functional materials developed for technological application (Professor M\. Y\. A\. Mollah, Department of Chemistry, DU) Page 69 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) â¢ Modern laboratory for teaching and research in Microwave Engineering and Optical Fiber communication (Professor Anis Ahmed, Department of Applied Physics, Electronics and Communication Engineering, DU) â¢ 400 MHz FT-NMR for researchers in physical and Biological Sciences in Jahangirnagar University (Professor Kazi Ali Azam, Director, Wazed Miah Science Research Centre, JU) â¢ Modern Plant Biotech Laboratory and Germplasm Centre/Gene Bank at PSTU â¢ (Professor Dr\. MahbubRobbani, Department of Horticulture, PSTU) â¢ ICT based teaching-learning environment in the department of Botany, RU (Professor Dr\. M\. Monzur Hossain, Department of Botany, RU) â¢ A modern laboratory for research on optical behavior and structure analysis of nonlinear materials (Professor Yasmeen Haque, Department of Physics, SUST) â¢ Materials with Linear and Nonlinear optics and liquid crystallinity Selected AIF Success Stories Success story-1: Technology of Detecting Cancer: An Innovation of SUST Researchers Title of the subproject: A modern laboratory for research on optical behavior and structure analysis of nonlinear materials Subproject Manager: Professor Dr\. Yasmeen Haque, Department of Physics, Shahjalal University of Science and Technology (SUST) Project Description: The project invented a cost-effective, world class technology to detect cancer in human body through Non-linear Optics\. It is to be noted that the team received financial support from the university-industry collaborative research subproject of Higher Education Quality Enhancement Project (HEQEP) being implemented by the University Grants Commission of Bangladesh with joint funding of the Government of Bangladesh and the World Bank\. Provisional patent applications have been filed both in USA and Bangladesh with the title âMethod and System Based on Non-linear Optical Characteristics of Body Fluids for Diagnosis of Neoplasia (Cancer)â on 09 July 2018 to protect the IP rights of the invention\. This breakthrough discovery of optical biomarkers to detect cancer has opened up a new field of research and work must continue to get greater benefits from it, said Yasmeen Haque, who led the team behind the discovery\. Explaining the technology, she said that nonlinear optics was the study of how intense light interacted with matter\. âWe witnessed a significant difference between nonlinear parameters of blood Page 70 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) samples from cancer patients and healthy people,â she said\. A team of 25 physicists, led by professor Yasmeen, came up with the findings recently\. It revealed that the method could detect even minor changes and could theoretically open up new possibilities in cancer detection at early stages\. In 2011, The Higher Education Quality Enhancement Project (HEQEP) awarded a subproject linear Optics (NLO) group at SUST in the Department of Physics\. This helped in Nonlinear Optics Research Laboratory\. MS and PhD students started conducting experiments on fundamental properties of various organic, inorganic and bio samples\. The path to discovery began when the team started studying fundamental properties of light matter interaction back in 2013\. During that time, RA Mashelkar, president of Global Research Alliance, paid a visit to the he was very happy to see our lab and the experiments the team was doing\. He then said, 'why don't you see if there are applications of this?' That prompted Dr\. Yasmeenâs students to see if there were nonlinear changes that could lead to cancer detection\. Back then, glucose and being measured by nonlinear optical method but no one had yet used it for cancer diagnosis\. In 2015, the NLO research team started looking at practical applications of these studies\. In a proposal submitted under Window 4, the researchers suggested an innovative idea; using these experimental biomarkers in cancerous samples\. The HEQEP project CP-4044 was awarded to the NLO construction of a new âNonlinear Bio Optics Laboratoryâ where studies have started on experiments with blood samples obtained from cancer patients\. Around BDT 9 crore was provided in two phases to the research group for developing laboratory and conducting research\. Professor Yasmeen fondly recalled how proud she was of her students who put in a lot of hard setting up the lab to conducting the research\. The experiments were very arduous\. âOur lab is the most sophisticated lab in the country\. The whole experimental procedure is automated, and they did it all by themselves\.â Referring to innovative ideas that the team had come up with in different steps of the research, Professor Yasmeen said they even developed quartz sample holders for TK 500 each and normal glass holders for Tk 20 each\. Such a holder used to be imported spending Tk 27,000 and once it was stained with blood and subjected to laser beams, it became useless and had to be discarded\. In this sub-project, the industry partner is Invent Technologies\. LTD which helped process blood samples and provided the team with the Page 71 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) serum to conduct the test\. The team is now working to make a prototype device of the lab experiments and hopes to get reliable results\. It is expected to be ready in a year and will help conduct the tests within a very short time for less than Tk 500\. Then industries may come in if they want market the product\. that Yasmeenâs students to see if there were nonlinear cholesterol concentrations were used it for cancer diagnosis\. Two companies: one local and another foreign have already shown interest in investing in the upcoming phases of the research\. Asked if this method would diagnose cancer with more accuracy than other existing ones, Yasmeen said it was too early to say but âthe method we are using is very sensitiveâ\. âAt this moment all we are trying to say is that we are going to try to identify optical biomarkers\. Some markers saying this blood is different from normal, healthy blood\. âSince we have seen some signs that we didn't expect to see so early, maybe we can see some signature that will tell us whether this [a sample] is cancerous â¦ at an earlier stage\.â In Bangladesh, a patient is diagnosed with cancer usually when it reaches the third or fourth stage\. The team is yet to determine the accuracy and experimental measurement error that may occur during the test\. It conducted the optical experiments on blood samples from 10 healthy people and 40 cancer patients\. Experiments on a larger scale would help find the accuracy rate, Professor Yasmeen said\. However, the test does not require any reagent which means there are no external parameters to look into, said the lead researcher\. Regarding the financial aspect, the SUST professor said it was the lack of funds for research that drove talented Bangladeshi students to countries like the USA\. If the government or industries come forward fund to scientific research, the country will be able to keep its talents, gain new knowledge and turn it into wealth, Yasmeen said\. âThe best outcome of our research is a strong nonlinear optical research team with exciting work ahead\. This is just the tip of the iceberg\. The research has to continue for years and years to comeâ\. Success story-2: Innovation in food varieties Title of the subproject: Enrichment of Facilities for Effective Access to Higher Studies and Advanced Researchers in Horticulture (CPSF-466) Subproject Manager: Dr\. MahbubRobbani, Innovation: 8 new fruits variety Name of the varieties: PSTU Bilati Gab (Velvet apple) Kamranga (Carambola) -1; PSTU BatabiLebu (Pomelo) (Monkey Jack)-2; PSTU Kamranga (Carambola) Specialty of innovation: All these varieties are sweeter than apple varieties are by nature seedless type\. Asexual propagation by cleft grafting of these varieties induced a dwarf canopy structure which is a favorable trait for cyclone prone plantation and roof gardening too\. Project Description: Being located at the southern area, the D horticultural research approaches suitable for the coastal edaphic and climatic conditions\. The advanced research capacity of this department was emerged and Page 72 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) enhanced during January 2011 when Plant Biotech Lab and Germplasm Center support of the HEQEP sub- project CP466 been possible due to its sale proceeds from Germplasm Center and a lump sum grant received from UGC\. In 2017, a supplementary fund was also awarded for sustainable continuation of the previous sub activities\. As a consequence of this sub through screening of the indigenous fruit genetic resources available in the coastal area\. The National Seed Board (NSB), Ministry of Agriculture has recognized the varieties\. In Bangladesh, fruit consumption per head per day is about 77g against the minimum requirement of 115g per head per day which indicated that their production could meet only 67% of her requirements\. Coastal region is a seat of species diversity for several native fruits, such as tamarind, aonla, velvet apple, golden apple, date palm, palmyra palm, river ebony, carambola, cowa, monkey jack, sapota, wood apple etc\. Most of these fruits have high medicinal value and are rich source of vitamins, minerals, dietary fiber, and antioxidants\. Apart from the nutritional and food security value, the income generation and poverty alleviation potential from these fruit species is enormous especially in the impoverished economy of disadvantaged coastal community\. About 50 local farmers are directly linked with the up-scaling activities of Germplasm Center and the community people have shown their interest to buy the Quality Planting Materials (QPM) from this Center\. Sale proceeds from QPM have made the Germplasm Center as a self-reliant one\. A series of research steps are yet to be done to promote commercialization of the new varieties\. Till today, there are 58 types of native fruits belonging to 29 families, 60 species and 646 accessions have been conserved in the Germplasm Center\. Morpho-physico-chemical characterizations have been done for about 15 accessions\. Prof\. Dr\. Robbani said âWe strongly believe that our facilities could be utilized for commercial and around production of quality plantlets\. Analytical facilities have potential for seed industry to test germination, purity, vigor, variability and hybridity of seeds\. Our Germplasm Center has enough opportunity for Page 73 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) contractual production of QPM for nursery and fruit industries to support the emerging needs of coastal agriculture towards nutritional and food security\.â He added that a comprehensive characterization leading to DNA profiling of these native fruit genetic materials would pave the way for establishing IPR protection and patenting in some cases\. So far, research works in the laboratories yielded four articles in the reputed journals\. âWe believe that this research effort will be a reflection to popularize and commercialize the galaxy of underutilized fruits available in Bangladeshâ, he further added\. Under the subproject an idealized plant biotech laboratory has been established (first one at PSTU)\. Since establishment, about 700 UG students of biological science related departments have got access for conducting hands on practical classes, and about 20 MS and PhD students performed researches related to plant TC and DNA analysis\. This lab has become a model learning place for the neighboring college students of the Department of Botany\. Moreover, genetic diversity analysis of drumstick was performed using RAPID marker\. In vitro regeneration protocols established for lettuce, potato, strawberry and chrysanthemum for Quality Plant Material (QPM)\. Rapid multiplication and in vitro salt tolerance screening of potato is being carried out\. Two classrooms have been refurbished, upgraded and modernized\. The entity is equipped with teaching âlearning equipment\. A seminar room cum library has been established with a collection of about 600 latest books, journals, theses etc\. Syllabi have been updated with new and need-based study topics\. A substantial increase in PG enrollment has been observed, such as MS and PhD students in 2010 were 4 and 1 respectively, but in 2018 the numbers are 32 and 5\. Six academic collaboration meetings with resource persons from teaching, research and extension organizations were held\. MoU signed with three agro-based organizations (ACI, Supreme Seeds, and ACF)\. Three training programs were arranged for capacity buildup of the faculties, PG students and staffs\. Success story-3: Countryâs first anatomy museum established Title of the subproject: Enrichment of Anatomy Museum for Enhancing Quality Education and Research at the Department of Anatomy and Histology (CP2179) Subproject Manager: Professor Dr\. M\. Lutfur Rahman Innovation: Establishment of Anatomy Museum Project description: The Department of Anatomy and Histology of Chittagong Veterinary and Animal Science University has developed the countryâs first anatomy museum under the subproject\. By definition, anatomy is the branch of science which deals with the bodily structure of humans, animals and other living organisms, especially as reveled by dissection and the separation of parts\. The museum, housed in a spacious well decorated room in the Department of displays skeletons of different animals and birds like crocodile, snake, lizard, pig, ostrich and monkey\. The museum, housed in a spacious well decorated room in the Department of displays skeletons of different animals and birds like crocodile, snake, lizard, pig, ostrich and monkey\. Besides, the museum displays 30 stuffed animals, 20 animal models, 500 sp formaldehyde, 2,000 different types of bones, 75 models of different animals, 3,000 different slides and 30 portraits of scientists\. Dried soft organs of some Page 74 of 75 The World Bank Bangladesh - Higher Education Quality Enhancement Project ( P106216 ) animals are also preserved in the museum\. The university authorities have not fixed any entrance fee yet\. Therefore, anyone can visit the museum free of cost on weekdays\. âCVASU is a specialized university cherishes to become center of excellence in biological arena\. The Anatomy museum would be very helpful to provide our thankful to HEQEP for awarding as many as 11 subprojects in CVSAU which helped us enormously to develop our research laboratories, establish anatomy museum, fisheries museum and purchase of teaching-learning equipmentâ, Professor Goutam Buddha Das, Vice statement while talking about his vision and contribution of HEQEP in CVASU\. âWe have a very rich collection of anatomical specimens in the museum\. The museum houses skeletons of different types of mammals, birds, reptiles, primates and ruminants,â said Prof Dr Mohammad Lutfur Rahman, chairperson of department of Anatomy and Histology and also the subproject manager\. âThe students will be able gain hands anthropologists, ornithologists, zoologists, wildlife conservationists, embryologists and paleontologists will be greatly benefited from the museum,â Prof Dr\. Lutfur added\. Drawing a line between an anatomical laboratory and a said: âThe educational institutes of our country have some anatomical laboratories\. Page 75 of 75	REVIEW
P110762	IEG Report Number: ICRR14718 ICR Review Independent Evaluation Group 1\. Project Data: Date Posted: 06/16/2015 Country: Nepal Project ID: P110762 Appraisal Actual Project Name: Nepal: Peace Project Costs (US$M): 50\.0 32\.78 Support Project L/C Number: Loan/Credit (US$M): 50\.0 32\.78 Sector Board: Social Protection Cofinancing (US$M): Cofinanciers: Board Approval Date : 05/06/2008 Closing Date: 06/30/2011 06/30/2014 Sector(s): Other social services (94%); Central government administration (4%); General public administration sector (2%) Theme(s): Conflict prevention and post-conflict reconstruction (67%); Social safety nets (33%) Prepared by: Reviewed by: ICR Review Group: Coordinator: Malathi S\. Judyth L\. Twigg Lourdes N\. Pagaran IEGPS2 Jayawickrama 2\. Project Objectives and Components: a\. Objectives: The project's objectives, as stated in the Financing Agreement (dated August 26, 2008), were to contribute to the consolidation of the peace process in Nepal by supporting: (i) Government to meet commitments to people affected by the conflict, including families of the deceased, orphans, widows and disabled people, and Maoists in cantonments; (ii) ensuring transparency in implementation of benefits under the Project for the conflict-affected groups including the Maoists in cantonments; and (iii) strengthening of key institutions which are tasked with policy and implementation functions in peace building, reintegration and rehabilitation\. This is the same as in the Emergency Project Paper (EPP, p\. 5)\. The revised objectives, as stated in the Amendment to the Financing Agreement (dated May 21, 2010), were to contribute to the peace process by providing interim cash transfers and services to eligible conflict affected groups and by increasing transparency and accountability in the delivery of these benefits\. b\.Were the project objectives/key associated outcome targets revised during implementation? Yes If yes, did the Board approve the revised objectives/key associated outcome targets? Yes Date of Board Approval: 05/17/2010 c\. Components: The project originally comprised three major components: Component 1: Transitional safety net payments to Maoists in cantonments during the transition period (appraisal: US$ 18\.55m; actual: US$ 6\.24m)\. Under this component, 19,602 Maoists placed in twenty-eight cantonments were to receive regular cash allowances, and the project was to reimburse the Government of Nepal (GON) for those payments made between July 2007 and mid January 2009\. The eligible Maoists were registered and verified by a two stage process involving the two parties to the conflict and the United Nations (UN)\. This component was intended to directly support the process of demobilizing the Maoist forces in fulfilment of the 23 Point Agreement (23PA)\. Component 2: Benefits to families of those killed as a result of the conflict and reintegration support to other conflict-affected populations (appraisal: US$ 28\.25m; actual: US$ 22\.31m)\. This component had two sub-components\. Sub-component (i) to finance benefit payments to families of people killed as a result of the conflict\. This comprised compensation payments to 14,000-plus families in the amount of NPR 100,000 per person killed as per a GON decision taken in March 2008\. This would be paid as a lump sum, though payment would be spread over several months to achieve national coverage\. Sub-component (ii) to provide support for reintegration assistance to other conflict-affected groups: people disabled in the conflict; IDPs; families of persons who had disappeared; minors involved in the conflict; orphaned children; and widows\. This could take a variety of forms (e\.g\. training, legal and counselling services, rehabilitation services for disabled people, and piloting of interventions), and would be elaborated by the GON with technical assistance (TA) provided under the Component 3 and in close consultation with other development partners through the Nepal Peace Trust Fund (NPTF)\. Component 3: Capacity building of key institutional structures in support of the peace process and project management support (appraisal: US$ 3\.20m; actual: US$ 3\.04m)\. This component had three sub-components: Sub-component (i)\. Capacity building and technical assistance for the Ministry of Peace and Reconstruction (MOPR) to perform its core functions more effectively\. This was to include as an immediate priority its oversight role on payments to families of deceased and Maoists in cantonments (i\.e\. strengthening the management information system (MIS), developing internal procedures, communications campaigns for beneficiaries of project financed payments, and monitoring, reporting (including beneficiary surveys), and beneficiary satisfaction surveys\. Sub-component (ii)\. Support for core project implementation tasks of the Project Management Team (PMT) such as procurement and financial management (FM), including evaluation of project interventions through surveys and other assessment tools; Sub-component (iii)\. Training, workshops and technical assistance for other actors in the peace process as needed, including the Peace Commission once formed, the Peace and Conflict Management Committee if required, Local Peace Committees, and other groups such as parliamentarians and possibly other bodies related to the peace process\. First Restructuring: In May 2009, less than a year after the projectâs approval, a Maoist leader claimed that money paid by the GON to Maoist ex-combatants would be used for purposes inconsistent with the peace process, and that the reported number of soldiers in the camps had been inflated\. Although payments to Maoists had been made by the Government of Nepal (GON), no withdrawals had yet been made against project funds for these expenses\. The Bank's money was not implicated\. The Bank's senior management took actions to avert any risk of Bank funds being used (or perceived as being used) in a manner inconsistent with the financing agreement\. It was decided to disallow expenditures under Component 1, an action that necessitated a Level 1 restructuring\. The restructuring also aligned the original PDO with the revised role of MOPR, which had originally been expected to assist with conflict management, truth finding and reconciliation in addition to delivering GON commitments to conflict-affected groups\. The restructuring was expected to improve the relevance of the project given the changed circumstances\. The original key and intermediate project indicators were replaced by streamlined and more precise indicators to reflect the revised PDO\. The closing date extension was due to the increased scope of rehabilitation services that needed time to be put in place\. Revised Components (following the first restructuring): At the Level 1 restructuring, the original Component 1 was dropped for the reasons already described\. The overall budget for the project was unchanged, however, as were the basic activities of the project for all beneficiary groups except for those originally envisaged under Component 1\. The original Component 1 was replaced by the original Sub-component 2\.2, and benefited from an increased budget, a change that shifted the focus of the project towards longer-term peace building and rehabilitation of CAPs\. The original Sub-component 2\.1 became Component 2\. The revised components were as follows: Component 1: Rehabilitation support to conflict-affected families and individuals (US$14\.5 million)\. This component provided (i) assistance in the design of service packages (to include needs identification, psycho-social counselling, health and nutrition counselling, occupational consultations, skill training, formal educational scholarships, microfinance and job placement); and (ii) support for a phased roll out in selected districts of skills development and employability services, including occupational consultations, education and skill training and job placement (an initiative called Employment and Self-Employment Services, or ESES)\. Component 2: Cash benefits to families and widows of those killed as a result of the conflict (US$31\.8 million)\. This component would finance: (i) payment of NPR 100,000 each to 18,000 families of those killed in the conflict (identified and confirmed by the government); and (ii) payment to 9,000 eligible widows of an additional NPR 25,000\. Component 3: Capacity building of key institutional structures in support of the peace process and project management support (US$3\.2 million)\. This component and budget were left unchanged from the original project design\. It comprised (i) capacity building and technical assistance for MOPR to perform its core functions more effectively; (ii) support for core project implementation tasks of the PMT, which included implementation of the Governance and Accountability Action Plan (GAAP) and revamped monitoring and evaluation arrangements; and (iii) training, workshops and technical assistance for other actors in the peace process as needed, including LPCs, the Peace Committee, the Truth and Reconciliation Committee, and others once formed\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Costs The original project costs were estimated at US$ 50\.0 million\. Final costs were US$ 32\.78 million, or 66% of appraisal\. Financing: The US$ 50\.0 million grant was to be financed by IDA\. No Borrower contribution was anticipated or made\. Final amounts disbursed: The final amounts approved for the three components in January 2014 were US$ 6\.56m; US$ 23\.24m; and US$ 3\.62m, respectively\. The actual amounts disbursed under the respective components were: US$ 6\.24m; US$ 22\.31m; and US$ 3\.04m (ICR, Annex 1), totaling US$ 31\.59m\. This is different from the total amount disbursed by 06/21/2014 listed in the ICR Data Sheet (US$ 34\.67m), and from the total amount disbursed listed in the ICR's Annex 1 (US$ 32\.78m)\. Dates: The project was restructured on three occasions: ï¬ 5/17/2010, to revise the PDO, change the scope and structure of the first two components, and reallocate funds from Component 1 to 2 in line with the restructuring; to revise the results framework to ensure consistency with the revised PDO and revised components; and to extend the closing date for one year, to June 30, 2012\. Disbursements before and after the revision of the PDO: The project had disbursed US$ 19\.59m of the US$ 34\.67m, or 56\.5%, prior to the revision of the PDO (ICR Data Sheet, p\. xii)\. The balance of US$ 15\.08m, or 43\.5%, was disbursed after the Level 1 restructuring\. The cancelled amount was US$ 12\.3m\. (These amounts differ from the amounts listed in the Data Sheet\.) ï¬ 5/28/2012, to extend the closing date by two years to June 30, 2014\. Second Restructuring: On 5/28/2012, a second restructuring extended the closing date due to the following: The Employment and Self Employment (ESES) program had been well received in the 12 districts covered in the pilot phase, and it was noted that there was a strong demand from CAPs and other stakeholders, including local peace committees, for employment services and capacity building that went beyond one-time cash relief\. MOPR had gained insight and experience in implementing the program, and it was proposed that this would enable the program to be expanded to the remaining 61 conflict-affected districts\. MOPR proposed to implement the expansion in two phases: Phase I, covering 42 districts, and Phase II, to cover 19 more districts\. ï¬ 1/31/2014, to cancel remaining funds\. Third Restructuring\. The Phase II ESES mentioned above started too late\. The call for proposals received an unexpectedly large number and there was insufficient time for training, etc\., to be completed before project closure\. Therefore, remaining project funds were cancelled in this third restructuring on 1/31/2014\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: Relevance of Original Objectives\. Substantial\. The project's objectives remain relevant today, as they were at approval\. The objectives are consistent with the World Bank's post-conflict support strategy for Nepal (Interim Strategy Note, 2007)\. They are also consistent with the latest Country Partnership Strategy (CPS), 2014-18, which emphasizes the importance of sustaining the peace process\. Following months of difficult negotiations between Maoists and government groups, a fragile peace agreement had been reached in November 2006\. The Comprehensive Peace Agreement (CPA) aimed to develop a new constitution based on principles of equity of gender, caste, ethnicity, and religion\. Part of the peace settlement (later called the 23 Point Agreement or 23PA) was a commitment by GON to pay reparations to conflict-affected persons (CAPs) and their families\. These actions followed international best practice, and were considered essential to sustain the level of trust and confidence build during the peace process\. The project's approach, which aims to fulfill the conditions of the 23PA in a fair and transparent manner, aimed to support the credibility of the peace process in Nepal, as well as the country's longer-term development outlook\. Apart from concerns of Bank management that the monthly payments made to Maoist ex-combatants under Component 1 might have been used in a manner inconsistent with the project objective of consolidation of the peace process, there was an additional motivation for restructuring\. This was the need to realign the PDO with the role that had emerged for the Ministry of Peace and Reconstruction (MOPR) regarding implementation of the CPA and the 23PA\. Relevance of Revised Objectives\. Substantial\. The country conditions remained relevant, and the relevance of this revised PDO remained high following the Level I restructuring until project closure\. The revised PDO more accurately reflects the scope of activities in the project and the expectations that can be met by MOPR in its capacity and role within the peace process (see Section 9a on Government Performance for further on the new role of MOPR)\. b\. Relevance of Design: Relevance of Design under the Original Objectives\. Substantial\. There were clear links between the PDO, the activities the project set out to support, the expected outcomes and the project indicators (see EPP, p\. 5 and Annex 2)\. Essentially, the project aimed to contribute to the peace process (the PDO) by meeting commitments to people affected by the conflict, ensuring transparency in implementing these benefits, and strengthening the institutions tasked with the functions involved with peace building\. The Results Framework lays out the program logic in these three areas\. The use of an emergency operation was appropriate (see section 8a Quality at Entry)\. Relevance of Design under the Revised Objectives\. Substantial\. The revised design more accurately represented the scope of activities under the project\. New activities were introduced that more accurately represented the revised PDO\. The revised design, including the results framework, reflected the revised project orientation toward greater rehabilitation support (for example, by introducing the ESES initiative)\. The project also included publication of summary information on payments to families on the MOPR website, and local disclosure boards were established to increase transparency\. 4\. Achievement of Objectives (Efficacy): The Project had three original objectives and two revised objectives\. The original objectives were: (i) Support the Government to meet commitments to people affected by the conflict, including families of the deceased, orphans, widows and disabled people, and Maoists in cantonments; (ii) ensure transparency in implementation of benefits under the Project for the conflict-affected groups including the Maoists in cantonments; and (iii) strengthen key institutions which are tasked with policy and implementation functions in peace building, reintegration and rehabilitation\. The revised objectives were: (i) provide interim cash transfers and services to eligible conflict affected groups; and (ii) increase transparency in the delivery of these benefits; and (iii) and increase accountability in the delivery of these benefits\. The first original and revised objectives were essentially the same\. The main beneficiaries of the project following the first restructuring were essentially the same, except for the Maoists in cantonments, as noted in Section 2 (d) above\. Objective (original/revised): Government to meet commitments to people affected by the conflict, including families of the deceased, orphans, widows and disabled people, and Maoists in cantonments/Provide interim cash transfers and services to eligible conflict affected groups\. RATING: Substantial Outputs: 14,770 of the 14,800 eligible families of those deceased due to the conflict received cash payments (99% coverage against the target of 95%)\. The revised component covered: (i) a NPR 100,000 payment to 14,800 families of conflict victims; (ii) a further NPR 200,000 to 2,900 families; and (iii) an additional NPR 25,000 payment to 4,700 widows of those killed in the conflict (and not covered by army or police compensation arrangements)\. The first Third Party Monitoring survey found high levels of satisfaction with and impact from the transfers\. The component exceeded the targets set at the June 2012 restructuring\. The delivery of skills and employability rehabilitation services to beneficiaries who sought them was met in the 61 districts where ESES was offered (pilot phase and phase 1)\. This activity/component was designed to be implemented in three phases: a pilot phase in 12 districts, followed by two additional phases to cover the remaining 61 conflict-affected districts\. During the pilot phase, employment-related training was offered in 19 different construction-related trades\. During the pilot phase, 2,964 beneficiaries completed the ESES training programs and 1,789 (60%) found employment\. Building on lessons learned from the pilot phase, Phase I of ESES was rolled out in 42 districts\. Training was delivered to 11,740 beneficiaries (of whom 11,693 enrolled)\. Female participation in the ESES program was encouraged in both phases\. In the pilot phase, 40% (1,200) were females, with female participation reaching 53% (6,147) in Phase I\. Accordingly, the PDO indicator of 30% female participation was substantially exceeded\. Female enrollment was encouraged by the provision of training in female-oriented trades such as tailoring and hand embroidery\. Phase I offered training programs for 27 different trades; 13 new trades were introduced, while 5 trades were dropped from the pilot phase\. Off-season vegetable farming had the largest number of participants (19%; 2,159), followed by building electrician (14%; 1,596) and tailoring (11%; 1,238)\. Of the total 295 contracts awarded, the project received Employment Completion Reports (ECR) for 276 contracts; according to these reports, 55\.3% of trainees in Phase I found employment 6 months or less after completing the training\. Third-party verification confirmed 206 of these ECRs, and found an employment rate of 56\.3%\. Of the 11,693 beneficiaries who enrolled in training services in Phase I of the program, 11,540 completed the training\. Phase II of ESES was intended to cover the remaining 19 districts\. The MOPR received 948 proposals from interested training providers, an unexpectedly large number that overwhelmed the capacity of the bid evaluation team\. Following notification that further extensions would not be granted, evaluation of proposals was cancelled and bidders were advised accordingly\. Since the closure of the project, the PMT has submitted a proposal to the Nepal Peace Trust Fund (NPTF) to support the implementation of Phase II\. The ESES component also supported the design of a psychological counselling program to CAPs\. This program assisted the reintegration of CAPs by helping them to deal with the traumas resulting from the conflict\. Outcomes: Overall, the Government met its commitment to people affected by the conflict by providing cash transfers and services\. The target beneficiary satisfaction rate for cash payments and rehabilitation services of 90% was met for cash benefits (with surveys showing 91% satisfaction), and also fully achieved for rehabilitation services (79% satisfaction against a target of 80% following the 2012 restructuring)\. The target female participation rate of 30% was substantially exceeded\. Female participation in the ESES program was encouraged in both phases\. In the pilot phase, 40% (1,200) were females, with female participation reaching 53% (6,147) in Phase I\. Objective (original/revised): Ensure transparency in implementation of benefits under the Project for the conflict-affected groups including the Maoists in cantonments/Increase transparency and accountability in the delivery of benefits\. RATING: Modest The transparency objective applies to the original project, but the restructured project added an additional objective of accountability\. These are sufficiently related to be rated as a single objective\. Outputs: At the end of the project, the MOPR website was fully operational\. Records and information of the deceased and widows were entered on the management information system (MIS) and made available online on the Ministryâs project website\. District disclosure boards were functional and updated quarterly\. Under Component 3, the project provided resources for project management, institutional capacity development and training\. Guidelines were developed for payment and ESES services, through a consultative process involving the NPTF and stakeholders\. Training, orientation, and information sessions outlining operating procedures, roles and responsibilities related to the project were conducted for MOPR personnel, Local Peace Committee (LPC) and District Administrative Office (DAO) staff, training service providers, and beneficiaries\. These training sessions were reinforced through media and communication campaigns\.The M&E plan was also completed\. Beneficiary assessments and social audits were financed and conducted on an annual basis\. Outcomes: There is now an appropriate grievance mechanism that is operational\. Two officers are designated as grievance focal points, and a grievance handling MIS system with a toll-free hotline is functioning for handling grievances\. The benefits described above can be attributed to the project, as they are a result of specific project-related inputs and outputs\. Objective (original): Strengthen key institutions which are tasked with policy and implementation functions in peace building, reintegration and rehabilitation\. RATING: Substantial\. This third objective was dropped at restructuring \. Outputs: The Project provided resources for project management, institutional capacity development, and training\. Guidelines were developed for payment and ESES services, through a consultative process involving the NPTF and stakeholders\. Training, orientation, and information sessions outlining operating procedures, roles, and responsibilities related to the project were conducted for MOPR personnel, LPC and DAO staff, training service providers, and beneficiaries\. These training sessions were reinforced through media and communication campaigns\. A grievance mechanism was introduced and handled a large number of grievances about the cash payment and ESES processes\. This substantially increased the social accountability of the project, as did the use of disclosure boards\. Outcomes: A key outcome was the development of the MIS, which contained data on all CAPs, the project accounting system, program budget modules, and all elements of the ESES program\. At the time of project closure, the MIS team was developing additional modules to support the implementation of other MOPR programs as well\. In order to ensure the system was usable at all levels, MIS training was provided to DAO, DDC, and LPC officials\. While the project-supported activities are now completed, the MIS will have ongoing relevance for the MOPR as it continues with peace-related interventions in ESES, psychosocial counseling, and the payment of remaining obligations to beneficiaries\. 5\. Efficiency: Neither the Emergency Project Paper (EPP) nor the ICR conducts a full economic or financial analysis of the program\. The intention of the Emergency Recovery Loan was to support the peace process and enhance the stability of a very tenuous peace settlement\. The overall economic return of the project was therefore impossible to quantify (ICR, p\. 23)\. While the project did have outputs with a direct economic benefit, it was not possible even at the ICR stage to measure the direct welfare impact of these outputs, since no impact evaluations were conducted and data from the beneficiary assessment were inadequate for such an exercise (ICR, p\. 23)\. The ICR does examine several outputs and concludes that the projectâs components had a substantial economic benefit\. In terms of economic benefits, the benefits of the targeted cash transfers are viewed as extremely high, given that they were provided to households that had lost family members or were caring for people with disabilities; the ESES delivered services to very needy individuals, and employment rates were reasonable (60%) in comparison to other training programs in the region; and it is important to factor in the social and community-wide impact of greater economic and social agency promoted by the project, a factor to which it is not possible to assign a precise value\. The project is also seen as being relatively cost efficient according to the ICR\. The ICR points to analyses of cost data for Phase 1 of the ESES program\. These show an average program cost of NPR 20,825, or NPR 231 per trainee per day\. This is relatively low in relation to comparator programs in other countries\. Factors that possibly contributed to efficiency include: (i) the utilization of non-governmental organizations and civil society organizations as training service providers; (ii) the adoption of competitive, performance-based contracting; (iii) the development and delivery of orientation workshops to potential bidders; (iv) clarity and transparency of the bid evaluation process; and (v) multilevel performance monitoring of training program delivery\. However, no specific information is provided on comparator programs\. However, there were factors that detracted from implementation efficiency, including weak PMT capacity, delays in hiring staff and submission of financial management reports, and slow implementation of cash transfers in the project's early years\. On balance, efficiency is rated Modest taking into account these factors\. a\. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The Project disbursed 56\.5% under the original PDO and 43\.5% under the revised PDO\. The ICRR rates the Project as follows: Relevance of Original Objectives: Substantial Relevance of Original Design: Substantial Achievement of the objective to meet commitments to affected groups: Substantial Achievement of Objective to increase transparency: Modest Achievement of objective to in strengthen institutions: Substantial Efficiency: Modest Therefore Outcome rating under the original objectives: MS Relevance of Revised Objectives: Substantial Relevance of Design under Revised Objectives: Substantial Achievement of the objective to provide interim cash transfers and services: Substantial Achievement of Objective to increase transparency and Accountability: Substantial Efficiency: Modest Therefore Outcome rating under the Revised Objectives: MS Overall, the project contributed to advancing the peace process in Nepal\. It is difficult to judge the counterfactual -- i\.e\. what would have happened in the absence of a Bank project\. Although the Bank saw a credible risk (at the time of appraisal) that the peace process could unravel, the fact that the Bank proceeded with the project contributed to the credibility of the peace process itself\. Given the projectâs strategic relevance and delivery of the bulk of anticipated outputs, the Bankâs decision to support cash payments and employment services in conflict-affected areas made a real difference to the lives of beneficiaries and thereby helped to promote social inclusion and restore economic activity and confidence in the GON\. This is evidenced in the findings of the beneficiary assessments in the ICR\. The project also contributed to capacity building within the MOPR and at the local institution level, which has arguably supported sustained peace in Nepal\. a\. Outcome Rating: Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The PDO was âto contribute to the peace process by providing interim cash transfers and services to eligible conflict affected groups and by increasing transparency and accountability in the delivery of these benefits\.â The cash transfers and services have been delivered (with the exception of Phase II of ESES), and have served their purpose of contributing to the peace process (ICR, p\. 15)\. There are, however, risks that political and economic changes could jeopardize the development outcomes achieved\. National level political risks cannot be entirely assessed\. Whether those who gained employment following the training remain employed is a function of what happens in the overall economy, and in those sectors\. a\. Risk to Development Outcome Rating : Negligible to Low 8\. Assessment of Bank Performance: a\. Quality at entry: The Project was prepared under the Bank's OP/BP 8\.00 (Rapid Response to Crises and Emergencies) due to its nature and the need for a rapid and flexible response\. The streamlined procedures under this policy helped to ensure timely processing to directly support the immediate needs of government\. The Bank considered other options such as general budget support, but the importance of robust fiduciary standards in the use of funds suggested that an emergency operation was a more appropriate instrument\. The Bank's policy under OP/BP 8\.00 also offered the flexibility to adapt elements of the project to an evolving institutional and policy situation\. The operation was also consistent with the 2007 Nepal Interim Strategy Note\. Given the range of UN and bilateral players involved in supporting the peace process, the project's design took into account existing and planned support to GON from other development partners, and sought a harmonized approach\. The Bank fielded a team of local experts, international experts and the Bank's extensive international experience with demobilization and reparation, while remaining sensitive to local circumstances and the need to honor the 23PA (ICR, p\. 15)\. Lessons incorporated included application of fiduciary arrangements, specifically FM, reliance on a dedicated budget line item for fund transfers, a robust beneficiary identification process, and a planned payment process that involved both government and Maoist input and oversight\. Considering the circumstances, the EPP was comprehensive in scope, and deliberately incorporated flexibility in its implementation arrangements\. The project's M&E design included a robust system with the UN and GoN conducting joint verification to identify and validate ex-combatant beneficiaries\. Third party surveys and social audits were also incorporated into the design to track payments and results indicators\. However, the ICR identifies several moderate shortcomings in design\. These include the realism of some of the outcome indicators and their links to the PDO\. (These were corrected at the restructuring\.) The Bank also did not explicitly identify capacity constraints at MOPR as a risk to the PDO, and expected disbursements based on rapid implementation of new procedures by a relatively new ministry (ICR, p\. 15)\. These capacity constraints slowed disbursements\. Quality-at-Entry Rating: Moderately Satisfactory b\. Quality of supervision: The Bank team was proactive and candid in flagging low disbursements and downgrading both progress towards the PDO and implementation progress to MU one year into implementation\. The Bank team, including senior management, took quick actions to restructure the project (Level I) and prevent any damage to the Bank's reputation when a potential risk identified in the EPP materialized early in the project\. During this time, the project team made a great effort to ensure coordination with donors and other stakeholders by keeping them informed (Implementation Status Report #3, December 2009)\. As stated in the ICR, this restructuring was opportune, since it improved the clarity of the project's design and strengthened the results framework, particularly by introducing specific and measurable PDO outcome indicators directly related to the objectives\. The team conducted a thorough Mid-Term Review (MTR) in June 2011, and identified a specific set of actions and milestones to be achieved\. Following the MTR, MOPR made notable improvements, and the project was upgraded from the earlier unsatisfactory status (Implementation Status Reports #6 of May 2011 and #7 of April 2012)\. The task team engaged actively in between missions, and played a key role in assisting the government\. This demonstrated the importance of a field-based TTL and teams in fragile and post-conflict environments such as that prevailing in Nepal\. Following restructuring, the Bank team continued to assist in strengthening capacity at MOPR\. The ESES component, however, fell short of planned targets, necessitating the cancellation of funds\. The Bank could have possibly accelerated procurement of the final phase of the ESES\. The team did well, working together with the Project Management Team, in incorporating lessons from the ESES\. The TTL maintained communications with the Nepal Peace Trust Fund and shared experiences on a regular basis (ICR, p\. 16)\. Quality of Supervision Rating : Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: Implementation was slow during the first year, and disbursements did not commence for over a year\. This was mainly due to slow budget release, limited capacity in MOPR, low capacity at the regional level, and changing leadership within the PMT (ISR #6)\. The Government could probably have done more to ensure that the MOPR was adequately staffed and procedures put in place to accelerate disbursements (ICR, p\. 16)\. Following the restructuring and the MTR, MOPR made significant progress\. Despite this progress, overall disbursements remained low and possibly affected the final phase of ESES, necessitating the cancellation of project funds\. At project approval, the MOPR had been in existence a little over one year, and had been mandated to take over the functions of the earlier Peace Secretariat\. The MOPR was to provide a strengthened internal structure for enhancing coordination of peace efforts, and assist national recovery and development through conflict management, truth finding and reconciliation, and social reconstruction\. Under the 23PA, several high-level commissions were to be formed and tasked with guiding different aspects of the peace project, including the High Level Peace Commission, a Truth and Reconciliation Commission, and others\. However, these commissions have not been established, and in the absence of political commitments, the MOPR has assumed the role of a more traditional ministry responsible for meeting certain GON obligations to conflict-affected groups\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance: Performance of the MOPR was mixed\. Although MOPR formed a PMT headed by the Project Coordinator, and included representatives from several divisions (Conflict Analysis and Policy Formulation, Relief and Rehabilitation, Planning and Monitoring, etc\.), implementation of the cash transfers was relatively slow during the first few years of the project\. This was due to the project management arrangements (weak PMT) and the capacity of the new ministry\. In late 2011, implementation progress was downgraded due to very low progress in delivering the cash transfers in FY2010-11, and the delay in hiring staff\. These factors were resolved, but impacted overall implementation\. FM reports were submitted with significant delays over this period; however, this improved over time\. Capacity at the PMT improved tremendously after a new Project Coordinator was appointed in November 2011\. Project status, including FM, was upgraded in April 2012\. The contracting for Phase II of the ESES was delayed\. The PMT could have anticipated this and started the contracting process earlier\. The ICR states that the PMT assumed the project would be extended for another year, although there is no evidence of this commitment (ICR, p\. 17)\. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: The EPP sets out the broad framework for results monitoring\. In the original design, M&E was central to verifying cash payments to beneficiaries\. As stated in the ICR (and in the project's design), the UN and GoN were to carry out joint verification to identify and validate ex-combatant beneficiaries\. An independent opinion survey was planned to track the payments\. These factors contributed to the sound M&E design at entry\. There were some issues with the Project's indicators\. Key indicators were not reflected under PDO indicators in Annex 2, Project Results Framework and Monitoring, of the original Project Paper; and there were some original indicators with doubtful relevance to the project\. These included participation of parties to the peace process in agreed upon structures and mechanisms addressing the peace at central and district levels; number of specific agreements in the CPA and 23PA adhered to; reduction in cease fire violations; and Peace Commission constituted and operational and agreed multi-party mechanism in place pending Peace Commission formation\. b\. M&E Implementation: The first restructuring significantly improved the results framework, including the indicators\. The original key and intermediate project indicators were replaced by streamlined and more precise indicators to reflect the new PDO\. The enhancements included development of an MIS and third-party monitoring in the form of beneficiary assessments and social audits\. These improvements made M&E easier and more efficient in terms of monitoring project performance\. The M&E process was well used to monitor project progress\. The ICR states that spot checks led to a substantial reduction in the number of identified beneficiaries compared with original estimates\. Beneficiaries were very satisfied with the cash payment process, as indicated in the surveys\. The survey process also likely influenced performance of the local authorities delivering the payments (ICR, p\. 9)\. c\. M&E Utilization: The project made good use of the data collected for evaluating and refining the outputs\. The ESES program's reports on training and job placement of beneficiaries during the pilot phase helped to refine the training models (although the final impact evaluation was cancelled due to the cancellation of this component)\. As observed in the ICR, the MOPR will likely use the MIS system beyond this project\. M&E Quality Rating: Substantial 11\. Other Issues a\. Safeguards: No safeguard policies were triggered by the project\. There were no safeguard issues during implementation\. b\. Fiduciary Compliance: The ICR rates overall FM performance as satisfactory\. Being a new ministry, MOPR took some time to establish FM arrangements\. There was also frequent turnover of accounts staff that resulted in delays in the submission of financial and audit reports\. FM was downgraded in June 2010 and remained so until 2012\. During FY10 and FY11, disbursements were suspended due to overdue audit reports\. A subsequent change of staff within the PMT, including hiring of FM consultants, led to significant improvements\. Account backlogs were cleared and the updated registers maintained until project closure (ICR, p\. 10)\. Procurement was generally satisfactory, with one exception\. There was a need to contract a large number of service providers to deliver ESES to the conflict-affected persons\. The preparation and implementation of a Field Implementation Manual (FIM) facilitated the smooth implementation of this process\. At the outset, ESES activities were delayed due to the lack of clarity regarding the process and the activities\. The FIM and several rounds of orientation programs helped to overcome this issue (ICR, p\. 10)\. c\. Unintended Impacts (positive or negative): None reported\. d\. Other: 12\. Ratings: ICR IEG Review Reason for Disagreement/Comments Outcome: Moderately Moderately Satisfactory Satisfactory Risk to Development Negligible to Low Negligible to Low Outcome: Bank Performance: Moderately Moderately Satisfactory Satisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR: Satisfactory NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The ICR (pp\. 17-18) presents a number of lessons as follows: ï¬ In a high risk and politically sensitive situation, it is critical to be proactive to adjust to the changing environment\. Hence the restructuring immediately following Board approval; ï¬ Conservative planning in terms of outputs is necessary when preparing emergency operations\. In this case, overly ambitious objectives with regard to the capacity of a new ministry became an issue\. In addition, IEG notes the following lesson: ï¬ A field-based TTL and project team that are able to closely monitor implementation and communicate with the client in fragile and post-conflict environments can be critical to project outcomes\. In the case of Nepal, the Bank's teams based in New Delhi and Kathmandu worked hard to build consensus with both key government representatives and donor staff on the first project restructuring; more frequent visits by the TTL and close coordination continued to be essential in improving project performance as the project moved forward\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR is clear and provides good information on project implementation and results\. The ICR could have done a better job linking the project outputs (listed in Annex 2) to the outcomes listed in Section 3\.2 of the ICR\. Section 3\.2 is rather thin, and reporting is limited to achievement of the revised PDO indicators\. The ICR provides several good lessons\. a\.Quality of ICR Rating : Satisfactory	REVIEW
P111592	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) Report Number: ICRR0021775 1\. Project Data Project ID Project Name P111592 MZ Higher Educ Science & Techn\. (FY10) Country Practice Area(Lead) Mozambique Education L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IDA-46840,IDA-D0510 31-Dec-2015 79,706,558\.13 Bank Approval Date Closing Date (Actual) 25-Feb-2010 31-Dec-2018 IBRD/IDA (USD) Grants (USD) Original Commitment 40,000,000\.00 0\.00 Revised Commitment 82,309,106\.00 0\.00 Actual 79,706,558\.13 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Antonieta Romero- Judyth L\. Twigg Joy Behrens IEGHC (Unit 2) Follette 2\. Project Objectives and Components DEVOBJ_TBL a\. Objectives According to the original financing agreement, the Higher Education Science and Technology (HEST) project had the following objectives: (a) increase the number and raise the quality of graduates at the undergraduate and graduate levels, and (b) strengthen the national research capacities to produce research outputs of relevance to the Recipientâs strategic economic sectors\. Page 1 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) A third objective was added at a 2015 Additional Financing (AF): (c) strengthen the institutional framework for Technical and Vocational Education and Training (TVET)\. Because of the revised objectives, a split rating will be performed\. b\. Were the project objectives/key associated outcome targets revised during implementation? Yes Did the Board approve the revised objectives/key associated outcome targets? Yes Date of Board Approval 02-Jul-2015 c\. Will a split evaluation be undertaken? Yes d\. Components The structure of the project included three components: Component A: System governance, quality and management strengthening (appraisal, US$14\.10 million; AF, US$9\.15 million; actual, US$14\.11 million and AF US$17\.45 million)\. The HEST project was to provide capacity building of system oversight and quality assurance institutions, implementation of key quality assurance policies, and piloting of the higher education financing reform\. Through this component the HEST was to provide training, technical assistance and/or goods to: (i) regulatory institutions and the Instituto Nacional de Ensino Ã DistÃ¢ncia (National Institute of Distance Education, NED) at the Ministry of Education and Culture (MEC); (ii) institutions in charge of developing new financing mechanisms for scholarships and training; (iii) the National Directorate of Higher Education; (iv) the authorities in charge of creating a third provincial learning resource center and implementing distance learning activities; (v) the scientific councils and the Ministry of Science and Technology (MCT); and (vi) the Executive Secretariat of the Commission for Professional Education Reform (ES-COREP), enhancing the TVET system\. At the AF, the original PDO activities were retained with scaled-up targets resulting in higher numbers of students graduating from higher education institutions; of Master's degree graduates in math, sciences, engineering and agriculture; of programs of higher education institutions (HEIs) accredited by the National Accreditation and Quality Council (CNAQ); and of project beneficiaries\. More activities were added (creating certification and accreditation mechanisms, technical assistance to the new National TVET Authority (Autoridade Nationale do Ensimo Professional, ANEP), and a decentralized management model for five institutions) to support the development of qualifications systems connecting medium-level TVET with tertiary education\. Funds were also provided to establish a management information system for higher education\. Component B: Improving quality of teaching, learning and research through competitive funds (appraisal, US$15\.8 million; AF, US$13\.0 million; actual, US$15\.41 million and US$11\.84 million)\. This component included five activities: (i) technical assistance, training, and goods to the MECâs institutional development fund to develop information communication applications for education; (ii) loans to Mozambiqueâs private HEIs to enhance the quality of their teaching and learning processes; (iii) grants to Page 2 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) Mozambiqueâs public HEIs to enhance the quality of their teaching and learning processes; (iv) grants to Mozambique postgraduate students, to improve the quality, relevance, and production of applied research; and (v) advisory services to the ES-COREP in delivering TVET grants and scholarships\. With the AF, the National Training Fund for Professional Education was established to improve teaching and learning in technical and vocational education\. Component C: Equity and competitive scholarships (appraisal, US$10\.1 million; AF, US$20\.1 million; actual, US$8\.08 million and US$12\.81 million)\. Through this component, scholarships were to be provided for: (i) approximately 350 poor/disadvantaged undergraduate students, in particular to females from the provinces; (ii) existing faculty and researchers acquiring masterâs and PhD degrees, with emphasis on science, engineering and technology; and (iii) teachers participating in TVET Lecturer Training Scholarships\. The AF provided support for 40 additional TVET Lecturer Training Scholarships\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project cost\. Total project costs were estimated at appraisal at US$40 million\. With the AF and exchange rate losses, total actual costs were US$79\.7 million\. Financing: The project was initially to be financed by a US$40 million Bank Credit\. AF was provided in the form of a US$45 million grant\. Unallocated funds in the amount of $2\.75 million were used for Mozambiqueâs participation in the Africa Higher Education Centres of Excellence (ACE) Program (P151847, 2016-2022, US$148 million)\. These funds were cancelled from the HEST project and are not considered in the overall HEST project funds\. The HEST projectâs total planned financing, including the AF, was therefore US$82\.25 million\. Total disbursement was US$79\.7 million, with losses of about US$ 3\.24 million (4% of total) due to SDR/US$ exchange rate changes\. Borrower contribution: No Borrower contribution was planned or made\. Dates: The project was approved on February 25, 2010 and became effective on November 11, 2010\. It underwent a mid-term review on May 15, 2013 and had one restructuring and two fund reallocations: ï July 2, 2015: A level 2 restructuring authorized AF to: scale up each component of the original PDOs (dropping two fulfilled activities, scaling up targets, adding a new objective and new activities) and extend the original closing date by three years from December 31, 2015 to December 31, 2018\. The AF also provided US$2\.75 million to finance Mozambiqueâs participation in the regional ACE project for the Center of Excellence of Oil and Gas in the Eduardo Mondlane University\. ï June 25, 2016: A funds reallocation between disbursement categories took place: SDR 1,900,000 (US$2\.75 million equivalent) were cancelled from the HEST project and transferred to the ACE project\. ï March 19, 2019: Another funds reallocation between disbursement categories was authorized\. Page 3 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) The project closed on December 31, 2018\. 3\. Relevance of Objectives Rationale The objectives were relevant at appraisal\. In 2010, Mozambique was undergoing an unprecedented swell of its higher education system; however, constraints remained\. The number of quality graduates (notably from STEM areas) was still insufficient to fully support the countryâs economic growth\. A lack of funds for research and other operational areas hindered the engagement of research institutions in meaningful research (PAD, para 28)\. The limited capacity (in some technical areas and the TVET curriculum) of teachers from intermediate-level education and TVET affected the governmentâs ability to geographically enlarge the enrollment of more distance learners, especially of females\. The government also faced the need to assure the TVET skills curriculumâs harmonization with other HEIs and employment market requirements\. The projectâs objectives â of enlarging the numbers of quality graduates (from HEI and the TVET), producing more robust and relevant research products for strategic sectors, and having a TVET system creating a labor force with market-relevant skills â were relevant to the 10-year Strategic Plan for Higher Education approved in 2000, and to the Education Strategy (PEE 2012-2016)\. The HEST PDOs were also consistent with the Poverty Reduction Strategic Plan (adopted in 2000), which sought to have a better educated and skilled work force entering the labor market each year\. The projectâs emphasis on boosting distance learning was also aligned with the governmentâs efforts to transform Mozambique into a more technology-driven and knowledge-based modern industrial country (ICR, para 22)\. The project was also relevant to Bank priorities\. At appraisal, the PDOs reflected priorities of Pillar 2 of the World Bank 2008-2010 Country Partnership Strategy (CPS), which was to expand the skills, technologies and knowledge in key economic growth areas\. In the same manner, the HEST targeted also the expansion of technologies and the number of undergraduates and graduates with skills and knowledge in science, technology and engineering\. Similarly, the HEST was aligned with the 2011-2015 CPS (endorsed by the Board on February 8, 2012), in particular with Pillar 1, which aimed at supporting a better educated and skilled workforce\. That goal was also a priority of the HEST\. After appraisal, the PDOs remained relevant for supporting the governmentâs Higher Education Strategic Plan (PEES 2012-2020), and continued to be linked to the Bankâs Country Partnership Framework at closing (2017-2021), under which Area 2 focuses on investing in strengthening the human capital skills base\. In particular, the HEST supported activities for the development of a national policy and regulatory framework for higher education, which included the design of a 2012-2020 strategic plan\. Rating Relevance TBL Rating High Page 4 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) 4\. Achievement of Objectives (Efficacy) EFFICACY_TBL OBJECTIVE 1 Objective Increase the number of graduates at the undergraduate and graduate levels Rationale The projectâs theory of change presupposed that the increased number of undergraduate and graduate students was to be supported by the projectâs Equity and Competitive Scholarships Program, via two funds, namely the Institutional Development Fund (IDF) and the national research fund (FNI)\. Outputs: increased number of scholarships granted to undergraduates and graduate students ï 2,110 needy students received scholarships to pursue a first degree at a Mozambique HEI, surpassing the original target of 1,900\. About 34\.6 percent of the scholarships were given to women\. The project developed and implemented targeting mechanisms to assess scholarship eligibility of students based on their social and economic circumstances\. ï 345 scholarships were awarded to students in the 3rd and 4th years of STEM courses at public and private HEIs, exceeding the original target of 340\. ï 146 masterâs graduates from post-graduate courses were supported by the Institutional Development Fund (IDF), of which 133 were in sciences and agriculture and 22 in education; and 176 master's students, 45 PhD students, and 1 postdoctoral student graduated under the scholarships program\. No targets were provided\. ï A loan scheme option was implemented as an alternative scholarship financing modality\. ï Standardization and verification mechanisms for the selection of scholarship recipients were enhanced\. ï 21 internships of medical doctors outside the country in areas that were lacking expertise in the country were supported\. Outcomes ï 19,197 students (8,995 females and 10,202 males) graduated from HEIs, surpassing the revised target of 14,700 graduates (4,998 females and 9,702 males)\. The original target was 10,000 graduates (4,000 females and 6,000 males)\. ï 605 masterâs degree students graduated from areas relevant to economic growth, i\.e\., math, science, engineering, and agriculture programs\. This exceeded the revised target of 340 graduates (original target of 40 graduates)\. Page 5 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) ï The number of male master's degree graduates increased from 17 in 2010 to 407 in 2018, and female masterâs degree graduates increased from 17 to 198, both exceeding the revised targets of 221 and 119 respectively (original targets: total 40 graduates, of which female 20 and male 20)\. The evidence shows that the number of graduates increased from both the undergraduate and graduate levels at HEIs (especially masterâs degree students graduating in math, science, engineering, and agriculture) and from the TVET programs\. Rating Substantial OBJECTIVE 2 Objective Increase the quality of graduates at the undergraduate and graduate levels Rationale The theory of change assumed that the rise in quality of HEI graduates was to result from: (i) operationalization of the accreditation body, the CNAQ, and (ii) the design of the National Qualification Framework for Higher Education assuring the basic regulatory structure for HEI institutions (ICR, para 25)\. Outputs ï The CNAQ was established and became operational in 2017 (a year before conclusion of the project)\. ï The CNAQ accredited 97 courses/programs, surpassing the revised target of 45 programs academic courses/programs (original target 20)\. CNAQ also provided the enabling environment for the adoption of quality assurance in major institutions\. ï 9,432 HEI graduates (49% of the 19,197) were from newly accredited HEIs programs\. Prior to the project, the quality of HEI programs was not assessed or measured\. ï By September 2019, 61% of university graduates from the 2017-2018 academic year had found employment, and of these, 40% had found work immediately on completing their studies (Survey on Education, Employment and Transition by University Graduates, in the Study on "Inclusive Growth in Mozambique, Scaling up Research and Transition by University Graduates\.") ï The higher education and science and technology regulatory frameworks were revised and led to the design of the 2014 National Higher Education Qualifications Framework in agreement with changes in the Law of Higher Education\. Outcomes ï In principle, the quality of studentsâ education was raised with CNAQ applying the accreditation system of standards and vouching for the quality-trained graduates\. Page 6 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) ï However, the project's results framework was not designed to offer data on whether the new system and standards actually translated into the outcome of enhanced quality of graduates\. The absence of students' exam scores or placements prevents measurement of a rise in the number of students who graduated from programs with enhanced quality\. Due to absence of convincing outcome data on the quality of graduates, achievement of this objective is rated Modest\. Rating Modest OBJECTIVE 3 Objective Strengthen the national research capacities to produce research outputs of relevance to the country's strategic economic sectors Rationale The theory of change for this objective was based on the premise that a larger number of funded research funded projects would build research groups and outputs of national excellence and relevance\. Change was to happen with support for the national research fund (FNI) to finance researchers from HEIs and research institutions inside and outside the capital, young researchers, and research partnerships with industry\. The premise for change was also grounded on the provision of capacity development to consolidate research findings and disseminate results (ICR, para 28)\. Outputs ï 88 research institutes received funding from the FNI, exceeding the revised target of 70 (original target was 25)\. The FNI became a fully institutionalized provider of research funding\. ï 215 proposals were funded by the FNI (no target was provided)\. ï 176 sub-projects supported public and private HEIs to improve learning conditions and teaching and to support research, and the four of the research sub-projects were in partnerships with organizations or companies (reaching the target of four projects)\. ï 64 IDF-supported proposals to improve teaching and learning were approved, exceeding the revised target of 42 (original target of 31) proposals\. ï 275 reports and research papers (citable and non-citable, out of 1,060 submitted) were published in domestic and international journals, surpassing the maintained original target of 220\. ï 6 higher education statistical yearbooks and 3 publications with regular data on STI indicators were published, meeting the revised target (original target of 3 yearbooks)\. Page 7 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) Outcomes ï The ICR (para 29) reports that 75 percent of research projects financed under this operation fully met their intended outcomes (and that an additional 11 percent of the research projects achieved a majority of their intended outcomes), thus meeting the target of 75 percent of research projects achieving their intended outcomes\. Although the ICR explains that "this was validated during joint field visits that included the technical evaluators of the proposals and the FNI team" and includes (in Annex 7, Table 9) a list of some of the research projects and their achievements, the information provided on the validation's coverage and methodology (as well as on the underlying reporting of achievements of the research projects) is insufficient to support a conclusion that the observations about these achievements are reasonably reliable and accurate\. This lack of sufficient information is considered a moderate shortcoming in achievement of this objective\. ï Evidence from surveys administered to the Mozambique Research and Education Network (MoReNet) in 2016 and 2017 indicated that 75 percent of the beneficiaries felt that the project's investments reflected their needs\. This achievement is below the maintained original target of 85 percent of survey participants offering that response\. Rating Substantial OBJECTIVE 4 Objective There was no fourth objective under the original project development objective statement\. Rationale There was no fourth objective under the original project development objective statement\. Rating Not Rated/Not Applicable OBJECTIVE 4 REVISION 1 Revised Objective Strengthening the institutional framework for TVET Revised Rationale The theory of change assumed that the development of a qualification system that linked medium-level education to TVET tertiary education would reasonably contribute to strengthening the TVET institutional framework\. Such reinforcement was presumed to stem from support to the Executive Committee for Professional Education Reform (COREP) and funding from the FNI to TVET institutions, teachersâ learning, and COREP managers' capacity building\. The expectation was that scholarships for teachers would enhance Page 8 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) their technical knowledge and abilities to implement a new TVET competency-based curriculum (CBT)\. In addition, the establishment of the first-time technical committees was at the basis of the expected actualization of technical fields in the TVET\. Outputs ï After the Manica Provincial Distance Learning Centre (CPEDM) was inaugurated on March 28, 2017 in the provincial capital, Chimoio, 3,075 students of higher education (particularly those that became teachers in secondary and primary schools), intermediate-level students originally without access to HEI conventional classrooms, and teachers enrolled in undergraduate courses\. ï 116 scholarships were granted to TVET teachers who furthered their training in technical subjects, exceeding the maintained original target of 40 scholarships\. ï 1,093 teachers received training on the new CBT, surpassing the maintained original target of 200\. Based on external verifications, over 80% of teachers apply the new teaching methodology\. The teachers with upgraded training contributed to an observed increase in 2018 in the students' pass rate of 73\.3 percent compared to 67\.9 percent in 2014\. ï 66 TVET managers were trained on decentralized management institutions (no target was provided)\. ï 20 Sectorial Technical Committees were established (no target was provided)\. ï 34 TVET institutions were accredited and provided the CBTs\. 11 projects were funded to develop vocational education institutions that implement the new CBT (no target was provided)\. ï 35 new TVET qualifications were developed\. Qualifications of eight higher education fields were updated based on the revised system: health sciences (medicine); engineering (undergraduate degree in civil engineering, computer engineering and telecommunications, electrical engineering, chemical engineering); law (degree in law); education (teacher education); and management (degree in accounting and auditing)\. Outcomes ï A qualification system was put in place connecting medium-level TVET with tertiary education\. The TVET and the HEI qualification systems were synchronized at project completion, which in itself is evidence of enhancement of the TVETâs institutional framework\. ï Two tracer studies to students provided further evidence of achievement of this outcome: students not only indicated that the new competency-based curriculum (CBT) used in TVET institutions (supported by the project) was useful, but also that they prefer the CBT compared to the classical system, finding it more challenging and more uniformly accepted and recognized by employers (ICR, paras 33 and 34)\. Revised Rating Substantial Page 9 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) OVERALL EFF TBL OBJ_TBL OVERALL EFFICACY Rationale Overall efficacy is rated Substantial under both the original and revised objectives\. The majority of targets of outputs and outcomes were met or surpassed, and there is evidence that project interventions contributed to observable results\. Among these, the project delivered a more than anticipated number of undergraduate and graduate students, the intended number of research publications with relevance for economic growth and supporting policy formulation, and a TVET-HEI synchronized system, both producing a larger number of graduates and many from enhanced programs\. With respect to quality of education, although there is not concrete evidence of achieved outcomes, the CNAQ introduced quality assurance mechanisms whose impetus is likely to sustain the process of upgrading quality enhancement in major HEIs\. Overall Efficacy Rating Substantial 5\. Efficiency Cost-effectiveness Cost-benefit analyses based on a human capital approach were conducted at appraisal and completion by the ICR\. At the basis of the approach is the assumption that the benefits of more years of education are higher productivity and higher future labor market earnings among graduates\. The project also took into account the experience of prior Bank-financed higher education projects in Mozambique and other countries\. Ex-ante analysis in the PAD considered as benefit the incremental salary, estimated as the difference between the salary of a worker with a higher degree and the salary of a worker with a secondary education degree (both in public service careers)\. Other social benefits (i\.e\., increased tax revenue) were not included\. Cost estimates included: (a) costs of the intervention, (b) the social unit costs for undergraduate and postgraduate students, which includes the direct cost of schooling (registration and tuition) and other costs accrued by society (e\.g\. donation to universities), and (c) the opportunity cost of schooling\. An estimated annual social unit cost of US$3,479 per student was used (PAD, para 260)\. The ex-post analysis in the ICR assessed direct contributions of the project in supporting the creation of a larger number of graduates\. Project costs included the investment implementation cost of the three components\. To assess scholarships, the estimated costs per student were taken from the UIS-UNESCO database, which corresponded to US$878 per student in tertiary education in 2013\. According to the ICR (para 4), âbenefits and costs of Components A and B were analyzed together, as these were assumed to be multi-level interventions to strengthen the TVET and higher education system as a whole\. Finally, the impact of Component C, related to the higher education and postgraduate scholarships, was estimated\." Costs and benefits were estimated using the actual number of students observed in TVET and HEIs, compared to a counterfactual scenario, where numbers were estimated in the case of the absence of the project\. The project yielded an internal rate of return (IRR) of 12\.1 percent, with a Net Present Value (NPV) of US$4,223 million\. The IRR was in line with the IRR Page 10 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) estimated during the projectâs appraisal (11\.5 percent)\. Best practices and results from other recent projects supporting the development of TVET, higher education, or research were also used for comparison\. Assessment by this review: The human capital approach, the estimated costs per student from UIS-UNESCO and the Internal Rate of Return of 11\.5% used for economic analysis (taken from prior World Bank projects) are reasonable parameters to ex-ante determine the opportunity cost of capital invested in strengthening tertiary education and boosting the numbers of undergraduates and graduates\. Similarly, findings from studies of scholarship impacts on student enrollment are a reasonable basis to establish a comparison of enrollment with intervention versus counterfactual scenarios to estimate cost and benefits among low-income students\. Implementation efficiency The quality of data from regular monitoring enabled accomplishment of milestones, scaling-up/expanding the project's scope, and timely delivery of outputs\. There were initial delays by the FNI (due to a slow process for opening bank accounts to receive money), and later, in 2014, by the CNAQ (due to changes in CNAQ management and longer-than-estimated time for HEIs to complete accreditation self-evaluations)\. Nevertheless, by 2013, the mid-term review found that outcome targets were going to be achieved prior to original closing date\. In 2018, all implemented activities were completed and targets for all indicators were met or exceeded (ICR, para 37)\. At closure, all allocated project financing was completely disbursed and all planned activities executed\. Assessment by this Review: The overall efficiency of the project is rated Substantial, as positive impacts (mainly increased graduation rate, enhanced scholarship mechanisms, a newly established CNAQ that accredited the quality of 97 programs, and a synchronized qualifications system of secondary education institutions with TVET) yielded economic returns (12\.10%) higher than the estimated cost of capital (11\.5%)\. The project was also diligent in its management of project funds\. Efficiency Rating Substantial a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) Coverage/Scope (%) 0 Appraisal ï¼ 11\.50 ï¾ Not Applicable 0 ICR Estimate ï¼ 12\.10 ï¾ Not Applicable Refers to percent of total project cost for which ERR/FRR was calculated\. Page 11 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) 6\. Outcome Relevance of the objectives is rated Substantial, as the three PDOs continue to be consistent with the development priorities of the Bank and the Government of Mozambique\. As noted in section 4 above, the project performed with seemingly substantial efficacy, generating a larger number of graduates from undergraduate and graduate program than planned, and also operationalizing the CNAQ (although the theory of change and the ICR did not provide data to verify improved quality of graduates)\. The project was also effective in enhancing Mozambiqueâs research capacity and dissemination of research products, and it achieved the synchronization of TVET and secondary education frameworks with HEI programs\. In the process, the TVET system was reinforced\. Efficiency is rated substantial considering that, despite a few implementation inefficiencies, target levels were met or exceeded, and that the project yielded greater-than-anticipated value for money without budget overruns\. However, moderate shortcomings were noted in achievement of some of the objectives/outcomes -- in particular, related to assessment of the quality of graduates at the undergraduate and graduate levels and assessment of achievement of intended outcomes by research projects financed\. The substantial relevance, efficacy, and efficiency, along with moderate shortcomings in achievement of two of the objectives/outcomes used to assess overall efficacy, are consistent with an Outcome rating of Moderately Satisfactory\. a\. Outcome Rating Moderately Satisfactory 7\. Risk to Development Outcome The increased flow of quality students was supported with a scholarship program and the creation of the quality assurance body\. Post-project, the sustainability of this development outcome is potentially at risk due to Mozambiqueâs public spending constraints since 2016\. Cuts in tertiary education budget allocations were not originally presumed\. Without scholarships, the deficit of graduates is likely to persist, and the limited budget may hamper the consolidation of the CNAQ and of the ANEP\. In addition, CNAQ may be underequipped to handle the increased demand for accreditation created by the project\. However, quality assurance frameworks and standards in STEM and other industry-relevant areas, as well as mechanisms to develop research, have been mainstreamed and should be sustained\. The continuation of private sector financing is another factor affecting sustainability; the project mobilized private sector financing in joint research and technology transfer activities (FNI), IDF loans to private institutions, and partnerships with the private sector for income generation (ICR, para 49)\. Going forward, this Review notes that without the Bank and private sector interventions, the sustainability of the PDO may be substantially compromised\. Acknowledging this, the Bank is preparing a new project focusing on HEST sub-sectors, i\.e\., training, funding and scholarships, TVET support, and cementing the institutionalization of the ANEP (ICR, para 75)\. 8\. Assessment of Bank Performance Page 12 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) a\. Quality-at-Entry Data on private and public returns to education studies, as well as economic, sector, cost-benefit and financial analyses, and best practices (PAD, paras 242-247) formed the basis for the development of the projectâs theory of change\. The team aligned the theory of change with the country's Higher Education Plan and Bank priorities as outlined in the CPS at appraisal\. Targets for the increase in quantity and quality of undergraduate and graduate students, strengthened research, scholarship awards, and funding mechanisms, as well as TVET frameworks, were set according to Mozambique's Higher Education Plan and the Bank's CPS\. According to the ICR (para 55), the monitoring plan was suitable for the participating institutions and project units to carry out\. However, an important shortcoming to quality at entry was that the projectâs M&E design lacked indicators that would adequately measure the extent to which higher education institutions âraised the quality of graduates,â which is a notable absence given this goal was part of the PDO\. Although the M&E design made provisions to measure the number of higher education institutions with accredited academic programs, apparently no provision was made to provide a metric of studentsâ performance (for example, demonstrating enhanced knowledge of specific subjects or enhanced skills for specific jobs), or to define what share of a cohort would be considered âa high number of graduates\.â Without these parameters, it would not be possible to make a valid judgment of whether there was an increase in the number of high performing or âquality,â graduates\. Except for this lack of specification about the number of students graduating from programs with enhanced quality, this review considers that the PDO statement was mostly well formulated and outcome-oriented\. Other than the caveats and shortcomings noted above, many indicators were measurable and fit for tracking progress towards milestones as outlined in the results chain\. However, there appear to have been opportunities for improvement in defining the methods for assessing and validating achievements of research projects\. The preparation team identified risks congruously with the current situation, incorporated features from other Bank-supported higher education projects to mitigate those risks, and included relevant technical experts and Bank peer reviewers to assess the project's expected economic returns\. Of particular relevance was that the design was calibrated with the Bank's know-how from the first higher education project in Mozambique (which focused on the quality of graduates and researchers), and it also prioritized gender and regional equality\. Overall, project preparation appears to have assessed sustainability challenges; however, it missed anticipating potential post-project cuts in government allocations to tertiary education linked to the entry in office of a newly-elected administration\. Such an event did not receive consideration as a potential deterrent for outcome sustainability\. Quality-at-Entry Rating Moderately Satisfactory b\. Quality of supervision Throughout the life of the project, the bi-annual Implementation Status and Results Reports rating on implementation supervision were always either satisfactory (early years of the project) or moderately satisfactory\. Between November 2011 and June 2014, and again in June 2015 and in June 2018, HEST Page 13 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) implementation performance was rated moderately satisfactory, mostly due to challenges experienced by government counterparts in finding staff for the involved implementing agencies\. The Bank showed responsiveness in supporting the AF, and skillful management of the project through challenging macroeconomic conditions resulting from external shocks, e\.g\., the global drop in commodity prices, weaker export revenues, devaluation of the metical against the dollar, and inflation, to cite a few (ICR, para 61)\. The Bank team closely coordinated with MEC, MTC, and ES-COREP/ANEP, reported on financial management and procurement progress, and worked with the project management unit team to build their capacity in these areas\. Bank experts also supported various implementation units\. In addition, experts participated in review panels for research proposals and the award of research grants (ICR, para 73)\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Moderately Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The M&E system design made it possible to track progress towards most of the PDOs\. The system enabled the quantification of the increase in numbers of graduated students, recipients of scholarships and grants, participants in training programs disaggregated for TVET and HEIs, and the delivery of quality assurance outputs, e\.g\., the regulation for the inspection of HEIs and regulations for the procedures for licensing and functioning of HEIs\. Similarly, the M&E system verified that the synchronization of a qualification system between medium-level TVET and tertiary education took place\. Concerning improvement in quality of graduates, the ICR (para 9) reported that the objective was operationalized by the institutionalization of accreditation programs and the certifications of HEI programs by the QNAC\. However, the M&E system lacked the ability to determine change, i\.e\., the change in quality of technical knowledge of students and TVET teachers who received training, and of students who graduated before CNAQ began its quality assurance functions\. A measure for learning outcomes is unavailable, making it problematic to assess outcomes from knowledge-enhancement activities and the overall contribution of the project to improved quality of graduates\. Responsibility for data collection initially sat with the National Directorate of Higher Education (DNES) in MEC and the National Directorate of Planning, Statistics, and Cooperation in MCT\. After government reorganization, it was transferred to ES-COREP/ANEP and DNES in the Ministry of Science and Technology, Higher, Professional and Technical Education (MCTESP)\. b\. M&E Implementation M&E activities included systematic routine monitoring, a mid-term review, and tracer surveys\. Overall, M&E data was available to determine achievement of milestones, identifying implementation successes Page 14 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) or the need for corrective strategies to assure timely progress\. For instance, the ICR indicated that the 2014 Implementation Supervision and Results Report (ISR) identified delays in CNAQÂ´s accreditation process (due to changes in its management staff and the underestimation of the time needed for HEIs to complete their self-evaluations)\. As a result, CNAQ was pulled back on track and was institutionalized before closure as the active education quality assurance player\. In another example, the mid-term revealed the potential early achievement of targets, and on this basis the AF in 2015 took place\. Tracer surveys showed the usefulness of the new CBT curriculum for TVET students and of the IDF grants\. The ICR reported that field visits and assessments validated the finding that 75% of research projects had fully met their intended outcomes, although detail on the method and coverage of these validations was not provided\. In addition, the project supported the design, development, and completion of a higher education management system, and the development of Science, Technology and Innovation indicators, which now inform on science and technology needs in Mozambique\. A project-supported digitalized management and monitoring system helped the National Scholarship Institute in the selection of student scholarship recipients\. c\. M&E Utilization M&E findings were effectively used to monitor the status of implementation and progress on outcome indicators\. Bi-annual M&E findings were shared with the MEC, MTC, MCTESTP, ES-COREP and ANEP, as well as with the project administrator\. The 2015 mid-term reviewÂ´s finding of the early reaching of targets was used by the government to ask for the introduction of a third PDO and the upscaling of targets\. These data also were used by the Bank to approve the additional funds to restructure the project accordingly\. Project-financed tracer studies and post-intervention analyses were used to corroborate evidence of impact, and to support the introduction of a functioning Board of Administration to institutionalize the FNI before closure\. The project also used the FNI management and fiduciary monitoring system to ensure that funds were used for the intended research purposes\. M&E Quality Rating Substantial 10\. Other Issues a\. Safeguards The project was rated environmental assessment Category "B" (partial assessment), and OP/BP 4\.01 "Environment Assessment" was triggered due to the construction of one distance learning resource center\. Throughout the project, safeguards were monitored and were consistently rated Satisfactory in ISRs (ICR, para 69)\. b\. Fiduciary Compliance Page 15 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) Evidence reported by the ICR (para 70) supported the observation that the project made proper budget execution and fund/grant disbursements as stated in the Financial Agreements\. Financial management performance was rated satisfactory in ISRs throughout the life of the project for all relevant implementation agencies, i\.e\., MCT and MEC (original project design) and MCTESTP and ES- COREP (AF design)\. Ex-ante, the PAD stated that the Bank team carried out a financial management capacity assessment\. Workshops were conducted by Bank financial management specialists after the Bank introduced its new Client Connection\. All of the implementation agencies accomplished the financial covenants of the Financing Agreements, including agencies disbursing scholarships and research grants\. Interim financial reports were submitted to the World Bank in a timely manner, and ES-COREP budget execution was consistently rated satisfactory\. Auditorsâ opinions throughout the project were unqualified (clean)\. The final audit report took place on June 30, 2019\. Procurement was consistently rated satisfactory in ISRs except for one assessment of MEC performance rated moderately satisfactory due to recruitment delays of a procurement specialist\. The Bank team ensured compliance with procurement guidelines through training of procurement staff in implementing agencies and sub-project teams\. No deviations from the Bankâs procurement guidelines were reported\. HEST migration to the Bankâs Systematic Tracking of Exchanges in Procurement (STEP) took place in June 2017, with procurement activities being included in the STEP platform\. c\. Unintended impacts (Positive or Negative) None reported\. d\. Other --- 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome rating of Moderately Satisfactory, based on substantial relevance, efficacy, and efficiency, along with moderate shortcomings in achievement of some of the objectives/outcomes used in the Outcome Satisfactory Moderately Satisfactory assessment of overall efficacy (in particular, related to assessment of the quality of graduates at the undergraduate and graduate levels and assessment/validation of the achievement of intended Page 16 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) outcomes by research projects financed)\. Quality at Entry is rated Moderately Satisfactory because the M&E framework is Bank Performance Satisfactory Moderately Satisfactory considered to have been inadequate to measure achievement of all the objectives\. Quality of M&E Substantial Substantial Quality of ICR --- Substantial 12\. Lessons The ICR (paras 77 to 81) offered several useful lessons, including the following adapted by IEG: 1\. Establishing a National Qualification Framework requires strong commitment and ownership from all stakeholders\. An inter-ministerial governmental structure can ensure commitment, framework ownership, and synchronization of qualifications of tertiary education institutions and TVET\. In this case, the incorporation of TVET as part of the MCTESTP, along with the participation of area-specific experts from HEIs, helped ease the transition of students from TVET institutions to HEIs as both systems became synchronized\. 2\. Effective accreditation mechanisms are essential to ensuring quality of higher education programs and institutions\. In the case of the CNAQ, the use of digital platforms to support data management introduced more flexibility to the accreditation process for courses and programs\. External evaluation of the CNAQ's performance helped the government gain insight on how to improve HEI's own processes and procedures\. 3\. Anticipating the capacity needs for an accreditation body to meet a potential post-project increase in the demand for HEI accreditation enables newly created bodies, such as the CNAQ, to solidify after closure\. This was a key point in the case of the HSET, as compulsory accreditation and a pre-accreditation for all new HEI programs became a requirement\. The HEST did not take this factor into account, and consequently the QNAC faced challenges in its ability to meet increased demand for its accreditation services, putting the sustainability of the outcome at risk\. 4\. The following considerations can support the enhancement of research capacity and its relevance: ï Early development of guidelines with clear selection and award criteria are key for research grants implementation\. ï Training on proposal writing and presentation as well as feedback to researchers can accelerate readiness and quality of research proposals\. ï Site visits to research groups by area-specific specialists, followed by capacity building in fiduciary matters, can help ensure compliance with research fund procedures\. Page 17 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) ï Partnerships and knowledge networks with international institutions can enhance research project funding, harmonization of methodologies for data collection, and strengthening of higher education quality assurance mechanisms\. 5\. Scholarships for equity and competitiveness programs can benefit from: ï M&E processes with beneficiaries and students involved can improve the quality and relevance of information\. ï Clear eligibility and selection criteria of scholarship candidates help achieve objectives\. ï A shift from a demand-driven model to integrated supply-side scholarship management is eased when clear planning and monitoring mechanisms and procedures are applied to scholarship holders\. Similarly, the shift is facilitated when the rights and duties of scholarship holders, host institutions, and scholarship granting institutions are clearly defined in the scholarshipâs handbook\. 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR provided thorough information on the project's scope and implementation\. Overall analyses and descriptions were presented with candor\. Evidence from the M&E system and post-training surveys formed the basis of the ICRâs logical explanation of results, supported by analyses of data referenced in tables in the main text and annexes\. The lessons section provided coherent insights on relevant factors to assure effectiveness\. However, the ICR had room for added clarity on the analysis of results achieved\. For instance, the ICR did not discuss the framing of the first objective, which encapsulated multiple dimensions of change in one phrase (such as quantity, quality, and two levels of education) and how this posed challenges for assessing achievement of each individual aspect of the PDO\. In particular, the inclusion in the objective of two distinct elements (quality and quantity) was not acknowledged\. The narrative of achievement related to the research outcomes objective contained shortcomings in terms of its fluidity and organization\. a\. Quality of ICR Rating Substantial Page 18 of 19 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review MZ Higher Educ Science & Techn\. (FY10) (P111592) Page 19 of 19	REVIEW
P010457	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 23855 IMPLEMENTATION COMPLETION REPORT (IDA-26300) ON A CREDIT IN THE AMOUNT OF SDR 62\.7 MILLION (US$88\.6 MILLION EQUIVALENT) TO THE GOVERNMENT OF INDIA FOR A FAMILY WELFARE (ASSAM, RAJASTHAN AND KARNATAKA) PROJECT June 21, 2002 HUMAN DEVELOPMENT SECTOR UNIT SOUTH ASIA REGION This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective) Currency Unit = Rupee Rupee 1\.00 = US$ 0\.0204 US$ 1\.00 = Rupee 48\.95 FISCAL YEAR April - March 31 ABBREVIATIONS AND ACRONYMS ANM Auxiliary Nurse-Midwife CBR Crude Birth Rate CDR Crude Death Rate CHC Community Health Centre CPR Contraceptive Prevalence Rate CVs Community Volunteers EFC Expenditure and Finance Committee (GOD FAQ Frenquently Asked Questions FRU First Referral Unit FW Family Welfare GOI Govemment of India HFWTC Health and Family Welfare Training Centre HMIS Health Management Information System ICB Intemational Competitive Bidding IDA Intemational Development Association IEC Information, Education, Communication IMR Infant Mortality Rate IPP India Population Project (I through IX) LCB Local Competitive Bidding LHV Lady Health Visitor MCH Matemal and Child Health (care, services, program) MIS Management Information System MTR Mid-term Review MTFP Mid-term Fiscal Plan NGO Non-Govenmmental Organization PDS Public Distribution System PHC Primary Health Centre PHN Public Health Nurse PMIS Project Management Information System PRIM Panchayat Raj Institution Members RCH Reproductive and Child Health Project SCHAC Sub-Centre Health Advisory Committee SMO Senior Medical Officer TBA Traditional Birth Attendant TFR Total Fertility Rate Vice President: Meiko Nishimizu Country Director: Edwin R\. Lim Sector Director: Charles C\. Griffin Task Teamn Leader Sadia Afroze Chowdhury FOR OFFICIAL USE ONLY INDIA POPULATION IX CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 1 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 9 6\. Sustainability 10 7\. Bank and Borrower Performance 11 8\. Lessons Learned 14 9\. Partner Comments 16 10\. Additional Information 18 Annex 1\. Key Performance Indicators/Log Frame Matrix 19 Annex 2\. Project Costs and Financing 24 Annex 3\. Economic Costs and Benefits 28 Annex 4\. Bank Inputs 29 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 32 Annex 6\. Ratings of Bank and Borrower Performance 33 Annex 7\. List of Supporting Documents 34 Annex 8\. Government's Contribution to ICR 35 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not be otherwise disclosed without World Bank authorization\. Project ID: P010457 Project Name: Family Welfare Project Team Leader: Sadia Afroze Chowdhury TL Unit\. SASHD ICR Type: Core ICR Report Date: June 21, 2002 1\. Project Data Name: Family Welfare Project L/C/TF Number: IDA-26300 Country/Department: INDIA Region: South Asia Regional Office Sector/subsector: HC - Primary Health, Including Reproductive Health, Child Health KEY DATES Original Revised/Actual PCD: 08/31/1992 Effective: 09/22/1994 09/20/1994 Appraisal: 12/15/1993 MTR: 12/18/1998 12/18/1998 Approval: 06/16/1994 Closing: 12/31/2001 12/31/2001 Borrower/lmplementing Agency: GOI/TBD Other Partners: STAFF Current At Appraisal Vice President Mieko Nishimizu Joseph D\. Wood Country Manager: Edwin Lim Heinz Vergin Sector Manager: Anabela Abreu Richard Lee Skolnik Team Leader at ICR: Sadia Afroze Chowdhury Althea Hill ICR Primary Author: Laura Kiang; Tazim Mawji 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M-Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: U Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The project had two original objectives as stated in the SAR: (1) To strengthen and improve the functioning of the Family Welfare programs in Assam, Rajasthan and Karnataka; and (2) To lower the current levels of fertility, and maternal and childhood mortality in the three states\. The project's goal was to provide further support to the Govemment of India (GOI), national Family Welfare Program in three focus states (Assamn, Karnataka, and Rajasthan)\. The objectives of the project were realistic and consistent with the needs in the Farnily Welfare sector, as detailed in the Country Assistance Strategy (CAS), and the national and state Action Plans for revamping the Family Welfare Program\. The implementation arrangements were consistent with the capacities of each state, however, during the project preparation process, it was noted that the risks of implementation varied across the states\. Many of the approaches and strategies to be implemented by the project such as those related to the outreach and community linkage schemes, and logistics component were new, innovative and untested in the Family Welfare Program\. In addition, in Assam, there was a lingering security concern, the control of which was beyond the scope of the project\. However, the objectives were clear to the GOI and the implementing states and commitments regarding implementation of the action plan were obtained from them during appraisal and negotiations\. Both childhood mortality and fertility rates in India had fallen significantly during the 1980s\. The contraceptive prevalence rate had risen to more than 40% and immunization coverage had reached 85%\. Despite these achievements, the national Family Welfare Program continued to suffer from long-standing implementation problems such as inadequate financing, weak and over centralized management, inadequate supervision, low quality training, and inadequate attention to activities for demand generation, outreach and community linkages\. If not addressed, these threatened further progress in reducing fertility, and matemal and childhood mortality\. To address these issues, the GOI launched efforts to restructure the Family Welfare Program through its "Action Plan for Revamping the Family Welfare Program in India"\. This plan included a central strategy for improving the performance and impact of the entire program, as well as state plans reflecting the central strategy\. Major assistance for putting the strategy into operation was support by IDA including the 4th, 5th, 6th and 7th Population Projects, the Family Welfare (Urban Slums) Project, and the national Child Survival and Safe Motherhood (CSSM) Project\. This project provided support to the Action Plan in Assam, Karnataka and Rajasthan and increased outreach and coverage to the underserved and rural communities in the entire state of Assam, and the 10 and 13 most underserved districts in Rajasthan and Kamataka respectively\. It also helped to develop the state's physical infrastructure and facilities to provide improved quality of health and family welfare services to mostly poor beneficiaries\. 3\.2 Revised Objective: No changes were made to the original objectives\. 3\.3 Original Components: The following lists the components as originally stated in the SAR: 1) Strengthening Facilities for Delivery of Family Welfare Services (US$55\.2 million) through (a) extension and upgrading of Family Welfare infrastructure in underserved areas including rehabilitation of existing facilities, establishment of ancillary mobile clinics, transport for outreach and supervision; and (b) strengthening of outreach and commnunity linkages and participation systems using community volunteers\. -2 - 2) Improvement of Quality of Family Welfare Services (US$23\.8 million) through (a) strengthening and rationalization of training institutions and programs; (b) improvements in logistics systems for medical supplies and transport; (c) the provision adequate drugs and medical supplies; and (d) involvement of Non-governmental Organizations (NGOs) and private medical practitioners (PMPs)\. 3) Strengthening of Demand Generation Activities (US$ 11\.1 million) through (a) strengthening and rationalization of Information, Education and Communication (IEC) institutions and programs; (b) lEC training for service providers and community volunteers; (c) EEC materials production; and (d) selected IEC activities\. 4) Strengthening Family Welfare Program Management (US$9\.6 million) through (a) development of states Management Information System (MIS) and planning capabilities; (b) development and monitoring of service delivery strategies for populations with special needs; (c) an office building for the Assam Department of Family Welfare; and (d) upgrading of staffing and equipment in the Ministry of Health and Famnily Welfare (MOHFW)'s Area Projects Division\. 5) Innovative Schemes and Preparation of Future Investments (US$4\.2 million) through (a) small pilot innovative schemes to improve service delivery; and (b) preparation of proposals for Family Welfare investment in the heavily tribal and underdeveloped states of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland and Tripura in the Northeast\. 3\.4 Revised Components: The project components were revised several times over the life of the project\. There was a change in the scope of civil works being supported by the project\. Another was the diversion of funds for the Gujarat Emergency Earthquake Assistance Project\. And a third revision was the agreement at Mid Term to closely integrate the implementation of the training, EEC and community mobilization activities planned under this project with that supported through the IDA assisted Reproductive and Child Health project\. The mid-term review (MTR) identified a price escalation in civil works which was much higher than that was anticipated at project appraisal\. This was also aggravated by a slippage of the planned works from the earlier to later years\. The MTR recommended an additional provision for civil works to provide for escalation and cost over-runs to complete the number of works, and the other software activities in accordance with the project objectives\. To accommodate this, and also avoid a disproportionate increase in the category, the total number of works in the three states were reduced and the amount of the IDA credit between expenditure categories in the Schedule I form of the Development Credit Agreement (DCA) were adjusted\. The steady devaluation of the Rupee against the US Dollar during the project period (the Rupee devalued from Rs\. 33\.9 per USD at appraisal to Rs\. 48\.95 per USD at project completion), led to project savings\. After the earthquake in Gujarat in 2001, US$10\.0 million (SDR 7\.8 million equivalent) of the project savings was reallocated for the IDA supported Gujarat Emergency Earthquake Assistance Project\. Recognizing that the activities of this project and the IDA supported RCH projects were quite similar and focussed towards the same audience - the woman and child at the household level - and also the fact that management capacity at the states was limited, it was agreed, that the training, IEC, and community mobilization activities would be integrated and closely coordinated so as to orient the community to the paradigm shift from a vertical family planning concept to the integrated reproductive health and rights based approach, to avoid duplication of efforts, and, to produce a demonstrable impact on health and -3 - fertility\. The training targets were subsequently revised with the load for awareness generation training being incorporated in the RCH project, and the content of the skill development training under this project being revised to reflect the same training undertaken by the RCH project\. 3\.5 Qualitv at Entry: The project was designed before routine quality assessments at entry were initiated and so there was no formal QAG rating\. However, as the program fitted well with both the Bank and the borrower strategies, and the GOI and the participating states had given their commitments during appraisal and negotiations that the project's components were appropriate to their institutional capacities, the project's quality at entry is rated as satisfactory for the purposes of this report\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Overall, the outcome of both objectives was satisfactory\. The first objective, which was to strengthen and improve the functioning of the Family Welfare program in the three states, was satisfactory\. The project provided for an expansion in the Family Welfare service delivery system in the participating states through the construction, equipping and upgrading of 2,655 sub-centers, 125 PHCs, 433 staff quarters, 316 FRUs (with the addition of an operating theatre), 29 drug warehouses, and 46 state and district level training institutions\. Most of the planned civil works were completed as planned, except in Rajasthan where 6% of the facilities remain incomplete\. 96,739 medical and paramedical professionals were provided with in-service training to upgrade their skills\. In terms of IEC, the project provided support to the ongoing activities being implemented by the Family Welfare IEC Bureau in each state\. Although planned, due to the limited capacity in the states, efforts to develop and implement innovative initiatives for demand generation, especially through the private sector, were constrained\. The IDA supported national Reproductive and Child Health Project also started during the life of the project (1997)\. This provided support in all states for the development of management and specialized technical skills, access to services for the under-served population, and demand-generation through innovative initiatives\. Therefore, it was decided at the MTR that the efforts of the two projects would be coordinated in the three participating states, and the targets and resources (in training, IEC and social mobilization), would be combined\. This prevented duplication of efforts and provided a strengthened focus on training and IEC, especially during the last three years of the project, as well as led to a revision of outcome indicators for training and EEC in the three states\. The second objective was to lower the levels of fertility, and maternal and childhood mortality\. During the seven and a half year life of the project, all three states showed moderate to significant improvements in these indicators (see Annex 1)\. Direct attribution of the project to these outcomes is difficult as there were other simultaneous development efforts in the health and family welfare sector, as well as in education, water and sanitation, and rural development\. However, it is reasonable to infer that the improvements in the Family Welfare sector in the three states, sponsored by the project, contributed to the improvement in outcomes for fertility, contraceptive prevalence, and infant and child mortality\. 4\.2 Outputs by components: The project aimed to improve the performance of the currently weak family welfare programn in the three focus states through the strengthening of program infrastructure and support systems necessary to maximize the program coverage, accessibility and quality as well as the many innovative initiatives to - 4 - improve upon current service approaches in conformity with the action plan strategy\. This project was envisaged as a bridging operation between the series of projects designed to build family welfare infrastructure and support systems in needy states and a future program of policy based lending\. 4\.2\.1 Strengthening Facilities for Delivery of Family Welfare Services In light of the outlined risks of irnplementation, including the low capacity of the states, the progress in this civil works sub-component was commendable and is satisfactory\. Assam completed all the targeted construction, renovation and upgradation of facilities\. This included 1,316 service facilities, 54 training facilities, 163 living quarters for the staff, and 6 Central and Regional Drug Warehouses\. Rajasthan completed all of the planned works including 929 service facilities, 32 district and state level training facilities, I computer site, 27 Major and Minor Drug Warehouses, and I Drug Testing laboratory\. In Karnataka, 1,120 of the planned 1,127 service facilities and training centers were completed, and 1,760 service facilities were renovated and upgraded in place of the planned 1,652\. In addition, 2,500 Family Welfare facilities constructed through the First and Third IDA supported Population Projects, were upgraded in Karnataka with state funds, in compliance with the project covenant\. All the works, as per the revised plans of the project, have been completed and have been handed over to the district health authorities for use\. All the new facilities and a large number of existing ones were fully equipped and furnished, and provided with essential supplies ranging from daily consumables to essential instruments\. In Rajasthan, however, procurement remained incomplete mainly due to delays in decision making of the State Empowered Commnittee\. As a result, the necessary furniture and equipment and equipment for the State Institute for Health and Family Welfare in Jaipur and the Health and Family Welfare Training Center in Jodhpur could not be procured\. 88% of the facilities are being fully utilized, and the remainder are being utilized partially\. Based on an independent survey, the quality of works in Assam has been rated as good, and in Karnataka and Rajasthan, as satisfactory\. As a whole, the progress in this sub-component for awareness generation was marginally satisfactory\. The MTR in late 1998, showed that the states had made very little progress with this sub-component\. In all three states, the bulk of the effort and project investments concentrated on the hardware components\. This emphasis prevented due attention on the software components, and so the breadth of community based mobilization envisaged by this project was not fully achieved\. Assam and Rajasthan had implemented mobile clinic and health camp approaches in limited areas, through the use of boats and vans, but had not monitored the activity or assessed its output\. Karnataka had not implemented this sub component\. Therefore, it was agreed that all three states would invest special attention to enhance this strategy during the remaining project time\. This would be done by improving outreach and community linkage activities in the designated intensive action districts, establish monitoring systems and reporting regularly on progress\. The achievement discussed below is for the period between the latter part of 1998 and the end of the project in December 2001\. Moped and bicycle loan schemes to increase mobility of the outreach workers had a poor response in all states\. It was stopped in Karnataka due to failure to establish procedures to receive loan re-payments\. Rajasthan replaced the scheme with an increased travel allowance for ANMs, but utilization of this allowance was only 35%\. 5,026 mobile health camps were conducted in Rajasthan, through the public system as well as through NGOs, providing services to over 600,000 people\. In Karnataka, mobile health camps were conducted by 14 NGOs who had been contracted to provide services for the population in the remote tribal areas and poor performing districts\. This is described in detail in section 4\.2\.5\. In Assam, 4 mobile teams were created to conduct outreach health activities in two districts where two boats clinics were used to transport service providers, drugs and equipment for the camps\. - 5- Several pre-existing community based volunteer schemes were supported and taken to scale, especially in Rajasthan\. These community based schemes involved community members and eligible couples volunteering as depot holders for contraceptives and basic drugs, and to provide contraceptive information to the conmmunity\. This activity was financed in 25 districts, where 7,754 couples were trained against a target of 11,065 and 7,396 of them functioned in the field\. Due to the prevailing law and order situation in Assam, the activities under this sub-component were delayed until 1998, and the achievements were limited\. Of the planned training for 75,000 Women Health Promoters to disseminate health education information to the community, 44,967 (60%) were ultimately appointed and trained\. The End line Surveys revealed that the actual number of those who worked as volunteers was much lower\. During the course of the project, Karnataka decided that it would not pursue the planned activity of utilizing the Village Health Guides as the link volunteers in the commrunity\. This was due to the fact that the state had made this activity redundant based on its assessment of the scheme\. Instead, the state decided to train the available Anganwadi Workers (AWW), and support them to function as link workers, supplementing the work of the Auxiliary Nurse Midwives (ANMs)\. 25,000 Anganwadi Workers were trained and appointed as link workers for Family Welfare activities in the project districts\. 4\.2\.2 Improvement of Quality of Family Welfare Services The objective for the training activity was to create 48 training facilities, and train service providers, community based providers and members\. The achievement was satisfactory; the project was successful in developing a network of training infrastructure, with a total of 46 newly built or renovated institutions\. This component resulted in the construction of a new State Institute of Health and Family Welfare (SIHFW) and an Apex training institution in Rajasthan, and the extension and renovation of the SIBFWs in the other two states\. It also led to the construction and upgrading of a network of Health and Family Welfare Training Centers, District Training Centers (DTCs) and Auxiliary Nurse Midwife Training Centers (ANMTCs) in each state to facilitate in-service training to the para-medical staff for ensuring the up-to-date knowledge and skills required for better and effective service dispensation\. This ensured decentralization of training to the districts\. As mentioned earlier in section 3\.4, during the MTR, it had been decided that the training under this project would be integrated with that of the on-going RCH project\. The awareness generation training would be shifted to the RCH project and the clinical skills development training would be revised in line with the guidelines of the RCH project\. The original training target for the project was to complete training of 1,142,649 medical and paramedical staff, and community members\. The total training load of this project was revised to 229,000, and a total of 183,000 medical and paramedical staff from the sub-centres and PHCs as well as community members in the three states were trained through this project\. Therefore, about 80% of the revised training targets were achieved\. The project's performance in training is rated as satisfactory\. The End Line surveys in the three states show that the training material utilized by the states was focussed on the needs of the trainees, and the courses were structured appropriately in terms of the aim of the training sub- component and category of health personnel\. Through the project, the training curriculum has been upgraded for various categories, with increased emphasis on participatory learning methods\. Linkages have been made with clinical training sites to establish clinical skills training\. More than 80% of the health personnel working in PHCs and Sub-Centers have received training during the project period, which seems to have improved their general ability to provide services\. Another achievement of this component was the large number of community members who were trained and oriented for family welfare and public health\. This assisted in implementing the innovative schemes with community participation\. - 6 - The appointment of critical academic teaching staff in the training institutions in all three states remained unsatisfactory during the project\. Procurement of equipment was also problematic and slow, as capacity for managing procurement was weak both in Rajasthan and Kamataka\. The SIHFW in Rajasthan has been completed after a long delay due to indecision of the Department of Medical, Health and Family Welfare, on the need for this facility\. This indecision also hampered the pace of procurement\. As a result, the SIHFW and some of the district training facilities had not been fully furnished by the close of the project, and were not utilized to full capacity\. During project preparation there was a felt need to examine the whole issue of drug availability, logistics, quality and supply, as well as the development of infrastructure\. The construction and rehabilitation, as well as the equipping of the drug warehouses were successfully completed in Rajasthan and Assam\. However, the warehouses were not utilized to their full capacity due to staff shortages and incomplete implementation of the logistics management system\. The logistics support, including software, computer hardware and training, is being provided by the MOHFW with assistance from the IDA supported India Family Welfare (Urban Slums) Project\. It is anticipated that when the system is in place, an enhanced level of functioning of the drug warehouses will be achieved\. The issue of drug availability and supply is being addressed by the Reproductive and Child Health (RCH) project\. An essential drugs list has also been established by each state\. 4\.2\.3 Strengthening Demand Generation Activities From the outset, it was acknowledged that there were implementation risks, given the weak capacity of the states to plan and provide guidance for district specific IEC activities\. At the MTR, the IEC survey revealed that IEC efforts had been ad-hoc, and the first year action plans developed for each state based on the beneficiary needs assessments and a corresponding communications needs assessment during project preparation did not appear to have been utilized to support the development of the targeted IEC efforts envisaged in the project\. There had been no inputs from either Assam or Karnataka, and the capacity of the Rajasthan IEC bureau was weak\. After the MTR, the focus on this component increased and targeted state focused IEC activities were started\. Therefore, on the whole, this component is rated as unsatisfactory\. In light of the experience gained from this project, it is important to note that equal emphasis must be given to the supervision of both hardware and software project activities\. Given the project management structure in the three states, it was difficult to strengthen state IEC institutions\. In Assam, the IEC activities took place through the [EC cell in the autonomous project implementation agency, which had very tenuous links with the State Family Welfare IEC Bureau\. As a result, it was not possible to impact the capacity of the State Bureau or to mainstream IEC activities\. Even in Rajasthan and Karnataka, where the project worked with the State IEC Directorate, it was difficult to change the traditional approach of providing information into the more modem approach of communicating to achieve behavior change\. Even though it is difficult to gauge the precise impact of the investments done under this component, it is possible to enumerate several achievements in the specific state focused IEC activities\. A variety of IEC materials were developed and a range of IEC activities, such as awareness generation through high profile public events and competitions, and use of the print and electronic media, took place\. The awareness generation training of service providers and community volunteers was carried out and, as indicated earlier, this was later subsumed under the RCH project from 1999\. Karnataka was successful in contracting out IEC activities in two underserved districts to NGOs, and in several other districts to a private sector communication firm in Bangalore\. These organizations used video vans and street plays to increase awareness of health issues\. In both cases, IEC activities were conceptualized and delivered in a very effective manner\. This will continue to be supported through the Bank funded RCH project\. The - 7 - newsletter of the Kamataka Family Welfare Department has been restarted with support from this project, and the Family Welfare Department printing press strengthened\. District level NGO engagement in the project for awareness generation was significant, and is detailed in sections 4\.2\.1 and 4\.2\.5\. In Rajasthan, the IEC activities continued to be conducted solely through the IEC Bureau of the Family Welfare Directorate, with less community participation and NGO involvement than initially envisioned\. The IEC activities have been of a more traditional nature and included radio and television spots and the distribution of print material such as posters and leaflets\. In Assam, due to the law and order situation, the original emphasis on commnunity-level activities with community involvement did not transpire as planned\. In the later part of the project, the awareness generation activities took place in seven districts with the assistance of 10 NGOs\. 4\.2\.4 Strengthening Family Welfare Program Management This component has been marginally satisfactory\. Achievements include the construction and equipping of a new office building for the Family Welfare Department in Assam, as well as varying levels of fulfilLnent of the state based plans for upgrading computer facilities, installation and maintenance of systems and training of staff in line with the state based plans\. Assamn has also set up a computer unit within the Project Office for activity planning and reporting of project progress\. Karnataka upgraded the computer center of the Family Welfare Department with an additional supply of computers coupled with a new Community Needs Assessment (CNA) software platform\. They also employed a senior management consultant for support and trouble shooting and implemented a Management Information Systems (MIS) for work planning for the comrnunity needs assessment (CNA) under the RCH program\. In Rajasthan, district based computer systems were installed and 41% of the planned staff are in position\. The remaining staff will be supported by the RCH project and other on-going assistance to the national RCH program\. Though planned, the integration of the information systems and the collection and use of data for program planning purposes has not been done through the project\. It has been planned that the states will complete implementation of the HMIS through the IDA supported RCH project\. With respect to the project plan to strengthen the Area Projects Division of the MOHFW, the project upgraded the division's computer departrnent\. This upgrading will likely benefit project reporting and financial management of all projects managed by the Area Projects\. The strengthening of the Area Project Division's capacity through the addition of 5 posts was not fully realized\. Given that the resulting strengthening of the Division, especially in the area of project monitoring, would have positively affected this as, it would be important to examine and address the systemic issues that inhibited this achievement\. 4\.2\.5 Innovative Schemes and Preparation of Future Investments During project preparation this component was left quite loosely defined so that states would have the flexibility to develop activities feasible within their respective contexts and capacity\. Innovations have also been extended to the other components described under 4\.2\.1 and 4\.2\.3\. Given the limited institutional capacity of the states to implement such schemes, this component has been satisfactory\. Karnataka was able to implement several innovative schemes through partnership with the private sector- contracting of NGOs in order to provide access to services in the remote and tribal areas of the state\. It also contracted a private communication firm to implement the IEC strategy in the poor perforrning districts\. Two NGOs were contracted to provide family welfare services through 2 PHCs and 10 sub-centres in tribal areas thereby increasing access to family welfare services in remote and underserved areas to a population of approximately 50,000\. 37 tribal girls were also trained as ANMs and certified to work in the tribal areas\. The contracting of PHCs to NGOs in the tribal areas of Karnataka has been very successfil\. This has been extended by the Government of Karnataka for an additional 10 years and expanded to other poor performing districts\. -8 - Rajasthan used community members as depot holders for contraceptives as well as to provide information on basic health care\. 426,401 eligible couples received services from them in 25 districts\. In addition, 14 NGOs were funded to provide information to community members on contraception, spacing and pregnancy related care\. 376 mobile health camps were conducted in the desert districts for delivery of family welfare services\. Assain contracted 10 NGOs already working in 7 hilly and tribal districts to create greater awareness of contraception, ante natal care, institutional deliveries, and full immunization coverage\. The other component which involved the extension of support of Family Welfare services to the North Eastern states was not done through this project\. It is now being supported through the Bank assisted RCH project\. The expenditure in this component was only 30% of the amount originally budgeted, indicating that the role of NGOs in this project has not been fully utilized\. The role of NGOs in project implementation could have been enhanced with more focus on this from the implementing agencies\. 4\.2\.6 Emergency Earthquake Assistance for Reconstruction in Gujarat This component has been satisfactory\. Following the earthquake in Gujarat in 2001, funds were made available to the Gujarat Emergency Programn by internal reallocation of the proceeds of the Loans/Credits under twelve projects, one of which was this project\. For this purpose, a new project objective and a new part Z for Gujarat earthquake reconstruction and rehabilitation was added to the project description schedule of the legal agreements for this project\. To reflect these reallocation, new categories 97-100 for part Z were inserted in the disbursement schedules of the legal agreements for the existing projects in which the reallocation were made\. SDR 7\.802 million (US$10\.0 million equivalent) was reallocated from this project to the Gujaat Emergency component\. SDR 7\.51 million (US$9\.53 million equivaient) have been disbursed only under Category 97 (Civil Works) for the Housing Component No disbursement have been made against any other category\. The funds were spent on reconstruction of fully collapsed houses and repair of partially damaged houses in earthquake affected area\. 4\.3 Net Present Value/Economic rate of return: Not applicable 4\.4 Financial rate of return\. Not applicable 4\.5 Institutional development impact: The project's contribution to the development of institutional infrastructure through expansion of physical infrastructure in all three states, human resources capacity development, increased access to care especially in low performing and difficult to access districts; are detailed in earlier sections\. 5\. Major Factors Affecting Implementation and Outcome 5\. r Factors outside the control of government or implementing agency: The law and order situation in Assam, which was identified as a potential project risk delayed the implementation of the community based activities\. Overall however, Assam managed its risks so well it was able to surpass the other states in terms of implementation results\. 5\.2 Factors generally subject to government control: There were two main factors that affected implementation at the GOI level; the limited capacity of the Area Projects division of the Ministry of Health and Family Welfare to provide adequate supervision and the disconnect between the commitment to the project by the GOI and the respective states\. The Area Projects division was effective in its ability to provide oversight on financial matters; it was not however, able to provide the project states with critical on-site monitoring and the technical supervision necessary to identify -9- and address implementation issues, due to lack of adequate manpower\. The provision made under this component to hire five consultants to strengthen the division, was not utilized\. In addition, although there was a firn conunitment from the GOI to IDA for the project, the same level of commnitment was not evident at the state level, especially in Rajasthan and Karnataka\. This point is addressed further below\. 5\.3 Factors generally subject to implementing agency control: This project was part of a large centrally sponsored national Family Welfare Program\. As such, states received 90 percent of the funds as grants-in-aid from GOI and contributed 10 percent themselves\. The project interventions were designed by MOHFW after detailed consultation with states and the World Bank, and implemented by the states\. This approach was beneficial from an equity viewpoint since it provided relatively protected funds for critical interventions for the poor, which would otherwise probably not be received by the states\. The states were to ensure that these funds were protected and utilized at the appropriate time, solely for the purposes of the project\. Karnataka and Assam ensured this, however, Rajasthan failed to adhere to this thus the funds flow problem persisted until the last 2 years of the project\. Due to a critical ways and means situation in the state, project monies were not always immediately available for activities supported by the project\. This also contributed to a delay in implementation of activities\. In Rajasthan and Karnataka, the lack of commitment resulted in weak management and slow implementation of project activities\. This was evidenced by a high turnover in project directors and key project management unit staff (there were eleven project directors in Rajasthan and nine in Karnataka over the life of the project) and, inadequate delegation of financial and administrative powers to the project directors\. Rajasthan was especially plagued by delays in decision making by the State Empowered Committee, particularly in relation to procurement and civil works\. This was complicated by a decision to repeat the facility survey for assessing the need for civil works, goods and equipment\. This resulted in the state having to forgo the procurement of a significant number of items of furniture and equipment, and unnecessary delay in completion of the construction of the State Institute of Health and Family Welfare (SIHFW)\. In Assam, this project represented the only donor inputs in the health sector, and as such the state had a commitment to make it work\. In order to ensure that the project was implemented without obstruction and delays, the Government of Assam created a separate autonomous society as the project implementing agency, guided by the state level Empowered Committee\. The autonomy given to the society and the stability of the project leadership (one project director for the full project period) was instrumental in ensuring that all project activities were implemented in time\. 5\.4 Costs andfinancing: The total cost of the seven-year project at appraisal was estimated at US$103\.8 million (Rs\. 4,409\.8 million equivalent)\. Of that, US$88\.6 million (SDR 62\.7 million equivalent) was to be financed by an IDA Credit and US$15\.2 million by the GOI\. At the project closing, the GOI estimated that the total project expenditure was Rs\.3,841\.76 million\. This was 87% of the original project cost estimates in rupee terms\. The total project expenditure was financed by a Government contribution of US$18\.91 million (exceeding the above committed amount), and an IDA credit of US$81\.6 million including the Gujarat Emergency Earthquake Assistance\. Due to steady devaluation of the Rupee against the US Dollars and the US Dollar appreciation against SDR (the SDR 62\.7 million is currently equal to US$ 83\.0 million equivalent), there remains a undisbursed amount of US$1\.4 million (SDR 1\. I million equivalent), of the IDA Credit at the end of project period\. Details are given in Annex 2\. - 10 - 6\. Sustainability 6\.1 Rationale for sustainability rating: The sustainability of the project interventions in all states is likely\. The issue of sustainability in the context of the evolving demands of the family welfare program in India, needs to be approached with realism and as a process which goes much beyond the limited horizon of this project\. This also needs special attention in the context of the relative isolation of project efforts from mainstream activities in family welfare during implementation\. Nevertheless, significant strides have been made toward setting up a large network of infrastructure and staff development for enhanced training and service delivery\. The challenge for sustainability will however be in ensuring that the service facilities created under the project are fully utilized and maintained; quality and coverage of the training is ensured; and the trained manpower continue to be appropriately utilized in the Family Welfare Program in the three states by making adequate provisions for salaries in the budget and supervision to ensure and enhance quality of their performance\. All the states have assured considerable additional support to bring the investments made under the project to full fruition\. The states have already initiated steps in this direction by making adequate provision in the state budget, and by coordinating with the other program been funded by the state/GOI, such as the RCH project\. The project has also been successful in making the states seek out alternatives to ensure access to services in remote and tribal areas, through partnership with the private sector\. The achievements through these strategies have differed in the three states, with Kamataka now going on to develop policies with their experience, while Rajasthan and Assam have recognized these as options which need to be tested and replicated for greater access\. In addition sustainability of the efforts will also be affected by the on-going Reproductive and Child Health Project, covering all the states, as this will continue and expand the activities of this project\. 6\.2 Transition arrangement to regular operations: All three states have developed a plan for the sustainability of the software activities initiated under the project Starting with a strategy for the hand-over of the project activities to the State Family Welfare Directorate, this plan includes continuation of all training, IEC and innovations in service delivery in the states under the RCH program\. The states have also initiated steps to make adequate provisions in the state budget for family welfare for the continuation of staff positions and activities created under the project\. The prospects for mainstreaming the project initiatives seem to be the best in Kamataka where several steps have already been taken by the state Government\. For example, Karnataka has discussed and initiated steps to make sustainable 19 DTCs and the SIHFW by creating a regular higher position of Director, SIHFW and making a provision of separate budget head of training for SIHFW and DTCs before January 2002\. Salaries and allowances of staff working in DTCs and SIHFW up to March 2002 was provided by the Steering Committee resolutions\. Budget estimates for payment of salary and allowances, office expenses and POL, amounting to about Rs\. 17 million annually, has been provided under State Family Welfare plan head as per commitment by the state\. Maintenance of facilities created under the project is also adequately provided for by increasing the non-wage non-plan budget for 2002-2003 through the Mid-Term fiscal plan\. The Government of Rajasthan and Assam are also in the process of making requisite financial provisions in the state budget to sustain the efforts made in the project\. However, the prospects for accommodating the salary for the new positions of faculty/staff in the training institutions and the drug warehouses, and the maintenance of these facilities in Assam and Rajasthan, are less certain as these states have financial - 1 1 - constraints\. Even though a decision has been taken to hand over all assets of the project to the State Family Welfare Directorate, and continue all current activities of the project through the same, further support and attention from the GOI will be necessary to ensure that these project initiatives are mainstreamed in the two states\. 7\. Bank and Borrower Performance Bank 7\. I Lending: The overall Bank performance in project identification, preparation and appraisal is satisfactory\. During the preparation phase the Bank provided extensive preparation assistance which resulted in the project fulfilling several criteria for readiness at entry\. Although these criteria are now standard practice they were less common at the time\. The Bank also ensured that the project was targeted to the poorest and most underserved areas for extension and upgrading of the Family Welfare Program infrastructure, and that the project supported the GOI's Action Plan for revamping the Family Welfare Program\. The project fulfilled the criteria with Operational Directive 4\.20 at entry\. The project covered states whose populations are 4-16 percent tribal (plus 2 percent nomadic in Rajasthan)\. Based on a beneficiary needs assessments, the project focused on: special tribal/nomad service strategies, service delivery to the underserved and poor women and children through mobile services, improving transport for providers, experiments with smaller coverage norms, and relaxation of staffing norms\. There was a clear awareness of the project risks by the preparation team\. These risks were identified as (a) the possibility of poor implementation in all three states; (b) the potential that project-created infrastructure and programs will not be maintained; (c) that many of the proposed approaches and programs were new and untested, particularly the outreach and community linkage schemes; and (d) the unpredictable security situation in Assam may make various schemes difficult to implement\. 7\.2 Stupervision: Overall, the Bank's performance in supervision is rated as unsatisfactory\. Frequent changes in task management (seven task managers over the life of the project) and inadequately equipped task teams that were unable to provide appropriate support and advice to the client negatively affected project implementation and supervision\. In 1997, a Quality of Supervision assessment of this project deemed the overall quality of supervision as marginal\. The report found that project supervision did not adequately address the developmental impact of the project\. It identified issues such as lack of attention in providing the client appropriate advice and solutions on project related matters and inadequate level of appropriateness and speed of follow-up limited the impact and effectiveness of the Bank's actions\. Following the QAG review and the Mid-Term Review, Bank supervision improved substantially with the formation of a more cluster based approach in project supervision and the addition of adequate technical expertise in the team\. The Bank team recognized the need to be more supportive of the client's need and also hold the client more accountable for factors affecting implementation\. Supervision was done in a systematic and holistic manner simultaneously with other Bank supported projects in the three states, i\.e\. the Population and State Health Systems Development projects, to better coordinate project inputs and provide the state health/family welfare authorities an opportunity to look at the outcomes in a holistic manner\. This integration of efforts also allowed the team to be pro-active and have an opportunity for a stronger and effective dialogue with the states, challenging them to move away from infrastructure orientation in order to achieve the development objectives\. An example of this was the downgrading of the project from satisfactory to unsatisfactory in 1999\. This down grading of project status had the salutary effect of making the state implementing agencies become more committed and focussed in completing - 12 - project implementation\. The project status was later upgraded to satisfactory in 2000 when key benchmarks affecting project implementation were met\. The work of the team was appreciated by the MOHFW, who also used it as an opportunity to hold the states accountable for their performance\. 7\.3 Overall Bank performance: Overall, the Bank's performance is rated as unsatisfactory\. Borrower 7\.4 Preparation: The Borrower's performance was satisfactory with respect to project preparation\. The performance of the three states was satisfactory during preparation although the tasks appeared to have overwhelmed them at times notably in Kamataka and Rajasthan\. Experience of implementation has shown that the initial plans and cost estimates underestimated the difficulties of construction in the project areas\. Project scope in terms of overall size and number of components was ambitious\. As a result, the start-up phase took longer than expected due to problems in setting up the management structure including the high-level state Empowered Committee\. Additionally, it took considerable time for project staff to familiarize themselves with Bank procedures such as the procurement guidelines and the financial reporting requirements and the auditing authority\. 7\.5 Government inmplementation performance: The overall performance of the borrower was satisfactory, however with varying levels of perfornance between the states, and between the center and the respective states\. The level of willingness to implement this project varied between the MOHFW, which had a high level of commitment, and the states (specifically Karnataka and Rajasthan), which showed lower levels of commitment\. The level of dedication by the MOHFW resulted in good supervision of the financial matters\. The provision of oversight and on-site monitoring of the states, however, remained inadequate\. Had the MOHFW been more pro-active in this area, a lot of the implementation problems at the state level could have been avoided or addressed earlier\. There was a provision made within the project to strengthen the Area Projects Division for improved on site supervision\. The MOHFW did not utilize this provision\. At the state level, the lack of political commitment led to the persistence of many issues including the high staff turnover, weak procurement capacity, fund flow problems, inadequate delegation of financial and administrative powers to project directors\. In addition in Rajasthan, delays of the State Empowered Committee to make key decisions affected project implementation specially in regards to procurement and civil works\. The audits reports were generally received after the due date (December 31) and had major disallowances in case of Rajasthan basically on account of advances having been claimed from IDA\. Although this systemic weakness prevailed throughout, Rajasthan, at the end of the credit period, Rajasthan was able to get the disallowed amounts recertified from the auditor to a major extent and reclaim them back from IDA\. Similarly Kamataka was also able to get the audit disallowances recertified and claim them back from IDA\. Due to non-receipt of audit report, SOEs were discontinued for Rajasthan and Assamn for the years 1997 and 1999\. The covenants have all been met, with some delays especially in Karnataka, where the covenant relating to maintenance of civil works built under the Population One and Three projects were not complied with until after the MTR\. 7\.6 Implementing Agency: It was satisfactory in Assam and Karnataka, and marginally satisfactory in Rajasthan\. Given the special nature of the project management structure in Assam, namely that the project management was undertaken - 13 - by an autonomous body that operated independently from the Family Welfare Directorate and also enjoyed significant financial independence, many of the implementation issues were circumvented\. However, long term sustainability remains pertinent in Assam (articulated in section 5 and 6 of this report)\. In Rajasthan and Karnataka, where the project management unit was an integral part of the Family Welfare Directorate, the lack of ownership and limited project management capacity led to slow project implementation in the early years\. Karnataka over came this problem by upgrading the position of Project Director after the MTR to that of full time IAS officer with the rank and status of Special Secretary, Department of Health and Family Welfare\. Thus, the project implementation unit was mainstreamed and this significantly enhanced the financial and management authority of the Project Director\. This also assisted in focusing the attention of the state machinery in completing project activities\. The main issues in Rajasthan, included poor delegation of authority to the project implementation staff, failure to appoint critical and appropriate staff to the project management, inappropriate fund flow mechanism and weak procurement capacity compounded by the perennial delays in the decision-making processes of the State Empowered Committee\. This situation in Rajasthan improved to some extent during the latter part of the project life\. 7\.7 Overall Borrower performance: The overall performance of the borrower was satisfactory\. 8\. Lessons Learned Some of the key lessons learnt from project implementation include: Management Political commitment at both the state and GOI level is critical for state ownership, successful implementation and project sustainability\. It is imperative that states play an active role in the design and monitoring of projects and there is clarity in the roles and responsibilities, between the GOI and the states, in order to foster ownership and accountability of outcomes\. In addition extemal inputs may not be sustainable unless the states themselves realize the critical needs for such institutions\. Thus a shared vision binding functionaries together for unified and dedicated implementation can also lead to a sense of ownership Continuity of the core project team, as well as the Project Director and critical staff in all key positions such as those working on IEC and training, is pivotal for the successful implementation of time bound projects\. Adherence to this has been key in ensuring the timely completion of all project activities in Assam, and conversely, has led to hampered progress in Karnataka and Rajasthan\. An examnple of this lack of continuity includes the fact that there were eleven project directors in Rajasthan and nine in Karnataka over the seven and a half year life of the project\. There needs to be an agreement to this effect with the Borrower and the implementing agency in order to limit disruptions and delays in project implementation\. Management structures and implementation arrangements for the project need to be relevant to the state context and environment With a unstable law and order situation and security in Assam, the implementation of the project activities without an autonomous project implementation agency, would have been difficult\. This was not necessary in Karnataka and Rajasthan, where an Empowered Committee headed by the Minister, Health and Family Welfare or Secretary, Medical, Health and Family Welfare, provided guidance on project implementation\. Ensuring adequate funds flow is critical for smooth implementation of the project\. Therefore routing of - 14 - funds through a mechanism separate from the state treasury, was vital in Rajasthan to ensure that project funds were readily made available for project activities\. This however, did not become an issue in Karnataka where project fimds were also channeled through the treasury\. Presence of program staff from the Family Welfare Departments in the project Empowered Committees did not bring about closer alignment of the project with the Family Welfare Directorate\. A conscious effort to forge coUlaboration and build linkages and relationships with the parent body/department, as has been done in Karnataka, is critical\. This requires an understanding of the role of the project in the overal context of health and development and ensuring having a shared vision and common understanding of the project goal and objective among all stake holders\. While decentralization is desirable for timely and effective implementation, there are certain activities, such as civil works and procurement, requiring a high level of accountability and follow-up, and effective monitoring systems, are better done through a centralized unit and system\. Training The large work force in the health sector justifies the need to have in-house training capacity and facilities\. The training institutions should explore options to contract external experts to broaden the skill base of the trainers\. They should also explore opportunities to market their services outside the Family Welfare sector: This will help to improve training quality and generate revenue\. AU the training in the health sector should be part of a human resource development strategy\. This strategy should incorporate all training; training that occurs within projects such as this, as well as the standard training offered by the Family Welfare Directorate\. Additionally, an ongoing evaluation of training outcomes including the appropriate placement of personnel and their performance, follow up training and supervision of on-the-job training, should be conducted in order to gauge the effectiveness of the training component\. Public Private Roles and Partnership Strategic choices regarding the roles of the public and private sectors, need to be made based on the core strengths of the sectors, institutional needs and the current capacity of the sector\. The participating states have learnt that the training of large numbers of para-medical staff requires in-house capacity and resources, while the implementation and management of a behavior change strategy may best be done by a private sector firm\. Similarly, the utilization of the PVO/NGO sector may not be the answer for all proposed interventions because they may not have the expertise to deliver the types of services required by the target population or the capacity to monitor and ensure results\. This sort of analysis needs to inform the choices ultimately made\. There have been in the project several opportunities for public private partnerships; (i) in planning and implementing behavior change communication strategies\. This has been demonstrated in Karnataka, where a private sector communication firm has successfully implemented the behavior change strategy; and (ii) increasing access to health service to the marginalized and tribal population, through innovations\. These have been explained earlier in Section 6\. Community Involvement Involvement of the community in project implementation has been limited, even though it could have had a - 15 - greater impact for the project\. One experience has been that involving the local conmnunity in sighting of health facilities is crucial in ensuring access\. This approach has helped Assam ensure that the facilities are central and accessible for the community\. To achieve this both the Bank and the Borrower needed to reach a common understanding on community participation, ways to achieve this, as well as developing the capacity for guiding this\. Project Design It is imperative that the role of supervision by both the Bank and the GOI be heightened in order to yield better project outcomes\. From the side of the GOI, regular monitoring and oversight of the project components, especially some of the software components, is crucial in order to provide support during implementation\. From the Bank, a greater level of engagement with the client and pro-activity, along the lines of what occurred in the later stages of project implementation is necessary to ensure that impediments are removed in time and all planned activities are completed\. The capacity for effective management of the procurement and financial aspects is critical in ensuring that all project activities are completed in time\. In this project too the lack of these aspects in the participating states resulted in implementation delays\. Project preparation needs to give adequate attention to ensuring that the project implementing units are fully conversant with and are fully equipped with necessary expertise in procurement and financial management\. In particular, the finance and procurement functions for this project should have been paid adequate attention and professionals with skills in budgeting, accounting, financial management and reporting as well procurement management should have been deployed in the states from the early stages\. In Assam and Karnataka, the irnplementation of civil works component progressed relatively smoothly, while in Rajasthan however, there were several issues\. The construction of the sub-centres had been contracted to the Panchayati Raj Institutions (PRIs)\. This led to delays throughout the construction process of civil works\. The contract was given to a body that was not held accountable for its performance, and the PRIs are part of a department different from the Family Welfare\. Therefore there was no urgency to ensure timely completion\. The PRIs were also responsible for site selection\. In some cases selection of sites took a very long time and led to delays in the commencement of civil works, while in others the site selection was poor resulting in the construction of sub-centres away from the village\. Coordination between project financed activities and non project Family Welfare activities was difficult to establish\. In each state, project implementation was the responsibility of a unit that was separate from the state's Family Welfare Directorate\. Although the project was expected to strengthen the Family Welfare program activities, there was poor coordination and as a result there were many difficulties in mainstreaming and coordinating activities\. This again brings out the need to have a shared vision between all stake holders to ensure that the project can achieve the stated outcomes\. 9\. Partner Comments (a) Borrower/implementing agency: The Borrower's Contribution to the ICR is listed in the Annex 8\. Below is a letter from the Project Director, commenting on the draft ICR dated April 30, 2002\. D\.O\.No\.L\.19013/17/2001-APS (Vol\.I) June 14, 2002\. - 16 - Dear Dr\. Kindly refer to your letter dated May 1, 2002 forwarding therewith the Implementation Completion Report (ICR) of the World Bank assisted Ninth India Population Project for comments of this Ministry\. While ICR is quite comprehensive, the following observations/points may be noted:- i\. Para 3\.1 states that the 3 States Assam, Karnataka and Rajasthan were not previously covered under other India Population Projects does not seem to be correct as Karnataka was covered under IPP-I and IPP-III also\. ii\. The World Bank has rated both the achievement of objectives and outputs as satisfactory and to support this the latest data has been referred to\. (para 4\.1) We suggest that the latest data as revealed by the State-wise end-line survey reports may be utilized so as to make it more accurate iii\. Para 4\.2\.1 regarding extension and upgradation of Family Welfare infrastructure of the State refers that about 2% buildings are under construction in Rajasthan\. We suggest that the final data as revealed by the States ICR reports may be taken into account for working out percentages of the buildings completed and handed over\. iv\. Para 5\.4 dealing with cost and financing, refers the cost at appraisal at Rs\.440\.98 crores and the likely expenditure at Rs\.390\.84 crores\. In this connection, it is pointed out that the original cost of the project was Rs\.335 crores, which was, enhanced to Rs\.414\.06 crores in May, 2000 and Rs\.422\.59 crores in January, 2001 and the expenditure reported upto April, 2002 is Rs\.377\.45 crores\. Therefore, figures in para 5\.4 may be replaced with these figures and percentage may be calculated accordingly\. v\. The World Bank report contains the Project Implementation Assessment, which is the draft Implementation Completion Report furmished by GOI in December (pages 17-27 of the report)\. There has been a lot of changes during the last 4 months and with the results of end-line survey already published and submission of the ICR by the State Government, we suggest that the final ICR report of the GOI should form a part of the ICR report of the World Bank\. The final ICR report is under preparation\. vi\. In para 7\.0 relating to assessment of outcome and in annexure 1 concerning key performance indicator, we suggest that the Word Bank may use the latest estimates of various indicators as revealed by end-line survey reports instead of taking the latest/1999 esfimates\. Similarly, annexure-2 concerning project cost and financing may be prepared by taking the latest final expenditure figures so that the percentage of appraisal column in page 34 of the report may be more realistic\. vii\. The ICR has correctly identified non-fulfillment of the software components\. It will also be useful to compare the achievements in the hardware sector with the less focused software sector as the project design does talk about the objective to strengthen and improve the functioning of the Family Welfare Programs of Assam, Rajasthan and Karnataka and to lower the levels of fertility and maternal and childhood mortality in the three states\. viii\. It is a fact that considerable hardware inputs have been put in place in the area of Training starting with ambitiously built and well equipped SIIHFWs\. The moot question is the State's ownership of the same\. The case of Rajasthan and Assam are cited as evidence where for most of the time regular faculty was not in place\. Another issue is convergence with the overall RCH training\. One lesson leamt is that external inputs may not be sustainable unless the states themselves realise the critical need for such institutions\. - 17 - ix\. There is a reference to interruptions in the training program of awareness generation program\. The critical issue is one of designing training inputs for effecting behavioral change\. From the ELS findings, it is clear that involvement of community, barring site selections has been limited\. Another question is whether these interventions led to actual behavioral change\. The contentions of the concluding sentence of this section namely that equal emphasis be given to supervision of both software and hardware activities of this project is relevant\. x\. One crucial issue is the preparedness of the project in the context of the implementing state\. In the Rajasthan case, it has been admitted that as the knowledge of the state level functionaries on Bank procedures is often insufficient, the project must provide some preparatory time before launching the project and provide mechanisms that ensure that the project be implemented fully rather than partially\. There is also a reference that the project design right formn the outset should incorporate mechanisms to develop common understanding of the project objectives, approaches, systems and procedures\. This should also take care of induction of leadership changes with the concept and components of the project\. xi\. One lesson leamt that has come up from the ELS Rajasthan is that all future Area Projects should include an in built component of sustainability both in terms of infrastructure as well as staff salaries under the project\. As a first step towards sustainability, the program needs to be accepted by the states and the sustainability dialogue should start halfway through the project\. xii\. The ICR has recomrnended the progress of civil works as commendable; this could be better substantiated with data on utilization of the assets created\. xiii\. The ICR may consider incorporating the need to have a Shared Vision which binds functionaries together for unified and dedicated implementation and also leads to a sense of ownership of effects created by the project\. xiv\. A finding of the ICR has been that modest interest has been shown by the community workers when deployed in an unpaid voluntary position\. This finding may be substantiated by other country/project experiences or otherwise so as to enable pragmatic lesson learning from the project\. With regards, Yours sincerely, (A\.K\. MEHRA) (1) Cofinanciers: (c) Other partners (NGOs/private sector): 10\. Additional Information - 18 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: Indicator/Matrix Projected In last PSR Actual/Latest Estimate Reduce Crude Birth Rate (CBR )(per 1000) Assam: 21 Assam: 1994: 27\.5 1999: 21\.8 (NFHS) 1999: 25\.8 (RCH-all districts) 2001: 27\.19 (Endline Survey) Kamataka: 20 Kanataka: 1994: 20\.4 1999:20\.4 (NFHS) 1999: 22\.6 (RCH-all districts) 2001: 20\.6 (Endline Survey) Rajasthan: 21 Rajasfthn: 1994: 33\.7 1999: 29\.9 (NFHS) 1999: 26\.6 (RCH-all districts) 2001: 32\.25 (Endline Survey) Raise Contraeptive Prevalence Rates Assam: 60 Assam: (CPR) % (Total) 1994: 29\.3 1999: 43\.3 (NFHS) 1999: 27\.7 (RCH-all districts) 2001: 44\.3 (Endline Survey) Kamataka: 60 Kamataka: 1994: 47 1999: 58\.3 (NFHS) 1999: 65\.6 (RCH-all districts) Rajasthan: 60 2001: 60\.8 (Endline Survey) Rajasthan: 1994: 30\.7 1999: 40\.3 (NFHS) 1999: 43\.5 (RCH-ali districts) 2001: 41\.1 (Endline Survey) Reduce Total FerUlity Rate (TFR) Data not available Assam: 1994: 3\.5 1999: 2\.3 (NFHS) 1999: 3\.34 (RCH-aII districts) 2001: 3\.05 (Endline Survey) Kanataka: 1994: 3\.1 1999: 2\.13 (NFHS) 1999: 2\.44 (RCH-all districts) 2001: 2\.2 (Endllne Survey) Rajasthan: 1994: 4\.6 1999: 3\.78 (NFHS) 1999: 3\.47 (RCH-all districts) 2001: 4\.7 (EndUrne Survey) Reduce Infant Mortality Rate (IMR) (per Assam: 50 Assam: 1000) live births 1994: 77 1999: 69\.5 (NFHS) 2001: 61\.61 (EndUine Survey) Karnataka: 71 Kamataka: 1994: 71 1999: 55\.2 (NFHS) 2001: 40\.2 (Endline Survey) - 19- Rajasthan: 60 Rajasthan: 1994: 81 1999: 80\.4 (NFHS) 2001: 39\.0 (Endline Survey) 1/ Reduce Child Mortality Rate (CMR) (Per Assam: >10 Assam: 1000) 1994: 41\.2 1999: 21\.4 (NFHS) Karnataka: Data not avaiable 1994 23\.3 1999: 19\.3 (NFHS) Rajasthan: Data not available Rajashthan: 1994: n\.a\. 1999: 37\.6(NFHS) Reduce Maternal Mortality Ratio (MMR) (Per Assam: 20 State and nationa data not found to be 100,000) live birtis Kamataka: 20 reiable\. Rajasthan: 20 Source: National Family and Health Survey (NFHS) 1998-1999\. Reproductive Child Project - Household Survey (RCH) 1999\. 1/ Endline Survey data: based on a very small sample and need to be interpreted carefully\. - 20 - Output Indicators: Indlcator/Matrix Projected In last PSR Actual/Latest Estimate No\. of fadlMes complted/renovated and State of Assam: All planned fadlities In Assam have been handed over\. 800 new sub-centers; 50 renovated completed and have been handed over\. The sub-centers; 100 PHCs upgraded State regbnal drug warehouses has also been Dispensaries; 88 ANM quarter at PHCs completed, but Is yet to be fumished\. The 75 Grade IV quarter at PHCs\.; 76 FRUs quality of completed works has been good\. UpgradhIg/Renovations State of Kamataka: In Kamata, an average of 93 percent of 1,133 new sub-centers and PHCs; 2,587 pinned fadilIes have been completed and renovated sub-oanters/PHC/CHs; are fully functioning\. These indude 932 271 Medical Offlcers quarter at PHCs sub-centers (new), 1,264 (renovation), 90 72 FRUs Upgrading/Renovations PHCs (new) 464 (upgraded) and 19 upgraded CHCa, and 250 Medical Officer Quarters\. Based on an independent survey, the quality of completed works has been found to be generally satisfactory\. State of Rajasthan: In Rajasthan, out of 810 sub-centers 860 sub-centers; 100 labour Room; 30 planned, 808 were completed and 804 have delivery room;31 Dnrg Ware House; been handed over to PWD\. The water and 10 upgradatlon of PHCt to CHC electrdty connection for some of works are stUIl to be completed\. No\. of mobile clinics planned Data not avalable In the State of Kamata, 12 NGOs are currently providing mobile Reproductive and ChUd (RCH) services\. This is more than 4 planned\. In Rajasthan, 318 mobile health camps were organized by India Red Cross Society\. 25,775 persons have accessed the services provided through these camps\. Success of community based vdunteer Data not available The project had dedded In the early years not scheme\. to continue this activities In Assam, due to the law and order situation prevailing in the State\. Hcowver, In Karnataka, 25,000 Angawadi Workers were appointed as link workers, and miUlon population reached through conmunity linkages\. In Rajasthan, health camps have been organized in 25 districts where the RCH services are not available\. These camps were held on fixed dates and places\. Dunng the project period, 5,026 camps have been conducted and RCH services and treatment of RTUSTD have been provided\. No\. of trained staff and faculty in posIton State of Assam: Assam has signflfcantly expanded trainin,g 9,835 Health Worker FemaUANM; 1,507 and exceeded all planned training target Health Asstant F/LHV; 2892 General During the project period a total of 96,739 Nurse; 170 Bbck Extnesion Education; 250 health personnel inCluding MSS, WHP, training faculty; 4,305 medical officers; 3,000 TBAs and vilage laders have been trained\. pMvt med pracL 590 Sr\. Physidcans/ Superv; 30,000 TBAs; and 78,000 Women Health Promotor\. Kamnataka decided to revise the trining State of Kamataka: miodules based on RCH guideflnes\. This 23,580 Health Worker FemiaiANM; 2,958 caused a slowing down of the training Health Assistant FemnaWLH/V and 13,413 activIides\. Hmowver, the training of functional male; 669 General Nurse; 2,954 Sr\. Heath e O Inspector, 1530 Block Extion Education; - 21 - PHCs were achieved on an average of 87 306 training faculty 9,172 medical offiars percenL The training of community based 3,000 pvt mfed pract\. 590 Sr\. Physicians/ functionaries has been slow\. Supervisors; 93 000 TBAs; and 370,000 various Health Promotor and school teachers\. All district trainrng faciliies in Rajasthan have trained faculty in position\. The critcal faculty State of Rajashan: has to be peced In the SIHFW\. However, 21\.960 MPW (M/F); 2\.130 Sector the quality of training needs to be assessed\. SupervAsors;2520 SMO/MO; 300 CHMO/Dy CH-MO; 114 State Officials; 535 Training Faculty; 90 equip\. operators; 453,915 joint training ANM/TBA/AWW No\. of training faclities upgraded, State of Assam: In Assam, 22 district training centers along constucted and fully equipped and handed 2 training centers; 17 ANMWGNM training with four 100 bedded nurses hostels, five 20 over as per training strategy centers/school building; 4 hostels bedded nurses' hostels and 16 hostels for (100-student) and 5 hostels (20-student) field practice area were constructed as 1 office building planned\. State of Kamataka: In Kamataka, as per the plans, 27 training 19 training centers facilities have been upgraded and fully 1 LHV/ANM school and 1 HFWTCs equipped\. 1 office building State of Rajasthan: In Rajasthan, out of 15 ANM training centers 15 District Training Center (DTC) have been upgraded as distict training I New HFWTC centers to facilita in service training\. Of the 2 updradation of existng HFWTC 14\.628 various levels of training\. 13\.427 have 1 SIHFW been completed\. No\. of NGOs contracted and % of populabon Data not avaibable Involvement of NGOs has only begun in the covered past year in Assam\. 10 NGOs have been contracted\. The coverage of 7 low performing and inaccessible districts Is commrendable\. In Kamataka\. 14 NGOs have been conbacted to provkie RCH services though innovative mneans to naccessble and tibal populabtons\. NGOs have also been ontracted to take over 2 PHCs and provide RCH services through them\. In additon\. Unk Workers, and Mobile Medical Units were also implemented\. In Rajasthan NGOs contracted for carrying out faclity survey for 138 First Referral Units (FRUs) for ldentication of their needs\. The FRUs were upgraded based on the assessment NGOs have also been ivolved in conducbng RCH camps described above\. It has been estimated than 47,835 population have been covered and benefited\. No\. of IEC actvities planned Data not available IEC acivity has been caried out in Assam\. Evaluaton on effectiveness of IEC actvities wivl be assessed under the planned end Une survey\. Earty Involvement of the NGOs in IEC actvities including trianing In all the disticts produced better impact in RCH service delivery\. In Kamataka, against 10\.986 planned actvites, 7,115 were conducted\. However, the effectiveness of IEC activities wiN be evaluated under the panned End Une survey\. A private communication firm has also been contacted to develop and implement the IEC plan\. - 22 - Improved Management Capacity through Create additonal posts: The HMIS Is In place as planned In Assam\. upgraded facility, Installed systems, and Assam - 90 It has helped in monitoring and evaluation of provided technical assistance Kamataka - 163 the project activities\. A similar facility (LMIS) RaJasthan -228 Is being Impemented In the Drug Warehouses/ Logistics component\. In Kamataka, faclity upgrading has been done according the plan\. Computr instaabtion, MIS training and PMIS software for cvil works and procurement were also completed\. (-Check the end-line survey for Evaluation of Implementation of MIS) Out of 228 planned positons for Raajasthan, only 93 in posidon (41% achieved)\. Computer system strengthened In the family welfare department at state and distict level\. % of tribal and special population being Data not avaglable Most of the districts under the project in covered and reiving health services\. Assam have a trbal and underserved population\. The seven districts with NGO Involvement In RCH have them providing services among the tribal populabtion\. % of population reached through the Data not avaiable In contrast, the Kamataka has a small tribal Innovative Schemes and Investment populabtion which is receivng health services\. Preparation Fund The services are provided by NGOs which were contracted by the project There also 8 innovative schemes were imopemented under the project period\. And 14 NGOs particpated in the investment preparation fund schemes in which population coverage was estimated as 716,783\. 22 NGOs In Rajasthan have been provided funds for organirng mobile health camps\. Innovative schemes such as the use of Jan Mangal couples and Jan Swastha Kasmi as community based distributors of suppfies and also as agents of change, were implmented under the project\. There were 30 NGOs participated in the investment preparation fund schemes and the population coverage was very encouraging\. In addition, NGOs have been assodated for carrying out various research studies\. Most of mobile health camps Were conducted in the under served area to provide RCH services\. These have been Implemented In 1,337 villages\. Rt has benefitd at least 27,000 persons\. End of project - 23 - Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million Strengthen F\. W\. Service Delivery 50\.10 47\.83 95 Improve Quality of F\. W\. Services 22\.00 21\.23 96 Increasing Demand for F\. W\. Services 10\.30 9\.44 92 Management Improvement 8\.80 8\.78 99 Innovative Schemes 4\.10 3\.70 90 Emergency Earthquake Assistance for 9\.53 Reconstruction in Gujarat 1/ Physical Contigencies 7\.70 Price Contigencies 0\.80 Total Baseline Cost 103\.80 100\.51 Total Project Costs 103\.80 100\.51 Total Financing Required 103\.80 100\.51 = 1/ A new component, Emergency Earthquake Assistance for Reconstruction in Gujarat was added following the earth quake in Gujarat in 2001\. DCA was susquently amended to include the Gujarat component as the part Z of the project\. - 24 - Project Costs by Procurement Arrangements (Ap ralsal Estimate) (US$ mllion ulvalent) CIVIL WORKS 36\.19 6\.60 42\.78 (32\.57, (\.94, (38\.51) GOODS Vehcles 3\.99 0\.30 - 4\.29 (3\.19) (0\.24) (3\.43l Mopeds, Bicycles for Field Staff 5\.48 5\.48 (4\.39) (4\.39) Furniture - 2\.71 0\.98 3\.69 (2\.17) (0\.79) (2\.96) Equipment & Health Kits - 6\.69 2\.43 - 9\.12 (5\.35) (1-94) (7\.29) Training Material & Books - 1\.67 - 1\.67 (1\.57) (1\.57) Consumables - 1\.84 - 1\.84 (1\.35) (1\.35) Medicines & Medical Material - 3\.04 - 3\.04 (2\.22) (2\.22) TECHNICAL ASSISTANCE Project Preparation & Implementation 15\.67 - 15\.67 Support (includes Grants, Innovative Schemes (14\.92) (14\.92) Project Preparation & Implementation 1\.30 - 1\.30 Support (Publicity services) (1\.04) (1\.04) Institutional Development (Includes 3\.04 - 3\.04 IEC & training) (2\.35) (2\.35) MISCELLANEOUS Salaries of Additional Staff 4\.56 - 4\.56 (3\.37) (3\.37) Honorarium to Community Volunteers 2\.83 - 2\.83 (2\.09) (2\.09) T\.AJD\.A\. of staff 0\.27 0\.27 Civil Works Operation & Maintenance 1\.73 - 1\.73 (1\.24) (1\.24) Equipment & Fleet Operation & Maintenance 2\.55 2\.55 (1\.87) (1\.87) Total 3\.99 45\.58 54\.00 0\.27 103\.84 (3\.19) (40\.09) (45\.31 - (88\.58) - 25 - CIVIL WORKS= 45\.45 7\.90 - 53\.35 (40\.45) (5\.45) (45\.90) CIVIL WORKS (PART Z) 1/ (9\.5__ (9\.53) GOODS Furniture, Equipment & Health Kits,Vehcles 1\.67 10\.18 2\.77 - 14\.62 (0\.98) (9\.71) (1\.89) (12\.58) Training Material & Books 0\.75 - 0\.75 (0\.69) (0\.69) Consumables 0\.97 - 0\.97 TECHNICAL ASSISTANCE Project Preparation & Implementation 5\.37 - 5\.37 Support (includes Grants, Innovative Schemes (0\.89) (0\.89) Institutional Development (Includes 9\.00 - 9\.00 IEC & training) (6\.96) (6\.96) MISCELLANEOUS Salaries of Additional Staff& TA/DA of staff 4\.83 - 4\.83 (4\.50) (4\.50) Honorarium to Community Volunteers 0\.56 - 0\.56 (0\.55) (0\.55) Civil Works Operation & Maintenance 0\.96 - 0\.96 Equipment & Fleet Operation & Maintenance 0\.57 0\.57 Total 1\.67 55\.63 33\.68 - 90\.98 _ (0\.98) (50\.16) (20\.93) (81\.60) I / The civil work financed by IDA under the Part Z of the project for the Emergency Earthquake Assistance for Reconstruction in Gujarat\. However, the total amount is not reflected by GOI financial report for the India Family Welfare (Assam, Rajasthan and Karnataka) Project\. - 26 - Project Financing by Component (in USS million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate IDA Govt\. CoF\. IDA Govt\. CoF\. IDA Govt\. CoF\. Strengthen F\. W\. Service 46\.64 8\.59 36\.30 11\.54 77\.8 134\.3 Delivery Improve Quality of F\. W\. 20\.95 2\.81 18\.37 2\.86 87\.7 101\.8 Services Increasing Demand for F\. 9\.05 2\.03 6\.94 2\.50 76\.7 123\.2 W\. Services Management Improvement 8\.08 1\.53 7,08 1\.69 87\.6 110\.5 Innovative Schemes 3\.86 0\.30 3\.38 0\.32 87\.6 106\.7 Emergency Earthquake 9\.53 Assistance for Reconstruction In Gujarat 1/ Total 88\.58 15\.26 81\.60 18\.91 92\.1 123\.9 1/ Emergency Earthquake Assistance for Reconstruction in Gujarat was added following the earth quake in Gujarat in 2001\. DCA was susquently amended to include the Gujarat component as the part Z of the project\. - 27 - Annex 3\. Economic Costs and Benefits No economic costs and benefits analysis was carried out at the time of project appraisal or for the ICR\. - 28 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, I FMS, etc\.) Implementation Development MonthNear Count Specialty Progress Objective Identificaffon/Preparaffon/Prea ppralsal 2 Mission Leader, Public Health 02/25/92 - Specialist 03/11/92 04/11/92 - 2 Mission Leader, Public Health 04/26/92 Specialist Appraisal/Negotiation 12/06/93 - 15 Chief, Population and Health 12/12/93 Adviser, Mission Leader, Economist, Public Health Specialist, Consultant/Project Preparation, 2 Consultant/Architects, Consultant/IEC/NGO/Comm unity Participation, Consultant/Management, Consultant/MIS, 2 Procurement and Disbursement Specialists Supervision 11/24/94 - 6 Mission Leader, 2 S S 12/21/94 Architects, 2 Training Specialists, Pharmaceutical 08/30/95 - 7 Mission Leader, IEC, S S 09/23/95 Procurement, Training, Health Specialist, Architect, Pharmaceutical 04/01/96 - 6 Mission Leader, Training, S S 04/15/96 Management, Health Specialist, Architect, Pharmaceutical 11/18/96 - 3 Mission Leader, Community S S 12/06/96 Partnership, Service Delivery 04/28/97 - 5 Mission Leader, S S 05/21/97 Community/Partnership, Training, Management, Civil Works 10/13/97 - 5 Mission Leader, Training, S S 11/17/97 Management, Civil Works, IEC 05/14/98 - 7 Mission Leader, Public Health S S 06/05/98 Specialist, Training, Management, Civil Works, IEC, Community Participation 11/05/98 - 10 Mission Leader, 3 Program and S S 12/15/98 Project Implementation - 29 - Specialists, Decentralized Planing, Community Mobilization, Training, IEC, 2 Civil Works 02/12/99 3 Mission Leader, Economist, S S Public Health Specialist 04/14/99 - 5 Task Leader, Operations Analyst, S S 05/18/99 3 Consultants 11/08/99 - 8 Task Leader, Consultant/Public S U 11/17/99 Health Specialist, Consultant/Architect, Consultant/Monitoring & Evaluation, NGOs, Social Assessment, Consultant/Management Specialist, Consultant/Obstetrics 04/26/00 - 9 Task Leader, 2 Public Health S U 05/22/00 Specialists, Public Health Analyst, Operations Analyst, Training, Bio-engineer, Institutional Management, Consultant/IEC 09/21/00 - 6 Task Leader, Public Health S S 10/04/00 Specialist, Consultant/Training, Consultant/lEC, Consultant/Architect, Team Leader 05/10/01 - 4 Task Leader, Public Health S S 05/30/01 Specialist, Health Specialist, Financial Management Specialist 09/21/01 - 5 Task Leader, Consultant/Public S S 09/23/01 Health Specialist, Consultant/Architect\. Procurement, Financial Management ICR 12/10/2001 - 5 Mission Leader, Public S S 12/14/2001 Health Specialist, Financial Specialist, Procurement, Operations Officer - 30 - (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation/Preap 205\.30 314\.70 praisal Appraisal/Negotiation 143\.47 221\.12 Supervision 342\.00 687\.02 ICR 20\.00 65\.98 Total 710\.77 1,288\.82 - 31 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating ;Macro policies O H OSUOM O N * NA ?Sector Policies O H O SU * M O N O NA Z Physical OH SUOM ON ONA 0 Financial OH OSUOM ON ONA z Institutional Development 0 H 0 SU O M 0 N 0 NA FEnvironmental O H OSUOM O N NA Social O Poverty Reduction O H O SU * M O N O NA M Gender O H SUOM O N O NA O Other (Please specify) O H OSUOM O N O NA F Private sector development 0 H O SU M 0 N 0 NA Public sector management 0 H O SU 0 M 0 N 0 NA O Other (Please specify) O H OSUOM O N O NA NGO development - 32 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bankperformance Rating I Lending OHSOS OU OHU z Supervision OHS OS * U O HU 3 Overall OHS OS * U O HU 6\.2 Borrowerperformance Rating I Preparation OHS OS O U O HU I Government implementation performance O HS * S 0 U 0 HU Z Implementation agency performance O HS OS 0 U 0 HU 0 Overall OHS OS O U O HU - 33 - Annex 7\. List of Supporting Documents 1\. IDA\. India, Staff Appraisal Report, Family Welfare (Assam, Rajajasthan and Karntaka)Project, May 26, 1994\. 2\. IDA\. Development Credit Agreement, Credit Number 2630-IN, June 1994\. 3\. IDA\. Project Agreement, Credit Number 2630-IN, June 1994\. 4\. IDA\. ICR Mission Report, December 5-12, 2001\. 5\. IDA\. Mid-Term Review (MTR)/Supervision Mission Aide-Memoire, November 5 to December 15, 1998\. 6\. IDA\. Supervision Mission Aide Memoires, 1994-2001\. 7\. Government of Karnataka, Mid-Term Review by World Bank Mission, November 15 - 18, 1998\. 8\. Government of Assam, Mid-Term Review, November 1998\. 9\. Govemnunet of Assarn, State Report, IPP-IX and Reproductive and Child Health (RCH), November 1998\. 10\. Econ Design and project Services (P) Ltd\., Guwahatai-6\. Final Report of Mid-Term Review (CW), Assam Area Project (IPP-IX) 11\. Government of Karnataka, Health & Family Welfare Dept\. Final Implementation Completion Report (IDA - 2630- IN)\. The Family Welfare Project (Population-IX) Karnataka\. 12\. Society for Implemetation of Assam Area Project IPP-IX, Hengrabari, Guwahati\. Assam Project Review Status, Project Report, December, 2001\. 13\. Health & Family Welfare Dept\. Government of Karnataka\. Implementation Completion Report (Draft) (New Delhi 12th - 14th December 2001) 14\. Government of Karnataka, Tribal ANM Report, July 1999 to March 2000\. Vivekanananda Foundation\. 15\. Government of Karnataka, Evaluation of ANM Trainingfor Tribal Girls under India Population Project IXInnovative Scheme\. Population Centre, Bangalore, March 1999\. 16\. Family Welfare (Assam, Karnataka & Rajasthan) IPP-9 Project, Implementation Completion Report (IDA Credit No\. 2630-IN) June 24, 1994 to December 31, 2002\. Medical, Health & Family Welfare Department (IPP-IX), Jaipur (Rajasthan)\. 17\. IPP-IX - Mid-Term Review (November 1998) Rajasthan, Family Welfare Project\. 18\. IPP-IX - Mid-Term Review (May 14-15, 1999) Jaipur\. 19\. Decentralized Planning in Reproductive Health\. The Indian Experience of Policy Reform\. Nirmala Murthy, December 2000\. 20\. Mid-Term Review of IEC and Training Programme Implemented under Assam Area Project IPP-IX, Final Report, Population Research Centre, Department of Statistics, Gauhati University\. 21\. Mid-Term Review\. India Population Project IX (K)\. Government of Karnataka\. Centre for Research in Health and Social Welfare Management, March 1999\. 22\. Mid-Term Review of Training Under IPP-IXProject, Rajasthan, A Report, Indian Institute of Health Management Research\. 23\. Action Plan for Remaining Training Activities in IPP-IX Project (From 01\.07\.2000 to 31\.12\.2001)\. Review on Training Progress upto July 2000 & Targets upto 2001\. - 34 - Additional Annex 8\. Government's Contribution to ICR IMPLEMENTATION COMPLETION REPORT, INDIA POPULATION PROJECT - IX IDA CREDIT - 2630-IN Department of Family Welfare Ministry of Health & Family Welfare New Delhi 1\.0 INTRODUCTION Area development projects have been taken up under the National Family Welfare Programme with financial assistance from external funding agencies in different States with a view to increase outreach and coverage, while aiming to bring about reduction in maternal and child mortality and morbidity, in birth rate and increase in the couple protection rate\. These projects have contributed greatly towards the development of the physical infra-structural facilities in the project states, and improved the quality of health & family welfare services to the people\. T he project has also been instrumental in bring down the birth rate, death rate, infant mortality rate and increase in couple protection rate\. The World Bank assisted DCth India Population Project (IPP-IX) has been implemented since June 1994 in the three states of Assam, Karnataka and Rajasthan\. The project in Assam covers the entire state, in Karnataka 13 Districts and in Rajasthan only 10 districts are covered The World Bank committed an IDA credit of SDR 62\.7 million for the project\. The original cost of the project was Rs\. 335 crores\. The joint Mid-Term Review by the World Bank and GOI of the project in November-December 1998 recommended an additional provision for civil works to provide for escalation and cost over-runs to complete the number of buildings originally planned and also to meet the additional activities consistent with the project objectives\. Accordingly, the cost of the project was enhanced to Rs\. 414\.06 crores in May 2000\. Again, in January, 2001 the cost of the project was enhanced to Rs\. 422\.59 crores from the earlier approved sum of Rs\. 414\.06 crores primarily to meet the additional cost of Rs 8\.53 crores for civil works in Assam\. The entire additional cost over and above the original approved cost was adjusted against the savings that became available due to exchange rate variations\. The project was implemented by the respective project organisations in the three States, with the overall responsibility resting with the State Heath & Family Welfare Departments\. The project ended on 31st Dec 2001\. 2\.0 PROJECT OBJECTIVES, SCOPE AND STRATEGY The specific objectives of the project were * To provide area specific health and Family welfare services to the rural population in the Assam, Karnataka and Rajasthan\. * To assist the three States to achieve reduction in birth rate, matemal and infant mortality rates\. 2\.1 Strategies The project had adoptedfive broad strategies to achieve the desired objectives\. I\. Expand the health andfamily welfare service delivery system)in the three states\. Creation - 35 - of additional facilities, up-gradation of existing facilities, provision of need based services and introducing appropriate area specific ways of service delivery, construction and rehabilitation of sub-centers, primary health centers and operation theatres, establishment of mobile clinics for inaccessible area, furnishing and equipping of the health centers etc were planned\. II\. Increase the demandforfamily welfare services through (a) an expanded program of information, education and communication (b) increased participation of private voluntary orgaiization, private medical practitioners and the community in the family welfare programme\. HI\. Improve the quality offamily welfare services being providing to the rural population\. It was planned to (a) up-grade the supervisory, managerial, technical and inter-personnel skill at all levels among new and existing medical and para-medical workers through pre-services, in-service and on the job training (b) establish and upgrade facilities available for training in the three States\. IV\. Implement innovative scheme covering a wide range of additional services including community based contraceptive depots, service delivery through NGOs in under served areas, construction of sub-centres by NGOs, formation of health advisory committees etc\. V\. Strengthening the Management Information System and Project Management Structure 3\.0 ACHIEVEMENT OF PROJECT OBJECTIVES Overall Achievement * The precise impact of the project has been viewed in a much longer time frame than only during the project implementation period\. Most of the activities have been completed\. The assessment is based on the input and process indicators, supplemented by outcome indicators based on the data available from the Base Line Survey, Mid-Term Review (MTR), End Line Evaluation and State Reports\. * The project substantially achieved its development objectives, especially those relating to training systems and infrastructure development and paved the way for enhancing quality of service delivery and care in FW and MCH\. The experience, however, has been uneven for the individual States\. * The IPP - IX provided for an expansion in the health and family welfare service delivery system in the three States through construction and equipping of buildings for sub-centers, PHCs, training institutions and drug warehouses and by upgrading existing health facilities\. The project envisaged inter alia including a total of 2655 sub centers, 125 PHCs, 433 staff quarters, 3 State level training institutes and 29 drug warehouses\. The status of the civil work at the end of the project is annexed in Table 1\.0\. It can be observed from the table that most of the planned civil works have been completed as per the plan\. The State of Karnataka has repaired and renovated an additional 108 CHCs/PHCs and achieved 99\.36% of targeted construction of SCs and PHCs\. Whereas the State of Rajasthan and Assam have achieved nearly 100 percent of targeted construction of SCs and PHCs respectively\. - 36 - Expand the health and family welfare service deliverv system The stated project objective of "expand the supply offamily welfare services " has envisaged increased coverage\. The staff was already in place in most of the cases providing outreach services, either from rented or makeshift premises before the launch of the project The constructed sub-centres and PHCs under the project enhanced the working environment of the outreach workers by providing a facility from which they could operate, maintain stores and records, and conduct clinical sessions\. Similarly the add-on OTs at PHCs/ FRUs enabled sterilization operations to be done in a proper facility and not in makeshift camps'\. This component was allocated more than a half of the project resources\. The objectives were substantially accomplished, through support to the construction, upgrading and functioning of a large network of rural health facilities/institutions\. Altogether, more than 4,800 outreach facilities received new or upgraded infrastructures\. The facilities constructed, inter-alia, included about 2,511 Sub-Centres (SCs) - with residential accommodation for the ANM\. Similarly, about 1514 SC's were renovated whereas about 137 Primary Health Centres (PHCs) were upgraded, and 40 FRU's got the Operation Theatres (OTs)\. Drug ware houses and training institutions were constructed in addition to these facilities\. Karnataka achieved about 99\.36% of targeted construction of SCs and PHCs\. 993 SCs out of 1000 SCs and 100 out of 100 PHCs have been constructed and handed over to Taluka Health Officers for operationalisation\. The standard scales of sub-centres and PHCs furniture & equipment have been supplied to them\. 4250 existing SCs and 802 existing PHCs also have been supplied with augmented supply of instruments and furniture\. As per End Line Survey Facility utilization is 77\.6% for SCs (clinic portion utilization) though only 64\.4% of ANMs have occupied the residential part of SCs\. 88% of SCs are within village limits\. 464 PHCs, 22 CHCs and 1277 SCs in project area and 1460 facilities in non project area have been rehabilitated fully, 58\.12% of which are quality audited and certified that rehabilitation work has been carried out satisfactorily\. Assam achieved 100 percent of targeted construction, up-gradation and renovation of SCs and PHCs\. Further, 90 State dispensaries were renovated\. The new facilities and a large number of existing SCs and PHCs, were fully equipped and furnished, and provided with essential supplies ranging from daily consumables to blood pressure measuring instruments etc\. About 150 generators were supplied to PHCs and BPHCs in Assam\. The fiuniture was supplied to 669 PHCs, 800 SCs, 100 upgraded PHCs and 50 Dispensaries have been supplied as per the norm where as in Karnataka, furniture was supplied to about 833 SCs, 460 PHCs/ MCWCs, training Institutes\. Similarly the aforesaid facilities in both the States were equipped with requisite equipments needed under the project\. About 90 MTP suction apparatus were provided to FRUs/PHCs/CHCs in Assam\. 193 vehicles were purchased and replaced, strengthening the referral and supervisory process\. In Rajasthan the procurement under service delivery inter alia included supply of furniture and equipment to 833 SCs, 414 PHCs/ MCWCs, 138 FRUs and 2941 beds for the sub centres\. However, the necessary furniture and equipment could not been procured for HFWTC, Jodhpur and SIHFW, Jaipur, Rajasthan\. As a result, the overall physical and operational facilities were improved to render quality clinic based and domiciliary services to the rural population, Increase the demand for family welfare services The Project envisaged achieving this objective in several ways - creating quality infrastructures with well - 37 - trained service providers and adequate equipment and supplies; orienting non-health functionaries and opinion leaders at the community level to FW and MCH services; and finally, promoting Information, Education and Communication (IEC), and Non-Government Organizations (NGOs)\. These two later components were also centrally administered by the MOHFW throughout the country as part of GOI's ongoing national health programs\. Approved activities were carried out in the three implementing States\. Although the Project utilized over Rs\. 157 crore for IEC activities, the precise impact of the investments made under this component is difficult to quantify, since the Project resources were combined with the GOI funds and programs for nationwide coverage\. It has been observed based on National Family Health Survey, Mid term / End line evaluation reports and various RCH surveys that the knowledge and awareness of the community and demand for the services has increased since beginning of the project towards achieving project objective\. However, the funds allocated for promotion of NGOs and build up-partnerships with them to achieve project objectives were under spent\. It indicates limited role the NGOs have played in the project implementation across three states\. The IEC strategy in all the three States emphasised on broader reproductive health and multi-sectoral approach while focussing the attention on spacing, delayed age of marriage, enhanced women's status, counteracting male-child preference and involving women's groups\. In this context, the IEC Cell was created in Assam under the project\. Project funds were used to develop innovative materials together with strengthening all media channels, emphasis on inter-personal communication, audience segmentation and area specific strategies\. The activities were planed and implemented at State, district and block levels in co-ordination with State health Bureau / Wing/ IEC personnel\. Community based distribution of contraceptives has been introduced in the State of Rajasthan, with launching of innovative scheme, namely Jan Mangal in the year 1992 in Udaipur and Alwar districts\. Since then, it has spread to all the districts of the State\. It aims at promoting and popularising the use of spacing methods of birth control, to ensure success of family welfare programme\. Under the Project, Jan Mangal activities are being financed in 25 districts of the State, whereas, rest of the seven districts were covered under Integrated Population and Development Project of UNFPA\. In these 25 districts, 8697 Jan Mangal couples have been selected, against a target of 11065\. Training has been imparted to 7754 couples, of which 7396 are functional in the field\. In Karnataka, market segmentation of population groups into unmarried women, currently married women with nil / one child, with two or more children, old women, married males and opinion leaders like PRI members, teachers, anganawadi workers, TBAs and health workers was done based on the findings of [PP-IX communication needs survey\. Twenty need-based messages specifically needed for each group were designed\. A revised IEC action plan was prepared and got approved at midterm joint WB and GOI IPP-IX progress review meeting at Jaipur in May 2000\. A reputed advertisement firm-OGILVY & MATHER was involved in developing a media plan and its implementation\. State family planning offset press was made functional again and the departmental newsletter "KUTUMBA" was restarted\. State IEC officers' communication planning capabilities were strengthened\. As on Dec 2001 all the district health education officers of respective districts were supplied with new IEC vans fitted with rear screens, state of the art video projectors and sound systems\. TVs, VCRs, Video cassettes of Family Welfare Tele-films, TV spots, 2 sets of panel exhibition sets with enough POL from IPP-DC funds to tour 25 days / month to screen video shows and organize exhibitions quarterly in open air theaters of 100 outreach villages in each District were ensured\. The Van has facilitated 6791 shows\. In Assam, awareness generation activities like Baby Show, Quiz, Essay competitions, Seminars, Workshop etc\. were held at State, district and Block level\. IEC activities through Radio spots, Quickies, telecast - 38 - through Doordarshan and local theatres were done\. NGOs were involved to generate awareness among the adolescent boys and girls and pregnant women on material and child health\. The State revived the health bulletin and its bi-monthly publication -'SWASTHYA SANBAD'\. In additions to these major activities many LEC interventions were done to enhance the awareness level of different stakeholders\. Improve the quality of family welfare services Setting up improved institutional and management capacity was the principle strategy toward achieving enhanced service quality and working environment\. The focus was on training and skill development as the pivot of operational efficiency at all levels\. The Project was conceived within the broad framework of the National Family Welfare Progrdm, with an emphasis on "quality" of services and as a step toward a "program" approach - as distinct from the earlier "project" approach\. The main thrust for quality was on upgrading the knowledge and skills of the staff, with focus on training as a core activity\. In addition to training, several strategies were pursued to improve quality - strengthening the supply dimension; upgrading physicalfacilities, equipment and vehicles; increasing the demandfor services; and revamping the managerial processes\. The satisfactory progress has been made in all these areas\. Under training, the goal was to create 48 training facilities and train service providers and related persons viz\. medical, paramedical and trained birth attendants etc\. The Project was successful in developing a network of training infrastructure - a total of 46 institutions were built/renovated; and about 1\.83 lac persons were trained\. The present status of the training sector achievements is given in Table 2 in the annexe\. Despite overall significant achievements, gaps have been observed between the targets and actual output in some of the categories\. The new SIHFW building were constructed in each of state of Karanataka and Rajasthan\. In Assam, SIHFW building was renovated with the project fund with added classrooms\. Four RHFWTC/ HFWTC and 43 DTC were constructed/extended in three project states\. Under the project in Assam TOT was completed and skill training undertaken to forrn part of ongoing RCH programme\. Training curriculum was prepared as per the project objectives in consultation with the State Health Department\. The Trainees were selected category wise and were trained at state, district and block level\. The trainings emphasised on retention of knowledge, skill and behavioural change of trainees\. The above indicators are reported to be good on evaluation that was also reflected in the Project indicators\. It is expected that there will be further improvement in the indicators if the training activities are continued periodically in future also\. During the Project period a total of 96,739 medical and para medical personnel including MSS, WHP, TBAs and village leaders have been trained\. The project in Assam has not only expanded the training facilities through construction of district training centres, expansion of RHFWTC and SHFWTC, Hostel facilities and supply of essential materials but has also systematically organised training at State, district and block level and has thereby established a good system of training\. In Rajasthan, the extensive training infrastructure that was established included State, regional and district-level institutions\. The most important achievement is the establishment of State Institute of Health and Family Welfare (SIHFW), Jaipur, as an Apex Training Institution\. Also a Regional Health and Family Welfare Training Centre has been established at Jodhpur\. Besides, 15 ANM Training centres have been upgraded as District Training Centres, to facilitate In-service training to the Pam medical staff for ensuring up-to-date knowledge and skill required for better and effective service dispensation\. In addition, existing two HFWTCs at Jaipur and Ajmer have also been provided inputs to strengthen them\. - 39 - In Karnataka, skill based training to ANMs/ LHVs/ MPWs/ HAs/ BHEs was introduced both under IPP syllabus under the first round as well as under RCH in the second round to improve quality of family welfare services\. Nearly 55,000 comnnunity volunteers were trained to support ANMs in family welfare service delivery in linkage systems\. A total of 14253 staff of both medical and para-medicals was trained\. The other major achievements included construction of one SIHFW, one HFWTC, 5 ANMTCs and 17 DTCs\. All the training facilites constructed and upgraded have been fully equipped\. A significant number of trained managers, supervisors and service providers as well as non-health functionaries are now available to provide and support effective and quality service delivery in all the three states\. During the Mid-Term Review, different categories of health personnel observed and interviewed in the clinical and outreach settings received generally satisfactory ratings on most counts\. A large number of functionaries in PHCs and SCs and their supervisors were found to have received in-service training, acquiring necessary skills in health and FW programs, such as: anti-natal care (ANC), post-natal care (PNC), the "five cleans" (clean surface, hands, blade, cord tie and cord stump), signs and symptoms of pregnancy, conduct of delivery, managing birth complications, immunization, family planning, record keeping, IEC, management and supervision\. Efficiency Improvement This objective was envisaged to be achieved through human resource development and by earmarking funds for improving the management and operation of the FW program by: (a) strengthening administration and management; (b) developing Human Resource Development Cells (HRDCs); (c) improving Management Information Systems (MIES); (d) undertaking research on Program Management and Evaluation, and Human Resources Development; (e) setting up Technical Advisory Committees; and (g) instituting regular Monitoring and Evaluation Mechanisms to follow up implementation progress and bottlenecks\. The Project Management Unit of the respective States of the project facilitated implementation of various project activities, by ensuring co-ordination between various project executing authorities and agencies\. The project management also provided regular feed back to the higher authorities of the State, MOHFW and World Bank, regarding status of implementation and difficulties experienced in execution of project activities etc\., to find solutions of the difficulties and hindrances\. The project management made timely persuasions with the executing departments to ensure timely and quality implementation of various project activities\. In order to improve management capacity by gathering, processing and taking quick data based decisions in Karnataka, the MIES cell of Family Welfare Department has been strengthened by additional supply of computers coupled with a new CNA software platform\. Large number of community volunteers approximately 55,000 has been trained to support ANMs in Family Welfare service delivery linkage systems\. Similarly under the project in Assam a computer unit has been established at the project headquarters\. It has helped in timely monitoring and evaluation of the project activities and data processing in relation to the health services delivery\. The computer system was freely used for flow of information\. It streamlined / quickened the administrative activities and its implementation\. Similar facilities were proposed for Drug Warehouses\. Under programme management in Rajasthan, the project has funded comprehensive contact and survey drives in the State, which have facilitated smoothening of record keeping at the health institutions and enforcing community needs assessment approach for RCH in the State\. These contact and survey drives, which were organised every year in all the villages of the States are unique, as these provide comprehensive - 40 - database required for successful implementation of Family Welfare Programme and RCH Programme in the State\. The other inputs inter alia included strengthening of computer system in the department at State and district levels\. The project management unit in Rajasthan facilitated implementation of various project activities, by ensuring coordination between various project executing authorities and agencies\. The project management also provided regular feed back to the higher authorities of the State, MOHFW and World Bank, regarding status of implementation and difficulties experienced in execution of project activities etc\., to find solutions of the difficulties and various hindrances\. The project management made timely persuasions with the executing departments to ensure timely and quality implementation of various project activities\. The regular and periodic visit of World Bank Mission and technical experts to the project states has contributed in enhancing the quality as well as the efficiency\. 4\.0 PROJECT COSTS AND EXPENDITURE Total project cost and expenditure is depicted in the following table\. Rs (in Crores) State Total Cost Expenditure Rajasthan 124\.94 103\.01 Assam 144\.37 144\.06 Karanataka as on 31/3/2002\. 150\.84 137\.08 Total 422\.58 384\.17 The component wise cost and expenditure in the three states is as follows: Rs in Lakh Category Civil Work Equip\. Vehicle Books & IEC rg ConsuL & Incremental Total Furniture Trg\. Mat Fellowship Salary ___________ ~~etc\._ _ _ _ _ 1 2 3 4 5 6 7 Rahasthan 5354\.40 970\.68 41\.01 47\.58 1567\.57 358\.39 1962\.04 10301\.67 Assam 8742\.89 3495\.85 6\.89 33\.14 1164\.05 49\.00 915\.17 14406\.99 Karnataka 8822\.03 1841\.44 653\.12 164\.06 1161\.61 126\.47 940\.11 13708\.84 22919\.32 630797 701\.02 244\.78 3893\.23 533\.86 3817,32 38417\.59 5\.0 MAJOR FACTORS AFFECTING THE PROJECT The regular joint GOI-WB periodical review, Mid Term Reviews and End Line Survey observed number of factors which affected the desired pace of implementation\. Some of them are as under:- The neeative factors included the followinn: -41 - (a) Preparedness in the Beginning of the Project: This was a challenge to all the States as quantified monitoring indicators were largely in abeyance in the beginning of the project\. The State's knowledge of the Bank's procurement procedures was highly deficient; and staffing and delegation of powers to the project authorities / implementing units was inadequate, especially with respect to civil works, procurement, and financial management\. (b) Management and Staffing: The State Empowered Committees were set up with delayand meetings of the same were not held regularly, resulting in delay in decision making process and delayed implementation\. Further, the Project Director was also not delegated administrative and financial powers\. Staff appointment and frequent transfers was also a perpetual problem\. Rajasthan and Karnataka had eleven and nine Project Directors during the project period respectively\. Nearly perennial vacancies in many operational and training positions, coupled with concurrent holding of several positions by an individual arising out of financial difficulties of the States have been observed\. The states' concern to avoid pernanent liability beyond the project period also proved debilitating e\.g\. procurement and MIS sections were totally vacant for two years in Karnataka, which affected functions of both these units for the period\. The project was implemented with head of IEC wing vacant for most of project life and even up to the end of project period\. The same is the case in the state of Rajasthan\. (c) Monitoring: Lack of a systemic and regular monitoring mechanism at the State & District levels coupled with inadequate field visits affected the implementation of the project adversely\. (d) Co-ordination: Project Management Unit (PMU) was created and made responsible for the implementation of the project in each state\. PMU has remained separate entity from the State's Family Welfare Directorate during the project period\. Linkages and coordination levels/ points between the Directorate and PMU has not been established\. As a result, at the end of the project, some of the activities of the project have not been budgeted in the yearly state budget (e) Fund Flow: While GOI released the Project funds regularly to the State Finance Departments (SFDs), flow of funds from SFDs to the Project Implementation Unit in Rajasthan was a major constraint\. Finance Department and Accountant General in Kamataka were not in favour of authorizing large number of district level officers to draw funds from the State sector project funds\. In view of this, there were some delays in funds flow to different field offices for some of the software activities\. (f) Civil Works: Lack of the appropriate engineering cells in the Implementation Units and ineffective coordination with the agencies responsible for construction - the Public Works Department (PWD), DRDA in Rajasthan for many activities led to problems of quality control, delayed completion and cost escalation\. Undue delays were also observed in handing over and operationalising the completed buildings\. In certain cases it was also observed that the States did not include external development work and external civic services like electricity, water, drainage and sewerage in the final estimates which also resulted in delay in operationalising such buildings\. In Kamnataka, the implementing agencies in the districts were mostly under administrative control of altogether different departments (Rural Development and Panchayat Raj / PWD) supervision over them was found to be extremely difficult and there were delays in getting requisite information/ support\. (g) Procurement: The procurement capacity of the project States was found to be weak\. This resulted in delay in procurement and also affected its quality\. Due to inadequate co-ordination between the civil works and procurement, many of the completed buildings remained non-operational for some time\. -42 - This was because of non-availability of requisite supplies in some cases while in other cases the supplies were procured much before completion of civil works\. Procurement in other matters also suffered, especially during the early years, due to inadequate familiarity of the States with IDA procedures and non-delegation of powers to the project authorities\. In Rajasthan, the procurement suffered badly due to delay in requisite approval by various committees despite appointment of HSCC as the nodal procurement agency\. (h) Public Private Partnership: In Rajasthan the project envisaged construction of sub-centres with the share contribution by NGOs and DRDAs\. The share could not be provided by these agencies with the result, there was no construction of sub centers for more than 3 years\. (i) Inappropriate Implementation: The activities envisaged in the project design were not implemented as per the approved project schedule\. This resulted in accumulation of backlog of activities and under utilization of funds during most of its life\. Due to this the States had to revise their targets and were also under pressure to complete all activities and utilise funds towards the end of the project (j) Commitment: The project at district and taluka level is implemented through medical officers\. The implementing medical officers at district and taluka level were not public health physicians, but of many surgical postgraduate specialities whose commitment to Public Health and FW programmes was less than to their specialities\. Despite the above constraints, the project made significant achievements\. The following were some of the positive factors\. Positive Factors\. * Proactive Initiatives: Committed project directors and top management at the state level did make a difference from time to time\. The continuity of the Project Director in Assam and regular meetings of the state empowered/ steering committees facilitated project to achieve its targets\. * Visits of the World Bank Missions: Regular visits of the World Bank Missions facilitated identification of weaknesses/shortfalls of the projects with a view to take appropriate remedial action and supplement new activities in line with the project objectives\. * Utilisation of External Resources: Experiments of using professional advertisement firms in social marketing of Health and Family Welfare messages brought in greater visibility to the programme\. * Involvement of faculty of professional management schools as guest lecturers for imparting management training to health staff undertaken as an innovative policy in Karnataka and the same was received well by trainees and trainers in the State\. * Strengthening Management Information System: Computerized tracking and monitoring of Project activities progress by IPP-IX and adopting E-mail Communications greatly improved the efficiency of the project\. Installation of Computers in Taluka Health Offices and connecting them by WAN with DBFWO Offices, DTCs and DHFWOs and Project office resulted in more efficient monitoring and faster feed back and enlarge the project stake holders web\. -43 - Similarly the computerisation of project offices has also greatly helped in improving their efficiencies\. * Appropriate Utilisation of Staff Quarters: Permitting contract doctors to occupy the medical officer quarters have resulted in wider utilisation of these buildings in Karnataka\. * Innovative / NGO Schemes: The innovative schemes and the experience of NGOs involvement in the three states demonstrated that such schemes could be taken up at wider scale to enhance the effectiveness of health and family welfare programmes\. Rajasthan - Organisation of health camps in remote and hilly areas on fixed day and time, association with the campaign " Prashashan Gaon Ke Sang" has directly benefited over 40 million people\. The schemes such as interest free loan for purchase of vehicles, support to implementation of neo-natal tetanus toxide campaign, formulation of HRD/Training Policy, associating NGOs with varying activities e\.g\. mobile camps, facility survey, Jan Mangal Scheme etc\., has contributed towards achieving project objectives\. Karnataka - Use of video van for outreach villages on experimental basis, supply of Nirodh through PDS shops, involvement of industrial houses in LEC, non-formal education for girls and young people, community incentives, mobile clinics and clubs for newly married couples are some of the innovative interventions implemented to meet the desired objectives\. Street plays tele- serials and radio serials also helped reaching the large section of the population\. Assam - Baby show, quiz, essay competitions, seminars, workshops held at State, districts and block levels focussing on breast feeding, birth spacing and ante-natal care have been of much effect\. IEC activities through radio, telecast of spots and local theatre have helped a lot in generating awareness in general public\. 6\.0 PROJECT SUSTAINABILITY The issue of sustainability in the context of the evolving demands of the family welfare program needs to be approached with realism and as a process much beyond the limited horizon of the present project\. This needs special attention in the context of relative isolation of project efforts from mainstream activities in health and related areas during the implementation\. Nevertheless, significant strides have been made toward setting up a vast network of infrastructure and staff development for enhanced training and service delivery\. Their potential contribution is certainly promising\. All the States have assured considerable additional investments to bring the investments made under the project tofullfruition to ensure sustainability\. All the States have already initiated steps in this direction by making adequate provision in the State budget and by coordinating with the other programme been funded by the State/GOL\. The State Government of Karnataka had taken steps to ensure sustainability of 19 DTCs and the SIHFW\. A position of Director, SIHFW from a senior grade has been created\. Provision of separate budget head for training in SIHFW and DTCs has been made\. Salaries and allowances of staff working in DTCs and SIHFW up to March 2002 has already been provided by the Steering Committee resolutions\. Budget estimates for payment of salary and allowances, office expenses and POL has been placed under State Family Welfare plan amounting to about Rs 23 million annually\. All training institutions were furnished and equipped with training equipment during the current year\. Sufficient training modules and materials catering to the needs until 2003 were supplied to the training institutes\. Provisions for the maintenance of - 44 - facilities created under IPP-LX has been made by increasing the non-wage-non plan budget for the coming year through the mechanism of the Mid Term fiscal plan\. Regarding IEC component, the state decided that Radio and Tele-serials will be broadcast and telecast for three months April to June from 2002 onwards every year under RCH / HNP project\. The Government further decided that arrangement made under the project like managing Thithimathi and Gumbahalli PHC by the NGOs would continue for next 10 years\. Similarly, the EEC vehicles with the facilities of screening films in 27 districts will continue to cover outreach villages through the funds provided by the RCH budget\. PVOs activities like mobile medical units and link workers schemes implemented by local entrepreneurial NGOs will be sustained under RCH / HNP projects\. The Goveming Body of the Society responsible for effective implementation of the project decided and proposed to the Govemment of Assam to maintain the health institutions up to the level of PHCs by the community through Panchayati Raj system\. The State PWD will maintain rest of the buildings constructed under the project\. Similarly, the state also decided to continue training and IEC activities through RCH budget\. The Department of Health would pay the salaries of the training institution's staff\. All the training institutions were furnished and have necessary equipment desired for the organisation of training programmes with appropriate infrastructure and material such as training materials, books etc\. The IEC activities will continue under RCH\. The Government of Rajasthan is also in the process of making requisite financial provisions in the state budget to sustain the efforts made under the project\. 7\.0 ASSESSMENT OF OUTCOME Taking into consideration the significant achievements, the project can be termed as very satisfactory\. The infrastructure created and Human Resource Development in the project period has resulted in improvement of provision of service delivery and its quality\. These would now need to be consolidated in order to ensure continued upgrading of the quantity and quality of services that the Project initiated\. While the quantifiable outcome indicators on infrastructure and personnel development provide evidence of considerable achievement in capacity building of training and quality service delivery, it is too early to assess the precise impact of the Project in terms of specific behavioural changes among the clients and the providers, and their implications for the family welfare and health indicators\. The assessment and impact of the project would be deliberated in detail after the results of the End-line Survey are out\. However, based on the available programmatic data the improvements in some of the health indicators are given as under: Indicators Assam Karnataka Raasthan SRS, Endline Baseline Endline Baseline Endline 1997-98 \. CBR 28\.20 27\.19 28\.30 20\.6 36\.89 32\.35 TFR 3\.20 3\.05 3\.30 2\.2 5\.08 4\.70 IMR 76\.0' 61\.61 66\.9 40\.2 128\.66 39\.0 CPR 18\.8 44\.3 49\.9 60\.8 126\.66 41\.1 -45 - W of 1996 ' ' of 1997 U Based on a very small sample and need to be interpreted carefully In addition to above indicators, the end line survey in three states provided insights towards the process and other indicators: * The mean age at marriage in case of both men and women * Percentage of children in 12-23 months fully immunised and by antigen * Percentage of expectant women who received Anti Natal care by number of contacts, receipts of TT, receipt and consumption of IFA and % of expectant women registeredfor AN care during the first trimester\. * Percentage of births attended by skilled health personnel - doctors or trained midwife excluding TBA (Trained or untrained)\. * Percentage of women who perceive that clinic hours/days are convenient and % of women in reproductive age with knowledge of location of essential obstetric care services * Percentage of children underfive who sufferedfrom diarrhoea during past 15 days, and % of those with diarrhoea who were referred or received ORS * Percentage of women and men in reproductive age familiar with different contraceptive methods and their availability: * % Couples having unmet need for contraceptive services * % new clients in reproductive age receiving counselling for contraceptives * Screening of FP methods users * Level of satisfaction about the current method among the contraceptive users\. * Unmet Need * Percentage of clients informed of timing and sources of re-supply/revisit for contraceptives * the mean age at marriage in case of both men and women is below legal age at marriage in case of Rajasthan as over two third of the men and women are married before the legal age\. However in case of Karnataka the mean age at marriage for women is just reaching the legal age and while it is quite above the legal age in Assam\. In case of age at marriage for men, the age ranged from 19 in case of Rajasthan to 24 and 27 years for Karnataka and Assam respectively\. The mean age for the first pregnancy ranged from 19 years in case of Rajasthan to 20 in Karnataka to 21 in Assam\. * Percentage of children in 12-23 months fully immunized and by antigen The status of immunization is an important process indicator that provides benchmark for child health\. The end line results of various states show that in increase has been observed in case of children (12-23 months) who had received all the requisite doses in case of vaccines\. In case of Rajasthan an increase of 12 per cent has been noticed (19 to 31) while the corresponding increase was about I per cent in case of Karnataka State\. In case of Assam when end line results are compared to the second round of National Famnily Health Survey, an increase of 27 per cent has been noticed\. In both Rajasthan and Assam where immunization status by antigen has been provided, it can be noticed that BCG continues to be the most popular vaccine, followed by the DPT and OPV respectively\. -46 - * Percentage of expectant women who received AN care by number of contacts, receipts of TT, receipt and consumption of IFA and % of expectant women registeredfor AN care during the first trimester More number of women are now registering themselves for ante-natal services and are doing so by the end of the first trimester\. About 93 per cent women are now registered for ante-natal care in Karnataka compared with the base line figures of 70 per cent, whereas the corresponding increase is about 16 per cent in case of Rajasthan and over two third are now registering themselves for ante-natal care in Assam\. One of the important indicators of ANC is timing of registration for the ANC\. It can be seen from Table X that nearly two thirds and over half of the registration are now being done by the end of the first trimester in Karnatak and Assam respectively, while about half of the women are doing so in Rajasthan\. The increase in registrations during the first trimester is an important process indicator and it has shown tremendous increase in Rajasthan (from 32 to 49) and in Karnataka states\. In case of Assam also compared to NFHS II, a good increase has been registered\. * Percentage of births attended by skilled health personnel - doctors or trained midwife excluding TBA An increase in the institutional deliveries has been noticed during the project period but a majority of deliveries continue to be domicillary\. In Karnataka, the number of institutional deliveries has doubled while the increase is small in case of Assarn and Rajasthan, where it has gone up 10 and 2 per cent respectively\. The percentage of deliveries by a trained personnel has also gone up albeit by a small margin\. * Percentage of women who perceive that clinic hours/days are convenient and % of women in reproductive age with knowledge of location of essential obstetric care services An overwhelming majority of the respondents in Rajasthan perceived the clinical hours to be convenient and comparative information is not available from the other states\. As far as knowledge of location of essential obstetrics services is concemed, a majority of the respondents (89%) knew about the same whereas the corresponding figures for Kamataka are about 45 per cent\. * Percentage of children underfive who sufferedfrom diarrhoea during past 15 days, and % of those with diarrhoea who were referred or received ORS There has been an increase in the number of cases where Diarrhoea was effectively managed during the project period\. It has been seen that though reference period for diarrhoea was different in the all states and therefore prevalence of diarrhoea also varied from state to state\. The number of cases that were effectively managed has doubled (from 18 to 40%) in Rajasthan and more than three-fourths cases are being referred in Kamataka and Assam\. * Percentage of women and men in reproductive age familiar with different contraceptive methods and their availability There is an increase in the knowledge of both men and women regarding contraceptives and their availability during the project\. Except in case of Assam where no particular trend has been seen in the absence of a proper base line information, the knowledge regarding various contraceptives and their availability has gone up by 5 to 12 per cent in case of modem methods in Rajasthan and Kamataka\. While conducting end-line survey in the state of Rajasthan an effort has been made to collect information on the following vital indicators and the corresponding information is not available from -47 - the other states * Unmet Need As per the end line survey unmet need for spacing was 4\.8 per cent while the unmet need for limiting was 13\.9 per cent\. Therefore a total unmet need of 18\.7 was found among the surveyed eligible women living in the project area in Rajasthan\. * Percentage of clients informed of timing and sources of re-supply/revisitfor contraceptives Among those who are currently using any modem FP method about 31 per cent mentioned that the health worker made the follow-up visits and 13 per cent of the respondents in Rajasthan also mentioned that they were informed about the timing and sources of revisit\. 8\.0 THE LESSONS LEARNT * There are chronic and persistent operational problems that adversely affect implementation of all family welfare projects in weaker states\. These include poor flow of funds to the implementing agency in states that experience fiscal problems, low procurement capacity, persistent staff vacancies and high turnover, and lengthy decision-making processes\. These often relate to macro-economic difficulties and problems of governance at the state level, and are beyond the scope of individual project teams to address effectively\. Unless resolved at an apex level, they continue to constrain implementation and create problems of long-range sustainability\. * GOI needs to consider creating incentives to states through performance-based financing during project implementation\. In IPP IX, Government of India released funds regularly to the State Finance Departments (SFDs), but the onward flow of funds from the SFDs to the project units was impeded as result of financial difficulties at the state level\. Such a situation would need to be guarded against through performance-based financing referred to above or through reallocation of funds to project states\. * The project design from the beginning should clearly incorporate phase-out strategy with the clear provisions of making project interventions sustainable after the project period\. It is essential to build in appropriate mechanisms to ensure quality assurance for interventions as well as continuous monitoring systems\. The mechanisms to orient various committees and staff members of project and relevant people about the Banks procedures, rules and regulations etc must be a part of project design\. * The project design from the beginning should incorporate mechanisms to develop common understanding of the project objectives, approaches, systems and procedures\. If new systems have been developed or proposed for the project, it must be made known to every one\. At the same time mechanisms must ensure that at the time of change in the leadership of the project, the new person get appropriate induction of project concept and over all project cycle components\. * Centralized system of functioning would be useful for hardware component whereas decentralized way of functioning provides better results wherein the software activities are involved\. * The newly constructed facilities must be registered at the PWD development register to ensure appropriate maintenance\. This is based on lessons from the IPP VII where these properties were not entered in the registers of PWD and were, as a consequence, neglected for maintenance\. -48 - * The project should prepare detailed action plan to integrate all the project components with in the existing health system of the state and take the action appropriately\. * A person of commissioner rank to minimise the delays must head the Project Procurement Committee\. * Computerized tracking and monitoring of Project activities, adopting e-mail communications, installation of computers in Taluka Health Offices and connecting them by WAN with DHFWO Offices, DTCs and DHFWOs and project office have resulted in improving efficient monitoring and faster feed back system\. * Use of professional advertisement firms in social marketing of health and family welfare messages, involvement of faculty of professional management schools as guest lecturers for imparting management training is found to be very effective approach\. * Inter-sectoral co-ordination was found to be a difficult task and required different area specific approaches\. Creative ideas are needed for the better utilisation of newly constructed facilities e\.g\. permitting doctors who are on contract services to occupy the residential quarters meant for MOs has resulted in wider operationalisation of these buildings in Kanataka\. * The tenure of the Project Director and the fund flow mechanisms ensuring timely receipt of funds by the project authority with requisite delegation of financial powers to them are pre-requisite for the success of project\. * District and Taluka (Sub-District) health administrations are critical crossover points in delivery of Public Health and Family Welfare Services\. It has been experienced that it could be better for project effectiveness if District and Taluka Project Implementation Committees would exist to monitor project activities\. * One Project Management Unit that is situated at state level cannot do monitoring of large number of ongoing civil works\. The community participation could be more encouraged at Zilla Panchayat level for better effectiveness of project implementation\. Zilla Panchayat could take a lead role in monitoring the progress of civil works and regular monitoring could be priority agenda item in its monthly general and subject meetings\. * Project Implementation Plan (PIP) should go into all details of implementation\. Preferably the persons who were involved in the preparation of PIP should also be involved in the implementation of the project for the first two years at least The funds flow and accounting / audit procedures to be clearly firmed up in the PIP to avoid loss of valuable time on such procedural issues after commencement of the project\. * The soft activities of the project should also be initiated from the beginning to have greater and faster impact\. -49 - Table 1\.0: State-wise Project Targets and Achievements S Activity Assam I Karnataka Rjasthan CIVIL WORKS )Target Achievements Targ et [chi"vementarget \|AJhievement N_-, F rt i 10 Y\ 11 14 J\i \. Jk'AN N W1\ (Nl SlT1(1T\. D1:I JVFRY _ I Sub Centres 800 800 1000 993 855 808 2 Construction of PHC - - 100 100 25 23 3 Upgradation of PHCs to - - - 10 9 CHCs 4 Construction of OT at FRUs - 45 40 5 Staff Quarters for ANMs 88 88 - - - - 6 Quarters for Medical Offtce - - 270 266 7 Staff Quarters for Grade IV 75 75 - - 8 Upgradation of existing State 100 l00 dispensaries to PHCs 9 Renovation of State dispensary 90 90 - 10 Renovation of sub-centres 250 250 1277 1277 - II Constructions of OT at FRUs - - - 45 40 12 Upgradation of 37 37 10 9 PHCs/CHCs/Hospital as FRUs 1 3 Rep\. and Renovation of existing 39 39 375 483 - CHCs/PHC I \.I _ I _ CONSTRUCTION RELATED TO TRAINING FACILITIES 14 Construction/ Extension I I I I 1 1 SHFWTC/ SIHFW 15 Construction/ Extension of I I I 1 2 2 RHFWTC/ HFWTC _ _ 16 Construction / Extensions / Upgradations of the training Schools a) School building for trg\. (DTC) b) l00 bedded hostel for GNM 2 22 6 6 1 5 1 5 _ 4 4 19 19 17 20 bedded Nurses' hostel 5 5 _ - - 18 Constructions of FPDAs _ 15 14 19 Accommodation at Field 16 16 Practice Areas _____ _ 2 Other Remarks _ c) OTHER CONSTRUCTIONS \. 21 Construction of Project Directo I I \. building with approach road an boundary wall 22 Construction of Central/ Stat I I Level Drug warehouse - 50 - Cont\. S# Activity Assam Karnataka Rasthan Target Achievement Target Achievement Target HAchievement 23 Construction of Zonal 5 5 - warehouses 24 Construction of Drug - - - 23 22 warehouse (Minor) 25 Construction of Drug - 5 5 warehouse (Major) 26 Completion of incomplete I 1 - - - work of boys Hostel (SHFWTC) 27 Completion of incomplete 1 I - work of SHTO 28 Institute of Pharmacy (SMC) 1 1 - 29 Completed of incomplete work 1 1 - of boys' hostel (SHFWTC) (i) Repairing and renovation o I girls' hostel for SHFWTC, (ii) Repairing and renovation 1 of SHFWTC 30 Regional Nursing College 0 1 boundary wall etc 31 Computer site preparation - - 32 Upgradation\. of Central SHTO I I workshop (with boundary wall, electrification and approach road and water supply and removal and shifting H\.T\. line) I - 51 - Table 3: Human Resource Development - Training Coverage S # Activity Assam I Karnataka Raj jasthan ITarget [Achievement Target \|Achievement Target Achievement Category of Health personnel I Core 10 11 57 67 - - Trainers 2 State Level Officers - - - 114 20 3 District Level Officers 300 92 4 SMOs/ Dy CMHOs - - - - 956 498 5 MOs including Sr\. Supervisory 4895 2489 1676 1867 2573 2490 officer 6 DPHN 23 15 - - - - 7 DEMOs and Dy\. 46 36 - - DEMOs 8 BEEs / HEs/ 1040 537 527 339 - - BHEs 9 HW (F) / ANMs/ 6720 5636 8741 10835 14628 13427 MPWs I 0 HW(F)/ANM Trained outside - 46 - - - - the state _ 11 HA (F) / LHVs/ Sector 960 540 1000 100 1920 1525 supervisors 12 Basic Training of 1500 788 - - - - GNMs 13 PMAs 4440 5122 - - 14 TBAs 15000 10386 15 Training faculty 250 261 67 57 16 Private Medical 3000 314 Practitioners 17 MSS (IEC) 35,000 21781 - 18 WHP (IEC) 75000 44967 19 OTC (IEC) 4900 3780 1120 523 20 SHAM ___ 3738 2290 21 CVs __ _ 155905 54506 22 IEC Workshops 46 34 \. - 52 - Report No\.: 23855 Type: ICR	REVIEW
P001995	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 18933 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF NIGER AGRICULTURAL SERVICES SUPPORT PROJECT (CREDIT 2355 NIR) February 10, 1999 Rural Development II Africa Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY AND EQUIVALENTS UNITS Currency Unit = CFA Franc (CFAF) EXCHANGE RATE 1988 US$1 = CFAF 298 1990 US$1 = CFAF 272 1992 US$1 = CFAF 265 1994 US$1 = CFAF 555 1996 US$1 = CFAF 512 1998 US$1 =CFAF 550 WEIGHTS AND MEASURES Metric System FISCAL YEAR January 1 to December 31 ABBREVLATIONS AND ACRONYMS AMRT Atelier Mensuel de Revue de Technologie (Monthly Technology Review Meeting) CORRA Comites R6gionaux de la Recherche Agronomique (Regional Agricultural Research Committees) EDA Equipe de Diagnostic d 'Arrondissement (District Diagnostic Team) GDP Gross Domestic Product INRAN Institut National de la Recherche Agronomique (National Agricultural Research Institute) M&E Monitoring and Evaluation MOAL Ministry of Agriculture and Livestock MOU Memorandum Of Understanding QAG Quality Assurance Group SAR Staff Appraisal Report SMS Subject Matter Specialist T&V Training and Visit UTNDP United Nations Development Program VEW Village Extension Worker Vice President: Jean-Louis Sarbib Country Director: Theodore 0\. Ahlers Sector Manager: Joseph Baah-Dwomoh Task Team Leaders: Madicke Niang (Jan 93 - June 95); Djibril Aw (June 95 - Feb 97) Turto Turtiainen (March 97 - Aug 97) Yves-Coffi Prudencio(Sept97-June98) FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT REPUBLIC OF NIGER AGRICULTURAL SERVICES SUPPORT PROJECT (Credit 2355 NIR) TABLE OF CONTENTS Page Preface Evaluation Summary \. i PART 1\. Project Implementation Assessment \.1\. A\. Introduction\. I B\. Project Objectives \.I B 1\. Description of Objectives \.1 B2\. Evaluation of Objectives and Risks\. 2 C\. Achievement of Objectives\. 2 D\. Project Cost and Financing\. 9 E\. Major Factors Affecting the Project\. 9 F\. Project Sustainability\. 9 G\. Bank Peiformance \.10 H\. Borrower Performance \.11 1\. Implementation Agency \.11 J\. Assessment of Outcome \.11 K\. Future Operations \.12 L Key Lessons Leaned \.12 PART II\. Statistical Tables \. 13 Table 1\. Summary of Assessments \. 13 Table 2\. Related Bank Loans/Credits \. \. 14 Table 3\. Project Timetable \. 15 Table 4\. Disbursements: Cumulative Estimated and Actual \. 16 Table 5\. Key Indicators for Project Implementation \.17 Table 6\. Key Indicators for Project Operation \. \. 18 Table 7\. Studies Included in the Project \. 18 Table 8A\. Project Costs \. \. 19 Table 8B\. Project Financing \. \. 19 Table 9\. Economic Costs and Benefits \. 19 Table of Contents, (continued) Page Table 10\. Status of Legal Covenants \. 20 Table 11\. Bank Resources: Staff Inputs \. 23 Table 12\. Bank Resources: Missions \. , \. , \.,\. 24 Appendix Map: 3IBRD 23273 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF NIGER AGRICULTURAL SERVICES SUPPORT PROJECT (Credit 2355 NIR) Preface This is the Implementation Completion Report (ICR) for the Agricultural Services Support Project (PRSAA) for which Credit 2355-NIR in the amount of SDR 12\.9 million (equivalent to US$18 million) was approved on June 12, 1992 and made effective on January 25, 1993\. The credit was closed on June 30, 1998\. The last disbursement took place on October 14, 1998\. About 99 percent of the credit was disbursed, and the undisbursed balance of SDR 89,495 was canceled on January 10, 1999\. The completion report was prepared by Yves-Coffi Prudencio, AFTR3, with assistance of Daniel Sellen and Soulemane Fofanal, AFTR2, and was reviewed by Joseph Baah-Dwomoh, Sector Manager, AFTR2, and by Theodore 0\. Ahlers, Country Director for Niger\. Preparation of this report began during a mission to Niger in September 1998\. The implementation report is based on the project documents, correspondence, supervision reports, appraisal report, and Credit Agreement\. The Borrower accepted the Bank's ICR and made no comments (letter attached as Appendix)\. The Borrower's twenty-five page report, "Rapport d'Achevemenft, is available upon request\. Points discussed in the ICR are the same as those discussed in the ICR mission's Aide Memoire, which is also available on request\. 1Michel Aklamavo, Amadou Alassane and Salifou Mahaman of the World Bank participated in the ICR mission along with govermnent and project representatives\. IMPLEMENTATION COMPLETION REPORT REPUBLIC OF NIGER AGRICULTURAL SERVICES PROJECT (Cr\. 2355-NIR) Evaluation Summary A\. Introduction 1\. This Implementation Completion Report evaluates the Agricultural Services Project in Niger, which was executed by the Ministry of Agriculture and Livestock\. B\. Project Objectives and Activities 2\. The principal objective of the project was to strengthen agricultural, livestock and environment protection extension to farmers with a view to increase agricultural production and sustain growth of farmers' incomes\. 3\. The activities planned and undertaken to meet the objective included: (a) reorganization of extension services, supported with adequate human and physical resources; (b) regular training of responsible officials at every level; (c) strengthening the linkage between extension and national and regional agricultural research; (d) strengthening of institutional relationships between crop, livestock and environmental services; and (e) functional literacy and numeracy training\. C\. Achievement of Objectives 4\. The project contributed substantially institution-building activities, especially to helping reorganize extension services, strengthening relationships between crop, livestock, and environmental services, and improving functional literacy\. However, it had serious management problems and failed to demonstrate a substantial achievement in providing benefits to farmers through technology adoption\. Thus, because the principal development objective of increasing agricultural production and incomes for farmers through improved extension was not achieved, the project outcome has been rated globally unsatisfactory\. 5\. The project substantially achieved the reorganization of extension services by providing human and physical resources at the farm, regional and national levels, and surpassed several of the goals set at appraisal in terms of geographical coverage and provision of human resources\. Improved efficiency of the extension system was partly achieved by implementing the previously tested training and visits (T&V) system\. - ii - 6\. Training objectives were partly achieved\. Regular training of field extension agents has been substantially carried out and has led to successful multidisciplinary training of village extension workers (VEW) and their supervisors\. However, there have been severe shortcomings in the training of farmers with only one third of planned fortnightly sessions carried out\. There have also been deficiencies in the training of management and support staff, particularly in the areas of monitoring and evaluation, accounting, and financial management\. Most training planned to take place outside the country for responsible officials did not take place due to poor management\. 7\. The objective of strengthening the research-extension linkages was partially achieved\. The project was able to get research and extension staff to collaborate and institutionalize this relationship through memoranda of understanding which assured cooperation\. However the achievements of the research-extension activities, such as on- farm trials, were often poor in terms of findings and impact\. 8\. The objective of improving institutional relationships between crop, livestock, and environmental services in the Ministry was substantially achieved through the institutionalization of working relationships between the three types of services at central, regional and district levels\. In particular, the multidisciplinary training of extension agents achieved under the project is the result of such integration\. 9\. The functional literacy objective was substantially achieved\. A total of 20,212 farmers, half of them women, were trained under the project\. 10\. Technology adoption by farmers of extended technologies was slow and insufficient\. This was mainly a result of inadequate participatory diagnosis early in the project to identify and extend demand-driven technologies\. A 1998 impact study suggests that nationwide, and within the contact group farmers, only 5 out of 32 crop production technologies (16 percent), 5 out of 19 livestock production technologies (26 percent), and 5 out of 13 environment protection technologies (38 percent) had non- negligible adoption ratios\. 11\. Monitoring and Evaluation (M&E) was insufficient\. The external and internal M&E systems did not operate effectively during most of the project implementation period, as a result of inadequate training and lack of support from Government and project management\. As a result, the M&E units were unable to assess project performance and to guide project management, contributing to the poor performance of the project\. 12\. Financial and administrative management was unsatisfactory throughout the project period\. Management was highly unstable with eight changes in project coordinators over a five-year period\. Bank project management was similarly unstable\. Audit reports found ineligible and insufficiently justified expenses from 1995 to the end of the project, which led to the government's reimbursing about 200 million CFAF\. - iii - D\. Sustainability and Future Operations 13\. The extension system in Niger, is not fmancially sustainable and is not likely to be so in the near future, given its current design\. However human resource development under the project, through transfer of information and knowledge, is expected to have a sustainable impact\. 14\. Due to the unsatisfactory performance of the project, no direct follow-up operation has been prepared\. However, the government is working on a rural development strategy that could serve as a basis for more innovative and cost effective future agricultural services operations\. E\. Borrower and Bank Performance 15\. The performance of the Borrower, including that of its implementation agency, was mixed, but is judged generally unsatisfactory, mainly as a result of poor financial and administrative management of the project\. 16\. The performance of the Bank was also mixed, and also rated unsatisfactory\. Supervision was quantitatively fair, although insufficient, but qualitatively poor\. It was close to the client and carried out on a regular basis, but was unstable (four Task managers in five years)\. Performance indicators with respect to development objectives were not clearly stated anywhere and were arbitrarily decided by each Task Manager\. Early opportunities for taking decisive actions to improve project management at an early stage were missed\. Procurement delays due to the Bank occurred\. Corrective measures such as retrofitting took place too late and therefore could not sufficiently improve the performance of the project before its closing date\. F\. Major Lessons Learned 17\. The following are the key lessons learned from the project: (a) It is essential to define and phase project objectives by stating clearly at appraisal the short-term, medium-term, and long-term objectives of the project and related performance indicators\. (b) It is essential to ensure, from the beginning of project implementation and during each supervision, that external and internal monitoring and evaluation systems use adequate performance indicators, are properly staffed, are allocated timely and adequate resources for operation and training, and are not adversely influenced by national project managers\. (c) Stability of project management must be encouraged, by ensuring that managers are recruited more on the basis of technical and managerial competence than on the basis of political affiliation\. -lv - (d) Multidisciplinary training of extension agents is feasible and shows potential to be an effective way of reducing costs of extension services to small farmers\. (e) Participatory diagnosis is a critical factor in improving the pertinence of extended technologies, and therefore the efficiency and the impact of extension services\. IMPLEMENTATION COMPLETION REPORT REPUBLIC OF NIGER AGRICULTURAL SERVICES PROJECT (Cr\. 2355 NIR) PART I: Project Implementation Assessment A\. Introduction 1\. At the time of project preparation (1991/92) the crop sector in Niger accounted for 35 percent of GDP and for 25 percent of exports\. Population growth (3\.1 percent) far exceeded growth of food production (1\.8 percent), which increased as a result of expanding cultivated area and not to productivity gains\. Agriculture was also hindered by environmental degradation from desertification and mining of soil fertility\. The livestock sector accounted in 1984-89 for 13 percent of GDP and 12 percent of exports\. It was characterized by poor husbandry practices, chronically low nutritional levels, and deteriorating grazing resources\. 2\. The Government's development strategy aimed at achieving sustainable per capita income growth with equity\. The rural development strategy strove for: (a) food security; (b) natural resource management; (c) intensification and diversification of production; and (d) promotion of participation of rural populations and of the private sector in development activities\. IDA, in collaboration with other donors, supported the strategy through projects with a strong emphasis on agricultural research (Cr\.2122-NIR) and small rural operations (Cr\. 1 890-NIR) to promote off-season production\. Support to agricultural services was undertaken initially in 1987-90 as a pilot project, after which Government decided to implement the resulting extension system nationwide\. B\. Project Objectives Description of Objectives 3\. The project aimed at strengthening agricultural, livestock and environmental protection extension with a view to generate increased production and sustained growth of farm incomes\. The project was expected to build on experience gained during the implementation of the pilot project\. 4\. The project included the following activities: (a) efficient organization of extension services, supported by adequate human and physical resources at the farm, regional and national levels; (b) regular and continuous training of responsible officials at each level by means of fortnightly, monthly and annual training sessions, including courses held outside Niger or conducted by external participants; -2 - (c) strengthening of the linkage between extension and national and regional agricultural research to address farmers' problems\. Technical problems such as those related to soil and water conservation, diversification of production, soil fertility, and ecologically adapted varieties were to receive priority under the adaptive research programs\. (d) strengthening of linkages between crops, livestock and environmental services so as to ensure effective extension support for these programs; (e) functional literacy and numeracy training for men and women, including stepped-up promotion of participation by women to enable them to play a progressively active role in rural development and village activities and management\. Evaluation of Objectives and Risks 5\. In hindsight, first phase objectives of increased production and sustained growth of farmers' income were too ambitious, given the poor state of the extension system at the time of project preparation\. The project, however, correctly emphasized institution- building in the first phase, but would have benefited from a clearer definition of the objectives and performance indicators at each stage\. 6\. Project risks identified during preparation were pertinent and properly managed during project implementation\. These included (a) the lack of workable solutions to deal with farmers' problems; (b) coordination problems between the central administration and the departmental and district agricultural services; and (c) failure of Government and donors to sustain a long term commitment to achieve durable improvements\. Unfortunately, several important risks were overlooked and adversely affected the project\. They include: (a) instability in project management due to eight changes of project manager in five years at the national level and four changes of task managers at the Bank level; (b) economic recession, leading to delays in salary payments and to low morale among extension staff, (c) climatic and famine risks, resulting in highly mobile farmers who were difficult for extension agents to reach; (d) lack of unity in the line of command at the ministerial level, resulting in conflicting management information flows; (e) delays in the transfer of accounting documents from regional to central level; and (f) non-project use of project vehicles by government officials\. C\. Achievement Of Objectives 7\. The Monitoring and Evaluation system of the project did not function properly and failed to address and measure project's development objectives, which were to increase agricultural production and farmers' incomes\. The project did, however, substantially achieve some, but not all of its institution building objectives\. -3 - Organization of Extension Services 8\. The objective of providing the extension services with adequate human and physical resources at the farm, regional and national levels was substantially achieved, but the objective of achieving an efficient organization of extension services was only partially achieved\. 9\. The project aimed at improving coordination and efficiency of the extension services provided to farmers by directorates from three different ministries (directorates of agriculture/livestock, of environment and of literacy)\. A coordination unit within the Ministry of Agriculture and Livestock was in charge of implementing the successfully tested Training and Visit (T&V) extension system in the project areas\. 10\. The project covered, in addition to the three departments of the pilot phase (Tilaberi, Dosso and Tahoua), the urban district of Niamey and three additional departments (Zinder, Maradi, Diffa) instead of two, as originally planned at appraisal\. Memoranda of understanding were signed between the project and other agricultural development projects to minimize conflicts and to achieve complementarity of interventions\. 11\. Staffing was higher than projected at appraisal to deal with the greater geographical area coverage of the project\. By the end of the project (in June 1998) extension was being implemented by about 1000 agents, including 600 Village Extension Workers (VEW), compared to 410 VEWs projected at appraisal\. In addition, there were 100 district level supervisors, compared to 66 supervisors projected at appraisal\. There were 25 district level coordinators, compared to 18 projected at appraisal\. In addition, there were, at the district level, 52 M&E enumerators, 22 coordinators of women activities, and 78 subject matter specialists, compared to none projected at appraisal\. At the departmental level, there were 7 Coordinators and 7 Extension Leaders as planned at appraisal\. Subject matter specialists (20 in SAR) were to be appointed at the departmental level but were appointed instead at the district level, as mentioned above, for greater efficiency\. In addition, 14 M&E agents, 7 Coordinators of women activities and 7 training coordinators were appointed at the departmental level, compared to none planned at appraisal\. At the central level there were 11 high level staff, 6 M&E staff and two training specialists as planned\. In addition, there was one Chief Coordinator of women activities, not planned at appraisal\. 12\. Extension coverage expanded substantially during the project period\. At closing, the project coverage grew from near zero to about 80 percent of small scale irrigation areas (40,000 hectares) as expected at appraisal\. However, it could only cover 40 percent of the 10,000 villages in Niger rainfed cropping areas, compared to the 60 percent target at appraisal\. The number of villages per VEW increased from three in 1993 to seven in 1997 with improved access to transportation\. The number of contact group farmers per VEW increased from 30 in 1993 to 140 in 1997, with each VEW serving about 1,400 agricultural households in the 7 villages covered, This is below the expectation of 2,000 households at appraisal\. The number of contact groups increased from 1,828 in 1993 to 8,694 in 1997 with about 2 contact groups per village and 10 farmers per contact group\. The number of VEWs per supervisor increased from 3 in 1993 to 6 at the end of the -4- project, within the range (6 to 8) expected at appraisal\. With the transfer of subject matter specialists from departmental to the district levels, there were over 10 Subject Matter Specialists per department, compared with 4 Subject Matter Specialists during the pilot phase, and as projected at appraisal\. 13\. Farmers' participation in fortnightly working sessions was relatively satisfactory\. During the last year of the project, two-thirds of contact group farmers were attending regularly and 81 percent of follow-up visits occurred as planned\. There were only two demonstrations per contact group and per cropping season before 1997, the main reason being that only one third of planned fortnightly training sessions of the VEWs and supervisors by Subject Matter Specialists took place\. Such sessions were to provide the demonstration themes needed and did not occur on a regular basis\. Reasons included the fact that there were few themes repeated several times leading to loss of interest from VEWs, and also insufficient means of transportation\. Following the retrofitting of the project in March 1997 and the implementation of its action plan, including the promotion of participatory diagnosis, the rate of completion of planned training sessions increased to 65 percent and the number of demonstrations per contact group doubled from 2 to 4 during the 1997/98 cropping season\. The number of demonstration units increased from 12, 950 in 1993 to 33,832 in 1997\. Training of Responsible Officials 14\. This objective was partially achieved\. A major achievement of the project has been its ability, through formal training and exchange of experience, to create a VEW force and its supervisors trained in several disciplines\. 15\. Seventy-seven percent of the planned monthly technology review meetings (AMRTs), which brought together researchers and subject matter specialists, took place during the project period\. The achievement ratio increased from 50 percent in 1993 to 89 percent in 1997\. 16\. Fortnightly training sessions, where Subject Matter Specialists transfer the information received during the monthly technology review workshops (AMRTs) to VEWs and their supervisors, did not occur on a regular basis\. On average, only one out of three planned actually took place\. The completion ratio was 26 percent in 1993 and increased to 39 percent in 1997\. 17\. In addition to the regular training sessions, there has been specific training sessions covering various themes, including T&V methodology, planning and implementation of on-farm trials, work planning, demonstrations, and Monitoring and Evaluation\. Participatory diagnostic training was also emphasized, particularly after the 1995 mid-term review and the 1997 retrofitting\. A total of 204 specific training events for extension staff at all levels in different parts of the country were organized during the project period\. 18\. Training of staff outside the country, as suggested in the SAR, did not take place until 1997 due to inadequate planning\. There has been no overseas training of key project staff in the monitoring and evaluation, rural extension, information support, and other -5 - important fields\. However, in implementing the action plan of the 1997 retrofitting, four project staff were finally sent abroad in 1997 for training in farmers organizations, and one was sent for management training\. Linkage with Research 19\. The research-extension linkage objectives were partially achieved\. The project was able to establish adequate research-extension mechanisms and to get research and extension staff to work together and to institutionalize their relationship through memoranda of understanding\. However the findings and impact of the research-extension activities, such as on-farm trials, were globally weak compared with the stated objectives of the component (paragraph 4-c)\. 20\. The linkage was governed by a memorandum of understanding between the National Agricultural Research Institute (INRAN) and the project\. Mechanisms for ensuring the linkage were (a) the regional agricultural research committees or Comit6s Regionaux de la Recherche Agronomique (CORRA); (b) monthly technology review workshops (AMRTs); (c) on-farm trials; and (d) multidisciplinary research-extension teams\. 21\. The regional agricultural research committees (CORRAS), which were not mentioned in the SAR, existed prior to the project (PRSAA) but were initiated under the research project (PNRA) which became effective in 1991\. The CORRA was a forum for farmers, administrators, research and extension specialists to meet at the regional level to discuss rural development problems and propose solutions\. Three CORRA meetings took place, at Tillaberi in 1992, at Dosso in June 1993, and at Tahoua in December 1993\. The CORRAS were suspended when the research project stopped funding them, because their performance was unsatisfactory from the point of view of the research project\. They were controlled by the political administration which was using them more for its own purpose than for providing answers to pressing research and extension questions\. 22\. Most of the planned monthly technology review workshops AMRTs took place each year during the project period\. There were 36 out of 72 planned (50 percent) in 1993; 42 out of 72 planned (58 percent) in 1994; 38 out of 95 planned (45 percent) in 1995; 61 out of 84 planned (72 percent) in 1996, and 75 out of 84 planned (89 percent) in 1997\. Reasons for the shortfalls were transportation problems faced by the SMSs, and the repetitive nature of discussion themes in the early years of the project, resulting in lack of interest from the SMSs\. This was a result of the neglecting to undertake a participatory diagnosis to identify pertinent and demand-driven themes\. 23\. On-farm trials of technologies were carried out by the extension services, but in relatively small numbers in the early years of the project\. There were 201 tests out of 309 planned (65 percent) in 1993\. There were no tests in 1994 due to a lack of communication between research and extension staff during that year\. There were 329 tests out of 369 planned (92 percent) in 1995; 532 tests out of 577 planned (92 percent) in 1996, and 1,856 tests and researcher managed trials (including 1200 extension tests) out of 2,204 planned in 1997\. The number of tests was generally greater than the target of 250 tests per year set at appraisal\. The increase in the last year was due mainly to the -6- requirements of the 1997 post (retrofitting action plans\. However, the quality -of the on- farm tests was often poor and led to few significant findings and minor impacts\. 24\. Two research-extension multidisciplinary teams were set up in 1996 in the departments of Dosso and Maradi\. The team included in each province six researchers and three extension staff and worked with extension staff at the district level\. Two districts were covered by each team in each province in 1996 and 1997\. Activities carried out by the team included participatory diagnostics and planning, and on-farm testing and demonstrations of technologies\. Following a positive evaluation in 1997 of the results achieved by the two teams, the national research and extension institutions decided to further decentralize the multidisciplinary team approach and establish a permanent diagnostic team in each district (Equipe de Diagnostic d'Arrondissement)\. Relations between Crop, Livestock, and Environment Services 25\. This objective was substantially achieved\. The strengthening of relationships between crops, livestock and environmental services was achieved through the institutionalization of working relationships between the three types of services at central, regional and district level\. In particular the multidisciplinary training of extension agents achieved under the project is the result of such strengthening of relations\. Gender and Audio-visual 26\. These components were articulated in action plans following the project's retrofitting in 1997 and were substantially completed\. The Gender component was designed to improve women's access to agricultural services\. As a result of the implementation of related plans, about 30 extension staff in charge of women's activities have been appointed at the national, regional and sub-regional levels\. Extension themes of particular interest to women have been introduced into the training schedule\. A total of 64 women VEWs have been appointed and the number of women contact groups increased from 1,004 in 1997 to 3,757 in 1998\. Women farmers' associations and women's savings and credit schemes also emerged as a result of the implementation of the plans\. 27\. The use of audio-visual instruments, such as radio and television extension programs was enhanced following the retrofitting, so as to lower the cost of extension and increase its impact\. A survey in May 1998 to assess the impact of such programs indicated that over 60 percent of farmers listened to the radio programs and over 40 percent watched the television programs\. Over 80 percent of the viewers or listeners found the demonstrated technologies relevant to their needs and applied partly or fully at least one of them\. Technology Adoption 28\. According to the M&E results, about ten out of more than fifty technologies had significant adoption ratios between 1994 and 1996\. The most adopted technologies (about 50 to 60 percent of farmers partially adopting within the contact groups) were soil water conservation techniques (the zai in particular) and planting density\. Technologies -7 - with moderate adoption rates (20 to 40 percent) included composting, mineral fertilizers, improved wood stoves, thinning, elimination of livestock internal parasites, livestock feeding crates, urea block and urea treatment of hay for livestock feeding\. However, a more independent impact study carried out in Febmary 1998 by a consultant with a sample of over 3,000 farmers (half of whom were contact farmers) suggested much lower adoption rates\. This study indicated that, out of 32 crop production technologies, only five (16 percent) had significant nationwide adoption rates between 8 and 17 percent of the contact group farmers\. These are, in a declining order of adoption, thinning, compost production, plant density, seeds treatment with fungicides, and use of organic manure\. Among the livestock production technologies, only five out of nineteen (26 percent) had a significant adoption ratio between 8 and 30 percent of contact group farmers\. These include in declining order of adoption, urea block (licks) for livestock feed supplementation, forage cutting and storage, stomach parasite treatments, construction of feeding crates, and hay treatment with urea\. Among the environment protection technologies, five out of thirteen (38 percent) had a significant adoption ratio between 8 and 25 percent of contact farmers\. These are, in a declining order of adoption, the improved wood stove, the zai land recuperation technique, improved land clearing, natural tree regeneration protection, and pruning techniques\. Technology adoption in the non-contact groups were much smaller and dispersion rate was estimated to be on average one contact farmer to four non-contact farmers, instead of 10 as expected at appraisal\. A third independent impact study carried out with the help of a consultant after project completion, on a smaller but widely spread sample (120 households) focused on the six most popular technologies identified in the previous study and found that their adoption rates were about 33 percent in the contact groups as well as in the non-contact groups\. Functional Literacy 29\. This objective was substantially achieved\. The literacy component, handled by the Direction de l'Alphab6tisation et de la Formation des Adultes of the Ministry of Education, was introduced in the project in 1994 as a pilot program, covering 5 villages in the Dosso district and 5 villages in the Konni district (Tahoua province)\. Five hundred farmers benefited from the pilot program\. 30\. The program was subsequently extended nationwide to cover 23 districts\. A total of 365 villages were covered under the program, surpassing the target of 350 villages at appraisal\. The population reached was 20,212 farmers of whom 50\.33 percent were women\. The final test was taken by 14,168, of which 5,175 men and 3,864 women passed and became certified literates, while the remaining were considered to be semi-literates\. These results reflect an acceptable 30 percent drop-out ratio\. 31\. According to UNDP statistics, the literacy ratio for adults in Niger increased from 14 percent in 1988 to 17 percent in 1998, partly due to the effects of the project\. In 1998, out of a total of 1,035 literacy training centers, 58 percent were under the project during the second half of the decade, thereby suggesting a significant contribution of the project to the observed increase in the adult literacy rate in the country\. -8 - Monitoring and Evaluation 32\. An external M&E unit was established in 1993 under the Direction des Etudes et de la Planification of the Ministry of Agriculture and Livestock\. In practice, however, it has rarely been operational\. A M&E report produced by the unit in 1994 was not considered useful by the extension services since the authors lacked adequate training\. Furthermore, it is the general feeling of the M&E unit staff that the project managers, fearing negative evaluations, never made available on time the necessary resources for them to carry out their duties properly\. Only two M&E surveys were carried out by the unit over the five years of the project while one was planned for each year\. The unit was instead used to compile and analyze routine extension management information contained in monthly reports from the field\. This was inadequate to acquire sufficient information to guide the project management\. One external adoption study was finally carried out by the end of the project to comply with the requirements of the 1997 post- retrofitting action plans\. 33\. The failure of the M&E unit to demonstrate any significant impact of the project, in terms of technology adoption and benefits to farmers, was the main cause for the project being rated unsatisfactory with respect to its development objectives from 1995 until the end of the project\. Major M&E achievements, such as the early 1998 impact study which documented action plans resulting from retrofitting, were similarly insufficient and occurred too late to guide project implementation\. Civil Works, Vehicles and Equipment\. 34\. Acquisition of program inputs in terms of buildings and equipment progressed faster than program outputs\. A total of 26 training centers, one in each district, were built and equipped\. One hundred and three vehicles (compared with 60 planned at appraisal) and 871 motorcycles were acquired, as well as office equipment, including computers\. The few performance indicators defined at appraisal emphasized mostly the achievement of such project input goals\. Financial and Administrative Management 35\. The project fmancial and administrative management was unsatisfactory throughout the project implementation period\. Management was unstable with eight different project coordinators over a five year period\. Audits reported ineligible and insufficiently justified expenses from 1995 to the end of the project, which led to the government's reimbursing about CFAF 200 million\. Up to 1995, the project had a centralized financial management system; it was subsequently decentralized to some extent but never functioned efficiently because of inadequate training of management staff, particularly the financial controller and the accountants\. Other problems included a lack of transparency on the side of the project coordinator and resistance to allow the internal control mechanism (procedures manual, co-signatures) to function as planned\. -9 - D\. Project Cost And Financing 36\. The total project cost was over US$20\.5 million\. US$18\.0 million were funded by the IDA credit with the balance funded by the government and beneficiaries, mainly to cover salaries of the extension staff, and also for land and other items offered by rural communities for the housing of the village extension workers\. E\. Major Factors Affecting The Project 37\. Management Instability\. The frequent changes in project management that coincided with almost every change in Minister of Agriculture was a major contributor to the poor performance of the project\. It led to lack of continuity in implementation strategy, frequent changes in priorities, and disruptive interventions of some government officials in project implementation, particularly in the allocation and use of project resources (e\.g\., vehicles, oil)\. 38\. Deficient Monitoring and Evaluation System\. The absence of adequate performance indicators and M&E data, both from internal and external sources, to guide project management, significantly contributed to the poor performance of the project\. 39\. Midterm review\. The midterm review carried out in February 1995 was instrumental in identifying several weaknesses in project implementation, particularly in the areas of extension management and financial management, and in making recommendations for corrections at an early stage\. Corrective action included restructuring of staff at the field level, with elimination of overlapping in areas of intervention of staff, and rationalization of the organization chart\. It significantly contributed to the institution building (T&V) achievements of the project\. 40\. Retrofitting\. The action plans put in place following the March 1997 retrofitting of the project significantly contributed to improvement of the project performance during its last year\. The plans enabled the project to shift emphasis slightly from level of efforts (or project inputs) to impact in terms of expected results and to introduce or emphasize needed specific components\. As demonstrated by the evolution of the previously discussed extension parameters, significant positive changes in such parameters were observed during that period\. In particular the introduction and successful implementation of the gender and audio-visual action plans significantly upgraded the performance of the project\. F\. Project Sustainability 41\. The extension system in Niger is not financially sustainable and is likely to remain so in the near future, given its current design and the low capacity of Government to finance its recurrent costs\. The government does not currently have the capability to sustain the recurrent costs of the project, and extension services are rapidly diminishing due to an absence of external funds\. 42\. The human resource development elements of the project (fanner's training in new technologies, literacy) are expected to have a sustainable impact\. It is even -10- expected, given the high rural demand for functional literacy, that with reduced or no funding, several village communities, are likely to maintain or create and pay for their functional literacy programs\. Furthermore, some of the low resource technologies that have been transferred to farmers, particularly in the area of soil fertility maintenance (e\.g\., zai, half moon) are expected to also have long lasting effects in environmental protection\. G\. Bank Performance 43\. Project Preparation\. The Bank's performance during preparation was unsatisfactory\. A two-year pilot project was carried out in preparation for the project, but glossed over a number of risks that in hindsight affected performance and sustainability, including the lack of continuity in national and Bank project managers, poor morale from delays in salary payments, lack of unity in the line of command at the ministerial level, and delays in the transfer of accounting documents from regional to central level\. There were deficiencies in some areas, such as the lack of a logical framework and performance indicators, insufficient risk control/mitigation mechanisms\. However, the design of the project, given the complexity of the Nigerien extension system, had some merits, particularly regarding the nation-wide institutionalization of the T&V approach, and inter-institution linkages and coordination mechanisms\. 44\. Project Supervision\. The Bank's performance during project supervision was overall unsatisfactory\. The project task manager was initially based in the field during the first two years of the project for close supervision and was assisted by specialists from headquarters\. Close supervision was maintained afterward with two local staff and with headquarters-based task managers\. Although formal supervision took place regularly twice a year, the supervision teams included mainly extension specialists and fimancial analysts, but lacked monitoring and evaluation specialists\. The midterm review took place as planned two and a half years after project effectiveness\. It identified several deficiencies and made adequate recommendations to correct some but not all of them, without any fundamental change in project design\. The Bank changed the project task manager four times during the five years of project implementation, thereby creating instability and lack of continuity in project management approach on the Bank's side\. This was exacerbated by the fact that, due to the absence of adequate development outcome indicators, the project performance was arbitrarily rated by each task manager on the basis of subjective opinions\. Decisive actions were not taken to limit the frequent change of project coordinators by the Government, to correct the financial management of the project or to suspend the project in view of its numerous qualified audits and ineligible expenses\. The project was declared "at risk" and was retrofitted as needed, but this was done fourteen months before the end of the project, with insufficient time to change project performance from unsatisfactory to satisfactory\. 45\. Procurement, Disbursement and Audits\. The Bank's performance with respect to procurement was marginally satisfactory, even with a field-based Task Manager, as a result of long delays for acquiring non-objections\. Performance with respect to disbursement and audit were more satisfactory, as they resulted in the project disbursing almost all the credit as planned, and allowed timely detection of ineligible expenses and other financial management constraints\. H\. Borrower Performance 46\. The performance of the Borrower was satisfactory during preparation, but unsatisfactory during implementation\. Government failed to establish an effective external monitoring and evaluation system\. The frequent change (eight times in five years) of project coordinator was for political reasons rather than for technical performance reasons\. Project resources were often abused by Government officials, such as the requisition of project vehicles by Prefets and sous-Prefets\. The Government did attempt to resolve problems by moving the project from the Ministry of Agriculture and Livestock (MOAL) to the Ministry of Economic Planning in April 1998, reflecting the Government's weaknesses in tackling fundamental problems within MOAL\. This was done too late and was not necessarily the best solution\. The Government satisfactorily complied with most legal convenants and supported action plans proposed by supervision missions to improve the performance of the project\. I\. Implementation Agency 47\. The performance of the project coordination unit was unsatisfactory, mainly as a result of financial management problems that resulted in several qualified audits and ineligible expenses reimbursed by the Government from 1995 to 1998\. Project coordinators' reluctance to provide adequate and timely resources to the M&E component contributed to the poor performance of the internal monitoring and evaluation system, and thereby to the poor performance of the implementation agency\. However, following the 1997 retrofitting, the performance of the project coordination office improved significantly and resulted in successful completion of most actions proposed in the post-retrofitting action plans\. J\. Assessment Of Outcome 48\. Supervision missions often rated the project satisfactory with respect to its implementation progress but generally unsatisfactory with respect to attaining its development objectives\. In retrospect, however, implementation progress was in fact barely satisfactory, if not unsatisfactory\. This was a result of administrative and financial management problems and problems stemming from not having an adequate monitoring and evaluation system\. In providing satisfactory rating for implementation progress, supervision missions focused achievement of action plans proposed during previous missions\. Most of such plans turned attention to technical T&V implementation issues rather than project management and M&E issues\. The project was most successful in capacity building\. Four of its seven major capacity building objectives were substantially achieved (organization of extension services; improvement of the linkage between crop, livestock and environment services; functional literacy; civil works and equipment)\. Other capacity building objectives, particularly regarding training and management were not achieved\. Although there are, as suggested by the early 1998 impact study, a few cases where the project successfully transferred technologies, the achievement remains insufficient (although no standards were originally agreed upon) with no knowledge of its impact on the livelihood of farmers\. It may be premature to expect much impact from a five-year project, but given the rather successful organization of the extension services during the first two years of the project, better results in terms of extension of pertinent -12- technologies and in terms of adoption might have been achieved during the other three years if the M&E and management components had functioned properly\. Seen in this broader context, the project outcome is rated globally unsatisfactory\. K Future Operations 49\. Due to the unsatisfactory performance of the project and the fact that supervision efforts were aimed primarily at correcting short-term problems, no preparation for a follow-up operation was made during the life of the project\. Since the end of the project, the extension system has been surviving on Government funds and on a revolving fund created for the maintenance of the motorcycles of the extension staff\. A rural development strategy is however being drafted by the Borrower and several strategic studies and workshops have been carried out under the project\. Their results may serve as a basis for the identification of future operations to provide more cost-effective agricultural services to Nigerien farmers\. L\. Key Lessons Learned 50\. The following are the key lessons learned from the project a) It is essential to define and phase project objectives by stating clearly at appraisal the short-term, medium-term, and long-term objectives of the project and related performance indicators\. b) It is essential to ensure, from the beginning of project implementation and during each supervision, that external and internal monitoring and evaluation systems use adequate performance indicators, are properly staffed, are allocated timely and adequate resources for operation and training, and are not adversely influenced by national project managers/coordinators\. c) Stability of project management must be encouraged, by ensuring that managers are recruited more on the basis of technical and managerial competence than on the basis of political affiliation\. d) Multidisciplinary training of extension agents is feasible and shows potential to be an effective way of reducing costs of extension services to small farmers\. e) Participatory diagnosis is a critical factor in improving the pertinence of extended technologies, and therefore the efficiency and the impact of extension services\. - 13- IMPLEMENTATION COMPLETION REPORT NIGER AGRICULTURAL SERVICES PROJECT (Cr\.2355-NIR) PART II: Statistical Tables Table 1: Summary of Assessments Substantial Partial Negligible Not applicable A\. Achievement of objectives (X) (X) (X) (X) Macroeconomic policies X Sector policies ___ X Financial objectives X Institutional development X Physical objectives X l Poverty reduction X Gender issues X Other social objectives x Environmental objectives _ X Public sector management X Private sector development X X Other (specify) X 1 Likely Unlikely Uncertain B\. Project sustainability (X) (X) (X) Highly satisfactory Satisfactory Deficient C\. Bank performance (X) (X) (X) Identification x Preparation assistance x Appraisal X Supervision X - 14- Highly satisfactory Satisfactory Deficient D\. Borrower performance (X) (X) (X) Preparation 1X Implementation X Covenant compliance X Operation (if applicable) X Highly Highly E\. Assessment of satisfactory Satisfactory Unsatisfactory unsatisfactory outcome (X) (X) (X) (X) x Table 2: Related Bank Loans/Credits Loan/Credit title Purpose Year of Status approval Preceding operation Dosso RDP The project was aimed to increase 1979 Completed (Cr\. 0967) agricultural production and reinforce capacity building at a local level\. The project Completion report concluded that the impact of Dosso project on production increase was marginal and that the adoption of insufficiently proven technical messages by farmers was limited\. The project closed in June 1985 with only 16 percent of fund disbursed out of the total credit of US$20 million Maradi RDP II The project aimed to: (a) encourage 1980 Completed (Cr\. 1026) farmer's initiative and participation and to make them more responsible for development activities; (b) develop village-based extension system; and (c) gradually reduce technical assistance and cut operating cost\. The project was confronted with implementation problems and failed to achieve the expected increase in crop production and a real participation of farmers in development activities\. Small Rural The project aimed at helping the 1988 Completed Operations Government to develop institutional (Cr\. 1890) capability in preparation and execution of small rural operations by (i) providing support to provincial and district technical - 15 - services, (ii) improving extension services, and (iii) training beneficiary groups in literacy and management\. In addition, the project financed investments in grant form for (a) bottomland improvements, (b) development of small- irrigated perimeters, (c) establishment of fruit tree nurseries, and (d) various operations in natural resource management\. AG\. Research The project aims to strengthen national 1990 Active Project planning and implementation capacity in (Cr\. 2122 Nir) agricultural research\. In particular, the project emphasizes the development of research capacity in order to respond to the needs and constraints of agriculture as practiced in Niger\. Following operations Pilot Private The project assesses and applies irrigation 1995 Active Irrigation technologies adapted to small-scale (Cr\. 2707 Nir) agriculture as practiced by individual farmers\. Natural Resources The project is intended to slow and arrest 1995 Active Mgt\. environmental deterioration, and (Cr\. 2796 Nir) eventually improve environmental conditions\. It is the first part of a long- term project aimed at improving agricultural productivity\. Table 3: Project Timetable Steps in Project Cycle Date Planned Date Actual/ Latest Estimate Identification October 1987 October 1987 Preparation October 1988 October 1988 Appraisal May 1991 May 1991 Negotiations January 1992 February 1992 Board Presentation March 1992 April 1992 Signing - June 1992 Effectiveness January 1993 Mid-term review July 1994 February 1995 Project Completion December 1997 December 1997 Credit Closing June 1998 June 1998 - 16- Table 4: Disbursements: Cumulative Estimated and Actual (US$ million) \| FY93 FY94 FY95 FY96 FY97 FY98 FY99 Appraisal Estimate 4\.5 7\.5 10\.5 14\.1 17\.3 18\.0 - Actual 2\.1 4\.0 6\.5 9\.4 12\.9 16\.1 18\.1 Actual as % of Estimate 46\.7 53\.3 62 66\.7 74\.6 89\.4 - Date of Final Disbursement October 14, 1998 - 17- Table 5: Key Indicators for Project Implementation Activity/objective At Project Expected at Project Situation During ICR Stait Completion Mission Program Inputs Fielding of Extension Staff: - VEW (field extension staff) 315 419 600 - Supervisors 60 66 100 - SMS/TS 12 20 78 Vehicles 2 20 103 Motorcycles 5 66 871 Mopeds 35 410 0 Actual recurrent expenditures per VEW per year for mobility and training N\.A\. 630,000 Program Delivery In service training of - VEW inadequate - SMS inadequate (periodicity & regularity) Extension trial plots 30 250 201 to 1,200 No\. of contact farmers/groups 2,200 8,000 8,694 No\. of farmers in contact groups (men, women) 30,000 120,000 84,000 Periodicity of farm visits - VEW inadequate fortnightly about 30 percent of - Supervisors cc planned - SMS visits carried out Program Impact No\. of farmers testing 0 to 25,000 improved technologies on depending on micro-plots (men/women) 2,200 16,000 technology (see paragraph # 28 Development of new extension messages per season 2-4 0-10 Surveys by Monitoring Unit on adoption and diffusion - 1 per year 2 in 5 years Geographic Coverage 768 6,100 4,000 villages - 18- Table 6: Key Indicators for Project Operation Key Indicators Estimated Actual Staffing Ratio Farmer households per extension agents 2000 1,448 Supervisor per extension agents 1/8 1/6 Training Schedule BI-weekly 7,213 2,225 Monthly 396 252 Number of contact groups 8,694 (in 1997) Total Number of contact groups (in 5 years) 41,012 Table 7: Studies Included in Project Studies Status Impact of the Study 1\. Participatory Method Fulfilled Production of a document on Programming participatory method and training of all the staff 2\. Detailed plan of ag\. Extension Fulfilled This study helped readjust the extension in peri-urban areas in peri-urban areas 3\. Study to set-up a sustainable Fulfilled This study helped set-up a sustainable extension strategy national extension strategy 4\. Study on farmers' Fulfilled Identification and recording of farmers' organizations organizations 5\. Study on institutional aspects Fulfilled This study helped put in limelight the of the project causes for project's problems and the solutions to solve them 6\. Study on the supply of Fulfilled This study helped analyze the market, agriculture Inputs identify the problems and find the solutions to solve them 7\. Study of the market of Fulfilled This study helped ensure a better chemical agriculture inputs in knowledge of chemical agriculture Niger inputs in Niger 8\. Diagnosis and identification of Fulfilled This study helped identify women's women's specific needs specific needs in order to better integrate them in extension activities 9\. Studies on the adoption of Fulfilled his study helped the project know the technologies technologies effectively mastered 10\. Study on the improvement of Fulfilled This study helped the unit in charge of the monitoring and evaluation monitoring and evaluation set-up system pertinent monitoring and evaluation indicators and also create a monitoring and evaluation system at sub-regional _ level 11\. Study to set-up an internal Fulfilled Conception of the internal control control system system - 19- TABLE 8A: Project Costs (in US$M) Project Components Appraisal Estimate Actual Civil Works 0\.8 0\.6 Vehicles, Equipment, Materials and 4\.3 4\.5 Furniture Consultant Services 0\.3 0\.4 Training 0\.9 1\.5 Operating costs 8\.5 10\.0 Refunding of Project Preparation 1\.5 1\.1 Advance Unallocated 1\.7 0\.0 Total 18\.0 18\.1 Table 8B: Project Financing Source Appraisal Estimate Actual/Latest Estimate (US$M) (US$M) Government and 1\.8 2\.5 Beneficiaries IDA 18\.0 18\.1 TOTAL 19\.8 20\.6 Table 9: Economic Costs and Benefits Not Applicable Table 10: Status of Legal Covenants Credit Covenant Present Original Revised Description of Covenant Comments Agreement Type Status Fulfillment Fulfillment Section Date Date 3\.01(a) 10,05 C The Borrower declares its commitment to the objectives of Complied with, the Project as set forth in Schedule 2, and shall carry out consistently\. Part A of the Project through MAG/EL and MH/E, Parts B and C through MAG/EL, MH/E and MEN/R, and Part D through MEN/R, with due diligence and efficiency and in conformity with appropriate administration, financial and technical practices, and shall provide promptly funds, facilities, services required for the Project\. 3\.01(b) 10 CD Without limitation upon the provisions of para (a) of this No comments\. Section, and expect as the Borrower and the Association shaU otherwise agree, the Borrower shall carry out the Project in accordance with the Implementation Program set forth in Schedule 4 to this Agreement\. 3\.02 03 C Except as the association shall otherwise agree, Complied with, procurement of the goods, works and consultants' services consistently\. required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement 3\.03 13 NC The Borrower shall ensure that aUl motorcycles and This covenant is being mopeds purchased under the Project for use by revised\. supervisors, VEWs and Monitoring & Evaluation agents shall be assigned to the appropriate local government, which shall thereafter be required to assume responsibility for the maintenance of such vehicles and for their insurance\. 3\.04 05,09 C The Borrower shall establish a coordinating committee, Satisfactory\. consisting of the Project Coordinator and representatives of each Directorate, and of INRAN, to be responsible for the coordination and supervision of the Projects: MAE/EL-Agrc, Plant Protection, Livestock, Studies and Programming; MH/E-Environment, MEF-Programs and Plan, Pub\. Debt; MEN/R-Functional Literacy; MAE/C- I________ International Organization and Conference\. 4\.01(a) 01 C The Borrower shall maintain or cause to be maintained Satisfactory\. records and accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures in respect of the Project of the departments or agencies of the Borrower responsible for canying out the Project or any part thereof\. 4\.01(b)(i) 01 C The Borrower shall: have the records and accounts Satisfactory\. referred to in para (a) of tNis Section including those for the Special Account for each FY audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association\. 4\.01(b)(ii) 01 NC The Borrower shall funish to the Association, as soon as Audit report for the 1994 available, but not later than 6 months after the end of each accounts was received\. year, a cerfified copy of the report of such audit by said However it was not auditors, of such scope and in such detail as the acceptable\. Its revision Association shall have reasonably requested\. would be done together with I________ ________ __________ ________________________________________________ the audit of 1995 accounts\. 4\.01(b)(iii) 01 C The Borrower shall furnish to the Association such other Satisfactory\. information concerning said records, accounts and the audit thereof as the Association shall from time to time reasonably request 4\.01(c)(i) 01 For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: maintain or cause to be maintained, in accordance with para\. (a) of this Section, records and accounts reflecting such expenditures\. 4\.01(c)(ii) 01 For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of SOE, the Borrower shall: retain, until at least 1 year after IDA has received the audit report for the FY in which the last withdrawal from the Credit Account or Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures\. 4\.01(c)(iii) 01 For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of SOE, the Borrower shall enable the Association's representatives to examine such records\. 4\.01(c)(iv) 01 Pertaining to the SOE, the Borrower shall ensure that said accounts and records shall be audited on a semi-annual basis with audit reports furnished to IDA not later than 3 months after the end of the audit period, with an opinion as to whether the SOE submitted during such period, can be l___________________ ________ relied upon to support the related withdrawals\. Status: Covenant Class: C: Complied with 1: Accounts/audit 7: Involuntary resettlement CD: Complied after delay 2: Financial performance/generate 8: Indigenous people NC: Not Complied with revenue from beneficiaries 9: Monitoring, review and reporting Soon: Compliance expected 3: Flow and utilization of Project fimds 10: Implementation in Reasonably Short Time 4: Counterpart funding 11: Sectoral or cross-sectoral budgetary or other resource allocation CP: Complied with Partially 5: Management aspects of the Project 12: Sectoral or cross-sectoral regulatory/institutional action NYD: Not Yet Due or of its executing agency 13: Other 6: Environmental covenants Table 11: Bank Resources: Staff Inputs Stage of Actual Project Cycle Weeks US$ \.___________________ ($000) Through Appraisal 147\.7 405\.3 Negotiation-Board 21\.7 68\.8 Supervision 275\.1 669\.7 Completion 12\.0 22\.5 TOTAL 456\.5 1,166\.3 l-h Table 12: Bank Resources: Missions Performance Rating Project phase Month/Year Number Days Specialized Implementation Development Types of of in Staff Skills Status Objectives problems Persons Field Represented Identification Oct\. 1987 - - Preparation Oct\. 1988 4 12 AS, AS, AE, TR Appraisal May 1991 EX, FA, OA, _ _ l___ EX, ME Supervision I Dec\. 1993 2 14 AS, AS S S Supervision II Aug\. 1994 3 14 AS, AS, AS S S Mid Tenn Review Feb\. 1995 4 15 EC, AS, AS, FA S U M, F, L Supervision IV June 1995 2 12 AS, AS S U M, F, L Supervision V Dec\. 1995 4 14 AS, AS, AE, U U M, F, L 00 Supervision VI Sept\. 1996 4 14 AS, AS, AE, S U FP 00 Supervision VII Oct\. 1997 4 12 EX AS, AE, S U M, P, PS Supervision VIII June 1998 2 10 AS, OA S U M, PS, M&E Types of problems: Subject specdalty: D: Slow Disbursement AE: Agricuhural Economist TR: Training Specialist F: Availability of counterpart funds AS: Agricultural Services Specialist 00: Operations Officer FP: Financial problems EC: Econornist OA\. Operations Analyst L: Adherence to legal clauses EX: Extension Specialist NRM: Natural Resources MgL Specialist M: Project management ME: Monitoring and Evaluation Specialist RR: Resident Representative PS: Project Staffing FA: Financial Analyst WID: WUD Specialist P: Progress with procurement LS: Livestock Specialist NGO: NGO Specialist TA: Progress with technical assistance PS: Procurement Specialist TR: Training SE: Social Economist M&E: Monitoring and Evaluation RF: Rural Finance Specialist MS: Management Specialist APPENDIX UPUBIIOUX DU NIOUl Nay, Du KZ!TXR D PUNM DXgCTZON DES PROR0g&b=S IT DU PLAN _"______/HP/D\./BDR v 7- L1 UICRZTAXRl M GIRAL Monsieur le Repr6sent\.nt Rhaident de la Banque Nondiale t Proj et de Reforcement des gervicas d'appui A iLAgriculture (CR 2355 - OMIR rapport d'adh&vement Ut= : 31R/liO/9 9/AgT Monsieur le Repr6sentant Resident, Suite & votre lettre ci-dessus rdf6renc6e, jiai l'honneur de vous informer que mon d6partement minist6riel n'a aucune observation quant au contenu de ce rapport d'achAvement\. Aussi noug vous saurions gr6 des dispositions qua vous voudriez blen prendre pour prxsenter ce document au Conseil d'Adminietration de la Banque\. Veuillez agrier, Monsieur le Repr6sentant R±aident, meo consid6rations distingu6es\. B MAP SECTION ALGERIA L 4' t is6 Th ~~~~~~~~~~~~~~~~~~~~~~~~~~LIBYA "This slo h-s been prepared by The Worl1d Bosh' stffechiey MALI ) NIGER rthe fdsooeiece of-seeders -sd is -1\.loiooly for the CHAD Irt-erol use of TheWorld8Bo-k '_IIAVrop\.The denominc tion s u sed A L E R A k Niomey 1fl\.1 an~~od fho boosdories shoe'sL ttX 2UR2a' w9 w on this map do ,ot impIy, on the wo part of The World b-n G-op\. \ ZX r0- I \ any judae-ent on the le\.gs o g \i J NIGERIA Ofstatus rf osy territory Or -yO -nd-r-sst or occeptooe ofI = l\.ooo w f surh bo-ed\.ries\. I ARICAN CIIRRON- REP : ~~~~NIGER ' AGRICULTURE SERVICES PROJECT 20 SE ARRONDISSEMENTS ADDED UNDER CURRENT PROJECT /BivMA io ARRO\.DISSEMENTS REACHED UNDER THE PILOT PROIECT AND CONTINUED UNDER CURRENT PROJECT/ ARBUT AGADEZ I PAVED ROADS EARTH ROADS RIVERS Arlit I o SELECTED TOWNS I o) DEPARTMENT CAPITALS _ * NATIONAL CAPITAL - - - - ARRONDISSEMENT BOUNDARIES AGbDfZ DEPARTMENT BOUNDARIES INTERNATiONAL BOUNDARIES l V < \| / ~~~~~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~DIFFA/ o 50 loo 150 20 2SO eT _ 16 I(lLOMETfRS ______________I_____J_____ 16- oMILES S ra l0 1 TAOUA 9 MALI T CHIN-TARA\.rADfNW/\. / ~~~ TAIdCUA ( D A\ \ g k ~~~~~~~~~~~~~~~~~~~~~~~~~~~ ZINDER GcjvkEiGI t hAU Na UMl' CHAD Teiltidi dnoe TAHOUA ¾ Torodi Soy ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~okr _ ~ NA _o SI _ I _ I _ I_ bN T\.~~~ ~ ~ ~ Kom 2 FASO NIGER IAIT 1' CAMEROON 15	REVIEW
P111567	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) Report Number : ICRR0021435 1\. Project Data Project ID Project Name Rwanda Electricity Access Scale-up P111567 Proj\. Country Practice Area(Lead) Additional Financing Rwanda Energy & Extractives P126483,P126489 L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IDA-46510,IDA-51930 31-Jan-2014 124,496,525\.55 Bank Approval Date Closing Date (Actual) 15-Oct-2009 30-Mar-2018 IBRD/IDA (USD) Grants (USD) Original Commitment 70,000,000\.00 0\.00 Revised Commitment 130,000,000\.00 0\.00 Actual 124,496,525\.55 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Victoria Alexeeva Fernando Manibog Ramachandra Jammi IEGSD (Unit 4) 2\. Project Objectives and Components a\. Objectives The project development objective was âto improve access to reliable and cost-effective electricity services for households and priority public institutionsâ (Financing Agreement, page 6; Project Appraisal Document, page 8)\. b\. Were the project objectives/key associated outcome targets revised during implementation? Page 1 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) Yes Did the Board approve the revised objectives/key associated outcome targets? Yes Date of Board Approval 19-Feb-2013 PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? No d\. Components 1\. National Grid Rollout (appraised at US$68 million, of which IDA US$58 million and OPEC Fund US$10 million; IDA additional financing (AF) of US$45 million; actual US$105\.19 million)\. The component targeted areas identified in the National Electricity Access Program (NEAP) access prospectus to be suitable for grid connection following a least cost prioritization model\. The investment program had the following subcomponents: (i) Grid intensification in urban and peri-urban areas to finance a grid intensification program for already-connected urban areas; the target was to increase the number of consumers from 110,000 to 210,000 households by end-2012\. This subcomponent would support Rwanda Electricity Corporation (RECO) to procure the required poles, conductors, transformers, meters, and other connection hardware and local installation services\. The project would start with âquick wins,â focusing on the larger cities such as Kigali, Cyangugu, Huye, Kibuye, Giseniy, Gitarama, and Ruhengeri, where the âunservedâ potential was believed to be the highest\. As the resource envelope permits, the project would then extend to peri-urban areas\.(ii) Electrification of new districts and sectors, including medium voltage (MV) extensions and low voltage (LV) reticulations would finance extension of the existing national grid to previously unconnected areas identified in the NEAP prospectus where there were major clusters of potential demand close to existing grid supply points\. Connections would be made using appropriate technologies to minimize investment costs and the need for maintenance\. Investments would include poles, conductors, transformers, and other needed hardware as well as planning, engineering and installation services\. (iii) Backbone MV/HV grid strengthening, improved operational capacity, and service network expansion would address persistent supply issues in the Rwandan national grid, such as supply bottlenecks and low or fluctuating voltage levels, to reach the required transfer capacity and supply quality for the targeted areas in the rollout program\. Investments would be focused on continued rehabilitation and capacity improvement of the existing grid infrastructure, started under the IDA-funded Urgent Electricity Rehabilitation Progam, including both upgrading the existing Kigali underground cable network and meeting rehabilitation needs as identified in the RECO energy audit to be completed in 2009\. With customer numbers set to triple, support would also be provided to RECO to extend its service network to new areas\. This would include establishment of new customer service centers, procurement of equipment and vehicles for improved maintenance, reduced response times to customer complaints, and unforeseen service interruptions\. 2\. Green Connections (appraised at US$5\.2 million (only IDA); IDA AF US$5\.0 million; actual US$3\.6 million) was to finance a range of activities to improve affordability for the consumers and reduce the need Page 2 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) for additional generation resources\. The subcomponents were: (i) Efficient lighting to improve affordability and reduce impact on supply, each new customer would receive a package of energy-efficient CFLs (compact fluorescent lights) when the new meter is installed\. (ii) Energy efficiency\. The program would support incentives to promote the use of solar hot water heaters sold through private dealers\. The incentive scheme would introduce a voucher system to provide partial subsidies for households (up to 40 percent of an estimated capital cost of US$1,200 per unit) and a credit scheme to cover part of the remaining investment cost\. (iii) Solutions adapted for low-income households\. The program would support initiatives to buy down connection costs further for the poorest households, including mainstreaming the use of low-cost âready boardsâ for poor households to reduce the need for internal wiring, and to enable households in dwellings previously not eligible for a connection (such as thatched roof houses and temporary constructions) to qualify\. (iv) Productive users would support efforts to increase productive use of electricity in the targeted areas, which would stimulate economic growth and job creation and increase affordability\. Project support would include spatial mapping and targeting connections to rural market centers and other clusters of commercial activities, such as coffee-washing stations, tea plantations, and sites for agro-processing\. It would fund specific outreach and information campaigns to newly connected areas to accelerate the use of electricity for productive purposes, with special focus on Small Medium and Micro Enterprises (SMMEs) and local artisans\. 3\. Technical Assistance, Capacity Strengthening, and Implementation Support (appraised at US$6\.8 million (only IDA); IDA AF US$10 million; actual US$25\.86 million)\. This component was designed to finance technical assistance and capacity building to ensure adequate management of the NEAP and Sector-Wide Approach (SWAp)\. The program focused on three main areas of support: (i) RECO Institutional Strengthening and Program implementation; (ii) Development of a SWAp for the Energy sector; (iii) technical assistance to develop strong sector institutions and strategies\. Revisions to components during project implementation: â¢ At the time of additional financing approved in February 2013, activities under all three components were scaled up (see sub-section (e) below for detail)\. â¢ During project restructuring in May 2016, Component 2- Green Connections was dropped\. Procurement of solar water heaters (SWH) under sub-component (ii) was delayed due to slow decision making related to procurement decisions and lack of understanding of the World Bank procurement procedures (ICR, para 98)\. As the Project Restructuring Paper (PRP, 2016) specifies the final draft bidding documents for the design, supply, installment, and commissioning of solar water heaters were submitted to the Bank in May 2015 (one year prior to project closure), and as there was not sufficient time to complete this activity, it was agreed with the Government that the activity would be dropped and the undisbursed funds (US$8\.17 million equivalent) would be reallocated for activities under Component 1\. Regarding the progress towards achievement of the target on compact fluorescent light bulbs (CFLs), the Government policy did not allow imports of incandescent bulbs, implying that all new households connected to the grid would use CFLs (the utility had a parallel project distributing compact fluorescent lamps for all new customer connections)\. As per PRP (2016), due to this Government policy, the target of 90 percent had already been exceeded (reaching 100 percent)-without project intervention\. The ICR Page 3 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) (para 100) also adds that the project had procured sufficient numbers of ready boards that were in stock and did not require more during the lifetime of the project\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project cost\. The estimated total project cost of US$80 million was increased to US$140\.17 million through additional financing to scale up project activities\. The actual total project cost was US$134\.5 million\. Financing: The project was financed through an original IDA credit in the amount of US$70 million, supplemented by an additional financing (AF) of US$60 million approved on February 19, 2013 to scale up the ongoing activities, to a total US$130 million\. The IDA credits were disbursed at US$124\.5 million at project closure\. A parallel co-financing loan of US$10 million was provided as appraised by the OPEC Fund for International Development (OFID) for the national grid rollout under component A\. Borrower contribution\. The project did not plan for the government contribution but, as the project team subsequently clarified, it introduced a principle (through a covenant) of the Government contributing to the electricity access program through reinvesting consumer connection fee contributions\. As reported by the project team, the Government continued to abide by this covenant\. Dates: The project closing date was extended by about four years from January 31, 2014 to March 30, 2018\. Overall, the project was restructured four times as follows: 1\. In February 2013, following fast progress on achieving the access targets, additional financing (AF) in the amount of US$60 million was approved to scale up the activities under all three components\. The AF would support connecting an additional 48,000 households to the electricity grid as part of Phase 2 of the Rwanda Electricity Access Rollout Program (EARP)\. In addition, the AF was to support scaling up of "green connections" associated with energy efficient solutions; increased uptake of solar products such as solar water heaters and solar photo-voltaic systems; low-cost products such as ready-boards to make it affordable for low-income households to get connected to the electricity grid; and productive uses of electricity to promote increased use of electricity by SMEs (Project Paper on a Proposed Additional Credit, 2013)\. The project closing date was revised from January 31, 2014 to June 30, 2016 in line with additional activities\. The outcome targets were revised upwards\. 2 \. In May 2016, the following changes were made: (a) Component 2 was dropped from the project (see reasons above in section 2d)\. (b) The implementation agency was changed from the Electricity, Water, and Sanitation Authority (EWSA) to the Electricity Development Company Limited (EDCL)\. (c) Funds were reallocated between the disbursement categories\. (d) Outcome indicators related to solar water heaters (SWHs) installed and estimated energy reduction from energy efficient investments were Page 4 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) dropped since related activities under Component 2 were cancelled\. (ii) The indicator âHouseholds connected to electricityâ was renamed âHouseholds connected to electricity under the Government EARP programâ, to reflect the relationship between the indicator and the Government electrification program\. (iii) The core indicator âPeople provided with access to electricity by household connectionsâ was added to the Results Framework\. (e) The project closing date was extended to June 30, 2017\. 3 \. In May 2017, the project was restructured to extend the closing date for an additional five months to November 30, 2017\. This was motivated by the availability of funds (US$3 million) released from cancellation of two nonperforming contracts of an engineering, procurement, and construction (EPC) company terminated in March 2017 (Restructuring Paper, May 2017)\. 4 \. In November 2017, the project was restructured to extend the closing date by an additional four months to March 30, 2018, to allow completion of a âpurchase of trucksâ contract due to delays in the approval process\. 3\. Relevance of Objectives Rationale At appraisal in 2009, only 6 percent of Rwandan households (110,000 customers) had access to electricity from the grid, despite the high density of population (estimated at about 9 million and more than 320 individuals per km2)\. The project was to support the Rwanda Electricity Access Rollout Program (EARP-the Program) that presented a five-year plan (2009-2013) under Phase 1 for extending electricity access to achieve Rwandaâs targets for the electricity sector set under the Economic Development and Poverty Reduction Strategy (EDPRS)\. The total number of electricity connections to be increased was from around 110,000 connections to 350,000 connections, tripling access to about 16 percent of households by 2013 and at least 50 percent of identified public institutions in health, education, and local administration\. The project was to be delivered through the Rwanda Electricity Sector Access Program Investment Prospectus (IP-2009) funded by the Energy Sector Management Assistance Program (ESMAP) that used geospatial prioritization for grid compatible areas, prioritizing new grid connections depending on demographic and cost factors, including proximity to the existing grid, inter-household distances, social infrastructure, access to road networks, and the ability of consumers to afford electricity\. Together with contributions pledged by the Government of Rwanda (GoR) and the Rwanda Electricity Corporation, contributions from customers, and major donors such as African Development Bank (AfDB), Arab Bank for Economic Development in Africa (BADEA), Belgium, European Union (EU), Netherlands, Japan, OPEC Fund for International Development (OFID), Saudi Fund, the World Bank, and others, a total of US$357 million was mobilized for the Program (PAD, Annex 1)\. The EARP was set up under a sector-wide approach (SWAp) concept that was initiated by Rwanda in 2008 in the energy sector to increase aid effectiveness by reducing fragmentation of donor aid flows in the sector\. The World Bank was a leading donor and the main contributor to the Program\. Page 5 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) The project was scaled up in 2013 as part of Phase 2 of the EARP to support increasing the national access rate to at least 35% by 2017 (Project Paper on a Proposed Additional Credit, 2013)\. The project development objectives remained aligned with the GoRâs priorities in the energy sector and its long-term development strategy-Vision 2020\. It also remained relevant to the most recent WBG Country Partnership Strategy (CPS) for Rwanda (FY2014-2018), which prioritized increased generation and access to electricity under its pillar of accelerating economic growth (CPS, Annex 1: Results Matrix)\. It emphasized that increased access to electricity was key to the countriesâ poverty reduction, economic growth, and broad- based welfare gains, and also highlighted the need for considerable institutional strengthening in the sector\. Rating High 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective To improve access of electricity services to households\. Rationale Theory of change: The projectâs theory of change was that through investments in the national grid roll-out, support to energy efficiency and affordability measures (e\.g\., efficient lightning, use of solar water heaters), and capacity strengthening for sector planning and financing, access would increase to reliable and cost- effective electricity services for households and priority public institutions\. In particular, the infrastructure investments (including rehabilitation of transformers and installation of meters), complemented by energy efficiency measures (such as developing strategy, incentive structure and strengthening mechanisms for promotion of energy-efficient technologies), institutional development of ministries/regulators and utilities/operators, and developing customer feedback systems and establishing of service standards, would lead to improved sector planning and financing framework, improved customer service orientation of utilities/operators, improved network capacity and efficiency, and increased adoption of energy-efficient technologies/options\. These activities were to lead to improved access to reliable and cost- effective electricity services measured through principal outcome indicators focused on the overall increase in connectivity and the decrease in monthly interruptions and average cost per connection\. Energy efficiency investments were to lead to load reduction that was to be monitored at the intermediate results level (PAD, Results Chain, Figure A3\.1, page 54)\. The results framework, however, had weak linkages between the project activities, outputs, outcomes and objectives\. The substantial support for the sector reform and institutional development activities under the project were not captured at the outcome level\. No activities were planned to improve the reliability of electricity services that was specifically stated in the objectives\. The ICR (para 51) clearly indicates that the project did not have any direct influence over upstream investment decisions to improve reliability\. Page 6 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) Split Rating: A split rating is not used for the assessment of the achievement of the objective, as the project outcome targets were revised upwards in line with additional investments\. Targets for energy efficiency at an intermediate outcome level were dropped with the cancellation of component 2\. Outputs â¢ 7,136 km of transmission and distribution lines were expanded under the project from the baseline of 1,800 km in 2008, significantly overachieving the target of 4,200 km (original target was 3,000km)\. The ICR reports a number of factors that contributed to a faster connection rate, i\.e\., (i) the project financed the extension of the existing national grid to previously unserved areas identified in the Investment Prospectus (IP-2009) that used a geospatial prioritization for grid compatible areas prioritizing new grid connections depending on demographic and cost factors, including proximity to the existing grid, interhousehold distances, social infrastructure, access to road networks, and the ability of consumers in each planning cell to afford electricity\. Once the MV backbone was built, the PIU focused on connecting all users within a 5 km distance of the backbone capturing many households and productive users\. (ii) The local contractors installed the LV line drops and house connections on the long MV lines, enabling a faster rollout of the program; and (iii) a new connection policy was introduced in 2017 that allowed connections without an advance payment and deduction of the connection fee from payments for purchase of units of electricity, which alleviated constraints to connections and consumption by poorer households (ICR, page 19)\. â¢850 transformers were rehabilitated or replaced, below the revised target of 985 (the original target was 40% of the overall number)\. Under the institutional component, the following activities were implemented: â¢ Joint Annual Sector Performance Report was approved by SWG, as planned\. â¢ A grid electrification study, 'The Electricity Network Planning & Design', was produced, commonly referred to as the SOFRECO Report, and according to the project team, it was a key tool in the implementation of the Government Program (2012-2018)\. â¢ The following sector-reform studies were prepared: (i) The EWSA Financial Performance Review and Outlook; (ii) A study to establish and advise on the legal framework for new companies to replace EWSA; (iii) A study to undertake the Energy Sector Functional and Organizational restructuring of EWSA; and (iv) A Study on Asset Verification and Separation between the two EWSA successor entities\. According to the project team, the above studies became a blueprint for sector horizontal unbundling that led to the creation of Rwanda Energy Group (REG) and its subsidiary companies (Electricity Utility Company Limited Page 7 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) â EUCL and Electricity Distribution Company Limited â EUCL), incorporated under progressive Company Law\. â¢ The two studies â (i) A study to undertake scoping for Management Information System (MIS) and (ii) The review of proposed strengthening projects for the EWSA HV and MV Networks â provided guidance on capacity building and strengthening of the newly created unbundled electricity utility\. According to the project team, these studies also informed project designs of interventions funded by other donors and the Government\. â¢ Capacity building was carried out for project staff and staff of the Implementing Entity in various areas of specialization including Finance, Project Management, Procurement, Environmental and Social Safeguards and Construction Management\. Outcome Access to electricity services was provided to 275,714 households under the project, as compared to the original target of 100,000 and revised to 148,000\. Under the overall Program, electricity access was expanded to 810,923 households\. The total EARP contribution to percentage electrification rate during the project lifetime was 28\.5%, of which 10% was through the project funds\. Overall, at project closure in 2018, the grid electrification rate was 31% in Rwanda\. The ICR (page 17) reports that Rwandaâs annualized increase in access (percentage points) between 2010 and 2016 was the highest among the worldâs 20 least electrified countries and much higher than the world average (3\.28%, compared to the world average of 0\.64%)\. The ICR also reports positive socio-economic outcomes in electrified households that were assessed as part of the impact study carried out between 2014 and 2016\. The results showed a decrease in total energy expenditure, increased income, increased asset values, including for rural communities showing a general improvement in quality of life and increase in incomes\. Rating High PHREVDELTBL PHEFFICACYTBL Objective 2 Objective Improve access of electricity services to priority public institutions\. Rationale Outputs Page 8 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) The same as under Objective 1 Outcome The achievement of access expansion to public institutions was measured at the program (EARP) level, as overall country connection rates\. The access to priority public institutions improved as follows: schools connection to electricity increased from 21% in 2009 to 77\.2% in 2018, slightly below the revised target of 80% (original target was 50%); connection of administrative buildings increased from 38\.7% in 2009 to 94\.5% in 2018, below the targeted 100% (original target was 52%); connection to electricity of health centers increased from 38\.4% to 92\.1%, not achieving 100% (original target was 50%)\. The ICR (page 20) attributes a small shortfall in realizing the targets to lack of funding for the GoR electrification program\. While all public infrastructure (health centers, schools, and public administration buildings) within a 5 km distance from the line were connected to the grid, other institutions were not reached beyond it\. Overall, according to the ICR (page 20), 100% of the administrative offices in the country were connected to electricity by a combination of grid and off-grid methods at project closure\. The impact study 2014-2016 has shown such results as increased time spent in school and improvement in health outcomes\. With respect to gender, there was a decrease in mortality rate during childbirth in health centers that had been connected to electricity; increase in the number of females ages 16 and above visiting health facilities; enrollment of girls in schools with electricity; performance of girls in the final examinations improved; and there was increase in the female teaching population\. Rating Substantial PHREVDELTBL PHEFFICACYTBL Objective 3 Objective Improve reliability of electricity services\. Rationale Outputs â¢ The same as under Objective 1\. Page 9 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) â¢Energy efficiency activities (i\.e\., compact fluorescent lights, solar water heaters), were cancelled under Component 2 that aimed to lead to load reduction (GWh); the relevant indicator was dropped\. Outcome At the time of project closure, the rolling average of monthly interruptions per km of MV line was 61 percent higher than the baseline (ICR, page 23)\. The rolling average was 0\.102 at closure (based on 730 interruptions per month and 7,135 km of MV line, as compared to the baseline of 0\.06338 (based on 270 interruptions per month and 4,260 km of MV line)\. The revised target set was a reduction of 35% (0\.0412), while the original target was 25%\. This indicator was measured at the Program (EARP) level, relating to the country grid expansion program\. The ICR (page 21) notes that the indicator monitored outages on the whole network and could not insulate the effects of the project implementation works from other activities being carried out on the electricity network\. The indicator was not well designed, as clarified by the project team, due to data collection limitations at appraisal\. At that time, reliability measurement tools based on SAIDI (System Average Interruption Duration Index) and SAIFI (System Average Interruption Frequency Index) were not available\. However, in 2015, the utility installed a SCADA system, which allowed the recording and reporting of accurate customer-level measurements starting in 2016\. The ICR and project team discussed with and provided IEG with more recent information, consisting of SAIDI and SAIFI data from July 2016 to December 2018\. In its April 15, 2019 note, the ICR team indicated that the data "shows that the annual cumulative number and frequency of outages have steadily decreased, clearly demonstrating a continuously improving service reliability trend\." The ICR also refers to results from the multi-tier framework energy survey (World Bank 2018), which found that 68\.4 percent of the grid-connected households in Rwanda lie within a higher Tier 4 (on a scale of 1-5), with more than 14 disruptions a week or more than 2 hours disruption a week and daily availability of 16â23 hours a day\. Data from the survey indicate that only 5\.7 percent of the population in Rwanda are constrained to relatively lower tiers due to low reliability, i\.e\., limited evening availability (less than 4 hours) and quality (such as inadequate voltage) (ICR, para 53)\. Given the trend that is evident from the latest available data, the achievement of Objective 3 is rated substantial, following IEG's guidelines (page 35) that the project almost fully achieved its objective or intended outcomes, or is likely to do so\. Rating Substantial PHREVDELTBL PHEFFICACYTBL Page 10 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) Objective 4 Objective Improve cost-effectiveness of electricity services\. Rationale Outputs â¢ The same as under Objective 1\. â¢ 60,000 low cost ready boards were delivered and installed to low-income households reducing the need for internal wiring\. The rest of the activities were cancelled under Component 2 that aimed to improve affordability for the consumers and reduce the need for additional generation resources\. While energy-efficient CFLs (compact fluorescent lights) were delivered under the Government Program, without project support, the support was cancelled for an incentive scheme to promote the use of solar water heaters sold through private dealers by providing partial subsidies for households and a credit scheme to cover part of the remaining investment cost\. In addition, the support for productive users was also cancelled\. The project team subsequently clarified that the project did not monitor the productive users as initially intended, but all customers, including productive users, were connected to the grid within a 5 km radius\. Outcome At project closing, the average cost per connection was US$ 411\.12, around 60 percent lower than expected cost (target was US$ 1,090)\. The indicator was a program-level (EARP) indicator\. During the implementation of the project between 2009 and 2012, unit connection costs ranged from US$300 (for fill-in connections) to US$840\. At the time of the AF in 2012, the target was set at +9 percent from the original target (US$1,090)\. The scale-up of electrification implied considerable reductions in connection costs\. In addition to the expansion of connections that drove connection costs down, the ICR (para 56) says that competitive procurement processes and using concrete poles and wooden poles instead of steel lattice poles and single wire earth return (SWER) technology on some of the MV lines helped cost reduction\. Rating High PHREVDELTBL PHOVRLEFFRATTBL Rationale The project significantly overachieved its access targets for households and was close to the access target for public institutions\. The most recent data (2016-2018) on monthly interruptions per km of MV line -- based on more accurate SAIDI and SAIFI measurements made possible by the installation of a SCADA system -- show an improving service reliability trend\. The average cost per connection dropped dramatically during project Page 11 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) implementation, due to the expansion of connections\. In light of these positive achievements, the overall outcome rating is rated substantial\. Overall Efficacy Rating Substantial PHREVISEDTBL 5\. Efficiency Economic analysis At appraisal, the proposed financing was expected to fund about 100,000 grid connections during a five-year period (2009â2013)\. An economic net present value (ENPV) was estimated to be US$273 million at a discount rate of 12 percent and the economic internal rate of return (EIRR) of the project was 40 percent\. The economic benefits were derived from the consumer surplus from electricity consumption estimated for newly connecting households\. The consumer surplus was estimated at US$0\.46 per kWh for households consuming less than 20 kWh per month and US$0\.26 per kWh for households consuming above 20 kWh per month\. For new commercial customers, the analysis used a consumer surplus of US$0\.27 per kWh, derived from the cost of backup self-generation\. In 2013, the World Bank approved AF US$60 million to support the connection of an additional 48,000 households to the electricity grid as part of the second phase of the EARP\. The EIRR estimated at this stage was 59 percent and the ENPV at a discount rate of 10 percent was US$75 million\. The AF was also designed to support scaling up of âgreen connectionsâ associated with energy efficiency solutions, including uptake of solar products such as SWHs and CFLs\. The economic benefits estimated during the AF were derived from (a) benefits from new household connections, (b) savings for households derived from the use of CFLs, and (c) savings from installing SWHs in public and commercial buildings\. At project closure, the economic analysis estimated an EIRR of 55 percent and the NPV, at a discount rate of 10 percent, at US$112 million\. The ICR notes (Annex 4) that the excel model used to calculate the economic analysis during appraisal was not available, thus, the ex-post economic analysis was prepared using various sources as well as the information available from the two existing economic analyses (the one prepared for appraisal and for the AF)\. The analysis identified the main benefits of the project to be derived from (a) increased electrification (households and institutions), (b) savings in electricity connection costs, and (c) savings from green connections (increased use of CFLs and SWHs)\. However, the ICR (Annex 4, page 63) erroneously estimates savings derived from the use of (a) efficient CFLs (131 kWh per household per year) and (b) SWHs (3,240 kWh per building per year)\. It reports that " all the connected households had received CFLs and 2,837 SWHs had been delivered until 2016 (after that the component was discontinued)"; no related activites were delivered under the project\. While the benefits primarily accrued from the increased electrification among households, the estimated EIRR should be lower due to nonattainment of benefits under Component 2 that was cancelled\. Page 12 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) Operational/ administrative efficiency While overall the project was scaled up adding another two years to implementation, other closing date extensions were due to delays in effectiveness, weaknesses in design, and procurement issues that resulted in cancellation of the whole component\. The ICR also attributes some delays to a slow decision-making process at the PIU\. In addition, the efficient use of US$26 million is questionable under the institutional building component that has no apparent benefits reported\. On balance, the overall efficiency rating is substantial in consideration of a high economic rate of return from grid roll-out investments, albeit marginally due to significant operational and administrative inefficiencies\. * In Table a below, (a) the ex-post EIRR is not reported due erroneous estimation of savings derived from energy efficiency activities (CFLs and SWHs) under Component 2, which were not implemented under the project\. It would be lower than the reported 55 percent, though not significantly\. (b) The coverage/scope for the ERR estimated at appraisal is the whole Program, therefore indicated as not applicable\. Efficiency Rating Substantial a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) Coverage/Scope (%) 0 Appraisal ï¼ 40\.00 ï¾Not Applicable 0 ICR Estimate 0 ï¨Not Applicable Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome Relevance of the project development objectives is rated high\. Efficacy is rated substantial\. The project significantly overachieved its access targets for households and was close to the access target for public institutions\. The monthly interruptions per km of MV line -- based on the most recent and more accurate SAIDI and SAIFI measurements -- shows the likely trend of improvements in the reliability of electricity services\. The average cost per connection dropped dramatically during project implementation due to the expansion of connections\. Efficiency is rated substantial in consideration of a high economic rate of return from the grid roll- out investments and operational inefficiencies that led to cancellation of a full component\. Page 13 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) The overall project outcome rating is satisfactory, based on high relevance, substantial efficacy, and substantial efficiency\. a\. Outcome Rating Satisfactory 7\. Risk to Development Outcome The main risks are: â¢ Funding gaps to cater to increased electricity access to households and priority public institutions\. The required estimated funding to meet the ESSP (2018/2019â2023/2024) targets are approximately US$1 billion, including a combination of funding from the GoR, development partners, and private sector\. The risk that this funding is not available in its entirety to meet the targets of the current ESSP/NST poses a risk to PDO outcomes not being maintained in the related period\. The GoR has included the sector goals in the draft NST1, which is an indication that the GoR would focus on raising funds to meet sector goals\. â¢ Decrease in system quality and reliability\. The reliability of the electricity system is affected by a combination of sources of electricity, age and maintenance status of the transmission and distribution network, and quality of network operation\. The GoR is aware of the risks and consequences of low reliability and has initiated several projects to strengthen the network\. â¢ Affordability related to high costs of electricity services\. The cost of supply of electricity service in Rwanda remains high, at approximately USÂ¢30 per kWh; however, the GoR is focused on addressing this problem in the medium to long term\. â¢ Sector financial sustainability and institutional capacity to plan and manage the utility prudently\. The Government is aware of the financial and fiscal risks and has initiated a reform program, which is supported by a three-year World Bank Development Policy Operation during FY2018â 2020 (US$125 million each)\. The reform program includes a comprehensive set of measures to reduce the cost of service, including a transition Page 14 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) to fully competitive procurement, least-cost planning of power generation investments, least-cost planning of electrification investments, and utility reforms\. 8\. Assessment of Bank Performance a\. Quality-at-Entry The project design reflected lessons from both the World Bank engagement in Rwanda and the World Bankâs experience in national electrification programs and SWAp framework development\. The SWAp design, which led to an MOU between the GoR and leading development partners in the energy sector and setting up of the GoR Program, was instrumental in consolidating the design of the project\. The Bank team acknowledged the capacity challenges in the areas of finance, technical, planning, procurement, communication, and stakeholder management that were identified in the IP-2009, and as clarified by the project team, considered those moderate relying on the capacity of the Project Management Directorate with experience in WB project implementation\. The project kickoff was delayed due to the low implementation readiness\. No substantial or high risks were identified at appraisal (PAD, Table E, pages 17-18), albeit during the project implementation, slow PIU decision-making and procurement (pages 34-35 and 38-39), and related delays resulted in the cancellation of a whole component and the necessity to expend the closing date four times (page 38)\. The ICR's account on Component 2 points to design shortcomings\. As indicated in para 126 of the ICR, "The CFL and SWH activities under Component 2 may not have been properly analyzed at project preparation, leading to failure of the activities to be funded by the project\." The utility already had a similar ongoing CFL project\. Para 126 of the ICR also notes that it was also not clear from the existing documentation whether adequate analysis was carried out to support the design of the SWH activity involving private sector and financial institutions\. These activities were subsequently dropped from the project implementation\. In a follow-up discussion with IEG, the ICR team reiterated that the utility had adequate stocks of CFLs and was able to successfully distribute 800,000 CFLs, of which 600,000 were distributed during the project's lifetime\. Moreover, GoR adopted a policy of banning imports of all non- CFL lighting accessories, which enhanced the success of 100 percent CFL use in Rwanda\. Regarding SWH provision, GoR's decided to finance all SWH subsidies under the Nordic Fund grant financing, while reallocating IDA funds to access-related activities, hence SWH activities were dropped from the project\. However, the PDO was still achieved, as follows: (i) SWHs were distributed to 3,459 households and public institutions; (ii) 34 local technicians were trained in the design, installation and maintenance of SWH systems\. The program is also supporting IPRC North, a technical school, to promote SWH manufacturing\. The ICR team also added that the project was designed to buy down the connection cost for poorer households (e\.g\., thatched roof dwelling that are not suitable for a connection) by reducing the need for household writing through the provision of ready boards, leading to the procurement and installation of 60,000 ready boards for the project's access activities\. Page 15 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) Quality-at-Entry Rating Satisfactory b\. Quality of supervision The project experienced a delayed start owing to the low implementation readiness and inadequate structure of the PIU\. The project was approved in October 2009 and became effective eight months later\. The first disbursement was four months after effectiveness, delaying the project start by one year\. During project implementation, as reported by the ICR, the World Bank task team continuously monitored the project progress against the targets\. The project was restructured four times to change the design (drop a component) due to implementation delays and the progress on these activities by the government\. Three of the four task team leaders were resident in the country and accessible to the client to provide necessary hands-on support\. With the position of co-chair, the World Bank was also tasked with coordination of the donors to the energy sector and leading sector dialogue on behalf of the donor community\. It was also the de facto co- chair of the Sector Working Group (SWG), which also entailed overseeing the activities of the eSWAP secretariat\. The SWG was responsible for approval of policy documents in the energy sector and reviewing sector reports\. The World Bank task team oversaw the quality of information transmitted to the SWG for review and approval, including information generated from the M&E exercise of the project that reported both project and program results\. With four project restructurings, the supervision team could have addressed weaknesses in the project's results framework and M&E design, in particular as Component 3 supported sector unbundling reforms and institutional strengthening that amounted to a total of US$26 million at project closure\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design Page 16 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) There were four outcome indicators linked with the project objectives\. These were defined to measure the increase in access for households and public institutions (disaggregated by type); improvement in reliability (reduction in monthly interruptions per km of MV measured for the whole network); and cost- effectiveness of electricity services (average cost per connection) (PAD, Annex 3)\. Under the access indicator, two sub-indicators were monitored: (a) households connected by the Program and (b) households connected under the project; for public institutions, there was a program-level results indicator\. The monitoring and evaluation (M&E) system for the project was to be in line with the proposed SWAp framework and M&E system within the National Electricity Access Program (PAD, page 57)\. There were, however, significant shortcomings in the project's results framework and M&E design, i\.e\., : â¢ No outcome indicators were defined to capture the institutional building and capacity strengthening activities, particularly for a US$10 million commitment under the related component\. â¢ No indicators were defined for various planned activities (efficient lightning, energy efficiency, solutions adapted for low-income households, and productive users) under Component 2 at the outcome level \. â¢ All outcome indicators were limited to the results from physical investments into the national grid rollout under Component 1\. b\. M&E Implementation The project was managed under the SWAp concept\. The GoR set up a reporting mechanism through the backward looking joint sector reports and forward looking joint sector reports (FLJSRs) that were presented to the SWG and approved by the GoR\. The SWAp setup ensured the participation of all stakeholders in the energy sector by ensuring approval of major policy documentation through the SWGs\. An impact evaluation was carried out during the project implementation\. The project was part of the IDA16 impact evaluation exercise, where the baseline (2014) and follow-up (2016) exercises were completed\. The ICR (page 36) reports that the data on the PDO indicators were collected and reported in a methodologically sound manner, however the overall process of data collection was slow\. No revisions were made to improve the project M&E design, in particular with respect to reliability and considering that the cost under the institutional strengthening component supporting sector reforms more than doubled to US$26 million, thus with no accountability for results\. c\. M&E Utilization Page 17 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) The M&E data were used in sector annual forecasts related to electrification; project restructuring, and decision-making on reaching connections further downstream\. The ICR reports that the results were also used to inform the setting of targets for the GoRâs Forward Looking Joint Sector Review, through which annual sector targets were set\. M&E Quality Rating Modest 10\. Other Issues a\. Safeguards The project was assigned the Environmental Assessment Category B in accordance with the World Bank Operational Policy on Safeguards, due to limited expected adverse environmental and social impacts\. The project triggered two safeguards policies on Environmental Assessment (OP/BP 4\.01) and Involuntary Resettlement (OP/BP 4\.12)\. An Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF) were prepared and disclosed both in country and at the World Bank InfoShop in February 2009\. During the preparation of the AF, both the ESMF and RPF were updated and disclosed in Rwanda in November 2012 and at the World Bank InfoShop on November 20, 2012\. The framework approach (ESMF and RPF) was adopted because the precise locations of project implementation sites were not known at the time of project preparation\. The ICR reports (page 33) that the project was always in compliance during the implementation phase\. According to the ICR (page 38), the PIU prepared a report covering the consolidated implementation progress of the eight subproject ESMPs throughout the project duration\. This report points out the mitigation measures implemented in response to the negative environmental and social impacts encountered during project implementation\. The report also shows that all anticipated negative impacts were short term, site specific, and managed through the implementation of the respective ESMPs\. Involuntary Resettlement\. One subproject (Rukarara substation funded by OPEC FUND) involved land acquisition and physical relocation\. The other subprojects that were distribution lines had no land acquisition implications and thus involved only compensation for trees and crops\. All compensation payments were completed by end December 2017\. In total, 3,678 households were affected, including 75 households that lost land and 30 households that were physically relocated\. The key challenge in the implementation of the RAPs was the delays in compensation because of unavailability of the required cash on time\. A Resettlement Completion Report was prepared and shared with the World Bank\. The report shows that the project was always in full compliance with rsettleme guidleniues during implementation (ICR, page 38)\. Page 18 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) b\. Fiduciary Compliance Procurement\. Project procurement activity at project start was performing well and rated âsatisfactoryâ; however, from October 2015, the rate was downgraded to âModerately Satisfactoryâ\. The major reasons for the downgrading were (a) the slow movement of the procurement plan owing to a slow decision-making process by the utility top management and (b) high procurement staff turnover\. Restructuring of the implementing agency in the middle of the project implementation and subsequent move of the project to a newly formed agency also contributed to delays\. A few contracts were not delivered by the time of project closure, and these were moved to under another project (ICR, page 39)\. The ICR does not discuss it but according to the project restructuring paper, in March 2017, the Project Implementation Unit terminated two contracts of an engineering, procurement, and construction (EPC) company that had declared insolvency (PRP, Nov 2017)\. Financial management\. As reported by the ICR (page 39), the FM performance was rated moderately satisfactory during project implementation mainly because of (a) qualified audit opinions and (b) delayed adequate FM staffing, which affected the capacity to effectively monitor FM-related issues on time\. The ICR does not discuss if the issues were adequately addressed\. c\. Unintended impacts (Positive or Negative) --- d\. Other --- 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Satisfactory Satisfactory --- Bank Performance Satisfactory Satisfactory --- There were shortcomings in Quality of M&E Substantial Modest the M&E design that were not fully addressed\. Quality of ICR Substantial --- 12\. Lessons Page 19 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) IEG selected three lessons from the ICR, with some modification: â¢ A combination of grid and off-grid solutions based on geographic information system mapping techniques helps accelerate electricity access expansion\. Rwanda was one of the first countries to prepare and implement a nationwide electrification program combining grid and off-grid means, based on a systematic and least-cost plan aided by geographic information system mapping techniques that combine technical, economic, demographic, and demand and supply data\. The objective of this prioritization was to ensure that the program maximizes benefits of electrification, while minimizing program costs\. The prioritization took advantage of Rwanda being a small country with high population density, making potential rollout faster than larger low densely populated countries\. â¢ Strong Government ownership of projects, and projects that are aligned with national priorities are in a strong position to succeed from the onset\. When governments own the access agenda and incorporate it in their growth strategies, the access expansion agenda is most likely to be successful\. The GoR participated in the design and preparation of the national program and geospatial plan, drew up clear results frameworks, and established M&E accountability under the overall institutional setup\. â¢ Well coordinated donor support can greatly enhance results from an inclusive sector effort, and is of particular value in a post-conflict situation\. This energy sector project is an example of how development partners can come together in a constructive manner in a post-conflict country\. The SWAp structure in Rwanda was built upon existing institutions and assigns clear responsibilities to the different parties in the sector working group, including government institutions, development partners, private sector, and other energy sector stakeholders\. 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR is outcome-oriented and written in line with the guidelines\. It provides an extensive narrative on Rwanda's electrification program and the project's implementation experience and results\. Lessons are Page 20 of 21 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Rwanda Electricity Access Scale-up Proj\. (P111567) experience-based\. The ICR would have benefitted from streamlining the text and being less defensive in its narrative\. A lot of issues were attributed to factors beyond the project control\. While the efficacy section focuses on outcomes, the ICR should be still clear what outputs were delivered to achieve those outcomes\. Not much is said regarding the institutional strengthening activities and related results, despite the US$26 million spent under the capacity building and implementation support component\. More explanation is needed with regard to procurement issues and unclean audits\. The ICR (Annex 4, page 63) factors calculations into the ex-post ERR results estimating savings derived from the use of (a) efficient CFLs (131 kWh per household per year) and (b) SWHs (3,240 kWh per building per year)\. However, the ICR does not report on the progress and deliverables under these activities before the component was discontinued in 2016\. Editing mistakes include: (a) the ICR refers to CAS that should be CPS; (b) discrepancies in numbers, i\.e\., Table 1 on page 11 indicates actual cost for component B as US$3\.6 million, while Annex 3 shows it as US$0\.028 million\. (c) approval date of AF inconsistently shows December 2012 on page 13 and February 2013 on page 1\. (d) Results chain mixes up the outputs and outcomes, i\.e, under outputs on page 11 it lists a number of households/institutions with access, average cost of connections, etc; and under intermediate outcomes, it lists construction of MV distribution network, rehabilitation, etc\. Overall, the ICR Quality is rated substantial albeit on a margin\. a\. Quality of ICR Rating Substantial Page 21 of 21	REVIEW
P008806	ï»¿ ICRR 11641 Report Number : ICRR11641 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/23/2003 PROJ ID : P008806 Appraisal Actual Project Name : Urban Transport Project Costs 391 308\.7 US$M ) (US$M) Country : Russian Federation Loan/ US$M ) 329 Loan /Credit (US$M) 247\.6 Sector (s): Board: TR - General Cofinancing 0 0 transportation sector US$M ) (US$M) (97%), Central government administration (2%), Sub-national government administration (1%) L/C Number : L3885; LP272 Board Approval 95 FY ) (FY) Partners involved : Closing Date 06/30/2001 12/31/2002 Prepared by : Reviewed by : Group Manager : Group : Kavita Mathur Peter Nigel Freeman Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The objectives, as stated in the Staff Appraisal Report and the Schedule 2 of the Loan Agreement, were to: preserve essential urban transport capacity in fourteen cities by linking financing of urgently needed replacement vehicles and spare parts to the implementation of reforms; strengthen the fourteen project cities urban transport sector institutions so as to improve the efficiency of passenger transport operations; arrest the decline in urban transport services throughout Russia through the provision of urgently needed spare parts for transport vehicles; and provide restructuring advice for the domestic bus industry\. b\. Components The main components of the project are (actual costs are in parentheses): (a) Purchase of new vehicles (US$ 247\.3 million or 80\.1% of the total project cost); (b) Vehicle rehabilitation (US$ 44\.7 million or 14\.5% of the total project cost); (c) Equipment (US$ 8\.6 million or 2\.8% of the total project cost); (d) National spare parts program (US$ 0 million or 0% of the total project cost); and (e) Technical assistance and training (US$ 8\.1 million or 2\.6% of the total project cost)\. Revised components: The national spare parts program was canceled in 1998\. Following the financial crisis in 1998-99, six cities were dropped from the project because of creditworthiness problems\. In 2002, the technical assistance component was revised to include two studies, one for national roads and the other for Russian railways\. c\. Comments on Project Cost, Financing and Dates The total actual cost of the project is US$ 308\.7 million compared to the appraisal estimate of US$ 391 million\. At project closing, US$ 247\.6 million was disbursed, US$ 80\.2 million was canceled and US$ 1\.2 million was undisbursed\. The project was extended for eighteen months to complete the national roads and railways studies\. 3\. Achievement of Relevant Objectives: The objective of preserving the essential urban transport capacity in fourteen cities by linking financing of urgently needed replacement vehicles and spare parts to the implementation of reforms was substantially achieved\. The provision of new and rehabilitated vehicles made it possible for most of the client cities to maintain and increase the frequency of services\. The number of passengers increased by 24% in the first quarter of 2000 compared to the first quarter in 1997\. For the same period, the trolley-bus services and tram-based services each increased by 24%\. Regarding capacity, most of the medium and small cities have preserved or increased their capacity\. However, in the biggest cities, the supply of services by public owned operators went down over the period 1995-2001 mainly due to two factors: (a) increased involvement of private operators, and (b) large scale retiring of over-age vehicles\. The project was successful in increasing cost recovery from fare revenues\. In 2001, cost recovery through fares was in the range of 49 to 105%, and the average was 77%\. The objective to strengthen the fourteen project cities urban transport sector institutions so as to improve the efficiency of passenger transport operations was modestly achieved\. The cities introduced the following reforms: (a) transformation of public transport companies into legally independent corporate entities in public ownership, (b) separation of urban operations from intercity operations, and (c) introduction of service contracts to regulate the city-company relationships\. However, there is not enough evidence to judge the impact of change in legal status and introduction of service contracts on operating costs and service outputs\. The objective to arrest the decline of urban transport services in cities throughout Russia through the provision of urgently needed spare parts for transport vehicles was not achieved\. The national spare parts component was canceled as a commercial spare parts market had developed through market forces\. The objective to provide restructuring advice to the domestic bus industry was modestly achieved\. Technical assistance was provided for market research on both the demand and supply side\. A market study was carried out and disseminated in July 1998\. 4\. Significant Outcomes/Impacts: There was anincrease in private sector involvement in the provision of urban passenger transport operations\. In 2001, the privately provided public transport services accounted for 10 to 15% of urban passenger trips\. The project assisted the Ministry of Transport in preparing an overall strategy for the urban transport sector\. High quality vehicle specifications were developed for new buses and trolley buses\. The project also introduced the practice of quality inspection of vehicles prior to the delivery\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): The project objectives were overly ambitious given the tight time schedule\. Also, they were not linked to the legal covenants and monitoring indicators\. At appraisal, inadequate poverty analysis was done of affordability and wage trend analyses for households\. This jeopardized the optimization of cost recovery\. Implementation of all the covenanted reforms was to be done by cities and none by the state\. This prevented a closer involvement of the Bank during implementation\. Also, the implementation of the agreed reforms by the client cities was weak\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Satisfactory [The ICR's 4-point scale does not allow for a Moderately Satisfactory rating]\. The project achieved most of its major relevant objectives but with significant shortcomings (see sections 3 and 5)\. Institutional Dev \.: Modest Modest Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: The Bank should ensure that the client governments do not pass the foreign exchange risk to sub-national entities whose revenue sources are limited to domestic currency\. With the collapse of ruble, most of the client cities had no other option but to opt out of the project\. Resources need to be allocated to collect and interpret data for calculating the ex-post economic rate of return\. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The quality of the ICR is satisfactory\.	REVIEW
P043367	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 24441 IMPLEMENTATION COMPLETION REPORT (IDA-29 130) ONA CREDIT IN THE AMOUNT OF SDR 7\.1 MILLION (US$ 10\.2 MILLION EQUIVALENT) TO THE REPUBLIC OF YEMEN FOR A RY-TAIZ WATER SUPPLY PILOT PROJECT 06/28/2002 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective April 26, 2002) Currency Unit = Yemeni Rial (YR) 1000 YR = US$ 5\.74 US$ 1 = YR 174 Official Rate Market Rate May 1992 US$ 1 =YR 12 US$ 1= YR 29 October 1994 US$ 1 =YR 50 US$ 1 = YR 103 October 1995 US$ 1 = YR 90 US$ 1 =YR 112 December 1996 US$ 1 = YR 100 US$ 1 = YR 126 December 1997 US$ I = YR 131 US$ 1 = YR 131 June 1998 \. US$ 1 =YR 135 US$ 1 =YR 135 December 1999 US$1 = YR 155 US$ 1 = YR 155 December 2000 US$ 1 = YR 160 US$ 1 = YR 160 April 2002 US$ 1 = YR 174 US$ 1 = YR 174 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS GOY - Government of Yemen MAI - Ministry of Agriculture and Irrigation MEW - Ministiy of Electricity and Water NWRA - National Water Resources Authority NWSA - National Water Supply and Sanitation Authority PMU - Project Management Unit PPF - Project Preparation Facility RWS - Rural Water Supply SAR - Staff Appraisal Report SURDU - Southern Uplands Regional Development Unit TWSLC - Taiz Water Supply and Sanitation Local Corporation WID - Women in Development YR - Yemeni Rial Vice President: Jean-Louis Sarbib Country Director: Mahmood Ayub Sector Manager: Francoise Clottes Task Team Leader: Somin Mukherji (Supervision) Manuel Schiffler\. (ICR) REPUBLIC OF YEMEN RY-TAIZ WATER SUPPLY PILOT CONTENTS Page No\. 1\. Project Data I 2\. Principal Performance Ratings I 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 6 5\. Major Factors Affecting Implementation and Outcome 7 6\. Sustainability 8 7\. Bank and Borrower Performance 10 8\. Lessons Learned 13 9\. Partner Comments 14 10\. Additional Infornation 18 Annex 1\. Key Performance Indicators/Log Frame Matrix 19 Annex 2\. Project Costs and Financing 20 Annex 3\. Economic Costs and Benefits 23 Annex 4\. Bank Inputs 25 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 27 Annex 6\. Ratings of Bank and Borrower Performance 28 Annex 7\. List of Supporting Documents 29 Annex 8\. Detailed Assessment of Outputs by Components and Sub-Components 30 Annex 9\. Assessment of the Rural Water Supply Schemes 35 Map: IBRD 31917 Project ID: P043367 Project Name: RY-TAIZ WATER SUPPLY PILOT Team Leader: Somin Mukherji TL Unit: MNSIF ICR Type: Core ICR Report Date: June 28, 2002 1\. Project Data Name: RY-TAIZ WATER SUPPLY PILOT LIC/TFNumber: IDA-29130 Country/Departnent: REPUBLIC OF YEMEN Region: Middle East and North Africa Region Sector/subsector: WR - Rural Water Supply & Sanitation; WU - Urban Water Supply KEY DATES Original Revised/Actual PCD: 04/04/1996 Effective: 02/24/1997 Appraisal: 04/12/1996 MTR: 07/10/1998 Approval: 09/03/1996 Closing: 06/30/2000 12/31/2001 Borrower/lImplementing Agency: GOVERNMENT/NWSA/TWSLC/NWRA/SURDU Other Partners: STAFF Current At Appraisal Vice President: Jean-Louis Sarbib Kemal Dervis Country Manager: Mahmood Ayub Inder K\. Sud Sector Manager: Emmanuel Forestier Team Leader at ICR: Manuel Schiffler Mario Zelaya ICR Primary Author: Manuel Schiffler 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: U Sustainability: UN Institutional Development Impact: N Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: Project at Risk at Any Time: 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The Project's main objectives were to mitigate the immediate water shortage in the city of Taiz (by increasing supply by about 100%) and to identify new water sources to avert a sustained water shortage (to meet the needs of at least the year 2000 or about 550 liters per second)\. The project also aims at developing and testing an institutional framework for decentralized water resources management through participation of local communities (through establishment of community associations), and to promote private sector participation in the management of water and wastewater utility services (by entering into a management contract in the second phase of the Taiz Water Supply Project)\. The project was in line with the Country Assistance Strategy and with the client needs\. Indeed the project was specifically requested on an urgent basis by the Government of Yemen to deal with an emergency water shortage in Taiz\. The project development objective is clear, except for the definition of the quantity of water to be supplied through the project to Taiz, which was not entirely clear (the base line for the 100% increase was not mentioned in the SAR)\. The objective was not realistic because: (i) water availability in the project area was much lower than anticipated; (ii) no component or sub-component to test an institutional framework for decentralized water resources management was included in the project; and (iii) the conditions for entering into a managing contract in Taiz (water availability, insufficient size of the city) were not fulfilled\. In more general terms, the project underesimated the incredible difficulty of implementing complex projects in an extremely difficult environment in Yemen characterized by weak institutional capacity in the public sector as well as social tensions in the project area\. 3\.2 Revised Objective: The objective was not formally revised, although numerous pragmatic changes were introduced in sub-components by supervision missions and the mid-term review, in response to changing circumstances\. As a result, the project ceased to pursue several of its original objectives, but rather worked to achieve other sensible objectives that were achieved in a cost-effective manner\. 3\.3 Original Components: 1\. Habir Well Field Development by NWSA (US$ 6\.Om incl\. contingencies and repayment of $ 0\.65m from the project preparation fund) 1\.1 Construction of eight deep wells for Taiz (and one well for Al Qaidah town) and provision of pumping equipment, water meter, piping and accessories, well head and accessories, standby power generation, electricity transformers and switch gear, and well structure and housing (US$ 1\.15m, incl\. project management); 1\.2 Provision of three aquifer monitoring wells, and installations for measuring groundwater levels (cost included in 1\.1); 1\.3 Provision of about 17\.5 km of transmission piping ranging in size from 150mm to 300mm diameter steel pipe (US$ 1\.6m); 1\.4 Replacement of three electric generators at NWSA power generation station and construction of about 10 kmn of electric power distribution overhead (US$ 0\.7m); 1\.5 Provision of potable water supply schemes to service about ten villages in East Habir and West Habir, including technical assistance to local cooperatives on O&M and management (cost included in 2\.1 below); 1\.6 Preparation of tender documents for a private management contract for NWSA Taiz branch, and of design and tender documents for the rehabilitation and upgrading of Taiz and Al Qaidah water and wastewater systems, for possible IDA financing under a second phase project (US$ 1\.9m)\. 2\. Rural Infrastructure by SURDU (US$ 2\.7 m incl\. contingencies) - 2 - 2\.1 Provision of rural water supply schemes for about twenty villages in the Al Haima area, including technical assistance to local cooperatives on O&M and management (US$ 1\.9m, incl\. project management and 1\.5 above) 2\.2 Provision of two demonstration irrigation schemes, technical assistance and extension services, one for East Habir cooperative and the other for West Habir cooperative, consisting each of a well, pumping equipment and a diesel power engine, well monitoring equipment, and about 5 km irrigation piping per scheme (US$ 0\.4m) 2\.3 Development of a pilot program of women activities, to be implemented in two poor villages in Lower Al Haima area (US$ 0\. Im) 2\.4 Undertaking feasibility studies for a possible recharge dike in Wadi Al Jaashin in Habir area and for a dam in Wadi Warazan as a potential water source for urban and rural development (US$ 0\.3m) 2\.5 Construction of three school rooms in Hajr Bin school(US$ 0\.03m) 3\. Water Source Studies by NWRA (2\.4m incl\. contingencies) 3\.1 Undertaking groundwater exploration studies in the Taiz region for the water supply of the city of Taiz (US$ 2\. 1m, including 3\.2) 3\.2 Undertaking groundwater exploration in Wadi Rasyan to complement water management plans for the Taiz region and the city of Taiz; and 3\.3 Undertaking a study in Wadi Masila in Hadramaut area to complement water management plans for the rational development of Hadramaut area (US$ 0\.3m)\. Note: Costs for the various sub-components were not included in the SAR and had to be compiled from data in the SAR Annex 2 based on certain assumptions for the purpose of this ICR\. 3\.4 Revised Components: The components of the project were not changed\. However, there were substantial changes at the level of the sub-components and activities (for details see Annex 8)\. The credit agreement was amended in early 2001 to formalize these changes long after they had been agreed and implemented\. The project development objectives, although long overtaken by the events, were left unchanged\. 3\.5 Quality at Entry: Quality at entry was unsatisfactory\. The combination of a pilot approach with an emergency approach proved to be unfortunate\. In a pilot project, new approaches are tested, the risk of failure is deliberately taken, and time is allowed for careful monitoring and evaluation in view of drawing lessons for the future\. In an emergency project, time is scarce\. Established, low-risk approaches should be used to deliver results quickly and in a reliable manner\. The Taiz Pilot Project attempted both approaches simultaneously\. At the time of appraisal in 1996, the project was perceived by the government and the Bank as an emergency project in response to the difficult water supply situation in Taiz\. Piped water was available only once every 40 days and there were rumors of a cholera outbreak\. This created pressure from the government and from Bank management to complete project preparation rapidly, affecting quality at entry\. For example, the SAR used substantial groundwater resources in the Habir area (140 Vs) as a basis for planning\. The hydro-geological study from which the figure was taken noted that its results were based on assumptions that remained to be verified and that the complex geology of the area made it difficult to assess resources in a reliable manner\. The resource assumptions drawn from the study proved to be faulty even before the project became effective\. Actual availability in Habir (West and East) was only in the range of 40 Vs\. Furthermore, important lessons from earlier stages of project preparation were not taken into account during appraisal\. For example, no participatory water resources management component was included in the project, although studies undertaken during project preparation showed that the implementation of the 'compensation' package in exchange for transferring water to Taiz would be controversial, making a participatory water resources management component desirable\. \.3\.- The project did not succeed to bring additional water to Taiz for the next five years\. Ironically, while the project did not make much progress, the govermment quietly and rapidly implemented its own "emergency project" drilling 6 wells in east and west Habir (supplying about 20 I/s) with production beginning in May 1996 and 12 wells in Taiz city supplying about 40 I/s in summer 1997\. While these wells exacerbated the over-pumping of local aquifers and partly drew on low-quality water with an elevated nitrate content, thus posing a potential health risk to the population, they succeeded in alleviating the acute water shortage before the Bank project that tried to achieve the same objective even became effective\. The appraisal report does not discuss compensation for land used to build infrastructure\. One of the reasons for the delay in completing the East Habir pipeline and in making water flow in the pipeline once it was completed were claims by local landowners for compensation for land used to drill two wells in East Habir\. Although the amount of land involved was very limited, it seems that several families claimed ownership to the land and compensation\. The government has made a financial allocation for compensation, but since the ownership claims of the families are competing with each other and are difficult to verify in the absence of registered land titles, the compensation was apparently not paid for several years after the works took place\. The project attempted at testing - for the first time in Yemen - an institutional framework for decentralized water resource management through participation of local communities\. The Al Haima and Habir areas were ill-suited for this purpose\. Trust between the communities and the government was low due to earlier broken promises, and there was a need to transfer water from one govemorate to another, a politically risky undertaking\. The principle of "picking the lowest hanging fruit first" was clearly not applied\. In a different area of Yemen chances of success would probably have been higher\. Even if the choice of the project area is taken as a given, the project should have been prepared differently\. The appraisal report continues to say that this risk is mitigated by the establishment of a steering committee that would include "representatives of concemed rural conmnunities in Habir area (up to six elected members), NWSA, SURDU, NWRA, and the Ibb and Taiz govemors\." The committee of eleven (later increased to 16, including two representative from Al Haima, two representatives from Taiz and an additional representative from NWSA) was designed in such a way that representatives of local communities would have a majority\. The implicit assumption that governors and agency heads would bow to a majority of user representatives in a committee that they did not contribute to create was apparently never questioned\. The steering committee met only twice during the duration of the whole project\. In one instance it proved very useful, when it mediated between local communities and NWSA Taiz branch to reach an agreement about the reduction of pumping from the West Habir wells which had affected pumping from a nearby community well\. Nevertheless, community representatives complained that it was ineffective\. The steering committee could have been smaller and more active, and it should have been supported by qualified local social consultants working in close coordination with local communities and the implementing agencies\. The project should have been based on realistic assumptions about water resource availability and timing\. It should also have included a requirement to reduce urban leakage losses in a comprehensive manmer before agreeing\. to support a water transfer to Taiz\. Unaccounted-for water was more than 50% and the rural population was well aware of inefficient water use in the city, making them even more reluctant to agree to water transfers than they already were\. A KfW-funded loss reduction project was undertaken in the old city of Taiz city in parallel to the project, but the area covered was only a limited portion of the total network\. -4 - The economic analysis - which calculated the economic rate of return at 55 percent ! - was based on overoptimnistic assumptions, in particular concerning the shadow price of water, the achievable reduction of unaccounted-for water and project timing\. Finally, implementation agencies reported that they were not sufficiently consulted during project preparation\. Finally, the choice of performance indicators was sub-optimal\. Indicators consisted mainly of physical inputs and outputs, many of which were not very meaningful by themselves\. Unfortunately the few outcome and impact indicators were not very meaningful, since some of these indicators were difficult to monitor under the circumstances (such as overabstraction of the Al Haima aquifer) and others were actually rather input indicators (such as employment)\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The overall outcome of the project, measured against the project development objective, was unsatisfactory\. The project's first objective was to mitigate the immediate water shortage in Taiz "by increasing supply by about 100 percent" without giving a figure for the base year\. Elsewhere, the SAR states that "water from eight of the nine proposed wells are expected to yield 173 Us"\. Even if the operation of the wells in East Habir - which started only in April 2002 - will not be interrupted by local communities and if the water quality problem at well No\. 6 is resolved, the project would increase the supply to Taiz by only 60 Ils (25 Ils from East Habir and 35 I/s from Hogalla-Hoban based on a new well supplying 10 I/s and a high assumption about leakage from the existing pipeline in the order of 25 I/s)\. But it could be as little as 40 Us if the water quality problem at wekk No\. 6 is not resolved\. Water from Hogalla-Hoban is of low quality and can only be made available if sufficient additional good-quality water from East Habir becomes available for blending\. During a test pumping of well No\. 6 in East Habir in March 2002 water with a temperature of 43 degree celsius was produced\. The problem remained unresolved at the time of writing, making the water unfit for consumption for the time being\. The above estimates do not include another 20 IUs that were made available in 1996 from the West Habir wells and trunkline that were funded by GOY from its own resources\. The second objective, the development and testing of an institutional framework for decentralized water resources management through participation of local communities, has clearly not been achieved\. The Habir and Al Haima areas - with a history of social conflict, a complex and ill-understood aquifer system, and involving the transfer of water both from one govemorate to another (from Ibb to Taiz) as well as from a rural area to an urban area - was one of the more difficult areas in Yemen to test such a framework\. It should, however, be noted that the project was relatively successful in introducing participatory arrangements for the operation of rural water supply and small irrigation infrastructure, as opposed to participation in the management of water resources\. Unlike the latter, the forrne was not among the project's objectives\. It also improved agricultural production through water harvesting and protection of fields against flood flows\. This was not among the project's stated objectives either\. Finally, the third objective of promoting private sector participation in the management of water and wastewater utility services by entering into a management contract in the 'second phase' of the Taiz Water Supply Project has not been achieved\. The Water Supply and Sanitation Project (Project ID 57602), which can be considered a replacement for the 'second phase' of the project, aims at introducing private sector participation in selected cities in Yemen, beginning with Sana'a\. Taiz is included in the project, but the timing and the form of private sector participation have not yet been decided\. A study under the Taiz pilot project that was supposed to assess PSP options did not address the issue adequately\. At the request of IDA it was thus decided to drop this component\. Meanwhile another donor (GTZ) funded an on-going - 5- study to assess PSP options in water resources management in the Taiz area\. It should, however, be noted that the project did bring substantial benefits to both the rural population of Al Haima and Habir and the urban population of Taiz at a reasonable cost, as evidenced by the high rate of return achieved\. In fact, it seems that the implementing agencies, with the support of the Bank, constantly modified their approach in a pragmatic manner in response to changing circumstances\. A pragmatic revised objective could be phrased as follows: "The project aims at (i) providing as much drinking water from Habir and any other available source to Taiz as politically, environmentally and technically feasible; (ii) implementing development measures in the Habir and Al Haima as agreed with local communities, including in particular the satisfaction of drinking water needs; and (iii) assessing the technical and social feasibility of the development of new water resources for Taiz\." Defined in such a way, the project did achieve its objectives\. However, since the project development objective at appraisal was never revised, the achievements under the project must be measured against the original benchmark and have to be rated unsatisfactory\. 4\.2 Outputs by components: The following table shows the sub-components at appraisal, their implementation status at completion\. Original Sub-Component Implementation Status Original Cost Actual Costs Estimate (US$m) (US$ m) 1\.1 Wells and associated Implemented without IDA 1\.15 n\.a\. equipment funding (by GOY) 1\.2 Aquifer Monitoring Implemented without IDA Included in 1\.1 n\.a\. Wells funding (by UNDP) 1\.3 Transmission Piping Implemented after changes 1\.6 3\.65 and delays 1\.4 Generators Implemented with delays 0\.7 Included in 1\.3 1\.5 Habir Water Supply Implemented with delays Included in 2\.1 Included in 2\.1 1\.6\.1 Technical Studies Implemented with delays 1\.75 1\.05 1\.6\.2 Management Contract Not implemented 0\.15 n\.a\. Preparation 2\.1 Al Haima Water Supply Implemented with delays, 1\.9 1\.2 but below cost estimate 2\.2\. Demonstration Implemented after changes 0\.4 0\.75 Irrigation Schemes and delays 2\.3 Women Activities Implemented 0\.1 0\.1 2\.4 Feasibility Studies for Dropped and balance used 0\.3 Dams for 2\.2\. 2\.5 School Rooms Implemented 0\.03 0\.03 3\.1 Groundwater Implemented with delays, 2\.1 1\.33 Exploration Taiz but below cost estimate 3\.2 Groundwater Implemented with delays Included in 3\.1 Included in 3\.1 Exploration Wadi Rasyan 3\.3 Hadramaut Study Implemented without IDA 0\.3 n\.a\. Funding (UNDP/NL) Project Preparaton Facility Implemented with 0\.65 0\.65 substantial delays Total 11\.1 8\.75 -6 - A detailed assessment of the outputs of each component is included in the project files\. Annex 1 shows output performance indicators\. 4\.3 Net Present Value/Economic rate of return: The economic rate of return of the project is estimated at 20%\. This analysis includes all components that are amenable to an economic analysis and whose costs is about 70% of total project costs\. The rates of return of the main components / sub-components is as follows: * TWSLC component (US$ 4\.6m): 20% (based on an estimated incremental flow of 42 I/s - for details see above) * RWS component (US$ 1\.2m): 23% * Agricultural component (US$ 0\.75m): 26%\. A detailed description of assumptions and methodology is included in Annex 3\. An Excel file with the spreadsheet used for the calculation is part of the project file\. 4\.4 Financial rate of return: No financial rates of return were calculated for the water supply components\. The financial rate of return of the agricultural component is estimated to be very high, since the farmers did not have to pay for any investment costs and the economic rate of return (including the investment costs) is already satisfactory\. 4\.5 Institutional development impact: Institutional development impact has been minimal\. Concerning TWSLC, the major reform step envisaged at appraisal was the introduction of a management contract, which never materialized\. Concerning SURDU, substantial training and capacity building was undertaken on the rural water supply side through the services of the social team\. However, SURDU was dismantled at project closure\. The decision to dismantle SURDU was not related to the project\. SURDU was active in a broad variety of rural development activities all over the governorates of Taiz and Ibb\. NWRA was not institutionally strengthened and continues to experience a variety of institutional weaknesses and a strong centralization in decision-making, while capacity by its local staff in the Taiz branch is high\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: The lack of acceptance of the East Habir pipeline by the local communities was a factor largely outside the control of government\. Indeed the central government became involved in reconfirning the implementation of the compensation package in October 2001, including adding the drilling of five new wells so substitute for four wells drilled earlier but that were dry\. The government thus made it possible that the construction of the pipeline was completed, although overabstraction would be exacerbated by these new wells\. The government also made compensation available for land that was confiscated to drill wells, but in at least one case disputes about land ownership made it impossible to disburse that money\. It could thus be argued that the lack of acceptance of the pipeline despite the government's best efforts can be considered as being outside the control of the government\. 5\.2 Factors generally subject to government control: The government contribution to the project was not made fully available\. Total government contribution should have been US$ 0\.9 million according to the SAR, but only US$ 0\.5 (check latest figure) were made available\. However, the SAR does not provide details on how the local contribution was calculated, and a re-assessment based on the cost breakdown and funding shares given in the SAR indicates that the estimate -7- may have been too high\. In some cases, the government did not pay its contribution for some contracts because they were procured in accordance with IDA guidelines, but not in accordance with government guidelines\. This was the case of some small works contracts under the SURDU component that were not subject to competitive bidding under IDA guidelines, but should have been advertised under government guidelines\. In most other cases the government apparently paid its contribution\. The government did assign the NWSA Taiz Branch a coordinating role for the three PMUs\. However, this proved to be largely ineffective, partially because of the structure of the agencies and their supervising Ministries: TWSLC (earlier on: NWSA Taiz Branch) is under the jurisdiction of the Ministry of Electricity and Water; SURDU was under the jurisdiction of the Ministry of Agriculture and Irrigation; and NWRA is an independent agency whose head has the rank of a Minister and reports to the Cabinet\. Maling the lead role of the TWSLC effective would have required a substantial political commitment at the highest level, which was simply not available at most times for a relatively small project such as the Taiz project\. 5\.3 Factors generally subject to implementing agency control: Coordination between the three implementing agencies was minimal, although NWSArTWSLC had theoretically been assigned a lead role\. However, for the reasons outlined above it was unable to fulfill that role, and the lack of coordination can thus be considered to have been only to a very limited extent subject \.to implementing agencies control\. Concerning many contracts, procurement was very slow, which was to some extent under the control of the implementing agencies, although for larger contracts the central government, the Tender Board and the Bank also played an important role\. The lack of pre-qualification of contractor for two major works contracts by NWSAJTWSLC has been a mistake\. The initial unwillingness of all three implementing agencies to engage the services of social consultants to complement in-house capacity, despite the admittance of the importance of social issues, was another mistake that made it more difficult to adequately address important social issues in a timely manner\. 5\.4 Costs andfinancing: Total project costs were estimated at US$ 11\.1 million at appraisal, out of which US$ 10\.2 million were to be financed by IDA and US$ 0\.9 million by GOY\. The actual costs are estimated at US$ 9\.0 million, out of which US$ 8\.5 million are financed by IDA and US$ 0\.5 million by GOY\. The main reason for the inability to disburse the full loan amount was the inability of NWRA to fully recommit amounts that had been made available through restructuring to new activities within the scope of the project and - where new activities were identified - to procure them in a timely manner (for details on costs and financing see Annex 2)\. 6\. Sustainability 6\.1 Rationale for sustainability rating: TWSLC: The Taiz Local Water and Sanitation Corporation was created in February 2001, in line with a policy to create local water and sanitation corporations in major Yemeni cities where they took over responsibility from the national utility NWSA\. This decentralized structure is expected to encourage autonomous decision-making, increase flexibility and to improve accountability\. In January 2000 water tariffs were raised, resulting in an increase in water revenues from YR 190m in 1999 to YR 292m in 2000 (+54%) according to the audited income statement\. In January 2001 the local council of Taiz approved another tariff increase of about 50 %\. A successful loss reduction program was recently completed in two central neighborhoods of Taiz under KfW funding\. Further loss reduction programs are expected under the upcoming Urban Water Supply and Sanitation Project, which also aims at introducing private sector participation (under a management contract or a lease) in a number of Yemeni cities, including possibly -8 - Taiz\. Under the private sector contract, the private operator will have incentives to improve and to maintain performance, thus increasing the likelihood of sustainable operation\. SURDU: A decision to dismantle SURDU, a regional rural development agency covering the governorates of Taiz and Ibb, has been taken recently, effective by December 2001\. The staff of SURDU will be attached to the local branches of the respective local Ministries, including the Ministry of Agriculture and Irrigation and the Ministry of Public Works\. It is not clear to which agency the SURDU staff involved in supporting rural water supply schemes will be attached\. It has been suggested that NWSA should be in charge of RWS and that the respective SURDU staff would thus be attached to NWSA\. A decision in this matter is still pending\. The dismantling of SURDU could have a negative impact on the sustainability of the various schemes built with the help of SURDU in the Al Haima and Habir area\. RWS: Eight out of twelve RWS schemes that have been handed over to communities\. Beneficiaries have formed water user associations, nominated committees to operate the pumps and to collect fees, as well as determiined fees and collect them in six communities\. However, the level of fees covers only energy costs and some salaries, while some operators still work for free\. Also, no provisions are made for major maintenance as of yet\. There are plans to increase water tariffs, but these remain to be implemented\. Especially after the dismantling of SURDU there is a risk that the water user associations will not be assisted if they face operational problems\. Thus, there is a risk that some schemes may temporarily break down and will not be repaired\. The risk that repair will be neglected is somewhat higher during the wet season when shallow wells contain water and in those communities where altemative supplies from agricultural wells are comparatively closer\. In the case of the four RWS whose water supply depends on the East Habir pipeline, their sustainability depends, in addition to the factors named above, on the completion of that pipeline\. Irrigation: The irrigation schemes are likely to be sustainable\. The infrastructure is located close to the farmers' land, directly benefiting them, built with labor of local communities\. Nine irrigation associations have been created to maintain the infrastructure\. It is, however, too early to assess if the structures will actually be maintained, since they have been completed only very recently\. WID : The WID centers have benefited from close support of SURDU staff\. Their sustainability after the end of the project is uncertain in the absence of external support, although interest by local women in training activities and the labor contribution during construction indicate a high degree of ownership\. Schools : The school buildings have been handed over to the Ministry of Education and are being used\. This small sub-component is likely to be sustainable\. NWRA: The sustainability rating is not applicable to the NWRA component, which consisted mainly of exploratory drilling, as well as socio-economic and hydrological studies\. The results of these studies are expected to lay the groundwork for the development of future water supplies to Taiz, based on sound hydro-geological studies and a good understanding of the local social context\. In that sense, they are an essential prerequisite for the sustainable development of the city and govemorate of Taiz\. 6\.2 Transition arrangement to regular operations: TWSLC: The works and equipment will be operated by an existing utility, which has substantial experience with the operation and maintenance of such works and equipment\. (check for training, esp\. for new types of pumps/vehicles)\. The recent increase in water tariffs and the planned management contract (see above under 6\.1\.) are part of transition arrangements that will facilitate regular operations and maintenance in the future\. -9- SURDU: RWS: Training for the members of the committees of water user associations has been completed\. While the transition to regular operations has been completed, tariffs need to be increased and further occasional technical support from SURDU/NWSA may be needed to ensure regular maintenance and timely repairs\. In the case of the four schemes on the East Habir pipeline, the pipeline has to be completed and wells have to be put into operation\. Irrigation: The equipment and works are being regularly operated by the beneficiaries\. NWRA: Not applicable\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank's performance in lending was unsatisfactory\. The reasons are listed in paragraph 3\.5 (Quality at Entry)\. 7\.2 Supervision: Bank supervision was satisfactory\. Supervision was carried out from the field - with support from headquarters - by a multi-disciplinary task team drawn from both the regional infrastructure department and the regional rural development department, as well as specialist skills from elsewhere in the Bank\. During the early phase of supervision, the Bank team facilitated start up under the difficult conditions resulting from design, limited capacity of implementing agencies and tensions in the project area\. The project directors for the three PMUs were recruited\. A project coordination group of the agencies working on the project was created under the chairmanship of the PMU director of NWSA Taiz branch and initially met on a monthly basis\. The Bank team worked closely with the Governor of Taiz and initiated meetings of the steering committee\. The Bank team worked hard to mitigate the shortcomings of the hurried project preparation and to adjust to changing circumstances on the ground by (i) retrofitting a participatory water resources management approach; (ii) identifying additional works in Hogalla-Hoban to substitute for the works in East Habir that were financed by GOY before the project became effective; (iii) modifying the technical assistance sub-component to prepare tender documents to allow works under the first project component to be procured and to be supervised, (iv) entrusting all rural water supply activities to SURDU instead of splitting them between SURDU and NWSA; and (v) replacing irrigation wells, demonstration farms and dams by gabions for flood protection, improvements in irrigation efficiency, and small water harvesting structures\. The retrofitted participatory water resources management approach was pursued tenaciously despite numerous obstacles\. For example, initially none of the three implementing agencies agreed to support a team of local social scientists to work on this activity, so that the Bank arranged for Trust Fund financing, and also added some financing from Bank budget The developments and lessons learned were very well documented, including in a series of notes halfway through the project\. This documentation - maintained in addition to the standard documentation - proved to be very useful\. It obviously allowed the team to focus on substantial issues in a better way than through formalized Bank processes\. The mid-term review, scheduled early in the project life in June 1998, was carried out by a team independent of the regular task team\. It concluded that the project was well supervised and that there was substantial progress, leading to satisfactory ratings on all counts\. There are, however, a number of caveats\. NWRA PMU had "no real commitment or ownership"; NWSA PMU was unable to fulfill its stated objective of overall coordination of the project; communities told the Bank that they were not informed - 10- about relevant developments in the steering committee, while at the same time expectations by communities had increased due to the project, so that they now expected the government to be in charge of even operation and maintenance of rural drinking water supply schemes without any charge\. The report by the social scientist noted that the term 'compensation package' had been poorly chosen, and that it should be rather called a 'development package' to reduce expectations by local communities\. The mid-term review suggested to formally restructure the project components and to change the credit agreement\. The MTR did not modify the project development objective, although it had already become apparent at that time that the objective was not any more realistic\. After the MTR, the task team proposed the formal restructuring of the project, but Bank management was uncertain about a proposed micro-credit scheme intended to promote off-farm employment and to reduce reliance on water-intensive irrigation\. A formal restructuring was postponed and was undertaken only in 2001 when the credit agreement was amended\. In February 2000 a major Bank mission including a senior Bank expert visited Yemen and the project area as part of the preparation of the new Bank Water Resources Strategy\. The mission was critical about the project, referring to a diffusion of focus ("too many bells and whistles") and alleging an ill-conceived approach concerning community participation, which was said to neglect the influence of local sheikhs and their importance as the main water users in the area\. At the same time the composition of the task team was changed\. After the mission the earlier emphasis on water resources management was effectively dropped\. Supervision in the last phase of the project, which was originally to be closed in June 2000 and had to be extended twice, focused on implementing all formal project components in a timely manner\. This was done despite numerous difficulties faced by contractors - pardy due to social tensions - and despite some persistent conflicts between contractors, supervising consultants and implementing agencies\. Due to the close supervision, all works were completed by March 2002\. During that period substantial input continued to be given from a Bank social scientist on participatory aspects of the rural water supply schemes\. 7\.3 Overall Bankperformance: Overall Bank performance is considered satisfactory, despite poor quality at entry\. Borrower 7\.4 Preparation: It is difficult to assess the borrower's performance during preparation, partly due to the scarcity of relevant documentation compared to supervision\. The central government has been active in arranging the compensation arrangement for the Habir area prior to the project\. This laid the foundation for the rural-urban water transfer at the heart of the project\. But the compensation agreement proved to be a mixed blessing, because it (i) involved a wide array of diverse activities under the responsibility of various agencies and (ii) created strong expectations for government support among the local communities and thus undermined efforts at community participation\. Furthermore, the government accepted an implementation structure including three PMUs under the jurisdiction of two Ministries and NWRA, entailing the risk of insufficient coordination, which materialized during the project Also, the central government accepted the creation of a large and unwieldy steering committee that proved to be ineffective during implementation\. Both NWSA and SURDU emphasize that they were not sufficiently consulted during project preparation, which makes the assessment of their performance during preparation even harder\. NWRA was created only during project preparation\. NWSA's performance during preparation is tainted by the neglect to highlight the need to include consultancy services for design, tender preparation and construction supervision in the project\. These were not included in the original contract for technical assistance which had to be amended during implementation\. Furthermore, NWSA agreed to implement mrual water supply schemes, an activity in which it had no experience\. 7\.5 Government implementation performance: Central government, in particular the Minister of Electricity and Water, and the governors of the two governorates covered by the project, in particular the governor of Taiz, provided crucial support to move the project forward at difficult junctures\. For example, the Minister of Electricity and Water played an important role in negotiating with local communities who had blocked construction of the East Habir pipeline towards the end of the project\. This intervention allowed the trunkline to be completed until project closure\. The governor of Taiz played an important role in the steering committee when it achieved a temporary reduction of pumping in West Habir at the request of local communities, as well as during the later phase of the project during the construction of the East Habir pipeline\. 7\.6 Implementing Agency: NWSA Taiz Branch / TWSLC: Progress on the NWSA component was initially very slow, partly due to changing PMU directors and due to the initial lack of provision for technical assistance for the preparation of tender documents\. Cooperation with the engineering consultant in charge of preparing tender documents and of construction supervision was difficult\. There was no pre-qualification in the process of procuring the contractor for the two main contracts under this component\. The perfornance of the contractor proved to be weak\. Together with work disruptions due to social tensions in the project area this led to very slow execution of works\. In the initial phase of the project, the Taiz branch had to clear all activities with NWSA headquarters, thus exacerbating to delays\. This improved after TWSLC was created in February 2001\. Since then, tariffs were increased twice, strengthening TWSLCs financial position considerably\. Close supervision has been necessary to ensure the execution of works and to prevent delays beyond the delays experienced by the project A positive feature under this component was the timely identification of new activities to substitute activities carried out with GOY financing, thus allowing the funds under this component to be fully used\. SURDU: SURDU has been very effective in adjusting the design of the rural water supply schemes in consultation with local communities in order to extend the coverage of the schemes substantially, without incurring additional costs\. It has also been effective at procuring goods and works for the schemes in a timely manner\. SURDU was initially somewhat reluctant to include communities rather than contractors in the laying of pipes, but it adapted its approach later on\. The creation of water user associations for the rural water supply schemes and the associated training faced some difficulties related to differences in approach between SURDU and consultants hired to help SURDU in this respect ("the social team")\. For details about the rural water supply schemes see Annex 9\. NWRA: Unlike the other implementing agencies, no PMU for NWRA was created in Taiz in the absence of clearance from NWRA headquarters\. There were major delays in the implementation of the exploratory drilling program\. This was partly explained by opposition from some local communities against drilling and an agreement with IDA that drilling should only be carried out after the social team had ensured community consent for drilling\. A\. study for water resources management plans in Wadi Masila was cancelled because procurement guidelines were not followed\. After that it took a long time to identify a substitute study and prepare terms of reference\. The small social team within the Taiz branch of NWRA was apparently not adequately qualified\. NWRA refused to "host" the social team hired by the Bank and at times refused to cooperate with that team\. Reports were inadequate and late\. About US$ 0\.7m from the allocated funds to that component were not used at the end of the project In the early phase of the project NWRA made a considerable effort to gather data on water resources, water uses (including a well inventory) and stakeholder attitudes in the project area as part of the "Taiz Water Management Plan" covering Upper Wadi Rasyan\. These covered the essential data that had not been collected as part of project preparation\. Finally, the preparation of studies for regional water management plans for Taiz and Sa'adah, following - 12 - Tenns of Reference carefully drafted by NWRA, strike a very positive concluding note to the NWRA component 7\.7 Overall Borrower performance: Due to strong performance by the Minister of Electricity and Water and the Governor of Taiz, overall borrower performance is considered satisfactory, despite mixed and sometimes weak performance by implementing agencies\. 8\. Lessons Learned Generic lessons for all types of projects are: * Do not combine a pilot approach with an emergency project\. * In an emergency project, time is scarce\. Established, low-risk approaches should be used to deliver results quickly and in a reliable manner\.If there is no such tested low-risk approach, resist pressure to rush a project under emergency circumstances\. Rather make sufficient time for careful preparation available and assess other options to cope with the emergency, including financing from government sources\. * In a pilot project, new approaches should be tested, the risk of failure should be deliberately taken, and time should be allowed for careful monitoring and evaluation in view of drawing lessons for the future\. Pilots are only appropriate where there is uncertainty over the right approach\. If this applies only to parts of a project, only the respective component should be labelled a pilot component and not the whole project\. * Assess all risks in a comprehensive, frank and realistic manner * Include staff with all specialities relevant for a particular project in the preparation and supervision teams * Revise the project development objective if it does not reflect reality any more, and formalize any changes of objectives and components in the Credit Agreement once they have been agreed to; * Avoid three different implementing agencies and PMUs, even at the cost of being limited to a more narrowly focused sectoral approach\. Specific lessons for water resources management projects or water resources management components of water projects are: * Up-front and as a priority it is essential to have a good understanding of the water resource, the shape of the aquifers and the relation between them, and the relationships between surface and groundwater resources\. * On the basis of this understanding of the resource, there is a need to spell out the "hydraulic goal " of the project - what do we mean by sustainability for each aquifer, what is an acceptable rate of resource depletion, what is the plan for each aquifer taking account of existing rights and public interest\. * There is a need for up-front stakeholder analysis that: (a) identifies rights holders and the nature of their rights; (b) identifies other users and their rights and relation to the water rights holders; (c) analyses the existing organizational and institutional structure, including the rules and sanctions; and (d) conducts a "sociopolitical" assessment of the dynanic and the scope for change * The stakeholder analysis should be used as the basis to select upfront stakeholder institutions that are as representative as possible and work with them on project design\. * There is a need to agree up front on an institutional development plan that defines the nature of the partnership between Government and the local stakeholders, and provides a road map for developing the capacity of stakeholder institutions\. The road map for the development of stakeholder institutions - 13- will need an adequate timeframe, as this is a slow process\. * There has to be a clear water resources management strategy that defines how the hydraulic goal is to be achieved, what the role of each actor is, and what is the package of rules and incentives which are expected to bring about changes in water management behavior\. * The state should put in place the enabling framework for decentralized management\. Under this, the state would (a) allow local organizations to handle their own affairs; (b) recognize and respect traditional rights and the decisions of decentralized institutions; and (c) provide needed tools of useful rules, education, information, technology, incentives, "court of appeal"\. 9\. Partner Comments (a) Borrower/implementing agency: Since this project had three implementing agencies, three separate comments were received from TWSLC, SURDU and NWRA Taiz branch\. The comments are included as they were received\. Specific comments concerning figures and data were incorporated directly in the ICR and have not all been included below\. 1\. Comments by TWSLC 1\. Major Factors Affecting the Project: * The policy to engage three agencies to implement the project\. Un-clearness of socioeconomic studies during the pre-appraisal of the project in order to have direct dialogue with the stakeholders at the rural areas\. The non-adequate studies for Habir aquifer which led to inaccurate estimation of the safe yield that can be extracted from Habir (it was proposed to be 150 lit/sec from 6 wells)\. While the physical pumping from 3 wells in west Habir for a period of 6 months, prove that the safe yield from those three wells should not exceed (20 lit/sec\.) this indication lead to a reduction of water extraction from the remaining three wells in east Habir to (20 lit/sec\.) as it was recommended by NWRA\. The reduction in production forces NWSA and IDA to minimize the investment in Habir well field and investigate the best use of the savings in components that can achieve the objectives of the project (Contract #2, and Contract #3)\. Due to the previous experience that lead to mistrust of the people in rural area of transferring water to urban areas without recompense in return\. Using the post-qualification procedure in selecting the contractor lead to the selection of less experience contractor\. Delay in payment from the government contribution budget\. 2\. Project Sustainabilitv: The project Succeeded in achieving its objectives especially in increasing water production for Taiz by saving about 20 lit/sec the losses from Hougalla/Houban transmission line, and by pumping 10 lit/sec from a new well in Hougalla (contract # 2)\. Also by pumping 5 lit/sec from well # 5, 15 lit/sec from well # 6 in east Habir\. In addition to the 20 lit/sec produced from wells # 1, # 2 and # 3 in west Habir that has been financed by Yemen Government and put in operation in 1996\. This results to a reduction on the time of rationing the water supply in Taiz from 40 days in 1996, to 10-18 days at most in the year 2002\. The project succeeded in supporting the TWSLC with vehicles, pipes, equipment, and spare parts have to improve the Operation and Maintenance capabilities of TWSLC\. With the tariff increased in January 2002, the revenue collected allows TWSLC to cover its - 14 - expenses (other than Depreciation and dept services)\. 3\. Bank Performance The frequency of the Bank's missions was adequate\. The mission who visited the site during the implementation of the project gave their assistance and cooperation to the entire satisfaction of the PIU in finalizing many issues that required quick decision\. 4\. Borrower Performance: One\. The PrU has successfully fulfilled its obligations with assistance of IDA's supervision missions\. Two\. The project received strong support from the related ministries, (MEW, MOPD, MOF) and from the Governors of Taiz and Ibb Governorates\. Three\. The PIU, NWSA HQ, and TWSLC maintained accurate records of project accounts which were\. audited by independent external Audit finn, audit reports were submitted to IDA in due time\. Four\. The PrU has submitted progress reports to IDA regularly\. Five\. The certified payments have been applied for payment\. 5\. Assessment of Outcomes The project Succeeded in achieving its objectives especially in increasing water production for Taiz by saving about 20 lit/sec the losses from Hougalla/Houban transmission line, and by pumping 10 lit/sec from a new well in Hougalla (contract # 2)\. Also by punping 5 lit/sec from well # 5, 15 lit/sec from well # 6 in east Habir\. In addition to the 20 lit/sec produced from wells # 1, # 2 and # 3 in west Habir that has been financed by Yemen Government and put in operation in 1996\. This results to a reduction on the time of rationing the water supply in Taiz from 40 days in 1996, to 10-18 days at most in the year 2002\. 6\. Key Lessons Learned The TWSPP has been implemented satisfactorily in general despite the necessity to extend the original closing date of 30/6/2000, by 18 months, and despite the social problems in rural areas\. The project has achieved its objective to certain extent and thus provided useful lessons during its implementation period as follows: One\. To prepare detailed and deep socioeconomic studies during the pre-appraisal of the project in order to build the trust and avoid the disputes between the project and the rural communities\. Two\. To involve the stakeholders during the negotiation and the preparation of the project\. Three\. To award the PMU's more authorities and facilities as an autonomous unit to enable the proper execution of its tasks\. Four\. To facilitate the disbursement of the counterpart budget without delay similar to the IDA contribution\. Five\. One Authority or identity should manage the implementation of all various activities in the project\. Six\. The sizes of the packages should be high to avoid awarding the contracts to non-qualified finms\. Seven\. The pre-qualification of contractors and/ or consultants is essential to avoid the awarding the contracts to non-qualified finns\. 2\. Comments by SURDU -15 - It is mentioned in the SAR that the Policy and Strategy of the World Bank for this project will be the basic and\. implemented in this project to confront the water crisis in Taiz, but in fact the crisis is still faced\. The Project was not able to find new resources to meet the water demands after completion of the Project in the Year 2000\. The results of the exploration are mostly high and faraway from Taiz city\. Our recommendations for the provision of water from the rural areas are to buy the water from these cities to the Urban areas and transfer it through the Galvanized pipes without any compensation\. NWRA prepared the study for the Water Resources Management for the Upper Wadi of Rasyan and the output from this study is Water Resources Management Action Plan (WRMAP)\. NWRA should implement that plan and the World Bank has to follow this issue with the Agency\. 3\. Comments by NWRA Page 2: " The base line for the 100% increase was not mentioned" Because at that time no body knows the quantity of water pumped to Taiz\. There were no flow meters installed on the wells to measure the quantities\. This has been done by NWRA-Taiz since the end of 1998\. From 1999 until know measurements are done in monthly bases\. The average abstraction rate in the last three years was 7\.5 Mm3/y\. Water availability is not a constrain to start management contract\. Management contract should come to resolve this issue also\. "The Project under estimate complex of the weak capacity and social tension"\. You should reflect that in the learning lessons\. At least we know now our weakness\. All organization in Taiz should find solution to resolve such problems\. Page 3: The project development objectives were left unchanged\. Who is responsible for that? Also, the evaluation should be based in the new developed objectives not in the starting ones\. This has not been done in the ICR\. The combination of Pilot with emergency approach proved to be unfortunate\. But, What about if you did not have sufficient, reliable, and clear picture about all the initial inputs to start an emergency project? This was our situation\. What are you going to do then? The SAR used substantial ground water in the Habir area (140 IUs) as a basis for planning\. That was the available data at that time\. Hydrological and hydrogeological data needs long series of data to give good conclusions especially in areas like Taiz\. Aquifers in Taiz have high response to recharge boundary\. In one instance it proved very useful, when it mediated between local communities and NWSA Taiz branch to reach an agreement about the reduction\. That was not the committee effort that was the effort from NWRA Taiz\. NWRA-Taiz used the monitoring data to convince NWSA-Taiz that it is not economical to continue operating the well with high production\. Also it was a solution for the society well, which is near by NWSA wells to avoid high drawdown in that well\. * Based on realistic assumption\. Realistic assumption needs good data, good knowledge, and clear information\. Which was not available at that moment * Implementation agencies reported that they were not sufficiently consulted during project preparation\. Does that mean NWSA was not there\. This is an excuse not to work hard for the success of the project\. * The main objectives were not achieved but we work together to investigate the possibility to implement water resources management NWSA as a water user started to understand that there is a new approach for water resources management\. According to that they started to arrange their priorities to take action to improve their operational work especially in resources sector\. - 16 - * Working together with the people made the people to think in different ways\. NWRA-Taiz still advised all the water users, the different implementation units, as well as the local council in the area and the decision maker to evaluate: What we did? Was it good enough? Did all parties do there best to use that chance? What shall we do if we have new fund? How are we going to use it? We should realize that WRM is a continuous process\. It also improved agriculture production through water harvesting\. This is an output from the experience and data collection during the project\. This was done based on a written advice given by NWAR-Taiz during the PMU's meetings\. Similarly contract number 2 and 3 all of them had been taken during meetings\. NWSA PMU has been highly loaded from the project and that is why he is saying he has no control in the others PMU's (Please sea all the minutes of the meetings and the successful decision and advice given during that meetings\. Most of the big advice was given by NWRA-Taiz in written form)\. Since the project development objective at appraisal was never revised \. Why has it been done? Evaluation in the base of the original objective is not fair at all\. Aquifer monitoring implemented by NWRA-Taiz with UNDP fund\. Feasibility studies for dams from the point of few of hydrology, hydrogeology, geology, and water rights have been done by NWRA-Taiz for Habir and Al Haima areas\. A report in Arabic has been released with conclusions and recommendations\. According to that the available budget has been used for other purposes useful for the people\. For Warzan dam a lot of data has been collected for this purpose\. Hadramout study implemented by NWRA head quarter with fund from UNDP/NL\. Capacity building in NWRA-Taiz through this project: § Train two graduate engineers and a technician in supervising deep drilling, pumping test, well logs, lithology logs\. etc § Train the engineers in storing, analyzing and reporting on the collected data\. § Train two engineer and sociologist during the social economic study carried in Taiz area, and five from Sana'a office\. Making the lead role of the TWSLC effective would have required\. No they need to take and practice responsibility and decision better than given an excuse for them selves\. For the reasons outlined above it was unable to fulfill that role\. No because they have many activities, small number of employee, inexperience in group works\. People should understand the meaning of higher salaries\. In Jan 2002 tariff also increased at present the revenue of TWSLC is around 35 MYR per month\. SURDU, all equipments should come back to NWSA and Local Council\. Local Council should be included in supervising and follow-up of those projects\. Irrigation: will be maintained from the users\. WID: should be hand over to the local council to supervise and support\. Schools: Two schools have been constructed in Al Haima by Social fund and Construction project fund, Electricity project has covered all Al Haima and part of Habir area since this project started\. NWRA: According to its mandate it will assist all water users in the area for the best way to use the available resources\. Persistent conflict between contractors, supervising\. The contractor thinks it is their rights to get the many as long as they sign the contract\. They think that they should do the work with minimum cost without thinking about its equality\. ICR did not evaluate or mentioned any thing about the contractors\. I think they should be black listed from future projects (NWRA as well as NWSA contractor)\. A positive feature under this component was the timely\. All the saving from the project comes from NWRA budget or from NWRA advices' for the different implemented agencies such as the - 17- size of Habir project, the feasibility study for the dams, using the available capacities and knowledge instead of consultancy\. NWRA-Taiz took the following additional responsibility in this project: § Attending all meetings during the project and participated in them\. § Attending most of the meetings between the contractors and the organization\. § Taking full responsibility about the decision taking related to water resources\. § Try to solve the conflicts between the different parties within the project Lessons learned: § All aquifers in Taiz are small and highly affected with abstraction and recharge\. § In future Taiz should get its supply from more than one area\. § Unit price of water will increase rapidly\. § Water supply from surface water should be considered (Warzan could be a good area) § The project initiate new approach between different water users\. § The project shows that improvement not only needed in water resources but in different activities of the organization\. § The project started to build the main foundation to improve water supply to Taiz\. § Structure geology has highly affected the aquifers in negative way\. § Volcanic fracture aquifer characterize by low production high drawdown, and low quality water, and highly heterogeneous\. § Deep wells in volcanic have relatively high production when the strike fault zone (depths more than 400 m) (Sharab well and Warzan welli\. § Sandstone aquifer is highly recharge able aquifer but has a limited extend\. * Shadow price is the price of one cubic meter sold by tankers, which is equivalent to 300 YRlm3\. * In page 26: it is stated that " Performance under (c) was weak,\. Why should we continue depending on consultancy? Can't NWSA do this job or its PMU and his group? (b) Cofinanciers: Not applicable (c) Other partners (NGOs/private sector): Not applicable 10\. Additional Information See Annex 7: List of Supporting Documents - 18 - Annex 1\. Key Performance Indicators/Log Frame Matrix TWSLC: Target Actual Remarks Output indicator: Excluding West Habir and a\. Water production, Cubic Meters/day 12,000 3,456 - 5,184 depending on whether water (40-60 Uls) quality problems at well No\. 6 can b\. Complete bidding documents for a be mastered\. management contract satisfactory No Frozen at the request of IDA Outcome Indicator: a\. Reduction of Taiz water rationing 50% (I day in 15-20 One in 15-20 days days) b\. Implementation of management contract yes No Frozen at the request of IDA Impact Indicator: a\. Participation of rural communities in successful Initiated in some Should be under NWRA water resources allocation areas; unclear if b\. Relieve stress on Al Haima aquifer satisfactory continued (by reducing over- Should be under NWRA extraction by 10%) Unknown c\. Successful management contract Yes Frozen at the request of IDA No SURDU: Target Actual Remarks Output Indicator: a\. Number of village water schemes (RWS) 20 70 This includes hamlets\. Includes Al b\. Number of people serviced (RWS) 14,940 26,401 Haima and Habir\. c\. Number of women beneficiaries (WID) 140 172 Outcome Indicator: a\. Number of households satisfied (RWS) 2450 4056 b\. Number of women literate (WID) 100 81 c\. Number of beneficiaries trained (WID) 140 172 d\. Number of cooperatives traine 20 21 12 in RWS and 9 in Agriculture (Agr\.&RWS) Impact Indicator: a\. Number of man-month locally employed 3200 3,500 during construction (Agriculture and RWS) b\. Number of men temporarily employed in 1100 2000 Construction (Agriculture and RWS) c\. Number of women hours saved per year by 876,000 1,678,662 provision of water supply d\. Equivalent YR input to local economy YR19\.2 million Not monitored during implementation of the project (2 yrs) NWRA: Target Actual Remarks Output Indicator: a\. Number of areas investigated 7 5 b\. Number of wells tested 14 12 c\. Number of water management studies 1 2 Outcome Indicator: a\. Number of successful wells Not determined 2 b\. Number of studies completed I I Impact Indicator: From the two successful test wells a\. Quantity of water developed (liters\./sec) Min 250 Ips 36 I/s (not yet exploited yet)\. The 36 I/s b\. Water management plans implemented Yes Prepared and partly exclude potential surface water implemented (Upper from Wadi Warazan estimated at _ _ _ _ _ __ _ Wadi Rasyan) 2-3 MCM/year (63-95 Its)\. Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal ActuaULatest Percentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million 1\. Well Field Development (by NWSA) 5\.44 5\.34 0\.98 2\. Rural Infrastructure (by SURDU) 2\.23 2\.58 1\.16 3\. Water Source Studies (by NWRA) 2\.27 1\.38 0\.61 Total Baseline Cost 9\.94 9\.30 Physical Contingencies 0\.46 Price Contingencies 0\.68 Total Project Costs 11\.08 9\.30 Total Financing Required 11\.08 9\.30 Notes: 1\. The summary cost estimate in Annex 2 of the SAR showed component 3 as "TA & Studies", although this should rather be an expenditure category to be allocated to various components\. Therefore, an amount of US$ 1\.7m - equivalent to the estimated base costs of Phase II design&preparation and management contract preparation have been reallocated to Component 1\. Also, an amount of US$ 0\.25m - the estimated base costs of the Wadi Warazan study - have been reallocated to Component 2\. Component 3 is called Water Source Studies, as in the main text of the SAR\. 2\. Repayment of the PPF, which was used to identify the well field, is included under Component 1\. 3\. Costs for each component in the SAR are not comparable to actual costs, since the former are base costs and the latter include contingencies\. Costs by component including contingencies were not shown in the SAR\. The following table shows actual costs by sub-components (including contingencies): Component / Sub-Component Cost (US$ m, actual) 1\. TWSLC Components (US$ 4\.69m, excl\. PPF) 1\.1 Well Field Development 3\.05 1\.2 Studies and Consultancy Services 1\.57 1\.3 TWSLC PMU Compensation 0\.07 2\. SURDU Components (US$ 2\.58m) 2\.1 Rural Water Supply Schemes 1\.20 2\.2 Improvement of spate and groundwater 0\.75 inigation schemes in Habir and Al Haima 2\.3 Construction of additional classrooms in 0\.03 selected Habir schools 2\.4 Development of the institutional capacity of 0\.02 SURDU 2\.5 Women in Development Activities 0\.10 2\.6\. Technical Assistance, Training and SURDU 0\.48 PMU 3\. NWRA Components (US$ 1\.38m) 3\.1 Groundwater Exploration and Testing 1\.00 3\.2 Regional Water Management Plans 0\.33 3\.3 Project Management 0\.03 4\. Repayment of PPF(US$ 0\.65m) 0\.65 Total 9\.30 - 20 - Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other' NB\.F\. Total Cost 1\. Works 0\.00 1\.89 0\.00 0\.00 1\.89 (0\.00) (1\.70) (0\.00) (0\.00) (1\.70) 2\. Goods 3\.37 0\.00 0\.26 0\.00 3\.63 (3\.20) (0\.00) (0\.25) (0\.00) (3\.45) 3\. Services 0\.00 0\.00 4\.91 0\.00 4\.91 (0\.00) (0\.00) (4\.43) (0\.00) (4\.43) 4\. Miscellaneous 0\.00 0\.00 0\.65 0\.00 0\.65 (0\.00) (0\.00) (0\.65) (0\.00) (0\.65) 5\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 3\.37 1\.89 5\.82 0\.00 11\.08 _ (3\.20) (1\.70) (5\.33) (0\.00) (10\.23) Project Costs by Procurement Arrangements (ActuaULatest Estimate) (US$ million equivalent) \. \. ~~~~~Procurement - Method Expenditure Category ICB NCB Other2 N\.B\.F\. Total Cost 1\. Works 0\.00 4\.67 0\.00 0\.00 4\.67 (0\.00) (4\.28) (0\.00) (0\.00) (4\.28) 2\. Goods 1\.12 0\.16 0\.22 0\.00 1\.50 (1\.08) (0\.15) (0\.20) (0\.00) (1\.43) 3\. Services 0\.00 0\.00 2\.28 0\.00 2\.28 (0\.00) (0\.00) (2\.24) (0\.00) (2\.24) 4\. Miscellaneous 0\.00 0\.00 0\.20 0\.00 0\.20 (0\.00) (0\.00) (0\. 1 9) (0\.00) (0\. I 9) 5\. Miscellaneous 0\.00 0\.00 0\.65 0\.00 0\.65 (0\.00) (0\.00) (0\.65) (0\.00) (0\.65) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 1\.12 4\.83 3\.35 0\.00 9\.30 (1\.08) (4\.43) (3\.28) (0\.00) (8\.79) - 21 - Figures in parenthesis are the amounts to be financed by the IDA Credit\. All costs include contingencies\. 2 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. - 22 - Annex 3\. Economic Costs and Benefits The economic analysis is undertaken separately for three activities: (i) the TWSLC component (1\.1; 1\.2; 1\.3); (ii) the six functioning rural water supply schemes (2\.1); and (iii) the agricultural sub-component (2\.2)\. The NWRA component, consisting of exploratory drilling and studies, is not amenable to economic analysis\. The very small WID and classroom components are negligible in terms of costs\. The cost of the components that, have been included is almost 70% of total project costs\. For all components included in the economic analysis, costs and benefits have been shadow-priced by excluding taxes on the cost side and by estimating the shadow price of water for urban water supply and the benefits from time savings for rural water supply schemes\. Costs and benefits were expressed in YR and in constant 2001 prices\. TWSLC component (US$ 4\.7m): The investment cost for this component is US$ 3m, half of which is for the East Habir pipeline and the other half for the rehabilitation of the Hogalla Hoban pumps and pipeline\. In addition, the costs of engineering design and supervision (Dorsch / Gitec) as well as the costs of the repayment of the project preparation fund used for well field development have been added\. It is assumed that the East Habir pipeline will supply 5 I/s beginning in 2003 (excluding well No\. 6 which yields 20 I/s of very hot water), and the rehabilitation of the Hogalla Hoban pumps and pipeline will yield 35 I/s immediately\. Furthermore it is assumed that without the rehabilitation the amount of water available from Hogalla Hoban would decline by 4 percent annually, while it can be maintained with the project\. The shadow price of water in Taiz is estimated at US$ I/cum\. This value is less than the US$ 2/cum paid to water vendors, because it can't be assumed that the willingness to pay for the limited quantities of water supplied by water vendors is the same as the willingness to pay for much higher quantities of water supplied through the piped distribution network (negative slope of the demand curve)\. RWS component (US$ 0\.6m): The estimate of the benefits was based on an average time saving of 2\.5 hours/household and day, an opportunity cost of the time of YR 25 / hr (US$ 0\.15/hr) for adults (almost exclusively women) and YR 12\.5 / hr (US$ 0\.08 / hr) for children, and the assumption that 44% of the hours saved are accounted by adults and 56% by children\. The values for adults is derived from the daily wage rate for unskilled labor in rural areas (YR 400 / day), divided by eight hours and multiplied by a factor of 0\.5 to arrive at the shadow wage rate that takes into consideration underemployment and the low opportunity cost of labor\. The time value of children is estimated to be about one half of the value of an hour spent by an adult\. The O&M costs of the schemes are estimated based on figures provided by SURDU, including fuel, spare parts and salaries for pump operators and staff involved in billing\. Based on these assumptions, the economic rate of return of the six operating rural water supply schemes is estimated at 23%\. 15,000 people in 48 villages and hamlets benefited from the six schemes, receiving 38 I/c/d\. The willingness to pay per cubic meter of water is estimated at about US$ 0\.6, based on the time needed to provide water from alternative sources\. Agricultural component (US$ 0\.75m): 1949 farm holdings owned by small-scale farmers (average farm size 0\.3 ha) benefited from the agricultural component of the project, covering 596 ha\. 1420 holdings were protected by gabions from floods, and 529 holdings benefited from improved piped irrigation\. The main crops grown are maize and sorghum, with tomatoes and potatoes cultivated on a small share of the area as well (about 10% together)\. For maize on fields protected by gabions, a yield increase of one third is assumed, while for most other crops yield increases are limited\. The main benefit, however, is the increase in cropping intensity from 96% to 105% on fields protected by gabions, and from 105% to 137% on fields benefiting from improved irrigation\. (Details on estimate of costs, including shadow pricing of labor)\. Based on these assumptions, the economic rate of return of the component is estimated at 26%\. - 23 - Overall Analysis: In the overall analysis, the three above analyses are aggregated, and the costs of project management (US$ 0\.14m) are included\. The resulting overall economic rate of return is 20%\. -24- Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance, Rating (e\.g\. 2 Economiists, I FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 02/02/1996 1 Economist Appraisal/Negotiation 04/22/1996 1 Engineer I Lawyer I Agro-Economist I Socio-Economist Supervision 01/15/1997 2 Economists S S 06/17/1997 1 Economist U U I Socio-Economist 1 Hydrogeologist 10/11/1997 1 Engineer U U I Social Scientist 2 Economist 03/24/1998 Engineer S S Pr\. Operations Officer Economist Participation Spec\. consultant 07/10/98 MTR I Sanitary Engineer Economist / Finanical Analyst Rural Sociologist 12/03/1998 1 Pr\. Operations Officer S S I Hydrogeologist 2 Social Scientists I Irrigation Specialist 04/30/1999 1 Pr\. Operations Officer U S I Cons\. Wid\. Specialist I Social' Scientist 09/27/1999 1 Financial Analyst U S I Pr\. Operations Officer 1 Social Scientist 03/17/2000 Financial Analyst S S Project Officer Social Scientist Fin\. Manag\. Specialist (FMS) Hydrogeologist Sector Manager (MNSID) Sector Manager (MNSRE) Senior Water Advisor 07/31/2000 1 Lead Agric\. Economist S S 12/02/2000 1 Financial Analyst S S I Pr\. Operations Officer - 25 - I Lead Agric\. Economist 05/17/2001 1 Financial Analyst S S ICR 11/13/2001 1 Sr\. Financial Analyst S S I Implementation Specialist I Economist (b)\. Staff: Stage of Project Cycle Actual/Latest Estimate No\.-Staffweeks US$ ('000) Identification/Preparation Appraisal/Negotiation 130,633 Supervision 565,156 ICR 20,000 Total 715,789 -26 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating O Macro policies O H OSUOM O N * NA 0 Sector Policies O H OSUOM * N O NA Physical OH OSUOM O N O NA Financial OH OSUOM O N O NA ? Institutional Development 0 H O SU O M 0 N 0 NA Fl Environmental O H OSUOM O N * NA Social Z Poverty Reduction O H OSUOM O N O NA O Gender O H OSUOM O N O NA Li Other (Please specify) O H OSUOM ON O NA LI Private sector development 0 H O SU O M 0 N 0 NA Fl Public sector management 0 H O SU O M 0 N 0 NA i Other (Please specify) O H OSUOM O N * NA Substantial lessons about the difficulties and pitfalls of rural-urban water transfers and ofparticipatory water resources management in the Yemeni context have been learned under the project\. These lessons will be of great importance for future projects in Yemen such as the Sana 'a - 27 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bankperformance Rating Ol Lending OHS OS U OHU D Supervision OHS OS OU O HU El Overall OHS OS O U O HU 6\.2 Borrowerperformance Rating El Preparation OHS OS U O HU O Government implementation performance O HS OS O U 0 HU El Implementation agencyperformance OHS OS * U O HU L Overall OHS OS O U O HU - 28 - Annex 7\. List of Supporting Documents 1\. Completion Report by SURDU 2\. Completion Report by TWSLC 3\. Economic Analysis Spreadsheet (Excel File in Project Files) 4\. Aide Memoire of the November 2001 Supervision Mission -29 - Additional Annex 8\. Detailed Assessment of Outputs by Components and Sub-Components 1\.1 Development of the Habir Well Field and Increasing Water Supply to Taiz (US$ 3\.05m) This component included the construction of well platforms, well houses and generator buildings, rehabilitation of the Al-Haima power station, rehabilitation of a chlorination plant and other electromechanical works, as well as the construction of a 6km trunkline between Habir well field and Al-Haima transmission network (Contract 1)\. Furthermore, it included the rehabilitation works at a 7 km pipeline and pump station supplying bulk water from the Hogalla Hoban wellfields to Taiz (Contract 2)\. The works carried out under the two contracts will allow to increase water supply to Taiz by between 40 Ils (5 Vls from Habir and 35 Ils from Hogalla Hoban) and 60 I/s (25 Vs from Habir and 35 Ils from Hogalla Hoban), depending on whether the current water quality problems at well No\. 6 in East Habir (high temperature) can be resolved\. Water from the two sources - Habir on the one hand, Hogalla Hoban on the other - will be blended, because the salinity and nitrate content of water from Hogalla Hoban is high\. In addition polyethylene pipes, submersible pumps, workshop equipment, spare parts, vehicles, water meters and laboratory equipment were purchased under small contracts (so-called "Contract 3")\. The construction of the East Habir pipeline faced substantial delays, initially due to slow procurement, later on due to opposition by individual families from local communities in East Habir\. The reasons for the opposition have been the subject of much debate\. Usually earlier broken promises leading to a lack of trust between communities and the government are cited\. Indeed, when wells for urban water supply were drilled there in the 1980s in Al Haima local sheikhs apparently received all the compensation, while other community members were not compensated\. In West Habir, the pipeline was built about two to three years before the compensation package was made available,,thus breaking an earlier promise\. However, in East Habir the construction of the pipeline was delayed for so long that the compensation package had been made available long before any water was allowed to flow\. The army actually had to be called in several times to allow construction to proceed\. Even after construction was completed, some local families prevented the pumps from being turned on\. The reason for this behavior is apparently unrelated to the already completed compensation package\. Rather, several families lay competing claims on the land that was used to drill a well in East Habir prior to the project in 1996\. The government has apparently made available funds for compensation, but since property rights are not clearly defined and there are many competing claims for the land it was not clear to whom this compensation should be paid\. Furthermore, it seems that some local communities are more concerned about employment of a significant number of villagers guards, rather than a one-time cash or in-kind compensation\. Given the need to contain recurrent costs TWSLC can hardly fulfill that expectation\. 1\.2 Studies and Consultancy Services (US$ 1\.57m) The technical assistance under this component included: (a) design of technical specification leading to preparation of the tender documents for Contract No I (Works-Habir), Contract No 2 (Works Hoban/Hogalla) and Contract 3 for procurement of goods to support the TWSLC; (b) construction supervision for Contracts I & 2; and (c) preparation of Initial Development Plan (IDP), Environment Impact Assessment (EIA), feasibility studies, detailed design, pre-qualification documents, evaluation report and short list, final tender documents for the following: (i) rehabilitation of the existing water and wastewater networks for Taiz; (ii) review of Howard Humphrey's Tender Documents for Habeel Al Dhabi Sewerage system to cover the eastern part of Taiz; (iii) rehabilitation of the existing water and wastewater networks for Al Qaidah including any expansion to the existing systems\. The works for which studies have been carried out under (c) are expected to be financed under an upcoming IDA project\. Designs under (a) - 30 - were completed satisfactorily, but construction supervision under (b) was marred by numerous disputes with the contractor as well as by substantial delays due to opposition from the local population\. Performance under (c) was weak, resulting in substantial delays and making the hiring of another consultant necessary to assist in the satisfactory completion of the study\. 2\.1 Rural Water Supply Schemes (US$ 1\.2 m) Under this component the civil works for twelve rural water schemes to supply water to 26 villages in the Habir area and 40 villages in the Al Haima area were completed, including the construction of water tanks and pump houses, laying of main pipe lines, setting up of the distribution network, and provision of pump and generator sets for each pump house\. At the time of the completion mission eight of the twelve schemes delivered water and four schemes did not receive any water, because they were to be supplied by the East Habir trunkline\. The total number of beneficiaries in all twelve schemes is estimated at 26,401; this compares very favorably with 19,640 as estimated during appraisal (= 77%)\. Because the total quantity of water available for the twelve schemes has been set at 8\.5 V/s in an agreement with TWSLC, the higher number of beneficiaries meant a reduction in per capita water use to 28 V/c/d compared to 37 VIc/d\. TWSLC - the bulk water supplier for the schemes - has agreed not to charge any tariff for the bulk water delivered within the quantities agreed upon\. For metered consumption, a charge of between YR 37 and 80/cum (US$ 0\.22-0\.47/cum) has been recommended by SURDU and the social team in order to cover the salaries of four staff in each scheme (a director, an accountant, a meter reader and a mechanic), maintenance costs and depreciation\. However, the communities have for the time being opted for lump-sum fees, partly because some beneficiaries suggested to postpone volumetric tariffs until they would have had a chance to install individual house connections from distribution points and meters at their own expense\. Currently in the eight operating schemes, water user associations levy charges varying from YR 150-300/household/month (US$ 0\.84 - 1\.67)\. These are substantially lower than the recommended charges, but the recommended charges were based on a staffing level that is probably excessive\. Revenues currently cover operating costs (mainly diesel), the cost of a mechanic and routine maintenance\. The accountants seem to currently work without pay, while the directors and meter readers are apparently not needed\. If the staff in each scheme remains limited to two (mechanic and accountant), the current charges would only need to be raised by a small amount to fully cover operation and routine maintenance costs\. The poorest in each village, estimated at between 10 and 20% of the inhabitants, are exempted from the charge\. The other community members apparently regularly pay their bills\. SURDU has completed providing necessary training to 48 members of all twelve Water User Associations (WUAs) in areas of operations and maintenance (O&M), billing/collection and overall management of the facilities\. All those trained are men\. No women have been trained\. Before formal hand-over of a scheme, a workshop has been arranged and hand-over contracts were signed\. A more detailed assessment of the rural water supply schemes is included in the project files\. 2\.2 Irrigation (US$ 0\.75m) This component covers a wide array of activities, including replacing existing open channels with pipes, wadi protection and training by gabions, introduction of improved irrigation techniques and water harvesting in ten villages (three in East Habir, four in West Habir and three in Al Haima)\. The original proposition to drill two new wells and to implement demonstration schemes, including extension services as well as monitoring equipment, was abandoned for tw6 reasons\. First, drilling new wells would have exacerbated the overpumping of the aquifer\. Second, the approach of the demonstration schemes was - 31 - perceived as too high-tech and costly, while benefits through replication of the water-saving technologies on other farms without govemment support remained uncertain\. Revised activities included in particular the following: * in six communities (two in East Habir [Hogfah/Ribat and Al Fawdaiah], one in West Habir [Al Faqeeh], and three in Al Haima [Al Sa'adah, Al Tadamoon, Al Taweel]), 1670 holdings covering 540 ha were protected through gabions; * conveyance efficiency from two springs in West Habir (Al-Arasha and Hadour) was improved benefiting 313 holdings with a total command area of 66 ha; * conveyance efficiency on 200 holdings covering 65 ha in East Habir (26 September and Madarat) was improved by laying pipes from wells to the fields; * four small rain water tanks were constructed in Al Haima, benefiting 16 holdings covering less than 5 ha\. Communities actively participated in the selection of the sites and the construction of the schemes\. However, no cost sharing arrangements were implemented concening the improvement of conveyance efficiency\. Under the simultaneously implemented much larger IDA-supported Land and Water Conservation Project, farmers all over Yemen (including in other parts of the Taiz and Ibb governorates) paid a cost sharing contribution of 50% for the same type of assistance (provision of pipes to improve conveyance efficiency from wells)\. Requiring such a cost sharing contribution was apparently difficult in the context of promises given and the agreement about the 'compensation package'\. The irrigation sub-component resulted in substantial benefits in terms of increased production (see economic analysis)\. 2\.3 Schools (US$ 0\.03m) Four classrooms were built in the West Habir area and handed over to the Ministry of Education (Ibb Office)\. The school rooms were not immediately used\. With 135 students, the school is now fully operational\. 2\.4 Development of the Institutional Capacity of SURDU (US$ 0\.02m) Since March 2000, SURDU had used the services of a Social Team under the project\. The terms of reference did include water resource management by local communities, one of the project development objectives\. However, water resources management does not fall within the mandate of SURDU, but it is the mandate of NWRA\. During implementation the responsibilities of the social team were narrowed down to arranging for an orderly hand over of the completed rural water supply schemes, including finalization of the hand-over contracts and assisting the communities in the development and implementation of a tariff system\. The social team has provided training to designated SURDU staff in areas of socio-economic analysis, participatory methods in community work, initiating and strengthening of self-help capacity in communities\. The social team played an important role in helping to create the basis for the sustainability of the rural water supply schemes\. 2\.5 Women in Development (US$ 0\.1m) Two Women in Development (WID) centers were built and equipped in Shahrah and Rahbah villages in the lower Al Haima area under the supervision of SURDU\. The buildings were constructed using local community labor contributions, leading to significant cost savings\. The centers have been formally handed - 32 - over to the Al-Hayat association\. The activities carried out by the association in the two centers include a literacy program, education in mother and child health care, hygiene and first aid, and water conservation and sanitation\. The centers are fully operational now and no further support is envisaged\. 3\.1 Exploratory Drilling (US$ 1\.Om) Under this component, twelve exploratory boreholes have been drilled\. The cumulative depth of drilling these twelve boreholes was 5,500m, thus exceeding the 4,500m estimated at appraisal\. The boreholes cover five areas: Wadi Warazan (south-east of Taiz), Wadi Al Ghayl (south of Taiz), Bani Khawlan (south-west of Taiz), the Hajdah area on the Wadi Rasyan (west of Taiz, also called Makbanah) and upper Wadi Rasyan (to the north and north-west of Taiz)\. The exploratory wells in Wadi Al Ghayl have so far yielded excellent results, while the resources in the Hajdah area seem promising so far pending further testing\. Both areas could potentially be tapped for the future water supply of Taiz, if satisfactory agreements can be found with the local population\. Results in the other three areas show that resources are either marginal or naturally contaminated\. The implementation of the exploratory drilling program was substantially delayed, partly because of opposition by local communities in some areas against drilling\. The execution of the drilling program took almost four years, compared to an admittedly overoptimistic - appraisal estimate of only six months\. For the location of the exploratory wells' see the attached Map\. 3\.2 Regional Water Management Plans (US$ 0\.33m) Under this sub-component, studies to prepare regional management plans in Taiz and Sa'adah (in the very Northem of Yemen) were carried out on behalf of NWRA\. The studies will consist of a socio-economic survey; an agricultural survey; as well as a hydrochemical and water quality study in both areas\. In addition, in the Sa'adah region it includes a well inventory; a remote sensing study; and groundwater modeling\. The studies will serve as key inputs for regional management plans by NWRA\. A regional management plan for the Upper Wadi Rasyan basin near Taiz - entitled Taiz Management Plan - has already been completed with UNDP financing\. The Al Haima and Habir areas are part of the Upper Wadi Rasyan basin\. The studies in the Taiz area cover most of the areas covered by the exploratory drilling program, except for Upper Wadi Rasyan\. 4\. Project Preparation Facility (US$ 0\.65m) Under a Project Preparation Facility (PPF) US$ 0\.65m were used for hydro-geological studies to identify the Habir wellfield\. The activity included a drilling program and the services of an international hydro-geologist\. Drilling was carried out between 1989 and 1995 by a local contractor hired and funded by NWSA, using equipment purchased under the PPF\. The drilling of exploratory wells faced strong opposition by local communities, thus delaying the completion of the drilling program\. The study by the hydro-geological consultant was apparently technically sound, but it was misinterpreted by the preparation team, which did not adequately consider the various caveats included in the study relating to the lack of information and the complexity of the aquifer\. Changes in Sub-Components from Appraisal to Closure The following activities were undertaken outside the project under financing by GOY or by donors (numbers refer to the original sub-components as shown above): six deep wells in Habir were drilled with GOY financing (1\.1); the three aquifer monitoring stations were financed by UNDP (1\.2); - 33 -: * the construction of a trunikdine from the West Habir wells under GOY financing (part of 1\.3); * an analysis of options for a private sector contract was financed by GTZ (part of 1\.6); and * the regional water management study in Wadi Masila in Hadramout was carried out with UNDP/Dutch financing (3\.3)\. The following activities were substantially modified: * Sub-components 1\.3 and 1\.4 were merged into a single component under the title "Development of the Habir well field and increasing water supply to Taiz"\. * The rehabilitation of pumps and pipelines associated with the Hogalla Hoban well field in the city of Taiz as well as the procurement of various equipment to strengthen the utility were included in t&is new sub-component\. * Rural water supply in Habir (1\.5) was included under rural water supply in Al Haima (2\.1) under the responsibility of SURDU\. * The studies under the NWSA component (1\.6) were broadened to include the preparation of tender documents, bid evaluation, contract negotiation and construction supervision for the works carried out under the TWSLC component - crucial tasks which had either been overlooked during project preparation, or it must have been assumed that TWSLC could easily carry them out without assistance\. The feasibility studies for a possible recharge dike in Wadi Al Jaashin and for the Wadi Warazan dam (2\.4) were completely cancelled\. Wadi Warazan is located South-East of Taiz, outside the project area\. Stored water from the reservoir behind the proposed dam could have been used as a future source of water supply for the city of Taiz\. It would have affected water supply further downstream, possibly up to Aden, since Wadi Warazan is a tributary to Wadi Tuban draining towards Aden\. The two studies were replaced by small works to improve spate and groundwater irrigation, in particular through the construction of gabions, the development of springs as well as water harvesting structures\. Under the NWRA component, sub-components 3\.1 and 3\.2 were merged, and the study in Hadramout (3\.3) was replaced by two regional water management studies in Taiz and in Sa'adah\. The following sub-component was cancelled: construction of two irrigation wells (2\.2) was cancelled (GOY funded the drilling of four agricultural wells in Habir in 1996, but they were dry)\. A small sub-component was added to strengthen SURDU's capacity\. -34- Additional Annex 9\. Assessment of Rural Water Supply Schemes Introduction This assessment is based on the completion report provided by the implementing agency SURDU - the Southern Uplands Rural Development Unit -, extensive discussions with members of the SURDU rural water supply team in November 2001 in Taiz and in March 2002 in Sana'a, and a brief field visit to two schemes (Hamair in Al Haima and xxx in Habir) in November 2001\. The accuracy and extent of the information provided below is necessarily limited by the short duration of the field visit and the limited number of schemes visited\. It is recommended that a more detailed assessment should be undertaken at a later stage, along with some limited assistance to SURDU and water user associations to ensure sustainability of the schemes\. This assistance could be provided as part of the currently launched Rural Water Supply and Sanitation Project\. Objective The SAR foresaw the "provision of potable water and technical assistance to local cooperatives (on O&M management), to service 30 villages in Habir and Al Haima (amount based on a daily per capita demand of 50 liters), to be serviced from the Habir transmission pipeline, and consisting of service pumping stations, storage tanks and distribution piping with public taps strategically located in the villages\." During implementation this objective was slightly adjusted\. Actually 66 villages and 35 hamlets instead of 30 villages were connected, covering 26,401 people instead of 14,940 estimated at appraisal (+ 77%)\. The beneficiaries were served by twelve schemes, each relying on one small pipeline (3") and pump to transfer water from wells that would also feed water into a much larger pipeline that serves the city of Taiz\. Since the total amount of water that was agreed to be made available to rural communities remained fixed at 8\.5 Ils, the actual amount of water available was reduced to an average of 28 I/c/d as a result of the decision by some water user association together with SURDU to extend services to a larger group of beneficiaries\. Status At the time of writing this report in March 2002 eight of the twelve schemes provided water (Groups I and 2)\. Four schemes (Group 3) did not provide water, because they were located on a pipeline that has been barely completed and for which test pumping had not been undertaken yet\. It was expected that the pipeline would soon carry water, so that all twelve schemes could provide services\. Group Habir area Al-Haima area I Al Zaal Al Khoms Al Hamair Wadi Oriq Shaqqab Shahara 2 Al Kosserai Al Markabah Repat Ramadah Al Maklad Al Fodaiah Hadadah - 35 - Institutional Arrangements and User Participation A social team, consisting of a Yemeni social scientist and his collaborators, was contracted to assist SURDU in helping communities to set up sustainable institutional arrangements for water supply, including the design of a tariff system\. Following the advice of the social team and SURDU, in each of the six schemes in Group 1 a three-tiered institutional structure was established in September 1999, consisting of: an operations and maintenance group; a control committee; and a water user association\. The water user committees have 424 members\. They include at least one representative from each of the 101 villages and hamlets covered by the schemes\. Each operations and maintenance group has four members: a director, a mechanic, an accountant and a meter reader\. The same institutional structure was established in the six schemes in Groups 2 and 3, but only in March 2001\. All 48 members of the O&M groups in the twelve schemes have been appointed by their respective water user associations and have received training by SURDU in its training center in Taiz\. The O&M groups are supervised by control committees with 143 members in total\. The control committees are elected by the water user associations (424 members in total), which in turn have been elected by the members of their respective communities (4229 households)\. Furthermore, each water user association has a Board with a total of 60 members\. The control committees also organized and supervised the laying of pipes in cooperation with SURDU\. The water user committees are said to meet about twice a year to discuss current issues\. While the responsibilities of the operations and maintenance group and of the control committee are clearly defined, the responsibilities of the board and of the water user association are less clear\. It seems that the overall institutional setup is unnecessarily complicated\. In October 2000, a workshop was held in Taiz by SURDU and the social team for all the members of water user committees in Group 1 (234 people), explaining the responsibilities of the communities during operation of the schemes in preparation for their handover\. One full day was reserved for each water user committee\. The workshop participants made recommendations for the improvement of the schemes, such as a request for maintenance tools and for fitting the taps with locks\. After they had a chance to go back to their respective communities, representatives of water user associations for the six schemes came back to Taiz in January 2001 for handover ceremonies, during which they signed handover contracts\. A similar workshop and handover ceremony is envisaged for the two schemes in Group 2 in April 2002, followed by the two schemes in Group 3, as soon as water will become available\. Design of Works The schemes provide for water distribution through public distribution points\. In each village or hamlet one or two distribution points were installed (136 distribution points for 101 villages and hamlets)\. A distribution point consists of between one and twelve metered taps (600 metered taps in total)\. Each tap in turn serves a group of households, usually belonging to the same family (4229 households and 26,401 beneficiaries in total)\. Households or household groups can decide to lay pipes to each house or to a location closer to their house\. They can also install meters at their own expense\. The distance from the distribution point to a house is said to be typically less than 100 meters\. If a household would like to make a connection, the water user committee requires that proper sanitation arrangements are made prior to laying the pipe\. SURDU recommended to install soak pits for each group of households\. In addition, if connection serve individual houses, each house must have a meter that has to be purchased and installed by the beneficiaries\. These - 36 - arrangements were discussed and agreed with the water user association and their representatives\. It seems that so far few households have made individual connections\. Execution of Works Between May 1998 and February 1999 the pumps and pipes for all twelve schemes were delivered\. Most of the works (construction of pump houses and reservoirs, laying of pipes) were executed during 1999 and early 2000\. The communities participated in laying the pipes and were paid for their contribution\. Unpaid labor contribution was not feasible, because the works were part of a 'compensation package' agreed between the local communities and the government in 1996 in exchange for the permission to transfer water from the area to the city of Taiz\. In the six schemes in Group 1, the works were organized by the elected control committees of the local water user associatons (see above)\. It is not entirely clear how they were organized in the six remaining schemes, since the water user associations were established only after the works were completed\. The pump houses and reservoirs were built by small local contractors selected through local shopping and who used local labor\. Water deliveries for four schemes in Al Haima (Al Hamair, Wadi Oriq, Shahra, Al Khoms) began in May 2000, followed by two more schemes (Al Zaal and Shaqab) in September 2000 (Group 1)\. Water deliveries for the two schemes in Group 2 (Al Kosseira and Al Markabah) began only in March 2002\. The schemes in Group 3 are expected to receive water as soon as pumping through the East Habir pipeline begins\. Operation The six operating schemes receive water from individual wells operated by TWSLC\. These wells also supply water to Taiz through the Habir-Taiz pipeline\. One scheme (Al Hamair) is supplied directly from a reservoir on the pipeline\. The quantity available for each scheme is capped through an agreement with TWSLC and is measured by a bulk meter installed under the project\. The schemes operate on an intermittent basis in such a way that the total amount agreed with TWSLC is not exceeded\. The schemes are operated for between one hour and twenty minutes and four hours every day in two shifts, one in the morning and one in the afternoon\. Households are currently billed a lump sum per month that varies between 150 and 300 YR/month\. This sum is sufficient to pay the diesel for the operation of the pump, the salary of a mechanic, and to accumulate reserves for maintenance\. However, in most schemes the director, the meter reader and the accountant of the O&M committees are not paid\. Their salaries could be covered from the existing revenues, but in that case no funds would be available for maintenance\. Fees are determined by each water user committee in such a way that the poorest in the community (10-20%) are exempted from paying without jeopardizing the financial viability of the project\. The social team and SURDU had advised the communities to charge the full costs of the salary for all four members of the O&M committees, estimated maintenance costs and depreciation\. It calculated these costs for the six schemes in group 1, resulting in recommended volumetric charges of between YR 37 and 80 / cubic meter (US$ 0\.22-0\.47/cum)\. These charges would result in revenues that would be two to three times higher than current revenues\. The communities do envisage to introduce volumetric charges to improve the equity between households with varying water use\. However, this measure has been postponed until households that wish to install house connections and individual meters on their own will have had a chance to do so\. If the recommended tariff level will be introduced or not remains to be seen and is up to the water user committees to decide\. - 37 - Performance Indicators The following table shows the performance indicators of the schemes as defined in the SAR compared to actual achievements: SAR Actual Input Indicators T_l_I Length of Pipes 65,000 110,859 Number of Service Pumping 15 13 Stations Number of water tanks 20 13 Output Indicators __ _ Number of village water 30 66 schemes Number of people serviced 14,940 26,401 (17,766) Outcome Indicator Number of households satisfied 2,450 4,056 (2,768) Impact Indicator Number of women hours saved 876,000 1,678,662 (n\.a) per year Note: Figures in brackets refer to the eight schemes that have water\. The other four schemes are completed, but depend on water supply on the East Habir pipeline, which is completed but does not carry water because of disputes with individual families about land compensation in the East Habir area\. Economic Analysis SURDU has undertaken a survey using questionnaires and covering 25 households from the 12 schemes\. Five representative groups were established, each with a different distance from the water source used before the project to the house\. Then, five households from each group were chosen to fill out the questionnaire\. Based on the information in the questionnaire, the exact time spent to collect water was determined and who in the family collected water\. The results showed that 56 % of the water was fetched by children (mostly girls), 42% by women and 2% by men\. It is estimated that through the six operation schemes about 2,500 women and girls will use an average of 45 minutes a day to fetch water instead of between 2 and a half and four hours before the project\. During the dry season, this time is usually much higher, and during the rainy season lower\. The opportunity cost of labor was estimated at YR 20/hour for adults and YR 10/hour per child\. The opportunity cost of labor per adult was derived from the going daily wage rate of YR 400, divided by eight hours and multiplied with a shadow wage rate coefficient of 40%\. The opportunity cost of children's time was set at half this level\. Given that the time children, and in particular girls, spend to fetch water may prevent them from attending school, this estimate is very conservative\. The opportunity cost of the time saved through the project was used to assess the project's benefits\. The operation and maintenance costs were calculated based on the estimated appropriate O&M costs for the scheme (including salaries for all four members of O&M committees)\. Concerning investment costs, the cost of labor used during construction will be shadow-priced and taxes will be excluded from the costs\. The results from the economic analysis remain to be finalized\. A preliminary calculation shows that the rate of return for the six schemes-in Group 1 is in the range of 20%\. - 38 - m tm;e(raX P sr_ sr 1_-¢/oo5 44!lg0 ~~~~~~~~REPUBLIC OF YEMEN REPUBLIC OF YEMEN, \. \ simwsximl ,---- \ o, :Qoo\-j c looTA'IZ WATER SUPPLY TA'IZ WATER SUPPLY \|V,,< '~~~~~~~~~~~~~~~~~~~~~~~~~~~I Explor-1 atory Boreholes 12 R\.- WatrSupplySchemes ',- h 2____,_- u~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ _ -\.W iA\. Epl\.,\." N-i W_t Tr )-135>\.4,o5 woeish3el s- P, b Ad Arashac \. \. - d -'1 , \. \ \| ' vr ~~~~~~~~jilah a\.h\. Ei fi\.q Wd ' uhmnAL arHdruhSC0TcrT1\( r eee ' ' ' -- -- ,- ,,,t,,/-9- -f' V~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~W, We, Tr--i,,§- Piph ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Mi -'- - (Bg 0 \. \. *- x1 h\. 'i \. d < f-~~ ~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~ $0k;T R\. W\.X Sapl kh\. t \.W\.bu\.$\. sp MAY 200, r1MIlQAG1IG Report No\.: 24441 I Type: ICR	REVIEW
P000732	ï»¿ ICRR 12149 Report Number : ICRR12149 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/07/2005 PROJ ID : P000732 Appraisal Actual Project Name : Education Sector Project Costs 1,799 N/A Development Project US$M ) (US$M) Country : Ethiopia Loan/ Loan US$M ) 100 /Credit (US$M) 95\.6 Sector (s): Board: ED - Primary Cofinancing education (60%), Tertiary US$M ) (US$M) education (16%), Secondary education (11%), General public administration sector (9%), General education sector (4%) L/C Number : C3077 Board Approval 98 FY ) (FY) Partners involved : Closing Date 12/31/2002 06/07/2004 Prepared by : Reviewed by : Group Manager : Group : Edoardo Masset Peter Nigel Freeman Alain A\. Barbu OEDSG 2\. Project Objectives and Components a\. Objectives The Education Sector Development Program was launched by the Ethiopian Government in 1997/98 to cover the first five years of a 20-year sector development program to be supported by Government and Donors \. The long term objective of the program was the achievement of universal basic education by 2015\. The objectives of the first five-year phase were: - to improve the overall educational attainment of the population; and - to achieve greater social equity \. b\. Components The program had six components : 1\. Basic Education Activities (978\.2 US$ million, 63% of project cost at appraisal ), including building of schools, curriculum reform, book provision and non -formal education\. 2\. Secondary Education Activities (184 US$ million, 12% of project cost at appraisal ), including expansion of school facilities, instructional material, curricula revision and teacher upgrading \. 3\. Technical and Vocational Education and Training Activities (36\.2 US$ million, 2% of project cost at appraisal ), including facilities expansion and employer /market surveys\. 4\. Teacher Training Institutes and College Activities (61US$ million, 4% of project cost at appraisal ), including expansion of facilities and training of teachers and head teachers \. 5\. Tertiary Education Activities (192\.2 US$ million, 12% of project cost at appraisal ), expansion of physical facilities \. 6\. Institutional Development Activities (93\.6 US$ million, 6% of project cost at appraisal ), including improvement of staffing, equipment and capacity of MoE and Regions \. c\. Comments on Project Cost, Financing and Dates The project costs cover all sector spending over the project period, whereas the ICR reports on costs in detail only for the Bank's 100 US$ million loan in the context of this program \. Although the budget in the PAD shows contributions from other donors, Bank's loan itself is not considered to have been cofinanced \. Hence a precise figure of actual project costs is not available because the Borrower counterpart consisted of current public spending in education over the period of the project \. Data on recurrent public expenditure on education are available in local currency up to 2001/2002, and suggest a borrower contribution above 90% of what was estimated at appraisal \. In addition, a precise figure of the disbursements from other donors is not available \. Low procurement ability of MoE and Regions resulted in an IDA disbursement of 95 US$ million out of 100 US$ million available\. Between 1998 and 2001, the external funding (278 US$ million, 15% of total financing committed at project appraisal) was reduced by more than 50% of original commitment, as donors reduced support after the war with Eritrea\. The original project closing date was extended to 06/07/2004 (by 18 months) because of difficulties in implementation caused by the war with Eritrea and the MoE's low procurement ability \. 3\. Achievement of Relevant Objectives: improving overall educational attainment ) was partially achieved\. (Modest) 1\. The first project objective (improving Net primary school enrolment increased from 35% to 62% over the period of project implementation, well above the target of 50%\. A substantial increase of enrollment rates was reported also in Secondary schools, Technical and Vocational Education, and in the eight public universities \. These accomplishments are even more remarkable considering that during this time several areas of the country were affected by an armed conflict with the neighboring Eritrea, and by a severe drought \. However, higher enrolment rates in basic education were not associated with an improvement in the quality of education\. School quality inputs deteriorated over the project period \. The pupil/teacher ratio increased from 45 to 65, and the pupil/section ratio increased from 57 to 70\. The student/book ratio improved from 5 to 2\.5 in 2001 (more recent estimates are said to be unreliable ), well below the 1/1 target set by the project\. Most importantly, between 2000 and 2004, no improvement was observed in learning outcomes (test scores of the national Second Learning Assessment), and a slight decline in several subjects was found \. 2\. The objective of producing a more equitable education system was partially achieved (Modest)\. The share of girls in primary school increased from 36% to 42\.6%, though still short of the 45% target set by the project\. It is not clear if the project readdressed the strong rural /urban enrolment imbalance since different sections of the ICR report contradictory trends (page 7 of ICR says enrolment growth was faster in urban areas, while page 11 says rural enrolment increased at a faster rate - there are no tables or charts supporting these statements )\. Though most project funds were directed to basic education, expenditure in tertiary education was higher than originally budgeted (20% of total project cost compared to 12% planned), thus helping to redirect project funds to more affluent sectors of the population\. 4\. Significant Outcomes/Impacts: The program significantly increased the supply of education facilities, and did so in accordance with the absolute targets set at the design stage \. Over the project period, 2398 new primary schools were built (99% of the planned amount)\. Primary school teachers increased from 109,237 in 97/98 to 143,321 in 03/04\. School textbooks increased from 2\.3 million in 95/96 to 20\.2 million in 00/01\. The program successfully engaged in the training of Regional staff in order to improve institutional capacity at the local level\. This included the institution of a National Learning Assessment Program measuring students achievements at grades 4 and 8, which is vital to monitoring progress in the quality of education over time \. As in other African countries, teachers' absenteeism and difficulties in recruiting teachers have been exacerbated by the spread of HIV/AIDS\. Under the program, Bank's staff promoted the organization of a national workshop on HIV/AIDS that culminated in the formulation of development plans, that are now part of the Government's intervention programs to address these issues \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): The program failed to project the dramatic growth in enrolment rates (which was much higher than expected ), and failed to adjust the structure of project cost to the emerging situation \. As a result, while absolute targets were met (like the number of schools built ), relative targets were not (like pupil/classroom ratio), thus potentially producing a worsening of the quality of education \. The program took limited action in order to create a more equitable education system \. In particular, no specific interventions were undertaken to support school attendance of the female population, and of the poorest section of society\. The program did not address the problems of the Afar and Somali regions, where language and pastoralism precluded an increase in the access to education \. At the end of the program, the gross enrolment rate in primary school was only 15% in these two regions, well below the national average \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Satisfactory Outcome is rated 'Moderately Satisfactory' (a rating which does not exist in the ICR's 4-point scale) because although education attainment increased over the project period in terms of enrolment rates, this happened at the expense of the quality of education\. The program was not able to respond adequately to the increased demand for schooling, and it addressed equity issues only in a limited way\. Institutional Dev \.: Modest Modest Sustainability : Unlikely Unlikely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory \. Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: Both Borrower and Bank should show more flexibility in project implementation in order to reach project objectives when exogenous factors affect the project \. Countries embarking on programs directed at increasing general educational attainment should be prepared to allocate a large share of public spending to education if the quality of education is to be preserved \. Higher enrollment rates can be achieved at relatively low cost, expecially where physical infrasturcture is poor or non -existent, and the demand for schooling very high \. However, in order to mantain the quality of education, the budget for recruitment of teachers, teacher training, and textbooks should be adequate \. Intensive training of Government officers at central and local level, should precede project implementation where institutional capacity is particularly weak \. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The quality of the ICR is rated 'satisfactory' though it is only marginally so for the following reasons \. Actual and estimated figures of project costs are contradictory and confusing \. In particular, it is not clear what was the financial contribution of the Borrower and of other Donors to the project \. Tables in Appendix 2 (Project Costs and Financing) and main text often offer differing figures of project costs \. Though the report contains a good discussion of the performance of school quality indicators, this is generally not supported by a clear display of data and charts \. The document is very long especially in relation to the amount of data presented \.	REVIEW
P091020	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) Report Number : ICRR0020109 1\. Project Data Project ID Project Name P091020 CN-Fujian Highway Sector Investment Country Practice Area(Lead) Additional Financing China Transport & ICT P119862 L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IBRD-48400,IBRD-80450 30-Jun-2012 1,637,000,000\.00 Bank Approval Date Closing Date (Actual) 12-Oct-2006 30-Jun-2015 IBRD/IDA (USD) Grants (USD) Original Commitment 370,000,000\.00 0\.00 Revised Commitment 368,879,822\.67 0\.00 Actual 368,879,822\.67 0\.00 Sector(s) Rural and Inter-Urban Roads and Highways(99%):Sub-national government administration(1%) Theme(s) Rural services and infrastructure(50%):Infrastructure services for private sector development(50%) Prepared by Reviewed by ICR Review Coordinator Group Victoria Alexeeva George T\. K\. Pitman Christopher David Nelson IEGSD (Unit 4) 2\. Project Objectives and Components a\. Objectives According to the Loan Agreement (page 5), the project development objective was to assist the Borrower âin increasing the effective use of the road infrastructure in Fujian Province to support its social and economic development by: (i) enhancing its rural roads network; (ii) reducing transport costs; and (iii) facilitating the interconnection across the Borrowerâs coastal provinces\.â In the Project Appraisal Document (PAD, page 8)), the overarching objective was identical, while the sub-objectives provided more details, in particular: â(i) improving living conditions in rural areas -particularly those in the areas of the Province where poverty rates are higher- by enhancing the transport accessibility of the rural communities to economic opportunities and social services; (ii) stimulating higher economic Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) growth in Fujian Province by reducing transport costs; and (iii) facilitating the interconnection across the coastal provinces\.â This ICR Review is based upon assessment of the achievement of the project objective as formulated in the Loan Agreement\. b\. Were the project objectives/key associated outcome targets revised during implementation? No c\. Components 1\. Rural Roads Improvement Program (RRIP) (appraisal US$502\.1 million; additional financing US$555\.9 million; actual US$1,086\.6 million) was to support a subset of at least 3,500 km out of 10,000 km of local road sections already identified based on the demand of counties, townships and villages that were part of the 35,000 km provincial rural roads 2004-2010 program\. At the time of Additional Financing (AF), the component was scaled up to add another 1,000 km of rural roads for rehabiliation in 61 counties/districts (including 14 new counties) of eight municipalities in Fujian province\. 2\. Yongâan-Wuping Expressway (YWE) (appraisal US$984\.2 million; actual US$1,278\.31 million) included construction of 195 km long four lanes new highway section of the ChangchunâShenzhen expressway between Yongâan (Sanming City) and Yanqian in Wuping (Longyan City), including the acquisition and installation of electrical and mechanical facilities, the construction of buildings and annex areas for service and safety operations\. The component cost also included land acquisition and resettlement\. 3\. Highway Maintenance Pilot Program (HMPP) (appraisal US$0\.66 million; actual US$1\.34 million) consisted of maintenance by contract in two highway sections of the (non-expressway) provincial highway network\. The component sought to increase the efficiency of force-account maintenance practices\. It also included implementation on a pilot basis of a program for sourcing out periodic and routine highway maintenance in selected sections of Fujian Province highway road networks, including staff training and supervision and provision of technical assistance\. 4\. Institutional Strengthening Program (ISP) (appraisal US$3\.12 million; additional financing US$0\.5 million; actual US$2\.66 million) included: (i) staff training on activities such as road asset management, operational management of roads and expressways, construction quality control, road safety, and design and operational safety considerations for tunnels; (ii) a comprehensive study on toll rates across Fujian Province to evaluate their influence on traffic demand, maximize the use of the expressway network and optimize its economic value, and on impact evaluation and monitoring to establish a knowledge base of the impacts of the RRIP on rural livelihoods to provide an analytical base for the design of future interventions on those types of roads across Fujian Province; and (iii) provision of technical assistance for the design and implementation of the Highway Maintenance Pilot\. During AF, training activities and study tours were added for the local government agencies for (i) environmental design and construction of rural roads and (ii) rural road maintenance and management\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project cost: The total project cost was US$2,395\.9 million at closure, about 60% higher than the appraisal estimate of US$1,490\.0 million due to scale- up of the rural roads improvement program and cost overruns under the YW expressway\. Additional Financing approved in 2011 enabled scale-up the rural roads program under the first component and added more institutional strengthening activities under the fourth component\. Financing: The World Bank Group contribution consisted of a Loan in the amount of US$320 million and Additional Financing (AF) Loan of US$50 million, totaling US$370 million\. At closure, the total amount of the loan was disbursed at US$368\.9 million\. US$1\.1 million were cancelled from the Loan as a result of the Government policy on foreign study tours planned under the project\. There was no other external partner financing\. Borrower contribution: The Borrower contribution of US$1,170\.0 million agreed at appraisal increased to US$2,027\.8 million by project closure\. Dates: The project closing date was extended for three years from June 30, 2012 to June 30, 2015 in conjunction with the Additional Financing approved on August 30, 2011\. 3\. Relevance of Objectives & Design Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) a\. Relevance of Objectives At the time of appraisal, Fujian Province lagged behind other coastal provinces in transport infrastructure\. 35 million people lived in the Province, which had large pockets of poorer population\. Of the 207 poorest villages, 166 were in the project areas, where the unclassified and lower class roads were often impassable in the rainy season and transport costs were high\. Project objectives were aligned with the launching a large scale Provincial highway development plan to reduce the imbalanced development between coastal and inland regions\. The total length of the highway in Fujian was to be about 490 km and the supported expressway link was the last section of the highway in south- eastern Fujian\. The project supported the Government of Chinaâs Eleventh Five-Year Plan (2006-2010), including Chinaâs National Expressway Network and the extensive Provincial Governmentâs flagship program to improve access and mobility in villages\. The objectives remained consistent with the development priorities of Chinaâs 12th FYP (2011- 2015), in particular for: (i) the expansion of road network in the country; (ii) provision of all-weather roads and passenger services to villages; and (iii) establishment of a modern logistic system at low cost and high efficiency\. The objectives were also consistent with the World Bank Group's Country Partnership Strategies for China at appraisal (2006-2010) and closure (2013-2016), the key goals of which were reducing poverty and promoting more inclusive development, in particular through improving transport connectivity for more balanced regional development\. Rating High b\. Relevance of Design The statement of development objectives was clear\. The project results framework indicated a clear causal chain between the activities financed by the project and the outputs and outcomes related to the attainment of the development objectives\. For example, with regard to physical investments, the improvement of rural roads (Component 1) was expected to reduce travel time, and the construction of a new 195 km highway section (Component 2) was to help reduce freight rates on the selected corridor and facilitate the interconnection across the coastal provinces\. The institutional strengthening activities were to support the Fujian Provinceâs capacity for developing and managing its road network that could help improve efficiency and reduce transport costs\. The project scope in rural roads was extensive; it covered over a thousand small rural roads scattered in the 7,500 administrative villages in Fujian\. The project incorporated the elements of the Sector Wide Approach (SWAp) in the design of rural roads component, which represented 20% of the resources required\. This approach sought to instill better practices in the application of social and environmental safeguards, procurement and fiduciary arrangements, and technical engineering quality among the counties, townships, and villages\. The disbursement approach and the monitoring and financial reporting procedures were designed to apply innovative mechanisms that could be replicated in similar investment initiatives in China\. Rating High 4\. Achievement of Objectives (Efficacy) PHREVISEDTBL Objective 1 Objective Increasing the effective use of the road infrastructure in Fujian Province to support its social and economic development by: (i) enhancing its rural roads network\. Rationale Outputs Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) â¢ A total of 10,290 km of rural roads were constructed or rehabilitated under the project\. The number of beneficiaries of 1\.30 million exceeded the estimate of 1\.25 million villagers living in the proximity to rural roads\. â¢ The pilot maintenance contracts were carried out, and contract maintenance approaches were adopted in 9 contracts in Fujian, above the target of 6 set for 2013\. Outcomes â¢ Travel time on project rural roads reduced by 79%, exceeding the target of 50%\. â¢ Traffic volumes (passenger car units (PCU)s/day) increased by 171%, substantially exceeding the target of 15%, and passenger services increased by 133%, exceeding the target of 30% (measured on a sample of 20 rehabilitated roads)\. â¢ According to the impact assessment based on 2,336 questionnairs collected in 72 villages (38 villages were in treatment group and 34 in comparison group), the following benefits were observed: (a) Rural households experienced significant travel time reductions: 27% for work travel; 42% to access health services and markets in towns; and 40% for student trips to middle schools\. Cost of travel by motorcycles and private vehicles reduced more than 50%\. Rural passenger services are now available to more than 80% of Fujian villages, and public transport ridership has increased 24%\. Annual accident rates in the treatment villages dropped from 7\.5 accidents per year before the project to 2 accidents per year after the works were completed\. (b) Profits from agriculture increased 46% in RRIP villages; whereas the increase in non-RRIP villages was 30%\. Non-agricultural proportion of GDP in RRIP villages increased 4% over non-RRIP villages\. The average household income in RRIP villages increased 81\.5%, while in non-RRIP villages the increase was 74\.9%\. Non- agricultural female employment has increased significantly to 48\.5%, one half of female population in surveyed villages have changed from heavy farm work to non-agriculture jobs\. Rating High PHREVISEDTBL Objective 2 Objective Increasing the effective use of the road infrastructure in Fujian Province to support its social and economic development by: (ii) reducing transport costs; and (iii) facilitating the interconnection across the Borrowerâs coastal province\. Rationale Outputs â¢ 195 km of a 4-lane toll expressway between Yongâan and Wuping (YWE) was constructed and opened to traffic in June 2010\. The highway provides a connecting link across Fujian for the coastal provinces, and access to the cities, towns and settlements in Fujianâs mountain region\. â¢ Capacity building activities were carried out as planned, including analysis of toll rates in the province and impact analysis/survey that was adopted as part of the Rural Road Improvement Program database\. â¢ Training and study tours were provided receiving 95% satisfactory rating (above the 70% target)\. Outcomes â¢ The freight rate on the YWE Corridor averaged RMB 0\.57 per ton-km in line with the target of RMB 0\.55 per ton-km\. The freight rate was calculated based on a sample of three products (coal RMB 0\.55 per ton-km, cement RMB 0\.60 ton-km and fruit RMB 0\.50 ton-km)\. â¢ The new YWE was expected to divert the traffic from the existing highway G205, however due to the Government policy to remove tolls on class II roads in 2009, G205 became a free alternative road to YWE\. As a result, the expected target on traffic volume (PCU/day) reductions on the existing highway G205 were not met\. On the new YWE, traffic increased to 6,033 above the target of 5,440 only on the Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) link between Yongâan-Liancheng but fell short of projections for the other two links that were 87% (8,795) and 74% (12,518) of the target values\. â¢ Travel time targets on new YWE and the existing highway G205 were met: YWE- 2 hours; G205-5\.7 hours, slightly down from 6 hours\. â¢ Annual accident rates were reported as 5 on YWE (less than estimated 10) and went down from 22 in 2005 to 15 on existing highway G205, in line with the target of 16\. Rating Substantial 5\. Efficiency Economic and Financial Efficiency Rural roads\. The ex-post economic internal rates of return (EIRRs) were estimated following the same methodology as at appraisal for the eight types of rural roads, i\.e\., country and township/village roads with varied width in mountainous and coastal areas\. Two benefits were estimated comparing âwithâ and âwithoutâ project cases: vehicle operating cost savings and passenger time savings\. The ex-post EIRR for the county roads in the coastal areas was estimated at 36\.8% that was higher than the appraisal of 21\.8% due to higher traffic volumes; the ex-post EIRR for the county roads in the mountainous areas of 41\.1% was close to the appraised one 37\.6%\. The EIRRs for the town/village roads in both coastal and mountainous areas are lower due to lower traffic volumes and higher investment cost than expected\. Overall, the aggregate ex-post EIRR for all the rural roads was 25\.7%, which is lower than the ex-ante 34\.7% and Net Present Value RMB 11,921\.2 million (at 12% discount rate)\. YW Expressway Economic Analysis: An ex-post economic internal rate of return (EIRR) was estimated at 14\.7% and NPV of RMB 5,745\.9 million as compared to the ex-ante of EIRR 16\.6% and NPV of RMB 3,210\.2 million (at 12% discount rate)\. The lower EIRR resulted from higher project investment cost by 32% and lower traffic than projected on two sections by 21%\. The increase in actual cost is explained by additional earth works, price escalations for labour and construction materials, and increase in land acquisition and resettlement cost\. The ex-post analysis used the same methodology as at appraisal comparing a âwithâ and âwithoutâ project case, where most of the road traffic in the corridor would use the existing parallel highway G205 with slower speed, longer distance, and higher accident rate\. The calculated benefits were vehicle operating costs, passenger time cost savings, and accident cost reductions\. Financial analysis: At appraisal, the FIRR was estimated to be 1% with NPV of RMB -4,142 million (at a discount rate of 5\.02%), due the low profit margin in early yearsâ operations to impact the FIRR on the capital investment (PAD, Annex 9)\. At closure, the financial internal rate of return (FIRR) of the YWE was estimated at 8\.5% before tax and 6\.2% after tax\. The ICR does not provide an NPV\. At the same time, according to the ICR p\.8, there was a 30% shortfall in expected toll revenue due to lower than expected traffic volume on YWE\. The ICR p\.14 adds that while profit margin is low in the early years of YWE operation, toll revenues provide enough liquidity for loan repayment, and operation and maintenance in the first years of YWE operation\. The ex-post financial evaluation had the following considerations: (i) PADâs financial investment costs of project and estimated O&M cost were used; (ii) the toll revenues were calculated using the actual traffic in 2010â2015 and with a new traffic forecast for future years; (iii) non-toll revenue was estimated at 5% of the toll revenue, mainly from advertisements and expressway services14; and (iv) business tax rate 3\.5% of the revenue and corporative income tax rate 25% of net profit were applied\. The cash flows covered 24 years, including 4 years for construction and 20 years for operation\. At appraisal, the overall economic internal rate of return (EIRR) of the project was estimated at 24\.8% and NPV of RMB 15,131 million (at 12% discount rate)\. The ICR does not provide the overall ex-post EIRR for the project but calculates it separately for rural roads and the YW expressway\. The weighted average of the project ex-post estimated EIRR of the rural roads and YWE was calculated by IEG, which is 20%\. Operational and Organizational Efficiency The YWE highway was completed and opened three months ahead of schedule in 2010, albeit there was a cost overrun of 32%\. Efficiency Rating Substantial Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) Coverage/Scope (%) 82\.00 Appraisal ï¼ 24\.80 ï¨Not Applicable 94\.00 ICR Estimate ï¼ 20\.00 ï¨Not Applicable Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome The relevance of objectives and design is rated high\. The project substantially helped the Borrower increase the effective use of the road infrastructure in Fujian Province in support of its social and economic development, through achieving its three project sub-objectives\. Transport cost and time went down along the project roads bringing economic and social benefits to the rural population as evidenced by the impact evaluation results\. The new road links facilitated an important interconnection in the Province, while reducing transport costs, albeit the projections for traffic volume were not fully met\. Efficiency is rated substantial\. a\. Outcome Rating Satisfactory 7\. Rationale for Risk to Development Outcome Rating â¢ Fujian has well-functioning maintenance operations\. The large rural roads network (about 70,000 km) is maintained by the County Communication Bureausâ sub-divisional maintenance stations\. Random checks on a sample of rural roads three years after completion showed that the maintenance organizations functioned well and the roads were in sound condition\. Rural roads maintenance in mountainous areas may present a moderate risk\. â¢ YWE is managed by two expressway companies which have lowered their cost structure and are likely to fulfill their road management and financial responsibilities\. YWE is part of China National Expressway Network and central and provincial governments will provide support in the event of the toll-free G205 eroding YWE toll revenues\. â¢ A well-established management system for rural roads is in place, and extension service on technical matters from the citiesâ Highway Bureaus is available when needed\. a\. Risk to Development Outcome Rating Modest 8\. Assessment of Bank Performance a\. Quality-at-Entry Project design was informed by prior projects in Fujian (Fujian Highway Project 3681-CHA and Second Fujian Highway Project 4502-CHA)\. This projectâs greater focus was on poverty reduction, which affected the balance between expressway and rural road components\. An Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) integrated framework was designed for the rural roads implementation (RRIF) incorporating procurement, environment, resettlement, ethnic minority, and financial management\. The training in these areas was carried out prior to project approval\. The RRIF framework included reporting and evaluation of progress with preset, defined formats, and the technical and quality control specifications for the rehabilitation of the rural roads, including the implementation arrangements\. Separate and independent supervision consultants were to be engaged for technical engineering works and for safeguard compliance\. The risks were rightly identified and mitigation measures were appropriately proposed, with the exception of one risk of the forecast traffic volume on YWE at opening that was rated low\. M&E arrangements were well- designed and included an impact evaluation\. The only shortcoming was that analysis of the loanâs financial burden on local governments was not done at appraisal, in particular evaluation of fiscal capacity of the participating municipalities\. Quality-at-Entry Rating Satisfactory b\. Quality of supervision Bank missions were carried out in a regular and timely manner, and implementation issues were assessed and resolved in a timely manner and reporting and ratings were candid\. A total of 14 Implementation Status Reports (ISRs) were filed\. The Bank provided considerable on- going implementation support on all aspects of project implementation, including engineering and compliance with fiduciary policies\. The Bank addressed a misprocurement issue appropriately and reallocated relevant loan amount to the rural roads improvement component (RRIP)\. The ICR notes that during preparation of the Additional Finance, the team did not evaluate the impact of the change to the government's toll policy on YWE traffic forecasts and adjust target value accordingly\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Satisfactory 9\. Assessment of Borrower Performance a\. Government Performance Governments at all levels showed strong ownership of the project and provided the requisite leadership and guidance for project implementation, especially on compliance with safeguard policies\. Due to a Central Government policy to remove tolls on parallel Class II road (G205), the lower level governments and the Expressway Companies had difficulties to fulfill their financial obligations\. The two cities (Longyan and Sanming) paid their share of the funds late, thus delaying payments to contractors\. A Government policy also reduced foreign study tours, resulting in a US$1\.12 million cancelation from the loan\. Government Performance Rating Satisfactory b\. Implementing Agency Performance â¢ The Fujian Provincial Expressway Construction Directorate (FPECD), Longyan Expressway Company and Sanming Expressway Company, which were the implementing agencies for YWE, completed construction of the 195 km expressway in a timely manner in compliance with safeguards requirements\. There was however misprocurement of one sub-grade contract (by FPECD) because it started the works without the Bankâs âno objectionâ\. The cancelled funds were returned and transferred to the rural roads component\. â¢ RRIP was implemented by many implementing entities under the guidance of the Fujian Provincial Communications Department (FPCD) and Project Management Office (PMO)\. The decentralized implementing agencies had a learning curve, but were dedicated and delivered results\. There were some shortcoming in procurement but these were addressed through training\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) â¢ The Fujian Provincial Communications Department (FPCD) implemented the institutional strengthening component\. Training programs, highway maintenance pilots, as well as toll-road and impact studies were completed as planned\. Under the impact evaluation and monitoring of the rural roads program, a data base was installed to track and observe the condition and performance of the rural road network\. Implementing Agency Performance Rating Satisfactory Overall Borrower Performance Rating Satisfactory 10\. M&E Design, Implementation, & Utilization a\. M&E Design The project's indicators were appropriately linked with the objectives\. The key indicators included baseline data and measurable targets set at appraisal (PAD Annex 3)\. The key performance indicators for the project development objective included: (i) reduction of travel times on rural roads; and (ii) reduction of freight rates on Yong'an-Wuping Corridor\. The indicator on the number of project beneficiaries was added as part of incorporation of the core Bank indicators at project level\. Impact evaluation and monitoring systems were included in the project to create a data base for tracking project progress, performance, and social assessments\. b\. M&E Implementation The Fujian PMO and the implementing agencies carried out frequent monitoring of indicators and updated them regularly in progress reports\. M&E data was collected and reported on time and helped the PMO to propose appropriate interventions during implementation (ICR, p\.9)\. c\. M&E Utilization M&E indicators helped to monitor implementation progress, pinpoint problems, and evaluate the results of the completed project\. M&E Quality Rating High 11\. Other Issues a\. Safeguards This classified as a Category A project under OP/BP 4\.01 Environmental Assessment\. The project triggered two other safeguard policies: OP4\.12 Involuntary Resettlement, and OP4\.10 Indigenous Peoples\. The ICR does not state compliance with each safeguard policy; it reports that "the safeguard issues and compliance were well managed" (ICR, p\.9)\. The Environmental Management Framework (EMP), Resettlement Policy Framework, and Ethnic Minority Policy Framework were prepared for the rural roads component under the Rural Roads Implementation Framework (RRIF), disclosed and complied with Chinese laws and Bank policies (ICR, p\.6)\. For YW Expressway, the Environmental Management Framework, Resettlement Action Plan, Environmental Impact Assessment were prepared\. An Ethnic Minority Development Plan was prepared and implemented for the She Minority Group in Shangshui Village, Ningde Citin accordance with the Ethnic Minority Policy Framework, when implementing a township- level road in this village\. The implementing agencies had prior experience in safeguards, including PMO with safeguard staff\. Training was carried out on safeguards before appraisal and throughout project implementation\. Overall, as reported by the ICR p\.9, the issues that arose with environmental protection, resettlement and compensation, Ethnic Minorities, and others were addressed\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) b\. Fiduciary Compliance Procurement\. Local administrative offices had no prior experience in Bank-supported projects, and contractors were inexperienced with making bids, arranging security deposits and complying with other policies governing the rural roads program\. There were some shortcomings in procuring over a thousand of rural roads projects, including incomplete or inaccurate bids, contracts inconsistent with the bid, missing security deposits, incomplete reporting, and technical capacity deficiencies\. These shortcoming were addressed through training\. Under the YWE expressway construction, one earthwork contract was declared misprocured as it was awarded to the second lowest bidder prior to fully responding to the Bankâs request for additional clarification on the lowest bidderâs complaint\. The corresponding loan in the amount of US$13 million was transferred to the rural roads component, and FPCD used its own funds to complete the contract\. Financial management\. The ICR p\.10 reports that financial management was carried out diligently during implementation; the report-based disbursement for the rural roads component was implemented well in general\. The audits were timely and unqualified\. c\. Unintended impacts (Positive or Negative) --- d\. Other --- 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Satisfactory Satisfactory --- Risk to Development Outcome Modest Modest --- Bank Performance Satisfactory Satisfactory --- Borrower Performance Satisfactory Satisfactory --- Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons IEG selected a number of lessons from the ICR list, with some adaptation: â¢ Prioritizing training on safeguards, procurement, and financial management early on helps smooth implementation\. Under this project, training started early before approval which helped the project implementation\. â¢ Early recognition of risks needs to be reflected in mitigation measures\. Under this project, lower than expected traffic volume on the YW Expressway was a result of a government policy to remove tolls on class II roads during implementation\. In this case, perhaps the enforcement of vehicle weights on a parallel route could have been used to address traffic diversion, albeit truck overloading control requires Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Fujian Highway Sector Investment(P091020) joint efforts of multiple agencies\. â¢ For engagement at sub-national level, it is important to include an evaluation of the projectâs fiscal burden on local governments, and mitigation measures should be included in project design\. During this project's preparation, no evaluation of the fiscal capacity of the participating municipalities was made\. During implementation, both YWE cities (Longyan and Sanming) had difficulty in meeting their counterpart fund obligations in a timely manner\. In China, the revised Budget Law issued in 2015 requires accountability and financial transparency at all levels of government\. â¢ Contract maintenance institutionalization is a long term reform\. Under this project, the pilot maintenance contracts were carried out with positive results but the institutionalization and network wide application of maintenance contracting and its adoption requires time\. The issues are not only technical, but include institutional reform, labor training and relocation, job security, budget processes, performance indicators for different road classes and their enforcement, supervision of contractors, and payment procedures\. â¢ The Sector-Wide Approach (SWAp) method of project execution is beneficial\. SWAp allows results-driven rather than process-focused implementation oversight\. By focusing on the large program and applying common fiduciary/safeguards standards, the project's SWAp approach could scale-up benefits, strengthen local capacity and reduce duplicative reporting\. 14\. Assessment Recommended? No 15\. Comments on Quality of ICR The ICR is concise and outcome-oriented\. It provides an insightful analysis of the project preparation and implementation experience\. The evidence on results and outcomes is well presented due to the impact evaluation carried out under the project\. Lessons are based on the project experience\. The ICR should have provided more details on the project compliance with Bank safeguard policies, in particular as this was a Category A project and involved land acquisition and resettlement\. The ICR does not explicitly state the compliance for each safeguard\. No information about mitigation activities, impacts, and affected households is provided in order to validate compliance\. The information had to be sought from the project team\. A few inconsistencies between the ICR's main text and annexes include (I) traffic volumes were 21 % lower than estimated (para 39; p\.13), while para 3 of Annex 3 indicates 40%; and (ii) the EIRR related to rural roads in mountainous area para 39 p\.13 does not correspond to Table 6 results on p\.33 (the ex-ante and ex-post EIRRs were close)\. a\. Quality of ICR Rating Substantial	REVIEW
P091827	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) Report Number : ICRR0020155 1\. Project Data Project ID Project Name P091827 BR GEF Sustainable Cerrado Initiative Country Practice Area(Lead) Brazil Environment & Natural Resources L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) TF-96766,TF-96767 01-Dec-2013 21,000,000\.00 Bank Approval Date Closing Date (Actual) 18-Mar-2010 30-Jun-2015 IBRD/IDA (USD) Grants (USD) Original Commitment 13,000,000\.00 7,000,000\.00 Revised Commitment 11,557,508\.51 7,000,000\.00 Actual 11,557,508\.51 7,000,000\.00 Prepared by Reviewed by ICR Review Coordinator Group Ranga Rajan Robert Mark Lacey Christopher David Nelson IEGSD (Unit 4) Krishnamani 2\. Project Objectives and Components a\. Objectives This Global Environmental Facility (GEF) project was part of the Sustainable Cerrado Initiative, an umbrella for four sub-projects, two at federal and one at state-level\. The two federal initiatives were (i) the Ministry of the Environment (MMA) Cerrado Policy and Biome Monitoring Project; and (ii) the Chico Mendes Institute for Biodiversity Conservation (ICMBio, an independent agency linked to the MMA) Biodiversity Protection Project\. The two state-level initiatives were (iii) Goias Sustainable Cerrado Project; and (iv) Tocantins Sustainable Cerrado Project\. Each sub-project was supported by a separate grant\. The horizontal Adaptable Program approach was adopted, since each grant involved a different executing agency, each with its own Page 1 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) level of institutional capacity\. The project development objectives (PDOs) as stated in the Project Appraisal Document (PAD,page 9) and the Global Environmental Trust Fund Agreement (Schedule 1, page 7) were: "to enhance biodiversity conservation in, and improve the environmental and natural resources management of, the Cerrado in the territory of the Recipient, through appropriate policies and practices"\. The PAD (page vii) states that there were two specific Global Environmental Objective (GEO) goals\. â¢ Adoption of the action plan of the National Sustainable Cerrado Program and at least two public policies aimed at contributing to biodiversity conservation by federal and state agencies in over 20% of the Cerrado biome (a large, naturally occurring community of flora and fauna occupying a major habitat, e\.g\. a forest or tundra); and â¢ Increase in biodiversity conservation (refers to saving life on earth in all its forms and keeping the natural ecosystems functioning and healthy) efforts in four priority regions identified by a prior Bank-financed Project (Project for the Conservation and Sustainable use of Biodiversity) as having high conservation value\. b\. Were the project objectives/key associated outcome targets revised during implementation? No PHEVALUNDERTAKENLBL c\. Will a split evaluation be undertaken? No d\. Components The components of the four projects were similar\. Conservation of the Cerrado Biodiversity\. (Appraisal estimate US$12\.00 million\. Actual Cost at Closure US$12\.00 million)\. This component aimed at increasing biodiversity conservation in the Cerrado region by strengthening the mosaic of legally Protected Areas (PAs) of biodiversity\. Activities included: (i) Studies for identifying suitable areas for creating PAs: (ii) Legal frameworks for establishing new PAs and expanding existing PAs, defining buffer zones and ecological corridors\. and, (iii) Measures aimed at ensuring the integrity of the PAs and consolidation process (including through consultations with the local population, establishing the PAs Management Council, studies for the PAs Management Plan, acquisition of infrastructure and equipment and hiring and training staff)\. Sustainable Use of the Cerrado Natural Resources\. (Appraisal estimate US$9\.00 million\. Actual Cost at Closure US$10\.75 million)\. This component aimed at promoting the management of the rural productive landscape (including the adoption of sustainable agricultural practices by medium and large farmers and sustainable use of native species by small farmers and local communities)\. Activities included field studies aimed at compiling information on best practices of sustainable uses in the Cerrado, dissemination of information, rural extension and capacity building activities to promote adoption of best practices, community infrastructure for rural production, developing techniques for rehabilitating degraded areas and implementing schemes for adding value to products from native Cerrado species with high market potential and identify and disseminate information pertaining to possible alternatives for charcoal production that will not negatively impact native vegetation\. Institutional Strengthening and Formulation of New Public Policies\. (Appraisal estimate US$12\.00 Page 2 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) million\. Actual Cost at Closure US$15\.10 million)\. This component aimed at formulating new public policies for the conservation and sustainable use of the Cerrado and strengthening the institutional capacities of the government agencies\. Activities included, undertaking consultations for concluding the design of the National Sustainable Cerrado program, supporting the Program Commission (CONACER), studies for identifying new public policies and their regulatory norms for the conservation and sustainable use of the Cerrado's natural resources, implementing integrated geographic information systems for environmental monitoring, empowering key public institutions through updating tools and instruments, open communication channels with sectors that traditionally put pressure on Cerrado ecosystems (such as large scale farmers, cattle breeders, loggers, charcoal producers and miners), participatory training for potential local community leaders and entrepreneurs, information-sharing activities to ensure participation of private sector and strengthening the local level socio-environmental networks identified with the Cerrado initiative\. Coordination and Monitoring\. (Appraisal estimate US$9\.69 million\. Actual cost at closure US$11\.43 million)\. This component aimed at ensuring the implementation of the initiative\. Activities included: (i) Strengthening the capacities of the Biodiversity Conservation Department within the Secretariat for Biodiversity and Forests (DCBio): (ii) Implementing a Monitoring and Evaluation (M&E) system: (iii) Facilitate coordination of research and development activities at the project level with other government programs: (iv) Monitoring public policies related to the sustainable use of the Cerrado biome: (v) organizing public-awareness and capacity building events: (vi) Integrating the project with the National program (National Sustainable Cerrado program): (vii) Studies on periodic monitoring of the Cerrado biome's vegetation cover, biodiversity and land use aspects: (viii) Developing a database system on the biodiversity, environmental and land use in the region\. (ix) Capacity building to potential users on the biome monitoring system's operation\. and, (x) Preparation and dissemination of periodic reports and preparing a proposal for Phase 2 of the initiative\. e\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost\. The total estimated cost at appraisal was U$33\.69 million\. The actual cost at project closure was US$38\.43 million, 14% more than the appraisal estimate\. The increase in actual cost at closure was met through increased borrower contribution\. Project Financing\. The project was financed by a Global Environmental Facility (GEF) grant\. The appraisal grant estimate was US$13\.00 million, of which US$11\.93 million had been disbursed by closure, about 92% of the appraisal estimate\. Recipient Contribution\. The appraisal estimate of counterpart funding was US$29\.69 million\. Actual contribution at US$37\.35 million, about 25% higher than planned\. Dates\. The closing date was extended twice\. The first extension was for a year from December 31, 2013 to December 31, 2014 in order to complete ongoing activities in all the project areas that had been subject to implementation delays associated with staff changes and unexpected obstacles in the procurement process\. The second, on December 12 2014, was for an additional six months to complete ongoing activities associated with the Terraclass Cerrado system in the MMA\. The project closed about 18 months behind schedule on June 30, 2015\. Page 3 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) 3\. Relevance of Objectives & Design a\. Relevance of Objectives The Cerrado region is an area of major international interest for biodiversity conservation\. With the development of agricultural technologies in the 1970s, the region had become the new agricultural frontier in Brazil in the years before appraisal\. The agricultural growth however had high environmental costs in terms of biodiversity loss, biological invasion by non-native species, soil erosion, land degradation and sedimentation water imbalance\. These problems were primarily due to: (i) poor agricultural practices that relied on soil mechanization with substantial use of fertilizers and lime\. and, (ii) non-compliance by farmers with the requirements of the Forest Code\. Although the code provided for maintaining natural vegetation cover in each private property and also required that properties maintain Permanent Preservation Areas (APPs), inadequate enforcement of the code had contributed to non-compliance by farmers\. The PDOs of enhancing biodiversity and improving the environmental and natural resource management practices were highly relevant to the Government and Bank strategies for Brazil and to the GEF goals\. Following the ratification of the United Nations (UN) Convention on Biological Diversity on June 13th, 1994, the Government officially expressed its commitment to the Cerrado conservation and preservation Program (National Sustainable Cerrado Program) in its 2003-2007 Multi-Year Plan\. This program was also maintained in the Federal Budget 2008-2012 Multi Year Plan\. The PDOs also contributed to the Millennium Development Goal (MDG) Seven of "ensuring environmental sustainability\." In 2013, the Government established a new National Target, collectively known as Aichi Targets, of protecting at least 17 percent of the Cerrado biome by 2020 under protected areas\. The PDOs were also relevant to the National Climate Change Policy that was issued in 2010 and updated in 2014, which had a component focused on agricultural, livestock and forestry sustainability\. The PDOs were well aligned with two of the World Bank Groupâs 2008-2011 Country Partnership Strategyâs (CPS) three pillars: (i) the sustainability pillar which underscored the need for increasing support for federal and state policies and programs aimed at sustainable management of natural resources and conservation of biodiversity on areas of critical biodiversity value and cultural heritage: and, (ii) the equity pillar which highlighted the need for increasing rural incomes, especially in the agricultural frontier\. The Bank's CPS for the 2012-2015 period highlighted the need for improving environmental management, biodiversity conservation and climate change mitigation\. The PDOs were aligned with the Geographical Environmental Objectives (GEO) guidelines of protecting biodiversity through improving sustainability of Protected Area Systems, reducing pressures on natural resources by managing land uses in broader landscapes and sustainable forest management\. Rating High b\. Relevance of Design The statement of the PDO is clear and the causal links between the project activities, their outputs and their outcomes were clear and generally measurable\. The outputs associated with activities of conserving cerrado Page 4 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) biodiversity (such as identifying Protected Areas or PAs), establishing a legal framework for establishing new PAs and existing PAs, and measures aimed at ensuring the integrity of the PAs through consultation with the local population) could be expected to enhance biodiversity diversification and protection in the project areas\. Activities aimed at promoting the management of the rural productive landscape (such as adopting sustainable agricultural practices by medium and large scale farmers and use of native species by small farmers and local communities) and formulating new public policies could be expected to strengthen the environmental management of the Cerrado\. Enhancing the institutional capacities of the federal and state- level agencies could be expected to improve natural resources management of the Cerrado\. Project activities activities could also be expected to contribute to reducing the loss of biodiversity and improving the quality of life for the population living in the biome (the higher level Global Environmental Objectives)\. The project, which essentially amounted to four individual initiatives, entailing a corresponding variety of implementing agencies and activities was complex\. This contributed to difficulties associated with project management in view of the sheer volume of oversight required for four simultaneous sub-projects\. It is not clear if the design specifically included enforcement mechanisms aimed at protecting Protected Preservation Areas, given that non-compliance by farmers had been identified as a concern in the years before appraisal\. Rating Substantial 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective To enhance biodiversity conservation in the Cerrado in the territory of the Recipient, through appropriate policies and practices\. Rationale Outputs\. â¢ 16 initiatives were developed in total by the implementing agencies for the sustainable management of the Cerrado's natural resources\. They included: implementation of six centers to recover degraded areas by the Ministry of Environment (MMA), five initiatives of traditional know-how and dissemination of best practices by the Chico Mendes Institute for Biodiversity Conservation (ICMBio) and five initiatives by the State of Tocantins\. Although the State of Goias financed technical studies to determine market mechanism to ensure the maintenance of Legal Reserves (LRs) and Permanent Preservation Areas (PPAs), the market-based mechanism for maintenance of LR and PPAs was not yet implemented at project closure (ICR, pages 36 and 37)\. â¢ Over 1400 landowners were trained in the application of best practices for the sustainable management of the Cerrado's natural resources (ICR, page 37)\. Page 5 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) â¢ An additional 355,141\.00 hectares of the Cerrado biome was protected through the creation and expansion of Protected Areas (PAs)\. Outcomes The creation and expansion of PAs supported by the projected represented less than 20% of the Sustainable Cerrado Initiative goal of 2\.0 million hectares of the Cerrado biome (ICR, page 34)\. At the time of project preparation, political circumstances appeared favorable to the creation and expansion of Protected Areas (PAs)\. However, during implementation, political circumstances became less auspicious, both at federal and state levels\. In the absence of sample surveys, there is no solid evidence to support the ICR's statement (page 12) that âbiodiversity in the Cerrado received a significant, practical increase in protection when compared to the departure point at the beginning of the project\.â Rating Modest PHREVDELTBL PHEFFICACYTBL Objective 2 Objective To improve the environmental and natural resources management of, the Cerrado in the territory of the Recipient, through appropriate policies and practices"\. Rationale cOutputs\. â¢ The Action Plan of the National Sustainable Cerrado program was publicly launched by the MMA and was under implementation at closure (ICR, page 38)\. Public policies contributing to biodiversity conservation were also developed by the States of Tocantins and Goias\. However, the State of Goias did not implement its targeted policy at project closure (ICR, page 39)\. As per GEO requirements, the Action Plan of National Sustainable Cerrado Program (NSCP) was officially adopted by the Presidential Decree on Septmeber 15, 2010\. â¢ Geo-referenced systems for environmental monitoring, licensing of rural properties and enforcement were developed at federal and state levels\. Training was provided for about 320 staff of the Goias State Environment and Water Resources Secretariat (SEMARH-GO) and Goias State Environment Fund (FEMA) as targeted (ICR, page 41) â¢ Information on the vegetation cover, biodiversity and land use of the Cerrado biome was updated\. The information was however not made public as intended at project closure (ICR, page 43)\. â¢ As per GEF requirements, four sector policies and plans which included measures to promote sustainable use or conservation of biodiversity had been developed by closure by the Ministry of Environment (MMA)\. This exceeded the target of two\. (The sector policies included the MMA ruling of 22 Page 6 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) March 2012 listing 52 municipalities for monitoring and control of illegal deforestation, the Ecological Zoning Decree, 2010 looking to coordinate ecological and economic zoning activities in Brazilian territory including in the Cerrado region, the Brazil Investment Plan addressing the Rural Environmental Registry and the Federal Agencies Strengthening Program) (ICR, Data Sheet, page ix)\. Outcomes\. No concrete evidence is provided to indicate that the expected improvements in environmental and natural resources management materialized\. Rating Modest PHREVDELTBL PHREVISEDTBL 5\. Efficiency Economic Analysis\. There was no economic analysis either at appraisal or at closure\. The global benefits of the Cerrado Initiative were assumed to come from increased biodiversity conservation and sustainable use of globally relevant species and hotspots, protection of watersheds in areas of global importance, increased opportunities for generating income while at the same time reducing pressure on biological resources, transition to more long term livelihoods by supporting the sustainable use of the productive landscape and involvement of civil society and contribution to the long term reduction in deforestation and ecosystem destruction\. The without project scenario assumed that issues pertaining to conservation challenges in the Cerrado region would not be addressed without GEF funding\. The baseline cost for this initiative was estimated at US$42\.69 million\. Of this, US$13\.00 million was provided by the GEF grant\. The GEF grant was able to leverage funds including from counterpart cash and in-kind contributions totaling US$29\.69 million from the federal and state governments for meeting the baseline cost\. Administrative and Operational Issues\. There were administrative shortcomings\. Although project preparation started in 2004, the project did not become effective until 2010, due to operational issues such as redesign of the project due to the limited availability of resources under Global Environmental Facility (GEF) 111\. In view of this, an assessment was made first for two sub-projects that were to be later integrated into the Adaptable Program Loan (APL)\. However, GEF required all four of the APL projects to be fully prepared to approve the grant and this necessitated more time for preparing the additional sub-projects\. Although the project dedicated about two thirds of funds for the creation of new Protected Areas (PAs), only about 20% of the original goal of creating two million hectares of new areas had been realized by project closure, due to the government's lack of willingness to create new protected areas in high value and densely occupied regions\. There were time overruns with the project closing 18 months behind schedule\. Efficiency Rating Modest Page 7 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) Coverage/Scope (%) 0 Appraisal 0 ï¨Not Applicable 0 ICR Estimate 0 ï¨Not Applicable Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome The relevance of the PDO to the Government, the Bank strategy and the GEO strategy was rated as High\. Relevance of design was rated as Substantial\. Efficacy of the two objectives - to enhance biodiversity conservation of the Cerrado in the Recipient's territory through appropriate policies and practices and to improve the environmental and natural resources management of the Cerrado was rated as Modest, as activities were output-oriented and there is no concrete evidence provided that they contributed to realizing the intended outcomes\. Efficiency is rated Modest as there were important administrative and operational inefficiencies that contributed to the non-realization of the intended outcomes and to time overruns\. Taken together, these represent significant shortcomings, and lead to a moderately unsatisfactory outcome rating\. a\. Outcome Rating Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating Government Commitment/Ownership\. Although the government presented the Fifth National Report on to the United Nation Convention on Biological Diversity in 2015, according to the Article 26 of the Convention, there is nonetheless a substantial risk to development outcome, given that neither the federal government nor the states were able to meet the targets associated with creation of Protection Areas (PAs), due to political economy considerations at project closure\. Economic Risk Given the macroeconomic situation, it is not clear if the government would have the capacity to invest in biodiversity conservation\. Also, given the pressure to continue and expand human population in the Cerrado region in view of Cerradoâs rapid economic development in the preceding years, it is not clear if the government would have either the ability or the political will to support biodiversity conservation efforts in the region\. Institutional Capacity\. It is not clear if the efforts to conserve biodiversity in Cerrado could be sustained given the limited institutional capacity of the executing agency to address biodiversity issues\. Page 8 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) a\. Risk to Development Outcome Rating Substantial 8\. Assessment of Bank Performance a\. Quality-at-Entry Preparation benefited from lessons learned from a prior Bank/GEF financed Project (Project for the Conservation and Sustainable Use of Biodiversity (PROBIO) which, among other things, defined priority areas for conservation in the Cerrado Biome\. The two main lessons incorporated in the design of this project were: (i) attempt to promote incorporation of biodiversity conservation into other productive sectors for achieving greater impact and, (ii) form partnerships for biodiversity conservation between the federal, state and municipal governments, given that environmental management in the Brazilian context is a shared responsibility of these agencies\. Appropriate arrangements were made at appraisal for ensuring compliance with safeguards and fiduciary issues (discussed in section 11)\. There were, however, significant shortcomings in Quality at Entry: â¢ As indicated in Section 3b, the project design which essentially amounted to four individual projects, a large number of implementing agencies and number of individual activities was complex\. Project preparation took almost seven years\. As discussed in Section 5, given limited availability of resources under Global Environmental Facility (GEF) 111, an assessment was made at preparation for the first two sub-projects that were to be later integrated into the Adaptable Program approach\. However, given the GEF requirements which required all sub-projects to be fully prepared to approve the grant, this necessitated additional time for preparing these additional sub-projects and thereby contributed to the long preparation time\. â¢ The mitigation measures that were designed at appraisal were not adequate to address the political economy risks\. The governmentâs lack of willingness or lack of capacity to overcome the political and economic consequences associated with creating new Protected Areas (PAs) in high value and densely occupied regions as envisioned at appraisal, resulted in the project falling considerably short of one of its expected key outcomes\. â¢ There were important weaknesses in M&E design (discussed in Section 10)\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision There were ten supervision missions over a six-year period\. According to the information provided by the task team, The Task Team Leader (TTL) was field-based and continuity of leadership was maintained with only one change in TTL at an early stage of project preparation\. This facilitated consistent Bank support for addressing Page 9 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) financial and procurement management and compliance with safeguards throughout implementation\. The ICR reports that the supervision team was diligent in proposing alternatives and supervising the preparation of an Action Plan to focusing on speeding up project activities including disbursement, establishing a timeline to receive bidding documents and terms of reference, and ensuring strategic collaboration and communications between the sub-projects\. According to the information provided by the task team, this Action Plan was instrumental in improving project implementation in the final years of the project\. There was one moderate shortcoming -- the monitoring indicators pertaining to creating new PAs were not modified although the federal governmentâs unwillingness to create new PAs had become apparent\. Quality of Supervision Rating Moderately Satisfactory Overall Bank Performance Rating Moderately Unsatisfactory 9\. Assessment of Borrower Performance a\. Government Performance Government in this case included the Federal Government and the two relevant State Governments (Tocantins and Goias\. The Federal Government adopted the National Sustainable Cerrado Policy (NSCP) as a public policy aimed at biodiversity conservation\. Both Federal and State Governments provided additional counterpart funding and issued the key legal instruments to support the Cerrado's sustainable development\. However, the Federal Government's unwillingness to support the creation of new PAs in high value, densely populated areas contributed to the non-realization of a key project objective and is therefore a significant shortcoming\. Government Performance Rating Moderately Unsatisfactory b\. Implementing Agency Performance There were four project implementing agencies: The Ministry of Environment (MMA): The State Water Resources and Environmental Secretariat (SRHMA) in the state of Tocantins: The State Environment and Water Resources Secretariat (SEMARH) in the state of Goias: and, The Chico Mendes Institute for Biodiversity Conservation (ICMBio)\. The Biodiversity Conservation Department (DCBio) in the Biodiversity and Forest Secretariat (SBF) in the MMA was in charge of coordinating the project activities\. All agencies complied with the social and environmental safeguards, financial management, and procurement guidelines\. There was, however, a moderate shortcoming\. All agencies faced capacity and staffing constraints which led to delays, especially in the early stages of implementation\. Only in the case of two of the agencies were these issues effectively addressed\. In both SRHMA and ICMBio they persisted throughout, and neither of these agencies was able fully cto disburse the grant funds provided to them\. â¢ All the agencies faced problems during implementation leading to slow disbursements, and these were Page 10 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) rectified only in the Ministry of Environment and SMARCH; neither SRHMA nor ICMBio was able to disburse all grant funds\. Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Moderately Unsatisfactory 10\. M&E Design, Implementation, & Utilization a\. M&E Design The M&E design had two Global Environment Objective (GEO) indicators- Adoption of an Action Plan of the National Sustainable Cerrado Program (NSCP) and at least two public policies by state or federal agencies contributing to biodiversity conservation in over 20% of the Cerrado biome and Increase in biodiversity conservation in four priority regions of the Cerradao\. However, the two indicators proposed could not be measured directly and proxies had to be relied upon\. Thus there was to be no direct measurement of environmental or resource management practices\. Achievement of the GEOs was to be assessed through measuring biodiversity conservation, medium-term outcomes (such as improved environmental and resource management practices) and short-term outcomes (such as policies and practices)\. A simpler results framework focused on two core outcomes such as increasing the area under PAs and improved management of PAs would have been more useful\. The implementing agencies were responsible for establishing the baselines for the project indicators and the Biodiversity Conservation Department (DCBio) within the Secretariat for Biodiversity and Forests (SBF) in the Ministry of Environment (MMA) was in overall charge of implementing M&E\. b\. M&E Implementation There was no complete ecological baseline for the GEO biodiversity indicator\. Further, there were no data for a number of indicators due to capacity problems at state level and unclear definition of indicators\. The large number of intermediate indicators necessitated additional data collection\. Given the Governmentâs unwillingness to designate PAs, the original indicators pertaining to biodiversity conservation were not revised\. c\. M&E Utilization The information provided by M&E was reportedly used by the Bank and project teams to solve problems that arose during implementation\. Page 11 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) M&E Quality Rating Modest 11\. Other Issues a\. Safeguards The project was classified as Category B for environmental assessment purposes\. Other than Environmental Assessment (OP/BP 4\.01), six safeguard policies were triggered: Natural Habitats (OP/BP4\.01): Pest Management (OP/BP 4\.09): Physical Cultural Resources (OP/BP 4\.11): Involuntary Resettlement (OP/BP 4\.12): Indigenous Peoples (OP/BP 4\.10: and, Forests (OP/BP4\.36)\. Environmental and Social Safeguards\. The PAD (page 25) notes that at appraisal, the draft Environmental Assessment (EA) and Environmental Management Plan (EMP) were submitted to the Bank\. The final EA and EMP were publicly disseminated as required (PAD, page 25)\. The Pest Management Framework, the procedures to address physical cultural resources, natural habitats and forests were included in the EMPs (PAD, page 26-27)\. A framework of Involuntary Resettlement summarizing guidelines and procedures to be followed by the project activities and a Policy Framework containing guidelines and procedures in the event any intervention affected indigenous communities was prepared and publicly disclosed as required at appraisal (PAD, page 27)\. Each sub-project also carried out a specific safeguard assessment that complied with the overall project safeguard framework and with federal and state laws\. The ICR (page 8) notes that there were no significant negative environmental impacts, and compliance with environmental safeguards was deemed to be satisfactory in supervision reports\. Activities associated with the creation and expansion of Protected Areas (PAs) for the Chico Mendes Institute for Biodiversity Conservation required land acquisition and compensation was provided according to market values of land and assets for those who had formal legal rights to land and compensation by market value of assets for those who had no recognizable legal right or claim to the land they were occupying\. This was in accordance with Brazilian Legislation governing PAs\. The ICR (page 8) reports that were no pending involuntary resettlement issues related to the four areas that were either created or expanded with the support of the project\. b\. Fiduciary Compliance Financial Management\. An assessment of each project's financial management capacity was carried out at appraisal and the assessment also included a financial management risk analysis and a framework that indicated the main risks and procedures to be followed to mitigate them (PAD, page 59)\.The ICR (page 9) reports there were delays in submission of financial reports, absence of detailed documentation of administrative costs and procedural shortcoming within internal controls to approve payments during implementation\. Auditing was carried out annually by independent auditors selected on a competitive basis and the auditorâs performance was deemed to be satisfactory (ICR, page 9)\. It is not stated whether the external auditor's opinions were qualified\. The latest supervision report assessed the project's financial management as moderately satisfactory\. Page 12 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) Procurement\. At appraisal, the grant recipients developed a procurement plan for each project which provided the basis for the procurement methods to be followed\. The plans were to be updated as required, depending on the actual project implementation needs and institutional capacity improvements (PAD, page 61)\. Although procurement took longer than desired, there were no serious procurement issues, no misprocurements were declared and no major procurement mistakes during project implementation (ICR, page 9)\. c\. Unintended impacts (Positive or Negative) --- d\. Other --- 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Moderately Outcome --- Unsatisfactory Unsatisfactory Risk to Development Substantial Substantial --- Outcome There were significant shortcomings in Quality at Entry\. Based on IEG Guidelines when the outcome for one dimension is in the Moderately Moderately Bank Performance satisfactory range and the Satisfactory Unsatisfactory rating for the other dimesnion is in the Unsatisfactory range, the overall rating for Bank Performance depends on Outcome rating\. Moderately Moderately Borrower Performance --- Unsatisfactory Unsatisfactory Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. Page 13 of 14 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review BR GEF Sustainable Cerrado Initiative (P091827) 13\. Lessons The following three lessons are taken from the ICR with some adaptation of language: (1) The Risk Assessment may need to be updated in cases of long or extended preparation time\. In this instance, preparation took almost seven years, which compromised the initial risk assessment findings\. At the time of project preparation, political circumstances appeared to be favorable for the creation of Protected Areas (PAs)\. However, as noted above, it became apparent during implementation that this was no longer the case\. (2) The difficulties associated with creating new PAs in densely occupied high value land in the case of this project may indicate the need to re-evaluate the current biodiversity preservation strategies\. A systematic approach encompassing water resources management, climate change, public health, and land management, besides biodiversity preservation may need to be considered in relation to the sole approach focusing only on PAs\. (3)\. The selection of initiatives to improve commercialization of native products to promote sustainable management production needs sound financial analysis\. Projects focusing on alternative economic activities should aim at developing complete production chains in order to guarantee ex post sustainability\. 14\. Assessment Recommended? No 15\. Comments on Quality of ICR The ICR is concise\. It candidly discusses the problems that were encountered during implementation (such as the change in political environment which in turn contributed to the non-realization of the objectives associated with establishing Protected Areas (PAs)\. The ICR draws useful lessons from the experience of implementing this project\. More information on GEF tracking tools would have helped better to understand the M&E issues that arose during implementation\. a\. Quality of ICR Rating Substantial Page 14 of 14	REVIEW
P003635	ï»¿ ICRR 11547 Report Number : ICRR11547 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 09/24/2003 PROJ ID : P003635 Appraisal Actual Project Name : Vocational Education Project Costs 68\.4 144\.5 Reform Project US$M ) (US$M) Country : China Loan/ US$M ) 30 Loan /Credit (US$M) 30 Sector (s): Board: ED - Vocational Cofinancing training (85%), Tertiary US$M ) (US$M) education (9%), Sub-national government administration (6%) L/C Number : C2898; L4063 Board Approval 97 FY ) (FY) Partners involved : Closing Date 12/31/2002 12/31/2002 Prepared by : Reviewed by : Group Manager : Group : Helen Abadzi Poonam Gupta Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives In support of labor market development, economic restructuring, and state-owned enterprise reform, the Vocational Education Reform Project would: (a) improve and increase the supply of skilled labor to meet labor market demands; (b) raise the quality and efficiency of the vocational education and training system; and (c) build up capacity for monitoring, evaluation and dissemination of pilot experiences and replication\. b\. Components The project, to be implemented in the Provinces of Guangdong, Jiangsu, Liaoning and Shandong and the municipality of Tianjin, would have the following components: (a) development of key schools for vocational education; (b) improvement of management and planning of vocational education; and (c) support of project management\. c\. Comments on Project Cost, Financing and Dates The project disbursed fully and was completed on deadline \. The municipality of Tianjin was omitted and was replaced by Beijing, whose population, however, has more economic opportunities \. 3\. Achievement of Relevant Objectives: The objectives were substantially achieved \. - Increasing capacity - satisfactory; 80 (rather than 82) secondary schools were renovated and developed as models to upgrade the quality and efficiency of vocational education \. The expected enrollment increases from 42,000 to 60,000 in full-time pre-employment courses were exceeded by far, and in 2002 enrollments were 202,290\. Curricula were revised to be responsive to market needs, while teaching methods became more student -oriented\. Average weekly teaching hours increased by 32%\. - Rasing quality - satisfactory; an extensive staff development program was carried out with the help of Singapore Nanyang Polytechnic\. Training took place in Singapore for 82 specialist teachers (12 women) and 75 school principals (5 women)\. Domestic staff training and technical assistance was extensive \. - Project management support - satisfactory\. A panel of Chinese experts provided strong advisory support during implementation\. 4\. Significant Outcomes/Impacts: The project pilot-tested improvements in the market responsiveness and quality of China's vocational and technical schools, and their capacity to produce well -trained workers in the skills sought by the market \. The international technical assistance was deemed of good quality by participants \. Provinces and municipalities were asked to take initiatives in determining participation and compliance in the project, and considerable initiative was given to the local level\. Industrial advisory committees and school boards in each school have facilitated ties with the industry \. The achievements of the schools have also had a spillover effect in non -project schools\. The pilot-test is gradually expanding to non-project schools\. At the end of the project, all schools had monitoring systems \. About half the school expenses were covered by industry and tuition fees at the end of the project period (in comparison to almost 0% in the beginning)\. Students of project schools earned 8\.6%-25% more at the end of the project period compared to students of non -project schools\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Unfavorable exchange rates during the project period significantly reduced the credit proceeds available to the project entities\. Monitoring data related to graduates' performance were not available in the ICR, and it is unclear whether the project collected them\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: Reforms in vocational education curriculum, teacher training methods, and student assessment need to be firmly grounded in labor market needs \. - Successful project implementation with multiple provinces and other entities depends upon strong local capacity built with targeted assistance and on dedicated agencies adequately staffed by skilled personnel \. - Upfront emphasis on project outcomes and impact as well as frequent monitoring key performance indicators may be critical for a good project outcome, despite the tendency to attend to details during implementation \. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The ICR is satisfactory overall \. However, even though schools reportedly collected information on graduates' labor market success, the information provided in the ICR was limited and could have been elaborated upon, e \.g\. regarding the job performance of graduates, the suitability of curricula, and the monitoring and evaluation mechanisms set up under the project (since capacity building for M&E was an explicit objective of the project )\.	REVIEW
P119295	Document of The World Bank Report No: 89045-IN IMPLEMENTATION COMPLETION AND RESULTS REPORT (P119295) 29\.7 MW WIND POWER PROJECT IN KARNATAKA, INDIA TO THE REPUBLIC OF THE INDIA FOR THE ACCIONA WIND ENERGY PRIVATE LIMITED (AWEPL) June 23, 2014 Sustainable Development Department India Country Unit South Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective May 15, 2014) INR 59\.405 = US$ 1 US$ 1\.366 = EUR 1 FISCAL YEAR July 1 â June 30 Acronyms and Abbreviations AWEPL Acciona Wind Energy Private Limited BESCOM Bangalore Electricity Supply Company Limited BvQI Bureau Veritas Quality International BWPPL Bellary Wind Power Private Limited CCGCF Climate Change Group â Carbon Finance Unit CDM Clean Development Mechanism CDM-EB CDM Executive Board CER Certified Emission Reduction CFAM Carbon Finance Assessment Memorandum CFO Carbon Finance Operation CSR Corporate Social Responsibility DANIDA Danish International Development Agency DNA Designated National Authority DOE Designated Operational Entity EMP Environmental Management Plan ENVCF World Bank Carbon Finance Unit ER Emission Reduction ERPA Emission Reduction Purchase Agreement FI Financial Institution FIT Feed-in-Tariff GHG Greenhouse Gases IBRD International Bank for Reconstruction and Development IMS Integrated Management System IRR Internal Rate of Return KPTCL Karnataka Power Transmission Corporation Limited kV Kilo Volts LOA Letter of Approval MP Monitoring Plan O&M Operations and Maintenance PCF Prototype Carbon Fund PDD Project Design Document PDO Project Development Objective PE Project Entity PPA Power Purchase Agreement SCADA Supervisory Control and Data Acquisition System SCF Spanish Carbon Fund UNFCCC United Nations Framework Convention on Climate Change Vice President: Philippe H\. Le Houerou Country Director: Onno Ruhl Sector Manager: Julia Bucknall Task Team Leader: Kavita Saraswat IMPLEMENTATION COMPLETION AND RESULTS REPORT 29\.7 MW WIND POWER PROJECT IN KARNATAKA, INDIA CONTENTS 1\. DATA SHEET \. 1Â A\. Basic Information \. 1Â B\. Key Dates \. 1Â C\. Ratings Summary \. 1Â D\. Sector and Theme Codes (not applicable since all ERPA ERs have been delivered) \. 1Â E\. Bank Staff \. 1Â F\. Verified Emission Reductions (VERs) to date \. 2Â 2\. ACHIEVEMENT OF IMPLEMENTATION OBJECTIVES AND OUTCOMES\. 3Â 2\.1 Basic project description and summary of any significant changes since ERPA signature \. 3Â 2\.2 Project implementation and commissioning \. 4Â 2\.3 Monitoring, reporting, verification and issuance of ERs \. 7 2\.4 Lessons learned \. 7Â 3\. BANK AND PROJECT ENTITY PERFORMANCE \. 7Â 3\.1 Assessment and rating of overall Bank performance \. 7Â 3\.2 Assessment and rating of overall project entity performance \. 8Â 4\. COMMENTS FROM PROJECT ENTITY AND OTHER PARTNERS \. 8Â 4\.1 Project entity\. 8Â 4\.2 Other partners and stakeholders \. 8Â 5\. JUSTIFICATION FOR MOVING TO THE SECOND PHASE (CARBON FINANCE MONITORING PHASE) AND SAFEGUARDS COMPLIANCE \. 9Â 5\.1 Compliance with safeguards and implementation challenges in the first phase - supervision phase \. 9Â 5\.2 Project entityâs capacity to carry out key functions related to safeguard requirements \. 10Â 5\.3 Potential issues in post completion operation, including project entityâs capacity and ability of the project to deliver the contracted Emission Reductions\. \. 10Â 5\.4 Justification for moving to the second phase - carbon finance monitoring phase \. 10Â 5\.5 Recommendations and guidance for project monitoring in the second phase - carbon finance monitoring phase \. 10 Annex 1: Borrower's ICR \. â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦â¦11 IMPLEMENTATION COMPLETION AND RESULTS REPORT 29\.7 MW WIND POWER PROJECT IN KARNATAKA, INDIA 1\. DATA SHEET A\. Basic Information Country: India Project Name: Karnataka Wind Power Carbon Finance Project Project ID: P119295 ICR Date: June 24, 2014 Project Design Document (PDD) Volume: 882,401 CERs (for 10 years) ER Purchase Agreement (ERPA) Volume: 178,917 CERs (for 3 years) Bank/IFC lending or grant: N/A Environmental Category: B Project Entity (PE): Acciona Wind Energy Private Limited (AWEPL), now Acciona Energy Co-financiers and Other External Partners: AWEPL â US$17\.59 million Local FIs â US$27\.52 million ICR prepared by: W\. Nick Bowden, Kavita Saraswat, Surbhi Goyal Approved by CD: Onno Ruhl Approved by SM: Julia Bucknall B\. Key Dates ERPA signing date December 23, 2009 ERPA effectiveness date December 23, 2009 ERPA amendment dates No ERPA termination date December 2, 2013 Project commissioning date September 29, 2008 C\. Ratings Summary Outcomes (project performance) Satisfactory Bank performance Satisfactory Project entity performance Satisfactory D\. Sector and Theme Codes Sector Codes (in %) LE â Renewable Energy 100% Theme Codes (Primary/Secondary) Climate Change (P) P E\. Bank Staff Position at ICR at ERPA Signing Project Team Leader Kavita Saraswat Kavita Saraswat Position at ICR at ERPA Signing ICR Team Leader Surbhi Goyal N\.A\. ICR Primary Author William Nicolas Bowden N\.A\. Deal Manager William Nicolas Bowden Manuel Luengo Environment Specialist Gaurav D\. Joshi Gaurav D\. Joshi Social Safeguard Specialist N\.A\. Mohammed Hasan F\. Certified Emission Reductions (CERs) to date: No\. Monitoring Period Volume of Date of Date of Status CERs Monitoring Completion of Reported Report Verification 1\. January 1, 2010 - 84,747 January 20, 2011 April 4, 2011 CERs Issued December 31, 2010 2\. January 1, 2011 - 97,126 January 12, 2012 April 18, 2012 CERs Issued December 31, 2011 TOTAL 181,8731/ 1/ There is a difference of 2% in reported volume and delivered volume\. The reported number of CERs is 181,873 of which 2% is deducted and allocated by the UN to an Adaptation Fund prior to crediting the balance to AWEPL\. In total 178,235 CERs were credited and invoiced to IBRD\. 2 2\. ACHIEVEMENT OF IMPLEMENTATION OBJECTIVES AND OUTCOMES 2\.1 Basic project description and summary of any significant changes since ERPA signature Objective: The project activity involved installation of a wind power plant and export of the electricity generated to the grid\. The main purpose of the project activity is to reduce Greenhouse Gas (GHG) emissions by generating clean electricity from wind energy\. Project Description: The project consists of 18 wind turbines of 1\.65MW capacity each totaling 29\.7MW spread over two locations (two villages), Arasinagundi (13\.20MW) and Anabaru (16\.50MW), in Davangere district of the Indian state of Karnataka\. The project was started by Bellary Wind Power Private Limited (BWPPL) and was later acquired by Acciona Wind Energy Private Limited (AWEPL), a 100% subsidiary of the Spanish Acciona group of companies, i\.e\. Acciona Energia Internacional, S\.A\. and Acciona, S\.A, in 2007\. The delivery of the power plants was done by Vestas Wind Technology India Private Limited, which is also the present Operations and Maintenance (O&M) contractor\. Both the plants are commissioned and are under operation - Arasinagundi since June 2008 and Anabaru since September 2008\. Both plants have employed underground cables and fully enclosed unit transformers and switchgear keeping safety aspects in view at the generating station\. A Supervisory Control and Data Acquisition (SCADA) system with remote monitoring facility is functional\. The electricity generated from the project is supplied to a sub-station owned by Karnataka Power Transmission Corporation Limited (KPTCL), the state transmission utility, at Hiremallaholle, and from there it is further evacuated by the state grid\. Metering is done at 66kV side, jointly by Bangalore Electricity Supply Company Limited (BESCOM), KPTCL and AWEPL through an electronic tri-vector meter installed at Hiremallanahole sub-station on a monthly basis\. As per the approved PDD, the project was expected to generate approximately 94\.88 Million kWh of electricity every year at a total capacity utilization factor of about 36\.47% against which it has generated 100\.55 Million kWh of electricity in calendar year 2009, which was the first full year after commissioning\. This was 6% higher than the yearly estimate as per PDD\. AWEPL has executed a 20-year Power Purchase Agreement (PPA) (with start date of March 17, 2008 for Arasinagundi and of May 2, 2008 for Anabaru) with BESCOM for sale of electricity at a fixed rate (with no escalation) of INR 3\.40 per unit (kWh)\. As per the PPA, the tariff from the 11th year onwards will be decided by Karnataka Electricity Regulatory Commission (KERC)\. BESCOM can exercise its option to procure power at KERC- determined tariff, else AWEPL can enter into an agreement with another party\. Main Beneficiaries: The project evacuates power to Karnataka state grid and hence to the Southern Regional Grid that consists of Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Pondicherry, and Lakshadweep\. CDM Process: This carbon offset project falls under the large-scale CDM project activity category for grid connected electricity generation from renewable energy sources\. The project 3 applied for CDM registration in 2007 and was registered on November 20, 20082/\. The International Bank for Reconstruction and Development (IBRD) received a request to purchase CERs from AWEPL in August 2009\. A Letter of Intent (LoI) was signed between the IBRD acting as the âTrusteeâ of the Spanish Carbon Fund (SCF) and AWEPL for the transaction of 178,917 CERs generated from the Project from January 1, 2010 until December 31, 2012\. Finally, an Emission Reduction Purchase Agreement (ERPA) was signed on December 23, 2009 between AWEPL and IBRD\. For the period from commissioning of project (September 2008) to end of 2009, AWEPL had an ERPA with Acciona Green Energy Developments, S\.L\. (AGED) for the sale of 99,211 CERs, which was successfully executed\. The project actually issued 102,914 CERs3/ 4/ since CDM validation till December 2009\. 2\.2 Project implementation and commissioning Project Development Objective (PDO): The development objective of the project was to âresult in reduction of Greenhouse Gas (GHG) emissions by supplying electricity generated from wind power to the gridâ\. Table 1: Basic Data S Owner Location Project Start Date for Commercial No Capacity implementation of Operation Date (MW) project 1\. AWEPL Arasinagundi 13\.20 MW April 27, 2007 June 6, 2008 2\. Anabaru 16\.50 MW September 20, 2007 September 29, 2008 Attainment of the PDO: The project has already achieved its PDO in terms of installed renewable energy generating capacity, and has been delivering clean electricity to the grid, and continues to do so\. Table 2: Key Results Indicators Indicator Target Result Actual at PDD At time of ERPA Termination (Dec 2012) Renewable Energy Generation Capacity 29\.7 MW 29\.7 MW Load (Capacity) Factor 36\.47% 35\.36%5/ CERs delivered 178,917 178,235 Except during 2012, both the plants performed well in the past five years as evident from the average Plant Load Factor, higher than the original forecast as per PDD (36\.47%) largely due to better predictive and timely maintenance\. 2/ Project Reference no\. 1949 3/ Issuance refers to the creation of certified emission reductions (CERs) equivalent to the number of greenhouse gas (GHG) reductions which have been generated, verified and certified in respect of a CDM project activity\. 4/ Of these, 2% CERs were deducted by UN towards the Adaptation Fund and the balance 100,855 CERs were available to distribute, which is higher than the ERPA target with AGED\. 5/ Since the operations of the plant were stopped for a few months in 2012, the load factor has been computed assuming generation if there were no stoppages\. 4 Table 3: Plant Load Factor Calendar Year Actual PLF Park Availability6/ 2009 38\.65% 94\.15% 2010 35\.02% 97\.71% 2011 40\.14% 98\.00% 2012 35\.36%7/ 67\.37% 2013 39\.21% 96\.44% The park availability varied between 94% and 98% during 2009 to 2013, except for 2012 when it dropped to 67\.37% due to forced stoppage of the plant for a few months (as explained in the Safeguards section)\. The following table gives details regarding electricity exported to grid during calendar years 2010 and 2011 and CERs issued to the Project\. Due to current carbon market conditions, no Monitoring Reports for 2012 and 2013 have been submitted to UNFCCC and no issuance has been requested yet\. Once a buyer for 2012-2013 assets is identified, these activities could be completed\. Table 4: Data for Generation and CER issuance (2010 to 2011) Calendar Net Export of Electricity Total CERs Issued CERs delivered to Year to Grid (MWh) Bank under ERPA8/ 2010 91,126\.80 84,747 83,052 2011 104,437\.20 97,126 95,183 TOTAL - 181,873 178,235 Delivery of CERs: The ERPA executed under this project was for purchase of CERs from AWEPL by IBRD acting as trustees of the Spanish Carbon Fund\. It implied that the SCF will make payment for monitored emission reductions after verification by an independent third party auditor known as a Designated Operational Entity (DOE)9/ and then certified and issued by the UNFCCC\. The DOE for verification of CERs for this project is Bureau Veritas Quality International (BvQI)\. As summarized in Table 4 above, as per the ERPA with IBRD, the Contract Volume of the Project was defined as the first 178,917 CERs generated by the Project starting in January 2010\. The Project delivered 178,235 CERs to the Trustee (IBRD) for the calendar years 2010 and 2011 and the Trustee had paid for these CERs\. In email dated June 28, 2012, AWEPL and the Trustee agreed not to process the transaction of the remaining 682 CERs of the Contract Volume but, instead, to terminate the ERPA following delivery of and payment for the 178,235 CERs due to heavy transaction cost10/ involved to process the remaining number of CERs\. The project has either met or exceeded the expected 6/ Park Availability considers overall park extending from the generation end i\.e\. wind turbine upto and including the sub-station and grid availability\. 7/ Since the operations of the plant were stopped for a few months in 2012, the load factor has been computed assuming generation if there were no stoppages\. 8/ Park Availability considers overall park extending from the generation end i\.e\. wind turbine upto and including the sub-station and grid availability\. 9/ DOE, as required to be hired under CDM rules, is an independent entity accountable to the supervising bodies of the CDM and is responsible for validating the project activities and verifying the projectâs anthropogenic GHG emission reductions\. 10/ AWEPL had about 1600 surplus CERs from year 2009 but since CERs of this year were not included in the ERPA agreement, it was not considered prudent to amend the same\. AWEPL also generated CERs in 2012 but due to high cost involved in validating a small number of CERs, it was mutually agreed between the Bank and AWEPL to waive the requirement of balance 682 CERs\. 5 performance parameters in terms of generation, O&M and sustainability objectives\. As compared to the certified emission reductions (CER) estimates in the PDD, the project has generated ~4% fewer CERs in calendar year 2010 and ~10% more CERs in calendar year 2011\. The accrual of CERs varies as it is linked to the variation in wind power generation from year to year which is an inherent characteristic of wind and caused by the cyclic non- systematic variations in the wind patterns\. The following table gives the details regarding the volume of CERs as agreed in PDD, as per ERPA with the Trustee, actual delivery of CERs to Trustee, etc\. Table 5: CERs Delivered since Registration of the Project11/ S Monitoring Volume of Volume Delivery Actual Actual Remarks, if No Period CERs as of CERs Date as per Volume Delivery any per PDD as per ERPA of CERs Date to ERPA delivered Trustee 1\. November 88,240 N\.A N\.A 64,712 N\.A Not under 20, 2008 â Bankâs ERPA July 31, 2009 2\. August 1, 88,240 N\.A N\.A 38,202 N\.A Not under 2009 â Bankâs ERPA December 31, 2009 3\. January 1, 88,240 59,639 On or before 84,747 April 4, Generated 2010 â September 2011 ~4% less December 30, 2011 CERs 31, 2010 compared to PDD 4\. January 1, 88,240 59,639 On or before 97,126 April 18, Generated 2011 â September 2012 ~10% more December 30, 2012 CERs 31, 2011 compared to PDD 5\. January 1, 88,240 59,639 On or before Request N\.A Due to 2012 â March 31, for involvement December 2013 issuance of high 31, 2012 of CERs transaction yet to be cost, made requirement to purchase balance 682 CERs was waived and ERPA terminated TOTAL 441,200 178,917 284,787 Demonstration Effect: As stated in the PDD, the Projectâs Internal Rate of Return (IRR) without considering CDM revenues was 11\.93% (barely above the offered lending rate of 11\.25%) and did not provide any risk premium\. Considering CER revenues @ EUR 9 per CER the Project IRR was 13\.65% which barely sufficed the return criteria factoring the risk 11/ on November 20, 2008 6 premium\. Therefore, carbon finance in the form of CER revenues was necessary to obtain approval for project investment\. 2\.3 Monitoring, reporting, verification and issuance of ERs The monitoring of the project is done in accordance with the Monitoring Plan as described in the PDD\. Monitoring reports for the first two reporting periods (2010 and 2011) were prepared by AWEPL and submitted to the DOE (BvQI) for verification\. Both verifications led to the issuance of CERs\. 2\.4 Lessons learned 1\. Carbon finance through CER sale is not an adequate incentive for investors to undertake wind power projects in India on a commercial basis, unless global negotiations have resulted in agreements and thereby the market for CERs becomes predictable\. 2\. The market price for CERs at the time of writing this ICR is less than $0\.5/CER, which is not at all attractive\. Necessary steps at the global and national levels must be taken for a CER market to be created such that it remains an important enabler to encourage investments in projects promoting sustainability such as this one\. 3\. Similar to creation of more predictable carbon markets, it is equally important to access concessional financing for improving project feasibility\. 4\. The project faces revenue constraints in spite of meeting its generation estimates due to the global CER market having collapsed since the project was set up\. Hence, a CER contract that guarantees CER offtake and price, and runs from the time the project is registered until it is generating CERs, will help to largely mitigate the price and CER revenue risk\. 5\. Improving the responsiveness of the CDM process to changes in domestic and global environments is necessary\. Changes in policy and global negotiations which are beyond the control of project entities and resultant delays in resolution of such matters place an unnecessary financial burden and uncertainty on projects, especially where the CER revenues make the project viable\. 6\. Specifically for the World Bank Group, it is advisable to take up carbon finance projects along with investment operations, otherwise it becomes very difficult to enforce Bankâs policies, especially safeguards, even when the project entity might be diligent and has its own robust procedures\. The investment helps in accounting for the expenditure likely to accrue to enforce additional measures required to comply with the Bankâs policies and hence, easier to enforce the same on the ground\. 3\. BANK AND PROJECT ENTITY PERFORMANCE 3\.1 Assessment and rating of overall Bank performance Rating: Satisfactory Overall, the World Bankâs performance has been satisfactory\. Since signing of ERPA in December 2009, the World Bank carried out two supervision missions including the site visits over the two-year implementation period\. Sufficient budget and staff resources were allocated as the project was adequately supervised and closely monitored; especially given that task team leader was Delhi-based staff, which proved to be highly effective\. The World Bank responded to the needs of the Project Entity (PE) by: 7 1\. Providing guidance and assistance to the PE to enable it to comply with the environmental and social safeguards requirements of the World Bank; 2\. Helping the PE identify potential issues in the verification/certification of the ERs and offering solutions\. In accordance with OP/BP 13\.05, the Region is responsible for supervision of carbon finance projects during the implementation phase from ERPA effectiveness to project commissioning after which the project may be transferred to CCGCF\. Further as per the same OP/BP, during the monitoring phase from project completion to ERPA termination, CCGCF is responsible for the monitoring of carbon finance projects according to the requirements and obligations in the ERPA\. However, for this project, ERPA was signed after commissioning of the project and for the closer monitoring of the pending land transfer issue (explained in detail in safeguards section), the monitoring of the project was retained with the region\. Now since the entire ERPA volume has been delivered, there will be no transfer of the Project to CCGCF\. 3\.2 Assessment and rating of overall project entity performance Rating: Satisfactory Overall, AWEPLâs performance has been satisfactory\. AWEPL has followed robust industry practices in carrying out operation and maintenance, including safety and environment and social safeguard practices\. The corporate culture includes regular reporting of safety aspects, monitoring of technical parameters, undertaking preventive maintenance, and refresher training of staff\. The Project maintains a cordial relationship with the local population and directs the CSR activities towards areas identified by the local representatives\. Additionally, the project has been very responsive to World Bankâs requests and requirements and accommodated World Bankâs safeguard requirements, in spite of no project funding by Bank\. In stand-alone carbon finance projects, it is always a challenge to enforce Bankâs safeguard practices on the client as some aspects may have a financial implication\. In particular, the PE has been extremely forthcoming in the following: 1\. Monitoring the performance of the installed equipment through SCADA system to ensure compliance with the PDD and the monitoring plan; 2\. Diligently preparing and sharing annual CDM Monitoring Reports with the World Bank, and; 3\. Complying with Bankâs environmental and social safeguards requirements and keeping the World Bank informed of potential issues during implementation\. As per AWEPL, the World Bank provided guidance and assistance to enable the project entity to comply with Bankâs environmental and social safeguards requirements\. The World Bankâs review of AWEPLâs ongoing sustainability initiatives and concurrence along with suggestions for social and environmental initiatives has helped provide a further boost to sustainability and the effort for involving the local community\. 4\. COMMENTS FROM PROJECT ENTITY 4\.1 Project entity Please refer to Annex 1\. 4\.2 Other partners and stakeholders N/A 8 5\. JUSTIFICATION FOR MOVING TO THE SECOND PHASE (CARBON FINANCE MONITORING PHASE) AND SAFEGUARDS COMPLIANCE 5\.1 Compliance with safeguards and implementation challenges in the first phase - supervision phase Transfer of Forest Land: The project was established on forest land: about 8\.77 ha (entire forest land transferred to the project in December 2007) for Arsanigundi and 26\.72 ha (of which 21\.78 ha transferred to the project in November 2007) for Anabaru\. Subsequent to taking over the project site by AWEPL, a small part of the approach road and a few spans of 33kV line were found to be located over a small land parcel of 3\.464 ha (as of December 2012, this is now modified to 5\.472 ha after measurements by forest department, Davangere), which was not transferred to the project\. In spite of AWEPL initiating immediate action to request the transfer the land to the project, the transfer of is still awaited\. This land was being used for grazing of cattle but since the project has not restricted movement of cattle, the alienation of this forest land did not adversely impact the livelihood of local people\. As part of compensatory afforestation, the project identified and delineated 34 ha of waste and uncultivated land which was transferred to the State Forest Department to be taken up for a plantation program\. Since October 2008, when the request for the additional 4\.94 ha land was submitted with the Karnataka Forest Department, AWEPL is consistently following up with the concerned authorities for approval\. This issue was known at the time of signing of ERPA and was expected to be resolved soon\. The project entity has complied with all the directions of the forest department in this regard including, but not limited to, furnishing compensatory land, guarantees etc\. The application has moved through some steps but the actual approval is still pending\. In January 2012, the project received notice from the divisional forest office to stop operations of Anabaru power plant as it considered the construction of road and transmission line on the above mentioned piece of land unauthorized\. After intense follow up by AWEPL, State Forest Department at Davangere through its letter dated April 20, 2012, allowed the plant to re-start generation for eight (8) weeks, after submitting a bank guarantee towards afforestation works on the alternate piece of land, which was already transferred to the forest department by AWEPL, and penalties, if any are imposed in the future\. After complying with the requirements, the plant was restarted immediately in April 2012 itself\. On June 21, 2012, AWEPL was again instructed by State Forest Department at Davangere to stop generation\. On September 18, 2012, based on a writ petition filed by AWEPL before the Honorable High Court of Karnataka, a stay order was obtained against the restraining orders of the state government (of June 21, 2012)\. The project is functioning normally since September 26, 2012\. The High Court also directed the State Government to forward the required application to the Central Government for approval and to confirm by the next hearing that they have forwarded the Projectâs request for land transfer n to the Central Government for approval\. The State Government has yet to file its response\. CERs volume in 2012 was impacted due to temporary stoppage of the plant\. Implementation of Site Related Mitigation Measures: The Environment Assessment indicated that there are no major migration routes within the project area as well as impediment to bird flight paths\. AWEPL implemented underground cabling to avoid unnecessary visual intrusion\. The blades of the turbines are painted in orange bands to make the contrast visible 9 from a distance\. Further, during missions, it was observed that the site offices maintained sequential records of the measures taken for environmental management, including safety of workers, and handling of chemicals\. Social: The project neither resulted in any involuntary resettlement nor did it adversely impact the local communities, particularly weaker sections (including scheduled castes and tribes)\. The contracts issued by AWEPL included the statutory requirements of (i) ensuring wages in accordance with the Minimum Wages Act of the government, (ii) not discriminating in wage payment to female workers, and (iii) non-involvement of child labor in any of the project activities\. AWEPL undertakes Corporate Social Responsibility (CSR) activities such as: ï Organizing cultural, sports and social welfare activities in consultation with stakeholders; ï Organizing wheelchairs, crutches and lunch utensils for local school; ï Facilitating annual gathering at local temple located within the project premises; ï AIDS awareness camps for local population Indigenous People: The project area has nearly 25% of the population belonging to tribal groups\. But the project does not adversely affect the tribal groups of the area\. As noted in Appraisal Aide Memoire, AWEPL informed that these tribal groups were actually benefitted by the project through better employment opportunities\. 5\.2 Project entityâs capacity to carry out key functions related to safeguard requirements The PE has satisfactorily addressed all the material environmental and social safeguards issues that have been identified during the appraisal and included in the Environmental Management Plan in the CFAM and included in the monitoring plan in the PDD\. The project entity is following up with the government and other parties to ensure that the pending land issue is resolved satisfactorily\. 5\.3 Potential issues in post completion operation, including project entityâs capacity and ability of the project to deliver the Contracted Emission Reductions\. The project entity will continue to follow up with the state government as well as with the central national government to resolve the land issue\. Apart from this, no safeguards issues are foreseen that could affect the projectâs ability to deliver on any future CER contracts to future buyers\. At present, the low market price for CERs does not justify the verification of emission reductions, but CERs could be delivered in the future when the price may increase and more buyers enter the market\. 5\.4 Justification for moving to the second phase - carbon finance monitoring phase There was no second phase in the said project as the ERPA was signed after commissioning of the project and immediately entered into carbon finance monitoring phase\. Further, the project has satisfactorily delivered all but 682 CERs in the ERPA\. Since both parties have agreed to terminate the ERPA, no monitoring was carried out by the Carbon Finance Unit and there was no transfer of the project from the region to CCGCF\. 5\.5 Recommendations and guidance for project monitoring in the second phase - carbon finance monitoring phase N/A 10 Annex 1 Borrowerâs ICR 1\. Performance of the project, including the role and value of carbon finance in improving the overall sustainability of the project a\. Performance of the project The project has either met or exceeded expected performance parameters (with respect to expected generation stated in PDD as well as shared with lenders) in terms of generation, O&M and sustainability objectives\. As compared to the certified emission reductions (CER) estimates in the PDD, the project has generated ~4% lesser CERs in calendar 2010 and ~10% higher CERs in calendar 2011\. The accrual of CERs varies as it is linked to the variation in wind power generation from year to year which is an inherent characteristic of wind and caused by the cyclic non-systematic variations in the wind patterns\. The machine availability averaged over 99% over the 2010 to 2012 period, barring a forced stoppage for some months in 2012 described below\. The CERs delivered by the project since registration on 20th November 2008 are as follows (http://cdm\.unfccc\.int/Projects/DB/DNV-CUK1216117082\.43/view) : Monitoring period CERs Annual estimated CERs 20-Nov-08 to 31-Jul-09 64,712 88,240 1-Aug-09 to 31-Dec-09 38,202 88,240 1-Jan-10 to 31-Dec-10 84,747 88,240 1-Jan-11 to 31-Dec-11 97,126 88,240 Request for issuance for CERs for calendars 2012 and 2013 is yet to be made\. We expect to have approximately 61,978 CERs for 2012 and 92,982 CERs for 2013\. 2012 CERs volume is impacted due to stoppage pertaining to land described in 6 a] iv] below\. As per the ERPA with IBRD, the Contract Volume of the Project was defined as the first 178,917 CERs generated by the Project\. The Project had delivered 178,235 CERs to the Trustee for the years 2010 and 2011 within Schedule and the Trustee had paid for such CERs\. In emails dated June 28, 2012, the PE and Trustee agreed not to process the verification and issuance of the remaining 682 CERs of the Contract Volume but, instead, to terminate the ERPA following delivery of and payment for the delivered CERs\. b\. Role and value of carbon finance in improving the overall sustainability of the project As stated in the PDD submitted to the UNFCCC for CDM approval for the project activity in 2008, the Project IRR without considering CDM revenues was 11\.93% (barely above the offered lending rate of 11\.25%) and did not provide any risk premium\. Considering CER revenues @ â¬9 per CER the Project IRR was 13\.65% 11 which barely sufficed the return criteria of the project proponent factoring the risk premium\. Therefore, carbon finance in the form of CER revenues were necessary to support project investment, else the project would not have been commercially\. The sustainable development aspects are addressed in the para below\. The market price for CERs at the time of writing this ICR is less than $0\.5/CER\. It is not attractive and the necessary steps at the global and national levels must be taken for a CER market to be created such that it remains an important enabler to encourage investments in projects promoting sustainability such as this one\. 2\. Measurement of the project's degree of success in meeting its implementation and development objectives The project was already constructed and operational at the time the ERPA with IBRD was executed\. It was constructed as per schedule and generation had stabilized\. The Host Country Approval from the Indian Ministry of Environment and Forests confirming that the project meets the countryâs sustainability criteria had been obtained and the project was already registered as a CDM project\. The project continues to meet and at times exceed its set development objectives\. The project activity is achieving its sustainable development objective in the form of social, economic and environmental well-being as follows: ï§ Substituting electricity generated using conventional fuel with wind energy\. Conserving coal and other non-renewable natural resource ï§ Mitigating the emission of GHG (CO2)\. Reducing pollutants like SOX, NOX etc\. associated with other power plants ï§ Arrangements made at site for storing rain water ï§ Contributing towards reducing power shortage in the state of Karnataka\. Help to bridge Indiaâs energy deficit\. ï§ Generate local employment in areas near the project activity leading to empowerment of the vulnerable sections of society dwelling near the project area\. Wage registers being maintained with labor contractors to ensure parity maintained between male and female workers ï§ Project maintains visitors and complaints registers ï§ The project area remains open for animal grazing ï§ Compliance with the forestry clearance conditions for environment compliance by the project ï§ The project maintains cordial relationship with the local community\. It undertakes Corporate Social Responsibility (CSR) and environmental initiatives from time to time like: ï§ Organizing cultural, sports and social welfare activities in consultation with stakeholders; ï§ Organizing wheelchairs, crutches and lunch utensils for local school; ï§ Facilitating annual gathering at local temple located within the project premises; ï§ AIDS awareness camps for local population ï§ Conducting plantation activity in the project and sub-station areas 12 3\. O&M of the plant in line to ensure its sustainability The O&M activities continue to be carried out by Vestas who are the original equipment manufacturers through a long term O&M contract since commissioning in 2008\. Both plants performed well in the past five years as evidenced through the average Plant Load Factor being higher than the original forecast as per PDD (36\.47%) largely due to better predictive and timely maintenance\. Calendar Year Actual PLF 2009 38\.65% 2010 35\.02% 2011 40\.14% 2012 35\.36%12/ 2013 39\.21% The project has in place a Quality, Safety and Health plan for construction, installation, commissioning, maintenance and operation of the plants\. The Integrated Management System (IMS) approved by an independent accredited agency complies with international norms and is strictly adhered to\. Reports indicating compliance with the plan are prepared regularly by the project for their internal management\. Quality and safety audits are also regularly carried out as a part of CER verification process by the accredited DOE\. The project has a SCADA system in place that is connected to the India office in Bangalore and also to the central control centre in Spain\. This is used to monitor the turbines 24/7 and improve operational efficiency\. 4\. Safeguards and safety policies/procedures that you adopted during construction/operations/maintenance The IMS referred to in the para above has been adhered to and the Bankâs team has reviewed the adoption and implementation of the laid down procedure, including the monthly reports from the O&M contractor which mentions any incidents that occurred relating to environment and accidents\. Records of accidents and near misses, if any, are systematically maintained\. Rain water harvesting is implemented to serve a portion of the water requirement for maintenance\. 5\. Lessons learned from the experience a\. Carbon finance through CER sale is not an adequate incentive for investors to undertake wind power projects in India on a commercial basis, unless global negotiations have resulted in agreements and thereby the market for CERs becomes predictable\. b\. Project feasibility is better established with concessional financing and similar more predictable initiatives in the present CER market scenario\. 12/ Since the operations of the plant were stopped for a few months in 2012, the load factor has been computed assuming generation if there were no stoppages\. 13 c\. The project faces revenue constraints in spite of meeting its generation estimates due to the global CER market having collapsed since the project was set up\. A CER contract that guarantees CER offtake and price and runs from the time the project is registered till the time it is eligible to generate CERs, will help to largely mitigate the CER price and revenue risk\. d\. Improving the responsiveness of the CDM process to changes in domestic and global environments is necessary\. Changes in policy and global negotiations which are beyond the control of the Project Entity and resultant delays in resolution of such matters place an unnecessary financial burden and uncertainty for the PE, especially where the CER revenues make the project viable\. 6\. Identification of key issues or events that may arise in the future that could impact the ability of the project to deliver the contracted emission reductions a\. Additional land i\. The Project Entity (PE) had applied for permission for transfer of 21\.07 hectares of forest land in its name to construct the project\. During the course of transfer of this land and construction the PE observed that a small project footprint was deviating from the original requested approval mainly due to topography and immediately requested for diversion of an additional 3\.464 hectares on August 19, 2008\. Since then the land requirement has been revised to 5\.472 ha during joint measurements\. ii\. While the originally requested land was transferred to the PE, the additional land is yet to be transferred on the date of this ICR\. The size of the additional land has been increased from 3\.5 ha to 5\.4 ha after subsequent measurements by forest department\. iii\. The PE is consistently following up with the concerned authorities for approval since its initial application in 2008\. The PE has complied with all directions of the forest department in this regard including but not limited to furnishing compensatory land, guarantees etc\. The application has moved through some of the steps leading to approval\. However, the approval is awaited on date\. iv\. The project was stopped for some months by the forest department pending completion of the process for additional land approval\. The project was re-started with the intervention of the Honourable High Court of Karnataka vide its order dated 18th September 2012 where the stoppage order was set aside and the State Government was directed to confirm by the next hearing of its forwarding the application to the Central Government for approval\. The State Government is yet to file its response\. b\. Collapse of Carbon Finance Market AWEPL recognizes and appreciates the role of the World Bank Group in promoting and tooling action against Climate Change\. The Carbon Finance Unit has pushed the development of clean projects in India, as per our view the renewable energy projects being most important in directing the growth of the energy sector towards a 14 clean future in a country with growing energy needs\. Reports (State and Trends of Carbon Pricing) and other challenging initiatives (Partnership for Market Readiness) are also backing policy decisions towards revitalizing markets\. As mentioned before, the project faces revenue constraints due to the global CER market having collapsed since the project was set up\. Design and implementation of National markets/ taxes/ other policies with use of nationally generated offsets may help CER market to recover: recent examples in China, Korea, Mexico and South Africa are a good proof of it\. AWEPL considers that the recognition of the sustainable development role of Indian CERs, and the development of the needed schemes to increase their value would be a good approach for India as well\. There are several options of doing so: the classical offsetting in an Emission Trading or Tax Scheme, and also other more innovative like the recognition of CER contribution to CSR (Corporate Social Responsibility) policies, as the one that is being developed in India nowadays\. The World Bank and its affiliates could play an important role in getting this together\. c\. Apart from above, no more issues are foreseen that could affect projectâs ability to deliver on any future CER contracts\. 7\. Assessment of the potential of the project to deliver the contracted CERs The PE has completed contracted CER delivery to IBRD as mentioned\. It is expected to continue generating the estimated CERs on an annual basis and deliver the same in a timely manner\. Although it cannot be said with certainty, the PE expects to obtain the requested additional land approval, sometime in 2014 as it depends on the agreement reached between the Central Government and the State Government\. As on the date of this ICR, the Project has no further commitment to deliver CERs to IBRD\. 8\. Comments on project and Bank performance from PE a\. The Bank has provided guidance and assistance to enable the PE to comply with Bankâs environmental and social safeguard requirements\. b\. Association with the Bankâs team has been an enriching experience\. The Bankâs review of the PEâs ongoing sustainability initiatives and concurrence along with suggestions for social and environment initiatives has helped provide further boost to sustainability and the effort for involving local community\. Some of the actions forming part of the sustainable development initiatives listed in the para above are owed to the Bankâs suggestions\. c\. The Bankâs proactive approach in identifying potential issues and advice in putting in place measures to address such issues, has added value to the project\. 15	REVIEW
P057272	ï»¿ ICRR 11563 Report Number : ICRR11563 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 08/14/2003 PROJ ID : P057272 Appraisal Actual Project Name : Gy Financial & Private Project Costs 5\.6 5\.1 Sector US$M ) (US$M) Country : Guyana Loan /Credit (US$M) Loan/ US$M ) 4\.8 4\.65 Sector (s): Board: PSD - Central Cofinancing government administration US$M ) (US$M) (73%), Banking (27%) L/C Number : C3290; CQ159 Board Approval 00 FY ) (FY) Partners involved : Closing Date 12/31/2002 12/31/2002 Prepared by : Reviewed by : Group Manager : Group : Michael R\. Lav John H\. Johnson Kyle Peters OEDCR 2\. Project Objectives and Components a\. Objectives (i) improve the regulatory framework of the overall financial sector to support private sector activity and achieve synergies among the banking, insurance, non -banking, and securities sectors; (ii) assist in the transfer of state-owned enterprises to the private sector to promote a private -enterprise led economy; and (iii) support the modernization of the public sector through improved service delivery in the areas of procurement, auditing, and public sector management\. b\. Components (1) Financial Sector Development (US$1\.5 million): funding of technical assistance to (a) implement a procedural framework for handling banks with structural or short term solvency and /or liquidity problems; (b) implement uniform financial accounting reporting standards and a chart of accounts in the banking sector; (c) update the regulatory framework to cover merchant banks, trusts, foreign exchange traders, and other non -bank financial institutions; (d) restructuring and improving the financial condition of the remaining state -owned bank including an assessment of privatization options; and (e) developing industry-specific regulations and directives to operationalize the new legal framework and supervisory bodies for the insurance and securities sectors \. (2) Private Sector Development (US$2\.3 million): fund technical assistance, training and equipment to support the second phase of the privatization program to transfer approximately 13-16 additional state enterprises to the private sector \. (3) Public Sector Business Services (US$ 1\.8 million): (a) fund the development of revised public procurement procedures and regulations to facilitate the public bidding and contracting processes, and the establishment of a national contractors registry; (b) strengthen and update the public sector's external auditing capacity to improve standards and timeliness of audits; and (c) modernize the public sector's payroll budget system to ensure full Y 2K compliance\. c\. Comments on Project Cost, Financing and Dates The project cost US$ 5\.1 million, financed by an IDA credit for US$ 4\.65 million and the Government, US$ 0\.45 million\. The project was appraised in June, 1999, approved by the Board on November 16, 1999, became effective on December 9, 1999, and closed on schedule on December 31, 2002\. 3\. Achievement of Relevant Objectives: (1) (a) The improvements foreseen in the implementation of a procedural framework were not achieved (see Significant Shortcomings, below); (b) the Government has financed the preparation of a uniform financial accounting reporting standard and a chart of accounts; (c) a regulatory framework was implemented to cover merchant banks, trusts, foreign exchange traders, and other non -bank financial institutions, but technical reviews will be needed to assess compliance with international standards; (d) the Guyana National Cooperative Bank was reorganized and, later, brought under contract for sale; and (e) the Insurance Act, previously approved by Parliament, was put into force, and a new Insurance Commissioner appointed \. However, adequate staffing is still uncertain, and additional regulations will be needed to implement the provisions of the Act \. The Securities Act is being implemented and entities responsible for oversight and self -regulation of the sector have been established \. Again, adequate financing and staffing are yet to be assured \. 2\. The project funded technical assistance expertise which led to the privatization of a total of 12 state enterprises, including two large enterprises (the Guyana Cooperative National Bank, already noted under 1 (d) above and the Guyana Electric Company ) which had not been on the original list \. 3\. A new public procurement act was approved in May 2002 and supplemental amendments approved in December 2002 following the Government's consultation with IDA \. Further improvements are needed and expected in Mid -2003\. The newly established National Procurement Tender Board, which will report directly to the Parliament, has been established \. (b) The audit examiners and senior staff at the Auditor General's Office (AGO) underwent on-site training implemented by US Department of Agriculture official \. Only the first phase of this training program was implemented because funds for the second phase were not allocated by the Ministry of Finance \. (c) The improved Government payroll system was implemented, was Y 2K compliant, and helped to automate processing and eliminate duplication of records\. 4\. Significant Outcomes/Impacts: Twelve state-owned enterprises were privatized, including the GNCB and Guyana Electric Company, the two largest SOEs, which had not been in the original target group for privatization \. Procurement, auditing, and public sector management have been improved, though in each of these areas follow -up reforms in legislation, procedures, and in staffing will be required if these improvements are to be consolidated \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): The procedural framework for handling banks with structural or short -term solvency and/or liquidity problems was not implemented as foreseen\. Specifically, a concrete draft amendment to the Financial Institutions Act and associated implementing procedures is yet to be completed \. Therefore, Guyana still lacks appropriate procedures for the efficient resolution of potential problem institutions, which was an important objective of the project \. The ICR contains no mention of the national contractors registry which was to be implemented to help improve public investment processes\. The second phase of training program for Auditor General Office staff has not been implemented but is expected to be executed under a follow -up IDA credit\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Despite the shortcomings noted in section 5 above, the project achieved important progress in privatization, procurement, auditing, and public sector management which merits an overall outcome rating of satisfactory\. Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. NOTE: 7\. Lessons of Broad Applicability: 1\. Complex operations need strong coordination at the agency level for each component \. This was the case in the privatization component of this project, which generated much of the progress achieved by this project \. Bank staff need to provide timely and targeted support to each implementing agency and department, especially those which lack capacity\. Building trust and working relationships is time consuming but essential to project implementation in these circumstances\. 2\. The design of a privatization program in a socially sensitive manner is a key factor for its successful implementation\. In this project, the Privatization Unit obtained political, labor union, and public support for privatization\. While in this project, clauses to protect minority investors and employees were important in building such support, care needs to be taken to allow the new owner sufficient leeway to allow the newly privatized enterprise to be profitable\. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: ICR is clearly written with a good overview of the project and all the details needed for a good evaluation \.	REVIEW
P065736	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 28939 IMPLEMENTATION COMPLETION REPORT (FSLT-70550) ON A LOAN IN THE AMOUNT OF US$65 MILLION TO THE KINGDOM OF MOROCCO FOR AN INFORMATION INFRASTRUCTURE SECTOR DEVELOPMENT OPERATION May 6, 2004 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective 8 May 2004) Currency Unit = Moroccan Dirham (MAD) 100 MAD = US$ 10\.93135 US$ 1 = 9\.24800 MAD FISCAL YEAR July 1 - - June 30 ABBREVIATIONS AND ACRONYMS 3RP Réseaux radioélectriques à ressources partagées (shared radioelectric networks) ADB African Development Bank ANRT Agence Nationale de Réglementation du Secteur des Télécommunications AoL Administration on line ADSL Asymmetric Digital Subscriber Line ATM Automatic teller machine BAM Barid Al-Maghrib (the postal operator) CAS Country Assistance Strategy CDMA Code Division Multiple Access DH Dirhams ETSI European Telecommunications Standards Institute FADES Fonds Arabes et Banque Islamique de Développement GDP Gross Domestic Product GIPE Gestion Intégrée du Personnel de l'Etat (Integrated Management of the Government's Human Resources) GMPCS Global Mobile Personal Communications Services GSM Global System for Mobile Communications HT Hors taxes (net of tax) IAM Itissalat Al-Maghrib (Maroc Telecom, the incumbent telecommunications operator) ICR Implementation Completion Report ICT Information and Communications Technologies iDEN Integrated Digital Enhanced Network IISDL Information Infrastructure Sector Development Loan IMF International Monetary Fund IPO Initial Public Offering ISP Internet service provider IT Information Technologies ITU International Telecommunication Union LEO Low Earth Orbit LSP Letter of Sector Policy MAD Moroccan Dirham MENA Middle East and North Africa MNA Middle East and North Africa OECD Organisation for Economic Co-operation and Development ONE Office National de l'Electricité ONCF Office National de Chemins de Fer PC Personal Computer PHRD Policy and Human Resources Development PSR Project Status Report QAG Quality Assurance Group RIO Reference Interconnection Offer SA Société Anonyme (French company designation) SARL Société à Responsabilités Limités SEPTI Secrétariat d'Etat Chargé de la Poste et des Nouvelles Technologies de l'Information SGG Secrétaire Générale du Gouvernement (Secretary General of Government) SMEs Small and Medium Enterprises SMS Short Message Service (cellular phone text messaging) SNO Second National Operator SPCS Satellite Personal Communication Services Tetra Terrestrial Trunked Radio TOR Terms of Reference TPI-SAL Telecommunications, Post and Information Technology Sector Development Sector Adjustment Loan UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organization UPU Universal Postal Union US Universal Service VSAT Very Small Aperture Terminal WB World Bank WBI World Bank Institute WTID World Telecommunication Indicators Database WTO World Trade Organization Vice President: Christiaan Poortman Country Director Theodore Ahlers Sector Manager Pierre Guislain Task Team Leader/Task Manager: Carlo Maria Rossotto MOROCCO Information Infrastructure Sector Development Project CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 7 5\. Major Factors Affecting Implementation and Outcome 15 6\. Sustainability 16 7\. Bank and Borrower Performance 17 8\. Lessons Learned 20 9\. Partner Comments 21 10\. Additional Information 22 Annex 1\. Key Performance Indicators/Log Frame Matrix 23 Annex 2\. Project Costs and Financing 24 Annex 3\. Economic Costs and Benefits 25 Annex 4\. Bank Inputs 26 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 28 Annex 6\. Ratings of Bank and Borrower Performance 29 Annex 7\. List of Supporting Documents 30 Annex 8\. Sector Performance 31 Annex 9\. Key Information Infrastructure Progress Measures 37 Annex 10\. Liberalization Schedule Originally Approved by ANRT's Board in March 2000 41 Annex 11\. Proposed Policy Matrix for IISDL as of 27 November 2000 42 Annex 12\. Borrower's Report 46 Project ID: P065736 Project Name: Information Infrastructure Sector Development Project Team Leader: Carlo Maria Rossotto TL Unit: CITPO ICR Type: Core ICR Report Date: May 12, 2004 1\. Project Data Name: Information Infrastructure Sector Development L/C/TF Number: FSLT-70550 Project Country/Department: MOROCCO Region: Middle East and North Africa Region Sector/subsector: Telecommunications (45%); Information technology (28%); Postal services (18%); Other industry (9%) Theme: Regulation and competition policy (P); Other financial and private sector development (P); State enterprise/bank restructuring and privatization (S); Access to urban services for the poor (S); Infrastructure services for private sector development (S) KEY DATES Original Revised/Actual PCD: 02/10/2000 Effective: 09/30/2001 06/27/2003 Appraisal: 03/27/2000 MTR: Approval: 05/31/2001 Closing: 12/31/2001 06/30/2003 Borrower/Implementing Agency: KINGDOM OF MOROCCO/SEPTI; KINGDOM OF MOROCCO/BAM; KINGDOM OF MOROCCO/ANRT Other Partners: African Development Bank STAFF Current At Appraisal Vice President: Christiaan J\. Poortman Jean-Louis Sarbib Country Director: Theodore O\. Ahlers Christian Delvoie Sector Manager: Pierre A\. Guislain Emmanuel Forestier Team Leader at ICR: Carlo Maria Rossotto Clemencia Torres ICR Primary Author: Carlo Maria Rossotto; Isabelle Andress; Mather Pfeiffenberger 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: M Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: HS U Project at Risk at Any Time: Yes 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The objectives of the Morocco Information Infrastructure Sector Development Loan (IISDL) were defined in the context of Morocco's desire to pursue further reforms in its information and communications technologies (ICT) sector\. This followed an initial phase of telecommunications liberalization that was supported by the successful Telecommunications, Post and Information Technology Sector Adjustment Loan (TPI-SAL) (Loan No\. 4465-MA) of 1999-2000\. Under that operation, Morocco implemented the provisions of a new telecommunications law (Law 24-96) and introduced competition in the cellular market\. Given the positive domestic and international reception for those conditions, Morocco was keen to undertake a second phase of reforms that would increase competition in the ICT sector, develop the legal and regulatory framework, and extend the benefits of ICT throughout the Moroccan population\. The Government requested Bank support for these initiatives, which was provided by the follow-up IISDL, a US$65 million one-tranche adjustment operation approved by the Board on May 31, 2001\. Cofinancing was supplied by the African Development Bank (ADB), which designed a two-tranche adjustment operation of US$100 million\. The main objectives of IISDL were to: (i) support the Government's program to deepen market liberalization, increase private sector participation, extend services and strengthen the regulatory environment of the telecommunications sector; (ii) assist the Government in the formulation and implementation of a strategy for the use and development of information technologies (IT); and (iii) formulate a national strategy for the postal sector, including the financial services provided through the postal network, which will serve as a basis for further specific reforms\. These objectives reflected Morocco's commitment at the time of Board approval to ongoing sector reform\. They were also consistent with the 2001 Country Assistance Strategy (CAS) objectives of enhancing conditions for economic growth and private sector development and increasing private participation in infrastructure\. In the aftermath of the TPI-SAL, the Government wished to continue focusing its measures on the broader scope of information infrastructure, and thus an operation which encompassed the three sub-sectors of telecommunications, post, and IT made sense\. However, the objectives were somewhat complex given the range of policy improvements sought over the three sub-sectors and the Government's limited capacity in IT and post\. More modest objectives in these areas, as discussed further below, might have been more appropriate\. 3\.2 Revised Objective: The original objectives were not revised\. 3\.3 Original Components: The components of the operation were divided among the three sub-sectors mentioned above: telecommunications, IT, and post\. The Government's Letter of Sector Policy (LSP) dated April 6, 2001 laid out in further detail the actions that would be taken to implement the commitments under IISDL\. - 2 - Telecommunications (a) Privatization of Itissalat Al-Maghrib (Maroc Telecom) The Government planned to sell a strategic block of 35% of Maroc Telecom's shares through international competitive bidding\. Completing this sale was a measure of Board presentation of the IISDL\. Following that sale, the Government intended to further divest its ownership of Maroc Telecom by offering shares for sale to the company's employees and retirees\. In addition, it intended to sell a second block of 16% of Maroc Telecom's shares in early 2002 through an initial public offering (IPO) on the Casablanca and international stock exchanges\. (see also the Borrower's Report in Annex 12)\. (b) Reinforcing competition in telecommunications infrastructure and services The Government would publish in the official gazette a decree awarding a GMPCS license, adopt a timetable to grant new licenses for networks and services in order to accelerate liberalization, and invite expressions of interest for these licenses\. These were measures for Board presentation\. The new licenses were expected to lead to the deployment of broadband networks, enabling fast Internet access and multimedia applications\. From January 2003 on, the new operators would be allowed to provide all services including voice and would thus become full-fledged competitors to Maroc Telecom in their respective market segments\. Additionally, as of January 1, 2002, the second GSM operator Méditel was scheduled to launch international services for its own customers, introducing competition in this segment\. Additional international licenses were to have been awarded in 2002\. (For further information on these licenses, see Annex 10\.) To further promote competition, the Government also planned send to Parliament an amendment of Law 24-96 that would facilitate the use of alternative infrastructures\. This would enable utility and transport companies to make their telecommunications networks and rights of way available to new and existing operators, consequently reducing infrastructure cost\. Approval of this amendment by the Council of Government was part of the effectiveness measures for the IISDL\. (c) Expanding access to services at reasonable prices for all segments of the population The Government set general objectives to increase rural teledensity from 0\.6% in 2000 to 7% in 2012 and to have at least one payphone per 250 inhabitants by 2005\. Actions planned by the Government in the pursuit of these objectives included defining the universal service obligations in Maroc Telecom's license and preparing a new universal service regime by the sector regulator (ANRT)\. The latter would be aimed at narrowing gaps in service not covered by commercial operations alone\. Carrying out these actions were measures for Board presentation of the IISDL\. The Government intended to present to Parliament an amendment to Law 24-96 to expand the definition of universal service to include telecommunications and information services in general, rather than telephony only\. Approval of this amendment by the Council of Government was an effectiveness measure for IISDL\. The Government also intended to draft a decree implementing the new universal service regime\. (d) Reinforcing the telecommunications regulatory framework In order to strengthen ANRT, the Government would send to Parliament an amendment to Law 24-96 that would replace a priori financial controls on ANRT by a posteriori controls\. The Government was also to submit to Parliament an amendment to Law 24-96 that would strengthen ANRT's enforcement power over - 3 - operators by allowing the agency to impose graduated sanctions (including financial penalties) for non-compliance, in addition to license suspension provided for in Law 24-96\. Approval of these two amendments by the Council of Government was part of the IISDL measures for Board presentation and effectiveness, respectively\. To strengthen the financial autonomy and accountability of ANRT, the Government intended to review by March 2002 the agency's funding sources and adjust regulatory fees to bring them more in line with the cost of regulation\. This was to be preceded by a study on pricing of spectrum rights\. The preparation of terms of reference and funding for this study was a Board \. The design of these four project components addressed all elements of the IISDL's first objective, namely to increase private sector participation, deepen liberalization, extend services, and strengthen regulation, respectively\. The intended sequencing of actions under the first two components -- increasing competition through the award of new licenses before further divestiture of Maroc Telecom -- also drew on the lesson from TPI-SAL, that strengthening competition prior to privatization is a powerful tool of sector reform\. Information Technology (e) Developing an adequate legal and regulatory framework for information technology and promoting the development of electronic commerce The Government was to prepare and submit to Parliament by September 2002 a draft law on data transmission, including recognition of electronic signature\. Approval of this draft law by the Council of Government was a measure for Board presentation\. Further draft laws to create a coherent and reliable legal framework were to be elaborated, including certification of electronic transactions, cryptography, privacy, technology neutrality, and consumer protection in the field of electronic media\. (f) Developing inter-administration networks The Government would launch a pilot project of its Administration-on-Line (AoL) initiative\. The aim of AoL was to gradually develop a government-wide information system, connect different ministries at the central and local level, and establish common interoperable procedures\. AoL was expected to streamline procedures, reduce costs, and benefit citizens and enterprises\. In addition, this infrastructure would allow development of e-government applications and improve public services\. The selection of the Integrated Management of the Government's Human Resources (Gestion Integrée du Personnel de l'Etat - GIPE) as the pilot project for the AoL initiative and the identification of financial resources for the initiative's subsequent phases were measures of Board presentation\. At Board, launch of the GIPE was expected in November-December 2001\. (g) Promotion of ICT-related applications through public-private partnerships and integration of certain traditional sectors in global commerce The Government would reach agreements with two private companies for the development of certified electronic commerce platforms for economic cooperatives (e\.g\. groups of local artisans, craftspeople, farmers)\. Signing these agreements was a measure for Board presentation\. In addition, the Government intended to promote the use of e-commerce portals among cooperatives\. Under this component the Government also intended to launch a cyber park in Casablanca and plan a second park in Bouznika\. The parks would host incubators for new ICT enterprises and SMEs\. - 4 - Postal Sector (h) Designing a national strategy for the modernization of the postal sector The Government would undertake a postal sector study\. This was viewed as a key element for the design of the national postal strategy, aiming at: a) the provision of universal service in the postal sector in line with international standards; b) the gradual opening of the postal service to competition and increased private participation; c) the strengthening of the postal operator Barid Al-Maghrib (BAM), notably through its corporatization, as a credible competitor in a liberalized environment; and d) the increased mobilization of rural savings and the improvement of management autonomy in postal financial services\. Completing the sector study was a measure for Board presentation\. (i) Modernizing the postal operator (BAM) The Government sought to modernize BAM through preparation and implementation of: a) an action plan for business development; b) an internal restructuring; and c) the increased use of telecommunications services and IT applications to enhance the internal efficiency (information systems) and to improve the quality of postal services (value-added services)\. Signature of a program contract between the Government of Morocco and BAM, and the completion of the first phase of a study on BAM's restructuring, were measures for Board presentation\. (j) Extending the provision of financial services through the postal network The Government would undertake, in collaboration with BAM and SEPTI, a study to identify actions aimed at: a) ensuring the access to financial instruments for a broader range of consumers, without undue distortions of fair competition with the banking and financial system; b) allowing BAM to diversify its revenue sources in a context of postal sector liberalization; and c) increasing savings mobilization and improving the allocation of resources towards productive activities\. These three components reflected accurately the project objectives for the postal sector\. Both the objectives and the components, however, were too ambitious given the Government's limited project implementation capacity\. It would have been better to have put the main focus on modernizing and corporatizing the postal operator (see also Sections 4\.2(i) and 7\.1)\. The multisectoral nature of the IISDL had merits given the common institutional legacy and technological convergence of the telecommunications, IT, and postal sectors\. However, the project design would have been stronger had there been fewer components focused on key areas to ensure maximum impact (see also Section 7\.1)\. 3\.4 Revised Components: The original components were not revised\. 3\.5 Quality at Entry: For this ICR, Quality at Entry is considered to have been unsatisfactory\. Quality at entry was undermined by the one-tranche design adopted by the Bank's country management on short notice before Board presentation\. This decision was not consistent with the assessment of the operation's risks, as explained - 5 - below\. Before Board approval of the IISDL, the Bank's country management decided to restructure the operation from two tranches to one\. This decision was based on the base case assumptions of a new CAS being presented to the Board in May 2001, at the same time as the IISDL\. The proposed IISDL fell outside of the proposed core program and fiscal triggers in the base case of the CAS\. Support for the IISDL, which had been in preparation since FY99, was nonetheless deemed important in recognition of Morocco's excellent track record under the TPI-SAL\. In order to reconcile these conflicting positions, the Bank's country management reduced the IISDL loan amount and cut the number of tranches from two to one\. The project team disagreed with this choice, because it was concerned that the one-tranche structure would weaken the Bank's leverage on implementation of the Government's reform program\. This decision was considered by the team as non consistent with the assessment of the risks faced by the IISDL\. The team had identified the following risks: (i) possible delay in the introduction of competition in the telecommunications sector (fixed line voice services); (ii) weak institutional capacity to design and implement reforms, especially in the IT and postal sectors; (iii) challenges to the regulatory agency's autonomy and its capacity to perform efficiently; (iv) delays in the elaboration and adoption of a new legal and regulatory framework in the postal sector; and (v) insufficient coordination among ministries for the development of IT-based initiatives\. Bank country management felt these risks were sufficiently mitigated by (i) consistency of the IISDL with the 2001 CAS objectives; (ii) consistency of the objectives with Morocco's stated priorities for economic growth and poverty reduction, through job creation and increased access to communication that the ICT sector offers; (iii) Morocco's commitment to ongoing sector reforms following TPI-SAL's substantial achievements and underpinned by a strong policy dialogue with the Bank; and (iv) existence of a second tranche of the related ADB operation\. A QAG assessment carried out in June 2001 rated Quality at Entry as highly satisfactory, praising especially the Bank management decision to convert the loan from a double-tranche to a single-tranche adjustment operation\. In QAG's view this was important, because the decision made it possible for the Government with Bank support to complete the privatization of Maroc Telecom, which was seen as the main aspect of the reform program, before the operation was sent to the Board\. QAG placed this emphasis on the importance of the privatization because it saw the involvement of major international private sector companies in Morocco's telecommunications sector (Vivendi in Maroc Telecom; Spain's Telefónica and Portugal's TelecomGroupe in Méditel, the second GSM operator) as providing a strong attraction for other private sector players to become involved\. Nevertheless, QAG singled out competition policy as an area for improvement, due to the exclusivities in various segments given to Maroc Telecom and Méditel until 2003\. QAG encouraged the Bank and the Government to continue working to ensure that the telecommunications sector was effectively opened to competition according to the Government's timetable with all barriers removed, in order to extend access to all services to the Moroccan population\. Competition, however, actually slowed down considerably throughout the operation, and in retrospect it also appears that QAG underestimated the effect that the privatization of Maroc Telecom would have in limiting further private sector participation in the sector\. For all these reasons, and with the benefit of hindsight, the one-tranche structure can now be seen as a significant shortcoming of the operation (see also Section 7\.1 for further discussion)\. - 6 - 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Overall, the outcome of the operation is rated satisfactory\. The reasons for this rating are the following: a) private participation in the sector was increased, through the successful privatization of Maroc Telecom; b) the Government made some effort to increase competition in the telecommunications sector through the attempt to award a license for a Second National Operator (SNO), although it failed to elicit the interest of investors; c) with delay, some improvements in the regulatory framework took place; and d) with delay, substantial achievements were obtained in the postal sector (specifically with regard to BAM's performance) and in the IT sector\. The satisfactory rating is also justified by the fact that the Government has, in the long run if not entirely during the IISDL, maintained its commitment to increasing competition and private participation in the sector\. The Government relaunched the liberalization process in 2004, after the IISDL had closed, and a plan to award new licenses is currently being led by ANRT\. The Government has confirmed its intention to further divest its remaining ownership interest in Maroc Telecom\. However, the outcome of the project, although satisfactory, fell short of the commitments and expectations set during project preparation\. In particular, the Council of Ministers approved Law 55-01 amending Law 24-96 only on April 16, 2004\. This is nine months after the approval by the Council of Government on June 26, 2003, and long after the original timetable that had forecast presentation to Parliament in the year 2001\. Shortfalls are examined in Section 4\.2 below\. Following the ICR review meeting of December 2003, Bank senior management decided to communicate to the Government that the ICR would be finalized with an unsatisfactory rating for this section, if Law 55-01 amending Law 24-96 was not approved before the planned ICR submission date of December 31, 2003\. Management agreed to extend the ICR submission date to May 14, 2004 to allow time for the draft amendments to be approved by the Council of Ministers\. 4\.2 Outputs by components: (a) Privatization of Itissalat Al-Maghrib (Maroc Telecom) The outcome of this component is satisfactory\. The initial privatization of Maroc Telecom was successfully completed in February 2001\. A block of 35% of shares was sold for US$2\.33 billion to the Vivendi Universal Group through international competitive tender\. A shareholders agreement gave Vivendi considerable authority to manage the company\. No other country in the MENA region, except Jordan, was able in 1998-2003 to bring private investment into their incumbent operators\. The Bank's advice on the terms of Maroc Telecom's license was generally accepted\. The issue of possible inconsistency between the license and Morocco's WTO commitments on telecommunications was raised by the Bank but a definitive clarification was not reached\. Slippages in the privatization schedule and the time consumed by these interactions delayed Board presentation by six months\. Further divestiture of the state's ownership in Maroc Telecom was postponed\. An initial public offering in domestic and international markets, planned for 2002, was not carried out\. This was largely due to the sharp decline of international capital markets from 2000, but other factors also played a role: (i) the restructuring of Vivendi's global business, which cast uncertainty regarding Maroc Telecom's future - 7 - ownership and management; and (ii) the unsettled condition of the Moroccan telecommunications regulatory framework, including amendments underway to the telecommunications law, unresolved interconnection problems, uncertain timetable for further liberalization, and absence of a working universal service financing mechanism\. The Government's option to sell a further 16% of shares to Vivendi (which would give the latter ownership control) has likewise been delayed, for much the same reasons and also pending valuation of the company\. The transfer of stock to Maroc Telecom's employees, planned for 2001, remains pending subject to setting a price in terms of new market placements\. The Government remains committed to the divestiture of the state's remaining stake in Maroc Telecom\. An important objective is to resolve the conflict of interest between the Government's roles as regulator (ANRT's board of directors is chaired by the Prime Minister and comprised mainly of Government ministers) and as the main owner of the largest regulated company (Maroc Telecom)\. The 16% block can be sold once an agreement on the valuation of the company is finalized\. The Government is also considering selling about 7-10% of shares in domestic and international capital markets\. The process is expected to be completed in the second half of 2004 exchanges (see also the Borrower's Report in Annex 12)\. (b) Reinforcing competition in telecommunications infrastructure and services The outcome of this component is unsatisfactory\. This rating is motivated by the considerable delay incurred by all measures in this component, with respect to the original timetable\. Some concrete progress was achieved only after the closing date of the operation, and expecially in 2004\. All sector performance indicators that are related to the potential impact of competition in the telecommunications sector are worse than forecasted (see Annex 1, price of international calls and price of international leased lines)\. Whereas licensing of a second mobile operator in 1999 led to spectacular growth of these services (Figure 1), opening other segments of the telecommunications market -- a central component of the Government's sector development plans supported by IISDL -- by and large did not happen\. The schedule for issuing major new licenses in 2001 and 2002 (Annex 10), was not implemented\. Only small non-exclusive wireless licenses were successfully awarded in 2000-2002 (see the Borrower's Report in Annex 12 for further detail on these licenses)\. Following a market study by McKinsey and Co\. and an invitation for expressions of interest in the major licenses in March 2001, it was decided to issue only a single SNO license combining fixed local, long distance, and international voice and data services\. The invitation for bids was successively delayed until June 2002 in view of slow progress towards amending the telecommunications law and the long time taken by an administrative commission in charge of approving the license conditions ( cahiers des charges)\. Fifteen companies bought the bidding documents\. The closing date to receive bids was set for October 8, 2002 and extended to November 5 at the request of prospective bidders\. - 8 - Figure 1 Competition in mobile stimulated strong and sustained subscriber growth 9,000,000 8,000,000 7,000,000 6,000,000 Tender Process launch Commerical launch June 1998 January 2000 5,000,000 4,000,000 Subscribers 3,000,000 Threat of competition Effective competition 2,000,000 1,000,000 0 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Source: EMC, 2004 In the end, no bids were received for the SNO license\. There is broad consensus on the reasons for this failure: (i) narrow scope of the license (fixed service only); (ii) nonviable roll-out and coverage obligations and lack of access to alternative infrastructures; (iii) a new reference interconnection offer (RIO) from Maroc Telecom had not been finalized and the draft raised major concerns on key technical and pricing aspects; (iv) changes in the telecommunications law were still underway; and (v) implementing regulations on universal service were not in place\. These defects, largely of the Government's and ANRT's own making, were compounded by the general downturn of international capital markets\. These shortcomings are in great part acknowledged by the Government in its Borrower's Report (Annex 12)\. Moreover, effective competition failed to develop even in markets that were already nominally open without quantitative entry restrictions, especially data and Internet services\. From about 100 Internet service providers (ISPs) registered with ANRT in 2000, only three remain in business today\. Maroc Telecom, a latecomer to Internet services, extended its market dominance to this new segment, of which it now has over 70% of all accounts\. The number of ISPs per million inhabitants in Morocco, already lower than in other countries in the year 2000, was reduced even further in 2001 and the number of Internet users stagnated (Figures 2 and 3)\. Slow growth and lack of alternative suppliers is likely to be hurting information-intensive business users in all sectors of the economy, discouraging foreign investment, and inhibiting development of new information services with considerable employment generation potential\. - 9 - Figure 2 ISPs decrease in Morocco 3 2\.71 2\.5 2\.03 inhabitants 2 1\.83 1\.83 2000 1\.5 1\.41 1\.22 1\.27 2001 million 1 0\.88 0\.9 per 0\.69 0\.5 0\.250\.29 ISPs 0\.070\.03 0 Morocco Egypt Malaysia Turkey El Georgia Chile Salvador Source: ITU Intenet for a Mobile Generation 2002, Netcraft Figure 3 Morocco trailing in internet users 3,500 3,19 7 3,000 inhabitants 2,500 2,375 10,000 2,000 1,6 6 8 1,719 per 2000 1,500 2002 users 1,000 728 4 6 5 500 3 0 6 Internt 14 9 16 9 2 2 9 4 6 70 71 112 0 Georgia Morocco Egypt El Turkey Chile Malaysia Salvador Source: ITU WTID 2002, ITU Statistics w ebsite 2003 A major factor in slow data and Internet growth has been the lack of effective competition in the provision of the underlying infrastructure\. Maroc Telecom's published prices for international leased circuits remain far above the levels expected at appraisal and several times higher than those prevailing in Europe and in competitive developing country markets (see Annex 1)\. This results in Morocco having the highest Internet access prices (relative to income) in the Middle East\. The UNDP Arab Human Development Report indicates that Internet access prices in Morocco are now by far the highest in the Middle East relative to GDP per capita, and a serious bottleneck to the diffusion of the Internet in Morocco\. VSAT services by new operators are inherently too costly to put downward pressure on wholesale prices of leased circuits for public use\. Méditel's license limits use of its international gateways only to its own clients and also prevents it from leasing its infrastructure to other operators\. - 10 - Large spare domestic and international transmission capacities that could be made available by parastatal enterprises (especially ONE and ONCF, the electricity and railway companies, respectively) were not allowed to be used to provide public telecommunications services\. An amendment to Law 24-96 (Law 55-01) that opens the way for the use of such alternative infrastructures, expected to be approved by the Council of Government in September 2001 as an effectiveness measure of the Loan, was approved only in June 2003 and by the Council of Ministers in April 2004\. Likewise, lack of competition and unbundling of the local networks has limited flexibility in the provision of corporate data and Internet services and kept wholesale call charges high\. Competitors also point out alleged anticompetitive practices by Maroc Telecom, including price squeezing and predatory pricing\. In response to a complaint filed in 2002 by MarocConnect, the main independent ISP, ANRT required Maroc Telecom to offer independent ISPs transit and interconnection terms similar to the ones it applied to Menara, its own ISP branch, for the provision of dial-up Internet services\. Another ANRT ruling in 2003 on ADSL (a type of broadband customer access to ISPs using phone lines) again found for the complainants and ordered Maroc Telecom to decrease transit charges to competitors, offer volume discounts, or increase its own retail prices, ranging between 15% and 40%\. The problems underlying slow Internet development and lack of effective competition may, however, be more complex than suggested above\. Maroc Telecom points out that there are tradeoffs between sustaining infrastructure development and promoting competition\. The business model used to successfully launch mobile services, it argues, now undermines the fixed network without which Internet and other advanced communication and information services cannot reach the public at large\. A detailed analysis of telecommunications competition in Morocco goes beyond the limited scope of this ICR\. This analysis is currently being undertaken by ANRT in preparation for further liberalization\. To the Government's and ANRT's credit, a serious effort to relaunch the liberalization process has started in 2004, and should provide concrete options to increase competition in the sector by the end of the year\. In addition, the Government has examined carefully the reasons for the failure of the SNO\. In preparation for approval by the Parliament of the amendments to the telecommunications law, ANRT has prepared a package of new regulatory decrees that would implement those amendments and address several of the shortcomings of the existing regime\. This includes, for example, vesting in ANRT the authority to monitor and act against anti-competitive behavior, providing a framework for the development of alternative infrastructures, setting the basis for launching a universal service program, and establishing the rules for sharing rights of way and other physical infrastructure\. At the ANRT's request, the Bank reviewed and commented on this package in April 2004\. (c) Expanding access to services at reasonable prices for all segments of the population This component is rated unsatisfactory\. Little progress was been made during the IISDL towards setting up a financing mechanism to extend telecommunications services to places and users that are not commercially viable on their own\. A draft amendment to the telecommunications law (Law 55-01 amending Law 24-96), approved by the Council of Government in June 2003 (two years behind schedule) and by the Council of Ministers in April 2004, would enable the establishment under the Loi Organique des Finances of a special account into which the universal service contributions of the operators would be paid\. A draft decree with such regulations, which had been prepared by ANRT as a measure of Board presentation of the Loan and was to have been approved by the Council of Ministers by the end of 2001, was never processed\. In the meantime, the solution envisaged by the Government and the Bank for universal service has now been overtaken by events\. First, the impressive growth of mobile services has increased coverage of basic - 11 - voice communications in Morocco to about 96% of the population countrywide\. Network roll-out, which was the main focus of the original approach to universal service, is no longer the main issue\. Moreover, pre-paid mobile has reached many low-income users that could not obtain conventional fixed or mobile services because they are not creditworthy, cannot commit to a fixed monthly bill, and need close control of calling expenditure\. Prepaid call charges, however, remain very high and most of these users receive many more calls than they generate, so call initiation from low-income users remains an issue\. Second, access to the Internet, information services, and information technologies, rather than just voice communication, is increasingly recognized as necessary for economic development\. Even after existing barriers to entry and competition in these services are removed (see Section 4\.2(b) above), a gap is likely to remain between what operating companies are prepared to do on a commercial basis alone and what the Government may want from a broader development viewpoint\. The Government had planned to submit to Parliament by the first quarter of 2002 an amendment to the Law 24-96 that would have expanded the scope of universal service beyond telephony, but this has not materialized and is not part of the amendments currently being processed\. The Bank agreed to declare IISDL effective, even though this amendment to Law 24-96 was an effectiveness measure\. The Bank's rationale was that in absence of clear rules to govern universal service, a broadened definition risked opening the way to ad hoc political slush funds\. As part of the package on decrees to implement the new amendments to Law 24-96, ANRT has drafted a new decree that established the basis for launching a universal service program that reflects these changed circumstances\. Implementing regulations should follow\. (d) Reinforcing the telecommunications regulatory framework The outcome of this component is overall satisfactory, although progress has been much slower than expected\. An amendment to the telecommunications law that replaced ex-ante financial control of ANRT by ex-post control, was approved by Parliament before Board presentation of IISDL and was enacted on time in June 2001\. ANRT continued to build its professional competencies, internal and consultative processes, and a body of specific results\. Amendments to Law 24-96 that would permit ANRT to impose graduated sanctions and allow alternative telecommunications infrastructures, a measure of IISDL effectiveness, were approved by the Council of Government only in June 2003 and by the Council of Ministers in April 2004 and have yet to be passed by Parliament\. A ministerial decree adjusting spectrum fees to reflect the cost of spectrum management and regulation, expected to be in force by the third quarter of 2001, was approved by SEPTI and the Ministry of Finance and sent to the Secretary General of Government only in early 2003 and has not yet been cleared\. Information Society The objectives of the Information Society components (components e-g below) were achieved, and their outcomes are satisfactory\. Most of the progress, however, was concentrated in the last 12-18 months, after SEPTI was incorporated into the Ministry of Industry, Trade and Telecommunications\. (e) Developing an adequate legal and regulatory framework for information technology and promoting the development of electronic commerce The first measure supported by the operation was the drafting of a bill on electronic signature and certification\. The Government prepared a draft which incorporated good international practice, supported - 12 - by technical assistance provided under the operation\. While a final draft for the bill was prepared in August 2000, it is still with the Secretary General of Government and the draft is still to be submitted to the Council of Government\. (f) Developing inter-administration networks In the area of e-government, the objectives set in the operation (launch of a pilot project for Administration-on-line) were exceeded\. The pilot project (GIPE) was successfully launched\. In addition, the progress achieved in the area of e-government has been substantial\. The Government has created a steering committee, led by the Ministre des Affaires Générales du Gouvernment, and including the Minister for Industry, Commerce and Telecommunications, the Ministry of Communications, and the Minister for the Modernization of the State\. Several administrations developed e-government applications, including the Ministry of Justice (Projet e-Justice), the Ministry of Industry, Trade and Telecommunications, the Ministry of Finance (e-Finance, and applications in areas such as trade facilitation and personnel management for the State, among others), and the Ministry of Interior\. The Government of Morocco is also assessing the development of platforms to deliver these electronic services to the public, including the wilayas, the Centres Regionaux d'Investissement, the Chambers of Commerce, and BAM\. These institutions, and others, can play different roles in the delivery of electronic services to the public\. The development of adequate and integrated platforms for the delivery of e-government services is critical\. Given the scarce Internet penetration in Moroccan households, the citizenry will need public access points and specific trained personnel to have access to and benefit from e-government applications\. With regard to e-government applications in the justice sector, this operation was a complement and will benefit from the positive results achieved under another Bank operation, the Legal and Judicial Development Project, which supported several specific databases and applications (e\.g\., case management and registries of commerce)\. (g) Promotion of ICT-related application through public-private partnerships and integration of certain traditional sectors in world commerce Under the activities of the operation, there was also the effective launch of activities in the Casablanca cyberpark\. This took place in June 2001, and today about 130 start-ups as well as established companies are operating in the park, and about 700 jobs were created\. The Government is planning a second larger park in the area of Bouznika\. We do not have enough evidence to assess how this operation has been actually conducted, whether it had the desired impact on support to the local IT industry, and whether the establishment of the cyberpark is the most cost-effective option for the Govenment in the area of support to the local IT industry\. Another measure to be achieved during the operation was the signature of agreements to foster use by cooperatives of electronic commerce\. A planned measure set at the time of Board presentation was to have 15 cooperatives starting to use e-commerce\. As of June 2001, this objective was achieved\. In addition, two thematic portals have been developed and are fully operational\. Postal sector The postal sector component is ranked satisfactory overall due mainly to the outstanding improvements achieved by the historical postal operator, Barid Al-Maghrib (BAM)\. The outstanding performance of BAM is also reflected in the relevant postal indicators (see annex 1)\. The Government's success in - 13 - reforming the postal sector was limited during most of the operation, but momentum was regained toward its end\. (h) Designing a national strategy for the modernization of the postal sector The Government did not design a sector strategy and did not implement any significant change in the organization of the postal sector during the operation\. Lack of political commitment was at the basis of this insufficient progress\. Technical assistance consultancies were provided to the Government to assist in the formulation of universal service obligations (Andersen report 2001, Kok report 2001, De Donder report 2002) to be followed by a liberalization strategy\. The Government felt the need to run an additional study to be completed by mid-June 2004\. This study will take into account the newly available cost accounting information provided by BAM\. It is considered by the Government to finalize the draft postal law currently in preparation\. The draft postal law currently in preparation is expected to be finalized by the Government by end-2004\. (i) Modernizing the postal operator (BAM) This has been a notable success\. BAM carried out a restructuring and implemented a new corporate strategy and a new investment plan that translated into significant financial improvements (profit has increased at an average annual rate of 14% over this period)\. There were two main dimensions to the restructuring: a large retrenchment program fully supported by BAM (a staff reduction of 1,000 in 2002 and of a few hundred in 2003, i\.e\., about 10% of total staff, for a total cost reduction of approximately MAD 280 million); and a decentralization of operations, through the transfer of responsibilities to the regional level\. The new corporate strategy, based on an ambitious investment plan (fully financed by BAM, with an investment envelope that reached MAD 220 million for 2003), is focusing on the development of a customer-oriented action plan and of a number of new products and services aimed at better meeting customer demand, such as hybrid mail, deployment of ATMs, a geographic information system, an address database, etc\. Postal access has improved through additional points of contact (see Annex 1, impact indicator on access to postal services), but quality of service improvement has not met the objective of 80% of mail delivered on day 2 after mailing (65%, see Annex 1)\. In addition to modernization, the company's relationship with its shareholder has benefitted from the preparation and implementation of a performance contract for 2002-2004, which was a measure for Board presentation\. Two years into the performance contract, BAM has met almost all the objectives while the Government met its objectives only partially\. (j) Extending the provision of financial services through the postal network This activity did not start during the course of the operation\. Although terms of reference were drafted early in preparation for the operation (2000), the study started only in November 2003\. Two reasons explain this delay: it was difficult to firm up the necessary funding (eventually the study was funded by FADES); and the Ministry of Finance seemed to find the timing of this study inadequate\. In spite of the delay, BAM achieved good performance over the period of the operation (amounts deposited in savings accounts increased at an annual rate of 10% over the period)\. - 14 - 4\.3 Net Present Value/Economic rate of return: NA\. 4\.4 Financial rate of return: NA\. 4\.5 Institutional development impact: The institutional development impact was positive but below the expectations originally set during preparation\. As indicated in 4\.1 above, an amendment to the telecommunications law replacing ex-ante financial control of ANRT by ex-post control, was enacted on schedule in June 2001 (Law No\. 79-99 of 22 June 2001, amending law No\. 24-96 of 7 August 1997)\. The amendment abrogated the application to ANRT of standard public sector financial controls and replaced them by semi-annual assessment by a commission of experts and a comptroller designated by the Ministry of Finance\. ANRT is also subject to annual external accounting audits\. These changes gave ANRT greater flexibility to respond to the rapidly changing demands of the telecommunications sector without diluting accountability to the Government\. The operation also supported the adjustment of spectrum fees to the cost of spectrum management and regulation, which strengthened ANRT's ability to make effective use of its financial resources\. The operation succeeded in supporting the drafting of amendments to the telecommunications law that would give ANRT the power to impose sanctions, thus strengthening its capability to act as an autonomous arbiter of the sector\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: The international capital markets, for telecommunications as much as for investment in developing countries generally, declined abruptly around 2000\. Major telecommunications operating companies, which earlier had been eager to expand into Morocco and other developing countries, started retrenching towards their home markets\. New licenses that in the 1990s would have attracted interest became difficult to sell, and the appetite for investing in existing companies decreased\. Moreover, the better business opportunities had already been taken up in earlier years, and new ones were intrinsically less attractive\. Expectations based on past success misled governments, including the Government of Morocco, to demand high prices or impose excessive obligations on operations\. This turn of events in international markets was compounded in the case of Morocco by structural changes within the Vivendi Group, which moved to the brink of bankruptcy\. Uncertainty regarding whether Vivendi would sell its stake in Maroc Telecom or instead keep it and increase its participation cast doubts among investors on the future ownership and management of the company\. 5\.2 Factors generally subject to government control: The Government postponed its plans to further divest its ownership interest in Maroc Telecom\. An initial public offering in Casablanca and foreign markets, which had been planned for 2002, is now being considered for 2004\. The Government's option to sell 16% of shares to Vivendi is still outstanding, pending agreement on the sale price which will be negotiated on the basis of company valuations currently being - 15 - prepared by financial advisers to both parties\. Sale of shares to Maroc Telecom employees has likewise been deferred, partly reflecting little interest from the employees themselves, who at the time of privatization mostly opted for cash bonuses rather than shares, and partly because lack of market signals on share prices (see also Section 4\.2(a))\. Shortcomings in the design of the SNO license is regarded by most observers as a key factor that resulted in lack of investor interest in this license (see Section 4\.2(b))\. It is unclear why ANRT, which had so successfully prepared and carried out the award of the second mobile license in 1998, failed to produce an attractive design for the second fixed license\. As ANRT became more burdened with increasingly difficult and contentious regulatory issues, the Government increasingly intervened in its decisions, and tensions arose between the Government's regulatory and ownership interests, one may speculate that the balance of forces shifted away somewhat from economic and technical design towards political considerations and compromises\. The Government's policy on the development of postal financial services was not completed due to the delay in launching the feasibility study (see Section 4\.2(j))\. Resources to fund this study were allocated at a very late stage of the operation, for which the Ministry of Finance is partially responsible\. 5\.3 Factors generally subject to implementing agency control: Although ANRT drafted the licenses for Maroc Telecom and the SNO, they were finalized by the Government\. The elaboration of an action plan to issue multiple licenses and meet liberalization objectives were under ANRT's responsibility, even though the decision to combine several licenses into a single SNO license was taken by the Government\. ANRT, within the limits of its regulatory attributions and powers, had some control over and responsibility for the oversight of the competition conditions in the Internet market\. In the postal sector, delays in initiating the drafting of the postal law can mostly be attributed to a lack of internal resources within SEPTI, whose staff was insufficiently aware of postal reform issues\. 5\.4 Costs and financing: NA\. 6\. Sustainability 6\.1 Rationale for sustainability rating: Sustainability of sector reform in telecommunications is overall likely\. A distinction needs to be made, however, between sustainability of achieved results and sustainability of expected results\. As concerns the achievements of the operation, they are likely to be sustainable\. In particular, privatization of Maroc Telecom is not likely to be reversed\. The transformation of BAM into an efficient and technologically advanced corporation is secure in the short term (BAM is financially solid, and it is unlikely that its performance will be threatened by liberalization, which is expected to gradually emerge)\. In the IT sector the recent e-government developments have good potential, are politically non-controversial, and will likely enjoy the support of the beneficiaries (Moroccan citizens and enterprises)\. The outlook for achieving and sustaining other results expected at the time of Board presentation but that - 16 - have not materialized is still uncertain\. In particular: a) Government may be discouraged from issuing new licenses by the lower prices these licenses will command, compared with the second mobile license and the sale of Maroc Telecom; b) developing more effective competition in the data and Internet markets, where Maroc Telecom now dominates, will require sustained political commitment to reform and to ANRT; and c) the conflict between the Government's interest as head of the regulatory authority and owner of the dominant regulated company continues to limit the extent to which anticompetitive behavior can be contained\. Amid these constraints on further progress of sector reform, there are positive signs\. For example, notwithstanding the absence of a prospect for large windfall revenues from the sale of licenses, the Government has publicly restated its commitment to building up competition\. This commitment is confirmed in the Borrower's Report to this ICR (Annex 12) and by the current effort of ANRT to relaunch the process to award new licenses\. In addition, new draft regulations have been prepared on competition and access to essential infrastructure\. Finally, the Board of ANRT has decided to change the composition of the Comité de Gestion (Board of Directors) of ANRT\. 6\.2 Transition arrangement to regular operations: NA\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Although there are some positive features, the Bank's performance during project preparation was overall unsatisfactory\. There are three main reasons for this assessment: l One-tranche design of the operation\. The Bank's MENA management required, only a few months before Board approval that the IISDL, designed in two tranches, be restructured as a one-tranche operation\. Management's decision was endorsed and praised by QAG\. This decision weakened the Bank's leverage on the reform program, specifically on the key components of the operation now rated unsatisfactory, and heavily affected implementation (see also Section 3\.5)\. For example, the request for expressions of interest for the award of multiple network licenses was a Board presentation measure and a second tranche measure would have explicitly detailed the license terms\. This decision to collapse from two to one the number of tranches was also combined with a decision by Management to keep a FY01 Board presentation date (May 31)\. The effectiveness measure was the only tool available to continue the dialogue after Board approval, but it was a narrow avenue to support broader sector reform\. l High costs and insufficient focus in design of the operation\. Total preparation cost reached US$823,000, of which US$668,000 financed from the Bank's budget, US$19,000 from PHRD, and US$36,000 from other sources\. This is three times the preparation cost for TPI-SAL, the previous successful telecommunications adjustment operation in Morocco (total US$266,000, of which US$166,000 from Bank budget and US$100,000 from other sources)\. In terms of the Bank's budget, IISDL was four times more expensive than TPI-SAL and about one and a half times as expensive as the MNA regional average of US$416,000 for adjustment operations between FY99-03\. A contributing factor was excessive spending on the postal financial services component (approximately US$47,000) at a time when the Government was not ready to tackle such controversial reform, and conflicting - 17 - interests put this component at odds with the rest of the operation while diverting time and resources from more important components\. The multisectoral design of the operation, encompassing post, telecommunications, and information technologies certainly had merits, due to the interdependence of these three sectors\. However, the design should have focused on fewer measures with a stronger impact\. l Inappropriate preparation timing\. The team started preparing IISDL in March 1999, when the previous adjustment operation (TPI-SAL) was still ongoing\. Preparation of IISDL started, respectively, ten months and twenty-two months before the expected and actual date of disbursement of the second tranche of TPI-SAL\. This had three adverse consequences: a) it increased preparation costs and time; b) the team was rushed into identifying measures to fit into the design of the operation, without allowing time for the Government, the Bank, and major stakeholders to develop a solid reform path in the course of the TPI-SAL underway; and c) the two tranches were reduced to one tranche on short notice late during project preparation, which did not match the objectives and risks of the reforms being supported\. These three major faults in project design could not be fully compensated by other positive features of project preparation, namely: l Close working relationship with African Development Bank\. ADB maintained the structure of their operation in two tranches, which gave the World Bank team some opportunity to jointly supervise the overall program and have some minimal leverage through their second tranche\. The two teams worked well together, and supported each other in the various phases of the program, continuing a relationship successfully started under TPI-SAL\. l Intense sector dialogue\. The team provided high-level comments on the license and tender documents for the privatization of Maroc Telecom\. These comments were taken into account by the Government and helped improve the license text\. The team also engaged in a dialogue, then successfully continued during supervision, on all major aspects of sector reform, including competition, regulatory reform, rural access, and postal and IT strategy\. As a result of the ongoing sector dialogue, the Bank is trusted by our Moroccan counterparts as a serious and credible interlocutor; l Provision of high quality technical assistance\. Grant technical assistance was provided in the areas of e-commerce regulation, e-government, and postal sector reform\. A specialized European law firm assisted SEPTI in drafting the law on digital signature, which incorporates good international practice\. In the area of e-government, technical assistance was provided at the design stage\. In the postal sector reform area, technical assistance was provided to the Government to prepare a postal sector policy\. 7\.2 Supervision: Overall project supervision performance was satisfactory\. The supervision team placed an effort in keeping the policy dialogue open through the provision of comments on the amendments to Law 24-96 and through intense discussions on competition and regulatory reform\. Use of budget resources by the supervision team was appropriate\. The comments of the Bank team to an earlier version of the amendments to Law 24-96 contributed, together with other factors (internal political pressure), to a substantial improvement of the draft, in which the amendments that would have seriously compromised ANRT's autonomy were eliminated\. - 18 - 7\.3 Overall Bank performance: Overall Bank performance was satisfactory, due to : a) numerous efforts of the project team during preparation and supervision to maintain a robust policy dialogue, notwithstanding constraining management decisions and a deteriorating institutional environment in Morocco; and b) high-level expert advice and technical assistance provided throughout preparation and supervision of the project\. Borrower 7\.4 Preparation: The Borrower's performance during preparation is rated as satisfactory overall\. The operation was tied to the broad strategic reform objectives of the Government\. The Government demonstrated commitment and credibility in privatizing Maroc Telecom, which elicited investor interest\. During the privatization of Maroc Telecom, however, some initial signs of deterioration of the institutional environment occurred\. On some occasions, the Government tried to stifle ANRT's autonomy\. For example, ANRT originally drafted the cahier des charges of Maroc Telecom along three different licenses, for fixed services, mobile, and Internet\. ANRT was correctly convinced that this structural separation would have reduced the risk of anticompetitive behavior, and would have allowed better monitoring by ANRT of Maroc Telecom's activities in the different market segments\. However, the Government overruled ANRT's decision on the three licenses\. 7\.5 Government implementation performance: Overall Borrower's performance during implementation is rated satisfactory, even though it presented some shortcomings\. The basis for the rating is the following: a) after a slow start, the implementation of the reform process in postal and IT services was satisfactory, under the leadership of the Ministry of Industry, Trade and Telecommunications; and b) credit needs to be given to the Government for having identified the institutional conflict between SEPTI and ANRT as an obstacle to implementation\. The Government's decision to incorporate SEPTI into the Ministry of Industry, Commerce and Telecommunications helped substantially to accelerate sector reform in these areas\. The following shortcomings reduced Government implementation performance: a) attempts to stifle ANRT's autonomy, as shown by the draft law approved by the Council of Government and submitted to the Bank in a letter from the Government dated December 14, 2001 (the draft was later revised due largely to specific Bank inputs); b) institutional conflict, as shown, for example, by serious differences between ANRT and the Government on the text of Maroc Telecom's license and the text for the SNO; c) poor design of the SNO license (see Section 4\.2(b)); and d) substantial delay in enacting changes to the telecommunications law (see section 4(d) above)\. 7\.6 Implementing Agency: ANRT's performance was overall satisfactory\. For example, ANRT initially proposed to the Government draft licenses for Maroc Telecom and the SNO that would guarantee fair competition conditions in the telecommunications market and attract investor interest\. However, ANRT's effectiveness has declined in recent years\. After an impressive start that contributed in a decisive manner to the successful award of the second mobile license, ANRT found increasing difficulty in carrying out its functions\. The effectiveness of ANRT increased again in 2003-2004, due a renewed impetus in promoting liberalization, and to a - 19 - proactive role in tackling key sector shortcomings, such as fair competition, access to essential infrastructure, and universal service\. SEPTI's performance in the postal sector was unsatisfactory, as sector reform at a policy level did not advance\. The delay in preparing the new sector law was mainly due to a lack of resources made available to SEPTI's postal team as their work was probably viewed as a secondary priority after telecommunications reform\. BAM's performance in modernizing the company was highly satisfactory (see Section 4\.2(i))\. SEPTI's performance in information technologies was satisfactory, as concrete progress occurred especially after SEPTI was incorporated into the Ministry of Industry, Commerce and Telecommunications\. For example, SEPTI's staff had prepared a very satisfactory draft e-commerce law, incorporating good international practise, as early as 2000\. It was the Government's political decision not to advance this draft until recently, after SEPTI was brought into the sector ministry\. 7\.7 Overall Borrower performance: Overall Borrower performance was satisfactory, due to the broadly positive performance of the implementing agencies\. Overall, ANRT's performance was broadly positive and SEPTTI's performance in IT improved during the life of the project\. BAM's efforts in modernizing the company were highly satisfactory\. The Government's commitment to advancing sector reform, however, showed limited results, especially in the competition and regulatory reform areas\. The recent institutional change, which incorporated SEPTI under the Ministry of Industry, Trade and Telecommunications substantially improved Borrower's performance\. 8\. Lessons Learned Adjustment lending in itself, with its focus on policy dialogue and reform, is an appropriate tool to engage a government in telecommunications sector reform, when the project supports a champion or proponent of reform within the government\. But support needs to be broadened in order for reforms to be sustainable\. This is the experience of the previous adjustment operation (TPI-SAL), and of the privatization component of IISDL\. The renewed interest in the IT component is also related to the interest and commitment of the new Minister of Industry, Trade and Telecommunications\. For two years, IISDL implementation had no clear champion of reform, and delays occurred\. While the identification of a clear leader is a legitimate tool to jumpstart reform, it may need to be complemented by broader stakeholder participation and buy-in to be sustainable\. The experience of IISDL also indicates that the effectiveness of adjustment operations can be increased if technical assistance is available to assist in the design and implementation of the reforms\. The risk that personal conflicts may affect the course of reform should be mitigated through solid institution building and transparent processes\. During the implementation of IISDL, personal relationships, more than the institutional setting, played a crucial role in fostering and then stopping reform (this is also consistent with existing studies on telecommunications reform in Morocco\. See Wilhelm and Mueller, 2003, and Tosi Hibon, Critique Internationale, January 2002)\. In addition, the experience of IISDL and TPI-SAL indicate that reforms related to transactions with a large "price tag" are more likely to activate the necessary political interests and incentives for change to take place\. This experience indicates some lessons for future assistance in fostering regulatory reform in telecommunications: (i) under IISDL an even higher - 20 - emphasis should have been put on transparent decision making processes, requiring the involvement of the private sector and of the beneficiaries of reform in project design; (ii) because the risk of personal and institutional conflict is a serious challenge to the sustainability of reform, sector dialogue should be focused on eliminating the roots of the conflict of interest for the Government, and minimizing the occasions for personal conflict to arise\. The establishment of ANRT as an autonomous entity could have been accompanied by the merger of the sector ministry in a larger Ministry\. The Bank could have placed a stronger emphasis on separating the dual interest of the Government as owner of Maroc Telecom, and members of the Board of ANRT (some ministers still sit on both boards) before supporting the privatization transaction\. When supporting privatization of a state-owned enterprise in a non-competitive sector, consideration should be given to accompanying measures that may be required to monitor and mitigate the risks of consolidation and abuse of dominant position\. Privatization always has the risk of reinforcing the dominant position of the incumbent operator in the sector\. In this sense, the Bank supported sector reform through the previous TPI-SAL which focused on the establishment of competition in the cellular market before privatization of the incumbent\. Privatization should be accompanied, or preceded, by credible measures aimed at strengthening competition\. In IISDL, the award of new licenses (under the old second tranche of the operation) was meant to provide this safeguard (see Annex 11)\. When moving to a single tranche operation, other measures could have been considered that could have limited the anticompetitive developments that took place in the Internet and data markets\. These could have included: (i) measures that allowed for the monitoring and sanctioning of predatory pricing and cross-subsidies; (ii) detailed provision of enforcement instruments to allow the regulator to sanction anticompetitive behavior; and (iii) introduction of full competition in international voice and data communications in conjunction with the privatization transaction\. In the postal sector as in many infrastructure sectors, governments and incumbent operators tend to overstate the importance of universal service costs\. The Bank should have been more firm in suggesting gradual liberalization, while carrying studies to assess the cost of universal service\. With limited resources for building up postal expertise within the administration, policy makers are slow to initiate reforms on the grounds that they lack market structure and cost information\. Incumbents should not be the sole source of information and policy dialogue\. 9\. Partner Comments (a) Borrower/implementing agency: In the postal sector, SEPTI has: a) supported and encouraged BAM to increase its operational, managerial and technical performance; b) undertaken a study on the cost of postal universal service, and c) prepared a draft postal law\. SEPTI is also part of the steering committee for the study of the Ministry of Finance and Privatization on postal financial services\. In the area of telecommunications, the Government has awarded to private investors a second GSM license, three VSAT licenses, seven GMPCS licenses and two 3RP licenses (radio trunking)\. It made an effort to award a Second National Operator license, but it was not able to attract investor interest\. The following actions were also undertaken: a) improvements in the regulatory framework; b) a new technical and tariff interconnection offer to Maroc Telecom's fixed network; c) a strategic study on sector liberalization; d) successful opening of the capital of Maroc Telecom; and d) development of GSM and Internet platforms\. In addition, Morocco is about to finalize a Free Trade Agreement with the USA with the aims of: a) - 21 - harmonizing national regulation with international trends; b) increasing competition in the sector; c) attracting investment; d) enhancing competitiveness of domestic firms; and e) strengthening the role of Morocco as a regional platform in telecommunications\. In the area of IT, considerable progress was achieved in the following areas: a) the Technopark (the Technopark has attracted over 130 ICT companies, operates close to full capacity, and has developed new services and international events to support Moroccan ICT firms); b) the Bouznika Technopole (finalization of the feasibility study, negotiation with private groups for the management of the Technopole, etc\.); c) e-commerce (implementation of an e-commerce platform through open and competitive bidding; market studies; draft laws on electronic signature, data messages, and privacy); d) e-government (studies to establish an ICT observatory; studies and other activities to implement a national portal and municipal portals; implementation of a management system for pilot administrative procedures; an Intranet system for the Government; and a pilot interconnection platform for e-government); e) establishment of digital public access points; f) digital content development; and g) development of the Marwan network\. (b) Cofinanciers: The African Development Bank has transmitted the following comments: The IISDL program did not achieve the same success as the previous TPI-SAL operation\. This operation, for which the second AfDB tranche has not been disbursed less than one month from project closing, has been hindered by the following factors: 1) The great success of the previous operation and a favorable international environment did not allow the parties to have enough perspective to address all the problems related to sector reform in the country, and also did not allow them to have a broader idea on the evolution of the international market in telecommunications\. The launch of the IISDL operation well before the conclusion of the previous adjustment program reflects the considerable optimism of all parties at the time of project preparation; 2) The government has slowed down in the implementation of the agreed reforms\. The success of the previous operation generated considerable international and national interest in the three subsectors, resulting in different views on how the reforms should be carried out, especially in the context of an unfavorable international environment\. The delay in the implementation of regulatory texts and the content of the bidding documents for the second fixed license reflect this situation\. 3) The short timeframe for the implementation of the program did not allow the necessary time for continuing the necessary policy dialogue\. A longer timeframe would have perhaps made possible the implementation of the second tranche measures of the ADB operation\. (c) Other partners (NGOs/private sector): NA\. 10\. Additional Information - 22 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Percentage of the population with access to a 96% (2003) 96% (2003) phone (fixed, cellular, payphones) Number of lines outside 2 main cities 1,010,000 (2003) 617,135 (2002) E-commerce development : revenue of 50 (2003) E-commerce is still at a very early stage in domestically generated and processed Morocco\. Esrimates based on Royal Air e-commerce transactions (US$ millions) Maroc and Maroc Telecommerce turnovers indicate that the volume of e-commerce transactions is still below US$1 million\. Access to Postal services : Number of postal counters per 10,000 inhabitants : - in urban areas 1\.00 (2003) 1\.13 (2003) /2 - in rural areas 0\.92 (2003) 1\.03 (2003) /2 Percentage of the employees of the public 10% (2003) 0%, as the inter-administration networks are administration connected to still being established on a pilot basis\. inter-administration networks 1End of project\. Note that the figures in the second column are forecasts from the President's Report\. 2These estimates were provided after those listed in the final PSR\. Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate Internet Users : number of dial up and 1,000,000 (2003) 800,000 (2003) dedicated line customers Price of International calls : price of 3 minute$0\.28 (2003) $1\.05 (2003) phone call to Paris Plein Tariffs Price in US$ of international leased lines (2 $2,000 (2003) $25,000 (2003) Mbps month) to London Fault rate : number of faults per 100 lines per 12 (2003) 19\.5 (2002) year Usage of Postal services : yearly increase in 2% (2003) 1\.53% (2002) traffic volume of letter mail per inhabitant Usage of Postal Services : yearly increase in 20% (2003) 16\.5% (2002) traffic volume of national express Postal financial services : yearly increase in 10% (2003) 11\.0% (2003) total deposits Letter mail : percent delivered on day 2 (from 80% (2003) 65\.0% (2003) end to end) Postal productivity : annual increase in value 3\.41% (2003) 24\.0% (2003) added per employee Postal sector investment : volume of net 210,250 (2003) 218,000 (2003) investments (in thousands of DH) 1End of project The figures in the second column are forecasts from the President's Report\. - 23 - Annex 2\. Project Costs and Financing Not applicable as this was an adjustment operation\. - 24 - Annex 3\. Economic Costs and Benefits Not applicable as this was an adjustment operation\. - 25 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 03/20/1999 5 1 Sector Manager, 1 Task Team Leader, 1 Regulatory Economist, 1 Postal Consultant, 1 Economist 07/25/1999 10 1 Sector Manager, 1 Task Team Leader, 1 Lead PSD Specialist, 1 Telecommunications Advisor, 1 Telecommunications Specialist, 1 Postal Financial Expert, 1 Regulatory Economist, 2 Postal Spcialists, 1 Program Assistant 09/25/1999 2 1 Telecommunications Advisor, 1 Regulatory Economist 11/22/1999 7 1 Task Team Leader, , 1 Lead PSD Specialist, 1 Telecommunications Advisor, 1 Regulatory Economist, 1 Postal Policy Specialist, 1 Postal Financial Expert, 1 Financial Sector Specialist 03/10/2000 7 1 Sector Manager, 1 Lead PSD Specialist, 1 Task Team Leader, 1 Telecommunications Advisor, 1 Regulatory Economist, 1 Postal Policy Specialist, 1 Postal Financial Expert Appraisal/Negotiation 05/24/2000 4 1 Task Team Leader, 1 Lead PSD Specialist, 1 Telecommunications Advisor, 1 Regulatory Economist 01/19/2001 2 1 Sector Manager, 1 Lead PSD Specialist 03/30/2001 5 1 Lead PSD Specialist, 1 Regulatory Economist, 1 Postal Policy Specialist, 1 Postal - 26 - Consultant, 1 E-government Consultant Supervision 05/10/2002 3 1 Task Team Leader, 1 Postal U S Policy Specialist, 1 Telecommunications Specialist 08/10/2002 2 1 Sector Manager, 1 Task Team S S Leader 12/16/2002 1 1 Sector Manager S S 06/28/2003 3 1 Task Team Leader, 1 S S Telecommunications Specialist, 1 Postal Policy Specialist ICR 10/27/2003 4 1 Task Team Leader, 1 S S Telecommunications Specialist, 1 Postal Policy Specialist, 1 Program Assistant (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 151 718 Appraisal/Negotiation Supervision 9 149 ICR 12 68 Total 172 935 The SAP system combines the data for Appraisal/Negotation with Identification/Preparation\. An additional amount of $226,000 in trust funds was utilized prior to project supervision\. - 27 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 28 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 29 - Annex 7\. List of Supporting Documents 1\. Draft cahier des charges for IAM (Maroc Telecom), 2000 2\. Report and Recommendation of the President, April 16, 2001 3\. Country Assistance Strategy, May 7, 2001 4\. Quality at Entry Assessment, June 2001 5\. Implementation Completion Report for Telecommunications, Post and Information Technology Sector Adjustment Loan, June 21, 2001 6\. Project Aide Memoires 7\. Project Supervision Reports (PSRs) 8\. Back to Office Reports 9\. Loan Agreement, April 12, 2002 10\. Law No\. 79-99 of 22 June 2001, amending Law No\. 24-96 of 7 August 1997\. 11\. Law No\. 55-01 (draft) as adopted by Conseil des Ministres on 16 April 2004, amending and completing Law No\. 24-96 of 7 August 1997\. 12\. ANRT, Analyse de l'Offre ADSL d'IAM, Synthese de l'Etude, undated 13\. ANRT, Rapport d'Activité 2002 14\. Kok report - "Étude du secteur postal" - April 2001 15\. Debbarh and Scher report - "Situation et perspective d'évolution des services financiers postaux au Maroc" - July 2001 16\. Andersen Legal report - "Travaux d'études portant sur la stratégie sectorielle de la poste au Maroc" - August 2001 17\. De Donder report - "Étude sur le coût du service universel au Maroc" - June 2002 18\. Contrat-Programme 2002-2004 entre Barid Al Maghrib et l'État 19\. Réalisation du Contrat-Programme pour 2002\. 20\. Beatrice Hibou and Mohamed Tozy, "La Liberalisation des telecoms au Maroc", in Critique Internationale--Presses de Science Po, No\. 14, January 2002\. 21\. Vera Wilhelm and Suzanne Mueller, The Ingredients of Capacity Enhancement\. Three Case Studies in Telecommunications\. WBI Working Paper 22\. Arab Human Development Report 2003\. Building a Knowledge Society, New York, 2003\. - 30 - Additional Annex 8\. Sector Performance Telecommunications Telecommunications revenues as a percentage of GDP, which were stagnant at 1\.90%-2\.08% between 1995 and 1998, increased substantially between 1999 and 2002\. From 2000 onwards, revenues more than doubled to reach 4\.29% in 2002\. This growth was mainly due to the introduction of competition in the cellular market\. Mobile penetration, following the introduction of competition, increased dramatically, from 0\.4% in 1998 to 21\.97% in 2003, an incredible 50-fold increase in just four years\. Part of this substantial mobile growth took place at the expense of fixed line penetration\. The number of fixed lines, from a peak of 1,472,000 lines in 2000, decreased to 1,127,000 in 2002\. As a result, fixed line penetration was reduced from 5\.21% in 2000, to 3\.8% in 2003\. The ratio of mobile to fixed customers went from 0\.25 in 2000 to an estimated 5\.77 in May 2003\. The increase in mobile penetration drove telecommunications access upwards throughout Morocco\. From a total of 1,835,000 customers (fixed and mobile), in 2000, the overall number of customers increased to over 7,637,000 by May 2003\. As a result, the waiting list, which was still 0\.95% of total connected customers in 1999 at the time competition in mobile was introduced, was eliminated shortly afterward\. A certain degree of tariff rebalancing occurred from 1999\. Prices of international calls were reduced from 5\.6Dh/min\., to 3\.5 Dh/min\., for a call to Paris\. Local rates were slightly increased in 2002, from 0\.8Dh/min\. to 0\.83 Dh/min\. Subscription rates were also increased from 60Dh/months to 70Dh/ month in 2002\. The fault rate decreased from 32 faults per 100 lines per year to 19\.5 faults per 100 lines per year in 2002\. Table 1 Morocco Basic Telecommunications Indicators 1995 1996 1997 1998 1999 2000 2001 2002 2003 (est\.) Telecom revenues as a % of GDP 1\.90% 1\.90% 1\.92% 2\.08% 2\.47% 3\.71% 3\.96% 4\.29% Main lines in operation 1,128,014 1,208,034 1,300,495 1,392,922 1,471,459 1,472,000 1,140,000 1,127,000 1,127,441 Fixed lines per 100 inhabitants 4\.3% 4\.5% 4\.8% 5\.0% 5\.2% 5\.1% 3\.9% 3\.8% 3\.8% Mobile subscribers per 100 inhabitants 0\.1% 0\.2% 0\.3% 0\.4% 1\.3% 9\.9% 16\.7% 20\.9% 22\.0% Total density (fixed + wireless customers) 1,157,525 1,250,976 1,374,967 1,503,922 1,835,459 4,324,139 5,996,562 7,325,470 7,637,417 Mobile/fixed penetration 3\.0% 4\.0% 6\.0% 8\.0% 25\.0% 194\.0% 426\.0% 550\.0% 577\.0% Waiting list as a % of connected subscribers 8\.2% 4\.0% 2\.2% 1\.3% 1\.0% Cost of a local call (in DH/HT)/min 0\.8 0\.8 0\.8 0\.83 0\.83 Cost of an international call to France (in DH/HT)/min (fixed to fixed) 5\.6 4\.8 4 3\.5 3\.5 Monthly subscription charge, residential (DH/HT/month) 60 65 70 70 70 70 % of digital lines 95 98\.3 99\.3 99\.5 100 100 100 100 100 Faults per 100 lines per year 32% 25% 21% 20% Source: ITU\. Data provided by Rih Nada, Agence Nationale de Réglementation des Télécommunications\. The results of the introduction of competition in mobile communications allowed Morocco to assume a leadership position in the region\. Mobile penetration in Morocco in 2002 was three to four times higher thant mobile penetration in Tunisia and Egypt\. The gap in mobile penetration with other well-performing emerging markets, such as Turkey, Chile and Malaysia, was effectively reduced\. On the other hand, the lack of competition in fixed line penetration, as well as mobile substitution, eroded the performance of Morocco in telephone mainline penetration\. Morocco's mainline penetration was 3\.8% in 2002, which compares negatively with penetration in Tunisia (11\.7%), and Egypt (11\.3%)\. - 31 - This lack of progress is also apparent when looking at Internet host penetration\. In 2002, the number of Internet hosts was only 0\.9 per 10,000 people\. The low numbers of two regional benchmarks (Tunisia and Egypt) should not divert the attention from the serious gap that Morocco (and the rest of the MENA region) has in terms of Internet penetration\.The number of hosts per capita is about 50 times higher in Malaysia than in Morocco\. Turkey has also about 25 times more hosts than Morocco\. High leased line prices (Table 4) are a likely factor behind this limited development, which has a potential adverse impact on Morocco's overall competitiveness\. Table 2 Telephone Telephone Mobile Internet mainlines mainlines phones hosts (per (per 100 per (per 100 10,000 2002 people) employee* people) people) Morocco 3\.8 74 20\.9 0\.5 Chile 23\.0 184 42\.8 86\.8 Egypt 11\.3 122 6\.9 3\.1 El Salvador 24\.1 155 13\.8 0\.4 Georgia 23\.4 72 10\.2 5\.0 Malaysia 19\.0 219 37\.7 35\.5 Portugal 41\.9 236 81\.9 290\.4 Tunisia 11\.7 143 5\.1 0\.1 Turkey 28\.1 270 34\.8 28\.7 Source: ITU, 2003\. Host data are from Network Wizards for January 2003\. * 2001 data Table 3 Morocco is trailing in Internet hosts 100 90 86\.8 80 people 70 60 50 Jan-00 10,000 40 35\.5 Jan-03 28\.7 per 30 25\.4 26\.4 20 13\.5 10 1\.60\.4 0\.3 0\.5 0\.7 3\.1 5\.0 1\.8 Hosts 0 El Morocco Egypt Georgia Turkey Malaysia Chile Salvador Source: Network Wizards, http://www\.nw\.com, accessed November 2003\. - 32 - Table 4 - Leased Line Market 2mb Prices Prices remain above levels expected US 50,000 to 45,000 line 40,000 leased 35,000 30,000 digital 25,000 for 20,000 15,000 charge 10,000 5,000 monthly 0 US$ Morocco Turkey Chile Finland Spain Germany Italy France Source: Tarifica, June 2002 Information Technologies As far as information technologies are concerned, the number of PCs increased in the country, from 85,000 in 1995 to 457,000 in 2002\. This brought PC penetration to 15 per 1,000 inhabitants in 2002\. The number of Internet users also increased, thanks to public access points such as cybercafes\. But the lack of progress in the ISP market was reflected in the low growth of Internet subscriptions, and especially on the low growth in the number of Internet hosts, as indicated above\. Table 6 - Morocco Basic Information Technology Indicators MoroccoBasicInformation Technology Indicators 1995 1996 1997 1998 1999 2000 2001 2002 PCs (per 1,000 people) 3 4 5 7 11 12 14 15 PCs 85,000 100,000 130,000 200,000 300,000 350,000 400,000 457,000 Television receivers 4,095,560 4,245,240 4,367,937 4,466,484 4,568,286 4,784,167 4,861,667 \. Television-equippedhouseholds 3,500,000 3,500,000 3,600,000 3,700,000 3,900,000 4,000,000 4,100,000 4,100,000 Internetusers 1,000 1,552 6,000 40,000 50,000 200,000 400,000 500,000 Internet users (per 10,000 people) 0 1 2 14 18 70 137 169 Internethosts 229 468 888 478 801 951 2,454 2,680 ISDN subscribers 0 38 216 612 2397 6728 10000 \. Source: World Bank, World Development Indicators 2003; ITU, WTID 2002, Birth of Broadband 2003, ITU Statistics website accessed Nov 2003 The lack of progress in the Internet market had a negative consequence on Morocco's performance in IT compared with regional and international benchmarks (see Table 7)\. Morocco had 1\.54 PCs per 100 inhabitants, compared to 3\.06 in Tunisia, 1\.71 in Egypt, 4\.46 in Turkey, 11\.39 in Chile, 14\.68 in Malaysia, which is now higher than the number in Portugal, an OECD country\. Similarly, the number of Internet users in Morocco, which has increased during this time period, has - 33 - nonetheless lagged behind its international competitors\. The number of Internet users per capita in Morocco is lower than the number in Egypt, is three times lower than Tunisia, four times lower than Turkey, fourteen times lower than Chile, and nineteen times lower than Malaysia\. Coupled with the negative performance in the Internet hosts area mentioned above, the deterioration of these basic IT indicators should be of great concern for Morocco's policymakers\. Morocco's economic competitiveness, and more broadly Morocco's human development, may be harmed by the lack of progress in the area of IT and Internet diffusion\. The insufficient progress in the area of data and fixed line liberalization and the consolidation of market dominance in the Internet market are major reasons for this troublesome delay\. Outside of the telecommunications and IT liberalization area, another commonly monitored IT indicator is the number of students in engineering, mathematics, and computer science per 10,000 inhabitants\. Morocco's performance in this area is also negative, if compared with regional and international benchmarks\. The number of Morocco's students in these technical fields is 10 times lower than the number in Tunisia and Egypt, and about 80 times lower than the number in Chile and Portugal\. Table 7 - International Benchmarks in IT Students in engineering, mathematics and Estimated computer science Internet Internet per 10,000 Number of Users per hosts (per inhabitants (high PC per 100 10,000 10,000 school and 2002 inhabitants inhabitants people)* university)** Morocco 1\.5 168\.7 0\.5 0\.8 Chile 11\.9 2,375\.4 86\.8 61\.9 Egypt 1\.7 228\.5 3\.1 8\.1 El Salvador 2\.5 0\.4 0\.4 \. Georgia 3\.2 6\.2 5\.0 \. Malaysia 14\.7 3,196\.9 35\.5 \. Portugal 13\.4 3,554\.6 290\.4 63\.9 Tunisia 3\.1 515\.0 0\.1 9\.0 Turkey 4\.5 728\.4 28\.7 \. Source: ITU, 2003\. * Network Wizards Jan 2003\. *UNESCO, 2000\. Postal Sector Note: No sector data are available for the postal sector as a whole, but only for the incumbent operator Barid Al-Maghrib (BAM)\. Because the reserved area for BAM's exclusivity covers letter items up to 1kg, its volume data on the letter mail segment covers that entire segment\. For the other market segments (mainly parcels and express mail), BAM's data gives only a partial view of sector volume\. The volume of ordinary letter mail has increased on annual average by 4\.18% over the 1999-2002 period, which is slightly inferior to the growth of the overall economy over this period (4\.5%) but remains a positive result that translated into increased operating revenues of 3\.25% per year over 1999-2002 (against 1\.4% over the 1995-1998 period), and a number of post-items posted per inhabitant reaching 8\.8 in 2000 (versus 7\.3 in 1996)\. Meanwhile express mail provided by BAM has also significantly increased in a competitive environment, growing by an annual average of 18%\. - 34 - The contribution of the postal sector to the overall economy remains very limited (0\.27% in 2002, versus 0\.29% in 1999) but universal access has improved, both for postal and financial services\. The number of post offices has increased by 14% between 1995 and 2002 (194 new post offices) enabling better access to the network for customers\. Home delivery has also slightly improved (68\.3% of total households in 2002, versus 65\.0% in 1999) while the percentage of population with no delivery has decreased from 15\.0% to 11\.7% over this period\. With respect to postal financial services, savings and giro account deposits have increased significantly between 1995 and 2002, by 86% for savings deposits and 47% for giro accounts\. This means that BAM has been able to attract new customers while increasing current deposits in existing accounts\. However compared to international standards, margins of improvement remain to be realized, especially in terms of access\. Criteria such as number of inhabitants per postal employee, average area covered by a post office, and number of inhabitants served by a post office remain significantly superior to other countries of the region (Tunisia, Egypt) and to Southern European countries\. One of the studies carried out under IISDL (De Donder report - "Étude sur le coût du service universel au Maroc" - June 2002) suggested that in order to meet international standards for postal universal access, the Government should look at extending access, notably through franchised post offices\. In addition, quality of service measured as delivery time has not reached the target forecast at Boare approval: only 65% of the letter-items deposited in the postal system are delivered by the next day (see output indicators table in Annex 1)\. BAM still needs to improve its transport and delivery system in order to achieve a delivery time comparable to international best practice (95% of letter-items delivered the next day)\. BAM's financial balance has improved significantly and productivity has picked up over the course of the operation, enabling the company to fund its own investment plan as well as a retrenchment plan that covers more than 1,000 employees\. BAM's investments are targeted to development of new services and to improvement in quality of service\. Table 8 - Morocco Basic Postal Indicators Morocco Basic Postal Indicators 1995 1996 1997 1998 1999 2000 2001 2002 Total postal revenues (US$ million) 82\.5 73\.8 88 87\.1 100\.8 101\.4 108\.9 113\.0 Postal revenues as a % of GDP \.25% \.20% \.26% \.29% \.29% \.28% \.28% \.27% Total operating and investment expenditures (US$ 109\.5 99\.7 92\.5 83\.9 99\.4 134\.5 127\.7 139\.7 million) Profits or losses (revenues less expenditures) (US$ -27 -25\.9 -4\.4 3\.2 1\.4 10\.3 14\.7 9\.2 million) Total number of postal staff 9,075 8,699 9,064 9,787 8,832 8,973 8,983 8,984 No\. of inhabitants per postal employee 2,987 3,175 2,978 2,838 3,170 3,198 na 3\.449 Number of permanent offices 1,401 1,425 1,454 1,469 1,498 1,569 1,577 1,595 Average area covered by a permanent office (km2) 319 313 307 304 298 284 283 280 Average number of inhabitants served by permanent 19,350 19,382 18,782 18,910 18,851 18,298 18,497 19,428 office Number of letter boxes (mailboxes) 3,080 3,234 3,397 3,564 3,737 3,809 3,850 4,022 Average no\. of deliveries per day in urban areas 2 2 2 1 1 1 1 1 Average no\. of deliveries per week in rural areas 5 5 5 5 5 5 5 5 % of population having mail delivered at home 80% 66% 64% 65% 65% 65% na 68\.3% % of population without postal delivery 4% 6% 6% 15% 15% 15% na 11\.7% Average number of letter-post items posted per 7\.57 7\.53 7\.76 7\.72 7\.91 8\.78 na na inhabitant End of year assets in postal savings accounts (US$ 396\.6 477\.9 512\.8 582\.5 592\.9 647\.0 658\.0 741\.0 million) End of year assets in postal checking accounts 518\.1 489\.6 461\.1 480\.1 575\.9 623\.0 657\.0 764\.0 (US$ million) Source : UPU, BAM, WB, IMF - 35 - Table 9 - International Postal Benchmarks Average Average Average Average number Average area number of number of of Percentage number of No\. of covered by inhabitants deliveries deliveries of the letter-post inhabitants a served by a per working per week population items posted per postal permanent permanent Number of day in urban in rural without postal per 2002 employee office (km²) office letter-boxes areas areas delivery inhabitant Morocco 3,449 280 19,428 4,022 1 5 11\.7 8\.78 Tunisia 1,078 135 7,979 3,861 1 6 0\.0 11\.68 Egypt 1,722 183 12,820 17,942 1 6 0\.0 3\.37 Turkey 2,035 174 15,728 79,513 1 1 0\.0 12\.38** Chile 2,913 1,851 38,115 860 1 NA 0\.0 17\.78 Malaysia 1,607 273 19,085 4,726 1 6 0\.0 NA Portugal 611 24 2,622 18,573 1 5 0\.0 158\.64 Ireland 384 40 2,196 6,200 1 5 0\.0 196\.24 Source: UPU 2003, accessed Nov 2003 via www\.upu\.int\. * 2000 data\. ** 2001 data\. - 36 - Additional Annex 9\. Key Information Infrastructure Progress Measures Sector and Topic Achievements at Planned Measures Status at ICR April 2001 assessed at Board (end-April 2004) Presentation (31 May 2001) Telecommunications Privatization 35% of IAM sold to Share sale to In conjunction with the strategic investor employees (2001) initial privatization in (02/01) IPO on Casablanca 2001, employees were and international offered a bonus in exchanges (2002); cash or shares\. There IPO calendar* was no subsequent share sale to employees\. The IPO was postponed\. The Government announced its intention to proceed to an IPO by end-2004\. Liberalization Launch of services Second international MediTel started second cellular starts international offering international operator (04/00) service (01/02) services in March 2002\. Award 3 VSAT licenses (10/00) Expressions of interest Launch of tenders for The original program requested for new new licenses, including approved by the Board fixed licenses (03/01) voice as of 2003 of ANRT on March 1, (Q3/01)* 2000 was later Award of new fixed abandoned\. The licenses (2001-2002) Government opted to Award of new award only one international licenses Second National (2002) Operator license in the fall of 2002, which did not elicit investor interest\. ANRT is leading a new effort to re-launch the liberalization process, which should lead to the introduction of competition in 2004\. - 37 - Universal service License conditions of IAM include specific US obligations (10/00) Amendment to telecom Amendment approved The amendment to law drafted expanding by government (09/01) telecom law to expand US definition (02/01) and national assembly the definition of (Q1/02) universal service was not included in the final version of the amendments to Law 24/96 to be approved by the Council of Ministers\. Decree establishing Decree approved by There are no plans to new US regime Council of submit the draft decree drafted (03/01) Government (06/01)* to the Council of and Council of Government\. Ministers (Q4/01) Legal/regulatory Amendment to telecom Amendment, approved The amendment to framework law drafted inter alia by government (06/01) give the power to to strengthen ANRT's and national assembly ANRT to impose enforcement powers (Q1/02), enters into sanctions was (02/01) force (Q2/02); approved by the substantial progress* Council of Government in June 2003, and is expected to be presented to the Council of Ministers\. Parliament approves Bill enters into force The bill entered into bill relaxing financial (Q3/01)* force on 22 June 2001\. controls on ANRT (04/01) New interconnection Maroc Telecom offer approved by presented a new ANRT (06/01) interconnection offer to ANRT in 2001\. Despite extensive negotiations in 2001 and 2002, an agreement was not reached\. A new interconnection offer was approved by ANRT in 2004\. TOR and funding for Adjustment of The decree adjusting - 38 - study on tarification of spectrum fees to cost spectrum fees to spectrum rights of spectrum reflect the cost of (04/01) management and spectrum management regulation (03/02) and regulation was approved by SEPTI and the Ministry of Finance and sent to the Secretary General of Government only in early 2003, and has not yet been cleared\. Information Society Legislation Bill on electronic Bill approved by Resubmitted to signature and Council of Secretary General of certification drafted Government (Q4/01), Government in June (08/00) Council of Ministers 2003\. (Q1/02) and Parliament (Q3/02) Selection of Pilot Effective launch of Effective launch Project for pilot project* confirmed in a letter Administration-on- dated 1 August 2003 Line (03/01) from Ministry of Finances to ADB\. Establishment of Effective launch of Activities in the cyberparks activities in the Casablanca cyberpark Casablanca launched in June cyberpark* 2001\. Signature of At least 15 At least 15 agreements to foster cooperatives have cooperatives organized use by cooperatives of started using into 3 groupements e-commerce e-commerce* d'intérêt économique have been using e-commerce since June 2001\. Postal Sector Legal/regulatory Completion of study Validation of study by SEPTI initiated an framework on the postal sector SEPTI* additional study (04/01) Draft postal law relative to postal covering: universal universal service; service, reserved draft law to be service, liberalization finalized upon schedule, regulatory completion of the new body, reform of BAM study (end-2004)\. legal status (Q4/01) Operator/Owner 2000-2004 program Signature of program Program contract for relationship contract agreed contract (Q2/01)* 2002-2004; annual between BAM and the report on program State providing greater contract realization for - 39 - transparency in their 2002 completed, in relationship (08/00) progress for 2003\. BAM restructuring Completion of first Validation of study by Thorough phase of BAM BAM management\.* reorganization of restructuring study Thorough BAM implemented; (04/01) reorganization, creation of a including, possibly, subsidiary for express subsidiaries for the mail activities\. main activities\. Signing of the Program contract performance contract signed for 2002-2004\. between the State and BAM\. Financial services TOR for major study Launching of the Launching of the on development of study by the Treasury study in November postal financial (2001)* 2003\. services (05/00) Dates in the center column are World Bank estimates at the time of Board approval\. Where date is in bold italics, it figures in the Government's Letter of Sector Policy\. * indicates this is also a second tranche condition of the ADB loan\. - 40 - Additional Annex 10\. Liberalization Schedule Originally Approved by ANRT's Board in March 2000 2000: 3RP licenses ("reseaux radioelectriques a ressources partagees") (Note: These licenses comprise fleet, dispatach, trunking, and other data and voice applications of radio communication for closed user groups sharing certain parts of the spectrum\.) 2001: A national telecommunications license allowing sale of all services excluding voice and with obligation to supply on demand a bandwidth of at least 2 megabits per second\. The sale of public telephony services will be allowed under this license as of December 2002\. 2001: An interurban telecommunications license allowing sale of all services excluding voice and with obligation to supply on demand a bandwidth of at least 2 megabits per second\. The sale of public telephony services will be allowed under this license as of December 2002\. 2001: At least one local telecommunications license per region allowing sale of all services excluding voice and with obligation to supply on demand a bandwidth of at least 2 megabits per second\. The sale of public telephony services will be allowed under these licenses as of December 2002\. 2002: An international telecommunications license allowing sale of all services\. 2002: Several universal service licenses according to needs to be established\. Taken from minutes of ANRT's board meeting of 1 March 2000 (unofficial translation)\. - 41 - Additional Annex 11\. Proposed Policy Matrix for IISDL of 27 November 2000 PROJET de Matrice des Objectifs et Mesures de Politique Projet de Développement des Infrastructures de l'Information (Révisée à l`issue de la réunion de synthèse de la mission d'evaluation du projet PDSII Mai 2000 ) REVISEE LE 27 NOVEMBRE 2000 TELECOMMUNICATIONS Objectif Première tranche Deuxième tranche Privatiser 2\.13\. Distribution du questionnaire 2\.13\. Signature par le Premier Ministre du décret l'IAM et du mémorandum d'information à des de cession de X pour cent du capital de IAM au investisseurs stratégiques qualifiés ayant partenaire stratégique\. (d'ici décembre 2000) exprimé un intérêt pour une prise de participation au capital de l'entreprise\. Statut : Documents distribués le 24 mars, suite à l'appel à manifestation d'intérêt lancé le 22 mars 2000 2\.13\. Lancement de l'appel d'offres pour la privatisation d'IAM avec un dossier incluant notamment : (a )les termes et conditions (cahier des charges) de la privatisation d'IAM\. (b) le pacte d'actionnaires, assurant le transfert du contrôle de la gestion d'IAM à l'investisseur stratégique\. (juin 2000) (c)les engagements de services du partenaire stratégique (d) le nouveau Cahier des Charges d'IAM reflétant la stratégie sectorielle du Gouvernement\. - 42 - Objectif Première tranche Deuxième tranche Renforcer la 2\.13\. Adoption par le Gouvernement 2\.13\. Notification par le Premier Ministre concurrence (Conseil d'Administration de l'ANRT) du aux adjudicataires des licences (suite à un dans les services programme d'octroi de licences pour appel à la concurrence) de la possibilité de différents segments du marché des d'ouverture de service pour : télécommunica-t télécommunications durant les années 2000 \. au moins une licence de ions et les et 2001\. (1er Mars 2000 télécommunications locales (boucle locale),et infrastructures de Statut : Adopté\. \. soit une licence pour les services interurbains (backbone) [soit une licence pour 2\.13\. Octroi d'une licence GMPCS, y un deuxième opérateur national]\. compris services de transport de voix, dans le cadre d'un appel à la concurrence\. (juin 2000)\. Les termes de ces licences incluent entre autres : (a) l'accès au réseau et la fourniture de Statut : Opérateur sélectionné, décret en capacité louée aux opérateurs de cours de préparation par l'ANRT télécommunications, prestataires de service et réseaux indépendants ; (b) des réseaux et 2\.13\. Publication par IAM d'une offre services de données aux utilisateurs finals ; (c) révisée d'interconnexion approuvée par la fourniture à qui le demande d'un débit d'au ANRT\. (d'ici fin juin 2000) \. moins 2 Mbits par seconde, et (d) tout autre type de service, y compris le service de voix Statut : En cours d'élaboration [au 1er janvier 2002/en 2002]\. (Septembre 2001) \. Étendre l'accès 2\.13\. Définition dans le cahier des 2\.3\. [Adoption par le Conseil des Ministres / aux services à charges de IAM des obligations éventuelles Promulgation d'un décret sur \.] un régime des prix incombant à cet opérateur en matière de pour la prestation du service universel et abordables pour service universel\. l'aménagement du territoire, y compris tous les [calendrier], définition de la portée initiale des segments de la Statut : En cours d'élaboration\. services, procédures pour déterminer les tarifs, population\. responsabilité en matière de prestation, sources de financement, et mécanisme de marché pour déterminer et allouer toute subvention requise\. 2\.13\. Définition des éléments clés du (2ème semestre 2000)\. régime pour la prestation du service universel\. Statut : En cours d'élaboration - 43 - TECHNOLOGIES DE L' INFORMATION Objectif Première tranche Deuxième tranche Développer 1\.12\. Approbation par la Commission 2\.13\. [Présentation au Parlement] d'un un cadre interministérielle sur les messages de données projet de Loi sur les Messages de Données\. juridique et d'un projet de Loi sur les Messages de (novembre 2000)\. réglemen-tai Données, y compris principes sur la re adéquat reconnaissance de la signature électronique\. pour les TI\. (juin 2000) Développer 1\.13\. [Lancement de l'appel d'offre] de la 2\.13\. Validation par le Gouvernement des des réseaux [première/deuxième] phase de l'étude sur conclusions et recommandations de l'étude sur inter-admini l'initiative « Administration en ligne (AEL) l'initiative AEL\. (décembre 2000\.)\. stra-tions » pour le compte de la commission 2\.10\. Lancement d'un projet pilote pour inter-ministérielle sur l'AeL\. (mars / juillet l'initiative AEL\.(1er semestre 2001) 2000)\. - 44 - SECTEUR POSTAL Objectif Première tranche Deuxième tranche Elaboration 1\.141\. [Lancement] par SEPTI d'une étude 2\.11\. Soumission au Conseil des Ministres d'une qui servira de base à la stratégie nationale des textes de loi et/ou des dispositifs stratégie pour le développement du secteur postal\. juridiques visant à : (a) définir les obligations nationale (Démarrage de l'étude prévue pour début de service public, leur portée et leurs coûts, pour la juillet) les modalités des mécanismes d'exécution et modernisa-ti de financement ; (b)définir un plan et un on du Statut : Appel d'offres déjà lancé le 6 avril calendrier pour la libéralisation du marché y secteur 2000\. compris une participation accrue des prestataires privés ; (c) définir un statut juridique pour BAM qui lui permette d'opérer efficacement dans une situation de concurrence; et (d) établir le cadre de réglementation requis\.(septembre 2001)\. Moderniser 1\.152\. Lancement par BAM d'une [étude] 2\.12\. Démarrage de la mise en oeuvre par BAM l'opérateur visant à mettre en oeuvre une stratégie d'une stratégie d'entreprise visant à renforcer postal BAM d'entreprise axée sur le renforcement de l'efficacité de l'entreprise, notamment sa l'efficacité de l'entreprise\. ( Adjudication du restructuration, et adoption des programmes marché début juillet 2000 ; démarrage de [d'investissement], de recrutement et de formation l'étude Septembre 2000 )\. nécessaires au succès de cette mise en oeuvre\. (septembre 2001)\. Statut : Appel d'offres déjà lancé\. Etendre la 2\.13\. Finalisation des termes de référence 2\.13\. Lancement par le comité de pilotage de provision pour une étude qui servira de base à la l'étude qui servira de base pour la des services stratégie de développement des produits proposition : (a) d'une ou plusieurs option(s) financiers d'épargne et des services financiers de la pour développer les produits d'épargne et les par le biais CEN et des CCP par le comité de pilotage services financiers de la CEN et des CCP, du réseau dirigé par la Direction du Trésor avec la sans toutefois introduire de distorsions indues postal participation du SEPTI et de BAM\. \. à une concurrence loyale au sein du système bancaire et financier ; et (b) d'un plan visant à développer l'expertise interne requise et Statut \.Termes de Référence discutés l'éventail de qualifications nécessaires pour et finalisés matérialiser les nouveaux produits et d'un plan axé sur l'essaimage éventuel de services de ce type à une institution distincte\. (1er semestre 2001) - 45 - Additional Annex 12\. Borrower's Report Morocco Information Infrastructure Sector Development Project Information and Completion Report Borrower's Comments Introduction The main objectives of the Program in support of Information Infrastructure Sector Development (IISD) in Morocco were the liberalization of the telecommunications sector, partial privatization of Maroc Telecom, strengthening of the legal and regulatory framework, development of the use of information technologies, and preparation of a strategy to modernize the postal sector\. The program met most of its objectives and contributed to the development of the telecommunications, information technologies, and postal sector\. I\. Telecommunications Sector I\.1 The liberalization process After the award of a second GSM license in 1999, and within the context of the ongoing sector liberalization process, the years 2000-2003 were particularly uneven: on the one hand, some licenses were successfully granted to the winning bidders, while on the other hand, the second license for fixed telephony could not be awarded\. At the same time, the opening to competition advanced during this period through the introduction of new successful licensees\. This refers to two 3RP (shared radioelectric networks) operators, Inquam Telecom SA and Moratel SA; and three new public telecommunications network operators using GMPCS satellite technology, namely European Datatom Maghreb, Soremar and Thuraya Maghreb\. I\.1\.1 3RP licenses The shared radioelectric networks (3RP) are based on the sharing of frequencies by many users without the proliferation of infrastructures\. They enable an effective and efficient use of frequencies, better planning of the frequency spectrum by resolving congestion problems in certain frequency bands, and the provision of telecommunications services to user groups at competitive rates\. 3RP license holders will be able to provide infrastructures and services to meet the communications needs within a same fleet of users and/or facilities attributed to a single subscriber\. Three companies established under Moroccan law, Miden SA, Inquam Telecom SA and Moratel SA, responded to the bid and were awarded three 3RP licenses\. However, Miden SA withdrew, following the purchase of its assets by Inquam Telecom\. Inquam Telecom SA is a subsidiary of the Inquam Group, whose controlling shareholders are, mainly, Qualcomm and Omni P61\. Inquam Telecom SA counts among its partners Nextel, Qualcomm and - 46 - Lucent Technologies\. Inquam Telecom chose the iDEN platform, which is a mobile communications system that provides bi-directional radiocommunications services, SMS paging, and packed-switched data transmission, through a single integrated system\. This operator plans to implement the CDMA technology within its 3RP network\. Inquam Telecom's offer will be essentially directed at transport carriers, firms with a large number of traveling employees, administrative entities, state-owned enterprises and certain local utilities\. Inquam Telecom plans to invest a total amount of MAD 800 million in Morocco over a five-year period and to create a total of 156 jobs\. Moratel SA plans to deploy a mobile communications network based on the Tetra standard (Terrestrial Trunked Radio)\. This is an open system defined by ETSI (the European Telecom Standards Institute), which can be used for fixed or mobile digital radiotelephony, message transmission, data transfer, and other applications for radio users\. With its services offer, Moratel wants to target public services (public security and public enterprises) as well as private firms (notably transportation, construction and civil engineering, paging, security, and water and electricity distribution)\. Moratel plans to invest MAD 500 million and to create a total of 97 direct jobs, and 150 indirect jobs during the first year\. I\.1\.2 GMPCS licenses The competitive bidding launched in 2002 focused on awarding GMPCS licenses for telephony and data transmission services for new GMPCS systems or for systems that had not responded to invitations to bid since 2000\. Four new public GMPCS satellite telecommunications networks will be set up and operated in Morocco\. Two of them will be based on the Inmarsat satellite system (European Datacom Maghreb SA and Soremar SARL), the third on the Iridium satellite system (European Datacom Maghreb SA) and finally the last one on the Thuraya satellite system (Thuraya Maghreb SA)\. Inmarsat (created in 1979 as an intergovernmental organization) became a private company in 1999 and operates a global network of satellites that are used by a worldwide group of service providers who offer terrestrial, maritime and aeronautical mobile communications solutions\. Inmarsat's satellite system is comprised of 9 geo-stationary satellites positioned over the equator at an altitude of 36,000 km, of which four are fully operational, ensuring a worldwide provision of Inmarsat services\. The Iridium system provides satellite personal communication services (SPCS), also known as GMPCS, enabling digital terrestrial, maritime and aeronautical communication worldwide\. The Iridium system uses 66 low orbit satellites (LEO) at an altitude of 780 km, distributed on six orbital planes with an incline of 86\.4 degrees and has one spare satellite on each plane\. The system also covers both terrestrial poles, providing a worldwide coverage\. The Thuraya system is comprised of two geo-stationary satellites, one currently in orbital position at 44 degrees east, and the other one being kept on the ground as a back-up\. The satellite covers more than 99 countries in Europe, North and Central Africa, the Middle East, Central Asia and the Indian sub-continent\. - 47 - I\.2 The second license for fixed telecommunications The year 2001 was mainly devoted to preparing the opening of the fixed telecommunications market\. To this end, a study on the fixed telecommunications market in Morocco was carried out to evaluate the basic options for fixed telecommunications licenses scheduled to be issued, namely a national license, a corporate backbone license, one or several licenses for local loops, and two international licenses\. The study sought to verify that future licenses would be viable, based on sensitivity analyses, and to evaluate the impact of certain parameters such as duration of the license, number of licenses, sequencing, interconnection tariffs, and other regulatory instruments\. At the same time, a call for expressions of interest was launched on March 1, 2001, in order to obtain the opinions of potentially interested firms on the elements and options to be used in the preparation of the cahier des charges for the licenses\. In June 2001, a one-day information seminar was organized, and the results of the study were presented\. Only the backbone license and the national license were deemed viable\. The licenses for local loops were therefore excluded from the process\. Only one license to establish and operate a fixed telecommunications public network at the local, long distance and international levels was retained\. The bid for awarding this license was launched in June 2002\. Fifteen (15) companies requested the bidding document, but no offer was submitted by the initial deadline of October 8, 2002; the deadline was extended to November 5, 2002, as requested by the potential candidates\. Several reasons explain the fact that the fixed telecommunications license was not awarded, notably, among others: § thedepressedinternationalclimate,inparticularasregardstelecommunications\.Thisalsoisshown by the fact that only one firm among the 15 that requested the cahier des charges was a telecommunications operator, the others being primarily international consulting firms specialized in the field and in search of investment opportunities; § the level, considered high, of the geographic coverage obligations, at the opening of the service (7 towns spread throughout the national territory); § the operator contributions, which were considered very restrictive (universal service, training and research); and § theuncertaintyastotheavailabilityofalternativeinfrastructures\. Despite the lack of interest in the second fixed license, the national telecommunications market continued its progress, exhibiting a significant growth rate in mobile telephony\. Tariffs were lowered for several products and services, to the strong benefit of individual users and businesses\. New tariff offers were made and authorized by the regulator in order to meet the specific needs of different types of customers\. I\.3 Partial privatization of Maroc Telecom The first phase of the opening of Maroc Telecom to private capital was achieved successfully\. This action was necessary for Maroc Telecom to be able to position itself effectively on the rapidly changing - 48 - domestic and global telecommunications markets\. To this end, an international competitive bidding process was launched, which led to the selection of Vivendi Universal Group as the strategic partner of Maroc Telecom\. Vivendi Universal currently holds 35% of Maroc Telecom's capital\. In the context of the implementation of the IISD, this operation was to be followed by the transfer of a second tranche of 16% of Maroc Telecom's capital\. This step should not only produce significant public revenues, but should also enable Maroc Telecom to integrate itself into the international capital markets\. This operation could not be executed according to the initially planned agenda, due to an international economic situation characterized by a decline of investments in this sector during the last three years\. However, the Government is still strongly committed to the liberalization of the telecommunications sector and the privatization of Maroc Telecom, and therefore is considering the completion of these operations during 2004\. In any case, the first phase of privatization of Maroc Telecom and the award of new licenses have had positive effects on the sector, notably: § totaldigitalizationoftelecommunicationsnetworks, § verystronggrowthinthenumberofmobilesubscribers, § awiderangeofvalue-addedservices, § significant choice among satellite telecommunications operators (GMPCS and VSAT) and among Internet service providers, § alargernumberofservicemarketingfirms, § localpresenceofforeigntelecommunicationsequipmentmanufacturers, § significantinvestmentsinthesector,and § increaseofGDP\. I\.4 Legal and regulatory framework After five years in force, and in order to take into account the evolution of telecommunications operators and user needs, it was deemed opportune to amend the law 24-96 relative to posts and telecommunications\. These amendments have enabled implementation of a new universal service regime with a reduction in operator contributions from 4% to 2%\. They have also permitted the use of alternative infrastructure for rapid expansion of territorial coverage with regard to fixed networks, and the implementation of graduated sanctions to strengthen the regulatory role of ANRT (Law 55-01)\. II\. The Information Technologies Sector II\.1 Projects implemented To enable a harmonious development of information technologies, several projects were implemented or are in the process of being implemented\. Among them are: § anationalportalandtownportals, § availabilityonlineofseveraladministrativeprocedures, § pilotgatewayofpilotinterconnection, - 49 - § ICTobservatory, § electronicmarketplacesandprovisionofcertificationservices, § roll-outofadministrativewebsitesandnationalcontent, § computerizationofschools, § increaseinthecapacityoftheMarwanacademicnetworkandlinkingitwiththeGEANTnetwork, § revitalizationoftheCasablancatechnologypark, § Bouznikaindustrialpark, § PilotprojectrelatedtotheIntegratedManagementoftheGovernment'sHumanResources(GIPE)\. II\.2 Legal framework One of the main points of the IISD Project was to assist the Government in implementing an appropriate legal framework for developing the use of information technologies\. In this context, two draft laws are in the process of being adopted; these cover, on the one hand, data transmission (electronic signature and certification), and on the other the protection of personal information\. The first draft aims to secure electronic commerce and online administration transactions, and is built upon the following points: § legalrecognitionofelectronicsignatureanddatatransmission, § rulesfortheirtransmission, § equivalencebetweenhandwrittensignatureandelectronicsignature, § equivalencebetweenhandwrittenevidenceandtheevidenceintheformofadatamessage,and § certificationandprovisionofcertificationservices, The second draft concerns treatment and exchange of personal data and targets the protection of individuals against data abuse that would be detrimental to private life\. III\. Postal Sector In order to achieve the goals of the IISD Project in the postal sector, and to ensure a sustainable and integrated development of post at the sector level as well as at the public operator's level, efforts have been made to upgrade the postal sector as a whole while enhancing Barid-Al-Maghrib's services and operational performance\. III\.1 Sector strategy In order to outline a global vision of postal sector development, a study was undertaken to determine the orientations of the development strategy, in particular as regards the specification of the public operator's legal status and the overhaul of the postal monopoly\. However, the absence of cost accounting data was an impediment to an in-depth economic analysis necessary to determine the scope of universal service and reserved services (as well as their costs) in a well-grounded manner\. Therefore, the economic and financial details of these services are currently being determined through a study on the cost of postal universal service\. - 50 - It is worth noting that after the completion of the study on postal strategy, a draft postal law was prepared by a commission comprised of Barid Al-Maghrib and the Department of Posts, Telecommunications and Information Technologies\. The draft law, which is articulated around universal service, will be completed and revised in light of the conclusions of the study on universal service cost\. The commission may thereafter be strengthened by the addition of representatives from other Departments\. The above-mentioned draft law proposes to address the following points: § The scope of universal service and reserved services as well as financing options for universal service, § Thelegalregimeforcompetitiveservicesandtheconditionsforoperatingtheseservices, § The transformation of Barid Al-Maghrib into a limited liability company and its designation as the provider of universal service, § Theimplementationofpostalregulation\. III\.2 Modernization of the company In the context of the modernization of Barid Al-Maghrib, a study was conducted to determine how to upgrade this institution by modernizing its management and adapting its structure to the requirements of the postal market\. The conclusions of this study were implemented with a new organizational structure for Barid Al-Maghrib, in which commercial and strategic functions are emphasized\. Barid Al-Maghrib's board adopted this restructuring plan during its meetings of September 2001 and June 2003\. Barid Al-Maghrib now has a new organizational structure, completely different from the previous public administration mode, and has been transformed into a commercial entity focusing on: § Greatercompetitiveness, § Enhancedlevelofservicequality, § Accomplishmentofpublicservicemissionsunderoptimumcostandqualityconditions\. Barid Al-Maghrib continues to diversify its range of products and to enhance the quality of the postal and financial services it offers, particularly through the introduction of information technologies and the extension of the postal network\. In this context, new projects have been launched, such as the offer of national courier service "Amana", a geographic information system whose aim is to better distribute the postal presence throughout the territory and to enable a better targeting of clients, and the introduction of a new information system for the Caisse d'Epargne Nationale (postal saving accounts)\. These efforts allowed Barid Al-Maghrib to maintain a satisfactory financial situation\. As a result, nearly all the objectives set in the program contract for 2002 were achieved\. III\.3 Development of postal financial services A study on the development strategy for postal financial services was launched\. It is designed to outline - 51 - the different paths and means to promote the products of the Caisse d'Epargne Nationale and the Comptes Courants Postaux (checking accounts) in a manner that does not harm fair competition within the banking system, while simultaneously developing internal expertise and the potential for establishing a separate institution for financial services\. - 52 - - 53 -	REVIEW
P127258	Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004700 IMPLEMENTATION COMPLETION AND RESULTS REPORT TF-14427 ON A GRANT FROM THE GLOBAL ENVIRONMENT FACILITY IN THE AMOUNT OF US$4\.2 MILLION TO THE REPUBLIC OF BURUNDI FOR THE SUSTAINABLE COFFEE LANDSCAPE PROJECT (P127258) April 25, 2019 Environment & Natural Resources Global Practice Africa Region Exchange Rate Currency Unit: United States Dollars FISCAL YEAR July 1 - June 30 Regional Vice President: Hafez M\. H\. Ghanem Country Director: Bella Bird Senior Global Practice Director: Karin Kemper Practice Manager: Iain G\. Shuker Task Team Leader(s): Paola Agostini, Amadou Alassane, Philippe Eric Dardel ICR Main Contributor: Yasmina Oodally ABBREVIATIONS AND ACRONYMS ARFIC The Regulation Authority of the Coffee Value Chain BD Biodiversity CAS Country Assistance Strategy CNAC National Coffee Growers Associations CWS Coffee Washing Station FFS Farmers Field School FM Financial Management GEO Global Environment Objective GEF Global Environment Facility GoB Government of Burundi ICR Implementation Completion Report IE Impact Evaluation ISABU Agricultural Research Institute IUCN International Union for Conservation of Nature LD Land Degradation M&E Monitoring and Evaluation MINAGRIE Ministry of Agriculture and Livestock MIS Management Information System NAIP National Agricultural Investment Plan OBPE Burundian Office for Environmental Protection PA Protected Area PACSC Coffee Competitiveness Project PAD Project Appraisal Document PADZOC Sustainable Coffee Landscape Project PAMETT Protected Area Management Effectiveness Tracking Tool PCU Project Coordination Unit PDO Project Development Objective PRODEMA Agro-Pastoral Productivity and Markets Development Project PRSP Poverty Reduction Strategy Paper REDD+ Reduce Emissions from Deforestation and forest Degradation, and foster conservation, sustainable management of forests, and enhancement of forest carbon stocks RNFB Burundi Natural Forest Reserve R-SEA Rapid Strategic Environmental Assessment SCD Systematic Country Diagnostic SFM Sustainable Forest Management SLWM Sustainable Land and Water Management TLF TerrAfrica Leveraging Fund ToT Training of Trainers WB World Bank TABLE OF CONTENTS DATA SHEET \. 1 I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 6 A\. CONTEXT AT APPRAISAL \. 6 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION \. 12 II\. OUTCOME \. 14 A\. RELEVANCE OF PDOs \. 14 B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 15 C\. JUSTIFICATION OF OVERALL EFFICACY RATING \. 22 Rating: Substantial \. 22 D\. EFFICIENCY \. 22 E\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 24 Rating: Satisfactory \. 24 F\. OTHER OUTCOMES AND IMPACTS \. 24 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 26 A\. KEY FACTORS DURING PREPARATION\. 26 B\. KEY FACTORS DURING IMPLEMENTATION \. 26 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 27 A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 27 B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 28 C\. BANK PERFORMANCE \. 29 D\. RISK TO DEVELOPMENT OUTCOME \. 30 V\. LESSONS AND RECOMMENDATIONS \. 31 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 33 ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 44 ANNEX 3\. PROJECT COST BY COMPONENT\. 47 ANNEX 4\. EFFICIENCY ANALYSIS \. 48 ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 55 ANNEX 6\. WATER QUALITY ANALYSIS 2017 AND 2018 OF THE EFFLUENTS FROM THE SIX REHABILITATED COFFEE WASHING STATIONS (CWS) (IN FRENCH) \. 56 ANNEX 7\. SUPPORTING DOCUMENTS \. 57 The World Bank Sustainable Coffee Landscape Project (P127258) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P127258 Sustainable Coffee Landscape Project Country Financing Instrument Burundi Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency The Ministry of Finance Ministry of Agriculture and Livestock Project Development Objective (PDO) Original PDO The project development objective is to pilot sustainable land and water management practices in the coffee landscape of Burundi\. PDO as stated in the legal agreement The objective of the Project is to pilot sustainable land and water management practices in the Recipient's coffee landscapes\. Page 1 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 33,000 33,000 33,000 TF-11799 4,200,000 4,187,868 4,187,868 TF-14427 Total 4,233,000 4,220,868 4,220,868 Non-World Bank Financing 0 0 0 Borrower/Recipient 0 0 0 Total 0 0 0 Total Project Cost 4,233,000 4,220,868 4,220,868 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 30-Apr-2013 08-Jun-2012 03-Oct-2016 30-Apr-2017 30-Oct-2018 RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 21-Feb-2017 3\.15 Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Reallocation between Disbursement Categories KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial Page 2 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 24-Nov-2013 Satisfactory Satisfactory \.33 02 06-Jul-2014 Satisfactory Satisfactory \.40 03 20-Mar-2015 Moderately Satisfactory Moderately Unsatisfactory \.65 Moderately 04 24-Sep-2015 Moderately Unsatisfactory \.75 Unsatisfactory 05 12-Feb-2016 Moderately Satisfactory Moderately Satisfactory 1\.13 06 01-Sep-2016 Moderately Satisfactory Moderately Satisfactory 1\.71 07 09-Dec-2016 Moderately Satisfactory Moderately Satisfactory 2\.46 08 30-May-2017 Satisfactory Satisfactory 3\.35 09 19-Apr-2018 Satisfactory Satisfactory 4\.23 SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 73 Public Administration - Agriculture, Fishing & Forestry 12 Other Agriculture, Fishing and Forestry 61 Social Protection 6 Social Protection 6 Water, Sanitation and Waste Management 11 Sanitation 11 Page 3 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Industry, Trade and Services 10 Other Industry, Trade and Services 10 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Economic Policy 7 Trade 7 Trade Facilitation 7 Private Sector Development 100 Jobs 100 Urban and Rural Development 23 Rural Development 23 Land Administration and Management 23 Environment and Natural Resource Management 69 Environmental Health and Pollution Management 12 Air quality management 4 Water Pollution 4 Soil Pollution 4 Renewable Natural Resources Asset Management 52 Biodiversity 52 Environmental policies and institutions 5 ADM STAFF Role At Approval At ICR Vice President: Makhtar Diop Hafez M\. H\. Ghanem Country Director: Philippe Dongier Bella Deborah Mary Bird Senior Global Practice Director: Jamal Saghir Karin Erika Kemper Practice Manager/Manager: Magdolna Lovei Iain G\. Shuker Page 4 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Philippe Eric Dardel, Paola Project Team Leader: Paola Agostini, Stephen Ling Agostini, Amadou Alassane ICR Co Author: Yasmina Oodally Note:- It should be noted that the project total cost includes two trust funds: a GEF trust fund of US$4\.2 million, and a TerrAfrica Leveraging Trust Fund (TLF) of US$33,000\. The effectiveness date shown in the datasheet above under âKey Datesâ reflects that of the TLF\. The other dates reflect those of the GEF\. The table below shows the key dates for each of the trust funds\. The project appraisal document makes reference to the GEF trust fund only\. Table\. PADZOC Trust Funds Key Dates Key Dates Trust Fund Approval Signing Effective Closing GEF (TF14427) May 13, 2013 May 23, 2013 September 4, 2013 October 30, 2018 TLF (TF11799) June 8, 2012 June 8, 2012 June 8, 2012 April 30, 2013 Page 5 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT AT APPRAISAL Context 1\. Burundi is a small, landlocked, and densely populated country that straddles Central and East Africa, with a total land area of 27,834 km2 and approximately 10 million inhabitants 1\. In 2013, when the Sustainable Coffee Landscape project (PADZOC) was approved, the population was approximately 8\.2 million\. Meanwhile, the countryâs population has been increasing at a rate of three percent annually and is mostly rural - only 10\.6 percent live in urban areas\. 2\. The Project Appraisal Document (PAD) notes that Burundiâs development trajectory has been marked by successions of periods of peace and conflict\. After more than 10 years of armed conflict between 1993 and 2003 that claimed the lives of about 300,000 people while displacing 1\.3 million people (about 16 percent of the population), the country witnessed a decade of political stability, security and economic recovery\. Over these 10 years, the annual GDP growth rate in Burundi consistently remained around four percent\. The consolidation of the peace process has helped start reconstruction and created positive prospects\. With substantial improvement in security, the Government focused its resources to expand basic social services in the country and initiated the modernization of the economic infrastructure and institutions\. The âVision 2025â developed by the Government of Burundi (GoB) in 2011 placed great emphasis on economic recovery and identified infrastructure development, agriculture, and tourism as priority areas\. These efforts, at the time, were recognized by the World Bank which ranked Burundi as a top economic reformer for streamlining business and improving its regulatory environment between 2012 and 2014\. 3\. These performances, however, have not prevented the country from falling back into violence in 2015\. The economy contracted by seven percent in 2015 and prospects for recovery are still uncertain\. These years of recurring conflict had a devastating effect on the economy leaving the country to address growing challenges in terms of infrastructure, road access, power generation, communications infrastructure, and access to water and sanitation\. This discourages domestic and foreign investment, thereby limiting economic growth\. According to the 2018 Systematic Country Diagnostic (SCD)2, years of political and economic fragility, combined with growing population density are beginning to leave their mark on the environment, escalating to a third important aspect of fragility: environmental fragility\. Sectoral and Institutional Context 4\. Coffee is the main export crop of the country, accounting for more than 60 percent of Burundi's total export earnings\. Gains vary from year to year due to extreme cyclical changes in production (alternating high and low production) caused by soil degradation, ageing plantations, pests and diseases, exacerbated by climate change\. The unsustainable and unregulated production of sun-grown coffee in Burundi has contributed to environmental problems related to land degradation and poor water management\. The use of marginal lands on steep slopes by coffee growers and the removal of forest cover on hillsides have also contributed to land degradation, biodiversity 1 World Bank\. 2013\. Project Appraisal Document: Sustainable Coffee Landscape Project (Report No\. 75889-BI) 2 Report No\. 122549-BI Page 6 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) loss and agricultural encroachment into protected areas\. In addition, solid and liquid organic waste from coffee washing stations (CWS) is a major source of water pollution\. 5\. Rationale for Bank Involvement\. The rationale for World Bank assistance through PADZOC, was first identified in the Rapid Strategic Environmental Assessment (R-SEA)3 Action Plan 2010 that highlighted the need to introduce shade-grown coffee in Burundi to combat land degradation and increase soil fertility\. This was followed by a successful exchange visit of Burundi representatives from coffee farmer cooperatives, Ministry of Agriculture and Livestock (MINAGRIE), and the agricultural research institute (ISABU), to witness successful shade-grown coffee practices in Ethiopia and Columbia4\. The lessons learned from these pilot actions from PADZOC would contribute to ongoing and future projects in the country, which as of today includes the World Bank (WB)-financed Coffee Sector Competitiveness Project (PACSC) in the amount of US$55 million, the Burundi Landscape Restoration and Resilience Project (BLRRP) in the amount of US$30 million, and the Agro-Pastoral Productivity and Markets Development Project (PRODEMA) Additional Financing in the amount of US$25 million\. Higher-level Objectives to which the Project contributed 6\. GEF-5 Strategy\. At the time of appraisal, PADZOC was aligned with the Global Environment Facility (GEF)-5 strategic objective for Land Degradation, Biodiversity and Sustainable Forest Management (SFM)\. 7\. Regional and National Priorities\. The Project was to contribute to GoBâs âVision 2025â, the 2012-2017 National Agricultural Investment Plan, the National Strategy for the Environmental Action Plan, the 2012 National Strategy and Action Plan to Combat Soil Degradation, National Strategy and Action Plan for Biological Diversity, the National Strategy for the Sustainable Development of Tourism (2011-2020), the National Action Plan for Adapting to Climate Change, and the second Poverty Reduction Strategy Paper (PRSP II) for the period 2012-2015\. 8\. World Bank Strategies\. The Project was to also contribute to: the FY13-FY16 Country Assistance Strategy (CAS)5 that aimed to support Burundiâs development as an increasingly stable, competitive and diversified economy with enhanced opportunities for productive employment and improved standards of living; the World Bank Strategy for Africaâs Pillar One, âCompetitiveness and Employmentâ and Pillar Two âVulnerability and Resilienceâ; the WBâs âEnhancing Competitiveness and Resilience in Africa: Action Plan for Improved Natural Resource and Environment Managementâ; the World Bank Africa Forest Strategy (âForests, trees and woodlands in Africa: An action plan for World Bank engagementâ), the Bankâs Africa Climate Change Strategy (Making Development Climate Resilient: A World Bank Strategy for Sub-Saharan Africa), and the TerrAfrica partnership6, as Burundi is one of the member countries\. 3 Report No\. 71823-BI 4 The exchange visit to Colombia was financed by the World Bank South-South Experience Exchange Facility (âSouth-South Facilityâ) multi-donor trust fund\. The Facility enables sharing of development experience and knowledge among World Bank client countries\. This demand-driven funding mechanism is designed to respond quickly and efficiently to the needs of development officials and practitioners in client countries\. 5 Report No\. 72334-BI 6 TerrAfrica is a NEPAD-led partnership present in 30 countries on the African continent that supports innovative solutions to sustain landscapes, address land and water degradation and adapt to a changing climate\. See more on http://terrafrica\.org Page 7 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Theory of Change (Results Chain) 9\. PADZOC was undertaken in two phases over a period of almost six years: a first phase from 2013-2016 and a second phase, after the restructuring, from 2016-2018\. 10\. The Project went from the premise that Burundiâs potential for exporting high quality Arabica coffee during peak production years could reach 60,000 tons annually (compared to 15,000 tons achieved in 2011)\. The R-SEA Action Plan mentioned above, was prepared with a set of recommendations and strategic directions which the Project followed through pilot actions\. 11\. At the production phase, the Project would set-up a training program on shade-grown coffee and sustainable land and water management in selected areas\. The Project would address the risk of increased land degradation from the use of coffee farmers of marginal lands on steep slopes and the elimination of shade cover on many hillsides\. 12\. At the processing phase, the Project would promote environmentally sound standards for CWS, and the development of a study on how to better regulate water pollution from the CWS, as an increase in coffee production without any efficient technology or specific regulations may lead to an increase in the demand for water as well as increased water pollution from coffee dumped into the rivers\. 13\. In addition, at the marketing phase, the Project would support the certification of selected CWS and a marketing study for the potential of coffee to access niche markets and diversification strategies\. 14\. Finally, the Project would work in one Protected Area (PA) â the Bururi Natural Forest Reserve, to adequately manage the agricultural expansion within the PA\. The implementation of the above Project activities, if successful would be scaled up throughout the country, thereby creating an enabling environment for a long-term sustainable coffee sector that will contribute to the development of the agriculture sector, the reduction of poverty levels, and the improvement of ecosystem management\. Figure 1 below illustrates the Theory of Change of PADZOC\. 15\. Sustainable Land and Water Management (SLWM) in this Project would involve the adoption of the landscape approach that, through appropriate management practices, enables land users to maximize the economic and social benefits from the land while maintaining or enhancing the ecological support functions of the land resources\. It involves a holistic approach that integrates social, economic, physical and biological assets from agricultural land to forest land to protected areas\. 16\. The Project would assist Burundi to improve the sustainability of coffee landscapes through: (i) implementing sustainable land and water management practices in productive areas, in order to prevent further land degradation and rehabilitate degraded lands (factors that have negatively) impacted coffee production); (ii) establishing a shade- grown coffee pilot program that promotes, with environmentally friendly production technologies, a polyculture that includes coffee as well as various types of trees and other plants that provide additional products for income generation and consumption; (iii) promoting sustainable management in a key PA, under the premise that protected area demarcation has been agreed between key stakeholders and the neighboring local communities have alternative sources for improving livelihoods, so that the risk of agricultural expansion to the area will be reduced; (iv) addressing point source pollution through the establishment of efficient, environmentally-friendly coffee processing technologies and the strengthening of policies and regulations; (v) promoting marketing and commercialization strategies for high-quality coffee, planted with shade and processed with reduced environmental negative impacts; and (vi) piloting initiatives that generate alternative sources of income such as agri-tourism and Page 8 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) ecotourism\. Accessing higher value markets with shade-grown coffee benefits the coffee sector as well as generates an incentive for the protection and conservation of the environment\. These measures also strengthen the capacity of the public sector to manage and regulate ecosystems services, following a landscape approach that considers both geographical and socio-economic considerations to manage the productive and protected areas\. Figure 1\. PADZOC Theory of Change Page 9 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Project Development Objective (PDO)/Outcome 17\. The Project Development/Global Environmental Objective (PDO/GEO) and outcome was to pilot sustainable land and water management practices in the Recipientâs coffee landscape\. Key Expected Outcome and Outcome Indicators 18\. The only key expected outcome from âunpackingâ the PDO is âto pilot sustainable land and water management practices in the coffee landscape of Burundiâ since sustainable land and water management practices are intertwined\. The following three indicators were used to assess the project outcome: (i) Land area where sustainable land and water management practices (including shade grown coffee) have been adopted as a result of the project7; (ii) Environmentally friendly effluent control systems implemented in selected CWS because of the project; and (iii) Direct project beneficiaries\. Components 19\. The project had four components, as summarized below\. Annex 3 contains details on the estimated and actual costs by component\. Component 1: Sustainable Coffee Landscape Management (US$2\.82 million GEF at appraisal; US$2\.83 million actual) 20\. This component aimed to promote sustainable land and water management (SLWM), agroforestry and shade grown coffee cultivation, as well as conservation activities in one protected area (Bururi Natural Forest Reserve)\. The component was to focus on addressing the landscape approach that integrates peopleâs livelihood objectives in the management of the different ecosystems within the landscape (including productive and protected areas)\. The component was to support SLWM matching grants for associated subprojects to applicants (farmer groups, associations or cooperatives) in degraded areas of the landscape mosaic\. The subprojects were to provide financial and technical assistance to implement SLWM technologies\. The component was also to promote shade-grown coffee plantations through on-the-ground matching grants for associated subprojects\. The component equally included supporting the process for the GoB to become ready for the REDD+ Strategy8\. The sub-components included: (i) sustainable land and water management; (ii) Promotion of shade-grown-coffee; (iii) Research and development; (iv) Sustainable protected area management; and (v) Promotion of sustainable livelihoods for local communities (including the socially marginalized Batwa community)\. Component 2: Addressing Pollution Point Sources in Coffee Washing Stations (US$0\.59 million GEF at appraisal; US$0\.24 million actual) 7 It should be noted that the indicator is worded the same way as the Board Approved Project Appraisal Document (PAD)\. The Operations Portal Results Framework in Annex 1, has a slightly different wording, but this has no effect on the parameters of measurement nor on the unit of measurement\. 8 Reducing emissions from deforestation and forest degradation, and the role of conservation, sustainable management of forests, and enhancement of forest carbon stocks are a set of activities collectively referred to as âREDD+â\. Burundi has app lied to become part of the FCPF that assists countries in their REDD+ efforts\. Page 10 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) 21\. The component aimed to address the sources of pollution in the CWS that would have direct environmental benefits and support attempts to access higher value markets that demand improved production standards\. The component was to promote environmentally sound processing of coffee cherries through: (i) matching grants for associated projects that were to upgrade and/or establish six effluent control systems including water efficient eco- pulpers at washing stations (two in each target province) managed by local farmer cooperatives or domestic privately-owned stations\. The main purpose of these systems was to reduce the volume of water consumption and remove waste organic matter that can be used for composting, but this was later changed to improving the quality of the water (see changes below)\. The component was also to finance the establishment of standards and regulations to promote the environmentally sound operation of CWS\. In addition, the component was to strengthen the institutional capacity to monitor the implementation of sustainable technologies and the enforcement of regulations and policies\. The sub-components included: (i) Promotion of environmentally friendly processing systems; (ii) Standards and regulations for the treatment of effluents in CWS; and (iii) Training program for environmental and social standards\. Component 3: Diversification of Livelihoods (US$0\.41 million GEF at appraisal; US$0\.43 million actual) 22\. The component aimed to support a marketing study and action plan to be conducted by InterCafÃ© to identify target markets for the regionâs coffee, along with potentially suitable certification schemes\. Following the marketing study, the project was to finance initial certification costs for three farmer cooperatives and washing stations supported under the previous components\. The certification process was to promote or strengthen increases in the adoption of environmentally friendly management practices\. The component also aimed to support an ecotourism pilot in the Bururi Forest Nature Reserve as well as pilot two community based agritourism initiatives in selected coffee farms\. Component 4: Knowledge and Learning (US$0\.38 million GEF at appraisal and US$0\.03 TLF; US$0\.72 million actual) 23\. The component aimed to support project management, implementation of project monitoring and evaluation (M&E), particularly an Impact Evaluation (IE), as well as communication activities\. Specifically, the component was to finance the employment of an additional accountant and expert in sustainable land management to integrate into Agro-Pastoral Productivity and Markets Development Projectâs (PRODEMA) PCU9, additional costs for PRODEMAâs M&E, the implementation of an impact evaluation to assess the impact of shade coffee on specific variables, and a communication strategy for the project\. 24\. The TLF amount of US$33,000 (which was not part of the PAD), aimed to provide a scholarship (through Illy CaffÃ©10) to one student from Burundi to study a masters in coffee economics in Trieste, Italy\. The student, after successfully obtaining his/her degree, would then return to Burundi to support PADZOC by building local capacity in coffee promotion and marketing\. 25\. The Projectâs area of intervention was located in three of the countryâs provinces, chosen according to the following criteria: (i) already included in PRODEMA; (ii) high potential for cultivating shade grown coffee; (iii) presence of coffee washing stations in operation; and (iv) proximity to a national protected area\. 9 During project appraisal, it was agreed that the existing project coordination unit (PCU) of the World Bank-financed Agro- Pastoral Productivity and Markets Development Project (PRODEMA) would also serve as the PCU for the Sustainable Coffee Landscape Project\. 10 Illy CaffÃ¨ is an Italian coffee roasting company (private sector) that specializes in the production of espresso coffee\. Page 11 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) 26\. The three provinces selected were: â¢ Bubanza, bordering Kibira National Park â¢ Bururi, where the Bururi Forest Nature Reserve is located â¢ Muyinga, bordering the Ruvubu National park\. Muyinga has also been shown to have a population receptive to innovations and where many coffee plantations are young\. 27\. The Implementations arrangement were as follows: â¢ The Ministry of Water, Environment, Land and Urban Planning (MEEATU) oversaw the activities to promote regulatory aspects towards environmentally friendly coffee processing\. â¢ InterCafÃ©, an autonomous professional organization created for consultation and decision-making regarding the coffee sector, was directly involved in the implementation of the sustainable shade-grown coffee production program, the activities related to coffee certification and marketing, SLWM practices, the piloting of agri-tourism initiatives in coffee farms and the communication strategy\. â¢ The Agricultural Research Institute (ISABU), supported research activities and the development of the Manual for Shade-Grown Coffee cultivation\. â¢ The Burundian Office for Environmental Protection (OBPE), the agency responsible for the management of national parks and nature reserves, oversaw the activities involving the Bururi Forest Nature Reserve\. â¢ The Regulation Authority of the Coffee Value Chain (ARFIC), the public enterprise that represents the GoB in the coffee sector, supported the training program regarding environmental and social standards at the CWS\. 28\. The project built on PRODEMAâs decentralized structure\. The activities at the local levels were implemented through the three decentralized Inter-Provincial Coordination Units (IPCUs) established for PRODEMA and located in each of the provinces\. The IPCUs oversaw field coordination, guidance, and supervision of project activities\. B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION 29\. The Project was revised through a restructuring in February 2017\. These resulted in changes to: (i) the geographical target area, (ii) the allocation of funds between the components and disbursement categories, (iii) Inclusion of an additional activity, (iv) two intermediate level indicators, and (v) the project closing date\. These changes are detailed below\. 30\. The project restructuring made no changes to the PDO, PDO outcome indicators and targets\. Revised Components 31\. (i) Changes to the geographical target area\. As a recommendation from the 2016 mid-term review (MTR), PADZOC activities on SLWM and shade-grown coffee were scaled up to include the Kayanza province, as successful demonstration plots had been established at ISABUâs research station in the Province and could be used as a platform for training\. 32\. (ii) Changes to the allocation of funds between the components and disbursement categories\. Changes to the allocation of funds between the components and reallocation between disbursement categories were made to reflect the changes agreed during the MTR mission\. See Table 1 below\. Given the good research results from ISABU observed during the mid-term review, there was a need to further scale-up capacity-building of smallholder farmers on sustainable techniques by increasing the number of demonstration sites and establishing Farmersâ Field Schools (FFS)\. Page 12 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) There was also a need to finance the PCU staff, as there was a financing gap between the end of PRODEMA project in December 2016 and the start of the PRODEMA Additional Financing in March 2017\. Funds were therefore reallocated from Component 2 and 3 (where activities were at an advanced stage of implementation and almost completed) to Component 1 (capacity-building in SLWM and shade-grown coffee) and Component 4 (staffing)\. It should be noted that change in allocation only affected the GEF trust fund of US$4\.2 million only\. 33\. (iii) Changes to project activities\. PADZOC established a Memorandum of Understanding with the National Coffee Growers Associations (CNAC) so that they could provide extension services to establish more demonstration sites, including the pilot establishment of FFS for SLWM and shade-grown coffee\. Table 1\. Budget Reallocation as part of the 2017 Project Restructuring Other Changes 34\. (iv) Changes to two intermediate level indicators\. The revisions to the two intermediate level indicators were as follows: â¢ The intermediate level indicator 2\.3, âReduced amount of water utilized for the processing of coffee as a result of the projectâ was replaced with âCoffee Washing Stations (CWS) meet national effluent discharge standards as a result of the projectâ\. The standards used were the ones established in the Joint Ministerial Directive No\. 770/468 dated 25 March 2014 (Ordonnance MinistÃ©rielle Conjointe nË 770/468 du 25 mars 2014 portant fixation des normes de rejet des eaux usÃ©es domestiques et industrielles au Burundi)\. The change in the indicator was justified by the investments that the project was to finance for the environmental improvement of the CWS as agreed by the team, PCU and station owners\. These CWS are not constrained by access to water and so there was less incentive to aim for improvements that reduce water consumption; the constraint was reducing the pollution that goes into the effluents\. The indicator is also consistent with the study that was prepared within the project regarding the norms and regulations for the CWSâ environmental management\. â¢ The intermediate level indicator 3\.3, âTourists visiting new agri-tourism and eco-tourism initiatives as a result of the projectâ was removed, as there was a potential attribution problem, as number of tourist visits is beyond the control of the project\. For instance, it was not possible to attribute the 90 tourists tracked only to project activities\. The PCU and the Bururiâs reserve manager continue however to keep track and report separately on the number of tourists that visit the protected area\. 35\. (v) Changes to the project closing date\. An 18-month extension of the closing date was granted to make up for: the delayed baseline survey for the impact evaluation for part of component 1; the political crisis in 2015 that Page 13 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) slowed down implementation, and the pro-longed drought that affected two rainy seasons and in turn disrupted Project plantation activities\. The closing date was extended to October 30, 2018, to allow the Project to complete its activities\. Rationale for Changes and Their Implication on the Original Theory of Change 36\. The changes explained above had no implication to the PADZOC theory of change\. II\. OUTCOME A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating Rating: High 37\. PADZOC aligns with Burundiâs 2018 SCD, which highlights the dependence of the economy on agricultural land productivity and the implications of land degradation and climate change on domestic growth, livelihoods, and overall development\. In particular, given the identification of the third aspect of fragility - environmental, long-term development goals include the mitigation of land degradation and environmental fragility\. PADZOC also contributes to the short and medium-term development goal of increasing food security by ensuring nutritional needs are met, by encouraging polycultures through shade-grown coffee practices, where fruit trees like banana (which form an important part of nutritional diet) are grown together with the coffee plants\. 38\. PADZOC was aligned with the CAS FY13-16\. As discussed in paragraph 8, PADZOC was well aligned with the FY13- FY16 CAS through two strategic objectives (i) âImproving Competitiveness and particularly the âimproved business climate and increased private investment outcome, by strengthening the countryâs largest employment sector, expanding research and extension services, assisting farmersâ organizations, establishing marketing strategies for high-quality coffee and promoting polycultures in pilot areas and; (ii) âImproving Resilience by Consolidating Social Stability, and particularly the âexpanded safety nets to reduce volatility of livelihoods outcome that, among others, aims to reduce environmental degradation and improve livelihoods\. 39\. The PDO is also in line with GEF-7 Strategy11 which continues to prioritize: â¢ Biodiversity, which is built around achieving three objectives: (i) âmainstream biodiversity â¦across production landscapesâ, (ii) âreduce direct drivers of biodiversity lossâ, and (iii) âstrengthen biodiversity policy and institutional frameworks\.â â¢ Land Degradation, in line with the Land Degradation Neutrality (LDN) concept, with a view to maintain or improve ecosystem services, land productivity, food security, and to increase the resilience of the land and the populations dependent on it\. The GEF-7 Land Degradation Focal Area seeks to achieve the following objectives: (i) enhance on-the-ground Implementation of LDN, and (ii) create an enabling environment to support LDN implementation globally\. â¢ Sustainable Forest Management, which is built around promoting good forestry management practices and continues to address challenges associated with sustainably managing and protecting forests and drylands\. 11GEF 2018\. Summary of the Negotiations of the Seventh Replenishment of the GEF Trust Fund\. https://www\.thegef\.org/council-meeting-documents/summary-negotiations-seventh-replenishment-gef-trust-fund Page 14 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) 40\. It is also in line with one of the new impact programs under GEF-7, the Food, Land Use and Restoration (FOLUR) which seeks to transform food and land use systems and help countries reconcile competing social, economic, and environmental interests by moving away from unsustainable sectoral approaches\. 41\. The PDO of the project is still relevant in the following current strategies: PRSP II; National Coffee Strategy (2015- 2021); Vision Burundi 2015; Burundiâs commitments as the current chair of the Commission of Central African Forests, 2015 Africa Climate Business Plan; 2016 Climate Change Action Plan; the FY16â20 Forest Action Plan, and the âVulnerability and Resilienceâ pillar of the World Bank Strategy for Africa, and the UN Decade of Sustainable Landscape Restoration\. 42\. The PDO fits in well with the new WB Climate Change Adaptation on Resilience Action Plan for the 2025 climate targets12 and the WB Africa Strategy 2023\. 43\. The PDO is also still relevant to the new Burundi National Development Plan 2018-2027 which among others, aims at protecting the environment and promoting the coffee sector\. 44\. Given that the project PDO is still very relevant in the current context, the relevance of PDO is rated High\. B\. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Outcome 45\. This section is organized around each of the three PDO-level indicators that contribute to the Project outcome, which is to pilot sustainable land and water management practices in the coffee landscape of Burundi\. âª PDO-Level Indicator 1: Land area where sustainable land and water management practices (including shade grown coffee) have been adopted as a result of project (overachieved, 103\.5%) 46\. The first PDO-level indicator was achieved through financing matching grants to beneficiary farmer groups (through sub-projects) that would promote investments in sustainable land and water management practices (SLWM) and training in the agricultural plots\. The sub-projects provided financial and technical assistance to beneficiaries to undertake activities that would generate economic and social benefits, while reducing land degradation, rehabilitating degraded areas and ensuring optimal and sustainable use of land and water resources\. A range of options in terms of SLWM technologies (see Table 2 below) were proposed to farmers, with the support of the SLWM project specialist, specific to the respective agro-ecological zones\. Farmer beneficiaries received technical assistance in selecting the appropriate technologies to be included in each sub-project\. 12World Bank 2019\. The World Bank Group Action Plan on Climate Change Adaptation and Resilience\. Washington, DC: World Bank\. Â© World Bank\. Page 15 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Table 2\. SLWM technologies 47\. The SLWM sub-projects did not necessarily require financial contribution from beneficiaries (although it was strongly recommended)\. However, for these sub-projects to be considered, the following criteria had to be met: (i) to increase land productivity and / or water use efficiency; (ii) improve the living conditions of the beneficiaries and; (iii) improve ecosystems while respecting the environment\. 48\. As a result, 66 sub-projects on SLWM [including restoration activities in the Bururi Natural Forest Reserve (RNFB)] and 324 sub-projects on shade-grown coffee were financed and implemented\. The Project provided grants totaling 2,535,442,899 Burundi Francs (about US$ 1,386,285), where beneficiaries were able to match about 10%\. These sub- projects benefitted some 13,309 households (of which 5,599 were Female headed) and a total of 4,658 hectares of land were brought under SLWM, Forest and shade-grown coffee (against the original target of 4,500 ha)\. See additional results from the PADZOC impact evaluation study 201813 in the Efficiency section below and in Annex 4\. 49\. The sub-projects included the cultivation of eucalyptus, calliandra, grevillea, cedrella and leucaena plants, as well as banana plants to control erosion and provide an additional source of income\. During the field mission, brief conversations with some of the beneficiaries of the project in Bubanza province seem to indicate that the implemented SLWM practices have somewhat contributed in reducing soil erosion and increasing mulching of hardwood species adopted in polyculture plantations\. 50\. However, as noted during the mid-term review of the Project in October 2016 and for which the Implementation Completion and Results (ICR) mission continued to observe in December 2018, the application of SLWM technologies in certain areas visited in Bubanza continues to be fragmented and fails to properly stabilize steep slopes\. The recent establishment of 28 FFS (seven in each of the four provinces), should help to mitigate this issue through structured, time-bound and participatory approaches\. The ICR mission confirmed that the FFS were successfully established and managed [by 33 coffee farmers and extension agents (including eight women)] and that farmers were being properly trained and assisted\. The FFS trained farmers have started to interplant field crops, bananas and some fruit and shade trees in their coffee fields\. It will take time before the trees are tall enough to produce the needed shade, but the bananas and field crops have already started to financially benefit the farmers and stabilize the soil\. According to the farmers, FFS facilitators of CENAC and the field staff of ISABU, the FFS approach has proven to be more successful in 13 PADZOC Impact Evaluation Report, June 2012 and December 2018 Page 16 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) convincing and supporting farmers in adapting shade grown coffee principles compared to the traditional demonstration plots\. The new WB-financed PACSC project will continue to support the FFS established under PADZOC\. 51\. The project supported the creation of three research sites on shade-grown coffee at the ISABU centers in Kayanza and Gitega, where data were collected to evaluate coffee growing conditions under different shading systems and with different cash crops\. Results showed that Grevillea (shade-tree) and Banana (cash crop) are the most popular species associated with coffee\. These two species are found in large numbers and everywhere in the three research sites\. Their popularity is explained by the fact that these species are the most profitable, multi-purpose and adapt well throughout the coffee landscape\. In addition, according to information collected during the interview with coffee growers by ISABU, shade-grown coffee plants benefit from the microclimate created by shade trees as well as mulching and fertilization from falling leaves\. Consequently, shade-grown coffee plants have an average but steady yearly yield\. Furthermore, shade-grown coffee plants are strong, lush and produce good quality cherries (very ripe and heavy); pests such as the Borer in coffee tree trunks and termites cause less damage in shade-grown coffee plants\. Products such as timber, firewood and stakes from these trees are important sources of income during the lean season\. Table 3 below summarizes the main beneficiary gains from associating trees and cash crops with coffee plants\. Table 3\. Main Beneficiary Gains Associated with Shade-Grown Coffee (shade trees and cash crops) Site Gasanda (Bururi) Mwakiro (Muyinga) Musigati (Bubanza) Type of association Association with âª Firewood âª Timber and firewood âª Timber and firewood shade trees âª Timber âª Mulching âª Mulching âª Mulching âª Production of trellises âª Soil moisture increase âª Additional source of âª Steady coffee yield every âª Production of trellises income year âª Additional source of income âª Production of good quality cherries (very ripe and heavy) Association with cash âª Food security âª Food security âª Food security crops âª Additional source of âª Additional source of income âª Additional source of income income âª Protection and âª Space saving multiplication of in situ seeds against diseases 52\. Training modules and five guidelines on SLWM technologies and practices, as well as a manual on shade-grown coffee were produced, validated, and translated in Kirundi (the national language) to facilitate the transfer of knowledge to farmers\. A total of 23,506 individuals (over a target of 30,000) were trained in SLWM, shade-grown coffee and biodiversity conservation practices\. The preface of the shade-grown coffee manual is currently awaiting the signature of the Minister of Agriculture, showing good progress towards the institutionalization of shade-grown coffee\. 53\. With regards to support to the REDD+ readiness process, PADZOC funded the participation of the REDD+ Coordinator to a conference organized by the International Union for Conservation of Nature (IUCN)\.The Project supported strengthening the protection and management of the Bururi Forest Nature Reserve (RNFB), due to its globally recognized biodiversity and its proximity and importance to coffee growing areas in terms of hydrology and soil fertility\. Established in 1951, the RNFB is classified as a protected area under active management, to ensure the maintenance of habitats and monitor the conditions of specific species (IUCN Category IV management)\. About 23,000 Page 17 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) people, including an indigenous Batwa community, live near the Bururi Reserve; some rely on natural resources exploited in or near the reserve for their livelihoods\. Given the local scarcity of land and the increased profitability of many crops (including coffee), the RNFB experiences agricultural encroachment\. 54\. PADZOC, through the Burundian Office for Environmental Protection (OBPE), took several actions to help protect the RNFB: (i) properly equip and train the eco-guards (in charge of patrolling the Reserve) to camp in the forest and work day and night to put an end to the illegal acts of degradation in the reserve and rehabilitate the dilapidated buildings of the OBPE in Bururi; (ii) train surrounding communities and local authorities on the importance and proper management of the Reserve; (iii) provide cash-for-work and other incentives to these communities in return for forest restoration and rehabilitation work; and (iv) support the establishment of the Reserve boundary; 55\. As a result, the main infractions (i\.e\. sawmilling, recurrent bush fires, boundary encroachment) that threatened the Reserve completely stopped (eco-guards and community members jointly patrol the forest); 264 ha (out of the total 2,600 ha) of the Reserve that was previously being severely degraded by agricultural encroachment practices is now at an advanced stage of natural regeneration; the Protected Area Management Effectiveness Tracking Tool (PAMETT) score is 8014 (higher than the original target of 5015), indicating a noticeable improvement in biodiversity of the Reserve (see table 4 below on species frequency observation); establishment of the Reserve boundary (by setting 511 boundary markers); 15 environmental clubs in both primary and secondary schools and 19 local community associations around the RNFB have been established; and the development of a 10-year RNFB management Plan (2016 - 2026)\. Table 4\. Species Observation in RNFB from 2015-2018 Frequency of Frequency of Frequency of Frequency of Species Observation 2015 Observation 2016 Observation 2017 Observation 2018 Diademe Monkey 15 202 127 153 Chimpanzee 6 37 61 49 Turaco 2 21 24 16 Hornbill 2 15 21 8 Green Monkey 1 3 10 7 Grimm's duiker 1 5 3 0 Squirrel 1 3 3 1 Hare 0 0 1 0 Jackal 0 0 1 0 Total 28 286 251 234 (Source: Project Completion Report December 2018) 56\. As mentioned above, in exchange for their restoration efforts in the Reserve, a few beneficiary associations received livestock from the Project (49 households received a bull each and 91 households received three goats each)\. 14 The PAMETT score underlying data can be found in the GEF tracking tools for Biodiversity filed under WBdocs at: http://wbdocs\.worldbank\.org/wbdocs/drl/objectId/090224b086bf0c83 15 There is a system generated error in the Results Framework in Annex 1 for this indicator, where the original target should read 50 and not 12\. Page 18 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) In addition to having manure, bull calf fattened after four months brings an additional income of about 400,000 and 500,000 Burundi Francs (BIF) (equivalent to about US$222-278)\. 57\. One of the biggest successes of the Project, was the integration of the indigenous Batwa community into the planning and management of the RNFB in 2017\. The 28 Batwa households, who were previously squatting in the center of the Bururi Commune and dependent of the natural resources of the Reserve, were organized into community groups and received financial support from the Project in the amount of 54,288,000 BIF (equivalent to US$30,000) in exchange for helping to protect the Reserve\. The OBPE encouraged the Batwa to place a third of the cash as savings\. The Batwa then used these savings to purchase three ha of land on which to establish themselves\. The additional financing for the WB-financed PRODEMA project has furthermore helped to build houses for the Batwa on their newly purchased land\. The president of the Batwa community groups expressed his thanks to the Project saying that it was like receiving "the promised land"\. The integration of the Batwa in the management of the Reserve has been successful and the Reserve is now well protected\. A tourist trail accessing a waterfall in the Reserve has been created by the Batwa and is now open to visitors\. The Project made a documentary on the Batwa which can be viewed using the following link: https://www\.youtube\.com/watch?v=UjFGebWEUmU 58\. The Project further supported the same Batwa community to sustainably develop and manage their new land\. The sub-project involved 28 households (53 Batwa community members of working age) in the development of their property through the installation of anti-erosion devices and food production through sweet potato crops and Amaranth, primarily aimed at improving the livelihoods of the community\. With the participation in the various works of sustainable management of the lands on their property, the Batwa should be able to benefit from the generated incomes for the daily food needs and with the daily savings, they will be able to constitute a fund which will allow them to buy small livestock goats\. 59\. In addition, several promising lines of eco and agro-tourism in and around the Bururi Reserve have been established under PADZOC: (i) chimpanzee tracking and habituation by trained trackers of the OBPE (chimpanzee observation rate is at 79%); (ii) rehabilitated thermal waters of Muyange (managed by a cooperative); (iii) tourist foot trail leading to the Siguvyaye waterfalls in the Reserve (managed by the Batwa); and (iv) house of coffee, for coffee tasting experience (managed by a CWS cooperative)\. 60\. It should be highlighted that the eco-guards, trackers, and the cooperative managing the thermal waters, which were previously financed by the Project, are now financed by the Government, thereby ensuring the sustainability of these Project activities\. âª PDO-Level Indicator 2: Environmentally friendly effluent control systems implemented in selected CWS as a result of the project (achieved, 100%) 61\. The discussions under this indicator will include both the pollution and certification aspects of the CWS\. 62\. The Project supported the rehabilitation of selected CWS to help address point source pollution to help protect the health of waterways as well as better access to higher value markets that require improved standards of production\. This was done through direct investments in technology improvements at selected CWS and support in strengthening policy and regulatory frameworks\. 63\. The Project supported agricultural cooperatives or private stations by funding relevant activities to improve their treatment and pulping systems for quality coffee\. Six CWS were rehabilitated (two in Bubanza, two in Bururi, one in Page 19 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Muyinga, and one in Ngozi)\. As a result, the coffee cherry pulp is now separated from the water, and not washed away with the water as was the case previously\. This has significantly reduced organic pollution as well as stopped the odors that arose from rapid fermentation of the pulp in the water\. 64\. A water and effluent quality analysis work in the six CWS was carried out by a consultant in May 2017 which reported on eight measured parameters [pH, temperature, 5-day Biological Oxygen Demand (BOD5)16, Chemical Oxygen Demand (COD)17, total dissolved solids, oils and fats, total Nitrogen, total Phosphorus]\. When compared to the national standards, four out of the eight water quality parameters were well within the national standards (temperature, total nitrogen, total phosphorus, oils and fats) whereas the remaining four had yet to reach the required standards\. A second analysis made in April 2018 confirmed the initial results of 2017, though pH results showed clear improvements, the three remaining parameters did not change much overall (see detailed results in Annex 6)\. Upon further discussion with the infrastructure specialist of the project implementation unit, two possible reasons were given as to why the water quality had not yet reached the standard norms: (i) the rehabilitated CWS might be operating at over capacity (where too much coffee is being processed at one time); and (ii) the cooperatives are utilizing too much water in the washing that the water simply flows over the pre-treatment tanks, without having time to seep through the tanks and removing the contaminants\. This will be further investigated under the PACSC project, that seeks to rehabilitate 80 CWS across the nation\. The following video link shows the rehabilitation of the CWS: https://www\.youtube\.com/watch?v=HJqer5fLgys 65\. The project supported the definition of standards and regulations to promote the management and treatment of environmentally friendly water at CWS that were discussed and agreed during a national workshop\. This exercise was carried out by a team of two consultants (a lawyer who focused on reviewing the legislation on treatment standards and a technical expert who focused on treating CWS effluents) in 2016 and the final report was presented at a national validation workshop in September2016\. The report was validated and submitted to the national regulations authority of the coffee value chain (AutoritÃ© de Regulation de la FiliÃ¨re CafÃ© - ARFIC) for further processing and hopefully future adoption\. 66\. The Project strengthened the capacity of the Ministry of Environment, Agriculture, Livestock, ARFIC, IntercafÃ© and NGOs working in the coffee sector to monitor the implementation of sustainable technologies and the enforcement of regulations and policies\. The Project also facilitated the participation of these institutions in meetings with the East African Community on the harmonization of environmental standards and standards for CWS\. The actual trainings were organized during the first quarter of 2018\. 67\. A workshop was organized in 2017 to inform and disseminate the standards and regulations in the management of effluents from the CWS\. The beneficiaries of this workshop were the representatives of the CWS from the Provinces of Bubanza (10 representatives), Bururi (5 representatives), Kayanza (40 representatives) and Muyinga (15 representatives) representing a total of 70 CWS\. As a result, there has been a 20% increase in the number of Fairtrade certification indicators met by farmers each year\. 68\. A marketing study and an action plan were done in 2016 with the support of IntercafÃ© to identify the target markets for coffee in the region, as well as potentially appropriate certification systems (particularly organic, coffee 16 5-day Biological oxygen demand (BOD5) measures the quantity of biodegradable organic matter contained in water\. This parameter is expressed as the milligrams of oxygen needed to break down the organic matter contained in a liter of water over five days\. 17 Chemical oxygen demand (COD) is a measure of the capacity of water to consume oxygen during the decomposition of organic matter and the oxidation of inorganic chemicals such as ammonia and nitrite\. Page 20 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) grown under shade, fair trade, superior quality, etc\.)\. As a result, the project promoted the development of relations and negotiations between cooperatives, IntercafÃ© with international buyers to access high value markets for the exceptional specialty and quality of Burundian coffee\. 69\. As result of the marketing study, the Project funded the initial Fairtrade certification costs for two of the newly rehabilitated CWS (Bururi and Bubanza)\. The two cooperatives benefited from a grant of two subprojects to meet certification needs\. The subsidy benefited 1,411 households, of whom 342 were women\. Both cooperatives obtained their Fairtrade certificates in 2016\. After the Projectâs mid-term review in 2016, two other cooperatives (in Musigati and Burunga) were added to the list and are currently in the process of obtaining their certificates\. The certification process for the two cooperatives are being delayed because the auditors are not travelling to Burundi for security reasons, so this will be completed under the new World Bank-financed PACSC Project\. The benefits of certification allow the subscriber to comply with a certain number of actions or code of conduct\. For the Fairtrade certificate, these are: (i) transparency in management and good organization, respect for human rights (e\.g\. right of children), (ii) respect of environmental conditions (through proper treatment of wastewater before reaching the main waterways), (iii) the resulting benefits are shared equitably among members, which can encourage coffee growers to continue their work, (iv) Financial benefits: Although the market for certified coffees is not always guaranteed, it opens up more opportunities\. It is an additional asset to access the markets\. 70\. In 2016, a conference and exhibition for the promotion and marketing of specialty coffee through Specialty Coffee Association of Japan (SCAJ) took place in Japan from September 28 to October 2, 2016 and saw the participation of two people from IntercafÃ©\. Another promotion and marketing mission of the Burundian coffee was carried out and nine Burundians including two people of IntercafÃ© participated at the 27th conference exhibition of the Specialty Coffee Association of Atlanta, which took place in the USA from 13 to 17 April 2016, where they had a chance to meet with different partners, including the Coffee Quality Institute and the ACE Coffee Company\. Building relations with international buyers is crucial, as having these buyers come into direct contact with the owners of the washing stations as well as the producers, these buyers get to learn how the coffee is produced\. These interactions make it possible to know the difficulties incurred by one and the other but also to exchange on the quality that is required\. This helps in establishing good business relations in the long term\. The main stakeholders in the Burundi coffee sector (InterCafÃ©, ARFIC, and the National confederation of coffee grower association (ConfÃ©dÃ©rations Nationales des Associations de CafÃ©culteurs - CNAC) have organized each year (with support from PADZOC) a program of selection of the best coffee of Burundi called Cup of Excellence to promote the Burundian coffee\. The activity of the Cup of Excellence took place in August 2014, 2015 and 2016\. This competition has allowed buyers to send their tasters to select the best coffees by being part of the jury\. This is an opportunity for them to make direct contact with the coffee growers and establish commercial relations\. âª PDO-Level Indicator 3: Direct project beneficiaries (over achieved, 119\.8%) 71\. The direct beneficiaries of the Project numbered 17,971 (over the target of 15,000) and benefitted from the total of 408 sub-projects implemented by PADZOC (SLWM, shade-grown coffee, restoration activities in the Bururi Reserve, rehabilitation of CWS, certification of CWS, livelihood alternatives for communities surrounding the Bururi Reserve, and agro-tourism)\. Page 21 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) C\. JUSTIFICATION OF OVERALL EFFICACY RATING Rating: Substantial 72\. At Project closing, the PDO-level indicators, namely: (i) Land area where sustainable landscape management practices were adopted as a result of project, (ii) Number of environmentally friendly effluent control systems implemented in selected CWS as a result of the Project and (iii) Number of direct project beneficiaries; attained 103\.5%, 100\.0% and 119\.8%, of their original target respectively, as shown in the Results Framework in Annex 1\. However, even though the effluent control systems were installed in the six targeted CWS, their effectiveness still needs to be improved under PACSC in order to comply with the national standards\. Though the project had to contend with slow implementation during the political unrest in 2015, severe droughts in 2016 (which disrupted plantation activities), and a reduction of the project implementation unit staff, which were previously financed under the PRODEMA, overall achievement of development outcome is Substantial based on the Project Completion Report and the field observations and interviews with the project stakeholders during the Implementation Completion Mission of December 2018\. 73\. The Project was transformational in introducing shaded-grown coffee to Burundi, where previously coffee mono- culture was predominant and enforced since the Belgian colonial times\. This adoption of a landscape approach through this and other appropriate sustainable land and water management practices, enabled land users to maximize the economic and social benefits from the land while maintaining or enhancing the ecological support functions of the land resources\. The shaded-coffee manual was elaborated by ISABU and the Preface will be signed by the Minister of Agriculture himself\. The Project beneficiary farmers have eagerly adopted the practice given that coffee grown under a poly-culture provides them with a more continuous and diversified source of revenue\. Furthermore, according to the impact evaluation conducted in 2018, project activities had a spill-over effect in other non-targeted project areas, where non-beneficiary farmers were starting to adopt shade-grown coffee\. The work done in Bururi has shown how involving marginalized communities like the Batwa in forest restoration and protection can be beneficial to both the communities and the forest\. CWS certification and promotion abroad under PADZOC are important if farmers are to attract foreign businesses and higher prices for coffee\. D\. EFFICIENCY Assessment of Efficiency and Rating Rating: Substantial 74\. The assessment below is organized in two parts: i) economic and financial analysis, and ii) efficiency of design and implementation\. 75\. Efficiency is rated Substantial as it is what would be expected in the projectâs sector\. The project delivery was efficient, with the sub-component of Component 1 alone having generated results and related benefits that are likely to last for years to come\. An impact evaluation (IE) study supported in PADZOC provided a series of scientific evidence that the project contributed to the expansion of shade-grown coffee production in Burundi\. Furthermore, this impact evaluation is first for Burundi in the environmental sector and will help pave the way for future IEs\. a\. Economic and Financial Analysis 76\. As detailed in Annex 4, among others, the study statistically confirmed that: (i) the project contributed to an increase in the shade-grown coffee adoption rate by 26% among the target beneficiaries, (ii) the target beneficiaries Page 22 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) on average increased shade-grown coffee trees by 37\.7 number of trees per farm between 2014 and 2018, (iii) on average, a coffee tree with shade produced 101 grams more coffee than a tree without shade18, and (iv) the project generated spillover effects in terms of adoption of SLWM practices in hills surrounding the project area\. All of this was achieved as a direct result of activities of sub-component A\.2 related to promotion of shade-grown coffee production, under which US$1\.65 million was disbursed according to the PADZOC final report\. The cost represented 40% of the total project cost of US$4\.2 million\. 77\. Together, the sub-component results translate into contribution to a net gain in coffee revenues in present value over a 20-year horizon of close to US$2 million at the discount rate of 20% and US$5 million at 5%\. In addition to the net gain in coffee revenues, the project generated other economic, social, and environmental benefits, even though accurate estimation of their magnitude was not possible\. For example, the IE study statistically confirmed that an indicator of food security improved among the direct project beneficiaries during the project, while no such improvement was found in the surrounding communities\. Environmental benefits of the project include the value of ecosystem goods and services generated in association with increased shade-grown coffee production\. Although directly relevant data were unavailable, the use of parameters from the economic analysis of the PAD for BLRRP, indicates that the results of Component A\.2 may amount to another US$1-2 million in net present value (depending on discount rates) due to increased vegetative cover, reduced soil erosion, and increased biodiversity (see Annex 4)\. Similar benefits likely were generated in activities associated with Bururi Forest Nature Reserve, but data were unavailable to include in the numerical analysis\. 78\. A GEF incremental cost analysis was conducted at appraisal and a post-incremental cost analysis was conducted at completion (see details in Annex 4)\. 79\. The resulting global environmental benefits include sustainable management of natural resources (land, water, and vegetation) on priority landscapes; protection of biodiversity on a critical protected area; protection against erosion and desertification in priority areas; and carbon sequestration\. These benefits also contribute to increased resilience in the country\. Carbon benefits under shade-grown coffee are estimated at 4,344\.1 t/CO2/yr and as a result of protecting the Bururi Forest Natural Reserve, 7,927t/CO2/yr are approximately being prevented from being emitted\. See more details in Annex 4\. b\. Efficiency of design and implementation 80\. Given that the PCU was experienced in implementing World Bank projects, it gave implementation of PADZOC an edge especially during the political crisis in 2015 and the severe drought in 2016\. The PCU staff had already been trained and well-acquainted with World Bank operational, fiduciary and safeguards procedures at the time of Project preparation, making it cost-effective\. However, the implementation of sub-projects under components 1 and 2 were delayed and two staff of the PCU resigned, but this was mitigated through the project restructuring and recruitment of staff\. See more details in Section III\.B below\. 18This a good result, given that a great number of shade-grown coffee around the world are less productive than sun-grown coffee\. However, it must be highlighted that sun-grown coffee in Burundi likely lacks significant inputs such as adequate pest control and fertilizer, given that most small coffee farmers in Burundi cannot afford inputs\. Page 23 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) E\. JUSTIFICATION OF OVERALL OUTCOME RATING Rating: Satisfactory 81\. The Satisfactory rating was reached given the high relevance of PDO, and the Substantial ratings of the both Efficacy and Efficiency\. 82\. The Project was transformational, in that it successfully managed to shift perceptions on shade-grown coffee, by changing deep-rooted behavioral traditions that date back to the colonial era of unsustainable sun-grown coffee mono-cropping practices\. This has required significant awareness, training and capacity building of various stakeholders and decision-makers and can be seen as a disruptive technology in the Burundian context\. Being able to pilot shade-grown polyculture coffee plantations and include it in the national agenda has been a grand success, as these practices were previously forbidden by the government\. With other results, guidelines and systematization of lessons, the project has had a positive impact on the expansion of shade-grown coffee, as shown in the impact evaluation study where a significant spill-over effect was detected in the control areas\. During the implementation completion review mission, the Ministry of Agriculture reiterated the relevance of project objectives\. Shade-grown coffee will significantly contribute in helping to adapt to climate change by increasing carbon sequestration\. In addition, the development of a set of standards and regulations to improve coffee processing, manual and technical guides on shade-grown coffee, as well as the certification of certain CWS, have all been achieved, which will lead to easier adoption of SLWM practices, reduced levels of downstream pollution, and improved livelihoods of coffee farmers through high quality coffee production\. Furthermore, the restoration of the Bururi Natural Forest Reserve and the support given to the indigenous Batwa community have been exemplary, both in terms of better protecting the surrounding coffee landscape by improving the hydrology and soil fertility, whilst improving the livelihoods of vulnerable indigenous communities\. The project demonstrated a holistic approach that integrates social, economic, physical and biological assets from agricultural land to forest land to protected areas\. 1\. F\. OTHER OUTCOMES AND IMPACTS Gender 83\. The Project has benefitted some 17,971 people, of which 40% women\. Though the Project has exceeded its target in terms of number of beneficiaries, it has not reached the target of 50% of women beneficiaries\. Therefore, projects like the new World Bank-financed Coffee Competitiveness Project and the new Landscape Restoration and Resilience Project will have to double their efforts in terms of providing more gender-sensitive awareness trainings and capacity-building\. The Implementation Completion Mission conducted in December 2018 had the chance to interview female members of the benefitting communities as well as female members of the benefiting cooperatives\. All of the interviewed cooperatives included female executive members, and in the case of Bururi, one of the community groups protecting the Reserve was led by a female\. When asked about the impact that the Project had on their livelihoods they all responded saying that the activities has empowered them in such a way that they now had more say in terms decision-making in the household due to their improved financial status\. A female executive member from the cooperative operating the CWS in the Musungi Commune in Bubanza Province named Mrs\. Seraphine Sabushimike, Executive Member, reported that she was now more economically independent with 210 coffee plants of her own\. Institutional Strengthening 84\. The Project through its numerous capacity-building and training sessions with the Ministry of Agriculture, CNAC, InterCafÃ©, ARFIC, ISABU and OBPE have significantly been able to raise awareness on the importance of sustainable Page 24 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) coffee practices among these institutions\. Encouraging results in the demonstration plots have also helped to change mindsets on the benefits of shade-grown coffee versus sun-grown coffee\. Furthermore, the fact that the preface of manual on shade-grown coffee will soon be signed by the Minister of Agriculture, means the manual will be institutionalized\. In Bururi, as a result of the Project rehabilitating the offices of the OBPE and properly training and equipping the staff, especially the eco-guards and the surrounding community associations have led to significant reduction in major infractions in the Forest Reserve, where both community members and eco-guards work together to regularly patrol the reserve\. The OBPE Director, Mr\. Leonidas Nzigiyimpal, in fact received a National Geographic Award in 2018, for his efforts in leading Project activities (see documentary on https://www\.nationalgeographic\.org/awards/buffett/)\. As a result, the trained trackers, eco-guards and the cooperative managing the thermal waters, which were previously paid under the Project are now being paid by the Government, thereby guaranteeing the sustainability of these activities\. Poverty Reduction and Shared Prosperity 85\. Though it is too early to report significant poverty reductions and shared prosperity, results from the demonstration sites and the rehabilitated CWS are encouraging\. According to the impact study conducted in 2018, which compared treated and non-treated areas before (2014) and after (2018) the Project showed that more than half of coffee farmers had adopted sustainable practices in the treated areas and as a result, coffee productivity had increased by 23% in these areas\. In terms of food security, the impact study reports a significant increase in food security from an index value of 16\.1 in 2014 in treated areas to a decrease to 11\.8 in 2018\. Results also show that treated areas had increased their expenditure on non-food items (such clothes, transport, house, electricity) compared to the controlled areas\. Other Unintended Outcomes and Impacts 86\. The small GEF project which had originally set out to merely introduce sustainable coffee practices in Burundi had a true transformational effect in terms of changing mindsets of the Government and local authorities to the advantages of a sustainable poly-culture shade-grown coffee system as opposed to an unsustainable mono-cultured sun-grown coffee one\. This is well documented in the video produced by the Project team: https://www\.youtube\.com/watch?v=cbCg6hN55CA 87\. In Bururi, thanks to Project support, the Batwa community were able to acquire three ha of land where they were further supported by the World Bank-financed PRODEMA additional financing in constructing 23 new houses\. This indigenous community as well as other restoration activities carried out to protect the Bururi Natural Reserve will be further supported and scaled-up to other reserves in country under the new World Bank-financed Landscape and Restoration and Resilience Project\. 88\. Rehabilitation and certification of CWS as well as continued promotion and marketing of high value coffee will be upscaled in the new World-Bank financed Coffee Competitiveness Project\. This new project will however not intervene in Bubanza and Kayanza provinces\. Page 25 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A\. KEY FACTORS DURING PREPARATION 89\. Realistic objectives\. The PDO was clear and realistic, emphasizing the piloting nature of the activities, aiming to introduce sustainable land and management practices in coffee landscapes\. The PDO was congruent with the financing scale of the Project, which was a small grant\. 90\. Simple design\. The activities were structured in such a way as to tackle all aspects of sustainable coffee production in a well-rounded way, i\.e\. the sustainable production practices, the high value promotion and certification of coffee to recognize these sustainable practices in order to improve the livelihoods of coffee farmers, and awareness raising and participation of communities, as well as local authorities and relevant institutions on the importance of protecting the natural-resource base not only to continue sustaining coffee production but to develop alternative sources of livelihoods like eco and agro-tourism\. 91\. Well-designed Results Framework\. The indicators were in general well aligned with operational objectives, though the intermediate indicator on âNumber of tourists visiting new agri-tourism and eco-tourism initiatives as a result of the projectâ was not directly relevant to the PDO objective or the output of the activities under component 3\. The latter indicator was later removed during the restructuring of the project\. 92\. Appropriate selection of stakeholders to engage or beneficiary groups to target\. The Project appropriately selected all the relevant stakeholders engaged in the coffee sector as well as in the neighboring parks and reserves to work with (i\.e\. CNAC, ARFIC, Ministry of Agriculture, ISABU, coffee farmers, communities surrounding the targeted landscapes, including the Batwa indigenous community)\. 93\. Adequacy of risk and mitigation measures identification\. Risks and mitigation measures were adequately identified, especially as regards to the fiduciary and institutional weaknesses\. These risks were mitigated by using an existing well-performing PCU to manage the project\. 94\. Readiness for implementation\. As mentioned above, given that the PCU was already in place and implementing the PRODEMA project at the time, the staff had already been trained and well-acquainted with operational, fiduciary and safeguards World Bank procedures at the time of Project preparation\. An experienced PCU would be ready to hit the ground running as soon the Project was declared effective as well as be more cost-effective\. However, it would have been more efficient to conduct the baseline for the impact evaluation prior to effectiveness, given the delays experienced afterwards\. The PCU was independent from the Ministry of Agriculture, which helped keep activities going during the 2015 crisis\. The time between approval (April 30, 2013), signing (May 23, 2013), and effectiveness (September 4, 2013) of the grant was equally on- track\. B\. KEY FACTORS DURING IMPLEMENTATION 95\. Factors subject the government and/or implementing entities control\. As mentioned above, the fact that the PCU was already in place and already implementing a WB-financed project, made Project implementation go much smoother overall with clear client commitment and leadership\. The coordination and clear roles and responsibilities of different stakeholders avoided many administrative barriers or structures that slow implementation\. However, the implementation of sub-projects under components 1 and 2 were significantly Page 26 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) delayed at start-up given the time taken to establish the baseline for the impact evaluation and the fact that the SLWM specialist had not yet been recruited by the project (a part-time SLWM consultant was recruited in 2016)\. Other implementation issues included the resigning of the financial management (FM) specialist in 2015 and the monitoring and evaluation (M&E) specialist in 2016\. The new FM specialist was recruited in 2016 (leaving a gap of about eight months) and the new M&E specialist was recruited in 2017 (leaving a gap of about one year)\. Though the PCU was able to pull through the FM gap by assigning temporal additional responsibilities to the project accountants, the gap in M&E was felt by the project, where during this time, data were not collected and aggregated on time, however, once the new M&E expert was hired, M&E was back on-track\. 96\. Factors subject to World Bank control\. The PCU staff were mostly being paid under the PRODEMA project, when the latter ended in 2015, there was a one-year gap between PRODEMA and the start of the Additional Financing under PRODEMA in 2016\. During this time, the WB agreed to have the Project pay for the salaries of key staff in the PCU so as not to disrupt project activities\. This shows the good collaboration between the environment and agriculture global practices\. Also, during the same time, a political crisis erupted in the country followed by a long drought period which caused some delays in disbursement and project implementation\. To try and mitigate this situation, the WB agreed during that time to increase monthly advances from US$240,000 to US$700,000 to facilitate implementation and take full advantage of the rainy seasons to make up for some of the delays\. Given all the delays incurred by the Project, the WB task team, informed by the recommendations from the mid-term review, recommended to restructure and extend the Project by 18 months to allow the Project to complete its activities, and exceed its targets for some of the indicators\. There was also good collaboration with the social and urban global practice, where the Task Team brought in a social development expert who recommended the revision of the indigenous plan in order to take into account the indigenous Batwa community\. The Task Team also liaised with the PACSC project and the Terrafrica Leveraging Fund, where both co-financed some of the PADZOC activities\. 97\. Factors outside the control of government and or implementing entities\. As mentioned above, the factors outside of the control of the Project, was the political crisis that happened in 2015 which somewhat hindered project activities and the prolonged drought in 2016 which disrupted plantation activities\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 98\. The Projectâs theory of change was clear and adequate indicators were identified to monitor the progress towards the PDO\. The monitoring plan was practical as it utilized the same as that of the World-Bank financed PRODEMA project that the Project Coordination Unit (PCU) was already implementing\. Therefore, the management information system (MIS) was based on an already functional and working system\. The MIS incorporated new information and data related to biodiversity, sustainable land and water management, and other topics relevant for to the Project, and supplemental training was extended to all relevant staff to cover these new topics\. As mentioned above, a need to further refine some intermediate indicators was identified during the MTR and changes to these indicators were made in the 2017 restructuring\. As part of the restructuring, an activity on establishing FFS was included\. The FFS are now accounted under the intermediate indicator on âResearch demonstration sites for shade- grown coffeeâ, however there is a difference between demonstration sites and FFS, where FFS follows a more participatory approach, and should therefore have been included as a separate indicator in the restructuring\. Page 27 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) M&E Implementation 99\. The data collection system that was applied for the Project was the same as that of the PRODEMA project and is based on the recording of technical and financial data (results) related to the implementation of the sub-projects by community organizations in the form of a registry\. These results were then collected by the Proximity Operators at the communal level and sent to the province M&E specialists\. The compilation, verification and consistency testing of these data were done by the province and national M&E specialist\. 100\. The M&E activities included: (i) the establishment of a data and information collection and processing system to inform and monitor the performance indicators, (ii) regular field visits by the province and national M&E specialists in following-up on the sub-projects to ensure data accuracy and conformity; and (iv) preparation of periodic reports (quarterly, semi-annually and annually) on the progress of the Project activities\. The various reports were prepared on time and included status of the project activities by component and sub-component, the main problems encountered and proposals for solutions\. 101\. As mentioned above, there was a gap in monitoring of activities between 2016 and 2017, when the national M&E specialist resigned and a new one recruited\. During this gap year, data were not collected and aggregated on time until the new M&E expert was hired, and M&E was then back on-track\. 102\. The Project conducted an Impact Assessment (IA) measuring the cause and effect of the main project results by comparing the results between treated and controlled areas using the WB Development Impact Evaluation (DIME) methodology before the intervention of the project (2014) and at the end of the Project (2018) on the same sample of 2,230 households\. The IA was conducted by an international consultant and a local consultancy firm called CERDA, was responsible in carrying out the surveys\. The IA focused on the following elements: (i) the degree of adoption of shade- grown coffee; (ii) the number of coffee trees under shade; (iii) the effects of the Project on coffee production; (iv) the effects of the Project on food security; and (v) the effects of the Project on household non-food expenditures\. 103\. The Project M&E system and the IA were used to build a learning platform to guide and influence the adaptive management of the project, providing opportunities for replication within outside of the Project\. M&E Utilization 104\. The project M&E system was used to track progress towards project objectives, assess performance, and inform project management\. M&E also informed the restructuring of the project in 2017, where it helped to highlight the need to reallocate funds in order to increase the number of demonstration sites and establishment of FFS\. It also helped to track the number of infractions in the Bururi Forest Reserve as well as help with the habituation of chimpanzees\. It also provided reliable information to the Burundi Eco Journal, which published an article about the Project achievements in its newsletter dated October 5, 2018\. The IA was used to conduct the efficiency analysis of this ICR\. Justification of Overall Rating of Quality of M&E 105\. The overall rating for the quality of M&E system is Substantial as it was generally sufficient to assess the achievement of the objectives and test the links in the results chain\. Despite the gap year in monitoring, M&E picked up again when the new specialist was hired\. B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 106\. Safeguard compliance was Satisfactory\. The project was classified as environmental category B partial assessment and triggered the following safeguards policies: Environmental Assessment (OP/BP 4\.01), Natural Habitats (OP/BP 4\.04), Forests (OP/BP 4\.36), Pest Management (OP 4\.09), Indigenous People (OP/BP Page 28 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) 4\.10), and Involuntary Resettlement (OP/BP 4\.12)\. An overall Environmental and Social Framework (ESMF) was prepared, as well as a Resettlement Plan and an Integrated Pest Management Plan, which served to guide the environmental and social management during project design and implementation\. Environmental screening was carried out for each sub-project and a plan to support the indigenous Batwa community was elaborated\. Safeguard missions were conducted by a WB environmental consultant to support implementation during the lifetime of the Project and mission findings were recorded in the Aide Memoires\. The Project also benefitted from visits from the World Bank Social development specialist, who was instrumental in recommending a review of the indigenous people plan to take into account the Batwa community near the Bururi Reserve\. 107\. Financial Management (FM) was Satisfactory\. A FM Specialist based in the Bank office in Bujumbura carried out regular implementation support missions\. The quarterly Interim Unaudited Financial Reports were submitted to the Bank for review on time and there were no inconsistencies for follow-up\. The latest project audit for the year ending in December 31, 2018 resulted in an unmodified (clean) opinion on the project financial statements\. The PCU is to be commended for maintaining satisfactory FM arrangements even during political and social crisis in 2015\. 108\. Procurement was Satisfactory\. Procurement processes were implemented based on the applicable guidelines at the time of project appraisal19 and in accordance with the procurement plan, which was duly updated, reviewed by the Bank and disclosed regularly\. The last post review was conducted in May 2017 and found that procurement capacity was adequate and in line with the work load\. Procurement processes and asset verification under the small grants program were verified by external auditors acceptable to the Bank, and no issues were raised\. Maintaining a satisfactory rating throughout project implementation should be noted as a significant achievement\. C\. BANK PERFORMANCE Quality at Entry 109\. This Project built on the PRODEMA project in Burundi in an area that remains relevant and strategic for the countryâs efforts to improve agricultural productivity\. The bottom-up sub-project approach provided direct investments to farmers and, coupled with facilitation and training, built capacity and ownership for SLWM\. The balance of components was appropriate and adequate emphasis was placed on knowledge management and communication\. The PCU had for the first time elaborated a communication plan\. The design of the results framework was adequate and further refined during Project restructuring and M&E arrangements were put in place to monitor this\. Implementation arrangements were well thought through and risks identified and adequately mitigated\. Quality of Supervision 110\. The WB supervised project implementation through implementation support missions (twice per year) to review progress and identify key issues including those that needed management attention\. During the 2015 political crisis in the country, a six-months moratorium on all Bank missions was issued, and the Bank resorted to video conferencing in conducting the implementation support mission during that time\. Fiduciary aspects were regularly supervised\. Performance reporting was candid and of high quality â aide memoires were detailed and recorded critical milestones, key decisions and next steps as well as information on sub-project visits; ISRs were also candid and filed on time\. During the crisis, the Bank was flexible in helping the PCU raise the initial advance thresholds to facilitate disbursement and recommended the Project extension for 18-months so that the Project could complete activities and make up for the delays in implementation\. The Task Team 19âProcurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowersâ and âSelection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Borrowersâ (January 2011, Revised July 2014), as well as the âGuidance Note for Design and Management of Procurement Responsibilities in Community-Driven Development Projectsâ (March 15, 2012)\. Page 29 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) also helped promote the RNFB forest warden, a champion in working with communities on the protection and conservation of the RNFB, by nominating him for the National Geographic Buffet award, which he won in 2018\. The Task Team also encouraged the PCU to elaborate and implement a communication strategy, which helped the project gain national and international recognition\. The Bank also made adequate transition arrangements after project closure for PACSC and BLLRP to take over\. Justification of Overall Rating of Bank Performance 111\. Based on the Quality at Entry and Supervision, the overall Bank performance is rated Satisfactory reflecting minor shortcomings in quality of supervision as described above\. D\. RISK TO DEVELOPMENT OUTCOME 112\. The Government remains committed to the sustainability of Project interventions as evidenced by the scaling up of Project activities through the WB projects on Restoration and Resilience of Landscapes and Coffee Competitiveness\. While Government strategies are in place to support SLWM efforts, there is a need to further leverage additional resources\. Beneficiary contribution-built ownership, which is viewed as a sign of sustainability of adopted interventions\. The learning events and material developed under the Project should continue to be an active source of information on SLWM and shade-grown coffee\. Many of the beneficiaries interviewed during the ICR mission communicated the added benefit of Project interventions and are convinced in the importance of continuing activities even after Project closure\. 113\. Despite improved beneficiary ownership and sustainability of Project activities, there remains a few risks to development outcomes: â¢ Insecure land tenure\. Without secure rights to land, beneficiaries may not be fully invested in ensuring the sustainability of rehabilitated lands\. The new BLLRP project will help address this aspect through land certification activities\. â¢ Climate change and extreme weather events have the potential to undermine development outcomes\. As mentioned earlier, building climate resilience is a long-term process that requires a sustained, multi-faceted approach taking into account the complexity of resilience\. Uncertainty about actual climate change patterns (including the frequency and intensity of extreme events, as well as their socio-economic impact) poses significant risks to development outcomes even in the face of improved resilience as a result of project interventions\. The sub-projects under PADZOC were specifically designed to take into account and respond to climate change risks and vulnerabilities\. â¢ Political and social unrest also undermines development outcomes especially in this case, on obtaining certification for the CWS and for foreign companies to invest in high quality coffee in the country\. It also undermines agro and eco-tourism\. Having an experienced PCU in the case of PADZOC, has helped maintain project activities through the crisis of 2015\. Page 30 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) V\. LESSONS AND RECOMMENDATIONS Lessons Learned 114\. Introducing shade-grown coffee in Burundi was significant and transformational\. The practice, since the Belgian colonial times had been to force smallholder farmers to grow coffee under a mono-culture as sun-grown coffee\. Over time, this led to lower coffee productivity and a decline in soil fertility, which pushed Burundi to try and find alternative solutions that would help protect soil fertility and at the same time, increase coffee productivity and improve livelihoods of smallholder farmers\. An exchange visit to see successful shade-grown coffee practices in Colombia, instigated the Ministry of Agriculture to request for the Project\. Demonstration sites and FFS set-up by ISABU, under the Project, were well accepted and replicated beyond the targeted areas, as smallholders saw the value in applying sustainable land management practices which provides additional income options for the farms\. As these changes go against the mainstream of deeply rooted views and practices, they will require sustained promotion efforts at national scale\. 115\. Integration of the indigenous landless Batwa community in the protection of the Bururi Natural Reserve is a model to be followed\. Through two sub-projects, the Project engaged the Batwa in forest rehabilitation cash-for-work activities, where they were encouraged to place part of that cash in a savings account, hence enabling them to acquire their own land on which to settle and invest\. This successful integration of communities in the management and protection of the Forest Reserve has yielded sustainable results and will be replicated in other protected areas under the new Landscape Restoration and Resilience Project\. 116\. The use of a WB experienced PCU helped the Project reduce related risks, generate synergies and, most importantly, pull through the 2015 political crisis\. The existing implementation structures set up by the PRODEMA Project for the selection, approval and monitoring of sub-projects under the Project helped to speed up disbursements and activities on the ground to make up for the delay incurred in carrying out the baseline study as well as the delays caused by the political unrest and pro-longed drought\. Recommendations 117\. Institutionalizing and disseminating shade-grown coffee manual\. Now that a manual on shade-grown coffee has been elaborated and validated, it will need to be disseminated across the country\. Once the Minister of Agriculture signs the preface of the manual, it will be institutionalized and used by extensionists across the country\. Furthermore, the WB-financed PACSC project has included the manual on shade-grown coffee as part of its overall more comprehensive manual and will be utilizing it when implementing activities across the country\. 118\. Conducting further agronomic and socio-economic research on shade-grown coffee\. There is a need to continue collecting data and information on shade-grown coffee in Burundi\. ISABU will continue working on its demonstration plots at its research station in Kayanza\. Recently, Food for the Hungry (an international non- governmental organization) has established a few more demonstrations plots in Kayanza on shade-grown coffee, following PADZOC\. PACSC will be establishing more plots and also help to maintain the current FFS established under PADZOC, which should yield more data over time for ISABU to continue analyzing and researching upon\. It would be especially important to collect more data on the productivity of shade-grown coffee versus sun-grown coffee over time and the economic and food security impact this has on smallholder farmers\. Page 31 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) 119\. Improving the water quality of the effluent discharge from coffee washing stations\. The effluents from the newly rehabilitated CWS under PADZOC, were unfortunately not able to reach the national water quality standards\. It is therefore crucial that this be further investigated and followed up on under the PACSC project, as the new project plans to rehabilitate 80 CWS across the country\. 120\. Conducting gender gap analysis and elaborating a gender action plan to design more gender targeted activities as well as to better capture information\. The gender dimension under the Project was gender informed but could have further benefitted from a gender gap analysis and plan\. Field visits and anecdotal stories have indicated that PADZOC has had a role in helping to empower women both economically and socially\. This will need to be taken into account in the new scale up projects (PACSC and BLLRP)\. Both projects are already tracking gender as part of their monitoring and evaluation\. \. Page 32 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: To pilot sustainable land and water management practices in the coffee landscape of Burundi Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Land area where sustainable Hectare(Ha) 0\.00 4500\.00 4656\.08 land mgt\. practices were adopted as a result of proj 21-Aug-2013 21-Aug-2013 30-Oct-2018 Comments (achievements against targets): â¢ 103\.5% of target achieved\. Land area under sustainable land management practices: 2501\.13 ha â¢ Land area shade-grown coffee cultivation: 1878\.95 ha\. Land area under shade-grown coffee at the ISABU research station and nearby farms in Kayanza: 12 ha\. Land area restored and protected in the Bururi Natural Reserve: 264 ha \. (Source: Project Completion Report, December 2018) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Environmentally friendly Number 0\.00 6\.00 6\.00 effluent control systems implemented in selected 21-Aug-2013 21-Aug-2013 30-Oct-2018 Page 33 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) CWS as a result of the project Comments (achievements against targets): â¢ 100% of target achieved\.The point-source pollution was addressed through the upgrading of the CWSâs processing systems aiming to reduce the volume of water consumption and remove waste organic matter for composting purposes\. The water analysis report of May 2017 and that of 2018 showed that the CWS had not achieved the national standards of water and effluent quality\. Follow up corrective measures have contributed to the improvement of the effluent control systems but the fulfillment of the norms and standards remained to be improved\. (Source: Project Completion Report, December 2018) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Direct project beneficiaries Number 0\.00 15000\.00 17971\.00 21-Aug-2013 21-Aug-2013 30-Oct-2018 Female beneficiaries Percentage 0\.00 50\.00 39\.70 21-Aug-2013 Comments (achievements against targets): â¢ 119\.8% of target achieved\.These beneficiaries are those of the 408 sub-projects implemented by the Project, where: 66 sub-projects on SLM; 324 sub-projects on shade-grown coffee and restoration activities on the Bururi Natural Reserve; 6 sub-projects on the rehabilitation of 6 CWS; 2 sub-projects on the certification of 2 CWS; 9 sub-projects on livelihood alternatives for communities surrounding the Bururi Natural Reserve; and 1 sub-project on agro-tourism in Bururi\. (Source: Project Completion Report, December 2018) Page 34 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) A\.2 Intermediate Results Indicators Component: Component 1: Sustainable Coffee Landscape Management Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Target population trained in Number 0\.00 30000\.00 23506\.00 SLWM, shade- grown coffee, and biodiversity conservation 21-Aug-2013 21-Aug-2013 30-Oct-2018 practices as a result of the project Comments (achievements against targets): â¢ 78\.4% of target achieved\. These include beneficiaries trained under the various sub-projects as well as benefitting from the demonstration sites set-up by ISABU\. (Source: Project Completion Report, December 2018) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Research demonstration Number 0\.00 12\.00 61\.00 sites for shade-grown coffee 21-Aug-2013 21-Aug-2013 30-Oct-2018 Comments (achievements against targets): Page 35 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) â¢ 508% of target achieved\.These are the demonstration sites set-up by ISABU and include the 28 Farmers Field School (FFS) that were set-up after Project restructuring\. The reason for higher number of demonstration sites was that many farmers volunteered to have their farms set-up as demonstration sites\. (Source: Project Completion Report, December 2018) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Improved biodiversity Number 0\.00 12\.00 80\.00 conservation in the protected area as measured 21-Aug-2013 21-Aug-2013 30-Oct-2018 by the PAMETT Comments (achievements against targets): â¢ 666% of target achieved\.The overachievement was mainly due to the significant capacity-building and equipping of trackers and eco- guards whom as a result were better able to better track forest infractions and number of species\. The Protected Area Management Effectiveness Tracking Tool (PAMETT) was developed as part of the World Wildlife Fund (WWF)-World Bank Forest Alliance program and the first version was field tested in 2001\. Since then it has been adopted and adapted by the Global Environment Facility (GEF) and many other countries, organizations and projects\. The PAMETT consists of two main sections: datasheets of key information on the protected area and an assessment form containing a questionnaire with four alternative responses to 30 questions, each with an associated score, a data field for notes and a justification for the answers, and a place to list steps to improve management if necessary\. The PAMETT measures the effectiveness of management by tracking the progress of one site over time\. In this case, PAMETT score has beyond the Project target, which signifies improved biodiversity as a result of improved management of the site\. See more details under the Efficacy section\. (Source: Project Completion Report, December 2018) Page 36 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion GEF tracking tools updated Number 0\.00 4\.00 4\.00 (SFM, Land Degrad\., Biodiversity 1 and2) 21-Aug-2013 21-Aug-2013 30-Oct-2018 Comments (achievements against targets): â¢ 100% of target achieved\. The GEF tracking tools were updated four times during the Project lifetime\.(Source: Project Completion Report, December 2018) Component: Component 2: Addressing Pollution Point Sources in Coffee Washing Stations Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Submission for adoption of Yes/No N Y Y new environmental regulations for CWS 21-Aug-2013 21-Aug-2013 30-Oct-2018 Comments (achievements against targets): â¢ 100% of target achieved\. A report on the proposed environmental regulations was reviewed and validated in workshop in September 2016 and were submitted to the regulation authority of coffee value chain (ARFIC) for further processing and eventual adoption\. (Source: Project Completion Report, December 2018) Page 37 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Capacity building program to Yes/No N Y Y enhance enforcement and monitoring of environmental 21-Aug-2013 21-Aug-2013 30-Oct-2018 and social standards Comments (achievements against targets): â¢ 100% of target achieved\.The Project supported a workshop to inform, raise awareness and disseminate the standards and management regulations to representatives of the CWS in the provinces of Bubanza, Bururi, Kayanza and Muyinga for a total of 70 CWS represented\. (Source: Project Completion Report, December 2018) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion CWS meet national effluent Yes/No N Y N discharge standards as a result of the project 21-Aug-2013 21-Aug-2013 30-Oct-2018 Comments (achievements against targets): â¢ 0% of target achieved\. â¢ Water analysis conducted in 2017 and again in 2018 showed that four out of eight water quality parameters had reached the standard national norms in the six CWS\. This will be further investigated and subsequent improvements made under the Coffee Sector Competitiveness Project - (P151869)\. See more details in Efficacy section\. (Source: Project Completion Report, December 2018) Page 38 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Component: Component 3: Diversification of Livelihoods Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Contracts signed by the CWS Yes/No N Y N with a certification agency 21-Aug-2013 21-Aug-2013 30-Oct-2018 Comments (achievements against targets): â¢ 0% of target achieved\.Two out of the targeted four CWS had obtained Fairtrade certifications, with the two others having completed the certification process but awaiting the auditors to come\. Auditors have not travelled to the country since the political unrest of 2015\. The certification process will therefore be completed under the Coffee Competitiveness Project\. (Source: Project Completion Report, December 2018) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 20% increase in the number Yes/No N Y Y of certification indicators met by farmers each year 21-Aug-2013 21-Aug-2013 30-Oct-2018 (specific indicators will depend on the certification scheme selected)\. Comments (achievements against targets): Page 39 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) â¢ 100% of target achieved\. The selected 4 CWS satisfy all the Fairtrade Certification indicators at 100%, though only two have been certified\. (Source: Project Completion Report, December 2018) Component: Component 4: Knowledge and Learning Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion M&E system functioning and Yes/No N Y Y providing accurate and on- time data (including impact 21-Aug-2013 21-Aug-2013 30-Oct-2018 evaluation) Comments (achievements against targets): â¢ 100% of target achieved\. M&E system is functional and the impact evaluation was completed in 2018\. (Source: Project Completion Report, December 2018) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Communication plan Yes/No N Y Y designed and implemented 21-Aug-2013 21-Aug-2013 30-Oct-2018 Comments (achievements against targets): Page 40 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) â¢ 100% of target achieved\. A communication plan was made and its implementation started in 2017\. Activities conducted include: Published articles about the results of the Project in the Journal Burundi Eco, IWACU, Renouveau et Ubumwe, and INGOMAG; Four documentaries on SLM, Point-source CWS pollution, Shade-grown Coffee, and Support to the Batwa Community; and Results of the Project disseminated though seven local radio stations\. (Source: Project Completion Report, December 2018) Note:- For the intermediate indicator on âImproved biodiversity conservation in the protected area as measured by the PAMETTâ, there is a system generated error, where the original target should read 50 and not 12\. Page 41 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) B\. KEY OUTPUTS BY COMPONENT Objective/Outcome: To pilot sustainable land and water management practices in the coffee landscape of Burundi\. 1\. Land area where sustainable land management practices were adopted as a result of project Outcome Indicators 2\. Environmentally friendly effluent control systems implemented in selected CWS as a result of the project 3\. Direct project beneficiaries (with % Females) 1\. Target population trained in SLWM, shade- grown coffee, and biodiversity conservation practices as a result of the project 2\. Research demonstration sites for shade-grown coffee 3\. Improved biodiversity conservation in the protected area as measured by the PAMETT 4\. GEF tracking tools updated (SFM, Land Degrad\., Biodiversity 1 and 2) 5\. Submission for adoption of new environmental regulations for CWS 6\. Capacity building program to enhance enforcement and monitoring Intermediate Results Indicators of environmental and social standards 7\. CWS meet national effluent discharge standards as a result of the project 8\. Contracts signed by the CWS with a certification agency 9\. 20% increase in the number of certification indicators met by farmers each year (specific indicators will depend on the certification scheme selected)\. 10\. M&E system functioning and providing accurate and on-time data (including impact evaluation) 11\. Communication plan designed and implemented Page 42 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) 1\. Component 1 key outputs: Established sub-projects on SLWM and shade-grown coffee; Established demonstration sites and FFS for SLWM and shade-grown coffee; Trained farmers on SLWM and shade- grown coffee; Shade-grown coffee manual for Burundi; Trained and informed communities and local authorities on the importance of conserving the RNFB; Improved REDD+ Readiness\. 2\. Component 2 key outputs: Six rehabilitated CWS with effluent control systems adhere to national standards and norms; Standards and regulations for environmentally sound CWS elaborated; Trained Key Outputs by Component farmers on monitoring effluent control systems; Trained relevant (linked to the achievement of the Objective/Outcome 1) institutions on enforcing regulations and policies\. 3\. Component 3 key outputs: Trained and equipped eco-guards and trackers at the RNFB; Improved living conditions for Batwa; Set-up of eco and agro-tourism pilots; Marketing study and action plan on shade-grown coffee elaborated; Three cooperatives and associated CWS are certified\. 4\. Component 4 key outputs: Impact evaluation carried out; Communication strategy elaborated; Communication activities implemented\. Page 43 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A\. TASK TEAM MEMBERS Name Role Preparation Paola Agostini, Stephen Ling, Chakib Jenane Task Team Leader(s) Maria Isabel Junqueira Braga Team member Ana Maria Gonzalez Velosa Team Member Melance Ndikumasabo, P\. Nindorera, L\. Ravaoarimino Pocurement Specialists Bella Diallo Financial Management Specialist George Ledec, Lead Ecologist Gayatri Kanungo Sr Environmental Specialist Antoine V\. Lema Social Development Specialist Asferachew Abate Abebe Sr Environmental Specialist Edward Ndwumfour Sr Environmental Specialist Dora Nsuwa Cudjoe Sr Environmental Specialist Guigonan Serge Adjognon Economist Hocine Halal Lead Environmental Specialist Julian Lee Sr Environmental Specialist Paul â Jean Feno Sr Environmental Specialist Maria Ruth Jones Survey Specialist Leoncie Niyonahabonye Team Member Madjiguene Seck Team Member Aurore Simbananiye Team Member Esther Bea Team Member Beula Selvaduria Team Member Alice Museri Team Member Jumaine Hussein Team Member Page 44 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Supervision/ICR Paola Agostini, Amadou Alassane, Philippe Eric Dardel Task Team Leader(s) Prosper Nindorera, Rahmoune Essalhi, Clement Tukeba Procurement Specialist(s) Lessa Kimpuni Christian Simbananiye Financial Management Specialist Tracy Hart Environmental Specialist Hussein Jumaine Team Member Aurore Simbananiye Team Member Shri Vasantt Kumar Jogoo Team Member Peter F\. B\. A\. Lafere Social Specialist Ana Maria Gonzalez Velosa Team Member Clarette Rwagatore Team Member Mimako Kobayashi Team Member Esther Bea Team Member Chakib Jenane Team Member Nadia Nkwaya Beza Team Member Tchilalou Awesso Team Member Yasmina Oodally Team Member Arcade Bigirindavye Senior Procurement Specialist Yeo Yenemanyan Financial Management Specialist Alexis Manirambona Environmental Specialist Alice Museri Program Assistant Nadine Manirambona Team Assistant Page 45 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) B\. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No\. of staff weeks US$ (including travel and consultant costs) Preparation FY12 5\.948 53,999\.20 FY13 18\.522 180,861\.46 FY14 2\.818 13,742\.23 Total 27\.29 248,602\.89 Supervision/ICR FY14 5\.349 108,583\.55 FY15 15\.683 159,661\.02 FY16 10\.281 32,763\.49 FY17 6\.933 96,943\.04 FY18 3\.982 61,823\.87 FY19 6\.351 65,220\.62 Total 48\.58 524,995\.59 Page 46 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) ANNEX 3\. PROJECT COST BY COMPONENT PADZOC Cost by Component (US$ Million) Amount at Amount at Percentage of Actual at Project Components Approval Restructuring Approval Closing (US$M) (US$M) (US$M) (US$M) Component 1: Sustainable 2\.82 2\.90 2\.83 100\.35 Coffee Landscape Management Component 2: Addressing Pollution Point Sources in Coffee 0\.59 0\.29 0\.24 40\.68 Washing Stations Component 3: Diversification of 0\.41 0\.39 0\.43 104\.88 Livelihoods Component 4: Knowledge and 0\.41 0\.63 0\.72 176 Learning Total 4\.23* 4\.23 4\.22 99\.76 *The amount approved comes from two trust funds: US$4\.2 million from GEF and US$33,000 from the TerrAfrica Leveraging Fund (TLF)\. The actual amounts are fairly on track with the amounts restructured\. The remaining US$0\.01 million will be reimbursed to the Bank\. PADZOC Level of Co-financing (US$ Million) Actual Actual Amount Confirmed Amount Amount Name of Co- at CEO Sources of Co-financing Type of Co-financing Materialized Materialized financer endorsement/ at Midterm at Closing approval (US$) (US$) (US$) Government Government In-kind of Burundi 500,000 232,000 500,000 Private Sector InterCafÃ© In-kind 500,000 204,500 500,000 Local NGO In-kind communities 300,000 195,300 300,000 TerrAfrica Multilateral Grant fund 200,000 224,500 224,500 World Bank Multilateral Grant PRODEMA 13,500,000 13,230,000 13,500,000 World Bank Lake Victoria Multilateral Environmental Grant Project II (LVEMP-II) 5,800,000 3,329,200 5,800,000 TOTAL 20,800,000 17,415,500 20,824,500 Page 47 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) ANNEX 4\. EFFICIENCY ANALYSIS 1\. This annex provides detailed economic analysis of the first component, which represented more than two thirds of the project cost\. In particular, the focus of the analysis will be on the activity related to promotion of shade-grown coffee production because it has led to more tangible outcomes than other activities of the project\. The analysis draws from the results of the impact evaluation (IE) conducted under the project (see entire IE report â available upon request) as well as additional numerical analysis prepared for the ICR\. Results from PADZOC IE report 2\. In PADZOC, an impact evaluation activity was conducted, where a total of 2,223 households were surveyed in 2014 and 2018 to measure the changes in the following areas, among others: â¢ Adoption of shade-grown coffee production â¢ Number of shade-grown coffee trees â¢ Coffee production per tree (productivity) â¢ Household food security\. 3\. In order to isolate the impacts of the project from other forces affecting the changes, households in the project area (treatment group) and non-project area (control group) were surveyed\. The treatment group included households in collines in three communes in three provinces (Bubanza, Bururi, and Myuinga), while the control group included households in collines contiguous to treatment collines\.20 The baseline survey successfully confirmed that the households in the two groups were sufficiently similar at the beginning of the project\. 4\. Adoption\. According to the survey data from the two years, the proportion of producers that adopted shade-grown coffee increased from 11\.9% in 2014 to 56\.2% in 2018 in the project area (treatment group), while an increase was also observed in the non-project area (control group) from 8\.3% to 31\.5% during the same period\. The 2018 adoption rate in the treatment group was greatest among farmers in Myuinga (78%), followed by those in Bubanza (58%) and Bururi (31%)\. It was statistically confirmed that the project contributed to an increase in the shade-grown coffee adoption rate by 26%\. In addition, the project generated spillover effects in terms of adoption in collines surrounding the project area\. 5\. Number of coffee trees\. In terms of the number of shade-grown coffee trees, with the support provided by the project, farmers in the treatment group could expand substantially more than those in the control group\. On average, the control group increased shade-grown coffee trees by 2\.6 trees per farm between 2014 and 2018, while the increase was 37\.7 trees per farm for the treatment group\. As a result, an average farm in the treatment group had 93\.7 shade-grown coffee trees in 2018, in contrast to 54\.3 trees in the control group\. 6\. Productivity\. Using the plot-level data from 2018, a gain in productivity (coffee production per tree) of shade-grown coffee was confirmed trees, relative to coffee trees with no shade\. On average, a coffee tree with shade produced 101 grams more coffee than a tree without shade\. The difference was 125 grams per tree in Bubanza and 207 grams in Bururi\. No statistically significant difference in productivity was observed in Muyinga\. 20 A geographic discontinuity design (GD design) was employed\. Page 48 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) 7\. Food security\. The IE study also confirmed an improvement in food security among households in the project area\. In the study, food security was measured by an index that ranges between 0 and 49, where the score indicates the number of measures to mitigate food insecurity needed to be taken21 and their frequency during the seven days immediately prior to the survey interview\. A statistically significant decline in the score was found in the treatment group from 16\.1 in 2014 to 12\.2 in 2018, albeit the average baseline (2014) score was higher in the treatment group than in the control group (13\.5)\. No significant change in the score was confirmed for the control group\. Additional analysis (NPV of sub-component A\.2, as found in PADZOC final report) 8\. Based on the data collected for the IE study and on other available information, an additional numerical analysis was conducted\. In particular, the analysis attempted to estimate the net present value of the sub- component A\.2 related to promotion of shade-grown coffee production, under which US$1\.65 was disbursed according to the PADZOC final report\. 9\. Conceptually, gains (G) in coffee production per year due to adoption of shade-grown coffee that was attributable to the project interventions can be represented as: (1) í µí±® = í µí±¸í µí²í µí²í µí²í µí² + í µí±¸í µí²í µí²í µí²í µí²í µí²í µí²í µí²í µí²í µí² , where í µí±í µí±í µí±í µí±í µí± represents the gains realized in the project area (treatment area) and í µí±í µí± í µí±í µí±í µí±í µí±í µí±í µí±£í µí±í µí± in the surrounding area (control area), with (2) í µí±¸í µí²í µí²í µí²í µí² = í µí² â í µí±¯í µí±¯í µí±» â (í µí²í µí²í µí²í µí²í µí²í µí±» í µí±» í µí±» í µí±» í µí¿í µí¿í µí¿í µí¿ â #í µí²í µí²í µí²í µí²í µí¿í µí¿í µí¿í µí¿ â í µí²í µí²í µí²í µí²í µí²í µí¿í µí¿í µí¿í µí¿ â #í µí²í µí²í µí²í µí²í µí¿í µí¿í µí¿í µí¿ ) and (3) í µí±¸í µí²í µí²í µí²í µí²í µí²í µí²í µí²í µí²í µí² = í µí² â í µí±¯í µí±¯í µí±ª â (í µí²í µí²í µí²í µí²í µí²í µí±ª í µí±ª í µí±ª í µí±ª í µí¿í µí¿í µí¿í µí¿ â #í µí²í µí²í µí²í µí²í µí¿í µí¿í µí¿í µí¿ â í µí²í µí²í µí²í µí²í µí²í µí¿í µí¿í µí¿í µí¿ â #í µí²í µí²í µí²í µí²í µí¿í µí¿í µí¿í µí¿ ), where â¢ q is the average shade-grown coffee production per tree per year; â¢ HH is the number of households with coffee trees in each area, with superscript T indicating treatment area and C control area; â¢ adopt is the proportion of households with coffee trees that adopted shade-grown coffee in each area (T or C, indicated by superscript) and in each period with subscript indicating the year (2014 or 2018); and â¢ #tree is the average number of shade-grown coffee trees per farm in each area (T or C, superscript) and in each period (2014 or 2018, subscript)\. 10\. This representation of gains relies on the following strong assumptions (that were necessary due to data limitation and for tractability): â¢ q is the same for the two areas and remained constant between 2014 and 2018; â¢ HH remained constant between 2014 and 2018 in each area (T or C); â¢ adopt and #tree would have remained constant between 2014 and 2018 in each area (T or C) if there had not been the project; and â¢ the project did not affect the production or productivity of non-shade grown coffee\. 11\. Using the data on HH from 2014, estimated q from 2018 data, and estimated #tree from 2014 and 2018 21Respondents were provided with seven options: (1) to consume less-preferred products; (2) to reduce the variety of consumed products; (3) to reduce the quantity consumed; (4) to reduce the number of meals per day; (5) to transfer part of the food from adults to children; (6) ask neighbors and family for food; and (7) fast for 24 hours\. Page 49 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) data, the gains (G) is estimated as in table 1\. The unit coffee price (p) at 500 Fbu/kg as quoted in the PADZOC final report and the exchange rate of US$0\.00055/Fbu were used in value conversion of the gains\. Table 1\. Estimated gains in coffee production per year due to project interventions Unit Bubanza Bururi Muyinga Total Gains (volume) G kg 175,111 25,836 52,205 253,152 Gains (value) pÂG Fbu 87,555,667 12,917,784 26,102,646 126,576,097 Gains (value) pÂG US$ 48,156 7,105 14,356 69,617 12\. Note that the gains in value are considerably lower than the project cost for sub-component A\.2 of US$1\.65 million\. A major reason is that G is measured as gains per year here, while the gains in reality will be experienced over a longer period\. It is known that coffee plants can last up to 100 years, while their productivity is highest between the ages of 7 and 20\. 13\. Another reason for the small value of the gains estimate is the depressed coffee unit price farmers in Burundi received\. The farm-gate price of 500 Fbu/kg translates to US$0\.12 per pound, when the coffee price moved between US$0\.95 and US$1\.22 per pound in the international market in 2018\. When a unit price of US$1\.09 per pound is used, the total gains in value would be over US$600,000 per year\. Promotion of improved coffee marketing as supported by PADZOC would help improve the unit price farmers receive\. 14\. Finally, the gains estimation thus far is based only on gains through coffee production and no other benefits are considered\. In the current context, three major benefits should be considered in addition to the gains in coffee productivity, as discussed in the economic analysis of the project appraisal document (PAD) for Burundi Landscape Restoration and Resilience Project (BLRRP, P160613)\. First, trees that provide shade for coffee trees can also provide direct output such as fruits (e\.g\. bananas, citrus) and fuelwood\. BLRRP PAD used US$244 per ha per year as the benefit of new forest cover providing fuelwood\. Second, shade-grown coffee is considered to contribute to stronger soil integrity, reducing soil erosions that affect the farm sites and in the downstream\. BLRRP PAD used $25\.2 per ha per year as the benefit of improved soil integrity in the form of avoided cost of sediment removal downstream\. Third, trees planted for shade-grown coffee provide other ecosystem services\. BLRRP PAD quoted US$44\.9 per ha per year as the value of forest ecosystem services in Burundi\. 15\. Given the observations, the quantitative analysis here attempts to estimate the net present value (NPV) of the sub-component A\.2 over a 20-year horizon, which corresponds to the maximum duration in which coffee plants are most productive\. For simplicity, the estimated average coffee tree productivity (q) is applied for the entire 20 years, rather than making additional assumptions on the age composition of coffee plants and their productivity dynamics over time\. The total increase in the acreage of shade-grown coffee of 470\.23 ha in project areas is used in the calculation as quoted in the PADZOC final report\. Since no specific data were collected for output of shade-providing trees, their contribution to soil integrity or to other ecosystem services, the parameters used in the BLRRP PAD were used in this analysis\. The NPV calculations were done using three levels of discount rate at 5%, 10%, and 20%\. Page 50 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Table 2\. Present value of various benefits and project cost over 20 years Discount rate 5% 10% 20% Gains (at farm-gate coffee price) 937,197 662,304 408,622 Gains (at international coffee price) 8,151,951 5,760,874 3,554,284 Value of fuelwood 1,544,595 1,091,545 673,450 Avoided cost of sediment removal 159,524 112,733 69,553 Value of ecosystem services 284,231 200,862 123,926 Project cost for sub-component A\.2 1,652,250 1,652,250 1,652,250 Table 3\. Net present value of sub-component A\.2 under different assumptions Discount rate 5% 10% 20% (1) NPV with coffee value only at farm-gate coffee price (715,054) (989,946) (1,243,629) at international coffee price 6,499,700 4,108,624 1,902,034 (2) NPV including other benefits at farm-gate coffee price 1,273,296 415,194 (376,700) at international coffee price 8,488,050 5,513,764 2,768,963 16\. As can be seen in table 2, the present value of the gains from increased shade-grown coffee production due to the project differ substantially depending on the unit price of coffee used\. Although the gains accrued to the intended beneficiaries (Burundi farmers) represent only a fraction, it would be safe to say that the project interventions have and will continue to generate greater gains in the international coffee market\. 17\. As seen in table 3, when incremental coffee production due to the project is valued at the farm-gate coffee price, it alone does not result in a positive NPV\. On the other hand, when the international coffee price is used, the NPV is positive and substantial at all discount rates\. While the incremental benefit of the project is evident, concerns remain on the distributional impact of the project, in particular regarding the extent to which the project benefits have reached the intended beneficiaries\. 18\. Finally, the estimation of other benefits than incremental coffee production is only approximation, using the parameters from the BLRRP PAD, rather than data obtained through the project M&E activities\. Nonetheless, the directional impact of these additional benefits only confirms the substantial net benefits generated by this sub-component of PADZOC\. Page 51 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Ex-Post GEF Incremental Cost Analysis & Achievements 19\. At appraisal, PADZOC was to benefit from co-financing from Government, IntercafÃ©, Local communities, TerrAfrica, PRODEMA, and the Lake Victoria Environmental Project II (LVEMP-II)\. At completion, PADZOC benefitted from all these co-financings\. The appraisal co-financings are represented as the baseline in Table 4 below\. The GEF incremental is the cost of PADZOC\. The Actual Leverage is the actual co-financings at completion\. Table 4\. PADZOC GEF Incremental Cost Analysis & Achievements INCREMENTAL GLOBAL INCREMENTAL BASELINE GEF INCREMENT ACTIVITIES BENEFITS ACHIEVEMENTS Component 1: Sustainable Coffee Baseline: US$14,400,000 Landscape Management GEF Incremental: US$2,830,00 Actual leverage: US$14,424,000 Actual leverage (%): 84% Support sustainable Lack of -Implementing sustainable land Sustainable -Sub-projects on land and water sustainable land and water management management of SLWM and shade- management and water practices in productive areas in natural resources grown coffee practices in degraded management to prevent further land (land, water, and established areas of the landscape practices in degradation and rehabilitate vegetation) on - Demonstrations sites mosaic\. coffee degraded areas (factors that priority and FFS for SLWM and landscapes\. have negatively impacted coffee landscapes; shade-grown coffee production)\. protection of established - Establishing a shade-grown biodiversity on a - Farmers trained on coffee pilot program that critical protected SLWM and shade- promotes, with area; protection grown coffee environmentally-friendly against erosion and - Shade-grown coffee production technologies, a desertification in manual for Burundi polyculture that includes coffee priority areas; and - Communities and as well as various types of trees the potential for local authorities and other plants that provide carbon trained and informed additional products for income sequestration\. on the importance of generation and consumption\. These benefits will conserving the RFNB - Promoting sustainable also contribute to - Eco-guards and management in a key PA, under increased trackers trained and the premise that protected resilience in the equipped at the Bururi areas demarcation has been country\. Forest Nature Reserve agreed between key (RFNB) stakeholders and the neighboring local communities have alternative sources for improving livelihoods, so that the risk of agricultural expansion to the area will be reduced\. Component 2: Addressing Pollution Point Sources in Coffee Washing Baseline: US$2,000,000 Stations GEF Incremental: US$240,000 Actual leverage: US$2,000,000 Actual leverage (%): 89%% Pilot cost-effective, Polluted Addressing point-source Clean downstream -Six CWS rehabilitated Page 52 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) integrated, downstream pollution through the water from CWS\. with effluent control environmentally- water due to establishment of efficient, systems friendly environmentally environmentally-friendly coffee -Standards and systems for the unsound processing technologies and the regulations for processing phase of practices of strengthening of policies and environmentally the coffee value chain\. coffee water regulations\. sound CWS stations (CWS)\. elaborated - Farmers trained on monitoring effluent control systems - Relevant institutions trained on enforcing regulations and policies Component 3: Diversification of Livelihoods Baseline: US$3,500,000 GEF Incremental: US$430,000 Actual leverage: US$3,500,000 Actual leverage (%): 89% Support a marketing - Low quality Promoting marketing and Accessing higher -Marketing study and study and action plan coffee commercialization strategies for value markets with action plan elaborated to identify target production and high quality coffee, planted with shade-grown -Two cooperatives markets for the limited shade and processed with coffee will benefit and associated CWS regionâs coffee, along marketing\. reduced environmental negative the coffee sector are certified (out of with potentially -Need for impacts, and piloting initiatives as well as generate the six rehabilitated suitable certification alternative that generate alternative an incentive for the CWS) schemes, and support income sources of income such as agri- conservation and - Batwa living an ecotourism pilot in generating tourism and eco-tourism\. improved conditions improved the Bururi Forest activities\. management of - Eco and agro- Nature Reserve and the environment\. tourism pilots set-up will pilot two These measures community based will also increase agritourism initiatives communitiesâ in selected coffee resilience to farms\. adverse shocks\. Component 4: Knowledge and Learning Baseline: US$5,100,000 GEF Incremental: US$690,000 Actual leverage: US$5,100,000 Actual leverage (%): 88% Improve knowledge Lack of impact Conducting and impact Improved - Impact evaluation management and evaluation for evaluation and communication knowledge on carried out\. dissemination\. environment strategy for the project\. shade-grown -Communication sector and lack coffee in Burundi\. strategy elaborated of -Communication communication activities plans in past WB implemented projects in the country\. Page 53 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) TOTAL Baseline:US$20,800,000 GEF Incremental: US$4,190,000 Actual leverage (approximately): US$20,824,000 Actual leverage (%): 83% 20\. The GEF increment centers on securing ecosystems services in productive landscape, forested areas and protected areas by promoting the uptake of SLWM practices and approaches (with an emphasis in shade grown coffee) that have global environmental benefits (described in Table 4)\. These include soil and water conserving practices such as shelterbelts, multipurpose trees on productive lands, small-scale irrigation, and water harvesting, water management in CWS\. The project was designed with multiple interlinked GEF Focal Areas\. The resulting global environmental benefits include sustainable management of natural resources (land, water, and vegetation) on priority landscapes; protection of biodiversity on a critical protected area; protection against erosion and desertification in priority areas; and carbon sequestration\. These benefits contribute to increased resilience in the country\. 21\. Carbon benefits in shade grown coffee: The project promoted the incorporation of shade in 1,878\.95 ha of areas planted with coffee\. The shade consisted of Grevillea, Cedrella, Calliandra, Cordia Africana, Albizia, Ficus, and Maesop shade trees as well as some intercropping with banana trees\. Approximately 479 shade trees were planted per ha\. Assuming that the aboveground biomass of the shade trees is 195 kg per tree and considering that the baseline is no shade trees and the increment represents 200 stems per ha, then the biomass is approximately 93,405 kg/ha or 93\.4t biomass/ha\. Given that biomass is around 50% carbon, then the shade trees have generated around 46\.7t CO2/ha (19t carbon/ha times 44/12 which is the stoichiometric ratio of CO2 to C)\. Assuming there is a 20-year rotation, the figure comes to approximately 2\.3t CO2/ha/yr\. Considering that the shade covers 1,878\.95 ha, the total amount of carbon sequestered is about 4,321\.59 t CO2/yr or 86,431\.8 t CO2 assuming 20 years of expected lifetime of the project impacts\. 22\. Carbon benefits as forest degradation is prevented: Seven percent of the countryâs area is forest; i\.e\. 194,838 ha or 1,948 km2\. According to the World Bank Africa Forest Strategy (âForests, trees and woodlands in Africa: An action plan for World Bank engagementâ), the annual deforestation rate from 2000 to 2010 was 1\.31%\. Taking this rate, every year 2,552 ha of forest are degraded\. The project protects 2,000 ha of natural vegetation that are present in the Bururi Forest Nature Reserve (total area: 2,600ha)\. Considering the overall countryâs deforestation rate, the project could be preventing the degradation of 26\.2 ha per year\. In this scenario, the project saves 240 tons of C02 per year (considering the 26\.2 ha/yr destroyed in the baseline and the CO2 amount of 9\.17 t CO2/ ha/yr)\. Over a 20-year period, 4,805 t of CO2 could be preserved or rather not emitted into the atmosphere\. Page 54 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS (Extract from the December 2018 PADZOC Project Completion Report â Translated from French) 1\. The year 2018 is the last year of implementation of the project activities in the field\. The actual start of project activities was delayed by the requirements of the impact assessment method which did not allow direct support to beneficiaries before the project baseline was established\. Baseline surveys were conducted in October-November 2014\. The interim report was produced in February 2015\. 2\. The level of achievement has improved significantly as activities started in February 2015 as they are specifically related to the rain cycle\. 3\. As of 31 October 2018, four hundred and eight (408) subprojects were financed and implemented and the total grant amounted of 3,843,532,942 BFI including 3,794,688,009 BFI were paid, or 98\.7%\. The funded subprojects benefited 17,971 direct beneficiaries, of which 6,935 were women (40%)\. 4\. It is also noted that compared to the total amount disbursed of US$4,200,000, the amount used on 30/09/2018 is US$4,187,368\.53\. The remaining amount of US$12,631\.47 will be reimbursed to the Bank\. 5\. With regard to the activities carried out in partnership with the actors of the coffee sector in this case, OBPE, ISABU, Inter-CafÃ© and ARFIC, they were initiated by the drawing up of the collaboration agreements with the project and activities were developed and implemented in the first quarter of 2014\. 6\. As at 31 October 2018, the final year of the Project, indicators of the overall environmental objective, namely: (i) area where sustainable land and water management practices (including shade coffee) were adopted as the results of the Project, (ii) Environmentally-sound selected Wash Station effluent control system implemented as Project results and (iii) Number of direct beneficiaries; have a satisfactory completion rate and reached respectively 103\.5 percent, 100\.0 percent and 119\.8 percent of forecasts\. However, even though effluent control systems have been installed in the six LDCs, their effectiveness remains to be improved\. Improvement should focus on the sizing of the pre-treatment tanks, the renewal of the equipment and the sensitization of the CWS beneficiaries in the maintenance of the infrastructures and the renewal of the effluent pre-treatment materials\. 7\. The impact study conducted in 2014 and 2018 revealed that the number of farmers who adopted shade coffee increased by 21% by comparing the intervention zone and the control zone\. There was also an increase in farmers adopting shade coffee in the control area (Project training effects), which also showed a 23% impact on coffee productivity, food security and non-food expenditures of Project beneficiaries\. Page 55 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) ANNEX 6\. WATER QUALITY ANALYSIS 2017 AND 2018 OF THE EFFLUENTS FROM THE SIX REHABILITATED COFFEE WASHING STATIONS (CWS) (IN FRENCH) ParamÃ¨tres Norme Valeurs des ParamÃ¨tres des effluents dans les 6 SDL Ã la sortie dans l'environnement burundaise UnitÃ© de rejet SDL Bururi SDL Musigati Muyinga Busiga nÂ°analyse KorerikawaKundud Twese Ikawa yacu OCB Tuvugirikawa utezimb twoterim Kagombe ere bere Â°C-1 Ã¨re An\. 22,0 23,4 24,9 23 20,3 21 TempÃ©rature 35 Â°C-2 an\. 21,4 23,3 23,2 21,8 22,8 20,3 1Ã¨re an\. 4,11 4,82 3,96 4,15 5,4 4,83 pH in situ 6Ã 9 2 Ã¨me an\. 5,44 5,01 4,45 5,25 4,58 5,45 mg/l N- 1 An\. 12 8,7 25,4 26 3,5 20,5 Azote totale 12 mg/l N- 2 An\. 2,6 8,01 4,13 6,82 0,98 3,7 mg/l P-1 An\. 0,48 0,44 0,21 0,78 0,11 1,09 Phosphore total 5 mg/l P- 2An\. 1,51 0,38 1,82 2,45 0,23 1,97 mg/l-1An\. 99 69 740 415 54 395 MES 50 mg/l- 2An\. 170 66 746 195 285 263 mg/l O2-1An\. 904 249 1024 746 30 893,76 DBO5 30 mg/l O2-2An\. 698 240 678 1125 1981 424 mg/l O2-1An\. 1921 513 2172 1444 150 1446 DCO 150 mg/l O2-2An\. 2030 501 2187 1562 2050 1272 mg/l N- 1 An\. 0,6 0,4 1,4 1,6 0 0,4 Huiles et graisses 10 mg/l N- 2 An\. 1,04 0,3 1,24 2,8 0,6 1,6 Les valeurs du PH, MES, DBO5 et DCO sont en dehors des normes burundaises de rejet des effluents dans l'environnement 1Ã¨re analyse: 6-9/5/2017 2 Ã¨me analyse: 3-6/4/2018 et du 22 au 23/4/2018 (Source: Project Completion Report December 2018) Page 56 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) ANNEX 7\. SUPPORTING DOCUMENTS 1\. Project documents âª GEF Project Identification Form (PIF), September 21, 2011 âª Minutes of the PCN Review Meeting, February 16, 2012 âª Project Appraisal Document, Sustainable Coffee Landscape Project; Report No: 75889-BI, April 2013 âª Global Environment Facility Grant Agreement between Republic of Burundi and International Development Association acting as Implementing Agency of the Global Environment Facility; GEF Grant Number TF 014427, May 21, 2013 âª Global Environment Facility, Project Agreement between International Development âª Association acting as Implementing Agency of the Global Environment Facility, GEF Grant Number TF 014427, May 21, 2013 âª Restructuring Paper on proposed project restructuring of Sustainable Coffee Landscape Project (P127258); Report No: RES25611, April 30, 2013 âª Project Implementation Manual : Manuel dâexÃ©cution du projet, April 2013 âª Resettlement Policy Framework (RPF), RP894 âCadre de Politique de RÃ©installation Involontaires des Populationsâ, March, 2009) prepared for the Agricultural Market Productivity and Development Project (PPDMA) âª Environmental and Social Impact Assessement (ESIA), E4117 âEvaluation dâImpact Environnemental et Socialâ, March 2009 âª Indigenous Plan (IP); (SFG2922), January 2013 2\. WB documents Mission reports âª Aide-MÃ©moire de Missions de prÃ©paration et supervision du PADZOC âª (Septembre 2012- Novembre, 2018) âª Aide-MÃ©moire de revue Ã mi-parcours du PADZOC, Octobre, 2016 âª Implementation Status Reports (number 1 to 09) Fiduciary reports âª Audit reports covering 2014 â 2019 âª IFRs: Rapport de suivi financier du PADZOC 3\. Project outputs âª Shade grown Coffee manual âª Impact Evaluation Report, June 2012 and December 2018 âª PADZOC METT 2012 and 2016 4\. Other relevant documents PADZOC Documentaries âª South â South Exchange (Colombia, Ethiopia and Rwanda) https://www\.youtube\.com/channel/UCa2KxjWz4QFUv3zS_NBMmSg?spfreload=1 âª National Geographic Award 2018: https://www\.nationalgeographic\.org/awards/buffett/ âª Journal Burundi Eco, October 5, 2018 âª WB Feature Story, Colombia, Rwanda, Burundi and Ethiopia: United by a Cup of Coffee, 2014 âª World Bank 2010 Rapid Strategic Environmental Analysis of the Coffee Sector in Burundi Page 57 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Pictures taken from the field 2018 Figure 1\. World Bank mission with members of the Figure 2\. Coffee drying racks at the rehabilitated Musigati Musigati Coffee Washing Station Cooperative\. CWS and in the background hills under SLWM practices\. (Source: Y\.Oodally, 2018) funded by PADZOC (Source: Y\.Oodally\. 2018) Figure 3\. Rehabilitated & certified Musigati CWS Figure 4\. Bullet hole through under PADZOC\. (Source: Y\.Oodally, 2018) one of the glass doors of the PADZOC PCU office in Bujumbura during the 2015 crisis\. (Source: Y\.Oodally, 2018) Page 58 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Figure 5\. Shade-grown coffee Figure 6\. Replication of shade-grown training material in Kirundi (local coffee demonstration site by Feed the language) funded under PADZOC\. Hungry at the ISABU Kayanza Research (Source: Y\.Oodally, 2018) Station\. (Source: Y\.Oodally, 2018) Figures 7 & 8\. PADZOC shade-grown coffee demonstration sites at the ISABU Kayanza Research Station, showing coffee inter-cropping with agro-forestry trees and banana trees\. (Source: Y\.Oodally, 2018) Figure 9\. World Bank mission member standing in Figure 10\. Newly constructed surveillance post at one of the established FFS under PADZOC\. Bururi Natural Reserve funded by PADZOC\. (Source: Y\.Oodally, 2018) (Source: Y\.Oodally, 2018) Page 59 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Figure 11\. Eco-guards patrolling the Bururi Figure 12\. Female community Natural Reserve\. (Source: Project group leaders in charge of Completion Report December 2018)) protecting the Bururi Natural Reserve\. (Source: Y\.Oodally, 2018) Figures 13, 14 & 15\. Batwa indigenous community acquired land and newly constructed houses\. The Batwa were supported by PADZOC and the new houses were funded by the PRODEMA Additional Financing\. (Source: Y\.Oodally, 2018) Figures 16 & 17\. House of Coffee in Bururi funded under PADZOC\. (Source: Y\.Oodally, 2018) Page 60 of 61 The World Bank Sustainable Coffee Landscape Project (P127258) Figures 18, 19, 20 & 21\. Eco and agro-tourism pilot initiatives supported by PADZOC in the Bururi Natural Reserve (Left to right: Tracking of chimpanzees; Thermal waters rehabilitation; Path constructed by Batwas leading to waterfalls; Batwas posing with waterfalls in background\. (Source: Project Completion Report December 2018) Page 61 of 61	REVIEW
P045053	ï»¿ ICRR 11743 Report Number : ICRR11743 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 02/25/2004 PROJ ID : P045053 Appraisal Actual Project Name : Rural Infrastructure Project Project Costs 5\.80 5\.7 US$M ) (US$M) Country : Nepal Loan/ US$M ) 5\.00 Loan /Credit (US$M) 4\.76 Sector (s): Board: TR - Roads and Cofinancing na na highways (74%), US$M ) (US$M) Sub-national government administration (26%) L/C Number : C3215 Board Approval 99 FY) (FY) Partners involved : Closing Date 07/31/2002 07/31/2003 Prepared by : Reviewed by : Group Manager : Group : Nalini B\. Kumar George T\. K\. Pitman Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The development objective of the project was to strengthen the institutional capacity of a decentralized local governance system in its planning and managing capabilities to improve the quality, efficiency and sustainability of rural roads in the selected districts with active participation of project beneficiaries \. The project was a Learning and Innovation Loan (LIL) in which the progress on the development objective was to be monitored through 6 outcome indicators: (i) average travel time and transport costs reduced by 20 percent on project roads; (ii) non-passability duration of project roads reduced by 2 months per year; (iii) roads maintained and rehabilitated under the project to remain in operation 3 years after project completion; (iv) district transport master plans (DTMPs) prepared in the selected districts using a participatory process and endorsed by people's representatives; (v) 80 percent of the project civil works expenditure remain with the local economy; (vi) completion of preliminary appraisal of a follow -on operation that encompasses the knowledge base developed under the project \. b\. Components The project had four components : (i) Infrastructure civil works (total cost at appraisal US $ 4\.20 million, actual US $ 4\.10 million); (ii) Supervision and design (total cost at appraisal US$0\.3 million, actual US $ 0\.30 million); (iii) Equipment and logistical support (total cost at appraisal US$0\.20 million, actual US$0\.20 million; (iv) Technical assistance for management support, monitoring and evaluation and preparation of a follow -on project (total cost at appraisal US$ 1\.1 million, actual US$1\.00 million)\. c\. Comments on Project Cost, Financing and Dates Although the Credit was to His Majesty's Government of Nepal, each participating district provided 20 percent of project costs as counterpart funds \. The project was approved in May 1999 and became effective in December of the same year\. It closed in July 2003, a year behind schedule\. 3\. Achievement of Relevant Objectives: The project was implemented in eight districts in the western and central regions of the country \. The development objective was achieved, albeit with significant shortcomings (section 5 below)\. The achievement on the development objective as per the 6 outcome indicators was as below : (i) Achieved (see (i) under section 4); (ii) Achieved (see (ii) under section 4);; (iii) To early to verify; (iv) Partially achieved (see (ii) under 5); (v) Achieved (vi) Not yet achieved (see (iv) under 5); 4\. Significant Outcomes/Impacts: (i) Travel times along roads improved by the project compared to unimproved roads was reduced by 24 to 54 percent with significant time reductions in trip time to schools, health services and local shops; (ii) Road rehabilitation, gravelling and upgrading has significantly improved the passability of roads and many improved roads are passable year round; (iii) Total road rehabilitation under the project was 373 km versus appraisal target of 340 kms; (iv) The project helped improve the institutional environment for rural road administration; most of the rural road network in participating districts has been decentralized to District Development Committees which have gained in skills and experience in project execution; (v) The project supported the preparation and updating of a number of key policy guidelines and procedures for rural road development and maintenance, and helped develop an integrated approach to rural road planning and investment decisions in the participating districts; (vi) The project provided wage earning opportunities to the poorest segment of the community; 5\. Significant Shortcomings (including non-compliance with safeguard policies): (i) Project environmental impact is not clear \. The project was categorized as Environmental Category C because of the small and pilot nature of the sub -components, however the ICR notes that the C classification may not have been appropriate as road rehabilitation work was in some cases, carried out in environmentally unstable sections which needed environmental protection measures \. Moreover, the planned system to screen the environmental impacts of road work at the local level was not adequately developed \. This was an important shortcoming especially since the experience of the LIL was expected to provide learning on screening criteria and mitigating actions for the preparation of the follow on project \. (ii) Though the preparation of the DTMPs involved meetings with Village Development Committees and communities, the degree of community consultation varied across the eight participating districts : while more than ten meetings were held with the community in Rupandehi and Syangia districts, only two meetings were held in Kapilabatsu district and no meeting was held in Kaski; (iii) Community marketing infrastructure sub -component which was to be 10 percent of the Infrastructure Civil Works component was not implemented; (iv) Training provided by the Technical Assistance Consultancy was not up to the mark and created implementation challenges\. In addition adequate work for appraising a follow on project was not done; 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Satisfactory OED rates a project as moderately satisfactory [a rating which does not exist under the ICR's 4-point rating scale] when it achieves most of its major relevant objectives but with significant shortcomings\. The shortcomings noted under section 5 are significant\. Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Bank Performance is rated satisfactory but only marginally so because of inadequate attention to environmental issues during implementation\. As designed the project was to develop a system to screen the environmental and social impact of road works at the local level\. This system was expected to identify works which could have moderate impacts and corresponding mitigation measures\.However as implemented, training on environmental assessment was conducted only in three districts and guidelines prepared by the Technical Assistance Consultancy were not followed by any district\. This is a serious shortcoming as the project experience was to provide learning on screening criteria and mitigation actions for the preparation of the follow on operation involving new road construction \. Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: Building on the ICR, the main lessons are : (i) Not all the challenges in implementing a project that has significant community participation can be visualized upfront\. Hence the importance of an efficient monitoring and evaluation system to report on progress and make mid course corrections if required \. (ii) In the difficult hill terrain of Nepal, rural roads offer critical access and travel time saving benefits to isolated rural communities\. Adequate weight needs to be given to these factors in the economic analysis of these operations \. (iii) Though community-based organizations provide a viable option for carrying out small scale civil works, adequate technical assistance and clear policy guidelines are required to ensure quality outcomes \. (iv) The small size of sub-projects and high costs of environmental assessments is no justification for not doing due diligence on environmental issues \. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The ICR is satisfactory, but for three shortcomings : (i) It does not shed any light on the quality of the input from the communities in preparation of the DTMPs; (ii) It does not explain why the project closed a year behind schedule; (iii) It does not give details on environmental protection measures that were undertaken and whether such measures were adequate\.	REVIEW
P008510	Document of The World Bank Report No: 31648 IMPLEMENTATION COMPLETION REPORT (TF-23078 CPL-40410 PPFB-P2760) ON A LOAN IN THE AMOUNT OF US$80 MILLION TO THE REPUBLIC OF KAZAKHSTAN FOR AN IRRIGATION AND DRAINAGE IMPROVEMENT PROJECT May 5, 2005 Environmentally and Socially Sustainable Development Unit Europe and Central Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective May 5, 2005) Currency Unit = Kazakh Tenge (Tg or KZT) US$ 1 = 135 KZT FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS APAP Agriculture Post Privatization Assistance Project CWR Committee of Water Resources CG Consultants Group ERR Economic Rate of Return EIA Environmental Impact Assessment FISD Farmers' Information Services Desk GOK Government of Kazakhstan ICR Implementation Completion Report I&D Irrigation and Drainage IDIP Irrigation and Drainage Improvement Project IDIP2 Second phase of IDIP MOA Ministry of Agriculture MOF Ministry of Finance MOENR Ministry of Environment and Natural Resources MTR Mid-Term Review O&M Operation and Maintenance PIU Project Implementation Unit PHRD Policy and Human Resources Development PPF Project Preparation Facility SAR Staff Appraisal Report SEE State Ecological Expertise SYNAS Syr Darya Control and Northern Aral Sea TA Technical Assistance TOR Terms of Reference QAG Quality Assurance Group of the World Bank ROK Republic of Kazakhstan WOP Without Project scenario for ERR estimate WP2004 With Project as in year 2004 (for ERR estimate) WPF With Project Future in about four years WUA Water Users' Associations WUCC Water User Consumer Cooperative Vice President: Shigeo Katsu Country Director Dennis de Tray Sector Manager Joseph Goldberg Task Team Leader/Task Manager: Masood Ahmad KAZAKHSTAN KAZAKHSTAN IRRIGATION AND DRAINAGE PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 5 5\. Major Factors Affecting Implementation and Outcome 11 6\. Sustainability 14 7\. Bank and Borrower Performance 15 8\. Lessons Learned 17 9\. Partner Comments 19 10\. Additional Information 21 Annex 1\. Key Performance Indicators/Log Frame Matrix 22 Annex 2\. Project Costs and Financing 24 Annex 3\. Economic Costs and Benefits 26 Annex 4\. Bank Inputs 31 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 33 Annex 6\. Ratings of Bank and Borrower Performance 34 Annex 7\. List of Supporting Documents 35 Annex 8\. Additional Information about the Subproject 36 Annex 9\. Opinion of the Ministry of Agriculture of ROK on the Project (IDP) 44 MAP No\. IBRD 33837 Project ID: P008510 Project Name: KAZAKHSTAN IRRIGATION AND DRAINAGE PROJECT Team Leader: Masood Ahmad TL Unit: ECSSD ICR Type: Core ICR Report Date: May 5, 2005 1\. Project Data Name: KAZAKHSTAN IRRIGATION AND L/C/TF Number: TF-23078; CPL-40410; DRAINAGE PROJECT PPFB-P2760 Country/Department: KAZAKHSTAN Region: Europe and Central Asia Region Sector/subsector: Irrigation and drainage (92%); Central government administration (8%) Theme: Water resource management (P); Rural markets (P); Environmental policies and institutions (P); Rural services and infrastructure (P); Infrastructure services for private sector development (S) KEY DATES Original Revised/Actual PCD: 04/07/1993 Effective: 09/23/1996 10/21/1996 Appraisal: 11/07/1995 MTR: 10/31/1999 10/12/1999 Approval: 06/18/1996 Closing: 12/31/2003 12/31/2004 Borrower/Implementing Agency: REPUB\. OF KAZAKHSTAN/MINISTRY OF AGRICULTURE Other Partners: STAFF Current At Appraisal Vice President: Shigeo Katsu Wilfried Thalwitz Country Director: Dennis de Tray Yukon Huang Sector Manager: Joseph R\. Goldberg Michael A\. Gould Team Leader at ICR: Masood Ahmad Van Roy Southworth ICR Primary Author: Masood Ahmad; Mahwash Wasiq 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: H Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes A more realistic rating of the project outcome would be "more than satisfactory" considering the Highly Satisfactory rating as the top of the scale\. This is so because all project development objectives were met as shown in Section 4, the outcomes are likely to be sustainable and in particular the institutional impact of the project was high\. Howevr, conservatively it is rated as Satisfactory\. 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The Project's main development objectives were to: (i) promote sustainable irrigated agricultural production through irrigation and drainage rehabilitation, improved water management, and better operation and maintenance; (ii) introduce improved agricultural practices and farmers' information services; and (iii) strengthen irrigation and environmental agencies\. The objectives were consistent with the Bank's strategy to assist the Government of Kazakhstan (GOK) and the Agricultural Sector Review of 1994\. The Project complemented the reforms incorporated in the Development Policy Letter for the FY95 Structural Adjustment Loan (SAL Ln\. 3900) and it was consistent with the Bank's Environment and Water Strategy in Kazakhstan and with recommendations of the Bank Water Resources Management Policy\. The development objectives were appropriate, particularly keeping in view that the Project was to start in a very uncertain environment when the Kazakh economy and agriculture sector were going through transition after the country's independence in 1991\. At the time of project appraisal, the process of transferring the Government farms to private farmers was still at its infancy, as was the restructuring of the institutions\. The irrigation and drainage (I&D) systems were in a dismal state after years of poor maintenance\. 3\.2 Revised Objective: The project objectives were not revised during implementation\. 3\.3 Original Components: The Project was to support GOK's six-year irrigation and drainage investment program\. It was appraised on the basis of pre-feasibility and feasibility studies for about 34 sub-projects prepared by the Ministry of Agriculture (MOA) with the assistance of foreign and local consultants\. Selection criteria were agreed with the MOA to include subprojects in the investment program\. Two of the most important considerations were that rehabilitation/improvement would only take place on the privatized successors to the state farms and it would aim at rehabilitating the existing irrigated areas and/or land previously irrigated but abandoned, thus specifically excluding expansion of irrigation to new lands under the Project\. A feasibility study had been undertaken for each subproject to establish technical, economic and environmental viability\. The main components of the Project are as follows (SAR estimate vs\. actual expenditures): Component 1: Rehabilitation of Irrigation and Drainage Systems (US$108\.14 million vs US$90\.19 million)\. This Component was to improve the reliability and efficiency of irrigation water use, involving rehabilitation of surface irrigation and sprinkler systems; and reducing waterlogging and salinity, including rehabilitation of collector drains and on-farm drainage improvements to surface, tile or vertical drainage systems\. Project works included predominantly on-farm system rehabilitation (considering the state farm as one large farm) as well as selected improvements in inter-farm irrigation and drainage\. A substantial part of what was initially assumed to be on-farm works became off-farm (or inter-farm) works after the state farms had gone through restructuring\. The rehabilitation works were to cover an area of about 30,000 ha and were undertaken in three groups of subprojects, averaging about 10,000 ha\. Out of 34 subprojects for which feasibility studies were prepared, a core program of nine subprojects was identified for construction to start in Year One (1996/97 with a base cost of US$26 million) and Year Two (1997/1998 with a base cost of US$17 million) of the Project\. A list of 13 "reserve projects" was prepared for selecting subprojects to start in Year Three of the Project (with a base cost of US$26 million)\. The detailed designs for these subprojects were to be prepared during project implementation\. Component 2: Promoting Agricultural Development in Privatized Farms (US$2\.27 million vs - 2 - US$2\.12 million)\. At the time of project appraisal most members of the subprojects farms appeared to prefer to be part of a functional group within their large farm unit and work under the aegis of the former State/Collective Farm management and specialists, rather than to take the risk of being the owner of a smaller private farm\. The functional groups were former production brigades, groups that had been responsible for either on-farm water management, crop production, management of the machinery pool, or dairy production\. The main reasons for the reluctance of the shareholders to restructure the larger farms into small units was: (a) lack of overall management skills; (b) lack of operating capital; (c) poorly developed marketing and input supply mechanisms; and (d) lack of inputs, spare parts, and equipment\. Also, effective research, extension and agricultural information services did not exist in the country for private farmers\. This Component was to address these shortcomings through: pilots for farmers' participatory training and information services; support for farm restructuring; and demonstrations for crop production technologies\. The Component was designed to cover training courses and workshops to be conducted at selected project farms for individual farmers or farmers' groups, farm managers and production specialists on topics of modern farm and business management, marketing and processing of produce, and environmental management\. Together with training, relevant demonstrations on improved on-farm water management and new crop production technologies were to be conducted to show farmers how to increase efficiency of applied inputs, and how to intensify crop production\. A Farmers Information and Services Desk (FISD) was to be established to provide technical pamphlets, videos and other materials on critical agricultural issues related to farm management, production and marketing\. FISD was also to serve other irrigated farms not included in the Project and information was to be disseminated in Russian and Kazak through the existing TV and radio channels by MOA's Press Center and through a "Farmers Weekly" paper\. The farm restructuring support sub-component was to develop a strong participatory process and empowerment of farm members by providing access to information and management skills\. It was to encourage development of Water Users' Associations (WUAs) in conjunction with farm restructuring, thereby providing an institutional mechanism to operate and maintain the system and assure equitable access to water by all farmers\. Component 3: Institution Building (US$5\.65 million vs US$4\.46 million)\. The Component consisted of two crucial activities: (a) support for the MOA and the Project Implementation Unit (PIU) to upgrade its capacity for project implementation; and (b) strengthening the environmental capacity for preparation of Environmental Impact Assessments (EIAs) of the various subprojects and environmental monitoring\. The Component also included a study to determine the feasibility of transferring irrigation management for a typical canal command area in Kazakhstan from government control to management by the farmers/water users\. The support for MOA and PIU was to upgrade their institutional capacity in planning, preparing, executing and monitoring the I&D investment program\. The PIU was to contract management and engineering consultants to: (i) assist and train PIU staff in project planning, management, monitoring, procurement, and financial management; (ii) take responsibility for updating/preparing feasibility studies, preparing EIAs, undertaking field surveys and designs, preparing bidding documents; and (iii) assist PIU with farmers' participation, establishing WUAs, and construction supervision\. The support for the environmental capacity subcomponent covered: (a) institutional development and training including: (i) preparation of an improved Environmental Assessment framework for irrigation/drainage development; preparation of an EIA manual for I&D, and building environmental capacity in MOA; (ii) EIA preparation and State Ecological Expertise (SEE) review, including preparation of remaining project specific EIAs and SEE review as required by national environmental legislation and - 3 - governmental regulations; (iii) training for managers, I&D engineers, environmental staff, farmers; and developing an EA harmonization procedure to reconcile differences in the Bank and Kazakh EA requirements and procedures in order to foster EIA preparation for project processing in various sectors; (b) strengthening water/soil quality monitoring and pollution control, agro-meteorological programs and provisions for equipment and materials, including provision of field and laboratory monitoring equipment, computers, data processing and management, and chemicals for laboratory analysis; monitoring of soil contamination, drainage surface and groundwater quality, and residues and quality control of agricultural inputs/outputs; (c) special environmental studies, including development of cost-effective methods to prevent salinity and water-logging; (d) development and implementation of mitigation plans, including a pilot project to clean drainage water from agro-chemical residues; and afforestation within the boundaries of the sub-project area\. 3\.4 Revised Components: The components were not revised during project implementation\. However, there was a shift in emphasis on various project activities\. The Project was the first investment in the sector after the country's independence and one of the few Bank projects in the agriculture sector in the region involving rehabilitation of infrastructure\. Based on the lessons learned in the region, the Project included technical assistance (TA) and consulting services for introducing rigorous economic and environmental analysis, preparation of detailed designs, bidding documents and procurement procedures that were standardized for the country, development of water users' associations (WUAs), and strong oversight for construction supervision and contract management\. The Agricultural Development Component, in particular, consisted of substantial TA and consulting services for establishing demonstration plots, farmers training, and the FISD\. Even though the GOK was convinced of the need for consulting services, based on the demonstrated necessity for them in the field, it remained concerned with the level of consulting services during project implementation, particularly for the agriculture Component because of high foreign consultant's fees and the fact that the agriculture Component was considered as a soft component\. Consequently, some of the TA and consulting services related to the agriculture Component were reduced, while the consulting services for engineering were slightly increased\. Also, GOK placed higher emphasis on the development of WUAs during the Project's mid-term because it was giving increasing attention to the cost recovery and was mandatory that agreements for cost recovery were to be signed with the WUAs prior to the start-up of the construction\. Project implementation was extended by one year, primarily to cover the defects liability period for a few subprojects that were completed in the year 2003 and enable final payments to the contractors from the project funds\. 3\.5 Quality at Entry: Quality at entry was satisfactory\. The Project was well prepared based on feasibility studies for about 34 subprojects\. A rigorous set of economic and environmental criteria were agreed with the Borrower for selection of the subprojects\. In addition to these criteria, some subprojects may have been selected, as the Borrower wished to spread the project investments country wide\. To ensure project readiness for implementation, detailed designs of several subprojects were prepared before project startup\. Sufficient resources and capacity were provided under the Project for carrying out high quality analysis, designs, and construction supervision during project implementation\. The institutional structure for implementation was very well designed and together with the agreed procedures for subproject design, procurement and contract management, contributed significantly to the smooth implementation of the Project\. At the time of appraisal, sectoral issues and constraints to production were thoroughly analyzed and incorporated in the project design\. In retrospect the cost recovery rate was over ambitious, given experience elsewhere in the world and the very early stage of transition in Kazakhstan\. The MOA and Bank project preparation teams had good collaboration and worked closely during project preparation and appraisal\. - 4 - 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The project outcome is assessed as satisfactory as all development objectives have been met\. The I&D system was rehabilitated in some 15 sub-projects in 9 oblasts of the country covering more than 32,000 ha of irrigated area\. Prior to their rehabilitation, the I&D systems in most of these subprojects were nonfunctional due to years of neglect and land was degraded with very little production capacity\. The farms in these subprojects were nearly abandoned and machinery stocks were depleted\. After I&D systems rehabilitation the land is coming back under production\. The crop yields have increased between 12-200% (compared to appraisal estimates of 20-139%) and the cropped area has increased in most subprojects --overall the cropped area has doubled with the Project\. Water management has improved in the rehabilitated subprojects\. There are substantial water savings annually in the rehabilitated subprojects, particularly in those with gravity schemes, and there are considerable energy savings in subprojects with pumped water supply and sprinklers (see Annex 8, Table 3)\. 2004 was the first year of cropping for several subprojects and the third year for those where rehabilitation started in the first year of the Project\. Therefore, farm productivity is expected to increase further and reach its optimal level over the next three to four years (by 2008) as soil fertility improves, the farmers are able to invest in better farming technologies and practices, acquire better inputs and services, gain more experience, and better organize and manage other farm activities, including the marketing of their products\. Thus, the first objective of promoting sustainable agricultural production, and better water management and Operation and Maintenance (O&M), has been achieved as envisaged at appraisal\. Similarly, the second objective of introducing improved agricultural practices has been largely achieved\. Towards this goal, improved agricultural practices were introduced to the farmers, training courses were successfully carried out; field demonstrations for the introduction of improved agricultural practices were held in 10 subprojects; business plans for all subprojects were developed to provide guidance on developing financially viable farms; and farm extension services in the form of a Farmers' Information and Services Desk (FISD) were provided\. Increasing cropped area, yields and water saving in subprojects provide credible evidence of positive outcome of various project activities towards this objective\. The aim of institutional development was fully accomplished under the Project\. The Project had wide ranging impacts on institutional strengthening\. The Government, MOA, and other concerned agencies and their staff have gained substantial experience in the preparation of irrigation and drainage improvement projects, formation of WUAs, design of rehabilitation works, preparation of cost estimates, procurement and bidding procedures, construction supervision and contract management\. The environmental institutional capacity building objective was achieved and environmental Hydro-Amelioration Expedition centers/laboratories were modernized\. 4\.2 Outputs by components: The component outputs were fully realized\. The details by component are given below: Component 1: Rehabilitation of I&D Systems\. This was the largest component of the Project\. Under this Component, I&D systems were rehabilitated in 15 subprojects spread all over the country\. The list of subprojects rehabilitated, area covered and type of the I&D system is provided in Annex 8, Table 1, and the subprojects that were canceled are listed in Annex 8, Table 2\. The description of works implemented in each subproject and other salient features are also given in Annex 8\. The rehabilitation/improvement works consisted of repairs and installation of sprinkler systems (both pivotal and linear move), rehabilitation and installation of pumping stations, pipelines, irrigation and drainage wells, rehabilitation/reconstruction of irrigation and drainage channels, canalets or concrete flumes, land leveling, rehabilitation of rural roads, - 5 - water supply systems, etc\. The rehabilitated and improved I&D systems cover more than 32,200 ha compared with the appraisal estimate of 30,000 ha\. An area of 17,500 ha is covered by gravity schemes and 14,700 ha is under pumped schemes\. The gravity schemes generally have open channels for water distribution, except in the case of Darkhan where enough pressure is available due to the elevation of the intake to distribute the water through sprinklers\. The pumped schemes generally include various types of sprinklers for water distribution in the field, except in the case of Shengeldy where buried pipes discharge water into concrete flumes and earthen open channels for distribution to the field by gravity\. At the time of project appraisal, feasibility studies were prepared for about 34 subprojects\. Out of these, initially 24 subprojects with an area of about 41,000 ha were selected for detailed studies and of those, five sub-projects were eliminated during the study stages due to environmental, economic and other reasons\. For the remaining 19 subprojects comprising an area of 35,000 ha, the study and design stages were completed and bidding documents and engineers' estimates were prepared\. After completion of the designs, two subprojects were canceled from the program, in one case the farm was in severe debt and in the other case, the owner decided not to proceed\. By spring 2000, 17 feasibility studies and EIAs were completed and 16 bidding documents and O&M plans were completed\. Business plans were prepared for several farms in various subprojects based on a sample farm for a typical unit\. In total, 17 business plans were developed\. Based on these plans, the areas of three subprojects were reduced\. Two subprojects were cancelled from the final selection because of high per hectare rehabilitation costs and lack of reaching an agreement with the owners\. The implementation of the subprojects started in three batches: (a) first stage or year one projects, consisting of four subprojects which had the highest priority and were most ready; (b) second stage projects, consisting of seven subprojects; and (c) four remaining subprojects, which were covered under the third stage\. Most of the subprojects were completed in two years, except two which had a three-year construction period\. All construction works were completed by end 2003\. The sequence of this Component's activities consisted of the selection of subprojects based on a pre-feasibility study, consultation with the farmers/owners followed by preparation of the detailed feasibility study and EIA, both of which were cleared by the State Expertise (in both Engineering and Environment) as well as the Bank\. This was followed by the preparation of detailed designs and cost estimates and development of WUAs\. Agreements for implementation arrangements and cost recovery were then signed with the WUAs, and the bidding documents and business/operational plans prepared\. The contractors were selected through international competitive bidding procedures\. After construction, the projects were taken over by the MOA/PIU and transferred to the farmers for operation and maintenance\. The subprojects had a defect liability period of one year, after which the project works were checked by the technical staff of the MOA/PIU, Committee of Water Resources (CWR), other concerned agencies of GOK responsible for State Expertise, the engineering consultants, and the farmers\. The contractors removed any defects identified during this inspection\. The procedure for forming WUAs was developed as part of a detailed study under Component 3 for Institution Building on the feasibility of transferring system management for a typical canal command to the farmers in Kazakhstan\. The WUAs were organized in accordance with the new law for WUAs passed in September 1999\. In large subprojects (such as Maktaral, Kurchum, Shengeldy, Akkumski) having a large number of farmers, a two-tiered organization was established\. Water User Consumer Cooperatives (WUCCs) were established at the lower level of the systems and an association of WUCCs was formed at the upper tier of each system\. As a part of the process of establishing WUAs, the Maktaral subproject was used as a pilot to establish procedures and for developing a standard form for the WUCC Charter and procedural methods\. This initiative also included: assistance in establishing the WUAs and at least two weeks training for WUCC staff in administration and financial management, and management of the I&D systems\. - 6 - The farmers/WUAs participated intensively in the rehabilitation/improvement of the I&D systems through all stages of the Project: during the planning and feasibility study phase, with selection of equipment and the final design, and during the construction phase\. Many changes were made during the subproject preparation and implementation at the request of the farmers\. The final design documents were countersigned by the owners/WUAs\. This was possible because the technical capacity existed in these subprojects\. The original farm managers and many of the technical staff responsible for water management and O&M of the I&D systems when these subprojects were operating as state farms were still present and functioning in some capacity in these subprojects\. Some were farmer/owners, and others were engaged by the owners\. Many of them were still living on these farms, some making a living through farm related activities such as livestock, machinery operation and maintenance, and trading agricultural commodities and inputs\. The bidding documents were therefore structured in a manner that allowed flexibility in the selection of equipment (meeting the technical specifications) by the farmers/owners\. In a few cases, the owners actually visited the equipment manufacturing factories outside Kazakhstan to check on the suitability and quality of the equipment, as well as the continued availability of spare parts e\.g\. the Kaisar 2 (near Astana) farmer visited sprinkler manufacturing plants in Russia\. As shown in the economic analysis section, the cropped area and crop yields have increased significantly after rehabilitation of I&D systems, yielding substantial employment and benefits to the farmers and the country's economy\. These benefits are expected to increase further over the next few years\. The Component was crucial for improving the systems' water management\. Annual water savings in the rehabilitated subprojects are substantial (1,300 cubic meters per hectare on average), particularly in subprojects with gravity systems like Maktaral, Akkumsky and Kurchum, where water savings are much higher\. (Annex 8, Table 3 indicates that in gravity systems water applications have been reduced to half)\. The annual energy savings in pumped schemes with sprinklers for water application in the field is also substantial (1,000 Kwh/ha on average)\. The employment is increasing in subprojects as a result of enhanced cropping activities\. The physical and institutional outputs of this Component were demonstrably significant and vital for achieving the project objectives, hence they are rated High\. Component 2: Agricultural Development\. Originally - during the preparation/pre-appraisal stage - this Component was intended to be a full-fledged farm restructuring and development component, including the provision of credit for farmers of the subproject areas\. However, unfamiliar with and uncertain about the new development approaches, and wary about the value of foreign consultants, the GOK delegation reduced the scope of the Component during negotiations to a three-year pilot, with the current title of "Pilots for Farmers Participatory Training Services and Information Services\." The most serious reduction took place in the farm restructuring part of the Component\. The elements of the revised component consisted of: participatory training, demonstrations, provision of farmer's information services and consultancy services\. Also, due to GOK's insistence to minimize the technical assistance and consulting services costs (particularly the costs for foreign consultants), the contract for consulting services for implementation of the pilots was limited to two years only\. However, the consultancy contract was subsequently extended for one more year through a reallocation of the existing budget under the contract\. Despite these limitations, the Component was very productive and effective in contributing towards the project development objectives\. For the "training of trainers," twelve training modules with 22 courses were designed\. The trainers were drawn from agricultural universities and other organizations\. For "farmers' training," 39 training courses were provided to over 1,000 participants in various locations in the field\. For demonstration and field days, 10 demonstration plots were developed\. The demonstration plots were used to show new technologies and crop rotations, economic and improved farm management practices and also served as training grounds for - 7 - other farmers in the area, as well as for farmers from other subproject areas\. Based on the farmers' demands, on field days much attention was given to the costs and benefits of the various crop and farming systems\. Under Component 1, a demonstration was also organized in Kaisar 2 subproject to demonstrate sprinkler technology\. The farmers considered the Farmers' Information Services Desk (FISD) extremely useful and, through its publications and broadcast service, became the most visible and successful part of the pilot program\. Under FISD, 31 technical brochures, 70 technical videos, 22 paper articles, 23 TV broadcasts and 26 radiocasts were produced\. What did not succeed under this sub-component, was the "Farmers' Weekly," which was to be carried out by two private agricultural newspapers "Selskaya Nov" and "Auyl," in the Russian and Kazakh languages respectively, as both papers ran into financial problems due to lack of a sufficient number of paying subscribers\. The Component was very successful and in high demand by the farmers of the subprojects, as well as other farmers\. After three years of implementation, a revised version of the component was prepared with reduced costs, based on the services of national consultants\. Along with this revised component, the Government also proposed to provide the subprojects' farmers with farm machinery under the project loan through the WUAs because banking services to farmers for medium term funds were not available at that time, and farmers had a serious need for new tractors\. Although the demand for such machinery among the farmers was high, an arrangement satisfactory to both the GOK and the Bank for providing this machinery could not be reached, despite efforts by several Bank missions to resolve this issue\. Notwithstanding its short duration, the Component contributed substantially towards the Project's success, particularly in improving water management and agricultural practices and thus increasing the profitability of the farms following the rehabilitation of the I&D systems\. Component 3: Institution Building\. The Project Implementation Unit's (PIU) capacity was strengthened substantially in preparing, designing, and constructing I&D projects\. However, in early 2000 following the PIU's move from Almaty to Astana, MOA dissolved the PIU as a semi-autonomous entity and most staff were re-employed in a Consultant Group (CG) in the MOA, under the overall supervision of the MOA\. The technical staff of the CG were headed by a Chief Consultant but the procurement, accounting and financial management staff in the CG were placed under the direct supervision of MOA's Finance Department, while the environmental and agriculture staff came under the supervision of MOA\. Unlike most countries in the region, CG was actually established within the MOA structure, reporting to the Vice Minister thus the MOA had ownership of the Project\. As a result, the capacity building was more enduring\. Additionally as the irrigation and drainage functions are now moved to CWR which is a very competent institution and an integral part of the Government structure, capacity building is more effective\. Throughout the implementation period, the PIU/MOA staff was given training in project design, procurement and construction management\. They also received on-the-job training by working with the engineering consultants, consisting of international firms and national design institutes\. The PIU/MOA staff worked as Project Managers for the civil works contracts and they were supported by construction inspectors and quantity surveyors\. All were given training in quality control, material testing and overall site and contract management\. In 2002, in keeping with the latest Water Law, the responsibility for I&D planning and management was transferred to the Committee of Water Resources, following its own transfer from the Ministry of the Environment and Natural Resources (MOENR) to MOA\. MOA's I&D staff was also transferred to CWR\. Consequently, CWR, which has significant capacity for the management of water resources systems, large structures, canals and inter-farm canals, will now also be responsible for the preparation and - 8 - implementation of the second phase of IDIP (IDIP2)\. These institutional changes have further strengthened the institutional capacity of the water sector, since it is now located in one agency that deals with the entire water and I&D system\. This allows it to address water issues in an integrated manner and will enhance the Government's interaction with the final water users through the already functioning oblast and rayon level branches of CWR\. The capacity of the water users and WUAs in O&M of the I&D systems has been strengthened under the Project through training and on-the-job experience at the subproject level\. The WUAs have taken over the completed systems, and have made formal and informal arrangements for carrying out O&M\. O&M manuals have been prepared for all subprojects\. The Project's institution building support has actually extended beyond MOA to many Government and private institutions involved in the sector, as well as the construction industry\. The capacity of several design institutes and contractors that were involved in project implementation has been enhanced substantially\. About ten design institutes have worked with international consultants in preparing engineering designs of I&D improvement works in various subprojects and most of these institutes are now private firms\. As a result of their participation in the Project, these firms (as well as the MOA staff) were exposed to, and have acquired new techniques and computer systems for carrying out surveys, investigations, engineering designs, preparation of environmental assessments, business plans, as well preparation of bidding documents, all aspects with which they were not familiar before\. Similarly, the contractors gained experience in construction through competitive bidding, higher construction and management standards, and quality control\. Study for Transfer of Irrigation Management\. A feasibility study for transferring system management for inter-farm canals from Government to the users was completed under the Project\. It encompassed a case study for the Tashatkul Massif in the Shoo and Moyinkum districts in Dzhambul Oblast, covering an area of about 42,500 ha, and a case study for the Maktaral subproject with an area of about 10,000 ha (mentioned in Component 1)\. No area was included in the Tashatkul Massif for I&D system improvement under the Project as it was just taken as a sample for a typical large gravity irrigation system\. The study formed, inter alia, the basis for developing the procedures and methodology for establishing WUAs in the subprojects\. The study included detailed recommendations for the establishment of the Tashatkul system as a pilot for irrigation management transfer at the inter-farm canal level\. It proposed a three-phase pilot transfer program to be implemented over a period of 12 months and also provided the cost estimates for its implementation\. It recommended that the pilot be started only after the recommended amendments and adjustments to the legal and regulatory environment supportive of large scale WUAs were made\. With recent legislation and adoption of a water code, it is now possible to implement the pilot and recommendations of the study\. Therefore, the recommendations of this study for participatory management at the inter-farm level are likely to be included in IDIP2, which would cover a large area in the South Kazakhstan Oblast with I&D systems similar to Tashatkul and Maktaral\. Strengthening Environmental Capacity\. Environmental capacity was strengthened through: (a) on-the -job training and technical seminars by the environmental consultants; involving PIU/CG staff, national consultants and farms in the preparation of EIAs for all subprojects; and demonstrating best EIA practices to the State Ecological Expertise (SEE)\. An Environmental Unit was established in the MOA for environmental sector policy making\. An EA Harmonization Seminar was held in 1997 with the aim to harmonize the environmental requirements and procedures of the Republic of Kazakhstan (ROK) and the World Bank\. Two documents were developed during the EA Seminar: (i) a document "On Understanding of Requirements and Procedures of ROK for EIA and SEE and those for EA of the World Bank:" and (ii) a letter on "Strengthening Environmental Assessment Management for World Bank-Financed Projects\." The - 9 - final report of the Harmonization Seminar was formally accepted by the MOA and the Ministry of Environment and Natural Resources (MOENR) in 1998\. The two mentioned documents thereby became the guidelines for EIA preparation and SEE review for the IDIP subprojects\. Over time a streamlined procedure was developed for carrying out an EIA and SEE for each subproject; (b) strengthening the three existing hydro-amelioration expedition centers in the cities of Almaty, Kzyl Orda and Shymkent for water quality, soil salinity and environmental monitoring through the provision of the necessary equipment and materials\. In addition, a new center was established in Astana\. The laboratories are now operational and carry out monitoring in the subproject areas as well as in other areas\. Detailed guidelines for subproject performance monitoring and evaluation system, based on GIS software, were also developed using the Shengeldy subproject as a sample area; and (c) the preparation of a pilot project to clean drainage water from agro-chemical residues for subsequent use in afforestation, was also prepared for Shengeldy by the Research and Production Association for Industrial Ecology (Kazmekhanobr), which is subordinate to the MOENR\. This pilot has not been implemented yet but a project based on the same idea is now under implementation in Astana for treatment of sewage water and its use for afforestation outside the city\. 4\.3 Net Present Value/Economic rate of return: The ex-post economic evaluation of the Project was carried out following the appraisal methodology\. Farm models developed for each subproject rehabilitated were used for performing the economic analysis\. The Project Economic Rate of Return (ERR) was estimated by adding all costs (including the costs of project management, construction supervision, agricultural and institutional components) and incremental benefits of all subprojects\. During appraisal, the ERR was estimated only for subprojects that were to be implemented during the first and second year of project implementation and these data were used to estimate the overall Project ERR\. The ERR for the remaining subprojects was estimated as a part of their feasibility studies prior to their inclusion in the Project, as the appropriate level of ERR was the main selection criteria\. At project completion, the overall ERR is estimated at 32% compared to 27% at the appraisal stage\. The ERRs for the individual subprojects range between 12% to 23% with the exception of Maktaral subproject that has an ERR of 51% (Annex 3, Table 4)\. Maktaral constitutes about 30% of the total project area and has lowest per hectare cost\. Thus its impact on overall ERR is substantial\. Ex-post ERRs for all subprojects and the projected ERRs for them at the appraisal stage and or during feasibility studies are presented in Annex 3, Table 4\. ERRs for individual schemes reflect their diverse characteristics, including the cost of their rehabilitation\. The ERR for subproject Maktaral is very high owing to favorable agro-climatic conditions for growing cotton which is a high value crop\. The net present value, discounted at 10% over a period of 25 years is KZT 18,557\.67 million (US$137\.5 million equivalent\.) Project benefits have resulted primarily from increased agricultural production with a combination of increase in cropped area, increase in crop yields and shift towards high value crops\. About 70% of the benefits are due to an increase in cropped area and 30% is due to an increase in yields\. Other benefits include savings in energy costs particularly for subprojects with pumped irrigation system which were quantified and included in the analysis\. There have been considerable water savings which in many cases will be utilized within the subproject area\. However, water savings in gravity schemes such as Maktaral and Akkumsky are so high that some of the water may be used out of the subproject area and/or for meeting environmental demands\. These benefits are not quantified\. The Project created direct employment for 6,600 people in 2004 (see Annex 3, Table 3 by subproject) in the farming sector and this is estimated to increase to more than 8,000 over the next three years\. The secondary impact of direct employment by the Project has not been estimated\. Based on the economic analysis, it is clear that the Project resulted in increased productivity and employment\. - 10 - 4\.4 Financial rate of return: Not applicable\. 4\.5 Institutional development impact: The Project's institutional development impact was high as it had this as an explicit objective and included a component for institution building\. The capacity of Government agencies involved in the I&D sector as well as in construction of infrastructure in other sectors has been enhanced greatly as a result of the Project\. The MOA/PIU's capacity was strengthened in preparing, designing, and construction of I&D projects\. The institutional building is also sustainable as the PIU was integrated into the MOA structure and CWR has now taken over the responsibility for future I&D development\. The water users and WUAs were strengthened at the subproject level in carrying out O&M of I&D systems\. As mentioned above, the Project also had a broader impact on institutional building and this was not limited to the MOA\. The MOA staff that have worked as Project Managers of the civil works contracts are in high demand in the country because of their experience in procurement, engineering, construction supervision and contract management\. After project completion, many of them are now working in other World Bank, Asian Development Bank and other donor funded projects\. Some of them are working in the private sector, with companies involved in construction of urban and rural water infrastructure as well as in the oil industry\. About ten national design institutes have worked as sub-consultants under the supervision of the international engineering consultants to prepare the engineering designs for I&D improvement works in the various subprojects\. Many of these are now private firms and are involved in construction projects all over Kazakhstan\. Since the strengthening of these design institutes has substantially upgraded the technical capacity in the country, GOK now finances all consulting services for development projects from its own resources, though consultants are selected using guidelines similar to those of the World Bank Guidelines for Selection of Consultants\. The construction industry in Kazakhstan has benefited greatly from the Project by enhancing its capacity in carrying out construction works under international contracts\. Many local contractors started working as subcontractors to the international contractors but they subsequently managed to win and implement ICB contracts themselves as main contractors, under the IDIP as well as other projects\. A few of the IDIP national contractors are now involved in other projects supported by the World Bank, other donors and GOK\. The most notable institutional development impact of the Project is probably in the area of procurement and contract management capacity\. Even for projects funded from its own resources, GOK has now adopted the Bank's procedures for procurement, bidding, forms of contracts and bidding documents\. After approval by the MOF, all agencies of GOK are now using these procurement and contracting procedures\. Although, all credit for these changes cannot be attributable solely to IDIP, it indeed deserves the most credit, since it was one of the first projects through which GOK gained experience in procurement and contract management,\. Based on the above and its impact on private and public sector development, the Project deserves a High rating for institutional development impact\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: There has been no significant events outside the control of the Government or implementing agency that affected project implementation\. 5\.2 Factors generally subject to government control: The Project experienced some delays in implementation, mostly related to budgetary problems, a - 11 - controversy about the mechanism for cost recovery, and the restructuring of the PIU following its move from Almaty to Astana (all of which are discussed in more detail below)\. Nevertheless, project implementation has generally been satisfactory mainly due to excellent project preparation, upfront preparation of feasibility studies and detailed designs for several schemes, the agreed upon institutional structure for implementation, and support from engineering and other technical consultants\. In the early stages of the Project, counterpart funding was a problem and this affected the implementation of a few subprojects\. To address this issue, the Bank increased the disbursement percentage for works at the request of the GOK in 2000\. During IDIP implementation, frequent changes in procedures for annual budgetary allocations created uncertainty and inflexibility, particularly, when a new budget system of "passports" was introduced in 1999/2000\. Due to the requirement that the budget requests for the following year had to be submitted well in advance and unutilized funds from the allocated budget were perceived as a sign of incompetence of the implementing agency, the implementing agency tended to lower its estimates for the next budget year\. In addition, the budget allocations were made against very detailed expenditure categories while the spending was strictly controlled by category without much flexibility for reallocation of funds among the categories\. In early 2000, due to these budgetary problems, the MOA had to delay the signing of two contracts that had been awarded; the opening of bids received for three contracts; and the pre-bid conferences for two contracts\. However, counterpart funding was not a problem during the later years (from 2001 onward) as the GOK had a budget surplus by then\. It is unlikely to be an issue in future projects --the GOK is financing at least 50% of the cost of projects recently approved/negotiated\. The MOF had a very strict control over changes in the contracts for consultants and works, which left little flexibility for the MOA in project management\. In addition, any changes to the contracts were also to be cleared by the local governments (maslihats) as part of the counterpart funds were provided by them\. In practice, this often caused delays in approval and avoidance of beneficial changes during construction\. The strict requirement by the State Expertise for a very detailed feasibility for each subproject, requiring considerable time and resources for preparation upfront, and particularly the inflexibility in reallocation of budget during the year, meant that expansion of a subproject or addition of a new subproject was very difficult in the later years of project implementation\. As a result, the savings from the cancellation of a subproject could not be utilized because the timely preparation of a new subproject was not deemed possible by the implementing agency\. The Government has been reviewing its budget procedures and is making adjustments since the introduction of a new budget system so that such issues can be avoided in the future\. Even during project preparation, it was realized that the availability of farm machinery for the farmers of the rehabilitated subprojects would be necessary to achieve rapid production gains after the rehabilitation of the I&D systems\. As some of the farms went out of production prior to I&D rehabilitation, the farm machinery of these farms had deteriorated drastically\. Moreover, the farmers lacked capital and were not able to obtain loans because of stringent requirements for collateral by the financing institutions (land could not be mortgaged\.) After the mid-term review in October 1999, the need for farm machinery was recognized by the Government, and it requested that IDIP loan funds be used to provide machinery to the farmers of the rehabilitated subprojects, at subsidized terms\. Unfortunately, the terms and mechanism on how to provide farm machinery is a subject on which GOK and the Bank were not able to reach an agreement\. More efforts could have been made by GOK to address this issue through its ongoing program of farm machinery financing or through the Bank financed Agricultural Post Privatization Assistance Project (APPAP)\. - 12 - Also, an extension of the consultants' contract for the Agricultural Development Component could have enhanced the project benefits further\. Unfortunately, although efforts were made by Bank missions, no agreement could be reached to revive this Component, in part because GOK linked the revival of this Component to the provision of farm machinery from the project loan\. Despite these various issues, the Government remained very committed and actually did quite well in project implementation\. 5\.3 Factors generally subject to implementing agency control: Particularly during the early years of the Project, the PIU was effectively managed by a very dynamic and experienced engineer, quick to make decisions and instrumental in starting-up several subprojects\. There have been no factors subject to the control of the PIU that have affected project implementation\. After the PIU structure was dismantled and its staff was merged with MOA departments, the management efficiency of the Consultants Group was lower than that of the PIU as the project staff had to seek many clearances within the Ministry\. However, this did not affect the implementation of already ongoing contracts or subprojects, which were already designed and included in the program, but it dampened their initiatives for starting additional subprojects with the available savings from the Project\. 5\.4 Costs and financing: At appraisal, the total cost of the Project was estimated at US$117\.88 million equivalent of which US$80\.00m was to be financed from the Bank loan, and the remaining US$37\.88m was to be financed by the Government of Kazakhstan\. At completion, the project cost was US$97\.7m of which US$72\.46m was financed from the Bank loan and US$25\.24m was financed by the Government (see Annex 2 for details)\. The unutilized loan amount of US$7\.54m was cancelled at the time of project closing\. The reasons for under utilization of the loan funds was: (i) the ICB bidding procedure resulted in lower than planned cost of rehabilitation for the subprojects; and (ii) cancellation of three subprojects (Kaisar in Aktobe Oblast, Pastaev, and Saryozenski) from the final list of subprojects to be rehabilitated during project implementation period due to their very high per hectare cost of rehabilitation\. Given the cumbersome budgetary and administrative procedures within the Government, as explained above, new subprojects were not added to the Project\. However, the unutilized amount of loan funds is lower than it would have been because the disbursement rate for the civil works contracts was increased from 70% in the original Loan Agreement to 80% during project implementation\. About 92% of the cost of the Project, both at appraisal and completion, was for rehabilitation of I&D systems in various subprojects and remaining for agricultural component and institutional building\. The disbursements proceeded according to the original estimates without major lag\. The financial management system worked well under the projects\. Payments were made to all contractors mostly on time with exception of a few cases when project implementation was halted to address the WUA and cost recovery issues\. In addition to the GOK's contribution, a small amount of the rehabilitation costs were to be met by the oblast governments\. The oblasts' involvement often delayed the decision making for design and contract management, particularly in making changes to the ongoing construction contracts\. Cost Recovery\. Cost recovery has been central to the design of the Project and an important factor in its evolution in its final form\. The planned cost recovery was to ensure that the farmers would make a strong commitment to the success of the Project while allowing them to make major decisions regarding the desired scope and extent of the subproject rehabilitation works - which was exercised very well by the IDIP farmers\. However, the demanded level of capital cost recovery under the Project was unusually high when compared to similar projects elsewhere in the world, where contributions of between 5% to 20% are typical\. For IDIP, GOK had required beneficiaries to repay 70% of the cost of rehabilitation/improvements (without VAT) in 30 years, with a grace period of five years beginning from the date of signing of the cost recovery agreement, prior to the commencement of rehabilitation works\. The justification for such a high - 13 - recovery rate was that most of the I&D system rehabilitation works were assumed to be performed on the on-farm level, considering the then existing state and collective farm structure and returns indicated adequate margins to cover those amounts\. However, the structure and delineation of on-farm and off-farm works changed considerably when the farms were privatized during the project implementation period, as many of the on-farm canals became off-farm canals and hence public works\. Immediately after the rehabilitation of the I&D systems, the farmers had to invest in farm machinery and had many other necessary expenditures for starting their own farming operations and bringing the land back into production\. Also the start loan repayment after five years grace period form the signing of the loan and not from completion of works made period of actual earnings too short\. This limited the farmers' ability to repay the loan for rehabilitation of I&D systems immediately after the subproject went into operation, even though the incremental benefits from rehabilitation far exceeded the cost\. Therefore, in addition to the level of cost recovery, the terms of cost recovery should have been designed taking into account the farmers' anticipated cash flow during post rehabilitation period, and particularly as they are may be facing problems in securing credit\. 6\. Sustainability 6\.1 Rationale for sustainability rating: The principal objective of the IDIP, restoring the productivity of irrigated lands, is highly likely to be sustained\. The private farmers in the rehabilitated subprojects are improving their farming practices every year\. Different and more profitable crops are being introduced\. These farmers/owners are also improving their response to the market economy, and their capacity to operate and maintain their on-farm I&D systems\. With the now reliable irrigation water supply and improved drainage conditions, some outside investors are getting involved in the rehabilitated subprojects by making investments and growing specialized crops\. For example, in Shengeldy, a private company is investing in soybean production, in Akkumsky in rice, and in "60 Years of October" a dairy plant is investing in fodder production\. In most subprojects there is shift towards high value crops, e\.g\. towards cotton in Maktaral, potato seed production in Kaisar 2 (near Astana), and vegetables in most subprojects\. This, together with higher income levels, makes backtracking very unlikely\. The farmers/owners and WUAs are well organized, improving their capacity to operate and manage the inter-farm I&D systems within the original state farm, and improving water management as indicated by the estimates of water savings in the rehabilitated subprojects\. The capacity for planning and designing I&D investments is anticipated to improve further as GOK is committed to support the program for rehabilitating irrigated lands\. GOK has already allocated substantial resources for this program\. A second phase of IDIP is planned for implementation with World Bank assistance and there are similar projects ongoing and in the pipeline with assistance from other donors (such as ADB) and also from GOK's own resources\. The achievements in institutional development and the strengthening of irrigation and environmental agencies are likely to be enhanced further\. The recent reorganization of the I&D sector and its merger with the CWR, which is responsible for the major water infrastructure, including main and inter-farm canals, and the increasing budgetary allocation for the O&M of this infrastructure has further added impetus to the sustainability of the I&D sector and its institutions\. 6\.2 Transition arrangement to regular operations: Plans for the O&M of the rehabilitated subprojects were prepared during the detailed design phase and updated after completion of the construction works, along with the engineering drawings of the systems as built\. The subprojects have competent technical staff for proper O&M and with the increasing profitability - 14 - of the subprojects and the healthy budgetary situation in Kazakhstan, O&M financing is not likely to be a problem\. Upon completion, the I&D systems were transferred to the farmers/owners and WUAs who became responsible for O&M of the new inter-farm infrastructure within the former state farms\. The I&D systems remained under warranty for a one-year period during which the owners were already responsible for O&M\. The inspections at the end of the warranty period showed that the subprojects are running in good condition\. Some of the earliest completed subprojects are now already a few years in operation\. The increasing cropped area in these subprojects is an indicator of the proper O&M of the system\. Also, with a single agency, CWR, now responsible for management of the major I&D and large water infrastructure (i\.e\. the whole water sector) there has been more interaction between the owners of the subprojects and the Government agencies in addressing any technical issues which arise in O&M\. CWR has the competence and ability to continue I&D rehabilitation program in future\. In conclusion, no serious difficulties are experienced in transition to regular O&M of these subprojects by the farmers/owners\. The institutions involved in the planning and development of the I&D systems, including the national consulting firms and contractors, now have increasing opportunities in Kazakhstan to participate in the further rehabilitation of the I&D systems in the country\. The remaining area that GOK is planning to rehabilitate is large, potentially exceeding some 1\.5 million ha\. such a program would continue to enhance the capacity of all institutions involved in the sector\. GOK also has resources now to invest in such a program\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank's performance during project preparation was satisfactory and actually crucial to the Project's success\. The preparation team was competent and balanced, and covered the necessary skills in agriculture, economics, engineering, environment, and social sciences\. The extensive experience of the team in preparing and implementing irrigation, drainage and agricultural development projects worldwide was likely the most important factor in the success of the Project\. The team worked closely with the Government, attended to government priorities and experience, and contributed to best practices in prioritizing subprojects, preparing feasibility studies, designs, EIAs, and institutional arrangements for implementation and procurement\. The team prepared excellent terms of reference (TOR) for the project preparation consultants funded under a PHRD Grant, and subsequently for feasibility studies and detailed designs financed using an advance from the Project Preparation Facility (PPF)\. The engineering consultant recruited for project preparation and design performed very well\. Due to thorough and detailed preparation of several subprojects before loan approval and the proper design of institutional arrangements for implementation, project implementation proceeded without any major hurdles\. The project preparation led to additional investment by ADB for rehabilitation of I&D systems in Maktaral region covering an area of about 35,000 ha using the feasibility study carried out for the Maktaral subproject\. Even though Kazakhstan is fully capable of financing I&D system rehabilitation program itself, despite the relatively higher cost of funds, has selected IDIP2 as one of the few loans it wants from the Bank because of the high value GOK places on technical advice that comes with Bank financing\. In retrospect, the Bank should have found a way to either link a credit operation more closely with IDIP or provide the farmers of rehabilitated subprojects with some capital to renew some of their farm machinery\. 7\.2 Supervision: Project supervision is rated satisfactory\. The supervision was based on the standard practice of two supervision missions per year\. However, the intensity was increased during the 1999-2000 period when project implementation was rated unsatisfactory\. The missions were staffed with appropriate skills, depending on the project implementation stage and expected issues\. The supervision missions consisted of - 15 - expertise in engineering, economics, agriculture, financial management, procurement, social and environmental, and operational issues\. When necessary, the Sector Manager participated in the supervision missions for discussions with high level officials in Government\. The Bank responded to the requirements of the Government quickly in order to resolve issues that may have otherwise created major problems in project implementation, e\.g\. the need for increasing the disbursement rate; allowing advances to the civil works contractors, and extension of the loan closing date by one year\. During implementation the Bank provided guidance about restructuring the PIU, issues related to capital cost recovery, development of WUAs, technical advice on various aspects of I&D system rehabilitation, agricultural services, as well as procurement and contract management\. The Bank could have found a way and shown more flexibility in accepting the Government's proposal on the terms for providing farm machinery using IDIP funds when it was realized that farm machinery is essential for expediting the productivity gains from the rehabilitated I&D systems\. 7\.3 Overall Bank performance: The Bank's overall performance is rated satisfactory, with good project design backed by sound supervision performance and follow up\. Borrower 7\.4 Preparation: The Borrower's participation in project preparation was satisfactory\. This was the first donor funded irrigation and drainage improvement project in the country\. Initially, there were high expectations that large amounts of funds would be provided quickly for carrying out rehabilitation works throughout the country\. In the early stages, GOK staff also had difficulties in using procedures that were different from those used in the past, such as the Bank's requirements for recruitment of consultants and the application of strict economic, social and environmental criteria in selection of subprojects\. However, the PIU staff quickly comprehended the concepts and coordination between the Bank and Government teams was excellent during the preparation phase\. Project preparation consultants played a crucial role in streamlining what was initially a very complex project preparation exercise due to the new project preparation requirements, an economy in transition, and the ongoing privatization of the farms\. Especially the latter was having an impact on the design concepts for the I&D systems of the subprojects and the envisaged structure for the O&M organizations\. The PIU was headed by a very dynamic and experienced engineer with great management and people skills and access to the upper tiers of Government, particularly to the Minister of Agriculture who trusted him and had delegated him with the responsibility for dealing with the project issues\. During the preparation phase, the PIU was the main decision making body and thus it was quick in addressing the issues and responding to the problems that kept project preparation on track\. The experience of PIU staff was a great asset in understanding the technical, environmental, social and institutional issues of subprojects spread thousands of kilometers apart all over the country\. 7\.5 Government implementation performance: The Government's implementation performance is rated satisfactory\. In the initial stages of the Project, decision making was quick and, as a result, the recruitment of consultants and the procurement of civil work contracts proceeded very fast\. This was helpful in setting the pace for project implementation to be followed during the later years\. In 1999, however, with changes in the MOA and GOK's decision to revert back to a more conservative approach to cost recovery involving an agent bank on behalf of MOF, the subprojects were required to sign complementary agreements on cost recovery\. The implementation of ongoing contracts was halted to ensure compliance with the revised procedures\. Also, during this time the MOA went through institutional reforms and decided to merge the PIU staff into the Ministry's - 16 - departments\. This slowed implementation of the contracts initially but it appears to be proving beneficial in the long run\. After the restructuring issues were settled, the Government's response to address financial, procurement, and administrative issues was again quick towards the later years of the Project\. 7\.6 Implementing Agency: The implementing agency's performance is rated satisfactory\. In the early years of the Project, the PIU was instrumental in quick project startup, development of WUAs, and the procurement and award of contracts for construction of several subprojects\. The implementing agency was efficient in monitoring the Project's progress, addressing contractual issues and pursuing Government agencies such as MOA and MOF for timely actions\. Audits were completed on time and satisfactorily\. However, in later years, after a decision had been made to cancel a subproject and it had become obvious that the Project would have cost savings, the implementation staff was slow in starting up the preparation of feasibility studies for additional subprojects\. The reasons behind this slow reaction are to some extent understandable and are explained in Section 5\.2\. On balance the implementing agencies performance is considered satisfactory\. 7\.7 Overall Borrower performance: Overall Borrower performance is rated satisfactory\. 8\. Lessons Learned As demonstrated in this ICR, rehabilitation of irrigation and drainage systems is highly beneficial, indeed crucial for improving the productivity of irrigated lands, generating employment, and increasing incomes\. Kazakhstan's irrigated area had reached more than 2 million hectares in the past (during late 1980s) and then declined particularly after independence in 1991 during transition and economic restructuring\. GOK is committed to continue the rehabilitation/improvement of I&D systems over a substantial part of these irrigated lands in line with its objective of diversifying and expanding the economy in the non-oil sectors\. With the implementation of this first project in the sector (which actually serves as a large scale pilot), considerable experience has been gained and applying the lessons learned in future projects would make it possible to accelerate the coverage of improved I&D systems with reduction in per hectare cost and increases in the number of beneficiaries\. Encouragingly, most of these lessons are being incorporated in the development of a second phase of IDIP which is now under preparation and is anticipated to cover an area of about 200,000 ha\. The key lessons are summarized below: Subproject Selection and Design\. In order to maximize the benefits and returns to I&D rehabilitation investments: (a) highest priority should be given to areas having more favorable agro-climatic conditions for increasing crop productivity\. The southern areas in South Kazakhstan, Kzyl Orda (in the Syr Darya Basin), Dzhambul and possibly Almaty Oblasts with warmer weather and comprising large plains have a comparative advantage in cropping activities over the northern areas as they offer possibilities for growing higher value crops like cotton with export potential, and generating higher employment locally through the processing of cotton and manufacturing of related products\. The farm sizes in these areas are smaller and the population density is higher so that I&D rehabilitation in this region would extend benefits to a large number of the country's citizens; (b) lower cost I&D system rehabilitation works covering a large area and a large number of beneficiaries should be selected\. The gravity irrigation schemes in the south have relatively lower per hectare cost as these systems are simpler and generally cover much larger areas\. Addressing the rehabilitation issues in these gravity based I&D systems first, would therefore further accelerate the areal - 17 - coverage and the number of people benefiting from these investments; (c) rehabilitation of I&D systems should not be seen in isolation from the rest of the agricultural production process\. Although I&D rehabilitation is a pre-condition for improving agriculture productin, a series of other agricultural intrventions and processes are crucial before substantial productivity gains can be realized from the rehabilited lands\. Therefore, for project planning, a coherent integrated approach should be adopted, which should include, inter alia, introduction of improved cropping practices, farmers' extension/information services, training, business development, marketing, and provision of agricultural machinery\. These issues were addressed in the IDIP, however, they need more emphasis in future operations, particularly the issue of access to farm machinery by the farmers of the rehabilitated areas; (d) the project area should be concentrated around a few locations instead of spreading it over the entire country which makes management more difficult and overhead costs in terms of consultants, staff, operations and logistics, much higher; (e) The nature of a rehabilitation project is that the condition of an I&D system may change during the time period from the date of preliminary project selection up to the actual start of construction\. Selection and pre-feasibility study, preparation of the feasibility study, designs, EIA, State Expertise, bidding documents preparation, and actual bidding can take up to two years before the start of construction\. During this period infrastructure may, and often, deteriorate faster than expected or may be vandalized\. Also, farmers' requirements may change during that period particularly after seeing alternatives for construction on the ground\. In addition, it is often discovered during construction that certain items need more repair than envisaged and other construction issues may arise as well for which solutions may need to be found\. Consequently, the designs, construction contracts, and budget allocations for the Project need to be flexible enough to accommodate the inevitable changes required\. Development of Water Users' Associations\. During IDIP preparation and startup, the Kazakhstan economy and the agricultural sector went through a rapid transition\. The land, input and output markets and services are in the private sector and the growth of Kazakhstan's economy is accelerating\. Despite some existing uncertainties in land tenure arrangements, and in the legal and regulatory environment for WUAs, the overall legal and regulatory environment has considerably improved in the country\. The formation of WUAs under the IDIP subprojects has been successful\. The WUAs are playing an increasingly important role in the O&M of the rehabilitated subprojects and will play a central role in the institutional structure for implementing, maintaining and operating future I&D improvement projects\. Land rights have become complex since the breakup of the state and collective farms and this situation adds to the time required for the organization of proper WUAs\. The important work of supporting the WUAs only really begins after I&D rehabilitation and can take a number of years\. Therefore, adequate resources, consulting services and time for technical assistance have to be provided under the Project to establish the WUAs, as well as to provide them with support after I&D rehabilitation to startup the agricultural production activities and arrange for proper O&M of the system\. Consequently for this type of investment, this would mean an implementation period longer than the usual five years\. Implementation/Organizational Arrangements\. Incorporating the CWR into the MOA and transferring I&D responsibility back to CWR has corrected a long standing institutional anomaly in the management of the water sector in the country\. The CWR, which was already responsible for major water infrastructure and main canals, has more capacity than any other agency in the country to design and coordinate I&D investments and deal with all issues related to irrigation projects and water distribution and management\. The CWR has its own technical capacity and is now responsible for the water sector as a whole and has branches at the oblast and rayon level\. CWR is, therefore, in a strong position to manage investments for - 18 - I&D system improvements, especially when aimed at accelerating the extent of rehabilitation in the country and enhancing the sustainability through proper O&M afterwards\. Although future construction expenditures are estimated, the nature of construction work is such that there are likely to be changes in the expenses incurred in a financial year\. The construction work may proceed faster (as was the case in some IDIP subprojects) or slower during a specific year depending upon the contractor's capacity, the number of contracts it is handling at a given time and its organization\. Therefore, there should be greater flexibility in revising the Government's budget for the projects by allowing appropriate revisions and reallocations among categories in order to respond to the subprojects' needs on the ground\. The annual budget for the Project should also include an adequate amount of contingencies to cover any unforeseen developments during a financial year\. Due to various reasons mentioned above (in the Project Selection and Design Section), changes to the scope of the Project are inevitable during the design and construction phases, requiring a more flexible and streamlined approach to revising funding requirements and processing variation orders for construction contracts\. Defining roles and responsibility upfront for the nature and scope of such changes and delegating these to the maximum extent to the engineers and project managers in the field would ensure the optimal outcome for I&D system improvement investments\. It is unrealistic to design a complex irrigation project with all of the issues outlined in the sections above related to: (a) development of WUAs and follow up with them during initial years of operations of subprojects; (b) meeting the requirements for detailed feasibility studies, EIA and social assessment preparation, state technical and environment reviews, detailed designs, procurement of often complex contracts; and (c) the construction period in the country which is limited to the summer season only\. Also, often, the timing of award of contract cannot be controlled\. A contract designed for two years of implementation, if awarded in winter as opposed to summer, would need to be extended till summer in order to check all works for taking over and issuing the completion certificates\. Similar adjustments would be necessary for the defects liability period under the contract which should be within the project implementation period in order to remove all defects and clear all payments\. Therefore, projects of this nature are likely to take 1-2 years longer than the standard implementation period of 4-5 years and this should be considered in designing future projects\. Cost Recovery/Sharing\. The lessons learned regarding cost recovery are that: (i) a rational approach should be used for defining the on-farm and off-farm works\. Unlike at the start of IDIP, this would now be possible since all farms are privatized, ownership is more clear and the farms are already under operation by private individuals; (ii) the Project should be designed to maximize the participation of the farmers in the implementation of the on-farm works, which would normally result in a lower cost per hectare for rehabilitation and thus cost recovery; (iii) the terms of the cost recovery, such as grace and repayment periods, should be based on the farmers' cash flows after completion of rehabilitation and additional investment needs; and (iv) a more streamlined process of cost contribution by the oblasts should be adopted, such as deduction of the oblast's share by GOK at source from its financial contribution to the oblast development projects\. 9\. Partner Comments (a) Borrower/implementing agency: The Borrower's (MOA) full comments are given in Annex 9, and the main points are summarized here\. MOA endorses the findings, contents and conclusion of the ICR, and in its view the overall project objectives were achieved\. MOA also concurs with the satisfactory rating of the project outcome\. - 19 - In its comments, the Borrower notes that the Project has made considerable contribution to socio-economic development in the project area, including higher income and employment for the beneficiaries, as large areas of agricultural lands were brought back under production\. Also, in the project area crop yields have increased, water use efficiency has improved and cost of water (particularly the energy use in pumped schemes) has reduced\. In addition to the technical/engineering component of the Project covering rehabilitation of I&D systems, MOA rates highly the contributions of the agricultural and the institutional development components of the Project, including impact of the demonstration plots, development of the Water Code of Republic of Kazakhstan and Law of Republic of Kazakhstan on Agricultural Consumer Cooperatives of Water Users, and establishment of hydro-amelioration expedition centers\. The institutional development and capacity building benefits are also confirmed by private institutions such as farm managers, consulting firms, design institutes and construction industry\. The major issues MOA highlights, and lessons learned that can be incorporated in the future Project are in line with the ICR team's findings: issues regarding financing of farm machinery to the farmers were not resolved during the project implementation\. Provision of farm machinery to farmers was essential for proper operation of the farm activities\. As a result, the gains from agricultural production activities are not at their potential levels, and consequently, the farmers are unable to fulfill their obligation in repayment of the loans; selection of farms was not always in accordance with the agreed criteria in a few cases because of political pressure, the local authorities had selected farms that were not highly promising; and high cost of consultancy contract for detailed design and construction supervision that constituted about 15% of the project cost, and that they were not always effective in convincing the farmers to use new and progressive technical solution at the time of subproject design and implementation of the construction process\. The comments conclude that the follow-up Project should take into consideration the lessons learned from the current operation, and it should include improvement of irrigated agricultural land in the Southern and Southeastern part of the country and should also assist in supporting rehabilitation efforts in farms close to large cities and industrial centers to grow vegetables and produce dairy products in the other parts of the country\. (b) Cofinanciers: Not applicable (c) Other partners (NGOs/private sector): Comments on the Project were received from owners/farm managers of the two participating subprojects, Kerbulak and Kaiser; Kazgiprovodkhoz Design Institute, now Kazakshtan's major private consulting involved in design and construction supervision of water structures and irrigation and drainage networks; Idil-Aksu, a large Kazakh construction company; and a Union of Water Users Associations established in 2001\. The comments are generally very positive and a summary is presented below: Kerbulak and Kaiser subprojects' managers explained that prior to project implementation particularly between 1994-2002, the agricultural land in these subprojects was abandoned, and only after completion of the I&D rehabilitation works, the land was brought back to cultivation\. The Project provided with the most fundamental element of farming, water through rehabilitation of the I&D system and therefore, in their view the Project is highly successful\. The Kaiser subproject has now become a major supplier of potatoes - 20 - and vegetables to the capital city, Astana\. They also highlight that with provision of farm machinery to the farmers of rehabilitated subprojects and initial working capital, the potential gains from the Project could have been realized faster\. In addition, Kaiser subproject manager supports the MOAs proposal to change the repayment terms to start the grace period of the loan from completion of works instead of signing of the agreement\. Director of Kazgiprovodkhoz, appreciates the business the Project generated for national consulting firms at a time when Government-owned design institutes were in decline due to economic transition in Kazakhstan\. The Project has created demand for services of national consulting firms, and built their capacity by familiarizing them with the international standards for construction design, the staff working with the international counterparts\. The construction company Idil-Aksu Ltd commented that it has become stronger due to its participation in the Project because of exposure to new technologies and ways of working\. Idil-Aksu has become more competitive, as it is now bidding and winning contracts independently as a main contractor for other construction works\. Also, with regards to the Project they further mention that before choosing an approach for rehabilitation, all alternatives should be studied and evaluated, especially the cost saving technologies\. The union of WUAs established under the Project in 2001 under the name of "Public Fund for Union of Ameliorators" is functioning as an independent entity with a main objective to protect farmers interest in areas of irrigation, drainage and water management through participation in the Parliament\. The Chairman of the entity has provided a number of comments on how the Project provided with alternative ways of managing the irrigation system at the local level\. Under the Project the land was rehabilitated which was out of production, and that farmers have greatly benefited from the training and farmers extension services provided under the Project, so for these reasons, Public Fund for Union of Ameliorators rates the Project very highly\. They mention that the Project did not do enough for provision of farm machinery which is an essential element of farming large tracks of land, and that they support MOAs proposal regarding the changes in repayment terms of the loan i\.e\. starting grace period from completion of works\. 10\. Additional Information See Annex 8\. - 21 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate 1\. Sustainable irrigated agricultural At the time of project appraisal in 1995, a Agricultural production has increased in the production logical framework was not developed for the subprojects in which irrigation and drainage Project\. Key monitoring indicators related to systems were rehabilitated\. crop yields, and other outputs of the Project Increase in agricultural production has were entered in the PSR and monitored time resulted from three sources : (i) increase in to time during supervision missions\. These irrigated land cropped area has doubled from indicators were not based on a well 15,000 ha before project to 32,000 with developed logical frame matrix like this one\. project ; (ii) increase in crop yields; and (iii) shift in cultivation of high value crops\. However, the Project outcome was assessed during the last supervision mission based on Crop yield increase ranges between 12-200% the available data collected as part of the for various crops in various subproject Government's own monitoring program\. It compared to an appraisal estimate of was indicated in the PSR the Project would 20-100%\. \. About 70% of the increase in achieve its development objective, which production has resulted from an increase in includes an increase in agricultural irrigated land and the remaining 30% from an production, income and employment for the increase in crop yields\. farmer, decrease in water use for agriculture and institutional development\. The last PSR The Project Economic Rate of Return is 32% also contains several output indicators that exceeding the appraisal estimate of 27%\. In are indicated in the output section below\. subprojects with higher individual ERRs, the shift in growing high value crops are high, such as cotton, soybeans, sunflowers, potato and vegetables\. As described in Section 6 of ICR on sustainability the increased production levels are highly likely to be sustained in the future\. 2\. Increased employment After rehabilitation of I&D systems about 6,622 people are directly employed in agricultural activities, this is estimated to increase to more than 8,700 at full development\. 3\. Improved water management as reflected On average, the Project has resulted in by water savings savings of 1,300 cubic meter of water per hectare annually\. Water savings are more in subprojects with gravity irrigation systems compared to the ones with pumped systems\. However, in the schemes with pumped irrigation system there are substantial energy savings and in average they amount to about 1,000 Kwh (or US$40) annually\. 4\. Introduction of improved agricultural Diversification in crops, increased yields, and practices involvement of investors in the subprojects with rehabilitated I&D systems indicates the achievement of this objective\. 4\. Institutional Development The Ministry of Agriculture's (MOA) capacity was strengthened in areas of (i) planning, design and construction supervision of irrigation and drainage projects; (ii) financial management and procurement; (iii) construction material testing, quality control and contract management; and (iv) more importantly the environmental capacity of the Ministry was strengthened by the establishment of a unit within the Ministry, modernization of 3 regional hydro-amelioration expedition centers and the establishment of one additional center in the city of Astana\. - 22 - In addition staff gained considerable experience in Environmental Impact Assessment and preparation of State Ecological Expertise (SEE) and SEE procedures were harmonized\. Furthermore, the capacity of Water Users Associations (WUA) were strengthened through training and on the job experience in Operation and Maintenance of the I&D systems\. Beside MOA, and WUA, the capacity of various engineering design institutes in sub-project design and the capacity of construction firms in subproject construction was strengthened\. This impact is very obvious in the construction industry today in Kazakhstan\. Output Indicators: 1 Indicator/Matrix Projected in last PSR Actual/Latest Estimate 1\. Irrigated area rehabilitated 30,000 ha\. 32,282 ha\. 2\. Agricultural Training 2\.1 Farmers' Training 4 * Training Days 46,000 6,000 * No\. of Courses 350 350 * Demonstration in 10 (sub-projects) in 10 subprojects Sub-projects 3\. Environmental Training & Seminars 3\.1 Environmental Harmonization 1 No\. 1 Seminar 3\.2 Environmental Training Activities 17 Nos\. 17 Nos\. 4\. Increase in crop yields about the same as actual 12%-200% 5\. Water Savings about the same as actual 1,300 cubic meter per hectare annually 6\. Energy Savings about the same as actual 1000 Kwh per hectare annually (US$40) 1End of project - 23 - Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Irrigation and Drainage Rehabilitation 108\.14 90\.19 83 Agricultural Development 2\.27 2\.12 93 Institutional Building 5\.93 4\.46 75 Refinancing PPF 1\.50 0\.93 62 Total Baseline Cost 117\.84 97\.70 Total Project Costs 117\.84 97\.70 Total Financing Required 117\.84 97\.70 Note: Appraisal estimates are tabuleted as total cost instead of base costs as they provide real comparison with the actual costs at completion\. Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 95\.98 3\.02 0\.00 0\.00 99\.00 (60\.88) (2\.00) (0\.00) (0\.00) (62\.88) 2\. Goods 1\.29 0\.00 2\.29 0\.00 3\.58 (1\.07) (0\.00) (1\.90) (0\.00) (2\.97) 3\. Services 0\.00 0\.00 12\.65 0\.00 12\.65 (0\.00) (0\.00) (12\.65) (0\.00) (12\.65) 4\. PPF Refinancing 0\.00 0\.00 1\.50 0\.00 1\.50 (0\.00) (0\.00) (1\.50) (0\.00) (1\.50) 5\. PIU Operation 0\.00 0\.00 1\.13 1\.13 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.00 0\.00 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 97\.27 3\.02 16\.44 1\.13 117\.86 (61\.95) (2\.00) (16\.05) (0\.00) (80\.00) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N\.B\.F\. Total Cost Other 1\. Works 81\.51 0\.00 0\.00 0\.00 81\.51 (57\.56) (0\.00) (0\.00) (0\.00) (57\.56) 2\. Goods 0\.00 0\.45 0\.13 0\.00 0\.58 (0\.00) (0\.39) (0\.11) (0\.00) (0\.50) 3\. Services 12\.31 0\.00 0\.83 0\.00 13\.14 (12\.31) (0\.00) (0\.69) (0\.00) (13\.00) 4\. PPF Refinancing 0\.00 0\.00 0\.00 0\.93 0\.93 (0\.00) (0\.00) (0\.00) (0\.93) (0\.93) - 24 - 5\. PIU Operation 0\.00 0\.00 1\.07 1\.07 (0\.00) (0\.00) (0\.00) () (0\.00) 6\. Miscellaneous 0\.00 0\.00 0\.00 0\.47 0\.47 (0\.00) (0\.00) (0\.00) (0\.47) (0\.47) Total 93\.82 0\.45 2\.03 1\.40 97\.70 (69\.87) (0\.39) (0\.80) (1\.40) (72\.46) 1/Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Irrigation and Drainage 72\.00 34\.10 67\.08 23\.08 93\.2 67\.7 Rehabilitation Agricultural Development 2\.30 0\.00 1\.96 0\.18 85\.2 0\.0 Institutional Building 4\.20 3\.70 2\.49 1\.98 59\.3 53\.5 Refinancing PPF 1\.50 0\.00 0\.93 0\.00 62\.0 0\.0 - 25 - Annex 3\. Economic Costs and Benefits This economic analysis was carried out following the same methodology used at the time of project appraisal\. Crop budgets were prepared for each crop and farm models were developed for each subproject simulating three following scenarios: (a) without project (WOP) representing the production conditions prior to start of the rehabilitation of I&D systems; (b) with project 2004 (WP2004) representing production condition as in 2004 after rehabilitation of I&D systems\. Currently, different subprojects are at different levels of development\. The subprojects where rehabilitation started during the first year of the project implementation (such as Shengaldy, Kzyl Agash etc\.) have achieved higher levels of production compared to those which were completed later and especially those completed in 2003; and (c) with project future (WPF), representing production conditions assuming full level of development about four years in the future\. Estimation of this scenario is necessary because prior to the start of rehabilitation works, the condition of farms was considerably deteriorated, cropped area was reduced and some farm areas went out of production\. As a result, for most of the rehabilitated farms, 2004 is the first or second year of production, so the crop yields are to increase further, as productivity of land increases with each production cycle, and as farmers are investing in improved farm technologies, such as better seeds, fertilizer and chemicals, and farm machinery for operation and management of their farms\. Incremental benefits for the Project were estimated using these models and the results were incorporated in the calculation of ERR\. The details are provided below\. Project Costs\. Project costs, their breakdown by subprojects and per hectare cost are provided below in Table 1\. The economic costs were estimated by subtracting the taxes and duties and applying standard conversion factors\. As project costs occurred during different years of project implementation, all costs were in addition converted to 2004 prices which is the base year for the project costs as well as for the estimated project benefits\. In addition, incremental operation and maintenance (O&M) costs were estimated for each subproject and included in their respective ERR estimations\. The project cost primarily consists of the cost of construction of I&D rehabilitation works in the subprojects\. Other costs include the engineering designs and construction supervision, project management, the agricultural component and institutional development component\. Project Benefits\. The project benefits have primarily resulted from increased agricultural production\. These were estimated using crop budgets for each crop and farm models for each subproject under three scenarios, WOP, WP2004 and WPF\. Incremental agriculture benefits come from increase in crop yields, increase in cropping areas and shifts to high value crops\. The cropped area has doubled i\.e\. increased from 15,111 ha\. WOP to 32,282 ha with project\. About 70% of the benefits are due for an increase in cropped area and about 30% is due for an increase in crop yields\. Shift towards higher value crops is significant in most subprojects but more pronounced in Maktaral towards cotton, in Shengeldy towards vegetables and soybeans, and in Kaisar 2 towards potatoes\. - 26 - Table 1: Project Costs (Million KZT) Actual Economic Actual Economic Sub-Project Total Costs Costs costs Costs Per ha Area 2004 Per ha Hectares Prices Shengeldy 2,368 534\.2 700\.4 0\.23 0\.30 Kzylagash 1,420 538\.2 633\.6 0\.38 0\.45 Akkumski 1,034 305\.7 359\.1 0\.30 0\.35 Maktaral 9,936 914\.6 1036\.7 0\.09 0\.10 Prirechny 1,574 486\.5 453\.7 0\.31 0\.29 Zhambul 1,114 482\.2 462\.9 0\.43 0\.42 60 Years of October 3,574 1,299\.1 1139\.4 0\.36 0\.32 Kerbulak 2,915 856\.8 781\.1 0\.29 0\.27 Kaisar 2 1,170 462\.6 420\.8 0\.40 0\.36 Chaganski/Zalik 1,187 756\.0 675\.6 0\.64 0\.57 Kurchum 3,217 1,373\.0 1239\.4 0\.43 0\.39 Krasnaya Polyana 915 359\.2 335\.7 0\.39 0\.37 Darkhan 867 435\.9 356\.2 0\.50 0\.41 Dusupov 991 426\.0 348\.1 0\.43 0\.35 Other costs 1,594\.51 1,270\.41 Total 32,282 10,824\.5 8,942\.70 0\.29 0\.28 Crop yield increases after rehabilitation of I&D systems vary from subproject to subproject depending on how long they have been under cultivation after rehabilitation and their specific agro-climatic conditions\. Actual yield data for each subproject was gathered after project completion and was used in the economic analysis\. Crop yields and comparison with the assumptions at appraisal stage are summarized in Table 2\. As there are 15 schemes spread over a wide geographic area, the yields are not represented by a single number, rather by a range for each scenario\. The crop yield increases observed at completion are higher than the appraisal estimates\. Actual increases range between 12-200% compared to the appraisal estimate of 20-139%\. Table 2 also shows that crop yields assumed for "Before Project" scenario at appraisal were much higher than those observed just before the start of I&D rehabilitation\. The reason for this is that the appraisal estimates are as of 1995 while the ICR estimates are just before the start of I&D rehabilitation\. Also after 1995, farm privatization progressed faster than expected, the I&D systems deteriorated much further than expected, farm machinery stocks were completely depleted, and large farm areas were virtually abandoned\. Thus, production conditions in the subprojects were much worse just before the start of the I&D rehabilitation than those assumed at appraisal in 1995\. For most of the rehabilitated farms, 2004 is the first or second year of production, so the crop yields are still increasing, as productivity of land increases with each production cycle, and as farmers are investing in better farm technologies, such as better seeds, farm machinery, fertilizer, for better operation and management of their farms\. At this stage, (WP2004) yields levels estimated for "After Project" during appraisal have been achieved in many cases\. However, in some cases where rehabilitation of I&D has just been completed, the yield increases will still continue\. Similarly, increase in cropped areas in various subprojects is continuing\. However, for WPF scenario representing the production conditions at full development, the yield increases assumed are very modest\. - 27 - Table 2: Crop Yield (Tons Per Hectare) At ICR At Appraisal Crops Before Project - With Project 2004 - With Project Future - Before Project - After Project Wheat 0\.8 1\.51\.5 - 2\.02\.5 - 3\.02\.44 Soybeans Not grown 0\.4 -1\.62\.0 - 2\.51\.52\.5 -2\.8 Maize 1\.2 -22\.5 - 3\.54\.03\.66\.3 - 6\.5 Rice 3\.34\.35\.04\.55\.2 Cotton 1\.5 1\.82\.03\.02\.73\.2 Buckwheat Not grown 0\.5 - 1\.21\.7 - 2\.0New crop New crop Potato 4\.0 - 12\.312\.0 - 15\.019\.0 - 20\.01115 -20 Vegetables 7\.0 - 16\.019\.0 - 22\.522 2517\.830 Maize Silage 11 12\.320302530-40 Sunflower Not grown 0\.4 - 1\.62 New crop New crop Melons 7\.5 1515-19\.519 209\.215 -22 Sugar Beet 15\.519\.820 222835 Alfalfa Mature 0\.1-3\.65\.5 - 7\.38\.7-1066-9 Other project benefits include substantial reduction in water use for irrigation in both gravity and pump schemes\. The water savings in gravity schemes particularly in Maktaral, Akkumsky and Kurchum are substantial\. On average, the annual water savings are estimated at about 1300 cubic meters per hectare\. Some of the water savings would be utilized within the subproject area for increasing the cropping area\. However, in some cases, the saved water would be more than required within the subproject, so it would benefit other areas as well as meeting the environmental demands\. For example water saved in Akkumsky could be diverted to Syr Darya delta lakes and /or the Northern Aral Sea\. These benefits have not been quantified\. In case of pumped irrigation systems, there are substantial savings in energy use (Annex 8, Table 3), these benefits have been quantified and included in ERR estimates\. Table 3: Employment in Farming Sector Persons Directly Employed in each Subproject Sub-Project Number of Jobs Shengeldy 493 Kzylagash 352 Akkumski 136 Maktaral 4795 Prirechny 298 Zhambul 325 60 Years of October 506 Kerbulak 230 Kaisar 2 232 Chaganski/Zalik 214 Kurchum 564 - 28 - Krasnaya Polyana 218 Darkhan 192 Dusupov 231 Total 8,786 Moreover, the Project has already created direct employment for more than 6,600 people in farming activities; this is expected to increase to 8,786 people at full development (see Table 3 for breakdown by subproject)\. Employment covers various skills such as agronomists, engineers, mechanics, farm machinery operators, unskilled workers and seasonal labor\. The secondary impact of direct employment by the Project has not been estimated\. Economic Analysis\. The Project ERR at completion is estimated at 32% compared to an estimate of 27% at appraisal\. The ERRs for individual subprojects range from 12% to 23% with the exception of Maktaral subproject that has an ERR of 51%\. ERR for each subproject and comparison with appraisal or feasibility study estimates is given in Table 5\. The ERR reflects diverse characteristics of each individual scheme and their cost of rehabilitation\. Maktaral ERR is very high owing to favorable agro-climatic conditions for growing cotton which is a high value crop\. The net present value, discounted at 10% over a period of 25 years is KZT18,577\.67 million\. The ERRs are generally higher for subprojects in southern oblasts and those with lower per hectare costs\. Also, generally schemes with gravity irrigation system and large irrigated areas have a higher ERR than those of the pumped schemes\. The exception is Shengeldy which is located in the southern part of the country, close to Almaty and where the farmers are growing vegetables and soybeans\. In addition, pumped schemes, such as `Prirechniye' has better than average ERR because of diverse crops, including vegetables, and have a relatively lower cost of rehabilitation\. Table 4: Economic Rate of Return Scheme Location Type of ERR at ERR Post Project Irrigation Appraisal Feasibility ERR Study Shengeldi Southeast PD 37% 23% Kzylagash East GR 18% 18% Akkumski South GR 18% 19% Maktaral South GR 20% 51% Prirechniye Northeast PS 33% 17% Zhambul Southeast GR 42% 13% 60 years Middle-East PS 15% 13% Kerbulak Southeast PS 12\.4% 12% Kaiser Middle North PS 12\.6% 15% Chiganski/Zahik Northwest PS 13\.1% 12% Kurchum East GR 12\.5% 12% Krasnaya Polyana Middle North PS 26% 12% Darkhan Southeast GS 13\.3% 16% Dusupova Northwest PS 12\.2% 13% Overall Project 27% 33% - 29 - PD Pumped with water distribution through pipelines and concrete flume (covering an area of 2,368 ha) PS Pumped with sprinklers (12,326 ha) GR Gravity intake and distribution through canals or concrete flumes (16,721 ha) GS is gravity with distribution through sprinklers (867 ha) - 30 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 11/24/1992 2 MISSION CHIEF S S (ECONOMIST) (1); IRRIGATION SPECIALIST (I) 02/08/1993 2 MISSION CHIEF (IRRIG (1); S S ECONOMIST (1) 9/11/1993 2 MISSION CHIEF (IRRIG) (1); S S AGRICULTURALIST (1) Appraisal/Negotiation 11/05/1995 7 MISSION CHIEF (ECON) S S (1); IRRIGATION ENGINEER (1); AGRICULTURALIST (1); ENVIRONMENTAL SPECIALIST(1); SOCIAL DEVELOPMENT SPECIALIST(1); CONSULTANT (COST/FINANCE) (1); OPERATIONS (1) Supervision 03/26/1997 6 MISSION CHIEF (IRRIG) (1); S S IRRIGATION AGRONOMY (1); SOCIAL SCIENCE (1); PROCUREMENT (1); ENVIRONMENT (1); IRRIGATION (1) 12/15/1997 4 MISSION CHIEF (IRRIG) (1); S S IRRIGATION (1); SOCIAL SCIENCE (1); PROCUREMENT (1) 05/26/1998 3 MISSION L\. (IRRIG) (1); S S AGRONOMY (1); SOCIAL SCIENCE (1) 10/13/1998 3 MISSION L\. (IRRIG) (1); S S AGRONOMY (1); SOCIAL SCIENCE (1) 05/10/1999 3 IRRIGATON (1); AGRONOMY S S (1); SOCIAL SCIENCE (1) 03/09/2000 3 TASK TEAM LEADER (1); U S IRRIGATION ENGINEER (1); RESOURCE ECONOMIST (1) 05/29/2000 3 TEAM LEADER (1); S S - 31 - RESOURCE ECONOMIST (1); IRRIGATION ENGINEER (1) 12/01/2000 5 TEAM LEADER (1); S S OPERATIONS ANALYST (1); DISBURSEMENT ASSISTANT (1); SECTOR MANAGER (1); ENGINEER (CONSULTANT) (1) 06/20/2001 3 TEAM LEADER (1); S S OPERATIONS ANALYST (2) 03/15/2002 4 WATER RESOURCES (1); S S ECONOMIST (1); IRIGATION ENGINEER (1); OPERATIONS ANALYST (1) 06/03/2003 5 TTL, WATER RESOURCE (1); S S ECONOMIST (1); IRRIGATION (1); OPERATIONS OFFICER (1); FINANCIAL MANAGEMENT (1) 01/05/2004 2 TTL WATER RESOURCE SPL S S (1); OPERATIONS OFFICER (1) 05/19/2004 1 TASK TEAM LEADER (1) S S ICR 11/08/2004 2 MISSION CHIEF (WATER S S RESOURCES SPECIALIST) (1); OPERATIONS OFFICER/ECONOMIST (1) (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation 118\.8 866\.6 Appraisal/Negotiation 69\.8 241\.9 Supervision 222\.1 910\.9 ICR 14\.6 47\.8 Total 425\.3 2067\.2 - 32 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 33 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 34 - Annex 7\. List of Supporting Documents Studies and Feasibility Reports Pre-Feasibility Studies for all Subprojects Feasibility Studies for all subproject Environmental Impact Assessment of all subprojects Business plans for 10 subprojects, a total of 17 business plans Operational Plans for all Subprojects Study for Transferring Irrigation Management for a Typical Canal Command Area Final Report of the Management and Engineering Consultancy Services Contract Reports and data tables prepared by the MOA as part of GOK's project completion report\. Report on "Pure Drainage Water in the Shengeldi Farm community" Monitoring Reports Quarterly Progress Reports on implementation of Component 1 rehabilitation of I&D systems Quarterly Progress Reports on Agricultural Component Progress Report and Strategy for implementation of Agricultural Component, Participatory Training and Information Services Pilot Program\. IDIP, Management and Engineering Component, Studies and Design Stage Final Report (April 1997-April 2000) Documentary video, showing construction progress on various subprojects and interviews with farmers, owners, and WUA representative on project impact\. - 35 - Additional Annex 8\. Additional Information about the Subproject The list of subprojects rehabilitated under the Project is given in Table 1\. The subprojects which were studied but their rehabilitation was not undertaken for various reasons are listed in Table 2\. Table 3 provides estimates of water and energy savings by subprojects\. Finally, a brief description of each subproject, rehabilitation works undertaken, and changes made during construction period are also provided in the sections below\. Table 1: List of subprojects implemented Name of Sub-project Contract Oblast Area (ha) Type of Scheme (contract number) Number 1\. Shengeldy IDIP 02 Almaty 2,368 PD 2\. Kzyl-Agash IDIP 03 Almaty 1,420 GR 3\. Maktaral IDIP 04 South Kazakhstan 9,936 GR 4\. Akkumsky IDIP 04 Kzyl-Orda 1,034 GR 5\. Prirechny IDIP 05 East Kazakhstan 1,574 PS 6\. Dzhambul IDIP 06 Zhambul 1,114 GR 7\. Kurchum IDIP 07 East Kazakhstan 3,217 GR 8\. Krasnaya IDIP 08 Karaganda 915 PS Polyana 9\. 60 Years IDIP 09 Pavlodar 3,574 PS of October 10\. Chaganski IDIP 10 West Kazakhstan 565 PS 11\. Zhaik IDIP 10 West Kazakhstan 622 PS 12\. Kaisar 2 IDIP 12 Akmola 1,170 PS 13\. Kerbulak IDIP 13 Almaty 2,915 PS 14\. Darkhan A IDIP 15 Almaty 867 GS 15\. Dusupova IDIP 16 West Kazakhstan 991 PS Total 32,282 PD- Pumped with water distribution through pipelines and concrete flume (covering an area of 2,368 ha) PS- Pumped with sprinklers (12,326 ha) GR- Gravity intake and distribution through canals or concrete flumes (16,721 ha) GS- Gravity with distribution through sprinklers (867 ha) Table 2: Subprojects studied but deleted from the program Original Notes Name of Sub-project Oblast Design Area (ha) 1\. Patsaev Aktobe 627 Per ha cost was too high 2\. Company Ltd Kaisar Aktobe 697 The owner was not interested 3\. Astra Karaganda 1,880 Could be implemented in future 4\. Saryozenski Kostanai 850 Oblast gov\. was not agreeable 5\. Pritobolskoye Kostanai 950 Owner was not interested 6\. Nura Akmola 1,500 Environmental Problems 7\. Mirny Karaganda 1,302 Economic cost of supplied pumped water too high 8\. Kuigenzhar Akmola 900 Land was not privatized 9\. Ardager Kzyl Orda 250 Did not meet criterion of being previous irrigated land Total 8,006 - 36 - Table 3: Typical Annual Savings in Water Use Contract Sub-project Name Annual Water Saving Annual Power Saving Number (`000m3) (`000 kWh) IDIP 02 Shengeldy 1890-2520 2,740-3,660 IDIP 03 Kzyl-Agash 1780-2380 n/a gravity system IDIP 04 Maktaral 6950-9260 n/a gravity system IDIP 04 Akkumsky 4500-6000 n/a gravity system IDIP 05 Prirechny 1150-1540 1080 1430 IDIP 06 Dzhambul 2500-3340 n/a gravity system IDIP 07 Kurchum 5300-7000 n/a gravity system IDIP 08 Krasnaya Polyana 630-840 510-680 IDIP 09 60 Years of October 1900-2540 3500-4700 IDIP 10 Changanski/ 390-520 320-420 Zhaik 420-560 350-460 IDIP 12 Kaisar 2 620-830 580-770 IDIP 13 Kerbulak 1180-2660 1180-1570 IDIP 15 Darkhan A 590-790 480-650 IDIP 16 Dusupova 680-900 550-740 Total 30,480-41,680 11,290-15,080 Description of Subprojects Rehabilitated Shengeldy The Shengeldy subproject is located in Almaty Oblast\. Under this subproject, an area of 2,368 ha\. was rehabilitated\. Distinctive features of the subproject were the reconstruction of the pumping station, an extensive irrigation flume distribution network and a buried drainage network\. The rehabilitation works comprised the following: (a) rehabilitation of the existing pumping station, including the replacement of 6 pumps (with capacities from 350 to 825 l/s and pressure heads from 45 to 72 m); (b) installation of concrete pipe, diameter 800 mm, 1\.02 km in length, and steel pipe, 3, 834 km in length; (c) rehabilitation and replacement of the existing open flume network, rehabilitation of a length of 2\.15 km and replacement of a length of 5\.27 km; (d) land planning and levelling, comprising 302, 000 m3 earthworks; (e) installation of horizontal underground drains over an area of 310 ha, including closed collectors of 150 to 300 mm diameter and 10\.4 km of field drains, 125 mm in diameter; and (f) leaching of 12 ha of saline lands\. To improve the irrigation scheme, remedy certain design deficiencies and also in response to farmers' requests the works were subject to a number of changes, including: (a) additional monitoring wells; (b) replacement of part of the distribution flume networks with underground reinforced concrete pipes; and (c) an increase in the length of the flume network\. - 37 - Kzyl Agash The Kzyl Agash subproject, located in Almaty Oblast, comprised the rehabilitation of irrigation systems over an area of 1,400 ha\. The distinctive features of this subproject were the construction of a water intake structure on the mountainous Kzyl Agash River, a gravity flow irrigation system and a buried drainage network\. The following works were carried out: (a) completion of the partially constructed diversion on the Kzyl Agash River; (b) completing the main and secondary supply pipelines over 7\.57 km (diameter 800-1400 mm); (c) constructing the main distribution network, 12\.79 km (diameter 300-800 mm); (d) constructing an irrigation network of buried distributors and hydrants, 33\.38 km (diameter 200-400 mm); (e) land grading and smoothing, 44 017 m3 of cut; (f) provision of gated pipe irrigation equipment; and (g) installation of a surface drainage network including the outlet scheme\. To improve the irrigation scheme, remedy certain design deficiencies and also following farmers' requests, the Kzyl Agash site was subject to a number of changes, including: (a) irrigation pipelines from asbestos pipes were replaced by steel pipes; (b) the irrigation scheme layout was fundamentally changed; (c) the diameters of main pipelines were increased; and (d) the quantities of works decreased as a result of the irrigation scheme change\. Maktaral The Maktaral subproject, located in South Kazakhstan Oblast, covers 9,936 ha of irrigated land\. The area is made up of a large number of small farms almost exclusively growing cotton\. The scheme is characterized by open channel irrigation and drainage but with also a series of vertical drainage wells\. Rehabilitation works included: (a) irrigation and drainage rehabilitation and improvement (9,607 ha); (b) canal rehabilitation (191 km) including associated structures; (c) collector drain cleaning (160 km) including associated structures; (d) installation of vertical drainage wells (57), including their electrical power supply, and; (e) rehabilitation of existing roads (328 km)\. To improve the irrigation scheme, remedy design deficiencies and also following farmers' requests, a number of changes were implemented\. Overall, project costs reduced by some 16% resulting from the deletion of some works such as flow meters, roads and canal lining, while other changes did not affect the costs\. The design of the vertical drainage wells introduced new and up to date technology to Kazakhstan\. The design allowed smaller diameter, more corrosion resistant wells to be used with lower power consumption\. However, this raised problems as the standards and norms in use at the time did not cover such new technology\. Concerns were therefore raised that the wells would not meet design standards\. It required much protracted technical discussion and a series of trial wells to demonstrate the success of the new design\. Akkumsky The Akkumsky subproject area, located in Kzyl-Orda Oblast, covered 1,014 ha\. and is primarily used for the growing of rice\. The rehabilitation works concentrated on the rehabilitation of open canals and drains\. The works included: (a) irrigation and drainage rehabilitation and improvement over 1,034 ha; (b) canal rehabilitation (52 km) including associated structures; (c) collector drain cleaning (63 km), including associated structures, and ; (d) rehabilitation of existing roads (44 km)\. No major changes were made in the scope of works during implementation\. - 38 - Prirechny The Prirechny subproject is located in the East Kazakhstan Oblast\. The rehabilitation works comprised an area of 1,574 ha\. The distinctive features of this subproject are the construction of a pumping station, new antechamber, an extensive irrigation flume distribution network and installation of new and rehabilitation of existing center pivots (overhead irrigation sprinklers) of the Russian Fregat type\. The following works were carried out: (a) rehabilitation and extension of a pumping station, including the replacement of electro-mechanical equipment; (b) supply and installation of 30 km of new pipelines: 200 mm to 1000 mm in diameter; (c) supply and installation of 7 new center pivots on 235 ha; (d) rehabilitation of 17 existing center pivots on 1,275 ha; (e) rehabilitation and installation of solid set irrigation systems on 85 ha, and; associated works, including land-levelling and road grading\. The water supply to the fields under the original design was provided by two existing main pipelines: 1 MTR and 2 MTR both 1,000 mm in diameter\. Main pipeline 1 MTR with total length of 1,360 m, and main pipeline 2 MTR with total length of 2,140 m\. Already before the start of the construction contract, the maintenance of the pipelines had become a real problem because of frequent breaks\. The farmer therefore requested an investigation of the condition of the pipelines\. The results revealed that these pipelines needed rehabilitation and a decision was made to do so\. Also, following the farmer's request to minimize maintenance and power costs, the decision was also made to change seven high pressure Fregats to low pressure\. Dzhambul The rehabilitation works for the Dzhambul subproject, located in Zhambul Oblast, covered an irrigated area of 1, 114 ha\. Crops grown are primarily wheat, barley, maize and sugar beet\. The rehabilitation works were characterized by the replacement of concrete flumes, rehabilitation of unlined canals, the installation of sub-surface drains and the rehabilitation of existing collector drains\. The works included: (a) irrigation and drainage rehabilitation and improvement on 1,114 ha; (b) 12 km of precast flume canal and 19 km of unlined canal, including associated structures; (c) 11 km of subsurface perforated PVC drains and 19 km of collector drains, including associated structures; and (d) other works include 875 ha of land levelling; 30 km of farm roads; leaching; and 17 km of forest shelterbelts\. The only significant change in the works was related to the design of the irrigation and drainage system around Kok Tobe village\. Kurchum This Kurchum subproject, located in East Kazakhstan Oblast, comprised the rehabilitation of irrigation systems over an area of 3, 217 ha\. The distinctive features of this subproject are the construction of a water intake structure on a mountainous river, a large quantity of land levelling works, earthworks on canals and drainage collectors, and works on earth canals and concrete lined canals\. The following works were carried out: (a) river intake rehabilitation; (b) rehabilitation and construction of lined canals (41 km); (c) rehabilitation and construction of unlined canals (57 km); (d) land levelling on 1,800 ha; (e) collector drainage network (56 km); (f) field drains (59 km); (g) graded farm roads (126 km); and (h) shelter belts (39 km)\. Following the farmers' request the irrigation scheme was partially changed\. Also, the spring floods of 2001 seriously damaged several structures and completely destroyed the water intake structure on Kurchum River\. Hence, the decision was made to: (a) rehabilitate the water intake and associated structures; (b) clean the main canal "Zhavgastinsky"; and (c) improve the conditions of the water intake\. - 39 - In addition, following the contractor's recommendations, it was agreed to change without any cost increase - the intended monolithic concrete canal lining included in the construction contract into lining with prefabricated reinforced concrete slabs\. As the precast slabs were factory produced, this has resulted in a high quality, more durable and frost resistant lining, which is particularly important in this part of the country where the winters are long and severe\. The main advantage of this design change for the contractor has been the savings in time as the prefabricated slabs could be installed quickly during a short construction season\. Krasnaya Polyana Krasnaya Polyana subproject is located in Karaganda Oblast a short distance from the city of Karaganda\. The rehabilitation works covered an area of 915 ha\. Primarily wheat with some potatoes and vegetables are grown on the subproject area\. The scheme is characterized by the construction of new small mobile pumping stations with new pipes to center pivots with overhead sprinklers\. The rehabilitation works included: (a) rehabilitation and reconstruction of the 915 ha irrigation system; (b) one primary and three secondary pumping stations; (c) pipelines (concrete and PVC, 14 km); (d) center pivots (12 nos) for 915 ha; (e) high voltage overhead lines and transformers, 60 km; (f) farm roads, 14 km, and; (g) shelter belts, 27 km\. There were no significant changes in the project scope\. 60 Years of October The 60 Years of October subproject is located in Pavlodar Oblast in northern Kazakhstan\. The rehabilitation project covered an area of 3,574 ha with potato, wheat and vegetables as the main crops\. The scheme is made up of a few large farms which obtain pumped irrigation water from the Irtish-Karaganda Canal\. Secondary pumping stations supply water to the center pivot overhead sprinkler irrigation equipment and also to small canals for irrigation by tractor mounted sprinklers\. The works included: (a) rehabilitation and reconstruction of 3,574 ha of irrigation and drainage system in Aksu Rayon of Pavlodar Oblast; (b) irrigation pumping stations, including associated works (5 nos); (c) irrigation pipelines (concrete and steel; 51 km); (d) center pivots (52 nos) for 3,148 ha; (e) tractor mounted boom sprinkler machines (7 nos); (f) drainage pumping stations, including associated works (4nos); (f) horizontal drainage network, field drains (42 km) and collector drains (40 km); (g) high voltage overhead lines and transformers (5 km); (h) farm roads (93 km), and; (i) forest belts (123 km)\. There were no significant changes to the Project\. At the request of farmers the amount of drainage works was reduced, additional works were carried out for the pumping stations, and some changes introduced in the contract documents for the tractor mounted sprinklers and center pivots\. No significant technical issues were encountered\. The farmers raised the issue that water charges for pumped water from the Irtish-Karaganda Canal were too high\. A reduction in water charges was negotiated\. Chagansky The Chagansky subproject comprises the Bahtiyar farm in Terktinskii Rayon, in West Kazakhstan Oblast near Uralsk\. The farm grows wheat and barley\. The rehabilitation comprised the rehabilitation and reconstruction of 534 ha of irrigation systems\. The main work items included: (a) rehabilitation and reconstruction of funicular pumping station; (b) high voltage overhead line and transformers, 50 m; (c) center pivots (8 nos) on 534 ha; (d) pipelines (PVC and steel, 5\.5 and 3\.5 km respectively); (e) farm roads (19 km); and (f) shelter belts (3 ha)\. No technical problems were encountered\. - 40 - Zaik The Zhaik subprojects comprises the Zhaik farm in Terktinskii Rayon, in West Kazakhstan Oblast near Uralsk\. The farm grows wheat and barley\. The rehabilitation comprises the rehabilitation and reconstruction of 615 ha of irrigation systems\. The main works items included: (a) rehabilitation and reconstruction of floating and mobile pump stations; (b) high voltage overhead line (50 m) and transformers; (c) center pivots on 471 ha (9 nos)\.; (d) sprinkler irrigation on 144 ha; (e) pipelines (PVC and steel, respectively 5\.4 and 4\.2 km)\.; (f) farm roads ( 31 km), and; (g) shelter belts (10 ha)\. The main technical issue encountered concerned a series of depressions that were discovered in the land surface during the detailed surveys for the design work and which required additional land leveling works\. Kaisar 2 The Kaisar 2 subproject is located in Akmola Oblast a short distance from the capital Astana\. The rehabilitation works covered an area of 1,404 ha\. The subproject is on a single farm, the Kaisar 2 farm, which produces mainly wheat and potato\. The scheme is characterized by the rehabilitation of a pumping station on the Viacheslavsky reservoir (which is the water supply reservoir for Astana) with new pipes feeding overhead center pivot sprinkler irrigation equipment\. The site was chosen to demonstrate the center pivot supplied and installed by Valley\. The works included: (a) rehabilitation of the 1,404 ha irrigation system; (b) construction of a new pumping station, capacity 1m3/s; (c) construction of 20 km of steel and PVC pipeline; (d) supply and installation of 18 electrically driven center pivots; (e) construction of farm roads; (f) construction of forest belts ( 45 ha) and; (g) levelling and filling of old canal embankments\. Additional work was required to de-commission the old irrigation equipment\. Rehabilitation of potato storage facilities was originally included in the designs, it was then decided by the farmer to omit this item from the works\. At a later stage of construction this was re-considered by the farmer but ultimately it was agreed with the farmer not to include it in the works\. No significant technical issues were encountered\. Kerbulak The Kerbulak subproject is located in Almaty Oblast in South Eastern Kazakhstan\. The Project involves the rehabilitation of 2, 905 ha of land owned by six farmers\. The Project is characterized by the rehabilitation of existing tube wells which feed a series of small reservoirs\. Water from the reservoirs is pumped to center pivot overhead sprinklers\. The land is mainly cultivated in wheat and barley with some soya and other crops\. The works include: (a) rehabilitation of the existing irrigation system at 10 separate sites, owned and operated by 6 farms in Kerbulak Rayon; (b) rehabilitation of existing tubewells and pumping equipment; (c) rehabilitation and replacement of pipelines (70 km); (d) rehabilitation/extension of existing reservoirs and construction of new reservoirs; (e) rehabilitation of existing center pivots and supply and installation of new center pivots on 2400 ha, both hydraulically and electrically driven; (f) rehabilitation and construction of associated electrical systems; (g) construction of farm roads (70 km); and (h) construction of forest belts (100 ha)\. There were no significant changes to the Project other than changing the center pivots from the Valley (electrical) type to Freygat (hydraulic) type machines, and; the change of asbestos pipes to glass-reinforced plastic (GRP) pipes\. No significant technical issues were encountered\. - 41 - Darkhan A The Darkhan subproject is located in the Almaty Oblast in the mountains bordering the Kyrgyz Republic\. The Project covers the rehabilitation of 867 ha of land\. The Project is characterized by the construction of an irrigation reservoir to warm snowmelt water so that it can be used for irrigation, and the installation of a new piped irrigation system to supply water to new center pivot overhead sprinklers\. The works include: (a) rehabilitation of the existing irrigation system (867 ha); (b) repair of the diversion structure (replacement of monolithic concrete, sealing of expansion joints, painting of metalwork, etc\.); (c) repair of main steel pipes; (d) replacement of pipes and construction of new pipes; (e) reinforced concrete pipes (diameter 800 mm, length 200 m; (f) PVC pipeline (diameter from 160 up to 500 mm, length 12 km); (g) construction of associated valve chambers, etc\.; (h) supply and installation of 20 hydraulic driven center pivots on 867 ha; (i) construction of a balancing reservoir (capacity of 35,000 m); (j) construction of farm roads (10 km); (k) construction of forest belts (22 ha)\. There were no major changes in the works for the Project\. The only main technical problem occurred when during impoundment of the irrigation supply reservoir in June 2003 a breach opened in the earth embankment dam along the line of the spillway culvert\. The cause of the breach was investigated and an inspection report was prepared\. Significant remedial works were subsequently carried out by the contractor at his own expense and the reservoir was successfully impounded later in the year\. No other significant technical problems were encountered\. Dusupova The Dusupova subproject is located in West Kazakhstan Oblast near the city of Uralsk\. The Project covers rehabilitation of 1,024 ha of irrigated land cultivated with wheat\. The Project is characterized by the construction of a major new pump station with new pipelines supplying new center pivot overhead sprinklers\. Works included: (a) rehabilitation of existing irrigation system (1,024 ha); (b) construction of new pumping station; (c) construction of steel and PVC pipeline (16 km); (d) supply and installation of electrically driven center pivots operated by independent power generator (15 units); (e) construction of farm roads (40 km); (f) construction of forest belts (15 ha); (g) leveling and filling of old canal embankment; (h) construction of 10 kV overhead power supply line (9\.4 km) and transformer for the pumping station\. There were no significant technical issues\. Additional Information on Cost Recovery and Machinery Issues In the following paragraphs additional background information is provided on the resolution of the cost recovery issue and the attempts made to resolve the problem of providing agricultural machinery to the farmers\. Cost recovery\. During the loan negotiations, it was agreed that the cost recovery would be through a per-hectare betterment fee that would be linked to the land and collected together with the land tax\. Upon insistence of GOK this fee was to recover 70 to 80% of the investment costs\. For the inter-farm works, an increased land levy was proposed for farms benefiting from the improvements\. At the start of the Project, all potential farms for Year 1 and Year 2 subprojects had already signed Letters of Intent indicating their willingness to pay the cost recovery fee\. However, in late 1997 MOF indicated its strong desire to change the agreed cost recovery system into a standard credit operation\. It planned that the Eximbank, acting as the agent bank on behalf of the MOF, would sign sub-loan agreements with the participating farms\. Further it was planned to have the new procedure described in a trilateral agreement between MOF, MOA and Eximbank\. Following failed attempts to reach a compromise solution, i\.e\. by using Eximbank as a collecting agent only, the Bank concluded (in August 1998), that MOF's proposal would require certain - 42 - changes in the institutional arrangements\. However, these changes were unacceptable to MOF and MOA\. In April 1999, it appeared that the issue had been resolved when MOF agreed not to pursue its proposed on-lending mechanism\. Still, in August 1999, MOA halted several key project implementation activities, as well as the procurement process for new contracts because of cost recovery concerns\. Finally, in early 2000, the issue was resolved\. Since then, agreements on sub-loans for the cost of rehabilitation have been signed between association of WUCCs, MOF and MOA, and Eximbank (the latter as the collecting agency of the MOF)\. This became possible when a decision was taken that association of WUCCs could be formed on the basis of a law on Rural Consumers Cooperatives\. At the signing of its Charter, the AWUC becomes the owner of the I&D system, which then can be used as collateral for the sub-loan from MOF\. The repayment schedule is in accordance with the terms in the Loan Agreement, while the Charter of the AWUC provides for annual cost recovery from the members on a per hectare basis\. Provision of agricultural machinery to the project farmers\. The need to provide agricultural machinery and other working capital was clearly recognized during project preparation thus the agricultural component initially included funds for providing credit to the farmers\. This Component was deleted during negotiations and the expectation was that this need may be met from the Agricultural Post Privatization Assistance Project (APPAP)\. Unfortunately, the provision of working capital and farm machinery remained an issue after APPAP became effective, the main reason being that the participating banks had conditions for collateral that could not be met by the farms, generally requiring real estate in the major cities as the agricultural land has almost no value\. Therefore, late 2000, MOA proposed to channel funds for essential agricultural/farm machinery at an estimated cost of $2 million to farmers in the subprojects through KAZAGROFINANCE (KAF) - an agency in MOA - under a hire-purchase scheme\. However, the Bank was of the opinion that the APPAP was a better vehicle and suggested that further efforts should be made to use APPAP funds\. In 2001 the loan agreement of APPAP was amended, inter alia, to extend the Project's coverage from two oblasts to the whole country and to cover leasing activities as well as credit for purchase but otherwise no concessions were made to accommodate the IDIP farmers\. However, early 2003 the Bank agreed in principle to provide farm machinery from the savings under the loan and provided a set of conditions for the use of these funds\. Although it was agreed that the equipment provided could be used as collateral, on the remaining conditions the Bank was more strict than the MOA (i\.e\. on the repayment period, interest rate and the size of the down payment) so unfortunately, no agreement could be reached\. The farmers are mobilizing their own resources and in some cases with the help of investors to replenish their machinery stocks\. As shown in Section 8 above the lessons learned for cost recovery as well as provision of farm machinery are being incorporated in the design of the IDIP2 - 43 - Additional Annex 9\. Opinion of the Ministry of Agriculture of ROK on the Project (IDIP) Relevance of the Issue and Project Rationale Agriculture is taking one of the leading places in the economy of the Republic of Kazakhstan\. Kazakhstan can export not only grain but also sugar, processed vegetable products, meat, milk, and etc\. However, the limiting factor is the low natural moisture content, as the main part of the country's territory is characterized by arid climate\. Recent practice has shown that under the market economy conditions dry land farming with the previous scope becomes risky in such zones\. Therefore, while continuing to use dry and rain-fed land, special attention should be given to the irrigated land which allows gaining high and sustainable yields, irrespective of the natural moisture content\. This issue is becoming more and more relevant and urgent in view of the forthcoming accession of Kazakhstan to WTO, as we need to produce competitive products not only in terms of grains, but also in crops such as cotton, rice, sugar-beets, legumes and oil crops, corn, vegetable and cucurbitaceous crops, and fruits as well\. Furthermore, for the last 30-40 years irrigated agriculture in Kazakhstan has provided population in the rural areas with means for income and livelihood\. In this respect, careful management of irrigated land and creation of conditions for its efficient use shall become a strategic objective of the Government, which ultimately will build the foundation for production of a competitive agricultural production and for effective social and economic development of densely populated regions of the country\. Total area of land prepared for regular irrigation amounts to 2\.39 million hectares\. Not so long ago, occupying only 6% of the country's crop land, this land provided for 30% of the entire agricultural output\. However, in early 1990s the efficiency of the irrigated land drastically decreased\. Losses of irrigation water increased\. According to Kazgiprovodkhoz research institute, annual total loss of irrigation water, which leads to deterioration of the irrigated land and economic situation as a whole, has reached 2\.0-2\.5 billion m3 annually, including losses in the irrigation systems, which require irrigation rehabilitation, up to 1\.2\.-1\.6 billion m3\. Generally, under such circumstances, reclamation condition of soil deteriorates, and it is difficult to estimate the efficiency of the entire set of agricultural practices\. Key reasons of the described situation were, first of all, the following: 1) Increased deterioration and failure of the main water intake facilities; 2) Increased deterioration and poor technical condition, and in some cases failure, of the existing irrigation and drainage systems; 3) Inadequacy of the irrigation methods and equipment, breakdown of the irrigation equipment\. Thus, urgent need for radical reclamation measures occurred, i\.e\. measures on technical improvement and rehabilitation of the deteriorated and failed irrigation and drainage systems\. This was also stipulated in the Government strategy on tackling the issues related to the need for environmentally safe use of water resources\. Prior to reforms, the irrigation and drainage systems were rehabilitated based on the special Government program at the budget expense\. Nevertheless, these activities were ceased in the second half of 1980s\. The current situation calls for resumption of the rehabilitation activities\. Moreover, due to high deterioration rates, the level of financing of rehabilitation activities would not be less than 45-60 thousand tenge/ha based on 1 ha of the rehabilitated land\. - 44 - Government Measures on Project Implementation Taking these circumstances into consideration, in 1993 the Government of Kazakhstan requested the International Bank for Reconstruction and Development (IBRD) to finance the program for irrigation and drainage system rehabilitation\. The Government program for irrigation and drainage system rehabilitation and technical upgrading on the area of 775,000 ha was based on the Republican Integrated Reclamation Program approved by the Government of ROK in 1991\. In this respect, it was necessary to examine initially the technical condition of the irrigation and drainage systems\. In 1993, for this purpose IBRD allocated project preparation funds to the Government of Kazakhstan in the amount of US$1\.5 million\. These preparation activities were undertaken during 1993-1995\. On June 25, 1996, the Loan Agreement between the Republic of Kazakhstan and IBRD was signed and ratified by the Law of the Republic of Kazakhstan as of September 27, 1996, No\. 36 I ZRK\. To follow the conditions of the Loan Agreement and to provide Government support for the development of the irrigation and drainage systems of the agricultural producers, the Government of RK passed the Resolution as of October 7, 1996, No\. 1237 "On measures to follow the conditions to make the Loan Agreement effective between the Republic of Kazakhstan and IBRD on the Irrigation and Drainage Improvement Project" (Resolution No\. 1237)\. Later on, Resolution No\. 1237 was amended and supplemented by the Government Resolutions as of July 9, 1997 No\. 1087, as of April 6, 1998, No\. 287, as of January 25, 2002, No\. 112 and as of March 18, 2004, No\. 336\. Goal, Objectives and Cost of the Project The main goal of the Project was to create the required reclamation conditions to increase the yields of agricultural crops by 1\.5-2 times through rehabilitation and introduction of market principles to organization of the irrigation and drainage system operations taking into account the environmental requirements and norms\. Accomplishment of the objectives required to achieve this goal was broken down into three main project components: 1) Engineering component which included objectives related to organization of the irrigation and drainage system reconstruction works; 2) Environmental component which included objectives related to the organization of activities aimed at improvement of the environmental reliability of the irrigation and drainage systems; 3) Agricultural component which included objectives related to the organization of activities on training of farmers and demonstration of agricultural reclamation practices\. Cost of the project was estimated at US$100 million, of which US$80 million was borrowed from IBRD and US$20 million was provided by the Government of Kazakhstan as loan cofinancing\. Key Information about the Project Implementation Selection and approval of land to be included in the Project was carried out in accordance with the IBRD requirements and conditions based on 5 stages\. During stage 5 conducted after the tender commissions selected the construction firm and prior to the rehabilitation works, farms/system owners made their final decision to rehabilitate the irrigation and drainage systems, concluded contracts for repayment of the subloans, though according to the project requirements these documents must be processed only after completion of the rehabilitation works and after final estimation of all the costs\. - 45 - After the first stage, 34 farms were selected to be included in the Project and feasibility studies were undertaken for all of them\. Out of this number, 22 farms in 11 regions of the country with an area of 40\.2 thousand ha were selected and upon the approval of the local authorities included in the Irrigation and Drainage Improvement Project\. In the course of project implementation, for various reasons rehabilitation works were implemented only on 14 sites (Chagansk and Zhaik were combined into one site) in 9 regions of the country on the area of 32\.0 thousand ha of the irrigated land\. 22 ultimate borrowers operate on this rehabilitated irrigated land, including 7 rural water users' cooperatives (RWUC), 1 association of rural water users' cooperatives (ARWUC), 8 partnerships (LLC and limited partnerships) and 6 farms\. A large number of farms, producers' cooperatives and in some cases limited liability partnerships are the founders of the RWUC\. Despite the availability of the feasibility study results, rehabilitation works were not conducted on 7 irrigation systems (sites), namely: 1\. Saryozen site in Kostanai Oblast (reason: the farm has chosen rain-fed farming); 2\. Pritobolsk site in Kostanai Oblast (reason: the new director of the farm considered the reconstruction to be premature); 3\. Mirny site in Karaganda Oblast (reason: low expected efficiency due to the increase of the cost of irrigation water from the Irtysh-Karaganda channel); 4\. Astra site in Karaganda Oblast (reason: the farm did not agree with the condition to repay the committed funds); 5\. Nura site in Akmola Oblast (reason: unfavorable environmental appraisal); 6\. Kaisar site in Aktobe Oblast (reason: the farm did not agree with the condition to repay the committed funds); 7\. Patsayev site in Aktobe Oblast (reason: the farm did not agree with the condition to repay the committed funds)\. Establishment of Water Users Associations and maintenance services Establishment of Water Users Associations and maintenance services became a main issue under this Project, as in the course of the reform many former large collective farms were disintegrated into small farms\. As a result, former intra-farm irrigation and drainage systems turned to be inter-farm and did not have any specific owner and orderly maintenance\. Such analysis allowed identifying those systems which need Water Users Association to be established and those which do not\. As a result, project irrigation and drainage systems could be subdivided into two groups\. It was taken into account when conducting design and construction works\. Group 1\. This group includes the irrigation and drainage systems located on the large farms' land (LLC, limited partnerships)\. There were 14 such irrigation systems which were owned by 14 individual farms\. The farms/owners of such systems participated independently in the resolution of all the official issues concerned with the Project\. Group 2\. This group includes 8 irrigation and drainage systems which turned to be inter-farm systems as a result of the disintegration of large farms (kolkhoz, sovkhoz, limited partnerships, etc\.) into two or more new farms (peasant farms, etc\.)\. There were more than 1,600 such farms\. The total area of their land use was 21,920\.6 ha or 69% of the overall project area\. In the course of project implementation, adequate attention was paid to the agricultural component of the - 46 - Project\. Seminars on market organization of production were conducted on all sites, brochures were published, demonstrations and educational films were produced\. More than 20 articles pertaining to the organization of production and operation of the rehabilitated systems based on the market approach were published in the mass media\. Adequate attention was paid to the environmental component of the Project\. The main objective was to improve the process of decision-making and ensuring environmental substantiation and sustainability of the design processes\. The environmental component provided for the resolution of environmental issues over the entire period of project implementation\. Moreover, the Center for Ecology and Monitoring in irrigated farming was established on the basis of the Zhetysu hydro geological meliorative expedition and KIO DGP "GosNPTszem"\. To enhance the capacities of the environmental sector, monitoring equipment was procured based on the Loan Agreement\. This equipment included field and laboratory devices, agro meteorological equipment, other auxiliary equipment and specialized machinery\. To pursue environmental monitoring using the budget funds, repair of the laboratory premises of the Kyzyl Orda hydro geological meliorative expedition was completed, a new laboratory for the Zhetysu hydro geological meliorative expedition was constructed, laboratory and production premises of the Northern branch of the Zhetysu hydro geological meliorative expedition were purchased and repaired\. Technical and economic evaluation of the initial results in the area of agricultural use of rehabilitated irrigation and drainage systems shall be conducted based on the following indicators: 1) restoration of production and growth of the area under crop; 2) reduction of irrigation water losses (savings); 3) reduction of power overuse (savings); 4) crop yield increase\. Based on a survey results of 2004 out of 32 thousand ha of land rehabilitated, only 28\.02 thousand ha or 88% of project lands were cultivated\. Big portion of the irrigated lands covered by the Project were being abandoned due to the breakage of water intake facilities and irrigation network\. Therefore, only 17\.9 thousand ha or 56% of all the project area were under production\. Since 1997-1998 more than 8\.0 thousand ha were not cultivated at all and were almost transferred to the category of rain fed lands\. The rest 6 thousand ha of the non-used territory due to unsatisfactory technical conditions of the pumping stations and irrigation network were used ineffectively and partially\. Thus, return of the abandoned lands to the category of irrigated lands is a major fundamental result of the Project\. Annual gross income on those lands saved from further desertification in 2004 exceeded 580 thousand KZT\. On the developed project irrigated lands with the total area of more than 28 thousand ha the crop yield increased in 1\.45 times\. As a result gross income comparing to pre-project indicators increased by more than 400 mln KZT\. The bottlenecks for crop yield growth are not of the meliorative nature but lack of agricultural machinery and working capital\. Once these problems are resolved, it is likely that the effectiveness of restored lands use will increase dramatically\. Reduction of irrigation water "overuse" is also a very important result\. Project implementation resulted in reduction of irrigation water and power overuse compared to pre-project indicators was more than 3 thousand m³/ha and 7 thousand kw/h annually, respectively\. This reduction allows farms to observe the required irrigation regime and use saved funds for agricultural improvements\. Potential agricultural, technical and economic opportunities of the project lands could be judged from the following data received in the course of implementing the agriculture Project Component\. - 47 - In 1998-1999 the Shengeldy irrigation facility of PC "Gylym" (manager D\. Zhakupov) managed to raise the crop yield of sugar-beet up to 40 t/ha by introducing discrete irrigation technology and maintenance of agricultural technology on the testing and demonstration fields supported by the Project\. During the same period, cotton crop yield on the testing and demonstration field at the Maktaral irrigation facility (CF of K\. Apashev) reached 34\.5 centners/ha\. In 1999 on the demonstration field of Krasnaya Polyana cabbage crop yield exceeded 60 t/ha\. Social indicators are also critical\. As a result of project implementation, more than 9 thousand jobs were either created or restored, including those requiring special knowledge and skills\. 250 jobs were created only in the area of operating irrigation and drainage systems (electricians, motor-mechanics, operators etc\.)\. The Project also became an important vehicle for institutional and legislative development: (a) establishment of PIU under the Ministry of Agriculture of the Republic of Kazakhstan, and further establishment of the project implementation division in the Ministry of Agriculture is an example of positive institutional development\. Around 50 experts were employed by those units as consultants, who accumulated sufficient international experience in project implementation under market conditions; (b) as it was noted, hydrogeology meliorative expeditions were significantly strengthened and received methodological support\. Many businesses of local developers and construction firms that used to be in bad conditions in the middle of 90s, managed to improve their production and financial status and accrued international experience in project implementation; (c) while addressing organizational and legal issues that appeared in the course of project implementation, project consultants according to the instruction of the MOA's management participated in the work of Working Groups on drafting the Law "On Rural Consumer Cooperatives of Water Users", a new version of the Water Code of the Republic of Kazakhstan, legal enactments, and Concept for Water Economy Development of the Republic of Kazakhstan up to 2010\. Compliant to the MOA"s application the project experience was considered when finalizing Method for setting subsidies' size based on the cost of water supply services and instruction on approving and issuing permissions for special water use etc\. In a view of the above and considering the feedback and conclusions of project participants as well as other parties concerned the following judgments could be made regarding this Project\. Irrigated farming in south and south-east dry regions remains the fundamental basis for improving socioeconomic development of the major part of rural areas; and in the other regions for establishment of vegetable and dairy production around large cities and industrial centers\. During the last 10-15 years a lot of irrigation and drainage systems became obsolete\. Due to that up to 60% of irrigation water is lost\. It is accompanied by deterioration of melioration status of irrigated lands (erosion, secondary salinization)\. Effectiveness of agricultural techniques (fertilizers, good seeds) is getting down, as a rule, what is not acceptable in the market conditions and does not facilitate getting competitive products\. To this end the initiative of the Ministry of Agriculture of the Republic of Kazakhstan on implementing IDIP on the total area of 32 thousand (ha) in 9 oblasts of the Republic was a timely and justified measure\. Actually the main Project goal appeared to be even larger that just "improvement" as one of the fundamental project results happened to be complete restoration and return to agricultural production of irrigation and drainage systems with the total area exceeding 14 thousand ha, which due to breakage of water intake facilities and irrigation network were almost out of use, while 17\.9 ha or 56% of all the project area were only partially used\. It is worth noting that according to the results of 2001-2004, i\.e\. first 3-4 years of operating rehabilitated - 48 - system, annual irrigation water savings were at least 60-65 million m³, power savings at least 30 mln kw/h, cost of gross annual products increased by 280 mln KZT, net income increased by 60 mln KZT comparing to the pre-project indicators\. These indicators shall become even better in the future as the production capacity is increasing and agricultural techniques at the farms are improving\. To do so Akimats need to arrange measures for priority support to the project farms in addressing the problem of effective disbursement (soft credits, leasing etc\.)\. It is also critical to ensure reduced tariff for electric power for the farms that own the systems and use pumping irrigation and drainage\. We conclude by saying that in general the completed Irrigation and Drainage Improvement Project deserves positive evaluation, given its goal and objectives, and that similar projects shall be continued further\. At the same time the following lessons of the Project shall be brought forward: 1) The Project was not comprehensive, i\.e\. it did not include a component on equipping farms with agricultural and maintenance machinery\. As a result today, lack of machinery has become a bottleneck in achieving project benefits faster, which could lead to a biased evaluation of the true project achievements\. Consequently repayment of the funds invested in the Project for reconstruction of the priority facilities is nearing, and the farms have difficulties in meeting their repayment obligations; 2) When preparing their applications for inclusion of subprojects in the Project, not all the Akimats met the criteria on farms selections set forth by the Ministry of Agriculture of the ROK and IBRD, and insisted on including in the Project not very promising farms\. For instance, CF "Darkhan" of Rayimbek Rayon of Almaty Oblast and "Kurchum" of Kurchum Rayon of East-Kazakhstan Oblast; 3) Services under the consulting component were provided by international companies\. This Component appeared to be very expensive and made up around 15% of total project cost\. At the same time, many project decisions were not of the modern sophistication, and the consulting firms did not propose up-to-date technical solutions\. In the next project, these aspects shall be taken into account\. More local consulting firms and construction companies should be hired\. Experience shows that quality of local services is not worse than that of international ones, but the price is much lower\. Vice-Minister D\. Aitzhanov - 49 - - 50 - IBRD 33837 45°E 50°E 55°E 60°E 65°E 70°E 75°E 80°E 85°E 90°E R U S S I A N F E D E R A T I O N 0 100 200 300 Kilometers 0 100 200 Miles Petropavlovsk NORTH PRITOBOLSKOI(950 ha) Ertis PRITOBOLSKI Volga KAZAKHSTAN (950 ha) (Irtysh) Kostanai Kokshetau Ob` ZHAIK DUSUPOVA Ural 60 YEARS OF (622 ha) (991 ha) Tob yl OCTOBER Pavlodar (3,574 ha) A K M O L A Ekibastuz 50°N Ural'sk 50°N CHAGANSKI ASTANA KAISAR 2 PAVLODAR (565 ha) KOSTANAI Esil (Ishim) (1,170 ha) Semipalatinsk Oskemen ¨ Chapaevo Zhaiyk COMPANY SARYOZENSKI KUIGENZHAR MIRNY WEST PRIRECHNY (Ura Aktobe LTD KAISAR (850 ha) (900 ha) NURA (1,302 ha) PATSAEV (697 ha) Arkalyk (1,574 ha) KAZAKHSTAN )l (1,500 ha) KURCHUM (627 ha) Yrghyz Karaganda Torghai EAST (3,217 ha) ASTRA Turgay Volga (1,880 ha) KAZAKHSTAN KRASNAYA Lake Ayakos ATYRAU Embi POLYANA Zaisan (915 ha) Zhem Atyrau AKTOBE Shalkar Zhezkazgan Balkhash KARAGANDA Lepsi Aral Lake 45°N Lake Alakol 45°N ARDAGER Sarysu Saryshaghan Balkash Karatal KZYL-AGASH Caspian (250 ha) Beineu (1,420 ha) Toretam Aral Ile ALMATY AKKUMSKY Taldykorgan MANGHYSTAU Sea (1,034 ha) ZHAMBYL KERBULAK Kyzyl-Orda Shu (2,915 ha) Aktau KYZYLORDA (Chu) SHENGELDY 2001 LEVEL OF ARAL SEA Syrdariya (2,368 ha) Talas DZHAMBUL DARKHAN A C H I N A (1,114 ha) Shu Sea Almaty (867 ha) Turkistan Taraz SOUTH Shymkent 80°E AZERBAIJAN K Y R G Y Z UZBEKISTAN KAZAKHSTAN 40°N R E P\. KAZAKHSTAN IRRIGATION AND DRAINAGE MAKTARAL 40°N (9,936 ha) IMPROVEMENT PROJECT TURKMENISTAN SUBPROJECTS IMPLEMENTED UNDER THE PROJECT (TOTAL AREA = 32,282 HA) TA J I K I S TA N SUBPROJECTS STUDIED BUT DELETED FROM THE PROJECT (TOTAL AREA = 8,006 HA) SELECTED CITIES AND TOWNS KAZAKHSTAN OBLAST CAPITALS NATIONAL CAPITAL ISLAMIC REPUBLIC RIVERS This map was produced by the Map Design Unit of The World Bank\. 35°N OF IRAN AFGHANISTAN The boundaries, colors, denominations and any other information OBLAST BOUNDARIES shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries\. INTERNATIONAL BOUNDARIES 50°E 55°E 60°E 65°E 70°E MARCH 2005	REVIEW
P095091	Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00004952 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON AN IDA CREDIT IN THE AMOUNT OF SDR 46\.2 MILLION (US$70 MILLION EQUIVALENT) AND GRANTS FROM THE EUROPEAN UNION FOOD CRISIS RAPID RESPONSE FACILITY TRUST FUND IN THE AMOUNT OF EUR 14\.64 MILLION AND FROM THE GLOBAL ENVIRONMENT FACILITY (GEF) TRUST FUND IN THE AMOUNT OF US$6\.2 MILLION TO THE REPUBLIC OF MALI FOR THE MALI-FOSTERING AGRICULTURAL PRODUCTIVITY PROJECT February 14, 2020 Agriculture And Food Global Practice Africa Region CURRENCY EQUIVALENTS (Exchange Rate Effective Aug 01, 2019) Currency Unit = FCFA FCFA 580 = US$1 US$ 1\.37 = SDR 1 FISCAL YEAR January 1 - December 31 Regional Vice President: Hafez Ghanem Country Director: Soukeyna Kane Regional Director: Simeon K\. Ehui Practice Manager: Chakib Jenane Task Team Leader(s): Amadou Ba ICR Main Contributor: Rhoda Rubaiza ABBREVIATIONS AND ACRONYMS APCAM AssemblÃ©e Permanente des Chambres dâAgriculture du Mali (Permanent Assembly of Mali Agricultural Chambers) CAADP Comprehensive Africa Agriculture Development Programme CNRA ComitÃ© National de la Recherche Agricole (National Agricultural Research Committee) CPS Cellule de Planification et Statistiques (Unit for Planning and Statistics) CRA Chambre RÃ©gionale dâAgriculture (Regional Chamber of Agriculture) CSIF Comprehensive Strategic Investment Fund DGMP Direction GÃ©nÃ©rale des MarchÃ©s Publics (General Directorate of Public Markets) DNA Direction Nationale de l'Agriculture (National Directorate of Agriculture) DNACPN Direction Nationale de l'Assainissement et du ContrÃ´le des Pollutions et des Nuisances (National Directorate of Sanitation and Pollution Control) DNPIA Direction Nationale des Productions et des Industries Animales (National Directorate of Animal Production and Industry) EA Environmental Assessment ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan GDP Gross Domestic Product GEF Global Environmental Facility GEO Global Environmental Objective GoM Government of Mali Ha Hectares IER Institut d'Economie Rurale (Institute of Rural Economy) IFAD International Fund for Agricultural Development MDG Millennium Development Goal MEA Ministry of Environment MFI Microfinance Institution MoA Ministry of Agriculture MoL Ministry of Livestock and Fisheries NEPAD New Partnership for Africa's Development NSC National Steering Committee OMA L'Observatoire Du MarchÃ© Agricole (Agricultural Market Observatory) ON Office du Niger PAP Program Action Plan PAPAM Projet d'Accroissement de la ProductivitÃ© Agricole au Mali (Mali-Fostering Agricultural Productivity) PASAOP Programme dâAppui aux Services Agricoles et aux Organisations Paysannes (Agriculture Services and Producer Organizations) PDA Politique de DÃ©veloppement Agricole du Mali (Mali Agriculture Development Policy) PDO Project Development Objective PIU Project Implementation Unit PIV Petit PÃ©rimÃ¨tre Villageois (Small village perimeter) PNIR Programme National dâInfrastructures Rurales (National Rural Infrastructure Project) PNISA Programme National dâInvestissement Sectoriel Agricole (National Agricultural Investment Program) PO Producersâ Organization PPM Petit PÃ©rimÃ¨tre Maraichers (Small village horticulture) RAP Resettlement Action Plan RPF Resettlement Policy Framework SLWM Sustainable Land and Water Management SRI System of Rice Intensification STEP Systematic Tracking of Exchanges in Procurement TECC Technical Execution Coordination Committee WAAPP West Africa Agricultural Productivity Program TABLE OF CONTENTS DATA SHEET \. 1 I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES \. 1 A\. CONTEXT AT APPRAISAL \.1 B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION \.5 II\. OUTCOME \. 9 A\. RELEVANCE OF PDOs \.9 B\. ACHIEVEMENT OF PDOs (EFFICACY) \. 10 C\. EFFICIENCY \. 15 D\. JUSTIFICATION OF OVERALL OUTCOME RATING \. 17 E\. OTHER OUTCOMES AND IMPACTS \. 17 III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME \. 17 A\. KEY FACTORS DURING PREPARATION \. 17 B\. KEY FACTORS DURING IMPLEMENTATION \. 18 IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME \. 19 A\. QUALITY OF MONITORING AND EVALUATION (M&E) \. 19 B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE \. 21 C\. BANK PERFORMANCE \. 22 D\. RISK TO DEVELOPMENT OUTCOME \. 24 V\. LESSONS AND RECOMMENDATIONS \. 24 ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS \. 26 ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION \. 41 ANNEX 3\. PROJECT COST BY COMPONENT \. 43 ANNEX 4\. EFFICIENCY ANALYSIS \. 44 ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS \. 53 ANNEX 6\. SUPPORTING DOCUMENTS \. 54 ANNEX 7\. RESULTS FRAMEWORK: BANK SYSTEM VERSUS PROJECT COORDINATION UNIT \. 55 DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P095091 Mali-Fostering Agricultural Productivity Country Financing Instrument Mali Investment Project Financing Original EA Category Revised EA Category Full Assessment (A) Full Assessment (A) Related Projects Relationship Project Approval Product Line Supplement P099709-Mali 03-Jun-2010 Global Environment Project Sustainable Land Management Organizations Borrower Implementing Agency Republic of Mali Ministry of Agriculture Project Development Objective (PDO) Original PDO The Project Development Objective is to increase the productivity of smallholder agricultural and agribusiness producers in the targeted production systems and project areas\. PDO as stated in the legal agreement The objective of the Project is to increase the productivity of smallholder agricultural and agribusinesses producers in the Targeted Production Systems in Selected Areas of the Recipientâs territory\. Page i of v The World Bank Mali-Fostering Agricultural Productivity (P095091) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing P095091 IDA-47510 70,000,000 70,000,000 65,161,343 P095091 TF-97175 19,040,784 2,055,347 2,105,802 P099709 TF-97183 6,200,000 6,200,000 4,453,137 Total 95,240,784 78,255,347 71,720,282 Non-World Bank Financing 0 0 0 Borrower/Recipient 23,700,000 23,700,000 0 International Fund for 32,000,000 32,000,000 14,700,000 Agriculture Development UN Development Program - 5,700,000 0 0 GEF Local Farmer Organizations 6,700,000 6,700,000 1,800,000 Total 68,100,000 62,400,000 16,500,000 Total Project Cost 163,340,784 140,655,347 88,220,283 KEY DATES Project Approval Effectiveness MTR Review Original Closing Actual Closing P095091 03-Jun-2010 19-Jun-2010 03-Nov-2014 30-Sep-2016 31-Jul-2019 Page ii of v The World Bank Mali-Fostering Agricultural Productivity (P095091) RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 15-Dec-2011 6\.06 Change in Loan Closing Date(s) Reallocation between Disbursement Categories 14-Jun-2013 20\.78 Change in Results Framework Change in Components and Cost Change in Financing Plan Reallocation between Disbursement Categories Change in Institutional Arrangements Change in Implementation Schedule 29-Jan-2016 52\.75 Change in Loan Closing Date(s) Reallocation between Disbursement Categories 14-Jun-2018 60\.50 Change in Results Framework Change in Loan Closing Date(s) Change in Procurement Change in Implementation Schedule KEY RATINGS Outcome Bank Performance M&E Quality Moderately Unsatisfactory Moderately Unsatisfactory Modest RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No\. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 23-Mar-2011 Satisfactory Moderately Satisfactory 4\.24 Moderately 02 19-Sep-2011 Moderately Satisfactory 4\.79 Unsatisfactory Moderately 03 29-Apr-2012 Moderately Satisfactory 11\.52 Unsatisfactory Moderately 04 17-Nov-2012 Moderately Satisfactory 14\.01 Unsatisfactory Moderately 05 24-Apr-2013 Moderately Satisfactory 18\.25 Unsatisfactory Page iii of v The World Bank Mali-Fostering Agricultural Productivity (P095091) Moderately 06 19-Nov-2013 Moderately Satisfactory 24\.26 Unsatisfactory Moderately Moderately 07 02-Jul-2014 29\.96 Unsatisfactory Unsatisfactory 08 16-Sep-2014 Moderately Satisfactory Moderately Satisfactory 34\.93 Moderately Moderately 09 29-Apr-2015 41\.82 Unsatisfactory Unsatisfactory 10 01-Nov-2015 Moderately Satisfactory Moderately Satisfactory 49\.12 11 26-Apr-2016 Moderately Satisfactory Moderately Satisfactory 53\.31 12 30-Sep-2016 Moderately Satisfactory Moderately Satisfactory 55\.36 13 13-Apr-2017 Moderately Satisfactory Moderately Satisfactory 57\.36 Moderately Moderately 14 23-Jun-2017 58\.39 Unsatisfactory Unsatisfactory Moderately Moderately 15 20-Apr-2018 60\.43 Unsatisfactory Unsatisfactory Moderately Moderately 16 19-Oct-2018 61\.34 Unsatisfactory Unsatisfactory 17 22-Jan-2019 Moderately Satisfactory Moderately Satisfactory 63\.09 SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 100 Agricultural Extension, Research, and Other 39 Support Activities Fisheries 5 Crops 2 Irrigation and Drainage 31 Public Administration - Agriculture, Fishing & 18 Forestry Livestock 5 Page iv of v The World Bank Mali-Fostering Agricultural Productivity (P095091) Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Finance 15 Finance for Development 15 Agriculture Finance 15 Urban and Rural Development 75 Rural Development 75 Rural Markets 15 Rural Infrastructure and service delivery 55 Land Administration and Management 5 Environment and Natural Resource Management 11 Climate change 3 Mitigation 3 Environmental policies and institutions 8 ADM STAFF Role At Approval At ICR Regional Vice President: Obiageli Katryn Ezekwesili Hafez M\. H\. Ghanem Country Director: Habib M\. Fetini Soukeyna Kane Director: Inger Andersen Simeon Kacou Ehui Practice Manager: Karen Mcconnell Brooks Chakib Jenane Task Team Leader(s): Olivier Durand Amadou Ba ICR Contributing Author: Rhoda Rubaiza Page v of v The World Bank Mali-Fostering Agricultural Productivity (P095091) I\. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A\. CONTEXT AT APPRAISAL Context 1\. At the time of preparation of the Fostering Agricultural Productivity Project (PAPAM), Mali was (and still is) a low-income country with a Gross Domestic Product (GDP) per capita of US$480 (2008)\. Agriculture was a key driver of the economy contributing 40 percent of GDP, 80 percent of the population at the time was dependent on agriculture\. Nearly half the population was poor, but poverty at 57\.6 percent, was more prevalent among the rural population\. A food and fuel price crisis in 2007/2008 had exacerbated already high levels of food insecurity and malnutrition\. In the face of climate change, and with a rapidly increasing population, natural resources were under pressure, affecting soil and water quality\. 2\. Agricultural production was largely subsistence, characterized by low productivity attributed to low input use and low levels of irrigation\. Despite a high level of investment in the agriculture sector by the Government, (13 percent of national budget in 2007) and a 6\.3 percent average investment for the period 2003-2008, attainment of the Comprehensive Africa Agriculture Development Plan (CAADP) growth target of 10 percent to meet the Malabo declaration was subpar\. The reduction in poverty rates, food insecurity and malnutrition were not sufficient for Mali to be on track to achieve its Millennium Development Goals (MDGS) 1 and 2\. The food and fuel price crises in 2007-2008 were perceived to be a threat to urban livelihoods and the potential market opportunities for farmers were not realized due to the low production\. Increasing productivity of key staples was envisioned as the key to achieving food security\. The sector was also poorly coordinated, with fragmented and scattered interventions with limited national impact, a multiplicity of conflicting strategies for rural development and food security, and a weak evidentiary basis for policy making by the Government\. 3\. The Government of Mali (GoM) adopted the Loi dâOrientation Agricole (LOA) in 2006 that intended to spearhead the modernization of the sector and increase value addition\. Key objectives included: (i) the country's food sovereignty and security; (ii) rural poverty reduction; (iii) the modernization of family farming and the development of agro-industry; and, (iv) environmental protection and sustainable management of natural resources\. The Growth and Poverty Reduction Strategy Framework (GPRSF 2007-2011), recognized food security and rural development as a key aspect under Pillar 1: Developing Infrastructure and Strengthening Productive Sectors\. The (Country Assistance Strategy (CAS 2007-2011) and 2006 Country Economic Memorandum (CEM) both noted the potential of Maliâs agriculture sector to accelerate its economic growth, particularly in the Niger and Senegal river deltas that were underexploited, and the need for stronger donor coordination and harmonization using sector wide approach\. 4\. Within the framework of the CAADP and under the guidance of the Economic Community of West African States (ECOWAS), the PNISA (Programme National dâInvestissement Sectoriel Agricole), the national agriculture sector investment program was developed in October 2009\. GoM funding would be leveraged by bilateral and multilateral financing\. The rationale for the Bankâs support of this project was based on the CAS Strategic Objective I: Promote Rapid and Broad-Based Growth, under which the sector aimed to increase agricultural productivity, improve competitiveness of selected supply chains, increase irrigation capacities, and improve availability of agricultural credit as well as increase factor productivity through sustainable natural resource and environmental management\. Page 1 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) 5\. At the preparation of this project, the Bank was the Co-Chair of the donor coordination group, therefore, this project was prepared in consultation with several other donors and had significant contributions from the International Fund for Agricultural Development (IFAD), and the European Union Food Crisis Rapid Response Facility Trust Fund, as well as contributions from the World Bankâs and the United Nations Development Programme (UNDP)âs Global Environment Facility (GEF)\. The GEF contribution was linked to its Strategic Investment Program for Sustainable Land and Water Management in Sub-Saharan Africa, the Bankâs Country Strategic Investment Framework (CSIF), and the TerraAfrica Initiative partnership\. 6\. The project was designed to address three (3) major issues: (i) the lack of productive infrastructure especially for irrigation and post-harvest management and processing; (ii) low productivity due to low input use, unsustainable land and water management practices, and poor access to advisory services and financing; and, (iii) the lack of coordination in the sector, leading to fragmented interventions with limited impact, and a lack of strategic vision by the Government of Mali (GoM) for long-term investments in the sector\. The target beneficiaries were smallholders organized under strong producer organizations, particularly the CRAs (Regional Chambers of Agriculture) under APCAM (Permanent Assembly of Malian Agricultural Chambers) with the capacity to engage in policy dialogue with the Government, as well as disseminate improved technology\. Theory of Change (Results Chain) 7\. During preparation, the project envisaged in the long-term to contribute to increased food security\. In the medium-term, the outcome was to increase the productivity of smallholder agricultural and agribusiness producers as a result of (i) increased adoption of technologies; and, (ii) improved access to water resources for agricultural production\. These two channels were to be supported by a programmatic approach to investment in the sector, as well as better monitoring and coordination\. 8\. The disseminated technologies and sustainable land and water management practices (SLWM) that would be adopted were to be in various value chains, through better links between agricultural research and farmers, facilitated by stronger producer organisations and better access to agricultural financing\. Improved water access for production focused on the rice value chain, and to a lesser extent horticulture, through the development of irrigation infrastructure on both a large and a small scale\. A Sector Wide Approach (SWAp) was initially anticipated to better coordinate, monitor and invest in the sector\. 9\. The results framework at the design stage did not explicitly state the key assumptions underlying the projectâs theory of change, although from different sections of the PAD a few were identified\. Following a couple of decades of peace and stability, a key assumption was political, social and economic stability in the country\. The coup dâÃ©tat and the war that broke out in the North in 2012, and the insecurity that later spread to the Central Mali had a severe impact on the project\. Secondly, it was envisaged that the achievement of the long-term outcome - increased of food security was dependent on managing the occurrence and impact of extreme weather events or natural catastrophes\. Thirdly, the proposed innovations particularly, the use of a programmatic approach, the use of country systems, and the revamped matching grant mechanisms â would have to be effectively delivered in order to achieve the projectâs objectives\. Lastly, for technology adoption, the availability of good public and private service providers would be critical for the dissemination of new technology\. Page 2 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Figure 1: Theory of Change Project Development Objectives (PDOs) 10\. The Project Development Objective is to increase the productivity of smallholder agricultural and agribusinesses producers in the Targeted Production Systems in Selected Areas of the Recipientâs territory12\. Key Expected Outcomes and Outcome Indicators 11\. The expected outcome from this project was: Increased productivity of smallholder agricultural and agribusiness producers\. This outcome was to be measured by the following PDO indicators and Intermediate results indicators: PDO Indicators: i\. Increase of milk production per milking cow ii\. Cowpea yield increase in project areas iii\. Yield increase of Rice production in targeted areas â Bas-fonds (Low-land) iv\. Rice yield increase on large scale irrigation perimeters supported by the project at the Office du Niger; v\. Rice yield increase on small scale irrigation perimeters supported by the project at the village level vi\. Direct project beneficiaries (number), of which female (percentage) vii\. Producers that have adopted SLWM practices 1 The Global Environmental Objective (GEO) was to increase the use of SLWM practices in the targeted production systems and project areas\. The GEO is not in any of the legal agreements, it is only stated in the PAD\. 2 The PDO in the PAD is slightly different - to increase the productivity of smallholder agricultural and agribusiness producers in the targeted production systems and project areas\. Page 3 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) viii\. Increase in areas under SLWM techniques in project production basins Intermediate Indicators: Intermediate Result 1: Technology Transfer and Service Provision to Agricultural Producers (Component 1): Increased adoption of agricultural production technologies, including SLWM practices i\. Share of producers that have adopted new cowpea varieties in the target production basins ii\. Producer organizationsâ subprojects that have achieved their objectives as stated in the request iii\. Dairy producers that have adopted improved husbandry practice iv\. Producer organizationâs subprojects that were co-financed by a bank or MFI credit v\. Producers that have adopted the system of rice intensification (Office du Niger and small-scale irrigation) Intermediate Result 2: Irrigation Infrastructure (Component 2): Improved access to water resources for agricultural production i\. Total irrigated area developed: (i) Office du Niger; (ii) Small horticultural perimeter (Petit Perimeter Maraichers-PPM); (iii) Low land (Bas-fonds) development; and, (iv) Small village perimeter (Petit Perimetre Villageois-PIV) ii\. Producers benefitting from newly or improved irrigated land â individuals: (i) Office du Niger; (ii) PIV, Bas-fonds and PPM iii\. Targeted areas with improved drainage Intermediate Result 3: Comprehensive Programmatic Approach, Sector Monitoring and Project Coordination: Improved sector coordination and monitoring i\. Regular production of reliable statistical data and sector analysis â rural households monitored ii\. Regular production of reliable statistical data and sector analysis â rice yield and production assessment Components 12\. The project had three components, namely: 13\. Component 1: Technology transfer and service provision to agricultural producers (US$59\.1 million: IDA: US$27\.8 million; IFAD US$13\.8 million, GEF-IDA: US$3\.8 million, Beneficiaries: US$3\.7 million, GoM: US$10\.0 million)\. The objective of Component 1 was to increase the adoption of agricultural production technologies, and it provided support for farming systems and supply chain modernization; capacity building for Producer Organizations (POs) and service providers; facilitating rural credit development; and, technology generation and research-producers linkages\. 14\. Component 2: Irrigation Infrastructure (US$67 million: IDA: US$19\.3 million; IFAD US$16\.1 million, EU: US$19\.5 million, Beneficiaries: US$3 million, GoM: US$9\.1million)\. The primary objective of Component 2 was to finance small-scale and large-scale irrigation infrastructure, although the soil and water resource protection and advisory services were also tackled\. 15\. Component 3: Comprehensive Programmatic Approach, Sector Monitoring and Project Coordination (US$26\.9 million: IDA: US$15\.9 million; IFAD US$2\.1 million, GEF-IDA: US$2\.4 million, GEF-UNDP: US$1\.9 Page 4 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) million, GoM: US$4\.6 million)\. This componentâs aims were to facilitate policy dialogue and coordination; sector monitoring and evaluation; the delivery of core public services; and, the delivery of core public resources\. 16\. The total actual costs were US$ 30\.5 million for Component 1, US$ 34\.1 million for Component 2, US$ 19\.0 for Component 3, giving a total of US$ 83\.4 million\. The differences between the estimated and actual costs were due to: the closure of the EU Trust Fund before it could be adequately utilized; the Government did not contribute counterpart funding due to resource constraints; missing information for the GEF-UNDP which was administered by the UNDP through the Ministry of Environment; and, only the beneficiariesâ contribution through sub-projects was captured\. B\. SIGNIFICANT CHANGES DURING IMPLEMENTATION 17\. A total of 4 Level- II restructurings were made to the project as summarized in table 2 below: Table 1: PAPAM Restructurings Date Purpose of Restructuring December 15, 2011 1\. Extension EU TF closing date from December 31, 2011 to April 30, 2012 2\. Reallocating funds from the IDA credit to finance all the project activities that could be implemented prior to April 30, 2012 from the proceeds of the EU Grant\. June 14, 2013 1\. Changes to results framework (modifications to indicators and targets) 2\. Changes to components 3\. Reallocation of proceeds 4\. Changes to project costs 5\. Changes to disbursement arrangements modified 6\. Changes to financing plan January 27, 2016 1\. Closing date extension from September 30, 2016 to July 31, 2018 June 14, 2018 1\. Extension of closing date from July 31, 2018 to July 31, 2019 2\. Change in implementation schedule 3\. Change in disbursement estimates 4\. Changes to results framework (modifications to indicators and targets) Revised PDOs and Outcome Targets 18\. The PDO was not revised during the life of the project, however the outcome indicator targets were revised during the restructurings in 2013, 2016 and 2018\. Table 2: Changes to Outcome Targets PDO Indicators Original Formally Target Revised Target Increase of milk production per milking cow (l/d) 6 2\.71 Cowpea yield increase in project areas (Kg/hectare) 700 700 Yield increase of Rice production in targeted areas - Bas-fonds (Low-Land) 2 2\.7 Rice yield increase on Large scale irrigation perimeters supported by the Project at the Office of 6\.3 6\.35 Niger Direct project beneficiaries 300,000 300,000 Female beneficiaries 120,000 120,000 Producers that have adopted SLWM practices 60 60 Increase in areas under SLWM techniques in project production basins 25 60 Page 5 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Revised PDO Indicators 19\. During the January 2013 Level II restructuring, the âRice production increase in targeted areas: (i) Sabalibougou, MâBewani and PIV, and (ii) Bas-fonds (Low-land)â outcome indicator was dropped\. Revised Components 20\. In the 2013 restructuring, the number of components were kept unchanged; however, changes were made to some subcomponents\. Component Changes C1 Implementation approach modified\. For SC1\.1 - Sub-project financing would account for 20 percent of the subcomponentâs costs instead of 100 percent as originally envisioned\. The 80 percent would be instead carried out through service delivery C3 Four SCs reduced to 2: â¢ SC1 (Public policy dialogue and coordination), and SC3 (Delivery of core public services) were merged into âPublic service delivery\. The new SC would support: (i) the elaboration and the implementation of the Agriculture development Strategy excluding the development of policy options or institutional reforms within key Ministries and public entities (e\.g\. ON modernization, cotton reforms) and the implementation of the CSIF as previously envisaged; (ii) restore the regular production of reliable statistical data; (iii) assess agricultural sector performance, based in particular on annual rural households surveys and production and yield assessment; (iv) elaboration of tools and instruments for policy decision (Agriculture sector public expenditure review)\. â¢ SC2 and SC4 were merged into Project coordination, monitoring and evaluation\. The new SC would: monitor the evaluation of natural resources and the impact of agricultural investments on the environment; and (ii) project implementation, coordination of stakeholders, monitoring and evaluation Other Changes 21\. The project closing date was extended in the 2016 and 2018 restructurings for a total of 34 months\. Additionally, the EU Trust Fund was extended in the 2011 restructuring to April 30, 2012 from the initial closing date (December 31, 2011)\. 22\. In 2013, the institutional arrangements were formally restructured with project coordination entrusted to Statistics and Planning Unit (CPS-Cellule de Planification et Statistiques)\. At appraisal, the idea was to phase out project coordination units in the sector while piloting a sector wide approach\. However, the Government unilaterally created a PCU within CPS to accelerate project implementation\. This created confusion within the various implementing agencies, thus negatively affecting implementation\. The restructuring formalized this arrangement with a TECC (Technical Execution Coordination Committee) to monitor project implementation, ensure coordination of field interventions and build synergies among project stakeholders\. 23\. The scope of Component 1 and Component 3 was reduced in the 2013 restructuring and reallocated to Component2 to compensate for the loss of the EU Trust Fund, and thus finance notably Sabalibougou 1 (1200ha), and the Kalankorola and Tango drains, and the feasibility studies for the irrigation financing mechanism\. In the Page 6 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) 2016 restructuring, the number of the target value chains was reduced from 15 to 3 (rice, cowpea, and milk) thereby reducing the production systems from 22 to 10\. 24\. Changes were also made to the intermediate indicators as well as their targets\. It is important to note that although the changes were made in the 2013 restructuring, subsequent restructurings referred to the original intermediate indicators, although the targets went through several changes\. The project coordination unit updated their results framework to reflect the 2013 changes but did not reflect the subsequent changes in intermediate indicators nor the respective targets\. Therefore, there were notable differences in the indicators and the targets between the project versus the Bank results framework\. It was not clear whether it was a failure of the Bank team to supervise the completion of the restructuring or a failure of the PCU to implement the Bank recommendations\. Table 3: Changes to Intermediate Indicators Component Revisions C1 Intermediate outcome related to âthe percentage of POâs subprojects that are co -financed by a bank or MFIâ was dropped since its achievement depended more on the involvement and the willingness of these institutions than on PAPAM C2 Intermediate outcomes relative to the âTarg eted areas with improved drainage (number of hectares drained)â was dropped due to difficulty to measure these indicators during the project time frame\. It was replaced with âthe number of water usersâ associations exploiting the tertiary canal system (OERT) in the office du Niger newly developed areas using the âTraditional Office du Niger Approachâ C3 Two intermediate outcomes indicators with respect to âthe reduction in the number of stand - alone projects in the agricultural and livestock (MoA and MEP)â and the âincrease of Government spending on SLWMâ were beyond the project scope and therefore discontinued\. They were replaced with the âadoption of the Agricultural Development Strategy âand the âadoption Land Tenure Strategyâ by the Government Page 7 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Table 4: Bank vs\. Project Coordination Unit Intermediate Indicators Intermediate Indicators Observations Dairy producers that have The project did not actively track this indicator, instead it tracked the number of adopted improved husbandry inseminated cows\. Assuming that the performance of the number of inseminated cowsâ practice (Percentage, Custom) indicator is indicative of the adoption rate of dairy technologies, it was assessed as not having been achieved PO's sub-projects that are co- This indicator was discontinued in the 2013 restructuring, but it was not removed from financed by a bank or MFI the operations portal and so continued to appear in the results framework of credit (Percentage, Custom) subsequent restructurings\. The project dropped it from its results framework and thus it was not actively tracked\. The project instead monitored the number of subprojects financed\. 900 out of 850 targeted subprojects were financed Targeted areas with improved This indicator was dropped in the 2013 restructuring but appeared in subsequent drainage (Hectare (Ha), restructurings\. The project dropped it from its results framework and thus it was not Custom) tracked\. The project instead monitored the number of functional water usersâ associations (OERT) in the old and developed plots of land\. 63 percent were functional versus a target of 70 percent\. The target was not achieved due to insecurity in the developed irrigated perimeters\. Regular production of reliable In addition to these two indicators, the project monitored the adoption by the statistical data and sector Government of agricultural policies, namely: Agricultural Development Policy (Politique analysis - rural households de developpement Agricole) and the Land Tenure Policy (Politique sur le foncier rural); monitored (Number, Custom) the number of household surveys conducted; and, the number of veterinary doctors Regular production of reliable trained\. Although, these indicators achieved 100 percent of their targets, they were not statistical data and sector formally part of the restructuring, informally added by the PCU as a result of a analysis - Rice yield and recommendation in the mid-term review\. production assessment (Yes/No, Custom) Rationale for Changes and Their Implication on the Original Theory of Change 25\. The following were the main drivers of the various project restructurings: a\. Loss of EU Financing\. The EU trust fund original closing date was December 2011, 18 months after the project was approved\. The trust fund was supposed to finance irrigation infrastructure development\. Project implementation was significantly behind schedule as a result of: (i) a 7-month delay to declare effectiveness; and, (ii) a 10-month delay to agree on using the Bankâs financial management system as the national systems were not considered to be sufficiently robust\. The closing date of the EU trust fund was extended to April 2012\. At the time of its closure, only 10\.8 percent of the trust fund has been disbursed due to procurement delays and a 6-month Bank suspension following the coup dâÃ©tat in March 2012\. Thus, the reallocation of resources and downsizing the project scope in the 2016 and 2018 restructurings to compensate for the financing loss and ensure that irrigation activities were funded\. b\. Procurement delays and price escalation of labor and materials severely hampered irrigation scheme development\. Thus, the extension of the closing date in 2016 and 2018 and the further narrowing of the scope of component 2\. As an example, only 11 km out of the planned 33km of the Page 8 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Kalankorola drain was constructed while the Tango drain would be developed by the EU under the eleventh European Development Fundâs support to Maliâs irrigation program\. c\. The initial scope of the project at its conception was broad and ambitious with complex implementing arrangements, capacity challenges and an unstable political and economic environment that ensued\. Conflict in some of the target areas, particularly with the development of the large-scale irrigation perimeters which were a key output for the Government further complicated the implementation 26\. Inconsistency and difficulty to measure some indicators\. The âproductionâ key outcome indicators were discontinued, while the âyieldâ key outcome indicators were kept to better measure productivity as stated in the PDO\. Component 1 intermediate indicator measuring âthe number of producer organizations co-financed by creditâ was discontinued as it depended on the willingness of the financial institutions to lend rather than the project\. Component 3 intermediate indicators on âReduction in the number of standalone projects in the agricultural and livestock sector (MoA and MoL)âand âIncrease of Government spending on SLWMâ were noted to be beyond the project scope and discontinued\. Several outcome and intermediate indicator targets were revised in the 2018 restructuring to be in line with the reduced project scope\. Please see annex 1\. 27\. None of these changes had a significant effect on the original theory of change II\. OUTCOME A\. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating The relevance of the PDO is rated High\. 28\. The Project Development Objective PDO was: âto increase the productivity of smallholder agricultural and agribusinesses producers in the Targeted Production Systems in Selected Areas of the Recipientâs territoryâ\. The project originally targeted smallholders in 15 value chains and 22 production systems in the Office du Niger zone; along the Niger River between SÃ©gou and Gao; the administrative sub-regions (âcerclesâ) of Douentza, Bankass, Koro, Bla, Macina, Tominian, Kidal, DirÃ©, Kayes, Dilly, DiÃ©ma, Nara, Kati, DioÃ¯la, Kita and BafoulabÃ©; and, the peri- urban areas of Bamako, Kayes, SÃ©gou, Mopti, Sikasso and Koulikoro\. The projectâs focus was increasing productivity of smallholders and primarily address low irrigation levels, low input use, the poor adoption of technology and have a better coordination of the sector\. 29\. The PDO was aligned to the Country Assistance Strategy (CAS) at appraisal\. Strategic Objective I of the CAS was to promote rapid and broad-based growth\. The first and third interventions under subobjective C (Undertake targeted sector interventions to accelerate growth) were to âIncrease agricultural productivity, improve competitiveness of selected supply chains, increase irrigation capacities, and improve availability of agricultural creditâ; and, to âIncrease factor productivity through sustainable natural resource and environmental managementâ which are directly aligned to PAPAMâs PDO\. PAPAM was in the pipeline a t the time of the preparation of the CAS and is indicated as an operation that would contribute to the achievement of these sub- objectives\. Page 9 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) 30\. The PDO was also consistent with the CPF FY16-19 objectives at completion which among others aims boost productivity in Maliâs agriculture sector under Objective 2\.1 (Improve Productive Capacity and Market Integration of Farmers and Pastoralists) and Objective 2\.2 (Agriculture value diversification) of Area of Focus 2 (Create Economic Opportunities)\. PAPAM is noted in the CPF as a key operation that would foster economic opportunities and increase productivity by increasing the productive/arable land area through financing irrigation development and strengthen producer organizations in order to facilitate access to seeds, fertilizers and extension services\. 31\. The PDO was ambitious regarding the targeted production systems and the selected areas\. A security crisis and a significant loss of financing early on compounded project implementation problems\. However, the operation stayed relevant by ensuring that targeted production systems and value chains were reduced to a manageable level with adequate funding to finance irrigation development as well as provide inputs and extension services in some of the affected areas such as Office du Niger zones\. At the time of the development of the MâBewani irrigation perimeter, the zone was so insecure that the project staff relied on the Bankâs Geo Enabling Monitoring System (GEMS) to monitor progress\. Although the irrigation development was completed nearly at the end of the project, farmers planted immediately following the completion of the works\. 32\. The components did address most of the constraints to productivity improvement â technology dissemination, ensuring PO capacity building, strengthening the capacity of the service providers to ensure that there is a reasonably functioning pluralistic system of service provision to inform productivity decisions, matching grants to support technology access, inputs and managerial training, assured supply of water through irrigation investments but also ensuring improved productivity per drop of water, and tailoring research to become more farmer responsive\. The only issue that the project probably did not address comprehensively relates to credit\. The constraint was identified correctly, and the proposed actions were expected to facilitate access to credit (75% of the sub-projects were expected to be bank co-financed)\. Banking sector staff capacity and availability of appropriate financial instruments were considered the operating constraints\. The credit related indicator was dropped during the 2013 restructuring and so there is little data on what the real issue was relating to credit access\. B\. ACHIEVEMENT OF PDOs (EFFICACY) Assessment of Achievement of Each Objective/Outcome Rating: Modest\. 33\. The objective/outcome of the project is to increase the productivity of smallholder agricultural and agribusinesses producers in targeted production systems in the project area\. Below is the assessment of the outcome of the objective: 34\. Outcome #1: Increase productivity\. Overall, at completion, the outcome indicators show significant improvements in productivity for the target value chains, both against the original and revised indicator targets as well as the baseline\. Five out of eight PDO indicators were fully achieved (or exceeded) while the rest were substantially achieved\. Although there were some weaknesses with the M&E system, the robust and regular surveys such as for the rice and cowpea yields as well as the PCU field supervision missions (milk production and SLWM), provide an adequate level of confidence that the outcome results were achieved as reported\. The target number of 247,720 (82\.6%) direct beneficiaries was substantially achieved\. Demonstration plots to disseminate new technology (56%) and sub-project financing (35%) had the highest proportion of beneficiaries\. Page 10 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Table 5: PDO Indicator Achievements Formally Actual Original PDO Indicators Revised Achieved at Status Target Target Completion 1 Increase of milk production per milking cow (l/d) 6 2\.71 5\.83 Achieved 2 Cowpea yield increase in project areas (Kg/hectare) 700 700 700 Achieved Yield increase of Rice production in targeted areas - Bas- Substantially 3 fonds (Low-Land) 2 2\.7 2\.5 achieved Rice yield increase on Large scale irrigation perimeters 4 supported by the Project at the Office of Niger 6\.00 6\.35 7\.19 Achieved Rice yield increase on small scale irrigation perimeters 5 supported by the Project at the village level 6\.30 6\.35 6\.66 Achieved Substantially 6 Direct project beneficiaries 300,000 300,000 247,720 achieved Substantially 7 Female beneficiaries 120,000 120,000 119,457 achieved 8 Producers that have adopted SLWM practices 60 62 Achieved Increase in areas under SLWM techniques in project 9 production basins 25 30 Achieved 35\. The dissemination of technologies as well as financing for subprojects was key to yield increases realized for the targeted value chains\. Dairy production was supported by input distribution of animal feeds, forage seeds, artificial insemination and training\. Although, the quality of the data is not perfect as it was not regularly collected by Direction Nationale des Productions et des Industries Animales (DNPIA), a survey with a sample size of 695 cows was conducted in March 2019\. On average, milk production per cow per day increased by surpassed its target by 200%\. However, the results when analyzed by cercle (district) had wide variations â for example, 14 liters per cow per day in Sikasso versus 2 liters per cow per day in Yorosso\. Similarly, the success rates for artificial insemination varied widely - 57 percent and 0 percent in Sikasso and Yorosso respectively\. Overall, Sikasso and Koutiala, major milk production basins performed better than their compatriots\. The project distributed forage seeds to milk producers, established dissemination plots, and provide artificial insemination services\. The intermediate indicator shows a low adoption rate of improved husbandry practices (based on the performance of the PCUâs artificial insemination indicator)\. Since this indicator was not monitored by the project as expected, the increase in milk production is not directly attributable to the project\. 36\. Cowpea and rice yields increases also was supported by input distribution, linkages to research\. For example, high yielding and drought tolerant cowpea seeds were distributed, in some cases they served a dual purpose â cowpea production for human consumption and forage for animals\. The producer organizations also received training in leadership and management, were provided with extension services, and the capacity of their platforms strengthened\. A lot of the activities were centered around the rice and cowpea value chains and thus they had most beneficiaries\. The achievements are evidenced by the annual (campagne) surveys carried out by Direction National de lâAgriculture (DNA) based on a robust methodology and a sample size of about 1700 farmers\. The PDO outcomes surpassed their targets expect for yields in the Bas-fonds which were substantially achieved\. Intermediate outcomes were achieved except for the small village perimeters irrigated area developed\. Despite the low adoption rate of SRI, the other project contributions were sufficient for these outcomes to be considered achieved\. 37\. Adoption of SLWM activities were largely supported by training, farmer field schools, and communal activities, for example moisture conservation, live fences, water saving technologies, etc\. Although, the project reported the SLWM indicators as having been achieved, the M&E field missions show the number of producers Page 11 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) that adopted the SLWM practices, they do not indicate the proportion of producers or areas (nor the total number of producers in the areas visited) that adopted Therefore, it was not possible to attribute this achievement directly to the project\. Table 6: Intermediate Indicators Achievements Formally Actual Original Intermediate Indicators Revised Achieved at Status Target Target Completion Share of producers that have adopted new cowpea varieties in 1 the target production basins (Percentage, Custom) 50 50 72 Achieved PO's subprojects that have achieved their objectives as stated Substantially 2 in the request (Percentage, Custom) 80 80 75 Achieved Dairy producers that have adopted improved husbandry 3 practice (Percentage, Custom) 50 50 22 Not Achieved PO's sub-projects that are cofinanced by a bank or MFI credit 4 (Percentage, Custom)3 Producers that have adopted the system of rice intensification Substantially 5 (ON + PIV) (Percentage, Custom) 30 30 26 Achieved Total irrigated area developed (Hectare (Ha), Custom) Substantially 6 72954 6400 6209 Achieved Office du Niger (Hectare (Ha), Custom Breakdown) 2700 2700 2700 Achieved Small Horticultural Perimeter (Petit Perimetre Maraichers) (Hectare (Ha), Custom Breakdown) 600 140 144 Achieved Low Land (Bas-fonds) development (Hectare (Ha), Custom Breakdown) 2500 2500 2802 Achieved Small Village Perimeter (Petit Perimetre Villageois-PIV) (Hectare (Ha), Custom Breakdown) 1500 1000 564 Not Achieved Producers benefiting from newly or improved irrigated land - Substantially 7 Individuals (Number, Custom) 77405 41806 3800 achieved Office du Niger (Number, Custom Breakdown) 540 540 725 Achieved PIV + Bas- fonds + PPM (Number, Custom Breakdown) 7200 3640 1740 Not Achieved Targeted areas with improved drainage (Hectare (Ha), 8 Custom)7 Regular production of reliable statistical data and sector Substantially 9 analysis - rural households monitored (Number, Custom) 1800 1800 1750 achieved Regular production of reliable statistical data and sector analysis - Rice yield and production assessment (Yes/No, 10 Custom) Yes Yes Yes Achieved 38\. Rice yields were significantly impacted by irrigation development\. Farmers realized yield increases from 3-4 tons per hectare to 6-7 tons per hectare\. The support of Office du Niger to farmers through extension and input distribution, in combination with APCAMâs implementation support with producer organization strengthening and subproject financing helped to achieve the yield increases realized\. 2,700 hectares were developed (2,200 hectares in Sabalibougou and 500 hectares in MâBewani), with 725 farms and 4305 beneficiaries\. These irrigation perimeters were expected to yield two rice crops per year, but a majority of the farmers are rotating rice with horticulture\. It is notable that with the majority of farmers producing only one rice 3 Not monitored by PCU 4 The total area was an addition of the respective irrigated areas under this indicator in the PAD 5 Ibid 6 The total area was an addition of the respective irrigated areas under this indicator in the Restructuring Paper 7 Not monitored by PCU Page 12 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) crop a year, the yield targets were surpassed\. Rice production is highly labor intensive, and an activity primarily carried out by women\. They do not have economic access nor decision making power over its production and marketing\. On the other hand, they are responsible for the labor, decision making and marketing of horticulture\. But it is also highly labor intensive, more so because it is grown during the dry season\. Therefore, the plots are not maximally planted, on average 25 percent of the land is used\. Therefore, the low adoption of SRI and the higher value output of horticulture was also not realized\. Although, based on beneficiaries interviewed, the horticulture contributes to household nutrition, as well as income for any extra produce sold\. Table 7: Beneficiary Numbers by Activity Activity Total Female Dissemination plots 138,675 69,134 Value chain platform trainings 66 0 2,380 0 Livestock input distribution and capacity building Rice and fish farming demonstration (rizipisciculture) 552 0 SRI 3,705 0 SLWM (agroforestry) 3,789 1,665 Subprojects 86,546 47,158 Large scale irrigation 4,304 500 Artificial insemination 1,687 OHADA Training 912 104 Service provider training 162 0 Income generating activities and rural microenterprises 1,770 Mixed cropping technology transfer 1922 896 SLWM (rice, cowpea and maize) 1250 Total 247,720 119,457 39\. 6618 subprojects were financed for various types of projects; predominantly cowpeas (26%), horticulture (17%), rice (12%) and livestock fattening (10%)\. 75 percent of sub-projects had achieved their objectives as per their request\. 8 Doesnât include 239 financed under IFAD financing Page 13 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Value Chain/Activity Total Proportion of total IDA IFAD Proportion of IDA subprojects financed (Number of (Number of subprojects financed Subprojects subprojects) (%) supported) Cowpea 252 28\.00% 174 78 26% Horticulture 232 25\.78% 111 121 17% Rice 118 13\.11% 78 40 12% Livestock fattening 65 7\.22% 65 10% Poultry 46 5\.11% 46 7% Milk 42 4\.67% 42 6% Dry cereals (sorghum, 41 4\.56% 41 6% millet, maize) Processing 33 3\.67% 33 5% Aquaculture 25 2\.78% 25 4% SLWM 22 2\.44% 22 3% Fruit 16 1\.78% 16 2% Storage 3 0\.33% 3 0% Mixed poultry- 2 0\.22% 2 0% aquaculture Beekeeping 1 0\.11% 1 0% Livestock trading 1 0\.11% 1 0% Sesame 1 0\.11% 1 0% Total 900 100\.00% 661 239 100% 40\. APCAM and the CRAs were supported to improve extension service delivery to farmers through existing and organized producer organizations\. 13 strategic and applied research programs under the Agricultural Research Agency (ComitÃ© National de la Recherche Agricole -CNRA) and the Institute of Rural Economic Research (Institut d'Economie Rurale -IER) were directly supported by the project in the following themes: forage crops, animal feeds, artificial insemination and SLWM\. , Farmers also received seeds such as drought resistant cowpea, forage and rice varieties that had been developed locally\. Justification of Overall Efficacy Rating 41\. Although only two of the PDO indicators were substantially achieved (with the rest having fully achieved or exceeded)\. Furthermore, all intermediate indicators have been substantially or fully achieved save one (#2)\. A few of the PDO indicators (#1, #6 and #7) and intermediate outcomes of indicators (#2 and #3) were not directly attribute their achievements to the project, therefore, overall efficacy rating is Modest\. Page 14 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) C\. EFFICIENCY Rating: Modest Assessment of Efficiency and Rating 42\. At appraisal, an indicative economic and financial analysis was prepared that modelled and estimated the benefits of the project activities as envisaged at design\. The ex-ante EFA focused on the different production practices in the projectâs regions and the differences between smallholders and medium holders as representative for the target population\. In particular, the EFA looked at rice, cowpea, milk production and poultry as indicative value chains\. The analysis did not model the activities using the standard methodology of comparing with-project situation (WP) with the without-project situation (WOP), and as a result it did not model incremental benefits â only the production costs and margins of the selected crop and livestock activities\. In addition, the appraisal EFA used a systemic aggregation of benefits, instead of aggregating the targeted number of beneficiaries\. In other words, the analysis assumed that the entire agricultural population in the target regions would benefit from the technology transfer and adoption, once again leading to over-estimates of efficiency\. Overall, these questionable methodological choices led to very large economic results, as described below, and this approach was not considered for the ICR analysis\. 43\. As a result, the appraisal EFA results indicated a very high economic rate of return of 34 percent and a large net present value (NPV) of the additional benefits of US$184\.2 million, based on a 6-year analysis period and assuming a social discount rate of 12 percent\. It is worth noting that these results seem to be based on a project budget of US$76\.2 million (IDA+GEF)\. No sensitivity analysis was conducted to test some of the scenarios linked with the risk matrix at appraisal\. It is worth stressing the ex-ante EFA has been significantly over-optimistic in terms of its results, given its methodology\. 44\. No other efficiency analyses were conducted throughout the implementation, despite reasons to reassess the projectâs economic justification\. In particular, the restructuring of the project, as a result of the loss of EU financing, and the subsequent re-orientation of activities, should have called for a review of the projectâs economic soundness\. Similarly, the delays in implementation and the extensions granted to the project should have been complemented by discussions on the impact on efficiency\. 45\. At completion, the efficiency analysis used a mix of methods: an economic and financial analysis (EFA) built on a cost-benefit approach to estimate the net additional benefits attributable to the projectâs main outcomes9 and a cost analysis to assess the efficient use of resources\. As presented in detail in Annex 4, the EFA analyzed the impact of technology transfer and service provision to agricultural producers by modelling and assessing some of the representative sub-projects (cowpea, rice, horticulture, livestock fattening, bio-digester) and demonstrated their profitability\. The EFA also analyzed in detail the financial returns to the large-scale irrigation schemes financed by the project, demonstrating their economic justification\. 9While the overall PAPAM project has been co-financed by IFAD, EU and UNDP-GEF, the present analysis has focused only on the efficiency of the activities financed by IDA and GEF resources, for the following reasons: 1) the overall ICRR looks only the IDA and GEF financed activities; 2) the IDA and GEF financed activities can be separated from the other activities; 3) IFAD has already completed its completion report and its own EFA; and 4) the appraisal analysis has been conducted only accounting for the IDA and GEF resources\. Page 15 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Table 8: Financial results for selected sub-project activities IDA-financed GEF-financed Sub-projects Sub-projects* Cowpea Mixed horticulture IVB Rice Livestock fattening Bio-digester (1 ha) (1 ha) (1 ha) (6 m3) Incremental net income 75,200 761,193 32,863 956,039 918,695 (per cycle, FCFA) Incremental net income 130 1,312 57 1,648 1,584 (per cycle, US$) NPV 388,629 4,158,112 165,345 2,964,324 2,394,034 (@10%, 10-year, FCFA) NPV 670 7,169 285 5,111 4,128 (@10%, 10-year, USD) * GEF-financed rice and horticulture sub-projects have been modelled with the same parameters as the ones for IDA\. Table 9: Financial results for large scale irrigation models Large-scale Irrigation Models Typical household Irrigated Rice Mixed (3 ha rice in main season, 0\.3 Sabalibougou M'BÃ©wani horticulture ha rice and 0\.25 ha (1 ha) (1 ha) (1 ha) horticulture in off-season) Incremental net income 650,385 560,132 761,193 2,187,651 (per cycle, FCFA) Incremental net income 1,121 966 1,312 3,772 (per cycle, US$) NPV 3,404,348 3,389,263 8,785,831 (@10%, 10-year, FCFA) NPV 5,870 5,844 15,148 (@10%, 10-year, USD) 46\. As recommended by the ICRR guidelines, the completion efficiency analysis went beyond the economic and financial analysis and provided some indications on the use of project resources\. The available data provided by the PCU is not sufficiently detailed to provide an in-depth analysis of project expenditure, in particular the sub-projects financed under the first component and the various cross-cutting activities under the third component\. Yet, the available information provides some relevant insights: (i) while the restructuring re- allocated significant resources from the first and third component to the large-scale irrigation activities in the second component, at the end only 80 percent of the re-allocated resources have been spent; (ii) significant over- spending (221%) when compared to budgets has been recorded for capacity building for POs and service providers, while very little has been spent technology generation and research/production linkages and not all resources were used for the sub-project sub-component 1\.1; (iii) under the third component, the project also over-spent significantly (141%) when compared with the restructuring allocation, mostly because of project coordination and M&E (due to unclear and dual structures early on and despite the poor performance of the M&E system); and (iv) the public service delivery related expenditure was only utilized at 83 percent\. Page 16 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) 47\. The project implementation also experienced significant delays in disbursement, when compared with the appraisal estimates\. With the additional three-year extension, the project only achieved a final 7810 percent disbursement rate\. At its original end-point in 2016, only 75 percent of the IDA resources have been utilized\. In terms of pace of implementation, the rate of disbursement slowed down after 2015, resulting in a significant 10 percent of IDA expenditure being disbursed in the last 6 months of the project in 2019\. 48\. Overall, the economic results are positive, indicating the projectâs economic soundness based on the available information\. The ICRR efficiency analysis demonstrates an economic internal rate of return (EIRR) of 11\.7 percent compared to 34 percent at appraisal and an NPV of US$13\.9 million compared to US$184\.2 million\. While it is likely that the appraisal EFA has over-estimated the projectâs potential returns, the completion economic results are still below expectations in the operationâs sector\. Coupled with the shortcomings of budget utilization, the overall project efficiency is rated as modest\. D\. JUSTIFICATION OF OVERALL OUTCOME RATING Rating: Moderately Unsatisfactory 49\. A single rating has been applied because the four restructurings resulted in the clarification of outcome indicators and the dropping of vague indicators (production indicators), the reallocation of resources, and the scope was narrowed by reducing the number of value chains and production basins, and dropping a few activities, such as the Tango drain, and the 4 subcomponents in Component 3 were reorganized into two\. Although the mixed level of robustness of the evidence of various outcome indicators weakens the attribution of their achievements to the project\. 50\. The overall relevance of the PDOs is high both at appraisal and completion, the overall efficacy rating is modest, and with a modest efficiency rating the ICR Guidance, recommends an overall outcome rating of Moderately Unsatisfactory (MU)\. E\. OTHER OUTCOMES AND IMPACTS 51\. One of the long-term impacts of project interventions is to increase household incomes\. The PAPAM Impact Evaluation indicated that the rice and forage producers had 72 percent and 33 percent higher incomes than the control group\. Primarily, the higher incomes were a result of higher rice production while the forage producers had longer lactation period than the control group\. III\. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A\. KEY FACTORS DURING PREPARATION 52\. The scope of the project was ambitious and broad with 15 value chains and 22 production systems targeted\. The value chains ranged from rainfed cereals, livestock, palm, to wheat\. Additionally, the timeline for the use of the EU trust fund was ambitious with the expectation that the irrigation development could be completed within 18 months\. Although, Office du Niger and APCAM had had previous experience implementing Bank projects, such as the PNIR (National Rural Infrastructure Project) and PASAOP (Agriculture Services and 10 It is a combination of the IDA (96%), EU TF (11%), IDA GEF TF (64%), and the UNDP GEF TF (72%)\. Data source: Client Connection Page 17 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Producer Organizations Program) respectively, their capacity to deliver within the tight deadline was over estimated\. 53\. The use of country systems was agreed during the preparation and it was World Bank policy to build the capacity of the client ministries responsible for implementation\. Subject to the Financing Agreement, financing mechanisms were expected to use the national procedures based on the Paris Declaration and would not establish a standalone PCU\. Project implementation was expected to rely on public-private partnerships (PPPs) for activity planning, decision making, funding allocation, and monitoring and evaluation\. Project supervision and strategic coordination was anticipated to be done by the National Steering Committee in the Ministry of Agriculture (PNISA-NSC), a body that involved a multi-sectoral institution that included the Ministry of Finance\. Multiple actors leading the various components e\.g\. APCAM was to lead Component 1, while ON was to lead sub-component 2\.2, and the MoA was to lead subcomponent 2\.1 and Component 3\. Therefore, multiple financial management information systems (APCAM, ON, MoA-CPS), with additional financial officers (2), accountants (2) and procurement specialists (3) recruited\. CPS was to have overall responsibility for M&E, and each CRA would avail someone to collect, compile, communicate and disseminate M&E results to the central level\. However, the capacity of all the implementing agencies proved to be weak to varying degrees\. It took several months of negotiation following the approval and effectiveness of the project for the Government to agree to use Bank systems which delayed the kick-off of project activities\. 54\. There was an expectation that advisory services would be moving towards a demand-driven approach with an increase in private players and a more decentralized approach for public services which did not happen as anticipated\. The project relied on government agencies such as DNA and DNPIA to provide advisory services\. However, they could not provide dedicated support to the project beneficiaries as anticipated due to other official duties within their remit\. B\. KEY FACTORS DURING IMPLEMENTATION 55\. A coup dâÃ©tat in March 2012, followed by war in Northern Mali and a conflict that spread to Central Mali hampered the implementation of the project\. Activities in some of the target areas such as Douentza and Kidal could not be implemented\. It also had an impact on the follow-up and M&E of activities in areas that had previously been peaceful that were later affected by conflict and violence during the life of the project\. For example, during the development of the MâBewani irrigation perimeter, the project team could not visit the area, and so relied on reports in GEMS submitted by the Engineer to follow-up and supervise the activity\. 56\. The loss of EU financing had a significant impact on the project\. Some activities were curtailed to allow for the reallocation of resources to cover the gap\. Furthermore, price escalation of materials and labor meant that key activities such as the construction of the 20 km Tango drain have to be dropped\. Additionally, the Borrower did not contribute counterpart funding due to financial constraints\. Furthermore, although UNDP GEF was supposed to contribute directly to the project activities, during implementation the financing and activities were managed by the Ministry of Environment under UNDPâs supervision, and were not coordinated by the PCU\. No information was available on actual costs or activities used for this financing\. 57\. Procurement delays caused significant delays that led to the loss of the EU financing and the extension of the project closing date on two different occasions\. It took over two years for CPS/SDR procurement staff to be hired\. To illustrate, up until April 2018, the recruitment of the firm to construct Karankorola drain was yet to be completed and the infrastructure was only completed as the project was closing and the immediate impact of the infrastructure could not be measured during the life of the project despite that it lasted 9 years\. Page 18 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) 58\. Staff recruitment delays and later their incompetence that led to their firing and a new recruitment process hampered project implementation\. Coupled with the appointment of multiple (7) coordinators over the life of the project meant that the continuity of project activities was affected\. IV\. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME A\. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 59\. The quality of the M&E system at design was generally good\. The results framework was well aligned with the projectâs theory of change\. At PDO level, the projectâs focus on increased agricultural productivity was to be measured through easily implementable indicators on yield (rice in different production system, cowpea), global production (only rice) and milk production per cow, complemented by the standard indicators on gender- disaggregated direct and indirect beneficiaries\. A minor shortcoming was the omission of any productivity indicators for the agribusiness segment of project beneficiaries, which is part of the PDO, but this limitation is understandable given the demand-driven approach and the focus on the most important three commodities (rice, cowpea and milk)\. At intermediate outcome level, the M&E system as initially designed had a long range of implementable indicators, with a minor gap between the ToC and the results framework at the level of the Component 3\. This could be explained by the complex and qualitative nature of the sector processes targeted by the project (programmatic approach, adoption of SLWM as a government approach, development of sectoral strategies, policies and legislation, sectoral monitoring and coordination, etc\.)\. Overall, the core results framework was well populated with baseline information and targets\. For a large number of indicators, the baseline information was provided by the PASAOP project for the year 2009\. Thus, there was a minor gap in timing at design and the slow start of the project further increased the time lag for certain baseline indicators\. Despite this situation, the PCU decided against having a baseline study to update the results framework\. 60\. It is worth noting the initial core results framework had a high number of indicators (10 at PDO+GEO level and 11 intermediate results indicators, and some with further disaggregation by gender, production system, etc\.)\. Adding to that, the PAD (p\.45) further introduced other monitoring indicators (discussed and agreed on to be included in the monitoring and evaluation manual to meet the specificity of the other donor partners of the Project, especially IFAD and GEF)\. The list included over 40 other indicators, bringing the total to over 60 â a rather impossible task for the M&E system\. 61\. At design, the overall M&E responsibility was given to the CPS of the MoA, as part of its sector supervision and evaluation mandate\. CPS was expected to have two national M&E staff and to collaborate at regional level with one staff in the Agricultural Regional Division and one staff in each Regional Agricultural Chamber, both dedicated to data collection, compilation and communication to the central level\. Yet, no financial and non- financial resource provision was made at design (as reflected in the Cost Tables/project budget and in the discussions with the PCU), which made it difficult from the start to have the necessary engagement of the regional colleagues who were supposed to serve as the primary entry point for data collection\. Furthermore, the yearly data collection for certain indicator groups was to be delegated to national partners, such as yield measurements to the Mali Rural Economics Research Institute (IER â Institut dâÃconomie Rurale), data collection on urban markets to the Agricultural Market Observatory (OMA - Observatoire des MarchÃ©s Agricoles), and all environment and SLWM related M&E activities and indicators to the counterpart at the Ministry of Environment and Sanitation (MEA-CPS)\. It is worth stressing the good intentions to build sustainability by engaging as much as Page 19 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) possible national systems and institutions, yet the expectation for additional resources to execute these roles was misunderstood at design\. 62\. The restructurings simplified to a limited degree the core results framework, by reducing the number of indicators and replacing some intermediate results indicators with new, better fitted ones, given the restructured activities\. The alignment between project logic and results framework remained satisfactory\. Despite the proactive efforts to restructure, the Governmentâs slow adoption of Bank systems, the coup dâÃ©tat, war and conflict in the North and Central Mali, and most importantly, the procurement delays meant that the project implementation was rated moderately unsatisfactory for most of the projectâs life M&E Implementation 63\. The quality of the M&E implementation was mixed\. Early on, the M&E suffered from the overall shortcomings of the project when it came to a delayed start, complications due to the institutional set-up and the use of the national procedures\. The set-up of the M&E system was only completed in 2013 and these gaps in data collection were noticeable as the information provided during the ICR stage mostly covered the period 2014- 2019\. Yet, the slow implementation in the early years also implied moderate achievements to be reported and it was thus easy to provide inputs into the results framework and ISRs\. 64\. The updating of the M&E manual in 2013-2014 (after the restructuring and with addition of the IFAD ASAP financing) helped with the systemâs streamlining, the reduction in number of indicators and especially with clarifying and re-working the roles and responsibilities of the different actors involved\. Data collection on project activities from that stage on was done almost regularly although not all PDO and intermediate indicator data was regularly collected\. It was completed by various surveys and monitoring field missions\. An integrated M&E system capable of giving a complete access to the different sets of information and a global picture of the project never emerged before the end of the project\. The focus of the M&E system seems to have been to track the required information to minimally populate the results framework\. Nonetheless, there is evidence that the data for some of the key indicators, particularly crop yields, is based on sound methodology, independent analysis and quality control\. Although efforts were made to avoid beneficiary double counting, it was not possible to accurately determine that it did not occur (particularly for the Component 2)\. 65\. Throughout implementation and even at completion, there was no consolidated database or system that could track the evolution of indicators\. Different categories of information resided with different responsible staff (the M&E officer, the component or sub-component leaders, etc\.)\. There is no indication that the M&E functions and processes are likely to be sustained after project closing, except that the M&E officer has been transferred to another project\. In addition, monitoring capabilities by the Office du Niger in their area of responsibility is likely to continue (as the capacity was in place prior to the project intervention)\. There is also no indication that novel or established ICT methods have employed in support of the M&E system (for example, a mapping using GPS coordinates of the sub-projects)\. 66\. It is worth noting that from 2016 significant improvements were noted in the data collection, analysis, dissemination and M&E reporting, including consistent and robust surveys by DNA, DNPIA, CPS and ON and Office Riz Mopti despite challenging security conditions and no resource allocations for M&E\. The implementing agencies tried to find other sources of financing to carry out the M&E activities\. Furthermore, the final impact evaluation has been very well done in a timely manner\. This final evaluation also highlighted the M&E implementation shortcomings M&E Utilization Page 20 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) 67\. The quality of M&E utilization has been modest\. On one hand, PAPAM suffered from the lack of a project management information system capable of providing real time information beyond some of the core indicators\. On the other hand, the difficulties encountered during implementation led to ad hoc decision making (responding to immediate issues, like suspension or cancellation of funding, instability and insecurity, conflicting institutional responsibilities, etc\.) instead of a strategic decision making (based on the emerging M&E data and other sources of information)\. Although the restructuring papers give some indication that some of the lessons learnt and proposed changes were derived from the project monitoring, it is not clear that the M&E system informed changes in the implementation\. In particular, the initial implementation arrangements altered the expected information flows\. Although efforts to clarify the information flows met with limited success\. It is important to note that, some of the commissioned studies (including the final impact evaluation) and knowledge management products have the potential to inform future interventions in the sector\. Justification of Overall Rating of Quality of M&E 68\. The overall assessment of the M&E system is rated Modest\. While the proposed M&E system at design was generally good, the implementation and utilization did not meet the expectations\. The data collection was uneven throughout implementation, with improvements towards the end, but bearing little influence on the projectâs implementation course and decision making\. B\. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 69\. Safeguards Compliance\. The project was classified as a Category A operation because of key investments in large scale irrigation\. Relevant safeguard policies on Environmental Assessment OP 4\.01, Natural Habitats (OP/BP 4\.04), Pest Management (OP 4\.09), Physical Cultural Resources OP 4\.11, Safety of Dams (OP/BP 4\.37), Involuntary Resettlement OP 4\.12 and Projects on International Waterways (OP/BP 7\.50) were triggered\. According to these policies requirements, an Environmental and Social Management Framework (ESMF), a pest management plan (PMP) and Resettlement Policy Framework (RPF) to guide screening of environmental and social risks during project implementation were prepared and completed during project appraisal\. The project also got no objection from Niger River Basin Authority of the type and size of the irrigation investments planned under the project\. Environment Assessment (EA) for the Sabalibougou and MâBÃ©wani irrigation works was prepared/updated as required\. Relevant environmental and social measures included in the ESMP was incorporated in the bidding documents and concluded in contractorâs contracts\. The Contractors prepared their own ESPM-C and provided environmental and social specialist to follow the civil work on field\. Also, the PCU didnât hire an Environmental and Social Specialist during the project implementation\. Safeguards issue had always been addressed through consultants hired by the Office du Niger\. 70\. A resettlement action plan was prepared reviewed and approved by the DNACPN and the Bank\. to displace four hamlets\. To assess the implementation of the RAP the project hired a consultant and organized in Jun 2019 a workshop with all the representatives of the affected persons (PAP) and other stakeholders\. The objective of the workshop was to make the balance between the content of the RAP and its implementation\. The participants announced the construction of some social infrastructures such as school, health center, vaccination park, cereal shop, Youth Club, etc\. planned and realized through the RAP\. However, it comes up that some of those infrastructures did not comply with national standards; example: a health center without fence, and infrastructures without a local management team set up for sustainability, etc\.; and that some of compensations planned in the RAP: 5 ha for displaced household (they received only 3 ha), loss of revenues, etc\. and activities such as literacy and training in the irrigation profession were not or correctly implemented\. The Grievance mechanism did not follow the Bank standards and no report of its implementation was available\. The Bank Page 21 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) recommended the Client to handle with all social and environmental incompliance on the project\. Up to date, no documentation related to the taken in account of these recommendation is shared with the Bank\. 71\. Procurement\. Many factors affected the efficient conduct of procurement during the implementation of PAPAM project\. The following risk areas and weaknesses were identified, mainly in procurement process and contract administration : (i) delays in contracts signature; (ii) delays in the execution of works; (iii) contracts not approved in the procurement plan, contracts not submitted to DGMP (review as required; (iv) absence of publication for procurement notice and contracts award; (v) insufficient bid submission deadline; (vi) technical expert absent in the evaluation committee; (vii) poor record keeping and documents not uploaded in STEP; (viii) absence of receipts and payments in the archive\. Due to the above-mentioned factors, the procurement risk evaluated as High during the preparation phase is rated Substantial and the procurement performance is Moderately Satisfactory\. 72\. Financial Management and Audits\. Financial management was Satisfactory, and no major shortcomings were noted\. During the project implementation, financial reporting was acceptable: reports submitted on time and acceptable\. Project audit reports did not highlight important shortcomings\. Audit reports and financial statement were produced on time\. Even though there are some underperformance in budget execution due to the delays in the implementation of the activities, Financial management was considered satisfactory throughout project life\. Project total disbursement reached 7811 percent at the closing date\. 73\. There is a discrepancy in the financing amounts in the datasheet and the actual projects costs\. SAP calculates the exchange rate based on the current date or the date the ICR is created while the loan system exchange rate is per transaction at the time of disbursement\. See table 11 for the actual costs Table 10: Estimated vs Actual Costs by Component Component Cost at Appraisal (US$ million) Cost at closing (US$ million) IDA EU GEF Total IDA EU GEF Total C1 27\.8 3\.8 31\.6 20\.3 3\.3 23\.5 C2 19\.3 19\.5 0\.0 38\.8 26\.9 26\.9 C3 15\.9 2\.4 18\.3 13\.8 1\.7 1\.2 16\.7 Total 63\.0 19\.5 6\.2 88\.7 61\.0 1\.7 4\.4 67\.1 C\. BANK PERFORMANCE Quality at Entry 74\. The preparation of the project was conducted over a period of over one year with the support of several consecutive missions from the World Bank and the FAO Investment Centre\. 75\. The project design was robust yet ambitious\. The PDO and its corresponding activities were mostly aligned and based on robust analytical work\. The assumptions made regarding the capacity of the APCAM and Office du Niger, and the Government were not sufficient/optimistic to manage the risks to implementation\. Notably, the expectation that that over 7000 hectares would be developed for irrigation within 18 months of project approval was very ambitious\. The risk to project implementation due to the complex structure and the use of country systems was noted however, sufficient steps to manage the risk were not taken\. The implementation arrangements relied on capacity assumptions for the various implementing agencies that proved to be excessive\. 11 Disbursement rate of IDA managed financing, that is, IDA, EU and GEF\. Data source: Client Connection as of February 10, 2020 Page 22 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) They were impractical and hampered the implementation of the project for several months\. Moreover, the project was overdesigned and unwieldy â it took 3 restructurings for implementation momentum to pick up, there were several target value chains and production basins, there were too many M&E indicators and no resource allocation was made to finance M&E activities\. The expectation that private sector would be able to provide advisory services and implementation would be through partnerships with the private sector, without the inclusion of private sector organizations such as the agro-input dealers, was also optimistic\. Several risks were identified but the mitigation measures were insufficient to manage the risks\. The rating for quality at entry is Moderately Unsatisfactory\. Quality of Supervision 76\. The review of project records and interview with key informants during the ICR mission, confirm that the Bank provided adequate supervision\. 77\. World Bank carried out 17 supervision missions throughout the life of the project\. The MTR was carried out on 21 January 201512 which led to a turnaround in the projectâs performance\. Restructuring in January 2016 following the MTR enabled the project to progress on irrigation development activities that had stalled\. 78\. The candor and quality of performance reporting was initially low, with positive ratings despite significant issues with financial management, procurement, recruitment, and implementation progress\. The latter half of the project had more candid reporting which was reflected in a more proactive approach taken by the PCU\. 79\. Both the Bank team and project team were flexible to restructure or revise indicators when it became evident that it would facilitate implementation\. Low quality of performance reporting affected the ability to resolve bottlenecks early on in the life of the project, although the PIU did not also always act on the recommendations made by the Task Team\. 80\. The task team failed to adequately address the M&E issues (funding, consistency of collection, analysis, dissemination and utilization) as well as demonstrated limited candor in assessing project ratings for a significant part of the project life\. Particularly, the restructuring changes to the results framework were not always adequately followed up with the project, as well as some changes that appear to have been implemented without formal restructuring\. Furthermore, there were 3 TTLs during the life of the project as well as 7 project coordinators; thus, the changes affecting the implementation of the project\. The quality at supervision is rated Moderately Satisfactory\. Justification of Overall Rating of Bank Performance 81\. Regular supervisory and implementation support missions, with Bank experts, the recommendations made as well as the efforts made to restructure the project indicate the steps taken to achieve the intended results\. However, the level of ambition in the scope of the project, the inadequate consideration of risks associated with the use of country systems for project implementation and the low quality of performance reporting in the initial half of the project led to an Overall rating of Bank Performance as Moderately Unsatisfactory based on the Outcome rating\. 12There is a discrepancy between the MTR date cited in the datasheet and the actual MTR date\. The system data was pulled from ISR Sequence #9, a date entered by the task team while the MTR aide memoire indicates that the MTR was held from January 21 to February 6, 2015\. Page 23 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) D\. RISK TO DEVELOPMENT OUTCOME 82\. The risk to development outcomes is expected to come from: (i) the SLWM practices are not sustained; (ii) weather risk on the cowpea and forage production; and, (iii) lack of maintenance to the developed irrigation infrastructure\. 83\. The adoption of SLWM practices although high overall, the beneficiaries noted the high cost of SLWM practices during interviews in the ICR mission\. For example, creating âdamsâ to reduce the speed to surface water and its absorption in the ground had a labor cost linked to collecting and constructing the âdamsâ\. 84\. Mali is prone to drought, floods and other weather risks\. It was noted that the 2018/19 season didnât perform as anticipated due to the drought that year\. Mali has mostly had good weather over the last 5 years, but chances are that a major drought risk event will occur in the next few years\. 85\. Despite the existence of water usersâ associations and the annual fees collected by Office du Niger, the maintenance of developed irrigation perimeters depends on the availability of Government funding\. Currently, 32 percent of agricultural sector budget is allocated to irrigation development (including maintenance)\. Should the Government priorities change leading to a reduction in allocation, maintenance and other activities would suffer\. A sustainable approach, for example creating an earmarked rolling fund for the water fees that would be managed by the water user associations with the support of Office du Niger (or vice versa) that would be used maintain the irrigation perimeter\. Similarly, inputs are currently distributed through the Office du Niger to the beneficiaries, and largely depend on the Governmentâs subsidy program\. The program allocation is 27 percent of the agriculture budget and is unsustainable\. Should Government priorities change, without a private input distribution system developed, the yield gains would rapidly be lost\. V\. LESSONS AND RECOMMENDATIONS 86\. The following lessons learned have emerged from the implementation of the project: 87\. It is important to design the M&E system prior to project appraisal\. Relegating the systemâs design to a projectâs implementation phase fails to capture early stage data, the system often becomes under -resourced, and eventually becomes unhelpful as a management tool\. For example, ensuring baseline information/studies are undertaken before project implementation begins\. 88\. More focused interventions are needed in complex implementation settings like Mali\. In particular, better targeting at design and strategic choice of value chains can accelerate the pace of implementation\. Demand-driven approaches are valuable tools, but their complexity can be tempered by limiting the menu of options (type of support, commodities included, etc\.) and by avoiding a geographical scattering of interventions\. A more specific recommendation is to introduce stakeholder consultations early on to determine together with sectoral experts a set of standardized sub-project or investment packages, which can be reviewed at mid-term if necessary\. While maintaining the demand-driven angle, this approach would reduce the time and effort necessary for developing and evaluating individual sub-project proposals\. 89\. Successful implementation through country systems requires a proper understanding of government systems, their weaknesses and capacity strengthening needs\. National processes, actors and timing should be critically analyzed and potential risks to implementation can be mitigated through the introduction of streamlined standard operating processes\. Capacity development for national actors needs to be included in the early stages of the project, even in the Project Preparation Facility (PPF)\. Page 24 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) 90\. Similarly, transitions from project to programmatic country approaches need to be supported only after assessing the feasibility and capacity to deliver and after securing the public stakeholdersâ buy-in\. PAPAMâs example highlighted that a programmatic or sector wide approach is demanding in terms of resources and commitment and that the newly created or assigned project management units need significant capacity development\. Furthermore, in case of emerging bottlenecks, the âhybridizationâ of the project management should be avoided, i\.e\. not creating a parallel project-style unit to compete with the sector-wide unit\. 91\. Well-designed synergies between implementation actors improve project delivery and build sustainability\. Despite significant delays in its implementation, beneficiaries in the MâBewani perimeter were able to plant a few weeks after it was completed\. The collaboration between the Office du Niger and APCAM ensured that training, input distribution, and the distribution of the plots occurred concurrently with the perimeter development\. PAPAM demonstrated that building synergies between g implementing agencies and establishing clear roles and responsibilities ensured the effective delivery of some of the core project activities, as well as potentially the sustainability of interventions\. 92\. Systemic risks (social, political and economic) need to be better integrated in design choices and adequate adaptation measures have to be developed\. PAPAMâs risk analysis at design failed short of identifying any macro risks, yet the emerging crisis in 2012 posed multiple challenges to implementation\. Innovations â in terms of activities and implementation arrangements â have to be gradually introduced in riskier contexts and some contingency plans should be developed for the main risks in order to avoid as much as possible disruptions to implementation and ad hoc decision-making\. 93\. More crowding in of private sector in service provision is needed in Mali\. Although this was in the initial design of the project, a more nuanced approach, perhaps with a pilot would have been more effective to demonstrate what works and what does not\. 94\. PAPAM is one of several projects in Mali that have used matching grants to finance microprojects\. Given their potential to âscatterâ the impact, it may be worthwhile to explore innovative matching grant programs or other financing mechanisms that would attract financial institutions to finance agricultural activities\. \. Page 25 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) ANNEX 1\. RESULTS FRAMEWORK AND KEY OUTPUTS A\. RESULTS INDICATORS A\.1 PDO Indicators Objective/Outcome: Component 1 - TECHNOLOGY TRANSFER AND SERVICE PROVISION TO AGRICULTURAL PRODUCERS Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Increase of milk production per Number 1\.50 6\.00 2\.71 5\.83 milking cow (l/d) 03-Jun-2010 30-Sep-2016 31-Jul-2019 31-May-2019 Comments (achievements against targets): This indicator is considered achieved\. Data source: DNPIA, 2019; APCAM, 2016; APCAM, 2013 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Page 26 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Cowpea yield increase in Number 250\.00 700\.00 700\.00 700\.00 project areas (Kg/hectare) 03-Jun-2010 30-Sep-2016 31-Jul-2019 31-May-2019 Comments (achievements against targets): This indicator is considered achieved\. Data source: DNA, 2016; CPS, 2019; APCAM, 2016; APCAM 2013 Objective/Outcome: Component 2 - IRRIGATION INFRASTRUCTURES Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Yield increase of Rice Hectare(Ha) 1\.50 2\.00 2\.70 2\.54 production in targeted areas - Bas-fonds (Low-Land) 03-Jun-2010 30-Sep-2016 31-Jul-2019 31-May-2019 Comments (achievements against targets): This indicator is considered to be substantially achieved\. Page 27 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Data source: DNA, 2018; DNA, 2017; DNA, 2016; CPS, 2019; CPS, 2017; APCAM, 2016; APCAM, 2013 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Rice yield increase on Large Hectare(Ha) 6\.00 6\.00 6\.70 7\.19 scale irrigation perimeters supported by the Project at the 03-Jun-2010 30-Sep-2016 31-Jul-2019 31-May-2019 Office of Niger - Comments (achievements against targets): This indicator is considered achieved although based on only the Sabalibougou perimeter\. A field visit to the M'Bewani perimeter in September 2019 indicated that the fields had been planted and farmers expected to achieve 6-7 T/ha yields that first season\. Data source: CPS, 2019; CPS, 2017; APCAM, 2016; ON, 2016; ON, 2016a Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Rice yield increase on small Hectare(Ha) 4\.00 6\.30 6\.35 6\.66 Page 28 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) scale irrigation perimeters 03-Jun-2010 30-Sep-2016 31-Jul-2019 31-May-2019 supported by the project at the village levet Comments (achievements against targets): Objective/Outcome: Component 3 - COMPREHENSIVE PROGRAMMATIC APPROACH, SECTOR MONITORING AND PROJECT COORDINATION Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Direct project beneficiaries Number 0\.00 300000\.00 300000\.00 247720\.00 03-Jun-2010 30-Sep-2016 31-Jul-2019 31-May-2019 Female beneficiaries Percentage 0\.00 120000\.00 120000\.00 119457\.00 19-Mar-2018 Comments (achievements against targets): This indicator is considered substantially achieved Data source: Various PAPAM M&E reports and surveys Page 29 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Objective/Outcome: GLOBAL ENVIRONMENT INDICATORS Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Producers that have adopted Percentage 5\.00 60\.00 60\.00 62\.00 SLWM practices 03-Jun-2010 30-Sep-2016 31-Jul-2019 31-May-2019 Comments (achievements against targets): This indicator is considered achieved\. Data source: APCAM, 2016; APCAM, 2013; DNA, 2018; DNA, 2019 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Increase in areas under SLWM Percentage 5\.00 25\.00 25\.00 30\.00 techniques in project production basins 03-Jun-2010 30-Sep-2016 31-Jul-2019 31-May-2019 Comments (achievements against targets): This indicator is considered achieved\. Page 30 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Data source: APCAM, 2016; APCAM, 2013; DNA, 2018; DNA, 2019 A\.2 Intermediate Results Indicators Component: TECHNOLOGY TRANSFER AND SERVICE PROVISION TO AGRICULTURAL PRODUCERS Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Share of producers that have Percentage 1\.00 50\.00 50\.00 72\.21 adopted new cowpea varieties in the target production basins 03-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 Comments (achievements against targets): This indicator is considered achieved\. Data source: DNA, 2016; CPS, 2019; CPS, 2017, APCAM, 2016; APCAM, 2013 Page 31 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PO's subprojects that have Percentage 0\.00 80\.00 80\.00 75\.00 achieved their objectives as stated in the request 03-Jun-2010 03-Jun-2010 14-Jun-2018 30-Nov-2018 Comments (achievements against targets): This indicator is considered to be substantially achieved\. Data source: APCAM, 2013; APCAM, 2016; DNPIA, 2019 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Dairy producers that have Percentage 5\.00 50\.00 50\.00 22\.00 adopted improved husbandry practice 03-Jun-2010 03-Jun-2010 14-Jun-2018 30-Nov-2018 Comments (achievements against targets): This indicator is considered not to have been achieved\. The project did not actively track this indicator, instead it tracked the number of inseminated cows\. Assuming that the performance of this indicator is indicative of the adoption rate of dairy technologies, it was considered not have been achieved\. Page 32 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Data source: DNPIA, 2019 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion PO's sub-projects that are Percentage 0\.00 75\.00 0\.00 cofinanced by a bank or MFI credit 03-Jun-2010 03-Jun-2010 30-Nov-2018 Comments (achievements against targets): This indicator was dropped in the 2013 restructuring but appeared in subsequent restructurings\. The project dropped it from its results framework and thus it was not actively tracked\. The project instead monitored the number of subprojects financed\. Component: IRRIGATION INFRASTRUCTURE Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Producers that have adopted Percentage 1\.00 30\.00 30\.00 26\.00 the system of rice intensification (ON + PIV) 03-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 Page 33 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Comments (achievements against targets): This indicator is considered to have been substantially achieved\. Data source: ON, 2018 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Total irrigated area developed Hectare(Ha) 0\.00 7295\.00 6400\.00 6209\.39 03-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 Office du Niger Hectare(Ha) 0\.00 2700\.00 2700\.00 2700\.00 03-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 Small Horticultural Perimeter Hectare(Ha) 0\.00 600\.00 140\.00 143\.99 (Petit Perimetre Maraichers) 03-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 Low Land (Bas-fonds) Hectare(Ha) 0\.00 2500\.00 2500\.00 2801\.90 development 03-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 Page 34 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Small Village Perimeter (Petit Hectare(Ha) 0\.00 1500\.00 1000\.00 563\.50 Perimetre Villageois-PIV) 03-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 Comments (achievements against targets): This indicator is considered to have been substantially achieved\. The small village perimeter irrigation development which only achieved 56\.3% of its target affected the overall achievement of the indicator\. Data source: APCAM, 2013; APCAM, 2016; DNA, 2018; DNA, 2017; CPS, 2019; CPS, 2017 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Producers benefiting from Number 0\.00 7740\.00 4180\.00 3800\.00 newly or improved irrigated land - Individuals 03-Jun-2010 19-Mar-2018 14-Jun-2018 19-Mar-2018 Office du Niger Number 0\.00 540\.00 540\.00 725\.00 03-Jun-2010 03-Jun-2010 14-Jun-2018 19-Mar-2018 PIV + Bas- fonds + PPM Number 0\.00 7200\.00 3640\.00 1740\.00 03-Jun-2010 03-Jun-2010 14-Jun-2018 19-Mar-2018 Page 35 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Comments (achievements against targets): There original target as stated in the PAD indicated 7,740 farm units, with 10 individuals expected to benefit per farm unit, and thus a target of 77,400 individuals\. It is not clear how it was changed to 7740 individuals in the results framework\. The assumption was 5 ha per farm unit which was reduced to 3 ha per farm unit during implementation\. The 2018 restructuring noted a revision to 5,400\. Based on the addition of the sub-indicators, a total of 4180 individuals was calculated\. The indicator is considered to have been substantially achieved\. Data source: PAPAM, 2018; PAPAM, 2018a; GoM, 2019; IFAD, 2018 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Targeted areas with improved Hectare(Ha) 0\.00 29\.50 6125\.00 0\.00 drainage 30-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 Comments (achievements against targets): This indicator was dropped during the 2013 restructuring\. An 11 km drain was constructed although 33 km at Karankola and 20 km at Tango were initially expected\. The drain was completed just before the project closed\. Page 36 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Component: COMPREHENSIVE PROGRAMMATIC APPROACH, SECTOR MONITORING AND PROJECT COORDINATION Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Regular production of reliable Number 610\.00 1800\.00 1800\.00 1750\.00 statistical data and sector analysis - rural households 03-Jun-2010 03-Jun-2010 14-Jun-2018 30-Nov-2018 monitored Comments (achievements against targets): This indicator is considered substantially achieved\. Data source: PAPAM, 2018; PAPAM, 2018a; GoM, 2019; IFAD, 2018 Unit of Formally Revised Actual Achieved at Indicator Name Baseline Original Target Measure Target Completion Regular production of reliable Yes/No N Y Y Y statistical data and sector analysis - Rice yield and 03-Jun-2010 03-Jun-2010 14-Jun-2018 31-May-2019 production assessment Page 37 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Comments (achievements against targets): This indicator is considered achieved\. Data source: PAPAM, 2018; PAPAM, 2018a; GoM, 2019; IFAD, 2018 Page 38 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) B\. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Increase productivity 1\. Increase of milk production per milking cow 2\.Cowpea yield increase in project areas 3\. Yield increase of Rice production in targeted areas â Bas-fonds (Low-Land) 4\. Rice yield increase on Large scale irrigation perimeters supported Outcome Indicators by the Project at the Office of Niger 5\. Rice yield increase on small scale irrigation perimeters supported by the project at the village level 6\. Direct project beneficiaries, of which female beneficiaries 7\. Producers that have adopted SLWM practices 8\. in areas under SLWM techniques in project production basins 1\.Share of producers that have adopted new cowpea varieties in the target production basins 2\.Producer organizationsâ subprojects that have achieved their objectives as sated in the request 3\. Dairy producers that have adopted improved husbandry practice 4\. Producer organizationsâ subprojects that are cofinanced by a bank or MFI credit 5\.Total irrigated area developed measured by: (i) Office du Niger; (ii) Intermediate Results Indicators Small horticultural perimeter (Petit PÃ©rimÃ¨tre Maraichers - PPM); (iii) Low-Land (bas-fonds) development; and, (iv) Small village perimeter (Petit PÃ©rimÃ¨tre Villageois â PIV) 6\. Producers that have adopted the system of rice intensification (Office du Niger and small-scale irrigation) 7\. Producers benefitting from the newly or improved irrigated land measured by: (i) Office du Niger; and (ii) PIV, Bas-fonds and PPM 8\. Targeted areas with improved drainage Page 39 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) 9\. Regular production of reliable statistical data and sector analysis measured rural households monitored 10\. Regular production of reliable statistical data and sector analysis measured by rice yield and production assessment Component 1: Technology Transfer and Service Provision to Agricultural Producers 1\. Number of producers that have adopted new cowpea varieties 2\. Number of producers that have adopted SRI 3\. Number of dairy producers that have adopted improved husbandry practices 4\. Number of producers that have adopted SLWM practices Component 2: Irrigation Infrastructure Key Outputs by Component 1\. Number of hectares of developed irrigated area (linked to the achievement of the Objective/Outcome 1) 2\. Number of producers that have benefitted from developed irrigated area Component 3: Comprehensive programmatic approach, sector monitoring and project coordination 1\. Number of policies/strategies developed 2\. Number of reliable statistical data and sectoral analyses produced 3\. Number of stakeholders whose capacity has been built Page 40 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) ANNEX 2\. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A\. TASK TEAM MEMBERS Name Role Preparation Supervision/ICR Amadou Ba Task Team Leader(s) Boubacar Diallo, Rahmoune Essalhi Procurement Specialist(s) Tahirou Kalam Financial Management Specialist Malick Fall Team Member Juvenal Nzambimana Team Member Emeran Serge M\. Menang Evouna Environmental Specialist Moussa Fode Sidibe Team Member Francois Onimus Team Member Alice Diarra Sangare Team Member Alexandre Hugo Laure Team Member Yoro Sidibe Team Member Mahamadou Ahmadou Maiga Social Specialist B\. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No\. of staff weeks US$ (including travel and consultant costs) Preparation FY07 3\.100 11,746\.85 FY08 7\.538 67,226\.45 FY09 35\.042 197,121\.44 Page 41 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) FY10 73\.682 346,455\.70 Total 119\.36 622,550\.44 Supervision/ICR FY11 45\.083 280,284\.58 FY12 37\.907 189,098\.85 FY13 17\.537 88,187\.63 FY14 17\.794 106,643\.87 FY15 8\.480 66,836\.85 FY16 17\.648 123,433\.33 FY17 15\.205 95,076\.43 FY18 18\.688 107,940\.24 FY19 21\.418 145,996\.67 FY20 10\.178 29,713\.91 Total 209\.94 1,233,212\.36 Page 42 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) ANNEX 3\. PROJECT COST BY COMPONENT13 Amount at Approval Actual at Project Percentage of Approval Components (US$M) Closing (US$M) (US$M) TECHNOLOGY TRANSFER AND SERVICE PROVISION TO 59\.10 30\.51 51\.62 AGRICULTURAL PRODUCERS IRRIGATION 67\.00 34\.11 50\.91 INFRASTRUCTURE COMPREHENSIVE PROGRAMMATIC APPROACH, 25\.00 19\.02 76\.08 SECTOR MONITORING AND PROJECT COORDINATION Total 151\.10 83\.64 55\.35 13 IDA, EU, GEF, IFAD, GoM and Beneficiaries as of February 6, 2020\. Data source: Client Connection and PCU Page 43 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) ANNEX 4\. EFFICIENCY ANALYSIS 1\. This annex presents the efficiency analysis at implementation completion of the Mali Fostering Agricultural Productivity Project (PAPAM)\. The present analysis uses a mix of methods: an economic and financial analysis (EFA) built on a cost-benefit approach to estimate the net additional benefits attributable to the projectâs main outcomes14 and a cost analysis to assess the efficient use of resources\. This annex is structured in five parts: the first section summarizes the results of EFA prepared at appraisal, followed by a second section that provides the financial analysis for the projectâs first component on technology transfer and service provision to agricultural producers (in particular when it comes to farming systems and supply chain modernization)\. The third section presents the methodology and results for the assessment of financial results of large-scale irrigation infrastructure developed by the project (the project secondâs component)\. The fourth section discusses the efficiency of project costs against the estimates at appraisal\. The final section describes the economic analysis, summarizes the overall results of the EFA and discusses the projectâs efficiency rating\. 2\. Needless to say, the projectâs scale and complexity had to be simplified in the present analysis, a decision also justified in terms of data availability\. In terms of information sources, the present analysis is developed based on the available M&E data as provided by the PMU and the final evaluation report\. As detailed in the M&E section of this ICRR, the projectâs M&E system had several limitations that impact the full accuracy of the analysis and required some strong assumptions throughout\. It was also assumed that the projectâs third component on comprehensive programmatic approach and sector monitoring does not generate its own benefits, but rather supports the impact generation of the other two technical components\. Furthermore, the present analysis also benefitted from the already completed EFA commissioned by IFAD for the project completion report for their co-financing\. As such, the present analysis covers only the World Bank financing of US$70 million and the Global Environment Facility (GEF) financing of US$6\.2 million\. 3\. Overall, the economic results are positive, indicating the projectâs economic soundness based on the available information\. The ICRR efficiency analysis demonstrates an economic internal rate of return (EIRR) of 11\.7 percent compared to 34 percent at appraisal and an NPV of US$13\.9 million compared to US$184\.2 million\. While it is likely that the appraisal EFA has over-estimated the projectâs potential returns, the completion economic results are still below expectations in the operationâs sector\. Coupled with the shortcomings of budget utilization, the overall project efficiency is rated as modest\. Efficiency analyses throughout the project cycle 4\. At appraisal, an indicative economic and financial analysis was prepared that modelled and estimated the benefits of the project activities as envisaged at design\. The ex-ante EFA focused on the different production practices in the projectâs regions and the differences between smallholders and medium holders as representative for the target population\. In particular, the EFA looked at rice, cowpea, milk production and poultry as indicative value chains\. The analysis did not model the activities using the 14 While the overall PAPAM project has been co-financed by IFAD, EU and UNDP-GEF, the present analysis has focused only on the efficiency of the activities financed by IDA and GEF resources, for the following reasons: 1) the overall ICRR looks only the IDA and GEF financed activities; 2) the IDA and GEF financed activities can be separated from the other activities; 3) IFAD has already completed its completion report and its own EFA; and 4) the appraisal analysis has been conducted only accounting for the IDA and GEF resources\. Page 44 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) standard methodology of comparing with-project situation (WP) with the without-project situation (WOP), and as a result it did not model incremental benefits â only the production costs and margins of the selected crop and livestock activities\. In addition, the appraisal EFA used a systemic aggregation of benefits, instead of aggregating the targeted number of beneficiaries\. In other words, the analysis assumed that the entire agricultural population in the target regions would benefit from the technology transfer and adoption, once again leading to over-estimates of efficiency\. Overall, these questionable methodological choices led to very large economic results, as described below, and this approach was not considered for the ICR analysis\. 5\. As a result, the appraisal EFA results indicated a very high economic rate of return of 34 percent and a large net present value (NPV) of the additional benefits of US$184\.2 million, based on a 6-year analysis period and assuming a social discount rate of 12 percent\. It is worth noting that these results seem to be based on a project budget of US$76\.2 million (IDA+GEF)15\. No sensitivity analysis was conducted to test some of the scenarios linked with the risk matrix at appraisal\. It is worth stressing the ex-ante EFA has been significantly over-optimistic in terms of its results, given its methodology 6\. No other efficiency analyses were conducted throughout the implementation, despite reasons to reassess the projectâs economic justification\. In particular, the restructuring of the project, as a result of the loss of EU financing, and the subsequent re-orientation of activities, should have called for a review of the projectâs economic soundness\. Similarly, the delays in implementation and the extensions granted to the project should have been complemented by discussions on the impact on efficiency\. Technology transfer and service provision to agricultural producers 7\. The first componentâs objective to ensure technology transfer and service provision to agricultural producers has been implemented through a demand-driven matching grant mechanism, as described elsewhere in this ICR report\. The IDA resources were used to finance a total of 661 sub-projects, while the GEF resources financed an additional SLWM-related 87 sub-projects\. The typology of IDA financed sub-projects is presented in Table 11 below, while 87 GEF sub-projects are represented by 30 bio-digesters, 41 small horticulture schemes, and 16 inland valley bottom rice production schemes\. Table 11 IDA-financed sub-project by type Commodity/Activity IDA Share (%) Cowpea 174 26% Horticulture 111 17% Rice 78 12% Livestock fattening 65 10% Poultry 46 7% Milk 42 6% Dry cereals (sorghum, millet, maize) 41 6% Processing 33 5% Aquaculture 25 4% SLWM 22 3% Fruit 16 2% Storage 3 0% Mixed poultry-aquaculture 2 0% 15 This aspect represents another reason for opting for the completion efficiency analysis to focus only the IDA and GEF financing, for comparability reasons\. Page 45 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Beekeeping 1 0% Livestock trading 1 0% Sesame 1 0% Total 661 100% Source: PAPAM M&E 8\. Due to data availability, the benefits derived from the IDA financed sub-projects have been modelled using the main four representative models: cowpea, horticulture, inland valley bottom rice, and livestock fattening\. As detailed in the table above, these four categories account for the majority (65%) of the financed sub-projects\. In addition, given the demand-driven approach of the matching grant scheme, it can be assumed that the sub-project categories have similar rates of return for the beneficiaries who engage in them\. For the GEF sub-projects, each of the three types have been modelled and included in the analysis\. 9\. The financial analysis follows the standard methodology recommended by the World Bank, as described in Gittinger (1982), Belli et al\. (2001) and is aligned to the recent guidelines for economic and financial analysis\. The financial analysis was conducted to assess the profitability of the sub-project activities, modelled from the perspective of the target beneficiaries, and compared with the without- project (WOP) situation\. The WOP parameters have been based on the baseline yield values, where applicable, while the with-project situation has been based on the M&E reported yields\. The discount rates used are in line with the World Bank guidelines, the practice of recent project and in-country discussions: 10 percent for the financial analysis and 6 percent for the economic analysis\. It is worth stressing that present analysis is different from the one used at appraisal, a choice justified on at least three grounds: 1) the appraisal EFA has over-estimated the projectâs economic and financial impact, assuming all the agricultural population of the target regions would adopt improved technologies and including all the benefits (not just incremental); 2) the present analysis is much better suited for how the project has been implemented and how its activities can be evaluated; and 3) the present analysis follows the standard methodology and guidelines of the World Bank\. 10\. The heterogeneity in size of sub-projects, as well as the data availability on the exact sub-project parameters, made it impossible to model sub-projects as a whole, except for the standard 6m3 bio- digester\. As such, the modelling for the crops has been done on one hectare, while the livestock fattening has been modelled for a 2-stable with 6 animal each and with three cycles per year (adapted from the IFAD PAPAM completion EFA)\. The economic aggregation later on used some strong assumptions on the average sub-project size\. 11\. All profitability indicators suggest the viability of the models prepared in this analysis, with significant margins for additional income and returns on the investment, as detailed in the table below\. Page 46 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Table 12 Financial results for selected sub-project activities IDA-financed GEF-financed Sub-projects Sub-projects* Cowpea Mixed horticulture IVB Rice Livestock fattening Bio-digester (1 ha) (1 ha) (1 ha) (6 m3) Incremental net income 75,200 761,193 32,863 956,039 918,695 (per cycle, FCFA) Incremental net income 130 1,312 57 1,648 1,584 (per cycle, US$) NPV 388,629 4,158,112 165,345 2,964,324 2,394,034 (@10%, 10-year, FCFA) NPV 670 7,169 285 5,111 4,128 (@10%, 10-year, USD) * GEF-financed rice and horticulture sub-projects have been modelled with the same parameters as the ones for IDA\. Large-Scale Irrigation 12\. The investment in large-scale irrigation was the projectâs main thrust and ultimately its most successful intervention\. An estimated 41 percent of the total IDA financing was spent on developing two large irrigated schemes in the Office du Niger area\. At the Sabalibougou site, 2,200 ha (2,188 ha effectively in production16) were developed and granted for use to 668 beneficiary households (on average 3\.27 ha/household), with first crop cycle in 2015\. At the MâBÃ©wani site, 500 ha (474 ha effectively in production) were developed and granted for use to 135 beneficiary households (on average 3\.51 ha/household), with first crop cycle in 2019\. Through the first componentâs activities, the infrastructure development was complemented with direct support to beneficiary producers (land preparation, input provision, capacity development, etc\.) for them to immediately start production and obtain the most value from the projectâs delayed investments\. It is worth emphasizing the pre-design studies established that sustainable poverty reduction would require a higher land allocation to beneficiary households (instead of the past practices of 1 ha per household)\. As a result, PAPAM allocated at least 3 ha per beneficiary household in both schemes and this novel provision was much appreciated by beneficiaries, as emphasized in the final impact evaluation\. 13\. While it was initially envisaged that full utilization of the investments would imply two rice cycles per year, it has been reported during ICRR mission discussions that the Office du Niger is promoting a policy of alternating rice during the main season with horticulture during the off-season\. As horticulture is more labor-intensive and more remunerative, producers crop only a fraction of their irrigated lands and use less water, which is one of the objectives of the Office du Niger, given their national and transboundary water management targets\. In this context, for the so-called Class 1 irrigated perimeters like the two developed by PAPAM, the water use fee is 67,000 FCFA/ha for rice for both main and off-season, while for horticulture the fee is 6,700 FCFA/ha in the off-season\. In addition to water use savings, the technicians consulted during the ICRR mission also indicated that crop rotation and soil resting periods have demonstrated positive impacts on rice yields the following season\. 14\. As a result, the estimation of project benefits has been modelled on a mix of main and off- season rice and horticulture cultivation\. In particular, based on data collected during the mission, in the 16Effectively in production represents the cropped area, while the total developed area includes the cropped area plus access roads, canals, etc\. Page 47 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) main season the entire useable area of the schemes is considered to be cropped with rice, while in the off-season only 10 percent is cropped with rice and in addition each beneficiary household crops 0\.25 ha with mixed horticulture (tomato, eggplant, chilli pepper, okra â as indicative crops)\. Given that the two schemes are newly developed, the without project situation (WOP) has been considered zero, i\.e\. previous agricultural and non-agricultural activities are not given up by beneficiaries, who rely on additional non-family labor, which is readily available\. Two irrigated rice models have been developed (one for each scheme, to account for slight yield variations, as detailed below) and one mixed horticulture model\. For irrigated rice, no differences have been modelled for the main and off-season parameters, because lack of data and anecdotal evidence by the PMU and Office du Niger staff that there are generally no major differences\. 15\. The project M&E data for the Sabalibougou scheme indicates high yields for irrigated rice since the start of production in 2015\. Against the target of 6,700 kg/ha and a baseline of 6,000 kg/ha, the PAPAM-commissioned surveys recorded 5,560 kg/ha in 2015/2016, 7,530 kg/ha in 2016/2017, 6,990 kg/ha in 2017-2018, 7,190 kg/ha in 2018/2019 and 6,818 kg/ha in 2019\. These past values have been used in the first years of the Sabalibougou model\. The last available measurement has been used as projected yield level for the remaining years and for all the years of the MâBÃ©wani model\. 16\. Climate change induced yield variability has been included in the present analysis using the newly developed IFAD Climate Adaption in Rural Development (CARD17) tool\. Given that project support did not include any climate-smart agriculture (CSA) technology transfer, nor any capacity development for producers to adapt to climate change, it has been considered important to adjust the yield parameters in light of foreseen changes in temperature and precipitation\. Using the CARD tool, the region and agro- ecological zone (AEZ) specific yield variability for irrigated rice has been determined, in percent change relative to 2019 and up to 2030, using the median climate change scenario\. The estimated evolution is summarized in the graph below and this estimated variability has been applied to the yield parameters in the modelling\. Figure 2 Climate change induced yield variability (% change relative to base year 2019) +0\.50% +0\.06% - 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 -0\.50% -0\.48% -1\.00% -0\.65% -0\.77% -1\.50% -1\.21% -1\.71% -2\.00% -2\.12% -2\.50% -2\.08% -2\.18% -2\.37% -2\.80% -3\.00% Source: Authorâs calculations using the IFAD CARD tool 17\. The crop models have been estimated using data collected during the mission, the information available from the IFAD completion EFA for their financing of PAPAM, and data from other similar analyses and studies\. In particular, it is worth noting that: (i) subsidized fertilizer prices have been used; 17 https://www\.ifad\.org/en/web/knowledge/publication/asset/41085709 Page 48 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) (ii) labor requirements have been estimated at two thirds family labor and one third hired labor; (iii) labor requirements have been adjusted based on increased production intensity, where applicable; (iv) post- harvest losses of 5 percent have been included; (v) the investment cost for developing the irrigation scheme has not been included in the financial, as it considered as delivered as a public good (yet its economic justification is provided below); and (v) a discount rate of 10 percent has been used\. 18\. Based on these parameters, the financial models demonstrate the profitability of the investments and the significant benefits that the targeted producers could secure ( Table 13)\. In particular, the irrigated rice modelling indicates incremental net incomes per cycle of FCFA 605,000 (US$1,040) on average\. For a hypothetical typical household cropping 3 ha of rice in the main season and another 0\.3 ha or rice and 0\.25 ha of mixed horticulture in the off-season, the returns per year are to the tune of FCFA 2,187,651 (US$3,772)\. Looking at the 10-year net present value (NPV) at a discount rate of 10 percent, the results are more than satisfactory taking into consideration the average investment cost per hectare of FCFA 4,000,000 (US$6,896), as reported for the Sabalibougou scheme\. Table 13 Financial results for the large-scale irrigation models Large-scale Irrigation Models Typical household Irrigated Rice Mixed (3 ha rice in main season, 0\.3 Sabalibougou M'BÃ©wani horticulture ha rice and 0\.25 ha (1 ha) (1 ha) (1 ha) horticulture in off-season) Incremental net income 650,385 560,132 761,193 2,187,651 (per cycle, FCFA) Incremental net income 1,121 966 1,312 3,772 (per cycle, US$) NPV 3,404,348 3,389,263 8,785,831 (@10%, 10-year, FCFA) NPV 5,870 5,844 15,148 (@10%, 10-year, USD) Note: Incremental net income per cycle at peak realization of benefits, i\.e\. after several years learning curve\. Source: Authorâs calculations Efficiency of Project Expenditure 19\. As suggested by the ICR guidelines, the present efficiency analysis goes beyond the economic and financial analysis and provides some indications on the use of project resources\. The available data provided by the PCU is not sufficiently detailed to provide an in-depth analysis of project expenditure, in particular on the sub-projects financed under the first component and the various cross-cutting activities under the third component\. Table 14 provides some relevant insights: (i) while the restructuring re- allocated significant resources from the first and third component to the large-scale irrigation activities in the second component, at the end only 80 percent of the re-allocated resources have been spent; (ii) significant over-spending (221%) when compared to budgets has been recorded for capacity building for POs and service providers, while very little has been spent technology generation and Page 49 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) research/production linkages and not all resources were used for the sub-project sub-component 1\.1; (iii) under the third component, the project also over-spent significantly (141%) when compared with the restructuring allocation, mostly because of project coordination and M&E (due to unclear and dual structures early on and despite the poor performance of the M&E system); and (iv) the public service delivery related expenditure was only utilized at 83 percent\. Table 14 Project Costs and Expenditures Amount at Amount at Amount at Share of Share of IDA + GEF Financing Approval Restructuring Completion Approval Restructuring Project Component/Activity (US$ million) (US$ million) (US$ million) (%) (%) Component 1 - Technology transfer and service provision to agricultural producers 31\.60 24\.90 27\.61 87% 111% SC1\.1 - Farming system and supply chain modernization 19\.20 17\.40 16\.17 84% 93% SC1\.2 - Capacity building for POs and service providers 6\.90 5\.00 11\.03 160% 221% SC1\.3 - Facilitating rural credit development 0\.00 0\.00 0\.00 0% 0% SC1\.4 - Technology generation and research/production linkages 5\.50 2\.50 0\.41 7% 16% Component 2 â Irrigation Infrastructures 19\.30 38\.20 28\.92 150% 76% SC 2\.1 - Small scale irrigation 2\.20 2\.20 0\.08 4% 4% SC 2\.2 - Large scale irrigation 17\.10 36\.00 28\.84 169% 80% Component 3 â Comprehensive programmatic approach, sector monitoring and project coordination 18\.30 12\.15 17\.13 94% 141% SC 3\.1 - Policy dialogue and sector coordination 2\.40 0\.00 0\.39 16% SC 3\.2 - Sector monitoring and evaluation 4\.50 0\.00 3\.20 71% SC 3\.3 - Public Service Delivery 7\.70 6\.40 5\.32 69% 83% SC 3\.4 - Project coordination/Monitoring and evaluation 3\.70 5\.75 8\.21 222% 143% Project Preparation Facility (PPF) 0\.95 0\.95 0\.95 100% 100% Unallocated 6\.05 0\.00 0\.00 0% 0% Total 76\.20 76\.20 73\.66 97% 97% Source: authorâs calculations based on PAPAM PMU, PAD and restructuring paper data 20\. The project implementation also significant experienced delays in disbursement, when compared with the appraisal estimates\. As shown in Figure 3, with the additional three-year extension, the project only achieved a final 97 percent disbursement rate (reportedly, not all GEF financing has been used)\. At its original end-point in 2016, only 75 percent of the resources have been utilized\. In terms of pace of implementation, the rate of disbursement slowed down after 2015, resulting in a significant 10 percent of expenditure being disbursed in the last 6 months of the project in 2019\. Page 50 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Figure 3 Planned and actual cumulative disbursement rates per year (%) 100% 100% 90% 97% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 Actual 7% 13% 27% 45% 67% 75% 81% 87% 97% Planned 20% 47% 62% 78% 90% 100% Source: authorâs calculations based on PAPAM PMU and PAD data Economic results 21\. The overall benefits of the project have been estimated using the economic results of the models, against the economic project costs over a 20-year period (2011-2030)\. In particular, conversion factors have been calculated for the main outputs and inputs to account for taxation and price distortions, including subsidies on fertilizer\. Labor costs have been discounted at 0\.8 to reflect the availability of labor in rural areas\. Economic costs have been calculated by avoiding double-counting and eliminating costs already included in the individual models\. The 20-year analysis period has been retained to account for the late implementation and start of some of the productive activities (such as the MâBÃ©wani scheme) that was only completed in 2019)\. 22\. Very strong assumptions had to be made about the size of the cowpea, rice and horticulture sub-projects\. The available M&E data made it impossible to determine the total and average per sub- project cropped area to be used in the overall economic aggregation\. As a result, the present analysis made use of proxy estimates using some of the available information on a case by case basis\. As such, it was conservatively estimated that a cowpea sub-project covered 20 ha, a rice sub-project had 25 ha on average, while a typical small horticulture scheme had 5 ha with 75 percent plot utilization (due to pathways, pipes, etc\.)\. No conclusive information on the viability and sustainability of the sub-projects was available at the ICRR stage, not even in the final impact evaluation\. As such, a 100 percent adoption rate was used at this stage, assuming that this optimistic choice would be mitigated by: (i) the conservative estimate of sub-project size mentioned above, and (ii) non-inclusion in the present EFA of the impact of the projectâs demonstration activities, which are expected to incentivise other producers to adopt improved technologies\. 23\. Overall, the economic results are positive, indicating the projectâs economic soundness based on the available information\. The ICRR efficiency analysis demonstrates an economic internal rate of Page 51 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) return (EIRR) of 11\.718 percent compared to 34 percent at appraisal and an NPV of US$13\.9 million compared to US$184\.2 million\. While it is likely that the appraisal EFA has over-estimated the projectâs potential returns, the completion economic results are still below expectations in the operationâs sector\. Coupled with the shortcomings of budget utilization, the overall project efficiency is rated as modest\. 1818For reference and comparability: the IFAD completion EFA concluded with an EIRR of 13\.8%, including environmental externalities and the ASAP-financed climate change adaptation activities\. Excluding those, the EIRR is very similar to the one obtained in this analysis\. The IFAD rating was 3 out 6 for efficiency\. Page 52 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) ANNEX 5\. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS No comments were received\. Page 53 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) ANNEX 6\. SUPPORTING DOCUMENTS Aide memoires of Supervision and Technical Support Missions APCAM, 2013\. Synthese du Rapport Bilan 2013 APCAM/PAPAM APCAM, 2016\. Etat dâexecution des Activites â Composante 1 : Transfert de Technologies et Prestation de Services aux Producteurs Agricoles Country Assistance Strategy (2007-2011) Country Engagement Memorandum (2006) CPS/SDR, 2017\. Ãtude dâÃ©valuation des Rendements du Riz et du NiÃ©bÃ© dans les Zones Interventions du PAPAM CPS/SDR, 2019\. Ãtude dâÃ©valuation des Rendements du Riz et du NiÃ©bÃ© dans les Zones Interventions du PAPAM DNA, 2016 - Note Sur La Convention DNA-PAPAM sur le Transfert de Technologies de Riz Bas-Fond et du Niebe par le PAPAM DNA, 2017 - Rapport dâActivites Definitif de la Convention DNA-PAPAM sur la Mise en Valeur des Bas Fonds et Perimetres Maraichers Amenages DNA, 2018 - Rapport dâActivites Provisoire de la Convention DNA-PAPAM sur la Mise en Valeur des Bas Fonds et Perimetres Maraichers Amenages par le PAPAM DNA, 2018a\. Rapport : Mission de suivi/appui aux facilitateurs sur les pratiques GDTE Ã travers les Champs Ecole des Producteurs (CEP) DNA, 2019\. Rapport :Mission de supervision et dâappui aux facilitateurs pour la rÃ©alisation des pratiques GDTE Ã travers les Champs Ecole des Producteurs (CEP) dans les sites de : YÃ©rÃ©founÃ©la, Tonfa et Tabacoro DNPIA, 2019\. Rapport de la Mission dâActualisation des Donnees sur la Production Laitiere Liee aux Fourrages et de lâInsemination Artificielle dans les Regions de Sikasso et de Segou End of Project Implementation Report\. Government of Mali (September 2019) Financial Agreement (June 19, 2009) GoM, 2019\. Rapport dâachevement du Projet dâappui Ã la ProductivitÃ© Agricole au Mali (PAPAM) IFAD, 2018\. Projet dâaccroissement de la productivitÃ© agricole du Mali (PAPAM) : Rapport dâachÃ¨vement du projet Implementation Supervision Reports (ISRs) ON, 2016\. Rapport Sondage Statistique pour la Determination du Rendement du Riz Paddy au Titre de la Campagne Hyvernale 2015/2016 dans la Zone de Nâdebougou (PAPAM/Sabalibougou) Â«220 CarresÂ» ON, 2016a\. Rapport Sondage Statistique pour la Determination du Rendement du Riz Paddy au Titre de la Campagne Hyvernale 2016-2017 dans la Zone De Nâdebougou (PAPAM/Sabalibougou) Â«220 CarresÂ» ON, 2017\. Rapport Definitif Sondage Statistique pour la Determination du Rendement du Riz Paddy au Titre de la Campagne Hyvernale 2017-2018 dans la Zone de Nâdebougou (PAPAM/Sabalibougou) Â«220 CarresÂ» ON, 2018\. Mise en Valeur En SRI dans le Perimetre de Sabalibougou ORM, 2017\. Situation de Production des Petits Perimetres Irrigues Villageois Rehabilites par le PAPAM ORM, 2019\. RÃ©sultats techniques de production PAPAM, 2018\. Evaluation des Acquis du PAPAM PAPAM, 2018a\. Evaluation des Conventions du PAPAM Project Appraisal Document (PAD, May 6, 2009) Project Information Document (PID) Restructuring Papers (2011, 2013, 2016 and 2018) Page 54 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) ANNEX 7\. RESULTS FRAMEWORK: BANK SYSTEM VERSUS PROJECT COORDINATION UNIT Formally Original Actual Achieved Intermediate Indicators Revised Status Notes Target at Completion Target Share of producers that have adopted new cowpea varieties in the target production basins 1 (Percentage, Custom) 50 50 72 Achieved PO's subprojects that have achieved their objectives as stated in the request Substantially 2 (Percentage, Custom) 80 80 75 Achieved The project did not actively track this indicator, instead it tracked the number of inseminated cows\. Assuming that the performance of this indicator is indicative of the adoption rate of Dairy producers that have dairy technologies, it was adopted improved husbandry Not considered not have been 3 practice (Percentage, Custom) 50 50 22 Achieved achieved This indicator was dropped in the 2013 restructuring but appeared in subsequent restructurings\. The project dropped it from its results framework and thus it was not actively tracked\. The project instead monitored the PO's sub-projects that are co- number of subprojects financed\. financed by a bank or MFI credit 900 out of 850 targeted 4 (Percentage, Custom) subprojects were financed Producers that have adopted the system of rice intensification (ON + PIV) Substantially 5 (Percentage, Custom) 30 30 26 Achieved Total irrigated area developed Substantially 6 (Hectare (Ha), Custom) 729519 6400 6209 Achieved Office du Niger (Hectare (Ha), Custom Breakdown) 2700 2700 2700 Achieved Small Horticultural Perimeter (Petit Perimetre Maraichers) (Hectare (Ha), Custom Breakdown) 600 140 144 Achieved Low Land (Bas-fonds) development (Hectare (Ha), Custom Breakdown) 2500 2500 2802 Achieved Small Village Perimeter (Petit Perimetre Villageois-PIV) (Hectare (Ha), Custom Not Breakdown) 1500 1000 564 Achieved 19 The total area was an addition of the respective irrigated areas under this indicator in the PAD Page 55 of 56 The World Bank Mali-Fostering Agricultural Productivity (P095091) Producers benefiting from newly or improved irrigated land - Individuals (Number, Substantially 7 Custom) 774020 418021 3800 achieved Office du Niger (Number, Custom Breakdown) 540 540 725 Achieved PIV + Bas- fonds + PPM Not (Number, Custom Breakdown) 7200 3640 1740 Achieved This indicator was dropped in the 2013 restructuring but appeared in subsequent restructurings\. The project dropped it from its results framework and thus it was not tracked\. The project instead monitored the number of functional water usersâ associations (OERT) in the old and developed plots of land\. 63 percent were functional versus a target of 70 percent\. The target Targeted areas with improved was not achieved due to drainage (Hectare (Ha), insecurity in the developed 8 Custom) irrigated perimeters\. Regular production of reliable In addition to these two statistical data and sector indicators, the project monitored analysis - rural households Substantially the adoption by the Government 9 monitored (Number, Custom) 1800 1800 1750 achieved of agricultural policies, namely: the Agricultural Development Policy (Politique de developpement Agricole) and the Land Tenure Policy (Politique sur le foncier rural); the number of household surveys conducted; and, the number of veterinary doctors trained\. Although, these Regular production of reliable indicators achieved 100 percent statistical data and sector of their targets, they were analysis - Rice yield and informally added as a result of production assessment the mid-term review but were 10 (Yes/No, Custom) Yes Yes Yes Achieved not formally revised\. 20 Ibid 21 The total area was an addition of the respective irrigated areas under this indicator in the Restructuring Paper Page 56 of 56	REVIEW
P069679	Document of The World Bank Report No: ICR0000759 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-46760) ON A LOAN IN THE AMOUNT OF USD 18\.6 MILLION TO ROMANIA FOR A Private and Public Sector Institution Building Loan June 22, 2009 Private and Financial Sector Development Unit ECCU5 Europe and Central Asia i CURRENCY EQUIVALENTS (Exchange Rate Effective June 9, 2009) Currency Unit = Romania (New) Lei RON 1\.00 = 0\.333756 USD US$ 1\.00 = 2\.99620 RON FISCAL YEAR January 1 December 1 ABBREVIATIONS AND ACRONYMS ACH Automated Clearing House ANRE Romanian Energy Regulatory Authority ANRGN National Regulatory Authority in Natural Gas Sector in Romania BCR Banca Comerciala Romana BSE Bucharest Stock Exchange CAFR Chamber of Financial Auditors of Romania CAP Country Strategy and Action Plan CAS Country Assistance Strategy CCRF Accounting and Financial Reporting Council CEC Savings Bank CECCAR Body of Expert and Licensed Accountants of Romania CIA Certified Internal Auditor CNVM National Securities Commission DFID United Kingdom Department for International Development DMFAS Debt Management Financial and Analysis System DRG Diagnosis related groups EPS Electronic Payment System EU European Union EU PHARE European Union «Pologne, Hongrie Assistance à la Reconstruction Economique» program FIAS Foreign Investment Advisory Service GD Government Decision GDP Gross Domestic Product GOR Government of Romania GSG General Secretariat of the Government GSRS Government securities trading IAS International Accounting Standards IBRD International Bank for Reconstruction and Development ICT Information and communication technology IT&C Information Technology and Communication IFRS International Financing reporting Standards IMF International Monetary Fund IOSCO International Organization of Securities Commissions ISC Insurance Supervision Commission JRP Judicial Reform Project JVA Jiu Valley Association JVR Jiu Valley Region KEP Knowledge Economy Project LCeN Local Community e-Networks M&E Monitoring and evaluation MCIT Ministry of Communication and Information Technology MOAI Ministry of Administration and Interior MOERYP Ministry of Education, Research and Young People ii MOEWM Ministry of Environment and Water Management MOH Ministry of Health MOJ Ministry of Justice MOL Ministry of Labor MOPF Ministry of Public Finance MOTCT Ministry of Transportation, Construction and Tourism MTEF Medium-Term Expenditure Framework NAFA National Agency for Fiscal Administration NAPA National Agency for Protected Areas NBR National Bank of Romania NVZs Nitrate Vulnerable Zones OP/BP Operational Policy/Bank Procedure OTC Over the counter market PAD Project Appraisal Document PAL Programmatic Adjustment Loan PDO Project Development Objective PFM Public Financial Management PIBL Private Sector Institution Building Loan PMU Project Management Unit PPIBL Private and Public Sector Institution Building Loan PPU Public Policy Unit PSAL Private Sector Adjustment Loan RAG Romanian Accounting Group ReGIS Real Time Gross Settlement system out of Romania ROSC Report on the Observance of Standards and Codes RTGS Real time gross settlement SaFIR Government securities registration and settlement system SCM Superior Council of Magistracy SDP Strategic Development Plan SENT Electronic multilateral netting system for small-value interbank payments of TransFond S\.A\. SEPA Single euro payments area SME Small and medium sized enterprises SOEs State Owned Enterprises STP Straight through processing STEPS State Treasury Electronic Payment System STFD TRANSFOND S\.A\. - Agent of the NBR for processing the interbank payments in Romania SWIFT Society for Worldwide Interbank Financial Telecommunication TA Technical Assistance TARGET2 Trans European Automated Real TimeGross Settlement Express Transfer TF Trust Fund TSA Treasury Single Account UNCTAD United Nations Conference on Trade and Development VAT Value-added tax Vice President: Shigeo Katsu Acting Country Director: Theodore O\. Ahlers Sector Manager: Sophie Sirtaine Project Team Leader: Arabela Aprahamian ICR Team Leader: Arabela Aprahamian ICR Author Paula Genis iii iv ROMANIA Private and Public Sector Institution Building Loan CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph 1\. Project Context, Development Objectives and Design\. 1 2\. Key Factors Affecting Implementation and Outcomes \. 6 3\. Assessment of Outcomes\. 13 4\. Assessment of Risk to Development Outcome\. 31 5\. Assessment of Bank and Borrower Performance \. 31 6\. Lessons Learned \. 34 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 35 Annex 1\. Project Costs Financed by PPIBL and Financing \. 36 Annex 2\. Outputs by Component \. 47 Annex 3\. Economic and Financial Analysis\. 98 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 99 Annex 5\. Beneficiary Survey Results\. 101 Annex 5\. Beneficiary Survey Results\. 101 Annex 6\. Stakeholder Workshop Report and Results\. 102 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 103 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders\. 110 Annex 9\. List of Supporting Documents \. 111 Annex 10\. PDO Indicators from the Implementation Status Report\. 112 Annex 11\. Original Components with Activities\. 116 Annex 12\. Beneficiaries of the Project\. 118 Annex 13\. Revised Components, Beneficiaries and Expected Benefits\. 119 Annex 14\. Implementation Schedules of the World Bank Financed and Administered Projects during 1999-2008\. 121 MAP v A\. Basic Information Private & Public Sector Country: Romania Project Name: Institution Building Loan (PIPBL) Project ID: P069679 L/C/TF Number(s): IBRD-46760,TF-50477 ICR Date: 06/22/2009 ICR Type: Core ICR Lending Instrument: TAL Borrower: ROMANIA Original Total USD 18\.6M Disbursed Amount: USD 18\.5M Commitment: Environmental Category: C Implementing Agencies: Ministry of Economy and Finance Cofinanciers and Other External Partners: European Union (EU) The Dutch Government B\. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: Effectiveness: 06/01/2002 11/25/2002 Appraisal: 11/26/2001 Restructuring(s): Approval: 09/12/2002 Mid-term Review: 10/24/2005 Closing: 06/30/2005 12/31/2008 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Unsatisfactory Government: Moderately Satisfactory Quality of Supervision:Moderately Implementing Unsatisfactory Agency/Agencies: Satisfactory Overall Bank Moderately Overall Borrower Performance: Unsatisfactory Performance: Moderately Satisfactory i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Performance Indicators (if any) Rating Potential Problem Project No Quality at Entry None at any time (Yes/No): (QEA): Problem Project at any Quality of No Unsatisfactory time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Banking 30 Capital markets 2 Central government administration 40 39 Law and justice 8 Power 20 Public administration- Finance 51 Sub-national government administration 10 Theme Code (as % of total Bank financing) Health system performance 4 Judicial and other dispute resolution mechanisms 8 Other accountability/anti-corruption 6 Other public sector governance 31 Public expenditure, financial management and 51 procurement E\. Bank Staff Positions At ICR At Approval Vice President: Shigeo Katsu Johannes F\. Linn Country Director: Theodore O\. Ahlers Andrew N\. Vorkink Sector Manager: Sophie Sirtaine Khaled F\. Sherif Project Team Leader: Arabela Sena Aprahamian Hiran Herat ICR Team Leader: Arabela Sena Aprahamian ICR Primary Author: Paula Genis ii F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The goal of the Private and Public Sector Institution Building Loan (PPIBL) is: (a) to provide the required technical assistance (TA) to implement the policy measures which will be supported by the Private Sector Adjustment Loan II (PSAL II); and (b) to lay the ground for the reforms that will be implemented under the proposed Programmatic Adjustment Loan (PAL), formerly the Institutional and Governance Reform Structural Adjustment Loan\. The PPIBL is a follow-on operation that will continue to provide the needed TA that began under the first Private Sector Institution Building Loan (PIBL) of which its entire amount is almost fully committed\. The PPIBL is a natural continuation of the PIBL\. The PPIBL will provide a small amount of funding to complete few remaining private sector actions while targeting the majority of the project resources to energy and public sector reforms\. In this sense, it aims to achieve the following objectives: (i) a competitive financial sector predicated on the restructuring and privatization of state- owned banks, development of securities markets, and improvements in legal, regulatory and institutional support structures; (ii) enhancement of the private sector's role in the economy through the privatization of state-owned assets; (iii) a more efficient and service-oriented energy sector based on needed restructuring and privatization of key industries, introduction of a sound regulatory framework, reduction in arrears, and clarification of new tariff schemes to achieve cost recovery; (iv) a competitive private sector based on the creation of an environment conducive to private sector growth and development; (v) a more responsive, transparent and accountable public sector; and (vi) adoption of critical measures to provide social protection during the adjustment period and to establish effective poverty reduction mechanisms\. I\. Project Development Objectives used in this ICR The ICR evaluates the Project against: (i) whether the Project provided or not the required technical assistance (TA) to achieve the high level policy objectives contained in the PDO; and (ii) the extent to which the assistance provided contributed (a) to implementing the policy measures supported by the PSAL2 and (b) to laying the ground for the reforms implemented under the PAL (whether they contributed to specific PAL benchmarks or to deepening and/or broadening the Government reform program in the policy areas included in the PDO, but not necessarily reflected by specific PAL benchmarks)\. The ICR does not evaluate the Project against the high-level policy objectives (i)-(vi) included in the PDO (see Sections 2\.1 and 2\.3) as the Project cannot be alone accountable for the achievement of the outcomes envisioned by the PSAL 2 and PAL operations\. However, the ICR provides an assessment on these policy reforms in Section 3\.2 and Annex 2 for reference based on the evaluations made in the ICRs for PSAL2 and PALs and other more recent work undertaken by the Bank in the relevant policy areas\. However, the ICR does not assess the provision of assistance in policy area (vi) because the PAD nor the loan agreement did not envision any funding for it under the PPIBL\. iii II\. Changes during the implementation and their impact on the Project The need for TA at the time of appraisal seemed almost limitless and the PPIBL had a broad mandate to contribute to a wide-range of high-level reform outcomes\. The Project was initiated at a time of high commitment to reform, mainly led by the objective to facilitate the accession of Romania to the EU\. However three developments affected the PPIBL and caused it to take a different track: (i) the PAL series preparation and implementation was delayed; (ii) other sources of funding, mostly grants, were made available to support the same PDO; and (iii) once the accession of Romania to the EU was assured, the PAL series was dropped and appetite for reforms decreased\. The combined effect of these developments had three major impacts on the Project implementation: (i) The activities under Parts (components) A (Financial Sector Restructuring), B (Privatization Support for Enterprises), C (Privatization Support for Energy Sector) and D (Business Environment) (except for minor activities under A and D) were undertaken by alternative sources of funding, including the PIBL, Dutch Grants (TF050477 and TF054658) and EU resources\. (ii) While upon the approval of the PAL the implementation of activities under Part E (Institutional Governance Reform) started with a delay and progressed slowly, the Ministry of Public Finance (MOPF) was engaging to reforming the public expenditure management both by including budget formulations reforms, but also budget execution strengthening measures\. Among these, cash management became a first priority and all available loan funds (first the PIBL, then the PPIBL) were directed for this priority\. Even though the PAD envisioned financing of goods at about 30% of the Loan, the emphasis of the PPIBL shifted from a TA operation supporting policy reforms towards a more likely investment operation as the MOPF expanded the Treasury modernization beyond what was envisioned in the PAD and about half of the PPIBL financing was directed to goods (that however included system development besides software and hardware)\. In 2005 the demand for funds from different ministries did eventually exceed the available funds, but nevertheless the Treasury modernization prevailed as the main activity under Part due to the commitment of the MOPF\. (iii) Once the accession of Romania to the EU was assured, the PAL series was dropped, reform fatigue set in and the Project outcomes were affected negatively as the TA outputs were not used to the extent possible\. Some PPIBL funds were put to alternative (good) uses, such as the provision of background studies and TA for other projects (tax administration reform, environment\. III\. Evaluation approach in the ICR The ICR evaluates the results of the Project activities irrespective of the source of financing\. The Project refers to the original activities of the PPIBL, as defined in the PAD, and the new activities added through loan amendments\. In addition to the PPIBL, these activities were financed by the earlier TA loan or the PIBL, the Dutch TF050477 linked to the PPIBL, the Dutch TF054659 linked to the PAL, as well as the EU (and some other sources) (Sections 1\.7 and 2)\. As a result of the above approach, the ICR also evaluates the activities under Parts A, B, C and D funded by the PIBL and the activities funded for Part E under the Dutch Grants\. Separate completion reports have been iv prepared on the PIBL and the Dutch Grants\. The approach to assess results - not only based on what was financed by the PPIBL, but based on the original objectives and targets - was chosen based on the ICR guidelines of the OPCS since neither the PDO nor the targets of the Romania PPIBL have been formally revised to reflect the de-facto significant changes in the PDO, design and project financing\. IV\. The Result Framework During the last year of supervision, the indicators in the result framework were retrofitted: (i) to reflect changes made during the implementation that were not formalized through formal restructuring; and (ii) to more comprehensively represent the original PDO (including the high level policy objectives included in the PDO) and activities described in the PAD\. The retrofitting helped to address problems contained in the original result framework\. Since the ICR does not evaluate the Project against the high-level policy objectives included in the PDO (see paragraph I), the related PDO indicators defined in the last ISR are provided in Annex 10 for reference\. The below PDO indicators were designed, instead, to help in assessing the PDO against which the Project was evaluated\. Guide to the Results Framework The definitions in the PDO indicator table have the following meaning: (i) Parts A-F refer to the different components, as follows: Part A: Financial Sector Restructuring and Privatization Support Part B: Privatization Support for State-Owned Enterprises Part C: Privatization Support for the Energy Sector Part D: Support for an Improved Business Environment Part E: Institutional and Governance Reform Part F: Project Management Unit (ii) Formally Revised Target Values are NA because the changes made during the implementation were not formalized through appropriate restructuring\. (iii) Original Target Values, as defined in the below result framework, were not provided in the PAD nor in the loan amendments\. They were developed for the purpose of providing more information about whether the TA was provided or not and about the extent\. They refer to the total number of PSAL2 conditions/PAL benchmarks under the objective area where the Project provided actually TA\. (iv) Actual Value refers to the number of TA outputs that contributed to (a) implementing the policy measures supported by the PSAL2 and/or (b) and (b) to laying the ground for the reforms implemented under the PAL and PAL (whether they contributed to specific PAL benchmarks or to deepening and/or broadening the Government reform program in the policy areas included in the PDO, but not necessarily reflected by specific PAL benchmarks)\. Section 3\.2 provides more information\. The definitions in the Intermediate Outcome indicator table have the following meaning: (i) Part in the definition of Indicators refers to components and various sub- components\. See Section 3\.2 and Annex 2\. v (ii) Original Target Values summarize the activities and outputs included in the PAD or loan amendments\. (iii) The references in parentheses in the Actual Value Achieved column refer to the funding source\. Annex 2 provides more information\. Revised Project Development Objectives (as approved by original approving authority) The PDO was not formally revised\. The key indicators were refined (see Section 2\.3) during the last supervision missions through an aide memoire\. (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Part A: Part A: No\.of TA outputs that contributed to (a) implem\.the policy Indicator 1 : measures supported by the PSAL2 and/or (b) laying ground for the reforms impl\. under the PAL (a) 1 output (it implemented 2 PSAL2 condition); 1 PSAL2 (b) 10 outputs (they Value condition; 9 PAL implemented 5 quantitative or NA benchmarks - 10 inNA PAL benchmarks; Qualitative) total contributed to 3 PAL benchmarks; 6 outputs helped w/GOR program) - out of total 11 outputs Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Part B: Number of TA outputs that contributed to (a) implementing the policy Indicator 2 : measures supported by the PSAL2 and/or (b) laying ground for the reforms implemented under the PAL a) 2 (they Value implemented 2 quantitative or NA 2 PSAL conditions NA PSAL2 conditions) Qualitative) - out of total 2 outputs Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) achieved highly\. See Section 3\.2 and Annex 2\. achievement) Part C: Number of TA outputs that contributed to (a) implementing the policy Indicator 3 : measures supported by the PSAL2 and/or (b) laying ground for the reforms implemented under the PAL vi a) 4 (they implemented 1 PSAL2 condition; Value 3 PSAL2 contributed to 1 quantitative or NA conditions; 6 PAL NA PSAL2 condition; 2 Qualitative) benchmarks - 9 in total outputs helped w/GOR program) - out of total 4 outputs Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) achieved highly\. See Section 3\.2 and Annex 2\. achievement) Part D: Number of TA outputs that contributed to (a) implementing the policy Indicator 4 : measures supported by the PSAL2 and/or (b) laying ground for the reforms implemented under the PAL Value (b) 4 (4 outputs quantitative or NA NA NA helped w/GOR Qualitative) program) - out ot total 9 outputs Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) achieved negligibly\. See Section 3\.2 and Annex 2\. achievement) Part E: Number of TA outputs that contributed to (a) implementing the policy Indicator 5 : measures supported by the PSAL2 and/or (b) laying ground for the reforms implemented under the PAL (b) 65 (they implemented 5 PAL benchmarks; Value 52 PAL contributed to 25 quantitative or NA NA PAL benchmarks; Qualitative) benchmarks 33 outputs helped w/GOR program) - out ot total 65 outputs Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) achieved substantially\. See Section 3\.2 and Annex 2\. achievement) (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Part A\.1: the extent of TA provision to restructure CEC (Savings Bank) in preparation of privatization (through a twinning arrangement) vii TA to restructure CEC provided in preparation of CEC restructured in privatization 2004 (PIBL); Value GOR had prepared a (PSAL2 2nd offered for sale but (quantitative restructuring plan (met tranche condition); NA not sold (Dutch or Qualitative)the PSAL2 Board condition)\. CEC restructuring TF050744); and offer for management privatization changed in 2007\. (PAL1-2 benchmarks)\. Date achieved 04/12/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part A achieved modestly\. See Section 3\.2 and Annex 2\. achievement) Part A\.2: the extent of TA provision to develop the capital markets by Indicator 2 : strengthening legal, regulatory and supervisory framework in line with the EU acquis and the institutional capacity of the National Securities Commission (CNVM) and the BSE TA provided for Legal and regul\. aligning the framework regulatory and developed in line with the acquis The legal and regulatory supervisory (CNVM, EU, framework not aligned framework to EU acquis TF050477); Value with the EU acquis; low (constituted/suppo supervisory (quantitative regulatory and rted PAL1-2 for NA capacity stronger, or Qualitative)supervisory capacity of staff trained, CNVM; Government the legislation, MIS/web portal securities not traded on CNVM#s developed the BSE\. capacity, mortgage markets); (TF050477, Government PPIBL); securities traded Government on the BSE\. securities traded on the BSE\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part A achieved modestly\. See Section 3\.2 and Annex 2\. achievement) Indicator 3 : Part A\.3: the extent of TA provision to strengthen the capacity of Insurance Supervision Commission (ISC) to regulate and supervise the insurance sector Provided TA to Contributed to strengthen the strengthened ISC's capacity for Value ISC's capacity supervising motor (quantitative ISC's capacity needed (constituted/suppo NA vehicle third party or Qualitative)strengthening\. rted PAL1 benchmark for liability market and assessing ISC's to modifying the capacity)\. accounting regulations in viii insurance field with acquis (Dutch TF050477)\. Date achieved 04/15/2008 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part A achieved modestly\. See Section 3\.2 and Annex 2\. achievement) Indicator 4 : Part B: the extent of TA provision for privatizing / working out the selected State Owned Enterprises (SOEs) 16 SOEs privatized; 1 SOE liquidated The GOR had selected 10 through assets sale SOEs for privatization procedure; 3 SOEs and 10 SOEs for workout liquidated through Value and issued a request for 8 SOEs privatized; voluntary/judicial (quantitative proposal for selection of 8 SOEs worked NA procedures\. PIBL or Qualitative) advisors for their out (PSAL2 2nd funded privatization privatization / workout tranche condition)\. of 4 SOEs and (PSAL2 core Board restructuring of 3 condition)\. SOE (the rest funded by the GOR based on the same principles)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) for Part B achieved highly\. See Section 3\.2 and Annex 2\. achievement) Part C\.1: the extent of TA provision for strengthening the regulatory capacity of Indicator 5 : Regulatory Authority in Natural Gas Sector (ANRGN) and Energy Regulatory Authority (ANRE) (the extent of training staff) TA funded by EU and the Electricity Provided TA to Market Project\. ANRGN and ANRE had strengthen the ANRGN was capacity of merged into ANRE Value been established in 1999 ANRGN and in 2007\. ANRE (quantitative to regulate the gas and ANRE (supported NA (and ANRGN until or Qualitative) electricity sectors, and their capacity needed broadly the energy its merger) has strengthening\. sector reform built up a solid under track record as PSAL2/PAL)\. probably the most competent regulator in the region\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part C achieved highly\. See Section 3\.2 and Annex 2\. achievement) Indicator 6 : Part C\.3: the extent of TA provision to support privatization strategy for the electricity generation sector ix Privatization strategy for electricity prepared GOR had launched on EU funds and preparation of became part of restructuring and Provided TA to Road Map (2003) Value privatizing power sector develop a strategy that was (quantitative from electricity for the electricityNA characterized as or Qualitative) distribution during generation sector exemplary by EU\. preparation of PSAL2\. (PSAL2 Made significant GOR was planning to condition)\. progress\. expand privatization to Successful electricity generation\. implementation enabled entry into EU\. Updated in 2007\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part C achieved highly\. See Section 3\.2 and Annex 2\. achievement) Indicator 7 : Part C\.4: the status of reviewing the legal and regulatory framework for private competition in the energy sector (namely network industries) Network ind\.y study aggregated from tax, struct\. and reg\. ass\. of electr\., GOR had to review the Provided TA to gas, oil and rvw of Value legal and regulatory review the tariff meth\. (PIBL, (quantitative framework in these areas framework for NA Dutch TF050477, or Qualitative) (met PSAL2 Board network industries Bank)\. Set up a conditions)\. (supported PSAL2 transp\. and objectives) predictable comm\. and reg\. frame for gas and power in line w/EU mkt lib\. principles\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part C achieved highly\. See Section 3\.2 and Annex 2\. achievement) Indicator 8 : Part C\.2: the status of examining the gas production technical tax regime GOR had initiated the process of procuring Completed before approval of the Value consultant services for the examine Provided TA to review of the oil and gas the gas PPIBL\. Used as an (quantitative production tax regime production tax NA input in the network or Qualitative) with a view to capture regime (supported industries and the some of the windfall a PSAL2 Board Road Map profits of domestic condition)\. approved in 2003 producers (PSAL2)\. (PIBL)\. x Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part C achieved highly\. See Section 3\.2 and Annex 2\. achievement) Part D\.1: the extent of TA provision to strengthen e-business and establishment Indicator 9 : of telecenters by the Ministry of Communication and Information Technology (MCIT) Contributed significantly to designing 3 comp\. in the Knowledge Provided TA in Economy Project The legislative and these areas (no which is Value institutional framework direct linkage to strengthening e- (quantitative needed strengthening\. TA PSAL2/PAL NA business with or Qualitative) was needed for its conditions; satisfactory impl\. implementation\. supported GOR's progress (PPIBL)\. business env\. Established the reform)\. Romania Gateway; 36\.7% of GOR's services available online (GOR, Bank)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part D achieved negligibly\. See Section 3\.2 and Annex 2\. achievement) Indicator 10 : Part D\.2: provide training of judges on bankruptcy GOR was going to Provided TA in Value streamline bankruptcy (supported the (quantitative legislation and planned broad policy NA No TA provided\. or Qualitative) training in implementing objectives of the it (linked to PSAL2)\. judicial reform)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part D achieved negligibly\. See Section 3\.2 and Annex 2\. achievement) Indicator 11 : Part D\.3: extent of TA provision for refurbishing selected courts Designed a Provided TA methodology for (supported the development of business physical design Value Backlog and environment standards; used as (quantitative inefficiencies in court reforms under NA an input in or Qualitative) system\. PSAL2; overall designing the objectives of the manual for the judicial reform court infrastructure under PAL)\. rehabilitation component under xi the Judicial Reform Project (Dutch TF50477)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part D achieved negligibly\. See Section 3\.2 and Annex 2\. achievement) Indicator 12 : Part D\.4: carry out public awareness campaigns on business environment FIAS had assessed the business environment\. Provided TA Value GOR was planning more (supported the (quantitative reforms and intended to business NA No TA provided\. or Qualitative) keep the business environment community info reforms under informed of the progress PSAL2)\. (linked to PSAL2)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part D achieved negligibly\. See Section 3\.2 and Annex 2\. achievement) Indicator 13 : Part D\.5: improve business environment and e-business in Jiu Valley A survey of business Based on the opportunities used Comprehensive Provided TA as input to a Development Framework (supported the business consultation, the PSAL2 policy development Value community had objective of social strategy for the (quantitative developed a strategy protection and NA region; IT&C to or Qualitative) approved by the GOR in poverty reduction strengthen the Jiu 2001\. TA was needed to in areas affected Valley Association; undertake a by the economic IT & design and competitiveness transition)\. impl\. of online tax assessment of the region\. collection system for six townhalls (PIBL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (a) and (b) for Part D achieved negligibly\. See Section 3\.2 and Annex 2\. achievement) Part E\. 1\.i\.a: the extent of TA provision to the MOPF for public expenditure Indicator 14 : management in modernization of Treasury operations measured in terms of (1) volume of treasury transactions Increased volume STEPS was Value The Treasury had a due to launched in 2005 (quantitative paper-based clearing and establishment of a NA and handled 28\.8 or Qualitative) settlement mechanism\. secure and million transactions electronic in the first year connection (PIBL and PPIBL)\. xii between the Treasury network and the banking system (STEPS) (supported the PFM reform under PAL) Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Part E\. 1\.i\.a: the extent of TA provision to the MOPF for public expenditure Indicator 15 : management in modernization of Treasury operations measured in terms of (2) speed of final settlement Increased speed due to establishment of a Target achieved secure and (PIBL and PPIBL)\. Value 3\.65 day duration for the electronic Real-time (quantitative final settlement (and connection NA settlement in case or Qualitative) maximum of 5\.25 days) between the of ReGIS and Treasury network SaFIR; settlement and the banking in 2 hours in case of sys tem (STEPS) SENT\. (PFM reform/PAL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Part E\. 1\.i\.a: the extent of TA provision to the MOPF for public expenditure Indicator 16 : management in terms of (3) the ability to determine balances in Government accounts on an online real time basis Target achieved (PIBL and PPIBL)\. The Treasury has The Treasury is real time able to determine knowledge of bal\. in its a/c and is Value No such ability due to a balances in better placed to (quantitative lack of a centralized Government NA make decisions for or Qualitative) public accounting ledger\. accounts on an online real time better cash man\. basis (PFM and better ass\. of reform/PAL)\. borrowing needs (except that the commitment budg\. remains to to be implemented)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 xiii Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Part E\. 1\.i\.a: the extent of TA provision to the MOPF for public expenditure Indicator 17 : management in terms of (4) the ability for the Treasury, its subordinate offices, spending units and clients to have on line real time access Treasury databases\. MOPF/Treasury The above able to produce mentioned entities government wide Distributed architecture inhave ready (on- fiscal reports in a the Treasury system and line real time) timely manner; to Value lack of a general ledger access to current determine relevant (quantitative and weak links in the year and historicalNA information from or Qualitative) treasury system\. Thus, no budget execution databases readily rapid ability for the data to carry out and status of budget previously mentioned the previously availability; functions\. mentioned undertake time functions (PFM series analysis on reform/PAL)\. budget execution (PIBL and PPIBL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 18 : Part E\.1\.i\.b: the extent of TA provision to the MOPF in budget formulation Built cap\. in GSG, ministries and the frame for policy GOR had initiated a set of Provided TA to form\. and integr\. budget reforms aimed at improve the strat\. planning (Dutch TF054659; Value preparing more realistic program and PPIBL)\. (quantitative and effective program andresults-oriented Contributed to dev\. or Qualitative) results-oriented budgets\. budget formulationNA TA was needed to further reforms already the frame, tools for develop and help underway (PFM integr\. strat\. implement them\. reform/PAL)\. planning system\. Designed macro model and built in- house forecasting capacity (PPIBL) Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 19 : Part E\.1\.i\.c: the extent of TA provision to the MOPF in debt management / foreign financing coordination (including number of staff trained) Value TA needed for improved Provided TA to Ugrade to (quantitative legislation on managing ensure better NA UNCTAD#s or Qualitative) public debt\. One issue coordination and DMFAS SW xiv was that line ministries accountability for implemented in contracted external foreign-financed 2006; a techn\. serv\. credits directly with a activities (PFM contract for sovereign guarantee, and reform/ PAL)\. Bloomberg fin\. not included in the serv\. 5/2006-mid- budget\. 2008; trained MOPF staf and NBR (Dutch TF050477); improved legal framework and set up a modern debt agency (GOR)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 20 : Part E\.1\.i\.d: the extent of TA provision to the MOPF in government accounting and financial reporting Impr\. reg\. frame for fin\. rep\., acc\., audit The accounting and Provided TA to in line w/ acquis reporting system suffered strengthen public and to impl\. CAP; from heavy dependence sector accounting cap\. building in Value on manual accounting andcapacities (PAL2- prof\. bodies; helped (quantitative bookkeeping processes\. 3 benchmarks for NA prepare and monitor or Qualitative) The quality of external improving the the Strategic financial reporting was transparency in the Development Plan not of a sufficiently high functioning of the (Dutch TF050477, quality\. firms; PFM/PAL)\. TF054659, PPIBL)\. Accrual acc\. enforced to a limited extent\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 21 : Part E\.1\.i\.e: the extent of TA provision to the MOPF in internal audit Training provided The internal audit for 42 internal function had become auditors for CIA effective in 2000 and certification some Value concerned not only Provided TA to of which passed the (quantitative budget execution but also strengthen internal NA exam and trained or Qualitative) effectiveness of audit (PFM other internal performance\. TA needed reform/PAL)\. auditors under the to regulate internal audit umbrella of IIA- activities\. Romania (now there are 120 internal auditors xv with CIA) (Dutch TF050477, PPIBL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 22 : Part E\.1\.i\.f: the extent of TA provision to the MOPF in decentralization Analyzed TA needed for improving Provided TA to Romania's the Law on Public address certain intergovernmental Finance for better local risks posed by the fiscal relations and local government Value government budget ongoing finance; GOR (quantitative management and in decentralization NA implemented many or Qualitative)developing a stable and process (PAL2 transparent financing benchmark about of the mechanism that matched an improved recommendations new expenditure decentralization in the reform responsibilities\. framework)\. package enacted in 2006 (Dutch TF054659)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Part E\.1\.ii: the extent of TA provision to the National Agency for Fiscal Indicator 23 : Administration (NAFA) to support analytical studies on revenue administration issues Made rec\. and provided direction for the dev\. of TA was needed to organization and NAFA#s capacity working processes Value strengthening, in Provided TA to in NAFA (Dutch (quantitative preparation of a planned NAFA NA TF50477, PPIBL); or Qualitative)project aiming to address impl\. funded by fiscal vulnerabilities and (PFM/PAL)\. EU\. Key result: modernize the public NAFA#s improved sector\. ability to serve the taxpayers based on modernized IT system\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex achievement) Part E\.4: the extent of TA provision to the MOAI for preparation, development Indicator 24 : and implementation of a system for civil services monitoring indicators, management and impact of the Civil Service Reform Value TA to strengthen public Provided TA to theNA Collected data on xvi (quantitative sector governance and MOAI (PAL1 the private and or Qualitative) capacity as part of the benchmark about a public sector public administration study on the pay, remuneration for reform\. grading and comparable employment positions and management and prepared a reform PAL3 benchmark strategy and draft about the law on legislation for a salary setting)\. unitary pay system in the civil service; not adopted (PPIBL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2 achievement) Indicator 25 : Part E\.5: the extent of TA provision to the MOJ, Superior Council of Magistracy and Courts for carrying out a program of judicial reforms Provided TA to the MOJ, Superior Contributed to cap\. Council of building, IT Magistracy and infrastr\. and some Courts act\. in MOJ and (support/constitute SCM; designing Jud\. Reform Project Value GOR's Judicial Reform PAL1-2 reg\. (court ration\. (quantitative Strategy adopted in 2003 selecting judges; a NA study; leg\. frame or Qualitative) but needing court ration\. implementation\. study; selecting for econ\. managers; econ\. man\.; prep\. court perf\. eval\. budgets in courts; system); revised monitoring and Co\. Law and evaluating jud\. reformed Civil perf\.; SCM cap\.; Code (TF50477 and revising Co\. Law)\. TF54659, PPIBL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 26 : Part E\.6: the extent of TA provision to develop a strategy and action plan for health insurance administration Provided TA to take initial steps TA needed for designing ensure more Value a strategy and action plan accountable, (quantitative for the resource allocation effective and or Qualitative) and public spending in fiscally prudent NA Please see (v) (q)\. the health administration use of public financial resources devoted to the provision of health xvii care in Romania (PFM/ PAL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 27 : Part E\.7: the extent of TA provision to the MOAI and to the MOPF for improvements in intergovernmental fiscal relations TA needed to build Value capacity for Provided TA to the (quantitative intergovernmental MOAI and MOPF See v (f)\. or Qualitative)coordination and (supported a PAL2 NA cooperation as part of the benchmark)\. decentralization reform\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Part E\.8: the extent of TA provision to the General Secretariat of the Government Indicator 28 : (GSG) and Prime Minister Chancellery for reforms in policy making and administrative accountability Contributed to (1) des\. and creating frame and a set of Provided TA to the tools for pol\. TA needed to support GSG and Prime analysis and integr\. Value GSG to build policy Minister strat\. Plan\., building (quantitative formulation capacity Chancellery NA cap, in GSG, or Qualitative)towards better strategic (supported PAL2 ministries for impl\. prioritization and fiscal bencmarks about them, and (2) impact assessment\. on policy making provided a design procedures)\. for an integr\. IT syst\. for tracking pol\. form\. process (TF54659,PPIBL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 29 : Part E\.9: the extent of TA provision to the MOL to carry out a labor code review, labor market study, strategy and action plan Made Provided TA to the recommendations Value MOL (constituted to revise the Labor (quantitative TA needed to support and supported NA code (PPIBL)\. Six or Qualitative)labor market reforms\. PAL1-2 out of seven key benchmarks about recommendations the Labor code)\. were used to amend the Labor Code in xviii 2005\. No funding requested for a labor markets study, strategy and action plan\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 30 : Part E\.10: the extent of TA provision to the MOE for reforms in the education sector Recommendations in line with PAL TA needed to provide not fully more adequate and incorporated into equitable financing for Provided TA to the 2004 leg\. neither Value education and to align the MOE (supported enforced in practice (quantitative roles and responsibilities PAL2 benchmark NA (PPIBL, Dutch or Qualitative) of education at the about the TF54659)\. Others central and local level Education Law)\. on the educ\. adm\. with financial and fin\. strategy decentralization\. adopted in 2005, but strategy has has not been implemented\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 31 : Part E\.11: the extent of TA provision to the MOH for reforms in the health sector Strengthened the 2006 Health Sector Reform Package; TA needed for developingProvided and enabled the approaches to providing TA to the national roll out of sustainable sources of MOH (supported the new hospital Value financing for the Health PAL2 benchmarks finance system; (quantitative insurance system, about health sectorNA informed of the or Qualitative) reducing corruption, financing, magnitude of improving effectiveness corruption, health corruption in the and efficiency of the sector legal health sector and of system\. package)\. the overall health sector financing (Dutch TF54659, PPIBL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) xix Indicator 32 : Part E\.12: the extent of TA provision to the MOTCT for reforms in the roads and railway sectors Carried out a housing policy and Provided TA to the subsidy review; a MOCT (supported housing mortgage TA needed to rationalize the PAL2 insurance scheme benchmark about review; and a Value the railway network and primary and feasibility study on (quantitative services, completion of NA a partial credit or Qualitative) interoperability and safetysecondary regulations with EU mortgage market facility for Directives, etc\. legislation; the mortgage backed overall PAL securities; funded policy reform in the review of a civil the roads sector)\. works contract (Dutch TF54659 and TF50477)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % NA achievement) Indicator 33 : Part E\.3: the extent of TA provision to the MOCIT for the development of the SMART-card system Provided TA to the MOCIT to take initial steps for TA to support GOR establishing a strategy for developing e- SMART-card Value government applications, system for use (quantitative including development of within the public NA See iv\.a\. or Qualitative) SMART-card access to administration government functions and (supported broadly services\. the business environment reforms under PSAL2)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % PDO (b) for Part E achieved substantially\. See Section 3\.2 and Annex 2\. achievement) Indicator 34 : (v) (s) the extent of providing TA to the MOEWM to carry out reforms in the environment and water management sectors TA needed to prepare a Carried out a planned environment Provide TA to the MOEWM diagnostic analysis Value management project to (supported broadly and an action plan (quantitative build capacity (including the PFM NA for implementation or Qualitative) in a new national agency) of the Nitrates and to implement the reform/PAL and Directive; drafted environment acquis and EU integration the first version of effectively absorb EU process/CAS) a strategy for xx funds\. contaminated area; and helped set up the operations of a new agency, NAPA (Dutch TF54659 and PPIBL)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % NA achievement) G\. Ratings of Project Performance in ISRs Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 12/16/2002 Satisfactory Satisfactory 0\.00 2 05/08/2003 Satisfactory Satisfactory 0\.00 3 12/16/2003 Satisfactory Satisfactory 0\.04 4 06/14/2004 Satisfactory Satisfactory 0\.78 5 12/16/2004 Satisfactory Satisfactory 0\.83 6 05/24/2005 Satisfactory Satisfactory 2\.41 7 11/22/2005 Satisfactory Moderately Satisfactory 2\.91 8 05/09/2006 Satisfactory Moderately Satisfactory 3\.90 9 11/16/2006 Satisfactory Moderately Satisfactory 4\.60 10 12/28/2007 Satisfactory Moderately Satisfactory 10\.59 11 01/31/2008 Satisfactory Satisfactory 11\.02 12 12/05/2008 Satisfactory Satisfactory 18\.45 13 01/09/2009 Satisfactory Satisfactory 18\.54 H\. Restructuring (if any) Not Applicable xxi I\. Disbursement Profile xxii 1\. Project Context, Development Objectives and Design1 1\.1 Context at Appraisal Country background\. A few years before the appraisal of the Private and Public Institution Building Loan (PPIBL), the Romanian economy had begun growing again, reaching a real GDP growth rate of 5\.3% in 2001\. However, the way in which it was being financed led to growing macroeconomic imbalances, including a rising current account deficit\. In 2000 the Government of Romania (GOR) defined a bold economic reform strategy to sustain the economic recovery and keep the country on a sustainable growth path\. The strategy was consistent with Romania's quest to accelerate its integration to the European Union (EU)\. Banking sector privatization and financial sector development\. The GOR had been implementing an ambitious banking sector privatization and restructuring program since 1999 to end the public sector banking so as to eliminate it as a source of financing of loss-making state owned enterprises (SOEs) and to build a more competitive financial sector\. The GOR planned to complete the privatization of the two remaining state commercial banks the BCR and the CEC - (about 42% of the banking sector assets); strengthen the legal and regulatory framework; enhance banking sector infrastructure (i\.e\. payment systems, accounting and auditing framework); improve the functioning of the Government securities market; develop the capital markets for debt and equity instruments under proper supervision; and develop the Insurance Supervision Commission\. Enterprise sector divestiture\. Likewise, since 1999, the GOR had privatized or liquidated a range of SOEs and closed down non-viable and environmentally damaging mines\. These reforms aimed at cutting arrears of SOEs to utilities, other commercial creditors, and the budget; reducing high fiscal and quasi fiscal costs of supporting loss- makers; improving efficiency of large industrial enterprises; and increasing the level of new direct investment and new owners, thus stabilizing the economy and providing a more fair environment for private sector growth\. Yet there were still about 600 SOEs in early 2001 to be privatized in the manufacturing sector from the more than 7500 SOEs back in 1992\. The private sector share of GDP was 69\.1 % in 2002\. The GOR's intended to complete divestiture of the state portfolio in the manufacturing sector and to move towards second wave of privatizations/restructurings in the utility sectors (energy, mining, transport)\. Utilities sector reform\. Utility companies had long suffered from low tariffs and poor payment discipline, resulting in the build-up of arrears and cross subsidies to inefficient state owned enterprises\. The GOR intended to reduce the quasi-fiscal activities of energy utilities by carrying out a major reform of the electricity, oil and gas sectors that would introduce a modern legal, regulatory and institutional framework to: (i) encourage competition, efficiency, reliable service, fair pricing, and proper regulatory oversight; and 1The length of the ICR is justified by the number of financing sources, complexity of the design and the policy objectives included in the PDO that call for discussion of the policy reforms\. 1 (ii) to enhance the independence and strengthen the institutional capacity of the regulatory agencies\. Business environment\. The Romanian business environment was characterized2 by macroeconomic instability, uncertainty about regulatory policies, high tax rates and administration, high cost and difficult access to financing, corruption, contract violations, and anti-competitive practices\. As result, Romania did not compare well among the Central and Eastern European countries either in the private sector output as % of GDP (2nd lowest) and average foreign direct investment as % of GDP (2nd lowest)\. The GOR planned further reforms to: remove barriers that impeded business development, including for e-business; rationalize fiscal inspection; streamline the building permit process; enforce corporate governance; advance tax reforms, including by the adoption of e-taxation; and ensure wider use of the international accounting standards and more efficient bankruptcy procedures\. Institutional and governance reform\. The GOR was acutely aware of having to launch reforms of the institutional, regulatory and governance framework to improve efficiency and effectiveness of allocation of public funds and delivery of public services\. Frequent changes in legislation and weak institutional capacity had led to poor delivery of services and an acute impact on the business environment and private sector development; the public sector was perceived and experienced to be inefficient and poorly accountable at the central and local levels; and the large quasi-fiscal deficits implied that public resources were allocated in a non-programmed, discretionary manner during the budget year\. In addition to continuing structural reforms, the GOR therefore laid the basis for a programmatic approach in 2000 to address these issues\. Rationale for Bank assistance\. The PPIBL was a follow-on technical assistance (TA) project designed to: (a) allow the completion of the activities remaining after the Private Sector Institution Building Loan (PIBL; FY99) to support the Second Private Sector Adjustment Loan (PSAL2; FY02); and (b) to support mainly energy and public sector reforms under the planned Programmatic Adjustment Loan (PAL; FY05)\. The loan was considered justified based on: (a) the positive experience in twinning an adjustment loan (PSAL) and a TA loan (PIBL) that allowed timely availability of funds and appropriate terms of reference, consistently designed to achieve the objectives of the policy reforms agenda3; and (b) the Bank's extensive experience in complex reforms and strategic use of TA\. These operations reflected the GOR's priorities and constituted the key elements in the FY02-04 CAS\. The operations were linked to the GOR's continued progress in areas where the IMF's 2001 standby agreement had highlighted the needs for reform and were coordinated with the EU accession program\. 2 EBRD-World Bank Business Environment and Enterprise Performance Survey (BEEPS) 2005\. 3 The success of twinning the two projects attracted unanticipated donor funds - the Dutch TF050477 was approved in May 2002 and linked to the PPIBL to support it\. The second Dutch Grant TF054659 was approved in January 2005 to support the PAL\. 2 1\.2 Original Project Development Objectives (PDO) and Key Indicators (from Project Appraisal Document)4 The goal of the Private and Public Sector Institution Building Loan (PPIBL) is: (a) to provide the required technical assistance (TA) to implement the policy measures which will be supported by the Private Sector Adjustment Loan II (PSAL II); and (b) to lay the ground for the reforms that will be implemented under the proposed Programmatic Adjustment Loan (PAL), formerly the Institutional and Governance Reform Structural Adjustment Loan\. The PPIBL is a follow-on operation that will continue to provide the needed TA that began under the first Private Sector Institution Building Loan (PIBL) of which its entire amount is almost fully committed\. The PPIBL is a natural continuation of the PIBL\. The PPIBL will provide a small amount of funding to complete few remaining private sector actions while targeting the majority of the project resources to energy and public sector reforms\. In this sense, it aims to achieve the following objectives: (i) a competitive financial sector predicated on the restructuring and privatization of state-owned banks, development of securities markets, and improvements in legal, regulatory and institutional support structures; (ii) enhancement of the private sector's role in the economy through the privatization of state-owned assets; (iii) a more efficient and service-oriented energy sector based on needed restructuring and privatization of key industries, introduction of a sound regulatory framework, reduction in arrears, and clarification of new tariff schemes to achieve cost recovery; (iv) a competitive private sector based on the creation of an environment conducive to private sector growth and development; (v) a more responsive, transparent and accountable public sector; and (vi) adoption of critical measures to provide social protection during the adjustment period and to establish effective poverty reduction mechanisms\. 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO was not formally revised\. The key indicators were refined (see Section 2\.3) during the last supervision missions through an aide memoire\. 1\.4 Main Beneficiaries The primary target group included the Romanian economy as a whole, the private sector and citizens more generally\. Benefits of structural reforms in the enterprise and financial sectors were enhanced prospects for growth and sustainability of macroeconomic stabilization\. Benefits of institutional and governance reforms were a more predictable legal environment, more enforceable legal rights, streamlined administrative procedures and a more transparent, accountable and responsive public administration\. 4 There are inconsistencies in the PDO between the PAD and the Loan Agreement\. There are also inconsistencies in the key indicators within the PAD\. See Section 2\. 3 Annexes 11, 12 and 13 contain information on the original secondary target groups and additional secondary target groups in the public sector that were included through the 2004 and 2006 loan amendments (see Section 1\.6)\. 1\.5 Original Components The Project consisted of the following six Parts (components) (see Annexes 11 and 12): Part A: Financial Sector Restructuring and Privatization Support Part B: Privatization Support for State-Owned Enterprises Part C: Privatization Support for the Energy Sector Part D: Support for an Improved Business Environment Part E:\. Institutional and Governance Reform Part F: Project Management Unit (PMU) 1\.6 Revised Components The components were not revised, but some new activities were added under Parts D and F and new sub-components were added under Part E\. Two loan amendments were approved by the Bank management (one in 2004 and 2006 each) to revise the original components so as to reflect in them mainly the advancing and the deepening of the programmed public sector reform (see Annex 13)\. The 2004 amendment expanded support to: (a) the agreed PAL reform program that included a number of new activities introduced since the initial design dating back 2002; (b) a new PAL PMU established in the Prime-Minister's Chancellery in 2004 to monitor the preparation and implementation of the PAL reform progress (its set-up in the Prime Minister's Chancellery was seen as an insurance against political and implementation risks); and (c) some small new activities under Part D\. The 2006 amendment provided support to prepare two projects planned in the FY06-09 CAS to deepen the public administration reform initiated under the PAL and necessary for the EU accession process; one for the National Agency for Fiscal Administration and the other for the Ministry of Environment\. After the cancellation of the PAL, there were no additions to the procurement plan\. These amendments were approved as minor changes by the Bank management\. Retrospectively, a restructuring would have been appropriate to formalize the significant changes in the PDO, project design, as well as expenditure category and component costs, They resulted from financing practically four of the six components under parallel financing due to their overlapping objectives with those of the PPIBL (see Section 1\.7)\. 1\.7 Other significant changes Changes in financing the components and activities and in their costs, as defined in the PAD and in the subsequent loan amendments\. The financing of the components and activities defined in the PAD (referred to as "the Project") changed significantly during the implementation\. The changes that took place during the implementation were not formalized appropriately through restructuring of the PPIBL\. They resulted in about $15 million of parallel foreign financing, including $10 million from the PIBL, $3 million from the Dutch Grant TF050477, $2\.3 million from the Dutch Grant TF054659, 4 and about $4 million of counterpart funding5 for the Project activities (see Annex 1) (excluding the EU)\. See Section 2\.2 for explanation of the factors that led to this\. In addition, the component costs, as far as financed by the PPIBL, changed significantly between the appraisal and the completion (see Annex 1)\. The significant changes that took place during the implementation were partially reflected in the reallocations of loan proceeds between disbursement categories approved by the Bank management (see below), but they were not formalized appropriately through restructuring of the PPIBL\. Thus, Part E accounted for 89% of the costs financed by the PPIBL (and the counterpart funds) at completion compared to 55% of the baseline costs at appraisal\. The cash management sub-component (E\.1\.i\.a) accounted for 57% of the Part E total costs (there were no appraisal estimates available)\. Part F accounted for about 8% of the PPIBL baseline costs (of which 61% for the PPIBL PMU, including audits, and 39% for the PAL PMU) compared to the estimated 1% at appraisal (that represented the costs of the PPIBL PMU for one year since the PIBL financed the rest)6\. In addition to Parts E and F, the PPIBL financed minor amounts under Part A (2% compared to the estimated 20%) and Part D (0\.6% compared to the estimated 9%)\. The PPIBL did not finance any activities under Parts B and C\. At completion $60,000 of the PPIBL was cancelled\. Changes in disbursements by expenditure categories under the PPIBL\. The Bank management approved a reallocation of loan proceeds in 2004 and 2008 from Consulting Services and Civil Works to Goods and Incremental Operating Costs in response to the request of the Borrower (see Annex 1)7\. The reallocations were approved as minor changes (instead of formalizing them appropriately by restructuring the PPIBL)\. They led to significant changes in disbursements by expenditure category at completion\. Disbursements under the Incremental Operating Costs Category accounted for 699% and Goods for 188% of the appraisal estimates\. The nature of the PPIBL changed de facto from a TAL to an investment loan due to the actual share of about 50% of infrastructure investments of the PPIBL proceeds compared to 26% at appraisal\. The increase in disbursements under Goods was mainly in response to the MOPF's request for supporting a move to a modern Treasury which was a priority of the MOPF8 as a critical tool to improve public expenditure management\. The PPIBL PAD envisioned primarily support to establish a connection between the Treasury and the interbank payment system, using the Transfond, so as to improve cash management\. The additional investments that were made during the Project implementation were guided by the MOPF's IT strategy from 2003 that was based on a number of recommendations from numerous reviews and recommendations made by the donor community to realize the full advantages afforded by implementation of a Treasury system9\. One key input was the PAL team's 2003 appraisal of the Romania's Treasury IT system and recommendations 5The amount of counterpart funding may include some counterpart funding for the PPIBL\. 6Later the 2004 amendment provided for the financing of the PPIBL PMU for another three years in addition to providing for financing of the costs of the PAL PMU\. 7The amendments were cleared by the Bank's legal, loan and procurement or financial management departments\. 8Aide-Memoire dated April 4, 2003 9 Romania: Public Sector Financial Management, 1998; Romania: Building Institutions for Public Expenditure Management: Reforms, Efficiency and Equity, 2002; Romania: Country Financial Accountability Assessment (2003)\. By 2003 the EU was launching a multi-million dollar TA project for Treasury modernization, including support for designing the MOPF's IT strategy\. 5 with the initial cost estimates of $14 million (without taxes) for further modernizing the Treasury system (see Section 2\.2)\. This appraisal (and the subsequent 2003 Country Financial Accountability Assessment, CFAA) proposed to upgrade the existing IT&C infrastructure and the systems to improve Treasury operations (which in turn improved cash management) instead of implementing an integrated package software\. The reason for this strategy was that the Romanian Treasury already had several functional applications in place to support their functional processes and a very costly ministerial project would have been needed to replace these with an integrated package\. The Bank IT/Treasury specialists recommended that the Treasury start by establishing a connection to the Transfond, the interbank payment system, and a debt management system as a short term measure to achieve some quick wins\. As a longer term strategy, the Bank specialists proposed that the Treasury develop an integrated public financial management system, including a centralized and real-time public accounting ledger, public contracts central database, integrated budgetary credit management workflow, central data warehouse, and public finance portal\. These recommendations were incorporated into the MOPF's IT strategy from 2003 and over time were supported under the PIBL and PPIBL based on the MOFP's requests\. The strategy aimed at improving the shortcomings in the budget execution, and fell under the overall objectives of the PPIBL of improving public expenditure management, reducing arrears and improving the quality and delivery of public services\. Changes in the implementation schedule of the PPIBL\. Implementation of the PPIBL started with a 2-year delay as a result of: (a) delays in preparing the PAL due to delays in completing the PSAL2 that led to delayed effectiveness of the PPIBL; (b) the GOR's request and the Bank's agreement to disburse other ongoing loans and grants to finance the PPIBL activities before or instead of the PPIBL (see above and Annex 14); and (c) delays in implementing some overlapping activities under the PIBL which the PPIBL was designed to continue (Treasury modernization)\. After the implementation had started, the Bank management approved extension of the closing date three times for three and a half years in total for the following reasons: (a) on December 20, 2004, an extension was granted for two years until June 30, 2007 to allow implementation of the activities that had been identified with a delay under Part E to support the PAL; (b) on August 21, 2006, an extension was granted for one year until June 30, 2008 to enable the Borrower to utilize all the funds under the Loan for new activities that had been identified earlier to support the PAL under Part E10; and (c) on February 25, 2008, an extension was granted for six months until December 31, 2008 to enable implementation of the last contracts that were undergoing long procurement process under Part E\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry Soundness of the background analysis\. Significant background analysis was done in the context of the adjustment loans that the PPIBL was designed to support\. The sound, 10The extension notification indicated this was an exception to the closing date policy since then the closing dates were not extended to complete new actions proposed to be added after a project mid-term review\. 6 extensive and high quality analysis11 identified the key sub-sectoral issues and institutional constraints and helped develop programmatic reforms\. However, not equal analysis was done for identifying the specific TA activities and their expected contribution toward achieving the policy reform objectives (see below)\. The lessons about the importance of good PMU arrangements mitigated the risks from inadequate capacity of the beneficiaries through efficient administration of the large and complex TA by the PPIBL PMU\. The lessons about the best practice privatizations led to provision of investment banks advisory services and introduced greater transparency to the process\. Finally, the lessons from addressing the financial and private sector and public sector reforms together helped address the interlinked issues in these sectors\. The rationale for twinning a policy reform loan with a TA loan, when expertise for reform implementation was needed, had been tested with successful outcomes in Romania (i\.e\. PSAL-PIBL)\. However, despite the recognized weak reform implementation capacity of the GOR, there was no clear rationale for incorporating Parts A-D under the PPIBL since, at the time of the approval of the PPIBL, the PIBL had unused funds for similar activities and the Dutch Government granted funds for some similar activities, as well (albeit unexpectedly)12\. New TA for Part E was justified because the public sector reform agenda was expected to grow substantially under the PAL\. The effectiveness delay of the PPIBL and the overlapping designs of the PIBL and the grants and the GOR's preference to use first them delayed the start of disbursements under the PPIBL but did not affect the outcomes that were overall substantially achieved under all Parts with the help of the parallel financing\. Assessment of the project design\. The PDO was inconsistent within the PAD and between the PAD and the Loan Agreement; and the PDO in the PAD included low and high level PDOs and gave the impression that the PPIBL is accountable for the high level PDOs ("More specifically, it aims to achieve to the following objectives: (i)\.(vi)")\. The PPIBL cannot however be held accountable for the high level PDOs that, as such, were clear and important for the country and the Bank, and their ambitious agenda was justified based on the previous experience in implementing structural reforms\. In particular, it is not clear why the high level PDO (vi) (social protection) was discussed in the PAD and included in the PDO in the PAD since no activities were planned for it under the PPIBL\. The lower level PDO ("TA to implement the PSAL2 policy measures and to lay the ground for PAL reforms") indicated different levels of accountability but was realistic\. All original components of the PPIBL were reasonably linked to the lower level TA objectives except for two: (i) Part C included some activities already financed by the PIBL; and (ii) Part D included a number of different activities that were unrelated to each 11See the PSAL2 and PAL ICRs (a QAG review conducted in 2005 gave a best practice rating for the Quality at Entry of the PAL1)\. Other analyses were done in addition to those listed in the PAL1 ICR, such as the Public Sector Financial Management Review (1998), Implementation of the Comprehensive Development Framework Principles in a Transition Economy, Fiscal Transparency ROSC (2002), Romania Public Finance Project Assessment (2002) to identify the strategic elements and implementation plan of the MOPF IT&C strategy, Country Financial Accountability Assessment (2003), Restructuring for EU Integration the Policy Agenda (2004)\. 12Interestingly, in 2001 the PIBL was fully committed, but as the privatization commitments were funded by the GOR, the PIBL accumulated unused resources by 2002\. 7 other and not directly linked to the policy programs\. In the end, Part C was financed by parallel financing and outcomes were not affected, while Part D results were only modest, since spreading resources between so many different purposes contributed to reducing the development effectiveness\. As the component design followed the complexity of the policy programs, it led to high complexity that was a factor in delaying implementation of the Project despite the efficient PMU arrangements\. Other factors included the high number of agencies involved in the implementation of the reform programs (and the ambitious high level PDOs), their limited institutional capacity and readiness to embark in the reform program and, in particular, their limited or even absent experience with the Bank's projects coupled with the need for coordinated intergovernmental efforts\. Finally, it was unrealistic to expect that the original 3-year implementation period would be sufficient for a complex TA loan that supported ambitious reforms\. Adequacy of Government commitment\. The GOR was fully committed to the ambitious program of structural and institutional reforms supported by the Project because they were anchored in the EU accession, a priority of the GOR\. The commitments to the EU related to adoption of the acquis to "close" the negotiating chapters, but also to the overall need to achieve the status of a functioning market economy, a precondition for the accession\. The GOR's commitment was demonstrated by the successful implementation of the PSAL1/PIBL program, eventual completion of the Board actions of the PSAL2 with a timetable for subsequent actions under the PAL program and establishment of a high-level PMU within the Chancellery of the Prime Minister in 2005\. Assessment of risks\. The estimated risks were relevant, but some of them could have been higher or they could have included more risks\. Due to the PPIBL's linkage to the ambitious policy reforms, the risk rating of the GOR's commitment could have been higher despite the demonstrated commitment at appraisal\. The risks could also have included poor market conditions that affected the privatization activities and led to changes in the funding of the PPIBL's activities (see Section 1\.7), as well as the weak institutional capacity of the new beneficiaries under Part E for implementing and absorbing the TA that affected the implementation pace\. Most importantly, the mitigation measures did not have alternative measures to help strengthen the results of the TA interventions in the possible absence of the leverage provided by a policy loan\. This risk materialized and reduced some outcomes under Part E (see Section 2\.2)\. No Quality at Entry assessments was carried out on the PPIBL\. A Country Lending Assessment from 2004 gave an overall unsatisfactory rating to the PPIBL\. The specific ratings were: moderately unsatisfactory rating for strategic relevance (especially for appropriateness of scope in the context of the CAS framework, clarity of the PDO definition and its consistency with the result framework, relevance to Romania's strategies and adequacy of country and sector knowledge underpinning the project); unsatisfactory ratings for design (especially for use of lessons, implementation readiness at approval, adequacy of capacity assessments of project beneficiaries and appropriateness of monitoring project implementation and reviewing progress with the Borrower), implementation (especially for quality of Bank identification, assessment and 8 resolution of problems, quality of Bank actions and follow-up, performance and progress monitoring, and realism and quality of project's performance reporting and risk rating) and Bank inputs and process (especially for quality of engagement of the project with strategic country clients and key counterparts); and satisfactory rating for participation and partnerships\. Some criticism is valid (i\.e\. the M&E issues; adequacy of capacity assessments; weakness in the Bank supervision; relevance for a new TA loan)\. Based on the information at completion on the results achieved, some other criticism is not valid any more\. Namely, the QAG assessed the project when the PPIBL was not active and other funds were used to finance its activities, while the ICR has the opportunity to take a holistic view on the results\. Thus, all components, as described in the PAD, achieved their objectives on the average substantially irrespective of the source of funding\. In addition, the Bank increased efforts to remedy the earlier slow progress and lack of proactivity towards the end of the Project\. 2\.2 Implementation Factors generally subject to government control Availability of parallel financing\. Availability of parallel financing affected negatively the implementation of the PPIBL but it did not affect its outcomes that were achieved on the average substantially under the parallel financing\. There were several reasons for availability of the parallel financing (see Annex 14)\. First, the Dutch Government offered the first grant (TF050477) to support the policy reforms unexpectedly in early 2002 under a tight deadline\. Due to this, the GOR and the Bank agreed that some of the activities appraised under the PPIBL be financed under the grant (and that the PPIBL finance activities to be identified under the PAL)\. The GOR also preferred to disburse grant funds first as they were "cheaper" and they had a more limited implementation period\. The grant was later amended to support public sector activities and extended until May 2006 in response to the GOR's request; this affected Parts A, D and E\. Second, the GOR requested and the Bank agreed that the PIBL be drawn down first for similar activities, given their similar design, prior to utilization of the PPIBL and that PIBL be extended January 200513; this affected Parts A, B, C and D\. Third, the Dutch Government awarded the second grant (TF054659) in early 2005 to assist the PAL program (together with the PPIBL) and extended it until December 2007; this affected Part E\. Fourth, the EU accession process attracted massive amount of capital inflows to Romania as foreign investment and privatization receipts and strengthened the growth so that the PPIBL financing lost its attraction and Project financing changed significantly\. Often beneficiaries requested funds from several sources, including the PPIBL, and as the requested EU grant funds were approved in due time, the PPIBL financing was cancelled\. 13The PIBL was originally expected to close in June 2002, but it was extended until January 2005\. It was fully committed yet in 2001 but as some of the privatization commitments made under the PIBL were cancelled due to the GOR's decision to use its own funds for financing them, the PIBL had unused resources available in 2002 for similar activities as the PPIBL (the PPIBL was designed to complete the activities launched under the PIBL to support the PSAL2)\. 9 These factors affected the implementation of the PPIBL negatively and positively: (i) Parts A-D were financed by the parallel financiers except for minor amounts under Parts A and D; (ii) therefore disbursements under the PPIBL did not start until late 2004; and (iii) the availability of unused funds under the PPIBL allowed to widen and deepen the TA under Part E (i\.e\. cash management, tax administration, environment; see Sections 1\.6 and 1\.7)\. The subsequent availability of unused funds under the PPIBL led to substantial results, in particular, under the "cash management" (the Treasury modernization) sub-component\. The difference in the actual costs ($25 million of foreign financing) and the estimate ($14 million without taxes) is explained by the fact that the actual work done under the Project went beyond what was defined in the PAD\. The items financed by the Project were broadly in line with the items in the estimate provided by the Bank's PAL team (except that the contracts data base was not implemented), but the intervention in the area of the clearing system went beyond establishing the connection to the interbank clearing system, as envisaged in the PAD, to modernize this system and the other interventions resulted in a more extensive renovation/ upgrade of the IT infrastructure ( i\.e\. replacement of servers, work stations etc\.) than envisaged in the Bank's PAL team's cost estimates (see Section 1\.7)\. Ultimately, these changes resulted in substantial improvements in speed, volume, controls and forecasts in Treasury operations and communication (see Section 3\.2\. and Annex 2)\. Government's commitment to policy reforms during pre and post-EU-accession14\. The EU accession context affected the implementation and outcomes of the Project, as defined in the PAD, both negatively and positively\. On one hand, prior to accession, the Project (initially financed mainly by parallel financiers) performed well in its support of the reform agenda - first under the PSAL2 and, then after an initial delay, under the PAL that was anchored in the EU accession (a priority of the GOR)\. In addition to the reasons explained above, the initial delay in starting disbursements under the PPIBL resulted from the longer than anticipated preparation of the PAL1 that had started in 2002 and slowed down in 2003 but was overcome as the new 2004 Government reconfirmed the EU accession as its priority and adopted the PAL program as its own\. Consequently, Part E under the PPIBL was expanded in scope to support the agreed PAL agenda and disbursements started (albeit with a delay, in 2005 and increasingly in 2006)\. On the other hand, as prospects for the EU accession firmed and after it had happened, the GOR's determination to advance reforms waned\. The Bank suspended further work under the PAL in January 2007, following the lack of response from the GOR to the Bank's invitation to negotiate the PAL 2 in mid-2006\. Subsequently, in the pre-accession context, the results of the Project interventions under Part E were undermined because the GOR was not motivated to implement the policy recommendations prepared under the Project and the Project had no leverage in the absence of the PAL\. This factor affected, for example, the outcomes under the overall public expenditure management reform, civil services reform, judicial reform and education financing reform under Part E\. 14Romania started accession negotiations in February 2000; it signed the Accession Treaty in April 2005 with the joining date stated as January 1, 2007; and in September 2006 the EU recommended confirming joining, as scheduled\. 10 Factors generally subject to implementing agency control Management effectiveness\. Good performance of both the PAL PMU and PPIBL PMU helped implement the ambitious and complex policy and TA program satisfactorily and mitigate the lack of capacity in the beneficiary agencies and thus affected the implementation positively\. The existence of the PAL PMU also strengthened the strategic relevance of the TA as it decided the TA interventions together with the PAL team15\. Implementation delays (loan extensions) The PAD envisioned an unrealistic implementation period (3 years)\. It did not consider: (i) the risk of delays in preparing a complex policy program; (ii) the risk of low procurement and project management capacity of the beneficiaries; and (iii) the emerging agenda in modernizing the Treasury system\. Thus, in addition to all the above factors, the PPIBL implementation delays resulted from the decision to finance the MOPF's IT strategy that aimed at building an integrated public financial management system based on the input from the donors, including the Bank (see Section 1\.7)\. The PAD envisioned investments in a short-term measure (connection to the interbank payment system) while the Project eventually began to support the longer term project for building an integrated public financial management system, as per the recommendations of the PAL and the CFAA\. The loan extensions that were made to catch up with the implementation delays helped fully utilize the PPIBL for the new PAL related activities under Part E and increase the results, in particular, under the Treasury modernization sub-component\. The project was not considered to be at risk at any time (see Section 5\.1\.b)\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization M&E design\. In light of the current standards on M&E, the original M&E design was very weak\. Besides the age of the project, this was perhaps due to the dependent and supportive role of a TA loan (see also 2\.1)\. The PDOs and indicators were inconsistent within the PAD and between the PAD and the Loan Agreement\. Some PDO indicators (i\.e\. "key milestones" as mentioned in the PAD for Part E) were not later defined; and others were not measured (i\.e\. "sound functioning of institutional support structures for market based growth")\. The component level indicators were mostly outputs which was appropriate in case of important outputs (i\.e\. "a privatization strategy") or lacked targets to indicate changes in the immediate project beneficiaries ("strengthen x's capacity")\. The result framework was not improved during the life of the project except for the last supervision missions during which discussions focused on how to retrofit the result framework to provide a fair basis for evaluation\. New and refined indicators provided a framework for evaluation, but they did not, as such, could not suggest any means to evaluate the changes in the absence of targets ("provide TA to support x")\. 15After the PAL PMU was closed, the relevance did not necessarily reduce because the Project was thereafter mainly implementing previously agreed interventions\. 11 M&E implementation\. The PPIBL PMU monitored the project implementation and maintained and monitored very detailed tables on procurement of contracts and use of all loan and grant funds\. While the PPIBL PMU collected data on the actual delivery of TA and the Bank supervision team reported on its completion, the PAL team and the PAL PMU focused on monitoring the outcomes and the progress of the policy reform, using additionally the quarterly report on the PAL indicators produced by the PAL PMU until late 2006\. M&E utilization\. The PPIBL PMU and the Bank supervision teams used the procurement and disbursement data to monitor the implementation progress and to discuss resource allocation\. This data was reported in the Bank's supervision reports\. The PPIBL supervision reports did not monitor the results of the TA interventions until during the last year of supervision, as described above\. 2\.4 Safeguard and Fiduciary Compliance Financial management\. The Borrower maintained a highly satisfactory financial management system\. It respected the relevant IBRD loan and Dutch grants financial covenants by submitting to the Bank quarterly financial monitoring reports and annual audit reports in a timely manner and in a format and content acceptable to the Bank\. Audit opinions were all unqualified and no internal control issues were mentioned\. Counterpart financing received from the GOR was highly satisfactory\. Procurement\. The PMU procurement function was carried out satisfactorily and in accordance with the Bank's guidelines and the legal agreements\. Waivers\. The Bank management approved an exception to the closing date policy in August 2006 and agreed to the use of Project cost savings for new activities to be added to the Project based on the enhanced value to the Project (OP/BP 13\.30 and 13\.25)\. 2\.5 Post-completion Operation/Next Phase In March 2009 Romania agreed on a multilateral financial support package with the IMF, the Bank and the EU to address the effects of the global economic and financial crisis and promote the reform agenda of the GOR\. This reform agenda will practically resume the reforms supported by the PAL but halted with the EU accession in 2007 (see Section 4)\. In addition, some Bank projects continue to provide TA to the PPIBL beneficiaries to support Romania's integration with the EU\. These include the Knowledge Economy Project (FY06), Judicial Reform Project (FY06), Health Sector Reform Project (FY05), Integrated Nutrient Pollution Project (FY08) and Hazard Mitigation and Emergency Preparedness Project (FY04)\. 12 3\. Assessment of Outcomes16 3\.1 Relevance of Objectives, Design and Implementation The PPIBL's objectives, design and implementation are substantially consistent with Romania's current development priorities and the Bank's country strategies (CAS FY06- 09)\. First, the core public sector reforms supported by the Project were in line with the GOR's aim to access the EU that was the anchor of the PAL\. The sub-components added in 2006 also aimed ultimately at improving the public expenditure management reforms although they did not support specific PAL conditions\. The objectives remained appropriate after Romania joined the EU even though the GOR's motivation for reforms waned\. They have become again priorities for the GOR due to the global financial crisis (see Section 2\.5)\. Second, the privatization and restructuring objectives were substantially relevant and were mostly achieved in accordance with the GOR's strategies early in the Project life (except in the energy sector)\. The complex design and a large number of beneficiary agencies followed the model of the ambitious and complex PAL agenda that the Project supported\. In this regard, they were relevant but they led to implementation delays (see Section 2\.2)\. The Bank and the GOR responded appropriately to the shortcomings in the capacity by establishing and maintaining the PAL PMU under the PPIBL financing in 2005-2006 although more attention could have been paid to strengthen the implementation capacity of the beneficiary agencies\. In addition, while Part C and D supported the GOR's reform programs in respective areas, they were not linked to the PSAL2/PAL programs to the same extent or directly, respectively as the other components\. 3\.2 Achievement of Project Development Objectives The objectives were achieved to a substantially extent (see Table 1) against the PDOs explained in the Datasheet\. The rating is calculated based on: (i) the component weights that were determined based on the original project cost allocations and the intentions of the PAD to focus on energy and public sector reforms; (ii) the weighted ratings of the components; and (iii) the total rounded rating\. The following text describes the Project outcomes for evaluation purposes and the status of policy reforms for information\. Table 1\. Rating of the contribution of the components to the PDOs Component Weight Rating Weighted rating Part A 0\.1 3 = substantial 0\.3 Part B 0\.05 4 = high 0\.2 Part C 0\.2 4 = high 0\.8 Part D 0\.05 1 = negligible 0\.05 Part E 0\.6 3 = substantial 1\.8 Rating 3\.15 (about 3 = substantial) 16It is important to read this section together with Annex 2 that describes the results of the TA activities and their outcome in terms of how they implemented or contributed to the benchmarks of the policy programs or supported the GOR's reform programs\. 13 Part A: Financial Sector Restructuring and Privatization Part A achieved the objective of providing the required TA and implementing PSAL2- supported policy measures, PDO (a), and laying the ground for reforms supported by the PAL, PDO (b), to a substantial extent (see the Datasheet and Annex 2)\. Funding was provided by the EU, PIBL, Dutch TF050477, PPIBL and the beneficiaries\. The Project contributed to strengthening the capacity in the CEC and regulatory agencies effectively and can take some of the credit in that the CEC has improved its indicators; the CNVM has improved its compliance with the IOSCO standards; and the ISC has improved its capacity in specific fields, as demonstrated below\. The success of the policy reforms that the CEC was not privatized; that capital markets are not as developed as in the neighboring countries; and that enforcement needs strengthening are affected by factors outside the control of the Project\. 1\. The Savings Bank (the CEC)\. The required TA was provided (under the PIBL and the Dutch TF059477) to restructure the CEC and offer it for sale, but the sale of the CEC was not completed as the GOR did not accept the bid price\. Thus, the PSAL2/PAL policy objective that the GOR exits from the banking sector was not fully achieved\. The ownership structure of the banking sector has changed significantly between 2002 and 2008 as a result of the policy reforms\. About 5% of the total banking sector assets, representing the CEC, compared to about in 2002 remains in the State's ownership\. The CEC has undergone additional restructurings and management changes, resulting in improved operational efficiency, profitability and ability to diversify its activities to become less dependent on interest revenues (see Table 2)\. The banking sector overall has made similar progress, although starting from a better position\. Going forward, the multilateral financial support package for the crisis will support financial sector reforms to enhance the resilience and functioning of the sector (see Section 4)\. Table 2\. Financial indicators for the CEC and the banking sector in total 31\.12\.2004 31\.12\.2008 Indicators CEC Banking CEC Banking sector (est\.) sector 1\.Aggregated Cost/Income Ratio 77\.79% 61\.6% 43\.89%* 55\.5% 2\.Aggregated Capital Adequacy Ratio 47\.12% 20\.6 % 18\.86%** 12\.3 % 3\. Return on equity 9\.26% 22\.53% 4\. Aggregated Net Interest Income / Total net 81\.83% 53\.25% 51\.76% 52\.44% revenues (including the result from the credit provisioning activity Source: CEC 2\. The National Securities Commission (CNVM) and the Bucharest Stock Exchange (BSE) (see also Parts E\.1\.i\.d and E\.12)\. The Project (namely the Dutch TF050477 and the PPIBL) and, most importantly, the EU provided TA to strengthen the legal, regulatory and supervisory framework for the capital markets and the CNVM's capacity\. Thus, the legal and regulatory framework for capital markets/investment funds has been aligned 14 with the EU acquis and the regulatory regime has been largely updated to international standards17 in line with the PAL objectives\. This work was funded by the CNVM and the EU and helped meet the related PAL1-2 benchmarks\. The Project contributed to helping the CNVM develop the secondary legislation for supporting the development of new financial instruments (part of the secondary legislation for the regulated secondary market for mortgage backed securities - a PAL2 benchmark for mortgage markets) and the enabling environment for the development of corporate and municipal bonds market (the framework for setting up and supervising credit rating agencies)\. As a result of all the capacity building efforts (of which the EU provided a major amount), the CNVM's supervisory capacity and enforcement activities have improved against the IOSCO standards, with an increase in the full compliance of the Principles and resolution of previously non-compliant Principles\. These results helped meet the related capacity building benchmarks in the PAL\. The PAL policy objective of developing a comprehensive legal, regulatory and supervisory framework was achieved at the time of the cancellation of the PAL2\. The BSE has recently diversified its financial instruments, with the introduction of derivatives and government bonds trading\. Government bonds have been listed on the BSE since August 2008 and this was expected to boost market liquidity in the long term; in practice, there is little trading, the main market being an OTC market supervised by the NBR\.18 Despite these efforts, the capital markets have remained less developed than in neighboring countries and the markets for various financial instruments are on the average underdeveloped (including the secondary market for mortgage bonds and mortgage backed securities, as well as the corporate and municipal bonds market that the Project supported)\.19 3\. The Insurance Supervision Commission (ISC) (see also E\.1\.i\.d)\. The Project contributed to strengthening the ISC's capacity to supervise the market for motor vehicle third party liabilities and provided recommendations used to align the relevant national laws in line with the EU acquis to strengthen ISC's supervisory capacity in this area (thus helping meet the PAL1 benchmark)\. Thus, the ISC has increased the percentage of carriers of the motor vehicle insurance from 60% in 2003 to 90% in 2007 and expedited 17The World Bank Capital Markets Technical Note, January 2009\. 18The World Bank Capital Markets Technical Note, January 2009\. 19While the capital markets framework and CNVM's capacity have improved, market capitalization and liquidity have remained behind other Central and Eastern European countries despite significant growth until 2007 (from 8\.8 billion in 2004 to 24\.6 billion in 2007 on the Bucharest Stock Exchange) before dropping drastically in 2008 to 14\.1 billion due to the financial crisis\. Liquidity has decreased with annual turnover rising from 593 billion in 2004 to 4 billion in 2007 before falling back to 1\.7 billion in 2008\. The Romanian market lacks institutional investors due to an underdeveloped private pension funds, investment funds, and insurance market\. The markets for various financial instruments are on the average underdeveloped\. The Romanian bond market is still in an embryonic phase, although there has been an increase in the issuance of corporate and municipal bonds in recent years\. The secondary market for bonds lacks liquidity\. The corporate bond market that started trading on the BSE in 2001 has grown (from 60 million in 2005 to 184 million in 2008) but is underdeveloped, with six bonds outstanding in 2008\. The secondary market for corporate bonds is illiquid\. The municipal bonds markets that started trading on the BSE in 2001 has expanded in recent years, with higher values (from USD11\.2 million in 2004 to USD 51 million in 2007 and to USD 105\.6 million as of end-October 2008) and longer maturities (from 3\.3 years in 2004 to 19 years in 2007 and 18\.6 years at end-October 2008)\. The secondary market for municipal bonds is illiquid, although turnover has increased in recent years\. Source: The World Bank Capital Markets Technical Note, January 2009\. 15 the time required to process claims\. The Project also contributed to modifying and implementing some accounting regulations for the insurance sector in line with the EU acquis and to designing the IFRS implementation strategy, both in accordance with the Country Action Plan for 2004-2009 that aimed at enhancing the quality of the financial reporting in Romania and the implementation capacity\. The PAL policy objective of developing the insurance market was achieved at the time of the cancellation of the PAL2\. Overall, the accounting regulations have been aligned with the EU Insurance Accounts Directive and the Fourth and Seventh Company Law Directives, as well as with the Transparency Directive, the IAS Regulation, and the Bank and Insurance Accounts Directives\. However, while the regulations are largely in place, enforcement of the regulations remains weak20\. Part B: Privatization Support for State-Owned Enterprises Part B achieved the objective of providing the required TA and implementing PSAL2- supported policy measures, PDO (a), to a high extent (see the Datasheet and Annex 2)\. Funding was provided by the PIBL and the GOR\. The required TA for restructuring and privatizing pools of state-owned enterprises (SOEs) was provided to meet the key conditions in the PSAL2\. Based on all the TA, the GOR successfully completed the privatization, workouts, restructuring, and liquidation of SOEs under the PSAL2 carried forward from the PSAL1\. The PAL policy objective for privatizing the state manufacturing was achieved by end-2007 (except for some residual shares) (although the Project did not support privatization of SOEs during the PAL)\. The private sector's share of the GDP has increased from 69\.1% in 2002 to 70% in 2008 (remaining slightly under the PAL target of 75% by end-2008)\. Part C: Privatization Support for the Energy Sector Part C achieved the objective of providing the required TA and implementing PSAL2- supported policy measures, PDO (a), and laying the ground for reforms supported by the PAL, PDO (b) ,to a high extent (see the Datasheet and Annex 2)\. Funding was provided by the Dutch TF050477, PIBL, the World Bank Electricity Market Project (FY03), GOR and, most importantly, the EU\. While the first two sources financed the required assessments of electricity and gas sectors envisioned under the PSAL2, the Electricity Market Project and additional EU funding continued and deepened the energy sector reform, as framed under the PAL2 and 3 (beyond the Project activities)\. Thus, the Project contributed to the development of the electricity sector strategy (a PSAL2 condition) that became part of the 2003 Road Map for the energy sector; to aligning the legal and regulatory framework for private competition in the energy sector; as well as to strengthening the National Regulatory Authority in Natural Gas Sector in Romania (the ANRGN) and the National Regulatory for Electricity (ANRE), later merged as the Romanian Energy Regulatory Authority (ANRE) in 2007\. The PAL objective of establishing a modern electric power and natural gas sectors consistent with EU market 20Romania Report on the Observance of Standards and Codes, Accounting and Auditing, June 2008\. 16 liberalization principles was largely achieved at the time of the cancellation of the PAL2 and has now been fully achieved\. Romania has been recognized as a regional market leader in South East Europe\. Restructuring and privatization in the power and gas sectors\. Significant progress was made in the restructuring and privatization of the energy sector since its unbundling of the sector in 2000 into three generation companies (Termoelectrica, Hidroelectrica and Nuclearelectrica), the transmission operator (Transelectrica), and the distribution company Electrica (holding eight electricity regional distribution companies)\. Five of the electricity distribution companies were privatized under the PSAL2/PAL2 and three are still held by Electrica\. The electricity market operator (OPCOM Power Exchange) was launched in 2005 and has developed quickly into the most successful exchange in Eastern Europe\. Along similar lines, Romania has restructured and privatized its gas sector, after unbundling it into the gas exploration and exploitation company (Romgaz), the gas transmission company (Transgaz) and two gas distribution companies (Distrigaz Nord and Distrigaz Sud)\. While the two gas distribution companies were privatized under PSAL 2, Romgaz remained in public ownership, although it was planned to be privatized under PAL3\. In the oil sector, the Petrom was privatized under the PSAL2\. Romania updated the 2003 Road Map for energy strategy in 2007 (a PAL2 benchmark) and approved the resulting "Romania Energy Strategy for the Years 2007-2020" in September 2007\. This strategy reconfirmed Romania's commitment to: (a) improving the competitiveness of electricity and gas markets; (b) supporting the development of the Energy Community and internal energy market of the EU, and more broadly; (c) proactively participating in the development and implementation of the new energy policy for the EU\. The updated energy strategy from 2007 proposed the continuation of the privatization program, as well as continued development of Hidroelectrica (some of its units planned for sale under the PAL3) and rehabilitation of Turceni and Rovinari, resulted from Termoelectrica restructuring (planned for sale under the PAL3)\. Following the reversals in some reform areas made by the previous Government in 2008, the new Government cancelled the plans on establishment of a power holding company in January 2009, but whether it will resume the privatization program is not clear yet\. Sound regulatory framework promoting competition within the gas and power sectors (including prices/tariffs)\. A transparent and predictable commercial and regulatory framework consistent with the EU market liberalization principles has been put in place\. Thus, the electricity sector was liberalized in July 2007, and the gas sector was fully liberalized by July 2007\. The ANRE has adjusted electricity and gas prices in accordance with its regulatory framework\. Through a series of tariff adjustments by the ANRE (and the ANRGN) and major improvements in bill collection by the distribution companies (from about 65% at the turn of the century to about 100% by 2005 in both electricity and gas, ahead of privatization), the power and gas sector reached cost-recovery level by the end of 2004\. The ANRE's tariff-setting objectives for power and gas have been in line with international best practice (full transparency, public consultations, incentive-based regulatory regime with efficiency incentives in investments and operations)\. However, its recent electricity and gas distribution tariff orders have not fully reflected these objectives, and the electricity tariff order has deviated from the earlier agreed methodology\. 17 Restoration of the ANRE's standing would help increase private capital participation in the power sector\. Reduction in arrears\. As a result of the restructuring and privatization of the energy sector, the inter-enterprise arrears (delays of payment more than 3 months) in the energy sector have decreased from 2\.5% of GDP in 2002 to almost zero of GDP as of end-2007; however, due to the financial crisis, the amount of arrears is expected to have increased\. Part D: Support for an Improved Business Environment Part D alone achieved the objective of providing the required TA and implementing PSAL2-supported policy measures, PDO (a), and laying the ground for reforms supported by the PAL, PDO (b), to a negligible extent (see the Datasheet and Annex 2)\. Financing was provided by the PPIBL, the Dutch TF050477, the PIBL and the GOR\. While several targeted TA activities were not carried out, the Project mostly contributed to identifying and designing e-business activities that are now being implemented under the Knowledge Economy Project (KEP; FY06) and are providing access to information and business opportunities\. These activities did not directly support the PAL although they supported the business environment component in the Government's strategy for convergence with the EU\. Besides Part D, some of the Part E activities (described under the next component and not accounted for here) however also contributed to improving the business environment in specific areas and helped meet specific PAL benchmarks or supported the policy objectives broadly with satisfactory results\. Thus, they contributed to: improved transparency in the functioning of firms by alignment of the financial reporting and auditing in the private sector with the EU acquis; improved efficiency of the court system; and improved commercial legislation to strengthen corporate governance\. Overall, the business environment has improved, but there are areas requiring strengthening and so, on the average, Romania ranks the 47th of the 181 economies in 2009 in terms of "ease of doing business"\. Romania has improved in terms of easiness to register a company (6 procedures and 10 days in 2009; 6 and 29, respectively, in 2004)\. Romania also ranks fairly well in enforcing contracts (31st, while 35th in 2008) although the number of procedures (31) and days (512) is still high (32 and 537, respectively in 2004)\. On the other hand, the main impediments to doing business in Romania are related to paying taxes (146th in 2009 while 137th in 2004 or 113 payments and a 48% tax rate in 2009, while 108 payments and 57\.2% rate in 2006), employing workers (143th while 149th in 2008); registering property (114th while 111th in 2008), dealing with construction permits (88th while 89th in 2008) and closing a business (85th while 84th in 2008 or 3\.3 years in 2009 compared to 4\.6 years in 2004)\.21 21Based on the World Bank Policy Briefs for the Government of Romania, January 22, 2009\. 18 Part E\. Institutional and Governance Reform Part E achieved the objective of providing the required TA and laying the ground for reforms supported by the PAL, PDO (b), to a substantial extent (see the Datasheet and Annex 2)\. The required TA was provided to implement or contribute to specific PAL1 benchmarks and the planned PAL2 benchmarks at mid-2006 (except for completing the privatization of the CEC and one electricity generator company)\. In addition, half of the remaining TA outputs supported the underlying GOR's reform programs in specific areas\. Funding was provided by the PPIBL (where it was the largest component), the Dutch Grants TF050477 and TF054659, the GOR and the EU\. More specifically, the Project contributed to: (i) improving the efficiency of selected Project beneficiaries through modernizing infrastructure (the Treasury system; debt management software; IT and communication software for the Court of Accounts and its 42 territorial offices; network capacity for the Ministry of Justice and the Superior Council of Magistracy for the statistical system of the court system); (ii) adapting the legal and regulatory framework in line with acquis or international standards by proposing/ providing input to the legal and/or regulatory framework (the strategic planning system; financial reporting in the corporate sector; the 2006 decentralization reform package; the amended Company Law; proposals on improved Civil Code (under discussion); the urgent areas in the environment sector; the 2005 Labor Code (improved but still problematic); the 2006 Health reform package); (iii) building the foundation for deepening the reforms in some policy areas under the World Bank or other donor funded projects (i\.e\. judicial reform; revenue administration reform; selected areas in the environment sector); and (v) strengthening the capacity of selected Project beneficiaries by providing training to staff\. In addition, the Project contributed in a number of other policy areas where assessments were done and recommendations were made but where they did not have limited impact on policy reforms (i\.e\. education financing; civil service pay reform; action plan for dealing with corruption in the health sector, some recommendations on the health sector reform package; the medium term expenditure framework and implementation of the judicial reform)\. With regards to the outcomes of the policy reforms, the PAL1 ICR assessed that, at the time of the cancellation of the PAL, the PAL policy objectives were achieved to a varying extent or could be evaluated only after the completion of all the three phases of the PAL based on the ICR of the PAL1, as follows: health sector reforms largely achieved; public expenditure management (cash management, budget formulation, foreign financing coordination, Government accounting, internal audit, decentralization, revenue administration, the Court of Accounts), labor market and education financing reforms partially achieved; civil service, judicial and policy formulation reforms achievements could not be evaluated as they were to be completed after all the three PAL phases\. However, more recently, the reforms have backtracked particularly in the public expenditure programs (education financing; civil service pay reform; action plan for dealing with corruption in the health sector, some recommendations on the health sector reform package; the medium term expenditure framework and implementation of the judicial reform) after EU accession and due to the fatigue of the reform\. 19 1\. (i) Public Expenditure Management Romania has gone a long way towards improving the public expenditure management with the goal of bringing it on a sustainable path and aligning it to the development priorities of the country\. The public expenditure management reforms supported by the PAL with the Project's assistance focused on a series of challenging dimensions (see below)\. As a result, the fiscal compliance has been considerably enhanced, and both revenue collection and public spending have increased substantially\. Despite the progress, institutional, policy, process and capacity weaknesses continue to hamper aggregate fiscal discipline, the effectiveness of public resources allocation, and the alignment of resources with strategic priorities\. They stem mainly from weaknesses in budget management, the absence of the medium term expenditure framework and program-based budgeting rules, lack of a unitary pay and employment system in the public sector, weak monitoring and evaluation arrangements, and inadequate accountability\. These vulnerabilities have become more apparent during the recent crises\. In this respect, the GOR and the Bank started the preparation of a crises response program that will focus on improvements in these areas (see Section 4)\.22 (a) Cash management within the Treasury system (Treasury modernization) The Project helped modernize the operations of the Treasury system and improve their efficiency by remedying most of the weaknesses highlighted by the Bank and other donors (see Annex 2)\. The modernized Treasury contributed and will contribute substantially to improving accountability, transparency and responsiveness of the Treasury operations\. It helped Romania achieve the targets set for the conformance of its payment systems with the EU and international standards\. It should be noted that the policy (legal and institutional) reforms that Romania carried out prior to these interventions constitute a major component in the overall reforms of modernizing the State Treasury because the implementation of the reforms is normally most difficult in terms of the political economy considerations involved\. The elements of the new system - improved cash management, payment and receipts management and bank reconciliation - have been developed and implemented gradually since 2005 and will be completed this year (the improved budget management application will be in use starting with April/May 2009)\. The commitment management function remains to be implemented\. When the Government implements this system, it is expected that it will further improve accountability, transparency, and responsiveness of the public expenditure management\. 22Partially based on Romania: the World Bank Policy Briefs for the Government of Romania, January 22, 2009\. 20 The interventions financed by the Project and their benefits are described below: 1\. Modernized clearing and settlement inter banking system and connected with the State Treasury The Treasury implemented a secure and efficient method of transferring data between the Treasury systems and the banking network, fully compliant with the international banking standards (SWIFT) and European requirements for the EU accession\. As a result of computerizing and automating cash flows, the efficiency of executing operations related to public debt and management of liquidity has significantly increased, with visible results in: Reducing the time between the point when the payment request is made and the point when the funds become available in the beneficiary's account (practically in real time); Improving the management of liquidity and liquidity risks at the State Treasury level; Eliminating paper support, as well as streamlining and rationalizing circuits for payment instruments since these are processed by STP (Straight Through Processing); Managing government debt; and Managing financial assistance grants received by Romania, as an EU Member State (see Annex 15 for more details on improvements in efficiency)\. In fact, according to the State Treasury, the payment solution implemented by the MOPF can be replicated in other European state Treasuries, thus assuring interoperability at government agencies and business communities in the European Member States\. Going forward, the State Treasury is planning to anchor its further development to international banking standards as registered by SWIFT, as well as on international and European regulations\. It plans to evolve the payment system in compliance with the TARGET 2 and the SEPA, scaling it up to provide the possibility to support the defined clearing and settlement mechanisms, and to align its business environment to the European environment\. The State Treasury has also in mind expanding the operations profile, running in the direct manner the operations related to the management of the European funds and public debt (and thus involving multi-currency transactions)\. 2\. Updated IT and telecommunications infra structure at the MOPF and at regional Treasury offices; improved connectivity between the MOFP and Treasury to the line ministries and spending units; and established central data warehouse comprising historical data for 7-10 years to enable time series analysis These interventions enabled: The setting up of the centralized public accounting ledger\. This enabled the Treasury to prepare accurate and consolidated government wide fiscal reports in an on-line real-time basis\. These fiscal reports could be obtained on demand instead of waiting for several weeks after the end of a particular period\. This gave the Treasury real time knowledge of balances in its accounts and it therefore was better placed to make 21 timely decisions regarding their use\. This in turn enabled better cash management in the Treasury and better assessment of Government borrowing needs\. Better flow of information between the MOFP/Treasury and the Line ministries and spending units\. This in turn enabled the spending units to determine the status of budget appropriations, releases, budget transfers and additional in year budgetary allocations, if any, in an online real time basis\. The access to the data warehouse gave the MOPF and other interested users access to data and capability to perform time series and other analyses that require data spanning several years on budget execution data\. 3\. Improved web-based communication between regional, local offices and the Treasury HQ, and between the line ministries and Treasury offices and functional internet portal for the MOPF clients The successful implementation of these technologies enabled Treasury offices and Treasury clients, including spending units and providers of goods and services, and government employees online real time access to the Treasury central databases and data warehouse\. This enabled: Spending units to forward and track payment requests to the Treasury, determine their budget availability position and produce required reports\. Public institutions to determine the status of their payment requests, the available balance in their accounts and produce detailed reports on expenditures incurred and receipts\. Providers of goods and services to track the status of their invoices\. Government employees could similarly track the status of payments due to them\. Treasury and other authorized officials to access the data warehouse and perform required analyses\. (b) Budget formulation\. The Project contributed to key reform measures and proposals to the legislation/procedures passed in 2006-2008 to establish the integrated strategic planning system with the objective of linking budgets to policies/ strategies and improving the policy content (see Part E\.8); to preparing and monitoring the Strategic Development Plan (SDP) that guided the public expenditure management reform under the PAL and addressed program budgeting, accruals accounting, internal audit and external audit of financial statements and performance, as well as Treasury cash management; to building the in-house macroeconomic forecasting capacity in the MOPF through building a macro model that is now used in preparing macro and revenue projections, as part of the budget formulation process, updated quarterly with the new sets of data and run on a regular basis; and to providing a forum for discussing policies to support the real income convergence\. The Project-funded TA supported the public expenditure management and policy formulation pillars of the PAL or its specific benchmarks\. The guidelines for the preparation of the budget (the budget framework letter) have improved significantly, following the assistance of the advisor\. Expenditure ceilings for 22 the current budget year are given in the framework letter\. Unfortunately, the numerous budget rectifications within the year make those ceilings largely redundant\. Under the coordination of the Directorate for Macroeconomic Analysis and Financial Policies in the MOPF the new GOR is however considering the building of a medium term budgetary framework a top priority and expects to advance this strategy under the coordination of the Directorate\. (c) Foreign financing coordination\. The legal and institutional framework and the capacity for foreign financing coordination have been significantly improved since 2002 to improve the public debt management\. The Project contributed to improving the infrastructure of the MOPF and the NBR and institutional capacity for debt and risk management with the upgraded UNCTAC DMFAS software operational since 2006 and the Bloomberg financial services available since 2005\. Under the new debt agency the General Treasury and Public Debt Directorate set up in 2007, the MOPF has continued improving the IT infrastructure and expects to replace the DMFAS by June 2009 by a new computerized IT system (FTI-STAR)\. The improved legal framework for public debt management, revised on the basis of the recommendations of the World Bank, the IMF and others, has addressed the issues raised at appraisal and will help control public debt and its cost\. (d) Government accounting; and financial reporting (in the corporate sector)23\. With regards to the public sector side for government accounting, the Project contributed to designing and monitoring the Strategic Development Plan (the SDP) a PAL benchmark during the PAL (see E\.1\.i\.b)\. The accrual accounting has been introduced starting with January 1, 2006 for all the public institutions, but despite certain progress, this is happening in practice to a limited extent, mostly when it comes to reporting budget execution results\. With regards to the financial reporting for the corporate sector24, the Project contributed to aligning the statutory framework to the acquis communautaire as it relates to financial reporting, to improving institutional capacity of professional bodies, and other stakeholders, including by training 50 high level professional in the International Financing Reporting Standards (IFRS), and to enhancing professional education and training\. In many cases, recommendations were incorporated into the Country Strategy and Action Plan (CAP) updates to enhance corporate financial reporting in Romania25\. Romania has transposed the acquis communautaire into its accounting laws and regulations; a new Audit Law on statutory audit introduces the new requirements of the amended Eighth Company Law Directive\.26 Some aspects of this law are already 23Most of the TA activities were practically related to improving the financial reporting in the corporate sector\. 24The sectoral information is from the World Bank Report on the Observance of Standards and Codes for Accounting and Auditing (ROSC) (2008)\. 25The Bank produced the first Accounting and Auditing Report on the Observance of Standards and Codes in May 2003\. Based on the input from the Bank, the GOR approved the draft of the Country Strategy and Country Action Plan in November 2004 to enhance t h e q u a l i t y of financial reporting in Romania\. 26On November 7, 2008, Parliament enacted the law 278/7, the amended Audit Law, approving the Emergency Government Ordinance 90/2008 on statutory audit, dated June 24, 2008, and published on June 30, 2008 in Romania's Official Gazette, Part I, 481/2008\. 23 included in the financial reporting framework, such as professional education and licensing requirements, the public registry and the quality assurance system, but further strengthening will be needed for them to fully comply with the high quality requirements of the amended Eighth Company Law Directive\. The Public Oversight System described in the new Audit Law is comprehensive but its practical implementation will be challenging\. Accounting rules are aligned with the Fourth and Seventh Company Law Directives, as well as with the Transparency Directive, the IAS Regulation (EU Regulation 1606/2002), and the Bank and Insurance Accounts Directives\. Since 2007, listed companies have been required to use International Financial Reporting Standards as endorsed by the EU to prepare their consolidated financial statements\. Financial statements are available at the trade registry, albeit not electronically\. However, Romanian Accounting Standards for the enterprise sector should be made comprehensive and complemented by authoritative guidance\. Although Romania has implemented the relevant accounting directives, the absence of many elements of the necessary supporting infrastructure, combined with Romania's rule-based accounting traditions, present challenges in ensuring that the principles contained in European Union legislation are applied in a manner that leads to high quality financial reporting\. (e) Internal audit\. The Project contributed to improving internal audit skills in the public sector and to increasing the number of the CIA internal auditors in Romania to support the overall PAL objective of governance and public financial management reform\. Since early 2000 the capacity for internal audit has been strengthened with considerable amounts of TA mainly from the EU with the result that there are 120 internal auditors with the CIA certification of which at least 5 internal auditors are from the public sector (the Project funded training for 3 auditors from the public sector who transferred knowledge to others; overall the Project trained 42 internal auditors)\. (f) Decentralization\. The Project contributed to the legal and institutional framework for the intergovernmental fiscal relations and local governance finance and fiscal decentralization reform package enacted in 2006, in support of a PAL2 benchmark\. Some of the recommendations (i\.e\. decentralization formula) were reversed in 2008 but reinstated in the 2009 budget by the new GOR\. The reform package contained a list of critical reform measures and a number of amendments to address many key issues in intergovernmental fiscal relations and local governance finance (including an intergovernmental transfer formula for equalization grants)\. These measures have improved predictability of intergovernmental relations and local governance finance\. Despite these critical reforms, effective decentralization and improvement of intergovernmental fiscal relations are incomplete27\. 1\. (ii) The National Agency for Fiscal Administration (NAFA)\. The Project contributed to identifying and prioritizing the NAFA's developmental needs during the first years of its 27Romania: the World Bank Policy Briefs for the Government of Romania, January 22, 2009\. 24 operations; it enabled extensive direct transfer of knowledge from international experts to the NAFA specialists; and provided the vision and direction according to which the NAFA further developed its first strategy in 2007 for 2007-2011\. The Project-funded TA resulted in a series of recommendations for the development of the organization and of the working processes within the NAFA\. The key result is considered the NAFA's improved ability to serve taxpayers based on the IT strategy developed with the Bank- funded TA's assistance and the subsequent transfer of the IT functions from MOPF to the NAFA in October 2007\. Other recommendations helped design strategies for internal reorganization and improved business operations that have been subsequently implemented with considerable amounts of the EU assistance and continuous twinning partnerships with European tax administration that the Bank-funded TA complemented28\. In addition, the Project resulted in a draft of a revised legal framework to harmonize the tax base for collecting payroll taxes and social contributions and to create a simplified and integrated declaration and payment environment; however, the implementation of the entire legal framework and the single tax return was postponed until January 2010 by the previous Government (some provisions were approved)\. With major assistance from the EU and foreign partners and Bank-funded TA and the NAFA's efforts, Romania has made progress in the revenue administration reform by enhancing the effectiveness and efficiency of revenue collection and promoting integrity and transparency of the tax administration\. Thus, revenues collected from taxes have increased from 28\.76% of GDP in 2007 to 29\.14% in 200829 (affected by many factors)\. The administrative burden to tax payers has been reduced, and effectiveness of the functioning of the tax administration has improved (see Annex 2)\. 2\. The Court of Accounts30\. The Project contributed to improving the efficiency of the work of financial controllers, judges and prosecutors in the headquarters and the 42 territorial offices of the Court of Accounts and to enabling electronic communication between them\. These activities supported the implementation of the Strategic Development Plan for the Public Financial Management Reform for 2005-2007\. 3\. The Ministry of Communication and IT\. See Part D\. 4\. The Ministry of Administration and Interior\. The Project contributed to collecting valuable data on the private and public sector remuneration for comparable positions and preparing a reform strategy and draft legislation for a unitary pay system in the civil service in late 2005-early 2006, in support of the PAL1 benchmark and preparation for its implementation during the PAL3\. The law for establishing a unitary pay system was not however approved and the strategy was not implemented\. This has led to an increased share of the personnel costs in the budget; inequity in compensation and excessive demands by unions; unrealistic wage demands that can exceed the budget resources (the recent law mandating a 50% pay increase for the education sector is the latest example); 28The EU has provided about Euro 75 million for implementation under PHARE 2003, 2004-2006\. 29Tax Administration in OECD and Selected Non-OECD countries: Comparative Information Series 2008"\. OECD\. January 2009\. 30The Court of Accounts is the supreme institution exercising external subsequent financial control over the formation, administration and use of the financial resources of the state and of the public sector\. 25 and distortions in the labor market31\. The GOR is however now resuming steps on civil service reforms, including public pay, under the financial package of the multilateral donors (see Section 4)\. 5\. The Ministry of Justice (MOJ), Superior Council of Magistracy (SCM) and Courts\. The Project contributed to helping implement the legislation adopted in 2004-2005 and the judicial reform strategy for 2003/5-2007; to building capacity and IT infrastructure in the MOJ and the SCM for carrying out their functions; to designing the Judicial Reform Project (JRP; FY05); to drafting revised legislation on trading companies in the field of corporate governance that constituted the amended Company Law in compliance with EU and OECD corporate governance standards effective as of December 1, 2006; and to drafting a reformed Civil Code that has been under debate since 2008\. The Project supported or helped meet a number of the PAL benchmarks in the judiciary and business environment areas\. More specifically, with regards to the judiciary, the Project activities contributed to the PAL policy objective of improved framework for enhancing efficiency and the accountability of the judiciary\. The JRP is benefiting from the data analysis of judicial performance and options for court rationalization that the Project financed and is building upon it in a new consultancy assignment for optimizing the court system administration and performance to, among other things, reduce the duration of judicial proceedings and the backlogs\. This assignment under the JRP will support the SCM's efforts launched in early 2007 to reorganize the courts and to establish an optimal volume of work for individual judges and courts\. The Project offered also valuable models for training; evaluating the professional activities of judges and prosecutors based on performance standards; and for the Law School Admission reasoning tests\. In addition, the Project contributed to helping strengthen the economic and financial management in the court system that was introduced in the 2004-2005 legislation and provided input to regulations clarifying the role of the courts in the budget formulation and execution\. Finally, the Project contributed to the continued automation of the judiciary and development of judiciary statistics (based not only on quantitative analysis but also on quality indicators of magistrates' activity)\. While the judiciary met the EU accession conditions, implementation continues albeit slowly, as demonstrated by, for example, still the lengthy proceedings of court cases\. Doing Business indicators for "enforcing contracts" have only slightly improved in 2004- 2009: the number of procedures has declined from 32 to31, time from 537 to 512 days, and cost (% of debt) is the same (see Part D)\. 6\. Public health insurance administration\. See Part E\.11\. 7\. The Ministry of Administration and Interior and the Ministry of Public Finance\. See Part E\.1\.f\. 31Romania: the World Bank Policy Briefs for the Government of Romania, January 22, 2009\. 26 8\. The General Secretariat of the Government (GSG) and Prime Minister Chancellery\. The Project contributed to the GSG's achievements in designing and creating a comprehensive framework and a set of tools for policy analysis, coordination and monitoring in line with the PAL benchmarks; to building capacity in the GSG and line ministries for implementing them32; and to providing a design for an integrated IT system for managing and tracking the policy formulation process (see also Part E\.1\.i\.b)\. In designing this framework and tools an essential role was played by the international assistance funded by the EU (in particular, a twinning project with a foreign State Chancellery) and the Bank\. Most of the proposals of all the international advisors were included in the legislation/procedures passed by the GSG in 2006-2008\. As a result of the GSG's efforts, the GSG PPU has made progress in improving both the process and substance of policy formulation work, at both line ministry level and in decision-making rules at the centre\. A legal framework, standards and procedures for policy formulation/strategic planning and program oriented budget process have been created and introduced\. In addition, the GSG PPU helped establish PPUs in all line ministries since 2005 to facilitate improvement in the quality of policies/strategies in line ministries\. The GSG played an important coordination role in strengthening their capacity through different training sessions and regular meetings and brought the PPUs together as a knowledge sharing network\. The PPUs require further capacity building in strengthening their position and relation with budget departments in respective line ministries but they have provided a new and important policy-making network across the government\. Consequently, the 2009 budget resulted from the first policy and program oriented budget cycle\. Based on the GSG's methodologies designed with the international assistance (including the Project), (a) each line ministry prepared a sector strategy by May 2007; (b) each line ministry prepared the budgetary part of the strategic plan, including the indicator system for monitoring the programs/projects in the 2009 budget by June 2008; and (c) 30% of the line ministries' policy submission met the GSG's standards in 2007 with some ministries, such as the Ministry of Environment and Ministry of Internal Affairs, submitting better policies than others (for example, effective strategic planning by the Ministry of Environment has led to above average results in absorbing EU funds and meeting the EU acquis33)\. Despite this progress, the policy formulation/strategic planning and budget formulation process are not integrated into one process (see Part E\.1\.i\.b)\. The GSG's success in enforcing the above instruments and framework was limited due to the lack of strong political support and the absence of a medium term expenditure framework (MTEF) and weaknesses in budget management\. After accession and especially after the recent Government changes, the GSG's and ministries' capacity has also deteriorated\. 32The PM Chancellery benefited from the TA provided to the GSG indirectly\. No consultants were hired for the PM Chancellery\. 33Romania: the World Bank Policy Briefs for the Government of Romania, January 22, 2009\. 27 9\. The Ministry of Labor (MOL)\. The Project contributed to the improvements to the Labor Code for the labor markets enacted in 2005 to increase the flexibility of the Romanian labor markets so that it would facilitate enhancing the competitiveness of the Romanian economy in Europe, stimulating growth and job creation and reducing structural unemployment\. The Labor Code is improved but is still problematic\. The labor market flexibility has continued to improve, but some rigidities persist, as evidenced by the Doing Business Report (see Part D)\. In addition to increased flexibility, substantial improvements in education, training and other reforms are also needed to support labor flexibility\. 10\. The Ministry of Education, Research and Young People (MOERYP)\. The Project contributed to designing the strategy and secondary legislation for implementing the education decentralization and per capita financing scheme that were introduced in the amended Education Law in 2004\. However, the recommendations resulting from the TA were not fully incorporated into the adapted regulations, and the desired policy objectives were not achieved\. The per capita financing formula in pre-university education was not implemented in line with the PAL policy objectives\. The secondary legislation remained unsupportive of effective decentralization and new financing formula; the updated education strategy was not implemented; and the pilot (on paper) did not result in a national roll-out\. Over the past ten years, Romania has produced and received a great deal of TA for education finance, budgeting and management\. Much of this work has been of high quality yet little of it has been implemented\. While a great deal of attention has been paid to budget procedures, expenditure norms, educational decentralization, and formula funding, there have been strong forces at work to preserve historical budgeting patterns and the historical process of budget negotiations between the central MOERYP and MOPF\. The primary prerequisite for an improved system is the application of a per student funding formula that would increase transparency of funding flows and provide better incentives to education managers to optimize resource use\.34 More recently, in response to the financial crisis, the new GOR will resume reforms in the education sector to improve fiscal management, promote a more efficient, improved quality of and equitable access to delivery of services\. The two reform measures would be the introduction of standard costs/per capita financing and a student loan scheme (the Project funded TA made recommendations on the implementation to support the PAL policy objectives)\. These would generate fiscal savings that would enable greater access to and more horizontal equity in education services\. 11\. The Ministry of Health (MOH)\. The Project contributed to (i) strengthening the Health Sector Reform Package enacted in 2006 in a form acceptable to the Bank, in line with the PAL objectives, (ii) study results on the overall health sector financing on all levels of health care to enhance the framework and implementation of the decentralized health insurance system; (iii) enabling the national roll-out of the new hospital finance 34Romania Public Expenditure and Institutional Review\. Vol\. II\. The World Bank 2006\. 28 system in 2006 (diagnosis related groups35); and to (iv) to establishing the magnitude of corruption in the health sector\. The 2006 Health Sector Reform Package was a major step forward to improve accountability and governance in the health sector and integrated various provisions in a single Act (it provided for deeper reforms than what was envisioned at the stage of the PAL1 negotiation in 2004)\. However, there is still a gap between the legislation and its actual reinforcement\. The case based financing of the hospitals which was rolled out progressively to all acute care hospitals by the MOH in 2006 - based on the methodology developed with the Project support - is contributing to more efficient provision of services in hospitals (i\.e\. shorter stays) (although it has some deficiencies)\. Reforms in the health sector have been substantial (in decentralizing of both the financing and the delivery of health services in different degrees) and are continuing, but many challenges remain36\. Romania's unfinished health reform agenda includes the needs for: (i) mobilizing additional resources for health; (ii) improving efficiency and equity of health financing and health service provision; and (iii) strengthening core public health functions\.37 More recently, the new Minister of Health acknowledged the existence of specific studies delivered under the Project related to health sector financing and corruption in the sector and publicly expressed the intention to consider their recommendations\. Moreover the Bank's support was asked to update the hospital rationalization strategy\. In addition, the new development policy loan financed by the Bank will address the unfinished agenda by focusing on mobilizing resources and improving efficiency and equity of service provision through the adoption of a drugs pricing and prescribing policy, introduction of co-payments with targeted support to vulnerable population trough a voucher scheme, the definition of a more realistic package of health services, the introduction of private insurance, and the adoption of an updated hospital rationalization strategy (see Section 4)\. 12\. The Ministry of Transportation, Construction and Tourism (MOTCT)\. In accordance with the TORs, the consultants funded by the Project delivered a number of studies on key themes to support the mortgage market development under the PAL (housing policy strategy, mortgage insurance schemes and partial credit facility for mortgage backed securities)\. No information was available on the results\. For development of the mortgage markets, see Part A\. In addition, an on-site advisor built capacity in the Economics and Budget Directorate in the MOTCT in 2006 as part of the wider TA to support the budget process reform (see Part E\.1\.i\.b)\. 35The DRG means that the hospital get funds according with the type of patients treated and not based on hospital structure (staff, equipment etc\.), process (number of hospitalization days) or other determinants\. This type of financing system provides a transparent and equitable allocation of funds to the hospitals, encourages the efficient use of resources at the hospital level, and works towards improving the quality of the services provided to the patients\. 36The Romania Public Expenditure and Institutional Review\. Vol\. II\. The World Bank 2006\. 37Based on the Romania Public Expenditure and Institutional Review, Vol\. II, the World Bank 2006; Romania: the World Bank Policy Briefs for the Government of Romania, January 22, 2009\. 29 13\. The Ministry of Environment and Water Management (MOEWM)\. The Project contributed to helping implement the budget process reform in the MOEWM as part of the wider TA under the PAL (see Part E\.1\.i\.b), as well as to helping meet the prerequisites for using the EU funds in the most urgent areas in the environment protection area (in terms of where there was a financing gap), including: (i) protection of the water and soil against nutrient pollution, (ii) contaminated areas and (iii) nature protection (see Annex 2)\. The TA was expected to be followed by a new project to support the MOEWM in its efforts to fulfill the EU commitments assumed in the environment protection area\. In the end, the project that was approved - the Integrated Nutrient Pollution Project (FY08) - focused on the first priority area where the EU did not provide funding, while the GOR deferred preparation of a project for the other two priority areas and is now benefiting from the EU funds to meet the needs\. 3\.3 Efficiency The PPIBL achieved the above results with substantial efficiency despite the extension of the implementation period\. The closing date extensions resulted in full disbursement of the Loan to widen (in the case of the NAFA and environment) and deepen (in the case of Treasury modernization) the Project's contribution to the public sector reform\. The Project helped in the implementation of policy reforms under two operations and in the capacity building of institutions (i\.e\. MOPF, NAFA, GSG, MOJ, SCM) to develop and implement policy reforms on a sustainable basis\. Despite these efficiency gains, a question arises whether more pro-activity should have been taken to postpone approval of the PPIBL as funds became unexpectedly available under the PIBL and the Dutch Grant TF050477 around the time of the approval of the PPIBL\. As said in the Country Lending Assessment, "the justifying argument could be that the actual costs of putting in place resources that were not used were much less than the potential costs of not having the resources available had they been needed"\. The use of unused resources for increasing the scale of assistance to the Treasury modernization, the largest component under the PPIBL, is expected to bring substantial results to the Government in terms of improved efficiency of public resources allocation\. The Bank interventions for the Treasury system financed by the PIBL and the PPIBL amounted to about $25 million (of which PPIBL loan about $11 million)\. The amount required for such a Treasury upgrade, as that carried out under the PIBL/ PPIBL, depends on the size of the Treasury network (the number of offices to be upgraded), the volume of transactions that the Treasury processes, etc\., and could vary widely from country to country\. These amounts are broadly in line with other Treasury modernization initiatives undertaken by the Bank for similar size Treasuries (i\.e\. Ukraine and Kazakhstan)\. 3\.4 Justification of Overall Outcome Rating Rating: Satisfactory The rating is based on: (i) the substantial consistency of the objectives with Romania's current development priorities and the Bank's country strategies (CAS FY06-09); (ii) substantial achievement of the objectives against: (i) whether the Project provided or not the required TA to achieve the high level policy objectives contained in the PDO; and (ii) 30 the extent to which the assistance provided contributed (a) to implementing the policy measures supported by the PSAL2 and (b) to laying the ground for the reforms implemented under the PAL and PAL (whether they contributed to specific PAL benchmarks or to deepening and/or broadening the Government reform program in the policy areas included in the PDO, but not necessarily reflected by specific PAL benchmarks); and (iii) substantially efficient use of resources to achieve the results\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development See other sections of the ICR\. (b) Institutional Change/Strengthening See other sections of the ICR\. (c) Other Unintended Outcomes and Impacts (positive or negative) See other sections of the ICR\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable\. 4\. Assessment of Risk to Development Outcome Rating: Moderate The risk rating is based on the following factors: (a) the GOR's commitment to resume public and financial sector reforms - some of which were stalled with the EU accession - as part of the multilateral financial support package provided by the IMF, the Bank and the EU (the GOR will be able to re-utilize many of the TA outputs financed by the Project); (b) privatization transactions supported by the Project at large are mostly irreversible; and (c) reversals of the reforms in the energy sector would need to be agreed and consistent with the competition rules in the EU\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Unsatisfactory The rating reflects: (a) the relevance of the PPIBL activities largely to the key development priorities in the country and in the sector based on the extensive and good quality analytical work prepared under the PSAL2/pre-PAL; (b) efficient PMU arrangements; (c) use of lessons from combining structural operations with TA loans; and (d) use of lessons learnt in the privatization transactions (even though carried out under the financing of the PIBL and the GOR) and in the design of the broad (albeit after the amendment even more complex and ambitious) public sector component\. The major shortcomings are related to issues in the areas of strategic relevance, M&E arrangements, implementation aspects and risk assessment, including: (a) the rationale for Bank assistance through a new TA loan when at the time of its approval the existing TA 31 loan had available funds for the same activities (except for Part E) and the Dutch Grant became available for the same activities reasons that led to existence of a project that was not disbursed until in a couple of years; (b) the M&E design (unclear PDO and accountability of the Project for the PDO, weak quality of indicators and lack institutional development targets beyond a mere list of outputs and independent of the adjustment loans), as well as inconsistencies in the PDOs, indicators and component descriptions in the PAD and in the Loan Agreement; (c) the underestimation about the required implementation period of the Project and complex design; (d) the inadequacy of capacity assessments of beneficiaries; and (e) the absence of mitigation measures to replace the leverage provided by the PAL in case it be cancelled (as it was)\. (b) Quality of Supervision Rating: Moderately unsatisfactory The rating reflects: (a) regular supervision missions, most of the times combined with the PAL supervision missions with recommendations reflecting the understandings reached by the PSAL/PAL missions and the GOR for implementing the policy reform agenda; (b) supervision done for all "pooled" funds in a coordinated manner (the PIBL, two Dutch Grants and the PPIBL); (c) good cooperation between the Bank PSAL/PAL and the PIBL/PPIBL teams in the headquarters and in the country office (whereby the PAL team assisted the Borrower with the TORs and monitored outcomes and the PPIBL team supervised the fiduciary aspects) and with the PPIBL PMU and PAL PMU that allowed good coordination of the supervision effort (the team remained same for most of the life of the PPIBL); (d) detailed monitoring and reporting of the procurement and disbursement data prepared by the PPIBL PMU based on the TA outputs; (e) regular financial management and procurement supervision missions and review work; (f) cooperation with the donors that were attracted to the adjustment program due to its success; and (g) flexibility and responsiveness to meet the Borrower's requests for TA through two loan amendments\. The significant shortcomings relate to the inadequacy of supervision processes, including: (a) the lack of proactivity in restructuring the PPIBL to reflect: (i) the significant reallocations between expenditure categories, (ii) the change of the PPIBL from a TAL to an investment loan due to the actual 50% share of infrastructure investments of the PPIBL proceeds compared to 26% at appraisal (including significant IT investments); and (iii) the significant change in the PDO, de facto cancellation of most of the Parts A-D under the PPIBL financing and significantly increased scale of TA under the original Part E due to the use of parallel financing; (b) the lack of efforts until the last year of supervision to improve the M&E framework; (c) inappropriate PDO and implementation progress ratings until the end of 2005; and (d) the lack of a Treasury specialist in the supervision team after the closure of the PAL (although the lack was compensated by the hiring of a consulting firm by the Borrower to supervise the work of the SW developer and IT installer delivered by the consultant and involvement of a Bank IT procurement specialist)\. The project supervision and reporting focused on the delivery of the TA outputs and their completion, while the supervision of the PAL program focused on the progress of the policy reforms and results of the TA interventions\. This followed from the "division of labor" between the PAL and PPIBL teams, but weakened the policy focus of the supervision after the cancellation of the PAL\. 32 (c) Justification of Rating for Overall Bank Performance Rating: Moderately unsatisfactory Although there were major shortcomings in the design phase, the overall moderately unsatisfactory Bank performance is justified by improvements in the Bank supervision and a number of proactive actions taken towards the end of the Project life, as well as the satisfactory outcome of the Project\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately satisfactory The GOR was committed to the policy reform program that was anchored in the EU accession program and using TA in general to support it, as demonstrated by: (a) the achievement of the PSAL2 and PAL1 conditions and most of the PAL2 conditions by the time Romania was ready to be accepted to the EU; (b) the establishment of the high level PMU PAL in the Prime Minister Chancellery to help implement and monitor the PAL program and the use of the TA and its effective cooperation and coordination with the PPIBL PMU; and (c) the practically full disbursement of the PPIBL\. The moderate shortcomings are related to: (a) the somewhat lacking commitment in the early phase to the use of the TA due to the availability of other funds and the subsequent extended implementation period that yet enabled in the end full disbursement of the loan; (b) the lack of even stronger implementation support to the beneficiaries so that they could have more quickly launched implementation activities and complete them once the PAL design and the TA needs were identified; and (c) the agreement to an overlapping design of the different Bank-funded and administered activities that led to delays in disbursing the PPIBL\. (b) Implementing Agency or Agencies Performance Rating: Satisfactory The PPIBL PMU administered and coordinated project implementation efficiently and with dedication throughout the Project and monitored the achieving of the PSAL I, PSAL II and PAL conditionalities, ensuring the timely release of scheduled tranches of the proceeds of the loans\. The regular financial management supervision missions carried out by the Bank's Financial Management Specialist throughout the project life confirmed the highly satisfactory financial management arrangements in place\. The PMU procurement function was carried out satisfactorily\. The PMU's performance was particularly good considering the complexity of the design, the challenging nature of institutional building in beneficiaries that lacked capacity in an evolving environment, and the volume of funds administered (the project costs included $30 million under the PIBL, $22 million under the PPIBL and two Dutch Grants of over $6 million during 1999-2008)\. The PPIBL PMU cooperated effectively with the PAL PMU in working with the beneficiaries to implement the TA\. When the PAL PMU was closed in early 2007, the PPIBL PMU took efficient care of allocating funds to ensure that they are utilized by the closing date\. 33 (c) Justification of Rating for Overall Borrower Performance Rating: Moderately satisfactory Despite the Implementing Agency's satisfactory performance, the overall rating is moderately satisfactory due to the importance of the Borrower's commitment and strategic supervision of the use of the TA that was lacking\. 6\. Lessons Learned Be pro-active\. Restructure projects when needed, especially when moving from TA to an investment project and/or when parallel financing is mobilized so that each project could be evaluated on its own merits and so that the Government resources would not be wasted on undisbursed funds\. The PPIBL was not restructured to reflect the de facto significantly changed PDO, project financing, as well as expenditure category and component cost allocations\. This made the PPIBL funds initially redundant; it led to disbursement delays as the GOR preferred to withdraw the existing grant and loan funds before or instead of the PPIBL; and it made the GOR pay commitment fees for unutilized funds until 2005\. It also complicated the Project evaluation that needed to cover all the sources of funding and made it somewhat artificial as no clear accountability lines were drawn between the Bank-related sources of funding since they were managed as a pool of funds\. Choose PDO indicators carefully\. A good result framework with good indicators and independent targets for institutional development provide a fair basis for supervising and evaluating developmental outcomes of a TA loan\. In the case of the PPIBL, the result framework was very weak and it lacked independent targets for evaluating the institutional development results\. As a result, supervision was bound to focus more on monitoring disbursements and completion of contracts than outcomes (it is true that the outcomes were monitored under the PAL)\. The project evaluation became also a complex exercise as it was not clear what is evaluated\. Further, in the absence of independent institutional development targets, the evaluation of the Project's success became unavoidably linked to the success of the policy programs while at the same time a TA could not be held accountable for reforms for which it has no leverage\. Have a strong anchor for TA projects\. The PAL and EU accession provided an anchor to the Project that initially helped achieve a lot (either itself, or through the Dutch grants) in terms of supporting the reform process\. Once the anchor was raised after the cancellation of the PAL, the results of the TA interventions were inevitably undermined as the PPIBL had no leverage to motivate reforms (i\.e\. in the area of public expenditure management, civil service, judiciary and education financing)\. TA projects can work best as long as they have a strong anchor\. Shift supervision responsibilities to appropriate department/staff\. While the PPIBL's original design had a strong public sector emphasis, during the implementation, the PPIBL changed de facto from a TA loan to an investment loan with major IT investments in the public sector\. This required expertise in IT and Treasury systems that the Bank supervision team did not fully possess (the team included only an IT specialist)\. On its part, this weakened the Bank's supervision impact as it relied only on the consultant hired 34 by the Borrower to supervise the design and installation phases\. As public financial management and investment activities became prevalent, supervision should have shifted to an appropriate department in the Bank with relevant skills to maximize the Bank's supervision input\. Keep the design simple\. The PPIBL was designed after the model of the complex and ambitious PAL program\. In addition, the original Part D included other unrelated activities that further complicated the design\. The design was therefore one more reason for the long implementation period and challenges in supervision and monitoring the Project properly\. The complex design can therefore slow down the implementation process and spread the resources with the subsequently fewer developmental results\. Set up PMU arrangements on the right level\. The GOR maintained an experienced and sufficiently staffed PMU throughout the Project life and established a high level PAL PMU to monitor the preparation and implementation of the PAL reform progress in 2004-2006 (its set-up in the Prime Minister's Chancellery was seen as an insurance against political and implementation risks)\. The location of the PAL PMU and the cooperation between the PMUs provided the required leverage to launch and expedite the project implementation because many of the beneficiary agencies had limited institutional capacity and readiness to embark in the reform program; they had limited or even absent experience with Bank's projects; and there was a need for coordinated intergovernmental efforts\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The intermediate outcome indicators in Annex 10 that the Borrower refers to were moved to the Datasheet in the final version of the ICR\. (b) Cofinanciers The comments of the Dutch Government are valid\. The Bank team appreciated the assistance of and cooperation with the Donor\. (c) Other partners and stakeholders Not applicable\. 35 Annex 1\. Project Costs Financed by PPIBL and Financing (a) Project Cost Financed by PPIBL by Component (in USD Million equivalent) * Appraisal Estimate Actual/Latest Components Percentage of (USD millions) Estimate (USD millions) Appraisal FINANCIAL SECTOR RESTRUCTURING 3\.99 0\.417 11 PRIVATIZATION SUPPORT FOR ENTERPRISES 0\.60 0 NA PRIVATIZATION SUPPORT FOR THE ENERGY SECTOR 2\.26 0 NA BUSINESS ENVIRONMENT 1\.80 0\.123 7 INSTITUTIONAL GOVERNANCE REFORM 11\.25 19\.422 173 PROJECT MANAGEMENT 0\.24 1\.840* 767 Total Baseline Cost 20\.14 21\.802 108 Physical Contingencies 1\.02 0 NA Price Contingencies 1\.01 22 NA Total Project Costs 22\.17 21\.824 98 Front-end fee PPF 0 0 NA Front-end fee IBRD 0\.19 0 NA Total Financing Required 22\.34 21\.824 98 The information on the actual costs is from the financial management reports of the PPIBL prepared by the MOPF\. At appraisal, an allocation of USD 240,000 was provided for financing the PPIBL PMU for one year as the rest of the funds were provided under the PIBL\. Later the PPIBL Loan Agreement was amended to finance the costs of the PPIBL PMU for another three years in addition to the costs of the PAL PMU (USD 711,000)\. The incremental operation costs of both PMUs totaled USD 1,399,894 at the end of the Project\. ** This amount includes the incremental operating costs, project audits during 2003-2008 and IT equipments for the PPBIL and PAL PMUs, furniture, air conditioning, communications equipments, etc\. (b) PPIBL financing (in USD Million equivalent) * Appraisal Actual/Latest Source of Funds Type of Percentage of Cofinancing Estimate Estimate (USD millions) (USD millions) Appraisal Borrower (PPIBL) 3\.74 3\.29 88% International Bank for Reconstruction and Development (PPIBL) 18\.60 18\.54 99% Total 22\.34 21\.83 98% The information on the actual financing is from the financial management reports of the PPIBL prepared by the MOPF\. 36 (c) Disbursement under the PPIBL by expenditure categories (in USD equivalent) At appraisal % of At Project % of % of Category Total End * Total Appraisal Goods 4,900,000 26% 9,213,268 50% 188% Civil works 450,000 2% 0 0% - Consultant services 11,350,000 61% 7,926,838 42% 70% (including project audit and training) Incremental operating costs 200,000 1% 1,399,894 8% 699% Unallocated 1,700,000 9% 0 0 - Total 18,600,000 100% 18,540,000 100% 99% * The information on the actual disbursements by expenditure category is from the World Bank's client database\. See the Footnote under Table 1 (a)\. (d) Project Costs Financed by the PPIBL (including counterpart funds) by Sub-Component (in USD `000 equivalent)* Components Actual % of Total A: Financial Sector Restructuring and Privatization Support 1\. The CEC (the Savings Bank) 0 0 2\. The National Securities Commission and the Bucharest Stock Exchange 417 1\.9 3\. The Insurance Supervision Commission 0 0 Total A 417 1\.9 B\. Privatization of the selected state-owned enterprises Total B 0 0 C\. Privatization support for energy sector Total C 0 0 D\. Improved business environment 1\. Strengthening e-business 123 0\.6 2\. Training of judges and court personnel 0 0 3\. Court refurbishing works and equipment to selected local courts 0 0 4\. Public awareness campaign on business environment reforms 0 0 5\. The Jiu Valley Region 0 0 Total D 123 0\.6 E\. Institutional and governance reform 1\. Public expenditure management (i) MOPF (a) cash management (and public accounting) 11225 51\.4 (b) budget formulation 343 1\.6 (c) foreign financing coordination 0 0 (d) government accounting 80 0\.4 (e) internal audit 3 0 (f) decentralization 0 0 Sub-total E\.1 (i) 11651 53\.4 (ii) National Agency for Fiscal Administration 1548 7\.1 Sub-total E\.1 13199 60\.5 2\. Court of Accounts 1372 6\.3 3\. Ministry of Communication and IT 0 0 4\. Ministry of Administration and Interior (Civil Service Reform) 541 2\.5 5\. Ministry of Justice, Superior Council of Magistracy and Courts 1822 8\.3 37 6\. Public health insurance administration 0 0 7\. Ministry of Administration and Interior and to the Ministry of Public 0 0 Finance (intergovernmental fiscal relations) 8\. General Secretariat of the Government and Prime Minister Chancellery 702 3\.2 9\. Ministry of Labor, Social Solidarity and Family 17 0\.1 10\. Ministry of Education, Research and Young People 18 0\.1 11\. Ministry of Health 839 3\.8 12\. Ministry of Transportation, Construction and Tourism 0 0 13\. Ministry of Environment and Water Management 912 4\.2 Total E 19422 89\.0 F\. PMU and PAL PMU PPIBL PMU 1129 0\.4 PAL PMU 719 8\.0 Total F 1840 8\.4 Discrepancy** 22 Total PPIBL 21824 100\.0 * The information is from the financial management report of the PPIBL prepared by the MOPF\. *The discrepancy between the total PPIBL and the sum of the sub-component amounts comes likely from the fact that the sub-component costs have been rounded, while the total PPIBL is a total of amounts from the financial management report provided in smaller decimals\. (e) Financing of the Project by the PPIBL and parallel financiers (in USD `000 equivalent) Dutch Dutch Component PIBL TF050477 TF054659 PPIBL GOR Total Part A 761 1,893 0 417 480 3,551 Part B 887 0 0 0 NA 887 Part C 50 280 0 0 49 379 Part D 609 137 0 123 0 869 Part E* 7,772 699 2,310 19,422 3,132 33,335 Treasury of Part E 7,772 0 0 16,940 3,078 27,790 Part F NA 0 0 1,840 1,840 Discrepancy* 22 Total 10,079 3,009 2,310 21,884 4,101 41,301 This table is imperfect but it provides an indication of the volume of parallel financing\. The information was not part of the formal financial monitoring reports reviewed by the Bank as part of the PPIBL supervision\. The table took into account of the total financing provided by the parallel financiers only those activities that were part of the "Project", as defined in the PAD and legal amendments of the PPIBL\. Therefore, the amounts are less than the total amount of these sources\. The information on the GOR financing is not complete\. In addition, some of the GOR financing for the PPIBL activities is included in the PPIBL column (i\.e\. for Part E, $440,000)\. The costs financed by the GOR may include some counterpart funding for the PPIBL\. The PMU was the same for the PIBL and PPIBL that were implemented simultaneously\. It is not possible to provide information on how much the PIBL financed of the costs related to implementing the PPIBL project activities\. *The discrepancy comes likely from the fact that the total PPIBL includes the amounts provided in smaller decimals in the financial management report, while the sub-component costs in this table have been rounded\. 38 Annex 2\. Outputs by Component The below tables describe: (i) the activities planned in the PAD or loan amendments (the required TA); (ii) the Project outputs; and (iii) the Project outcomes in terms of: (i) whether the Project provided or not the required TA to achieve the high level policy objectives contained in the PDO; and (ii) the extent to which the assistance provided contributed (a) to implementing the policy measures supported by the PSAL2 and (b) to laying the ground for the reforms implemented under the PAL and PAL (whether they contributed to specific PAL benchmarks or to deepening and/or broadening the Government reform program in the policy areas included in the PDO, but not necessarily reflected by specific PAL benchmarks)\. The text refers to the status of meeting the PSAL2/PAL policy objectives for information, not for evaluation, as a TA loan cannot be held accountable for policy reforms\. That information is based on the ICR on the PAL1\. Part A: Financial Sector Restructuring and Privatization Support (PPIBL: estimated project costs $3\.99 million/actual project costs $0\.42 million) 1\. The Savings Bank (the CEC) Target at Project outputs Project outcome Funder appraisal (as amended) Engage Services of a restructuring advisor; the CEC restructured PDO (a) achieved PIBL restructuring and under a twinning arrangement in 2004 Implemented the related PSAL2 privatization condition advisors Services of a privatization advisor; the CEC offered for PDO (b) achieved Dutch sale Implemented the related PAL1-2 TF050477 benchmarks The PPIBL did not finance activities related to the CEC\. The targeted TA that was financed by the PIBL and the Dutch Grant TF050477 contributed to the Project PDOs (a) and (b)\. The restructuring of the CEC in 2004 was completed under a twinning arrangement and the CEC was prepared ready for privatization by the Privatization Commission with the advisor's assistance\. These outcomes helped meet the PSAL2 2nd tranche and the PAL1 & 2 conditions as far as taking actions towards the restructuring and the sale of the CEC were concerned\. However, the winning bid did not meet the expected price of the GOR, and the CEC was not privatized\. Therefore the PAL policy objective was not achieved\. 2\. The National Securities Commission (CNVM) and the Bucharest Stock Exchange (BSE) Target at Project outputs Project outcome Funder appraisal (as amended) TA to A functional capacity assessment and PDO (b) achieved Dutch strengthen the recommendations for staff learning; Implemented the PAL1-2 benchmarks for the TF050477 legal, incorporated into the CNVM's annual CNVM's capacity building regulatory and objectives\. supervisory A study, a draft regulation and procedures for PDO (b) achieved Dutch framework for setting up an Arbitrage Chamber; accepted by Helped implement the Government's reform TF050477 47 the capital the CNVM which intends to implement them program in the capital markets (see the Letter of markets (EU) in the medium-term\. Development Policy) and the Integrated MIS operational since 4/08; and an PPIBL CNVM's improved web-portal operational since 3/08\. capacity Public awareness strategy and campaign; PDO (b) not achieved Dutch cancelled after the 1st interim report; provided No outcomes TF050477 some input to EU-funded activities\. CNVM instructions for setting up and PDO (b) achieved Dutch supervising credit rating agencies; piloted and Helped implement the Government's reform TF050477 adopted by the CNVM; training provided\. program in the capital markets Regulatory review of a regulated secondary PDO (b) achieved Dutch market for mortgage bonds and mortgage Contributed to achieving the related PAL2 TF050477 backed securities and training; a number of benchmark about mortgage markets new regulations adopted\. Other activities to improve the legal and PDO (b) achieved CNVM, regulatory framework for the capital markets Contributed to achieving the PAL1-2 benchmarks EU in line with the EU acquis and international for the consolidated law and secondary standards\. legislation for capital markets Strengthen the Government securities traded on the exchange PDO (b) achieved BSU BSU's capacity since August 2008\. Helped implement the Government's reform to trade GOR's program in the capital markets? securities on the stock exchange The targeted TA that was financed by the Dutch Grant TF050477, EU, the PPIBL and the beneficiaries contributed to the Project PDO (b)\. It helped meet specific PAL benchmarks and/or contributed to implementing the Government's reform program in the capital markets\. The PAL policy objective of developing a comprehensive legal, regulatory and supervisory framework was achieved\. The Dutch TF050477 and the PPIBL financed the following TA to: Carry out a functional capacity assessment to strengthen the capacity of the CNVM to deliver its responsibilities in the framework of the EU single financial market and helped meet the PAL1 condition\. The assessment suggested measures for strengthening the CNVM's institutional capacity as a market regulator, covering the internal organization, the regulations and enforcement procedures for the 2004 consolidated law on capital markets, as well as the training and staffing requirements based on the IOSCO standards and in the context of accession to the EU\. The capacity building program was presented to a number of 20 attendees in a workshop (including the CNVM's staff and donors)\. The CNVM accepted the recommendations and incorporated them to a subsequent medium-term action plan for improving the institutional capacity as part of the CNVM's annual objectives\. Make recommendations for a relevant out of court mechanism to establish an Arbitrage Chamber for the securities sector in Romania, including a model for its organizational structure, governance mechanism and the scope of authority, a draft regulation and Chamber rules for its functioning in compliance with this mechanism, and an internal procedure manual for the personnel of the Arbitrage Chamber\. The CNVM accepted the regulation and the rules in 2006 and intends to implement them in the medium-term\. Provide the design, supply and installation of an IT system to create an internally integrated database that became operational in April 2008\. It has given the CNVM's employees the possibility to more efficiently manage information related to authorization of regulated entities, registration of issuers, and incomes evidence\. 48 Provide the design of an IT system to develop and implement a web portal for the capital market in Romania\. The web-portal became operational in March 2008\. Launch activities for improving public awareness of and participation in capital markets among individual investors\. The contract was cancelled after the first interim report based on unacceptable progress towards achieving the project results\. Several activities like publication of awareness materials, as well as organization of events were included in the activities funded by the EU project\. Provide: (i) a draft CNVM instruction for setting up and supervising credit rating agencies; (ii) a pilot program for the simulation of the process of assigning a rating to an issuer; and (iii) a training program for 10 staff members in supervising such agencies\. The TA helped create the framework for credit rating agencies in line with the existing international practices (IOSCO principles) and building the CNVM's supervision capacity in this area\. Further to this assistance, the CNVM adopted an instruction on this topic (i) Produce three new draft regulations38 (secondary legislation) that were adopted in line with the PAL2 condition under the mortgage markets and that, together with the existing four laws for the primary and secondary market, constituted the legal framework for these markets; (ii) provide recommendations on instruments, actions, measures, and regulatory and institutional developments for establishing regulated secondary mortgage markets that have been considered within the internal policy of the CNVM; and (iii) deliver three training sessions of three days for 10 staff members in the field of mortgage lending, mortgage bonds and mortgage-backed securities\. The TA contributed to developing the framework for a regulated secondary market for mortgage backed securities, a new financial instrument in the Romanian market\. The BSE did not request funding from the PPIBL for capacity building to enable trading of Government securities on the stock exchange\. The objective of the TA was achieved on the BSE's own funds: the BSE started trading Government securities on the exchange on August 25, 2008\. 3\. The Insurance Supervision Commission (the ISC)39 Target at Project outputs Project outcome Funder appraisal (as amended) TA to Design of a computerized system related to motor vehicle PDO (b) achieved Dutch strengthen the third party liability and recommendations on improving Implemented the PAL1 benchmark for TF050477 institutional the related regulations in line with the acquis; the system assessing the capacity capacity of procured in 2005 on the EU funds is operational since the the ISC to end of 2005; the revised regulations adopted\. regulate and TA to modify some accounting regulations and to draft PDO (b) achieved Dutch supervise the instructions for supervision and assessment of the Helped implement the Government's TF050477 insurance financial statements of the insurers and insurance reform program in the capital markets sector brokers; supported the implementation process of the (see the Letter of Development Policy) adopted accounting regulations and made recommendations on the strategy for the IFRS implementation 38Based on the TA, the following regulations were adopted: the CNVM Regulation no\. 11/2006 on securitization of receivables; the CNVM Regulation no\. 13/2006 on mortgage bonds; and the Joint NBR/CNVM Regulation no\. 12/3/2006 on authorizing the agents and portfolio management companies based on the Law no\. 32/2006 on mortgage bonds\. 39The Insurance Supervisory Commission (ISC) was established in July 2001 as an administrative and financial autonomous entity responsible for supervising the insurance market in Romania\. 49 The PPIBL did not finance activities related to the ISC\. The targeted TA that was financed by the Dutch Grant TF050477 contributed to the Project PDO (b) as it implemented a PAL1 benchmark and helped implement the Government's reform program in the capital markets\. The PAL policy objective of developing the insurance market was achieved\. The Dutch TF050477 financed the following TA to: Help strengthen the ISC's capacity to supervise the motor vehicle third party liability market, thus helping meet the PAL1 condition\. The consultant developed an architecture for a centralized integrated database on motor vehicle third party liability and provided recommendations on transposing into the Romanian regulations the specific EU Directives in this field\. The ISC implemented the proposed centralized integrated database (CEDAM) on motor vehicle third party liability under the EU PHARE funds in 2005, and it has been operational since December 2005\. The system can be used in real-time by the users (the ISC, insurers and police) to determine the coverage for a particular motor vehicle (or its lack thereof); to input and exchange data; to produce reports, etc\. As a result, the ISC has increased the percentage of carriers of the motor vehicle insurance from 60% in 2003 to 90% in 2007 and expedited the time required to process claims\. Based on the recommendations of the TA, the ISC also aligned the relevant national laws in line with the EU acquis to strengthen ISC's supervisory capacity in this area\. (i) Help the ISC modify the accounting regulations that the ISC had drafted in line with the acquis prior to the IFRS implementation40; (ii) provide internal instructions and procedures to strengthen the ISC's institutional capacity for supervision and assess the financial statements of the insurers and insurance brokers; and (iii) provide recommendations related to the strategy for implementing IFRS in the insurance sector, a complex process that is in progress\. Thus, the modified Accounting Regulations in conformity with the EU Directives specific for the insurance field approved by the ISC`s Order no\. 3129/2005 were adopted\. The TA supported the implementation process of the provisions of the Accounting Regulations, which were modified by the ISC`s Order no\. 7/2007, in order to enhance the amendments of the EU Directives\. In addition, the TA supported the issuing of the ISC`s Order no 113\.105/2006 approving the Norms regarding the criteria for approving the financial auditors to audit the financial statements of the insurance companies that supported compliance with the provisions of the proposal for the amending of the 8th Directive\. The ISC`s Order no\. 22/2008 assured compliance with the provisions of the European Directive 2006/43/EC on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC\. 40The directives included: the COUNCIL DIRECTIVE on the annual accounts and consolidated accounts of insurance undertakings (91/674/EEC); the FOURTH COUNCIL DIRECTIVE on the annual accounts of certain types of companies (78/660/EEC); and the SEVENTH COUNCIL DIRECTIVE on consolidated accounts (83/349/EEC)\. 50 Part B: Privatization Support for State-Owned Enterprises (PPIBL: estimated project costs $0\.60 million/actual project costs $0) Target at Project outputs Project outcomes Funder appraisal (as amended) TA to Privatization advisory services for 10 PDO (a) achieved PIBL, privatize enterprises organized in 3 pools & restructuring Implemented the PSAL 2nd tranche condition GOR selected advisory services for 10 enterprises organized PDO (a) achieved PIBL, state-owned in 4 pools; sold 16 and liquidated 4 SOEs Implemented the PSAL 2nd tranche condition GOR enterprises The PPIBL did not finance activities related to the privatization of state-owned enterprises (SOEs)\. The targeted TA that was financed by the PIBL and the GOR contributed to the Project PDO (a) as it helped implement the related policy conditions\. Thus, the PIBL funded the privatization of four SOEs and the restructuring of three SOEs, while the rest of the targeted privatizations and restructurings were financed by the GOR\. Although tenders were launched under the PIBL for all 20 companies to hire privatization/workout advisors, only two contracts were signed - one out of the three pools for privatization and one out of the four pools for workout - because of failed negotiations, lack of bids or timing issues\. As a result, 16 SOEs were privatized, one SOE liquidated through an assets sale procedure through the Asset Resolution Agency, and three SOEs were liquidated through voluntary/judicial procedures\. The PSAL2 policy objectives were met (the broader policy objective of the PAL of privatizing the state manufacturing sector was achieved by the end of 2007)\. Part C: Privatization Support for the Energy Sector (PPIBL: estimated project costs $2\.26 million/actual project costs $0) Target at appraisal Project outputs Project outcome Funder (as amended) TA to strengthen the No information on specific outputs\. PDO (b) achieved EU, the regulatory capacity of Benefiting from the TA, over the years the Helped implement the Government's Electricity the National Agency ANRE (and the ANRGN until its merger) reform program in the energy sector Market for Gas Distribution built up a solid track record as probably the (see the Letter of Development Policy) Project most competent regulator in the region\. TA to develop a Provided TA to prepare the privatization PDO (a) achieved EU privatization strategy strategy that was used as an input to the Implemented the PSAL2 condition for the electricity Road Map for the energy sector approved in generation sector 2003\. TA to provide a legal The Bank aggregated a number of studies PDO (a) achieved PIBL, Bank, and regulatory that constituted the network study; the Road Helped implement the Government's Dutch framework for private Map covered the framework issues\. The reform program in the energy sector TF050477 competition in the legal and regulatory framework has been (see the Letter of Development Policy) energy sector (namely implemented consistent with the EU network industries) Directives\. TA to review the Completed before approval of the PPIBL\. PDO (a) achieved PIBL taxation system for the Used as an input in the network industries Contributed to a PSAL2 condition oil and gas sector\. and the Road Map approved in 2003\. about efficiency improvements in the oil and gas sectors The PPIBL did not finance activities related to the energy sector\. Instead, the EU, the Bank-funded Electricity Market Project (FY03), the PIBL and the Dutch Grant TF050477 financed TA in the targeted areas that contributed to the PDO (a) and (b)\. 51 1\. Regulatory capacity of the National Regulatory Authority in Natural Gas Sector The National Regulatory Authority in Natural Gas Sector in Romania (the ANRGN) received capacity building support from the EU, resulting in the introduction and subsequent implementation of a new formula for gas distribution companies\. The Government merged the ANRGN into the Romanian Energy Regulatory Authority (the ANRE) in 2007 in order to reduce the number of agencies and to have a better correlation between gas and electricity prices\. The ANRE had received TA from the EU together with the Bank-financed Electricity Market Project (FY03) for developing a commercial framework for electricity trading with satisfactory results (demonstrated by a commercial framework consistent with the EU market liberalization principles), as well as for developing a new formula to calculate the tariff for the electricity distribution\. Over the years the ANRE (and the ANRGN until its merger) built up a solid track record as probably the most competent regulator in the region\. The new commercial code and a clear formula for establishing the tariff for the electricity and gas distribution facilitated the privatization of five electricity distribution companies (out of eight) and of two gas distribution companies (100 % of the gas distribution is private-owned)\. 2\. Taxation system for the oil and gas sector See C\.4\. 3\. Privatization strategy for electricity distribution sector The privatization strategy for electricity distribution sector, mentioned in the PAD, was prepared using the EU PHARE funds in early 2000\. It provided input to the Road Map for energy sector reforms approved by the GOR in 2003 that included the policies, tasks, targets and timetable for implementing the reforms mainly in the power and natural gas sectors\. The Road Map was submitted to the EU as the official strategy that Romania would follow and that included the measures Romania would take to achieve compliance with the EU's electricity and gas directives and other energy sector parts of the EU acquis\. Romania's energy market model was based on liberalization (gradual opening)\. The stated aim was to create "such structures and a market environment that would enable to respond and cope with the increasingly integrated European energy market"\. The European Commission characterized the Road Map as "exemplary" and its successful implementation facilitated (for the energy sector) Romania's entry into the EU in January 2007\. The Road Map (and its 2007 version) benefited from several reviews by the Bank as part of supervising and preparing the PAL programs\. 4\. The legal and regulatory framework for private competition in the energy sector The legal and regulatory framework for private competition in the energy sector (namely in the network industries) was covered in the above Road Map which provided an energy market model based on liberalization\. The network industries study was done by aggregating several studies, including taxation study, structural and regulatory assessment of electricity, gas and oil sectors funded by the PIBL before the approval of 52 the PPIBL, as well as a review of tariff methodologies funded by Dutch TF050477\. This aggregation work was done by the Bank\. The legal and regulatory framework has been implemented consistent with the EU Directives\. Part D: Support for an Improved Business Environment (PPIBL: estimated project costs $1\.80 million/actual project costs $0\.12 million) 1\. E-business Target at Project outputs Project outcome Funder appraisal (as amended) TA to the Ministry Three consultancy assignments to improve access to knowledge by PDO (b) negligibly PPIBL of Communication establishing local community e-networks (LCeNs); significant inputs achieved and Information to the design of the LCeN component in the Knowledge Economy Helped implement Technology Project (KEP)\. the Government's (MCIT) to Draft design of operations of the Grant Facility of the KEP; used as business PPIBL strengthen e- the basis for the operational manual of the Grant Facility component environment business, including A business model for the e-Store; used as the basis for the Operational component of its PPIBL e-commerce, e- manual for the e-Store sub-component under the KEP\. strategy government, e- No TA requested for e-government services (or e-procurement) from GOR, KE Romania Gateway the PPIBL; the GOR has developed them from its own funds\. The Project and establishment KEP includes an e-government services component\. of telecenters No funding was requested for e-Romania Gateway Portal by the GOR, MCIT from the PPIBL, following the changes in its priorities after PIBL 2004\. The targeted TA that was financed by the PPIBL supported the business environment component in the Government's strategy for convergence with the EU\. As such, it strengthened e-business by providing significant inputs to the design of the Local Community e-Networks (LCeNs) component in the Knowledge Economy Project (KEP; FY06)\. These activities were not directly linked to support the PAL\. No financing from the PPIBL was requested for e-government services\. The PPIBL financed the following TA to: Help design the US$43 million "Improving Access by Establishing LCeNs" sub- component in the KEP\. The consultants: (i) identified the typologies of the most knowledge disadvantaged communities eligible for the LCeN implementation and selected a sample of 80 rural and small urban communities with these typologies; (ii) carried out a survey in 100 communities, including the 80 communities and an additional 20 for benchmarking purposes, to assess the demand for knowledge driven activities and accordingly defined the LCeN's functional model to address the needs of different target groups (teachers and students, citizens, businesses) under the KEP; (iii) designed the business and organizational model of the LCeN; (iv) prepared application and business plan templates, the design of a public awareness campaign in support of the deployment of LCeNs, a related training program for communities, and technical specifications for the LCeN's equipment; and (v) piloted competitive selection of 9 future LCeNs from the 80, representing each of the community typologies, based on the above\. The KEP applied the above selection criteria and methodology with some modifications and scaled up the exercise to select further 255 communities under the KEP component with satisfactory results\. The 255 Local 53 Community e-Networks (LCeNs41) were established n 255 communities by the end of 2007\. They are operational; represent 44% of the most disadvantaged communities in Romania; and cover a population of about 1\.8 million people\. In each of the 255 communities, the local electronic networks link the: (i) basic and lower secondary schools; (ii) local administration offices (Town Halls); (iii) public library; and (iv) Public Information Access Points\. The KEP has already demonstrated results in terms of increased use of ICT as a pedagogical tool, improved networking between schools, increased ICT skills of pilot schools' students and teachers, etc\. With regards to the Grant Facility sub-component42, design the eligibility criteria, application process and templates, selection mechanism, and the monitoring mechanism for use of the grants by the beneficiaries\. This information was used as the basis for drafting an operational manual for the KEP\. The Grant Facility was launched in August 24, 2008; 131 applications were received by November 24, 2008 and further 279 applications were received from 35 counties in the second round of submissions due by January 26, 2009\. The grants are intended for facilitating innovative business solutions, including e-business adoption among natural persons, family associations, micro, small and medium enterprises, as well as wide collaboration and innovation between them, industries, RDIs, etc\., to improve their competitiveness\. With regards to the Portal for E-Store, carry out an impact and needs assessment to design a business model for the e-Store, including organizational and legal structure, technological solutions appropriate for the portal, financial analysis and projection and supervision arrangements\. This design was used as an input in designing the Portal for e-Store sub-component and for developing the technical specifications for the e-portal developed under the KEP\. An e-Comunitate portal was launched in early 2009 with the resources page, web links to similar or complementary portals (such as the EU-funded e-SME Portal), Business directory, Product cataloging and Job directory to facilitate knowledge sharing\. Due to a parallel financing from the EU for developing an e-Store portal, the KE portal e-Comunitate assists in the development of business opportunities in knowledge disadvantaged areas, by providing better access to information and thus fostering the socio-economic development of these communities\. This portal complements and capitalizes the EU-funded e-Store portal\. No TA was requested for e-government (neither for the SMART-card system) services under the PPIBL as the Government developed them mainly from their own funds43\. 41Communities will be offered access to knowledge through "Local Communities e-Networks" (LCeNs) which provide a number of services and technologies, including computers, the Internet and communication services and specific content provision for different target groups (citizens, businesses and pupils) in rural and small urban communities\. 42The Grant Facility and Portal for E-Store sub-components constituted the US$11\.9 million Promotion of E-commerce and Innovation Support for Micro, Small and Medium Enterprises Component in the KEP\. 43Regarding e-procurement, Romania has successfully implemented e-procurement starting with a pilot project in March 2002, without requesting the project's support\. The Romanian government involved key stakeholders, launched advertising campaigns, created training programs and put an emphasis on SME-user friendliness\. In addition, a gradual implementation and strong political commitment helped to make it successful\. Thus, since January 2007, all public procurement announcements of the GoR have to be published on the national portal "e-Licitatie'' (www\.e-licitatie\.ro on the GOR's web-site) and are transferred to the EU Official Journal\. It has hence become easier and faster for companies in Romania to participate in public procurement by simplifying access to information and to the bidding process, which is especially important for SMEs\. Today, every company wishing to learn about contracts with the Romanian government can visit the national e-procurement website and register as a supplier\. In 2007, 9,000 54 Overall 36\.8% of the public basic services are available to citizens online and 67\.8% of the basic business services are available online out of the 20 basic services agreed with the EU under the i2010 agenda\. They include 12 e-Public services for citizens (income taxes; job search; social security benefits, passport and driving licence; car registration, building permission, declaration to Police, public libraries, birth and marriage certificates; enrolment in higher education; announcement of movement; health related services) and 8 public e-services for businesses (social contributions; corporate tax; VAT; company registration; statistical data; customs declaration; environment related permits; public procurement)\. The PPIBL did not finance the development of the e-Romania Development Gateway Portal, which was originally expected to be financed under the PIBL and subsequently transferred to the PPIBL, due to changed priorities of the new GOR in using the PPIBL funds\. The PIBL funded some staff costs for it\. The Portal was developed and managed by the eRomania Gateway Association within the Development Gateway initiative of the Bank\. 2\. Training of judges Target at appraisal (as Project output Project outcome Funder amended) Training to judges and Not requested funding for specific training for PDO (a) not achieved N/A court personnel in the area judges from the PPIBL\. of bankruptcy The PPIBL did not finance specific training for judges in bankruptcy, as originally targeted, as it was not requested (see Part E\.5 for training for the MOJ/SCM)\. 3\. Refurbishment of courts Target at appraisal (as Project output Project outcome Funder amended) Court refurbishing works Designed a methodology for development of PDO (a) achieved The Dutch and equipment to selected physical design standards; used as an input in Helped implement the TF050477 local courts designing the manual for the court infrastructure Government's program to rehabilitation component under the Judicial improve judiciary (during the Reform Project PSAL2) Not requested funding for works and equipment PDO (a) not achieved N/A from the PPIBL (being financed under the Judicial Reform Project; FY06)\. The PPIBL did not finance the targeted court refurbishing works and equipment to selected local courts; these activities were included into the design of the Judicial Reform Project (the JRP; FY06)\. However, as the first step, the Dutch TF050477 financed the work of a consultant to develop space planning and design standards for modest, functional and flexible court buildings that adapted international standards to the Romanian practice and custom and ensured cost-effectiveness\. This activity contributed contracting authorities used this modern public procurement facility and 160,000 notices and invitations to tender have been published through e-licitatie\. 55 to the PDO (a) as it supported the implementation of the Government's program to improve the judiciary\. The standards were used as input in developing a manual for the $90 million Court Infrastructure Rehabilitation component under the JRP\. The manual was envisioned to be used in rehabilitating/constructing about 25 locations under the JRP and in any other similar projects with the courts in future\. Implementation of this component is however marginally unsatisfactory due to delays\. It is likely that the JRP will complete rehabilitation of 10 courthouses versus the projected 25 by its closing date\. 4\. Business environment reform campaigns Target at appraisal (as Project output Project outcome Funder amended) Develop and implement a Not requested funding for a public awareness PDO (a) not achieved N/A public awareness campaign campaign from the PPIBL\. on business environment reforms The PPIBL did not finance a public awareness campaign on business environment (neither other financiers)\. Instead of developing "a communication strategy" under the Bank Projects, following Bank procurement rules, the GOR decided to develop concrete actions in order to raise awareness of the Government's measures that have impact on business environment\. 5\. The Jiu Valley Region Target at appraisal Project outputs Project outcome Funder (as amended) TA to the Jiu Valley Household survey of business opportunities in Jiu Valley; input to a PDO (a) achieved PIBL Region for strategy and action plan approved by the GOR for the Jiu Valley Helped implement implementing a Region\. the Government's business environment Video/ audio conferencing system for the Jiu Valley Association; the reform program for PIBL improvement strategy video system was placed in the Petrosani University and was used the reduction of and for e-business during the preparation of the Jiu Valley project, but also for poverty and connecting people to training and conferences opportunities\. unemployment in the Design and IT equipment for an on-line information system for the areas affected by PIBL collection of local taxes in six town halls; the system is in use\. economic transition The PPIBL did not finance TA to the Jiu Valley Region\. The targeted TA that was financed by the PIBL contributed to the PDO (a) as it helped implement the GOR's reform program in the reduction of poverty and unemployment in the areas affected by economic transition\. It represented the first step before launching a projected Bank- financed regional development loan that aimed at supporting private sector development in areas hit by the economic transition, such as the Jiu Valley Region (JVR) to support the related policy objectives of the PSAL2\. The regional development loan did not however materialize following changes in the Bank's assistance to Romania\. The PIBL financed the following preparatory TA: A household survey of business opportunities in the JVR to support an assessment of Competitiveness and Poverty Incidence in the JVR that resulted in a business plan and action plan approved by the GOR for the JV\. 56 A video/ audio conferencing system and equipment for the Jiu Valley Association44 to facilitate easy communication\. TThe video system was placed in the Petrosani University and was used during the preparation of the Jiu Valley project, but also for connecting people to training and conferences opportunities\. An on-line information system for the collection of local taxes and charges\. The system was implemented on a pilot basis for six Town Halls selected by the GOR for the implementation of the Comprehensive Development Framework\. The six town halls use the system for local collection of taxes for those who want to pay online\. Most of the benefits were generated by internal efficiency gains due to the restructuring of the business flow within the administrations\. Part E: Institutional and Governance Reform (PPIBL: estimated project costs $11\.25 million/actual project costs $19\.42 million) 1\. (i) Public Expenditure Management (a) Cash management within the Treasury system45 Background In 1991 the National Bank of Romania (NBR) elaborated a timetable for the reform of the Romanian payments system, structuring the process in two stages: Stage 1: The main objective was to modernize the interbank payments system in the national currency based on paper support, increasing the capacity of the NBR to implement monetary policy through liquidity supervision during the day and starting the transition towards a society with no cash\. This was implemented by putting into operation the national payments system on paper support, DECONT-BNR, in 1995\. At this stage, the average settlement duration of the payment instruments was about 3\.65 days for a payment order and 5\.26 days for a transfer debit payment instrument\. Stage 2: The main objective was to implement an electronic system of transfer of funds and registration and settlement of securities\. The general objectives were to facilitate the development of the economy by improving safety and efficiency of the interbank payments system; to transition towards a society with no cash; and to set up a robust legal framework for the payment systems with systemic importance and also, for the settlement systems, and for transactions with Government securities\. The transition from a paper-based payment system to an electronic one was determined, on the one hand, by development of the financial markets and the significant increase of 44The Government had approved a Development Strategy for the Jiu Valley Region prepared through a consultative process in the region which involved all relevant development stakeholders, including central and local authorities\. One of the outcomes of this process, supported by the Bank as part of the Comprehensive Development Framework process in Romania, was the establishment of the Jiu Valley Association (JVA) - a stakeholder partnership group that included representatives of the central and local public sectors, private entities, and the community, and had a mandate to oversee the economic development of the region\. 45The ICR provides a more detailed background and assessment of the Project's contribution to the Treasury modernization since it was the largest sub-component under Part E\. 57 the activity carried out by the national payment system, and on the other hand, by the need to shift towards a predominantly cashless society and by the improvements in the cashless payments\. Also, the final consumers requested for a safe, efficient, and low cost payment services\. Box2\. The National Bank of Romania Electronic Payment System (EPS)\. In 2000-2005 the NBR had a paper-based interbank clearing and settlement system\. The connection between the State Treasury and the NBR, where the Treasury held its accounts according to the legislation, was manual\. The exchange of paper documents between the MOPF and the NBR was manually intensive at both ends because each document had to be entered into the Public Accounting IT system\. The NBR and the Company for Funds Transfer and Settlement - TransFond S\.A\. established in May 2001 - launched the work on implementing a fully automated real-time interbank EPS STFD TransFond S\.A\.46 - funded by the EU-PHARE after the TransFond S\.A\. became operational\. The TransFond S\.A\. was established due to Romania's commitment to revamp the domestic financial and banking infrastructure in order to access the EU\. It became responsible for processing the interbank payments in Romania and, as such, it took over, as the NBR's agent, the operation of the paper-based payment system, which was thus outsourced by the NBR\. The "Interbank Payment System" Project implemented by the NBR and TransFond under the EU PHARE project became operational in 2005 in three phases\. At the incorporation date, the shareholders were the NBR and 28 commercial banks47\. The EPS was designed as a single contact point for all the EPS participants (42 Romanian banks, the MOPFthe State Treasury) in order to provide customer services related to any issues which they might face in using the EPS system\. According to its functional requirements, the implemented EPS was centralized with each participant entering payment instructions through the single point of access\. This fundamental concept of the new system enabled the increasing of the system's safety and improving of the management of the participants' resources through a centralized ordering/sorting of the payments, depending on the priorities of the financial institutions\. The participants to the EPS became the commercial banks operating in Romania and the Romanian Stock Exchange\. The real time gross settlement (RTGS) and the government securities trading (GSRS) were architected on the SWIFTNet, while the net settlement (the Automated Clearing House; ACH) began to be performed on a TFDNet TransFonD's (market infrastructure) proprietary network\. The first institutional measure in the extensive Treasury reform was to establish a State Treasury in 1992 (the Government Decision no\.78/1992)48\. It remedied the key 46STFD - TransFond S\.A\. is: (i) the main supplier of interbank low-value cashless payment services\. Except for the card payments (cleared by Visa and MasterCard), all low-value payments are cleared via an electronic system operated by STFD - TransFond S\.A\., i\.e\. SENT, and the paper-based clearing houses system; (ii) the operator of ReGIS, managed by the NBR, within the boundaries of the mandate given by the NBR; and (iii) the technical operator of all 3 Electronic Payment System (EPS) components\. The technical infrastructure, computer infrastructure, applications, systems telecom networks and security infrastructure are all managed by STFD - TransFond S\.A\., directly or by its partners\. 47The system went live in three separate stages: (i) April 8th, 2005: the ReGIS became operational\. The RTGS system named ReGIS system processes the real-time settlement of large-value and/or urgent payments; (ii) May 13th, 2005: the first day of automated clearing through the SENT system\. The ACH (Automated Clearing House) component, registered under the SENT trade mark in Romania\. The State Treasury joined the other participants in the multilateral netting system; and (iii) October 3rd, 2005: the SaFIR service was launched\. This was the third EPS component that ensures the deposit and settlement of Government securities\. The SaFIR is the Romanian GSRS system\. Once this stage was concluded, the EPS project implementation was considered to have been completed\. The TransFond was the technical operator of this system\. 48The legal basis for the Treasury function of the MOPFP is the law on Public Finance (LPF) (Law 10/1991, further amended through Law 72/July 12, 1996 republished through Law 500/August 13,2002) which describes broadly the roles and responsibilities of the Treasury and the Government ordinance No 146/2002 on the Treasury which regulates in greater detail the operations of the Treasury\. The Treasury organization was established under this legal framework and now consists of two General Directorates (GD), namely the General Directorate of Treasury and Public Debt and the GD of Treasury and Public Accounting within the MOPFP and a network of treasury offices (42 + 6 territorial offices at the territorial level and over 305 state Treasury territorial units)\. Total staffing of the Treasury at all these offices is about 6,500\. 58 institutional weaknesses in the budget execution process in which, prior to the reform, the budget was executed through the banking system, via a range of banks, and the Ministry of Public Finance (MOPF) periodically deposited money in bank accounts held by the spending units in commercial banks\. The budget execution was assured by the NBR\. When the banking system developed and the NBR became more independent and mainly focused on monetary policy regulation, the budget execution activity was transferred to the Romanian Commercial Bank (BCR)\. Experimentally, the management of public funds was done through Treasury in five counties\. Having in mind that some sectors of the economy did not benefit from enough resources, and it was consequently difficult for the local budgets to be balanced with resources, it was necessary to find a new mechanism/a financial instrument and a State Treasury was created mainly for the following reasons: It was not possible for the MOPF to determine in a timely manner the balances in spending unit bank accounts and sizable idle balances could build up in them\. Cash management was therefore weak\. More importantly, the MOPF did not have any ex-ante control on the actual expenditures made by spending units to ensure that such expenditure was in accordance with budget appropriations\. The MOPF relied on periodic reports from spending units detailing expenditure incurred by them\. These reports were often received after considerable delays and the MOPF had no independent means of verifying the accuracy and authenticity of these reports\. After the establishment of the Treasury and a network of Treasury offices across the country, spending unit Bank accounts in commercial banks were brought under the control of the Treasury and balances consolidated in a Treasury Single Account (TSA) at the NBR\. The restructured budget execution process is summarized below: Following the MOPF's notification of the main budget administrators in line ministries (credit ordinators), the MOPF requested them to prepare and submit within 20 days, quarterly breakdown of the granted appropriations, including the amounts required by their secondary and tertiary ordinators in subordinate units\. Based on revenue projections, the MOPF issued monthly spending limits to spending units\. The limits were communicated to the respective regional and local treasuries and copied to the institutions concerned, each of which had accounts in the Treasury from which payments could be made\. On the basis of this information credit lines were opened for each institution containing details of the relevant budget chapter and category of expenditure\. On receipt of goods and services, the institution checked the invoice and sent it to its designated local Treasury along with a payment order\. The Treasury performed a control function by checking whether the expenditure was properly authorized and was within the spending limit for that institution and category of expenditure\. If this was the case, the Treasury debited the institution's account accordingly and made the payment\. Payments could be made in cash (e\.g\., for salaries) and via a payable order for goods and services\. Payable orders were transmitted by the regional Treasuries to 59 a branch of the NBR where the Treasury held its accounts and debited the regional Treasury and credited the payee account\. These reforms were designed to eliminate the key weaknesses in the budget execution process and ensured that: The Government has up-to-date and accurate information on the financial resources available to it and can make informed decisions on budget releases, borrowings and investments since all Government resources were now in bank accounts controlled by the Treasury and balances from any regional Treasury bank accounts were routinely consolidated in a State TSA held at the NBR's headquarters; and All expenditure transactions initiated by spending units were in accordance with the budget appropriations passed by the Parliament and within spending limits imposed by the MOPF taking into account revenue projections and cash availability\. These reforms addressed the key institutional weaknesses of the budget execution process, and the consolidation of bank accounts in a TSA eliminated the idle balances in spending units accounts\. The ex-ante control exercised by Treasury units on payment requests from spending units ensured that expenditure transactions were in accordance with budget appropriations and within spending limits\. However, the realization of these reform objectives was critically dependent on: The information systems support and IT infrastructure available at the Treasury offices at the center and the regional and district branches which process spending unit transactions and enable the imposition of necessary ex ante controls before a transaction is passed for payment; The availability of a good telecommunications network that connects the central and regional Treasury systems and their ability to exchange information in a secure manner and in real time; The availability of a good electronic means of connecting the spending units to the Treasury to enable them to pass their transactions to the Treasury for processing; The availability of a good electronic connection between the Treasury offices and the banking network where the Treasury holds its accounts to enable it to process expenditure transactions; and The availability of an automated interbank clearing and settlement system that could provide an efficient and secure means of affecting payments initiated by the Treasury, consolidate balances from regional branches in a TSA, and receive accurate information on revenue receipts\. However, the available IT&C infrastructure in the Treasury and MOPF impeded the capacity of the new Treasury to realize the full advantages afforded by implementation of a Treasury system\.49 49In the early years of the reform, the MOPF set up a basic network of information systems to support the Treasury functional processes and transaction processing\. The application software was built using FOXPRO\. The applications were implemented under a 60 A Bank sponsored diagnostic and other similar analyses carried out in 2001-2003 highlighted the following weaknesses with the Treasury system: Lack of electronic links between the line ministries and the Treasury offices and fragility of the links between the Treasury office branches and the central offices; Lack of an automated interbank clearing and settlement system in the banking sector; Lack of secure and electronic connections between the Treasury network and the banking network; Existence of distributed data bases and absence of a central ledger data base; and Use of heterogeneous and outdated IT equipment in the Treasury network\. As a direct consequence of this, considerable resources were invested in manually feeding data into the system at the different administrative levels\. As a result, the speed and accuracy of information transfer across the Treasury network and between the Treasury and its clients (the spending units/line ministries) and the banking network were severely impeded considerably reducing the realization of the main advantages that are afforded by the implementation of a Treasury system\. On the functional side, the deficiencies in the IT and telecommunications infrastructure resulted in the following weaknesses\. The implementation of a distributed architecture and weak links between the subordinate and the central office meant that a central ledger containing all payment and accounting data could not be implemented\. As a result of this, rapid collection, consolidation and preparation of overall system wide reports was severely impeded; Under the system described above, whereas the credit ordinators are required to record commitments and these are approved ex-ante by the MOPF controllers in spending units, such commitments were reported to the MOPF only on a quarterly basis\. The Treasury therefore did not have a real time, on-line record of commitments before approving payment requests\. This reduced its ability to monitor arrears, perform cash management and implement commitment accounting; and The lack of a central database of all transactions and lack of availability of historical data impedes analyses that require exploiting time series of data for several fiscal years\. The Bank and other donors made a set of recommendations and bench marks for modernizing the Treasury operations based on various assessments made by them in 2001-2003\. Their key features included the following: distributed architecture with separate databases at subordinate Treasury offices\. The systems at the local office were responsible for carrying out the basic transaction processing that is required in processing payments for spending units and recording receipts\. Regional and Local Treasuries were connected via dial up connections to the central Treasury offices in the MOPF\. Summary data was forwarded to the higher levels of the Treasury network\. At this time the NBR had a paper-based interbank clearing system and the connection between the State Treasury and the NBR where the Treasury held its accounts was manual\. The exchange of paper documents between the Public Accounting Directorate and the NBR was manually intensive at both ends because each document had to be entered into the Treasury system\. 61 Modernizing the inter-bank clearing and settlement system used by the banking sector; Setting up a connection between the State Treasury and the interbank payment system; Renovation of the existing IT and telecommunications infra structure at the MOPF and at regional Treasury offices to enable a move from a distributed to a centralized architecture that would enable the setting up of a centralized public accounting ledger; The use of web-based internet and intranet technologies to enable better communications between regional and local offices and Treasury HQ, and between the line ministries and Treasury offices; The implementation of a centralized database containing up-to-date information on public investment contracts and commitments; The implementation of a system for efficient flow of information from the MOPF to the line ministries and the Treasury regarding budget releases - credit management work flows; Setting up of a central data warehouse comprising historical data for 7- 10 years to enable time series analysis; and Setting up of an internet portal for the MOPF's clients, including public institutions and providers of goods and services for these institutions, and for employee access\. The implementation of these recommendations involved investments for the following: Setting up an automated inter-bank clearing and settlement system and implementing technologies to enable the connection between the Treasury and the interbank clearing system; Installing and upgrading the server equipment and the center, the network connections between local and regional Treasury offices and line ministries and the center and deploying a new set of work stations across the network; Upgrading the application software to an industry standard relational database (ORACLE) and associated application development tools; Moving the application software from a client-server-based architecture to a web- based centralized architecture; Installing data warehousing software; and Upgrading the application software used by the Treasury to enable it to implement the additional functionalities including, the centralized accounting ledger, the commitments database; the budget release work flows\. The achievement of these benchmarks formed the specific objectives of the Bank's intervention under the PIBL and PPIBL\. Based on these recommendations, the MOPF used part of these funds under PIBL and PPIBL to implement these recommendations over the period 2003-2008\. 62 Outputs Target at Project outputs Project outcome Funder appraisal (as amended) TA to improve Design, supply and installation of information systems for connection of the PDO (b) achieved PIBL, cash state Treasury to the electronic interbank payment system Helped implement PPIBL management, the Government revising the Installation and upgrade of server equipment at the center, the network reforms in the PIBL, legal connections between local and regional Treasury offices and line ministries public expenditure PPIBL framework of and the center and deployment of a new set of work stations across the management governing network to support the migration from a distributed to a centralized Treasury architecture and the implementation of a real time public accounting ledger\. functions, and Procurement of additional IT & C infra structure to support the migration to training the Centralized architecture and implementation of the public accounting ledger\. Technical assistance for improvement of the information systems for PIBL, Treasury, public accounting and budget management PPIBL Provision of additional equipment and IT infra structure upgrades to support PPIBL the set of information systems and functionalities developed for Treasury Republished the Law on Public Finance through Law 500/August 13,2002; GOR adopted the Government Ordinance No\. 146/2002 on the Treasury operations\. Trained 121 staff members: (a) 9 MOPF staff members participated in a risk PPIBL management and analysis seminar (Dublin, Ireland); (b) 27 MOPF staff members participated in workshops organized by the Center of Excellence in Finance and the IMF (in Slovenia) on different topics, such as management of structural funds; cash management; budget analyses; fiscal sustainability in the health sector; introducing market value-based taxation of real property, etc\. (c) 2 MOPF staff members participated in a training program on public enterprise restructuring and privatization organized by the International Law Institute; (d) 82 MOPF staff members participated in a complex set of training programs organized by a number of different international institutions on a diverse set of topics related to public finance reform for EU accession\.; and (e) one MOPF staff member participated in external training on infrastructure in a market economy: public-private partnerships in a changing world\. The PIBL and PPIBL financed IT & C infrastructure and customized software development to modernize the Treasury system established by Romania (in addition to the considerable EU assistance), with significant efficiency and effectiveness improvements in its operations\. In addition, the PPIBL financed training of 121 staff members from the MOPF under this sub-component\. These activities contributed to the PDO (b) as they helped implement the GOR's public expenditure management reforms\. The PAL policy objectives were partially achieved due to the lack of a formal medium term expenditure framework\. The GOR revised the legal framework of governing Treasury functions by its own efforts\. The following outputs were designed, launched and developed with the assistance of the PIBL and the PPIBL\. Design, supply and installation of Information systems for connection of the state Treasury to the electronic interbank payment system (PIBL and PPIBL) To become a participant to the Electronic Payment System (EPS) and to benefit from its features (see Box 2), the MOPF needed to upgrade its own systems and establish a connection to the TransFond\. The Bank support for this project was provided through two contracts\. The first contract funded by PIBL started in 2004 implemented a turn key 63 system to connect the State Treasury to the EPS (TransFond)\. It included procurement of hardware and software and development of a software application to interface the Treasury systems with the TransFond and SWIFT\. The contract implemented the following technical conditions: Connection to the SWIFT, secured by a back-up line, for access to the ReGIS50 and the SaFIR51; Connection to a proprietary network (of the Romanian banks) that accesses the SENT52 and some additional functions; A back up and disaster recovery plan; An operating plan in relation with the EPS in case of malfunctions or destruction of the main centre; Hardware to install an on-line interface with the ReGIS and the SaFIR and the interface with the SENT; Provision of security of the installed software and hardware systems and the access to these; Audit of the implemented solution in order to obtain the final technical certification required by the TransFond and the NBR and necessary to access the EPS\. The MOPF (the State Treasury) became a direct participant (with the assigned BIC TREZROBU) to the national settlement closed user group, for all the three subsystems: the NBR's real time gross settlement (ReGIS), the TransFonD's net settlement (SENT) and the Government bonds registration and settlement system (SaFIR) since the 2nd quarter of 2005\. Once the State Treasury became participant in the EPS, this eliminated the preferential treatment granted to it in the old payment system\. The State Treasury had the same rights and obligations as other participants in the system (credit institutions in Romania)\. Obtaining the status of participant in this settlement system involved extensive efforts at the State Treasury level, both from financial and human resources points of view, since the solution that was to be developed included a number of business modules: a system for transferring funds in real time which enables automatic processing of payments at the central level between the State Treasury in the MOPF and economic operators (Treasury clients - public institutions and business community) through banking institutions with access to the interbank EPS operated by the TransFond; a control system based on a continuous accounting reconciliation of the operations that allows early detection and investigation of exceptions; the monitoring system of the liquidity in real time; an electronic platform for placement of securities by the MOPF in the primary market and a system for registration of issuance of Government securities; 50ReGIS - Real Time Gross Settlement system out of Romania 51SaFIR The government securities registration and settlement system 52SENT The electronic multilateral netting system for small-value interbank payments of TransFond S\.A\. 64 a system for continuous monitoring and control of IT&C resources and financial transactions; and a control system of the processes, operations and resources\. The system was further upgraded in June 2007 through another contract financed under the PPIBL to ensure liquidity management, continuous accounting reconciliation and competitive transactions report\. This upgrade consisted of improving the efficiency of performance of the STEPS, adding additional business functionalities and implementing measures aimed at reducing the operational risk of financial transfers\. This fulfilled a requirement to ensure readiness and compliance with reforms necessary for the EU accession\. These two contracts helped the STEPS to become compliant with the European financial market regulations and financial industry standards\. The STEPS is aligned with the financial industry regulations by its full compliance with the SWIFT standards and its readiness for the Target2 and SEPA\. Since its implementation, the STEPS uses the EU identification codes, such as BIC, IBAN and ISIN\. The fact that the STEPS uses banking instruments and standards creates an interoperability bridge with the business community\. Thus, the implementation of the STEPS dramatically improved the service provided by the Treasury and Public Debt Directorate to the public administration and to the business community both by ensuring the same day final settlement and reduced operational risk\. In particular, given the centralized architecture of the STEPS payment system engine and the high level of straight-through-processing, all transactions flow is performed online in real time\. The Treasury clients place directly their payment orders to the closest Treasury Unit which captures it electronically, processes it and consolidates it (through the Treasury's proprietary network) to a central payment engine\. The Treasury collections are routed, according to their reference (IBAN account and fiscal number) to the client's account\. The funds transfers (payments and collections) are centralized, ensuring real time cash management and forecast\. By ensuring real-time and resilient straight-through- processing of the funds transfer, the STEPS provides not only a higher velocity of fund transfers and a diminished operational risk, but also competitive tools for public liquidity management and successful debt administration\. Efficiency improvements of the STEPS are demonstrated by the following data: The move from a manual clearing and settlement mechanism used in 2002 to electronic, real-time system enable the Treasury to process 28,820,000 transactions in the first year (2005)\. The implementation of the new electronic payment system brings along a significant increase in the processing speed of the interbank payments\. Final settlement can take place a few seconds (ReGIS53 and SaFIR54) or hours (SENT) after the payment instructions are received by the EPS\. More precisely, the funds transfer from the payer's account to the beneficiary' account takes place as follows: (i) in real time (as 53Real Time Gross Settlement system out of Romania 54SaFIR The government securities registration and settlement system 65 soon as the funds are received from the sending participant) in case of the ReGIS and the SaFIR; and (ii) two hours at most after the funds are received in SENT (after clearing)\. SENT55 basically allows a payment order that a client presented at the bank's desk early in the morning to be submitted to settlement on the same day and the bank at the receiving end should be able to make that particular amount available to its client by the end of the bank operating day\. The settled volume of transactions increased, as follows\. ReGIS Payments: +75\.49% between 4/2005 - 4/2006; +28\.03% between 4/2006 4/2007;and +55\.30% between 4/2007 4/2008; and Receipts: +52\.86% between 4/2005 - 4/2006 ; +30\.27% between 4/2006 4/2007; and +31\.50% between 4/2007 4/2008\. SENT Payments: +30\.77% between 5/2005 - 5/2006; +6\.87% between 5/2006 5/2007; and +95\.26% between 5/2007 5/2008; and Receipts: +66\.07% between 5/2005 - 5/2006; +24\.78% between 5/2006 5/2007; and +37\.31% between 5/2007 5/2008\. The gross settlement transaction fee for the Government accounted for 27% of the level applicable in 5/2/2005, resulting in a net fee reduction of 72% in 2008\. The settled volume of the MOPF's transactions (reflecting the Government expenditure and receipt transactions, payments through the State Treasury Electronic Payment System) increased between April 2005 and December 2008, as follows: Table 3\. Settled volume of the MOPF's transactions April 2005-December 2008 Traffic growth between April 2005 and December 2008 (RON): SWIFT Traffic ReGIS/ SaFIR Traffic payments 514\.78% Traffic receipts 131\.48% Traffic growth between April 2005 and December 2008 (RON): TFDNet Traffic SENT Traffic payments 170\.99% Traffic receipts 67\.31% The fees have fallen down in comparison with the higher volume of the traffic due to competitive payment system, enhanced interoperability with the economies of scale and increased skills of the staff (see Graph 1)\. 55The electronic multilateral netting system for small-value interbank payments of TransFond S\.A\. 66 Graph 1\. Evolution of Receipt and Payment Traffic vs\. Value Fee April 2005-December 2008 It is clear that the implementation of the new settlement system required substantial investments\. In this context, the costs related to the implementation of this system and also, the interconnection with the EPS in Romania, cannot be analyzed separately from the benefits this investment has on the State Treasury's customers through: (i) reducing the financial costs, the settlement timing and streamlining of the payment circuits; (ii) facilitate expansion of business activities on new markets; and (iii) providing of new profitable and efficient services, such as e-invoicing, reconciliation and management of liquidity\. In order to increase the visibility of the projects implemented by the State Treasury in the payment area, the MOPF has participated, along with the provider of the centralized payment solution of the State Treasury, to the SIBOS 2008 conference organized by the SWIFT in Vienna\. The SIBOS is a conference that is organized annually as the main event in the financial industry (over 7000 participants from departmental and top management in the most important financial banking institutions and specialized solution all over the world)\. The results of the successful implementation of the STEPS by the State Treasury have been recognized also by awards by specialty magazines during 2007 and 2008\. For example: 2007: Gala of Fin Media awards e-success prizes: the Romanian State Treasury, a SWIFT member, for supporting international banking industry standards and for its readines for TARGET2 and SEPA compliance; 2008: Gala of Fin Media awards e-support prizes: for sustaining the adoption of the SEPA-compliant settlements in national currency and for its leading position in promoting the SEPA standards within both Romania's and EU's public institutions\. 67 Installation and upgrade of server equipment at the center, the network connections between local and regional Treasury offices and line ministries and the center and deployment of a new set of work stations across the network to support the migration from a distributed to a centralized architecture and the implementation of a real time public accounting ledger (PIBL and PPIBL) As mentioned above, the connection between the STEPS and TransFond was at the central level of the Treasury and the NBR\. This required that Treasury move from its distributed to a centralized architecture where the main transaction databases are located at the center instead of being distributed across a network of databases spread across the local and regional Treasury offices\. This required that the server capacity at the central level be augmented and the links that enable data transfer between the subordinate Treasury offices and the center be strengthened\. The upgrade to the IT & C infra structure to accommodate a centralized public accounting ledger was carried out under two contracts funded by the PIBL and the PPIBL\. The main objective of the first contract was to enhance the IT technical infrastructure for the Treasury at all the three levels of its organization structure, including, servers at the central level, work stations, printing facilities and communications equipment\. This upgrade would support the first stage of migration to a central database using existing versions of the Oracle DBMS and client server technology and also implement a back-up and recovery system\. This contract supplied the work stations, servers and systems software and communications equipment for the system to function effectively\. The contract also supplied ancillary equipment, including printers, scanners, UPSs and office automation software\. Based on this contract, 2,615 workstations and 814 printers were supplied for about 5,000 employees in the Treasury offices across the country\. The application software for this migration was developed in-house\. The General Directorate for IT from MOPF developed a software application which was implemented country wide on the upgraded infrastructure in January 1st, 2005\. At the end of phase I, the new application system was in a position to consolidate data entered in local offices in a central database in order to ensure a secure connection between the Treasury systems and the TransFond\. The system also enabled all data received from TransFond (e\.g\. in respect of Treasury receipts) to be stored centrally and dispatched to local offices\. Procurement of additional IT & C infra structure to support the migration to the Centralized architecture and implementation of the public accounting ledger - phase 2: December 2004 In phase II of the implementation of the migration of the centralized architecture and implementation of the centralized public accounting ledger, the MOPF completed the 68 move to a centralized architecture and procured central infrastructure to enable implementation of web-enabled technologies which would allow the end-users to access the centralized Oracle database using a browser and a web application server\. The Project financed the purchase of the Oracle DBMS software and application development tools and also paid for support/maintenance services for two years\. This infrastructure was supposed to also support better interface with the application systems in the tax administration area and in the budget management area which were also moving to a centralized architecture\. Technical assistance for improvement of the information systems for the Treasury, public accounting and budget management (PIBL and PPIBL) The new ORACLE client server application to consolidate data at the central level in a central database and also to deploy data received through the TransFond to the operational public accounting units mentioned above was implemented in a client-server environment\. The next phase of the transition was to implement technologies to enable end-users to take advantage of web-enabled technologies to connect to the central database using a browser and a web-application server to provide additional functionalities\. Some of the IT &C infrastructure for this was procured under the second contract detailed above\. To assist the Government in this migration and systems upgrade, TA support was first provided under a contract funded by the PPIBL to hire a consultant to define the technical specifications of equipment and services required for the upgrade of information systems in the MOPF and to assist the Government in their procurement and implementation\. This assignment provided project management technical assistance to plan and implement the necessary activities required for the systems upgrade\. The project then provided TA under two contracts to assist the Treasury in designing and doing the necessary application software development that would be necessary in their existing information systems\. The objective of the first TA assignment funded by the PIBL was to hire consulting services for preparing the migration from the distributed database architecture to a centralized architecture and from client server technology to web enabled technologies\. This assignment defined the centralized architecture of the data base and defined the approach and road map for migration to this architecture\. Under the second assignment funded by the PPIBL funded by the project the following activities were carried out\. Migration of the public accounting IT systems towards a centralized architecture with a web-enabled interface; Implementation of information systems to create integrated work flows between the MOPF and the budget holders to support the budget distribution, release and other budget related processes necessary during budget execution; 69 Creation of a central data warehouse to store fiscal data for 7-10 years and provide the MOPF with capabilities for carrying out time series and other analyses on this data; To implement/enhance the internet MOPF Portal to enable its clients (public institutions and employees) to access the central database and the data warehouse; and To provide specialized training to the MOPF staff in the use of these systems\. Provision of additional equipment and IT infra structure upgrades to support the set of information systems and functionalities developed for the Treasury (PPIBL) To fully implement the new systems designed under the technical assistance described above, the IT & C infrastructure across the Treasury network needed further upgrades\. Support was provided under two contracts\. The main objective of the first contract was to provide for servers and associated equipment at the central level that will allow the implementation of the web-enabled applications designed under the contracts described above\. The infrastructure was also to allow better interfaces with the application systems for tax administration and budget management\. Support under the second contract provided work stations and associated equipment like printers, scanners UPSs, etc\., equipment to the subordinate Treasury units\. The MOPF did not implement the system for recording commitments and registering public investment contracts under the PPIBL funding, as per the MOPF's IT strategy, because it would not have been possible to complete it within the duration of the project\. Further, the establishment of such a database would also require participation from the line ministries and spending units that enter into the contracts in addition to the MOPF's participation\. The MOPF is planning to implement it using its own resources or the EU funds in the future after agreement has been reached with the line ministries and spending units as to their responsibilities for keeping it up-to-date\. Thus, until the system for recording commitments and registering public investment contracts is implemented, budget execution at the Treasury will be carried out on a cash basis\. Though the budget ordinators at spending units would ensure that commitments are recorded, the Treasury has no advance knowledge of these commitments\. This can potentially affect the ability of the Treasury to monitor all commitments entered into by spending units and determine spending unit cash flow requirements unless ordinators made an effort to inform the Treasury well in advance of, for example, large payments that would become due in the coming months\. 70 (b) Budget formulation Target at Project outputs Project outcome Funder appraisal (as amended) TA to Advisor in the budget department of the MOPF; recommended key measures PDO (b) achieved Dutch improve to improve the budget process, calendar, guidelines and designed a pilot for Helped implement TF054659 budget applying "resource choice" strategic planning process; recommendations not the Government formulation effectively implemented\. reforms in the TA to strengthen the in-house capacity of the Directorate for Macroeconomic public expenditure PPIBL Analysis and Financial Policies in the MOPF for macroeconomic forecasting management and (including a model); the model is in use\. policy formulation Training for Ministry of Public Finance staff in budgeting and cost control Dutch TF054659 Organization of a 2-day "Romania Conference on Growth, Competitiveness PPIBL and Real Income Convergence"; provided a discussion forum; distributed the book of conference proceedings to the participants and to government agencies\. The targeted TA that was financed by the Dutch TF054659 and the PPIBL contributed to the PDO (b) as it helped implement the GOR's reforms in the public expenditure management and policy formulation\. The PAL policy objectives were partially achieved due to the lack of a formal medium term expenditure framework\. The Dutch Grant TF054659 and the PPIBL financed the following TA to: Help implement the budget reform in the MOPF (as well as in the General Secretariat of Government, GSG, Ministry of Justice, Ministry of Education, Health, Ministry of Transportation and Ministry of Environment as part of a wider TA program to support the budget process reform under the PAL; see Parts E\.5, 8, 10-13)\. The MOPF advisor identified a number of practical key reform measures for 2006-2007 to improve the budget process, such as: (i) a revised policy-centered budget preparation calendar; (ii) guidelines for simplified version of the `resource choice' strategic planning process; (iii) practical steps for adapting the first guidelines developed by the MOPF in March 2006 for pre-budget planning in line ministries56 to become the means of implementing the `resource choice' strategic planning in all line ministries; and (iv) knowledge transfer in several workshops organized for staff from the MOPF, the GSG and line ministries to exchange views on the progress of the assignment (involving about 100-200 participants)\. The MOPF advisor worked most closely with the GSG advisor who together made important contributions to the legislation/procedures passed by the GSG in 2007-2008 to establish the strategic planning and policy formulation framework and procedures (see E\.8)\. The guidelines for preparing the budget have improved significantly, following the assistance of the advisor (unfortunately, the numerous budget rectifications within the year make those ceilings largely redundant)\. The advisors in the line ministries, in turn: (i) were involved with developing strategic planning processes in their ministries and preparing the newly required strategic plans; (ii) provided input to their ministries' 56The MOPF instructed line ministries to present information on strategic planning by completing a newly-designed policy matrix and to submit information on program funding requirements in advance of the annual budget preparation in March 2006\. 71 submissions for the National Development Plan for the MOPF; and (iii) made recommendations on the proposed financing system changes and their impact\. Strengthen the in-house capacity of the Directorate for Macroeconomic Analysis and Financial Policies in the MOPF for building the forecasts of budgetary revenues and expenditures and for evaluating the macroeconomic impact of various tax changes with a view to proposing more appropriate policy measures to the Government\. In the previous years, the MOPF had relied on external work\. The consultant delivered the customized macro-economic model for policy analysis and medium term forecasts and training for 6 staff members from the Macroeconomic Division of the Directorate in the use of the model\. The model is used by the Directorate to check the consistency and coherency of the macroeconomic framework used in the budget preparation process\. Moreover, the model was used in the preparation process of the Convergence Program for the sensitivity analysis and the estimation of structural, cyclical budget components, including output gap and potential GDP\. The Directorate updates it quarterly with the new sets of data and runs it on a regular basis\. Going forward, the model will be used in the process of building a medium term budgetary framework which is a top priority for the new Government\. Organize a two-day "Romania Conference on Growth, Competitiveness and Real Income Convergence" in Bucharest in April 2008, including finalization of the agenda, identification of speakers, logistics and preparation of a book of speeches\. The conference was open to the informed public and the press, and it provided a forum for discussing which kind of growth sustaining public policies in the area of labor markets, education and human capital, infrastructure (particularly network infrastructure), agriculture, and energy could promote the growth and real income convergence of Romania as it tries to integrate with the EU\. The book of the conference proceedings was distributed to the participants and all the Government agencies\. (c) Foreign financing coordination Target at Project outputs Project outcome Funder appraisal (as amended) TA to improve An upgrade to the UNCTAD's DMFAS, version 5\.3; PDO (b) achieved Dutch foreign implemented in 2006 Helped implement the TF050477 financing Technical services contract for the Bloomberg Government's reforms in public Dutch coordination Professional Services; from 2006 until mid-2008 expenditure management TF054659 (incl\. setting up Adopted an improved legal framework for public debt GOR a central unit or management (the 2004 Public Debt Law and the requiring Emergency Ordinance 64/2007 on the Public Debt) MOPF's sign- off of any Established a modern debt agency, the General Treasury GOR foreign and Public Debt Directorate within the MOPF, in April financed 2007 project) The targeted TA that was financed by the Dutch Grants TF050477 and TF054659, as well as the GOR contributed to achieving the PDO (b) as it helped implement the GOR's reforms in the public expenditure management\. The PAL policy objectives were partially achieved due to the lack of a formal medium term expenditure framework\. 72 The Dutch Grants TF050477 and TF054659 financed the following TA for: (i) An upgrade the existing UNCTAD Debt Management System (DMFAS version 5\.3) for the State Treasury Management Unit in the MOFP and the NBR; (ii) a two- year maintenance agreement (until mid-2008); and (iii) training of the officials on the system and on formulating debt strategies and debt sustainability analysis (including a 2-week trip to Bucharest for a senior debt management expert)\. The upgraded system has been in use since 2006 and its maintenance is currently provided for free by the UNCTAD\. This system will be replaced by a new computerized system (FTI-STAR) at the time when an entire database for public debt will have been created by the end of June 200957\. Nonexclusive and nontransferable right to use the Bloomberg Professional service information, data, software and equipment from 2006 until mid-2008 for the State Treasury Management Unit in the MOPF\. The terminals were installed on the MOPF's premises and have been operational since 2005\. With regards to other activities envisioned in the PAD, the MOPF implemented them without the PPIBL's assistance\. In accordance with the recommendations made by both the IMF and the World Bank, the GOR improved the legal framework for public debt management by adopting a new public debt law in 2004 in line with the acquis\. The new law: (i) eliminated the possibility of the line ministries directly contracting loans with the guarantee of the State; (ii) made clarifications regarding the integration of the local public debt as part of the public debt; and (iii) clearly defined the objectives set out in the public debt management process, as well as the attributions of the State institutions in this intricate process\. Based on further recommendations by the World Bank, the IMF and the foreign experts involved in the EU PHARE Project for "Improving the Treasury System in Romania", the GOR passed Emergency Ordinance 64/2007 on the Public Debt, introducing changes, such as the following: (i) the MOPF can contract new Government public debt for financing the budget deficits and refinancing the existing Government public debt and can issue guarantees for loans/grant on-lending for beneficiaries only based on laws, in such cases needing the approval of the Parliament; (ii) starting 2009, MOPF takes over, for management purposes, the loans contracted by the main spending units with the guarantee of the State, or the loans directly contracted by the MOPF for on- lending to the main spending units, in a move to centralize all the Government public debt operations for which the only repayment source is the State budget and social security funds at the MOPF level, for a more efficient management of the budgetary resources and public debt; and (c) the obligation was introduced to elaborate the Government public debt management strategy on a medium term, which may be revised annually, and to define the strategic objective of the Government debt management which is to secure the financing needs at a Government level, along with minimizing the costs in the long run and reducing the risks associated with the Government debt portfolio\.58 57Romania's Public Government Debt Management Strategy for 20082010\. 58Romania's Public Government Debt Management Strategy for 20082010\. 73 In addition, the public debt department of the MOPF was reorganized in April 2007 to a modern debt agency under the General Treasury and Public Debt Directorate by merging the three former general directorates involved in the public debt management\. The new Directorate includes the contracting activity (front office), the risk analysis and management and the liquidity management (middle office) and public debt payments (back office)\. (d) Government accounting; and financial reporting (in the corporate sector)59 Target at appraisal (as Project outputs Project outcome Funder amended) TA to improve On-site advisor on strategic management of the PDO (b) achieved Dutch Government accounting Public Financial Management Reform (PFM) for Contributed to achieving the TF050477 (incl\. developing accrual the President of the MOPF in 2004-2005; helped PAL1-2 milestones for the accounting capacities, manage and monitor the PFM during the PAL governance and PFM accounting regulations and (see E\.1\.i\.b)\. capacities) An Order of the MOPF from 2005 introduced PDO (b) achieved GOR accrual accounting in all public institutions from Helped implement the January 1, 2006\. In practice, full accrual Government's reforms in accounting is not in place in the absence of a public expenditure public contracts database and lack of an management integrated financial management system\. TA to improve financial TA to the Accounting and Financial Reporting PDO (b) achieved Dutch reporting (in the corporate Council (CCRF) to implement the first phase of Contributed to achieving the TF050477 sector) the Country Accounting Plan (CAP) to enhance PAL2-3 milestones for the quality of financial reporting and contribute to improving the transparency in essential improvements in the Audit Law at the the functioning of the firms time\. TA to implement the remaining accounting Dutch agenda under the 8th Directive (incl\. how to set TF054659 up the Romanian Accounting Group); recommendations included in the new Law on the Statutory Audit that ensured compliance with the 8th Directive and that was enacted by the relevant Emergency Government Ordinance of June 24, 2008 and was ratified on November 7, 2008\. TA to implement the remaining auditing agenda Dutch in the 8th Directive (incl\. the establishment of a TF054659 public oversight system); recommendations included in the above Audit Law to ensure full compliance with the 8th Directive\. TA to assess the institutional and legislative PPIBL framework and the capacity and operations of the Body of Expert Accountants and Chamber of Auditors; recommendations were endorsed\. Actions to ensure segregation of their roles included in the CAP\. Training programs to 50 key stakeholders from Dutch the regulatory bodies in the implementation of the TF054659 IFRS The targeted TA in the area of Government accounting that was financed by the Dutch Grant TF050477 and the GOR contributed to the PDO (b) as it helped achieve the PAL1- 2 milestones for the governance and Public Financial Management (PFM)\. The PAL policy objectives were partially achieved due to the lack of a formal medium term expenditure framework\. The additional TA that was financed by the Dutch Grant TF054659, the PPIBL and the GOR contributed to the PDO (b) as it helped achieve the 59Most of the TA activities were practically related to improving the financial reporting in the corporate sector\. 74 PAL2-3 milestones for improving the transparency in the functioning of the firms\. The PAL policy objective of improving the transparency of firms was partially achieved\. The Dutch Grant TF050477 financed the following TA for public financial management and government accounting to: Help improve the institutional capacity of the MOPF (and line ministries) for strategic management of the PFM reform and, in particular, program budgeting, accruals accounting, internal audit and external audit of financial statements and performance, as well as treasury cash management\. The TA was to ensure that the Romanian government could meet the EU requirements under financial control which would facilitate the accession to the EU\. The advisor: (i) helped establish and make operational the Inter-ministerial Committee for the PFM reform; (ii) prepared the Strategic Development Plan (SDP) for the PFM reform for the period 2005-2007 to facilitate access to the EU (these were PAL1-2 conditions); (iii) helped lead efforts to manage the reform based on the recommended SDP that was approved; as well as (iv) monitored the progress of achieving the PAL triggers and conditionality related to the PFM Reform\. In cooperation with the other budget advisors (see Part E\.1\.i\.b), the advisor helped the MOPF and line ministries implement recommendations of the Country Financial Accountability Assessment, included in SDP, and made further recommendations which are under implementation\. With regards to results in accrual accounting, it has been introduced starting with January 1, 2006 for all the public institutions, but despite certain progress, this is happening in practice to a limited extent, mostly when it comes to reporting budget execution results because (i) the Treasury does not require copies of all contracts signed, thus lacking a complete view on commitments (as opposed to other countries, such as Moldova); (ii) the budget formulation is still done on a cash basis, and the entities in practice report both on a cash basis, as well as on an accrual basis; (iii) the fixed assets revaluation has been carried out on a regular basis and there are procedures for regular revaluations; (iv) there is no full commitment budgeting, although there is some progress with a relatively new concept introduced (as an "off budget" item) - "credite de angajament" - commitment budgets, which is used for example for multi-annual projects, and this is in addition to the standard regular budget openings - "credite bugetare" - regular budget openings; (v) there is no centralized public procurement contract database system; and (vi) the line ministries and the other budgetary entities do not have direct access to the Treasury systems\. The Dutch Grants TF050477 and TF054659 as well as the PPIBL financed the following TA for corporate financial reporting: Assist the Accounting and Financial Reporting Council (CCRF) develop, promote and coordinate implementation of the first phase of the CAP to improve financial reporting in Romania on the basis of the recommendations of the 2003 Accounting and Auditing Report on the Observance of Standards and Codes (ROSC)\. The recommendations were included in an updated version of the CAP and consequently implemented\. Recommendations included, for example, suggestions: (i) to strengthen 75 accounting and auditing professional bodies; (ii) to reform accounting education; (iii) to create an oversight system; and (iv) on which provisions in the Romanian legislation related to financial audit to transpose the 8th Company Law Directive\. Based on the recommendations, the CCRF made a decision to establish the Romanian Accounting Group (RAG) to address the issues arising from the adoption of the International Financial Reporting Standards (IFRS) and the increased influence of the IFRS on national accounting requirements in Romania\. Assist the CCRF to create the framework for establishing the RAG, including its overall architecture, organization structure, resources and governance arrangements, as well as procedures and decision-making processes for the main functions and the roles and responsibilities of other relevant stakeholders\. In addition, the consultant gave substantial contribution to further comply with the 8th Directive\. The recommendations were included in the first draft of the Law on the Statutory Audit, mainly to transpose Directive 2006/43/CE regarding the statutory audit of the annual accounts and of the consolidated accounts and the setting up of the RAG\. The draft Law was enacted by the relevant Emergency Government Ordinance of June 24, 2008 and was ratified on November 7, 2008, with a delay\. Once implemented, it provides a unified structure and central source of technical expertise on the IFRS in Romania\. The RAG has however not been established yet\. Assist the MOPF to further implement the 8th Directive on Statutory Audit and, in particular, to create a framework for organising an effective system of public oversight on statutory auditors and audit firms\. The consultant helped prepare a draft law regarding implementation of the 8th Directive\. The recommendations were included into the above Law on Statutory Audit\. Assess the national legislation and practice of liberal professions in accounting and auditing area, based on the recommendations of the above first assignment, to ensure consistency with the EU and international standards and to propose a clear and logic demarcation of respective roles and responsibilities of the MOPF and of both professional bodies concerned (i\.e\. the Chamber of Financial Auditors of Romania (CAFR) and the Body of Expert and Licensed Accountants of Romania (CECCAR)\. The recommendations urged the CAFR and the CECCAR to: (i) strengthen their operations in a number of key areas; (ii) suggested the professional organisations, the MOPF, and the auditor/audit public oversight body (when created) focus their efforts and resources on a number of areas; and (iii) proposed an action plan to update the CAP\. The MOPF endorsed the recommendations and included the recommended action plan to the updated CAP, including actions to ensure segregation of the roles of the MOPF, CAFR and CECCAR\. The next step is the setting up of the public oversight body\. Provide a practical training course to 50 representatives from the regulatory bodies (the MOPF, the NBR, the ISC, the National Securities Commission and the Pension Supervision Commission) on the IFRS implementation in the second half of 2007\. The program provided: (i) 20 days of initial training to all the participants; (ii) then specialized training from 10 to 20 days separately to each regulatory body on the IFRS transition issues arising in the special regulatory areas; and (iii) a five-day final session with all participants on the most complex issues arising within the program and required participation in debates and presentations on these topics\. 76 (e) Internal audit Target at Project outputs Project outcome Funder appraisal (as amended) TA to Trained about 42 staff in the public sector for the Certified Internal Auditor PDO (b) achieved Dutch improve (CIA); some passed the exam and trained other internal auditors under the Helped implement TF050477 internal audit umbrella of IIA-Romania (now totaling 120) the Government's Application fee and tax for the CIA exam for 3 staff reforms in public Dutch expenditure TF050477 Participation of 2 staff members from the Audit Department in the MOPF to management PPIBL a seminar on internal and external audit No funding requested from the PPIBL for software and hardware for GOR monitoring and providing search capacities for legal instruments governing internal audit and a data base on internal audits and their findings; addressed through other means The targeted TA that was financed by the Dutch Grant TF050477, the PPIBL and the GOR contributed to the PDO (b) as it helped implement the Government's reforms in public expenditure management\. The PAL policy objectives were partially achieved due to the lack of a formal medium term expenditure framework\. Following on the previous training funded by the EU PHARE, the MOPF through the Central Unit for Internal Public Audit Harmonization launched a training project for internal auditors from various organizations, such as the MOPF, Ministry of Industry, Ministry of Justice, Ministry of National Defense, Ministry of Labor, Ministry of Transport, Town Hall of Bucharest Ministry of Agriculture, and the Fiscal Administrations\. Training supported the decentralization of internal audit into ministries and agencies launched after 2002\. The Dutch TF050477 financed preparatory training to 42 internal auditors in the internal audit units of the above organizations for obtaining the CIA certification that they were preparing for, with the aim of further transferring the knowledge to other internal auditors\. Three of the participants successfully completed the CIA exam in May 2006\. Some of the CIA auditors trained other internal auditors under the umbrella of IIA-Romania (now there are 120 internal auditors)\. This training complemented the extensive internal audit training carried out since 2005 with the GOR's and the EU's funding\. Overall, a government-wide internal audit system has been initially established, including: (i) the Law on Public Internal Audit from 2004 that regulates the organization (the Public Internal Audit Committee, the Central Harmonization Unit for Public Internal Audit, and internal audit services within public entities), types of audit (system, performance and financial audits), audit planning, tasks of internal audit, and framework for professional training; (ii) the requirement for public entities to have their own internal audit unit (or, for smaller entities, to use the services of the parenting ministry); and (iii) professional continued education is required by the law for all internal auditors\. However, much more capacity is required, especially at the rural level, to fill in the available posts of internal auditors and build skills\. Thus, all line ministries and large public agencies have their own internal audit unit with 2,159 posts of internal auditors out of which 1807 are occupied\. At the level of local public administration, there are 2,159 posts of internal 77 auditors out of which 983 are occupied\. An EU-funded twinning project is under implementation to improve the internal audit function at the rural level and to assure the adequate competencies and skills for internal auditors in the public sector\. The PPIBL did not finance acquisition of an IT system, including a data base, as initially planned for the use of internal auditors to provide information on cases when reconciliations between financial documents of the taxpayers (i\.e\. the invoice of the seller and the cash book of the buyer) did not match\. This initial request was related to the MOPF's efforts in the early 2001 to improve the revenue collection because at that time there was a large tax evasion\. The issue was addressed by the new legal framework drafted and specifically by the Fiscal Code, and there was no need to finance the initially requested TA from the PPIBL\. (f) Decentralization Target at Project outputs Project outcome Funder appraisal (as amended) TA to improve Review of intergovernmental fiscal relations and local PDO (b) achieved Dutch decentralizatio governance finance; recommendations on fiscal Contributed to achieving the PAL2 TF054659 n decentralization policy reform design and implementation milestone for an improved incorporated into the 2006 reform package, some were decentralization framework reversed in 2008 but reinstated in the 2009 budget The targeted TA that was financed by the Dutch TF054659 contributed to the PDO (b) as it helped achieve the PAL 2 milestone for an improved decentralization framework\. The Grant financed the work of a consultant to carry out a review of the proposed legal and institutional framework package for intergovernmental fiscal relations and local governance finance and fiscal decentralization reform issues\. The consultant made a set of short and medium-term policy recommendations to move forward the reform agenda\. The GOR incorporated many of the recommendations into the legal and institutional framework for the decentralization reform enacted in 2006; some were reversed in 2008 but reinstated in the 2009 budget by the new GOR\. 1\. (ii) The National Agency for Fiscal Administration (NAFA) Target at appraisal (as Project outputs Project outcome Funder amended) TA to support analytical Trained NAFA's staff: (a) a training/study tour in PDO (b) achieved Dutch studies on revenue Bulgaria for the management officials and Helped implement the TF050477, administration issues workshop Sinaia; (b) NAFA PMU training in Government's reform program PPIBL Croatia; (c) a study tour of 7 NAFA officials in for public expenditure Finland; management In anticipation of the planned Revenue Dutch Administration Reform Project (applies to all TF050477 assignments), a consultant to produce a draft Project Implementation Plan and a Project Operational Manual; gave input to identifying NAFA's developmental needs An on-site advisor to develop a macroeconomic PPIBL model for estimating compliance and revenues, recommendations for improved monitoring, client communication, etc; the model is in use, the M&E unit has been set up, many other results 78 An on-site advisor to recommend an improved PDO (b) achieved PPIBL organization structure for the NAFA, especially Helped implement the for the IT functions; accepted and implemented Government's reform program or are planned to be implemented for public expenditure A consultant to draft new legislation, in management PPIBL cooperation with the NAFA etc, for the collection of social contributions, including the unification of the tax base for all the social contributions at the level of the income tax; adopted some provisions separately (regarding the pensions) but implementation of the full unification postponed until 1st of January 2010 An on-site advisor (2007) to draft an overall PPIBL strategy, policy framework and developmental priorities, in cooperation with the NAFA, on information management and IC&T management; created an IT department in the NAFA in October 2007 The targeted TA that was financed by the Dutch TF050477 and the PPIBL contributed to achieving the PDO (b) as it helped implement the Government's reform program for public expenditure management\. The PAL policy objectives were partially achieved due to the lack of a formal medium term expenditure framework\. The PPIBL and the Dutch Grant TF050477 financed the following TA to: Draft a project implementation plan and a project operational manual for the planned Bank-financed Revenue Administration Reform Project (FY06)\. This TA was used to help the NAFA to assess its TA needs under the planned project\. Eventually, the GOR did not approve the project at negotiations in 2006\. Build the NAFA's capacity for compliance monitoring during 2007\. In cooperation with the NAFA, the on-site advisor: (i) helped define a system of indicators to estimate tax compliance and a model to estimate non-collected revenues and VAT fraud; (ii) helped develop a system of mathematical models at the macroeconomic level for estimating revenues and tax compliance; (iii) recommended setting up a separate directorate for monitoring performance indicators; and (iv) provided practical recommendations for improving services to/communication with taxpayers\. Based on the recommendations, the NAFA: (i) implemented the macroeconomic model referred above and tested it during the 2008 budget revision process; (ii) uses the analytical model in the discussions with the MOPF regarding the collection targets; (iii) set up a directorate general for strategic planning and monitoring the collection of budgetary claims by merging the planning and monitoring units; and (iv) carried out a customer survey and took a number of measures to reduce the administrative burden and to improve the efficiency of operations from the customer's point of view60\. 60For example, companies can submit online tax returns country-wide; individuals receive the forms for tax returns by mail; tax payers can access a database containing most frequently asked questions and answers (funded by the EU); overall, tax payers have available more information on the NAFA's web-portal; and taxpayers receive more information on issues related to taxes and social contributions through mass media than in the past\. 79 Provide recommendations to the NAFA on organization structure and management system (for headquarters/regional office network, special taxpayer units), consolidation of functions, managerial roles, accountability, governance, internal control, risk management, evaluation of managerial performance, monitoring, reporting, and management information\. The recommendations that were to be implemented during the planned project were accepted and implemented or are planned to be implemented\. For example, (i) support functions, including the IT department, were transferred from the MOPF to the NAFA in 2007; (ii) the NAFA prepared its first strategy in 2007; (iii) it increased staff in the headquarters from 450 in 2007 to 1,300 in 2008 to better coordinate the territorial activity (although it still shares management of the county offices with the MOPF); (iv) the NAFA College (having a consultative role for the management) and the Endowment Committee have been set up, and (v) an internal commission was established to develop managerial/internal control\. Draft a revised legal framework to harmonize the tax base for collecting payroll taxes and social contributions and to create a simplified and integrated declaration and payment environment (previously, the legal provisions were part of different pieces of legislation)\. The work was done in coordination with the Inter-ministerial Committee and in cooperation with the NAFA\. Part of the proposed provisions was adopted separately, in an Emergency Ordinance of the Government, in October 2007\. As a consequence, the tax base for the social security contributions (pension's fund) approached significantly the tax base for the income tax (defined in the Fiscal Code) and the base for calculating contributions to the health fund\. However, even though the institutions involved in the process had previously agreed on the principles proposed by the consultant, the Inter-ministerial Committee did not reach an agreement regarding the elimination of exceptions in the tax base for the contributions to the unemployment fund and decided in March 2008 to postpone the implementation of the proposed legal framework and the single tax return until 1st of January 2010\. However, there are expectations that the proposed legal framework and the implementation of the single tax return would move forward during the new Government that has announced some reforms of the social contributions tax base and accepted the idea of regulating the social contribution's collection by the Fiscal Code and not by special pieces of legislation\. In addition, as a result of this TA an inventory of the information needs was made for the NAFA and the Social Houses in order to redesign the information flow between the tax payers, the fiscal administration and the social houses\. Further, after the conclusion of the consultant mission, a model for the future single tax return was made in the beginning of 2008\. The single tax return is supposed to replace the existing four present tax returns which are submitted to the NAFA and to the Social Houses\. Draft an overall strategy and policy framework and developmental priorities on information management and the IT&C technology management in cooperation with the NAFA\. Based on the strategy drafted by the consultant, the NAFA's IT functions and infrastructure were separated from the MOPF in October 2007\. This was the key recommendation and the first step in the full separation\. The recommendations are being further developed and implemented under the EU funds\. Thus, PHARE 2005 and 2006 are funding a series of contracts for services and goods to develop the 80 NAFA's IT&C system and the information management at the organization level\. Importantly, the NAFA has now horizontal projects affecting all organizational and decisional structures and activities within the NAFA, such as electronic documents management and archives, identity and information management\. In addition, there has been developed a concept for a major IT project that would result in the unification of the administration system for individuals and legal persons\. This project is being implemented with the consulting assistance of the Spanish Fiscal Administration since May 2008 and is expected to last for two years\. As a result of the NAFA's efforts and TA, the administrative burden to tax payers has been reduced, and effectiveness of the functioning of the tax administration has improved, as demonstrated by the following: The administrative burden to tax payers has been reduced, for example, as follows: (i) special administrative structures have been set up for medium sized taxpayers (companies) at the level of each district and at the level of Bucharest municipality to improve quality of services; (ii) the procedures for tax submission have been modernized and simplified, respectively, as follows: (a) starting with January 1st, 2008, the tax returns are submitted in electronic format (for all districts and for all companies/legal persons); (b) the payment to the single account for the correct payers was introduced for the first time in September 2007 and extended for all categories of taxpayers in January 2008; (c) tax payments by credit cards have been made possible since October 2008, essentially for the physical authorized persons; (d) starting from 2007, the certificate for fiscal records has been issued on the spot, in the presence of the taxpayer; and (e) a database containing most frequent questions and answers related to tax matters is available for civil servants and, partially, for taxpayers\. Effectiveness of the functioning of the tax administration has improved, as follows: (a) there is a central database and is used for the application "administration of individual taxpayers" since the end of 2007; (b) in accordance with the EU requirements, the VIES and SEED systems were implemented for the intra- community exchange of information (before the end of 2006); (c) better measures have been carried out to abate arrears61 in the economy, a policy for preventing the incurring of new arrears has been adopted and specific related regulations have been improved; (d) a risk analysis for combating tax evasion has been developed; (e) a series of guidelines, methodologies and themes have been elaborated, with a view to increase efficiency and effectiveness of fiscal inspections; and (f) the elaboration of a methodology for the use of electronic control in fiscal inspections and the improvement and the update of the system of procedures for fiscal inspections are underway\. 61Arrears as of % of GDP have decreased: from 4\.3% in 2006 to 2\.9% in 2007 and to 2\.5% in 2008\. The stock of arrears has decreased by 19\.4% from 2006 to 2007 (from 14\.711,6 millions RON to 11\.861,9 millions RON)\. 81 2\. The Court of Accounts Target at appraisal (as Project outputs Project outcome Funder amended) TA (IT and training) to IT equipment and systems for the PDO (b) achieved PPIBL complement a broad TA headquarters and territorial offices of the Helped implement the program focused on financial Court of Accounts Government's reform program and performance audit Training for 3 staff members from the Court for public expenditure Dutch of Accounts and MOPF management TF050477 The targeted TA that was financed by the PPIBL, the Dutch TF050477 and the EU contributed to the PDO (b) as they helped implement the GOR's reform program for public expenditure management\. The PAL policy objectives were partially achieved due to the lack of a formal medium term expenditure framework\. The PPIBL and the Dutch Grant TF050477 financed the following TA to: Supply and install modern IT and office equipment and systems (notebooks and computers, printers, USB memory sticks, servers, software) to the headquarters and/or 42 territorial offices of the Court of Accounts for carrying out their daily work (in particular, the county offices were poorly endowed with IT equipment)\. The TA also supported the expansion of the "national data exchange system" between the territorial offices and the headquarters that had been designed and piloted on the EU PHARE funds and that facilitated documents exchange in electronic format based on a Lotus Domino platform\. To complete its establishment, the TA helped extend the "national data network" by supplying a storage and archiving data system for the exchanged data through the NDN and a number of workstations in order to increase the network's nodes number\. The workstations procured under this contract were installed throughout the county offices for the main purpose of covering the communication needs between all the departments within each of the county offices\. The following IT equipment was supplied and installed: The Dutch TF050477 financed two training activities: (i) training courses for staff of the Court of Accounts organized by the General Accounting Office Washington D\.C\. and (ii) a training seminar on budgeting and cost control for 3 staff members from the MOF\. 3\. The Ministry of Communication and IT See Part D (a)\. 4\. The Ministry of Administration and Interior (MOAI) Target at appraisal (as Project outputs Project outcome Funder amended) TA to the MOAI for civil Consultant for the National Agency for Civil PDO (b) achieved PPIBL services reform monitoring Servants to carry out a comprehensive Implemented the PAL1 benchmark indicators, management private/public sector salary survey and provide about a study on the pay, grading and impact civil service salary reform options; the survey and employment management results and recommendations used as an input in within the central administration the next assignment (strategy), and they provided valuable information 82 Consultant for the same to design a sustainable PDO (b) achieved PPIBL unitary pay system; drafted a strategy, an action Contributed to the PAL3 plan and a draft law to establish a unitary pay benchmark on the civil service law system\. The law was however not approved and on salary setting the strategy was not implemented\. The TA that was financed by the PPIBL contributed to the PDO (b) as it helped implement a specific PAL1 benchmark about a study on the pay, grading and employment management within the central administration and contributed to the PAL3 benchmark on the civil service law on salary setting\. The PAL policy objectives were not achieved as the PAL was cancelled and the objectives were designed to be achieved after all the three PAL phases had been completed\. The PPIBL financed the TA to: Carry out a survey comparing private and public sector salaries for similar positions and to provide a replicable methodology for estimating civil service salaries and their wage bill impacts which would ensure consistent competitiveness (across positions) between civil service and comparable private sector positions\. This review was a PAL1 benchmark\. The consultant provided several civil service salary reform options, each of which ensured roughly consistent competitiveness across civil service positions and yielded a particular overall wage bill impact (the latter was related to the issue of fiscal sustainability of the wage bill)\. This information was used as an input to produce a strategy for establishing a unitary pay system for civil service under the second contract\. (i) Design a 4-7 year pay and employment management implementation strategy and action plan based on the previous assignment and work funded by the EU PHARE; (ii) draft a pay framework law (a draft Law on Civil Service Salary Setting) for a unitary pay system for the civil service; and (iii) helped develop the secondary legislation necessary for the unitary pay system implementation\. The law was however not approved and the strategy was not implemented\. 5\. The Ministry of Justice (MOJ), Superior Council of Magistracy62 (SCM) and Courts Target at Project outputs Project outcome Funder appraisal (as amended) TA to the Court rationalization study for the MOJ and PDO (b) achieved PPIBL MOJ, SCM SCM by an expert in judiciary systems and an Implemented the PAL1 benchmark about and courts expert in court administration; launching a court rationalization study for a recommendations on the court rationalization program of are providing input to a large study launched judicial recently under the JRP\. They will be used at reforms the moment when the new codes (the civil procedural code and the penal procedural code) will be implemented since the recommendations are linked to the new competencies of the courts\. 62The SCM is the representative organ of the magistrates with competencies related, in principal, to this body\. The SCM was given the mission to decide regarding the selection, recruitment, assignment and revocation of magistrates, as an institution profoundly independent to the executive and legislative powers\. 83 Consultant for the MOJ to develop a PDO (b) achieved PPIBL legislative framework and training program for Contributed to achieving the PAL2 benchmark economic managers in courts about regulations for selecting and appointing economic managers/ Supply and installation of storage area network PDO (b) achieved PPIBL systems for the MOJ and the SCM to provide Contributed to achieving the PAL2 benchmark access to the automated judicial statistical about the SCM's capacity system (design financed by the EU); operational and contributed to expanding the implementation of the ECRIS software Professional training/study tours for the Dutch institutional strengthening of the SCM; 14 TF050477 SCM members/staff participated in a study tour Spain and 10 to Ireland Consultant for the MOJ to develop a manual PDO (b) achieved PPIBL for planning and budgeting future investments Contributed to achieving the PAL2 benchmark in the court system about the regulations for preparing/ executing budgets in the court system Consulting services for the SCM in PDO (b) achieved Dutch establishing a trainers' network to support the Contributed to achieving the PAL2 benchmark TF054659 training of the commissions' members in about adopting new merit-based regulations on charge with the evaluation of the professional the criteria and evaluation procedures for activities of judges and prosecutors magistrates' professional activities Consultant for the SCM to develop logical PDO (b) achieved Dutch reasoning tests in the Romanian language; Contributed to achieving the PAL2 benchmark TF054659 fully developed under the Judicial Reform about selecting and appointing judges Project (JRP); in use and being further developed under the JRP Consultant for the SCM to develop a PDO (b) achieved PPIBL comprehensive, reliable and meaningful court Implemented the PAL2 benchmark about statistics system and a comprehensive system developing a system for monitoring judicial of objective indicators measuring judicial performance performance; made recommendations for an initial design and different models of statistics and performance indicators\. (TA to Consultants for the MOJ to drafted revised PDO (b) achieved PPIBL improve the legislation on trading companies in the field of Implemented the PAL2 benchmark about legal corporate governance; amended the Company revising the company law framework Law in compliance with EU and OECD for business corporate governance standards and effective environment) as of December 1, 2006 Consultants for the MOJ to draft a reformed PDO (b) achieved PPIBL Civil Code; under debate since 2008 Helped implement the Government's reform program for improving business environment and modernizing the public sector The targeted TA that was financed by the PPIBL, Dutch Grant TF050477 and TF054659 contributed to achieving the PDO (b) as they either helped implement or contributed to specific PAL benchmarks in the area of judicial reforms or business environment\. The PAL policy objectives were partially achieved either because they were targeted to be completed after all the three PAL phases\. The PPIBL financed four consultant assignments to assist the MOJ to: Identify the needs towards restructuring the organizational structure of the court system and enhancing the court administration\. While this TA did not lead to a final court rationalization strategy, the consultants' recommendations that were mainly linked to the new procedural provisions and new competencies of magistrates and courts described in the new drafted codes (the civil procedural code and the penal procedural code) are expected to be reconsidered and applied at the moment when the new codes will be approved\. In addition to this input, the findings of the TA were 84 used to design the JRP to help implement court rationalization\. Thus, based on this study, the SCM has recently considered some of the recommendations and developed a court rationalization plan with a specific proposal on the court of first instances restructuring\. The SCM is launching a larger consultancy under the JRP for developing a comprehensive plan for optimization of the court system\. Further define the role, functions and status of economic managers and to design a selection process and a training program for economic managers63\. This TA helped implement the requirements of the 2004 legal package and further amendments in 2005\. The consultant identified the training needs of economic managers and made recommendations on their specific job descriptions for courts and prosecutors' offices, segregating the roles and duties of economic managers and court presidents and other involved parties, and, most importantly, on a training curricula and train-the-trainers plan for economic managers\. The proposed improved job description and selection process for economic managers in courts were used in the regulation on economic managers (that was the PAL2 benchmark)\. In addition, the JRP is following up on developing the framework for economic management of the courts (and expects to develop training activities for court presidents and personnel)\. Provide storage area network systems for the MOJ and the SCM to support their efforts in developing the automated statistical system in the court system\. The judicial IT system (ECRIS project64) had been developed with support of the EU PHARE\. Part of the courts, prosecutor's offices and penitentiaries had been endowed with software applications and hardware\. At that time, new data (new judicial indicators) were being added to the database and the new storage area network systems enabled the MOJ and SCM to use the updated data more efficiently\. This contributed to improving the management of the court system by the MOJ and SCM (allocation of cases per judge/ court/ region, budgetary management, human resources management etc)\. Support implementation of some essential changes in the budget formulation and execution process at the level of the MOJ, the SCM, the courts and the prosecutors' offices65 that had been introduced since 2004\. The TA was part of the larger TA to improve program budgeting funded by the Dutch TF054659 (see E\.1\.i\.b)\. The consultant drafted a manual for planning and budgeting future investments in the 63The "economic manager" program was institutionalized with the 2004 Law on the organization of the judiciary that provided for the transfer of economic and financial responsibilities to the courts and established the role and duties of the economic managers, as well as the criteria for his/her appointment\. Later amendments, adopted in July 2005, introduced additional tasks for the court managers, as well as modifications with regard to the competency requirements of the economic managers\. By these amendments, the economic managers were also responsible for: the efficient utilization of funds received from the state budget, social security budget or special funds budget and funds constituted from internal incomes; ensuring accountability within the court's/prosecutor's office through the maintenance of proper financial records and supporting documentation; coordinating the administrative activities of the court's/ prosecutor's office headquarters\. 64ECRIS project was initiated in 2001 to create and implement a national system for manage legislative cases and documents\. ECRIS was first implemented during March-August 2002\. National implementation was carried out using the EU PHARE funds\. 65In addition to introducing the role of economic managers in the courts, as explained above, the role of the Superior Council of Magistracy was increased in the field of formulating the budget, in the way that Council's endorsement was needed for the budget projects elaborated at the level of the Courts of Appeal and of the Prosecutors' offices attached to the Courts of Appeal for the courts or the Prosecutor's offices within the jurisdiction of the Courts of Appeal and of the Prosecutors' offices attached to\. 85 court system, providing two important tools: one for budgetary programming and one for prioritizing investments\. The manual included a methodology of planning investments performed by the MOJ\. The manual provided input to the Regulation for the 2004 Law on Judicial Organization\. The manual is used by the economic managers in carrying out their activities in courts and prosecutors' offices\. The Dutch Grants TF050477 and TF054659 as well as the PPIBL financed four consultant assignments to assist the SCM to: Carry out professional training/study tours for the institutional strengthening of the SCM, including a study tour to Spain for 10 members of the SCM (and 4 representatives from the SCM's staff) and a study tour to Ireland for 6 members (and 4 SCM's staff)\. Establish a trainers' network to support the training of the commissions' members in charge of the evaluation of the professional activities of judges and prosecutors\. The objective was to implement an improved system of performance evaluation and new/improved performance indicators\. The consultant delivered a number of outputs, such as: (i) a data-base analysis of the magistrates readiness to conduct evaluations based on the new established criteria; and (ii) an institutional appraisal, training needs assessment and a proposed curricula based on the needs of the participative evaluation process\. The consultant undertook the training seminars for: (i) the 80 magistrates, including 50 judges and 30 prosecutors, selected to be trained as future trainers; and (ii) 15 trainers, one for each Court of Appeal, selected out of the initial recruited magistrates to form the network of trainers in the participative evaluation process\. The TA resulted in a number of outcomes\. The SCM Plenum adopted a Regulation to establish the criteria and methodology for the evaluation of professional activity of magistrates (SCM Plenum' Decision no\.676/2007)\. It included the main proposals made by the consultant regarding the content of the Evaluation Guide, the professional evaluation indicators (such as quality of work, integrity), mandatory participation of each evaluator in a specialized training program held by the National Institute of Magistracy (NIM)\. The magistrates who were involved in the TA program became trainers for the evaluators\. Thus, fifteen training seminars for evaluators have been held between 2007 and now for each Court of Appeal\. Develop a new methodology for psychological testing of the magistrates by developing logical reasoning test in the Romanian language adapted to the specifics of the Romanian society\. The methodology now used in the Law School Admission' reasoning tests is based on the one proposed under the TA and have been further developed under the JRP\. The tests have been used at the National Institute of Magistrate's (NIM) admission contests starting with 2005 and, in the last two years, they have been tested at all law faculties within the country\. Assess the state of statistical court/judicial performance monitoring in Romania and develop the initial design of a comprehensive, reliable and meaningful court statistics system and a comprehensive system of objective indicators measuring judicial performance\. This TA proved useful for the SCM in developing an objective system and indicators for monitoring court performance\. The SCM used the recommendations for developing three main areas: (i) improvement of the statistical 86 system (under the ECRIS new versions); (ii) training for all evaluators of judges and prosecutors' professional activity (continued and developed also under the next assignment); and (iii) training material of judges and prosecutors who are candidates for leading positions within the Romanian judiciary\. Different modules of the NIM's continuous training are based on the study's recommendation (for example, the training module on "act of justice' methodology")\.The JRP has been designed to further improve monitoring of judicial performance\. This TA also served as a support paper in the SMC's recent efforts in preparing for a more comprehensive plan for optimization of court system under JRP (see above)\. The PPIBL financed the following TA in the area of business environment to: Draft a law amending the Company Law no\. 31/1990 in compliance with the OECD principles on corporate governance and in line with acquis communautaire\. The Romanian legal framework for corporate governance has been in compliance with international standards effective as of December 1, 2006\. Carry out a comparative analysis of various civil codes (especially with respect to commercial law) and to prepare a draft reformed Civil Code (books I-VII), also incorporating commercial obligation law, family law, special contracts law and private international law that were previously separate laws\. The proposed draft Civil Code together with the secondary legislation has been under public discussion since July 2008\. It is ready to be submitted for approval to the Parliament\. Recently, the SCM has asked the approval of the Bank for developing impact studies in the framework of the JRP for all codes expected to be approved by the Parliament in order to evaluate the cost of implementing the new Codes' provisions\. 6\. Public health insurance administration\. See Part E\.11\. 7\. The Ministry of Administration and Interior and the Ministry of Public Finance See Part E\.1\.f\. 8\. The General Secretariat of the Government (GSG) and Prime Minister Chancellery Target at appraisal Project outputs Project outcome Funder (as amended) TA to the GSG and Consultant for the GSG to help develop procedures, PDO (b) achieved PPIBL PM Chancellery for indicators and build capacity for policy formulation; gave Contributed to achieving reforms in policy input to the general structure of the public policy document the PAL2 benchmark making and Consultant for the GSG to help streamline policy about policy making Dutch administrative formulation processes, along with ensuring interface with procedures TF054659 accountability budget system; contributed, together with the twinning project and the MOPF consultant, to setting up the strategic planning system\. Their recommendations were taken into account when policy link with budget was elaborated in the Government Decisions approved in 2006 and 2008\. 87 25 staff members in the Public Policy Unit (PPU) GSG PDO (b) achieved PPIBL were trained in policy analysis, monitoring and evaluation helped implement the techniques for policy making process; contributed to Government's reform implementing the new procedures and building PPU program capacity in line ministries for public expenditure Functional requirements and bidding documents for the management PPIBL design and implementation of an integrated system for managing and tracking policy formulation process; included in the GSG' 2009 budget The targeted TA that was financed by the PPIBL and the Dutch TF054659 contributed to the PDO (b) as it helped achieve the PAL2 benchmark about policy making procedures and implement the GOR's reform program for public expenditure management\. The PAL policy objectives were partially achieved due to the lack of a formal medium term expenditure framework\. During the period 2005-2006 the GSG consultants coordinated their TA with other TA programs in the GSG mainly the twinning project with the State Chancellery of Latvia that provided major contributions and the budget advisor for the MOPF (see Part E\.1\.i\.b) and provided useful information to support their TA\. One of the key assignments financed for the GSG as part of the wider TA for the budget reform was centered on strengthening the capacity of the GSG to assist ministerial decision-making, along with ensuring interface with the budget system\. The consultant worked closely with the other budget reform advisors placed in the MOPF and selected other ministries (including the consultants funded by the EU PHARE and others)\. The consultant (together with the MOPF budget advisor) wrote a number of very important reports focusing mainly on the following issues: (i) policy-making system with a special focus on institutional mechanisms and procedures for policy-coordination and strategic planning (including the role of the GSG); (ii) machinery of the center of the Government and the machinery of Government (including the functioning of inter-ministerial councils); and (iii) monitoring and evaluation issues related to the effective implementation of policy-coordination and strategic planning framework\. The work done by the GSG and MOPF consultants contributed, together with the twinning project, to setting up the integrated strategic planning system which has 2 parts: the management side (Part I) and the budget side (Part II)\. Their recommendations were taken into account when policy link with budget was elaborated in the GDs approved in 2006 and 2008 on the two methodologies for strategic planning\. The GD 1807/2006 concerned Part I of the strategic planning methodology at line ministries level, requiring each line ministry to clearly define its mission, vision, main directions of activities and priorities and carry on a brief functional review to be adopted at each line ministry level\. The GD 158/2008 concerned Part II of the strategic planning methodology, including how to transpose the policy objectives set by the first part of the strategy of line ministries in effective programs and projects with clear budgetary requirements and how to monitor their effective implementation\. This GD 158/also had a strong chapter on how measure the program/project result based on indicators\. This part constituted the basis for preparing budget proposals by the line ministries\. The GSG/DPP (department for public policies) used the consultant's reports in its initial work for creating a methodological framework for policy monitoring and evaluation that started in 2008\. 88 In addition to contributing to the above strategic planning system, the Bank-financed consultants' reports informed the work carried out under the twinning arrangement to prepare the second GD 1361/2006 regarding the content of explanation (substantiation) of some legal proposals\. The form for substantiation note designed by the GD 1361 is - for the first time - obligatory for law and Government ordinances drafts and for majority of Government decisions (only for Government proposals, not for proposals coming from the members of the Parliament)\. The GD 1361 placed more stress on the impact evaluation of legal proposal and sets a sort of minimum regulatory impact assessment that should be done by the initiator line ministry\. Finally, the consultant cooperated with the twinning team to propose a clear division of functions between the GSG and the PM Chancellery regarding the policy coordination and strategic planning\. The delimitation of their functions was approved by the Prime Minister in March 2007\. More recently, the new GOR decided to abolish the Prime Minister Chancellery and to transfer its functions to the GSG\. This is a decision, reflecting all the recommendations from foreign advisers (including the consultants funded by the PPIBL) from 2004-2006 (the GSG proposed a similar Government Emergency Ordinance in the fall of 2006 but the proposal was initially postponed and after few weeks cancelled by the former Prime Minister)\. The abolishment of the Chancellery did not however affect the core functions of the Prime Minister Office (formed by the Prime Minister advisers and their staff), which are to be preserved\. The coordination of the Prime Minister Office and the GSG on procedural aspects and substance of policy is still to be defined\. In addition, the PPIBL financed the following TA for GSG to: Build capacity in the GSG PPU established in 2003 and in the line ministries' PPUs required since 2005\. Building on the GSG's own work to establish systems and procedures for enhancing key aspects of policy management on the part of line ministries, the consultant: (i) provided valuable advice on designing the system for policy formulation, specifically the general structure of the public policy proposal (a concept paper); (ii) developed a number of monitoring indicators for the SDP Committee and the GSG to capture how well the policy formulation reforms are advancing their underlying objectives; and (iii) helped operationalize the PPUs in the line ministries\. The consultant's reports were used to some extent in preparing the Government Decision (GD) 775/2005 approved in July 2005 and effective as of January 2006, which for the first time set the content of policy documents and the connection between the policy documents and the legal proposals\. This GD introduced a new system of policy formulation in Romania whereby policy formulation was to concentrate on substantial policy solutions instead of mere normative acts and required establishment of specialized PPUs in line ministries\. These procedures included a PPU policy proposal template with the requirements for budget, monitoring and evaluation information aimed at better policy documents, strategic prioritization and enhanced fiscal assessment\. Provide training for 25 staff members of the GSG PPU in 2007 in policy analysis, monitoring and evaluation techniques for policy making process and, in particular, in 89 using more sophisticated instruments for assessing impact of policies and in selecting the appropriate instruments for different policies\. This training proved important in helping the GSG PPU implement the newly clarified functions and to implement the strategy for improving the public policy planning and formulation system\. It built on initial training in monitoring and evaluation provided in a twinning arrangement funded by the EU\. Prepare functional requirements and bidding documents for the design and implementation of an integrated IT system for managing and tracking the policy formulation process\. The project was included in the GSG's 2009 budget with the estimated costs of RON 2\.5 million\. The technical solution was designed in such a way that it can be adapted to the actual /future structure of the Government\. The system would operate at the level of the GSG with the possibility of expanding it to the PPUs in line ministries\. It would allow sending policy documents for the Government's approval within the IT system and show information on the status\. This would improve communication and consultation process for policy making between the GSG and the line ministries, its security and quality of policy documents, as well as reduce costs\. The system would implement the procedures and timetable set for each step in the first Government Decision for policy making\. 9\. The Ministry of Labor (MOL) Target at appraisal Project outputs Project outcome Funder (as amended) TA to the MOL for Consultant to make recommendations to revise PDO (b) achieved PPIBL carrying out a labor the Labor Code; many of them included into the Contributed to achieving the related code review, labor amendments to the Labor Code enacted in 2005 PAL1-2 benchmarks markets study, about the amendments to the Labor code strategy and action No funding requested for a labor markets study, PDO (b) not achieved N/A plan strategy and action plan from the PPIBL\. Part of the targeted TA that was financed by the PPIBL contributed to achieving the PDO (b) as it helped achieve the PAL1-2 benchmarks about the amendments to the Labor code\. The PAL policy objective of enhancing the flexibility of the labor market was partially achieved\. The PPIBL financed the work of a consultant to assess the impact of the Labor Code on the labor force and businesses and to propose necessary adjustments with a view to enhance the flexibility of the labor market and improve the investment climate and the competitiveness of the Romanian economy\. The consultant made recommendations to revise the Labor Code of which a critical number of seven were considered as conditionalities under the PAL and IMF Stand By programs and of which about six were considered for the Labor Code amendment (except for the conditionality related to the obligation of the non-signing parties to observe the Collective Labor Contracts)\. The amendments to the Labor Code were enacted in 2005\. 90 10\. The Ministry of Education, Research and Young People (MOE) Target at Project outputs Project outcomes Funder appraisal (as amended) TA to the Consultant to comment on the secondary legislation PDO (b) achieved PPIBL MOE for for the Education Law on education decentralization Contributed to achieving the PAL2 benchmark education and financing; some recommendations incorporated about the Education Law reforms into the amendments adopted in 2004 CS for making recommendations on the strategy for PPIBL education administration and financing (scheme & financing formula); adopted the strategy in 2005 based on the recommendations, but not implemented Consultant to assist in the budget process reform; PDO (b) achieved Dutch built capacity (see Part E\.1\.i\.b) Helped implement the Government's reform TF54659 program for public expenditure management The targeted TA that was financed by the PPIBL and the Dutch Grant TF054659 contributed to the PDO (b) as it helped achieved on its part the PAL 2 benchmark about the Education Law and implement the GOR's reform program for public expenditure management\. The PAL policy objective of more effective and efficient resource utilization in the education sector was partially achieved\. The PPIBL and the Dutch Grant TF054659 financed the following TA to: Assist the National Council for Pre-University Education Financing and other stakeholders in reviewing and enhancing the secondary legislation for implementing the amended versions of the Education Law and of the Statute of the Teaching Staff\. The amendments introduced decentralized education management and per capita financing of pre-university education\. The international consultant made recommendations on the design and implementation of the new management system, per capita financing formula and a decentralization pilot\. The recommendations on the secondary legislation, that were in line with the PAL, were not fully incorporated into the version adopted in 2004 neither have they been enforced in practice\. The recommendations on the education administration and financing strategy were adopted in 2005, but the strategy has not been implemented\. The recommendations on the pilot suggested its postponement due to lack of clarity in the legislation on distribution of responsibilities, on the financing scheme, etc\. Nevertheless, a pilot was carried out based on the existing norms with no subsequent national roll-out\. The capacity building efforts were lost in the National Council for Pre-University Education Financing because the people who were involved in the decentralization and formula funding work and directly benefited from TA support left the working group in 2006\. Help implement program budgeting in the Budget and Finance Department of the MOERYP as part of the wider TA program whereby budget advisors were placed in the GSG and a number of line ministries (see Part E\.1\.i\.b)\. Due to slow pace of the budget reform, the capacity building efforts resulted in little changes at that time\. 91 11\. The Ministry of Health (MOH) Target at Project outputs Project outcomes Funder appraisal (as amended) TA to the Consultant to design an implementation methodology for PDO (b) achieved PPIBL MOH for rolling out nationally a case-based mechanism for hospital Contributed to achieving the health financing and SW licenses; GOR accepted it and implemented PAL2 benchmark reforms from its own funds about implementing a health sector financing improvement plan Consultant to develop a plan for improving transparency and PDO (b) achieved PPIBL decreasing informal payments in the health sector; main results Contributed to achieving the disseminated in workshop to stakeholders with no other PAL2 benchmark tangible results so far\. The new senior management of the about preparing a plan for MOH acknowledged the existence to this study and expressed reducing corruption in the health the intention to consider its recommendation s within the new sector health sector reform program\. Consultant to carry out a study on health financing in Romania; PDO (b) achieved PPIBL some recommendations included in the Health Reform Package Implemented the PAL2 enacted in 2006\. The new senior management of the MOH benchmark acknowledged the existence to this study and expressed the about carrying out health sector intention to consider its recommendation s within the new financing study health sector reform program\. Consultant to comment on the health reform legal package PDO (b) achieved PPIBL elaborated by the MOH and to develop the implementing Contributed to achieving the regulations; GOR accepted them and the package was enacted related PAL2 benchmark in 2006\. about the health sector legal package An on-site budget advisor in the Budget Department in the PDO (b) achieved Dutch MOH and the Budget Department of National Health Insurance Helped implement the TF54659 House during 2006; built capacity\. Government's reform program for public expenditure management The targeted TA that was financed by the PPIBL and the Dutch Grant TF54659 contributed to the PDO (b) as it helped achieve a number of PAL benchmarks and implement the Government's reform program for public expenditure management\. The PAL policy objective of building accountability for results around sector decision-making structures in the health sector was largely achieved\. The PPIBL and the Dutch Grant TF054659 financed the following TA to: Continue the national roll-out of the hospital financing system based on the DRG launched in early 2000's reform, while the EU PHARE funds were being awaited for this activity\. The consultant: (i) developed a comprehensive implementation methodology for continuing development of the Romanian case-based financing scheme and its implementation at central and local level; (ii) designed a training methodology that was rolled out at all implementing levels central (National Health Insurance House) and local (hospitals and District Health Insurance House) for the new proposed regulations and mechanisms; (iii) trained central and local staff involved in of the case-based financing; and (iv) made recommendations for improving the regulatory framework and data collection and analysis for case based financing, as well as for integration of case based financing with other public and health financing reform activities\. The consultant's recommendations on implementing the new financing mechanism for hospitals were included into the 92 Health Sector Reform Package enacted in 2006\. The new hospital payment system was rolled out nationally on the MOH's own funds based on the methodology, leading to its introduction in 278 hospitals in 2006 (or 100% of all acute care hospitals proposed)\. Assess the magnitude and the distribution of informal payments and corruption in the health sector\. The assessment identified the main causes, the forms of manifestation within the sector, as well as the transparency in the pharmaceutical sector, and proposed a plan of interventions for decreasing the corruption in health sector\. The TA helped establish the magnitude of the problem, and the main results were disseminated to stakeholders in a workshop, but overall the recommendations were not implemented\. Carry out of a study of the overall health sector financing on all levels of health care to support the GOR in implementing a decentralised health insurance system\. The study complemented some earlier efforts that had focused on putting together the pieces of the health financing mechanism but that had suffered from a lack of strategy, political changes and influences, lack of data and conflict of interests/not clear definition of institutions roles and responsibilities\. The study: (i) assessed the overall situation in the health sector financing in Romania and then formulated concrete results and made appropriate recommendations for a short and medium time period implementation through an action plan; (ii) provided a forecast of the adequacy of funding and potential sources; (iii) defined the basic package of services reimbursed by the National Health Insurance System and the allocation criteria among regions and types of services; (iv) identified the types of services that can be financed from other public sources (state budget, local budgets, social securities, private sources, etc); (v) made recommendations for an optimal regulatory framework for proper functioning of the social and private insurance systems; and (vi) disseminated the project results\. Some recommendations were included in the Health Sector Reform Package enacted by the Parliament in 2006\. Other recommendations that were not included are still valid\. Comment on the extensive health sector reform legal package elaborated by the MOH in 2006\. The consultant helped strengthen it and align it with the EU legislation or policies and drafted the related secondary regulations, as well as assessed the impact of the new legislative package (and the proposed secondary legislation) and identified potential barriers for implementing the legal framework\. The recommendations were accepted and incorporated into the Health Reform Package enacted in 2006\. For the on-site budget advisor, see Part E\.1\.i\.b\. 12\. The Ministry of Transportation, Construction and Tourism (MOTCT) Target at Project outputs Project outcome Funder appraisal (as amended) TA to the MOTCT Consultant to assess the fairness commercial terms PDO (b) not rated Dutch for health reforms of a civil works contract for road construction; Helped implement the Government's TF050477 in the roads and concluded as fair reform program in modernizing the railways sectors public sector (broadly) Consultant to review the housing policy and PDO (b) achieved Dutch subsidies; no information on the results achieved Contributed to achieving the PAL2 TF54659 benchmark about primary and 93 Consultant to design and implement the housing secondary mortgage market legislation Dutch mortgage insurance scheme; no information on the TF050477 results achieved Consultant to design and implement an Dutch enhancement facility for mortgage-backed TF050477 securities; no information on the results achieved &TF054659 An on-site budget advisor in the Economics and PDO (b) achieved Dutch Budget Directorate in the MOTCT during 2006; Helped implement the Government's TF54659 built capacity (see Part E\.1\.i\.b)\. reform program for public expenditure management The targeted TA that was financed by the Dutch Grants TF050477 and TF054659 contributed to the PDO (b) through the various activities that either helped implement the GOR's programs in the public sector modernization and public expenditure management or helped achieve on its part a PAL benchmark\. Besides the output related to the public expenditure management, these activities were not directly linked to a PAL policy objective\. The Dutch Grants TF050477 and TF054659 financed the following TA to: Assess the commercial terms of a civil works contract awarded to a consultant for the BrasovBors Motorway construction project\. The civil works contract had been awarded but without a public tender\. The contract conditions contained some special features wherefore, based on the IMF's recommendations, an independent evaluation consultant was hired to assess the financial structure of the project and the unit prices in the contract in comparison with similar projects carried out by consultants in the region (including Romania) in order to determine if they represent fair prices to the project; the overall cost (or likely cost) of the project and their fairness; and other contractual mechanisms and the financial arrangements to determine if they are in line with other similar motorway projects\. The conclusion of the assessment was that the contract price was fair and comparable with those of other road contracts in the region, with the caveat that the contractor was given the right to introduce new unit prices for those quantities not found in the reference section, which was used as the basis of the contract's unit prices\. Carry out: (i) review the then current housing policy documents and provide a comparative analysis regarding housing policy experiences in the new EU member states for the same reference period of time, quantitative evaluation of existing and contemplated subsidy programs and their impact on budget at different levels, housing policy goals, financial sector development etc; and made policy recommendations to the GOR; (ii) a feasibility study on mortgage insurance scheme aimed at helping develop the primary mortgage market by reducing credit risk to lenders who in turn would offer improved terms and conditions to borrowers; and (iii) a Partial Credit Facility for mortgagebacked securities in order to diversify the existing financing sources and to decrease the financing costs\. No information was available on the results\. For the on-site budget advisor, see Part E\.1\.i\.b\. 94 13\. The Ministry of Environment and Water Management (MOEWM) Target at Project outputs Project outcomes Funder appraisal (as amended) TA to the An on-site budget advisor in the Budget Department in the PDO (b) achieved Dutch MOEWM for MOEWM; strengthened its PPU that is playing a key role Helped implement the TF54659 reforms in the in the budget planning process\. This planning by objective Government's reform program for environment and has not replaced the traditional budget exercise, but they public expenditure management water management are done in parallel (see Part E\.1\.i\.b)\. sectors Consultant to develop a strategy and action plan for PDO (b) not rated Dutch monitoring and evaluating nutrient reduction activities in Helped implement the TF54659 the Nitrate Vulnerable Zones; identified sites and Government's reform program for developed action plans, and follow-up TA provided under modernizing the public sector a World Bank project Consultant to develop a national strategy for management PPIBL of contaminated sites; based on the recommendations, the GOR issued the first version of a strategy in May 2008; it is being further developed under a PHARE project Consultant to develop the National Agency for Natural PPIBL Protected Areas and Biodiversity Conservation (NAPA) and subordinated bodies; provided a legal framework for the new agency The targeted TA that was financed by the Dutch Grants TF054659 and the PPIBL contributed to the PDO (b) as it helped implement the Government's reform program for public expenditure management and for modernizing the public sector\. The activities related to the environment were not directly linked to a PAL policy objective\. The Dutch Grant TF054659 and the PPIBL financed the following TA to: On-site budget advisor, see Part E\.1\.i\.b\. Provide support in the implementation of the EU Nitrates Directive (and new Romanian legislation)\. The consultant: (i) reviewed the list with the Nitrate Vulnerable Zones or Nitrate Potentially Vulnerable Zones (NVZs) established through the Order 241/2005 issued by the MOEWM and performed detailed Diagnostic Analysis of the areas reconfirmed as NVZs; (ii) prepared Action Programs for the Nitrates Directive implementation on these areas; (iii) proposed and costed the necessary remedial measures; and (iv) developed the strategy and action plan for monitoring, evaluation and impact (the monitoring and evaluation plan consisted of a conceptual framework widely applied internationally and included a comprehensive set of indicators for carrying out a regular assessment of the quality of soil and groundwater with respect to pollution by nutrients from agricultural sources)\. The Integrated Nutrient Pollution Project (FY08) will help implement the Action Programs for the NVZs or most of them proposed under the TA, building on the previous World Bank and Global Environment Facility assistance in this area\. The monitoring and evaluation indicators proposed under the TA are being used by the MOEWM together with other indicators, for reporting to the EU\. The above Bank project will test the indicators in the program and will continue to assist the MOEWM in developing and consolidating the indicators in this area\. Overall, these indicators can be used to provide information to policy makers and the public on the state of the environment and its changes; establish the causal link between activities/policies and the environment; and evaluate and adjust policies\. 95 Help implement the EU requirements for contaminated areas\. The consultant: (i) drafted an outline for the Romanian strategy -- a pre-requisite for the EU funds; (ii) made recommendations for improving the existing environmental institutional and legal framework with proposals prepared to bring it line with the agreed national strategy; (iii) designed the necessary technical guidelines to contain standards and detailed instructions on investigations, risk assessments and corrective action planning, and a compendium on remediation and drilling techniques; and (iv) in order to enable the completion of a nationwide inventory of contaminated sites, created an intranet-based inventory system which local environmental protection agencies are able to use to prioritize sites based on risk and invest in those that need urgent attention\. Based on the TA, the GOR accepted a first version of a National Strategy for the Management of contaminated sites in May 2008 and launched more work to further elaborate the Contaminated Lands Strategy in December 2008 under a PHARE project\. While the first draft strategy was critical to move this agenda forward when nothing had previously existed, the new study went into further detail to expand on some chapters of the Strategy and create a more detailed action plan\. A first draft of the Strategy for Contaminated Lands was recently delivered for consultation/comments to the MOEWM, and the final version of the Strategy is expected to be approved by a ministerial order in the next few months\. An action plan is under development to implement the strategy under the PHARE financed project as a continuation of the PPIBL\. All these two documents depend on and are related with the national inventory of contaminated sites that is under preparation within the National Environmental Protection Agency - the template for such inventory was prepared under PPIBL and then the agency and local EPAs worked to complete the entire territory; this inventory is almost completed\. The existence of the inventory has: (i) centralized the data on the contaminated sites in one location; (ii) improved transparency about the quality of lands where people and will further increase it as it will become more complete and the information will be updated; and (ii) introduced a system for their risk ranking\. Support the MOEWM in its efforts to implement the EU Directives in nature protection and biodiversity conservation66\. The consultant: (i) made recommendations on the existing institutional context and legal framework regarding the functionality of the existing protected areas administrations, as well as their capacity for accessing the EU structural funds; (ii) identified and prepared a pipeline of projects for the National Agency for Protected Areas (NAPA) to develop and administer under the EU funds; (iii) provided further recommendations on the internal structure and operating documents of the NAPA; and (iv) drafted a 5-year institutional development plan that would create the operating conditions and projections for the NAPA, including the required legal framework, roles and functions of the NAPA and other organizations, a human resources plan (including a training plan), the costs and financing of establishing and running of the NAPA and its subordinated bodies 66The MOEWM needed assistance in setting up the operations of a new agency, the National Agency for NAPA\. The GOR had made a Decision on December 31, 2005 to establish NAPA in the future to administer environment protection issues and manage the EU funds for supporting "Natura 2000" implementation in Romania\. This decision included a timetable for further elaborating its roles and responsibilities and structures\. 96 (investment costs, maintenance and operation costs), and a communication plan\. These outputs represented a full package of legal framework for this new national agency that took over functions from several ministries and were considered useful at the ground level in the formulation or roles and responsibilities for this agency\. Consequently, the TA contributed effectively to have the NAPA set up and approved through the Government Decision no\. 1320 from October 14, 2008 - with a total number of staff of 50 (the NAPA started to function in Brasov this year although with a very reduced number of staff)\. The existence of the NAPA is expected to make provision of the related functions more efficient and cost-efficient and improve accountability\. This is importance since Romania has a lot of work in adapting the EU environmental standards, and the costs of the meeting of the environmental commitments of the acquis are very large\. Part F\. PMU (PPIBL and PAL) (estimated project costs $0\.24 million/actual project costs $1\.84 million) Target at appraisal (as Project outputs Project outcomes Funder amended) TA to the PPIBL PMU and PAL PMU staff, legal, public administration, PDO (b) achieved PPIBL PAL PMU for strengthening public services, and private sector experts, as Helped implement the project management capacity well as administrative and secretarial services, Government's program supported and for performing their IT and other equipment, office furniture and by the PAL activities under PAL equipment PPIBL/PAL PMU staff, supplies, operational PPIBL costs, and project audits in 2004-2008 The PPIBL funded the PIBL/PPIBL PMU in 2004-2008 and the PAL PMU in 2005-2006 until the latter was closed after the cancellation of the PAL2 in early 2007\. The PMUs were instrumental in managing the implementation of the complex TA program that eventually included about 20 sub-components and four sources of financing\. The PPIBL PMU was an independent unit operating within the MOPF under the minister coordination67\. It employed the PMU director, a minister's counselor until the closing of the PAL, administrative staff and experts in procurement, financial management and accounting from nine in 1999 to 12 in the busiest years and to three in 2008\. The PAL PMU was established in 2005 in the Prime Minister's Chancellery to: (i) ensure the highest level of coordination of the PAL reform agenda; (ii) coordinate and monitor the reform progress; (iii) keep the line ministries aware of the next steps in the PAL program; and (iv) report to the Prime Minister, the Chancellor and the Bank on the progress\. The Project funded a pool of experts (one expert in public finance in 2004 and our experts in 2005-2006 to support PAL implementation, including an expert in capital markets, public services, public administration, justice and anti-corruption), as well as the PMU director, assistant director and administrative assistant\. The PMU also The PAL PMU was closed in January 2007\. 67The PMU was established in 1999 under the Ministry of Transportation to implement the PIBL, then the PPIBL, and to monitor the PSAL condationalities\. It was moved to the MoPF in November 2000\. The PIBL funded the PMU from 1999 until 2004\. 97 Annex 3\. Economic and Financial Analysis Not applicable\. 98 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty Lending Arabela Negulescu Senior Operations Officer ECSPF Operations Arben Maho Procurement Specialist ECSPS Procurement Doina Visa Operations Officer ECSIE Energy Elly Gudmundsdottir Counsel LEGEC Legal advice Eszter Kovacs Procurement Officer ECSPS Procurement Gary Reid Senior Public Sector Management Specialist ECSPE Public sector Hiran Herat Financial Management Specialist ECSPF Project team leader Irina Kichigina Senior Counsel LEGEM Legal advice Irena Tchoukleva Consultant ECSPF Operations James Dick Welch Consultant ECSPF Privatization Khaled Sherif Acting Sector Manager ECSPF Sector Manager Banking sector and Marcelo Bueno Senior Financial sector Specialist ECSPF financial sector development Nadia Sirghi Consultant ECSPF Private/Financial Sectors Development Ramin Shojai Senior Private Sector Development Specialist ECSPF Project team leader Rodrigo Chaves Lead Financial Economist ECSPF Program team leader Sorin Teodoru Consultant ECSPF Banking sector and financial sector Varadarajan Atur Senior Financial Analyst ECSIE Energy/Power Sector William Porter Lead Oil and Gas Specialist COCPO Energy/Petroleum Sector Supervision/ICR Arabela Aprahamian Senior Operations Officer ECSPF Task team leader Arben Maho Procurement Analyst ECSPS Procurement Bogdan Constantinescu Senior Financial Management Specialist ECSPS Financial management Catalin Pauna Senior Economist ECSPE Public sector Corina Alexandrescu Senior Program Assistant ECCRO Operations George Moldoveanu Information Assistant ECCRO Operations Hiran Herat Financial Management Specialist SASHD Task team leader Ireneusz Smolewski Senior Procurement Specialist ECSPS IT procurement Irina Kichigina Senior Counsel LEGEM Legal advice Nadia Sirghi Consultant ECSPF Private/Financial Sectors Development Paulo Guilherme Correa Senior Economist ECSPF Task team leader Ramin Shohaj Senior Private Sector Development Specialist ECSPF Task team leader Sorin Teodoru Consultant ECSPF Banking sector and financial sector Tatiana Segal Operations Analyst ECSPF Operations Paula Genis Operations Officer ECSPF ICR 99 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle No\. of staff weeks USD Thousands (including travel and consultant costs) Lending FY00 2 7\.80 FY01 8 107\.35 FY02 19 150\.00 FY03 1 6\.35 FY04 0 FY05 0 FY06 0 FY07 0 FY08 0 Total: 30 271\.50 Supervision/ICR FY00 0 FY01 0 FY02 0 FY03 3 56\.82 FY04 12 54\.12 FY05 27 97\.73 FY06 27 114\.77 FY07 25 122\.18 FY08 10 37\.58 FY09 26 99\.06 Total: 130 582\.26 100 Annex 5\. Beneficiary Survey Results Not applicable\. 101 Annex 6\. Stakeholder Workshop Report and Results Not applicable\. 102 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR 103 Summary of Borrower's ICR and/or Comments on Draft ICR 1\. The Project context Development Objectives, Design and implementation The Private and Public Institution Building Loan (PPIBL) was signed on September 13, 2002 for the amount of US$18\.6 million to provide technical assistance to achieve the targets and conditionalities established under the Private Structural Adjustment Loan (PSAL 11)\. The PPIBL was made effective on November 25th 2002 approved through OUG 135/2002 and ratified by the Parliament through the Law no 1112003\. The PPIBL was approved to support reforms in both the private and public sectors\. Related to the PPIBL, a Dutch Grant Fund (TF 050744 in amount of USD 3\.17 Million) was approved in May 2002 to support part of the private sector activities included under PPIBL\. The Grant Agreement was amended to include TA for public sector activities and was fully disbursed on April 2005\. The initial objective of the PPIBL was to provide the required technical assistance to implement those policy measures supported by the PSAL II and to prepare the reforms to be supported by the proposed IGRPAL\. During 2003-2005 the PPIBL was implemented in parallel with the Private sector Institution Building Loan (PIBL) signed on 1999 and having as main objective supporting the program under the PSAL I\. The PIBL was fully disbursed on 2005, covering a main part of the activities provided to be financed under the PPIBL\. Due to the impact of the reform programs and successfully implementation of PSAL I (the first Loan fully withdrawn in the scheduled dead-lines and ranked highly satisfactorily) the unexpected donors provided funds for financing part of activities provided in PIBL and PPIBL\. The PHARE funds covered the technical assistance for privatization of state-own banking sector and the funds allocated to these activities were reallocated to cover supplementary needs identified by the Borrower and the Bank\. While the activities provided under the PPIBL to complete the reforms initiated under the PSAL Ii have been financed by the savings amounts registered under the PIBL, the institutional and governance reform component was used to help in designing and implementation of the Programmatic Adjustment Loan (PAL) program\. With respect to the privatization and business environment components under the original component provided in PPIBL and financed under PIBL and first Dutch Grant, the TA was provided to strengthen public expenditure management (treasury, public accounting, internal audit and decentralization process); external audit; e-government; public administration; rule of law; and health insurance administration\. On May 09, 2005 the Bank has approved and signed a new Trust Fund TF054659 in the amount of EUR 2 million to support 104 the public administrative reform activities included under the PPIBL and also under the PAL\. As a result of funds available under the new Dutch Grants and deleting of some activities due to availability of other grant funds (EU PHARE), several million dollars remained available to be utilized for other activities\. In this respect, the PPIBL was amended two times to support the PAL program and the following additional activities were identified and included to be financed by PPIBL and the second Dutch Grant\.: (i) civil service reform; (ii) judicial reform; (iii) public expenditure management, (iv) service delivery in the education, health and infrastructure areas; and (v) intergovernmental fiscal relations\. An amendment to the PPIBL was done in order to allow the financing of these activities\. 2\. Key factors affecting implementation and Outcomes Due to availability of other source of funds mainly grant funds provided by Dutch authorities and EU for similar activities the disbursements under the PPIBL started only at the end of 2004\. More than2/3 of initial activities provided to be financed initially from the PPIBL were financed from alternative sources\. During the Joint Portfolio Performance Review session for the PPIBL in 2004, it was agreed to up-date the procurement plan of the PPIBL in order to include new activities related to PAL Program, particularly establishing a Project Management Unit (PAL PMU) in the Prime Minister Chancellery, under direct coordination of the Head of Chancellery for monitoring and implementation of PAL Program\. The up-dated procurement has been approved in the Cabinet Meeting on February 5, 2004 based on which the items and responsible ministries related to PAL program have been included in the Loan Agreement\. However, as a result of substantial delays in the approval of the PAL program (approved only on September 16, 2004 and effective on February 28, 2005) the implementation progress under the PPIBL was delayed\. In April, 2006, a comprehensive list of activities related to PAL programs were provided to be financed Out of PPIBL, part of them were not eligible, or abandoned by the beneficiaries\. In order to cover other needs, several new activities were identified by the Borrower to be funded out of the PPIBL proceeds\. These included request from the Prime Minister's Chancellery, National Agency for Fiscal Administration (NAFA) and the Ministry of Environment and Water Management (MEWM)\. The request from the NAFA and MEWM were for the preparation of new projects to be financed by the Bank\. The Bank agreed with the Government that funding should be provided for priority activities to meet PAL program objectives and on a first-come-first-served basis\. Having in mind the overlapping of funds (PIBL, Dutch Grants, PHIARE 105 funds) which were not envisaged at the moment of PPI\.BL signing the PPIBL funds could not be used in the initial implementation Øeriod of three years\. The Borrower, as the Bank also considered that the initial period of implementation was not realistic, having in mind the complexity of the project and the large number of beneficiaries and topics to be financed out of the Loan\. For this reason an extension of three years and a half was granted and the funds were fully committed and disbursed (excepting the amount of USD 60,000 representing the cost of a study related to the budget proceeds allocation which did not met the contract requirements and the beneficiary had not approved the payment\. The respective amount was not disbursed and cancelled out of the Loan)\. 3\. Assessment of the Outcomes The PPIBL did not finance all activities included in the PAD but the development objectives were fully met, while for different components EU funds were provided after PPIBL signing (see energy, gas component, banking sector privatization) and objectives meet\. Due to continue deterioration of the financial situation of the companies included in the main list of companies agreed to be privatized/restru ctured with technical assistance provided by PPIBL the beneficiary proceeded to the liquidation or used own funds for their restructuring, or sold them\. Also, when PPIBL was signed the PIBL was in place, but having certain activities envisaged to be financed\. Later the funds remained available under PIEL and activities from PPIBL were financed out of FIBL, and first Dutch Grant, based on the Government decision to use first grant funds (EU and Dutch) to cover urgent needs and priorities and the Bank fully agreed with the Government\. In this context the PPIBL funds contributed to the achieving of the PIBL and Dutch Grants programs objectives\. When the PAL was envisaged and agreed with the Bank the Government decided not to commit another TA loan, but to use the PPIBL funds to finance all TA requested by PAL program becoming attached to it fully contributing to the achieving of the development objective of PAL program\. The Loan Agreement was amended periodically to support PAL program and other urgent needs of the Government without consequently adding the new development objectives in PPIBL but there were included in the PAL program for which the PFIBL were accountable and assured their fulfillment besides of the EU inlegration conditionalities\. 4\. Assessment of the Bank and Borrower performance The Government monitored and assessed the FPIBL not only as it was defined in the PAD but also as it was agreed in the loan amendments and in the collateral 106 financing (PIBL, Dutch Grants, PAL etc) since all the funds were designed and managed as a pool of funds and properly supervised by the Bank, even that the Bank prepared separate implementation completion reports for them\. During the amendment made to the Loan in 2004 and 2006 new project activities were added under the institutional and governance reform to respond to the new needs emerging from the deepening of the policy and the institutional reforms in the public sector area\. No new indicators had been introduced to reflect all the planned activities and results as all these activities achieved the PAL development objectives and were reflected in the PAL implementation completion report\. But, in order to more accurately reflect the project activities added in 2004 and 2006 and to assess the project impact on achieving the development objective, the Borrower established a set of expected indicators outcome/outputs to serve as a basis for the Borrower to monitor and evaluate the progress of the Project and the achievement of the assumed objectives\. The results on each new activity were assessed by the Borrower and beneficiaries and submitted to the Bank and inserted in the ICR (Annex 10-- Intermediate outcomes indicators)\. The Government For the implementation of the program the Government established a PMU, under direct coordination of the minister of public finance, fully dedicated to the project and financed out of the Loan\. The PMU was initially established for implementation of PIBL and further assigned for the management of the pool of projects\. As PIBL was extended till 2005 initially in the PPIBL were provided funds for PFVU only for one year\. The Government was fully determined to make the EU accession a reality and achieved an ambitious program of structural and institutional reforms\. In this context was concluded the PAL Loan and establish a PMU within the Chancellery of the Prime Minister in 2005 as a guarantor of PAL program implementation\. The Loan was amended and extended to include the PAL activities, funds have been provided for financing of both PAL and PPIBL PMU for another three years\. These units operated very efficiently\. Good performance of both the PAL PMU and PPIBL PMU helped implement the ambitious and complex policy and TA program satisfactorily and mitigate the lack of capacity in the beneficiary's agencies\. No risk was identified in project implementation\. The Government provided adequate funds from local contribution\. The Bank supported the program implementation in a very satisfactory and timely manner\. 5\. Lessons learned A key lesson learned from implementation of the project to be avoided in the further project is related to the negative impact on the projects implementation done by the repeated changes in the strategies and priorities of the Government in performing the public administrative reform\. In many cases the PMU faced with lack of commitment from the beneficiaries (Government agencies and public entities) in achieving the objectives of the projects\. In many cases they recorded 107 a huge delay in preparing the technical documentation including the TOR and adequate technical specifications in such a form and content to meet the procurement process requirements and to accelerate the bidding process\. Some projects were abandoned or withdrawn from financing after performing all procurement steps, including signing the contract by the consultant\. In many cases the staff nominated by the beneficiaries as their representative in the evaluation committees of the bids received for different projects were not available, or not very committed, or not even specialized for this activities and jobs\. Many times the committees were changed and delayed the process\. Part of these deficiencies were addressed by the PMU and the program continued on proper way and met the objectives, but mainly these inconsistencies contributed to the extension of the financing in order to have time to achieve the objectives and proper use the money\. Under the public expenditure management component the main achievement of the project represented the institutional strengthening of the Ministry of Public Finance\. Based on the findings of the World Bank assessment during March 2003 on the status of the IT infrastructure of the Ministry of Economy and Finance and the main recommendations made by the Bank, the Ministry prepared the IT strategy for the next five years\. The Bank assessments made several recommendations for further development of the IT system, respectively: improvement of the software applications in order to facilitate a rapid and easy communication and to develop electronic relationships between financial partners; renewing the IT&C infrastructure based on Internet/Intranet technologies in order to increase both for the centralized real-time data processing and, an easy remote control management of the infrastructure\. Based on these recommendations, the MPF decided to use part of the funds PPIBL loan for funding the above assignments and based on the Bank agreement had started an ambitious program for improving the State Treasury management\. The results stated on reforming of payment system to be compliant with financial market regulations and banking practice, ensuring the transparency and interoperability between the public sector and the business community, implementation of a real-time electronic payment system (EPS) replacing the manual intensive clearing and settlement mechanism, adding new business functionalities and reducing the operational risk, aligned to financial regulation by its full compliance with SWIFT registered standards and improvement of the Public Accounting IT infrastructure to support the Public Accounting central Oracle database and the web enabled application\. The main business results of implementing the new application for Budget construction and Treasury centralization continues on the ongoing implementation of the Ministry of Public Finance reform process in these areas\. The aim of the budget process was stated as helping the Government deliver, through better information for decision-making and, clearer managerial authority 108 and accountability\. As a result, considerable effort had gone into the budget to develop a process whereby the Budget is developed within a proper planning framework\. Implementing these applications, the main achieved results are: Process for the collection and consolidation of data -- offer one single application for entering/collecting data; data are consolidated once; clear process; information available immediate -- result: increase the productivity by reducing the clerical activity and having single source of truth Quality of data, as considerable work is required to be undertaken on initial information supplied by budgetary owners; Using the General Registers and Nomenclatures assure that all information provided by Budgetary Owners are using the same reference data, increasing the quality of data and decreasing the chance to introduce invalid data\. Timeliness of reporting the information generated -- creating applications that are available over the WEB, all participants have to enter data in a timeframe well defined by MEF -- result: giving time for decision making Reporting: Accountability and transparency: the possibility to have a clear picture of public spending and transparency Improve quality of service: creating the environment to facilitate the collaborative work between MEF and Budgetary owners and increase the responsiveness of their requests Management improvement: prepare process of having aggregated views and complex reports to management related to public expenditures Governance & Public Sector Improvement: improve the data quality and the Opportunity of versioning of the budgets and increase the responsiveness Given the complexity of the tasks and the need for the improvements, there needed to be continued coordination and leadership of the Ministry of Public Finance to ensure that relevant, accurate and timely information is available to Executive Government to allow it to monitor government finances\. 109 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders Comments received from the Dutch Ministry of Foreign Affairs on May 4, 2009: "In general, the PPIBL-program has encompassed a broad range of activities that were designed to cover specific needs in Romania's macro-economic and institutional capacity\. In some cases, political or economic situations influenced the sustainability of the results\. The lack of judicial reforms remains a source of concern and is one of the areas that further require strengthening\. The Dutch Grants funded activities were punctual and catalytic for other, larger scale, activities\. Given the short project cycle, the Dutch grants have been appreciated for their flexibility which helped moving things forward\. The report reflects accurately the activities undertaken under the Dutch Grants\." 110 Annex 9\. List of Supporting Documents Country Assistance Strategy of the World Bank Group for Romania (2001) & Country Partnership Strategy for Romania (2006) Doing Business Report (2009)\. EBRD-World Bank Business Environment and Enterprise Performance Survey (2005)\. Implementation of the Comprehensive Development Framework Principles in a Transition Economy\. A case study of a Romanian experience\. The World Bank (2002)\. Electricity Market Project: project appraisal document Judicial Reform Project: project appraisal document, implementation status reports PPIBL: aide-memoires, implementation status reports, terms of references and reports of consultants PIBL, PSAL and PAL1-2: project appraisal document/report and recommendation of the President report/program documents, respectively; implementation completion reports Romania Building Institutions for Public Expenditure Management: Reforms, Efficiency and Equity\. The World Bank (2002)\. Romania Country Financial Accountability Assessment\. The World Bank (2003)\. Financial Sector Assessment Program for Romania: Capital Markets Technical Note\. The World Bank (2009)\. Romania Public Expenditure and Institutional Review\. The World Bank (2006)\. Romania Public Finance Project Assessment by the World Bank (2002)\. Romania Public Sector Financial Management Review\. The World Bank (1998)\. Romania Report on the Observance of Standards and Codes, Accounting and Auditing (draft)\. The World Bank (2008)\. Romania Restructuring for EU Integration the Policy Agenda\. The World Bank (2004)\. Social Sector Development Project: project appraisal document Tax Administration in OECD and Selected Non-OECD countries: Comparative Information Series 2008"\. OECD (2009)\. World Bank Policy Briefs for the Government of Romania (2009)\. 111 Annex 10\. PDO Indicators from the Implementation Status Report Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : (i)(a) % of the total banking sector assets held by the state owned banks Value quantitative or About 40% (BCR, CEC) 0% - PSAL 2 and NA 5\.5% (CEC) Qualitative) PAL objective Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % - achievement) Indicator 2 : (ii)(a)privatized state-owned assets in manufacturing sector and (b)increased private sector's share of GDP as % Completed The state manufacturing Value privatization in the sector was privatized quantitative or Met PSAL 2 Board manufacturing NA by end 2007, except Qualitative) conditions; 69\.1%\. sector (PSAL2/PAL for some residual objectives); 75%\. shares; 70% (12/31/2008)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2007 Comments (incl\. % - achievement) Indicator 3 : (iii)(a)restructured and privatized SOEs in energy sector Privatized: 5 out of 8 PSAL 2(2nd): electricity Offered and closed distribution Met PSAL2 Board the sale of: 2gas companies conditions: Electrica and 2 electricity (PSAL2/PAL2); 2 Value reorganized in 8 distribution gas distr\. cos\. quantitative or distribution entities; companies; sold to NA (PSAL2); Petrom Qualitative) unbundled gas sector; strategic investor (oil) (PSAL2); privatization of two distr\. Petrom; adopted a restructured cos\. launched\. privatization Termoelectrica strategy for (PSAL2)\. Romgaz, electricity Hidroelectrica, generation sector\. Rovinari are public (PAL3)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % - achievement) Indicator 4 : (iii)(b) strengthened regulatory framework for network (electricity and gas) industries Value Gas regulatory agency Legal frame for NA Legal and regulatory 112 quantitative or (ANRG); and electricity increasing the framework for Qualitative) (ANRE) regulatory agency independence of increasing the established\. Regulatory the regulatory independence of the frame in place\. agencies enacted; regulatory agencies progressed in place (PAL2); liberalization of the 100% electricity and electricity and gas gas markets markets in liberalized (PAL3); accordance with the ANRGN and ANRE Road Map\. merged; OPCOM Power Exchange established (PAL2)\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % - achievement) Indicator 5 : (iii)(c)amount of inter-enterprise arrears as % of GDP (in the energy sector) Almost zero (no info Value on 2008 but it is quantitative or 2\.5% < 1% NA expected to have Qualitative) increased due to the financial crisis) Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2007 Comments (incl\. % - achievement) Indicator 6 : (iii)(d)status of clarifying new tariff schemes to achieve cost recovery Through tariff adjustments by ANRE (and ANRGN) improved Value Progressed price collection (65% in c\. quantitative or Tariffs do not achieve cost and tariff setting in 2000 to c\. 100% by Qualitative) recovery\. accordance with theNA 2005 in both Road Map\. electricity and gas), reached cost- recovery in 2004 (PAL2)\.Recent signs of decline\. Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % - achievement) Indicator 7 : (iv)(a) easiness of doing business: number of procedures and days for enforcing contracts (Doing Business) Value quantitative or 32; 537 NA NA 31; 512 (2009) Qualitative) Date achieved 12/31/2004 12/31/2008 12/31/2008 12/31/2008 Comments - 113 (incl\. % achievement) Indicator 8 : (iv)(b) easiness of doing business: number of years to closing a business (Doing Business) Value quantitative or 4\.6 NA NA 3\.3 (2009) Qualitative) Date achieved 12/31/2004 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % - achievement) Indicator 9 : (iv)(c) easiness of doing business: number of procedures and days of starting a business (Doing Business) Value quantitative or 6; 29 NA NA 6; 10 (2009) Qualitative) Date achieved 12/31/2004 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % - achievement) Indicator 10 : (iv)(d) easiness of doing business: number of payments and total tax rate as % Value quantitative or 108; 57\.2% NA NA 113; 48% (2009) Qualitative) Date achieved 12/31/2006 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % - achievement) Indicator 11 : Private sector share of GDP (as %) Value quantitative or 69\.1% 75% NA Qualitative) Date achieved 04/15/2002 12/31/2008 12/31/2008 Comments (incl\. % achievement) Indicator 12 : (v)(a)cash surplus/deficit (%of GDP) Value quantitative or -2\.0% (deficit) NA NA -2\.5% (deficit) Qualitative) Date achieved 12/31/2002 12/31/2008 12/31/2008 12/31/2007 Comments (incl\. % - achievement) Indicator 13 : (v)(b)tax revenues % of GDP Value quantitative or 17\.4% (World Bank data) NA NA 29\.14% (data from Qualitative) the NAFA) Date achieved 12/31/2002 12/31/2008 12/31/2008 114 Comments (incl\. % - achievement) Indicator 14 : (vi) adoption of critical measures to provide social protection during the adjustment period and to establish effective poverty reduction mechanisms\. Value quantitative or NA NA NA NA Qualitative) Date achieved 04/15/2002 12/31/2008 12/31/2008 12/31/2008 Comments (incl\. % Not provided information since the PPIBL did not envision any activities related to achievement) PDO (vi) in the PAD\. 115 Annex 11\. Original Components with Activities Part A: Financial Sector Restructuring and Privatization Support 1\. Provide TA to the CEC to engage bank restructuring and privatization advisor(s) under a twinning arrangement, and to commence its restructuring in preparation for privatization within 60 days of First Tranche Release\. 2\. Provide TA in developing the capital markets by: (a) strengthening the legal, regulatory and supervisory framework in consistence with the EU acquis and the regulatory and supervisory capacity of the National Securities Commission; and (b) supporting the institutional strengthening of the Bucharest Stock Exchange to enable trading of Government securities on the exchange\. 3\. Provide TA in strengthening the institutional capacity of the Insurance Supervision Commission to regulate and supervise the insurance sector\. Part B: Privatization Support for State-Owned Enterprises 1\. Provide consultant's services to the Government of Romania in privatization of the selected state-owned enterprises by disposing of at least 50% of its ownership stake in them\. Part C: Privatization Support for the Energy Sector 1\. Provide goods and consultants' services (and training) to strengthen the regulatory capacity of the National Agency for Gas Distribution68\. 2\. Provide assistance to review the taxation system for the oil and gas sector\. 3\. Provide TA in developing a privatization strategy for the electricity generation sector\. 4\. Assist in providing a legal and regulatory framework for private competition in the energy sector (namely network industries), to increase prices and reduce arrears in the oil and gas sectors, and initiate efforts in other energy sectors to ensure that the growing problem of cross- subsidization and arrears is contained and brought under control69\. Part D: Support for an Improved Business Environment 1\. Provide TA to the Ministry of Communication and Information Technology to strengthen e- business, including e-commerce and e-government (including a review of the existing legal framework for e-business)\. 2\. Provide training to judges and court personnel in the area of bankruptcy\. 3\. Carry out refurbishing works and provide equipment to commercial divisions of selected local courts (tribunals)\. 4\. Develop and implement a public awareness campaign to improve the Government's communication with the business environment on the business environment reforms\. 5\. Provide advisory services and goods to improve the local capacity in the Jiu Valley Region for implementing a business environment improvement strategy (including removing administrative barriers, improving the local public administration's services and marketing of the region)\. 68Annex 1 of PAD refers to training of the ANFG staff (should be ANFE) but it is not mentioned in the main text of the PAD neither in the Loan Agreement\. 69This activity is not mentioned in the Loan Agreement\. 116 Part E: Institutional and Governance Reform 1\. Provide TA and goods to improve public expenditure management, inter alia, in the areas of: (a) cash management for handling transactions (e\.g\., building a clearing house within the Ministry of Public Finance (MOPF) vs\. contracting with the commercial banks, using Transfond), revising the legal framework for governing Treasury functions, and training of Treasury Department staff in cash management; (b) budget formulation for training of major budget institutions on how to prioritize their activities and budget proposals, how to define programs for the purpose of program budgeting, and how to build capacity to monitor performance in achieving program objectives; (c) foreign financing coordination for implementing legislation for improving coordination of foreign financing by assisting the MOPF staff in exploring options, such as establishing a central unit for coordinating foreign financing within the MOPF, ensuring that accounting improvements capture foreign financing, or requiring the MOPF to sign-off for any foreign-financed project, as well as for a study tour to Hungary to expose the key MOPF staff to that system for coordinating public debt; (d) government accounting for helping the MOPF to develop accrual accounting capacities, accounting regulations and procedures, and program accounting capacities; (e) internal audit for developing and installing software and hardware for monitoring and providing search capacities for legal instruments governing internal audit and a data base on internal audits and their findings; (f) decentralization for advising the Government on amendments to the Law on Local Public Finance, strengthening institutional capacities of local authorities on a pilot basis, in order to improve their accountability and providing advice to the Government on implementation of the equalization formula\. 2\. Provide advisory services, training and information technology to complement a comprehensive program of TA to the Court of Accounts which was already in place and being financed by the EU and the DFID\. Training was to focus on financial and performance auditing for the Court of Accounts staff working at the local level (in the 28 Judets not already provided such training under the existing twining arrangement), auditing of privatization processes, program budget auditing, and fraud, corruption and TA evasion auditing\. Information technology (hardware and software) was to be developed and installed to support financial and performance auditing\. 3\. Provide TA and equipment to the Ministry of Communication and Information Technology for advancing one or more of the efforts in developing e-government applications, such as e- procurement, a unified portal for access to government web-sites, and development of various national on-line registries and, at the minimum, in developing the SMART-card system\. 4\. Carry out a feasibility study for development of an integrated information system for document management to use throughout Romania's public administration system\. 5\. Provide TA to institutions involved in the process of legal drafting and to judicial institutions to strengthen their procedures and processes for fair and speedy adjudication of disputes ("Rule of law")\. 6\. Provide TA to design a strategy and action plan for public health insurance administration and to launch their implementation\. Part F: Project Management Unit (PMU): Provision of incremental operating costs to the PMU to continue its management capacity in carrying out the Project\. 117 Annex 12\. Beneficiaries of the Project G o v e r n m e n t o f R o m a n ia G e n e ra l S e c r e t a ria t o f P r im e M in is t e r t h e C h a n c e l le r y G o v e r n m e n t M in is tr y f o r S m a ll a n d M in is t ry o f M in is t ry o f M in is t r y o f M in is t r y o f M in is t ry o f M in is t r y o f M e d i u m - S iz e d C o m m u n ic a t io M in is tr y o f M in is t r y o f E n v iro n m e n t A g ric u lt u r e M in is t ry o f D e v e lo p m e n t , E d u c a t io n , M in is t r y o f F o re ig n I n te r io r a n d C o m p \. , T r a d e , a n d R u ra l n s a n d C u lt u r e a n d D e f e n c e P u b lic W o rk s E c o n o m y a n d R e s e a r c h a n d a n d A f f a ir s A d m in is t r a t iv e T o u r is m & I n f o r m a ti o n C u lt s F in a n c e S u s ta in a b le D e v e lo p m e n t a n d H o u s in g Y o u th R e f o r m L ib e ra l T e c h n o lo g y D e v e lo p m e n t N a t io n a l N a ti o n a l A g e n c y f o r A g e n c y o f N a t u r a l N a t io n a l F is c a l P r o t e c t e d A g e n c y o f A d m in is t ra t io n A r e a s a n d C iv il S e r v a n t s ( A N A F ) B io d iv e r s it y C o n s e r v a t io n R o m a n ia n S a v in g s B a n k (C a s a d e E c o n o m ii s i C o n s e m n a t iu n i - C E C A N R E - R o m a n ia n C O U R T O F E n e r g y R e g u la t o ry A C C O U N T S A u t h o r it y G a s R e g u la t o ry A g e n c y A N R G N 118 Annex 13\. Revised Components, Beneficiaries and Expected Benefits Original Revision of components70 Revised beneficiaries and expected benefits components D\. Improved business environment 1\. Strengthening e- Added e-Romania Gateway and establishment Increased knowledge sharing\. business of telecenters by the Ministry of Communication and Information Technology to the sub- component\. 5\. The Jiu Valley * Added e-business to the sub-component\. Increased knowledge sharing\. Region E\. Institutional and governance reform 1\. Public expenditure management (i) MoPF * Added training to the sub-component\. More skills building\. (d) government * Added financial reporting to the sub- Introduction and implementation of internationally- accounting component\. recognized accounting standards and financial audit requirements\. ** Added a new sub-component: (1) (ii) To better address the issue of the improvements in the provision of TA, goods and training to the collection of contributions, the Government (the GOR) National Agency for Fiscal Administration decided to create a separate agency, the NAFA, by (NAFA) to support analytical studies on revenue merging the directorates responsible for the activities of administration issues\. tax administration within the MOPF\. The NAFA became the single collecting agency for all the contributions and personal income taxes\. It was to be the main beneficiary under the planned Bank-financed Revenue Administration Reform Project (FY06)\. It was established in January 2004, and required advice in identifying capacity building priorities to be funded under the planned project\. 4\. Integrated * Replaced with a new sub-component: 4\. The original activity was eventually cancelled due to the information system Provide TA, goods and training to the Ministry expected high costs\. It was also thought that it could be for document of Administration and Interior for preparation, funded under an EU grant\. With regards to the new management development and implementation of system for activity, after 2000, the GOR identified a public Civil Services Reform monitoring indicators, administration reform as a central objective of its management and impact\. program\. It launched trimming of public sector staffing levels to reduce the fiscal burden of the public administration\. The evolution of public sector wages was a source of inflationary pressures\. Public administration was viewed as inefficient, and there was a need to strengthen its governance and capacity through TA to the Ministry of Administration and Interior\. 5\. Rule of law * Replaced with a new sub-component: 5\. The GOR had launched a number of important Provision of TA, goods and training to the initiatives since 2000 aimed at reforming the judiciary Ministry of Justice (MOJ), Superior Council of and strengthening the rule of law\. In September 2003 the Magistracy (SCM) and Courts for carrying out a GOR adopted a comprehensive Judicial Reform Strategy program of judicial reforms\. and an implementation plan\. PPIBL was to participate in supporting the MOJ, SCM and Courts in implementing it\. - * Added a new sub-component: 7\. Provision of The GOR had launched fiscal decentralization in 1998\. TA, goods and training to the Ministry of Intergovernmental coordination and cooperation were Administration and Interior and to the MOPF considered key factors for successful decentralization for improvements in intergovernmental fiscal and good local governance\. TA to the Ministry of 70* refers to the 2004 loan amendment and ** refers to the 2006 loan amendment\. 119 relations\. Administration and Interior and to the MOPF was required to build capacity and cooperation\. - * Added a new sub-component: 8\. Provision of The GOR had adopted legislative changes to limit the technical assistance, goods and training to the scope of emergency ordinances\. A new Public Policy General Secretariat of the Government (GSG) Unit had been established in the GSG to build policy and Prime Minister Chancellery for reforms in formulation capacity towards better strategic policy making and administrative accountability\. prioritization and fiscal impact assessment\. TA was required to assist GSG and Prime Minister's Chancellery in these efforts\. - * Added a new sub-component: 9\. Provision of The GOR adopted a comprehensive employment plan TA, goods and training to the Ministry of Labor, that provided a legal basis for implementing labor Social Solidarity and Family to carry out a labor market reforms\. It was planning to enhance flexibility of code review, labor market study, strategy and the labor market to facilitate labor mobility\. TA was action plan\. required to assist the Ministry of Labor, Social Solidarity and Family in these efforts\. - * Added a new sub-component: 10\. Provision of The GOR had moved to a new phase in the education TA, goods and training to the Ministry of sector reforms\. The objective was to provide more Education, Research and Young People (MOE) adequate and equitable financing for education and to for reforms in the education sector\. align the roles and responsibilities of education at the central and local level with financial decentralization\. TA was required to assist the MOE in these efforts\. - * Added a new sub-component: 11\. Provision of The GOR faced important challenges to provide health TA, goods and training to the MOH for reforms care to citizens\. Compounding the impact of low in the health sector\. spending (compared to the EU), resource allocation within the sector was inefficient\. TA for health administration to the MOH was required to design a strategic and action plan and launch their implementation\. - * Added a new sub-component: 12\. Provision of The GOR was launching a restructuring program aimed TA, goods and training to the Ministry of to establish the Romanian railway companies as viable Transportation, Construction and Tourism business with good productivity\. Work was required to (MOTCT) for reforms in the roads and railway rationalize the network and services, completion of sectors\. interoperability and safety regulations with EU directives etc\. TA was required to assist the MOTCT in these efforts\. - ** Added a new sub-component: 13\. Provision The 2006 CAS included a $50 million environment of TA, goods and training to the Ministry of management project to build capacity (including in a Environment and Water Management new national agency) and to implement the environment (MOEWM) to carry out reforms in the acquis and effectively absorb EU funds\. The PPIBL was environment and water management sectors\. amended to support the MOEWM in these activities\. E\. Project Management Unit * Added PAL PMU to strengthen their Because of the ambitious objectives of the reforms, the management capacity in carrying out the Project Government was aware of how much implementation and to perform their activities under the effort it required (including TA support) and therefore Programmatic Adjustment Loan (PAL) proposed established a high level PMU in the MOPF to coordinate for Bank financing\. implementation of the reforms\. It was established in 2004 in the Prime-Minister's Chancellery for monitoring the preparation and implementation of the PAL activities, and its funding was allocated to the PPIBL\. The PAL PMU was headed by a director and five individual consultants responsible for implementation of the PAL program, one assistant director and administrative assistant\. 120 Annex 14\. Implementation Schedules of the World Bank Financed and Administered Projects during 1999-2008 2Q99 \.//\. 4Q01 1Q02 2Q02 3Q02 \.//\. 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 \.//\. PIBL PPIBL TF050477 PSAL1 PSAL2 PPIBL PAL 1 (PAL 2 dropped) PAL TF054659 Original implementation period Extended implementation period 121 122	REVIEW
P006012	Document of The World Bank FOR OFFICIAL USE ONLY Report No\. 15868 IMPLEMENTATION COMPLETION REPORT ARGENTINA SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN (PERAL II) (LOAN NO\. 3556-AR) JUNE 21, 1996 Public Sector Management and Private Sector Development Division Country Department I Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS Currency Unit = Argentinean Peso Exchange Rate I US Dollar = I Peso (Since April 1, 1991, the exchange rate has been established by law) GOVERNMENT OF ARGENTINA FISCAL YEAR January I - December 31 ABBREVIATIONS AND) ACRONYMS AFNE Astilleros y Fabricas Navales del Estado AMC Area Material Cordoba AHZ Altos Hornos Zapla DDSR Debt and Debt Service Reduction DGFM Direccion General de Fabricaciones Militares ECA Fabrica Militar de Vainas y Conductores Electricos EFF Extended Fund Facility FM Fabrica Militar FMAS FM de Acido Sulfuirico FMRT FM Rio Tercero FMSF FM San Francisco FMSM FM San Martin FMTS FM Tolueno Sintetico HIPASAM Hierro Patagonico de Sierra Grande S\.A\.M\. MV Monomeros Vinilices PBB Petroquimica Bahia Blanca, S\.A\. PE Public Enterprise PERAL Public Enterprise Reform Adjustment Loan PEREL Public Enterprise Reform Execution Loan PGM Petroquimica General Mosconi, S\.A\. PRT Petroquimica Rio Tercero SECAL Sector Adjustment Loan SEGBA Servicios Electricos del Gran Buenos Aires SIGEP Sindicatura General de Empresas Publicas SOMISA Sociedad Mixta Siderurgia Argentina TAMSE Tanque Argentino Mediano YPF Yacimientos Petroliferos Fiscales IMPLEMENTATION COMPLETION REPORT FOR OFFICIAL USE ONLY ARGENTINA SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN (PERAL II) TABLE OF CONTENTS Page PR1EFACE \. ii EVALUATION SUMMARY \. iii PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE \.1 A\. GENESIS OF THE LoAN \.1 B\. LOAN OBJECTIVES AND DESCRIPTION \.2 C\. LOAN IMPLE NTATION \.3 D\. RESULTS AND ASSESSMENT \. \.7 E\. BANK PERFORMANCE \.8 F\. BORROWER PERFORMANCE \.9 G\. SUSTAINABILITY \.9 H\. FuTuRE OPERATION \.9 I\. LEssoNsLEARNED \. 10 PART H: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE \. 13 Economic Framework \. 13 Steel Sector \. 14 Other Defense Companies \. 15 PART m1: STATISTICAL TABLES \. 20 A\. Summary of Assessment B\. Related Bank Loans C\. Project Timetable D\. Cumulative Estimated and Actual Disbursements E\. Project Financing F\. Tranche Disbursements G\. Bank Resources: Staff Inputs H\. Bank Resources: Missions Vice President: Shahid J\. Burki Director: Gobind T\. Nankani Division Chief: Paul Meo Task Manager: Anil Kapur Ths document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed wiihout World Bank authorization\. IMPLEMENTATION COMPLETION REPORT ARGENTINA SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN (PERAL I) LOAN 3556-AR PREFACE This is the Implementation Completion Report (ICR) for the Second Public Enterprise Reform Adjustment Loan (PERAL II) to the Argentine Republic, in the amount of US$300 million\. PERAL II (Loan No\. 3556-AR), a quick disbursing sector adjustment operation, was designed to support privatization of the Argentine Government's military- industrial complex enterprises\. The Loan was approved on January 5, 1993 and closed on December 31, 1995\. It was fully disbursed in two tranches -- the first, released on effectiveness and the second on December 31, 1994\. The Export-Import Bank of Japan (JEXIM) co-financed PERAL II\. This ICR was prepared by the Public Sector Management and Private Sector Development Division of Country Department I of the Latin America and the Caribbean Regional Office\. The ICR is based, inter alia, on the Initiating Memorandum, the Report and the Recommendation of the President, the Loan Agreement, mission and supervision reports, correspondence between the Borrower and the Bank, internal Bank memoranda, and other background papers and reports\. - iii - IMPLEMENTATION COMPLETION REPORT ARGENTINA SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN (PERAL m' LOAN 3556-AR EVALUATION SUMMARY i\. The US$300 million PERAL II Loan to the Argentine Government, approved on January 3, 1993, was designed as an integral component of public sector reform efforts for sustained fiscal improvements\. PERAL II supported the Government's scheme to extend its program of privatizing public enterprises to encompass defense industries\. The underlying aims were to: (a) end Government budget relief of these enterprises' losses and debts plus their indirect subsidies; (b) improve the environment for private sector competition; and (c) reduce and maintain military expenditures at 2% of GDP\. It was the first Bank loan to address the privatization and conversion of defense industries\. ii\. The Bank's role was to provide the necessary financing and technical assistance that enabled the Government to undertake the defense reforms\. The resources from PERAL II and the complementary US$200 million loan from the Export-Import Bank of Japan (JEX[M) permitted the Government to replace domestic borrowing (on onerous terms) with foreign loans\. It used the counterpart from the loans to indemnify workers displaced by the defense enterprises' restructuring, consolidate or close some of the firms, and carry out environmental clean-ups\. Further, US$100 million each of the IBRD and JEXIM loans were used as set-asides for the Government's simultaneous debt and debt service reduction operation\. iii\. PERAL II was the fourth adjustment operation directly supporting the Government's reform programs for the public sector\. It was complemented by independent technical assistance operations, i\.e\., the Public Enterprise Reform Execution Loan (PEREL) for US$23M, and a Japanese Grant Facility for US$1\.8 million equivalent\. These operations helped finance consultants and other advisors to assist in the implementation of the defense reform program supported under PERAL II\. iv\. PERAL II was disbursed against import receipts following prevailing guidelines in two tranches\. The first tranche was made available at the time of loan effectiveness; the second was available for release when specific conditions were met\. All but one of the - iv - latter conditions were satisfied, permitting the second tranche to be released on December 31, 1994\. The condition for the sale of Petroquimca Bahia Blanca (PBB) was waived by the Board, though the Government did privatize PBB later the next year\. v\. Overall, the Government more than achieved the objectives set forth under the loan\. For instance, the Government sold or closed more PEs than were previously included under the loan; has capped defense expenditures at 2% of GDP; and exceeded the level of reduction for the "military staff' under the program\. In addition, the loan was also conditioned on evidence of progress on the macroeconomic program, and the attendant macroeconomic indicators were strong\. The authorities similarly were successful in rationalizing fiscal incentives for steel producers and in advancing environmental audit and remedial improvements in selected PEs that were closed; vi\. These achievements were reached despite continuous organizational changes in the Ministry of Defense, relatively weak technical depth in the counterpart teams and poor financial conditions\. In large part, the success of the loan can be attributed to the strong political commitment of the Government and the heavy utilization of Bank resources\. In addition to financing, the Bank continuously coached and guided the Government's teams on the restructuring and privatization process in the Defense sector and provided for the necessary analytical underpinnings for the reform in the steel sector by undertaking a steel sector report (that was not published at the Government's request)\. Without these conditions, it is doubtful that the project would have achieved the objectives under the loan\. vii\. A few governmental actions were less than fully satisfactory\. First, due to lengthy arbitration disputes between the upstream and downstream producers and the unfavorable global conditions prevailing in the petrochemical industry, the Government was unable to sell Petroquimica Bahia Blanca (PBB), a relatively small-scale petrochemical plant, in a timely manner\. This loan condition was waived by the Bank's Board in December 1994, in view of the overall progress made by the Government\. PBB was in fact sold, though after the loan closed\. Secondly, although the Government satisfied the second tranche condition of submitting satisfactory legislation on competition policy to the Congress, this proposed law still remains pending in the legislature\. And finally, due to the absence of the proposed law for competition policy, SOMISA (the large steel manufacturer) was sold to a consortia of regional steel producers\. Addressing these problems was difficult because of repeated organizational changes and inter-ministerial jurisdictional difficulties which obstructed the privatization process and its enforcement\. viii\. The project's successful structural reforms helped improve the fiscal balance through reductions in parastatal deficits and staffs along with the proceeds of asset sales\. Moreover, military expenditures were kept at the reduced level\. While it is too early to determine if the industrial sectors involved are definitively more efficient and profitable post-privatization, preliminary data shows that average labor productivity and capacity utilization in steel increased considerably in 1990-93\. The consortium that purchased SOMISA expects a positive net income from the steel plant in 1996\. Also, the civilian industrial component of Argentina's defense complex has been transformed\. ix\. As a result of the strong vested role of the Argentine military and the Bank's limited historic involvement in the defense sector, this program had to be innovative and creative to succeed\. There are few examples of its kind in the world and therefore, comparative lessons learned are not easily available\. However, the single most important factor was the strong personal comrnitment of President Menem, without whom these reforms might not have taken place\. In addition there were some specific lessons from the Ministry of Defense experience\. These had to do with the special complexities of addressing civilian tasks under often dissimilar military administrative rules and systems\. Addressing these aspects under project preparation is key when designing defense reform programs\. ARGENTINA: SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN IMPLEMENTATION COMPLETION REPORT PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE A\. GENESIS OF THE LOAN 1\. While Public Enterprises (PE) in Argentina did not account for a disproportionate share of the economy compared with other Latin American countries, their inefficiencies and heavy losses had a profound economic impact\. Furthermore, during the past 50 years, government policies created uncertainty as they varied -- from nationalization, creation, growth, to an eventual reduction of the public sector\. The PEs under the ownership of the Federal Government were concentrated in three major activities -- Hydrocarbons and Energy, Transport and Communications, and the Industrial and Service sectors\. The PEs in the last category were principally under the Ministry of Defense due to their perceived strategic importance and the evolving role of the past military governments\. 2\. In the mid- I 980s, after the election of the first democratic government, the Ministry of Defense had on a number of occasions announced the privatization of its two biggest defense enterprises -- Sociedad Mixta Siderurgia Argentina (SOMISA) and Petroquimica Bahia Blanca (PBB), years before a broader privatization program became successful\. Due to numerous changes in the Ministry, lack of political commitment and inertia, and strong labor union opposition--especially in the steel sector-- there were a number of false starts\. The early defense teams' reform programs, which had launched the privatization effort, lay dormant until the early 1990s\. 3 \. However, periodic fiscal crises, continued bouts of hyperinflation and inefficient expenditure programs, shifted the focus of reforms from the military to economic sphere\. This change was primarily due to the PEs' increasing burden on the economy\. In 1978- 91, PEs' overall financial balances (before budget transfers) were consistently negative (reaching as high as -4\.9% of GDP), requiring Government financing that averaged 2\.5% of GDP\. When the Menem Government took control in 1989, PEs had an operating deficit of US$3\.8 billion and were increasingly being criticized for waste and poor services\. 4\. In response to the severity of the economic situation, the Menem Administration implemented the divestiture of nearly all its PEs at a record-breaking pace\. It moved first on the largest PEs in order to quickly reap the biggest potential welfare gains and demonstrate its commitment and seriousness\. It sold the major national airline and telephone company (efforts initiated under the previous government), followed by similar sales of the state's petroleum, power, and railroad industries\. Simultaneously, the - 2 - administration eliminated PE price setting and deregulated the supply of numerous goods and services\. These measures were fortified by the "Convertibility Plan," which converted the Central Bank into a virtual monetary board, and killed inflationary expectations rapidly\. 5\. After putting some key economic reforms into place, President Menem transferred the then Minister of Economy and his team to the Ministry of Defense in early 1991, with the mandate to implement badly needed reforms in the defense sector\. Close prior working relationships with the Bank, proven credibility in implementing reforms and the Bank's institutional and sector knowledge was among the principal factors that contributed to the genesis of the Bank's first loan directed to defense reforms\. 6\. Of the 45 PEs under the ownership of the Ministry of Defense, the Bank's loan focused on 23 industrial PEs (1 PE was subsequently dropped from the original list), which accounted for more than 90% of the Defense complex's economic activity in terms of employees, assets, and sales\. The remaining PEs were excluded from Bank support due to past liquidation actions and their defense orientation (in which the Bank did not have a comparative advantage)\. Amongst those PEs covered under the Bank's loan, the PEs in the steel and petrochemical sectors were the most important and complex, in terms of labor unions, vested private sector interests, and sector policy distortions\. 7\. At the end of 1991, PEs under the Ministry of Defense accounted for losses of almost US$478 million, over 16% of total government borrowing needs\. The new team set out to stem these losses, cutting defense expenditures and thus reducing the role of the military\. The Government decided to sell or otherwise dispose of 23 of the 45 enterprises within the Defense Ministry complex\. These PEs, in terms of their economic importance, were led by steel companies, followed by petrochemicals, shipyards and other manufacturing enterprises\. Less than a third of these PEs were profitable; they were generally not subject to the rigors of the marketplace; and most of their senior managers were not commercially oriented\. B\. LoAN OBJECTIVES AND DESCRIPTION 8\. PERAL II was the fourth adjustment operation in support of the Government's public sector reform program\. The Loan sought mainly to assist in privatizing/ restructuring Defense PEs (excluding purely military plants) and improving the environment for private sector competition\. 9\. These goals were part of a broad World Bank effort to help sustain the 1991-92 Argentina's major structural adjustments\. PERAL II aimed at ending Government budget relief of the Defense PE losses and debt obligations plus their indirect subsidies\. It was also intended to support the Government's attempt to reduce and maintain military expenditures at 2% of GDP\. 10\. The arrangements for the US$300 million loan called for a first tranche of US$200 million to be made available at effectiveness, with a second tranche of US$100 million\. - 3 - The Export-Import Bank of Japan cofinanced the project with a US$200 million loan\. The first tranches of both loans included US$ 100 million set-asides in support of a Debt and Debt Service Reduction (DDSR) operation\. The remainder of the loans was to finance general imports except those defined by the usual small negative list of ineligible items\. Their local currency counterpart proceeds were to finance severance payments of displaced workers, the closure of facilities, consolidation of plants and environmental clean-ups\. 11\. The macroeconomic underpinning for PERAL II was elaborated in close coordination with an IMF Extended Fund Facility\. A medium-term framework and financing plan were agreed with the Government, predicated on the assumptions underlying the DDSR loan (presented to the Board on the same date)\. Specific policies and performance monitoring criteria were spelled out in the agreed Letter of Development Policy, with special attention to sustaining open trade policies\. 12\. Moreover, for enhancing private sector development, PERAL II's emphasis was on supporting the revision of the anti-trust legislation in order to bolster competition incentives\. The market share of both the petrochemical and steel plants to be privatized was large enough to have led to oligopolistic distortions without a clearer anti-trust policy\. Other provisions included the pursuit of a stronger deregulatory framework, lower import barriers for steel products and removal of entry barriers\. Further, the project plan called for rationalization of fiscal incentives to steel producers in the interests of leveling the playing field for private and public agents alike\. Another focus was on improved environmental safeguards, for which there were to be enterprise audits and clean-ups\. 13\. In addition, PERAL II supported privatizing or closing all three steel PEs (notably SOMISA, which had about 60% of the country's total capacity), the two most important petrochemical enterprises (PGM and PBB), and eleven other industrial companies\. It was likewise agreed that seven defense-related companies would be converted to civilian purposes\. These collectively accounted for 97% of all Defense Ministry sales and 91% of its employment\. 14\. The Loan was prepared with the help of a Japanese Grant and the Public Enterprise Reform Execution Loan (No\. 3292-AR)\. In addition, the Defense Ministry (the executing agency) needed technical assistance to carry out the scheme in the light of its managerial deficiencies\. Accordingly, the project plans envisaged the employment of a substantial number of consultants for advising on and helping carry out the privatization's\. However, the Loan did not contain provisions for such assistance, relying instead on the projected availability of a second Japanese Grant and the further reallocation of proceeds under another ongoing Bank loan\. C\. LOAN LMPLEMENTATION 15\. The Government's strategy for this operation called for the privatization--sale or closure--of all PEs within the Ministry of Defense's purview\. The then newly appointed Minister of Defense delegated day-to-day management responsibility to the Secretary of - 4 - Defense Planning, the former Vice Minister of Economy\. His office was assisted by the Office of the Under-Secretary of Restructuring and Asset Control (IJRA) and a small inter-disciplinary team of advisors, financed under available technical assistance funds\. In addition, the Minister of Defense appointed "Interventors" (trustees) to oversee the restructuring and privatization efforts in some of the more important PEs; e\.g\., SOMISA and PBB\. 16\. In spite of these efforts, the project unit was relatively weak with limited technical ability to undertake complex and broad-based restructuring and privatization programs\. This, coupled with the lack of cooperation at the PE level, the poor financial performance of most PEs and their relative unattractiveness, made for a difficult, challenging working environment\. However, strong commitment and technical support (provided mainly by the Bank) resulted in considerable up-front actions taken towards achievement of the project's goals\. Before Board approval, the Government had passed enabling legislation, promulgated a deregulation decree for the steel sector, sold one of the steel PEs, and closed the biggest provincial steel PE under difficult political circumstances\. Prior to privatization, the Government restructured SOMISA -- reduced the labor force from 14,500 to 5,500, rationalized the product mix from international to the domestic market, and closed certain unprofitable product lines --based on the Bank's recommendations as detailed in a sector report\. In addition, the PEs' sales memoranda were well advanced for SOMISA, PBB and PGM, and five other PEs had been divested and another closed\. In all, nine of the 23 targeted PEs were sold or closed and advancements were undertaken in the sales process in a number of others by this early juncture\. On the sectoral framework, the authorities drafted revised anti-trust legislation and issued a decree eliminating fiscal incentives for steel firms\. In addition, Argentina and it's MERCOSUR partners had effected two regional tariff cuts in compliance with the Loan's macro-economic objectives\. This impressive record permitted the release of the loan's first tranche immediately after effectiveness\. 17\. However shortly afterwards, a number of politically motivated reorganizations in the Ministry of Defense and the replacement of the Secretary of Defense Planning, slowed the impetus for concerted change\. As a result of these changes, the closing date of the loan ultimately had to be extended by one year and the Bank needed to allocate additional supervision resources to ensure that the actions in the remaining PEs were undertaken according to Bank procedures\. Despite these circumstances, almost all the actions under PERAL II were completed\. 22 of the targeted 23 companies were sold or closed and many of the sectoral policy actions identified under the loan were also completed satisfactorily\. 18\. In the case of the last remaining PE--PBB-there was less progress\. Its sale was persistently delayed\. At the outset, this was mainly caused by the enterprise's contractual disputes with downstream firms\. Unsuccessful arbitration of these differences set back the Government's initial sales efforts in 1992\. Due to economic policy and legal issues surrounding PBB, the Ministry of Defense transferred the privatization responsibility to the Ministry of Economy\. Subsequently, the legal and economic issues were resolved and the Government retained a merchant banker to conduct the sale\. In view of this and the - 5 - overall progress on other aspects of the loan, together with the sector liberalization that put PBB into a more competitive market situation, the Bank ultimately waived the requirement for its sale\. PBB was eventually sold in late 1995, almost a year after the waiver\. In hindsight, PBB's privatization could have been expedited if its sale had been undertaken jointly with the gas conversion plant of General Serri (the sole provider of ethane to PBB)\. 19\. In addition, the Government perceived that, for some PEs and industries it needed to take complementary policy measures for averting or minimizing monopoly concentration and otherwise obtaining greater competition\. Argentina's market mechanisms had many distortions because of unduly rigid rules governing labor markets, oligopolistic producer pricing and retailers' mark-ups, etc\. These concerns were especially relevant for the Defense complex's largest industries, particularly those in the increasingly concentrated steel sector\. 20\. At this time as well, Argentina's fiscal position was still fragile, suggesting the need to buttress the "Convertibility Plan\." The economic team consequently set out to press the new privatized enterprises to achieve more efficient production by stimulating greater competitiveness in the economy\. It decided to supplement the constructive steps already taken for this purpose by further opening of the trade regime and deregulation\. Similarly, it committed itself to strengthening the anti-trust legal framework since the existing law enforcement machinery was inadequate\. 21\. During this period, moreover, the Government launched a campaign for reducing its external debt interest obligations to commercial banks to levels sustainable with its projected fiscal performance\. Although Argentina was only paying 28% of interest due, debt service encumbered public finances\. The economic team thus set out to obtain debt and debt service reduction, and it requested IBRD, IDB and IMF assistance for this effort'\. 22\. While generally rapid, Argentina's privatization process was uneven and occasionally marked by delays\. In addition to some PEs not being very commercially attractive, there was limited interest in their purchase because of the prevailing perception among foreign investors of high country risk \. Unfortunately too, these constraints were exacerbated by persistently thin Defense Ministry implementation capability and the lack of enthusiasm for privatization among some enterprise managers\. There were furthermore progressive weaknesses in the executing agency's direction of the project, especially with the departure of its main sponsors\. 23\. URA's small staff encountered difficulties, therefore, especially in contracting and supervising of the substantial, diverse experts engaged in preparing and assessing many bidding documents\. This was compounded by the over one year delay in the Government's approval of a Japanese Grant designed to mobilize substantial technical and 1 ICR Report No\. 13885, dated January 20, 1995 (Loan 3555-AR, Debt & Debt Services Reduction) details the DDSR loan and process, as well as evaluated the Bank's performance\. - 6 - administrative support for the executing agency\. Even after that action was completed, the Defense Ministry was frustrated by delays in paperwork processing, mainly within the Ministry of Economy, which hampered employment of the needed advisors\. 24\. In the important SOMISA case, the management of the process also suffered from excessive pressure for rapid progress vis a vis careful screening of alternative sales strategies\. The merchant bank charged with preparing and processing the sale first was given very limited time to prepare the bidding documents\. It also was later directed to proceed on a "one option" basis, at variance with instructions\. These contributed to the eventual presence of a single bidder (Propulsora Siderurgica S\.A\., a consortium led by Argentina's largest steel company)\. 25\. Other problems reflected larger policy issues, notably the compatibility of the sales with the desire for a more competitive business environment\. Most of these issues also centered on SOMISA\. Early on, the authorities were mindful that opening the larger Defense industries to private sector ownership made it important to block moves from interested firms which could cause even more industrial concentration\. The Loan arrangements therefore included provisions to incorporate the general principles of the Government's competition policy in the sales memoranda for privatization of the PEs\. The Government also promptly began defining how to strengthen the anti-trust law\. Moreover, the Presidential Decree that accompanied the SOMISA sales memorandum prohibited major local producers from jointly participating in the privatization\. 26\. However, SOMISA's fast pace towards privatization indicated that the new legislation could not be in place before the sale\. The Bank therefore cautioned the authorities that this circumstance could interfere with the application of the desired competition policy\. But despite these efforts, none of these would-be safeguards proved to be effective\. After SOMISA's sale, there was a purchase of minority shareholdings (7%) by another major local steel company, effectively linking the two largest Argentine steel companies in the new operation\. The Bank questioned this action on the grounds of incompatibility with the sales memorandum's aforementioned ban on such collaboration\. It also noted that the Letter of Development Policy had stated that the Government would avoid the transfer of public to private monopolies\. 27\. After examination, the Government concluded that it lacked the authority to forbid such events, i\.e\., there was then no legal barrier to "inside trading" among private groups\. Following its own review, the Bank agreed with that judgment on the limitations of the existing legislation\. It also concluded that the sale was consistent with the agreed bidding documents and there were inadequate grounds for demonstrating that the 7% share purchase had effectively produced a monopoly\. The Bank therefore acquiesced in SOMISA's sale\. 28\. In this connection, the Development Policy Letter stated that the Government "\.intends to improve the existing competition law to avoid undue ownership concentration and be more proactive to ensure a dynamic and competitive private sector\." The submission of agreed new anti-trust legislation to the Congress was a second tranche - 7 - condition\. However The admrinistration requested the Bank's comments on the text of the new competition law only after it had been passed, and the Bank found it faulty\. Subsequently, after the incorporation of -&mendments incorporating some Bank sugges :ons, the erec 'tive bra; \. h sent a later version to the Congress\. This satisfied the trancht-e oonditio\. altho-ugh the iriproveA text still provides only a limited autonomy and authority for the oegulaltory agency\. 29\. On other project aspects, the Government successfully rationalized its fiscal incentives for steel p'oduce\.rs\. ft issued tax credits to the new private companies (after they had undergone tax audits), and later eliminated future investment tax credits in the sector\. The plareA e-nvironimental diagnoses and clean-ups were performed satisfactorily\. I}\. PESIJLTS AND ASSESSMENT 30\. T'he execution of the project resulted in the attainment of a considerable part of its goals\. After a relatively brief operation, the civilian industrial component of Argentina's defense complex was radically trafnsformed\. The Argentine state has completely departed from both steel and petrochemical production\. Overall, the targeted enterprises were mostly closed or their asstets sold 31\. In the process, there was a large impact on public finances, with favorable long- term effects fromr\. reductions ;n Pt-, deficits (more than offsetting reduced income from their operations)\. Another importanit consequence has been the reduction in public employment by aboitr I ,000\. The privatization's also generated over US$1\.0 billion in asset sales, one third\. 0$ which h!elped the Government directly to reduce its public debt\. (The actual enterprise sales however were generally closer to 10% of original book value rather than the 20-30% that was considered possible earlier)\. Moreover, military expenditures were kent to the targeted reduced level\. All these provided welcome breathing room in con olidatir'g putblic finances, at the heart of Argentina's successful adjustment program2\. 32\. An ancillary qiuestion is whether the privatized enterprises substantially improved and have provided better services and products\. It is too early to make any detailed judgments on increases in p!roduction efficiency, financial profitability, improvements in the quality o-f services, etc However, some partial, short term data is noteworthy\. A Bank-commissioned study oni labor markets and productivity in Argentina reported that average labor productivity in the steel sector grew at 12\.0% p\.a\. in 1990-93 for crude product, and 22\.1% for laminates (the latter practically doubling productivity in the three years)\. During the same period, capacity utilization in steel production increased from 53 to 60%, and in laminates fromn 60 to 79%\. Further, a Bank assessment of productivity trends during 1991 -94 reported a 13\.9% rise in ethylene output\. Its cost meanwhile fell by over one third as a result of lower producer prices and the greater opening of the economy\. I'he consortion that\. purchased SOMISA reported operating profits in 1995, and has so far (i\.e\., in 1 996) reported positive net income for a complex that in the 1980s had required major subsidies simply to stay open\. -8 - 33\. The project was less successful though from the standpoint of the management of the privatization transactions\. It did move the Government's processes for developing and directing these activities forward, and thus helped set the stage for further programs of this type\. However, the Bank's assessment of project risks had underscored the need for ensuring transparency and objectivity in the process\. It cannot be said that the Government's institutional capacity to meet these essential criteria were strengthened through the project\. 34\. The same applies to the goal of transforming the rules of the game in Argentina so as to establish meaningful norms and enforcement machinery for a more competitive business environment\. To be sure, this was a difficult and delicate matter for the authorities under the political conditions that then obtained\. However, with the limited legislative action taken, the Government achieved considerably less than its intention "\.to avoid the transfer of public to private monopolies\. (and) undue ownership concentration" (Letter of Development Policy)\. 35\. Moreover, the privatization program in fact increased the concentration of asset ownership\. But this was not surprising as, in fact, the Government had relatively low expectations about the prospects of selling all the targeted PEs\. Further, it certainly would have been difficult to carry off the program without Argentine entrepreneurs' participation\. On balance though, while these conditions mitigate what occurred, the resulting condition is undesirable and remains to be remedied\. E\. BANK PERFORMANCE 36\. The operation was notable for the Bank's strong and close participation with the Government at very detailed levels, which entailed a major resource allocation\. In the process, the Bank effectively brought together and monitored on a timely basis a large array of technical, legal and financial specialists\. These services were incalculable in the vacuum within and instability of public sector management at the time\. The Bank staff became the "memory" of the Government, as well as technical advisers to frequently changing officials\. These accomplishments incidentally were influential in leading the way to the subsequent request for IBRD counsel on rationalizing other military complex activities (airports)\. 37\. Another impressive Bank Group contribution resulted in the sale of the Altos Hornos Zapla steel plant within a record 9 months and with a three-fold rise in the sales price from the successful purchaser's original bid\. This was largely the product of the IFC's active promotion of the sale under its advisory services to the Government (although fear of competition among the bidders was also a factor)\. As a result of this work, IFC was asked to, and also successfully, managed the privatization of Defense's electric equipment manufacturer cable plant (Fabrica Militar de Vainas)\. Close Bank-IFC collaboration helped ensure consistency and transparency in the process\. - 9 - F\. BORROWER PERFORMANCE 38\. Nevertheless, this close and detailed Bank assistance ultimately reduced the ownership of the reform within the Ministry of Defense and led to a dependency on Bank staff and advice that contrasts poorly with other collaborative reform approaches with other Ministries\. 39\. The Government's performance was exceptional at the outset but diminished in quality during the remainder of project implementation\. It's substantial "up front" actions were commendable, reflecting strong political will combined with managerial drive and technical competence\. And the administration merits praise for meeting most of the Loan conditions with a high level of commitment\. However, the latter waned rather rapidly\. This was most significantly manifested in the after-the-fact consultation with the Bank on the revised anti-trust legislation and the administration's failure to win it's Congressional endorsement later\. 40\. There also were equally serious institutional shortcomings\. These were mainly manifested in the lack of resolution of the inter-ministerial differences that deprived the executing agency of badly needed services and support\. These shortcomings were inconsistent with the Government's strong political commitment to and the imperatives of the privatization program\. Greater managerial discipline was needed in order to obtain the requisite collaboration\. G\. SUSTAINABILITY 41\. The privatization program of the seven-year Menem administration remains in force and has encompassed most other areas of the public sector\. It's more recent aspects included reductions in the state's role in the nation-wide banking sector and additional asset sales of federal power and transportation systems\. There have moreover been widespread privatization measures at the provincial level as well\. Officials at both levels are now planning still further actions in addition, accompanied by initiatives in strengthening regulatory frameworks\. Regarding only the project's achievements, the transformation and closure of the former Defense Ministry PEs appear irreversible, with no foreseeable development threatening alter their new status\. Memories of hyperinflation and the PEs' degradation make it unlikely that public perceptions would change so drastically as to undermine the reforms of the failed parastatals\. Thus, the PE privatization achievements have robust chances of being fully sustainable\. H\. FUTURE OPERATION 42\. The Government has moved to deepen privatization reforms, including remaining federal and provincial public enterprises and is acting more decisively in other key areas such as privatization of public banks\. Bank dialogue with the government on these matters has been continuos and is ongoing\. Bank assistance to Argentina has been, and is projected to continue, strongly focused on consolidating structural reforms, including - 10 - substantial operations with sub-national governments in pursuit of further privatization activities\. This is intended to meet the Government's requests for still broader application of Argentina's privatization program and its refinement for additional maximization of the project and its similarly oriented predecessors' benefits\. With regard to the ex-Defense PEs, the success of their future operations will hinge largely on the success of the Government's plans to strengthen economic reforms\. Beginning in mid-1994, officials implemented a major reform of the national social security system\. Provincial reforms -- privatization of banks, utilities, etc\. as well as fiscal downsizing-- accelerated in 1995\. It is now undertaking additional efforts directed at reforms of labor and financial markets, as well as health financing, and the transfer of provincial pension systems to the national system, mostly with Bank support\. 1\. LESSONS LEARNED 43\. Argentina is the only country in the hemisphere, and among only a handful of countries in the world, which has undertaken a major reform covering its defense complex\. As a result of its uniqueness, the strong vested role of the Argentine military, and the Bank's limited historic involvement in the defense sector, the PERAL II program was innovative and creative\. There are few examples of its kind in the world and therefore, comparative lessons learned are not easily available\. However, the single most important factor was the strong personal commitment and support of President Menem, without whom these and other reforms might not have taken place\. 44\. There have been many lessons learned, both by the Government and the World Bank, from the Argentine privatization process\. Some of these lessons are common to the overall approach (as documented in the World Bank publication entitled, "Argentina's Privatization Program: Experience, Issues, and Lessons" dated 1993)\. Others are more specific to the institutional arrangements, and privatization techniques used and process undertaken by the Ministry of Defense (the focus of this ICR)\. 45\. The lessons learnled from the privatization of defense industries in Argentina can be grouped under two broad areas: Di) Institutional Aspects: The privatization niomentuin peaked while the defense reform program was still underway\. Argentina's privatization program peaked in 1992 while the defense initiative was still underway\. In late 1993, the Office of the Under Secretary for Privatization (the central coordinating body within the Ministry of Economy) was dissolved\. This, coupled with continues reorganizations in the Ministry of Defense, left a major coordinating gap within the Government to ensure consistency and continuity of the process\. As a result, a number of sales transactions within the Ministry of Defense were delayed, set off-track, and lost their inertia\. The resulting lesson is that significant achievements should not be expected --and perhaps large - I l - privatization investments not launched--after the Government's focus on key management has shifted\. A key requirement of the privatization process for oligopolistic industry is the enforcement of laws that effectively promote competition and protect consumer rights\. Although these laws existed, there institutional and enforcement capability was minimal\. With this inadequate framework, it was almost impossible to intervene solely through bidding documents\. Therefore, there was further concentration in asset ownership, especially in the steel and petrochemical sectors\. In retrospect, this was probably to be expected, since it stemmed from the speed of the privatization effort, the limited interest of prospective international bidders, and the desire to prequalify bidders on their financial soundness\. Nevertheless, one of the conditions of this loan was that the Government submit a proposed competition and consumer protection law (which would overcome some of the institutional and enforcement shortcomings) to Congress\. This was undertaken subsequently by the Executive Branch, but a year and a half later, and has not yet been approved by both houses of Congress\. The lesson is that statements of competitive principles in sales memoranda may not be appropriate in enforcing anti- monopolistic behavior during the privatization process\. Therefore, strong laws and institutions need to be wvell in place\. Managing cross-ministerial relationships and multiple objectives are complex under a single loan\. This loan's principal objective was to privatize PEs under the Ministry of Defense\. However, since a large number of PEs were in the tradeable sector, there was a need to modify the prevailing laws for competition policy and consumiier protection, which was the primary responsibility of the Ministry of Economy\. As the proposed loan did not provide direct incentives for the latter Ministry and large vested groups lobbied against passage of the new law, the result was a lack of cooperation within the Executive Branch for the proposed reforni\. In retrospect, this condition would have been better served if such general policy aspects were more directly charged to the agency responsible for overall regulatory issues\. * The appointment of Interventors and their results were mixed for Defense PEs\. The larger PEs entering the privatization process had "Interventors" (appointed trustees) whio had full executive power-s to operate the company until the privatization was completed\. The appointment of these interventors helped, in principle to expedite the privatization process, but offered limited incentives to improve the operations of the PE during the interim\. In the case of SOMISA, after the appointment of three interventors in a period of one year\. the management finally focused onlv on the sales process; its chief goal was speed Unlike restructuring specialists, an interventor focuses largely on the speed of transfer\. As a result, knowing that the company would soon be under different managemenit, there was limited - 12 - incentive to take decisions or embark on new initiatives during the interim sales phase\. In the case of smaller PEs, where there was a need for such an interventor, the Government could not fill their appointments due to limited management and privatization depth\. The lesson is that arrangements to expedite privatization's through the appointment of special executives need to be accompanied by well designed provisions for managing enterprises efficiently during the interim\. (ii) Techniques and Process Aspects: * The successful sale and/or the transfer of selected defense industries is generally more prone to private placement as opposed to international competitive bidding procedures\. There are few potential defense industry players, especially those who are permitted to operate overseas, and therefore, competitive bidding may not always be either feasible or desirable\. In many cases, in spite of international and local sales efforts, the Argentine government could not find any prospective private buyers\. For instance, Domecq Garcia, an assembler of deep sea submarines, could not be sold without the participation and involvement of Thyssen Industries, the original manufacturer\. However, current Bank procedures require a lengthy and sometimes expensive process that fosters only international bidding\. The lesson is that these procedures may not be universally suitable, and need to be altered for the particular context of the country and industry\. * A number of potential sales transactions may not be successful due to enterprises' small sizes, unattractive market and financial conditions, and environmental unsoundness\. Unattractive public enterprises, especially in military industries (e\.g\., which are relatively small, operating poorly, functioning for "strategic" more than productive purposes) might better be closed rather than subjected to privatization efforts\. The lesson is that greater focus should be devoted to developing prior analyses of small PEs, whose privatization could prove to be unviable from economic, financial, and environmental aspects\. - 13 - IMPLEMENTATION COMPLETION REPORT ARGENTINA SECOND PUBLIC ENTERPRISE REFORM ADJ1USTMENT LOAN (PERAL m) LOAN 3556-AR PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 46\. Within the framework of the State Reform Program undertaken by the Argentine Government, agreement was reached on February 2, 1993 between the Argentine Republic and the International Bank for Reconstruction and Development on the Second Public Enterprise Reform Adjustment Loan (PERAL II)\. The objective of this Loan was to assist the Borrower in carrying out the reform of state enterprises under the responsibility of the Ministry of Defense, in order to reduce the State's financial deficit and improve the conditions for private sector activity and investment and for the implementation of the Debt Reduction program\. 47\. In order to evaluate the proposed objectives and the achievements reached in Project implementation, the completed actions and those arising from Schedule 5 of the Loan Agreement are described below\. Economic Framework 48\. The proposed objectives under this point consisted of reducing inflation and stimulating growth as well as achieving a public spending program that was consistent with income and with the potential to obtain loans\. 49\. In this regard, it should be noted that the actions carried out include: (i) approval of the Consumer Protection Law by the Executive Branch, with the agreement of the National Congress; and (ii) the issuance of fiscal credits to the steel sector following the corresponding audit by the General Tax Bureau, whereby this sector's tax system was consolidated\. 50\. Another relevant issue under this point is the environmental audit carried out in the former METEOR factory and in HIERRO PATAGONICO DE SIERRA GRANDE S\.A\.M\. As a consequence of the high level of toxicity contained in the sulfuric acid waste accumulated in the building, the Argentine Government ordered an environmental assessment of the former factory's installations and on the grounds of HIPASAM\. 51\. AMBIENTAL S\.A\. was selected for this purpose\. The environmental audit was completed in July 1993 but, due to the high risk stemming from harmful residue, the - 14 - Terms of Reference were expanded so that the consulting firm could assist the Ministry of Defense in preparing the technical specifications for residue removal\. 52\. Consequently, the firm TECNICA Y SERVICIOS S\.A\. was hired under Ministry of Defense Resolution N° 1338/93 to clean the building\. The firm has recently completed the environmental clean-up of the former METEOR factory\. Steel Sector 53\. When the Project began, the proposed objectives were to reduce the State's role in this sector, on the one hand, and to improve the sector's competitiveness, on the other\. The actions carried out refer to the following companies: SOCIEDAD MIXTA SIDERURGICA ARGENTINA (SOMISA) (Argentine Steel Joint Venture) This company was declared subject to privatization by Law N° 24\.045; the General Bidding Conditions were approved by Ministry of Defense Resolution N° 1054 dated July 10, 1992\. Only one bid was submitted, that of bidder PROPULSORA SIDERUJRGICA S\.A\. that offered US$140 million in cash and US$12\.1 million in public debt notes\. Once awarded to this company, the name was changed to ACEROS PARANA S\.A\. As stipulated in Ministry of Defense Resolution N° 546 dated August 9, 1993, SOMISA was declared to be in a state of liquidation in accordance with the regulations of Law N° 19\.550 and its respective amendments\. Finally, responsibility was ordered to be transferred to the Subsecretariat of Asset Regulation, under the Secretariat of the Treasury of the National Ministry of Public Works and Services\. HIERRO PATAGONICO DE SIERRA GRANDE (HIPASAM) (Patagonian Ironworks of Sierra Grande) The Ministry of Defense transferred the assets of this company, whose production was suspended, to the Province of Rio Negro which agreed to comply with the provisions of Laws N° 23\.696 and N° 24\.045\. The Transfer Contract was ratified by the Executive Branch under Decree N° 2007/93\. - 15 - Responsibility for the residual entity was transferred to the Subsecretariat of Asset Regulation, under the Secretariat of the Treasury of the National Ministry of Public Works and Services\. Other Defense Companies 54\. Continuing the objectives proposed in the above points, the following companies were privatized, liquidated or transferred to other jurisdictions: PETROQUIMICA GENERAL MOSCONI (General Mosconi Petrochemical Company) As stipulated by Ministry of Defense Resolution N° 1283/92, P\.G\.M\. was transferred to YPF S\.A\. for US$10\.2 million\. On March 31, 1993, a contract was signed with YPF S\.A\. for the purchase and sale of certain assets and liabilities belonging to Petroquimica General Mosconi that basically constituted the Industrial Complex located in the city of Ensenada, Province of Buenos Aires\. Thus, P\.G\.M\. S\.A\.I\. y C\. is now comprised of only a few assets such as buildings, DMT - PET equipment and credits with the General Tax Bureau\. In addition, liabilities are basically comprised of debt to the D\.G\.I\. stemming from the granting of promotional benefits in accordance with Executive Branch Decree N° 1156/88 and allowance for lawsuits; most of this debt may be consolidated\. PETROQUiMICA BAHIA BLANCA (Bahia Blanca Petrochemical Company) This company was declared to be subject to privatization by Executive Branch Decree No 1398 dated July 27, 1990, approved by Law N° 24\.045\. On January 12, 1994, and under Ministry of Defense Resolution N° 29, authorization was granted for the transfer from P\.B\.B\. S\.A\.I\.C\. to the Banco de la Naci6n Argentina of ownership of 17% of the equity shares owned by said Ministry, in order to partially cancel the debt arising from advances of funds made under the Financial Assistance Contract signed with said entity on January 14, 1992\. Executive Branch Decree N° 1318/94 ordered the transfer of responsibility to the Ministry of Economy and Public Works and Services in order to carry out privatization management\. - 16 - FORJA ARGENTINA S\.A\. (Argentine Foundry) Ministry of Defense Resolution N° 381 dated March 16, 1993 declared the company in a state of liquidation due to its technical, operational, economic and financial status\. The company was unable to operate normally and its accumulating losses were leading it to a state of virtual cessation of payments\. On August 11, 1993 the Forja C6rdoba factory was sold; a bill of purchase and sale was also signed for the factory's machinery and furniture\. On August 24 of the same year, a bill of purchase and sale was signed for the offices in the Federal Capital\. Joint Resolution N0 116 of the Ministry of Economy and Public Works and Services and N0 1499 of the Ministry of Defense ordered the transfer of Forja Argentina S\.A\. (e\.l\.) to the Subsecretariat of Asset Regulation; the Transfer Certificate signed on May 11, 1995 and the Supplementary Transfer Certificate signed on June 7, 1995 made the transfer effective\. CARBOQUIMICA ARGENTINA S\.A\. (Argentine Carbon Chemical Company) Ministry of Defense Resolution N° 880 dated July 3, 1992 authorized Local Competitive Bidding for the company\. Two bids were submitted, one by PITTMETAL S\.A\., and the other by SAFETY S\.A\. together with PROCAMET S\.A\. Based upon the bids submitted, the contract was awarded to SAFETY S\.A\. - PROCAMET S\.A\. after S\.A\.I\.C\. RAGOR, the major private shareholder, was informed so that it could exercise its right of pre-emption\. SAFETY S\.A\. - PROCAMET S\.A\.'s bid consisted of US$331,500 in cash, US$425,425 in internal debt notes, and US$348,075 in external debt notes\. ASTILLEROS Y FABRICAS NAVALES DEL ESTADO S\.A\. (State Shipyards and Naval Factories) The Ministry of Defense transferred to the Province of Buenos Aires the assets, staff and third-party contracts that were in the process of being implemented\. This act was carried out in order to ensure the preservation of sources of employment and the continuity of ongoing contracts, as well as to take advantage of the geographic conditions of the location of these installations through the creation of a free trade zone\. The Province of Buenos Aires assumed the commitment of carrying out the privatization process as stipulated in Laws N° 23\.696 and N° 24\.045, and of maintaining the continuity of production until the moment of definitive - 17- privatization, thereby providing a harmonious solution to the complex social and economic interests involved\. AREA DE MATERIAL CORDOBA (C6rdoba Material Area) Law N° 24\.045 declared this company subject to privatization\. Ministry of Defense Resolution N° 1364/93 transferred all of the company's assets, liabilities and contracts from the Argentine Air Force to the Ministry of Defense\. In view of progress in the privatization process being undertaken for the C6rdoba Material Area, and under the framework of the provisions of the State Reform Law, several invitations were sent in December 1993 to the principal international firms involved in this field so that they could express their interest in this privatization\. Of the ten companies invited, only LOCKHEED AIRCRAFT SERVICE CO\. (LAS) expressed its wish to participate in the privatization process of the C6rdoba Material Area\. In addition, during the selection process conducted by the Ministry of Defense and the Argentine Air Force for the purpose of reconditioning and modernizing 36 A- 4M airplanes purchased by the Argentine Republic from the United States Navy, LAS was the only qualified company that expressed interest in handling the A-4M Program and in reconditioning fifty percent of said planes in the C6rdoba Material Area, as well\. On April 19, 1994, the Ministry of Defense and LAS signed a letter of intent in which LAS agreed to submit or obtain a proposal for the A-4M Program together with a long-term financing proposal for said Program, contemplating that the reconditioning and modernization of half of the above-mentioned A-4M airplanes would be performed in the C6rdoba Material Area, as well as a plan to privatize and revitalize this Area\. The countersigned Contract between the Argentine Republic and Lockheed Aircraft Co\. became effective on July 1, 1995; under the Contract, this company is in charge of operating the C6rdoba Material Area for a period of 25 years\. PETROQUIMICA RiO TERCERO (Rio Tercero Petrochemical Company) After the competitive bidding carried out in compliance with the provisions of Decree N0 1385 dated July 23, 1990, dealing with the transfer of the company's Government-owned shares owned, was declared void due to lack of bidders, a new invitation to bid, without a cost estimate, was issued by means of Joint Resolution N0 1262 of the Ministry of Defense and N0 626 of the Ministry of Public Works and Services dated October 9, 1990\. - 18 - The same was ordered by Joint Resolution N° 1306 of the Ministry of Defense and the N° 635 of the Ministry of Public Works and Services dated October 16, 1990\. On December 6, 1991, the only bid submitted, that of EGERTON FINANCE S\.A\., was declared admissible and was awarded for a total amount of US$7,300,000, including notes and cash\. FABRICA MILITAR SAN MARTIN (San Martin Military Factory) Ministry of Defense Resolution N° 1795/92 ordered the privatization of this factory for US$8\.5 million\. Later, Ministry of Defense Resolution N0 463 dated April 2, 1993 ordered that the International and Local Competitive Bid be awarded to TALLERES SUDAMERICANOS S\.A\. Joint Resolution N° 974 of the Ministry of Defense and N0 783 of the Ministry of Economy and Public Works and Services ordered the transfer of this military factory's residual assets to the latter Ministry\. FABRICA MILITAR DE ACIDO SULFURICO (Sulfuric Acid Military Factory) Ministry of Defense Resolution N0 1280 dated August 29, 1992 ordered a new call for International and Local Competitive Bidding, with a cost estimate, for the sale of assets of the Fabrica Militar de Acido Sulfurico, attached to the General Bureau of Military Manufacturing\. Said Resolution also approved the General Bidding Conditions\. Ministry of Defense Resolution N0 384 dated March 16, 1993 awarded the Competitive Bid for the sale of the factory to MASPRO S\.A\. for US$1\.6 million\. Joint Resolution N° 974 of the Ministry of Defense and N0 783 of the Ministry of Economy and Public Works and Services ordered the transfer to the latter Ministry of this military factory's residual assets\. FABRICA MILITAR DE TOLUENO SINTETICO (Synthetic Toluene Military Factory) Ministry of Defense Resolution N° 1190/92 ordered the sale through Local and International Competitive Bidding, with a cost estimate, of the assets of the Fabrica Militar de Tolueno Sint&tico, attached to the General Bureau of Military Manufacturing\. Said Resolution also approved the General Bidding Conditions\. Ministry of Defense Resolution N° 163 dated February 9, 1993 awarded the Bid to RUTILEX HI[DROCARBUROS ARGENTINOS for US$2\.6 million\. - 19 - Joint Resolution N° 974 of the Ministry of Defense and N° 783 of the Ministry of Economy and Public Works and Services ordered the transfer to the latter Ministry of this military factory's residual assets\. FABRICA MILITAR DE VAINAS Y CONDUCTORES ELECTRICOS (ECA) (Military Factory for Electrical Sheathing and Conductors) Resolution N° 1523 dated October 1, 1992 ordered the sale through Local and Competitive Bidding, without a cost estimate, of the assets of the Fabrica Militar de Vainas y Conductores Electricos "ECA"\. Since there were no bidders, Resolution N° 2117 dated December 29, 1992 ordered a second a call for Local and International Competitive Bidding, with a cost estimate, for the sale of ECA's assets\. Ministry of Defense Resolution No 243 dated February 22, 1993 awarded the Bid to the METACAB Consortium, comprised of the firms GUILLERMO DECKER S\.A\.I\.C\.A\.F\.I\., METALURGICA E INDUSTRIAL S\.A\. and INDUSTRIAS ELLECTRICAS DE QUILMES S\.A\., for US$15 million\. Joint Resolution N0 974 of the Ministry of Defense and N0 783 of the Ministry of Economy and Public Works and Services ordered the transfer to the latter Ministry of this factory's residual assets\. FABRICA MILITAR PILAR (Pilar Military Factory) Ministry of Defense Resolution N0 1131 dated July 28, 1994 awarded this company to Industrias Argentinas de Material Pirotecnico S\.A\. (IAMP), under the terms of the General Bidding Conditions that governed the call for competitive bidding ordered by Ministry of Defense Resolution N0 971 dated October 25, 1993 for the company's privatization\. The bidding price was $2,820 million\. 55\. Now that the Project is concluded, the Ministry of Defense is pleased to state that PERAL II has been of fundamental importance in the achievement of the objectives proposed at the beginning of the Project and which implied significant progress in the State Reform Program implemented by the Argentine Government\. - 20 - IMPLEMENTATION COMPLETION REPORT ARGENTINA SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN (PERAL II) LOAN 3556-AR PART mI: STATISTICAL TABLES Summary of Assessments A\. Achievement of Objectives Substantial Partial Neali-ible Not applicable () () () () Macroeconomic policies * Sector Policies * Financial objectives * Institutional development * Phvsical objectives Poverty reduction * Gender concerns * Other social objectives * Environmental objectives * Public sector management * Private sector development Other (specify) Competition Policy B\. Project sustainability Likely Unlikely Uncertain N~~~~~~~~~~~ * C\. Bank performance Highly Satisfactory Deficient satisfactory () () () Identification Preparation assistance * Appraisal * Supervision * D\. Borrower performance Preparation * Implementation * Covenant compliance * Operation (if applicable) E\. Assessment of outcome * -2 1- ARGENTINA IMPLEMENTATION COMPLETION REPORT SECOND PUBLIC ENTERPRISE REFORM ADJIUSTMENT LOAN PERAL II (LOAN 3556-AR) PART Iml: STATISTICAL INFORMATION A\. Related Bank Loans (in US$ millions) Loans approved prior to or concurrent with Loan 3556-AR Loan # Fiscal Purpose Amount Less Undisbursed Year Cancelations 3015 1989 Tax Administration TAL I 6\.5 0\.00 3280 1991 Provincial Development 200\.0 110\.75 3291 1991 Public Enterprise Reform Adjustment 300\.0 0\.00 Loan (PERAL) 3292 1991 Public Enterprises Reform Execution 23\.0 0\.14 Loan 3362 1991 Public Sector Reform TA (PSRTAL) 23\.0 1\.00 3394 1991 Public Sector Reform Loan (PSRL) 325\.0 0\.00 3460 1992 Tax Administration TAL II 20\.0 2\.80 3555 1993 Debt and Debt Service Reduction Loan 450\.0 0\.00 Total 1,347\.5 114\.69 Loans approved after Loan 3556-AR 3558 1993 Financial Sector Adjustment Loan 400\.0 0\.00 3709 1994 Capital Markets 500\.0 500\.00 3710 1994 Captal Markets TA 8\.5 7\.18 3836 1995 Provincial Reform Loan 300\.0 200\.37 Total 1,208\.5 707\.55 -22- B\. Project Timetable Stage of Project Cycle Date Planned Date Actual Identification March 1991 (First IBRD Mission) Appraisal Mission March/April, 1992 March 23-April 6, 1992 Loan Negotiations July 1992 July 13, 1992 Board Approval January 1993 January 5, 1993 Loan Signature February 2, 1993 Loan Effectiveness March 1993 February 16,1993 Loan Closing June 30, 1994 December 30, 1995 Loan Completion December 31, 1993 April 14, 1995 C\. Loan Disbursements Cumulative Estimated and Actual Disbursements (US$ million) IBRD Fiscal Year FY93 FY94 FY95 Appraisal Estimates 200 300 0 Actual Disbursements 200 0 300 Actual as % of Estimate 100 0 l Date of Final Disbursement: April 14, 1995; but only a residual $25,984 that remained in loan balance\. D\. Proiect Financing Source (US$ million) IBRD 300\.0 Export-Import 200\.0 Bank of Japan Total 500\.0 -23- E\. Tranche Disbursements Tranche \|BRD Export-Import Bank of \._________________ _ \.Japan US$ million Date US$ million Date First 100\.0 Feb\. 24, 1993 133\.3 Apr\. 1, 1993 100\.0 Mar\. 25, 1993 Second 100\.0 Dec\. 31, 1994 66\.7 Dec\. 31, 1994 F\. Bank Resources: Staff Inputs (in staff weeks) Stage of FY91 FY92 FY93 FY94 FY95 Total Project Cycle Preparation 3\.1 51\.9 55\.0 Appraisal 13\.8 13\.8 Negotiations 26\.2 26\.2 Supervision 4\.2 9\.8 2\.2 16\.2 Total 3\.1 65\.7 30\.4 9\.8 2\.2 111\.2 -24- G\. Bank Resources: Missions Stage of Date No\. of Days in the Specialization Performance Project Cycle Persons Field 1/ Represented Rating Status Preparation 6/91 5 16 a,b 9/91 4 16 a,c,d 12/91 5 18 a,c,e,h 1/92 1\.5 7 a,f Appraisal 3/92 9 16 a,c,e,f,g,h,j through 5/92 1 3 f Effectiveness 6/92 1 7 a 9/92 2 4 a,c Supervision 4/93 1 2 f - 5/93 1 10 a 1 6/93 1 10 a 2 9/93 6 12 a,h,i,j 2 10/93 1 10 e -- 1/94 1 8 a 2 5/94 1 7 a -- 11/94 1 8 a I/ Refers to Task Manager/Mission Leader\. -- Not Available\. a\. Task Manager b\. Industrial Specialist/Economist c\. Lawyer/Legal Specialist d\. Economist e\. Environmentalist f\. Division Chief g\. Macro Economist h\. Regulatory Framework Specialist i\. Private Sector Development Specialist j\. Reseacher/Consultant ARGENTINA IMPLEMENTATION COMPLETION REPORT SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN PERAL 11 (LOAN 3556-AR) STATUS OF ACCOMPLISHMENT OF POLICY MATRIX ACTIVITY ACCOMPLISHED BY BOARD PRESENTATION SECOND TRANCHE CONDITIONS SECOND TRANCHE CONDITIONS 1\. ECONOMIC FRAMEWORK ACCOMPLISHMENTS A\. Macroeconomic Program Agreed to 3-year macroeconomic program and Maintenance of 3-year macroeconomic Govenmment continued maintaining agreed external financing plan in context of EFF and program, including fiscal targets, open macroeconomic framework and financing plan\. adjustment lending programs, reviewed public trade policy, and agreement on use of expenditure program\. privatization sales proceeds\. Counterpart proceeds from privatization of defense enterprises was used for voluntary staff retirement and l Agreed to maintain open trade policies\. debt reductions\. B\. Sectoral Economic Reformsl B petoai Eonoi R Issued decree on deregulatory framework; import Forward satisfactory Competition Law for Competition Policy forwarded to Congress\. Competition Law barriers lowered for steel products, barner to entry Legislation to Congress for approval\. removed\. Submitted analysis to Bank of steel and petrochemical structures\. Submitted to Bank consultant's study on Draftl Competition Legislation\. Establish transparancy of fiscal Developed program for the issuance of the fiscal Issue tax credits to steel producers after Tax audit of SOMISA, AHZ, and HIPASAM were Egishin steel sector, bonds for steel PEs in accordance with Industrial accounts have been audited by Direccion undertaken, future investment tax credit eliminated and a regime m steel sector\. Promotion Control Program\. General de Impositiva (Tax Office)\. final credit to newly privatized firns were issued\. Later, all investment tax credit aimed at industrial promotion were eliminated\. Environmental Assessment Sent letter of invitation and TORs to consultants for Commence work on environmental clean- Environmental diagnostic study of METEOR and site clean-up of two closed PEs\. up of closed PEs\. H[PASAM were undertaken\. The clean up of the former - For closed PEs, i\.e\., had commenced and the latter did not pose an METEOR, HIASAM environmental issue\. - For PEs to be sold\. Incorporated environmental clauses in sales memoranda - Distribution of selected PEs to be sold\. - Generation Sold distribution facilities\. Sold Central Puerto and Costanera generation centers\. ARGENTINA IMPLEMENTATION COMPLETION REPORT SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN PERAL 11 (LOAN 3556-AR) STATUS OF ACCOMPLISHMENT OF POLICY MATRIX ACTIVITY ACCOMPLISHED BY BOARD PRESENTATION SECOND TRANCHE SECOND TRANCHE 11\. STEEL SECTOR CONDITIONS CONDITIONS ACCOMPLISHMENTS A\. Privatization of Steel PEs: SOM1SA Downsized SOMISA and issued sales memorandum cosistent with open Sell and/or otherwise dispose of SOMISA was sold to a competition strategy\. SOMISA's assets\. consortium of steel producers\. Two steel PEs - Altos Hornos Zapla (AHZ) Sold AHZ\. - HIPASAM Closed HIPASAM\. ARGENTINA 1MPLEMENTATION COMPLETION REPORT SECOND PUBLIC ENTERPRISE REFORM ADJUSTMENT LOAN PERAL II (LOAN 3556-AR) STATUS OF ACCOMPLISHMENT OF POLICY MATRIX ACTIVITY ACCOMPLISHED BY BOARD SECOND TRANCHE SECOND TRANCHE CONDITIONS mII\. ALL OTHER PEs WITHIN DEFENSE PRESENTATION CONDITIONS ACCOMPLISHMENTS COMPLEX A\. Privatization of PEs *PGM/PBB Issued PGM's sales memorandum; prepared Sell PGM and PBB\. PGM was sold to Yacimientos Petroliferos draft sales memorandum for PBB consistent with Fiscales (YPF)\. competition policy\. Requirement for PBB's sale was waived\. Eleven other PEs in industrial sector (Polisur, Sold six PEs (Polisur, Inductor, Petropol, Carboquimica, FM Acido Sulfurico, FM inductor, Petropol, Monomeros Vinilicos, Monomeros Vinilicos, Tandanor, and Tolueno and FM Pilar, which replaced FM i Tandanor, Petroquimica Rio Tercero, Petroquimica Rio Tercero)\. Rio Tercero, were sold\. Forja was closed Carboquimica, Forja, FM Acido Sulfurico, FM and its assets liquidated\. Tolueno, and FM Rio Tercero)\. Issued sales memoranda for three PEs; and Sell/close five PEs\. evaluated bids from private investers\. B\. Convert Defense Activities to Civilian Use ECA and San Martin were sold and TAMSE and Domecq Garcia closed\. AMC; AFNE; Domingo Matheu; TAMSE; FM Signed decrees for AMC, TAMSE, Domingo Sell/close at least five PEs Moreover, DGFM sold six military San Francisco; FM San Martin; and ECA Matheu and AFNE for legal conversion from (including ECA)\. properties for commercial uses\. defense to civilian use; issued sales memoranida for ECA, San Francisco and San Martin\. Source: PERAL 11, President Report (# P-581 I-AR); and Memo on PERAL 11 Release of Second Tranche, Dec\. 23, 1994\. IMAGING Report No: 15868 Type: ICR	REVIEW
P096594	Document of The World Bank Report No: ICR0000903 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-47610) ON A SERIES OF CREDIT AND LOANS IN THE AMOUNT OF SDR47\.4 MILLION (US$ 70 MILLION EQUIVALENT) IN CREDIT AND $1\.830 BILLION IN LOANS TO THE REPUBLIC OF INDONESIA FOR DEVELOPMENT POLICY LOANS I-IV January 30, 2008 Poverty Reduction and Economic Management Unit East Asia and Pacific Region CURRENCY EQUIVALENTS (Exchange Rate Effective January 30, 2008) Currency Unit = Rupiah (IDR) US$ 1\.00 = Rp 11,415 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS AAA Analytical and Advisory Activities IG Inspector General ADB Asian Development Bank IMF International Monetary Fund AG Attorney General JBIC Japan Bank for International Cooperation ASEAN Association of South East Asian Nations JSX Jakarta Stock Exchange BAPEPAM LK Badan Pengawas Pasar Modal dan Lembaga Keuangan KDP Kecamatan Development Program (Financial Institutions and Capital Markets Supervisory Agency) KKPPI Komite Kebijakan Percepatan Penyediaan Infrastruktur BAPPENAS Badan Perencanaan Pembangunan Nasional (National (National Committee on Policy for Accelerating Development Planning Agency) Infrastructure Provision) BI Bank Indonesia KMK Keputusan Menteri Keuangan (Decree from Minister of Finance) BKF Badan Kebijakan Fiskal (Fiscal Policy Office) KPK Komisi Pemberantasan Korupsi (Corruption Eradication Commission) BKPM Badan Koordinasi Penanaman Modal (Indonesia Investment KPPN Kantor Pelayanan Perbendaharaan Negara (State Treasury Coordinating Board) Services Offices) BOS Bantuan Operasional Sekolah (School Operational LPKPP Lembaga Pengembangan Kebijakan Pengadaan Pemerintah Assistance) (National Public Procurement Office) BOS-KITA BOS- Knowledge Improvement for Transparency and MDGs Millennium Development Goals Accountability BPK Badan Pemeriksa Keuangan (Supreme Audit Agency) MoE Ministry of Education BPS Badan Pusat Statistik (Central Bureau of Statistics) MoF Ministry of Finance BUMD Badan Usaha Milik Daerah (Regional Government Owned MoH Ministry of Health Enterprise) CAS Country Assistance Strategy MoT Ministry of Trade CBS Central Bureau of Statistics MTEF Medium-Term Expenditure Framework CCT Conditional Cash Transfer NBFI Non-Bank Financial Institutions CDD Community Driven Development NPL Non-Performing Loans CFAA Country Financial Accountability Assessment NPPO National Procurement Policy Office CG Central Government NSW National Single Window CGI Consultative Group on Indonesia OECD Organization of Economic Cooperation and Development CPI Consumer Price Index OP Operational Policy CPS Country Partnership Strategy PEFA Public Expenditure and Financial Accountability CY Calendar Year PEPI Peningkatan Ekspor dan Peningkatan Investasi (National Team for the Development of Exports and Investment) DAK Dana Alokasi Khusus (Special Allocation Funds) PER Public Expenditure Review DB Doing Business PFM Public Financial Management Dep HukHAM Departemen Hukum dan Hak Asasi Manusia (Ministry of PINTAR Project for Indonesia Tax Administration Reform Justice and Human Rights) DGFI Directorate General of Financial Institutions - Ministry of PKH Program Keluarga Harapan (Family Hope Program) Finance the NBFI Regulator DG Director General PKPS- Program Kompensasi Pengurangan Subsidi Bahan Bakar BBM Minyak (Fuel Subsidy Reduction Compensation Programs) DIPA Daftar Pelaksanaan Isian Anggaran (Budget PNPM Program Nasional Pemberdayaan Masyarakat (National Implementation Statement) Program for Community Empowerment) DPL Development Policy Loan PPP Public-Private Partnership DPR Development Policy Review PRSP Poverty Reduction Strategy Paper ii EPP Economic Policy Plan RANPK Rencana Aksi Nasional Pemberantasan Korupsi (National Plan for the Eradication of Corruption) ESW Economic and Sector Work RDA Regional Development Account FDI Foreign Direct Investment RDI Rekening Dana Investasi (Investment Fund Account) FPO Fiscal Policy Office RKP Rencana Kerja Pemerintah (Government Work Plan) FY Fiscal Year RPJM Rencana Pembangunan Jangka Menegah (Medium-Term Development Plan) GDP Gross Domestic Product Satker Satuan Kerja (Working Unit) GFMRAP Government Financial Management and Revenue S&P Standard and Poor's Administration Project GFS Government Finance Statistics SDR Special Drawing Rights GNP Gross National Product SME Small and Medium Enterprise GoI Government of Indonesia SOE State-owned Enterprise GoJ Government of Japan TSA Treasury Single Account IBRA Indonesian Bank Restructuring Agency UCT Unconditional Cash Transfer IBRD International Bank for Reconstruction and Development UNDP United Nations Development Program ICR Implementation Completion Report UPP Urban Poverty Project IDA International Development Association VAT Value-Added Tax I-DPL Infrastructure Development Policy Loan WBG World Bank Group IFC International Finance Corporation YoY Year on Year Vice President: James W\. Adams Country Director: Joachim von Amsberg Sector Manager: Vikram Nehru Lead Economist: William Wallace Task Team Leader: Shubham Chaudhuri iii INDONESIA DEVELOPMENT POLICY LOAN I-IV IMPLEMENTATION COMPLETION REPORT CONTENTS Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Program Performance in ISRs H\. Restructuring 1\. Program Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 4 3\. Assessment of Outcomes\. 8 4\. Assessment of Risk to Development Outcome\. 17 5\. Assessment of Bank and Borrower Performance \. 18 6\. Lessons Learned\. 20 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 22 Annex 1 Bank Lending and Implementation Support/Supervision Processes\. 23 Annex 2\. Development Outcomes Indicators\. 27 Annex 3\. Stakeholder Worshop Report and Results\. 31 Annex 4\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 31 Annex 5\. Comments of Cofinanciers and Other Partners/Stakeholders\. 31 Annex 6\. List of Supporting Documents \. 31 MAP iv A\. Basic Information Program 1 First Development Policy Country Indonesia Program Name Loan Program ID P092663 L/C/TF Number(s) IBRD-47610 ICR Date 10/24/2008 ICR Type Core ICR REPUBLIC OF Lending Instrument DPL Borrower INDONESIA Original Total Commitment USD 300\.0M Disbursed Amount USD 300\.0M Implementing Agencies Ministry of Finance Coordinating Ministry of the Economy Cofinanciers and Other External Partners Government of Japan Program 2 Second Development Country Indonesia Program Name Policy Loan Program ID P096594 L/C/TF Number(s) IBRD-73540 ICR Date 10/24/2008 ICR Type Core ICR GOVERNMENT OF Lending Instrument DPL Borrower INDONESIA Original Total Commitment USD 400\.0M Disbursed Amount USD 400\.0M Implementing Agencies Ministry of Finance Coordinating Ministry of the Economy Cofinanciers and Other External Partners Asian Development Bank (ADB) Government of Japan Program 3 Third Development Policy Country Indonesia Program Name Loan Program ID P100327 L/C/TF Number(s) IBRD-74180,IDA-42520 ICR Date 10/24/2008 ICR Type Core ICR Lending Instrument DPL Borrower MINSITRY OF FINANCE Original Total Commitment USD 600\.0M Disbursed Amount USD 601\.3M Implementing Agencies Ministry of Finance Coordinating Ministry of the Economy v Cofinanciers and Other External Partners Asian Development Bank (ADB) Government of Japan Program 4 Fourth Development Policy Country Indonesia Program Name Loan Program ID P105637 L/C/TF Number(s) IBRD-74950 ICR Date 10/24/2008 ICR Type Core ICR REPUBLIC OF Lending Instrument DPL Borrower INDONESIA Original Total Commitment USD 600\.0M Disbursed Amount USD 600\.0M Implementing Agencies Ministry of Finance Coordinating Ministry of the Economy Cofinanciers and Other External Partners Asian Development Bank (ADB) Government of Japan B\. Key Dates First Development Policy Loan - P092663 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 09/30/2004 Effectiveness: 12/22/2004 12/22/2004 Appraisal: 11/10/2004 Restructuring(s): Approval: 12/21/2004 Mid-term Review: Closing: 03/31/2005 03/31/2005 Second Development Policy Loan - P096594 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 10/14/2005 Effectiveness: 12/19/2005 12/19/2005 Appraisal: 11/14/2005 Restructuring(s): Approval: 12/15/2005 Mid-term Review: Closing: 03/31/2006 03/31/2006 Third Development Policy Loan - P100327 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 09/07/2006 Effectiveness: 12/20/2006 12/20/2006 Appraisal: 11/13/2006 Restructuring(s): vi Approval: 12/19/2006 Mid-term Review: Closing: 03/31/2007 03/31/2007 Fourth Development Policy Loan - P105637 Process Date Process Original Date Revised / Actual Date(s) Concept Review: 06/20/2007 Effectiveness: 12/19/2007 12/19/2007 Appraisal: 10/09/2007 Restructuring(s): Approval: 12/04/2007 Mid-term Review: Closing: 03/31/2008 03/31/2008 C\. Ratings Summary C\.1 Performance Rating by ICR First Development Policy Loan - P092663 Outcomes Satisfactory Risk to Development Outcome Moderate Bank Performance Satisfactory Borrower Performance Satisfactory Sustainability Likely Institutional Development Impact Modest Second Development Policy Loan - P096594 Outcomes Satisfactory Risk to Development Outcome Moderate Bank Performance Satisfactory Borrower Performance Satisfactory Third Development Policy Loan - P100327 Outcomes Satisfactory Risk to Development Outcome Moderate Bank Performance Moderately Satisfactory Borrower Performance Satisfactory Fourth Development Policy Loan - P105637 Outcomes Satisfactory Risk to Development Outcome Moderate Bank Performance Satisfactory Borrower Performance Satisfactory vii C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) First Development Policy Loan - P092663 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Satisfactory Overall Bank Performance Satisfactory Overall Borrower Performance Satisfactory Second Development Policy Loan - P096594 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Moderately Satisfactory Overall Bank Performance Satisfactory Overall Borrower Performance Satisfactory Third Development Policy Loan - P100327 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Moderately Satisfactory Implementing Agency/Agencies: Moderately Satisfactory Overall Bank Performance Moderately Satisfactory Overall Borrower Performance Satisfactory Fourth Development Policy Loan - P105637 Bank Ratings Borrower Ratings Quality at Entry Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Moderately Satisfactory Overall Bank Performance Satisfactory Overall Borrower Performance Satisfactory viii C\.3 Quality at Entry and Implementation Performance Indicators First Development Policy Loan - P092663 Implementation QAG Assessments (if Performance Indicators any) Rating: Potential Problem Program at any time (Yes/No): No Quality at Entry (QEA) None Problem Program at any time Quality of Supervision (Yes/No): No (QSA) None DO rating before Closing/Inactive status Second Development Policy Loan - P096594 Implementation QAG Assessments (if Performance Indicators any) Rating: Potential Problem Program at any time (Yes/No): No Quality at Entry (QEA) None Problem Program at any time Quality of Supervision (Yes/No): No (QSA) None DO rating before Closing/Inactive status Third Development Policy Loan - P100327 Implementation QAG Assessments (if Performance Indicators any) Rating: Potential Problem Program at any time (Yes/No): No Quality at Entry (QEA) Satisfactory Problem Program at any time Quality of Supervision (Yes/No): No (QSA) None DO rating before Closing/Inactive status Fourth Development Policy Loan - P105637 Implementation QAG Assessments (if Performance Indicators any) Rating: Potential Problem Program at any time (Yes/No): No Quality at Entry (QEA) None Problem Program at any time Quality of Supervision (Yes/No): No (QSA) None DO rating before Closing/Inactive status ix D\. Sector and Theme Codes First Development Policy Loan - P092663 Original Actual Sector Code (as % of total Bank financing) Banking 25 25 Central government administration 50 50 General industry and trade sector 25 25 Theme Code (Primary/Secondary) Debt management and fiscal sustainability Primary Primary Public expenditure, financial management and procurement Primary Primary Regulation and competition policy Secondary Secondary Small and medium enterprise support Secondary Secondary Tax policy and administration Secondary Secondary Second Development Policy Loan - P096594 Original Actual Sector Code (as % of total Bank financing) Central government administration 55 55 General finance sector 40 40 Sub-national government administration 5 5 Theme Code (Primary/Secondary) Debt management and fiscal sustainability Secondary Secondary Public expenditure, financial management and procurement Primary Primary Regulation and competition policy Secondary Secondary Small and medium enterprise support Secondary Secondary Social safety nets Secondary Secondary Third Development Policy Loan - P100327 Original Actual Sector Code (as % of total Bank financing) General finance sector 17 17 General industry and trade sector 17 17 General public administration sector 66 66 x Theme Code (Primary/Secondary) Other financial and private sector development Secondary Secondary Public expenditure, financial management and procurement Primary Primary Regulation and competition policy Primary Primary Standards and financial reporting Primary Primary Tax policy and administration Secondary Secondary Fourth Development Policy Loan - P105637 Original Actual Sector Code (as % of total Bank financing) Banking 25 25 Central government administration 50 50 General industry and trade sector 25 25 Theme Code (Primary/Secondary) Debt management and fiscal sustainability Primary Primary Other economic management Primary Primary Regulation and competition policy Secondary Secondary Small and medium enterprise support Secondary Secondary Tax policy and administration Secondary Secondary E\. Bank Staff First Development Policy Loan - P092663 Positions At ICR At Approval Vice President: James W\. Adams Jemal-ud-din Kassum Country Director: Joachim von Amsberg Andrew D\. Steer Sector Manager: Vikram Nehru Homi Kharas Task Team Leader: Shubham Chaudhuri Wolfgang Fengler ICR Team Leader: Shubham Chaudhuri ICR Primary Author: Elaine A\. Tinsley xi Second Development Policy Loan - P096594 Positions At ICR At Approval Vice President: James W\. Adams Jemal-ud-din Kassum Country Director: Joachim von Amsberg Andrew D\. Steer Sector Manager: Vikram Nehru Homi Kharas Task Team Leader: Shubham Chaudhuri Subrahmanya Pulle Srinivas ICR Team Leader: Shubham Chaudhuri ICR Primary Author: Elaine A\. Tinsley Third Development Policy Loan - P100327 Positions At ICR At Approval Vice President: James W\. Adams Jeffrey S\. Gutman Country Director: Joachim von Amsberg Andrew D\. Steer Sector Manager: Vikram Nehru Homi Kharas Task Team Leader: Shubham Chaudhuri Subrahmanya Pulle Srinivas ICR Team Leader: Shubham Chaudhuri ICR Primary Author: Elaine A\. Tinsley Fourth Development Policy Loan - P105637 Positions At ICR At Approval Vice President: James W\. Adams James W\. Adams Country Director: Joachim von Amsberg Joachim von Amsberg Sector Manager: Vikram Nehru Vikram Nehru Task Team Leader: Shubham Chaudhuri Wolfgang Fengler ICR Team Leader: Shubham Chaudhuri ICR Primary Author: Elaine A\. Tinsley F\. Results Framework Analysis Program Development Objectives (from Program Document) The DPL program supported the government's reform program under four core policy areas\. (i) Support macroeconomic stability and creditworthiness\. The DPL program sought to further improve Indonesia's macroeconomic fundamentals, by supporting measures to reduce the debt burden, re-profile debt to free up resources for development expenditures, and continue fiscal discipline supported by the mobilization of additional non-oil and gas revenues\. Improvement in its fundamentals was expected to lead to upgrades in the country's credit ratings and provide access to international capital markets\. (ii) Improve the investment climate\. Under this policy area, the focus was on reforms to make Indonesia a more attractive place to invest and to strengthen its financial sector\. This was to be xii accomplished by reducing transaction costs for business, strengthening the financial sector and encouraging investment in infrastructure\. Key reform areas were tax and customs reforms, financial sector reforms, rationalizing regional government taxes and fees, public private partnerships to develop infrastructure and to improve policy toward SMEs\. (iii) Improve public financial management, governance and anti-corruption\. The DPL program was expected to contribute to a more efficient, transparent and accountable management of public resources and to strengthen the institutional framework for addressing corruption (iv) Making services work for the poor\. In DPL 3, public service delivery was added as a policy pillar, as the reduction in fuel subsidies led to an increased need to better target the increase in pro-poor expenditures\. The objective of the pillar was to improve quality, coverage and utilization of basic services and to make stronger progress toward achieving the MDG goals\. As the DPL series evolved, the reform focus shifted in each operation and the reform agenda became broader\. DPL1 sought to consolidate macroeconomic stability following Indonesia's exit from its post- crisis IMF program\. With macro stability underway, DPL2 focused on creating more fiscal space for more pro-poor expenditure\. Following the increase in fiscal space brought on by the reduction in fuel subsidies, the focus of DPL3 shifted to improving service delivery\. In DPL4, the focus shifted to deepening institutional reforms\. (a) PDO Indicator(s) See Annex 2\. Development Outcomes Indicators (b) Intermediate Outcome Indicator(s) See Annex 2\. Development Outcomes Indicators xiii 1\. Program Context, Development Objectives and Design (this section is descriptive, taken from other documents, e\.g\., Program Document/ISR, not evaluative): 1\.1 Context at Appraisal The DPL series was envisioned at a time when the country was transitioning, politically, administratively and economically\. Politically the country was moving from autocratic rule to democracy\. In mid-2004, Indonesia held it first directly elected presidential elections in what was the largest voter participation of any presidential election in the world\. Universally acknowledged as peaceful, free and fair, the elections did much to consolidate the democratic process in Indonesia\. A "big bang" decentralization in 2001 has devolved substantial funds and authority to local governments and new forms of decentralized participation in policymaking have been created\. The political stability and the broader embrace of the democratic process that these changes have engendered have been critical to supporting Indonesia's economic recovery and calming separatist sentiments\. Economically, the country's fundamentals were improving as the impact of the Asian crisis was put behind\. The country had successfully graduated from its post-crisis IMF program, growth was picking up, and inflation falling\. Therefore at the time of the initial DPL, the timing was right for the government's economic program to shift from a short-term post-crisis stabilization framework to a longer term strategic growth and poverty reduction agenda\. And, among other concerns, investment rates had not yet recovered, exports were not growing like its neighboring countries, and the overall investment climate was weak\. These became the areas the government identified as priorities\. At the end of 2003, the country was exiting the IMF-supported program and would for the first time be completing its 2004 budget financing needs without the IMF\. The Government issued a "White Paper" to signal the continuation of prudent macroeconomic policies and economic reforms\. As the Government made significant strides in implementing the White Paper policy actions, particularly in the areas of macroeconomic stabilization and public financial management, it was the Bank's assessment that a DPL could help serve Indonesia's financial needs and keep the reform momentum moving forward\. The DPL policy actions, though drawn from the government's reform agenda, also drew on the Bank's continuous dialogue and engagement with the GoI and the Bank's extensive analytical work, including annual Development Policy Reviews (Consultative Group for Indonesia), bi-annual Public Expenditure Reviews, flagship reports (decentralization, combating corruption, poverty and trade), policy briefs for the incoming government, and an investment climate assessment\. While this ICR looks back at the DPL series as a four-part series in fact it was not intended as such\. The original DPL series was a two part operation, DPL1 and DPL2\. However, the CAS at the time specified different program lending limits for a base case (where Indonesia was) and a high case\. DPL 1 and DPL 2 would have used up the program lending limits under the base case\. Thus it was not until the ROC for DPL 2 that there was there was a decision that Indonesia was in the high case and therefore received the go ahead for DPL3\. DPL3 then was considered to be the last loan of the series, as it finished off the expected CAS period\. However, it was then decided to extend the CAS period by a year and to add another DPL to the series, i\.e\. DPL 4\. As a result, each DPL was planned not knowing if it would be continued beyond the next tranche--this created a level of uncertainty and limited the forward looking ability of the DPL program\. 1 1\.2 Original Program Development Objectives (PDO) and Key Indicators (as approved) The DPL program supported the government's reform program under three original core policy areas\. (i) Support macroeconomic stability and creditworthiness\. The DPL program sought to further improve Indonesia's macroeconomic fundamentals, by supporting measures to reduce the debt burden, re-profile debt to free up resources for development expenditures, and continue fiscal discipline supported by the mobilization of additional non-oil and gas revenues\. Improvement in its fundamentals was expected to lead to upgrades in the country's credit ratings and give Indonesia access to international capital markets\. (ii) Improve the investment climate\. Under this policy area, the objective was to focus on reforms to make Indonesia a more attractive place to invest and to strengthen its financial sector by reducing transaction costs for business, strengthening the financial sector and encouraging investment in infrastructure\. Key areas of reform focused on tax and customs reforms, financial sector reforms, rationalizing regional government taxes and fees, public private partnerships to develop infrastructure and to improve policy toward SMEs\. (iii) Improve public financial management and anti-corruption\. The DPL program was expected to contribute to a more efficient, transparent and accountable management of public resources and to strengthen the institutional framework for addressing corruption\. Later in the DPL series, civil service reform and improving the decentralization framework became additional objectives\. 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification: In DPL 3, public service delivery became a policy pillar, as the reallocation of the fuel subsidies led to an increased need to better target pro-poor expenditure\. (iv) Making services work for the poor\. The objective of the pillar was to improve quality, coverage and utilization of basic services and to make stronger progress toward achieving the MDG goals\. As the DPL series evolved, the reform focus shifted in each operation and the reform agenda became broader\. DPL1 sought to consolidate macroeconomic stability following Indonesia's exit from its post- crisis IMF program\. With broad macro stability underway, DPL2 focused on creating more fiscal space to allow more pro-poor expenditure\. Following the successful generation of more fiscal space brought on by the reduction in fuel subsidies, DPL3 shifted focus to improving service delivery\. DPL4's focus remained along the lines of the DPL3, seeking to deepen the process of institutional reform\. 1\.4 Original Policy Areas Supported by the Program (as approved) 1\. Macroeconomic Stability and Creditworthiness\. Despite significant progress in post-crisis economic management, Indonesia was the last East Asian country to graduate from the post-Asian crisis IMF program and its credit ratings, despite several upgrades, still trailed neighboring Philippines and Vietnam\. With the 2004 budget the first for Indonesia without an IMF program, the country was looking to shore up its creditworthiness and macroeconomic stance to open the doors for external financing\. Therefore, and in line with the government's White Paper measures, the DPL sought reforms to improve debt management and improve fiscal policy\. As macroeconomic stability improved -- debt to GDP and the fiscal deficit ratios declined over the DPL period-- emphasis in this pillar shifted to monitoring progress so that more effort could be focused on the service delivery pillar\. 2 2\. Investment Climate\. Investment and exports rates remained relatively low in 2004 and this was attributed to a weak investment climate characterized by high transaction costs for business, tax and regulation complications, a vulnerable financial sector, and deficits in infrastructure investment\. In order to improve the investment climate, reforms to the financial sector, tax and customs, and were selected as a key policy areas for the DPL as well as developing a medium term plan for infrastructure development that encouraged public-private partnerships ad reforms aimed at developing SMEs\. 3\. Public Financial Management & Governance\. At the time of DPL1, the then-new government had won the elections on a strong anti-corruption platform and had stated their willingness to make a decisive impact on the extent of corruption in Indonesia\. They sought to achieve this through increased accountability and transparency in government financial management and public procurement, and also thorough judicial reforms in the prosecution of corruption\. The DPL series supported these objectives by supporting efforts to improve the legal and regulatory frameworks for public financial management, budget management, procurement and auditing\. 4\. Service Delivery\. This pillar, though officially added in DPL3, was identified in DPL2 along with the triggers\. The pro-poor orientation of the Government's annual and medium-term development strategy, and the potential reallocation of public expenditure from untargeted fuel subsidies to high-priority social sectors, provided an opportunity to focus on efforts improving service delivery\. 1\.5 Revised Policy Areas (if applicable): The following policy areas were added on in the subsequent DPLs\. DPL 3: Civil service reform, and social protection\. DPL 4: Education, and community driven development Given the stability and resilience of the economy, the government and Bank agreed to drop the macroeconomic stability pillar --there were no triggers for this pillar in DPL4--and instead focus on the service delivery pillar\. 1\.6 Other significant changes As mentioned, there has continuously been uncertainty around each subsequent DPL in the program\. Originally, the DPL series was envisioned as a two part operation, DPL1 and DPL2\. Although triggers were identified and met for DPL2, it was not until the November 2006 Regional Operations Committee meeting that Indonesia met the high case and DPL2 could then take place\. DPL3 in turn was considered the last loan of the series, but then the CAS was extended for an additional year and the CAS Progress Report extended the DPL program to a fourth tranche\. Therefore, the program has continued to have a shifting program horizon and never really focused beyond the next year's triggers\. DPLs' after the first DPL tended to be characterized by more detailed specific prior actions\. This fit with the interaction with Government counterparts who used the DPL process to provide discrete concrete steps (and focal points) for further reforms, with or without the DPL\. It also reflects the size and technical depth of the Bank team in Indonesia and the range of areas where they were engaged with the Government and in turn their depth of understanding of the policy or institutional reforms needed\. Aside from specificity of triggers the DPLs grew broader in scope\. This trend was reflected in the goal of government counterparts choice to raise the profile of their reforms by including them in the DPL policy matrix and to extend the DPL into new areas, including as a precursor to possible stand alone sector 3 DPLs\. The broader policy coverage saw the number of prior actions increase from 10 in DPL1 to 18 in DPL4, reflecting more government buy in\. For example, the DPL served as an effective incubator for the infrastructure DPL reform and a parallel Infrastructure DPL (I-DPL) was established to address the needs of the infrastructure sector\. The DPL lending commitments were also higher than originally envisioned either in the CAS and CAS update\. Generally this reflected the government's request for additional amounts, and the Bank's recognition of the government's sustained economic and reform\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Program Performance Reflecting the momentum of the reform process, the DPL series was delivered annually and on a timely basis with no delays\. As the DPL series progressed, the scope broadened and the number of prior actions increased\. Overall there was also little variation between the triggers identified and the prior actions required to have the next DPL approved\. Only in DPL3 were there some changes between DPL2 identified triggers and the prior actions identified\. In the case of DPL3, one trigger was fully replaced, others were kept as triggers but not made into prior actions, and some triggers were split to give credit for actions taken\. To compensate, additional sub-measures were added to investment climate and PFM\. First Development Policy Loan List prior actions from Legal Agreement/ Program Document Status Pillar 1: Macroeconomic Stability and Creditworthiness Reduction of government debt to GDP to below 60%\. Fulfilled Issuance of international bond\. Fulfilled Divestment of majority shares in all IBRA banks\. Fulfilled Pillar 2: Investment Climate Progress in establishing a financial sector safety net\. Fulfilled Effective functioning of the Investment team\. Fulfilled Progress in tax administration and customs reforms\. Fulfilled Pillar 3: Financial Management and Anti-corruption Issuance of implementing regulations for State Finance Law\. Fulfilled Organizational reform at the Ministry of Finance, including first steps to establish Fulfilled a Treasury Single Account\. Presidential Decree on Government Procurement\. Fulfilled Continuation of special audit program for SOEs\. Fulfilled Second Development Policy Loan List prior actions from Legal Agreement/ Program Document Status Pillar 1: Macroeconomic Stability and Creditworthiness Develop and implement a debt management strategy\. Fulfilled Progress in reducing subsidies to the non-poor\. Fulfilled Make tax revenue administration more efficient through expansion of modern tax Fulfilled offices\. Pillar 2: Investment Climate Continue establishing a financial sector safety net including implementing the first Fulfilled phase of the removal of the deposit guarantee and clarifying roles with respect to bank closure and emergency operations\. Develop strategy to strengthen non-bank financial institutions\. Fulfilled Develop a medium-term action plan and effective framework to coordinate the Fulfilled 4 development of SMEs\. Complete draft amendment of Law No\. 34 to move from negative to positive list Fulfilled for regional tax items to restrict the creation of nuisance and/or economically harmful charges and levies\. Develop a medium-term plan for infrastructure development that encourages Fulfilled public-private partnerships\. Pillar 3: Financial Management and Anti-corruption Issue additional implementing regulations for State Finance Law, Treasury Law Fulfilled and State Audit Law\. Treasury Single Account timetable and activity plan adopted for the consolidation Fulfilled of bank accounts\. Implement Law No\.33/2004 by drafting government regulations\. This includes the Fulfilled redesign of KMK35 and re-allocation of deconcentrated central government spending to the DAK mechanism\. Investigation unit is established and fully operational in the IG MoF, vested with Fulfilled the necessary legal powers to investigate all MoF employees\. Third Development Policy Loan List prior actions from Legal Agreement/ Program Document Status Pillar 1: Macroeconomic Stability and Creditworthiness Create an operational Fiscal Policy Office by 2007 with capability and access to Fulfilled information sufficient to provide analysis of proposed tax, tariff and financial market policies\. Pillar 2: Investment Climate Continue implementation of the financial sector safety net including implementing Fulfilled the lowering of the coverage of the deposit guarantee to Rp 1 billion\. Complete the reorganization of Bapepam/DGFI\. Fulfilled Submit to Parliament the Warehouse Receipts Law that establishes a system of Fulfilled designated warehouses providing official, centrally registered receipts for commodities stored by farmers and SMEs\. Propose revisions to Tax Law to allow taxpayers to delay the payment of tax Fulfilled assessments from disputed audits\. Risk management function and PPP framework is operational and legally Fulfilled empowered\. Pillar 3: Financial Management and Anti-corruption Extend the pilot for zero-balance non-salary accounts to at least 50 KPPNs\. Fulfilled Improved fiscal reporting by timely presentation of aggregate Central Government Fulfilled financial statements for fiscal year 2005\. Develop a separate unit that handles the modernization program on a full-time Fulfilled basis\. Issue ministerial decrees for blue-book and on-granting procedures\. Fulfilled Pilot civil service reform through the design of a new job classification and Fulfilled remuneration policy for high-ranking state officials\. Pillar 4: Service Delivery Monitor effectiveness and undertake independent operational assessment Fulfilled including fiduciary aspects of the new compensation programs funded by reallocated fuel subsidy funds\. Fourth Development Policy Loan List prior actions from Legal Agreement/ Program Document Status Pillar 1: Macroeconomic Stability and Creditworthiness Pillar 2: Investment Climate Issue a comprehensive SME policy package that increases access to finance and Fulfilled implements the Warehouse Receipts Law\. 5 Implement good corporate governance and risk management standards, Fulfilled particularly in state-owned banks and continue implementation of financial sector safety net\. Implement the Investment Law, its supporting regulations, and new operating Fulfilled procedures\. Simplify or eliminate unnecessary/redundant business licenses, procedures, and Fulfilled multiple registration requirements\. Improve VAT by reducing time for VAT refunds through the implementation of Fulfilled the DG tax regulation No\. 122/2006\. Issue DoF Decree on tax audit procedures that allow taxpayers to request details Fulfilled of audit finding and a review in case of disputes after closing conference but before completion of audit\. Roll out a National Single Window with on-line clearance of merchandise\. Fulfilled Enhance tariff-setting through improved governance procedures, better Fulfilled information technology, and research capability\. Pillar 3: Financial Management and Anti-corruption Implement Medium-Term Expenditure Framework with a system of clear forward Fulfilled estimates for the 2008 budget\. Continue to consolidate core government (revenue and expenditure) bank Fulfilled accounts\. Implement transparent accountability arrangements for RDI and RDA accounts\. Fulfilled Fully operationalize NPPO and issue draft procurement law\. Fulfilled Complete the regulatory framework for issuance of sub-national government Fulfilled bonds\. Establish a Remuneration Commission or interdepartmental team to recommend Fulfilled pay policy and pay levels for high-level state officials\. Develop a comprehensive civil service reform plan on a larger scale\. Fulfilled Pillar 4: Service Delivery Develop an enhanced assessment framework for selected service delivery Fulfilled programs\. Establish competency standards for teacher certification and the instruments for Fulfilled measuring compliance with those standards\. Permit community spending over multi-year periods and clarify procurement Fulfilled procedures for national budget-funded CDD programs\. 2\.2 Major Factors Affecting Implementation: As the overall performance of the DPL program has been timely and satisfactory, the major factors affecting implementation have been positive and conducive to the continued success of the program\. Even with the devastating impact of the 2004 tsunami, progress on the identified triggers was met\. Strong government partnership\. Key to the DPL's success is the partnership the teams have sustained with the government\. There was government buy-in of many specific elements of the reform agenda that emerged from the analytic and advisory activities of the WB\. However, in many instances, the DPL process, and the discipline and attention to detail it implied, came to be viewed as an important tool for key champions of reform within the economic ministries\. This was particularly important to bringing about the high-level policy focus and bureaucratic consensus needed to advance and implement the reform agenda within what was and is a highly complex institutional environment\. This was particularly evident in DPL reforms that called for multi-agency coordination\. To implement the DPL, the Government created a coordinating committee under the leadership of first the MoF and later the Coordinating Ministry for the Economy and including the Planning Ministry (BAPPENAS), which was comprised of the implementing agencies responsible for carrying out the program\. This committee worked with the Bank on an on-going basis\. Implementation was aided by the fact that there were a 6 number of key government counterparts--both top and mid-level officials--who were committed to enacting the reforms and to engaging with the task team on monitoring progress\. The result has been a DPL program in Indonesia driven by the government's own reform agenda\. Stable economic and political environment\. During this DPL period, the government faced a generally favorable economic environment, both externally and domestically\. There has also been political stability with the same government in place\. At both an economic and political level, this kept the reform agenda reasonably consistent throughout the DPL, and as the DPL prior actions were based on the government's reform program, this meant that commitment and ownership was consistent from the beginning\. Decentralization of task team management\. The task team leaders of the different DPL loans have been based in the field\. In addition, most of the team members were also based in the field office and therefore were able to cultivate close working relationships with government counterparts\. This facilitated dialogue, especially as the breadth and depth of the engagement grew\. The engagement on the DPL also had positive synergies with the Bank's active work programs in the respective pillars of the DPL, including trust funded work on trade and investment, the public financial management work done under GFMRAP and more recently PINTAR and the poverty team and public expenditure teams work\. Coordination with development partners\. Keeping with the Bank's agenda of strong harmonization and coordination between development partners, the DPL series was prepared in collaboration with the Government of Japan (DPL1-4) and the Asian Development Bank (DPL2-4)\. The GoJ contributed $400 million for the series and the ADB provided parallel financing of $600 million\. The leveraging of resources also provided a stronger incentive to achieve the triggers, in addition to sending a consistent signal on priority reforms and reducing transaction costs for the government\. This said, increased leverage from donor coordination also came at a price, namely in the form of additional triggers\. The pressure for each donor to leave their imprint meant less control over some of the triggers identified, however, it also helped delegate out some of the monitoring and dialogue\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization: Monitoring of the DPL program was based on continuous dialogue with government counterparts to assess progress and bottlenecks\. With team members in the field, monitoring was done on a relatively continuous basis and supported by complementary investment projects, TA and/or AAA activities that aided in the design or implementation of the reform\. The DPL program also benefited from several bilateral donor-funded trust funds, which helped underpin the policy dialogue on the DPL program\. Starting in DPL2, a series of indicators were identified to provide a baseline data to measure progress, and additional indicators added as the policy areas broadened in the sequential DPLs\. 2\.4 Expected Next Phase/Follow-up Operation (if any): DPL 5 will begin a new series of programmatic loans under the 2008 Country Partnership Strategy (CPS)\. This loan builds upon the triggers identified in the DPL4\. It is anticipated that the new series will span another three operations, covering the period of the CPS FY09-12\. The new series will seek to consolidate and deepen reforms along the same objectives and pillars of DPL1-4, namely investment climate, public financial management and governance, and service delivery, though there will likely be differences in the sub-focus areas\. 7 3\. Assessment of Outcomes1 3\.1 Relevance of Objectives, Design and Implementation Rating: Highly Satisfactory DPL1: Highly Satisfactory DPL2: Highly Satisfactory DPL3: Highly Satisfactory DPL4: Highly Satisfactory The DPL series was built around the 2003 CAS pillars (Investment Climate and Growth, Service Delivery, and Governance and Anti-Corruption)\. The focus of the CAS was in turn based on the Indonesian Government's exit strategy from the IMF program published as Whitepaper in 2003, their medium term plan (RPJM), subsequent annual government work programs and periodic investment climate reform packages\. The Government focus on improving the investment climate and improving Governance were a natural outgrowth of the conditions at the start of the DPL program\. Investment had been slow to recover since the crisis in the late 90s and growth was well below historical levels, moreover there was underinvestment in public services and the quality of services was generally poor\. Thus the Government plan (and Bank CAS) reflected the broad consensus that measures were needed to continue to improve the macroeconomic situation, directly address investment climate and improve spending\. Cross cutting the problems with the investment climate and service delivery were governance concerns, and there was an active public financial management reform agenda in the making, building on a suite of laws on Finance, Treasury and Accounting\. Over time the focus and weight of the DPL series shifted in two significant ways\. First, the focus on macroeconomic stability was reduced and service delivery increased as the macroeconomic situation improved, especially as fiscal constraints fell and service delivery naturally increased as a priority\. Second, infrastructure which was initially included in the umbrella DPL as an element of the investment climate, outgrew this role to become an important government agenda on its own, and this is subsequently occurring for education\. As noted the DPL has drawn its focus from the Government's reform programs in various areas\. The Bank also has in place large decentralized teams with engagements with the Government in almost all areas of the DPL (investment climate, PFM and service delivery)\. In fact, in part due to the DPL, these engagements have deepened and become increasingly institutional in focus and are agendas that feature prominently in the new 2008 Country Partnership Strategy\. However, the depth of these engagements also results in relatively detailed policy actions\. The breadth and knowledge of the Government's reform agenda has been a strength in the design and implementation of the DPL program as it has allowed the teams to understand constraints and better deliver a relatively high percentage of agreed on actions while pushing faster in some areas and slower in others as opportunities and obstacles appear\. In summary the focus of the DPL series has been on reform agendas central to Indonesia's development and supported by the engagement of the Bank team in these areas\. This has had implications for the design and implementation of the policy actions chosen, with more and more detailed actions than generally considered best practice and more of an institutional focus\. 1For programmatic DPL, sections 3 through 5 will include and justify individual ratings for each operation in a programmatic series\. 8 3\.2 Achievement of Program Development Objectives Overall Achievement of Objectives Rating: Satisfactory DPL1: Satisfactory DPL2: Satisfactory DPL3: Satisfactory DPL4: Satisfactory The DPL series contributed to more transparent and efficient government operations\. Among other things the DPL supported macroeconomic objectives including continued debt reduction (in early years), the widening of the tax base, and improved financial stability\. To support growth and attract investment, obstacles to investment were addressed, including such long time issues as time to start a business, VAT refunds, and a National Single Window for trade\. To improve governance and transparency of public spending, involved improvements to and modernization of the public financial management and revenue administration systems, including the synergy of the DPL and GFMRAP (budget and treasury) and PINTAR (tax) projects\. Even the more recently added DPL agenda on public service delivery has already begun to bear fruit with steps to support increased spending on the poor, improved evaluation of poverty programs and better targeting of those in need as well as improvements to education focused on teaching\. Progress on the individual pillar objectives and Bank contribution during the DPL process is detailed below\. Macroeconomic Stability and Creditworthiness Rating: Highly Satisfactory Over the period of these DPLs, economic growth averaged 5\.6 percent (2004-07), budget deficits were conservative (always less than 2 percent of GDP) and foreign reserves rose to record levels\. By 2007 the GOI had reduced its debt to GDP to less than 35 percent and was already closing on its 2010 debt-to-GDP ratio target of 30 percent, a striking reduction from 60 percent in 2003\. In a reflection of the country's improved economic footing, the three major credit agencies raised their credit ratings by three notches or more since 2003\. Additional macroeconomic contributions under the DPL were focused on improving the Government's debt management capacity (in the aftermath of the creation of a domestic bond market for Government Bonds) and the development of a fiscal policy office to improve economic management capacity, and both of these institutions have been developing satisfactorily\. Over the DPL period the Government took measures to expand the tax base and improve tax efficiency and taxpayer service\. The Government introduced and has extended modern tax services to virtually all medium and large taxpayers\. More recently they developed, submitted to Parliament and passed the first two of three transformative tax laws (tax administration, income tax and VAT tax [pending])\. The tax administration law restored the balance between taxpayers and tax officers, while the income tax law reduced rates on individuals and corporations while at the same time broadening the base to improve compliance\. Also put in place have been measures, to modernize registration and payment systems (including the introduction of electronic systems), improve incentives to encourage investment and introduce procedural changes to improve compliance\. Owing, in large part, to the measures adopted by the Government, the number of tax payers increased and taxes were growing rapidly, reaching close to 50 percent more in nominal terms in 2008 than 2007\. The DPL 2 agenda to reduce untargeted subsidies to the non-poor was successful after the fuel price increases in 2005\. Expenditures were shifted from un-targeted fuel subsidies to regional government transfers and social spending (poverty programs, education and health)\. In 2005, picking up on the DPL agenda the government raised fuel prices by more than 150 percent (cumulative), resulting in the decline of fuel subsidies from 4 percent of GDP in 2004 to 2\.7 percent in 2007, before they rose 9 rapidly again in early 2008\. This increase in fuel prices (reduction in subsidies) is estimated to have directly freed up $10 billion a year\. Some of these additional resources were used for a cash-transfer program targeting 19\.1 million poor households in 2006 and to increased central government education (and to a lesser extent health) expenditures as well as a scaled up Community Driven Development program based on the Bank's KDP and UPP programs (called PNPM) and a pilot Conditional Cash Transfer program\. However, in 2008 as oil prices rose to record highs, fuel subsidies again rose sharply\. In response in May 2008, despite pre-election concerns the government again increased fuel prices by almost 30 percent and again provided an improved cash transfer program designed to protect the poor from the fuel increase as well as rapid food price increases\. Rating agencies responded favorably to Indonesia's lower debt ratio and reform packages\. Standard and Poor's upgraded Indonesia's credit rating from CCC+ in 2003 to BB- by 2008, Moody's raised its ratings from B2 to Ba3, and Fitch raised theirs from B to BB\. In supporting their ratings upgrade, the agencies cited debt reduction as the primary cause, but also cited the government's commitment to broad based reform, including changes to investment laws, customs and taxes, and also to explicitly fiscal reforms, specifically in treasury and budget-- all supported by the DPL program\. Investment Climate Rating: Satisfactory In the Investment Climate pillar, the DPL series performed Satisfactory in achieving its outcomes and objectives of creating a more attractive place to invest and investment rates have risen, though the full impact of some of the reforms has yet to fully feed through\. The DPL's performance in the broad array of areas indentified as critical to improving the investment climate, is summarized as: regulatory reform (moderately satisfactory, due to delays), taxes (highly satisfactory), customs trade reform (satisfactory), the financial sector (satisfactory) and strengthening small businesses (satisfactory, though still early)\. Over the course of the DPL series the Government made strides on improving the investment climate, though much remains to be done\. Following up on the 2003 White Paper starting in 2006, the government began to issue economic policy packages covering investment climate, infrastructure and financial reform\. These packages were designed to indicate priorities and improve coordination by laying out actions, timelines and responsibilities which then became the basis of the DPL engagement, with key measures in the packages chosen as DPL actions\. The actions in these investment packages have timelines that include agendas well into 2009, nevertheless, there has been some progress on observable outcomes as investment rates rose significantly from below 20 percent of GDP in 2003 to 25 percent in 2007\. Business perception also continues to improve\. A study of Indonesian firms (commissioned as part of the Banks engagement in this area) indicated that by mid-2007 (latest available) improvements in VAT refunds, tax filing processes, informal payments and import and custom clearance were all being cited positively\. Surveys of foreign investors (JBIC) also confirm this\. Finally Fitch's credit ratings upgrade in February 2008 directly attributed the pick-up in investment to the government's efforts to improve the investment climate\. Indonesia's overall investment climate has improved as also measured by the Doing Business rankings\. In Doing Business (DB) 2008, Indonesia ranked 123 out of 178 countries\. Between the 2007 rankings and the 2008 rankings, its overall rank rose ten places and Indonesia made double-digit jumps in the categories of 1) dealing with licenses, 2) paying taxes, and 3) trading across borders\. Between the DB 2006 and DB 2008 rankings, on comparable data, Indonesia showed significant strides in the following areas\. In starting a business-- where Indonesia ranks near the bottom globally -- it has made big improvements\. Starting costs declined from 102 percent of GNI per capita to 80 percent, and the time taken declined from 151 days to 76 days\. The cost of dealing with licenses also fell from 370 percent of income per capita to 287 percent\. On access to credit, within a short time span of two years, credit 10 information from a public registry rose from 0\.0 percent of adults to 20\.5 percent, much higher than the OECD average level of 8\.6 percent\. This was achieved through a new regulation that requires all loans to be registered, including credit cards\. On paying taxes, although the number of tax payments remained the same, the time taken to prepare and pay for taxes was halved from 576 hours to 266 hours as electronic registration and filing were implemented\. Improvements on the trade indicators resulted in fewer procedures taking less time and were enough to jump Indonesia several notches in the rankings\. However, while there were no major negative shifts in the indicators, little to no improvements were made in ease of employing workers, registering property, protecting investors, enforcing contracts or closing a business\. Regulatory reform has streamlined procedures and there is an improved legal framework for investment\. A consistent focus of the DPL has been on issues related to Investment including the Investment Law and its follow-on\. The Law (passed in March 2007) was very well received and featured among other things, (a) a unified framework for investment, (b) equal treatment of domestic and foreign investors, (c) a clear and well defined negative list, (d) removal of forced divestment and (e) an extension of the duration of foreign investment, (f) reaffirms the principle of no expropriation without compensation and free repatriation of capital, and (g) allows for internationally recognized arbitration\. However, the development of the negative list has been more problematical\. Increased transparency and clarity desirable in their own right, however, revealed many previously unknown measures designed to restrict foreign investment\. Further, Government agencies sometimes added other protectionist measures\. In addition, these changes to the negative list introduced legal uncertainties around grandfathering, divestment and the status of public companies and began an extended dialogue between investors and the Government around these complex matters\. The National Team for Accelerating Investments and Exports (PEPI) is charged with formulating investment policies and resolving key constraints faced by the private sector\. Thus the DPL agenda moved to providing policy and institutional support for PEPI, including on issues around the negative list\. Despite the ups and downs the Bank engagement in this area has been highly appreciated by the business community (domestic and foreign)\. Another focus in the regulatory area has been on the reduction in the time to set up a business\. The World Bank and IFC teams have worked with the Government to improve this measure which was among the worst in the region at 168 days in the DB report published in 2004\. Doing Business in 2007showed a reduction in this indicator to 97 days but there was a setback in Doing Business 2008when the number rose to 105 days\. Despite the adoption of a number of measures designed to reduce the amount of time to establish a company, one measure -- delegating authority to legalize companies to the local offices of the Ministry of Justice-- ended up adding more to start-up time than the other measures cut\. The Bank team alerted the Government to this problem and it was fixed in September 2007\. With the elimination of this measure and a number of additional reforms, Doing Business 2009 showed a reduction in time to start a business to 76 days\. Though technically (on paper) the government has streamlined procedures even further down to 16 days--on par with the OECD average of 15 days-- implementation obstacles still need to be overcome\. The focus on SME policies, especially on strengthening their access to finance, was put in place in July 2007 and the impact is too early to assess\. Reforms in tax administration have reduced the time for VAT refunds\. More than Rp 10 trillion (roughly US$1 billion) in outstanding VAT refunds (some outstanding since 2002) were settled and new procedures put in place to expedite the issuance of VAT refunds to export companies\. Standards (which had been up to a year) were set at 7 days for "golden" taxpayers, 2 months for low risk exporters, and 4 months for medium risk exporters\. Standard operating procedures for a complaint management system were developed and issued\. The DPL team (including Japanese partners) identified tax audit procedures as an especially critical area for reform\. There were concerns that tax auditors increased assessments and forced taxpayers to pay the full amount upfront\. This created costs and governance concerns\. The recent tax administration law allows taxpayers to self-asses amount from disputed audits until they are resolved 11 in tax court (although interest and fees may be added if they lose)\. This provision becomes effective on disputes from 2008 onward\. Progress on trade and customs reform was advanced through the development of Indonesia's National Single Window (NSW) and paperless import clearance\. The implementation of the Indonesian NSW, as supported by the DPL and our trade/investment engagement, is the country's most important trade facilitation initiative\. Under the single window, exporters and importers are no longer required to apply individually to multiple agencies, significantly reducing the 26 days (DB2008) currently required, and reducing associated governance problems and costs\. A pilot is underway in the Jakarta port (where the bulk of Indonesia's imports and exports occur)\. The resulting NSW will be expanded to include all other ports as part of the Government's commitment to the establishment of an ASEAN Single Window\. Establishing the NSW is a major institutional and coordination challenge involving 32 ministries and agencies in all\. The Coordinating Ministry has used the Bank's engagement to support this agenda and the DPL to reinforce the commitment\. Other trade activities in the DPL included improving the technical capacity and administrative procedures of Team Tariff as they have gradually introduced a tariff harmonization program\. The DPL has supported improvements to the stability of the financial sector\. The initial focus of the DPL series was on the need to reduce the potential moral hazard created by the blanket guarantee of deposits, introduced during the Asian crisis\. This involved a focus on the establishment of a deposit insurance scheme and the phasing out the blanket guarantee, By DPL4, coverage on deposits was reduced from a blanket guarantee (where it was in 2003) to Rp\.100 million (roughly $10,000), and this was done without disruption\. This was a notable achievement as Indonesia stands as one of the few countries in the world that has removed its blanket guarantee on schedule\. Unfortunately, the current global financial turmoil has resulted in a number of countries around the World, including Indonesia's neighbors Singapore and Malaysia, now instituting blanket guarantees\. In response Indonesia raised the guarantee to 2 billion Rupiah (roughly $200,000) which is estimated to cover more than 99 percent of accounts\. Most recently the DPL support in the financial area has included support for the Government initiative to clarify Bank Indonesia's role as lender of last resort, the establishment of the institutional processes and mechanisms for resolving troubled banks and to support the development of a financial sector safety net (and the institutions needed to operate it)\. Across the board, financial sector indicators strengthened over the period of the DPL series\. The original objectives included strengthening the financial sector by reducing the role of state owned banks and increasing the share of financial assets at non-bank financial institutions (NBFI)\. The share of state- owned banks in the banking system is now around 36% a significant 10 percentage point decrease since 2003, indicating the increasing role of private banks in the sector\. There was less than expected progress on NBFIs, as their share in 2007 at 22\.3% of total financial sector assets, is not much different than in 2003 (20\.3%), reflecting the continued dominance of the Banking sector\. However, generally Indonesia's banking indicators, in mid 2008, point to a healthy financial system\. Ratios such as net interest margin, return on assets and return on equity have been strong\. And, after peaking in 2005, non-performing loans, particularly in state-owned banks are down sharply\. In terms of diversification, SME lending has been rising rapidly and now accounts for a major share of the lending portfolio\. The DPL agenda on public private partnership in infrastructure was shifted to the infrastructure DPL where it continues to be a key focus although progress is slow\. Labor reform and privatization are two aspects of investment climate that have consistently been raised as obstacles to investment and growth that were not addressed in the DPL\. Given their importance for labor absorption and infrastructure this issue remains relevant\. In fact the DPL teams have raised the issue of how best to approach these areas with the Government and if there were reforms in 12 these areas that might be considered for support under the DPL\. The Government feedback has been consistent that these areas were highly politicized and that World Bank support, in particular, would be counterproductive, and could hurt support for reform in other areas\. As the DPL is not the only way the Bank engages with the Government, there is an ongoing effort to better assess the issues and stakeholder attitudes on labor, including on key issues such as severance through an upcoming ESW\. Key policy issues related to SOEs, especially in energy, are included in the infrastructure DPL agenda\. Public Financial Management and Anti-Corruption Rating: Satisfactory With respect to this pillar, the DPL series has overall performed Satisfactory--with some areas performing strongly counterbalanced by those that have lagged\. To improve the efficiency, transparency and accountability of public finances, the DPL series focused on three key areas of reform: i) modernizing public financial management systems including treasury single account (highly satisfactory), budgeting (moderately satisfactory), and procurement (moderately satisfactory) and to a lesser extent ii) strengthening anti-corruption institutions (highly satisfactory) and later, iii) civil service reform (satisfactory)\. The progress achieved in these areas has relied heavily on the Bank's Government Financial Management and Revenue Administration Project (GFMRAP)\. Changes in the legal and regulatory architecture are now largely complete and the focus is on implementing a modern PFM system\. Historically, Indonesia's government financial operations were based on outdated laws (from 1925) that had been updated through a series of inadequate decrees\. The old PFM system was characterized by (a) systematic and pervasive corruption, (b) collusion and nepotism in part as assignments were unclear, (c) low transparency and poor enforcement, (d) opaque and inefficient budget formulation (making it difficult to quantify basic concepts of the budget), (e) delayed budget execution, (f) weak monitoring arrangements, (g) corruption and collusion prone procurement processes, (h) fragmented and unreliable accounting and reporting, and (i) unclear mandates of government audit bodies\. The DPL series supported various regulatory and implementing measures needed to create and operate a modern PFM system, including laws on State Finance, State Treasury and State Audit laws, a presidential decree on procurement and follow on institutional and operational measures\. A key achievement under the DPL has been the implementation of the Treasury Single Account (TSA) to improve cash management of public finances\. At the start of the DPL series, more than 18,000 separate commercial bank accounts--and other accounts unknown to the Treasury-- handled government funds\. As an initial step, DPL1 supported addressing the regulatory deficiencies in the PFM system, including the passage of several laws defining the regulatory framework\. This was accompanied by the reorganization of the MOF, splitting Treasury and Budget functions, in part designed to address governance weaknesses including in budget execution and cash management\. DPL2 then supported the implementing regulations underlining these laws and adopted an implementation plan\. DPL3 piloted the TSA on the expenditure side to zero-balance accounts in over 50 KPPNs\. DPL4 extended the TSA coverage to all government expenditure accounts\. The push to meet the DPL commitments has almost certainly accelerated implementation of the TSA\. Progress on revenue accounts is expected to be completed under DPL5\. Budgeting procedures have improved but execution remains problematic\. The DPL program in combination with GFMRAP has helped reinforce reforms designed to re-engineer business processes across the budget cycle\. The Government budget is now compatible with the international standard GFS classification\. Fiscal reporting is quite comprehensive and timely\. Elements of a Medium-Term Expenditure Framework and Performance Based Budgeting have been introduced but progress is uneven 13 with the planning and reporting side of the budget process definitely improved, but budget execution weak, with about 50 percent of capital expenditures still spent in the last quarter\. Procurement reform has been slow, but did progress toward the end of the DPL\. The original goal had been to strengthen the National Procurement Office, located within the Planning Ministry\. Now the government has decided that the National Procurement Office should be an independent office responsible directly to the President\. As an independent agency with adequate resources, authority and strong political backing, this change in direction will place it in a stronger position to drive public procurement reform\. The establishment of this office was achieved in 2007 (DPL 4) and is now being staffed out (2008)\. However, because of delays due to the shift in strategy on the NPPO, there has been less progress on other procurement reforms, especially on developing a comprehensive national public sector procurement law\. This law is needed to address inconsistencies resulting from decentralization, whereby different levels of Government are issuing procurement procedures\. Progress on regulations and the development of standard tools, such as bidding documents and user manuals, also need to be accelerated\. To address anti-corruption, institutions now exist to investigate and prosecute corruption cases\. Since 2003, anticorruption institutions have been established and given considerable autonomy and authority, and existing institutions are increasingly active\. The number of cases prosecuted has gone up dramatically and high profile corruption investigations have been launched at every level of government and SOEs--including mayors, governors and ministerial level officials\. Since 2004, more than 114 former and public officials-- have been legally processed under corruption investigations\. Newspapers have daily accounts of new cases and the latest prosecutions\. This agenda was working well and given the engagement with key economic agencies, the focus of the DPL was shifted to addressing anti-corruption through civil service reforms (after DPL 2)\. Over time a focus on civil service reform was added\. While reforms advanced in both the investment climate and public finance, it was clear that civil service incentives were a key constraint to policy implementation as well as delivery of public services\. Thus as opportunities arose to support the civil service reforms they were taken\. The first entry opportunity was to support the development of a comprehensive reform of the structure and remuneration framework for high-ranking state officials (Ministers, Judges, Parliamentarians, etc)\. To provide some comparability a task force was set up (and supported) that was tasked with examining the total compensation package of these high level officials with the goal of creating a more transparent, systematic, and coherent framework for pay and allowances\. Subsequently the DPL has begun to focus on the need for civil service reforms in support of PFM reforms at the MoF\. MOF has now implemented a number of important reforms within the Ministry to improve its efficiency and staff performance\. New, improved job descriptions have been introduced and a new grading scheme has been added and is linked to responsibility, complexity and work load of each graded position\. Due to the additional allowance determined under the new grading scheme, take home pay for MOF officials has considerably improved\. Performance based management has been introduced and key performance indicators have been established at the level of Echelon 1 units and is being introduced downstream\. An Assessment Center is being established and vacancies are being filled after competitive selections based on merit\. Making Public Service Delivery Work Rating: Satisfactory With DPL 3 (end 2005), the macroeconomic emphasis of the DPL program was replaced with an emphasis on public service delivery and especially on improved poverty programming (reflecting this pillar in the CAS)\. As noted above Indonesia's macroeconomic situation changed dramatically in 14 2005\. That year saw the initial very rapid run up in international oil prices and domestic fuel prices were also raised\. Initially fuel prices were increased by 30% in March, in July subsidies were eliminated for all fuels except residential kerosene, transportation diesel and low octane gasoline and by October another increase in administered fuel prices of over 115% was enacted\. The total increase for the year was in excess of 150%\. The higher international oil prices accompanied by reduced subsidies created significantly greater fiscal space (an estimated $10 billion annually) and social spending was increased, although initially in rather ad hoc ways\. In particular the first round of fuel price increases in March of 2005 was accompanied by poverty programs aimed at providing rice to the poor, grants to schools, health care to the poor and village infrastructure\. The second round of fuel increases was accompanied by a cash transfer program that ultimately reached 19\.1 million households\. With these fuel price increases being put in place over the course of 2005 (as DPL 3 was being developed) the focus shifted to assessing existing and potential poverty programming as an objective for 2006\. The results of these assessments proved to be illuminating, demonstrating that some of the programs were far more effective than others\. For example, the results on the village infrastructure indicated that this program was not at all effective and that the Bank programs such as KDP and UPP were far stronger in terms of governance, poverty reduction and income generation\. This then set the stage for what ultimately became a national scale up in these programs\. The education grant program BOS received relatively positive reviews and has now also been scaled up including through the support of the recently agreed BOS-KITA loan\. Another, byproduct of this focus on evaluation and poverty programming was a consultancy for a conditional cash transfer program\. The consultancy for this program in 2005 led directly to the establishment of the unconditional cash transfer program above, and the current conditional cash transfer pilot\. Starting with DPL 4 , the aim has been to push ahead with the institutionalization of poverty programming assessments for Government (and not just loan funded programs)\. In addition measures designed to make the operation of PNPM (by then a national program) more effective and an attempt to extend the DPL engagement beyond the core agenda into education reform, especially teacher certification were added\. The assessment of the initial cash transfer (2005) assessing targeting and performance was used when the cash transfer program was reinstated to accompany the May 2008 fuel price increase\. Progress has continued and comprehensive monitoring and evaluation function was created with the establishment of a high level unit responsible for improved performance evaluation at the Planning Ministry\. The DPL 4 agenda on Education was achieved and a measure proposed for DPL 5, to address teacher remuneration\. However, the need for the DPL support for Education reform has been reduced as the Bank Education Team agenda with the Ministry has deepened around programmatic initiatives including BOS-KITA\. 3\.3 Justification of Overall Outcome Rating Rating: Satisfactory DPL 1: Satisfactory DPL2: Satisfactory DPL3: Satisfactory DPL4: Satisfactory Success has been not always been linear and it has been greater in some areas than others, but overall the DPL program has delivered highly relevant reform progress in the areas chosen\. When the DPL began the macro situation was uncertain, investment and PFM reforms were in their infancy (or not even underway) and not much attention was being provided to improving service delivery (particularly in the area of poverty)\. Looking back, the DPL has satisfactorily supported macro, investment, PFM and service reforms and served as an incubator for other bank efforts, most notably the scale up of PNPM, and the infrastructure DPL\. In part this is attributable to a consistent economic environment maintained by 15 consistency among key counterparts\. At the end of the DPL 4, while there remains much to do, the institutional and policy foundations for future reforms look to be stronger in each of the pillars\. 3\.4 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development The poverty rate rose in 2006 when cash transfers were not sufficient to compensate for rising fuel and rice prices\. However, by 2008 it had resumed its decline and was 15\.4 percent (mid-2008) as compared to 17\.4 percent (2003)\. This decline in poverty is not commensurate with the economic growth over this period when as noted growth averaged approximately 5\.5% and per capita income in USD almost doubled from $930 (2003) to $1650 (2007)\.) The failure to deliver improved economic outcomes despite the recovery in growth is not entirely understood, but has served as a motivation to the Government\. The DPL series has attempted to address poverty outcomes in two ways\. First the DPL 2 agenda directly suggested shifting resources away from non-targeted subsidies to pro-poor spending including on health and education\. Second, once spending on various pro-poor programs was undertaken, in the aftermath of the series of fuel price increases, the DPL supported an increasingly rich program designed to institutionalize the evaluation and implementation of poverty programs to improve poverty targeting\. (b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development): The DPL supported numerous reforms aimed at institutional strengthening across the pillars and in fact recent DPLs have increased the focus on institutional reform as the constraint to reform progress\. Institutional reforms have focused on improving analytical capacity, on using technology to enhance efficiency, and better and more transparent reporting\. These reforms were also supported through other Bank instruments, including technical assistance, investment loans and trust funds\. On the macroeconomic front, the DPL supported the institutional arrangement and capacity building around debt management and the development of a fiscal policy office to provide analysis of proposed, tax, tariff and financial market policies\. In the investment climate area institutional strengthening has focused on the National Team on Accelerating Investments and Exports (PEPI), which serves as a liaison between the government and private sector, to coordinate and follow-up on investment and export issues; Team Tariff (an inter- ministerial team); the Financial Stability Forum and modern tax offices\. On public financial management, the DPL has largely reinforced GFMRAP organizational reforms designed to implement a Treasury Single Account; improved budgeting; a the National Procurement Office and in the civil service area a remuneration task force and reforms at the Ministry of Finance\. On service delivery, an achievement of the DPL was to improve the efficiency of resources being spent on poverty programs by conducting evaluative assessments of the poverty programs\. An assessment of more than 14 poverty programs was made to identify which programs were not effective--such as the village infrastructure--and shift those resources into programs that were stronger---such as the PNPM, BOS and cash transfers\. The assessment also highlighted the duplication of programs and poor targeting\. In part, due to these results the government has created a high level monitoring and evaluation unit\. 16 (c) Other Unintended Outcomes and Impacts (positive and negative): On the positive side it appears that over the course of the DPL series, there has been a gradual improvement in the perception of Government counterparts about the Bank, lending and program loans\. Initially there was skepticism concerning the DPL as a Bank/externally driven agenda not well matched to Indonesia's needs\. However, the Bank's consistent support for a strong Indonesian led reform program (as well as the reliable financing) has reduced this skepticism at least among counterparts and may have contributed to an environment where the Bank can be more effective in areas not directly linked to the DPL\. Initially the DPL was considered a temporary phenomenon, something needed while regular lending recovered but over time all sides seem to have come to an appreciation that it can play a role as one among a number of Bank tools needed to support policy reform\. 3\.5 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops NA 4\. Assessment of Risk to Development Outcome Rating: Moderate DPL 1: Moderate DPL2: Moderate DPL3: Moderate DPL4: Moderate The DPL program has been strong, with solid government ownership and triggers reflecting the government's reform agenda\. The reforms in later DPLs generally build on previous reforms leaving the risks lower for the older DPL reforms\. However, the current global upheaval in financial markets provides an instructive example on how reversals on even earlier reforms can happen\. With financial panic erupting in many countries, including developed ones, regional neighbors Australia, Singapore and Malaysia have moved to provide blanket banking system guarantees, assessing the risk of moral hazard to be less than systemic failure\. In response the Indonesian Government has also moved to reverse the earlier process and raise the limit on the guarantee, while watching to see if a blanket guarantee will be needed in Indonesia as well\. Across the board risks have risen and risen dramatically for a range of development outcomes\. Still some areas seem more at risk than others and in some areas there are signs that reforms may even benefit from the current turmoil Macroeconomic (Moderate): Almost certainly macroeconomic outcomes are at moderate or higher risk\. Indonesia has some advantages due to its efforts to put its fiscal situation in order (low debt/GDP), its relatively large domestically dominated economy, a banking system that does have much exposure to the sophisticated financial instruments that caused the problems in developed countries\. However, Indonesia also has some risks, as significant foreign investment in bond and equity markets create risks and puts pressure on bond yields, and the exchange rate, while confidence in Banks, especially international ones has jeopardized credit flows\. A deep global slowdown, especially a protracted one would reduce Indonesian growth to the point where recent poverty and unemployment gains would be jeopardized\. Investment Climate (Moderate): Global financial turmoil can push risks in different directions\. On the one hand there are pressures to attract foreign direct investment to make up for the falling portfolio investment, as FDI is less volatile\. On the other hand, Indonesia like many countries is seeing a rise in protectionist sentiment which might involve a roll-back in investment climate reforms, especially those that facilitate trade and foreign investment\. 17 Nevertheless most reforms have the strong support from the business community and are likely to continue moving in the right direction\. For example, the President of Indonesia has committed to the ASEAN Single Window creating momentum in this area\. Financial sector reforms especially strengthening the financial sector safety net are an increased priority and a Government regulation in place of a Law to create a Financial Sector Safety Net was enacted\. Public Financial Management/Governance (Low): This is an area where one might expect lower risks of reversal due directly to the financial turmoil\. However, this agenda is vulnerable to the choice of Finance Minister and 2009 is an election year\. The TSA and the government accounting statements now seem to be reasonably in place and are unlikely to be reversed, but budget and civil service reforms continue to need high level attention and are more at risk\. Service Delivery (Low): This agenda is less well developed and therefore not well reinforced as yet, nevertheless the Government is well aware of the need to protect social spending in the year ahead- and this agenda is being given a higher priority\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory DPL 1: Satisfactory DPL2: Satisfactory DPL3: Satisfactory DPL4: Satisfactory The Bank worked closely with the government to identify reforms and to follow-up on the progress\. Quality at entry was ensured by a strong program of support outside of the DPL to help facilitate technical assistance and guidance in the trigger selection and execution\. As a result, despite the numerous triggers, almost all were made into prior actions with less changes than normally associated with programmatic DPLs\. This demonstrated the strategic relevance and the buy-in of government commitment\. Moreover, throughout the annual process, the Bank met a tight delivery schedule, especially considering the breadth of the engagement involved across numerous government agencies and personnel\. While the Bank was responsive to the client's need to obtain financing each year it did place limits on the choice of policy actions\. \. The DPLs were also prepared in close collaboration with the Government of Japan and the Asian Development Bank\. This provided a harmonized approach to policy-based lending and also reduced the government's transactional costs\. A Quality at Entry Review (QAE) conducted for DPL 3 rated it as "Satisfactory"\. The QAE review supported the operation as "Highly Satisfactory" in terms of "strategic relevance and approach", "fiduciary aspects", and "implementation arrangements"\. DPL3 was rated as "Satisfactory" in "structural, financial and macroeconomic aspects", "poverty, gender and social development", "environmental aspects", "policy and institutional aspects" and "bank inputs and processes"\. Only in "risk assessment" was the DPL rated "Moderately Satisfactory"\. In particular, the QAE highlighted the DPL's strong alignment with the government's program, the Bank's team strong inter-sectoral coordination, the Bank's flexibility to adjust to economic and political developments, and the DPL's grounding in sound AA and other forms of policy dialogue and technical support\. Of concern was weakness in risk identification and prioritization and the need for a more relevant results framework 18 given the shifting focus in policy areas--and these issues were corrected in the DPL4 program document\. The QAE for DPL3 also noted that some of the triggers "allowed an elasticity of interpretation beyond that justified for the flexibility needed for programmatic lending triggers"\. On the other hand, flexibility in the trigger definition has meant that throughout the DPL series, the Bank was able to translate almost all triggers into prior actions and thereby maintain the vested interests of a wide range of policy reformers in the DPL process\. This kept the reform momentum going, even when in some years less progress was being made in certain areas, but then picked up in later years\. (b) Quality of Supervision Rating: Satisfactory DPL 1: Satisfactory DPL2: Satisfactory DPL3: Moderately Satisfactory DPL4: Satisfactory As the prior actions were completed before the loan went to the board, supervision was technically not needed\. Instead, in preparation for the next DPL loan, continuous dialogue with the government and follow-up on the trigger status served as a de facto form of supervision\. Dialogue was also supported through on-going technical assistance and project lending\. Although overall supervision was satisfactory, in DPL3, monitoring progress of the triggers was more problematic than in the other DPLs\. This was partly the results of a socialization problem, whereby agencies new to the DPL process felt the DPL triggers were being imposed by the central economic agencies\. As a result, DPL3 saw a greater variance between original triggers and final prior actions\. Results indicators were not identified in DPL1, but were identified in DPL2 and their progress tracked in subsequent DPLs\. Not surprising, as the DPL moved into different areas, new indicators were added, but some of the older results outcome identified became less relevant to assessing the DPL impact\. (c) Justification of Rating for Overall Bank Performance: Rating: Satisfactory DPL 1: Satisfactory DPL2: Satisfactory DPL3: Moderately Satisfactory DPL4: Satisfactory Overall rating for Bank Performance is Satisfactory\. The Bank worked closely with the government and development partners to develop a relevant reform agenda that strategically addressed several core constraints in the country while delivering the program on time\. 5\.2 Borrower Performance NOTE: When the government and implementing agency are indistinguishable, provide rating and justification only for Overall Borrower Performance\. Click here if the Government and the Implementation Agency is the same or indistinguishable (a) Government Performance: Rating: Highly Satisfactory DPL 1: Satisfactory DPL2: Highly Satisfactory DPL3: Satisfactory DPL4: Highly Satisfactory 19 Borrower's performance is rated as Highly Satisfactory\. Part of the success of the DPL program can be attributed to the government's high level commitment to see it succeed in full form, rather than opt for passing fewer prior actions of the given set of triggers\. During the DPL process, the government designated a key counterpart government official for the overall program and also for each related set of triggers\. This greatly facilitated communication and monitoring of progress by the task team, as well as identifying possible bottlenecks\. Moreover, the lead government counterpart would follow up with the respective units to ensure that the triggers were being met and bring in pressure from the Finance Minister as warranted\. Over the years, as the DPL expanded into different subtopics, the government took greater control of the socialization process of engaging new government agencies and players into the DPL process\. (b) Implementing Agency or Agencies Performance: While the Coordinating Ministry of the Economy played a consistent and effective role in pushing through progress on the triggers, the performance of the implementing line agencies was mixed\. This ICR does not go into detail about the various line agencies as each pillar involved working with several different implementing agencies across four years\. Hence, while some agencies were more responsive, for example education, others were more resistant and sometimes resented the imposition of DPL triggers, particularly when their unit would not directly benefit from the DPL tranches\. In part this was a socialization problem, but , over time, performance of such agencies did improve as working relationships with the agencies evolved in the DPL and unit heads realized they could count on higher level support from the Ministry of Finance to enact the reforms\. This said, there was sometimes a clash between the unit's timetable for reforms and the DPL/Ministry of Finance desire to meet the DPL timeline\. Pillar Overall Performance of Implementing Agencies 1\. Macroeconomic Satisfactory 2\. Investment Climate Moderately Satisfactory 3\. Public Financial Management Moderately Satisfactory 4\. Service Delivery Moderately Satisfactory (c) Justification of Rating for Overall Borrower Performance: Rating: Satisfactory DPL 1: Satisfactory DPL2: Satisfactory DPL3: Satisfactory DPL4: Satisfactory Borrower performance is rated Satisfactory\. The ratings reflect a combination of the highly satisfactory performance of the coordinating government unit with the moderately satisfactory performance of the line agencies\. Beyond government ownership of the reforms, the Government of Indonesia was also proactive during the DPL process and in committing the resources and personnel to facilitate it\. As a result, the program was delivered on a timely basis and almost fully intact, there were no serious slippages and no back tracking on the reforms, if anything the government frequently exceeded the requirement\. 6\. Lessons Learned (both operation-specific and of wide general application) The Indonesia DPL series can be characterized by the numerous prior actions that were highly specific and covered a broad range of policy areas, which is a different model than the standard Bank practice for fewer but key headline reforms\. Given the political sensitivities to conditional lending at the time of DPL1, the latter was not really a feasible option\. Rather it is likely that if the Bank had instead pursued high profile reforms, the DPL series would not have garnered the support it currently holds\. Undoubtedly, 20 the Indonesia model makes the loan processing more complicated as it involved numerous key players, both on the Bank and government side\. However it was an approach that was supported by the government and did succeed in advancing the reform agenda on several fronts\. In this respect, the Indonesia DPL series offers several key lessons for future operations as well as for those countries that are seeking a more collaborative engagement with client countries\. A DPL program "driven" by the government\. It is a truism that the success of a DPL program depends on government ownership, less clear is how to bring about government ownership in what is often a donor-driven process\. On this the Indonesia DPL program offers an important lesson\. For a long-term sustained ownership of the DPL program by the government, there needs to be more than just government "buy-in" of a set of policy actions that are suggested by the Bank's or other development partners' analytic assessment of what the main priorities are\. Rather, the DPL program needs to be "driven" by the government's own reform agenda and perhaps more importantly, that the pace and scope of reforms be driven by the judgment and tactical sense of key reformers regarding what may or may not be bureaucratically or politically feasible at a particular point in time\. Such an approach is not without its tradeoffs\. The pace of reforms may, at times, and on certain issues seem more incremental rather than "substantive"\. However, this also helps to break down the reforms into deliverable segments that maintain the reform momentum and consolidate implementation until the timing was right for larger breakthroughs (e\.g\. as happened with the TSA and NSW) On the other hand, the number and span of prior actions may appear ambitious, because government counterparts use the DPL process to leverage their own efforts to push through a broader more detailed agenda\. Over the long-term, however, such an approach has the potential to yield, as occurred in Indonesia, genuine government ownership of the DPL program, and a robust foundation from which the DPL process can be continuously improved and refined\. Success lies in following up on the implementation details of the reform process, which is critical to the sustainable effectiveness of the reforms\. To often the implementation stage of a DPL sponsored reform is overlooked to focus on the next higher level reform--however, the Indonesia DPL specifically focused on numerous detailed implementation triggers to ground the reform, make it operational and transparent, and therefore successfully effective\. As a result, having multiple prior actions has been an effective way for the Indonesia DPL to broaden its reform agenda, but more importantly, to make concrete steps forward in the reforms initiated and thereby make the reforms sustainable in the medium term\. By emphazing implementation, the triggers chosen have been relatively non-controversial politically, though frequently they have been slowed because of vested interests or lacked the regulatory framework, which the DPL often addressed\. Given the nature of the DPL policy actions, constant collaboration and dialogue between the GoI and the Bank was fundamental to its success\. In this respect, the Bank's heavy field presence enabled it to interact frequently with the government, not just on the DPL but in other related engagements that supported the DPL policy areas\. This in turn afforded the government the ability to appoint high level counterparts to ensure that the triggers would be met, as their mandate was not just narrowly focused on the DPL reform triggers but also in the broader engagement\. As a result, the appointment and socialization of high-ranking motivated counterparts, greatly enabled pushing through the triggers and ensuring the loan could be delivered\. Mapping out a reform program would provide meaningful direction, substantive results, and less criticism over trigger selection\. In the past DPLs, some reforms, such as the Treasury Single Account, had key reforms implemented annually that resulted in a substantial improvement in government operation from DPL1 to DPL4\. These "storybook" reforms are also more sustainable, as the reforms progressed and were deepened, and the parties involved remained engaged in the DPL reform process\. Furthermore, their socialization of the DPL cycle and process eased the engagement from both the Bank and the government side\. But the fact that the DPL program was not at the outset, because of the 21 circumstances at the time, envisioned as a four-year program but instead evolved into one as the progress each year led to confirmation, often late in the process, that the series would continue the next year, meant that the program was continuously a work in progress\. The commitment to furthering the various reform objectives was always strong, but there was not always the time to map out in advance a detailed strategy and a multi-year agenda under each of the various reforms aims that the DPL program eventually ended up supporting\. As a result, under some of the reform streams, the annual selection of triggers for the subsequent operation was sometimes a rushed exercise in determining what was feasible and consistent with advancing the relevant reform aim rather than a more strategic consideration of what the most critical next step might be\. That represents a missed opportunity to realize the full potential of the DPL process\. It is important therefore, going forward, that a multi-year DPL program is clearly envisioned, so that a more systematic attempt can be made to adopt a multi-year strategic frame for the program, and to lay out a basic mapping of the reform program that more specifically describes the end posts, though still allowing for flexibility on how to arrive there\. The DPL can be an effective vehicle to support inter-government coordination, but not without substantial challenges\. One of the benefits cited of having a reform in the DPL, was that it provided the pressure needed to force government agencies to coordinate together to meet the trigger, as in the National Single Window which involved over 30 agencies\. This said, reforms involving inter- government coordination were more difficult to achieve, though the payout could be significant\. While reforms housed in the Ministry of Finance were generally easier to achieve, however once intergovernmental coordination was needed, this slowed progress on the reforms\. Even within ministries, reforms that required the MOF to work with local government levels also saw relatively slow progress\. Likewise, whereas the macro and public financial management triggers made satisfactory progress, investment climate triggers, which generally required coordination of numerous agencies, e\.g\. in reducing time to start a business, made more modest progress\. DPL can provide a fruitful means of leveraging limited resources into making changes in the government program\. This method of engagement is now reflected in the new Indonesia Country Partnership Strategy, which recognizes that as Indonesia grows and accesses global markets, the Bank's contribution will play a smaller share in the government's financing\. Therefore the Bank's ability to focus on specific lynch pin reforms is important to opening the way for spillover reform\. The DPL also provides a useful way of starting an engagement in a specific sector to test its readiness for reform--for example, as it did with infrastructure, where once these reforms started building up, it was then spun off into its own DPL\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/Implementing Agencies: (b) Cofinanciers: (c) Other partners and stakeholders (e\.g\. NGOs/private sector/civil society): 22 ANNEXES Annex 1\. Bank Lending and Implementation Support/Supervision Processes2 (a) Task Team members Name Unit Name Unit P092663 First Development Policy Loan Wolfgang Fengler- Co TTL EASPR James Sheppard EASPR P\.S\. Srinivas Co TTL EASFP Susan Wong EASSD William Wallace EASPR Robert Saum EAPCO Bert Hofman EASPR Rajiv Sondhi EAPCO Yoichiro Ishihara EASPR Yogana Prasta EACIF Amitabha Mukherjee EASPR Anthony Toft LEGEA P096594 Second Development Policy Loan P\.S\. Srinivas- TTL EASFP Josef Lietmann EASES William Wallace EASPR Angus Mackay EASES Yoichiro Ishihara EASPR Meltem Aran EASPR John Factora OPCCE Hongjoo Hahm BCFBD Rajiv Sondhi EAPCO Lars Jessen BCFBD Jehan Arulpragasam EASPR Ravikumar Balasubramanian BCFAL Menno Pradhan EASPR Aniruddha Dasgupta EASUR Vivi Alatas EASPR Preeti Ahuja EACIQ Blane Lewis EASPR Rajashree Paralkar EACIQ Peter Rosner EASPR Yogana Prasta EAPCO Greg Elms EASPR Rizal Rivai EAPCO Raj Soopramanien LEGEA Susan Wong EASSD Juan Ellis IEF James Sheppard EASPR Soren Davidsen EASPR David Shand OPCFM Anne-Lise Klausen EASPR Timothy Irwin IEF Djauhari Sitorus EASPR 2For programmatic DPL, Annex 1 will have multiple entries, as applicable, to include relevant data on each individual operation in a programmatic series\. 23 P100327 Third Development Policy Loan P\.S\. Srinivas TTL EASFP Peter Rosner EASPR William Wallace EASPR Josef Lietmann EASES John Factora OPCCE Vivi Alatas EASPR Yoichiro Ishihara EASPR Neil McCulloch EASPR Rajiv Sondhi EAPCO Angus Mackay EASES Jehan Arulpragasam EASPR Timothy Brown EASES Hongjoo Hahm EASUR Imad Saleh EAPCO Vic Paqueo EASHD Kathy MacPherson EASPR Michael Warlters EASUR Jennifer Donohoe EASPR Rizal Rivai EAPCO Lars Jessen BCFBD Yogana Prasta EAPCO Rodrigo Bazzano Barfield EASUR Wolfgang Fengler EASPR James Sheppard EASPR Blane Lewis EASPR Nina Herawati EACIF 24 P105637 Fourth Development Policy Loan Wolfgang Fengler EASPR Joel Hellman EASPR William Wallace EASPR Nina Herawati EACIF Sebastian Eckardt EASPR Vishnu Juwono EASPR Natalie Tavernier EASPR Lloyd Kenward EASPR Peter Milne EASPR Luc Lecuit EAPCO Soekarno Wirokartono EASPR Josef Lietmann EASES P\. S\. Srinivas EASPR Blane Lewis EASPR Peter Rosner EASPR Kathy MacPherson EASPR Jens Kromann Kristensen EASPR Jock McKeon EASPR Rajiv Sondhi EAPCO Niltha Mathias EACIF Vivi Alatas EASPR David Newhouse EASPR John Factora OPCCE Vic Paqueo EASJD Giovanna Dore EASES Yogana Prasta EAPCO Timothy Brown EASES Andrew Ragatz EASHD Raj Soopramanien LEGEA Sjamsu Rahardja EASFP Cut Dian Agustina EASPR Imad Saleh EAPCO Enrique Aldaz EASFP Djauhari Sitorus EASFP Arsianti EASPR Chairani Triasdewi EACIF Javier Arze EASPR Susan Wong EASSO Mae Chu Chang EASHD Elif Yavuz EASPR Paramita Dewi EACIF Piyush Desai IMF Jennifer Donohue EASPR 25 (b) Staff Time and Cost (from SAP) (the system pulls data available for all fields) Staff Time and Cost (Bank Budget Only) Stage No\. of staff weeks USD Thousands (including travel and consultant costs) P092663 - First Development Policy Loan Lending FY05 159\.61 FY06 8\.27 FY07 0\.29 Total: 168\.17 P096594 - Second Development Policy Loan Lending FY06 63 266\.98 FY07 0\.99 Total: 63 267\.97 Supervision FY06 26\.59 FY07 39\.87 Total: 66\.46 P100327 - Third Development Policy Loan Lending FY06 15 48\.39 FY07 42 197\.16 FY08 -2\.62 Total: 57 242\.93 P105637 - Fourth Development Policy Loan Lending FY07 15 68\.06 FY08 34 181\.06 Total: 49 249\.12 Supervision FY08 3 17\.04 Total: 3 17\.04 26 Annex 2\. Development Outcome Indicators Objective / Target Outcome Indicators Comments Baseline Latest Available OVERALL GOAL OF THE DPL PROGRAM Goal: Achieve sustained growth and poverty reduction Sustain Economic Growth GDP growth: 6\.3 in 2007 GDP growth was 4\.9% (2003) Exceeded target\. Achieve growth of at least 5 percent [CAS] GDP average growth 2004-2007: 5\.6 Poverty Reduction 17\.4% of people live below the national poverty line 15\.4% of people live below the national poverty line Reduce the percentage of people living (2003) (Mar\. 2008) Moderately Satisfactory below the national poverty line [RPJM] DPL CORE POLICY AREA I: MACROECONOMIC STABILITY AND CREDITWORTHINESS Objective: Maintain macroeconomic stability as precondition for sustainable growth Overall Outcome S&P sovereign rating at CCC+ and Moody's rating at S&P raised sovereign ratings to BB- and Moody's Satisfactory S&P sovereign rating upgraded to BB B3 (2003) ratings to Ba3 (May\. 2008) Debt Management Debt-to-GDP ratio at 59% (2003) Debt-to-GDP ratio 34\.4% (2007) Exceeded target\. Reduce debt-to-GDP ratio to below 38% Fiscal Policy and Management Domestic non-oil and gas tax revenues at 10\.4% of GDP Domestic non-oil and gas tax revenues reached 11\.3% Mobilize domestic non-oil and gas tax (2003)10 (2007) Satisfactory revenues to 12-13% of GDP DPL CORE POLICY AREA II: IMPROVED INVESTMENT CLIMATE Objective: Attract quality investments through a supportive business environment Objective: Strengthen, diversify, and increase equitable access to the financial sector Financial Sector Stability: State bank share of overall banking system is 36% Reduce state bank share of overall State bank share of overall banking system is 46% (2007) Satisfactory banking system [CAS] Eliminate economic distortions and Coverage on deposits was reduced from Rp 5 billion in moral hazard in the financial sector Government maintained a policy of providing blanket March 2006 to Rp 100 million in March 2007 as per stemming from unsustainable blanket guarantees on all bank liabilities in response to the 1997 schedule (2007)\. In Oct 2008, it was raised to Rp 250 Satisfactory deposit guarantees [CAS] financial crisis (2003) mln to shore up confidence following the US financial crisis\. Diversification: Increase NBFI assets as a share of total NBFI assets estimated to comprise 20\.2% of total NBFI assets comprise 22\.3% of total financial sector Moderately financial assets by 5-10 percentage financial assets (2003) assets (2006) Satisfactory points 27 Policy Area / Issue and Outcome Outcome Indicators Assessment Baseline Latest Available Access : Create a fair business environment in Loans to SMEs comprised 47% of total loans (2003) Loans to SMEs comprised 50\.4% of total loans5 (June Moderately Satisfactory which SMEs benefit from market based 2008) services [CAS] Regulatory and institutional framework for trade and investment Investment-to-GDP ratio at 18\.9% (2003) Investment-to-GDP ratio 24\.8% (2007) Satisfactory Increase investment to GDP ratio to 23- 25% Reduce start-up time for new businesses Start-up time for new businesses takes 76 days8 (2008) Satisfactory to 30 days Start-up time for new businesses takes 168 days8 (2003) Significant progress given ambitious original target\. Tax services Improved perception by users [CAS] 57% of respondents identify tax administration as a 38% of respondents identify tax administration as a Highly Satisfactory moderate, severe, or very severe constraint to doing moderate, severe, or very severe constraint to doing business (2003)1 business (2007)2 Reduce time to obtain VAT refunds Average time to obtain VAT refunds is 12-18 months Average time to obtain VAT refund for low-risk [CAS] (2003)3 taxpayer is 1month (June 2008)2 Highly Satisfactory Customs services Improved perception by users [CAS] 51% of respondents identify customs and trade 32% of respondents identify customs and trade Highly Satisfactory regulations as a moderate, severe and very severe regulations as a moderate, severe and very severe constraints to doing business (2003)4 constraints to doing business (July 2007)2 Improve average import clearance time Average import clearance time is 8 days in the red lane Average import clearance time is 6 days in the red lane [CAS] (2004)4 (preliminary 2007 data)2 Satisfactory The PPP framework has improved\. A decree was issued (Perpres No\. 67) requiring open and transparent Public-private partnerships in competitive bidding for PPPs\. The National Committee infrastructure Regulatory initiatives in several infrastructure sectors were adopted but with limited impact given the lack of on Policy for Accelerating Infrastructure Provision Improve the regulatory and institutional overall coherent sectoral strategy, central coordination, (KKPPI) and a Risk Management Unit were created Shifted to I-DPL framework for public-private partnerships and follow-through (2003)6 within the MoF to determine public funding for PPPs\. (PPP) [CAS] These initiatives have been successful in stopping non- compliant projects but have so far failed to initiate model PPP transactions\. 28 Policy Area / Issue and Outcome Outcome Indicators Assessment Baseline Latest Available DPL CORE POLICY AREA III: IMPROVED PUBLIC FINANCIAL MANAGEMENT AND GOVERNANCE Objective: Improves transparency, accountability, efficiency, and effectiveness in the use of public resources Objective: Improve the institutional framework for addressing corruption 29 Accountability and transparency in public financial management Increased accountability and Budgets supported with limited fiscal information and Comprehensive fiscal information now included in budget transparency in government financial incomplete budget documentation\. No government accounting documentation\. Government accounting standards developed and management through availability of standards developed or applied, nor aggregate financial applied nationally\. Aggregate government financial statements Satisfactory complete, reliable and timely budget statements prepared\. prepared in a timely manner and made widely available, although information and financial statements reliability of these statements needs to be improved\. Budget authorization documents to line ministries invariably Improved budget disbursement pattern issued around mid-year, resulting in expenditure being skewed Percentage of CG gross capital expenditures disbursed in the last on capital and material expenditures during the second half of the fiscal year\. 41% of disbursement Unsatisfactory CG gross capital expenditures was disbursed in the last quarter quarter of 2007: 47% of the fiscal year (average 2004) Improved cash management through a More than 18,000 commercial bank accounts handled Pilots for TSA were successfully implemented and the national Treasury Single Account government funds, with no standards for efficient authorization regulatory framework for efficient management of bank balances Highly regime\.[CAS/PEFA] and management of balances (2003) has been established\. Govt completed the consolidation of all govt Satisfactory expenditure bank balances into a TSA\. The first major step in public procurement reform was the passing Improved procurement regime that of presidential decree Kepress 2003/8 on public procurement promotes greater transparency, open and which includes basic principles of good public procurement\. fair competition, economy, and Keprss 80/2003 was instrumental in removing barriers to efficiency as evidenced by: (i) 100% of participation for bidders and thus drastically reducing the degree government agencies following of fragmentation in the market\. This instrument is being used by presidential decree on procurement; (ii) No national standards in procurement policies and processes all government agencies\. Reform efforts received another major Moderately the prices of public procurement are exist\. boost end of 2007 with the establishment of the national Satisfactory within market prices; and (iii) bidders regulatory body on public procurement: Lembaga Pengembangan from outside the districts/provinces of Kebijakan Pengadaan Pemerintah (LPKPP) the procuring agencies are free and encouraged to participate\. Initial feedback from implementing agencies generally indicate increases in number of participating bidders and receiving bids less then owner's estimates\. Law No\. 33/04 needed to be clarified and extended through the Major regulations based on Law No\. 33/04 were issued\. KMK 35 Decentralization Framework issuance of government regulations before it could be was replaced by regulations on blue book, on-lending, and on- implemented\. The design of mechanisms for donor finance was granting resulting in a clearer and (slightly) improved system\. Clarify and improve decentralization particularly inadequate (unclear, not facilitative), constraining Regulatory framework for bonds was developed\. Insufficient time Shifted to IDPL framework in respect to fiscal affairs financial flows to the sub-national level\. Furthermore, has elapsed to see any real improvements in terms of sub-national [CAS] alternative financing mechanisms were insufficiently developed borrowing through on-lending mechanisms and through bonds (i\.e\. no framework for bonds) (2003) (Sept\. 2007)\. 30 Policy Area / Issue and Outcome Outcome Indicators Assessment Baseline Latest Available Institutional framework for addressing corruption The following institutions have been established: the Anti- Strengthened institutional framework for No special institutions or agencies to investigate and prosecute Corruption Commission (KPK), the Anti-Corruption Court, the addressing corruption as evidenced by corruption cases and few corruption prosecutions (2003) Judicial Commission, the Police Commission, and the Highly continued positive trend in the number of 1,367 cases investigated and 617 cases prosecuted (2004) Prosecutorial Commission (2007)\. Satisfactory corruption cases investigated and 1,892 cases investigated and 586 cases prosecuted (2007) successfully prosecuted\. DPL CORE POLICY AREA IV: MAKING SERVICES WORK FOR THE POOR Objective: Improve quality, coverage, and utilization of basic services, especially for the poor Objective: Make stronger progress toward achieving MDG goals Pro-Poor Expenditure Spending on non-targeted subsidies accounted for 4% of GDP Spending on non-targeted subsidies accounts for 3\.8% of GDP Reduce costly, inefficient, and regressive (2004); combined spending on health and education accounts (2007); Spending on health and education accounts for 3\.9% of Satisfactory spending and reorient public spending for 3\.5% of GDP (2004) GDP (2007) toward pro-poor programs Social Protection Social assistance is now delivered in the form of cash transfers systematically targeted to poor households and communities\. Improved impact of social assistance System of public social assistance characterized primarily by This represents a more focused approach to identifying and programs on the welfare of the poor crisis-era safety net programs and large universal commodity protecting the poor than the series of ad-hoc subsidies instituted Satisfactory through better targeted, publicized, and price subsidies, particularly through fuel products that benefited in the aftermath of the economic crisis\. In addition, evaluation managed social protection and human primarily the non-poor (2003) has been given more attention in the design of the current development programs for the poor programs\. Education Improve the professional competency and performance incentives of teachers 36% of teachers had four-year university (S1) degree (2004)7 42% of teachers had four-year university (S1) degree (2006)7 Satisfactory through compliance with 2005 Teacher Law Notes: 1\. Investment Climate and Productivity Study, Asian Development Bank, 2003 2\. Monitoring Investment Climate in Indonesia Round 3 (draft), The World Bank, 2007 3\. Study of Implementing VAT Refunds in Indonesia, LPEM, Faculty of Economics, University of Indonesia, 2003 4\. The Study on Trade Related Systems and Procedures in the Republic of Indonesia, Japan International Cooperation Agency (JICA), 2005 5\. Total credit realization by SMEs from commercial banks, as measured by Bank Indonesia 6\. Averting an Infrastructure Crisis: A Framework for Policy and Action, The World Bank, 2004 7\. Ministry of Education statistics\. Data reflects end-Indonesian school year and includes all primary, junior, and secondary public schools (religious schools not included)\. 8\. Doing Business Report, The World Bank, 2004 9\. Doing Business Report, The World Bank, 2008 10\. Spending for Development, Making the Most of Indonesia's New Opportunities, The World Bank, 2007 31 Annex 3\. Stakeholder Workshop Report and Results - NA Annex 4\. Summary of Borrower's ICR and/or Comments on Draft ICR Annex 5\. Comments of Cofinanciers and Other Partners/Stakeholders - NA Annex 6\. List of Supporting Documents 1\. Program Documents: Report No 30418-IND, Report No\.34439-ID, Report No\.38027-ID, Report No\.41232-IND 2\. Letter of Development Policy 3\. Tranche Release Document 4\. Standard and Poor's RatingsDirect Indonesia October 2007 5\. Fitch Ratings Indonesia Sovereign Rating February 2008 6\. Moody's International Sovereign Indonesia December 2007 7\. Doing Business 2004 8\. Doing Business 2008 9\. Doing Business 2008 Indonesia 10\.World Bank\. Indonesia; Economic and Social Update April 2008 32	REVIEW
P128013	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) Report Number : ICRR0020674 1\. Project Data Operation ID Operation Name P128013 First ICT Sector Development Operation Country Practice Area(Lead) Marshall Islands Transport & ICT L/C/TF Number(s) Closing Date (Original) Total Financing (USD) IDA-H8380 31-Dec-2013 3,000,000\.00 Bank Approval Date Closing Date (Actual) 19-Mar-2013 31-Dec-2013 IBRD/IDA (USD) Co-financing (USD) Original Commitment 3,000,000\.00 0\.00 Revised Commitment 3,000,000\.00 0\.00 Actual 3,029,260\.00 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Peter Nigel Freeman George T\. K\. Pitman Christopher David Nelson IEGSD (Unit 4) 2\. Project Objectives and Policy Areas a\. Objectives The Program was to increase the availability of telecommunications services and enable the more widespread application of ICT services supporting improvements in economic and social development in the Marshall Islands\. It was to be implemented through three consecutive operations; only the first operation was completed\. The objective of this first operation stated in the Program Document (page iii) was to support the transition from a monopolistic to a liberalized telecommunications market\. Page 1 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) The objective of the program is not specifically stated in the Financing Agreement and so the development objectives given in the Project Paper are used in this review\. b\. Were the program objectives/key associated outcome targets revised during implementation of the series? --- c\. Pillars/Policy Areas There were three policy areas: The first policy area focused on introducing a pro-competitive ICT sector policy\. The new National ICT Sector Policy established the Governmentâs commitment to introducing a competitive market, while also recognizing that the small market size and challenging business environment in the Republic of the Marshall Islands (RMI) may mean that new entries do not necessarily materialize, and that the National Telecommunications Authority (NTA) may continue as a sole provider to be monitored and supervised by an independent regulator\. The second policy area was focused on strengthening the legal and regulatory framework\. The existing Marshall Islands National Telecommunications Authority Act 1990 did not (and still does not) allow for the introduction of competition, and reserves certain monopoly rights over telecommunications services in favor of NTA\. The third policy area focused on restructuring and liberalizing the ICT Sector\. The sustainability of the reforms depended upon restructuring and strengthening NTA to compete effectively in a liberalized market, which included providing the fiscal support needed for the government to carry out a restructuring of NTAâs debt and to finance a recapitalization\. d\. Comments on Program Cost, Financing, and Dates Program Cost: The program cost was to be $13 million in three operations\. The first operation was for $3 million and this was fully disbursed\. The second and third operations were cancelled in May 2016\. Financing: The lending instrument was a Development Program Loan\. Dates: The project was approved on March 19, 2013, became effective on June 3, 2013, and closed as expected on December 31, 2013\. 3\. Relevance of Objectives & Design a\. Relevance of Objectives The Republic of the Marshall Islands (RMI) is one of the least âconnectedâ countries in the world\. It has a single service provider, the majority state-owned National Telecommunication Authority (NTA)\. Survey data Page 2 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) from 2013 indicated that only around 35 percent of the population subscribed to ICT services\. Mobile phone penetration was around 26 percent of the population\. Less than two percent of the population subscribed to an Internet connection\. Mobile broadband was not yet available\. Total broadband Internet take-up was approximately 520 subscribers, or around one percent penetration of the population\. Information flows were poorly coordinated and the stakeholder engagement process was not managed satisfactorily within the Government\. Key reasons for the limited and costly service included the high costs of connecting remote and sparsely populated islands, the monopolistic market structure, and the constrained financial position of the Marshalll Islands NTA, which limited access to funds for new infrastructure\. However, ICT sector reforms had been implemented in similar countries in the Pacific such as Fiji, Samoa, the Solomon Islands and Vanuatu and demonstrated linkages between market-based reforms to attract new private sector investment and improved economic and social indicators\. NTA presented a significant fiscal risk for the Government\. The RMI section of the HANTRU-1 submarine communications cable system was installed at a cost of $21\.5 million\. It was financed by a loan of $18\.5 million from the United States Department of Agricultureâs Rural Utilities Service to NTA, unconditionally guaranteed by the Government of RMI\. However, NTAâs financial situation has deteriorated due in part to the burden of loan repayments\. The company was generating insufficient cash flow from its operations to meet its repayment obligations without additional financial support\. The Government was making annual transfers to NTA of approximately $1\.5 million\. An analysis of its financial position determined that NTA was unable to undertake the investments in new infrastructure that were required to improve access and services in line with demand\. External debt at appraisal was around 67 percent of GDP, mostly in the form of concessional Asian Development Bank loans and Government guaranteed debts in the state owned enterprises sector\. Consequently, a new legal and regulatory framework was needed to attract new investment\. The nationâs remoteness and small size were recognized as significant challenges to attracting foreign investment, and the Government agreed that it would need to undertake policy and legislative reforms to improve the investment climate and to attract new investment into the ICT sector\. The Programâs objectives were aligned with the Bankâs Country Partnership Strategy for the Marshall Islands FY13-16, which remain applicable\. The objectives were closely aligned with the Governmentâs priorities under its Vision 2018 National Development Plan, and also reflected the urgent needs to address the fiscal risks posed by NTA and establish a more efficient ICT sector\. Rating Substantial b\. Relevance of Design The Program recognized and built upon the extensive experience of the Bank in the field of telecommunications policy, regulatory reform and rural access issues\. Program design followed established good practice principles regarding the structuring, sequencing, and implementation of ICT sector reform\. All prior actions and triggers were consistent with the development objectives\. The Program followed a logical sequence, beginning with the basic policy and regulatory foundations for ICT sector reform, the enactment of Page 3 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) key enabling legislation, the establishment of the new sector regulator, the adoption of a plan for restructuring of NTA, the issuing of new licenses and market entry, the commencement of regulatory functions, and the further strengthening of the ICT sectorâs enabling environment, with a particular emphasis on facilitating access in the Outer Islands\. The identification of the need to strengthen and reposition NTA financially, especially its debt obligations, prior to the liberalization of the market and the introduction of competition, also followed good international practice\. Specific measures to prepare NTA for the introduction of competition were deemed important to build a consensus and manage the risk of opposition to the reforms\. However, while the design may have been sensible in theory, for a first Bank engagement in the Marshall Islands in a fragile environment and where there was no prior experience, the timeframe to deliver the policy and institutional reforms was overly ambitious\. The pace of reform under the Program caused anxiety amongst NTA and other stakeholders according to the ICR (page 13), which ultimately slowed progress as the Governmentâs attention was diverted towards opposition to the reforms\. A program with a less ambitious series of deliverables may have been more appropriate and may also have helped to avoid suggestions that the sector restructuring and liberalization program had been predetermined or stipulated by the Bank\. The Program's monitoring and evaluation framework also had serious weaknesses (see section 9)\. The pairing of the program with a parallel technical assistance (TA) project was a proactive design feature identified during appraisal\. With the benfit of hindsight, the program's start might have been postponed until the TA project could be implemented and produce results\. Such a deferral, however, would not have been feasible, given the Government's urgent needs for budget support and the pressure to commit IDA funds in FY13 that was the last year of IDA 16\. Rating Modest 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective The first DPO policy area was to introduce a pro-competitive ICT policy Rationale The baseline value at appraisal identified no policy outlining the Governmentâs vision for sector development\. However, the Government formally endorsed a new ICT sector policy through a Cabinet Resolution and the publication of this in the official Government journal committed it to liberalizing the ICT sector and to restructuring NTA\. This said, the Government never completed the underlying analytical studies needed to provide a foundation for sector reform\. Information flows were poorly coordinated and stakeholder concerns were not dealt with satisfactorily leading to a lack of trust in supporting the enabling legislation, which was not passed\. Page 4 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) Rating Negligible PHREVDELTBL PHEFFICACYTBL Objective 2 Objective The second DPO policy area was to strengthen the legal and regulatory framework\. Rationale The baseline value at appraisal identified an inadequate ICT sector legal and regulatory framework that prohibited competition and provided inadequate mechanisms for oversight of service outcomes\. Supporting prior action two, the Government prepared a draft Communication Bill consistent with the new ICT policy framework, and the Ministers of Finance and of Transportation and Communications authorized the joint introduction of the Communications Bill 2012 to the Parliament\. International expert advisors were to be appointed\. However, such advisors were never retained and the Bill never completed its Third Reading\. In May 2016, the new Government reconfirmed its commitment to ICT sector reform, but requested a deferral of the Second ICT Sector DPO, at which point the Bank dropped the operation, terminating the Program\. Rating Negligible PHREVDELTBL PHEFFICACYTBL Objective 3 Objective The third DPO policy area was to restructure and liberalize the ICT sector\. Rationale The DPO Program did not increase the availability of ICT services and enable the more widespread application of such services\. The Government did not implement any of the subsequent, more challenging, and substantive policy and institutional actions called for in the Programâs Policy Matrix\. The Communications Bill was not enacted\. Consequential to the completion of the law reform process, an independent ICT sector regulator was not established\. Spectrum allocations for new wireless mobile services were not carried out, and no new operators were licensed\. A restructuring plan for NTA was not prepared or approved\. The burden and fiscal risk posed by NTA to the government remains unaddressed\. No steps were carried out regarding open access to international connectivity\. The limited development of the ICT sector due to the failure to implement the reforms is also illustrated by the lack of improvement in sector indicators\. Mobile penetration in 2015 was 32 percent of the population, which represents only three Page 5 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) percent annual growth since 2013, which is significantly lower than the reported annual growth rate of 12\.5 percent for the Pacific region between 2009 and 2014\. Mobile broadband is also yet to be introduced\. Rating Negligible PHREVDELTBL PHREVISEDTBL 5\. Outcome The development objectives were not achieved\. The Program's key milestones were not achieved relating to the enactment of the new legislation introducing competition, the establishment of an independent ICT regulator, Government approval of a restructuring plan for NTA, and the offering of new licenses for a second operator\. The second and third operations were cancelled in May 2016, when the program was terminated for lack of progress with reform\. a\. Outcome Rating Unsatisfactory 6\. Rationale for Risk to Development Outcome Rating The risks that the development outcomes will not be maintained or realized are rated as High, recognizing that the Programâs policy and institutional actions were not implemented and outcomes were not achieved\. Without the Governmentâs renewed commitment to the objectives under the Program, specifically to examine the fiscal risk posed to the Government by NTA debt and the potential to introduce legal reforms to promote private sector led investments in new infrastructure and improved services, there would have been no basis to continue with the implementation of the ICT TA Project\. The new Government realizes that it needs to strengthen the financial performance of NTA, promote its financial sustainability, and reduce the call on Government funds for activities that could be financed commercially\. a\. Risk to Development Outcome Rating High 7\. Assessment of Bank Performance Page 6 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) a\. Quality-at-Entry At the request of the Government, in 2010/2011 the World Bank provided technical assistance (TA) in relation to formulating development options and a strategy for the ICT sector\. This included an assessment of existing network infrastructure, a supply and demand analysis, and an initial review of the current ICT policy and legal environment\. The Program team utilized some of the extensive experience of the Bank in the field of telecommunications policy, regulatory reform and rural access issues\. The appraisal identified the role that the Bank had performed in providing advice to other governments in the Pacific and globally on ICT issues\. The proposed Program was also designed to draw upon lessons learned from the implementation of similar reforms in the Pacific region and in other comparable countries and was consistent with the Country Partnership Strategy for the Marshall Islands\. However, it was identified that the capacity of the Ministry of Transport and Telecommunications to lead an engagement on ICT sector policy was highly constrained and would need to be enhanced\. A joint Bank-Fund debt sustainability analysis was not available for RMI at the time of appraisal\. However, an informal Bank assessment carried out using the joint framework showed RMI exceeding several policy thresholds under baseline and stress-test scenarios\. At the time of appraisal, the budget support associated with the proposed program was expected to assist the RMI to move towards long- term fiscal sustainability\. The pairing of the Program with this TA Project was a positive design feature that was attuned to the capacity issues in RMI, which were anticipated during appraisal\. With the benefit of hindsight, the Programâs start should have been postponed until the TA Project could be implemented and produce results\. Such a deferral, however, while ideal in principle, probably would not have been feasible, given the Government's urgent needs for budget support and the pressure to commit IDA funds in FY13 (the last year of IDA16)\. The First DPO might also have included a prior action specifying Cabinet consideration and endorsement of a report on market restructuring options for NTA, which would have helped to ensure the DPO Program was implemented with the benefit of expert technical assistance\. The up-front presence of recipient executed technical advisors to provide independent guidance on policy and legal reforms would also have helped to counter suggestions that the Bank was forcing the reforms\. In engaging in ICT sector reform in RMI, the Bank faced an extremely challenging situation and took a substantial risk in supporting the preparation and implementation of the program at the urging of the Borrower\. The Bank, however, did not have sufficient understanding of the political and governmental context, which emphasized shared decision-making\. A better understanding of the interests supporting the incumbent monopoly stakeholders would have allowed the Bank to design the program in a more realistic way or perhaps not to have undertaken a PDO operation at that time\. Quality-at-Entry Rating Moderately Unsatisfactory b\. Quality of supervision Implementation was not well managed\. The Bank should have done much more in the first year of the DPO Page 7 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) Program to support the Government to get the consultant advisers mobilized and have them produce an initial scheme for restructuring NTA\. There were discussions to help improve transparency and the possibility of dividing the proposed third DPO into two operations, and to restructure NTS's debt, but these suggestions were not taken up due to the Government's lack of readiness\. The Bank also carried out a review of the TA project's financial management arrangements, which had been performing unsatisfactorily due to very poor contract management and lack of oversight\. Despite all these endeavors progress was extremely slow\. A new Government was formed in early 2016, and the Bank sought guidance regarding the allocation of IDA 17 resources for the DPO Program and its commitment to using the TA Project\. In its engagement with the Government, the Bank recommended that the DPO be dropped from delivery under IDA 17 and that these funds be reprogrammed\. The Bank also emphasized that the Government could continue to use the TA Project to support work on telecommunications sector reform, but that strong commitment would need to be demonstrated before the Bank would consider an extension of the TA Projectâs closing date of August 31, 2016\. Quality of Supervision Rating Unsatisfactory Overall Bank Performance Rating Unsatisfactory 8\. Assessment of Borrower Performance a\. Government Performance The Government initially indicated that the Communications Bill (No\. 44), dealing with sector liberalization and regulatory reform, would be introduced to parliament and would receive its first reading in March 2014\. However, it adjourned on March 31, 2014 without the Bill having been tabled\. An indicative Board date of May 29, 2014, for the Second DPO was therefore dropped due to the lack of progress in satisfying this key prior action\. The Bill reached Second Reading stage in February 2015\. In March 2015, during an interim Bank supervision mission, the Government also confirmed its intention to expedite the recruitment of international expert advisers to provide essential support for the law making process, including consultation and engagement with stakeholders and NTA as part of the Select Committee processes\. These advisors, however, were never retained and the Bill never completed its Third Reading due to opposition in parliament\. In May 2016, the new Government reconfirmed its commitment to ICT sector reform but requested a deferral of the Second ICT Sector DPO, at which point the Bank dropped the operation, terminating the Program\. The new Government communicated to the Bank its intention to examine options for addressing the fiscal risk posed by its guarantee of NTA debt\. It also indicated its willingness to examine new market arrangements to promote private sector led investments in new infrastructure and improved services\. It requested the postponement of the DPO Program until the work under the TA Project was further advanced and indicated that it would review IDA 18 programming in light of the strategic options and recommendations for ICT sector reform and development that would be identified under the TA Project, Page 8 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) including funding requirements needed to implement any reforms\. Government Performance Rating Unsatisfactory b\. Implementing Agency Performance The MTC and NTA did not interact in an effective or coordinated way with each other or with the Ministry of Finance (ICR, page 21)\. The implementing agencies, through the Government, repeatedly requested additional time to overcome severe capacity constraints that impeded the commencement of the analytical work required to support the Program\. The agencies attempted unsuccessfully to complete the procurement processes for the selection of advisors, financed under the TA Project, on two separate occasions\. In 2013 there was an extended delay in completing the request for proposal stage that led to the procurement process becoming stale\. This process was restarted in August 2014, but formally abandoned again in March 2016 until the Government could determine whether to restructure and extend the TA Project\. The inability of the Government to complete one international recruitment during three years of implementation of the TA Project, from August 2013 until August 2016, despite extensive technical support from the Bank, including extensive assistance of a procurement specialist deployed by the Bank during 2015 to help build capacity and provide in-country training on procurement procedures and processes, highlights the deep capacity limitations of the implementing agency encountered during the period of this Program\. Implementing Agency Performance Rating Unsatisfactory Overall Borrower Performance Rating Unsatisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The Programâs monitoring and evaluation had significant shortcomings of design, implementation, and use\. The three end-of-program key indicators were adequate to measure the first key Program outcome of increased availability of ICT services, but only one of these indicators (increased number of licensees) had baselines and target values\. b\. M&E Implementation The provisions for monitoring and evaluation in the Program Document were vague, referring only in very general terms to monitoring by the Ministry of Finance and the Bank\. The Ministry provided no formal reports on implementation progress or results\. The Bank did not file Implementation Status and Results Reports during the life of the Program\. No restructuring was carried out to address the gaps in the M&E Page 9 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) framework\. There are no indications that an M&E system for the Program was implemented or used\. c\. M&E Utilization None\. M&E Quality Rating Negligible 10\. Other Issues a\. Environmental and Social Effects Not applicable to DPOs\.http://operationsdashboard\.worldbank\.org/project/secure/sap/forms/icrr?projId=P128013&stage=com# icrreview-ratings b\. Fiduciary Compliance The funds for the First DPO (US$3,029,260\.00) were disbursed at effectiveness following completion of the prescribed prior actions\. c\. Unintended impacts (Positive or Negative) The Government has now established a unit within the Ministry of Finance to manage international development and aid programs\. Policy engagement and coordination is also being reformed and enhanced including formal record keeping and project management including procurement\. d\. Other --- 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Unsatisfactory Unsatisfactory --- Page 10 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) Risk to Development High High --- Outcome The Bank could have done Moderately Bank Performance Unsatisfactory more to resolve issues Unsatisfactory regarding the lack of capacity\. Borrower Performance Unsatisfactory Unsatisfactory --- Quality of ICR High --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 12\. Lessons 1\. There was a lack of borrower readiness for a development policy operation in the ICT sector\. The delays and political opposition to reforms in the ICT sector highlight the difficulties of such sector reforms and the challenges of opening monopolies to competition\. A thorough political economy assessment is an essential tool to support ambitious reform programs\. The interests of incumbent monopolies, especially private shareholders, management and workers, capacity issues, and government readiness all play a role\. The robustness of the governmentâs consultation and decision making processes also need to be evaluated carefully, especially to avoid situations where a lack of information, or misinformation, may be used by opponents to undermine the credibility or desirability of reforms\. Political economy issues or concerns may be aggravated if the Governmentâs decision-making processes are weak and consultation processes are ineffective, especially in countries where shared decision- making is favored\. The Bank needs to undertake realistic assessments of the political economy situation and ensure that operations include actions to resolve likely areas of opposition or resistance 2 \. Thorough risk identification and mitigation is essential in sector reform\. The two key risk factors that caused the Program to failâweak capacity of the public sector and opposition from the incumbent operator to sector reformsâlean against the use of the DPO instrument, with its basis of policy and institutional actions as conditionality\. In this context, close implementation support or capacity building by the Bank might have added to misconceptions on the part of opponents that reforms were being forced by the Bank\. In countries with high budget deficits and related macroeconomic weaknesses, DPOs can create incentives to commit to unattainable reforms in order to trigger the release of budget support, notwithstanding a lack of readiness or consensus among key stakeholders\. 3 \. Public sector capacity constraints are especially challenging to deal with in the context of a DPO\. Sufficient capacity and sustained commitment are necessary to deliver on reforms\. There needs to be strong linkages between the DPO and associated technical assistance\. In this case the failure of the TA inter alia led to the failure of the program\. Page 11 of 12 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review First ICT Sector Development Operation(P128013) 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR was well prepared and written and in accordance with the guidelines applicable to ICRs for DPOs\. It was honest and candid about the failure of the Program and the reasons for its poor performance\. It brings out some lessons based on a thoughtful analysis of events\. a\. Quality of ICR Rating High Page 12 of 12	REVIEW
P008381	ï»¿ ICRR 10596 Report Number : ICRR10596 ICR Review Operations Evaluation Department 1\. Project Data : Date Posted : 07/05/2000 PROJ ID : P008381 OEDID: OEDID : L3474 Appraisal Actual Project Name : Power And US$M ) Project Costs (US$M) 638\.1 432\.5 Environmental Improvement Project Country : Czech Republic Loan/ US$M ) Loan /Credit (US$M) 246 209\.8 Sector, Major Sect \.: Distribution & US$M ) Cofinancing (US$M) 0 0 Transmission , Electric Power & Other Energy L/C Number : L3474 FY ) Board Approval (FY) 92 Partners involved : Closing Date 06/30/1997 06/30/1999 Prepared by : Reviewed by : Group Manager : Group : Alvaro J\. Covarrubias Alain A\. Barbu Ridley Nelson OEDST 2\. Project Objectives and Components a\. Objectives The project's main objectives were to improve power plant efficiency, reduce air pollution in northern Bohemia and thereby improve the environment and health of local population, modernize the transmission system, and facilitate interconnection of Ceske Energeticke Zavody (CEZ) with the German grid\. These objectives were to be accomplished in the context of an overall reform of the energy sector \. b\. Components The objectives were to be achieved by : (a) the installation of equipment and operational improvements at Prunerov II thermal power station and other large CEZ power plants to reduce lignite consumption; (b) installation of flue gas desulfurization (FGD) at Prunerov II; (c) installation of electrostatic precipitators at the worst polluting CEZ power plants; (d) modernization of five 400 kV substations and construction of a short 400 kV line; and (e) consultants and staff training\. c\. Comments on Project Cost, Financing and Dates The actual cost of the project (US$397\.6 million, excluding interest during construction ) was 28\.7 percent lower than the appraisal estimate (US$ 557\.5 million) as a result of a low price of the FGD equipment obtained by CEZ through international competitive bidding\. The Bank loan financed the foreign cost (US$209\.8 million) and CEZ financed the local cost (US$187\.8 million)\. In 1998, in order to decrease its exposure to certain currencies, CEZ decided to convert the initial Bank loan into two sub loans, one US$ -denominated loan of US$169\.0 and another DEM-denominated loan of DEM135 million\. The undisbursed amount of US$36\.2 million equivalent was cancelled (US$1\.3 million and DEM59\.1 million) shortly before the loan closing date, which had been extended by two years \. 3\. Achievement of Relevant Objectives : The project achieved its major environmental, efficiency, physical and institutional development objectives \. Air pollution in Northern Bohemia decreased significantly as shown by the reduction of annual emissions from power plants by a factor greater than 4 from 1992 to 1998\. The reliability of the CEZ power system and the efficiency of its Prunerov II and other six major power plants increased as indicated by a reduction in breakdowns by 7\.2\. percent from 1997 to in 1998, and a decrease of power plant gross fuel consumption by 2\.8 percent from in 1993 to 1999 (including the 1\.5-2\.0 percent additional electricity consumed by the FGD and precipitator equipment )\. Four major 400 kV substation were modernized, and the control and protection systems of other four substation were upgraded, and a short but important 400 kV transmission line was built\. Methodologies for least-cost development of the power system, as well as for assessment of nuclear plant safety, were introduced in CEZ \. In addition, early in project implementation CEZ was transformed into a corporation, and later equipped with state -of-the art accounting and financial management information systems \. 4\. Significant Outcomes /Impacts : The emissions of air pollutants were significantly reduced in the period 1992-1998\. The environmental survey carried out in 1998 indicated annual reduction of emissions --compared to those existing in 1992-- from about 58,000 to 7,000 ton of dust, from 770,000 to 160,000 ton of SO2, from 128,000 to 57,000 ton of NOx, and from 18,000 to 6,000 ton of CO\. Moreover, CEZ strategy is to achieve compliance with ISO 14001 Environmental Management Quality Standards by probably end -2000\. Further, in 1998 CEZ was accepted as associated member of the Union for the Coordination of Production and Transmission of Energy (UCPTE) in merit to its quality parameters of electricity supplied through the power interconnected system \. 5\. Significant Shortcomings (including non -compliance with safeguard policies ): The estimated 6 percent project economic rate of return on a time slice of CEZ âs total investment program is well below the 14 percent estimated at appraisal \. This is the result of the big drop in electricity demand in the period 1992-1999 and low electricity tariffs (used as a measure of project economic benefits ) not recovering the cost of service\. It is now estimated that electricity demand will only reach in 2007 its 1992 level, compared to the appraisal's forecast of an increase in demand of 36 percent between 1992 and 1999\. And average electricity tariffs are now 40 percent below their 1992 level in real terms\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory This rating is mainly supported by project's achievements of its primary environmental and physical obectives, which outweigh its relatively low 6 percent estimated economic return -- caused by depressed electricity sales and the prevailing low electricity tariffs\. Institutional Dev \.: Substantial Substantial Early corporatization of CEZ, its adherence to high environmental standards, its adoption of modern methodologies for planning, and the introduction of modern accounting and information systems for CEZ management support this rating\. Sustainability : Likely Likely CEZ has a long term commitment to remain in compliance with environmental ISO standards\. Bank Performance : Satisfactory Satisfactory Bank supervision was intensive following extension of loan closing date (4 missions in 1998)\. Borrower Perf \.: Satisfactory Satisfactory Full commitment of the Government to project objectives and CEZâs good management and competent professional staff during project implementation, outweigh weaknesses in project preparation which delayed project completion by two years\. Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : The corporatization and the strengthening of the financial management of a Government entity have proven to be valuable measures in preparing that entity to access international capital markets and obtaining financial resources for its investment program without Government guarantees \. 8\. Audit Recommended? Yes No 9\. Comments on Quality of ICR : The ICR is of satisfactory quality \.	REVIEW
P070252	Document of The World Bank Report No: ICR00001168 IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-052140) ON A GRANT IN THE AMOUNT OF SDR 2\.2 MILLION (US$ 2\.9 MILLION EQUIVALENT) TO LAKE CHAD BASIN COMMISSION FOR A REVERSAL OF LAND AND WATER DEGRADATION TRENDS IN THE LAKE CHAD BASIN ECOSYSTEM PROJECT June 17, 2009 AFT - Water Resource Management (AFTWR) AFCC1, AFCF2, AFCW2 Africa CURRENCY EQUIVALENTS FISCAL YEAR January 1 December 31 (Exchange Rate Effective) Currency Unit = US$ Abbreviations and Acronyms AFD Agence Française de Développement AfDB African Development Bank APR Annual Performance Report (UNDP) BGR German Institute for Geosciences and Natural Resources CAR Central African Republic CAS Country Assistance Strategy CBO Community Based Organization COM Council of Ministers of LCBC CMP Catchment Management Plan CPS Country Partnership Strategy (Nigeria) DGIS Directorate-General for International Cooperation DES Deputy Executive Secretary of LCBC DFID Department for International Development (UK) EMF Environmental Management Framework ES Executive Secretary/secretariat of LCBC ESI Environmental Status Indicator EU European Union FM Financial Management FMWR Federal Ministry of Water Resources, Nigeria GEF Global Environmental Facility GEO Global Environmental Objective GTZ German Assistance for Developing Countries IA Institutional Assessment ICR Implementation Completion and Results Report IMCC Inter-Ministerial Coordinating Committee IP Investment Plan/Implementation Progress ISR Implementation Supervision and Results Report IUCN International Union for Conservation of Nature and Natural Resources IW International Waters (GEF) IWRM Integrated Water Resources Management JWL Joint Wetlands Livelihoods project K-Y pilot Komadugu-Yobe pilot project (Nigeria) KYB Komadugu-Yobe Basin (Nigeria) LCB Lake Chad Basin LCBC Lake Chad Basin Commission LCB-GEF The Project Reversal of Land and Water Degradation Trends in the LCB Ecosystem M&E Monitoring and Evaluation MSA Management Services Agreement MTR Mid-term Review NAP National Action Plan NCC National Coordination Committee NCF Nigerian Conservation Foundation NGO Non-governmental Organization NPC National Project Coordinator PAD Project Appraisal Document, World Bank PIM Project Implementation Manual PSC Project Steering Committee PI Process Indicator PIR Project Implementation Review (UNDP) PM Project Manager PMG Project Management Group PMU Project Management Unit Prodoc Project Document, UNDP PRSP Poverty Reduction Strategy Paper PSC Project Steering Committee RAF Resettlement Action Framework SAP Strategic Action Program/Plan SRI Stress Reduction Indicator TDA Transboundary Diagnostic Analysis TOR Terms of Reference TPR Tri-partite Review TTL Task Team Leader UNDP United Nations Development Program UNOPS United Nations Office for Project Services WWF World Wild Life Fund Vice President: Obiageli K\. Ezekwesili Country Director: Alberto Chueca Mora Sector Manager: Ashok K\. Subramanian Project Team Leader: IJsbrand H\. de Jong ICR Team Leader Johannes G\. Grijsen REVERSAL OF LAND AND WATER DEGRADATION TRENDS IN THE LAKE CHAD BASIN ECOSYSTEM PROJECT CONTENTS A\. Basic Information \. B\. Key Dates \. C\. Ratings Summary \. D\. Sector and Theme Codes\. E\. Bank Staff \. F\. Results Framework Analysis \. G\. Ratings of Project Performance in ISRs \. H\. Restructuring (if any) \. I\. Disbursement Profile \. 1\. Project Context, Global Environment Objectives and Design\. 1 2\. Key Factors Affecting Implementation and Outcomes \. 5 3\. Assessment of Outcomes \. 11 4\. Assessment of Risk to Development Outcome \. 17 5\. Assessment of Bank and Borrower Performance \. 17 6\. Lessons Learned\. 19 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners\. 21 Annex 1\. Project Costs and Financing \. 22 Annex 2\. Outputs by Component (achievements versus targets in PAD and Prodoc) \. 24 Annex 3\. Economic and Financial Analysis \. 29 Annex 4\. Bank Lending and Implementation Support/Supervision Processes\. 30 Annex 5\. Beneficiary Survey Results \. 32 Annex 6\. Stakeholder Workshop Report and Results\. 33 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 34 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders \. 53 Annex 9\. List of Supporting Documents \. 54 Annex 10\.Enhanced Results Framework Analysis, synthesized from PAD and Prodoc \. 56 MAP \. 60 A\. Basic Information Reversal of Land and Water Degradation Country: Africa Project Name: Trends in the Lake Chad Basin Ecosystem Project ID: P070252 L/C/TF Number(s): TF-52140 ICR Date: 06/17/2009 ICR Type: Core ICR LAKE CHAD BASIN Lending Instrument: TAL Borrower: COMMISSION (LCBC) Original Total USD 2\.9M Disbursed Amount: USD 2\.8M Commitment: Environmental Category: B Global Focal Area: I Implementing Agencies: Lake Chad Basin Commission (LCBC) Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 02/12/2001 Effectiveness: 01/22/2004 Appraisal: 04/08/2002 Restructuring(s): Approval: 01/21/2003 Mid-term Review: 12/19/2006 02/26/2007 Closing: 01/21/2008 12/20/2008 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Global Environment Outcome Substantial Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C\.2 Detailed Ratings of Bank and Borrower Performance Bank Ratings Borrower Ratings Moderately Moderately Quality at Entry: Government: Unsatisfactory Unsatisfactory Moderately Implementing Moderately Quality of Supervision: Unsatisfactory Agency/Agencies: Unsatisfactory Overall Bank Moderately Overall Borrower Moderately Performance: Unsatisfactory Performance: Unsatisfactory i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Moderately Yes time (Yes/No): Supervision (QSA): Unsatisfactory GEO rating before Moderately Closing/Inactive status Unsatisfactory D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 50 60 General water, sanitation and flood protection sector 25 40 Irrigation and drainage 25 Theme Code (as % of total Bank financing) Land administration and management 50 50 Water resource management 50 50 E\. Bank Staff Positions At ICR At Approval Vice President: Obiageli Katryn Ezekwesili Callisto E\. Madavo Country Director: Alberto Chueca Mora Ali Mahmoud Khadr Sector Manager: Ashok K\. Subramanian Inger Andersen Project Team Leader: IJsbrand Harko de Jong Tracy Hart ICR Team Leader: IJsbrand Harko de Jong ICR Primary Author: Johannes Geert Grijsen ii F\. Results Framework Analysis Global Environment Objectives (GEO) and Key Indicators(as approved) To build capacity within the Lake Chad Basin Commission (LCBC) and its national committees, so that it can better achieve its mandate of managing land and water resources in the greater Conventional Basin of Lake Chad\. The GEO has not been revised\. While the PAD and Credit Agreement did not provide a Results Framework, the project had a logframe which contained objectives, outputs and outcomes\. logframe was the norm at the time of project preparation and its design did not include information on baseline and end-of-project targets\. At the time of project preparation result framework was not a requirement and the logframe was the norm\. The following framework has been derived from information provided in the logframe (see Annex 1 of the PAD: #Project Design Summary#); refer also to Sections 1\.2 and 2\.3\. In Annex 10, UNDP#s APR/PIR and Prodoc outcome indicators have been integrated with the outcome indicators used in the Bank#s ISRs\. This integration provides a better presentation of project outcomes and an alternative for the Results Framework provided in this Section F\. The objectives and indicators of the Project Appraisal Document#s (PAD) logframe were overly ambitious and by design lacked baselines and targets\. As a result, it is difficult for stakeholders to reach agreement in rating the achievements of the project\. For example, this ICR rates the project performance as moderately unsatisfactory (MU), while the independent final evaluation rates the project performance as moderately satisfactory (MS)\. The MU rating is based on the comparison of the achievement of the project with the overly ambitious objectives\. The MS rating, on the other hand, is based on the project#s achievements despite the difficulties encountered, such as the civil strife\. Revised Global Environment Objectives (as approved by original approving authority) and Key Indicators and reasons/justifications (a) GEO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years (1) Increased numbers of stakeholders involved in local and transboundary water management issues, with the ability to influence decision making processes, (2) Indicator 1 : Increased awareness of the impact of national policies on shared water resources by groups CBOs and local stakeholders Value proposed and (quantitative or Not available Not Available implemented Qualitative) projects addressing local concerns\. iii National teams developed the National Action Plans (NAP) for the implementation of IWRM, through the involvement of multiple stakeholders\. Date achieved 01/21/2003 12/20/2008 12/20/2008 Partial achievement\. Limited avenues were available for public involvement in Comments the overall management of the LCB system\. National/local capacities for the (incl\. % sustainable development of the LCB resources have improved through training of achievement) groups, e\.g\. IMC/CBO\. Indicator 2 : Implementation support for three pilot projects Local micro-grant activities were implemented in 3 out 5 of pilot projects, with involvement of Value many stakeholders\. (quantitative or Not available Not available Catchment Qualitative) Management Plans were developed for 4 pilot Basins\. Lessons learned on pilot activities are incorporated in the NAPs and SAP\. Date achieved 01/21/2003 12/20/2008 12/20/2008 Comments Partial achievement (no target set)\. The Upper-Chari Basin pilot was cancelled (incl\. % and the Lake Fitri pilot was curtailed due to the prevailing security conditions; achievement) micro-grants were disbursed with delays\. Completion and adoption of the Strategic Action Plan (SAP), with a framework, Indicator 3 : timeline and Financing Plan for implementation of priority activities\. The SAP has been endorsed by the Council of Ministers in June Value 2008, but the (quantitative or Not available Not available Investment Plan for Qualitative) SAP implementation has yet to be developed\. Date achieved 01/21/2003 12/20/2008 12/20/2008 Comments Partial achievement (no target set)\. At the start of the project, the planning (incl\. % document for Basin development was the Master Plan of 1992\. This indicator is iv achievement) partially achieved since the Investment Plan is not available\. Increased donor involvement in and support for the SAP and LCBC Plan Indicator 4 : implementation\. A donor conference is under preparation for 2009\. AfDB has approved the LCB Sustainable Development Value Program (quantitative or Not available Not available (PRODEBALT), Qualitative) which will support implementation of the SAP\. Additional donor funding is available from the EU, BGR, GTZ\. Date achieved 01/21/2003 12/20/2008 12/20/2008 Partial achievement\.Few Donors were involved in the development of land and Comments water resources in the Lake Chad\. This indicator is partially achieved since the (incl\. % donor conference has been postponed beyond project closure\. AfDB's project achievement) was approved in 12/2008 (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Specific, country-endorsed, and implemented proposals to create a more effective Indicator 1 : LCBC\. The Institutional Assessment (IA) Value has been endorsed (quantitative or Not available Not available in the Extraordinary Qualitative) Council of Ministers (CoM) in June 2008\. Date achieved 01/21/2003 12/20/2008 12/20/2008 Partial achievement\. In March 2008 the Heads of States resolved that #LCBC Comments should carry out - within six months # institutional\.# The IA was approved in (incl\. % June 2008 by the CoM, but has not been implemented at when the project closed achievement) (12/08)\. The LCBC has been reformed according to the endorsed institutional audit and is Indicator 2 : operating more effectively\. Value LCBC has (quantitative or None implemented the Qualitative) recommendations v of the institutional reform and functions more effectively as a political institution, while its Secretariat functions efficiently\. Date achieved 01/21/2003 12/20/2008 Comments (incl\. % achievement) G\. Ratings of Project Performance in ISRs Actual Date ISR No\. GEO IP Disbursements Archived (USD millions) 1 08/06/2003 Satisfactory Satisfactory 0\.00 2 02/25/2004 Satisfactory Satisfactory 0\.00 3 07/28/2004 Satisfactory Unsatisfactory 0\.00 Moderately Moderately 4 04/18/2005 0\.25 Unsatisfactory Unsatisfactory Moderately Moderately 5 11/04/2005 0\.53 Unsatisfactory Unsatisfactory Moderately 6 03/29/2006 Moderately Satisfactory 0\.53 Unsatisfactory 7 05/09/2006 Moderately Satisfactory Moderately Satisfactory 0\.53 8 05/15/2006 Moderately Satisfactory Moderately Satisfactory 0\.53 9 11/08/2006 Moderately Satisfactory Moderately Satisfactory 0\.53 10 06/12/2007 Moderately Satisfactory Moderately Satisfactory 1\.18 Moderately Moderately 11 11/16/2007 2\.20 Unsatisfactory Unsatisfactory Moderately Moderately 12 05/20/2008 2\.20 Unsatisfactory Unsatisfactory Moderately Moderately 13 12/05/2008 2\.85 Unsatisfactory Unsatisfactory H\. Restructuring (if any) Not Applicable vi I\. Disbursement Profile vii 1\. Project Context, Global Environment Objectives and Design 1\.1 Context at Appraisal Regional context and issues\. Lake Chad and its active basin constitute an important freshwater resource shared by Cameroon, Central African Republic (CAR), Chad, Niger and Nigeria\. Due to persistent drought and human activity, the lake's surface area has decreased from a peak of 25,000 km2 to less than 2,000 km2\. Socio-economic pressures on the region's limited water resource base and a drier climate have led to a significant increase in extractions for irrigation\. Rural poverty and environmental degradation: General poverty characterizes the development situation in the Basin, which is a key factor for all environmental threats\. The member countries rank among the last thirty in the latest Human Development Index ranking (December 2008)\. Close to 20 million peoples' livelihoods depend on economic activities carried out in the lake and its hydrological active basin of about 1\.0 million km2, which also includes important wetlands and floodplains\. Inadequate water and environmental management policies: Generally, there is insufficient knowledge of water resources in the Basin, and there is no effective system for monitoring freshwater resources\. Water demand management is ineffective, and little attention is paid to adapting production methods to natural resource limitations\. Focus on strengthening regional (LCBC), national and local capacity: On May 22, 1964, the Lake Chad Basin Commission (LCBC) was instituted under the `Convention Relating to the Development of the Chad Basin,' executed by Cameroon, Chad, Niger and Nigeria\. CAR joined LCBC in 1994 and Libya ratified the convention in June 2008\. LCBC's broad mandate includes prior notification, monitoring studies and works related to water resources\. LCBC has the authority to examine complaints and contribute to the resolution of differences among member countries\. The latter, however, have often bypassed the LCBC in pursuing national development projects\. Rationale for Bank's assistance: The Project Appraisal Document (PAD) does not explicitly elaborate the rationale for Bank assistance\. LCBC and GEF requested the involvement of the Bank as co-implementing agency with UNDP, for its comparative advantage\. At the time of appraisal, the project was consistent with the general sector goals of relevant Country Assistance Strategies (CAS) and PRSPs, but relevant CAS documents gave different levels of attention to the issue of water in general, and little or none to transboundary water basin management\. The project contributed to the overarching goals of the Regional Integration Assistance Strategy (RIAS) for Sub- Saharan Africa by strengthening collaboration across borders, promoting cooperation, and coordinating investments in support of shared water resources\. The Central Africa Regional Integration Assistance Strategy (2003) specifically mentioned the Project and sector work to define basin-wide priorities\. 1 Designed to generate global benefits through sustainable transboundary water resources management and comprehensive participation of local stakeholders in land and water management in the Lake Chad Basin, the project was fully aligned with GEF's OP9 "Integrated Land and Water Multiple Focal Area Operational Program\." The GEF project was an opportunity for LCBC to embrace institutional change towards: (i) a planning and management based organization, (ii) ensuring a sound and environmentally sustainable basis for investments and economic developments, and (iii) creating a culture of transparent public participation\. 1\.2 Original Global Environment Objectives (GEO) and Key Indicators (as approved) Lack of uniformity in GEO descriptions: The PAD, Grant Agreement and Prodoc (UNDP) provide various descriptions of the PDO/GEO (see Table 1)\. These descriptions, although different, are not contradictory\. They all agree on the capacity building aspects of the LCBC, and the Grant Agreement and Prodoc further elaborate on the TDA and SAP, and on the increase and coordination of donor support\. The Grant Agreement mentions donor coordination, while the Prodoc focuses on donor support, specifically in implementing the SAP\. GEO in the PAD GEO in the Grant agreement GEO in Prodoc (UNDP To build capacity within (i) to strengthen the capacity of LCBC (i) to overcome barriers to the the LCBC and its national to promote and improve coordinated concerted management of the committees so that it can and sustainable water management in basin through enhanced better achieve its mandate the Basin; (ii) to strengthen collaboration and capacity of managing land and institutional mechanisms in member building among riparians and water resources in the countries for management of stakeholders; (ii) to complete a greater Conventional transboundary water issues; (iii) to TDA and prepare a descriptive Basin of Lake Chad develop a Strategic Action Program framework for the concerted (SAP) to improve the conservation and water management across the management of land and water basin; and (iii) to prepare a resources in the Basin; and (iv) to GEF-SAP for long term assist LCBC in coordinating donor implementation of priority support of the SAP and transboundary actions to address management transboundary issues, and to mobilize increased donor interest/support for implementing the SAP\. Table 1: Description of the GEO in the different Project documents\. Lack of uniformity, baseline, and end of project target values in key performance indicators: While the PAD and Credit Agreement did not provide a Results Framework, the project had a logframe which contained objectives, outputs and outcomes\. At the time of project preparation result framework was not a requirement and the logframe was the norm\. The design of logframe design did not include information on baseline and end-of- project targets\. The logframe (Annex 1 of the PAD) only lists outcome indicators (some 2 of which are activities/outputs), in addition to a host of output indicators\. Similarly, Annex 2 of UNDP's Prodoc provides a detailed logframe for the project without baseline and end-of-project target values for its indicators (see Annex 10)\. 1\.3 Revised GEO (as approved by original approving authority) and Key Indicators, and reasons/justification There were no formal revisions of the original GEO and key indicators\. 1\.4 Main Beneficiaries The primary regional benefit of the project was a stronger LCBC for the decision-making process at the regional level, resulting in: (i) strengthened regional institutional capacity for coordinated decision-making; (ii) local communities empowered in managing the Lake Chad and Lake Fitri resources; (iii) design of an effective mechanism to translate regional policies to the local level for managing the natural resources; and (iv) regional consensus and support for the next phase of work based on a SAP\. The PAD and Prodoc identified beneficiaries at three levels: (i) At the regional level LCBC would benefit from institutional strengthening, capacity building to implement projects, and an overall advancement of its vision, mandate and strategic planning framework\. It would be able to build more commitment from its members, and serve them efficiently\. (ii) At the national level water management structures of LCB countries would benefit from institutional capacity building and being mandated to lead the national-level process of the TDA and SAP\. Member governments would put mechanisms in place to harmonize their activities and get prepared to attract donor support and investment\. (iii) At the local level rural communities in the Basin would benefit from the micro-grant programs and become more involved in decision-making processes to manage their natural resources\. 1\.5 Original Components (as approved) The project consisted of six components, as summarized below from PAD and Prodoc (see also Annex 2)\. Components 2 and 6 were implemented through the Bank, components 1, 3 and 4 were implemented through UNDP, and component 5 (pilot projects) was jointly implemented\. The total budget of the project was US$9\.6 million, of which US$2\.9 million was implemented through the Bank\. Component 1 (An established PMU and national Lead Agencies to drive and coordinate implementation - US$ 2\.34m) aimed at establishing: the Project Management Unit (PMU) at LCBC; national lead agencies; and a Technical Advisory Committee and Project Steering Committee (PSC) to drive and co-ordinate TDA, SAP, pilot projects, policy initiatives and institutional linkages\. Component 2 (Enhanced regional policy initiatives and institutional mechanisms to address trans-boundary issues - US$1\.08m) aimed to strengthen the institutional and environmental management capacity at regional and national/local levels through: (i) review of current functions and responsibilities of LCBC, creating awareness of national 3 policy makers on transboundary issues and building regional capacity; (ii) integration of transboundary water and environmental management policies into National development Action Plans (NAP); (iii) review of legal, institutional, financial and socio-economic frameworks in member countries; and (iv) the harmonization of legal frameworks, regulations and approaches for transboundary management of shared resources\. Component 3 (Strengthened engagement of stakeholders - US$ 1\.23m) aimed at strengthening community level participation through: (i) supporting local planning initiatives to establish their sustainable development plans in line with sub-basin planning frameworks; (ii) workshops for the prioritization of local, national and regional initiatives to arrive at a coherent and integrated approach; and (iii) development of a regionally based methodology and mechanism for multi-level stakeholder participation, with provisions for environmental impact studies\. Component 4 (A completed TDA and a synthetic framework for concerted management of the basin US$ 2\.05m) aimed to examine basin-wide conditions and issues and to determine the linkages between environmental and socio-economic systems and their transboundary impacts\. These would serve as an input to the SAP design (component 6) and implementation\. This component was also designed to collect data, improve data collection systems and capacity, develop water resources models and develop risk analysis capacity\. Component 5 (Demonstration pilot projects - US$2\.54 m) aimed to test and validate methodologies, secure stakeholder involvement and develop implementation modalities for national and local SAP and NAP interventions\. Pilot projects implemented through the World Bank were (i) the Lake Fitri pilot in Chad, (ii) the Komadugu-Yobe (KY) pilot in Nigeria, and (iii) the Waza-Logone (WL) flood plains pilot in Cameroon\. Pilot projects funded through the UNDP included: (iv) the Lake Chad Shorelines and Northern Diagnostic Basin pilot, and (v) the Upper Chari Basin land use systems pilot in the CAR\. Component 6 (Strategic Action Plan endorsed and donor support mobilized- US$0\.36 m) aimed to develop a prioritized Strategic Action Program (SAP) for basin management (with an Investment Plan (IP)) and to mobilize donors support\. The Project was jointly implemented by the World Bank and UNDP\. The United Nations Office for Project Services (UNOPS)was the Executing Agency for the components funded through the UNDP, and acted as a Management Services Provider for the components funded through the Bank\. The project was managed by a PMU in collaboration with National Coordinators (NC)\. 1\.6 Revised Components None of the project components were restructured during project implementation\. 1\.7 Other significant changes At project effectiveness (January 21, 2004) the closing date was extended till January 20, 2008, following which it was extended twice, ultimately to December 20, 2008\. No significant changes related to project design occurred during implementation\. The only changes made in 2006 were: (i) a reallocation of funds; (ii) the merging of funds for 4 goods and works with the funds for "micro grants" to allow full community participation in the implementation of local initiatives under the pilot projects; (iii) an adjustment of the financing parameters for all expenditures to 100%; and (iv) an amendment of the Procurement Schedule of the Grant Agreement\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry Quality at Entry Assessment (QEA): The project was not subjected to a QEA, but QAG conducted in August 2004 a Quality of Supervision Assessment (QSA6), which covered mainly the period from appraisal to effectiveness\. The panel noted (i) the Bank's weak performance in helping the project achieve effectiveness; (ii) slow response to serious design issues; and (iii) the absence of a strategy to remedy weak ownership and commitment of LCBC\. The latter was highlighted as a main threat to the project's sustainability\. The Panel also expressed concern about the weak performance of UNOPS/PMU in project execution\. Delay in project effectiveness\. It took a full year after Board approval to achieve effectiveness conditions in January 2004\. Factors causing this delay included: (i) LCBC's institutional weakness and lack of capacity; (ii) LCBC's failure to provide counterpart staff for the PMU; (iii) UNOPS' inability to timely establish the PMU; (iv) severe constraints to travel and communication within the region; and (v) initial disbursement problems of UNOPS\. Overly ambitious project design: The QSA6 panel (August 2004) concluded: (i) the project's scope, design and GEO were too ambitious given the implementation capabilities of the Recipient; (ii) the institutional context was not properly appraised at entry, (iii) the project design did not sufficiently address the development of SAP implementation capacity in LCBC; and (v) the safeguard framework overly focused on a set of micro-level pilot sites, while failing to look at the region's problems more strategically\. Lessons learned\. Lessons learned from other GEF operations were enumerated in the PAD, but in some cases not adequately incorporated into the project design, such as: Political support from riparian countries is needed to strengthen regional mechanisms\. Although the riparians were expressing their commitment to improving the environmental management of Lake Chad, this did not translate into effective until the end of the project\. Capacity building is critical for effective decision-making and management at all levels\. The project aimed at building regional, national and local capacity to strengthen the decision-making process for sustainable ecosystem-based management of the Basin's resources\. However, the project's design provided insufficient resources for strengthening of the regional institution LCBC itself\. 5 Assessment of risks: Crucial risk factors were seriously underestimated in the PAD\. These included (i) the political willingness of the member states to effectively support LCBC financially and politically in executing its mandate and the project, and (ii) LCBC's lack of ownership of the project\. The lack of implementation and fiduciary capacity within LCBC prompted the Bank to insist that LCBC would utilize a project management service\. The LCBC selected the UNOPS\. However, the use of this service management agent eroded LCBC's ownership of the project\. 2\.2 Implementation Inadequate project management caused delays in project implementation: During 2004 and 2005, the project experienced operational and managerial problems\. These included (i) the lack of funds due to problems in UNOPS' financial system ATLAS, (ii) lack of participation of LCBC staff, and (iii) lack of office facilities, vehicles, and other logistical requirements\. Appointment of a new Project Manager (PM) in 2005 caused implementation progress to deteriorate further\. By then, the lack of communication with LCBC's management had led to complaints and disinterest at various levels\. LCBC was not involved in project decisions, and its staff members had been withdrawn from the project\. Lack of commitment and ownership by Recipients: The lack of commitment of the member countries to LCBC has resulted over time in large arrears in the national contributions to LCBC, which at the end of 2007 stood at 3\.4 billion FCFA or about US$ 6\.6 million1\. In turn, LCBC's weak financial position and its limited management capacity contributed to inadequate co-funding of project staffing\. Linkages between the PMU and LCBC remained weak throughout the project, despite numerous efforts and commitments to improve the situation, including (i) the establishment of a Project Management Group (PMG) in LCBC, (ii) increased participation of LCBC staff members in the project, and (iii) increased internal communications and regular meetings\. Project at risk but not restructured: Following the QSA6 assessment in August 2004, the team considered restructuring the project\. The team faced the following dilemma: either restructure the project formally or supervise it intensively to improve project implementation\. The formal restructuring would have been a lengthy process as endorsement was required from each of the member countries\. The project was already in its eighteenth month of implementation (project Board date January 2003 and effectiveness January 2004)\. The team was of the opinion that funding a costly PMU-- which included international staff-- during a lengthy restructuring process would come with significant transaction costs\. On this basis, the team concluded that the optimal solution was to (i) work intensively with the PMU/UNOPS to improve project implementation `en route' and (ii) assess the success of this choice at the MTR stage\. The project, at risk of cancellation in 2005, moved out of problem status by May 2006\. LCBC's project ownership and PMU's performance had improved, and substantial 1 Since the project became effective in January 2004 only Nigeria paid its contribution for 2005 and Chad reportedly paid its total arrears in 2008\. 6 progress had been achieved with procurement\. The project slipped back into problem status in 2007 (refer to section 5\.1 for more information on project supervision)\. Overly optimistic Mid-Term Review Assessment did not occasion project restructuring to fix design flaws: An independent MTR was carried out in February 2007, while the project still had the momentum gained by mid 2006\. The MTR concluded that the project had: (i) established the PMU and coordinating bodies; (ii) prepared a draft institutional assessment (IA) of LCBC and its restructuring plan; (iii) launched all pilot projects; (iv) prepared the TDA; (v) launched a consultancy on IWRM and on the preparation of NAPs; and (vi) contributed to the creation of regional mechanisms to integrated sub-basin management\. The MTR considered the project to be progressing successfully towards the achievement of the GEO and judged the objectives to be relevant and achievable\. The MTR failed to assess the project's outputs on the basis of the key performance indicators articulated in the logframe in the PAD, and did not assess the likelihood of achieving the GEO as per the project document\. The overly optimistic MTR resulted in a perception that the intensive supervision was satisfactorily addressing the design flaws identified as early as August 2004 (QSAE assessment)\. In retrospect, the MTR was a missed opportunity to objectively reconsider the option of formally restructuring the project and fixing its design flaws\. Security situation caused difficulties with project staffing and implementation: The recruitment of project management staff for the PMU was difficult due to duty station location (N'Djamena)\. Because of civil strife, the project was forced to suspend its business twice, the Lake Fitri pilot project in Chad was not be completed, and the Upper Chari Basin pilot in CAR was not initiated\. Delay in approval of the Institutional Assessment (IA): LCBC, until late in the project, failed to provide leadership in the pursuit of its restructuring\. The IA was initially approved by Technical Experts (June 2006), but did not offer a concrete action plan towards institutional reform\. The November 2006 CoM requested that LCBC complement the IA\. Little progress was made until November 2007, when a consultant was hired to finalize the phase 2 of the IA\. In March 2008, the Heads of States and Government Summit resolved that "LCBC should carry out - within six months - institutional reforms in order to define the most appropriate structure for the Executive Secretariat and adequate mechanisms for institutional capacity building likely to render the LCBC more operational\." Since this statement of the Heads of States and Government Summit, progress on the IA has improved\. The IA was approved in June 2008 by the Extraordinary CoM\. Moreover, the action plan implementation (supported by GTZ) was endorsed at the last CoM held in Nigeria in May 2009\. Missed opportunity of international exposure and donor interest: The Heads of State and Government Summit (March 2008) requested "the LCBC/GEF project partners to assist in the preparation and organization of a donors' conference\." However, the late endorsement of the SAP (June 2008) and the delay in developing the IP caused the Chairman of the CoM to postpone the donors' conference till after project closure\. 7 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Inadequate M&E framework design: The PAD and Prodoc did not provide a concise Results Framework, but provided a logframe, which contained objectives, outputs, and outcomes\. At the time of project preparation result framework was not a requirement and the logframe was the norm\. Outcome indicators varied between the PAD and Prodoc, which provided mainly lengthy lists of broadly defined output/process indicators\. The documents lacked quantified baselines and were not specific in the end-of-project outcome/output targets since by design logframe does not contain this information\. The PSC adopted in 2005 a Results Framework, but it was never formalized\. Subsequent ISRs and annual APR/PIR reports of UNDP showed a gradually evolving set of M&E indicators\. Monitoring of Basin status: During the CoM of March 2008, the `Protocol of Agreement on Data Exchange between Member States of LCBC' was signed, with the objective to exchange data on water resources for the LCB\. A database will be established for monitoring the status of the Basin from an environmental, natural resources and water management angle, including regional basin data on: water resources (quality and quantity), water use, land use (soil, vegetation and erosion), climate conditions and meteorological observations, environmental aspects, navigation, and socio-economic conditions\. This regional database will be based in the LCB-Observatory at LCBC, as proposed in the endorsed IA\. 2\.4 Safeguard and Fiduciary Compliance Safeguards compliance assessment: The Project was classified as Environmental Category B due to potential impacts from the implementation of the pilot projects\. Four safeguards policies were triggered for the pilot projects: OP 4\.01 Environmental Assessment, OP 4\.04 Natural Habitats, OP 4\.12 Involuntary Resettlement, and OP 4\.37 Safety of Dams\. During preparation, an Environmental Management Plan and Resettlement Policy Framework were developed\. The latter was developed in view of possible redistribution of community and/or private assets for optimal resources management\. Framework Dam Safety Plans were also prepared for the Maga Dam in Cameroon and the Tiga and Challawa George Dams in Nigeria\. The project funded Environmental Safeguards Audits (ESA) in mid 2008 for the K-Y Integrated Wetlands Management pilot, the Waza Logone pilot, and the Lake Chad Shorelines & Northern Diagnostic Basin pilot\. The safeguard ratings in the ESA reports varied across pilot projects, but were overall moderately satisfactory (MS) for the OPs 4\.01, 4\.04 and 4\.12, and Unsatisfactory (U) for OP 4\.37\. The dam safety policy was triggered because it was felt that some pilot project activities might rely on the performance of existing dams, which constituted a reputational risk\. The project did not provide financing to fund mitigation measures and intended to convene a donor conference to solicit funding for structural and non- structural mitigation measures\. As per Annex 13 of the PAD, the Bank was expected to receive twice yearly progress reports on the progress in addressing the risks identified at the various dam sites\. However, such reports were not received\. 8 Under this project no severe negative impacts arose due to the small scale and thorough selection process of individual micro-interventions under each pilot project\. The ESA noted missed opportunities to mainstream environmental and social concerns in pilot projects and to establish a system of screening with environmental and social checklists, EMPs/ EAs and approval processes\. This was noted with reference to the possible up- scaling of micro- projects under future SAP funded activities, when cumulative environmental impacts of many small-scale investments may become significant\. The ESA noted that the knowledge of safeguard documents by the project staff and other stakeholders was very limited, and that the safeguard documents were not applied and implemented systematically\. There was no Environmental Specialist in the PMU, which relied on the Environmental Specialist of LCBC\. The pilot project operators did not conduct baseline studies before the start of the implementation of micro-projects and did not put in place M&E systems to assess the impacts of micro-projects\. Also, there were no references to safeguards in the LCB Micro-grants Implementation Manual\. Overall, supervision missions and the MTR report did not pay adequate attention to safeguard issues\. However, the ESA noted that strong positive feed-back was received from K-Y community members on the process of consultation, training for the CBOs, and the involvement of CBOs and NGOs in micro-project identification, formulation, implementation, supervision, and conflict resolution\. Communities showed strong ownership in the implementation of micro-projects\. Financial management assessment: The financial management system for the project was based on UNOPS' ATLAS system, and all payments for the project were processed through UNOPS and the project's Imprest Account at the PMU\. Neither supervision missions nor audit reports revealed critical issues\. The MTR reported that flow of funds through UNDP's country offices to pilot project activities (micro-grants) was not satisfactory\. ISRs rated the financial management performance as moderately satisfactory\. UNOPS failed to regularly provide the mandatory annual audit reports, which for the years 2005 2007 were only submitted in October 2008\. Lack of fiduciary capacity in LCBC: LCBC generally failed to adhere to the legal agreement, as it did not timely provide the annual audit reports for the Executive Secretariat\. Therefore, it was agreed at the tri-partite review (May 2006) that the project would hire a FM consultant to assist LCBC in developing an Action Plan for Fiduciary Capacity Building and conduct training for representatives of the member countries\. This support was expected to enhance sustainability of project efforts, increase accountability of LCBC and enhance the trust of donors in LCBC\. Unfortunately, this consultancy performed poorly and was of little use to the LCBC\. Procurement assessment: The Bank's standard bidding documents were adjusted to UNOPS' internal requirements and procurement clauses in the Grant Agreement were amended to support the procurement needs of the pilot projects\. The task team provided intense procurement support to the PMU, and most of the procurement activities were successfully completed by December 2006, albeit with large delays\. Procurement was rated satisfactory in all ISRs\. The MTR Procurement review identified a weakness in the filing of procurement documents and observed undue delays in procurements\. 9 2\.5 Post-completion Operation/Next Phase The project had marginal success in putting in place a conducive and enabling environment that would ensure the long-term, environmentally sustainable development of the basin's transboundary land and water resources\. At project closing in December 20, 2008, the biggest foreseen threats to sustainability of achieved results were the Project's failure to implement the IA of LCBC\. As of May7-8, 2009, the CoM endorsed IA's action plan, which was elaborated with GTZ support\. This decision of the last CoM provides positive signs that the IA is still being pursued\. LCBC's current weak financial position, delay in recruiting technical staff and (past) inadequate management still pose threats to the sustainability of the project outputs\. There is still a risk that the envisaged long-term objectives of the project may not be achieved\. To increase the likelihood of achieved results being sustainable, the task team ensured that key milestones of the project, the TDA/SAP and the Institutional Assessment, were endorsed by an Extraordinary COM in June 2008\. The Bank initiated in FY06 the coordination and communication with other development partners, such as representatives of the AfDB, the EU, GTZ and AFD (France)\. LCBC is seeking to secure additional funding for the implementation of priority actions identified in the SAP, and a donor conference is now envisaged to take place later in 2009\. The Investment Plan (IP) has yet to be prepared and endorsed by the member countries\. Meanwhile, the following ensuing donor support provides a marginal sustainability scenario: The approximately US$ 45 million (UC 30 million) AfDB funded Lake Chad Basin Sustainable Development Program (PRODEBALT; 2009 - 2014) was approved in December 2008 and is designed to implement part of the SAP\. PRODEBALT was conceived in response to the observed reduction of flows and water quality, the loss of bio-diversity, and the erosion and siltation, which affect Lake Chad and its Basin\. The program is coherent with the SAP and LCBC's Vision 2025 for sustainable development of the Basin and is designed to reverse land and water degradation trends in the Basin The project appraisal document for PRODEBALT suggests the following co-financing (other than contributions of member countries): EU funding of about Euro 5 million for local development activities, water resources studies and upgrading of the Basin's hydro-meteorological monitoring systems; GTZ funding of US$2 million for implementation of the Institutional Assessment; and BGR funding of US$3 million for the monitoring and assessment of groundwater resources\. The potential catalytic function of this GEF project is well demonstrated by the success of the Komadugu-Yobe pilot project in Nigeria\. This pilot project supported ongoing activities (JWL and IUCN-NCF projects) regarding the adoption of a Water Charter for the K-Y catchment by the six riparian states and the Federal Government of Nigeria, 10 which resulted in the creation of a US$13 million Trust Fund for the financing of the K-Y Catchment Management Plan\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation The project and its objective remain relevant to sectoral strategies of the member governments, LCBC, the World Bank and UNDP, as well as to the strategic objectives of the GEF\. Regional and national priorities: Niger (2008) and Nigeria (2004) developed new PRSPs since the project became effective\. The project objective remains relevant to priorities of the PRSPs of the member countries, including rural development strategies with the rural sector as engine of economic growth, the sustainable management of water and other natural resources, the protection of the environment and reduction of environmental degradation\. The project also responded to objectives declared by NEPAD (Agriculture and Environment programs) and the MDGs, as well as to LCBC's Vision 2025 (2003)2\. CAS: The Bank generally supports rural development and regional integration in the LCBC member countries\. The Project and its envisaged follow-up (AfDB-funded PRODEBALT and SAP implementation) contribute to CAS objectives by contributions to rural livelihoods in the Basin through increased income opportunities for the poor, improved community-based natural resource management, and a reversal of land and water degradation trends in the Basin\. GEF priorities: The project is fully consistent with the updated strategic priorities for GEF-IW projects under GEF-4\. It specifically fits with the Strategic Program #3 on "Balancing overuse and conflicting uses of water resources in surface and groundwater basins that are of transboundary nature\." The following expected outcomes of SP # 3 are most relevant to the project: Political and legal commitments made to utilize IWRM policies towards sustainable water use; Institutions and reforms introduced to catalyze implementation of policies for basin- scale IWRM and increased water use efficiency; Communities benefit from access to water-related benefits in tests of innovative demonstrations of balancing water uses\. 2 Vision summary: Land, water and all natural resources are conserved, sustainably exploited, managed in an integrated manner and shared equitably, in order to not only eradicate poverty and improve living standards of the people living in the Lake Chad Basin, but also to ensure peace, security, cooperation and sound economic developments of the region' 11 3\.2 Achievement of Global Environmental Objectives The major expected outputs of the current phase of the project were to: (i) efficiently carry out a successful TDA/SAP process, (ii) derive lessons learned from pilot projects, (iii) assess the legislative and institutional frameworks of the member countries, (iii) enhance LCBC's institutional capacity, (iv) develop a stakeholder Analysis, (v) develop a transboundary strategy for a functional network of protected areas, and (vi) generate full commitment of member countries and strong donor support for implementing the Strategic Action Program (SAP)\. The achievement of the GEO in terms of `building capacity within LCBC for better achieving its mandate of sustainably managing land and water resources' is rated moderately unsatisfactory, despite various commendable project outputs achieved under difficult operational conditions\. Some key opportunities were missed, including: (i) the project was not able to support the implementation of the LCBC's reform due to the late endorsement of the IA; (ii) the Investment Plan (IP) of the SAP could not be completed due to late endorsement of the SAP; and (iii) as a consequence, the Chairman of the CoM postponed the donors' conference\. The above deficiencies are primarily due to three key root causes, namely (i) lack of commitment of the member countries to LCBC until the last year of the project, (ii) LCBC's lack of ownership of the project until the last year of the project, and (iii) an understaffed PMU\. The moderately unsatisfactory project performance is unquestionably also associated with the difficult security and logistic circumstances under which the project had to operate\. The project partially achieved its GEO and key achievements include: a) The Institutional Assessment of LCBC was completed and endorsed by the CoM in June 2008\. Also as of March 2008, the Heads of States and Government Summit resolved that "LCBC should carry out- within six months institutional reforms in order to define the most appropriate structure for the Executive Secretariat and adequate mechanisms for institutional capacity building likely to render the LCBC more operational"\. The IA report contains 34 recommendations aimed at reforming LCBC into a reinvigorated, product-oriented institution\. These recommendations call inter alia for the preparation of a Biennial State of the Lake Chad Basin Ecosystem Report and the establishment of: (i) a regionally-based data and information system - the Lake Chad Basin Observatory - as part of LCBC's capacity to undertake a systematic monitoring role for the natural resources of the basin; (ii) a Water Resources Experts Committee (WRC) comprised of senior level water resources specialists from the Member States; (iii) an Environment, Science and Planning Committee (ESPC) to provide needed scientific capacity to the LCBC; (iv) a Donor Consultative Committee (DCC) to facilitate continued donor involvement and investment in the work of the LCBC, and (v) a Staff Development Fund providing professional development opportunities for recruiting and retaining high quality staff\. The IA also recommends upgrading and strengthening the fiduciary capacities of LCBC and improving its overall accountability to Member States and other contributors\. Due to the late endorsement of the IA (June 2008), the project was not in a position to support the implementation of these reforms of LCBC\. It should be noted, however, that the GTZ is currently supporting 12 the LCBC in the implementation of these reforms\. GTZ supported LCBC in elaborating an action plan for the implementation of the IA\. This action plan was endorsed during the last CoM held in Nigeria on May7-8, 2009\. b) Progress was made towards the harmonization of relevant legal frameworks, regulations and approaches in the member countries for the integrated and transboundary management of the shared land and water resources of the Lake Chad Basin\. Comprehensive national and regional diagnostic reports on legal, institutional, economic and financial aspects of the transboundary management of shared land and water resources of the Basin have been prepared\. These reports complement the development and implementation of the SAP\. Recommendations focused on: (i) creating transboundary IWRM Committees; (ii) harmonizing and completing the national legal frameworks through an integrated approach regarding the various uses of water, land and the environment; (iii) creating of the LCB Observatory to monitor water resources, environmental, economic, socio-economic and other aspects relevant to an implementation of IWRM; and (iv) capacity building to promote IWRM\. Though national legal and institutional frameworks are yet to be harmonized, each Member State has committed to ensure that its body of laws and regulations will be coordinated and supportive of environmental policies developed through the NAP/SAP process\. The NAPs, the main foundation of the SAP, were prepared based on an assessment of national priority areas of concern, including regional concerns identified in the TDA\. Each country has developed objectives and targets, proposed interventions and elaborated a resource mobilization strategy to address their objectives\. c) A comprehensive Transboundary Diagnostic Analysis (TDA) was completed at national and regional levels\. The TDA analysis was conducted through a participatory process and presents the transboundary problems as identified and prioritised by the basin stakeholders\. The TDA identifies three overarching root causes of the transboundary problems caused by unsustainable resources use practices, i\.e\. (i) the absence of sustainable development on the political agendas of the riparian countries, (ii) low standards of environmental education and awareness, and (iii) population pressure\. The regional TDA identified seven priority regional environmental concerns, as follows: (i) the variability of the hydrological regime and fresh water availability, (ii) water pollution, (iii) decreased viability of biological resources, (iv) the loss of biodiversity, (v) the loss and modification of ecosystems, (vi) sedimentation in rivers and water bodies, and (vii) the presence of invasive species\. The TDA highlights the need to pay special attention to institutional reform of LCBC as the bedrock for arresting the degradation trends in the Basin\. LCBC lacks the power to arbitrate water conflicts in the basin\. It also has no mechanism for fostering basin level IWRM by way of getting the line agencies of the member countries to harmonize their water resources development programs\. d) Based on the findings of the TDA, a Strategic Action Program (SAP) was completed as a regional policy framework for the Lake Chad Basin\. The SAP was developed in a regional consultation process and endorsed by the Extraordinary COM in June 2008\. This result is commendable as few Basins in Africa have been able to complete a SAP in five years\. The SAP primarily addresses the seven priority regional environmental concerns as identified in the TDA, lays down the principles of environmental management and cooperation, and establishes a long-term vision for the 13 sustainable development of the Lake Chad Basin\. It subsequently defines a set of targets and interventions to meet regionally agreed Ecosystem Quality and Water Resource Objectives (EQWRO) and related indicators for the priority areas of environmental concern, in the transboundary context of the Lake Chad Basin\. These EQWROs are: (i) improved quantity and quality of water; (ii) restoration, conservation and sustainable use of bio-resources; (iii) conservation of biodiversity; (iv) restoration and preservation of ecosystems; (v) strengthened participation and capacity of stakeholders, and (vi) institutional and legal frameworks for environmental stewardship of the LCB\. The overall objective of the SAP is to contribute to poverty alleviation in the Basin through priority actions, including (i) initiating shared management of the Basin's water resources, (ii) implementing a basin-wide sustainable data collection system (the LCB Observatory), (iii) taking sectoral actions for enhanced water demand management, (iv) fighting against desertification and against the loss of bio-diversity, (v) preventing and controlling pollution, and (vi) improving exploitation methods of aquatic ecosystems\. The Project did not prepare the Action Plan for the SAP implementation\. Missing components include (i) estimated costs to achieve the identified EQWROs, (ii) an Investment Plan, and (iii) a strategy and financing mechanism\. Although the envisaged donor conference could not yet be held, initial SAP implementation will to an extent be supported by the AfDB-funded LCB Sustainable Development Program (PRODEBALT)\. e) In addition, the micro-grants and pilot demonstration programs yielded some successes and impacts on the ground\. Catchment Management Plans (CMP) for integrated natural resources management were prepared and adopted for the Chari- Logone Basin, Lake Fitri and the Lake Chad Shorelines & Northern Diagnostic Basin\. The CMP for the Komadugu-Yobe (K-Y) Basin was developed jointly with the K-Y Basin Project (IUCN-NCF) and the Joint Wetlands Livelihoods Project (DFID-funding)\. The cooperation with these projects yielded a significant success in establishing a Water Charter for the Sustainable and Equitable Management of the K-Y Basin\. This Charter represents a legal and institutional framework for cooperative management of the shared water resources of the Basin by six riparian states in Nigeria\. The riparian States and Federal Government of Nigeria established a US$13 million Trust Fund to finance the KYB - CMP\. The CMPs proposed action plans targeted to resolve identified water problems and challenges and institute integrated natural resources management instruments in the regions\. The Upper Chari and Lake Fitri pilots were terminated due to security conditions\. Local priorities were supported with 56 micro-grants to demonstrate environmentally sustainable approaches to reverse land and water degradation, as a basis for poverty alleviation\. Local beneficiaries have been consulted and encouraged to participate in basin resource management\. Local stakeholders have thus developed a certain environmental awareness that could benefit long-term integrated basin resources management\. Implementation progress and efficiency were hampered by problems with the transfer of micro-grants to beneficiaries\. A Bio-diversity Study was also completed and a Regional Protected Area Strategy was approved by stakeholders and adopted by the countries\. 14 3\.3 Efficiency Consistent with GEF requirements, Annex 4 of the PAD included an Incremental Cost Analysis, which found that the project was composed of activities necessary to improve transboundary water resources management\. The support from the GEF was specifically targeted at covering the transaction and other costs of cooperation between the LCB riparian countries\. Due to the transboundary nature of the issues and the public goods aspect of the environmental benefits, it is unlikely that beneficiary countries would or could have financed these activities\. Therefore, the costs were almost certainly incremental, but the project achieved its GEO only partially within the estimated incremental costs\. Because this was a stand-alone GEF project, additional economic analysis was not required\. Component 5 of the project in the K-Y pilot project contributed to the creation in Nigeria of a US$ 13 million Trust fund to finance the KYB CMP\. Component 6 of the project contributed towards catalyzing an additional $45 million of future investments in the sustainable development of the LCB through the AfDB-funded PRODEBALT project\. Despite the project's contribution to leveraging additional funding, a number of factors doomed the operation to be inefficient in achieving its objective\. These factors were: prevailing security conditions in the region, time consuming land based transport, limited services of airlines, non-availability of up-to-date logistical and technical facilities in N'Djamena, and high costs of workshops\. This inherent inefficiency of the project was exacerbated by large initial implementation delays, the light structure of the PMU, difficulties in the flow of funds, less than expected contributions of LCBC staff to project implementation, significant project management issues, and delays in recruiting consultants and in procuring essential equipment and vehicles\. A two-year extension of the project was insufficient to achieve the overly ambitious project outputs\. Overall, although the project helped to leverage additional funding in the Basin, the cost of doing business in the region is prohibitively expensive causing the implementation of the project to be inefficient3\. 3\.4 Justification of Overall Outcome Rating Rating: Moderately Unsatisfactory Despite the continuing high relevance of its GEO, the overall outcome of the project is rated moderately unsatisfactory because (i) the project partially achieved its main development objective, (ii) key project outputs were insufficiently achieved, (iii) the project implementation was inefficient, and (iv) sustainability of the project outcome, although showing promise, is not ensured\. 3 A classic economic analysis is not applicable as this was a regional GEF grant and not an investment project\. 15 It is noted that with a few exceptions, UNDP's annual APR/PIR reports rated the project performance consistently as satisfactory, while the Bank's ISR ratings were most of the time in the unsatisfactory range\. The independent final review of the Project rated the overall outcome moderately satisfactory based on a consideration of the project achievements, project outputs, project effectiveness, and of the context in which the project was implemented (see Section 3\.2)\. Given the overly ambitious objective in the PAD and lack of any baseline or target, the rating of the overall outcome of the project reflects the proverbial "half-full versus half-empty cup"\. The last CoM (May 7-8, 2009) endorsed implementation of the IA and nominated a new ES, providing stakeholders some assurance on the sustainability of the project's achievements\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development Some pilot projects included direct income generating activities and focus on women's groups\. Pilot projects generally improved flooding and desertification conditions in specific areas\. The pilot projects contributed as such to the restoration of income of local stakeholders, which proved to be an important incentive for stakeholder motivation\. Public participation drives helped to involve as many beneficiaries as possible and opened up the decision-making process to a broader range of local stakeholders\. Quantitative data on these aspects are not available\. (b) Institutional Change/Strengthening Although the project did not achieve its objective regarding institutional reform and capacity building in LCBC, it did achieve some improvement of the institutional framework for Basin management, including: At national level, the project strengthened on-the-job the capacity of staff of key institutions responsible for land and water management with potential transboundary impacts; At local level, the project actively involved communities in the participatory management of wetlands and protected areas, and in the equitable sharing of the benefits deriving from such management through the set-up and support of CBOs; Overall, the project broadened LCBC's traditional sectoral role towards a more integrated approach to transboundary basin resources management, by adopting principles of environmental sustainability and encouraging participation from multi- level stakeholders\. (c) Other Unintended Outcomes and Impacts The protection of almost 100% of the lakefront of Lake Chad as Ramsar wetlands sites of international importance was a great achievement of this project\. This is one of the few examples of fully transboundary lakefront in terms of Ramsar jurisdiction\. 16 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops No survey was held\. 4\. Assessment of Risk to Development Outcome Rating: Substantial The risk to the Development Outcome of this operation is conservatively rated as substantial\. Generally, LCBC's weak financial position, the lack of performance incentives for its staff and its past weak management pose a continuing threat to the sustainability of the project outcome\. It is uncertain when the Investment Plan of the SAP will be completed, when the envisaged donor conference will be held, and to what extent donors will be willing to support the SAP implementation\. Factors in favor of the sustainability of project interventions are the recently approved AfDB-funded PRODEBALT program for SAP implementation, the CoM endorsement of the implementation of the AI, and the nomination at the CoM of a new Executive Secretary in May 7-8, 2009 (who assumed office on May 18th, 2009)\. Although these factors presage potential improvements in sustainability risks and breakthroughs occurred in the last year of the project, the rating is kept as Substantial\. 5\. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues) 5\.1 Bank (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory Whereas the project was aligned with the CAS in all countries and the GEF-IW strategy and OP 9 guidelines, the PAD did not provide a clear description of the project and its anticipated activities\. The QSA6 panel (August 2004) noted weaknesses, as described in section 2\.1\. The design also neither addressed the unsatisfactory level of commitment to LCBC of the member countries nor designed to help countries to take ownership of the project\. It was further perceived that LCBC's weak management and fiduciary capacity needed to be compensated by requesting LCBC to contract a project management service (UNOPS)\. This approach resulted in lack of incentive for LCBC to be accountable\. The logframe and M&E arrangements for the project were inadequate and the time schedule for completion of the major activities was not realistic\. (b) Quality of Supervision Rating: Moderately Unsatisfactory The Bank team has seen four TTLs\. Following effectiveness, supervision intensified to quarterly supervision\. The project, at risk of cancellation in 2005, moved out of problem status by May 2006\. The project slipped back into problem status in 2007\. Based on ISRs, it appears that supervision was of unequal quality during the project's lifetime\. The 17 supervision of fiduciary aspects was moderately satisfactory (see Section 2\.4)\. Most procurement actions were completed in FY06\. The quality and candor of ISRs and the reporting on outcome indicators was generally adequate\. Overall, the project was handled by the Bank as a small operation, and the supervision budgets were inadequate\. The budget was not commensurate with the fact that the project was covering five large countries in a complex region, with problems of civil unrest requiring intensive supervision\. The Bank's supervision was generally coordinated with the UNDP as co- implementing agency, which assigns the responsibility for regular supervision to its local offices in the member states\. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory Despite frequent and good quality supervision during part of the project period, the project could not overcome its basic design flaws and did not achieve its main development objective\. The project's overly ambitious objectives and failure to restructure guaranteed the final MU rating\. The overall Bank performance is thus rated moderately unsatisfactory\. 5\.2 Borrower (a) (Government Performance Rating: Moderately Unsatisfactory The governments of the member countries demonstrated till late in the project an unsatisfactory level of commitment to LCBC and to achieving the development objectives of the project\. The CoM lacked actions regarding inadequate management of LCBC\. The amount of arrears in the LCBC is of concern (ref\. Section 2\.2), although the situations of arrears in contributions also exist to a certain extent in other transboundary Basins in Africa\. Chad reportedly paid its total arrears to LCBC in 2008\. As a consequence, the project faced serious issues regarding counterpart staffing and funding\. Although the CoM endorsed the IA in June 2008, this shows a late commitment of the member countries, which demanded in 2002 the institutional reform of LCBC's Secretariat\. (b) Implementing Agency Performance Rating: Moderately Unsatisfactory LCBC's performance is rated moderately unsatisfactory for its lack of ownership of the Project and its ineffectiveness in supporting the PMU in achieving the Project's outputs\. Until the last year of the project, the Secretariat did not lead the process of its IA or use available resources for addressing its own institutional challenges\. It is worth noting that in 2008 two CoMs and a Heads of States Summit were organized by the LCBC, despite recent civil strife affecting the operations at the LCBC Headquarter in N'Djamena\. LCBC failed to provide its annual audit reports in compliance with the Grant Agreement\. 18 The performance of UNOPS/PMU in managing the implementation of the Bank's part of the project is also rated moderately unsatisfactory\. It is, however, recognized that the project suffered from having to operate under extremely difficult operational conditions and lack of support from LCBC\. The PMU was understaffed and project management suffered from repeated changes of the Project Manager (PM)\. The time required to establish the PMU, procure project vehicles, establish project offices in the member countries and procure various consultancy contracts was very long\. Consequently, the project took more than two years from the start of the UNDP component (August 2003) to achieve some momentum\. When the PM resigned in July 2007, the project was managed by UNOPS from Denmark\. UNOPS provided intermittent quarterly progress reports and financial reports, but the mandatory annual audit reports were provided only shortly before project closure\. (c) Justification of Rating for Overall Borrower Performance: Rating: Moderately Unsatisfactory (See paragraphs (a) and (b) above)\. 6\. Lessons Learned The following lessons can be drawn from the final evaluation of this project: In complex regional projects, it may be more difficult for the implementation/supervision process to fix design flaws\. To increase the likelihood of achieving project objectives, design flaws need to be fixed early in project implementation, at minimum during the MTR\. The QSA6 identified significant design flaws (see section 2\.1)\. For example, the institutional setting included a light- weighted PMU -- which included only a PM and a DAF-- that was not mainstreamed in LCBC\. The project relied on LCBC's domain expertise, while the availability of such expertise was not sufficiently considered and guaranteed\. The PMU did not report to LCBC and was not mainstreamed in LCBC\. The team did not restructure the project on the ground that intensive supervision would address identified design flaws\. The MU rating of this project is evidence that supervision does not fix design flaws\. Restructuring is the avenue to fix design flaws and should be conducted at an early stage, at minimum during the MTR\. Hence, it is critical that the MTR conduct a critical assessment of the likelihood of achieving outcomes, rather than checking a list of outputs achieved\. The full endorsement and commitment of all the riparian countries of a shared Basin is desirable for successful GEF-IW project implementation, but not necessary if adequate action plans are incorporated in the project design\. Country management units' and country offices' increased involvement in project supervision is critical for the regional projects' success\. Having the full commitment of all the countries of a shared basin is unlikely and should not be a pre-requisite to get involved in a regional project\. Lack of commitment of member countries to their regional institution and ownership of the project by the regional institution need to be assessed carefully, and an action plan incorporated in project design\. For example, the lack of commitment of the member countries to LCBC has resulted over time in large arrears in the national contributions to LCBC, which at the end of 2007 stood at 3\.4 billion FCFA 19 or about US$ 6\.6 million\. LCBC's lack of ownership (until late in the project) contributed to the delay in achieving results (e\.g\. endorsement of the IA)\. Hence, the project design should include an adequate action plan to foster commitment and endorsement of all the member countries\. The countries' compliance with regional commitments could also be part of the CMUs' policy dialogue\. In the absence of a strong regional institution, development assistance should focus on capacity building and institutional strengthening of the Recipient, rather than attempting to resolve or bypass the institution's shortcomings by introducing outside agencies for project management and execution\. In case of the Lake Chad Basin GEF project, the employment of UNOPS as Executing Agency (EA) for the UNDP components and Management Services Provider (MSP) for the Bank components diminished the interest of LCBC's management in the project\. It is critical that strategic decisions are made at the right management level\. The team made the decision to not restructure the project (see section 2\.2)\. This strategic decision of whether to formally or informally restructure the project should have involved senior management of the sector unit, regional integration unit, and country management units\. Joint project implementation through two GEF implementation agencies (i\.e\. World Bank and UNDP) requires that roles and responsibilities during project implementation are agreed upon in advance\. Key reporting and supervision processes need to be harmonized\. Different procedures and reporting requirements for UNDP and the Bank place an additional burden on project implementation\. The difference in UNOPS' roles as EA and MSP caused from time to time confusion regarding its decision-making authority\. For example, certain decisions (e\.g\. changes in components) that could be made at the UNOPS/PMU level for the UNDP components required prior approval from the Bank for Bank components\. Although joint WB/UNDP missions were occasionally conducted to improve cost-efficiency and communication between all partners, the overall project implementation and supervision might have been more effective and cost efficient with a single GEF implementing agency\. The Bank should be realistic regarding project implementation planning, the time it takes to complete a project of this challenging nature, and the outcome targets to be achieved\. There is a need for realism in operations challenged by Recipients' low capacity and unclear commitment, multiple players, and difficult operational conditions\. Project design should take into account the implementation capacity of the Borrower, and the potential technical and logistic problems with project implementation particularly in a region with frequent civil strife and severe limitations in its operational conditions\. One or two years of delay in project implementation are frequent in this kind of projects\. Project documents have no provision to compensate delays and don't include them among the project risks\. Standard Bank budgets for supervision of relatively small regional GEF operations in this and similar regions are inadequate\. 20 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies Refer to Annex 7 for the draft ICR of the Recipient (as received in May 27, 2009)\. (b) Co-financiers The draft ICR was submitted for review to LCBC, UNDP and UNOPS\. Comments were received from UNOPS and UNDP\. Received comments are included in the project files, and are partially incorporated in this document\. (c) Other partners and stakeholders (e\.g\. NGOs/private sector/civil society)\. Not applicable\. 21 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in US$ million equivalent), as on December 31, 20084 Appraisal Latest Percentage Components Estimate Estimate Appraisal Bank funded 2\.900 2\.899 100% 2\. Enhanced regional policies and institutional 122% 1\.081 1\.323 mechanisms 5\. Demonstration projects with micro-grants 1\.457 1\.349 93% 6\. SAP development and donor coordination 0\.362 0\.223 62% UNDP funded 6\.700 6\.499 97% 1\. Establishment and operation of PMU and 115% 2\.338 2\.700 Coordinating mechanisms 3\. Strengthened community level participation and 88% 1\.227 1\.077 education 4\. Completed TDA and modeling framework for basin 92% 2\.055 1\.896 management 5\. Pilot projects 1\.080 0\.826 77% Total Baseline Cost 9\.60 9\.398 98% Physical Contingencies Price Contingencies Total Project Costs 9\.60 9\.398 98% Project Preparation Facility (PPF) 0\.69 0\.69 100% Front-end fee (IBRD only) Total Financing Required 10\.29 10\.088 98% (b) Financing Latest Type of Appraisal Percentage Source of Funds Estimate Financing Estimate Appraisal (US$ million)5 4 The UNDP budget is expected to be completely disbursed at the time of closure of the UNDP project in 2009\. 5 Information on co-financing and in-kind contributions is not available\. 22 (US$ million) Recipient In-kind 0\.41 0\.41 100% GEF 10\.29 10\.09 98% Member countries In-kind 1\.75 DFID UK (JEWEL Co- 4\.69 project) financing DGIS Netherlands Co- 1\.97 (IUCN) financing World Wildlife Fund Co- 0\.16 0\.16 100% financing UNDP Co- 0\.35 0\.35 100% financing Total 19\.62 23 Annex 2\. Outputs by Component (achievements versus targets in PAD and Prodoc6) Component 1 Established project mechanisms, PMU and national Lead Agencies to ensure inter-sectoral coordination (UNDP managed) Rating: Moderately satisfactory; Disbursed: 115% Planned activities as per project design Outputs at the time of project completion Create and organize the Program Co- Partially achieved\. The PMU was established ordination Unit (PMU) to facilitate and with substantial delays, but was seriously co-ordinate the work program of the understaffed (by design and due to the lack of project, efficiently deliver project participation of LCBC staff) and displayed outputs, give technical assistance and significant shortcomings in project manage program activities\. management, resulting into significant delays and inefficiency in project implementation\. Create and make provision for the Achieved\. A coordination network with other conduct of meetings of the co- initiatives and donors active in the Basin was implementation Task Force, and maintained\. A website www\.lakechadbasin\.net interact effectively with related regional was developed to support coordination and GEF-IW projects\. information sharing with all stakeholders and other IW-projects\. Inter-Ministerial Committees (IMCs) in Achieved\. The PSC was established, each country, a Project Steering conducted regular meetings and fostered Committee (PSC) and Technical Task regional cooperation in the management of the Teams (TTT) established\. basin\. The IMCs were created in each member country and the TTTs contributed to the NAPs, TDA and SAP\. Support a Lead Agency for each Achieved\. Five National Coordination Units, participating country and a NC to lead directed by a National Coordinator (NC), were national project activities and represent established to manage and coordinate all the participating country in PSC national components of the project\. meetings\. Component 2: Enhanced regional policy initiatives and institutional mechanisms to address transboundary issues (WB managed) Rating: Moderately Unsatisfactory; Disbursed: 122% Planned activities as per project design Outputs at the time of project completion The adoption of new or updated Partially achieved\. NAPs, aimed at the 6 Summarized from Annex 1 (Project Design Summary) of the PAD and the descriptions of Project Outputs, Rationale and Activities and Annex 2 (Logical Framework Analysis) of the Prodoc\. 24 national water policies in each country, integration of transboundary water and which take into account transboundary environmental management policies into water issues and encourage national development plans, were completed environmental protection, and are and endorsed by all IMCs, but they are not incorporated into National Action Plans anchored in national programs\. The (NAP)\. development of new national water policies has not yet been initiated\. Assess existing national legal Achieved\. Comprehensive national and frameworks and provide specific regional diagnostic reports on the legal, recommendations for incentives and institutional, economic and financial aspects of harmonised legal frameworks to enable integrated transboundary management of the an integrated regional approach towards shared land and water resources of the LCB long-term sustainable basin have been prepared, with the ultimate management\. objective to harmonize the relevant national legal frameworks, regulations and approaches\. The studies were endorsed by the PSC in Dec\. 2008\. The harmonization of legal and institutional frameworks is yet to be initiated\. Develop, endorse and implement a Partially achieved\. The Institutional specific proposal for the institutional Assessment (IA) has been completed and was reform of LCBC, to create a more endorsed by an Extraordinary COM in June effective LCBC with an improved 2008, but implementation of this crucial capacity for IWRM\. project is not completed\. Thus, the project was not able to support LCBC's crucial reform and provide capacity building\. GTZ is supporting the implementation of the IA\. Adopt regional agreements to improve Not achieved, but a Protocol on data exchange transboundary management of power has been endorsed by the COM, and a draft generation, irrigation, fisheries, water water sharing agreement (funded by FAO) is quality and effluent standards, under negotiations\. diversions and consumptive uses, and the creation of economic instruments\. Component 3: Strengthened engagement of stakeholders (UNDP managed) Rating: Moderately Satisfactory; Disbursed: 88% Planned activities as per project design Outputs at the time of project completion Support for 15 local participatory Partially achieved\. The Project supported 12 planning initiatives for community level local planning initiatives for community level stakeholders, to establish their stakeholders; selected initiatives in the Upper sustainable development plans in line Chari sub-basin in CAR could not be with sub-basin planning frameworks\. implemented due to civil unrest; 49 NGOs, CBOs and local authorities partnered with the Project\. More than 800 people benefitted from training provided\. Prepare a report, including Partially achieved\. The Regional Stakeholder recommendations based on lessons Analysis for the LCB was completed and 25 learned from the coordination between approved by the member countries; 3 reports were prepared on lessons derived from the K- local, national and regional initiatives, to assist governments and LCBC with Y and W-L pilot demonstration projects\. With implementation of key results from theWWF a documentary to promote partnership mini-agenda 21 exercises\. and cooperation between stakeholders was produced, distributed to stakeholders and partly shown on CNN\. Develop a regional based methodology Not addressed/achieved\. for conducting environmental impact assessments, ensuring provision of multi-level stakeholder participation and the communication of results to stakeholders\. Component 4: A completed Transboundary Diagnostic Analysis (TDA) and a synthetic framework for concerted management of the Basin (UNDP managed) Rating: Moderately Satisfactory; Disbursed: 92% Planned activities as per project design Outputs at the time of project completion Prepare country reports on existing Partially achieved\. Country reports were relevant data, and collect and synthesize prepared with information on the information\. environmental conditions in the LCB\. Perform a data gap analysis and define Partially achieved\. A database and GIS with a basin-wide monitoring network; historic data relevant to IWRM was prepared, incorporate results into the TDA, with and capability for the analysis of remote involvement of national technical and sensing data was developed\. Future academic entities\. requirements for LCBC's knowledge management system were assessed\. The COM adopted a Protocol of Agreement on Data Exchange between Member States of LCBC, but the LCB Observatory has yet to be initiated\. Examine the basin-wide conditions and Achieved\. National and regional TDAs have issues relevant to transboundary been prepared and were endorsed through a IWRM, determine the linkages between participatory process, as input for SAP environmental and socio-economic development\. The regional TDA identified systems and their transboundary seven priority regional environmental impacts, identify and assess concerns, and highlights the need for environmental hot spots and prepare, institutional reform of LCBC as the bedrock validate and publish the TDA for arresting the degradation trends in the Basin\. The TDA process contributed considerably to capacity building in the region\. Support for the development of key Not achieved/addressed\. These activities will water resource measures such as be executed by other donor-funded projects, upgrading of hydrological monitoring namely EU, and GTZ\. stations and water quality measurements\. 26 Assemble a basin-wide synthetic Not achieved\. The project did not produce framework for surface/groundwater substantial new knowledge and models on the interaction within the Lake Chad Basin, water resources of the Basin, which could help to pre-identify long term consequences in better designing investments in the Basin's of development alternatives\. Develop resources\. This will be executed through water resources models for the Basin\. projects implemented by GTZ, BGR (groundwater) and the EU\. Component 5: Demonstration projects to test methodologies, secure stakeholder involvement and develop implementation modalities (WB and UNDP managed) Rating: Moderately Satisfactory; Disbursed: 86% Planned activities as per project design Outputs at the time of project completion Develop and adopt a regional program Achieved\. A Bio-diversity study and a to improve existing and define new Regional Protected Area Strategy were Protected Areas\. prepared, approved by stakeholders and adopted by the member countries\. Develop a regional program and Partially achieved\. CMPs were developed and Catchment Management Plans (CMP) adopted for the Chari-Logone and Komadugu- to protect immediately threatened Yobe Basins, Lake Fitri and Lake Chad & aquatic ecosystems, including six pilot Northern Diagnostic Basin\. Local priorities demonstration sites\. were supported through micro-grants (WB: 16 and UNDP: 25), which aimed to demonstrate environmentally sustainable approaches for the reversal of land and water degradation\. Some achievements contributed to local level ownership of sustainable natural resources management\. Implementation of local initiatives in the Lake Fitri and Upper Chari pilot areas was terminated due to prevailing security conditions\. Progress and efficiency were hampered by delays in the transfer of micro-grants to beneficiaries and in the contracting of consultants\. Develop and test regional mechanisms Partially achieved\. CMPs were developed for for integrated basin approaches in the the Chari-Logone and K-Y Basins\. The K-Y K-Y and Chari-Logone sub-basins; pilot contributed to the development of a prepare basin management plans for Water Charter for water sharing between 6 maintaining the integrity of sensitive riparian States of the K-Y Basin and the wetlands systems and promoting establishment of a US$13 million Trust Fund sustainable development\. for implementation of the KYB-CMP\. Develop a regional program for Not addressed/achieved\. reducing growing water demands and future pollution, with an emphasis on identified hotspots and building capacity to prevent pollution\. Incorporate lessons learned regarding Partially achieved\. There is no strong evidence 27 good land and water management that the CMPs and pilot projects contributed practices in the NAPs and SAP\. directly to the preparation of the TDA and the SAP\. The M&E process of micro-projects was inadequate\. Component 6: Strategic Action Program and Investment Plan designed and endorsed, with donor support and funding committed (WB managed) Rating: Moderately Unsatisfactory; Disbursed: 62% Planned activities as per project design Outputs at the time of project completion Develop and finalize the SAP through Mostly achieved\. Based on the TDA and the IMCs and LCBC, with support of through a regional consultation process, the national and regional specialists, SAP was completed as a regional policy stakeholders and authorities\. framework for the LCB\. CMPs, NAPs and experiences from micro-projects fed into the SAP development process\. The SAP addresses seven major regional environmental concerns identified in the TDA, and defines a set of targets and interventions to meet regionally agreed Ecosystem Quality and Water Resource Objectives\. The SAP was endorsed by the member states of LCBC during the Extraordinary COM of June 2008\. The NAPs, TDA and SAP are not yet anchored in the planning processes of the member countries, and there is no clear strategy for NAP/SAP implementation at national and regional levels\. Implement a plan for continuing donor Not achieved\. The Investment Plan, strategy contact, develop a strategy and and financing mechanism for SAP Investment Plan (IP) for ongoing implementation were not prepared; thus the financing of SAP implementation, and donor conference for generating funds for SAP generate increased funding for SAP implementation could not be held\. SAP implementation through the implementation will initially be supported by organization of two donor conferences\. the AfDB-funded (approx\.) US$ 45 million LCB Sustainable Development Program (PRODEBALT)\. 28 Annex 3\. Economic and Financial Analysis Not applicable for GEF projects\. 29 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending/Supervision ICR Tracy Hart Sr\. Environment Specialist ENV Principal Water Res\. Mgmt\. Franklin Cardy Specialist Ousmane Dione Lead Water Resources Specialist SASDI Undala Alam Water Resources Specialist Marie-Adele Tchakounte Language Program Assistant AFTU2 Sitchet Marjorie Kingston Team Assistant SARVP Robert Robelus Sr\. Env\. Assessment Specialist AFTTR Sr\. Soc\. Dev\. Kristine Ivarsdottar Specialist/Anthropologist Karen Hudes Senior Counsel Magaye Gaye Financial Management Specialist AFTFM Sr\. Financial Management Agnes Albert-Loth EAPCO Specialist Tesfaalem Iyesus Lead Procurement Specialist SARPS Samuel Redji Mobeal Resource Management Analyst AFTRM Jeff Lecksell Cartographer GSDPG Alessandro Palmieri Lead Dam Specialist OPCQC AFR GEF Coordinator/AFR Peer Christophe Crepin AFTEN Reviewer Sr\. Env\. Spec\./AFR Peer William Leeds Lane AFTEN Reviewer Rune Castberg ECA Peer Reviewer Willem Zijp AFR Quality Assurance Advisor Richard Verspyck Lead Economist AFTU2 IJsbrand H\. de Jong Sr\. Water Resources Specialist AFTWR Johan Grijsen Sr\. Water Resources Specialist AFTU2 Hugues Agossou Sr\. Auditor IADDR Stefanie U\.S\. Brackmann Consultant AFTEN Ningayo Charles Donang Sr\. Procurement Specialist AFTPC 30 Djibril Doucoure Consultant AFTEN Pierre Jacques Lorillou Jr\. Professional Officer AFTWR Chloe Milner Rural Development Specialist AFMTD Sr\. Financial Management Etienne NKoa AFTFM Specialist Africa Eshogba Olojoba Sr\. Environmental Specialist AFTEN Lucson Pierre-Charles Program Assistant AFTWR Abdoul-Wahab Seyni Social Development Specialist AFTCS Amal Talbi Water Supply Specialist AFTWR Armele Vilceus Language Program Assistant AFTU2 (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) USD Thousands Stage of Project Cycle No\. of staff weeks (including travel and consultant costs) Lending FY00 71\.13 FY01 65\.14 FY02 77\.64 FY03 38\.99 FY04 0\.00 FY05 0\.00 FY06 0\.00 FY07 0\.00 FY08 0\.00 Total: 252\.90 Supervision/ICR FY00 0\.00 FY01 0\.00 FY02 0\.00 FY03 2\.68 FY04 77\.76 FY05 115\.52 FY06 7 152\.23 FY07 1 40\.53 FY08 94\.90 Total: 8 483\.62 31 Annex 5\. Beneficiary Survey Results Not applicable\. 32 Annex 6\. Stakeholder Workshop Report and Results Not available\. 33 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR LAKE CHAD BASIN COMMISSION DRAFT BORROWER IMPLEMENTATION COMPLETION REPORT ON A GLOBAL ENVIRONMENT FACILITY GRANT IN THE AMOUNT OF US$9\.6 MILLION TO THE LAKE CHAD BASIN COMMISSION FOR THE REVERSAL OF LAND AND WATER DEGRADATION TRENDS IN THE LAKE CHAD BASIN ECOSYSTEM (P070252) March, 2009 34 Table of Contents Preface\. 36 I\. PROJECT DESCRIPTION AND START UP \. 38 II\. PROJECT DESIGN, EXECUTION, IMPLEMENTATION, AND IMPACT \. 38 2-1 Evaluation of Project Design \. 38 2-2 Main results obtained in each project component \. 42 2-3 Project Coordination and Management \. 47 2\.4 Project Impact on the regional agenda \. 47 III\. ASSESSMENT OF THE ACTIVITIES OF THE WORLD BANK AND GOVERNMENT\. 47 3\.1 Assessment of the Activities of the World Bank During Project Execution \. 47 3\.2 Assessment of the LCBC s Activities During the Course of Project Execution \. 47 3\.3 Evaluation of the Effectiveness and Quality of Relations between the World Bank and the LCBC during Project Execution \. 48 3\.4 Evaluation of the Performance of the Various Institutions, Consulting Firms and Consultants who Participated in Project Activities\. 48 IV\. OUTLOOK FOR THE FUTURE WITH RESPECT TO THE SUSTAINABILITY OF PROGRESS ACHIEVED \. 48 4\.1 Sustainability of process\. 48 4\.2 Sustainability of impact \. 49 V- LESSONS LEARNED \. 50 5\.1 General Lessons \. 50 5\.2 Lessons Learned on Effective Grant Management \. 52 5\.2\.1 Seeking Appropriate Grantees \. 52 5\.2\.2 Proposal/Concept Paper Preparation\. 52 5\.2\.3 Grantee Capacity Strengthening \. 52 5\.2\.4 Monitoring and Evaluation \. 52 35 Preface The preparation for the project "Reversal of Land and Water Degradation Trends in the Lake Chad Basin Ecosystem" were initiated by the need to hold a donor conference to financed the 1992 LCBC's "Master Plan for the Development and Environmentally Sound Management of the Natural Resources of the Lake Chad Conventional Basin"\. A number of resolutions of the LCBC's Council of Ministers that reflected this wish include Resolution N°2 of the 43rd Session held in Garoua, 13th-14th March 1995, Resolution N°5 of the 44th Session held in N'djamena, 26-28 October 1996, Resolution N°9 of the 46th session held in Niamey, 25-26 January, 1999, and the Resolution N°3 of the 48th Session held in Bangui 27-28 March 2001\. The preparation and the consultative process engaging all basin stakeholders that culminated in the project document took 9 years to mature\. The project eventually commenced with the first Project Steering Committee Meeting held at Abuja on the 24th-25th June, 2004\. As a signed of good fortune for the outputs of the project, some of the actors present at the 1st PSC meeting have now move ahead to higher positions of authority\. The pioneer Project Manager Mr\. Anada Tiega is now the Secretary General of the Ramsar Convention, a pioneer member of the PSC from Cameroon, Mr Yaouba Abdoulaye is now the Junior Minister of Planning and Territorial Administration in the Republic of Cameroon\. In Nigeria one of the pioneer PSC members Engr\. I\. K\. Musa is now the pioneer Director General of the Nigeria Integrated Water Resources Management Agency, an agency in the forefront of reforms in the management of land and water resources in Nigeria\. A key member of the TDA and SAP team from Nigeria and also a co-author of the TDA document is now the Administrative Secretary of the HJKB Trust Fund in Nigeria\. It is the hope of the LCBC, that these eminent personalities will continue to provide their wise contribution so that the long term objectives of the project articulated in the SAP will eventually be realized\. There were difficulties in the implementation of the project but I am glad to state that the LCBC has never been in a better position to lead the Member States in the reversal of land and water degradation trends in the Lake Chad Basin ecosystems\. The LCBC is today in possession of 5 country prepared National Action Plans, a 25-year regional vision and Strategic Action Programme, Wetland level management plans for the Waza - Logone and the Komadugu - Yobe basins and the Lake Chad and Lake Fitri management plans\. In addition, the capacity of an estimated 800 experts and stakeholders equipped with the latest knowledge and tools for sustainable environmental management and an action plan for a new focused LCBC is now available in the basin\. The LCBC wish to proffer its sincere appreciation of support to the GEF, WB, UNDP and the executing agency UNOPS\. We also would like thank the government of Chad, Cameroun, RCA, Niger and Nigeria for providing the counterpart contribution during the execution of the project\. We would also like to thank our co-funding partners GTZ, BGR and the EU and hope that we would continue to get their support as we transition to the implementation of the Lake Chad Basin Strategic Action Programme\. 36 Mahaman Chaibou Acting Executive Secretary Lake Chad Basin Commission 37 I\. PROJECT DESCRIPTION AND START UP The long-term objective of the GEF project "Reversal of Land and Water Degradation Trends in the Lake Chad Basin Ecosystem" is to achieve global environmental benefits through concerted management of the naturally integrated land and water resources of the Lake Chad Basin\. The specific purpose of the project is to overcome barriers to the concerted management of the basin through well-orchestrated and enhanced collaboration and capacity building among riparians and stakeholders\. The project is built upon the result of an earlier study conducted by the Member States of the Lake Chad Basin Commission\. The project "The Diagnostic Study of Environmental Degradation in the Lake Chad Basin" had identified trans-boundary issues and had drawn up an LCBC Strategic Master Plan\. The LCBC GEF Project was therefore designed to complete a Trans-boundary Diagnostic Analysis (TDA) that will lead to the formulation of a GEF Strategic Action Programme (SAP)\. The SAP will include necessary baseline and additional actions to address the priority trans-boundary issues and provide an essential monitoring and evaluation tool for implementation\. The project will also lead to the development and testing of set of institutional mechanisms and implementation methodologies, including pilot demonstrations, that explicitly link regional, national and local initiatives in land and water management\. In addition, the project will institute a basin-wide framework in which trans-boundary priorities can be addressed and project interventions monitored\. The project implementation commenced in September 2003 with the assumption of duty of the Project Manager but became effective in January 2004\. Project launch and the first Project Steering Committee(PSC) meeting was held in Abuja in August 2004\. II\. PROJECT DESIGN, EXECUTION, IMPLEMENTATION, AND IMPACT 2-1 Evaluation of Project Design The project document has clearly defined the objectives of the project\. Long-term objectives has been separated with the immediate project's objectives\. The link between the immediate project objectives and the long-term goals was also similarly defined\. The long-term objective of the project is a combination of LCBC Member State's Vision, earlier consultations that led to the development of the LCB Strategic Action Plan together with the vision of Africa Integrated Land and Water Initiative of the GEF implementing agencies\. The project's long-term objective can be summarized as follows; To achieve global benefits through broad, basin wide participation in the development and implementation of measures that ensure that the integrity of the Lake Chad system is protected by concerted, integrated management of the basin's resources by the orchestration of both national and regional activities through a working system of basin governance\. The Project's specific objectives are; 1\. To overcome barriers to the concerted management of the basin through enhanced collaboration and capacity building among riparians and stakeholders\. 38 2\. To complete a TDA and prepare a descriptive framework for the concerted water management across the basin\. 3\. To prepare a GEF SAP for long term implementation of priority actions to address trans-boundary issues\. Output and Activities The project design identified six principal outputs of the projects\. The outputs were clearly defined and were adequate in establishing the mechanism for future basin governance\. The projects outputs and activities which are also the main components of the projects are; Output Project mechanisms: an established Program Co-ordination Unit (PMU) and 1: nominated lead agencies to drive and co-ordinate TDA completion, pilot projects, policy initiatives and institutional linkages\. Activity 1\.1 Recruit the Project Manager, public participation and communications expertise, and requisite technical, administrative and secretarial support\. Activity 1\.2 Create and organise the PMU to facilitate and co-ordinate the work program of the project; Activity 1\.3 Create and make provision for the conduct of meetings of the Co-implementation Project Steering Committee Activity 1\.4 Promote, in co-operation with the participating countries and through the LCBC, country specific Inter-ministerial, and local co-ordinating committees, as necessary, and a scientific advisory committee to assist in the work specified in Activity 1\.6 and Output 3; Activity 1\.5 Support a Lead Agency for each participating country and a senior official to assume leadership of project activities and represent the participating country in meetings of the Project Steering Committee (PSC); Output Enhanced regional policy initiatives and institutional 2: mechanisms to address transboundary issues\. Activity 2\.1 Review the current functions and responsibilities of the LCBC with a view to strengthening and improving its functional capabilities, regional effectiveness, and ensuring a sufficient level of finance for its operations; Activity 2\.2 Identify actors in water resource and related land and environmental policy implementation in each country Activity 2\.3 Through the PMU and the LCBC co-ordinate activities with other related GEF projects, such as those in the Niger, Volta and Senegal River Basins, including technical exchanges and field visits as necessary\. 39 Activity 2\.4 Define and promote the integration of trans-boundary water and environmental policies into the National Development Plans; Activity 2\.5 Undertake an assessment of current, relevant agreements, protocols, conventions statutes and other relevant legal frameworks in each country, including recommendations for incentives and harmonised legal frameworks to enable an integrated regional approach toward long-term management of the Basin's resources; Activity 2\.6 Establish the necessary structural arrangements for participating countries to review, harmonise and co-ordinate frameworks, regulations and approaches for the improved trans-boundary management of issues such as power generation, irrigation, downstream riparian considerations, fisheries, water quality and effluent standards, diversions and consumptive uses, and the creation and use of economic Output Strengthened engagement of stakeholders\. Activity 3\.1 Create and provide resources for a Steering Committee for the engagement of stakeholders and key user groups at all levels Activity 3\.2 Formulate, plan and execute 15 stakeholder group exercises (3 in each participating country); Activity 3\.3 Support for 15 final workshop reports including recommendations for pilot projects in the SAP implementation phase of the GEF project; and Activity 3\.4 Support for preparation of a final report, including recommendations, to assist governments and the LCBC to begin implementation of key results from the user group exercises Activity 3\.5 Develop a regionally based methodology and mechanism for stakeholder participation at all levels including provision for environmental impact studies Output A completed TDA and a synthetic framework for concerted 4: management of the basin\. Activity 4\.1 Compile existing scientific, hydro-environmental and socio- economic data and information (including groundwater, aquatic ecosystems and water consumption)\. Prepare a descriptive basin framework and establish key processes and hot-spots\. Data and descriptive models to be hosted by the LCBC\. Activity 4\.2 Undertake a gap analysis of existing data to define a basin- wide monitoring network; 40 Activity 4\.3 Support for the development of key water resource measures (e\.g\. the hydro stratigraphy in the Chad Formation, updating of rating curves of existing hydrological stations to determine low flow and flood conditions and specific water quality measurements) in order to refine the Lake and sub-basin water balances and complete the TDA\. Activity 4\.4 Establish key environmental indicators (process, stress reduction and environmental status) in the Lake Chad Basin to verify compliance with existing and future management plans and, ultimately, to assist in evaluating GEF SAP implementation; Activity 4\.5 Develop risk analysis capability within the participating countries with the objective of, among other things, assessing regional-level hydro-environmental risk and identification of risk-management systems and approaches; Activity 4\.6 Assemble a basin-wide synthetic framework for surface/groundwater interaction within the Lake Chad Basin to pre-identify long term consequences of development alternatives\. Output Demonstration projects to test and validate methodologies, 5: stakeholder involvement and implementation modalities\. Activity 5\.1 Develop and begin implementation of a regional program to improve existing and define new protected areas, including the creation of corridors to link existing and new protected areas; Activity 5\.2 Develop and begin implementation of a regional program, including establishment of five pilot demonstration sites, to protect immediately threatened aquatic ecosystems Activity 5\.3 Develop a regional program aimed at reducing growing water demand with an emphasis on identified hot-spots identified in the LCB Strategic Plan; Activity 5\.4 Support development of a regional mechanism to create and implement a regional program to anticipate future pollution threats, including those that may derive from increased oil exploration, drilling, production and transport, and build capacity to prevent their occurrence; Activity 5\.5 Support a regional mechanism to develop integrated basin approaches (including floodplain management) in the Komadougou-Yobe and Chari- Logone sub-basins\. Using with full stakeholder participation, design and initiate basin development and management plans, with supporting decision aid tools, to maintain the integrity of sensitive wetlands systems downstream and promote sustainable development\. 41 Activity 5\.6 Feedback of demonstration results into SAP design through the PMU\. Output GEF SAP designed and endorsed with implementation 6: methodologies validated and donor support mobilised\. Activity 6\.1 Development and implementation of a plan for continuing donor contact Activity 6\.2 Planning and implementation of 2 donor conferences, one shortly after GEF project approval and one immediately prior to SAP implementation Activity 6\.3 Present the TDA and the GEF SAP to Inter-ministerial Co- ordinating Committees and the LCBC,; and formalise a regional agreement on the GEF SAP Activity 6\.4 Development of donor conference reports and preparation of a strategy for ongoing project finance\. 2-2 Main results obtained in each project component COMPONENT 1 : An institutional and management system established and operational for the Project Activities under this component were funded through the UNDP\. All activities in Component 1 of the project were successfully executed\. There were initial delays in project implementation\. Notably, the appointment and resignation of a new C\.T\.A\. affected the smooth take-off of project activities\. In the RCA, there was a delay in the setting-up of the National Coordination Unit due to the delay in the resolution of the conflict over the appointment of the lead national focal point for the project by the RCA government\. Inter-Ministerial Coordinating Committees were established in the Member States and have been the medium of providing input for policy decisions on the Lake Chad basin in each Member State\. Overall, the capacity of 800 estimated experts and local stakeholders have been strengthened through the implementation of project activities in the Lake Chad basin\. The PSC provided the following strengths and weakness in the implementation of component 1\. Strengths 1\. Setting-up project management structures (PMU, NCU, PSC) 2\. Setting-up of the IMC and the funding of their operation 3\. Contributions of offices and equipment from some LCBC Member States Weakness 1\. Insufficient technical personnel in the PMU 2\. Initial instability in the project management 3\. Delay in the release of funds 4\. Delay in the installation of the means of communication(Internet) 42 5\. Difficulty in acquiring project office in some countries 6\. Non-respect of commitments by Member States 7\. Delays in the deployment of logistics COMPONENT 2: Enhanced regional policy initiatives and institutional mechanisms to address transboundary issues during and beyond the life of the project Activities under this component were funded through the WB\. All activities under component 2 were successfully executed\. LCBC restructuring Plan has been validated by the Council of Ministers and an action plan is in the progress of implementation by the GTZ and LCBC\. The GTZ has appointed a year long adviser located in the LCBC headquarters for this purpose\. LCBC Financial audit designed to provide advise for sound financial management and strengthening fiduciary capacity was completed for the period 2005 - 2007\. The National Action Plan for each of the LCBC Member States in accordance with the principles of Integrated Water Resources Management have been developed\. The study on Institutional/Legal and economic/financial framework in each of the LCBC Member State has been completed and recommendations for regional harmonization has been provided\. In Nigeria, reform implementation has been initiated by the discussion in the National Assembly of 3 bills\. The bills are for establishing the National Water Development Commission, the National Integrated Water Resources Management Agency and the bill for restructuring the existing River Basin Development Authorities to be in line with the ecosystem approach\. The PSC provided the following strengths and weakness in the implementation of component 2\. Strengths 1\. Draft and approval of the institutional Audit 2\. Regional implementation of IWRM practices 3\. Satisfactory financial audit of the LCBC 4\. Completion of national and regional studies for the promotion of IWRM 5\. Training of experts, decision makers and members of parliament in the implementation of IWRM 6\. Use of national experts in conducting the IWRM study 7\. Facilitation and use of common tools and methodologies in the IWRM studies Weakness 1\. Difficulty in conducting the Institutional Audit 2\. Lack of means to implement the IWRM studies at the local level COMPONENT 3\. Strengthened engagement of stakeholders Activities under this component were funded through the UNDP\. The project identified and mobilized the key stakeholders and launched the local initiative projects in 4 out of the 5 LCBC Member States\. It was not possible to launch the local initiatives in the RCA because of the persistent insecurity in the country's portion of the Lake Chad basin\. Fifteen micro-grants projects aimed at getting stakeholder participation were collectively identified, funded and executed in the Lake 43 Chad basin\. Three are located in Nigeria, three in Cameroon, four in Niger and five in Chad\. The Hadejia Jama'are Komadugu-Yobe Stakeholder Consultative forum a stakeholder forum for the Komadugu-Yobe has been established and is functioning in the basin\. In the total of six activities in this component, one could not be initiated due to the lost of time experienced at the beginning of project implementation\. The activity that could not be initiated is; (I) Development of regional methodology for involvement in regional Environmental Impact Assessment\. This activity being very vital to successful environmental management has been included into the SAP\. One activity remains to be completed; (I) Selection of most successful local initiative projects for inclusion in the Investment Plan\. The PSC provided the following strengths and weakness in the implementation of component 3\. Strengths 1\. Existence of the Stakeholders analysis reports 2\. Project financing of local initiatives through the provision of small grant funds 3\. Active participation of basic communities in the identification of projects, provision of matching grant and implementation of local initiatives Weakness 1\. Insufficiency of follow-up and monitoring of the pilot projects COMPONENT 4\. A completed TDA and a synthetic framework for concerted management of the basin Activities under this component were funded through the UNDP\. The TDA has been completed and has identified seven priority trans-boundary problems\. The TDA and the gap analysis form the basis for developing the Lake Chad Basin SAP\. Key environmental indicators have been identified and forms part of the SAP document\. Environmental and social risks have been identified and were communicated to the pilot demonstration teams and other stakeholders at the local levels\. Two out of the six activities under this component are receiving attention through complementary funding provided by the BMZ (German Federal Ministry of Economic Cooperation and Development) and the European Union\. GTZ is providing assistance for surface water in Activity 4\.1 and 4\.2\. while BGR is executing groundwater studies\. The status of the activities are as follows; 1\. Commitment for cooperation on data exchange among LCBC member countries have been signed by all Ministers in December 2005 / January 2006 44 2\. Data exchange protocol has been endorsed by the resolution of the 54th Ordinary Session of the Council of Ministers of the Lake Chad Basin Commission in Abuja on 26th March 2008\. 3\. A data base of historic data has been implemented\. 4\. Training of LCBC and national experts in the application of the new data base system has been completed 5\. A system for the cartographical presentation (GIS) of IWRM information is operational on LCBC computers 6\. A methodology for the detection of surface water changes from remote sensing data has been developed for the satellite images procured by the LCBC GEF Project\. 7\. Procurement of IT hardware and software undertaken in 2006\. 8\. A study on the current situation and future requirements for the knowledge management system of LCBC has been completed in July 2007 9\. The recommendations from the assessment of LCBC's knowledge management, including the upgrading of the documentation department has been completed\. 10\. Data collection on water resources, water demands and water management infrastructure (existing and planned) has been completed\. 11\. Historic hydrological information has been published on the MapServer (http://www\.wr-man\.net/lcbc/) and is available to the interested public\. 12\. The delineation of drainage network and sub-catchment boundaries has been carried out using up-to-date remote sensing data\. 13\. Recommendations from the UNDP master plan and its Hydro_Chad model (1993) have been reviewed 14\. Groundwater contour lines for the Quaternary aquifer of the Lake Chad basin for the year 1984 has been determined and shows presence of three important hydraulic depressions\. Subsequently groundwater flow direction has been determined\. 15\. Groundwater contour lines for the Lower Pliocene and the Continental Terminal aquifer of the Lake Chad basin and groundwater flow direction were determined\. 16\. Localisation, sampling and measurement of static water level in 136 water points to update the database and the determination of water quality was carried out in 2008\. The PSC provided the following strengths and weakness in the implementation of component 4\. Strengths 1\. Completion and validation of the Lake Chad basin TDA 2\. Full contribution of IMC to the formulation of the TDA 45 COMPONENT 5\. Creation of regional programs and initiation of demonstration projects to test and validate methodologies, secure stakeholder involvement and develop implementation modalities The activities under this component were both funded through UNDP and the WB\. Pilot demonstration projects were successfully completed in the Komadougou-Yobe and the Waza-Logone sub-basins under WB financing\. Management plans have been developed and validated by the stakeholders in the Komadougou-Yobe and the Waza- Logone\. In the Komadougou-Yobe basin, a Water Charter has been negotiated among the riparians States in Nigeria and a trust fund has been established in addition\. Eight micro-grants projects were executed by the local communities in the Komadougou-Yobe basin\. In the Waza Logone pilot demonstration project, eight micro-grants projects were also executed by the local communities\. The Lake Fitri pilot demonstration project also financed by the WB has produced a management plan and has been validated but local initiatives projects could not be implemented due to insecurity in the area\. Similarly, the Lake Chad Shoreline and Northern Diagnostic Basin pilot demonstration project has produced a management plan while 21 micro-grants projects were executed by local communities under UNDP financing\. The Upper Chari Water Course pilot demonstration project which was supposed to be financed by the UNDP in the CAR could not be initiated due to insecurity in the area\. The PSC provided the following strengths and weakness in the implementation of component 5\. Strengths 1\. Formulation of management plans for Waza-Logone, Komadougou-Yobe and the Lake Chad shoreline Weakness 1\. Inability to formulate a management plan for the Upper Chari water course\. COMPONENT 6: GEF SAP designed and endorsed with donor support mobilized Activities under this component were funded through the WB\. The SAP has been developed and was endorsed by the Council of Ministers\. Other activities relating to the donor conference could not be completed\. The uncompleted activities include; (I) Develop and implement strategy for donor support (II) Plan and implement donor conferences (III) Strategy for SAP implementation The PSC provided the following strengths and weakness in the implementation of component 6\. Strengths 1\. Formulation and the adoption of the SAP Weakness 1\. None execution of the Investment Plan\. 46 2\. None execution of the Donors' Conference\. 2-3 Project Coordination and Management Project management and coordination was centred in the PMU located in the headquarters of the LCBC in Ndjamena\. The PMU provided the coordination and management structure that implemented the project activities in the member states of the LCBC\. Problems that affected the smooth implementation of project activities are related to the peculiar setting of the location of the PMU at Ndjamena\. The host country Chad do not have the facilities to support modern communication and therefore the project was hampered in implementing an effective communication platform until towards the end of the project\. During the course of project implementation, the PMU had to be relocated to Cameroon in 2006 and 2008 due to deterioration in the security situation in Ndjamena\. This insecurity situation in Chad and the Central African Republic also affected the implementation of pilot demonstration projects in those countries\. Another aspect affecting smooth implementation of project activities include the use of two different implementing agencies procedures for some activities\. Overall the delays experienced in project coordination and management can be explained by the initial change in management, lack of clarity in the application of procedures, difficulties in communication and periods of insecurity in Ndjamena\. 2\.4 Project Impact on the regional agenda The project has a great impact on the regional agenda of the Member States of the Lake Chad Basin Commission\. The project has succeeded in bringing the Member States of the LCBC together to develop a SAP addressing the priority transboundary issues affecting successful management of the land and water resources of the Lake Chad Basin\. Capacity of the national institutions in working together has been enhanced through the TDA and the SAP development process\. In addition the capacity of national institutions to address local problems and developed National Action Plans to address them has created the foundation for implementing basin-wide IWRM in the Lake Chad basin\. For the first time, regional management plans have been developed for key wetlands in the Lake Chad basin ecosystem while the needs of local stakeholders have been integrated in finding solutions in a participatory manner\. The project intervention in Member States of the LCBC and the international need for a new system of water governance has elevated the issue of reforms in the management of land and water resources to the top of legislative agenda\. III\. ASSESSMENT OF THE ACTIVITIES OF THE WORLD BANK AND GOVERNMENT 3\.1 Assessment of the Activities of the World Bank During Project Execution The World Bank has provided sufficient support and satisfactory performance in the implementation of the project\. 3\.2 Assessment of the LCBC s Activities During the Course of Project Execution 47 The LCBC performance during project implementation was satisfactory despite the tremendous stress due to insufficient technical staff to participate fully in the pilot demonstration projects\. 3\.3 Evaluation of the Effectiveness and Quality of Relations between the World Bank and the LCBC during Project Execution The effectiveness and the quality of the relationship between World Bank and the Lake Chad Basin Commission during project execution has been satisfactory\. The project has established new partnership between the LCBC and the World Bank in facing the environmental and developmental challenge facing the Lake Chad basin region\. 3\.4 Evaluation of the Performance of the Various Institutions, Consulting Firms and Consultants who Participated in Project Activities All consultants, consulting firms and institutions that participated in project activities performed satisfactorily with the exception of the following; Institution Reason ONG Rayuwa , Maine Soroa, Diffa ONG Rayuwa received an initial province in Niger Republic disbursement of XAF 1,222,721 out of a total grant of XAF 8,151,470 from UNDP funds but fail to mobilize to the site for the local initiative project\. GIC ALMAHANA Unsatisfactory results in the execution of UNDP funded Lake Chad Shoreline local initiative "Création d'une ceinture verte dans le village TAGAWA I & II Arrondissement de Waza Département du Logone et Chari" in the Waza prefecture of Far North region of Cameroon\. IV\. OUTLOOK FOR THE FUTURE WITH RESPECT TO THE SUSTAINABILITY OF PROGRESS ACHIEVED The Lake Chad region now has all the elements needed to assure sustainability of the results achieved by the project's impact\. The SAP document and the future implementation framework articulated in Institutional Strengthening Study prepared by the project were both backed by resolutions of the regional Council of Ministers\. The regional institutional network built by the project has however not been incorporated into the institutional mechanism of the Lake Chad Basin Commission and this will require further donor intervention to support SAP implementation\. 4\.1 Sustainability of process The prospect for the sustainability of the process is good due to the increased in the capacity of actors in terms of new knowledge, techniques and tools that were generated during project execution\. It is however important that processes and lessons learnt be incorporated into procedures of the Lake Chad Basin Commission\. This could be achieved through further consolidation of the results of the project in a second phase through institutional strengthening and focus on water governance\. 48 4\.2 Sustainability of impact The project impacts are felt is some portions of the Lake Chad Basin more than in other portions\. In the Komadugu-Yobe basin, it has been reported that for the first time in ten years, the water flow arrived at the Lake Chad early in July 2008 as a result of the interventions in the Komadugu-Yobe pilot demonstration project and the subsequent expansion of the local initiatives to clear the blocked water channels by the HJKYB Trust fund\. The success in the Komadugu-Yobe pilot demonstration project is also speeding the process towards institutional and legal reforms within the water sector in Nigeria\. The EU and DFID has given further support to the government of Nigeria for reforming the water governance system\. In the forefront of the advocacy and legislative lobbying for this reform process are the stakeholders and partners of the LCBC GEF Project who have benefitted from the projects capacity build effort\. The HJKYB Coalition Partners made up of IUCN-KYB project, HJKYB Trust fund, Joint State IWRM committees, LCBC, KYB-WDI, C4C-NNWGI(successor to DFID JWL project) objective is to advocate for legislative reforms and institutionalization of IWRM practices in the land and water sector\. The results of the Komadugu-Yobe pilot demonstration project is the main tool use in showcasing the benefit of IWRM to livelihood and the environment\. The coalition partners are in the third year of implementing a 5-Year action plan\. A draft water resources bill that endorsed the successful arrangement of basin management through the Water Charter initiated by the States in the Hadejia-Jama'are-Komadugu-Yobe Basin is currently in its third revision in the Nigerian National Assembly\. There are probably more of such impacts of the project in the Lake Chad Basin but it will need more time for them to be sufficiently large to be noticed\. The success of the Komadugu-Yobe pilot demonstration project both in terms of institutional, legislative, financial and environmental impacts points to the fact that the result of the project could be replicated in the whole Lake Chad basin provided donors continue to provide incremental cost support to the Member States of the Lake Chad Basin Commission\. Donor support for the implementation of the Lake Chad Basin Strategic Action Programme is therefore imperative in ensuring sustainability of project result\. 49 V- LESSONS LEARNED 5\.1 General Lessons7 1\. The pilot demonstration projects implementation has been very good\. The lessons derived from joint fact finding, articulating proposals for solving local problems has been judged to be most beneficial to the stakeholders\. 2\. The TDA/SAP process is the best attempt at regional planning in a cooperative manner in the Lake Chad Basin\. It creates a platform for competing sectors to appraise and agree on common problems and seek common solutions both in the national and regional level\. 3\. The project did not give enough attention to gender and youth involvement\. 4\. Project implementation using two different agencies and implementing different procedures has been cumbersome\. 5\. Capacity building of CBOs on problem identification, project proposals and implementation has been beneficial\. 6\. The methodology of engagement of stakeholders as a result of implementation of the project is different from what obtains in the LCBC and should be incorporated into the organization's work procedures\. 7\. The small grant from a donor and a matching grant from the communities has proved successful in getting the communities to work together in solving their own problems\. 8\. The project provided an opportunity for stakeholder groups to form partnerships, collaborate and develop synergies that reduce cost and bring about efficiency\. 9\. The use of MOU to form partnerships and develop synergies with strong stakeholder groups in solving complex problems at the wetlands level should be incorporated into the work procedures of the LCBC\. 10\. There used to be different plans within each country but the NAP process provides an opportunity to bring existing plans together and introduce the use of common tools and methodology in implementing IWRM in the Member States\. 7 The general lessons are generated by the PSC members during the final PSC meeting held in December 2008 at Abuja\. 50 11\. It was not possible for the executing agency the LCBC to exercise full ownership of the project because the implementing agency has a total control of both project and financial management\. This has impinge on efficiency of project implementation\. 12\. The pilot projects has enable the local communities to recognize their potentials and capabilities and that of other levels of government at the regional, federal, state and local levels\. 13\. The methodologies of stakeholder engagement demonstrated and validated in the pilot demonstration project should be incorporated in LCBC work procedures\. 14\. The development of the TDA and SAP has solved the problem of future project in the Lake Chad Basin Commission\. 15\. Staffing pattern in the PMU was adequate to the task\. 16\. Future projects should be implemented within the framework of LCBC condition of service 17\. LCBC seconded staff to the project should provide the linkage from the Phase I and Phase II and in the future should form the nucleus of the new LCBC project implementation arrangement\. 18\. The Institutional Assessment reforms, the NAP and SAP implementation should form the core the of phase II of the GEF project\. 19\. The phase II of the project should address the need of building a strong link between the transformation of technical decisions into policies and political actions at the highest level of the Member States\. 20\. The results of IMCC, recommendations of the IWRM Study and NAP development processes should be incorporated in the institutional arrangement of the LCBC\. 21\. The Phase II of the project should develop a basin-wide communication strategy that will focus on key stakeholder groups including regional parliamentary committee and the ambassadors of the Member States\. 22\. Monitoring and evaluation should provide for a joint supervisory mission made-up of donors, government and project personnel 23\. There should be capacity building of focal points and strong implication of national focal points and experts in the execution of the next phase of the project\. 51 5\.2 Lessons Learned on Effective Grant Management8 5\.2\.1 Seeking Appropriate Grantees 1\. Use nontraditional media outlets and outreach methods to connect with potential grantees\. 2\. Take risks on nascent NGOs and CBOs\. 3\. Bring-in local experts familiar with local conditions where the grant program is to take place 4\. Prepare to announce several rounds of grant giving opportunities since most proposal funding needs are small in nature until the initial available grant budget is exhausted\. 5\.2\.2 Proposal/Concept Paper Preparation 1\. Accept short concept papers before or instead of a full-length proposal\. 2\. Provide guidance in thinking through linkages between objectives, outcomes, methods and M&E indicators 3\. Use local experts in the selection panel to help the most promising potential grantees develop the full-length proposal 5\.2\.3 Grantee Capacity Strengthening 1\. Arrange field visits to the extent feasible and ask questions\. 2\. Be flexible with timelines and sensitive to time constraints\. 3\. Provide training and workshops based on grantee needs\. 5\.2\.4 Monitoring and Evaluation Introduce monitoring and evaluation into the project planning process\. Provide guidelines, assistance, and rationale for baseline data collection\. Facilitate grantee selection of simple, measurable, and useful indicators\. Encourage the grantor/donor to participate in monitoring visit during grant implementation\. 8 The lessons on effective grant management were developed from the presentation on lessons learned at 5th Meeting of the PSC held in Niamey in April 2008\. 52 Annex 8\. Comments of Cofinanciers and Other Partners/Stakeholders UNDP contracted consultant provided inputs at time of the ICR mission\. UNOPS provided comments and The UNDP regional team leader provided comments below in addition to comments provided directly into the text\. Comments received from UNDP My main comment is with regard to the ICR rating of "moderately unsatisfactory" which does not reflect well the challenging working conditions of the project and the actual degree of achievements\. As indicated by the ICR section 3\.2 on achievements (pages 20- 21) two major outcomes (the institutional assessment, and the investment plan) were not achieved\. However, the following outcomes were achieved to satisfactory levels: (i) efficiently carry out a successful TDA/SAP process, (ii) derive lessons learned from pilot projects, (iii) assess the legislative and institutional frameworks of the member countries, (iii) enhance LCBC's institutional capacity, (iv) develop a stakeholder Analysis, (v) develop a transboundary strategy for a functional network of protected areas\. The ICR itself indicates that these achievements are commendable and achieved under difficult conditions\. Comments received from UNOPS We have reviewed the report here and although we are of course disappointed that in the end the project could only attract a rating of "moderately unsatisfactory" there is well reasoned explanations provided by the evaluator, the key finding of which is that the original project design was overly ambitious\. The report does mention the achievements that the project had despite the difficult circumstances and mentions that the independent evaluation gave it a rating of "moderately satisfactory"\. So overall, as it is put in this report, it is to a large extent a matter of perspective - is the glass half-full or half-empty\. As far as UNOPS is concerned, the report gives credit to our achievement where it is due and points out our weaknesses, which we acknowledge and have indeed identified during the course of implementation and taken the necessary steps to remedy these\. 53 Annex 9\. List of Supporting Documents 1\. WB: LCB-GEF Project Appraisal Document; January 2003\. 2\. WB: LCB-GEF Trust Fund Grant Agreement; April 2003\. 3\. WB: Project Status (PSR) and Implementation Status Results Reports (ISR); 2003- 2008\. 4\. WB: Aide-Memoires and BTOs of Supervision Missions; 2002-2008\. 5\. WB: Quality of Supervision Assessment (QSA6); August 2004 6\. WB: Environmental Safeguard Audit for Komadugu-Yobe Pilot Project; June 2008\. 7\. WB: Environmental Safeguard Audit for Waza-Logone, Transboundary Desertification Control and Lake Chad Shorelines Pilot Projects; July 2008\. 8\. WB: Environmental Assessments and Resettlement Framework; 2002 9\. WB: Country Assistance Strategies (CAS) for Cameroon (2003), CAR (2003), Chad (2003), Niger (2003 and 2008) and Nigeria (2005)\. 10\. UNDP: Project Document RAF/00/G31/A/1G/31; September 2002\. 11\. UNDP: Mid Term Review; April 2007 12\. UNDP: Annual Performance Reports and Project Implementation Reviews (APR/PIR); FY2004 - FY2008\. 13\. UNDP: Project Final Evaluation, April 2009 14\. UNOPS: Audit reports for the years 2005, 2006 and 2007; October 2008 15\. PMU: Institutional Assessment of LCBC, Final Report; June 2008 16\. PMU: Assessment of the Capacity-Strengthening Needs of the LCBC; March 2006 17\. PMU: Transboundary Diagnostic Analysis of the Lake Chad Basin; May 2007\. 18\. PMU: Strategic Action Program for the Lake Chad Basin; June 2008 19\. PMU: National Action Plans for the 5 member countries; 2008\. 20\. Country (5) reports on Promotion of IWRM in the Lake Chad Basin countries: (a) Diagnostic économique et financier du secteur de l'eau, and (b) Diagnostic juridique et institutionnel de la gestion de l'eau et des terres; January 2008\. 21\. Report on Promotion of IWRM in the Lake Chad Basin countries: Diagnostic régional des aspects juridiques, institutionnels, économiques et financiers de la gestion de l'eau et des terres du bassin du lac Tchad; July 2008\. 22\. PMU: Project Implementation Manual; 2003 23\. Poverty Reduction Strategy and equivalent Papers (PRSP) for Cameroon (2003), CAR (2006), Chad (2003), Niger (2008) and Nigeria (2004)\. 24\. AfDB: Project Appraisal Report for the Lake Chad Basin Sustainable Development Program (PRODEBALT); October 2008\. 25\. PMU: Catchment Management Plans for Komadugu-Yobe (May 2006), Waza- Logone (November 2007), Lake Fitri (October 2007) and Lake Chad Shoreline & Northern Diagnostic Basin (May 2007) Pilot Projects\. 26\. PMU: LCB Stakeholder Analysis\. 54 27\. PMU: Designing a Regional Strategy of Protected Areas of the Lake Chad Basin; June 2007\. 28\. Water Charter for sustainable and equitable management of the Hadejia-Jama'are - Komadugu-Yobe Basin; February 2007\. 55 Annex 10\. Enhanced Results Framework Analysis, synthesized from PAD and Prodoc While the PAD and Credit Agreement did not provide a Results Framework, the project had a Logframe which contained objectives, outputs and outcomes\. Logframe was the norm at the time of project preparation and its design did not include information on baseline and end-of-project targets\. Key performance indicators are the following: Increased numbers of stakeholders involved in local and transboundary water resource management issues, with the ability to influence decision making processes; Increased awareness of the impact of national policies on shared water resources by constituency groups; Implementation support for three pilot projects; Completion and adoption of the Strategic Action Plan (SAP), with a framework, timeline and Financing Plan for implementation of priority activities; and Increased donor involvement in and support for the SAP and LCBC Plan implementation\. Annex 2 of UNDP's Prodoc provides a detailed log frame for the project, but also does not provide baseline and end-of-project target values for its indicators\. The Prodoc acknowledged that the project's success cannot be measured against Environmental Status Indicators (ESI), since it was of catalytic nature and aimed at mobilizing a process of institutional and regulatory reform, with a focus on capacity building and regional policy initiatives to address transboundary issues\. Thus, the Prodoc expected that most of the indicators employed to track implementation progress (and to be defined by the PMU in its first year) would be Process Indicators (PI) and some Stress Reduction Indicators (SRI) such as changes to regulations, harmonized approaches to land degradation issues, and improvements in the LCBC's capacity to effectively address its mandate\. In its APRs/PIRs, UNDP monitored progress towards achieving the project objective through the following outcome indicators: A co-operatively developed and approved framework and co-ordination mechanism for regional and national interventions on behalf of the participating countries\. Improved national and regional capacities for the long-term sustainable development of the resources of the Lake Chad Basin\. Increased donor interest in and support for the efforts of the participating countries and the LCBC to achieve a sustainable future for the Basin\. Documented, substantial stakeholder participation in the work of the project To create consistency and clarity in reporting, UNDP's APR/PIR and Prodoc outcome indicators have been integrated with the outcome indicators used in the Bank's ISRs, to provide the following Results Framework for improved presentation of project outcomes, consistent with subsequent ISRs and APRs/PIRs and as an alternative for the Results Framework provided in Section F\. 56 Global Environmental Objective (from PAD): To build capacity within the LCBC and its national committees so that it can better achieve its mandate of managing land and water resources in the greater Conventional Basin of Lake Chad\. GEO Indicator Baseline Value Target Values Values Achieved at Completion GEO Policy and management decisions for the long-term sustainable Indicator: development of the land and water resources of the Lake Chad Basin take place, through a strengthened institutional framework and an approved policy framework and co-ordination mechanism for regional and national interventions\. Value Inadequate policy National and regional The TDA, NAPs and framework and stakeholders endorse SAP have been regional coordination the NAPs, TDA and finalized and for sustainable SAP, as the basis of a adopted, and the development of land sustainable SAP was endorsed at and water resources in development an Extraordinary the Basin; donors are framework for the CoM (June 2008)\. not informed and Basin; donor support involved\. mobilized; LCBC reformed\. Date 01/21/2003 01/20/20089 12/20/2008 Comments Partial achievement (60 %) due to lack of time in the project to implement the Institutional Assessment and to prepare the Investment Plan for the SAP, and the subsequent related decision of the CoM Chairman to postpone the donors' conference\. Institutional and legal frameworks are yet to be harmonized in the member countries\. Intermediate Outcome Indicators Baseline Value Target Values Values Achieved at Completion Indicator LCBC has been reformed, is operating more effectively and its 1 capacity to sustainably develop LCB resources has been strengthened according to an endorsed IA\. Value Regional, national Recommendations for The Institutional and local institutional reform of Assessment (IA) has institutions are LCBC have been been endorsed in the not able to co- implemented, and LCBC Extraordinary CoM ordinate policies functions effectively and (June 2008)\. CBOs and actions for efficiently as the regional and local stakeholders managing the LCB management proposed and vulnerable LCB's institution\. Capacity exists implemented projects resources in a to implement CBO- based addressing local 9 Closing date as agreed upon at time of project effectiveness 57 sustainable approaches for local concerns\. National manner\. interventions\. National teams developed the and regional capacities for National Action Plans the sustainable for the implementation development of the LCB of IWRM\. resources have improved\. Date 01/21/2003 01/20/2008 12/20/2008 Comments Partial achievement (60% of target)\. On request of LCBC, GTZ has agreed to support implementation of the IA\. Plans, TORs and the budget for the recruitment of new technical staff have been developed and are awaiting approval of the CoM (expected to be held May 2009)\. The project could not serve as a capacity building instrument for LCBC through IA implementation\. Indicator Pilot project activities provide opportunities for stakeholder 2 involvement and lessons on land and water management practices for inclusion in NAPs and SAP\. Value Limited avenues All pilot project activities Local micro-grant for public are completed with activities were involvement in substantial involvement of implemented in most the management stakeholders\. Workshops pilot projects, with of the Lake Chad to share lessons learned on involvement of Basin system\. pilot activities are stakeholders, albeit conducted and lessons are with large delays and incorporated in the NAPs below target budgets\. and SAP\. Six riparian states and the Federal Government of Nigeria approved a catchment Water Charter for the KYB\. Date 01/21/2003 01/20/2008 12/20/2008 Comments Partial achievement (60 %): the Upper-Chari Basin pilot was cancelled and the Lake Fitri pilot project was curtailed due to the prevailing security conditions\. Indicator The Transboundary Diagnostic Analysis (TDA) and an IWRM study 3 have been completed and adopted by the PSC\. Value Regional Data gap analysis has been The TDA was synthesis of performed and results are finalized and adopted available water incorporated in the TDA\. by national Technical resources data TDA and IWRM study are Experts in September and information adopted by the PSC\. 2006\. The IWRM on socio- study was adopted by economic and the PSC in December environmental 2008\. impacts of the use of basin resources 58 not available\. Date 01/21/2003 01/20/2008 12/20/2008 Comments Target fully achieved (100 %)\. Indicator The SAP and Investment Plan (IP) are endorsed by riparian countries 4 and donors have pledged increased support for future investments in the Basin\. Value Donors are not The SAP has been The SAP has been substantially endorsed by riparian endorsed by the CoM involved in the countries, a donor in June 2008\. A sustainable conference has been held donors' conference is development of and donors have pledged under preparation for land and water future investments\. 2009\. AfDB has resources in the approved the LCB Lake Chad Basin\. Sustainable Development Program, to support SAP implementation; other donor funding is confirmed (EU, BGR and GTZ)\. Date 01/21/2003 01/20/2008 12/20/2008 Comments Partial achievement (60 %) since the IP has not yet been prepared and the donor conference has been postponed beyond project closure\. 59	REVIEW
P005212	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 23335-IRN IMPLEMENTATION COMPLETION REPORT (CPL-35700; SCPD-3570S) ON A LOAN IN THE AMOUNT OF US$ 157\.00 MILLION TO THE ISLAMIC REPUBLIC OF IRAN FOR AN IRRIGATION IMPROVEMENT PROJECT 12/11/2001 This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective June 2001) Currency Unit = Rial Rials 1,000 = USS 0\.125 US$ 1\.00 = Rials S,000 FISCAL YEAR March 21 March 20 ABBREVIATIONS AND ACRONYMS AD Agncuutrai Development ASC Agricultural Services Center CAS Country Assistance Strategy CCs Central Consultants CoCoS Contract Costing System DOE Departrnent of Envirotment FAO Food and Agriculture Organization GIS Geographic InfoTrnation System GOI Government of Iran ICB International Competitive Bidding ICR Impplementation Completion Report lip Irrigation Improvement Project IPM Integrated Pest Management -tc Land Consolidation NCB National Competitive Bidding LOS Liaison Offices M&E Monitoring and Evaluation MEAF Ministry of Economic Affairs and Finance MEIS Monitoring and Evaluation Infornation System MOE Ministry of Energy MOE/CC Ministry of Energy/Central Consultants MOE/LO Ministry of Energy/Liaison Office MOJA Ministry of Jihad and Agriculture MOJA/CC Ministry of lihad and Agriculture/Central Consultants MOJA/LO Ministry of Jihad for Agriculture/Liaison Office MOMC Mazandaran Operation and Maintenance Company MPO Management and Planning Organization MTR Mid-Term Review MWRA Mazandaran Water Regional Authority OMC Operation and Maintenance Company PADs Provincial Agriculture Departments PAO Provincial Agricultural Organization PRO Planning and Budget Organization PSC Project Steering Committee PVS Pilot Village Studies PWIT Power and Water Institute PWMS Pilot Water Management Studies QAG Quality Assurance Group R&EC Research and Extension Comnsittee RET Research, Extension and Training RRA Rapid Rural Appraisal RWAs Regional Water Authorities RWAs/OMCs Regional Water Authorities/Operation and Maintenance Comnpanies SAR Staff Appraisal Report SPCs Sub-Projects Consultants TOKTEN In-house Training through Expatriate National Consultants UNDP United Nation Development Program WID Women in Development WUCC Water Users Co-operative Company WUGs Water User Groups Vice President: Jean-Louis Sarbib Country Manager/Director: loseph P\. Saba Sector Manager/Director: Salah Darghouth Task Team LeaderJTask Manager: Adel Bichara FOR OFFICIAL USE ONLY ISLAMIC REPUBLIC OF IRAN, IRRIGATION IMPROVEMENT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 12 6\. Sustainability 13 7\. Bank and Borrower Performance 14 8\. Lessons Learned 16 9\. Partner Comments 17 10\. Additional Information 17 Annex 1\. Key Performance Indicators/Log Frame Matrix 18 Annex 2\. Project Costs and Financing 20 Annex 3\. Economic Costs and Benefits 22 Annex 4\. Bank Inputs 24 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 26 Annex 6\. Ratings of Bank and Borrower Performance 27 Annex 7\. List of Supporting Documents 28 Annex 8\. Borrower's Contribution This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. Project ID: P005212 Project Name: IRRIGATION IMPROVEMENT Team Leader: Adel F\. Bichara TL Unit: MNSRE ICR Type: Core ICR Report Date: Decemnber 11, 2001 1\. Project Data Name: IRRIGATION IMPROVEMENT L/CYTFNumber: CPL-35700; SCPD-3570S Country/Department: IRAN, ISLAMIC REPUBLIC OF Region: Middle East and North Africa Region Sector/subsector: AA - Agriculture Adjustment; AE - Agricultural Extension; Al - Irrigation & Drainage; AR - Research KEY DATES Original Revised/Actual PCD: 09/30/91 Effective: 04/29/93 04/29/93 Appraisal: 11/11/92 MTR: 09/30/97 03/18/98 Approval: 03/16/93 Closing: 06/30/2001 06/30/2001 Borrower/Implementing Agency: GOI/Ministry of Jihad & Agriculture/Ministry of Energy Other Partners: STAFF Current At Appraisal Vice President: Jean-Louis Sarbib Caio Koch-Weser Country Manager: Joseph P\. Saba Ram K\. Chopra Sector Manager: M\. Salah Darghouth Ngozi N\. Okonjo-lweala Team Leader at 1CR: Adel F\. Bichara Aizad Khan ICR Primary Aithor: Raffaele Suppa (FAO/CP); Francois Dauphin (FAO/CP) 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Irmpact: SU Bank Perfonnance: S Borro,wer Performance: S QAG (if available) ICR Quality at Entry: U S Project at Risk- at A4ny Time: Yes 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The main objectives of the project were to: (a) enhance water resources management through the rehabilitation and improvement of existing irrigation systems that were incomplete or in a state of disrepair; (b) upgrade research and extension in four sub-projects so as to raise crop output, farm incomes and foreign exchange savings through increased agricultural production; and (c) strengthen planning and implementation capacity of sector institutions including the Ministry of Agriculture (now Ministry of Jihad and Agriculture - MOJA) and the Ministry of Energy (MOE)\. The project was designed to benefit about 46,000 farm families and incorporated appropriate technologies for drainage and irrigated agriculture to meet the agricultural development needs of the four sub-project areas (see para 3\.3)\. These objectives were clear and focussed on addressing sector policy and investment, and institutional issues\. The project was consistent with the Bank's emphasis on environmental management\. The criteria used for sub-project selection were linked to the need of large rehabilitation requirement and relatively quick returns in areas of economic or social priority\. With regard to sector policy, the Government of Iran (GOI) was, at the time of appraisal, pursuing a strategy of full cost recovery for O&M costs and recovery of 40% of on-farm development costs\. The IIP was designed to support and advance the implementation of this new cost recovery policy for the sector serving, as well, as a vehicle for a constructive dialogue on technical and institutional issues and on areas where Iran could use the Bank's experience in supporting prevention programs of environmental degradation\. From a technical/engineering standpoint, the project was fairly straightforward and within the actual national technical capabilities of Iranian engineering and contracting skills\. 3\.2 Revised Objective: The original project objectives were maintained throughout the life of the project\. The Mid-Term Review (MTR) mission, conducted in March 1998, confirmed the validity of the original project objectives although project restructuring was proposed for a number of reasons, including the: (a) combination of delays in civil works execution and high inflation, which was at the basis of the unexpected increase in unit costs; (b) Planning and Budget Organization's (PBO) lengthy procurement procedures, and (c) lack of counterpart funds\. Another reason for the proposed restructuring could be attributed to the changing Bank-Country relationship, whereby prior to this project, the Bank stopped lending to Iran for about 10 years thus eroding the working relationship between the GOI and the Bank\. As a result, real project implementation started in 1995, two years after effectiveness, and by 1998 only about 20% of project funds were spent as opposed to the scheduled 60%\. 3\.3 Original Components: As designed, the Irrigation Improvement Project (TIP) comprised the improvement and upgrading of four existing irrigation and drainage systems in Behbahan, Moghan, Zarrineh Roud and Tajan sub-projects, covering a total net irrigable area of about 90,600 ha and the intensification of agricultural services on these 90,600 ha and on an additional 16,400 ha in Tajan\. In particular, the project included the following components: (a) Irrigation and Drainage Improvement; (b) Agricultural Development; (c) Irrigation/Drainage On-farm Development; (d) Support for O&M; (e) Support for Project Coordination, Technical Assistance, Training, Strengthening MOJA and MOE and Monitoring; (f) Environment; and (g) Resettlement\. The largest share of the project funds, 46\.4% of total base cost, were to support the irrigation and - 2 - drainage improvement program including the construction and lining of main, secondary and tertiary canals and drains\. While the Agricultural Development component provided support for institutional strengthening of research and extension facilities, the On-farm Development included subsurface drainage, land levelling and pilot on-farm water management demonstration schemes\. A range of studies was included in various project components including environmental management studies, a study of rural financial markets, and an irrigation subsector review\. Special emphasis was to be given to strengthening the O&M of all facilities from the main down to the tertiary system developing at the same time farmers' participation through water users' groups and to addressing critical environmental issues\. Funds were also to be allocated for resettlement of population in one of the sub-project areas who were displaced by completion of a dam not financed by the project\. 3\.4 Revised Components: Project components were maintained as foreseen at appraisal and no major changes were required during implementation\. As indicated above, the MTR proposed to scale down the project scope of the physical infrastructure for irrigation and keep the project within its effective implementing capacity as experienced up to 1997\. As a result, and in agreement with both the MOJA and MOE, the irrigation conveyance system (main and secondary canals) and the distribution system (tertiary canal network) were reduced so as to only cover about 58,000 ha as opposed to the 90,600 ha envisaged at appraisal\. 3\.5 Quality at Entty: The Quality Assurance Group (QAG) did not exist at the time of the Project's approval\. Peer reviewers and Bank decision-makers endorsed the project's design and objectives and considered its quality at entry as satisfactory\. However, the state of readiness of the project at time of effectiveness was insufficient\. For example, the project's first year's construction program was not ready at time of entry\. After the MTR, the project supervision was subject to a QAG analysis in 1998\. The QAG Panel, while emphasizing its fundamental support for the project, rated the project as marginally satisfactory in respect to both the quality at entry and the quality of supervision, for a number of reasons including rushed project preparation, inadequate stakeholder analysis during preparation and lack of continuity in management on the Bank side\. The above-mentioned rating was based on the period 1994-1998 during which project's implementation was extremely slow\. As described in the following chapters, implementation improved considerably afterwards\. In addition, it should be noted that: a) the project was the first Bank operation in agriculture after been inactive in Iran for 10 years; and b) the project was geographically disperse with the components covering four different regions involving at the central level two ministries and four Provincial Agriculture Departments (PADs) and four Regional Water Authority (RWAs) at local level\. As foreseen at appraisal, the project faced economic, financial, institutional and technical risks\. The first related mainly to the wide disparity between economic and financial prices\. During the course of the project, the GOI was able to gradually bring domestic prices much closer to intemational prices as indicated in the Annex 7\. The concem about the financial contribution required from the GOI to support project activities did not materialize at the beginning of the project and was one of the main causes for project implementation delays up to 1996\. However, at project completion the GOI's contribution was fully disbursed in line with SAR estimates\. The third risk regarding the institutional set-up was also relevant at the beginning of the project\. Nevertheless, the implementing agencies, both at central and provincial level, were finally able to work closely and jointly\. This was put in evidence by the satisfactory overall project implementation\. The technical risk regarding Operation and Maintenance (O&M) has been addressed under -3 - the project and the good results experienced in Tajan and Behbahan sub-projects with the successful establishment of Water User Groups (WUGs) and Cooperatives, is to be considered as a positive element of project sustainability\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievetnent of objective: Partly as a consequence of changing Bank-Country relationship, but mainly due to initial lack of counterpart funds, project implementation experienced substantial delays\. The project implementation actually started in 1995, two years after effectiveness\. Up to 1998, only about 20% of project funds were spent as opposed to the scheduled 60%\. This was at the origin of the restructuring exercise carried out at MTR in 1998, which reduced the size of the areas to be improved under the project\. However, project implementation gained momentum in 1997 gradually recovering the time previously lost\. In late 1996, changes took place in the management of the two Liaison Offices (LOs) in Tehran and the Bank appointed a new Task Manager\. Efforts by this new team combined with the signature of the sub-project consultant contracts, made qualitative changes in project implementation\. Supervision reports have since begun to put in evidence the positive achievements of the project\. As a result, the outcome of the project as a whole, both in respect to its development objectives and its physical implementation, is rated satisfactory\. Achievement of each development objective is surnmarized below\. 4\.1\.2 Objective 1: Enhancing Water Resources Management: The existing irrigation and drainage networks in the four sub-project areas were successfully rehabilitated and improved and related water resources management substantially enhanced\. Overall, a net area of some 84,600 ha has been improved\. This represents about 97% and 150% of SAR and MTR estimates respectively\. Similarly, in line with SAR estimate, some 44,500 farmers have benefited directly from the project\. It is estimated that in the year following project completion, the total developed areas will be fully irrigated using the newly improved facilities in three of the four sub-project areas, and partially in Tajan where tertiaries canals remain to be constructed\. The water use efficiency in the project areas have/will increase as a result of the project and on the basis of clear indications and data collected through surveys carried out by the MOJA\. As indicated in details in Annex 1 and in Annex 7, irrigation main canals and drains were rehabilitated, secondary and tertiary canals were constructed, sub-surface drainage and land levelling works were carried out, and overall, the implementation rate for the major civil works is assessed at about 95%\. The project was assigned Environmental Assessment Category B and was in fact design to focus on the rehabilitation of existing irrigation systems\. The project has had a positive impact on the environment by improving water use efficiency and protecting soil resources from water logging, salinization and wintering wildfowl at the surroundings of Lake Oroumiyeh and Shadegan marshes\. Potential environmental management problems have been addressed in the special studies undertaken under the project\. 4\.1\.3 Objective 2: Upgrading Research and Extension and Raising Crop Production: By the project closing date, some 33,500 farmers have been reached by extension and participated in 4,620 programs\. Cropping intensities have increased in all sub-projects (from 81% in Zarrineh Roud to 138% in Moghan) and are in line with SAR targets\. Similarly, according to the data provided by MOJA and based on field surveys, special village studies and Rapid Rural Appraisals (RRA), yields of major - 4 - crops are in line with both SAR and MTR assumptions in spite of the recent severe drought that hit Zamrneh Roud sub-project area\. 4\.1\.4 Objective 3: Institetional Strengthening National and international consultancy services were provided to both MOJA and MOE to help them in project's planning and coordination of project activities\. In addition, highly qualified local staff were recruited at both liaison offices to help in project's implementation and in coordination especially at the regional level\. Extensive local and overseas training programs were provided to the staff of these two ministries in the fields of water resources management, planning, monitoring and evaluation, etc\. 4\.2 Outputs by components: Irrigation and Drainage Improvement (including On-Farm Development) Component: General\. The irrigation and drainage improvement works actual implementation program is shown in detail in Annex 1\. It is estimated that some 54,500 ha under MOE contracts and about 32,900 ha under MOJA contracts have been actually improved\. Excluding overlap between the MOE and MOJA contracts, the total net area developed under the project reached some 84,600 ha by the end of October 2001\. The on-farm development, executed by MOA include tertiary irrigation canals, sub-surface drainage and land levelling contracts while the MOE contracts are mainly for main and secondary irrigation & open drainage networks\. A brief description of the current implementation performance regarding the civil works is given below\. Moghan Sub-Project (MOE: 28,600 ha; MOJA: 19,900 ha)\. By the project closing date (June 30, 2001), the physical progress for the five MOE contracts stood respectively at 100%, 100%, 100%, 94% and 68%\. As far as the five MOJA contracts are concerned, the physical progress of the three tertiary networks contracts and the two sub-surface drainage contracts stood respectively at 100%, 85%, 57%, 100% and 82%\. By the loan closing date (October 31, 2001), all above contracts were completed, covering a total net area of 41,500 ha\. Tajan Sub-Project (MOE: 14,400 ha)\. As of June 30, 2001, the physical progress of the main contract TC-I/1&2 stood at 82%\. Delays are to be attributed to difficulties related to land acquisition for secondary and tertiary canals\. The implementation of the remaining works is expected to be completed under the supervision and with the technical and financial support of the Mazandaran Water Regional Authority (MWRA) by the end of 2001\. While the first additional contract (not included in the SAR) for a supplemental area of 3,300 ha has been completed, the the second additional contract for the Semeskandah-Aspevard diversion and regulation works, which started in June 2000, had a progress rate of about 83%\. Overall, by the end of the project, the main and secondary canals construction have been completed, covering a total net area of 11,900 ha\. While MWRA confirmed its intention to carry out the construction of tertiary canals on about 2,500 ha with its own financial resources by the end of the current year, the related works in the remaining part of the sub-project area are expected to be executed during 2002, with GOI's funds\. To reduce costs, the possibility of using unlined tertiary canals would be envisaged\. Behbahan Sub-Project (MOJA: 8,400 ha including 8,000 ha of land levelling and 2,760 ha of sub-surface drainage)\. By June 30, 2001, the two Behbahan contracts were 100% complete\. The contracts for the project facilities (BC-I/4A and I/4B) regarding offices and laboratories for three agricultural research centers were also completed\. The Shadegan Marshes Research Center Laboratory contract was - 5- almost complete (90%) and the Agriculture City Management Center's Staff Housing stood at about 80%\. By the loan closing date, all remaining works were completed\. Zarrineh Roud Sub-Project (MOE: 28,450 ha; MOJA: 6,200 ha)\. By June 30, 2001, out of the eight contracts (six for MOE and two for MOJA), seven were under execution and one (1,800 ha - subsurface drainage) was completed\. The progress rates for six MOE contracts were 77%, 74%, 58%, 73%, 58%, and 69% respectively\. The remaining MOJA contract (sub-surface drainage) recorded an implementation rate of 90%\. All contracts experienced major delays despite the efforts of the MOJA and MOE regional offices\. The main reason for the implementation delays of the sub-surface drainage works is to be attributed to the poor condition of the contractor's machinery\. If the present pace of implementation is maintained, all remaining works should be early 2002\. Overall, a total net area of 22,800 ha is expected to be finally developed\. Dams Safety\. The Dam's Panel of Experts (POE) put in place in 1996, continued to have regular meetings and in its December 1999 report made a series of recommendations for both the Shahid Rajaee (Tajan) and the Marun (Behbahan) Dams\. As far as the Shahid Rajaee dam is concerned, the design, construction and supervision were found of high quality\. Some safety concerns remained and included some minor cracks in the downstream foundation blocks 23 and 25 and the need for continuos monitoring of the right abutment displacements\. The Marun Dam was constructed in accordance to proper design specifications and its overall behavior is rated satisfactory\. However, the POE raised some issues, which included reservoir filling procedures, grouting and concrete lining at several locations, the checking of upstream rip-rap protection behavior and reviewing the drainage holes design at the downstream blanket\. The above recommendations were transmitted to and implemented by the Dam's Consulting Engineers and the Regional Water Authorities (RWAs)\. Agricultural Development Component Cropping intensities have increased in all sub-projects and are close to the SAR targets\. Yields of major crops are also in line with both SAR and MTR assumptions\. Farmers, through the Research and Extension Committee (R&EC), are currently involved in research activities\. They visit the research stations, discuss trials and indicate their preference and bring up their problems\. Training has involved MOJA officials at sub-projects, provincial and national levels to ensure that local initiatives promoted by the project are properly understood and accepted by higher hierarchical levels\. The interest generated by the new approaches at all levels went well beyond expectation and the GOI has expressed its willingness to support similar activities in other provinces outside the project\. The success of the Pilot Village Studies (PVS) and the continuous expansion of the Integrated Pest Management (IPM) are very encouraging and, as indicated above, crop production has markedly increased as a result of reinforced research and extension efforts provided by the project\. The construction of housing, office and workshops buildings (total of about 4,000 m2) for Research and Extension have been completed\. The procurement of vehicles audio/visual equipment, laboratory and office equipment, and farm machinery have been completed according to the envisaged program\. O&M Institutional Support Component The implementation of O&M institution aspects is considered satisfactory based of the following considerations: -6 - All O&M studies (Moghan, Tajan, Behbahan and Zarrineh Roud) were completed satisfactorily\. The MOJA and MOE OMC are supposed to endorse these studies in consultation with WUGs\. For Tajan sub-project, a draft (in Farsi) for service contracts within the pilot area (640 ha) has been finalized by the Mazandaran Operation and Maintenance Company (MOMC)\. Recommendations are being negotiated with farmers\. The MOMC has given farmers an observer status in its Board\. The company agreed to have MOJA represented in the Board\. The MRWA and the MOE/LO have sponsored the formalization of the Board meetings with an appropriate invitation and agenda\. Shareholders representation and different board appointments has been decided and meetings are regularly held\. An O&M plan for each sub-project has been formulated with the assistance of the MOMC, CCs and the SPCs\. The draft O&M study for Tajan has been completed\. The O&M costs have been reviewed but not yet finalized by the SPCs\. The adoption in Tajan of the accounting and information systems for efficient management is being completed\. In the other 3 sub-projects, adoption of the above measures is less advanced\. All the above institutional reform measures were not envisaged at appraisal and were initiated and discussed in two national workshops and during the supervision missions\. The training program for Tajan and Behbahan sub-projects were designed and carried out successfully by the MOJA/CC and MOJA/LO\. MRWA and/or the MOMC, with the involvement of MOJA, established a training unit for both its own staff and farmers' representatives\. MOE central and the regional offices are in agreement with the policy of sharing between the MOMC and the WUGs, a portion of the fees paid by the users, for financing special maintenance (specially on-farm) and improvement works\. While no direct participation is immediately foreseen, negotiations on O&M operations/procedures are under way\. Integrating all the new works received by the MOMCs into the inventory is proceeding as programnned\. However, it will be important to monitor its progress and report it as one of the items of the agenda of the MOMC Board meetings\. Negotiations between MRWA/MOMC and farmers on the construction of the tertiary systems, and related O&M are underway taking into account the experience derived from the pilot operations in Tajan and in Behbahan\. Water Users Groups (WUGs): The creation of the WUGs covering the two pilot areas in Tajan and in Behbahan have been carried out very satisfactorily\. These groups are organized using participatory approaches, according to the existing legal set-up as nonprofit associations\. The election of the representatives for each of these WUGs was also completed\. More specifically, in Tajan, seven WUGs have formed the Water Users Co-operative Company (WUCC) which has already assumed legal entity and is currently operating\. The whole Tajan pilot area of 640 ha has been equipped with tertiary canals\. For Behbahan the work regarding the establishment of the cooperative, grouping 9 WUGs, has been completed and its registration is under preparation\. Some 670 ha are included in the Behbahan pilot area\. MOJA support in the formation and formalization of WUGs was very effective and included: (i) the establishment of the Provincial, Pilot and the Operational Task Forces; and in both pilot areas, (ii) the selection of the pilot areas; (iii) the call for meetings and organization of field visits by the Task Forces; (iv) the preparation of draft legal documents related to the creation of WUGs, Co-operatives and service contracts; (v) the surveying of all physical assets for the project; (vi) the preparation of training programs for all concemed including farmers\. Like for O&M, these institutional aspects were not foreseen at appraisal and were initiated during project's implementation\. Project Coordination, Technical Assistance and Training Component Both MOE/LO and MOJA/LO performned well during the course of the project\. They are expected - 7 - to remain in place until the end of 2001 to be able to follow the implementation of the remaining project activities\. They have prepared the Borrower's contribution to this ICR with the assistance of CCs\. The Project Steering Committee (PSC) met seven times, the last being in July 2001\. The issues discussed during the meetings and actions taken were essential for helping project implementation\. The MOJAILO and MOE/LO Central Consultants' (CCs) assignments were completed satisfactorily\. Their contracts were extended to June 30, 2001\. The implementation of the surface/groundwater monitoring programs in the sub-projects of Tajan and Zarrineh Roud started in July 1999 and was completed on time\. As the requirement regarding the third amendment of the MOJA CC contract could not be concluded in 2000 as proposed due to problems related to taxes imposed on foreign consultants, all the remaining activities including the Water Users' Groups (WlUGs) formation in the two pilot areas, the preparation of the Pilot water Management Studies as well as the Monitoring and Evaluation aspects (M&E), were finally successfully completed by the national consultants\. MOE Sub-Projects Consultants (SPCs): All final designs related to the civil works were completed as and when required\. Additional man-months and corresponding funds were allocated to the three sub-projects consultants to undertake the O&M studies and to supervise the remaining civil works construction contracts\. MOJA Sub-Projects Consultants (SPCs): All final designs related to civil works have been completed\. The majority of SPCs agricultural reporting assignments have also been completed\. However, the reports on Land Consolidation (LC) in Zarrineh Roud, on the Agricultural Development (AD), and on the Stage II Women in Development Plans (WID) experienced long delays\. Testing of the hydraulic performance of sub-surface drainage has been carried out at Behbahan, Moghan and Zarrineh Roud and the final reports were submitted on time\. All the field works related to the Pilot Water Management Studies (PWMS) in Behbahan and Moghan have been concluded and the analysis of all the results is completed by early 2001\. In the two sub-projects and for four different crops over three planting seasons, it was shown that water use could be reduced while obtaining similar or increased yields\. The challenge for the PAOs is to disseminate these results as widely as possible\. The successful workshops on the results of the studies were conducted both in Behbahan and in Moghan in February 2001 indicate that the involvement of local institutions in planning and carrying out on-farm management trials as well as in disseminating results is of utmost importance\. The implementation of these results on a large scale would require, by the OMC, a coordinated irrigation scheduling in all tertiary units and delivery of water accordingly\. Training: Implementation of the training component is rated very satisfactory and both FAO and UNDP contributed substantially to the success of the program\. Details on the current situation of the implementation of the training component are given in Annex 7, Appendix B\. MOE Training Programs were well conducted\. Under Category I (in-country training), for which a contract was signed with the Power and Water Institute (PWIT), a total of 522 participants attended 55 courses and workshops, recording an implementation rate of about 90%\. For the M\. Sc\. programs, candidates have started for 7 candidates\. For Category II (short courses in Iran) and Category III (overseas study tours) training programs were combined under one contract signed with FAO on January 2001, and involving about 230 participants attending 15 short courses and study tours\. As regards the MOJA Training Programs, the completed training activities are summarized as follows: (i) Central Level Training\. The local short-tern training courses progressed very well and - 8 - exceeded their expectation with 220 staff months actually utilized against the original target of 120\. By October 2001, the overseas short-courses and workshops have both reached an implementation rate of 85%\. The study tours programs, included in the FAO contract, was completed by 31 October 2001\. Finally, in-house so-called "Transfer of Knowledge through Expatriate National Consultants" (TOKTEN) training program, organized with UNDP, has been very successful with the participation, during the period 1996-2000, of 37 professors and specialists from overseas\. A total of 21 seminars, 40 workshops and 3 consultancies were carried out with, all together, 1,317 participants; (ii) Sub-projects Level Training\. The local short-term training courses have been completed very satisfactorily (109% of SAR estimates)\. Other training categories did not progress as well (overseas short-courses: 60%, and workshops: 51%) because they were initiated late during the course of the project\. The study tours program included in a contract with FAO was completed by the end of October 2001; and (iii) Training for DOE personnel\. Nine candidates were sent to the Netherlands to follow-up a one year M\.Sc\. course on Environmental Technology\. Overall, the quality of the training was quite good\. This was shown by the impact on the ground (i\.e\. increased agricultural production) and by the assessment made after each training session\. Procurement of Goods and Building Construction: Ninety nine vehicles (station wagons, 4WD and minibuses) have been procured by MOJA/LO\. Most of these vehicles have been distributed to MOJA regional offices\. This completes the overall procurement program for vehicles, as foreseen by the project\. The procurement of much needed tractors has experienced long delays\. The delivery of the first lot composed of 30 "35HP" tractors procured by MOJA/LO took place in December 2000\. Fort two additional tractors were procured in 2001\. In addition, MOJA procured Farm Machinery and Implements for these tractors\. The procurement of computers and audio-visual equipment for MOJA was completed\. Due to high demand by the regions, the numbers of these items exceeded the original estimates\. Procurement of all foreseen heavy operation and maintenance equipment for MOE RWAs was completed in 1998\. Three separate contracts conceming the construction of MOJA housing, cffices and workshops at the sites of Dodangeh Agricultural Services Center (ASC) and Behbahan Research Center were completed by the loan closing date\. In addition, the construction of a research station at Moghan and an extension services office at Tajan were completed using counterpart funding\. Monitoring and Evaluation (M&E): The quality of the MOE/LO and MOJAILO progress reports were satisfactory especially during the last 4 years of project implementation\. The MOECC developed a monitoring and evaluation system based on computerized project management techniques using appropriate software\. Training for this purpose was also provided\. As requested, MOJA/LO reports provided quantifiable performance indicators related to agricultural production\. The reporting capacity at the regional level, although improved, remained weak\. MOJA/LO will put more emphasis on this issue and will appoint local personnel to help improve the situation\. MOE/CC prepared GIS databases for Moghan, Zarrineh Roud and Tajan sub-project areas comprising various geo-referenced maps indicating primary, secondary and tertiary canals, drains, and related structures as well as other important facilities within the irrigation schemes\. The attributes of all these facilities have been attached and can be retrieved at query\. Other infomnation related to O&M -9- requirements are also included in the database\. User's manual has been prepared and translation into Farsi is being prepared\. For Tajan Pilot Project area, cadastral information have been added to the database along with data on ground water aquifer characteristics\. A database for a Monitoring and Evaluation Information System (MEIS) was developed by MOJA/CC and, guidelines for collecting, storing and dispatching data were made available\. Similarly, guidelines and forms for collecting and reporting R&E indicators were also produced\. In addition, a Contract Costing System (CoCoS) is in place and has been utilized by MOJA/LO for monitoring the financial performance of MOJA's project components\. Environmental Component The project was placed in environmental screening category "B" consistent with O\.D\. 4\.01 "Environmental Assessment"\. The project has actually had a positive impact on the environment as a result of improved water use efficiency and protecting soils resources from waterlogging and salinization\. The environmental management plan has supported: (i) institutional strengthening (including the construction of a visitor center for Sahdegan marshes) and training; (ii) water quality monitoring programs; (iii) agricultural chemical management programs; and (iv) special environmental studies\. With respect to the various studies associated with the project, the following table represents results to date: Responsibility MOE MOJA Total Number of Studies 8 18 Completed 6 14 Being Implemented 21 22 Studies Cancelled 0 2 I Include the Zarrineh Roud Delta & Wetlands Management Plan, which is about 85% complete\. 2 Includes 3 studies conducted by FAQ - see below\. 3 Includes Improved Migratory Bird Census Methods and Establishment of New Protected Region for Gazelles\. Most of the completed studies were of an acceptable quality\. Studies Conducted by FAO\. The contract for the Shadegan Marshes Management Plan and Lake Ouroumieh National Park Management Study was signed with FAO in April 2000 and studies should be completed by the end of 2001\. By October 31, 2001, the progress rate for the plan and for the study stood at 70%\. Good cooperation between all interested parties was experienced during the preparation of the Terms of References and the implementation plans of these studies\. Due to lack of proper coordination and budgetary allocations, MOJA/LO and DOE did not manage to finalize the list of goods to be procured by MOJA/LO for DOE and as a consequence the procurement of these goods were not carried out by loan closing date\. The failure of the DOE to appoint adequate staff to help in implementing the envisaged programs negatively affected the outcome of the environment components of the project\. - 10 - Resettlement Component Although the resettlement of Dej-e-Mahtabi village inhabitants was not associated with the Behbahan sub-project, it was agreed at appraisal that the MOJA would have implemented the resettlement plan for the 49 families affected by the construction of the Maroon Dam\. The above was also included in the Legal Covenants\. As a consequence MOJA prepared a resettlement plan consistent with the Bank O\.D\. 4\.30 and successfully implemented the resettlement program as early as 1993\. Therefore, the related covenant is considered complied with satisfactorily\. 4\.3 Net Present Value/Economic rate of return: The economic analysis has been carried out for the project as a whole of for each of the four sub-projects of Behbahan, Moghan, Zarrineh Roud and Tajan\. The analysis, which has been carried out over a project period of 25 years, is described in details in Annex 7\. The ERR for the project as a whole at project completion is estimated at 16\.6% as compared to the SAR rate of 18\.8%\. Separate economic analysis has been carried out for each of the four different sub-projects area namely Behbahan, Moghan, Zarrineh Roud and Tajan with rates of return of 9\.3%, 22\.4%, 6\.9% and 23\.5% respectively compared to SAR rates of return of 22\.6, 15\.6, 20\.0 and 24\.5 % respectively\. The above ERR's estimates indicate that the project as a whole as well as the individual sub-projects remains, at project completion, satisfactory\. The Zarrineh Roud subproject which, with an ERR of about 7%, well below SAR estimate, may be considered slightly marginal\. In reality, the ERR for the Zarrineh Roud sub-project is to be considered underestimated on the assumption that the heavy rehabilitation programme that has been undertaken has involved full lining of the primary and secondary canals, which would result in a considerable saving in water for irrigation and therefore allowing an increased availability of water downstream\. Data on possible water savings as a result of the project were not available at the time of the ICR and it would be difficult, at this stage, to quantify accurately the relative project benefits in the downstream areas\. Furthermore, the Zarrineh Roud subcomponent should be maintained because of the high expectation of the farmers in the area\. The sensitivity analysis indicates that the ERR to the project and for the four subprojects has been found to be quite resistant to deviations from the base case assumptions\. With benefits lagged one year or reduced by 10%, the project as a whole would generate ERRs of 14\.2% and 14\.9% respectively\. 4\.4 Financial rate of return: As described in details in Annex 7 and summarized in Annex 3, the impact of the project on farm income would be satisfactory confirming the financial viability of the project as estimated at appraisal\. At full development, increases in net farm income would range from 40% for farms in Tajan to 250% for farms in Behbahan (as compared to SAR estimates of 153% for farms in Tajan, Behbahan and Moghan and 346% for farms in Zarrineh Roud) making the project effectively attractive to the farmers\. Furthermore, considering that these farms' incomes are based on crop budgets per ha including water charges and incremental O&M costs for irrigation infrastructure, the actual increases in the net farm incomes to be foreseen under the with project situation, clearly indicate the farmers ability to pay for these incremental costs\. As regards the cost recovery and finance for operation and maintenance the sustainability of the present system, which by law provides for recovery of scheme O&M costs from farmers up to 3% of average gross income per hectare for each crop, would be better assured by the increased level of fanner's income to be generated by the project\. - 11 - 4\.5 Institutional development impact: The project is a major initiative for changing attitude and approaches of both the MOJA and MOE towards the implementation of development programs with foreign financial assistance\. The two principal implementing agencies and their respective Provincial Agriculture Departments (PADs) and Regional Water Authorities (RWAs) in each of the four sub-project areas were in fact exposed to new technologies and good practices in various fields, including: (i) irrigation and drainage; (ii) participatory irrigation management; (iii) environmental survey and monitoring; (iv) technical reviews; (v) water resources planning and investigation; (vi) sector planning and programming; (vii) land acquisition; and (viii) community mobilization\. These good practices are gradually being main-streamed in the MOJA and MOE\. As indicated above, GIS Database and MEIS have been developed by MOE/CC and MOJA/CC and are now fully operational\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control ofgovernment or implementing agency: Basically, most factors were within control of the Government or its agencies\. Perhaps, the main obstacle to project implementation was the unexpected macroeconomic difficulties combined with restricted budget allocations during the first four years of project implementation, including greater than expected rate of inflation experienced during the course of the project\. This caused enormous delays, up to 1997, in the Government approval of procurement and technical assistance contracts, and substantial increase in the costs of civil works\. The lack of management capability of some civil works contractors also negatively affected the project implementation schedule\. Civil works could have been executed more rapidly if proper project management and scheduling techniques would have been followed by private contractors\. Nevertheless, implementation took place in a generally stable social environment\. 5\.2 Factors generally subject to government control: The lack of counterpart funds, during the early years of the project, was one of the major stumbling blocks to normal project execution\. The matter was discussed during the World Bank supervision mission of July 1994 and the situation improved considerably since then with the introduction of a system through which the work program and budget, related to project activities, had to be prepared and sent to the Bank for information six months before each fiscal year\. Major improvement was noted since early 1995 when the PBO finally agreed to include in its budget allocations, funds for the entire project life\. However, counterpart funds remained insufficient till 1997\. Approval of contracts and budgets continued to experience long delays mainly due to PBO' regulations and complicated administrative procedures\. the sub-project consultants and the central consultants were appointed with a delay of two and three years respectively\. In addition, the lack of cooperation between the MOJA and MOE, already experienced at preparation stage, persisted as an important issue throughout the project, although considerably improved after the creation and the proper staffing of the two LOs by mid 1996\. The continuous postponement of target dates for actions agreed with supervision missions was put in evidence by the Bank, as early as 1994\. As a result, the Bank, in April 1995, under the provisions of the "General Conditions" seriously considered initiating procedures for suspension of loan disbursements\. It was also noted during supervision that up to 1996, there was still a considerable lack of understanding between MOE/LO and RWA on their respective roles\. The appointment of POE for dam safety also remained a matter of great concern until early 1996, when the MOE finally agreed with the recruitment of independent experts and complied with the related covenant of the Loan Agreement that should have been complied with by December 31, 1993\. The first POE meeting, comprising of four intemational experts and - 12 - a Bank dam safety specialist, took place in April 1996\. The Project Steering Committee (PSC) as foreseen by the SAR was established to promote, together with the LOs, effective coordination between the various implementing agencies\. The PSC included the Deputy Minister of MEAF, the Deputy Minister for Projects and Planning of MOJA, the Deputy Minister for Water Affairs of MOE, and representatives of MOJA/LO and MOE/LO, PBO and DOF\. The PSC did meet for the first time only in July 1995\. Due to the complexity of the project and the potential for major problems, it was suggested by the Bank that the PSC meets at least twice a year to devote the necessary attention to key issues such as budget allocations and PBO decisions\. Unfortunately, this was not implemented\. 5\.3 Factors generally subject to implementing agency control: Considerable procurement delays took place in the recruitment of consultants both by MOJA and by MOE Liaison Offices (LOs) which remained under staffed until 1995\. In addition, the use of part time personnel and frequent turnovers was at the origin of obvious perturbations in the performance of the LOs, which had difficult terms of reference considering the various organizations involved with project implementation and the related long administrative procedures\. The situation improved considerably by mid-1996 when the Bank supervision mission noted that both LOs were finally staffed with well qualified and experienced personnel and that project implementation has started to gain momentum\. Coordination at the central and local levels was not rated satisfactory during the first years of the project, but improved markedly by the beginning of 1997 as project's activities began to materialize\. 5\.4 Costs andfinancing: Actual project cost, including eligible expenditures to take place in 2001, is estimated at US$ 311\.8 million or about 100% of the estimate made at appraisal\. The final overall project disbursement from the WB loan is US$ 157\.0 million, indicating a disbursement rate of 100% and the GOI's contribution to the project is US$ 154\.8 million\. The project cost has been estimated converting expenditures in local currency using an average exchange rate of US$ I = Rials 3,000\. Due to the scarce counterpart funds during the first years of project implementation, the Bank agreed to increase its financing for the civil works so as to cover 60% of the local expenditures as opposed to 40% stipulated in the Loan Agreement\. 6\. Sustainability 6\.1 Rationalefor sustainability rating: The sustainability of the project is rated as likely and this assessment is based on the following considerations\. Gains in yields and land/water productivity resulting from better practices are expected to be sustainable\. This is because they result not from the simple application of new recommendations, which may be no longer relevant e\.g\. when market prices change, but from an improved capacity by farmers and their advisors to analyze problems and provide solutions\. Cropping intensities increased to an average of 125% in the sub-projects areas compared to 95% at the onset of the project\. Sustaining the quality of research, extension and training (RET) services requires government to continue providing sufficient resources to those services\. Greater sustainability would probably require further reform to partially - 13 - privatize or commercialize the services\. Farmers in the project areas have become less dependent on government services and more assertive\. The project initiated the move towards the creation of WUAs\. Such farmers' organizations will reinforce farmers' ability and resolve to tackle their problems\. The positive results regarding the establishment of WUGs in Tajan and in Behbahan and the bold institutional reforms initiated with and implemented by the MRWA and OMC are important aspects of project sustainability as far as the O&M of the irrigation infrastructure is concemed\. The GOI intends to apply the same successful approach utilized in the two sub-project areas of Tajan and Behbahan, not only in the two other sub-project areas of Moghan and Zarrineh Roud, but also throughout the country\. This experience is in fact expected to become the base for the national policy in this regard\. The current cost recovery system for the irrigation infrastructure allows the collection of water charges based on the gross value of production of irrigated crops and not on water consumption\. However, the GOI has at present plans to change the cost recovery approach to make it more equitable and more efficient\. The law currently provides for recovery of scheme's O&M costs form farmers up to 3% of the average gross income per hectare for each crop\. The money has to be paid at the beginning of the season otherwise water is not delivered\. The system generates revenues that not always cover 100% of the O&M costs (e\.g\. Behbahan and Zarrineh Roud)\. However, once the volumetric approach is implemented and all the institutional changes are completed at the OMCs level, the recovery of full O&M costs would be achieved\. 6\.2 Transition arrangement to regular operations: A post-completion O&M plan, based on the SPCs study carried out in the Mazandaran province and covering the total Tajan plain is under preparation by the MOE\. Data for the study was derived from the Tajan plain where about 35,000 water users are operating\. Similar studies for other sub-projects are being reviewed and would be implemented in due course\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: The Bank's performance during project identification, preparation and appraisal is rated marginally satisfactory\. The strained nature of the World Bank-Iran dialogue and lending led to uncertainty in the nature of the Bank's long term likely presence in Iran, at the time the project was designed\. Project preparation and appraisal were rushed with negative effects on project implementation\. In particular, a proper stakeholder analysis was not carried out and those entities generally directly linked with project implementation were not adequately identified\. Some key institutional issues at the local level, mainly the role of the farmner's organization and land tenure, were not incorportated in the project design\. These were added later by the Bank during the implementation process\. 7\.2 Supervision: The Bank performance during supervision is considered to have been satisfactory\. In general, the Supervision Forms 590 and the Project Status Reports were realistic and adequately reported implementation progress\. However, at the beginning of project implementation, there was a lack of continuity in supervision due to frequent changes in management and staffing within the Bank\. In line with the supervision plan indicated at appraisal, a total of 17 supervision missions were carried out including a Mid-Term Review in March 1998\. Substantial improvement in the quality of supervision is - 14 - to be reported since the end of 1996\. A closer and more adequate supervision gave an important positive input to project execution and combined with the upgrading of the summary project implementation progress rating from unsatisfactory to satisfactory in May 1997\. Project rating remained satisfactory till completion\. Supervision missions monitored and facilitated compliance with covenants, and were pro-active in identifying and addressing project implementation issues\. At the same time the Bank played a very important active role in the preparation of detailed plans of actions especially those related to the institutional aspects, which were agreed upon with local authorities, to closely monitor the project implementation progress\. 7\.3 Overall Bank performance: Given the Bank's lending and supervision performances analyzed above, the Bank's overall performance can be considered satisfactory\. Borrower 7\.4 Preparation: The Borrower performance during preparation is rated satisfactory, but with some reservations\. Although the Iranian authorities were not heavily involved in project preparation, they provided the FAO/CP team the necessary support to complete the project preparation work within a short time\. The preparation report proved to be quite weak in many important areas, notably in the absence of quantity estimates for civil works and in the in-depth environmental analysis\. In effect the preparation report showed the inexperience of the Iranian Government in preparing projects\. However, as this project was the first Bank agriculture operation in Iran since 1975, only experiences from previous Government operations in the sector were taken into account\. The Ministry of Economic Affairs and Finance (MEAF) was able to establish a special unit to assist the implementation agencies on matters of procurement and disbursement and closely followed the establishment of the two liaison offices which finally participated in the loan negotiations, held in Paris in January 1993\. 7\.5 Government implementation performance: The Government's performance during project implementation was mixed\. The Government failed to provide the needed counterpart funds on a timely fashion at the beginning of the project\. The preparation of bibbing documents for civil works remained for sometimes in the hands of the Foreign Trade Department of SATKAB (MOE) causing unexpected delay\. The GOI was also late in recruiting the independent POE for dam safety as indicated in the Loan Agreement covenant\. As a result, the Bank in 1995, seriously considered initiating procedures for suspension of loan disbursement\. With the progressive strengthening of the implementing agencies and the provision of sufficient counterpart funds, project implementation gained momentum as of June 1996\. The July 1996 Bank supervision mission's reading was that the project development objectives were finally on the right track with the MEAF fully committed to providing the anticipated funds for the project and budgeted in the related fiscal years\. The Liaison Offices put much emphasis on strengthening the Central coordination unit with the recruitment of experienced and dedicated staff improving considerably the coordination at both central and sub-projects level\. 7\.6 Implementing Agency: While performance of the two principal implementing agencies, MOJA and MOE, varied during the various stages of the project, it was satisfactory on balance\. Long delays in procurement of - 15- consultants and lack of coordination between MOJA and MOE were at the base of the lower than expected implementation pace experienced during the first years of the project life\. In addition, because of centralized decision-making, contract management was weak and important decisions were often delayed\. The Provincial Agricultural organizations (PAOs), the Regional Water Authorities (RWAs) and the Operation and Maintenance Companies (OMCs) performance was satisfactory and, in particular, were able to successfully initiate in Tajan and Behbahan sub-projects, a new approach to O&M including the establishment of WUGs\. The system will be followed in the remaining sub-project sites and it is the intention of the GOI to monitor the outcome of this exercise and draw the lessons to form the basis of the O&M policy regarding irrigated agriculture in the country\. 7\.7 Overall Borrower performance\. In view of the above, the overall borrower's performance is rated satisfactory\. 8\. Lessons Learned The main lessons from the project are: - At project design, the capacity of the implementing agencies was over optimistic\. Widening the project objectives, with so many components, and the vast geographical spread in four different sub-project areas, were too ambitious especially in view of the fact that the Bank had suspended lending to the Islamic Republic of Iran for a long period of time\. The Bank should have been more conservative when designing a new agricultural operation in Iran after an extended period of non-activity\. The implementation capacity of DOE was also over estimated\. The failure of executing its obligations under the project was mainly due to its inability to appoint adequate staff to implement the program as envisaged under the project\. The lack of personnel combined with continuous replacement of key staff at regional level, was also a determining negative factor in the process\. - Implementing Agencies Financial Independence: The other reason for DOE inability to implement its activities under the project is the fact that the financial resources foreseen for the DOE activities were all allocated to the Ministry of Agriculture budget rather than to the DOE budget\. The lack of counterpart flmds for few years and the unwillingness of the MOJA/LO director to procure equipment on behalf of the DOE (despite the WB insistence) resulted in under allocation of budgets to DOE\. In addition, the lack of efficient project management at the DOE and of a clear work program were at the origin of the continued unwillingness of the MOJA/LO to release funds or to carry out procurement activities for the DOE\. - Detailed Designs Readiness: Detailed engineering designs for the civil works should be as far as possible ready before loan effectiveness so that tendering could start as soon as loan effectiveness is declared\. - Beneficiaries Participation\. Beneficiary participation, based on a preliminary agreement with the water users at the early stages of project's implementation, would have allowed faster implementation of the irrigation works especially those related to the tertiary networks\. Direct involvement of the beneficiaries in planning and implementation of O&M systems, even at later stage, has created a sense of ownership among farmers, which is considered instrumental for achieving sustainable water management\. - Procurement\. The WB prescribed ICB for major civil works and the pre-qualification exercise - 16 - produced national contractors only \. It is therefore considered appropriate to be more flexible in case of procurement of civil works which do not attract foreign contractors, and possibly leave these works be procured through NCB\. As the procurement of vehicles is concemed, the project appraisal team should have insisted on getting govemment written acceptance for either ICB or NCB procedures prior to negotiations rather than accept local sources procurement at the end\. The same should also have been applied to procurement activities related to short listing of both national and foreign consultants\. - Involving all Concerned Agencies and Ministries throughout the Project Cycle\. The Management and Planning Organization (MPO, formerly PBO) was not fully involved during the identification, preparation and evaluation phases of the project\. As a result, the MPO was reluctant, during 1994-96, to endorse a number of activities foreseen under the project\. Issues such as employment of foreign consultants, funds allocation for various activities including overseas training, etc\. could have been adequately addressed at project design rather than late during project implementation\. The implementation delay experienced in the early years of the project could have been avoided through a more effective cooperation between PBO and the implementing agencies in line ministries\. In this regard, the early involvement of all concemed with project implementation should be also considered at the preparation stage\. - Capacities of National Agricultural Consulting Firms: It became clear during project implementation that the national consultants specialized in agricultural activities (research, extension, etc\.) were not up to standard and had difficulties in producing reports in English\. All reports were written in Farsi and later summarized and badly translated into English\. The lesson learned is that it is far better to associate national consultants with good local knowledge with experienced intemational consultants and to request that all documents to be first produced in English and later translated into Farsi\. This has worked very well for the MOJA/LO and the joint venture between the foreign and Iranian consulting firms proved to be satisfactory\. - Operation and Maintenance Modalities\. This aspect of the project should be well thought during project preparation\. Detailed, timed and agreed action plan (including triggers and responsibilities) covering the institutional, financial, legal and social aspects related to operation and maintenance should be prepared at the onset of the project\. Implementation of this plan should start as soon as possible in order to ensure the sustainability of the investments by the project closing date\. 9\. Partner Comments (a) Borrower/implementing agency: The final evaluation report prepared jointly by the MOJA and MOE for the Borrower is included as Annex 8\. (b) Cofinanciers: (c) Other partners (NGOs/private sector): 10\. Additional Information N/A - 17- Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome I Impact Indicators: Indicator/Matrix Projected in last PSR ActualULatest Estimate Enhancement of Water Resources Management - Area Improved (ha) 87,500 84,600 - Direct Beneficiaies (No\.) 46,000 44,500 Upgrade Research and Extension and Raise Crop Output - Farmers Reached by Extension (nb) N/A 33,500 - Cropping Intensity (%): 112 129 Behbahan 122 138 Moghan 125 117 Tajan - Number of Demonstration Plots N/A 956 - Number of Research Themes Undertaken N/A 716 Training - MOJA: N/A 4,620 Number of Programmes N/A 33,500 \. Number of Participants -MOE: 81 55 Number of Programmes 18100 522 \. Number of Participants 1 Output Indicators: Indicator/Matrix Projected in last PSR Actual/Latest Estimate I\. Ministry of Energy Number of contracts awarded: Works 14 14 Goods 8 7 \. Consultancy 7 7 Civil works: 1,132 1100 Length of rehabilitated and new canals (km) \. Length of rehabilitated and new drains (km) 854 800 Areas improved (ha) Studies: 58,000 (at MTR) 54,800 \. Number of studies contracted \. Number of studies completed 7 11 7 6 II\. By Sub-projectArea Moghan1 Concrete lining of main canals (km) 17\.5 32 Slope stabiization of main canals (km) 60 Concrete lining on secondary canals (ha) 21,000 27,900 \. Construction of tertiary canals and drains 27,400 15,950 (ha) \. Sub-surface drainage (ha) 11,000 6,800 Zamneh Roud: \. Concrete lining of main canals (km) 97 99 Extension and lining of left main canal (km) 17 19 Construction of the lined secondary canals - 18 - and sub-surface drains (ha) 24,800 22,800 \. Tertiary l&D System (ha) 36,000 22,800 Sub-surface drainage (ha) 7,500 6,200 Tajan: \. Concrete lining of main canals (km) 35 35 The main drain (km) 22 14 \. Secondary canals (ha) 7,500 7,500 \. Tertiary canals (ha) 7,500 640 (only pilot area) \. Drains (ha) 7,500 \. Main canal dto Dashte Naz (km) - 7 \. Regulation structure across river Tajan for 3,600 benefiting Semeskandeh Aspevard area Behbahan: \. Sub-surface drainage (ha) 2,500 Land levelling (ha) 8,000 8,400 \. Soil amendment (ha) 1,700 End of project - 19- Annex 2\. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal ActuallLatest Percentage of Estimate Estimate Appraisal Project Cost By Component US$ million US$ million A\. Irrigation/Drainage improvement 120\.80 169\.60 140\.4 B\. Irrigation/Drainage on farm 26\.30 83\.90 319 C\. Agriculture Development 40\.20 5\.30 13\.2 D\. Project facilities incl\. O&M Equip\. 27\.70 19\.40 70 E\. Institutional support 41\.90 31\.70 75\.7 F\. Environment 3\.40 1\.80 52\.3 G\. Resettlement 0\.20 0\.00 0 Total Baseline Cost 260\.50 311\.70 Physical Contingencies 18\.60 Price Contingencies 32\.50 Total Project Costs 311\.60 311\.70 Total Financing Required 311\.60 311\.70 Project Costs by Procuremet Arrangements (Appraisal Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other2 N\.B\.F\. Total Cost 1\. Works 136\.40 30\.70 0\.00 0\.00 167\.10 (64\.00) (13\.50) (0\.00) (0\.00) (77\.50) 2\. Goods 60\.60 7\.00 8\.00 0\.00 75\.60 (48\.90) (6\.10) (6\.50) (0\.00) (61\.50) 3\. Services 0\.00 0\.00 25\.50 0\.00 25\.50 (0\.00) (0\.00) (11\.70) (0\.00) (11\.70) _ 5\. Training 0\.00 0\.00 14\.10 0\.00 14\.10 (0\.00) (0\.00) (6\.30) (0\.00) (6\.30) 6\. Miscellaneous 0\.00 0\.00 29\.40 0\.00 29\.40 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 197\.00 37\.70 77\.00 0\.00 311\.70 (112\.90) (19\.60) (24\.50) (0\.00) (157\.00) Exchange Rate: IUS$ = Rials 3,000 Project Costs by Procurement Arrangements (ActuallLatest Estimate) (US$ million equivalent) Procurement Method Expenditure Category ICB NCB Other2 N\.B\.F\. Total Cost 1\. Works 238\.50 8\.70 0\.00 0\.00 247\.20 (109\.20) (5\.00) (0\.00) (0\.00) (114\.20) 2\. Goods 9\.70 2\.20 8\.90 0\.00 20\.80 (7\.00) (1\.60) (5\.50) (0\.00) (14\.10) 3\. Services 0\.00 0\.00 36\.80 36\.80 - 20 - (0\.00) (0\.00) (23\.00) (0\.00) (23\.00) 5\. Training 0\.00 0\.00 6\.20 6\.20 (0\.00) (0\.00) (5\.00) (0\.00) (5\.00) 6\. Miscellaneous 0\.00 0\.00 0\.70 0\.00 0\.70 (0\.00) (0\.00) (0\.70) (0\.00) (0\.70) Total 248\.20 10\.90 52\.60 0\.00 311\.70 (116\.20) (6\.60) (34\.20) (0\.00) (157\.00) Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 2 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt\. CoF\. Bank Govt\. CoF\. Bank Govt\. CoF\. Civil Works 77\.50 89\.60 114\.90 132\.40 148\.3 147\.8 Equipment 61\.50 14\.10 14\.10 6\.70 22\.9 47\.5 Consultancy 11\.70 13\.80 23\.00 13\.80 196\.6 100\.0 Training 6\.30 7\.80 5\.00 1\.20 79\.4 15\.4 Others 29\.40 0\.70 2\.4 TOTAL 157\.00 154\.70 157\.00 154\.80 100\.0 100\.1 - 21 - Annex 3\. Economic Costs and Benefits The economic analysis has been carried out for the project as a whole of for each of the four subprojects of Behbahan, Moghan, Zarrineh Roud and Tajan\. The analysis, which has been carried out over a project period of 25 years, is described in details in Annex 7\. On the basis of the assumptions outlined in Annex 7, the ERR for the project as a whole at project completion is estimated at 16\.6%\. Separate economic analysis has been carried out for each of the four different subprojects area namely Behbahan, Moghan, Zarrineh Roud and Tajan\. The results of the economic analysis are summarized in table below with a comparison with SAR estimates: Results of the Economic Analysis Economic Rate of Hectares Subproject Return (%) SAR I ICR SAR ICR Behbahan 22\.6 9\.3 11,500 8,400 Moghan 15\.6 22\.4 35,600 41,500 Zarrineh Roud 20\.0 6\.9 36,000 22,800 Tajan 24\.5 23\.5 7,500 32,900 1/ Total Project 18\.8 16\.6 90,600 105,600 1/ 1/ Including 21,000 ha of rainfed area The above ERR's estimates indicate that the project as a whole as well as the individual subprojects remains, at project completion, satisfactory\. The Zarrineh Roud subproject which, with an ERR of about 7%, well below SAR estimate, may be considered slightly marginal\. In reality, the ERR for the Zarrineh Roud subproject is to be considered underestimated on the assumption that the heavy rehabilitation programme that has been undertaken has involved full lining of the primary and secondary canals, which would result in a considerable saving in water for irrigation and therefore allowing an increased availability of water downstream\. Data on possible water savings as a result of the project were not available at the time of the ICR and it would be difficult, at this stage, to quantify accurately the relative project benefits in the downstream areas\. Furthermore, the Zarrineh Roud subcomponent should be maintained because of the high expectation of the farmers in the area\. The sensitivity analysis indicates that the ERR to the project and for the four subprojects has been found to be quite resistant to deviations from the base case assumptions\. With benefits lagged one year or reduced by 10%, the project as a whole would generate ERRs of 14\.2% and 14\.9% respectively\. The sensitivity analysis results are summarized below: - 22 - Sensitivity Analysis Results Basic ERR [ Decrease Item ERR Benefits Lagged Benefits by 10% \. \. \.%\. \. %\. Total Project 16\.6 14\.2 14\.9 Behbahan 9\.3 7\.9 7\.9 Moghan 22\.4 19\.4 26\.7 Zarrineh Roud 6\.9 5\.6 5\.4 Tajan 23\.5 19\.9 21\.4 - 23 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, I FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation Identification: 2 E, A October 1991 1/ Preparation: 6 A, JE, WRS, EX, E, ES Jan\./Feb\. 1992 Appraisal/Negotiation Pre-Appraisal: 10 IE, OP, ES, A, S, IL, A, IF, June/July 1992 EC, EX Appraisal: 5 IE, OP, ES, A, S Oct/Nov\. 1992 Supervision June/August 1993 5 IE, IE, P\. FN, E U U 2/ December 1993 2 IE, A U U July 1994 2 IE, A U S October 1994 1 IE U S April 1995 2 IE, ES U U September 1995 1 DS U U November 1995 2 IE, ES U U June 1996 3 IE, A, ES U S December 1996 2 A, EX U S May 1997 5 OP, IE, A, ES, M&E S S November 1997 2 IE, ES U S March 1998 (MTR) 5 IE, A, IE, A, E S S November 1998 6 IE, A, ES, IE, A, P U S April 1999 5 IE, DR, A, A, ES S S January 2000 6 IE, IE, DR, ES, P, A S S June 2000 3 IE, A, E S S November 2000 3 IE, IE, DR S S ICR June,2001 2 E, A S S AE = Agricultural Economist; E = Economist; EC = Ecologist; ES = Environmental Specialist; IL = Institutional Legal Expert; S = Sociologist; OP = Operations Officer; P = Procurement Specialist; IE = Irrigation Engineer; A = Agronomnist; DS = Dams Specialist; EX = Extension Specialist; M&E = Monitoring and Evaluation Specialist; DR = Drainage Specialist; WRS = Water Resources Specialist I/ A joint WB/FAO-CP mission, composed of an Economist and an Agronormist, took place in July 1991 to agree with the GOI on the concept of an Irrigatiion Rehabilitation Project\. 2/ Including project launch workshop\. - 24 - (b) Staff Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks USS ('000) Identification/Preparation 88\.8 92\.5 Appraisal/Negotiation 322\.4 1,311\.1 Supervision ICR 10\.0 30\.0 Total 421\.2 1,433\.6 - 25 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negoigible, NA-Not Applicable) Rating El Macro policies O H O SU O M O N * NA El Sector Policies O H OSU M O N O NA [ Physical H O SU O M O N O NA E Financial O H * SU O M O N O NA O Institutional Development 0 H O SU O M 0 N 0 NA El Environmental O H O SU * M O N O NA Social El Poverty Reduction O H * SU O M O N O NA El Gender OCH OSUOM ON * NA El Other (Please specify) O H OSUOM ON * NA El Private sector development 0 H 0 SU 0 M 0 N * NA El Public sector management 0 H 0 SU 0 M 0 N 0 NA El Other (Please specify) O H OSUM ON 0 NA Water Users' Groups -26 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bankperformance Rating El Lending OHS O5 U OHU 0 Supervision OHS Os O u O HU 3 Overall OHS OS O U O HU 6\.2 Borrowerperformance Rating 3 Preparation OHS OS O U O HU 3 Government implementation performance O HS O S 0 U 0 HU El Implementation agency performance OHS OS O U O HU 3i Overall OHS OS O u O HU - 27 - Annex 7\. List of Supporting Documents Appendix A: Mission's Aide-memoire Appendix B: Details on Project Physical Implementation Appendix C: Econornic and Financial Re-evaluation (Tables are only listed in ICR and can be found in project file) - 28 - ANNEX 7 APPENDIX A MISSION'S AIDE-MEMOIRE Annex 7 Appendix A: Mission's Aide-memoire ANNEX 7 Appendix A: Aide-memoire (5-21 JUNE, 2001) A\. INTRODUCTION 1\. An FAO/World Bank Co-operative Programme mission comprising Messrs\. Raffaele Suppa (Economist, Mission Leader), from 05 to 21 June 2001, and Francois Dauphin (Agronomist), from 12 to 21 June 2001, visited Iran to initiate the preparation of the implementation completion report (ICR) of the above project\. 2\. During the mission stay, several working sessions took place with representatives of the Ministry of Economic Affairs and Finance (MOEAF), the Ministry of Energy (MOE), the Ministry of Jihad for Agriculture (MOJA) and the consulting engineers as well as with the personnel of MOJA and MOE Liaison Offices (MOALO and MOELO)\. On its field trip to the sub-project area of Tajan, the mission had the opportunity to visit both WUG's and individual project beneficiaries\. The FAO Representative in Tehran was kept informed of mission activities\. 3\. Preliminary impressions and findings of the mission were presented and discussed during a wrap- up meeting chaired by the Assistant Deputy Minister of MOJA Mr\. Bani Saeed on June 20, 2001\. The mission would like to take this opportunity to express its sincere appreciation and gratitude to the various government officials met for their great assistance, and for the warm hospitality extended to the mission during its stay in Iran\. Special thanks and appreciation are also due to the FAO Representation for the assistance and logistic support to the mission\. The content of this Aide-Memoire is subject to modification following detailed analysis\. B\. BACKGROUND 4\. After final appraisal which took place in October/November 1992, the project was approved by the Board of the Bank on 16 March 1993 and the IBRD Loan became effective on 29 April 1993\. The main objectives of the project were (i) to enhance water resources management through the rehabilitation and improvement of the existing irrigation system that were incomplete or in a state of disrepair; (ii) to upgrade research and extension in the four sub-projects so as to raise crop output, farm incomes and foreign exchange savings through increased agricultural production; and (iii) to strengthen the planning and implementation capacity of sector institutions including MOA (now MOJA) and MOE\. 5\. Major project components included: (i) Irrigation and Drainage Improvement, (ii) Agricultural Development, (iii) On-farm Development, (iv) Project Facilities, (v) Institutional Support, and (vi) Environment\. Total project cost was estimated at US$ 311\.7 million\. The financing plan included an IBRD Loan of US$ 157\.0 million and a GOI's Contribution of US$ 154\.7 million\. 2 Annex 7 Appendix A: Mission's Aide-mdmoire C\. IMPLEMENTATION EXPERIENCE General 6\. The outcome of the project as a whole, both in relation to its development objectives and its physical implementation is rated as satisfactory\. Designed as a seven and one-half years operation, from July 1993 to December 2000, the project will be completed by October 2001 7\. Project implementation experienced some delays during its early years because of lack of co- ordination between the Planning and Budget Organization (PBO) and the implementing agencies\. However, good implementation performance initiated since 1998 and continued satisfactorily throughout the project as indicated in the WB supervision reports\. While all civil works contracts in Moghan and Behbahan sub-project area have been executed, some works remain to be completed in Tajan and Zarrineh Roud\. More specifically, works in Tajan, currently 82% complete, are expected to reach an implementation performance of 90% by end of October 2001\. Similarly, in Zarrineh Roud, project implementation rates for MOJA and MOE works are set at 82% and 71% respectively\. It also expected that the remaining works will be completed by the GOI with own financial resources\. Overall some 84,600 ha have already been improved representing about 97% of the SAR estimate\. 8\. The work of MOJA and MOE central consultants (CCs) assignments have been completed satisfactory\. The Pilot Water Management Studies (PWMS) at Behbahan and Moghan sub-projects have produced good results which should now be replicated as widely as possible\. However, sustained efforts are still required in order to complete the remaining civil works as foreseen in the two sub-project areas of Tajan and Zarrineh Roud\. Both the environmental "special" studies, and the procurement of the remaining vehicles, tractors and laboratory equipment which were delayed are expected to be completed by the end of the project provided that adequate efforts and attention to the matter be assured by the project implementing agencies\. 9\. Actions related to the reinforcement of the Operation and Maintenance Company (OMC) activities at Tajan are progressing satisfactorily and will be completed by the end of June 2001\. The creation of two pilot areas in Tajan and Behbahan has been completed\. The establishment of Water Users Groups (WUGs) in these two sub-projects has been very satisfactory and members are meeting regularly using the facilities built by the project\. 10\. Implementation of the environmental component has gained momentum with the start of the special studies contract with FAO\. Out of the 28 environmental studies proposed under the project, 24 are completed, two are under implementation and two have been cancelled\. 1l\. Both MOE and MOJA local training programmes are progressing satisfactorily (paras 31 and 32)\. The remaining international short-courses and study tours programmes, also to be implemented through a second contract with FAO, are now progressing well\. MOE categories II and III programmes, also assigned to FAO, will be completed by the end of October 2001\. 3 Annex 7 Appendix A: Mission's Aide-m6moire Project Coordination 12\. Liaison Offices: The MOJA liaison officer Mr\. Darab Malek Ghassemi retired in March 2001\. His deputy, Mr\. Mirnezami, is currently acting\. Both MOELO and MOALO, expected to remain in place until the end of October 2001, will be able to follow the implementation of the remaining project activities\. They are presently engaged in the preparation of their respective ICR with the assistance of CCs\. The mission confirmed that a consolidated ICR for the project as a whole would be required\. 13\. Steering Committee (SC): The SC met six times, the last being in April 2001\. The issues discussed during the last meeting and actions taken were essential for helping the project's implementation\. The next SC meeting is due to be held in July 2001\. Central Consultants (CCs) 14\. Both the MOALO and MOELO CCs' assignments are continuing to progress satisfactorily\. Their contracts have been extended till June 30, 2001\. The implementation of the surface/groundwater monitoring programmes in the sub-projects of Tajan and Zarrineh Roud started in July 1999 and was completed\. As the requirement regarding the third amendment of the MOJA CC contract could not be concluded as proposed due to problems related to taxes imposed on foreign consultants\. the responsibilities to carry out all the remaining activities including the WUGs formation in the two pilot areas, the preparation of the Pilot water Management Studies as well as the Monitoring and Evaluation aspects (M&E), were finally successfully completed by the national consultants\. The MOJA CC has nearly completed its final report "Integrated Development in the Irrigation Improvement Project Areas" covering the period between 1998-2001\. The report is expected to submitted by the end of June 2001\. Sub-Projects Consultants (SPCs) 15\. MOE Sub-Projects Consultants: All final designs related to the civil works were completed as and when required\. Additional man-months and corresponding funds were allocated to the three sub- projects consultants to undertake the O&M studies\. These studies would be finalised by October 2001\. 16\. MOJA Sub-Projects Consultants: All final designs related to the civil works have been completed\. The majority of SPCs agricultural reporting assignments have also been completed\. However, the reports on Land Consolidation (LC) in Zarrineh Roud, on the Agricultural Development (AD), and on the Stage II Women in Development Plans (WID) are being completed\. The AD report was finally received by the MOJA in February 2001\. The remaining part of the LC, originally delayed because of difficulties in carrying out the cadastral survey, will be finalized by the local authority (PAO)\. The WII) is being carried out by a team hired by MOALO\. Both LC and WID reports are expected to be completed by the end of October 2001\. Testing of the hydraulic performance of sub-surface drainage has been carried out at Behbahan, Moghan and Zarrineh Roud and the final reports are completed\. 17\. All the field works related to the Pilot Water Management Studies in Behbahan and Moghan have been concluded by April 2001 and the analysis of all the results is now completed\. In the two sub-projects and for four different crops over three planting seasons, it was shown that water use could be reduced while obtaining similar or increased yields\. The challenge for the PAOs is to disseminate these results as widely as possible\. The successful workshops on the results of the studies were conducted both in Behbahan and in Moghan in February 2001 indicate that the involvement of local institutions in planning and carrying out on-farn management trials as well as in disseminating results is of utmost importar-ce\. The implementation of these results on a large scale would require co-ordinated irrigation scheduling in all tertiary units and delivery of water according to this schedule by the OMC\. 4 Annex 7 Appendix A: Mission's Aide-memoire Civil Works: 18\. General: The civil works progress is shown in detail in Tables I and 2\. It is estimated that, so far, some 54,500 ha under MOE contracts and about 32,900 ha under MOA contracts have been actually improved\. Excluding overlap between the MOE and MOJA contracts, the total net area developed by the project will reach some 84,600 ha\. by the end of October 2001 A brief description of the current implementation performance regarding the civil works is given below\. 19\. Moyhan Sub-Proiect (MOE: 28,600 ha; MOJA: 19,900 ha): The physical progress for MOE contracts MC-I/1, MC-1/2, MC-1/3, MC-1/4 and MC-I/4A (new) stand respectively at 100%, 100%, 100%, 94% and 68%\. As far as the MOJA contracts are concerned, the physical progress of MC-I/5A, MC-1/5B, MC-1/6, MC-I/10&1 I and MC-1/12 contracts stand respectively at 100%, 85%, 57%, 100% and 82%\. By the loan closing date, it is expected that all contracts would be completed, covering a total net area of 41,500 ha\. 20\. Tajan Sub-Project (MOE: 14,400 ha including 3,300 ha under TC-1/14 and 3,600 ha for TC- 1/4A contracts): As of this date, physical progress of the on-going contract TC-I/1&2 stands at 82%\. Delays are to be attributed to difficulties related to land acquisition for secondary and tertiary canals\. The implementation of the remaining works is expected to be completed under the supervision and with the technical and financial support of the Mazandaran Water Regional Authority (MWRA) in 2001\. While the TC-I/4 contract for an additional area of 3,300 ha has been completed, the TC-1/4A contract for the Semeskandah-Aspevard diversion and regulation works, which started in June 2000, has a progress rate of about 83%\. Overall, by the end of the project, the main and secondary canals construction will be completed, covering a total net area of 11,900 ha\. While MWRA confirmed its intention to carry out the construction of tertiary canals on about 2,500 ha with its own financial resources by the end of the year, the related works in the remaining part of the sub-project area are expected to be executed during 2002, with GOI's funds\. To reduce costs, the possibility of using unlined tertiary canals should be investigated\. 21\. The creation of the Water User's Groups (WUGs) in the pilot area of 640 ha has been carried out very satisfactorily and the execution of the tertiary networks was completed in April\. The seven WUGs have now formed a Water Users Co-operative Company (WUCC) which was legally registered on 04/03 2001 and has commenced its activities\. 22\. Behbahan Sub-Project (MOJA: 8,400 ha including 8,000 ha of land levelling and 2,760 ha of sub-surface drainage): The two Behbahan contracts BC-I/Il& 2 and BC-1/3 are 100% complete with minor remedial works still to be completed\. The contracts for the project facilities BC-1/4A and 1/413, regarding offices and laboratories for three agricultural research centres, were awarded in January 1999 and June 1999 and are completed\. The Shadegan Marshes Research Centre Laboratory contract has started and its progress stands at 90%\. Finally, the implementation rate regarding the Agriculture City Management Centre's Staff Housing stands at about 80%\. By the loan closing date, it is expected that all on-going contracts for the total net area of 8\.400 ha, would be completed\. 23\. Zarrineh Roud Sub-Project (MOE: 28,450 ha; MOJA: 6,200 ha;): Out of the eight contracts (six for MOE and two for MOJA), seven are under execution and one (MOJA: ZRC-I/7for 1,800 ha) is completed\. To this date, the progress rates for MOE contracts ZRC-II1, ZRC-1/2, ZRC-I/3A, ZRC-I/3B, ZRC-I/3C and ZRC-I/4B1I are 77%, 74%, 58%, 73%, 58%, and 69% respectively\. The remaining MOJA contract (ZRC-I/6) records an implementation rate of 90%\. All contracts are still experiencing major delays despite the efforts of the MOJA and MOE regional offices\. 5 Annex 7 Appendix A: Mission's Aide-memoire 24\. If the present pace of implementation is maintained, it is expected that, by the loan closing date, the completion rates for MOE contracts ZRC-I/1, ZRC-1/2, ZRC-I/3A, ZRC-1/3B, ZRC-1/3C and ZR'C- 1/4B 1 contracts would be 80%, 76%, 60%, 75%, 60% and 72% respectively and completion is expected to be achieved by end October 2001\. Designs for the MOJA remaining contract ZRC-1/6 for sub-surface drainage on 3,300 ha (total of 4,600 ha minus 1,300 ha occupied by permanent crops), are ready and the completion of the works is also expected to be achieved by end October 2001\. No further delays are envisaged as, since last December, three new additional trenchers were made available to complete the work\. The main reason for the implementation delays of the sub-surface drainage works is in fact to be attributed to the poor condition of the contractor's machinery\. Overall, a total net area of 22,800 ha is expected to be finally developed 25\. O&M Studies: The progress of MOE contracts for Moghan, Tajan and Zarrineh Roud stand at 80% 75% and 50% respectively\. The MOJA's O&M studies for Behbahan and Moghan have been completed satisfactorily\. No contract for Zarrineh Roud was necessary as all studies are conducted under the MOE's contract\. It is expected that by the project closing date, the remaining on going O&M studies will be completed\. The MOJA and MOE OMC should endorse these studies in consultation with WUGs\. O&M Institutional Aspects 26\. The present status of the activities is given below: - Action 1: The Mazandaran OMC (MOMC) should formalise through equitable contracts the commitment to an agreed quality of service in the project area\. Status: A draft in Farsi for service contracts within the pilot area has been finalised\. Recommendations are being negotiated with farmers\. - Action 2: The MOMC will give farmers an observer status in its Board\. The company should also make all possible efforts to have MOJA represented in the Board\. At least one Board meeting should take place before that date\. Status: This activity has been completed as programmed\. The MRWA and the MOELO have sponsored the formalisation of the Board meetings with an appropriate invitation and agenda\. Shareholders representation and different board appointments has been decided and meetings are regularly held\. - Action 3: WUGs covering about 500 to 1,000 ha in Tajan and similar area in Behbahan should be formalised\. These groups should be organised using participatory approaches, according to the existing legal set-up as non-profit associations\. The election of the representatives for each of these WUGs should be also completed\. Status: As indicated above, in Tajan, seven WUGs have formned the WJUCC which has alreadly assumed legal entity and is currently operating\. This covers the whole 640 ha of the pilot area where tertiary canals have been constructed\. For Behbahan the work regarding the establishment of the co-operative, grouping 9 WUGs, has been completed and its registration is being prepared\. Some 670 ha are included in the pilot area\. - Action 4: An O&M plan for each sub-project including Tajan should be formulated with the assistance of the MOMC, CCs and the SPCs\. Real costs of O&M should be determined by SPCs\. 6 Annex 7 Appendix A: Mission's Aide-mdmoire Status: The draft O&M study for Tajan has been completed\. The O&M costs have been reviewed but not yet finalised by the SPCs\. In this respect, close co-operation between the MOMC, the SPC and the CC is urgently needed\. The adoption in Tajan of the accounting and information systems for efficient management is being completed\. In the other 3 sub-projects, adoption is less advanced and if the present pace is maintained it is unlikely that this activity will be completed on time\. - Action 5: MRWA and/or the MOMC should establish a training unit for its own staff and representatives of farmers, preferably with the involvement of MOJA\. Status: The training programme was designed and carried out successfully by the MOJA/CC and MOALO in Behbahan and in Tajan\. Action 6: The MOMC should share with the WUGs a portion of the fees paid by the users, for financing special maintenance (specially on-farm) and improvement works\. Status: The mission was informed that the central and the regional offices of the MOE are in agreement with this policy\. While no direct participation is foreseen, negotiations on O&M operations are still under way This activity will be completed as scheduled if the O&M plans are finalised (see action 4 above)\. - Action 7: All new works should be formally received by the MOMC to integrate them into the inventory\. The company should verify the quality and the state of the works\. Status: The mission has been informed that this activity is proceeding as programmed\. However, it will be important to monitor its progress and report it as one of the items of the agenda of the MOMC Board meetings\. - Action 8: Farmers and WUGs in Tajan will agree to participate in the construction and O&M of the tertiary systems with the assistance of MOMC\. Status: Negotiations between MRWA/MOMC and farmers on the construction of the tertiary systems, and related O&M are underway taking into account the experience derived from the pilot operations in Tajan and in Behbahan\. WUGs Establishment 27\. As indicated above, the formation and formalisation of WlUGs, using a participatory approach, is to be rated very satisfactory\. MOJA support in this regard was very effective and included: (i) in Tajan, the establishment of the Provincial, Pilot and the Operational Task Forces; and in both areas, (ii) the selection of both pilot areas; (iii) the call for meetings and organisation of field visits by the Task Forces; (iv) the preparation of draft legal documents related to the creation of WUGs, Co-operatives and service contracts; (v) the surveying of all physical assets for the project; (vi) the preparation of training programmes for all concemed including farmers\. The first training course took place in October 2000 in Tajan\. Environmental Aspects 28\. With respect to the various studies associated with the project, the following table represents results to date: 7 Annex 7 Appendix A: Mission's Aide-memoire Responsibility MOE MOA Total Number of Studies 8 18 Completed 6 182 Being Implemented 2' Studies Cancelled 0 3 29\. FAO Studies (Shadegan Marshes Management Plan, Lake Ouroumieh National Park Management Study and GIS Support): The contract was signed in April 2000 and studies should he completed by September 2001\. The progress rate for the Shadegan Marshes Management Plan and Lahe Ouroumieh Management study stands at 45%\. Completion is expected to be achieved by the end of October 2001\. Good co-operation between all interested parties was experienced during the preparation of the Terms of References and the implementation plans of these studies\. However, due to the recent retirement of the senior MOALO officer, is doubtful if such strong co-operation would be maintained\. 30\. MOALO and DOE did not finalise the list of goods to be procured by MOALO for DOE and as a consequence the procurement of these goods will not be carried out before the project closing date\. Overall, some Rials 10\.0 billion were disbursed for the implementation of this programme\. Training 31\. MOE Training Programmes: Category I: in-country training; contract with the Power and Water Institute (PWIT)\. A total of 522 participants attended 55 courses and workshops (Table 3A) which means that about 83% of the short courses programme has been completed\. For the M\.Sc\. programmes, candidates have been selected and the programmes have started for 7 candidates\. Categories 11 (short courses in Iran) and III (overseas study tours) have been combined under one contract signed with FAO on January 2001, and involving about 230 participants attending 15 short courses and study tours\. 32\. MOA Training Programmes: Table 3B gives a summarised status of the completed and expected training activities\. a) Central Level Training\. The local short-term training courses are progressing very well and exceeded their expectation with 220 staff months actually utilised against the original target of 120 i\.e\. more than 180% of SAR estimates\. The overseas short-courses and workshops have both reached an implementation rate of 76%\. The study tours programmes included in the FAO contract will be completed before 31 October 2001\. There are at the moment plans to conduct some M\.Sc\. programmes (in Iran and Overseas)\. The candidates will be chosen from the central level and the rest will come from the regions\. If these are to take place, substantial efforts by MOALO should be exerted\. Finally, it should be mentioned here that the TOKTEN programme, for in-house-training and organized with UNDP, has been very successful with the participation during the period 1996-2000, of 37 professors and specialists frot overseas\. A total of 21 seminars, 40 workshops and 3 consultancies were carried out with, all together, 1,317 participants\. b) Sub-projects Level Training Programmes\. The local short-term training courses have been completed very satisfactorily (109% of SAR estimates)\. Other training categories did not progress as well Include the Zarrineh Roud Delta & Wetlands Management Plan, which is about 85% complete\. 2 Includes 3FA 0 studies -see below Includes Improved Migratory Bird Census Methods and Establishment of New Protected Region for Gazelles\. 8 Annex 7 Appendix A: Mission's Aide-memoire (overseas short-courses: 60%, and workshops: 5 1 %) because initiated late during the course of the project\. The study tours programme included in the FAO contract will be completed by the end of October 2001\. c) Training for DOE personnel: Nine candidates have be chosen and sent to the Netherlands to follow-up a one year M\.Sc\. course in Environmental Technology\. Procurement of Goods 33\. Laboratory Equipment (MOA- Research - US$ 1\.7 million): The procurement exercise for the first lot of equipment (US$ 0\.4 million) is not yet completed due to lengthy administrative procedures\. However, actual delivery is expected to be completed by June 2001\. Another bidding to meet DOE's requirements has been cancelled because of budget limitation\. 34\. Vehicles (MOA - Rials 12\.0 billion): So far 57 vehicles, for a total cost of about Rials 4 billion, have been procured by the project\. MOALO has recently obtained a new license for purchasing 40 new vehicles including station wagons, 4WD and minibuses for a total estimated cost of Rials 8 billion and delivery is expected to take place before June 2001\. With this, the overall procurement programme for vehicles as foreseen under the project will be completed\. 35\. Agricultural Tractors (MOA - Rials 7\.0 billion): The procurement of much needed tractors has experienced long delays\. The delivery of the 30 "35HP" tractors (total costs Rials 0\.8 billion), as procured by MOALO in July 2000, has taken place in December 2000\. Out of the additional 60 tractors to be procured, only 42 would be actually delivered\. 36\. Farm Machinery and Implements (MOA - Extension - Rials 2\.0 billion): It is understood that, overall, about Rials 0\.3 billion have been spent on this project sub-component\. 37\. Research Equipment (MOA- Rials 3\.2 billion): The total allocation for the procurement of research equipment will be utilised before the end of the project\. 38\. Computers and Audio-visual Equipment (MOA - Rials 1\.1 billion): About 1\.6 billion Rials have been already spent on these items, which exceeds the original estimate\. Other Items 39\. MOA Housing, Offices and Workshops: Three separate contracts concerning the construction at the sites of Dodangeh ASC and Behbahan Research Centre have been signed for a total value of about Rials 1\.5 billion\. The present progress rate stands at around 87%\. and completion is now expected by June 2001\. The construction of a research station at Moghan and an extension services office at Tajan are complete using counterpart funding\. Monitoring and Evaluation 40\. Progress Reports: The quality of the MOELO and MOALO progress reports continues to be satisfactory\. The MOECC developed a monitoring and evaluation system based on computerised project management techniques using appropriate software\. Training for this purpose was also provided\. As requested, MOALO reports provide now quantifiable performance indicators related to agricultural production\. The reporting capacity at the regional level, although improved, remains weak\. MOALO should put more emphasis on this issue and appoint, if necessary, local personnel to help improving the situation\. 9 Annex 7 Appendix A: Mission's Aide-memoire 41\. GIS Database: MOECC prepared GIS databases for Moghan, Zarrineh Roud and Tajan sub- project areas comprising various geo-referenced maps indicating primary, secondary and tertiary canals, drains, and related structures as well as other important facilities within the irrigation schemes\. The attributes of all these facilities have been attached and can be retrieved at query\. Other information related to O&M requirements are also included in the database\. User's manual has been prepared and translation into Farsi is being prepared\. For Tajan Pilot Project area, cadastral information have been added to the database along with data on ground water aquifer characteristics\. A training workshop, on the use of the database, for five concerned staff members of each of the three RWAs/OMCs, is to be held at CC's office from 25 to 27 June, 2001 42\. Monitoring and Evaluation Information System (MEIS): A database was developed by MOACC and, guidelines for collecting, storing and dispatching data were made available\. Similarly, guidelines and forms for collecting and reporting R&E indicators were also produced\. The MEIS became fully operational before the end of 2000 and will be used not only until the end of the project, but also for future projects\. However, suitable staff should be selected and trained for this purpose\. In addition, a Contract Costing System (CoCoS) is in place and has been utilised by MOALO for monitoring the financial performance of MOJA's project components\. 43\. Performance Indicators: The performance indicators are shown in Tables 4A and 4B\. The total net area so far improved has reached about 84\.600 ha or about 97% and 150% of SAR and MTR estimates\. It is estimated that in the year following project completion, the total area developed will be fully irrigated using the newly improved facilities in three of the four sub-project areas, and partially in Tajan where tertiaries remain to be built\. Details by sub- project area is summarised as follows: Sub-Project SAR MTR Contracts Completed Actual as % of SAR Moghan 35,600 18,000 41,500 41,500 116\.6 Tajan 7,500 7,500 14,400 11,900 158\.7 Behbahan 8,400 8,400 8,400 8,400 100\.0 Zarrineh 36,000 22,800 28,400 22,800 63\.3 Total 87,500 56,700 92,700 84,600 96\.7 44\. Up to April 2001 some 33,500 farmers have been reached by extension and participated in 4,620 programmes\. Cropping intensities have increased in all sub-projects and range from 81% in Zarrineh Roud to 138% in Moghan, and are in line with SAR targets\. Similarly, according to the data provided by MOJA and based on field surveys, special village studies and Rapid Rural Appraisals (RRA), yields of major crops are in line with both SAR and MTR assumptions in spite of the recent severe drought that hit the Zarrineh Roud sub-project area D\. ACTUAL PROJECT COST AND DISBURSEMENT 45\. Actual project cost, including eligible expenditures to take place in 2001, is preliminary estimatied at US$ 311\.8 million or about 100% of the estimate made at appraisal\. In view of the fact that the remaining US$ 7\.0 million from the IBRD Loan will also be disbursed, the final overall project disbursement will include US$ 157\.0 million from the Loan and US$ 154\.8 million as GOI's contribution\. The project cost has been estimated converting expenditures in local currency using an average exchange 10 Annex 7 Appendix A: Mission's Aide-memoire rate of US$ I = Rials 3,000\. This will be revised by the mission in Rome on the basis of official statistics regarding annual inflation rates\. E\. PROJECT OUTCOME 46\. The final economic re-evaluation of the project will be carried out by the mission after its return to Rome and incorporated into the final ICR\. The following is a preliminary indication of project outcome\. Major irrigation improvement works are coming to completion in the last year of project implementation and their impact on water availability, agricultural production and farm incomes cannot be verified yet on the ground\. It is expected that those effects will be felt increasingly during the two to five years to come\. New projections of future crop yields and cropping intensities will be reflected in the ICR\. There is however evidence that crop productivity and cropping patterns have started to change, and that some of the changes can be attributed to improved agricultural RET services\. Other factors that contributed to those changes include the liberalisation of prices and a much greater farmer freedom in planting decisions\. 47\. In all four sub-project areas, the traditional top-down delivery of RET services has been replaced by a participatory approach to identifying and responding to the needs and problems of farmers\. Farmers are now influencing the work of researchers and extension workers, and an increasing part of adaptive research is being conducted in farmers' fields, reducing the time to identify problems and to test and disseminate solutions\. Farmers have responded very positively to these changes which have been now introduced to districts outside the project areas\. Workshops and specialised training are being organised in view of extending the participatory approaches piloted by the project to other provinces\. 48\. The promises are particularly great in the fields of integrated pest management (IPM), where farmers' understanding of crop and pest biology is crucial, and of water management, where group experimentation of better water management has resulted in farmer awareness that greatly reduced applications can positively affect crop yields\. 49\. It must be noted that some of the constraints identified during project preparation, such as the lack of adequate farm machinery, have still not been resolved satisfactorily\. Insufficient machinery resources has been shown to cause delayed plantings, lower yields and lower cropping intensities\. Although much of the equipment needed has been procured by the project, such a constraint needs a solution on a national scale, ensuring that farmers have access to the equipment needed to make the best possible use of the scarce water resources\. F\. PROJECT SUSTAINABILITY 50\. The sustainability of the project is rated as likely and this assessment is based on the following considerations\. There are good prospects for sustaining the achievement so far generated under the project\. The positive results regarding the establishment of WUGs in Tajan and in Behbahan are to be considered important aspects of project sustainability as far as the O&M of the irrigation infrastructure is concerned\. The GOI is strongly intended to apply the same successful approach utilised in the two sub-project areas of Tajan and Behbahan throughout the country\. This experience is in fact expected to become the base for the national policy in this regard\. However, the current cost recovery system for the irrigation infrastructure allows the collection of water charges based on the gross value of production of irrigated crops\. 11 Annex 7 Appendix A: Mission's Aide-mdmoire 51\. Gains in yields and land/water productivity resulting from better practices are also expected to be sustained\. This is because they result not from the simple application of new recommendations, which may be no longer relevant e\.g\. when market prices change, but from an improved capacity by farmers and their advisors to analyse problems and provide solutions\. Sustaining the quality of RET services requires government to continue providing sufficient resources to those services, which cost may be deemed excessive\. Greater sustainability would probably require further reform to partially privatise or commercialise the services\. 52\. On their side, farmers in the project areas have become less dependent on government services and more assertive\. The project only initiated the move towards the creation of WVUAs\. Such farmers' organisations will reinforce farmers' ability and resolve to tackle their problems\. G\. FUTURE OUTLOOK 53\. As indicated above, the positive outcome deriving from the successful establishment of WUGs in Tajan and Behbahan is considered by the GOI as the base of the national policy for assuring adequate and effective O&M for irrigation schemes\. Considering that the project has not yet reached its full development targets, continuous project monitoring would be advisable to draw possible new lessons for future similar activities\. The GOI is presently considering the possibility of two new similar projects, one in Mazandaran Province, and the other in Khouzestan Province\. The implementation experience of the IIP and its lessons are expected to be taken into account in the design of the new projects\. H\. KEY LESSONS LEARNED 54\. The main lessons from the project are: -At project design, the capacity of the implementing agencies was over optimistic\. Widening project objectives, with so many components, and the vast geographical spread in four different sub-project areas, was too ambitious also in view of the fact that the Bank had suspended lending to the Islamic Republic of Iran for a period of time\. The Bank should have been more conservative when designing a new agricultural operation in Iran after a long period of non-activity\. -Department of Environment (DOE) The implementation capacity of DOE was also over estimated\. The failure of executing its obligations under the project was mainly due to its inability to appoint adequate staff to implement the programme as envisaged under the project\. The lack cf personnel combined with continuous replacement of key staff at regional level, was also a determining negative factor in the process\. -Direct involvement of Primary Stakeholders in planning and implementation of O&M systems has created a sense of ownership among farmers, which is considered instrumental for achieving sustainable water management\. -The implementation delay experienced in the early years of the project could have been avoided through a more effective co-operation between PBO and implementing agencies\. In this regard, the 12 Annex 7 Appendix A: Mission's Aide-m6moire early involvement of all concerned about project implementation should be also considered at design stage\. -The M&E system needs to be put in place shortly before or right at the start of project implementation in order to follow closely project implementation through a continuous process of data collection and analysis necessary for the final evaluation of project outcome\. -Beneficiaries Participation\. It was foreseen at project design that all tertiary canals in newly developed areas would be financed without beneficiary participation\. Only the pilot area of 640 ha of Tajan has been equipped with tertiary canals\. In this case, a beneficiary contribution, based on a preliminary agreement with the water users, would have also allowed the construction of tertiary canals outside the pilot area\. However, in such a case, whereby project interventions may require up-front capital cost contributions, effective linkages with credit facilities should have been envisaged\. -Procurement\. The WB prescribed ICB for major civil works\. In effect, the pre-qualification exercise produced only local contractors\. It is therefore considered appropriate to be more flexible in case of procurement of civil works which do not attract foreign contractors in Iran, and possibly leave these works be procured through LCB\. As the procurement of vehicles is concerned, the project appraisal team should have insisted on getting government written acceptance prior to negotiations\. The same should also have been applied to procurement activities related to short listing of both national and foreign consultants\. -Operational constraints regarding the approval of RWAs even for central level expenditures were experienced by MOELO\. Some degree of autonomy would have avoided unnecessary delays in this regard\. -Implementing Agencies Financial Independence: Another reason for the failure of the DOE in implementing its activities under the project is the fact that the financial resources foreseen for the DOE activities were all allocated to the Ministry of Agriculture budget rather than to the DOE budget\. The lack of counterpart funds for few years and the unwillingness of the MOALO director (despite the WB insistence) resulted in insufficient allocation of budgets to DOE\. In addition, the lack of efficient project management at the DOE and of a clear work program were at the origin of the continued unwillingness of the MOALO to release funds or to carry out procurement work for the DOE\. -Implicating all Concerned Agencies and Ministries throughout the Project Cycle\. The Management and Planning Organization (MPO, formerly PBO) was not fully involved during the identification, preparation and evaluation phases of the project\. As a result, the MPO had difficulties, during 1994-1996, to endorse a number of activities foreseen under the project\. Issues such as employment of foreign consultants, funds allocation for various activities including overseas training, etc\. could have been adequately addressed at project design rather than late during project implementation\. -Capacities of National Agricultural Consulting Firms: It became clear during project's implementation that the national consultants specialized in agricultural activities (research, extension, etc\.) had difficulties in producing reports in English\. All reports were written in Farsi and later badly summarized and translated into English\. The lesson learned is that it is far better to associate national consultants with international consultants\. This has worked very well for the MOALOCC and the joint venture between the foreign and Iranian consulting firms proved to be satisfactory\. In spite of the earlier than expected completion of the foreign assignments under the 13 Annex 7 Appendix A: Mission's Aide-memoire project (due to heavily and unexpected imposed taxes on foreign consultants earnings), the national consultants could finally completed the work assignment satisfactorily using the knowledge and experience gained during the first part of the contract\. -Detailed Designs Readiness: Detailed engineering designs for the civil works should be as far as possible ready before loan effectiveness so that tendering could start as soon as loan effectiveness is declared\. -Operation and Maintenance Modalities\. This aspect of the project should be well thought of before project implementation\. Detailed, timed and agreed action plan (including triggers aTid responsibilities) covering the institutional, financial, legal and social aspects related to operation and maintenance should be prepared at the onset of the project\. Implementation of this plan should start as soon as possible in order to ensure the sustainability of the investments by the project closing date\. 1\. FOLLOW-UP 55\. The mission will return to Rome on 21 June 2001 and during the following three weeks, will prepare the draft ICR which will be transmitted to the project Task Manager Mr\. A\. Bichara by the end of July 2001\. The mission discussed with both the MOALO and MOELO the preparation of the ICR from the Borrower's perspective\. In line with WB guidelines, the Borrower's ICR may be incorporated in WB's ICR if contained within a maximum of ten pages\. In this case, it is suggested to send the final version of the Borrower's ICR not later than mid-July 2001\. 14 Annex 7 Appendix A: Mission's Aide-memoire Table 1: Status of Project Implementation (June 2001) Item Description SAR Current Ratings/ Remarks Status Start Complete Start Complete Behbahan Engineering and consultant Services(MOA/PANDAM) 06/93 12/99 01/95 06/01 C/El Completion rate = 100%* BES-lI Moghan Engineering and consultant services(MOA/YEKOM- 06193 06/00 02/96 06/01 Cl/El Completion rate = 90%* MES-1 ACE) Moghan Engineering services(MOE/YEKOM-ACE) 06/93 06/00 10/94 06/01 Cl/El Completion rate = 94%* MES-2 I Zarrineh-Roud Engineering and consultant services(MOA/MAHAB 06/93 06/00 12/95 10/01 C/El Completion rate = I 00%* ZRES-1 GHODSS) Zarrineh-Roud Engineering services(MOE/MAHAB GHODSS) 06/93 06/00 12/94 06/01 Cl/El Completion rate = 80%* ZRES-2 \. Tajan Engineering and consultant services(MOA/MAHAB 06/93 02/99 12/95 06/01 Cl/El Completion Rate = 90%* TES-1 GHODSS) I Tajan Engineering services(MOE/MAHIAB GHODSS) 06/93 02/99 11/94 05/01 Cl/El Completion rate = 88%* T E S-2 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _9__ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Central Cons\. Consultancy for Irrig\.Review and common studies to 09/93 03/98 07/98 06/01 C/El Completion rate = 100% CC-I the 4 sub-projects (MOA) I Central Cons\. Rural Financial Market study (MOA) 06/94 12/94 I / / Cancelled CC-2 \. \. CCntral Cons\. Hydrometric Monitoring (MOE) 04/94 06/97 10/97 10/00 i Included in the CCs contract\. C C -3 I__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Central Consultancy Services (MOE) 09/93 03/98 04/97 06/01 Cl/El Completion rate = 96% Consultancy IvI_I Central Cons\. Panel of Experts for Dam safety (MOE) 12/93 12/97 04/96 06/00 Cl/El 3rd meeting took place in Dec\. 1999 CC-4 1__93 _2/9_04_6_ _CI_E____meeing_ook_lacein_ * % age related to contract price\. 15 Annex 7 Appendix A: Mission's Aide-memoire Item Description SAR Current Ratings/ Remarks ___ ___ ___ Status Start Complete Start Complete Behbahan Land leveling North Behbahan 03/94 03/98 06/96 12/00 C Progress rate = 100%\. 8,400 ha completed\. BC-1/1& 1/2 (8,000 ha) Behbahan Subsurface drainage 03/94 03/99 03/97 12/00 C Progress rate = 100%\. 3,300 ha completed\. BC-1/3 (3,300 ha) ___ Behbahan Project facilities for agriculture and 0&M (MOA) 09/94 09/97 01/99 06/01 Cl/El 5 contracts under execution: (i) Office BC-1/4 Building for the Agricultural Service Center (ASC) in Behbahan: 87%; (ii) Research Station in Behbahan: 100%; (iii) Staff' houses for ASC: 80%; (iv) staff houses and (v) for Environment Research Station in Shadegan\. Overall Implementation rate 85%\. Behbahan Equipment and vehicles for O&M (RWA) - MOE 06/96 01/97 12/97 C 100% delivered while the remaining is EC-1/5 committed\. No vehicles envisaged\. Behbahan Equipment and vehicles for Agriculture (PAD) - MOA - 12/96 06/96 06/99 C2/E2 12 vehicles delivered\. Tractors procurement EC-1/6 is delayed (SNo delivered)\. Rials 0\.2 billion allocated for equipment\. Behbahan Miscellaneous Equipment and Materials - MOA 11/94 11/97 06/96 06/00 C2/E2 Rials 0\.20 billion allocated for this year to BE-L/7-9 \. \. _ \._ PAD\. 16 Annex 7 Appendix A: Mission's Aide-memoire Item Description SAR Current Ratings/ Remarks Status Start Complete Start Complete Moghan Bebak to Bilesavar area irrigation networks (MOE) 03/94 03/99 03/96 03/00 C Progress rate - 100% MC-1/1 Moghan Parsabad area irrigation networks (MOE) 06/95 06/00 11/96 01/01 C Progress rate 100% MC-1/2 I Moghan Ultan area irrigation networks (MOE) 03/95 06/00 08/97 03/00 C Progress rate= 100% MC-1/3 _ _ Moghan Main canal A - 7 km (MOE) 03/95 06/00 03/00 10/01 Cl/El Progress rate = 94% MC-1/4 Moghan Main canal and canal A (MOE) 09/95 09/99 05/99 10/01 Cl/El Progress rate = 68% MC-1/4A I_ Moghan Canalettes Factory - 260 Km (MOA) - / 06/98 06/01 C2/EI Progress rate = 76% MC-1/5 A Moghan Hassan Khanloo Shahsavan area tertiary system (5,200 03/94 03/99 01/99 06/01 C/El Progress rate = 100% MC-I/5 B ha) - MOA Moghan Shahsavan area tertiary system (8,200 ha) - MOA 06/95 06/00 0 1/99 10/01 C2/EI Progress rate = 85% MC-1/6 Moghan Parsabad area tertiary system (5,000 ha ) - MOA 09/95 09/00 0 1/99 06/01 C2/E I MC-1/7 B Canceled\. Re-bidding for MC- MC-1/7A&B 1/7A because of lack of funds\. Moghan Utan- Aslandus area tertiary system (6,800 ha) - MOA - 06/95 06/00 01/99 -06/01 n\.a\. Cancelled because of lack of funds MC-1/8 CANCELED Moghan MC-1/9 Land leveling (4,000 ha) - MOA\. CANCELED 09/96 09/00 / / n\.a\. Cancelled because of lack of funds Moghan Shahsavan area subsurface drainage (4,200ha) - MOA 03/95 03/99 06/98 05/01 C Progress Rate I 00% MC-1/10 & 1/11I Moghan Ferozabad area subsurface drainage (2,200) - MOA 09/95 09/99 01/99 05/01 C Progress Rate = 95% MC-1/12 Moghan Construction of O&M buildings for RWA (MOE) 06/94 03/98 - n\.a\.- Cancelled MC-L/12 bis Moghan Construction of buildings for PAD (MOA) 03/94 12/97 / / n\.a\.- Cancelled Mc-L/13 Research/Extension Moghan Equipment and vehicles for O&M of RWA - MOE - 12/96 01/97 12/97 C-- 100% of equipment delivered, No vehiclcs ME-L/14 envisaged Moghan Equipment and vehicles for Agriculture (PAD) - MOA 12/96 01/97 06/99 C2/E2 13 vehicles delivered\. 5 No T ractors deliv\. ME-I/I5 Rest as for Behbahan\. Moghan Equipment and miscellaneous material (MOA) 09/99 06/96 06/00 C2/E2 Rials 0\.2 billion allocated for PADs\. ME-L//15-20 _ 17 Annex 7 Appendix A: Mission's Aide-memoire Item Description SAR Current Ratings/ Remarks Status Start Complete Start Complete Zarrineh Roud Zone no\. 2 Irrigation network -MOE 06/94 09/99 06/96 10/01 C2/E2 Progress rate = 77% ZRC-1/1 (6,300 ha reduced to 1,440 ha at MTR) I Zarrineh Roud Zone no\. 4 Irrigation network - MOE 12/94 09/99 06/97 10/01 C2/E2 Progress rate = 74% ZRC-1/2 (9,400 ha reduced to 5,100 ha at MTR) Zarrineh Roud Zone no\.5 Irrigation and drainage network (1,500 ha) - 03/95 09/00 09/99 12/01 C2/E2 Progress rate = 58% ZRC-I/3A MOE Zarrineh Roud Zone no\.5 Irrigation and drainage network (3,000 ha) - 03/95 09/00 09/99 12/01 C2/E2 Progress rate = 73% ZRC-1/3B MOE Zarrineh Roud Zone no\.5 Irrigation and drainage network (1,500 ha) - 03/95 09/00 09/99 12/01 C2/E2 Progress rate = 58% ZRC-I/3C MOE Zarrineh Roud Zone no\. 1,3, and 8 Irrigation network - MOE 09/95 03/00 08/99 06/02 C2/E2 Progress rate = 69% ZRC-1/4B I (12,400 ha reduced to 4,950 ha at MTR) Zarrineh Roud Zones 2 and 5 drainage + Zone 2 land leveling - MOA 03/96 09/00 01/99 03/00 / Cancelled ZRC-1/5 (2,100 ha + 1,600 ha) now Zone 3 (430 ha L\. leveling) Zarrineh Roud Zones 3 and 8 and leveling + Zone 3 drainage - MOA 06/96 06/00 06/99 06/02 C/El Progress rate = 100% ZRC-1/6 (3,100 ha + 3,000 ha)\. Now Zones 3 & 4 (3,800 ha sub- surface drainage) Zarrineh Roud Zone 4 land leveling and drainage - MOA 09/96 09/00 05/99 12/01 C/El P'rogress rate = 100% ZRC-1/7 (3,000 ha)\. Now Zones 2 & 5 (1,340 sub-surface drainage) Zarrineh Roud Construction of buildings for O&M RWA (MOE) 08/94 12/97 - - n\.a\. Cancelled ZRC-1/8 Zarrinch Roud Construction of buildings for Agriculture (PAD) - MOA 10/94 09/98 / /-- n\.a\. Cancelled ZRC-1/9 Zarrineh Roud Equipment and vehicles for O&M (RWA) -MOE - 06/96 01/97 12/97 C 100% of equipment delivered\. No vehicles ZRC-1/1 2 _ envisaged\. Zarrineh Roud Equipment and vehicles for Agriculture (PAD) - MOA 12/96 01/97 06/99 C2/E2 12 vehicles delivered\. Tractors procurement ZRE-I/13 delayed, 10 tractors delivered to PAO\. Zarrineh Roud Equipment and miscellaneous materials - MOA 06/96 01/98 06/00 C2/E2 Rials 0\.2 billion allocated this year for ZRE-L/14-16 \. _ PADs\. Zarrineh Roud Farm machinery - MOA 09/97 12/97 09/99 C2/C2 Rials 0\.2 billions of counterpart funds ZR-I/17 _ allocated\. 18 Annex 7 Appendix A: Mission's Aide-mmoire Item Description SAR Current Ratings/ Remarks Status Start Complete Start Complete Tajan Zone no\. 4 rainfed area improvement - MOE 03/94 03/99 04/96 12/01 C21E2 Progress rate = 82%\. TC-I/1 & 1/2 (7,500 ha) __________ ______________________________________ Tajan Construction of buildings for 0 & M (RWA) and 10/94 09/97 - - - Cancelled TC-l/3 Agriculture (PAD) ___________ Tajan Main Canal 7\.4 km 03/95 12/99 07/99 04/01 C/El Progress rate = 100% TC-l/4 ______ ________ TC I/4A Diversion/Regulating Structures 06/00 10/01 Cl/El Progress rate = 83% Tajan Equipment and vehicles for Agriculture (PAD) - MOA - 12/96 06/97 06/99 E2 12 vehicles delivered\. Tractors procurement TC-l/5 _________________________________________ ________ delayed, 10 No tractors delivered to PAO\. Tajan Equipment and vehicles for 0 &M (RWA) - 06/96 0 1/97 0 1/97 El 100% of equipment delivered\. No vehicles TC-l/6 _______ envisaged Tajan Equipment and miscellaneous materials - 11/94 06/97 06/00 C2/E2 Rials 0\.2 billion allocated this year to PAD TC-l/7-9 11/97 _________ Tajan Farm Machinery - 12/97 12/96 0 1/99 C2/E2 Rilas 0\.2 billion allocated\. TC-l/1 0 _______ __________ _________ ___________ __________ ________________________________________ Ratings Status: C- Completed B- Bidding Cl-Ongoing and generally satisfactory E- Evaluation C2- Ongoing with minor delays C- Contracting C3- Ongoing but major delays El- Execution satisfactory E2- Execution with minor delays 19 Annex 7 Appendix A: Mission's Aide-m6moirc Table 2 - IIP ENVIRONMENTAL COMPONENTS - STATUS OF IMPLEMENTATION ( As of June 2001) MEASURE RESPONSIBILITY PROGRESS TO DATE PLANNED ACTION I\. INSTITUTIONAL MOALO - Central & Under the training programme, 8 persons were sent overseas for STRENGTHENING\.Local Level MSc and 2 other were also sent overseas for short-term courses\. STRENGTHENING Local Level McA total of 10 Environment Specialist were invited under the TOKTEN Programme\. Several national and local workshops were carried out\. Equipment and vehicles were procured and delivered to DOE\. MOE- Central and MOECC designed Surface and Groundwater monitoring Approximately 30 persons have been trained to date\. Further training Local programmes for Zarrineh Roud, Moghan and Tajan sub-projects\. on-going\. WARWA for Zarrineh Roud and MGRWA for Tajan implemented the programmes and collected data for the 12 months period\. The CC made improvements in the monitoring programme after review of difficulties experienced in the field\. Implementation by EARWA did not start in Moghan due to non installation of the required number of piozometers\. PWIT Cat\. I training program included one specialized management course (social, env\. Inputs for dev\. Projects) and two courses (evaluation and control of watercourses quality and env\. __Impact assessment of water resources projects)\. (a) Agricultural MOALO MOACC designed guidelines for Agrochemical Monitoring (a) eAgnculturals MOALOProgrammes for the four Sub-projects The monitoring Chemicals implementation has been assigned to thc Department of Management Program "Sustainable Agriculture Development" as a focal point, with assistance of other related Dpt's of MOJA\. The Agrochemical Analysis Lab\. of Sharif University would also assist\. This activity will be continued with national financial resourses\. MOALO Central Consultant has produced initial report\. 20 Annex 7 Appendix A: Mission's Aide-memoire 2\. BEHBAHAN SUB- MOA Sub-project PROGRESS TO DATE PLANNED ACTION PROJECT Responsibility (b) Strengthening of the MOALO Procurement of priority equipment completed\. No DOE Behbahan DOE Office specialists appointed\. Staff housing and Lab Building construction (a total of 2,380 sq m) will be complcted by the end of the project (c)Water Quality Monitoring MOALO Central Consultancy has investigated program required\. Program (d) Archaeological and MOALO MOALO has written at Ministerial level and attempted meetings Historic Site Survey with CHO to finalize the report\. At this time no response from Historic Site SurveyCHO\. (e) Archaeological Emerg\. MOALO/CHO Procedures have been established with CHO\. (I) Special Studies i\. Maroon River MOALO PANDAM submitted report (July 1998) in Farsi and in English\. Mieratorv Fish Revised report sent to the WB for approval Management Plan ii\. Management Plan for MOALO Study included in revised contract with FAO\. On-going, the Shadegan 45%implementation rate\. To be completed by the end of October Marshes P\.A\. 2001, iii\. Institutional SuDuort for MOALO The design and master plan for offices, housing, and guard posts Shadegan Marshes has been prepared in consultation with DOE\. Negotiations P rteced M Ares concluded vis a vis priority additions to new DOE facilities\. Protected Ar\.ea Building construction for a total of 2,380 sq m is now under construction and will be completed by the end of the project\. 21 Annex 7 Appendix A: Mission's Aide-m6rnoire 3\. MOGIIAN SUB-PROJECT MOA Sub-project PROGRESS rO DATE PLANNED ACTION responsibility (a)DStrEngthening office hn MOAI\.O Similar to 2 (a) above\. 5 specialists appointcd Refer 2 (a) above - but part of existing DOI- local officc must be ( D)StEnghnn off MohacMAL Refer to I allocated as lab space\. (b) Water Quality Monitoring MOELO/MOAI \.O Refer 2 (b) above\. Program (c) Agricultural Chemicals MOALO Refer to I (a) and 2 (c) above\. Management Program (d) Design and Implemt\. of a MOALO Programme was carried out and reported by the TOKTEN Canal Bank Erosion Specialist\. Control Program (e) Sub-project Archaeological MOALO and Site Plans provided to CHO\. Working arrangements defined, No further action at this time\. Clearance Implementation Units in consultation with CHO (t) Archaeological Emergency MOALO and Refer 2 (e) No further action at this tine\. Procedures Implementation Units in consultation with CHO (g) Special Studies and Actions iv\. Improved Migratory MOALO No response from [)OE on this issue since May 1999\. 'I'his Biv Cmrosus Metho MO activity has been cancelled\. v\. Establishment of New MOALO Activity cancelled\. No further action is required Protected Region for Gazelle 22 Annex 7 Appendix A: Mission's Aide-memoire 4\. TAJAN SUB-PROJECT MOE Sub-project PROGRESS TO DATE PLANNED ACTION responsibility (a) Strengthening of Sari MOE/MOALO As for I (a) above\. As for 2 (a) above\. DOE Office (b) Water Quality Mgt\. Pgm MOELO As for I (a) above\. As for 2 (b) above\. (emphasis on upstream water discharges) (c) Agricultural Chemicals MOALO No appropriation to MOA for this component\. Included in Management Program Khazar-Ab consultants\. As for 1(a) above\. (d) Management Program MOELO Khazar-Ab consulting submitted summary report\. Studies Final report, in English, received and summary available\. Evaluation for the Middle Tajan completed by Khazarab Consulting Engineers of the report required by MOE environmental specialist and DOE with River Basin respect to TOR\. Consultant findings review being undertaken with Regional DOE ffices\. (e) Sub-project Arch\. MOELO Procedures established with CHO\. No further action at this time\. Clearance (f) Arch\. Emergency MOELO Procedures established with CHO\. No further action at this time\. Procedures (g) Special Studies and Actions i\. Management Plan for MOELO Studies completed but yet to be reviewed by MOELO/DOE the Man-made `Ab- Bandan" Systems ii\. Taian River Migratory MOELO Studies completed but yet to be reviewed by MOELO/DOE Fish Management Plan 23 Annex 7 Appendix A: Mission's Aide-memoire S\. ZARRINEH ROUD SUB- MOE Sub-project PROGRESS TO DATE PLANNED ACTION PROJECT responsibility (a) Strengthening of the MOELO/MOALO As for 2 (a) above Refer to l(a) As for 2 (a) above Miandoab DOE (b) Water Quality MOELO As for 2 (b) above As for 2 (b) above Management Program (c) Agricultural Chemicals MOALO Refer to I (a) Management Program (d) Analysis of Potential MOELO Mahab-Godds consultancy (about 80 % complete)\. Contract Preparation of final report and evaluation to be completed after the Envtl Issues (proposed with laboratory for sample analysis signed\. analysis results are available\. MOALO and DOE to follow-up\. for Zone 9 extension) (e) Sub-project MOELO, Procedures established No further action at this time\. Archaeological Implementation Units Clearance and CHO (f) Arch\. Emergency MOE, Implementation Procedures established No further action at this time\. Procedures Units and CHO (g) Special Studies and Actions i\. Lake Oruyimeh MOALO On-going with 40% progress\. Completion is expected by the end National Park of October 2001\. Management Studv ii\. Zarrineh Roud Delta & MOELO Mahab-Godds consultancy undertaking work (as part of package As for 5 (d)\. and review Wetlands Mangmt Plan including 5 (d) above)\. A summary report prepared\. 6\. IMPLEMENTATION (a) Appmt\. of Full-time Envtl\. MOELO & MOALO One part-time personnel appointed in MOELO\. Environment Work to be assigned to Deputy Director and increased liaison with Specialists Sub-Project Level specialist dismissed in MOALO\. DOE\. (b) Consultant Environmental MOALO & MOELO Contracts have been reviewed to determine expertise consistent On-going\. Specialistswith TOR (c) Monitoring and Evaluation MOALO, MOEl\.O Consultants are reporting regularly according to the developed On-going\. (c) MoioigadEauto OL,MOELIO format and Implementing Agencies 24 Annex 7 Appendix A: Mission's Aide-memoire Table 3A: MOE TRAINING PROGRAMS - As of Mid June 2001 Type of training Programs Programs Number of Participants Proposed Completed Proposed Attended Category I - Seminars & Workshops 5 2 200 90 - Management courses 18 18 200 118 - Engineering courses 24 24 250 218 - Technical courses 12 11 220 89 -M\.Sc\. 7 - 7 7 sub-total 66 55 877 522 Categorv II & III combined - International short courses in Iran 8 160 - - Overseas study tours 7 70 25 Annex 7 Appendix A: Mission's Aide-memoire Table 3B: MOA TRAINING PROGRAMS - As of Mid June 2001 Type of training Unit SAR estimates MTR Actual Central Level Local short-courses s/m 120 150 220 Overseas short-courses s/m 170 188 129 Fellowships s/y 24 32 7 Workshops no 60 70 46 Study Tours no 0 6 6 Sub-projects Level Local short-courses s/m 460 460 500 Overseas short-courses s/m 180 172 108 Fellowships MOJA&MOE s/y 55 71 2 Workshops no 116 96 59 Study Tours no 0 6 6 26 Annex 7 Appendix A: Mission's Aide-memoire Table 4A\. PERFORMANCE INDICATORS - MOE (June 2001) INDICATORS TO DATE TOTAL AT SAR A\. INPUT INDICATORS Al\. Disbursement (%) 100 100 A2\. Counterpart Funds %) 100 100 A3\. Number of contracts awarded A3\.1 Works 14 14 A3\.2 Goods 7 8 A3\.3 Consultancy 7 7 A4\. Contracts Value (Rials billion) 385 385 B\. OUTPUT INDICATORS BI\. Civil Works B 1\. I Length of Rehabilitated 601 1,132 and new Canals (km) B 1\.2 Length of Rehabilitated 504 854 and new drains (km) B2\. Areas Improved (ha) 54,500 58,000 (at MTR) B2\. Value of goods Purchased (US$ million) 11 1 B3\. Training Programs B3\.1 Number of Programs 55 81 B3\.2 Number of Participants 522 1,100 B4\. Studies B4\.1 Number of studies contracted 11 7 B4\.2 Number of studies Completed 6 27 Annex 7 Appendix A: Mission's Aide-memoire Table 4B\. PERFORMANCE INDICATORS - MOA (June 2001) INDICATORS SAR TO DATE A\. INPUT INDICATORS Al\. Total number of contracts 12 12 A2\. Total Disbursement (US$ million) 44 53 A3\. Counterpart Funds (Rials billion/US$ million) na 120 B\. OUPUT INDICATORS B 1\. Number of hectares improved na 32,900 B2\. Number of research themes undertaken na 716 B3\. Number of demo plots na 956 B4\. Number of Farmers Total farmers 46,000 33\.500 Farmers reached by Extension na 33,500 B5\. Training B5\.1 Number of Programs na 4,620 B5\.2 Number of Participants na 92,400 B6\. Cropping Intensity (%) B6\.1 Behbahan 112 129 B6\.2 Moghan 122 138 B6\.3 Tajan 125 117 28 ANNEX 7 APPENDIX B: DETAILS ON PROJECT PHYSICAL IMPLEMENTATION Annex 7 Appendix B: Details on Project Physical Implementation Table 1\. Performance Indicators (MOJA) - June 2001 INDICATORS SAR ACTUAL 1/ A\. INPUT INDICATORS Al\. Total number of contracts 12 12 A2\. Total Disbursement (US$ million) 44 53 A3\. Counterpart Funds (Rials billion/US$ million) na 120 B\. OUPUT INDICATORS Bl\. Number of hectares improved na 32,900 B2\. Number of research themes undertaken na 716 B3\. Number of demo plots na 956 B4\. Number of Farmers Total farmers 46,000 33\.500 Farmers reached by Extension na 33,500 B5\. Training B5\.1 Number of Programs na 4,620 B5\.2 Number of Participants na 92,400 B6\. Cropping Intensity (%) B6\.1 Behbahan 112 129 B6\.2 Moghan 122 138 B6\.3 Tajan 125 117 1/ As of June 2001 Annex 7 Appendix B: Details on Project Physical Implementation Table 2\. Performance Indicators ((MOE) - June 2001 INDICATORS SAR ACTUAL 1/ A\. INPUT INDICATORS Al\. Disbursement (%) 100 100 A2\. Counterpart Funds %) 100 100 A3\. Number of contracts awarded A3\.1 Works 14 14 A3\.2 Goods 8 7 A3\.3 Consultancy 7 7 A4\. Contracts Value (Rials billion) 385 385 B\. OUTPUT INDICATORS B 1\. Civil Works B 1\.1 Length of Rehabilitated 1,132 601 and new Canals (km) B 1\.2 Length of Rehabilitated 854 504 and new drains (km) B2\. Areas Improved (ha) 58,000 (at MTR) 54,500 B2\. Value of goods Purchased (US$ million) I 11 B3\. Training Programs B3\.1 Number of Programs 81 55 B3\.2 Number of Participants 1,100 1,100 522 B4\. Studies B4\.1 Number of studies contracted 7 11 B4\.2 Number of studies Completed 6 1/ As of June 2001 Annex 7 Appendix B: Details on Project Physical Implementation Table 3\. MOJA Training Programs - As of Mid-June 2001 Type of training Unit SAR estimates MTR Actual Central Level Local short-courses s/m 120 150 220 Overseas short-courses s/m 170 188 129 Fellowships s/y 24 32 7 Workshops no 60 70 46 Study Tours no 0 6 6 Sub-projects Level Local short-courses s/m 460 460 500 Overseas short-courses s/m 180 172 108 Fellowships MOJA&MOE s/y 55 71 2 Workshops no 116 96 59 Study Tours no 0 6 6 Annex 7 Appendix B: Details on Project Physical Implementation Table 4\. MOE TRAINING PROGRAMS - As of Mid June 2001 Type of training Programs Programs Number of Proposed Completed Participants Proposed Completed Categorv I - Seminars & Workshops 5 2 200 90 - Management courses 18 18 200 118 - Engineering courses 24 24 250 218 - Technical courses 12 11 220 89 -M\.Sc\. 7 - 7 7 sub-total 66 55 877 522 Category II & III combined - International short courses in Iran 8 - 160 - Overseas study tours 7 70 Annex 7 Appendix B: Details on Project Physical Implementation Table 5\. MOJA: Training Activities at Central and Sub-project Level Region Activity Unit SAR MTR Actual Central Local Short Courses S/M 120 150 220 Overseas Short Courses S/M 170 188 129 Fellowships S/Y 24 32 7 Workshops No\. 60 70 46 Study Tours No\. 0 6 6 Behbahan Local Short Courses S/M 70 70 99 Overseas Short Courses S/M 25 29 26 Fellowships S/Y 8 11 1 Workshops No\. 32 30 18 Study Tours No\. 0 2 2 Moghan Local Short Courses S/M 130 130 116 Overseas Short Courses S/M 46 46 20 Fellowships S/Y 12 20 0 Workshops No\. 32 30 18 Study Tours No\. 0 2 2 Tajan Local Short Courses S/M 130 130 156 Overseas Short Courses S/M 53 44 33 Fellowships S/Y 16 17 1 Workshops No\. 32 20 13 Study Tours No\. 0 1 1 Zarrineh Roud Local Short Courses S/M 130 130 129 Overseas Short Courses S/M 56 53 29 Fellowships S/Y 19 23 0 Workshops No\. 32 29 14 Study Tours No\. 0 1 1 TOTAL Local Short Courses S/M 460 460 720 Overseas Short Courses S/M 180 172 237 Fellowships S/Y 55 71 9 Workshops No\. 116 96 105 Study Tours No\. 0 6 12 Annex 7 Appendix B: Details on Project Physical Implementation Table 6\. Training in Central Level - MOE Activity Unit SAR Actual Management (abroad) S/M 24 0 Planning (abroad) S/M 30 0 M&E (abroad) S/M 12 0 * Specialized short courses (abroad) S/M 30 45 Graduate fellowship (abroad) S/Y 12 0 Local Training S/M 80 20 In-country Workshops/Seminar No\. 15 15 Study Tour No\. 0 52 Annex 7 Appendix B: Details on Project Physical Implementation Training @ RWAs - MOE Activity Unit Sub-project SAR Actual RWAs Management (abroad) S/M Behbahan 3 Moghan 6 0 Zarrineh Roud 6 0 Tajan 3 i RWAs Design/O&M (abroad) S/M Behbahan 10 0 Moghan 14 0 Zarrineh Roud 20 0 Tajan 8 0 Consult Design/Const\. (abroad) S/M Behbahan 4 0 Moghan 8 0 Zarrineh Roud 8 0 Tajan 3 0 * Graduate Fellowship (abroad) S/Y Behbahan 3 0 Moghan 6 1 Zarrineh Roud 6 I Tajan 2 3 Local Training S/M Behbahan 34 0 Moghan 70 70 Zarrineh Roud 6 1; Tajan 35 65 Workshops/Seminars S/M Behbahan 10 1 0 Moghan 20 20 Zarrineh Roud 20 20 Tajan 10 10 Specialized short courses No\. Behbahan 0 4 Moghan 0 14 Zarrineh Roud 0 114 Tajan 0 14 Study Tour No\. Behbahan 0 3 Moghan 0 1 5 Zarrineh Roud 0 15 Tajan 0 13 * Participants have started their program in Power & Water Institute of Technology (Iran)\. ANNEX 7 APPENDIX C: ECONOMIC AND FINANCIAL RE-EVALUATION ANNEX 7 APPENDIX C: ECONOMIC AND FINANCIAL RE-EVALUATION CONTENTS A\. FINANCIAL ANALYSIS \.1 SAR Approach \.1 ICR Approach \.1 Available data and methodology \.1 Assumptions \.2 Remarks \.4 Farm Incomes \.4 B\. ECONOMIC ANALYSIS \.5\.5 C\. PROJECT RISK \.8 TABLES 1\. Behbahan: Wheat Crop Model 2\. Behbahan: Broadbeans Crop Model 3\. Behbahan: Sesame Crop Model 4\. Behbahan: Rice Crop Model 5\. Behbahan: Vegetables Crop Model 6\. Behbahan: Cropping Pattern and Yield Projections 7\. Behbahan: Crop Financial Prices 8\. Behbahan: Net Incremental Benefits 9\. Moghan: Wheat Crop Model 10\. Moghan: Alfalfa Crop Model 11\. Moghan: Sugarbeet Crop Model 12\. Moghan: Cotton Crop Model 13\. Moghan: Soybean Crop Model 14\. Moghan: Cropping Patterns and Yield Projections 15\. Moghan: Crop Financial Prices 16\. Moghan: Net Incremental Benefits 17\. Zarrineh Roud: Wheat Crop Model 18\. Zarrihen Roud: Alfalfa Crop Model 19\. Zarrineh Roud: Sugarbeet Crop Model 20\. Zarrineh Roud: Grape/Raisin Crop Model 21\. Zarrineh Roud: Vegetables Crop Model 22\. Zarrineh Roud: Cropping Patterns and Yield Projections 23\. Zarrineh Roud: Crop Financial Prices Annex 7 Appendix C: Economic and Financial Re-evaluation 24\. Zarrineh Roud: Net Incremental Benefits 25\. Tajan: Wheat Crop Model 26\. Tajan: Rice Crop Model 27\. Tajan: Vegetables Crop Model 28\. Tajan: Cotton Crop Model 29\. Tajan: Soybean Crop Model 30\. Tajan: Clover Crop Model 31\. Tajan: Cropping Patterns and Yield Projections 32\. Tajan: Crop Financial Prices 33\. Tajan: Net Incremental Benefits 34\. Current Cost of Main Agricultural Inputs 35\. Current Prices of Main Agricultural Outputs 36\. Derivation Import of Parity Prices of Major Project Output/Input 37\. Cotton: Export Parity Price 38\. Financial and Economic Prices of Major Project Outputs and Inputs 39\. MOJA - Projects Cost (in Million Rials) 40\. MOJA - Projects Cost (in Thousand US$) 41\. MOJA - Projects Cost Summary & Percentage of Actual Expenditure/SAR (in Million Rials) 42\. MOJA - Projects Cost Summary & Percentage of Actual Expenditure/SAR (in Million US$) 43\. MOJA - Project Financing (in Million Rials) 44\. MOJA - Project Financing (in Million US$) 45\. MOJA - Procurement Arrangements (in Million Rials) 46\. MOJA - Procurement Arrangements (in Million US$) 47\. MOE Project Cost in Current Terms 48\. Project Cost: Central Level (MOJA) 49\. Moghan Sub-project Cost (MOJA) 50\. Tajan Sub-project Cost (MOJA) 51\. Zarrineh Roud Sub-project Cost (MOJA) 52\. Behbahan Sub-project Cost (MOJA) 53\. Project Cost by Component and by Sub-project Area 54\. Project Costs, Total and by Sub-project Area Expressed in Constant June 2001 Prices 55\. Total and Unit Cost of IIP Civil Works (MOA Part) 56\. Total and Unit Cost of IIP Civil Works (MOE Part) 57\. Total Project: Economic Rate of Return 58\. Behbahan : Economic Rate of Return 59\. Moghan: Economic Rate of Return 60\. Zarrineb Roud: Economic Rate of Return 61\. Tajan: Economic Rate of Return ii ANNEX 7 APPENDIX C: ECONOMIC AND FINANCIAL RE-EVALUATION A\. FINANCIAL ANALYSIS SAR Approach 1\. Agricultural benefits derived from irrigation and drainage improvements were expected from changes both in cropping patterns and yield increases\. As such changes depended on local ex-ante situation and on the nature of irrigation improvements, different agricultural zones (called here << Land Types o) were distinguished within each of the four sub-project areas\. The SAR identified seven land types in total\. Changes in cropping patterns and in yields on these land types would be influenced not only by irrigation investments, but also by the adoption of new technologies, which the project was to facilitate through its support to research and extension\. For each land type, crop models were established to reflect the situation before and with project\. The full project benefits were assumed to be reached by year 8, and the incremental benefits (the difference between the net value of production after and before) were distributed in a linear way over the 5 years of project implementation starting in year 3\. 2\. At appraisal, benefits were also introduced to account for the improved maintenance of irrigation & drainage infrastructure made possible with the project in Behbahan, Moghan and Zarrineh Roud\. It was assumed that, without project, waterlogging would further deteriorate, which would be reflected in agricultural production through a yield decline averaging one percent annually over the total project duration (25 years)\. ICR Approach 3\. At project completion, the major irrigation improvement works have just been completed or are about to be achieved\. The first benefited areas received water through the improved structures only in late 1999, and so the impact of the works on the productivity of crops or on cropping patterns cannot be verified yet\. There is however some evidence that crop yields and land use started to change faster in the project areas than in the surrounding districts\. Clear examples of increased productivity can be found in wheat (Behbahan, Zarrineh Roud, Moghan), sugarbeet (Moghan, Zarrineh Roud), cotton (Moghan)\. These benefits must be attributed to the improved efficiency of research and extension services under the project\. However, there are also cases where yields have somewhat receded\. In Zarrineh Roud and in Moghan, this is due to the drought which has affected the region from 1998/99 to 1999/00\. In Behbahan, the ebb is attributed to the temporary negative effect of land leveling\. Available data and methodology 4\. During project preparation, various land types had been identified within each of the sub-project areas, depending on the major constraints to intensification, e\.g\. poor drainage or lack of water\. These land types had marked differences in land productivity before project, and would develop differently under the project\. It was therefore logical to use different farm models for each of these zones\. It was expected that these changes would be tracked during project implementation, but data collection has been deficient even at district level (Sharestan)\. Annex 7 Appendix C: Economic and Financial Re-evaluation 5\. During Mid-Term Review, the same approach was still followed, as delays had made a reduction in works unavoidable, and this would have different results depending on which zones would be affected by the reductions\. Extended visits to the areas affected made it possible to collect sufficient data to produce acceptable models for the various land types\. This was not possible during ICR preparation\. However, thanks to the efforts of central and sub-project consultants, a relatively acceptable set of data on cropping patterns and yields was finally assembled at sub-project level, based on various sources, including district level statistics, and covering the project implementation period\. 6\. Due to data limitations, it was therefore decided to simplify the approach followed at appraisal and to develop crop and farm models at sub-project rather than at land type level\. The situation without project is based on the SAR models, aggregated at sub-project level, with minor modifications where there is clear evidence of a bias (e\.g\. in the case of Zarrineh Roud for wheat which was affected by a virus disease at the time the preparation studies were conducted: the disease had receded when the project was launched)\. The situation with project reflects the gains already made in crop productivity, as a result of improved farm advice, plus the benefits expected from improved water control\. Assumptions 7\. Sub-project areas used for calculating project benefits correspond to areas that have been impacted by project activities, not limiting to irrigation improvements\. The major differences with SAR sub-project areas are in Moghan, where completed works have exceeded plans, reaching 41,500 ha against 36,000 ha; and in Tajan, where the total area benefiting from project interventions is considered, i\.e\. 28,000 ha, rather than the area expected to benefit from irrigation improvements (which at SAR was expected to be 7,500 ha)\. In the case of Zarrineh Roud, the SAR area of 36,000 ha has been kept, although works will be completed only over 22,800 ha\. This allows to take into account the benefits from agricultural extension over the whole area where the project has had a direct impact\. 8\. Improved water control\. It is expected that the improved water control resulting from project works will essentially translate into changes in cropping patterns, rather than in crop yield changes\. This is because there is at present no serious water shortage for the crops grown - except in case of a general drought as occurred in northwest Iran during 1998-2000, as cropping patterns are adjusted to reflect water availability\. Increased water availability at sub-project level will allow increased cropping intensity, and a shift towards higher value crops, but it is not expected that more water will be available for each crop on a per ha basis\. 9\. Improved farm advice\. While benefits from changed cropping patterns, i\.e\. from increased water availability, will be entirely attributed to the project, this cannot be assumed for yield increases if they are assumed to result mainly from improved practices, including better varieties\. The project has improved research and extension, but without project, some of the improved practices would have found their way to a number of farmers, as is shown by progress outside project areas\. A systematic comparison is not possible for lack of data and also because the reforms introduced by the project have started permeating through the entire provinces concerned\. It has been assumed that only 20% of the increased benefits resulting from better practices are attributable to the project (25% in the case of Behbahan)\. 2 Annex 7 Appendix C: Economic and Financial Re-evaluation 10\. Phasing\. Crop yield increases have been phased over 5 years, starting from year 3 of project implementation - which is assumed to be when the extension system improvement start to bear fruit\. Changes in cropping patterns have been phased over 4 years, starting from year 8, when the new systems are becoming operational\. 11\. Detailed assumptions regarding yields and cropping patterns are shown in the Tables I to 33\. Assumptions on crop yields and cropping intensities are summarized below: Yields (t/ha) Behbahan Moghan I Tajan Zarrineb Roud Without With Without With Without With Without With Wheat 2\.1 3\.5 3\.1 5\.5 2 3\.5 2 4\.5 Broadbean 5\.5 7\.0 Vegetables 12 16 _ 15 20 14 20 Sesamie 0\.6 0\.8 Clover 20 30 Alfalfa 7 10 7,2 9 _ 5\.7 8\.3 Rice 3 4\.5 Cotton 1\.8 2\.8 1\.5 1\.8 Soybean 2 2\.5 2 2\.3 Sugarbeet 38\.5 50 25 35 Cropping 84 131 72 126 103 117 4 Intensity % 6 l 12\. These assumptions indicate that project agricultural outcomes, as can be inferred from the information available, are somewhat contrasted between regions\. In general, expected yield increases match SAR's expectations, which is remarkable given the fact that current yields are already close to the with project yields shown above, and this was reached before water improvements were achieved\. However, cropping intensities are expected to increase significantly only in Behbahan and in Moghan\. In both sub-project areas, a sharp increase is already shown in the 1999/2000 land use statistics, as a result of works already completed\. By contrast, cropping intensity increases in Tajan and Zarrineh Roud are expected to remain very modest, far below SAR expectation\. In Tajan, works will extend over an area bigger than envisaged at appraisal (11,900 ha as against 7500 ha)\. However, tertiary canals have been excluded from the project (contrary to SAR plans), so that irrigation water will initially reach only farms situated along the secondary canals\. The cost of the tertiary canals is no longer included into project costs, but is now expected to be shared between government and farmers (who still have to agree)\. The potential benefits from those canals when built, cannot be attributed to the project\. However, as indicated in Tables 25 to 33, total incremental benefits that can be attributed to the project include also the positive impact on crop yields of the research and extension component over a total area of 32,900 ha and, therefore, adding the 21,000 ha of rainfed area\. In Zarrineh Roud, project works have been sharply reduced as compared to original plans, and because of delays, their impact remains difficult to estimate\. However, water availability will remain a constraining factor, even after project completion\. 3 Annex 7 Appendix C: Economic and Financial Re-evaluation Remarks 13\. It must be recognised that data limitations are extremely serious\. Statistics provided to the ICR mission were incomplete and often inconsistent\. Most of the time, SAR data were kept, because there was no evidence that current statistics on the situation before project are any more accurate than those available at the time of appraisal\. Only few changes were made, as summarised above, and only when there was enough evidence of large variations with appraisal estimates, and there was sufficient consistency over different sources and/or mission observations and interviews\. The major difficulty arises as little effort has been made so far to monitor trends over the different land types distinguished at appraisal\. Instead, it appears that excessive reliance is made by project management on Sharestan (district) statistics which are both inappropriate to monitor changes due to project activities and of much irregular quality\. 14\. These limitations acknowledged, two main trends can be observed\. As stated earlier, yields, when they differ from SAR estimates, tend to be now higher than at appraisal\. However, the reverse is true for cropping intensities, which are much lower at present than stated at appraisal in two sub-project areas: Tajan and Moghan\. This is essentially because areas of winter crops are well below expectations, either because they were overestimated at appraisal (Tajan), or because they declined significantly since (Moghan)\. Whatever the reason, there is no assurance that cropping intensities, particularly in those two sub-projects, will ever reach the target levels envisaged at appraisal\. As project benefits are largely linked to increased cropping intensities, this stresses the need for project management to understand current trends and foresee future changes\. Farm Incomes 15\. A financial analysis has been carried out to allow an assessment of the likely benefits at farm level expected to be generated by the project\. For this purpose, and in line with the SAR approach, typical farm models based on average holding sizes of 5\.4 ha for Behbahan, 7\.0 ha for Moghan, 3\.7 ha for Zarrineh Roud and 2\.7 ha for Tajan have been prepared\. However, within this range, farm models could not be prepared to represent areas with no constraints, with moderate constraints and with constraints, e\.i\. saline and waste lands, as given at appraisal because of lack of data\. Farm sizes for each sub-project and total project irrigated area are presented in the following table: Farm Size Total Project Farm Model Irrigated Area (ha) (ha) Bebbahan 5\.4 8,400 Moghan 7\.0 41,500 Zarrineh Roud 3\.7 22,800 Tajan 2\.7 11,900 Total 84,600 16\. The farm income analysis without and with project is based on crop budgets per ha, as given in details in Tables I to 33\. Results are summarised in the table below: 4 Annex 7 Appendix C: Economic and Financial Re-evaluation Net Farm Income Increase due to Project Farm Models Before Project Actual (ICR) SAR Actual 1/ q (ICR) \. \. (Rials'000) \. \. \. Behbahan 8,400 29,500 153 251 Moghan 17,1 00 36,000 153 110 Zarrineh Roud 3,500 11,100 346 217 Tajan 7,200 10,100 165 40 1/ SAR: Average values (see staff appraisal report Annex VIII, Table 2) and converted into 2001 prices\. 17\. As indicated above, the impact of the project on farm income would be satisfactory, confirming the financial viability of the project as estimated at appraisal\. At full development, increases in net farm income would range from 40% for farms in Tajan to 250% for farms in Behbahan making the project effectively attractive to the farmers\. Furthermore, considering that these farms' incomes are based on crop budgets per ha including water charges and incremental O&M costs for irrigation infrastructure, the actual increases in the net farm incomes to be foreseen under the with project situation, clearly indicate the farmers ability to pay for these incremental costs\. As regards the cost recovery and finance for operation and maintenance the sustainability of the present system, which by law provides for recovery of scheme O&M costs from farmers up to 3% of average gross income per hectare for each crop, would be better assured by the increased level of farmer's income to be generated by the project\. B\. ECONOMIC ANALYSIS 18\. General\. The economic analysis has been carried out for the project as a whole of for each of the four subprojects of Behbahan, Moghan, Zarrineh Roud and Tajan and on the basis of average output/input prices (Table 38)\. The analysis, which has been carried out over a project period of 25 years, is described in details as follows: 19\. Cost stream\. The economic analysis has been carried out in constant June 2001 prices\. The exchange rate of Rials 3,000/US$ has been used\. The investment costs in economic terms as estimated by the MOJA and MOE are given in Table 54\. However, in the case of Tajan, the investment costs relative to the civil works so far completed have been excluded from the analysis because the tertiary canals remain to be constructed and full benefits from improved irrigation have not yet been materialized (para\. 12)\. In estimating the ERR for the specific subprojects, the costs of central level coordination for both the MOJA and MOE (Table 48) have been allocated proportionally to the related subproject areas, i\.e\. 10% for Behbahan, 49% for Moghan, 27% for Zarrineh Roudand and 14% for Tajan\. Specific investment costs in constant June 2001 prices that have been included in the ERR analysis are given in detail in Table 54\. Final and accurate O&M costs for the main and secondary irrigation and drainage networks were not yet available\. The MOE has delegated the O&M responsibility to private companies (MOE being the major share-older) working in each subproject\. These companies collect water charges from the farmers which vary from one subproject area to another\. As foreseen under the project, the studies on O&M are being completed for each sub-project area\. Two phases were foreseen: the first concentrated on collecting information on existing situation, and the second will finally include a plan of actions for a sustainable O&M system after works completion\. For the purpose of the analysis, O&M costs of Rials 300,000 ha for the sub-project areas of Moghan, Behbahan and Zarrineh Roud and Rials 100,000/ha for Tajan were included\. Incremental operating costs of 5 Annex 7 Appendix C: Economic and Financial Re-evaluation both agricultural support services, i\.e\. Extension and Research, and project facilities have also been included in the analysis\. 20\. Benefit streams\. The benefit streams for the economic analysis for the project as a whole have derived from aggregating the benefits from the total cultivated area of 105,600 ha including 84,600 ha of irrigated land and 21,000 ha of rainfed area as indicated in para\. 12\. These benefits have been estimated on the basis of per hectare crop models which are presented in details for each specific subproject area in Tables I to 8 for Behbahan, in Tables 9 to 16 for Moghan, in Tables 17 to 24 for Zarrineh Roud and in Tables 24 to 33 for Tajan\. The ICR approach for estimating future project benefits is described in paras\. 3 to 6 above and assumptions on yields and cropping patterns and remarks are discussed in paras\. 7 to 14\. Contrary to the SAR approach under which in the absence of the project yields in affected areas would have declined in the future by 20-30 percent and that a value corresponding to these averted losses were considered as a project benefit has not been taken into consideration\. This hypothesis has not in fact materialized and, as indicated by data collected in the field by the MOJA, yields have not shown any declining trend since 1994\. (a) Prices\. The following are basic principles on which the prices used in the analysis are based: (b) Traded output\. Major project crops including rice, wheat, soybeans and sugarbeets have been priced on the basis of import parity, brought to the point of first sale, i\.e\. at the farm gate\. Cotton has been treated as exportable as statistics indicate that Iran is a net export country for both cotton lint and cotton seed meal\. These economic prices have been estimated on the basis of projected 2005 parity prices derived from the January 2001 World Bank Commodity Price Projection and expressed in June 2001 constant prices as shown in Tables 36 and 37\. In the case of rice, domestic production has a higher quality of imported rice and trades at prices well above the price of imported rice (Thai - 5% broken)\. The traditional Tarom variety is of a quality comparable to Basmati rice which trades on the world markets at a premium between 30-50%\. A quality adjustment factor of 130% has therefore been applied to local rice\. (c) Non traded commodities\. Other output crops, which are either not internationally traded or for which no world market reference price was obtainable (for alfalfa, clover, grapes, broadbeans and vegetables) have been priced based on local financial prices (Table 38)\. (d) Inputs\. Urea, DAP and MOP, the main fertilizers used in the project area have been priced at import parity taking into account the January 2001 World Bank Commodities Price Projections as indicated in Table 36\. The financial prices of other tradable agricultural inputs in the crop budgets (mechanization, seeds, pesticides) exhibit currently prevailing subsidization and other distorsions in the domestic and foreign exchange markets\. To correct for these distorsions, a conversion factor of 1\.5 has been applied to these items\. (e) Labour\. Wage rates vary from Rials 25,000 to 35,000 a day depending on area, season and sex, and age of the workers\. There is seasonal labour surplus in all areas and chronic labour surplus in some\. On the other hand, current financial prices of many agricultural outputs are below economic prices leading to a downward bias in financial wages as 6 Annex 7 Appendix C: Economic and Financial Re-evaluation indicators of the opportunity cost of labour\. To reflect both aspects, an average wage rate of Rials 30,000 a day has been applied to both hired and family labour\. (f) Recurrent costs\. Annual recurrent costs in economic terms as derived from Table 54 of the Extension & Research, Environmental components have been included in the analysis\. Similarly, the operating costs of the central offices of both the MOE and MOA have also been taken into consideration\. (g) Water charges\. Irrigation water charges have been excluded from the economic analysis as the scheme investment and O&M costs have already been included in the project costs\. Water charges have been included, however, in the farm income analysis\. 22\. Economic rates of return\. Cost to be included in the economic analysis have been summarized in Table 54 and on the basis of the assumptions outlined above, the ERR for the project as a whole at project completion is estimated at about 17% (Table 57)\. As indicated earlier, separate economic analysis has been carried out for each of the four different subprojects area namely Behbahan, Moghan, Zarrineh Roud and Tajan\. The results of the economic analysis are given in details in Tables 58 to 61 and summarized in table below with a comparison with SAR estimates: Results of the Economic Analysis Economic Rate of Hectares Subproject Return (%) SAR ICR SAR ICR Behbahan 22\.6 9\.3 11,500 8,400 Moghan 15\.6 22\.4 35,600 41,500 Zarrineh Roud 20\.0 6\.9 36,000 22,800 Tajan 24\.5 23\.5 7,500 32,9001 Total Project 18\.8 16\.6 90,600 105,600 23\. The above ERR's estimates indicate that the project as a whole as well as the individual subprojects remains, at project completion, satisfactory\. The Zarrineh Roud subproject, with an ERR of about 7%, well below SAR estimate, may be considered slightly marginal\. In reality, the ERR for the Zarrineh Roud subproject is to be considered underestimated on the assumption that the heavy rehabilitation programme that has been undertaken has involved full lining of the primary and secondary canals, which would result in a considerable saving in water for irrigation and therefore allowing an increased availability of water downstream\. Data on possible water savings as a result of the project were not available at the time of the ICR and it would be difficult, at this stage, to quantify accurately the relative project benefits in the downstream areas\. Furthermore, the Zarrineh Roud subcomponent should be maintained because of the high expectation of the farmers in the area\. Including 21,000 ha of rainfed area\. 7 Annex 7 Appendix C: Economic and Financial Re-evaluation 24\. Sensitivity analysis\. The sensitivity analysis indicates that the ERR to the project and for the four subprojects has been found to be quite resistant to deviations from the base case assumptions\. With benefits lagged one year or reduced by 10%, the project as a whole would generate ERRs of 14\.2% and 14\.9% respectively\. The sensitivity analysis results are summarized below: Sensitivity Analysis Results Basic ERR Decrease Item ERR Benefits Lagged Benefits ______________ _ \|by 10% \. \. \.%\. \. %\. Total Project 16\.6 14\.2 14\.9 Behbahan 9\.3 7\.9 7\.9 Moghan 22\.4 19\.4 26\.7 Zarrineh Roud 6\.9 5\.6 5\.4 Tajan 23\.5 19\.9 21\.4 C\. PROJECT RISK 25\. The economic and financial risks, as foreseen at appraisal, are at ICR considerably reduced\. The economic risk related to the wide disparity between economic and financial prices still remains applicable for most of agricultural inputs but it is drastically reduced for major project output\. In particular, as indicated in Table 38, economic prices of fertilizers are still about 400% over the current financial prices\. The economic prices of wheat, soybeans and cotton are more in line with their respective financial prices with specific conversion factor ranging from 0\.65 for wheat to 1\.55 for rice\. The policy of GOI has been effective over the last five years to bringing domestic prices more in line with international prices\. This policy is expected to be maintained in the future mitigating, as a result, the economic risk\. 26\. The financial risk at ICR is considered negligeable\. Discussions with MOE and MOJA officials and project beneficiaries suggest that the financial risk associated with the project may not cause in the remaining construction programme\. At project completion, in fact, about 98% of the civil works contracts have been carried out, and are expected to be completed by end of October 2001\. The GOI, in view of subprojects farmers' high expectation and aiming at reducing social pressure, has reaffirmed its commitment to the full financing of both the investment and recurrent costs of the project\. 8 ANNEX 8 BORROWER'S CONTRIBUTION Islamic Republic of Iran Irrigation Improvement Project IBRD LOAN 3570 IRN Borrower 's Contribution in ZIP Implementation Completion Report (ICR) July 2001 Ministry of Agricultural Jihad Ministry of Energy Deputy Ministry for Techniques and Infrastructure Water Resources Management Organization Liaison Office Liaison Office YEKOM Consultinq Enqineers LAR - NESPAK Table of Contents 1\. INTRODUCTION \.I 2\. PROJECT OBJECTIVES \. 1 3\. PROJECT ORGANIZATION \. 1 3\.1\. The Borrower and Concerned Ministries \. ] 3\.2\. The Implementing Agencies \. 2 3\.3\. Coordination Arrangements \. 2 3\.4\. Consulting Engineers \. 2 4\. IMPLEMENTATION RECORD \. 2 4\.1\. Period \. 2 4\.2\. Midterm Review \. 2 4\.3\. Expenditure \. 3 5\. MAJOR FACTORS AFFECTING THE PROJECT \. 3 6\. STATUS OF PROJECT COMPONENTS COMPLETION \. 4 6\.1\. Institutional Support \. 4 6\.2\. Irrigation/ Drainage Development (MOE) \. \. 5 6\.3\. Agricultural Development \. 6 6\.4\. Irrigation/ Drainage On-Farm Development (MOA) \. \. 6 6\.5\. Project Facilities including O&M (MOE) \. 6 6\.6\. Environment \. 6 7\. ACHIEVEMENT OF PROJECT OBJECTIVES \. 7 7\. 1\. Enhance water resources management \. 7 7\.2\. Raise crop output, farm incomes and foreign exchange savings \. 7 7\.3\. Improve Planning and Implementation capacity of sector institutions \. 7 8\. PROJECT SUSTAINABILITY \. 7 9\. BANK PERFORMANCE \. 8 9\. I\. Lending \.8\. 8 9\.2\. Supervision \. 8 9\.3\. Overall Performance \. 8 10\. BORROWER PERFORMANCE \. 9 10\.1\. Pre-implementation\. \. \. 9 10\.2\. Government Implementation Performance \. \. 9 10\.3\. Implementing Agency \. 9 10\.4\. Overall Performance \. 9 11\. LESSONS LEARNED \. 9 12\. ACKNOWLEDGMENT \. 10 Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (iCR), July 2001 GLOSSARY/LIST OF ABBREVIATIONS ASC Agricultural Service Centre CAM City Agricultural Management CC Central Consultants DOE Directorate of Environment FAO Food and Agricultural Organisation FAO/(CP) FAO Co-operative Program GL Guidelines IDDB Irrigation & Drainage Development Bureau lIP Irrigation Improvement Project ]PM Integrated Pest Management M& E Monitoring and Evaluation MOAILO Liaison Office Ministry of Agriculture MOF/LO Liaison Office Ministry of Energy MOA Ministry of Agriculture (Later changed to MOAJ) MOE Ministry of Energy MoF Ministry of Finance M&E Monitoring and Evaluation MIS Management Information System Ml Management Information OFDB On Farm Development Bureau O& M Operation and Maintenance PA Pilot Area PBO Planning and Budget Organisation (Later changed to MPO) PAO Provincial Agricultural Organisation PWMS Pilot Water Management Studies; R&E Research and Extension RRA Rapid Rural Appraisal RET Research, Extension & Training RWA Regional Water Authority SAR Staff Appraisal Report (World Bank) SP Sub-Project (of IIP) SPC Sub-Project Consultants TOR Terms of Reference WB World Bank WUG Water Users Groups Islamic Republic of lran lIP, Borrower's Contribution in lip Implementation Completion Report (ICRj, July 2001 Page I 1\. Introduction Pursuing a policy of rehabilitation of existing irrigated areas rather than a policy of new land reclamation, the GOI selected the following four sub-projects areas as a target for rehabilitation under this project: i) Behbahan (11,500 ha) in Khuzestan province; ii) Moghan (35,600 ha) in East Azarbaijan and Ardebil province; iii) Zarrineh Roud (36,000 ha) in West Azarbaijan province; iv) Tajan (7500 ha) in Mazandaran and Golestan province\. The improvement was thus targeted in a total area of 90,600 ha\. The emphasis of GOI was to improve irrigation and drainage network in sub-project areas, on-farm development including improvement of irrigation and drainage networks, selective sub-surface drainage and land leveling, carrying out of institutional reforms, full recovery of O&M costs, carrying out of several pertinent studies and overseas and on-job training of managerial and technical staff\. The Project was implemented by the Ministry of Energy (MOE) and the concerned Regional Water Authorities (RWAs), and by the Ministry of Agriculture (MOA) and the concerned Provincial Agriculture Organizations (PAOs)\. The IBRD Loan amount was to be shared by the two ministries as follows: (Allocation in Million US $) Category MOE/RWAs MOA/PAOs TOTAL, I (a) Works 76\.00 I (b) Works -- 33\.00 109\.00 2(a) Equipment and Materials 11\.00 2(b) Equipment and Materials -- 7\.00 18\.00 3(a) Consultants Services 12\.20 -- and Training 3(b) Consultants Services -- 17\.80 30\.00 and Training ----- --- --- Total 99\.20 57\.80 157\.00 The present report is the contribution of The Government of the Islamic Republic of Iran (GOI) for the Implementation Completion Report (ICR) of the Irrigation Improvement Project (IIP) financed by the GOI and the WB\. ICRs are an integral part of the World Bank's systems of knowledge management and accountability\. ICRs aim to improve the quality and effectiveness of Bank loans and enhance borrower's ability to design, implement and operate projects\. One of the borrowers responsibilities in the preparation of the ICR is preparing its own final evaluation report on the project (current report)\. In this report it is aimed to present an assessment of the project and an evaluation of performance of involved parties 2\. Project Objectives The overall objectives of the project were: a) To enhance water resources management through the rehabilitation and improvement of irrigation and drainage systems in four subprojects (SPs); b) To upgrade research and extension in the four SPs in order to raise crop output, farm incomes and foreign exchange savings through increased agricultural production; c) To improve the planning and implementation capacity of sector institutions, including Ministry of Agriculture (MOA) and Ministry of Energy (MOE)\. 3\. Project Organization 3\.1\. The Borrower and Concerned Ministries The borrower was the GOI, represented by the Ministry of Economic Affairs and finance (MEAF)\. The beneficiaries of the loan were MOA, MOE and the relevant RWAs and PAOs of each SP\. Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 2 3\.2\. The Implementing Agencies The execution of the SPs was carried out by the relevant PAOs (OFDB & IDDB as their headquarters) and RWAs, according to their mandates\. Each of the four subproject PAOs were responsible for implementing on-farm and agricultural developments, and RWAs executed the main, secondary and tertiary Irrigation & drainage systems\. 3\.3\. Coordination Arrangements \.3\.3\.1 Project Steering Committee (PSC)\. Because of the complex institutional and budgetary arrangements and coordination between two ministries, GOI established a Project Steering Committee at the central level to guide the project in policy matters\. The PSC was chaired by a Deputy Minister of MEAF and its members included the former MOA and MOE Deputy Ministers\. 3\.3\.2\. Liaison Offices (LOs) MOA and MOE set up LOs in Tehran to coordinate implementation by PAOs and RWAs; to provide support in specialized areas; and to harmonize and consolidate work programs, reports, budgets and accounts between MOA and MOE\. 3\.4\. Consulting Engineers 3\.4\.1\. Central Consultants LOs required assistance principally for preparing special studies\. The consultants also assisted LOs in coordinating project activities\. The consultants were a joint of an international firm and a local consulting engineer\. MOE central consultants were NESPAK from Pakistan jointed with LAR from Iran\. The central consultants of MOA were Arcadis/Euroconsult from Netherlands (till July 2000) joined with YEKOM from Iran\. 3\.4\.2\. Subproject Consultants Subproject consultants who had already started their preliminary work before the loan, were contracted to carry out the planning, design and supervision of construction of the irrigation, drainage and land leveling works\. In Moghan and Zarrineh Roud, four contracts in all were signed with YEKOM-ACE and Mahab Ghods respectively\. Associated with works under the scope of MOE and MOA\. In Tajan there was just one contract for MOE part with Mahab Ghods and in Behbahan, one contract with Pandam for MOA part\. The subproject consultants also performed some special studies\. 4\. Implementation Record 4\.1\. Period Project activities started when the FAO/CP (Food and Agricultural Organization Co-operative Program) and a WB identification mission visited Iran in October 1991\. Additional required information was collected by GOI\. Three consultancy firms already engaged for each SP completed preliminary preparation reports in December 1991\. A project preparation report was submitted by FAO/CP in May 1992\. The WB's pre-appraisal was carried out in June/July 1992, and the Bank appraisal, following a mission to Iran in October/November 1992 was finalized in February 1993\. The Loan Agreement between GOI and WB was signed on March 31, 1993\. It became effective in April 29 1993\. The project completion date was June 30 2001\. 4\.2\. Midterm Review During the Mid-Term Review (MTR) held on March 1998, conducted jointly by the World Bank Mission and MOE, MOA, PAOs, RWAs and DOE based on the reports prepared by LOs, adjustments necessary to achieve the project objectives within the remaining three years were made\. As a result of these adjustments and other factors emerging during the course of implementation, the project has undergone the following salient variation: a) Major deviations from SAR were in the costs of the Irrig\.lDrainage Development (MOE) and the Irrig\./Drainage On-Farm Devel\. (MOA) components which have increased by 23% and 189% respectively due to unit cost escalation, in real term, of the civil works\. On the contrary, the institutional support and the agricultural development components were Islamic Republic of Iran: IIP, Borrower's Contribution in lIP Implementation Completion Report (ICR), July 2001 Page 3 scaled down by 45% and 63% respectively because of the reduced need for services related to these activities\. A summary of project costs by component at MTR is given in the following table where a comparison with SAR estimates is also provided\. b) The development envisaged under the four sub-projects was reduced from 87,500 ha in SAR to 56,700 ha\. However, the satisfactory work progress in later years resulted in an increase of the rehabilitated areas to 84,600 ha\. Subproiect SAR MTR Completed Behbahan 8,400 ha 8,400 ha 8,400 ha Moghan 35,600 ha 18,000 ha 41,500 ha Zarrineh Rud 36,000 ha 22,800 ha 22,800 ha Taian 7,500 ha 7\.500 ha 11,900 ha Total 87,500 ha 56,700 ha 84,600 ha c) Purchase of hydrometric equipment was cancelled due to non-allocation of funds by MPO\. d) Hydrological network studies were also cancelled, as MPO did not allocate funds\. e) Mathematical groundwater monitoring component excluded from the project\. 4\.3\. Expenditure The project expenditure by component and source of funding is presented in the table below: Actual Component SAR MTR (Rials billion) (USS million) (MillionUSS) (MillionUSS) GOI IBRD Total GOI IBRD ToI Funded Funded Funded Funded ota Institutional Support 41\.9 27\.1 46\.7 64\.7 111\.4 15\.6 21\.6 37\.1 Irrig/DrainageDevel\. (MOE) 120\.8 149\.2 285\.6 228\.0 513\.6 95\.2 76\.0 171\.2 Agricultural Development 40\.2 15\.0 12\.8 0\.0 12\.8 4\.3 0\.0 4\.3 Irrig-/Drainage On-Farn 26\.3 75\.9 102\.6 147\.6 250\.2 34\.2 49\.2 83\.4 Devel\. (MOA) Project Facilities including 27\.7 27\.6 10\.7 30\.0 40\.7 7\.53\.6 10\.0 13\.6 O&M Environment 3\.4 4\.9 5\.7 0\.7 6\.4 1\.9 0\.2 2\.1 Resettlement 0\.2 - - - - - - - Total Baseline Costs 260\.5 299\.7 - - - - - Physical Contingencies 18\.6 25\.1 - - - - - Price Contingencies 32\.5 69\.4 \. - - - - Total Baseline Costs 311\.7 394\.3 464\.2 471\.0 935\.2 154\.7 157\.0 311\.7 5\. Major Factors Affecting the Project a) The project faced considerable difficulties during the initial three years of implementation mainly due to inadequacies in the envisaged institutional arrangements some of which continued even till later stages\. The staff was not adequately familiar with the World Bank's procedures\. The result was that the implementation of the project suffered as; i) approval of the budgets was delayed; ii) counter-part funds remained insufficient till 1997; iii) approval of appointment of Sub-Project Consultants was delayed until June, 1995 although they had started working in 1993, which in turn caused delay in approval of final designs and tender documents; iv) high inflation rates caused substantial increase in cost of civil works which were procured belatedly; v) appointment of CC for MOE was delayed for four years which adversely affected the monitoring and evaluation (M&E) activities\. They were commissioned in April 1997 vi) payments to Contractors and Consultants were sometimes not made promptly; vii) O&M Studies for the three sub- projects of MOE were delayed; and viii) training programs were delayed\. b) There were factors outside the control of the implementing agencies such as; i) inadequate management capability of the civil works contractors; and ii) lack of experience of the sub-project consultants in respect of agricultural development and O&M studies, which hindered the progress of project activities\. Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 4 c) Yet there were factors that could be controlled such as; farmers' resistance to execution of civil works, insufficient coordination among many organizations involved in the implementation of the project and use of variable exchange rate of US Dollar that caused difficulties in budgeting of counterpart funds\. 6\. Status of Project Components Completion 6\.1\. Institutional Support 6\.1\.1\. Project Coordination Project coordination was carried out by LOs\. The only hampering issue in the LOs' efficiency was staff changes, which happened a few times for MOALO and twice for MOELO during the project\. The steering committee had 6 meetings\. Considering the project's complexity, more meetings could have resulted a smoother pace in the project and more coordination between the parties\. 6\.1\.2\. Technical Assistance The services of SPCs with regards to supervision of civil works are ongoing and shall be completed fully even after the loan closing date\. Regarding to special studies: a) Agricultural Developments studies reported in 10 volumes including Research and Extension; Present Status except Behbahan which includes planning (MOA) b) Water User Group studies, 4 reports (MOA) c) Land Tenure studies, 2 reports (MOA - Zarrineh Roud and Behbahan) d) Women in Development (MOA - Behbahan, Tajan & Zarrineh Roud) e) O&M studies, 4 reports The services of Central Consultants were carried out in two contracts for MOA and MOE separately as described in Para\. 3\.4\.1\. It is worth mentioning that the contracts of the Central Consultants were signed with 3 years delay mainly due to a lack of coordination between PBO and the Ministries of Agriculture and Energy\. The following services were carried out by the CCs: a) M& E of the Project improved significantly after the beginning of the CCs activities and periodical progress reports of the project were formed and prepared regularly\. b) The CCs assisted LOs in all project activities such as supervision of technical and agricultural studies, coordination, preparation of periodic monitoring reports and conducting several training seminars and workshops\. They accompanied all of the WB supervision missions in the meetings and site visits; c) The CCs jointly produced guidelines for Monitoring Network of the Surface/Groundwater Quality for Chemical Substances (MOE/CC) and Agro-Chemicals (MOA/CC), which is under implementation by EARWA, WARWA and MGRWA\. d) Agricultural Development and Operation and Maintenance studies in the subprojects were supervised by the CCs; e) A model and implementation plan for the establishment of Water Users Groups was formulated by MOA/CC and a pilot project for the formation of WUGs was developed in Behbahan (MOA/CC) and in Tajan (Both CCs); f) Assisting LOs in preparing periodical and quarterly Progress Reports together with MTR and ICR; g) General supervision, review and evaluation of O&M studies carried out by SPCs in Tajan, Zarrineh Roud and Moghan SPs by MOE/CC; h) General supervision, review and evaluation of O&M studies carried out by SPCs in Behbahan and Moghan (tertiary) SPs by MOA/CC; i) Pilot Water Management Study (MOA/CC) which concluded that water application to the field can be reduced with 30-50% while similar (Behbahan) or even higher yields (170% Moghan) are obtained\. In other word, during three cropping season it was proved that the yield per cubic meter of irrigation water can be increased 170 to 280 percent\. Consequently substantial water saving can be realized with better controlled irrigation; Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 5 j) An Agro-Chemical Management Plan was prepared by MOA/CC\. As part of the Pilot Village studies the replacement of expensive polluting agro chemicals with biological agents was introduced at field level\. This proved to be highly successful\. It served as a practical proof to the farmers that pollution control, cost reduction with similar or higher yields can go hand in hand\. The results of pilot farms during three cropping seasons showed that using biological agents increased the yield 10 to 40 percent while decreasing the spraying by 50 to 80 percent; k) A model for adaptive research and extension services was formulated and its implementation plan was prepared by MOA/CC\. To obtain the necessary information from the field as inputs for development of the model, Pilot Village Studies (PVS) were set up\. At the same time, the PVS demonstrated participatory methods, tested farmer-to- farmer extension, provided information about the actual needs of farmers and introduced and tested the Farmer Field School concept\. 1) A Management Information System covering the project input and progress, project finances and project impacts indicators were provided to the MoALO by its CC\. All systems can be tailored for other projects\. The experience of this project proved that implementation of such systems can be very effective especially for complex projects like IIP\. However, the system was completed in the last year of the project due to the late start of CC services\. 6\.1\.3\. Training MOE arranged a total of 53 courses of Category - I training (local training) which were conducted in Abbaspour Institute Tehran\. 425 participants; managers; professionals; and technicians from 3 RWAs attended these courses\. A two-day national workshop on the subject of O&M and Participatory Irrigation Management (PIM) was also held in this institute\. A three-day training workshop with 15 participants from 3 RWAs and the concerned OMCs was also held relating to the use of GIS technology for preparing databases for irrigation and drainage networks\. Besides CC of MOE imparted on-job training to a substantial number of staff members of 3 RWAs, consulting engineering companies and contractors related to state-of-the-art computerized M&E activities\. MOA arranged two categories of training; i) Central Level Training; and ii) Sub-Project Level Training\. Ninety percent of the central level training programs were completed while only eighty five percent of sub-project level training programs was carried out\. MOA training programs had two categories: 1\. Central Level Training - US$ 2\.5 million, 90% of programs completed; 11\. Sub-projects Level Training - US$ 3\.8 million, 85% of programs completed; During the project course the MOA arranged 720 and 237 staff/months of local and overseas short courses, respectively\. Furthermore, 105 workshops, 12 study tours and 9 staff/years of fellowships were conducted\. Most of the progress in both categories has been achieved in local short courses and workshops (more than SAR estimates)\. There was a contract for study tours with FAO\. It should be mentioned that the TOKTEN program that was carried out by the MOA was successful with the participation of 37 Iranian professors and specialists from overseas\. Regardless of number of conducted programs and participants, lack of a detail Training Need Assessment at the beginning of the project, caused incompatibilities between the programs and the participants and their job\. 6\.1\.4\. Institutional strengthening The total expenditure in this part has been 63% of MTR plan\. The activities under this section consisted of procurement of vehicles and equipments for central offices of MOA and MOE\. 6\.2\. Irrigation! Drainage Development (MOE) The overall completion of MOE part of the civil works was 81\.35 %, which is based on 92\.5 % completion in Moghan Sub-Project, 76\.8 % completion in Zarrineh Roud Sub-Project, and 84\.5 % in Tajan Sub-Project\. The individual completion of 14 awarded Contracts was; MC-I/1 (100 %); MC-1/2 (100 %); MC-1/3 (100 %); MC-1/4 (96 %); MC-1/4A (68 %); ZRC-I/1 (80 %); ZRC-1/2 (79 %); ZRC-1/3A (65 %); ZRC-1/3B (87 %); ZRC-1/3C (58 %); ZRC-1/4B1 (79 %); TC-I/1&2 Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 6 (83 %); TC-I/4 (100 %); and TC-I/4A (85 %)\. It is pertinent to mention that there were delays in awarding of the civil works contracts due to initial institutional weaknesses\. The progress on awarded contracts was also not achieved at the rate envisaged due to various reasons until the year 1999 when MOELO and RWAs particularly WARWA started concerted effort and the pace of work was increased\. 6\.3\. Agricultural Development This component covers just the physical activities in the filed of agricultural development\. All the studies and pilot programs, which fall in this field, have been described in Para\. 6\.1\.2 in order to be consistent with the SAR and MTR classifications\. The following activities have been carried out under this component: a) Totally, 4,000 m2 buildings have been constructed for different offices related to Research and Extension; b) US$ 8\.3 million have been financed for procurement of vehicles, audio/visual equipments, laboratory equipments, farm machinery and computers and distributed among the Research and Extension offices in the subprojects\. 6\.4\. Irrigation! Drainage On-Farm Development (MOA) Nine contracts were active in that section covering 33,000 ha in all subprojects except Tajan\. The total expenditures in this section reached to 142% of MTR\. The contracts in different subprojects are as follows: a) Moghan\. There were 5 contracts covering about 18,350 ha in Moghan\. One contract for 260 km canalette production, two contracts for installation of canalettes in 16,000 ha and two contracts for installation of subsurface drainage in 6,600 ha of lands\. b) Behbahan\. Two contracts for land leveling (7400 ha) and subsurface drainage (3500 ha)\. Both contracts were completed before the loan closing date\. c) Zarrineh Roud; Two contracts for subsurface drainage (11500 ha)\. The contracts started with much delay due to several revisions in the designs and delay in selection of the contractor\. The contractor had many problems due to lack of trencher machines but both contracts will be completed by the loan closing date\. 6\.5\. Project Facilities including O&M (MOE) MOE engaged the services of Satkab to prepare bid documents for procurement of the machinery and equipment under the Project including; i) O&M machinery for Moghan, Zarrineh Roud, Tajan Sub-Projects; ii) Pumps for Behbahan Sub-Project; and iii) Hydrometric Equipment\. Later the procurement of Pumps for Behbahan and Hydrometric Equipment was dropped, as PBO did not approve their funding under the Project\. However, some assorted equipment required for implementation of Surface/Groundwater Monitoring Program was procured at the request of EARWA, WARWA and MGRWA\. Sixty three (63) pieces of machinery for O&M were procured from overseas, which included 37 pieces purchased from 5 different international suppliers (Japan and Europe) and 26 pieces were purchased from local manufacturing companies\. Nineteen (19) pieces of machinery were given to EARWA for use on Moghan Sub-Project, thirty one (31) pieces were given to WARWA for use on Zarrineh Roud and thirteen (13) pieces were given to MGRWA for use on Tajan Sub-Project\. 6\.6\. Environment Surface/Groundwater Monitoring Programs for Moghan, Zarrineh Roud and Tajan sub-projects were prepared by the MOA/CC\. These programs have been used to monitor surface and groundwater qualitatively in Tajan and Zarrineh Roud Sub-Projects for one year cycle during 1999-2000\. However, in Moghan Sub-Project no measurement or testing was made due to incomplete installation of piezometers\. It is expected that implementation of this program would be institutionalized and it will continue to generate useful data for better management of irrigated agriculture in the concerned sub-project areas\. Tajan Plain Environmental Study was completed by Messrs\. Khazar - Ab Consulting Engineers\. The preparation of an environmental management plan based on this study was also undertaken under the Project\. The Delta and Wetlands Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 7 Management Studies in Zarrineh Roud Sub-Project were carried out by Messrs\. Mahab Ghodss Consulting Engineers\. The following activities have been done in the MOA part: a) Incremental staff: 4 persons in Behbahan and 5 persons in Moghan subprojects\. b) Studies: * Marun River Fish Management; * Environmental studies of Lake Urumieh (Zarrineh Roud), 1600 million Rials; * Conducting a National workshop titled "The First Workshop on Applying The Ecosystem Approach to The Management of Lake Uromiyeh"; 2-4 July 2001; * Environmental studies of Shadegan Marshes (Behbahan), 800 Million Rials; * FAO studies, US$ 453,912 on the said wetlands; * Regional studies on existing condition in all subprojects\. c) Goods: Laboratory equipments (250 Million Rials) and three pickups for DOE\. d) Facilities: * Office Building in Shadegan, 645 Million Rial * Visitors Building in Abadan, 985 Million Rial e) Training Activities: * Participation of DOE staff in abroad short courses; * Participation of 8 DOE specialists at M\.Sc\. courses in Netherlands; * Inviting several environmental specialists using TOKTEN program\. 7\. Achievement of Project Objectives 7\. 1\. Enhance water resources management The major part of project funds and activities was allocated for achieving this objective\. Irrigation and water management was enhanced in about 84,600 hectares of subproject areas through construction or rehabilitation of irrigation and surface or subsurface drainage and land leveling\. Moreover, the results of pilot water management studies proved water application to the field can be reduced with 30-50% while similar (Behbahan) or even higher yields (170% Moghan) are obtained\. In other words, during three cropping season it was proved that the yield per cubic meter of irrigation water can be increased 170 to 280 percent\. Consequently substantial water saving can be realized with better-controlled irrigation\. 7\.2\. Raise crop output, farm incomes and foreign exchange savings Agricultural indicators have been greatly improved comparing the situation at the project start\. Average cropping intensity of the SPs has been increased from 90% to 113% and total yield have had 64% average increases\. Consequently, this advance leads to an increase of farmers' income and foreign exchange savings\. It is worth to mention that due to completion of civil works just in the last year of the project from one side and heavy drought in the subprojects from the other side, it is predicted that the impacts of IIP will be more outstanding than the current figures\. 7\.3\. Improve Planning and Implementation capacity of sector institutions This project had lots of experiences for all of the involved parties in different levels\. Central offices of the ministries, regional water authorities, provincial agricultural organizations, research stations and agricultural service centers, all gained experiences in one or another way during the project\. The project had major effects on the traditional top-down decision-making system of the sector\. In the other side, Consultants got good experiences particularly for carrying out the agricultural development and environmental studies\. 8\. Project Sustainability The sustainability of the project has been achieved fully by adopting following measures: a) WUG\. The expansion of the modem irrigation sector results in an increasing involvement and financial burden to the Government\. Within the framework of the privatization policy Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 8 of the Government of Iran, the Ministries of Agriculture and Energy have started the process of handing over the responsibility for irrigation management to the farmers\. The successful experience in formation of the WUG in Tajan & Behbahan SPs in this project, which is the first legal WUGs in Iran, is now a National Policy, which is carried out at the present with the strong support of government\. The government provided good incentives like agricultural and O&M machinery, office building & implementation of pressurized irrigation, all for free to enhance this activity\. It is important to mention that the WUGs, which have been formed in this project, are the first legal one in Iran\. b) O&M\. Operation and maintenance of the networks in the subprojects were studied in parallel with formation of WUGs\. In all subprojects, special studies were carried out covering all aspects of these companies in terms of organizational structure, authority, staff and administration procedures\. Moreover, for each of the networks a manual for operation and maintenance of* irrigation and drainage schemes has been prepared individually\. As the first subproject, the farmers are now the partners of Tajan O&M Company and are taking part of the responsibilities\. In the other side, special local and overseas training programs have been carried out on O&M issues for related staff\. With the said actions, it is evident that the government is seriously following up motivation of these companies with participation of farmers, which will guarantee appropriate operation of networks constructed or rehabilitated in IIP\. c) Training\. Human resources are one of the key elements of sustainability\. Training activities which were carried out in IIP covered a large number of MOA central and local staff and farmers\. Through these trainings the main topics of IIP were transferred to the staff and farmers and results of PWMS, IPM, PVS, O&M and WUG studies were disseminated\. There is a good chance that the trained people will disseminate the project findings, which maintains the sustainability of the project\. 9\. Bank Performance 9\.i\. Lending Bank performance in the lending phase of IIP was satisfactory\. Although, there were some issues which can be improved for future projects\. The objectives of the project were in line with GOI strategies but the implementation plans had some conflicts with the economic and administrative rules and regulations of GOI\. These conflicts were mainly in procurements of goods and recruitments for R&E staff\. Moreover, the components consisted of different types of functions (procurement of goods, training, studies, etc\.), which were more than the authority and competences that had been appraised for the liaison offices\. 9\.2\. Supervision Bank performance regarding the supervision of the project was satisfactory\. Appropriate experts were visiting the project regularly\. At the beginning, the supervision missions were every 3 months but in the last years, due to considerable improvements in project implementation it was carried out every 6 months\. During the last months of the project, the payments requests by MOA/LO were not replied timely by the WB\. 9\.3\. Overall Performance Overall Bank performance is satisfactory based on the several issues discussed above\. Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 9 10\. Borrower Performance 10\.1\. Pre-implementation As the first experience of the country in this sector, the Borrower's performance in the pre- implementation phase was satisfactory\. The weak points of this phase were due to inadequate involvement and coordination of several organizations\. 10\.2\. Government Implementation Performance Some difficulties such as late recruitment of the central consultants, changes in the management and staff of the LOs and untimely provision of local funds, arose at the beginning of the project, however, during the last three years of the project, activities gained momentum and so government implementation performance can be ranked as satisfactory\. 10\.3\. Implementing Agency The performance of the implementing agencies, which comprise of PAOs, RWAs and LOs, were satisfactory\. Taking into account the limitations that were out of their control, the implementing agencies achieved good results\. The good performance of the LOs during the last years of the project enhanced such good achievements\. 10\.4\. Overall Performance The overall performance of borrower is satisfactory\. Although IIP was the first WB loan in this sector (lack of experience of working with the bank regulations), involvement of too many organizations (difficult to coordinate), diversity of the project (in 4 subprojects) and moreover, the complexity of the project due to the variety of the components, the project mostly achieved all of its objectives\. 11\. Lessons Learned a) This project was the first experience of GOI on implementation of an integrated irrigation improvement project, which covers all aspects of agricultural developments\. This integration proved to be very useful as it guarantees the sustainability of the investments\. The GOI will use this framework for future similar projects\. b) The experience of IIP proved that participatory approach is very successful and effective\. It should be used in all levels of management and beneficiary levels\. This approach could affect the traditional top-down system of decision making in R&E activities, pilot activities and formation of WUGs in the subprojects\. c) Some of the activities, which had been planned in the appraisal phase, were not completely in accordance with GOI administrative and economic regulations and it took a lot of efforts to solve the related problems\. For any new project with the WB, this lesson has to be considered in the project design to prevent such problems\. d) Management of a project covering several organizations is very complicated and somehow impractical\. IIP showed that the number of involved parties could be reduced without hampering the integrity of the project\. In addition, all parties should be involved from the early stages of the project otherwise they will act reluctantly during the project implementation\. e) One of the most important aspects of the project organization was the Liaison Offices\. Their performance could make them an acceleration engine for the project as well as a bottleneck\. For the future projects, the structure of the liaison offices, their TOR and their authority should be carefully designed\. More over, it should be tried to minimize the changes in the staff of these offices during the project\. In this regard, The MOA has assigned the current LO as the permanent focal point of all similar projects for the future in order to keep and use the experiences achieved during the implementation of IIP\. f) A Training Need Assessment Detail Plan is very essential for a training component\. It should define the qualification of trainees, trainers and training materials based on the project objectives, assessment of project staff and sustainability of the project achievements\. Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 10 g) Due to the complexity of integrated development projects, a MIS and M&E from the very beginning is a very essential element\. During implementation of IIP, these systems were very useful not only as a management tool but also as a documentation tool\. h) Dissemination of the useful findings and outcomes of the project should be predicted and taken into account in the planning phase of the project\. 12\. Acknowledgment At the end of this report, it is the best opportunity to acknowledge the key persons that were greatly involved and had major contribution with the IIP project\. However, it is hardly possible to name all the people who had contributed to such a large project: Mr\. A\. Bichara WB Task Leader Mr\. F\. Dauphin FAO\CP Agriculture Specialist Mr\. E\. Khan WB Civil Engineer H\.E\. Mr\. Amidi MoF Deputy Minister for Foreign Investments Mr\. Davoodi MoF General Director of International Affairs Office Mr\. Pakbaz MoF General Director of Foreign Investments Office H\.E\. Mr\. Gh\. Hosseinifar MOA Deputy Minister for Techniques and Infrastructure H\.E\. Mr\. R Zargar MOE Deputy Minister for Water Affairs Mr\. A\. Banisaeed MOA Liaison Officer Dr\. M\. H\. Mousavizadeh MOE Liaison Officer Mr\. H\. Mirnezami MOA Senior Expert of the Liaison Office Dr\. J\. Jebelli MOE Deputy and Technical Advisor Mr\. S\. Khalaj MOE Senior I&D Expert of MOELO Mr\. D\. Malek Ghassemi MOA Liaison Officer (retired) Mr\. Farzaneh MOA Moghan Subproject Coordinator Mr\. Ettehad MOE Moghan Subproject Coordinator Mr\. Khodadadnejad MOA Behbahn Subproject Coordinator Mr\. A\. Nabavi MOA Tajan Subproject Coordinator Mr\. Frouzan MOE Tajan Subproject Coordinator Mr\. H\. Yahyappour MOA Zarrineh Roud Subproject Coordinator Mr\. Azadi MOE Zarrineh Roud Subproject Coordinator Dr\. K\. Shiati MOA/CC Central Consultant Project Manager (YEKOM Consulting Eng\.) Mr\. F\. Croon MOA/CC Central Consultant Team Leader (Arcadis EUROCONSULT) Mr\. Y\. Van Staveren MOA/CC Agriculture Specialist (Arcadis EUROCONSULT) Mr\. Sh\. Ghotbi MOA/CC MIS Specialist, ICR preparation (YEKOM Consulting Eng\.) Mr\. A\. Zohadi MOE/CC Central Consultant Project Manager (LAR Consulting Eng\.) Mr\. M\. Ehsan MOE/CC Central Consultant Team Leader (NESPAK Consulting Eng\.) Mr\. M\. Sharifzadeh MOE/CC Senior Expert (LAR Consulting Eng\.) Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 1 1 Annexes Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 12 Annex A Key Indicators Cropping Intensity Subproject Area (ha) Yield Increase (%) Before After Behbahan 11,500 88 129 38 (w,b,a,r,s,y,m,f,bb,y) Moghan 35,600 104 138 49 (w,b,c,a,m,ct,v,sb,s,sy,sf) Zarrineh Roud 36,000 70 80\.6 90 (w,b,a,m,c,v,sb,s,sy,m,sf) Tajan 7,500 95 117 48 (w,b,a,c,sb,v,m,sf,p,sg) Total 90,600 90 113 64 w Wheat r Rice sy Soybean b Barely s Sesame sf Sunflower a Alfalfa m Maize pt Potatoes f Flax c Colza v Vegetables bb Broad Beans ct Cotton sb Sugar Beet Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 13 Annex B Effect of reduced water use Water Use and Yield Water Use (1000 m3/ha) Yield (toniha) Cropping Pilot Crop % of % Of Season Ref\. Pilot reduction Ref\. Pilot increase Parsabad Silage 8\.0 5\.0 37 33\.0 56\.0 70 Summer Bileh Savar Soya 9\.7 4\.6 53 2\.2 3\.8 73 1999 Behbahan Maize 17\.0 9\.5 44 4\.4 5\.0 14 Winter Bileh Savar Wheat 5\.4 3\.6 33 4\.0 6\.8 71 99/00 Behbahan Wheat 7\.2 3\.9 56 3\.4 3\.7 7 Spring Parsabad Sugar beet 13\.6 10\.5 23 Root: 51\.9 Root: 664 Root:28 2000 Sugar: 4\.9 Sugar: 7\.9 Sugar: 81 Summer Bileh Savar Soya 3\.8 1\.7 54 2\.1 2\.8 36 2000 Behbahan Maize 13\.9 8\.9 36 5\.3 5\.9 11 Efficiencies of Water Use & Application Water use eff\. (kglm3) Application eff\. (%) Cropping Pilot Crop Pl % of Ref\. P % of Season Ref\. 0 incBreasei increase Parsabad Silage 4\.1 11\.1 171 32 59 84 Summer Bileh Savar Soya 0\.2 0\.8 257 23 49 113 1999 Behbahan Maize 0\.3 0\.5 104 20 47 135 Winter Bileh Savar Wheat 0\.7 1\.9 171 27 60 122 99/00 Behbahan Wheat 0\.5 0\.9 98 - 69 - Spring Pasbd Sugar bet Root: 3\.8 Root: 6\.3 Root: 87 33 61 82 2000 Parsabad beet Sugar: 0\.4 Sugar: 0\.8 Sugar\. III Summer Bileh Savar Soya 0\.5 1\.6 200 27 58 115 2000 Behbahan Maize 0\.4 0\.7 76 34 61 79 Islamic Republic of Iran: IIP, Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001 Page 14 Annex C Effects of IPM and Reduced A Cs Use Yield, Total Cost and Net Income Yield (ton/ha) Total Cost (10A6 [RR/ha) Net Income (106 IRR/ha) Pilot Crop%o%f Ref\. Pilot ce of Ref\. Pilot % Of Ref\. Pilot increase Moghan Cotton 2\.4 3\.2 38 NA NA NA NA NA NA Parsabad Silage 37\.8 38\.4 1 1\.7 1\.7 0 0\.8 0\.9 13 Moghan Cotton 2\.4 2\.5 5 2\.4 2\.0 20 4\.9 5\.6 16 Bileh Savar Soya 1\.9 2\.8 49 1\.4 1\.3 7 1\.5 2\.5 68 Tajan Rice 4\.1 4\.7 12 4\.7 4\.2 11 10\.4 11\.9 14 Joibar Tajan Rice 4\.9 5\.4 8 4\.2 4\.1 2 13\.2 15\.8 20 Sad Agro-economic Indicators \| Pilot Crop Chemical Herbicide Pesticide Additional Yield Income Pilot Crop ~~Fertiliser Income___ ________ ________ (Kg/ha) (Kg/ha) (Kg/ha) \. (Kg/ha) (IRR/ha) Moghan/ Cotton NA -60% -60% +860 NA Parsabad Silage -174\.0 -0\.7 -1\.5 +640 +100000 Moghan/ Cotton -84\.0 -0\.6 -4\.8 +113 +790000 Bileh Savar Soya -176\.0 0 -3\.0 +920 +1000000 =_~~~~R \. Nose Tajan/Joibar _ Rice -27\.0 -1\.8 Not used +503 +2650000 I Tajan/Sari Rice \| -225\.0 0 -2\.1 +404 +1500000 Islamic Republic of Iran: IIP\. Borrower's Contribution in IIP Implementation Completion Report (ICR), July 2001	REVIEW
P045091	ï»¿ ICRR 13470 Report Number : ICRR13470 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 11/22/2010 PROJ ID : P045091 Appraisal Actual Project Name : Human Resources US$M ): Project Costs (US$M): 37\.00 35\.77 Development Project Country : Rwanda Loan/ US$M ): Loan /Credit (US$M): 35\.00 33\.70 Sector Board : ED Cofinancing (US$M ): US$M): 0 0 Sector (s): Secondary education (39%) Primary education (39%) Tertiary education (10%) Sub-national government administration (8%) Central government administration (4%) Theme (s): Participation and civic engagement (25% - P) Education for all (25% - P) HIV/AIDS (24% - P) Gender (13% - S) Child health (13% - S) L/C Number : C3367 Board Approval Date : 06/06/2000 Partners involved : Closing Date : 06/30/2006 12/31/2009 Evaluator : Panel Reviewer : Group Manager : Group : Pia Helene Schneider George T\. K\. Pitman IEGSE ICR Reviews IEGSE 2\. Project Objectives and Components: a\. Objectives: The Project was "to assist Rwanda in its efforts to develop and implement a sustained program of capacity building through education and skills development in order to redress human resources deficiencies and develop a critical mass of trained human resources " (PAD p\. 2)\. The PAD and the Credit Agreement have an identical statement of these objectives \. The PAD (p\. 2) elaborates on the PDO by stating that âspecific actions are geared towards (i) increasing access to primary and secondary education through the involvement of local communities in school rehabilitation and construction; (ii) improving the quality of primary and secondary education, (iii) heightening awareness of HIV/AIDS and promoting behavioral change prevention strategies among children and youth, (iv) building capacity within the education sector and the overall economy including support for the provision of focused training in key areas, and (v) undertaking analytical work and experimentation in preparation for a Sector -Wide Investment Program\.â? KPIs ): The PAD identified 19 KPIs (Annex 1) and 6 of these were Change in Key Performance Indicators (KPIs): short-listed in the PAD (page 2) following description of the PDOs: 1\. At least ten sub-projects planned and executed by local communities every year until the end of the project; 2\. In-service training provided to 1,000 teachers every other year until the end of the project; 3\. Primary pupil/text book ratio of 2:1 in mathematics and one teacher's guide per teacher by 2004 4\. At least 70% of schools with functioning anti -AIDS clubs by the end of the project, with an approach appropriately targeting girls and boys; 5\. Average of at least 20% of planned training programs executed every year until the end of the project; and 6\. Sector-Wide Investment Program (SWAp) prepared and adopted, and implementation initiated by the end of the project\. Additional KPIs added retrospectively in May 2008 (when 85% 85 % of project funds disbursed ): - Gross and net enrollment rates in primary education - Number of regional offices for school inspectorates established - Number of students enrolled in Primary Education, boys and girls Dropped KPIs de facto in June 2006 during first restructuring, and formally in May 2008: 2008 : KPI 4: Percentage of schools with functioning Anti -AIDS clubs KPI 6: Sector-wide investment program prepared, adopted and implementation initiated \. But the SWAp was approved in 2003\. Because the ICRâs statement of reformulated objectives (page 3) were not formally approved during a first order restructuring, IEG only assesses achievement against the original objectives \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components (or Key Conditions in the case of DPLs, as appropriate): (a) Community -based school rehabilitation and development program (CSRDP) CSRDP ) (US$7\.70 million appraisal; US$7\.68 million actual) to carry out a community-driven school rehabilitation and development program through : (i) provision of grants to Community Development Committees (CDCs) to finance the construction, rehabilitation and equipment of school infrastructure under sub -projects identified and proposed by Community -Based Groups; (ii) provision of specialized training, including in project cycle management to CDCs, prefectoral and communal administrations; (iii) provision of technical advisory services to CDCs in the preparation of the education components of Community Development Plans; (iv) carrying out of M&E activities involving the beneficiaries; and (v) the Forum for African Women Educationists (FAWE) girls' secondary school was added during the restructuring in June 2006\. (b) School quality improvement program (US$16\.11 million appraisal; US$13\.09 million actual) to raise the quality of education training through (i) improving the quality of teacher training by providing pedagogical support, staffing, facility rehabilitation, equipment and completion of construction of science faculty at the Kigali Institute of Education; (ii) capacity building in curriculum development; (iii) improving the availability of textbooks and pedagogical material; (iv) strengthening the examination /assessment system; and (v) improving the quality teaching in science and technology\. HIV /AIDS (US$3\.29 million appraisal; US$1\.81 million actual) to promote behavioral changes required for (c) HIV/ effective HIV/AIDS prevention through: (i) sensitization activities among ministry officials, teachers and students; (ii) curriculum development and teacher training drawing from the experience of other countries with HIV /AIDS; (iii) development of dissemination strategy; (iv) strengthening HIV/AIDS program management at the Ministry of Education (MINEDUC); and (v) counseling, caring and testing targeted to teachers and students \. Activities (ii) - (iv) were cancelled and funds reallocated during the restructuring in June 2006\. (d) Capacity building program, studies and development of a Sector Wide Approach (US$6\.56 million appraisal; US$9\.66 million actual) including (i) strengthening capacities for educational management and planning; (ii) reinforcing the system of decentralization and general inspectorate with logistics, training, office equipment and transport; (iii) focused training and staff development in key tertiary education institutions; and (iv) studies to support the development of the SWAp in collaboration with DFID \. (e) Project technical support, Monitoring and Evaluation (US$1\.34 million appraisal; US$1\.46 million actual) to support project implementation through the Education Project Office (EDO) including operating costs and external evaluations\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project costs : According to the ICR total project costs were US$ 33\.77 million compared with the US$35\.0 0 million planned\. A total of US$2\.10 million was cancelled (US$1\.56 million in May 2006 as a result of misprocurment; and following closure : US$0\.51 million in February 2010 and US$0\.027 million in June 2010)\. The difference in cost and cancellations was the result of exchange rate variations in the SDR to the US$ \. Financing : - The first restructuring in June 2006 amended the legal agreement to address the implementation lag caused through misprocurement by (i) reducing the total amount of the credit through a cancellation of SDR 1\.08 million (US$1\.56 million), (ii) providing a 24-months project extension; and in addition (iii) added under Component (a\.1) the construction of the girls' secondary school under the auspices of the Forum for African Women Educationists (FAWE) (US$1\.4 million appraisal), which subsequently led to a reallocation of funds to civil works, consultancies, M&E, project operating costs from the HIV /AIDS component\. On June 23, 2006, 55% of the original credit amount was disbursed (or SDR 14\.3 million)\. - The second restructuring in June 2008 amended the legal agreement to allow the completion of the FAWE school construction by (i) extending the project by 12 months, and (ii) reallocation of funds to text books (25% increase) from operating costs under Component (e) and from community-based school construction under Component (a\.1)\. The results framework was amended to include core education indicators and reduce HIV /AIDS indicators in line with restructured activities in 2006\. As of March 30, 2008, 81% of credit amount was disbursed (SDR 20\.35 million)\. - The third amendment to the legal agreement in June 2009 extended the closing date by another 6-months in order to (i) complete the construction of the FAWE girls' school, and (ii) finalize a resettlement audit to assess whether individuals were affected by the construction of the FAWE school and the provision of compensation payments to affected groups\. As of June 29, 2009, 90% of the original credit amount was disbursed (or SDR 23\.5 million)\. Because of variations in the SDR -US$ exchange rate the Bank âs Operations Portal reports the final credit amount disbursed as US$35\.77 million, compared with US$35 million at appraisal and US$33\.70 million reported in the ICR\. -On September 6, 2007 as parallel financing, the Bank executed an Education For All - Fast Track Initiative EFA -FTI) (EFA- FTI ) Trust Fund in the amount of US$26 million to the Recipient to support the implementation of activities under the 5-year Education Sector Strategy Plan 2006-2010\. On September 10, 2008 the total FTI amount was increased to US$70 million\. Borrower contribution planned at US$2\.0 million at appraisal was US$2\.07 million\. Dates: Dates The project took 8\.5 years to implement\. It was extended three times from the original closing date first by 24 months, second by another 12 months and third by 6 months to the final closing date of 12/31/2009\. 3\. Relevance of Objectives & Design: The relevance of project objectives was high at the time of preparation and completion \. In 1998/1999, Rwanda was still short in infrastructure and capacity in the public sector after the 1994 war, and had to respond to the increased demand by a growing population (migration and high fertility rate)\. The 1999 Country Assistance Progress Report on the 1998 CAS stressed the need to (i) strengthen primary and secondary education and address the shortage of skilled manpower by investing in science and technology, and (ii) address the high HIV/AIDS prevalence as a major constraint to reduce poverty in Rwanda \. The project objectives support the current CAS (2009-2012) which focuses on equitable growth \. The CAS (p\.19) foresees the use of EFA-FTI to continue supporting Primary Education as well as collaboration with bilateral donors through the SWAp (e\.g\. Canada)\. The CAS (p\.20) states that through FTI the Bank will continue the primary education policy dialogue with the Government \. The Poverty Reduction Strategy also recognizes the importance of free access to better education to reduce the population growth rate, and become a knowledge -based and technology-driven society\. Design relevance is rated modest \. The project was designed (PAD, page 6) as a bridge between the First Education Sector Project (FESP: that focused on expanding and improving primary education and building sectoral management capacity ) and a SWAp that would achieve full donor coordination through a comprehensive investment program \. This was relevant as it was designed to address the âacute lack of collaboration with partners â? (ICR page 6) that occurred during the FESP\. In addition, increasing the scope to include secondary education was relevant given the need to build capacity in the whole education system\. Activities were in line with objectives, the Government's priorities and the Bank's assistance strategy\. However, while the focus on demand -driven community-based school rehabilitation and development was relevant to encourage community support for the project, it failed to take account of the lesson from the FESP that most rural communities were too poor to generate financial buy -in or maintain the improved facilities\. In addition, the ICR states (p\. 14): âthe requirement that districts submit District Development Plans in addition to a 10% contribution towards the sub-projects may have limited the participation of the poorest districts in the program \.â? It should be noted that the inclusion of the HIV /AIDs awareness component was relevant at the time of project preparation because of the little attention to it by government at the time â it accounted for only 1% of total health spending in 1998\. However it became much less relevant as the government and international community paid greater attention to HIV/AIDS prevention after 2000, and by 2006, 24% of health expenditures were earmarked for HIV/AIDS\. Thus the redesign of the project to shift resources from HIV /AIDS related activities to the FAWE school construction was relevant\. 4\. Achievement of Objectives (Efficacy): The objectives "to assist Rwanda in its efforts to develop and implement a sustained program of capacity building through education and skills development in order to redress human resources deficiencies and develop a critical mass of trained human resources " were partially achieved\. Overall Efficacy is rated Modest \. Attribution of outcomes solely to the project is difficult \. The ICR (page 13) states: âMany of the activities that were originally planned under the HRDP were delivered by other partners or through the Education For All -Fast Track Initiative Grant\. The conundrum is that although most of the KPIs were met (and some surpassed), the PDO and its associated indicators were too broad to attribute success to the Project \. Furthermore, sector integration and partner harmonization was precisely one of the goals of the Project \.â? The project contributed towards assisting Rwanda in its efforts to develop and implement a sustained program of capacity building through education and skills development \. Although there was substantial government buy -in to policy reform, infrastructure and human resource capacity -building, there remains a substantial systemic weakness that undermines the effectiveness of these efforts \. Community involvement was only partially successful \. A critical mass of trained teaching resources was only partially achieved \. 1: Increasing access to primary and secondary education through the involvement of local communities in school rehabilitation and construction - Modest Outcomes : Originally, the project had foreseen to involve the local communities in the school construction and rehabilitation, however this responsibility including the revenue raising for co -financing of 10% of construction costs, was shifted to the districts because communities did not have the necessary human or financial capacities to implement\. Even so, communities remain responsible for school maintenance, and participate in Parents-Teacher-Associations, the sustainability of schools remains a concern because they remain dependent on essential financing from the Districts and MINEDUC \. Gross enrollment rate increased from 103\.7% in 2001 to 127\.9% in 2009 (artificially inflated through repetition and late-entry) and net from 74\.5% to 94\.2% (target 100%)\. Transition rates from primary to secondary education increased from 37% to 55% (exceeded target 50%), Since the beginning of the project there has been gender parity among primary school pupils \. Equity in enrollment at the primary level improved with the wealth parity index improving from 0\.78 in 2000 to 0\.87 in 2006, suggesting that poor households are now more likely to send their children to school \. The ICRâs Benefit Incidence Analysis found based on 2008 household data that public spending on education is benefiting the urban, male and wealthier groups : The urban population benefit from 49 percent of public resources for education, or 4\.6 times more than their rural counterparts \. Boys are more favored than girls, benefiting from 50 percent more of public resources than girls \. The top 20 percent richest benefits from 59 percent of public resources against 7 percent for those coming from the poorest households \. This is reflected by an appropriation index of 7\.7 times higher for the richest than for the poorest \. No baseline data is available to identify whether the project has affected these results \. No information is collected under the project on secondary school enrollment and completion rates \. Outputs : The Government education strategy abolished school fees for nine years of basic education in 2003 (see Economic Development and Poverty Reduction Strategy 2008-12); however, according to the CSR (p\.17) direct costs associated with schooling (uniforms, transport costs etc ) remain a major obstacle for families from low income groups\. The abolition of school fees reduced household spending on education only from 22% in 2000 to 19% of total household expenditures in 2008\. The project invested in the improved availability of education capacity (see above)\. These outputs contributed to improved access indicators \. 2: Improved quality of primary and secondary education inputs - Modest Outcomes : Success rate for national examinations increased slightly from 40 to 52% (less than 70% target)\. Transition rates from primary to secondary education increased from 37 to 55% (exceeded target 50%)\. Teacher-pupil ratio improved substantially from 1:125 to 1:74; though this achievement may be temporary given the high attrition rate among teachers \. The Country Status Report (CSR) on Education 2010 (p\.15) reports worsening retention rates between 2002/03 and 2008 at the primary level (42 percent to 28 percent), and upper secondary (19 percent to 9 percent) as a result of higher student drop -out\. The Project did not collect information on drop -out rates and repetition rates; though PAD reports baseline repetition rate of 29\.6% in 1999\. Indicator on the execution of planned training programs is not tracked \. According to the 2009 CAS (p\. 10) several proxy indicators for quality at the primary level are poor (including teacher-pupil ratio of about 1 to 74, low completion and high drop out rates and insufficient text -book pupil ratios)\. Outputs : By 2009, the project delivered as targeted 2\.7 million primary school textbooks for Maths, 378,000 for social studies, and 387,000 for English; a textbook/pupil ratio of 1:1 in Maths (exceeded target of 2:1)\. 765 new classrooms were built through the project (no target) and about 10,920 teachers received in-service training (exceeded target of 3,000)\. 3: Heightening awareness of HIV /AIDS and promoting behavioral change prevention strategies among children and youth - It is not known how effective this activity was \. The project contributed to education about HIV /AIDS with dissemination activities including 6000 radios for schools, TVs and HIV/AIDS films, and financing of participants at HIV /AIDS conferences and study tours; before this activity was stopped and reallocated in 2006\. 4: Building capacity within the education sector and the overall economy including support for the provision of focused training in key areas - Substantial Outcomes : A SWAp was adopted by government in 2003\. A program of capacity building was sustained as evidenced by the Government's move towards sector -wide planning in education using indicators agreed with all development partners to implement the Education Strategy \. The contribution of the project to this development is not clear \. The project funded 1 study on education financing, less than originally planned; as other donors provided technical support\. The MINEDUC ratified the gender-sensitive Girl's Education Policy in 2008\. The Government increased the share of education spending allocated to primary education from 43% in 2001 to reach 46% in 2008, and for secondary from 16% to 23% comparable to the African average (the 2010 Education Country Status Report (CSR) p\. 159)\. Human resource investments contributed to a substantial improvement in the qualification of the primary school teaching corps (from 49% to 99%; versus 65% target) and tertiary level (from 5% to 18%; versus 10% target); but achieved only modest improvements in the share of qualified teachers at the secondary school level (from 26% to 36% of secondary school teachers; versus 52% target)\. The additional infrastructure capacity allowed training of about 54,000 additional students per year \. The ICR (p\. 14) questions the sustainability of these capacity building efforts : teachers have few incentives to stay in their positions (as evidenced by the 44% attrition rate of scholarship recipients ) and there is a lack of continuous professional development \. The CSR (p\.118) identifies relatively low teacher salaries compared to professions in other sectors, as the reason for the high attrition rate of teachers \. Outputs : The project financed construction to increase capacity at the Institute of Education where school teachers are trained, built 6 teacher training centers, the FAWE secondary girl school, Rwanda National Examination Council (RNEC) which manages examinations for primary and secondary schools, and Rwanda's 6 regional inspectorate offices\. It built 124 schools (target 50) with 765 classrooms; 172 latrine blocks, 111 administrative offices, 1 library and 6 laboratories for the Kigali Health Institute \. About 11% of civil works in schools were incomplete as contractors had abandoned construction due to disagreements \. A survey of construction sites (Public Administration International, 2009) rated construction quality as variable across schools \. Overall it trained more than twice the number of teachers planned (5,000) as follows: 10,264 primary school teachers, 424 lower secondary and 172 upper secondary school teachers \. It also recruited 50 science teachers from Kenya to assist teaching in secondary schools \. Indicators did not track the number of training programs \. The project also trained 123 school inspectors, To build capacity in education, the project provided scholarships for lecturers from educational institutions (119 for Master's level and 15 PhD level) with mixed results: 57% returned to their institutions either to teach or to pursue further studies, but 40% left the education sector after their studies to work elsewhere, and 4% did not return to Rwanda\. 5: Undertaking analytical work and experimentation in preparation for a Sector -Wide Investment Program - It is not known how effective this activity was \. The project funded 1 analytical work\. The SWAp was approved in 2003; however, the project impact could not be established by the ICR\. 5\. Efficiency (not applicable to DPLs): The PAD (Annex 4) includes a detailed analysis of the input, output, and fiscal expenditure implications of three scenarios for Rwanda's education system as a whole (scenario 1: attaining universal primary education [UPE] by 2008; scenario 2: UPE by 2008 and rapid subsequent reductions in repetition rates; and scenario 3: UPE, rapidly reduced repetition rates and higher student -to-teacher ratios)\. There is, however, no estimate of the efficiency of project investments\. The ICR did not conduct an economic analysis of the project that would indicate the extent to which project resources were used efficiently\. Efficiency is rated as modest \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal No ICR estimate No * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The relevance of project objectives is high at the time of preparation and completion and in line with strategic directives of the Bank and the Government \. However, the relevance of project design is modest because it was overly complex\. This contributed to the relatively long implementation period of 8\.5 years\. Efficacy is rated as modest \. While the project substantially contributed much needed infrastructure and human resource capacity, and supported strategic and policy formulation, the sustainability of the infrastructure built and increased number of teachers is at risk because of poor incentive structures \. Training of government managers was inefficient due to their high drop-out rate following training\. While primary school enrollment rates increased, changes to secondary enrollment remains unknown, and community involvement to support sustainability of schools was far less than anticipated\. Efficiency is rated as modest \. a\. Outcome Rating : Moderately Unsatisfactory 7\. Rationale for Risk to Development Outcome Rating: Despite the strong commitment by the Government to education, given the country's socioeconomic and fiscal constraints, there is a significant risk to the development outcome to "develop and implement a sustained program of capacity building through education and skills development in order to redress human resources deficiencies and develop a critical mass of trained human resources \." The Government has started the implementation of the education strategy, abolished school fees, and increased the public butget for primary and secondary education to invest in teachers \. However, the main risks to the DO are related to (i) insufficient funding for school maintenance which increases the financial burden mainly for poor communities (ICR p 20); and (ii) low teachersâ salaries\. Primary teacher salaries in Rwanda are considerably lower compared to salaries of civil servants with similar qualification which poses a significant risk to the objective of "capacty building through education and skills development " and retaining qualified teachers in the school system (ICR 21)\. The sustainability of skills development is further put at risk by "serious problems of teacher absenteeism " as identified in citizen report cards (Economic Development and Poverty Reduction Strategy 2008-2012: p\. 22)\. Given the Government's financial constraints in education and the competing demand for funding within the education budget, there is also a significant risk that pupils will not continue to receive textbooks as initiated under the project\. a\. Risk to Development Outcome Rating : Significant 8\. Assessment of Bank Performance: Bank performance during project preparation is rated Moderately Unsatisfactory \. The project took 12 months to prepare and benefited from US$ 600,000 Project Preparation Facility (PPF)\. The project design was over-ambitious for the following reasons : (i) complexity of activities in a limited capacity context, (ii) weak M&E and result framework, and (iii) the insufficient recognition of fiduciary and environmental safeguard risks in project management \. Project design was informally revised in 2004 and the new design was confirmed in 2008 (ICR page 13)\. Specific actions were to be geared towards (i) targeting the poorest members and regions in the country, (ii) focusing on improving the quality of education inputs rather than broadly addressing the quality of primary and secondary education, and (iv) focusing on building capacity within the education system rather than the economy as a whole \. Despite these adjustments, the effects of substantial shortcomings in Quality at Entry remained : The design was too complex to manage in Rwanda's capacity -constraint environment with 4 components including 19 sub-components, and the participation of representatives from 15 implementing units, including 7 Ministries, local governments, communities, as well as donors, private sector and the civil society to participate\. The management and technical capacity to implement the design was missing at the EDO, the Ministry of Education and in local governments \. The design did not provide the necessary capacity building at the local level (e\.g\. financial management at district authorities) to implement the project\. During the project preparation phase, the team could have anticipated the impact of the administrative decentralization on project implementation, or at least could have modified the project design accordingly \. The results framework was not appropriately adjusted to reflect the design change with respect to (i) clarified objectives, (ii) addition of the FAWE girlsâ secondary school, and (iii) reduced HIV/AIDS activities\. As a result of the lack of adjustment of the results framework, some indicators were not in line with activities and related objectives\. Bank performance during supervision is rated Moderately Unsatisfactory \. While the team showed pro-activity by extending the project and reallocating project funds to respond to the changing needs in the sector, there was insufficient attention given to procurement, financial management and environmental and social safeguards (see Section 11)\. Procurement was slow initially and Bank's No Objection could take up to 6 months\. Only in 2005, a procurement specialist was placed in the country \. The financial management and oversight to implement sub -projects in communities was not set up to ensure the transparent use of project funds at the local level for school construction by communities \. The Bank team did not include an HIV /AIDS specialist\. The addition of the FAWE school was not formalized sufficiently in the legal agreement and project document during the project restructuring in 2006\. The M&E framework was not changed in line with activity changes during restructuring \. The Bank team could have changed the project Safeguard Category from C to B during the Restructuring by triggering the necessary policies given the additional new construction on new sites which involved land acquisition and resettlement\. The risks related to involuntary resettlement could have been mitigated by the Bank team by applying the necessary Safeguard Policies and providing training for local staff in safeguard issues and financial management before starting with construction on new sites \. The Bank team did take remedial actions to address these issues although it could have been more pro -active by setting up precautionary measures and through better implementation support \. at -Entry :Moderately Unsatisfactory a\. Ensuring Quality -at- b\. Quality of Supervision :Moderately Unsatisfactory c\. Overall Bank Performance :Moderately Unsatisfactory 9\. Assessment of Borrower Performance: There was Government support for the project during the preparation, an enabling environment and adequate stakeholder consultation\. However, the Government's readiness for implementation was inadequate \. There was an absence of key staff at the MINEDUC to collaborate with the implementing unit and insufficient human capacity in local governments to manage community participation in schools under Component 1\. The Government treated the involuntary resettlement and land acquisition cases following its own safeguard regulations\. There were delays in compensation of displaced people, as well as insufficient financial management capacity at the districts who were recipients of project funds \. EDO ) suffered specially at the beginning from high staff turn -over rates, substantial lack The implementing unit (EDO) of capacity and operational problems that limited implementation readiness, the timely resolution of implementation issues and project performance \. EDO was never fully staffed and lacked key staff members in fiduciary, technical and management positions \. The EDO did not have an HIV/AIDS specialist\. The result framework remained incomplete for the first 3 years\. Misprocurement and Bank procurement violation in 21 contracts led to cancellation of US$ 1\.56 million project funds and the suspension of the National Coordinator by the Minister in 2005\. The reasons for the misprocurement were: contract fragmentation to avoid prior review by the World Bank, prices were higher than usual and from the same supplier, and international competitive bidding should have been used for a large consolidated contract, and non -objection should have been sought from the Bank \. Procurement quality was flagged several times throughout the project \. Safeguard violations could have been prevented by following Bank rules \. The Bank supervision identified poor quality of financial monitoring, lack of a clear budget system and a non -functioning internal audit system (ICR p\.10)\. The project was not fully implemented despite a 3\.5 years extension to the original closing date \. a\. Government Performance :Moderately Unsatisfactory b\. Implementing Agency Performance :Unsatisfactory c\. Overall Borrower Performance :Unsatisfactory 10\. M&E Design, Implementation, & Utilization: M&E Design : The PAD describes 19 KPIs with baseline and target values for outcome and output indicators \. Mainly output indicators are reported \. KPIs changed over time but did not account for specifications made during reallocation (e\.g\.no indicator to assess addition of FAWE school )\. Some indicators were never measured as they did not represent objectives and activities, or were too ambiguously defined (e\.g\. teenage pregnancy, or % of schools with functioning anti-AIDS clubs - these two indicators were not tracked and formally dropped in 2008)\. Objectives related to teaching quality and targeting the poor were not included in the M&E design \. M&E Implementation : Several indicators were collected routinely by the Government in population surveys, and in the project annual action plan \. Several indicators were never tracked (e\.g\. planned training programs executed )\. M&E Utilization : The ICR (p\.10) identifies a lack of consistency on the type of data collected, indicators not being attributable to results achieved by the project, and points to "poor quality of information on performance outcomes "\. a\. M&E Quality Rating : Negligible 11\. Other Issues (Safeguards, Fiduciary, Unintended Positive and Negative Impacts): Safeguards : - The Environmental Assessment provided a C rating during appraisal under OP 4\.10, although the project involved construction of schools on new construction sites and land acquisition \. Thus, an Environmental Management Plan EMP) was not required for the project based on the PAD \. Instead, an environmental safeguard plan was developed (EMP) for the construction of the FAWE school, but not for the 124 schools and different institutes built before (see above)\. - There was no Resettlement Action plan or Resettlement Policy Framework for the FAWE school or other new construction\. However, an audit of 10 sampled schools and the FAWE school conducted retrospectively at the end of the project, identified land acquisition took place in 2 of the 10 schools and for the construction of the FAWE school \. The Government had appropriately compensated the previous owners \. However, in the case of the FAWE school construction started before the land was harvested -- there were delays in compensation and the timing of the construction (before the harvest reason ) was problematic\. - Although the Environmental and Social Management Plan (ESMP) ESMP ) was prepared in 2007 for the FAWE school, the audit identified inadequacy in compliance including insufficient water provision for the FAWE boarding school which may lead to higher recurrent costs (ICR p\.58) and project staff not being trained to monitor the implementation of the ESMP\. The Bank team could have changed the project Safeguard Category from C to B during the 2006 Restructuring, when the FAWE school was added \. Procurement : An independent procurement review conducted in October 2005 identified 21 contracts in violation with Bank procurement rules and substantial misprocurement leading to the cancellation of US$ 1\.56 million of Credit funds\. Although the Government took corrective measures, procurement remained a concern throughout the project life (ICR p\.11)\. Financial Management : The ICR (p\. 10) reports poor quality of financial monitoring reports, insufficient internal audit and budget system in reporting \. District authorities did not submit monthly financial statements, as they were not trained on financial management and did not receive a reporting template \. An unintended positive impact on the project finances was the substantial increase in donor attention and funding to HIV/AIDS with the MAP, GFATM, and PEPFAR providing major support to governments \. This funding increase in Rwanda allowed the project to downsize the HIV /AIDS component and reallocate funds to the capacity building component during the project restructuring \. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Unsatisfactory Unsatisfactory Risk to Development Moderate Significant Insufficient funding for school Outcome : maintenance and the low teachers â salaries are a significant risk to the development outcomes\. The sustainability of the objective of "education and skills development " is further put at risk by "serious problems of teacher absenteeism" as identified in citizen report cards (Economic Development and Poverty Reduction Strategy 2008-2012: p\. 22)\. Given the Government's financial constraints in education and the competing demand for funding within the education budget, there is also a significant risk that pupils will not continue to receive textbooks as initiated under the project \. See Section 7\. Bank Performance : Moderately Moderately Unsatisfactory Unsatisfactory Borrower Performance : Moderately Unsatisfactory There was misprocurement to the tune Unsatisfactory of US$1\.56 million caused by: contract fragmentation to avoid prior review by the World Bank, prices were higher than usual and from the same supplier, and international competitive bidding should have been used for a large consolidated contract, and non-objection should have been sought from the Bank\. Procurement quality was flagged several times throughout the project\. See Section 9\. Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate \. 13\. Lessons: There is generally a strong need for infrastructure and human capacity investment in a post -war environment\. In such cases, project designs should prioritize and focus on fewer activities \. This may also require a need to revisit Bank procurement rules to ensure speedy procurement (e\.g\. rules for tendering of international construction firms to build schools if there are only few private firms available locally )\. Project design should be kept flexible if a country is preparing for decentralization that affects sector management \. This is particularly important if the project is implemented in collaboration with local governments who might be affected through the decentralization process \. Projects that include sub-components managed by communities (e\.g\. community based school rehabilitation ) should include activities to train community members in financial and project management \. Extending a rather complex project to 8\.5 years will create some "loss in momentum" among all partners, and may affect the quality of implementation \. In such cases, it may be better to conduct a first order restructuring, with substantial streamlining of project design to facilitate implementation \. 14\. Assessment Recommended? Yes No Why? Input into upcoming sector evaluation on post -primary education evaluation, and follow -up on safeguard and sustainability risk concerns \. 15\. Comments on Quality of ICR: The ICR provides candid, concise and good analysis and evidence on project performance, progress and outcomes \. However, despite the fact the PDOs were not formally restructured, the ICR presents project achievements against informally revised sub-objectives and components (see ICR Guidelines)\. a\.Quality of ICR Rating : Satisfactory	REVIEW
P038641	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 17905 IMPLEMENTATION COMPLETION REPORT MOLDOVA PRE-EXPORT GUARANTEE FACILITY (Loan No\. 3851-MD) May 11, 1998 Private/Financial Sector Development H:ungary, Czech Republic, Moldova, Slovak Republic, Slovenia Country Unit Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (as of January 23, 1998) Currency Unit Leu I Leu US$ 0\.2132 US$ 1 = 4\.6895 AVERAGE EXCHANGE RATES 1995 1996 1997 4\.5 4\.56 4\.6 WEIGHTS AND MEASURES Metric System MOLDOVA 'S FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS IBRD - International Bank for Reconstruction and Development IDA - International Development Association MIGA - Multilateral Investment Guarantee Agency IFC - International Finance Corporation EBRD - European Bank for Reconstruction and Development EU - European Union GAU - Guarantee Administration Unit MOF - Ministry of Finance PGF - Pre-Export Guarantee Facility FSU - Former Soviet Union Vice President: Johannes Linn Director: Roger Grawe Sector Leader: Gerhard Pohl Responsible Staff; Onno Ruahl FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT MOLDOVA PRE-EXPORT GUARANTEE FACILITY (Loan No\. 3851-MD) Contents Preface \. Evaluation Summary \. ii Part I\. Project Implementation Assessment \.1 Part II\. Statistical Tables \. 10 TABLE 1: SUMMARY OF ASSESSMENTS \. 10 TABLE 2: RELATED BANK LOANS/CREDITS \. 12 TABLE 3: PROJECT TIMETABLE \. 12 TABLE 4: LOAN/CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATED AND ACTUAL \. 13 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION \. 1 3 TABLE 6: STATUS OF LEGAL COVENANTS \. \. 14 TABLE 7: BANK RESOURCES: STAFF INPUTS \. 14 TABLE 8: BANK RESOURCES: MISSIONS \. 15 Appendix: A\. Borrower contribution to the ICR This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. IMPLEMENTATION COMPLETION REPORT MOLDOVA PRE-EXPORT GUARANTEE FACILITY (Loan No\. 3851-MD) Preface This is the Implementation Completion Report (ICR) for the Pre-Export Guarantee Facility in Moldova, for which Loan 3851-MD in the amount of US$ 30 million equivalent was approved on March 9, 1995 and made effective on October 30, 1995\. Given the lack of demand for guarantees, the contingent loan was closed on May 17, 1997, compared with the original closing date of December 31, 2003, at the request of the borrower\. No disbursements were made as the contingent loan served the purpose of backing up guarantees that were to be issued by the Guarantee Administration Unit, and no guarantees were called or issued\. The ICR was prepared by Marie-Sophie Tar and Onno Riuhl, ECSPF, of the Europe and Central Asia Region and reviewed by Marc Blanc and Kathleen McCollom\. The Borrower's contribution is included as an appendix to the ICR\. Preparation of this ICR was begun during the Bank's final supervision mission, in May 1997\. It is based on material in the project file\. The borrower's contribution to the ICR includes evaluations of the project and comments on the ICR from the Ministry of Finance, the Ministry of Economy and Reforms, and the National Bank of Moldova\. - ii - IMPLEMEENTATION COMPLETION REPORT MOLDOVA PRE-EXPORT GUARANTEE FACILITY (3851-MD) Evaluation Summary Introduction 1\. The Pre-Export Guarantee Facility was prepared in the context of an IMF supported stabilization program and a structural adjustment program with Bank assistance\. It was designed to address the lack of working capital finance which resulted from a tight domestic credit policy and a capital base which had been seriously eroded by inflation\. Furthermore, the perceived government performance risk inherent in doing business in Moldova was inhibiting foreign traders and input suppliers from providing capital inputs directly to local enterprises\. The agriculture and industry sectors were suffering in this environment as even potentially viable Moldovan agricultural and industrial enterprises with good export prospects were having difficulty in obtaining working capital\. Project Objectives 2\. The principal objective of the Pre-Export Guarantee Facility (PGF) was to attract foreign private fmance for pre-export transactions in a manner that would allow the market to select the most viable activities and bear the full commercial risk of each transaction\. By providing credible guarantees against risks associated with government performance and war and civil disturbanceforce majeure, the PGF was aimed at mitigating risks that were inhibiting private input suppliers, trading companies, and commercial lenders from financing the provision of inputs for commercially viable production to Moldovan enterprises\. 3\. The PGF was designed in parallel with the Structural Adjustment Loan that was approved in December 1994\. The PGF was aimed to support the structural reform program by: (i) enabling the private sector to act as a screening mechanism, identifying and channeling private resources to commercially viable enterprises and transactions; (ii) helping restore employment and viable production for export in the short term, while reforms were taking hold; (iii) helping Moldovan enterprises build links with foreign partners, diversifying their sources of supply and improving their access to markets; (iv) being sufficiently flexible to support more sophisticated financial instruments for the financing of pre-export transactions, as they were introduced in the Moldovan market; (v) promoting a transparent business climate in which the rule of law would prevail\. Implementation Experience and Results 4\. Project implementation was unsatisfactory as no guarantees were issued over a period of 22 months, from effectiveness in October 1995 to the closing date in July 1997\. The loan was canceled at the request of the borrower, as guarantee activity was not expected to pick up\. This project was the first of its kind, and, as such, in some ways an experiment\. - iii - 5\. Several impediments to the issuance of guarantees emerged during implementation\. The main problem was lack of demand for guarantees under the facility\. Some factors which affected demand were specific to the design of the facility, such as pricing of guarantees, while others were specific to Moldova, such as the provision of full Govermment guarantees to selected firms\. 6\. Initially, effectiveness delays resulted in a detrimental time lag between marketing efforts which had sparked interest in the guarantee facility among input suppliers and trading companies, and availability of guarantees which came only later, once the facility was fully operational in October 1995\. As a result, demand for guarantees was not as high as it could have been in the early stages of the project, and momentum was lost\. 7\. The project was designed to offer guarantees for projects in both the agriculture and industry sectors\. Transactions in the processing and light industry sectors suffered from a number of specific problems in the legal environment for business, as well as business practices in Moldova\. In particular, it emerged that difficulties in assigning the benefits of a specific export contract to the bank which finances a transaction, and uncertainty regarding the ability to enforce such an assignment were an impediment to concluding deals\. In addition, as most Moldovan enterprises conduct their export business on an undocumented basis, transactions cannot be financed by a commercial bank and cannot attract outside investment\. Such transactions could not benefit from the PGF\. Thus, although applications were received, the underlying transactions did not materialize as a result of problems which arose regarding the commercial aspects of the deals envisaged\. 8\. Different problems prevented the GAU from issuing guarantees in the agriculture sector\. When the project was being prepared, it was expected that liberalization of the agriculture sector would be fast paced\. Demonopolization of input supply and distribution did not occur, however, limiting the opportunities for foreign suppliers to enter the market through an emerging private distribution network\. Foreign suppliers that did business in Moldova worked with Cereale and Fertilitatea, two large state- owned enterprises, and were offered full Government guarantees\. The impact of the Government guarantees was twofold\. First, these guarantees appeared to be more beneficial than those issued by the GAU, as they covered both commercial and political risks, and could be less expensive\. Second, as some foreign firms had bad experiences with Government guarantees which had to be called and were not awarded, but had to go to arbitration, certain companies became wary of doing business in Moldova, regardless of the availability of guarantees\. Demand for GAU guarantees suffered as a result\. 9\. In the initial implementation period, guarantees were priced too high relative to demand\. All guarantees were 3% per annum of the underlying transaction amount, regardless of the type of transaction, and its maturity\. A premium rate schedule was introduced in the Summer of 1996 to address this issue\. 10\. The institutional set-up of the project was not conducive to promoting the GAU and the guarantee facility within the Government\. As foreign firms were accustomed to working with the Government and state-owned enterprises, this set-up also limited the GAU's links to foreign input suppliers\. The GAU effectively operated as part of the Department of Foreign Economic Relations of the Ministry of Economy, which led to a marginal involvement of the Ministries of Agriculture, Industry, and Finance in the implementation of the project\. Not only were valuable contacts lost as a result, but it appeared that business contacts heard contradictory stories from different Government officials on the availability of Government and PGF guarantees\. -iv - 11\. The GAU's work was further affected by funding problems which led to the non-payment of salaries of GAU staff, and resulted in temporary demotivation of the staff\. Although this problem was solved after some time, it contributed considerably to the loss of momentum in project implementation\. Summary of Findings, Future Operations, and Key Lessons Learned 12\. The experiences gained during implementation of the Pre-Export Guarantee Facility Project were useful in understanding under what circumstances such facilities could achieve the stated objectives, and which steps should be taken during project preparation to sound the market, tailor the product to the needs of the private sector, and establish the Borrower's ownership of the project\. 13\. The fact that the legal and business environment in Moldova had not undergone sufficient reform to allow foreign suppliers to enter the market without the comfort of commercial risk guarantees was a significant barrier to the success of the PGF\. Indeed, in the later stages of the project, the Government requested that the Bank widen the coverage of the guarantees issued by the GAU to include commercial risks\. The Bank felt that an important objective of the PGF was to unbundle political and commercial risks, so that the Government would be exposed only to those risks which it could control, i\.e\. the political risks, and did not agree to restructuring the project to allow for coverage of commercial risks\. The experience gained in Moldova clearly demonstrates that Bank guarantees cannot overcome structural problems which exist in transition economies\. Rather Bank guarantees can provide guarantee-holders with the comfort that, if structural reforms are reversed, or governments with little experience in running a market economy take specific actions which interfere with business transactions, their resulting losses will be covered\. Preparation of similar projects should therefore involve an in depth analysis of the private sector's perception of risks involved in doing business in a specific country, in order to determine whether guarantees against political risks are sufficient to tilt the balance in favor of doing business there\. An initial market survey to identify interested companies and financial institutions should be done\. In the case of Moldova, a survey was conducted in March-April 1997, and the results showed a low level of interest\. One of the conclusions of the survey was that the perceived high commercial risk for Moldovan enterprises indicated the need for further reforms in Moldova's private sector\. 14\. A survey can also be useful to improve the design of a guarantee facility by tailoring it to the specific needs of the private sector in a given country\. It is important to incorporate a degree of flexibility in a political risk guarantee facility, and be responsive to market signals both during project preparation and implementation\. In Moldova, it appeared that the guarantee rate that had initially been set at 3% for all transactions regardless of the type of transaction or its maturity was too high\. The rates were adjusted in light of this information\. Even though this change did not directly lead to the issuance of guarantees, it is useful to note that an important dimension of this kind of project is its degree of responsiveness and flexibility in terms of the types of transactions which can be covered, the fluctuations in demand, and the perceived risks\. For example, a later project, similar to the Moldova PGF, the Bosnia and Herzegovina Emergency Industrial Re-start Project, included the imposition of a United Nations embargo as a covered risk, to adapt the guarantee to the conditions in the country\. 15\. The ownership of the Borrower is crucial to the success of a political risk guarantee facility project\. In the case of Moldova, only one part of the Government was fully on board and supportive of the PGF\. As stated above, the Ministry of Agriculture was offering unconditional sovereign guarantees, which were in fact competing with guarantees offered by the GAU\. It was determined that the link between the GAU and the Ministry of Economy should be severed, and that, instead, the GAU should work more closely with the Ministry of Finance with specific liaisons to the Ministries of Industry and Agriculture\. In terms of future projects, it is important to keep in mind institutional issues when establishing the agency that will manage the guarantee facility so as to maximize its exposure both within and outside of government circles and at the same time ensure its independence from the government in terms of day to day management\. The independence of the guaranteeing agency is central to the project's success as prospective guarantee holders must feel that the agency can issue guarantees, and review and award claims, if they arise, in an impartial manner\. IMPLEMENTATION COMPLETION REPORT MOLDOVA PRE-EXPORT GUARANTEE FACILITY (3851-MD) Part I\. Project Implementation Assessment INTRODUCTION 1\. At the time the Pre-Export Guarantee Facility was under preparation, Moldova was experiencing a wrenching economic contraction, with a cumulative decline in GDP since 1990 at over 60 percent, and a sharp fall in living standards\. A macroeconomic stabilization program had achieved some significant results with inflation down to monthly rates of under 2 percent, and a fiscal deficit narrowed to 8 percent of GDP for the first part of 1994\. However, adjustment in the real economy was occurring at a slow pace\. State-owned enterprises continued to predominate, and claimed the larger share of credit, crowding out the, nascent private sector\. The Government was under pressure to lend from the budget for seasonal agricultural finance, as banks, affected by tight credit ceilings, would not extend credit for these purposes\. In addition, foreign traders and input suppliers were reluctant to provide working capital inputs directly to local enterprises due to the perceived government performance risk inherent in doing business in Moldova\. Overall, the inefficient allocation of credit and productive resources in both banks and enterprises was directly threatening the stabilization program\. 2\. The Pre-Export Guarantee Facility was the Bank's fourth loan to Moldova\. It was prepared in parallel with a Structural Adjustment Loan (US$ 60 million; Ln\. 3815-MD), approved by the Board on December 8, 1994\. The SAL focused on privatization, hardening the budget constraint on enterprises, creating a competitive environment, and better targeting the social safety net within fiscal constraints\. The Pre-Export Guarantee Facility was designed to address the specific problem of access to credit for the productive sector in Moldova\. 3\. The project was not successful in achieving its objectives for a number of reasons which are spelled out in this report\. The project was the first of its kind and has served as a useful learning process for future projects\. This report identifies the main reasons for the unsatisfactory outcome of the project and presents suggestions for improvements in subsequent projects\. PROJECT OBJECTIVES 4\. The principal objective of the Pre-Export Guarantee Facility (PGF) was to attract foreign private finance for pre-export transactions, in order to increase the level of productive activity in Moldova, which was bounded by the lack of working capital available in the economy\. Restraints on the pace of domestic credit creation limited the local banking system's provision of working capital for sound, commercially viable transactions\. Furthermore, linkages with traditional trading markets had been broken, and the PGF was aimed at fostering new partnerships between Moldovan and foreign companies, and assisting Moldovan enterprises to diversify their sources of supply and improve their access to markets\. 5\. The PGF was structured to allow the market to select the most viable activities and bear the full commercial risk of each transaction\. By providing credible guarantees against risks associated with -2 - government performance and war and civil disturbanceforce majeure, the PGF was designed to mitigate risks that were inhibiting private input suppliers, trading companies, and commercial lenders from financing the provision of inputs for commercially viable production to Moldovan enterprises\. 6\. The PGF was designed in parallel with the Structural Adjustment Loan that was approved in December 1994\. The PGF was aimed to support the structural reform program by playing a role in the transition to a market driven economy and improving the business environment in Moldova, both for local and foreign enterprises\. These goals would be achieved by enabling the private sector to act as a screening mechanism, by identifying and channeling private resources to commercially viable enterprises and transactions\. Guarantees were to be issued for deals where a Moldovan and a foreign company had already identified a transaction, and were to be granted on a first-come, first-served basis\. Thus, the selection of covered transactions would have been market driven\. The Guarantee Facility was designed to be sufficiently flexible to support more sophisticated financial instruments for the financing of pre-export transactions, as they were introduced in the Moldovan market, thereby playing a part in the development of the banking and financial sector\. It was also envisioned that the guarantee mechanism would promote a transparent business climate in which the rule of law would prevail\. It created disincentives for the Government to intervene in private sector transactions', and incorporated acceptable dispute resolution mechanisms in case claims occurred (international arbitration)\. The PGF was further aimed at helping structural reform by facilitating the transition period through its contribution to employment and viable production for export, while reforms were taking hold\. EVALUATION OF OBJECTIVES 7\. The objectives of the project were adapted to the country's needs at the time the project was developed\. Moldova's economic development and transition would have greatly benefited from an increase in productive activity and commercial links with new markets and foreign companies, at a time when both production and employment were plummeting\. Purchasers in the FSU Republics, the traditional market for Moldovan products, were often unable to pay for goods, and when payment was made, long delays on transferring the revenues to Moldova via the inter-bank system further eroded the working capital base of local enterprises\. 8\. The perceived political risk of doing business in Moldova was inhibiting western foreign input suppliers from providing working capital inputs directly to local Moldovan enterprises\. Companies that had done business in other FSU countries had faced situations where the Government revoked export licenses or imposed retroactive changes in rules and regulations that prevented them from being paid for the inputs which they had already delivered to the local enterprise\. These precedents were used to evaluate Moldovan risks, and severely restricted the flow of working capital to Moldova\. Discussions with commercial lenders, input suppliers, and trading companies indicated that effective mitigation of political risk would significantly increase the volume of commercially viable pre-export transactions with Moldovan enterprises\. 9\. Most export credit agencies (ECAs) were off cover for Moldova, which made the case for a Bank-supported guarantee program compelling\. Without Bank involvement, the resumption of short- term, commercial banking flows was highly unlikely, and would continue to restrain growth in productive activity and employment\. To provide cover, ECAs required full counter-guarantees from the Government, including both commercial and political risks\. This guarantee structure would not have Indeed, if the Government were to act in a way that resulted in a claim under the Guarantee Facility, this would result in a direct financial loss for Moldova, as the Bank would have a claim on the Government\. -3 - been desirable, had the Government been deemed creditworthy, since, from a policy standpoint, the government should not assume commercial risks\. 10\. The PGF was not intended to and could not address all of the barriers limiting foreign entities from taking financial exposure in Moldova, and concluding deals\. Discussions with private sector players had seemed to indicate that the PGF would be sufficient to enable a critical mass of commercial transactions\. During implementation, however, it appeared, that mitigating political risk was not enough to overcome other risks and barriers which stood in the way of commercial deals\. The problems that were encountered are discussed in detail below\. ACHIEVEMENT OF OBJECTIVES 11\. The objectives of the project were not achieved\. No guarantees were issued, and the project was closed in July 1997, while the original closing date was December 31, 2003\. Although no guarantees were issued, the GAU was active in promoting and developing several potential transactions involving foreign comrnmercial banks and input suppliers\. Over the implementation period, the GAU made three guarantee offers for deals that did not go through for a variety of reasons\. Examples of deals that were envisaged include a working capital advance to a winery, a loan for importing oil drilling equipment, and a barter transaction involving the exchange of oil and electricity for cement\. It is important to note that established export credit agencies see many potential transactions for each deal that materializes (a 1 to 10 success rate is not unusual)\. Thus, in a small economy like Moldova, where fewer opportunities for viable transactions exist, it could be expected that it would take time before a successful deal came through\. 12\. As mentioned earlier, the Moldova Pre-Export Guarantee Facility was the first project of its kind\. Several problems led to the unsatisfactory outcome of the project\. Many lessons were learned during project implementation which have subsequently been used when designing similar projects in other countries, including Bosnia and Herzegovina, Ukraine, and Albania\. The following sections of this report will explain why the objectives were not achieved and will focus on project design, preparation, and implementation\. MAJOR FACTORS AFFECTING THE PROJECT Demand 13\. The main problem which arose was that demand for guarantees was not as high as expected\. Several factors contributed to the lack of demand, some of which were independent of the project\. 14\. The PGF covered political risks, which were perceived to be high, and constitute a significant barrier to increased foreign investment in Moldova\. However, commercial risks were also perceived to be high\. Despite the fact that many foreign banks, input suppliers and trading companies had indicated that political risk cover would be sufficient to result in a number of transactions, their assertions did not translate into business deals, often because of the perceived commercial risks, which could not be covered\. The results of the survey which was conducted in March and April 1997 indicated that 65% of the companies which responded were mostly concerned about non-performance of a potential Moldovan partner\. 15\. The participation of local banks, confirming the local partner's payment obligation, could have been a solution to this problem\. However, local banks viewed pre-export transactions as risky and less -4- profitable than their traditional lending activities and other investment opportunities in the local market, such as Government treasury bills\. For example, a letter of credit confirmation facility was put in place by ING Bank through the Moldovan Agroindbank which was never used\. The facility was designed so that ING Bank would confirm Agroindbank L/Cs, as long as the underlying transaction benefited from a GAU guarantee\. Agroindbank did not make use of the facility, partly because it felt that returns on domestic lending were more favorable to its shareholders\. Furthermore, Agroindbank was accustomed to receiving cash collateral from its clients involved in import transactions, and was not prepared to start taking commercial risk on these clients\. Thus, neither local banks nor foreign input suppliers were prepared to take the risk of the Moldovan counterpart, and deals did not go ahead\. 16\. The general business and legal environment in Moldova constituted a significant limitation to the success of the project\. A major impediment to the conclusion of commercially financed deals was that it was very difficult to assign the benefits of a specific export contract to a bank that would be financing the transaction\. If one succeeded in assigning these benefits, the enforcement of such an assignment was highly uncertain\. Transactions in the processing and light industry sectors were particularly handicapped by this weakness of the country's legal system\. Indeed, the first type of transaction that foreign banks tend to consider when entering a new market is the so-called "packing credit" where the local enterprise receives a working capital loan from a bank to fulfill a confirmed export order\. To limit the commercial risk to the performance risk under a specific transaction, the benefits of the export order are assigned to the financing bank\. 17\. The business practices of Moldovan enterprises further inhibited PGF-type transactions\. It became apparent that most Moldovan enterprises conducted their business on an undocumented basis\. This meant that they would export goods based on the expectation that their invoice would get paid, without a letter of credit or equivalent payment document\. This was especially true for exports going to the CIS markets, which represented the bulk of exports\. Business carried out on this basis could not attract outside investment, could not be financed by a commercial bank, and therefore could not benefit from the PGF\. 18\. Moldova's agriculture sector had been an important source of exports, and at the time of project preparation, it was assumed that input financing for the agriculture sector would be the PGF's main market\. It was also expected that the liberalization of input supply and distribution in the agriculture sector would progress rapidly, creating opportunities for foreign suppliers to enter the market through an emerging private distribution network\. This did not happen\. Agriculture input financing continued to be dominated by unconditional Government guarantees for transactions through two large state-owned enterprises, Cereale and Fertilitatea\. The impact of the Government guarantees was twofold\. First, these guarantees appeared to be more beneficial than those issued by the GAU, as they covered both commercial and political risks, and could be less expensive\. For example, a full Government guarantee costing a once only charge of 5% in respect to a five year loan period was offered to a company interested in purchasing equipment from Italian suppliers, while the GAU would have charged 3% per annum, and would have covered political risks only\. Second, as some foreign firms had bad experiences with Government guarantees which had to be called and were not awarded, but had to go to arbitration, certain companies became wary of doing business in Moldova, regardless of the availability of guarantees\. 19\. The question of cost was another issue that limited the success of the PGF\. Initially, the cost of guarantees was set at 3% per annum of the value of the underlying transaction\. The price was the same for all transactions, regardless of maturity\. It quickly became apparent that charging the same rate for transactions of different types and different maturities was not justified\. Certain types of transactions -5 - were inherently more risky than others, and, for similar transactions, those with longer maturities should be priced higher to account for the additional risk\. A premium rate schedule was developed within six months of effectiveness to fine-tune the PGF\. The 3% per annum rate remained in place for crop financing (sale of agricultural inputs in exchange for the following season's crop), and, for other types of transactions, the rate varied from 1\.35 % per annum (up to 90 days credit period with a local commercial bank guarantee) to 3% per annum (up to 3 years credit period without a commercial bank guarantee)\. Lower rates for transactions involving local bank guarantees were introduced to encourage the involvement of the Moldovan banks (see para\. 15 above)\. 20\. Initially, effectiveness delays resulted in a detrimental time lag between marketing efforts during project preparation which had sparked interest in the guarantee facility among input suppliers and trading companies, and availability of guarantees which came only later, once the facility was fully operational\. As a result, demand for guarantees was not as high as it could have been in the early stages of the project, and momentum was somewhat lost\. This delay, combined with the high premium rate, may have played a role in dampening the initial interest demonstrated by input suppliers, trading companies and commercial banks during project preparation\. 21\. The small size of the Moldovan economy was an additional factor which limited demand for the PGF\. As stated above, the GAU issued three guarantee offers and was actively involved in promoting and developing a number of transactions\. However, the small size of the market led to take-off problems for the GAU\. In fact, the Moldovan economy may not have been large enough to support a full-fledged guarantee agency, such as the GAU, especially given that there was no specific political risk that stood out as a critical barrier for increased foreign involvement, such as war risk for example\. Institutional Issues 22\. The institutional set-up of the project was not conducive to promoting the GAU and the guarantee facility within the Government\. As foreign firms were accustomed to working with the Government and state-owned enterprises, this set-up also limited the GAU's links to foreign input suppliers\. The GAU effectively operated as part of the Department of Foreign Economic Relations of the Ministry of Economy, which led to a marginal involvement of the Ministries of Agriculture, Industry, and Finance in the implementation of the project\. Not only were valuable contacts lost as a result, but it appeared that business contacts heard contradictory stories from different Government officials on the availability of Government and PGF guarantees\. 23\. The GAU's work was further affected by funding problems which led to the non-payment of salaries of GAU staff, and resulted in temporary demotivation of the staff\. Factors not generally subject to government control 24\. Many factors described above were not subject to Government control\. The most significant ones include the cost of the facility, the size of the economy, and the perception of high commercial risks\. The fact that Moldova's legal and business environment were not yet sufficiently developed to provide comfort to foreign companies and facilitate commercial transactions, regardless of the availability of political risk cover, can also come under this heading, at least in the short-run\. Moldova was undergoing a transition process which takes time, and it could not be expected that all the deficiencies would be resolved at once\. Thus, the introduction of the PGF may have come too early in Moldova\. - 6- Factors generally subject to government control 25\. Certain government actions had a negative impact on the implementation phase of the project\. The main one, flagged above, is the issuance of unconditional Government guarantees for short-term transactions in the agricultural sector, which could have been one of the PGF's main markets\. One of the policy objectives of the PGF was to end the Government's role in taking commercial risk on these types of transactions\. Under the PGF, the Government would only have taken political risk, which are the risks that the Government is best able to manage and control\. It appeared that the Ministry of Agriculture did not support this objective and continued to offer full guarantees to prospective input suppliers\. The coordination among different ministries discussed under "Institutional Issues" exacerbated this problem, as the Ministry of Economy, that the GAU operated under, was not successful in marketing the GAU and the guarantee facility to other important ministries that were in direct contact with companies, such as the Ministry of Finance, Agriculture, and Industry\. These ministries did not refer prospective transactions to the GAU, and did not inform private companies about the PGF\. 26\. The lack of reform in the agriculture sector was a further impediment to the success of the PGF\. The Bank worked with the Government on this issue under the auspices of other Bank loans and technical assistance programs, but progress was not rapid enough to increase the private sector's participation in input supply and distribution to a level that would have created business for the PGF\. Factors generally subject to implementing agency control 27\. The Guarantee Administration Unit was responsible for marketing the PGF\. It did a solid marketing job within Moldova which resulted in a high level of credibility of the facility in the Moldovan market\. The GAU's marketing efforts outside Moldova were not as successful, however\. The fact that the PGF did not get enough exposure abroad may have added to the difficulty of attracting foreign traders and input suppliers to the Moldovan market\. Better marketing outside of Moldova may have facilitated deals between Moldovan enterprises and foreign partners, as more foreign companies may have considered doing business in Moldova had they been aware of the availability and benefits of the PGF\. 28\. It should also be noted that the GAU's work and results were affected by the funding problems mentioned above, which led to the non-payment of salaries of GAU staff, and resulted in temporary demotivation of the staff\. PROJECT SUSTAINABILITY 29\. As the project did not achieve its objective for the reasons described above, it is not meaningful to assess the probability of maintaining the projects achievements\. BANK PERFORMANCE 30\. The Moldova Pre-Export Guarantee Facility was the first project of its kind\. Its identification and preparation were therefore managed differently from most Bank projects\. Continuous dialogue among various Bank staff, involving a wide range of departments and specialties, was an integral part of project preparation\. The concept of the project had to be developed and agreed upon\. The project's structure was modified during the preparation process in order to create an instrument that could both effectively guarantee commercial transactions against political risks, and be in compliance with the Bank's internal requirements\. The Bank's performance must be judged on the basis that this project was in some ways an experiment, and was meant to be a learning process for both the Borrower and the Bank\. -7 - 31\. Despite the fact that the project team conducted discussions with a wide number of input suppliers, trading companies, and commercial banks, the demand for the PGF was incorrectly assessed\. The preparation of the project could have benefited from a more in-depth study of the market, and of competing programs and instruments\. In Moldova, a survey could have helped to identify that, although political risks represented an impediment to productive activity, commercial risks were a significant concern of foreign input suppliers and banks\. A survey was conducted, but only in March-April 1997, a year and a half after project effectiveness\. A better assessment of demand could have led to a smaller contingent loan to back up GAU guarantees which would have reduced the Government's commitment fees, and thus reduced the overall cost of the project\. Had the commitment fees been lower from the start of the project, the Government may have been willing to maintain the facility for a longer time, thereby allowing the GAU to overcome initial difficulties, such as high premium rates, and lack of cooperation among ministries\. 32\. The fact that other agencies offered competing loan programs for private sector transactions should have been taken into account by the Bank when assessing the match between supply of and demand for guarantees, although these programs may have been developed after the PGF\. However, the situation which arose points to a more general observation, regarding the need for better coordination and communication between multilateral and bilateral institutions\. 33\. The Bank could also have done more research on private risk insurers, and the pricing of their instruments\. Indeed, the fact that the GAU only offered one premium rate, which was relatively high, was not in line with general practice in the risk insurance industry\. The premium rates were adjusted in the Summer of 1996\. The major marketing efforts of the PGF occurred before this adjustment, however, which could have had a negative impact on demand, and general interest in the facility\. 34\. The Bank's performance during supervision was good\. Supervision was thorough from both a reporting and substantive standpoint\. Project implementation was adequately reported, and implementation problems were identified and assessed\. The Bank worked closely with the implementing agency in order to resolve the issues that have been discussed previously\. Technical assistance to the GAU encountered difficulties early on, but they were resolved, and the GAU benefited from the presence of a foreign consultant on site for the duration of the project, who played an important part in identifying the barriers to increased demand for the guarantee\. Solutions to some of these problems were proposed and put in place\. The solutions, such as adjusting the premium rate schedule, may have been insufficient to overcome other impediments that were external to the project's design and implementation, but they addressed important issues and provided for a learning process that has been useful for future projects\. BORROWER PERFORMANCE 35\. The Borrower was responsible for certain institutional problems that hindered the GAU's performance\. During project preparation, Bank staff and Government representatives in the relevant ministries (Agriculture, Industry, Economy, Finance) discussed and agreed on the project's design, goals, and institutional set-up\. During project implementation, however, the GAU did not receive the support that it needed from the Government\. The Ministry of Agriculture's unconditional sovereign guarantees to input suppliers severely restricted the GAU's ability to become active in the agricultural sector which had been identified as one of the most promising areas for the guarantee facility during project preparation\. Neither the Ministry of Industry nor the Ministry Agriculture referred prospective private sector companies interested in doing business in Moldova to the GAU\. Furthermore, it appeared that the Department of Foreign Economic Relations within the Ministry of Economy did not have enough clout within the Government to build up support for the GAU\. -8 - ASSESSMENT OF OUTCOME 36\. Despite the fact the outcome of Moldova Pre-Export Guarantee Project was unsatisfactory, it was the first project of its kind, and provided a useful learning experience\. The many lessons learned have enabled the Bank to identify, prepare and implement projects with similar goals and structure in other client countries, avoiding the many pitfalls that prevented the success of the PGF in Moldova\. The following section summarizes the lessons of experience, and provides recommendations for future projects\. KEY LESSONS LEARNED AND RECOMMENDATIONS FOR FUTURE OPERATIONS 37\. During identification and preparation, it is crucial to assess the demand for guarantees against political risk\. The approach to determining demand has to be free of any bias, which is quite difficult\. As mentioned earlier, a survey to obtain initial feedback from potential users can be helpful\. A survey, however, must be followed up with detailed discussions with respondents, both to get a more in depth understanding of the critical barriers to commercial transactions in a country, and, if there seems to be sufficient demand, to ask the private sector for its input regarding the design of the guarantee facility\. If the facility is designed without taking into account the needs of potential users, demand may be low, not only in the case that there is little or no demand for political risk cover per se, but for other reasons such as the facility is not credible in the eyes of investors, it does not cover the most important risks, it is too expensive, it is not easily accessible, etc\. Thus, many different aspects of a political risk guarantee facility need to be analyzed and discussed with potential users during the identification and preparation phase of this type of project\. 38\. The dialogue with the private sector is a two-way dialogue\. Political risk guarantee facilities backed up by Bank funds are innovative and not well known in the market\. It is therefore necessary to advertise the project to potential users in order to ensure a high enough level of demand\. The guarantee agency which is established to administer the facility should have staff that is capable of marketing the facility effectively\. The preparation phase should be used to establish a network of contacts with private sector companies, banks, chambers of commerce, etc\., so that the facility is well known in relevant circles when it becomes operational\. Ideally, a pipeline of applications of guarantees should be built during project preparation\. 39\. The institutional set-up of the guaranteeing agency is another important component of project preparation\. As was pointed out above, the GAU in Moldova was not attached to the most appropriate ministry(ies) in terms of getting governmental support and exposure both within and outside government circles\. The process of setting up the guaranteeing agency should be used to create a consensus within the government regarding the role of the agency, its mandate, and its level of independence\. Bank staff should engage the government in a discussion to identify a suitable organizational structure and operational rules for the guaranteeing agency\. 40\. The commitment of the Government to economic reform should also be tested before creating a political risk guarantee facility\. This comes down to assessing the Government's ownership of the project\. The facility covers guarantee holders against government interference in their business transactions\. If the Government interferes in business transactions, guarantees may be called, which would both create a direct Government obligation to the World Bank, and hurt the reputation of both the country as a place to do business\. The ultimate goal of a guarantee facility is to build confidence in the government's commitment to maintain the rules of the game that apply to commercial transactions, so that a political risk cover is no longer needed to encourage private sector transactions\. Thus, if it is -9- determined, that the Government is likely to continue interfering in private business, it is preferable to withhold from offering political risk cover\. In the case of Moldova, the fact that the Government did not liberalize the agriculture sector as quickly as planned, and continued to offer unconditional sovereign guarantees was a sign that it was not ready to let go of one of the most important sectors in the country's economy\. -10- Part II\. Statistical Tables Table 1: Summary of Assessment Table 2: Related Bank Loans/Credits Table 3: Project Timetable Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Status of Legal Covenants Table 7: Bank Resources: Staff Inputs Table 8: Bank Resources: Missions Table 1: Summary of Assessments A\. Achievement of Objectives Substantial Partial Neglible Not applcable Macro Policies 5 5 Sector Policies E E Cl Financial Objectives [ E a Institutional Development E E El Physical Objectives O 5 al Poverty Reduction [ [ ,l Gender Issues O E El Other Social Objectives E E El Environmental Objectives E E E Public Sector Management a E El Private Sector Development E E El Other (specify) n o E E (Continued) B\. Project Sustainability Likely Unlikely Uncertain (ef (if) (if) C\. Bank Performance satisfactory Satisfactory Deficient (V) (V) V/) Identification i a: Preparation Assistance n 5 Appraisal VI 'f Supervision n O Highly D\. Borrower Performance satisfactory Satisfactory Deficient (i) (f) (f) Preparation a i O Implementation E D Covenant Compliance i E Operation (if applicable) if ighly E\. Assessment of Outcome satisfactory Satisfactory Unsatisfactory unsatisfactory (i/) (i) () () El El El - 12 - Table 2: Related Bank Loans/Credits Loan/credit title Purpose Year of Status Approval Preceding operations 1\. Structural Adjustment Loan Promote a recovery in sustainable, non- 1994 inflationary growth by stimulating competition throughout the economy, increasing the responsiveness of economic agents to the new economic environment, while maintaining a minimum level of social protection Table 3: Project Timetable Steps in Project Cycle Date Planned Date Actual Latest Estimate Identification (Executive Project Summary) Preparation Jun\. 18 - Jul\.2, 1994 Jun\. 18 - Jul\. 2, 1994 Appraisal Nov\. 15 - Nov\. 27, 1994 Nov\. 26 - Dec\. 10, 1994 Negotiations February 1-2, 1995 February 1-2, 1995 Letter of Development Policy (if applicable) n/a n/a Board Presentation March 1, 1995 March 9, 1995 Signing April 19, 1995 April 19, 1995 Effectiveness April 1, 1995 October30, 1995 Midterm review (if applicable) n/a n/a Project Completion December 31,2003 May 17, 1997 Loan Closing December 31, 2003 May 17, 1997 - 13 - Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ thousands) FY96 FY97 FY98 FY99 FYOO Appraisal estimate 0 0 0 0 0 Actual 0 0 0 0 0 Actual as % of estimate 100 100 100 100 100 Date of final disbursement n/a Table 5: Key Indicators for Project Implementation Estimated Actual L Key implementation indicators in SAR 1\. Issuance of Guarantees n/a 0 II\. Other indicators - Development Objectives 1\. Amount of coverage issued, not n/a 0 leading to any claims under the guarantee 2\. Increase in short to medium term n/a 0 import-export transactions financed by non-barter trade finance mechanisms - 14- Table 6: Status of Legal Covenants Moldova Pre-Export Guarantee Facility Covenant Present Original Revised Description of Covenant Comments Agreement Section Type Status Fulfillment Fulfillment Date Date Project 4\.01 1 C n/a n/a (a) The GAU shall maintain records and accounts n/a Agreement adequate to reflect in accordance with sound banking practices its operations and financial condition, including records and separate accounts for the Project\. (b) The GAU shall: (i) have the records referred to in Section 4\.01 of the Agreement, its accounts and financial statements (balance sheets, statements of income and expenses and related statements) and records and accounts for the Guarantee Account each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case no later than six month after the end of each such year: (A) certified copies of said financial statements for such year as so audited and (B) the report of such audit by said auditors of such scope and in such detail as the Bank shall have reasonably requested; and (iii) fumish to the Bank such other information conceming said records, accounts and financial statements and the audit thereof, as the Bank shall from time to time reasonable request\. Covenant types: Present Status: 1\. = Accounts/audits 8\. = Indigenous people C = covenant complied with 2\. = Financial performance/revenue generation from 9\. = Monitoring, review, and reporting CD = complied with after delay beneficiaries 10\. = Project implementation not covered CP = complied with partially 3\. = Flow and utilization of project funds by categories 1-9 NC = not complied with 4\. = Counterpart funding 11\. = Sectoral or cross-sectoral budgetary 5\. = Management aspects of the project or executing or other resource allocation agency \.12\. = Sectoral or cross-sectoral policy/ 6\. = Environmental covenants regulatory/institutional action 7\. = Involuntary resettlement 13\. = Other - 15 - Table 7: Bank Resources: Staff Inputs Planned Revised Actual Stage of project cycle Weeks US$ Weeks US$ Weeks US$ Preparation to appraisal 30\.0 100\.0 30\.0 100\.0 27\.9 95\.0 Appraisal 10\.0 40\.0 10\.0 40\.0 10\.9 43\.8 Negotiations through Board 8\.0 18\.0 8\.0 18\.0 7\.2 16\.7 approval Suapervision 40\.0 124\.2 23\.6 64\.8 29\.1 84\.3 Completion 8\.0 15\.3 8\.0 15\.3 8\.0 15\.3 Total 48 139\.5 31\.6 80\.1 77\.6 243\.6 Table 8: Bank Resources: Missions Perfornance Rating2 Types of Stage of project cycle Month/ No\. of Days in Specialization' Implem\. Developm\. Problems3 Year Persons Field status objectives Through appraisal 6/94 2 11 G 7/94 2 10 AB Appraisal through Board 11/94 5 10 G, L, EC approval Supervision 5/95 1 5 G S S S 7/95 1 5 G S S S, E 9/95 1 4 G S S S 2/96 1 5 G S S S, D, R 6/96 1 8 G U S S, D, G,R 10/96 1 14 G U U D, G, R 2/97 1 4 G U U D, G, R Completion 5/97 1 3 G U U D, G, R Total 79 1 - Key to Specialized staff skills: G- 2 - Key to Performance Ratings: S- 3 - Key to Types of Problems: S- GAU Guarantees; AB- Agribusiness; L- Legal; Satisfactory; U- Unsatisfactory salaries and staff; E- Effectiveness delays; EC- Export Credit D- Lack of Demand;; G- Government guarantees; R- Lack of reform in agriculture; Appendix A The Ministry of Finance of the Republic of Moldova 2012, 7 Cosmonautilor St\., Chisinau, Moldova No\. 03/4-2/3-220/700 April, 13, 1998 Ref: 2207-242 April, 6, 1998 The Government of the Republic of Moldova Dear Sirs: In conformity with the Instruction of the Government of the Republic of Moldova no\.2207-242 from April, 6, 1998 the Ministry of Finance has examined the Implementation Completion Report on the Pre-export Guarantee Facility, which was elaborated by the World Bank, and considers that the analysis of the failure of the Project is ample and complete\. At the same time, we would like to point out the following\. One of the main causes of the Project not being viable, was a wrong determination of the objectives at the preparation stage of the Project\. Thus, the Facility was oriented to guarantee only political risks for Westem working capital provided for the production of goods with export potential\. At the same time, the Report does not stress that, while the Project was being developed and the credit agreement was signed, there did not exist any specific political risk which would constitute a serious barrier to the increase of foreign investments, both in the country and the region\. The country's political stabilization was also implicitly shown in 1995 by the successful results of the macroeconomic stabilization policy, which indicated the Republic's orientation towards reforms and creation of a market economy\. Thus, the Project was not viable from the date of its constitution, and the deficiencies caused by the management of the Project and other conditions, which were defined in the report as barriers to the implementation of the Project, played a secondary role during the implementation of the Project\. One of the arguments specified as a barrier to Project implementation was its institutional structure, i\.e\., the establishment of an Agency within the framework of the Department of Foreign Economic Relations that led to the lack of direct connections with other governmental bodies, such as the Ministry of Finance, the Ministry of Agriculture and the Ministry of Industry which had to participate in the implementation of the Project, even though the establishment of this Agency under any of these ministries would have produced the same effect\. From this point of view, an optimal option would have been to establish an independent and non-governmental agency\. In case of project viability, this structure would provide more confidence among investors\. Regarding the lack of governmental support to the Project, it should be mentioned that optimal coinditions were created for the activity of the Project and the need for additional support just indicates that the Project was not viable\. It should also be pointed out that the failure of the Project imposed additional costs, which were not compensated by any positive economic effects\. Respectfully yours, V\. Chitan Minister The Ministry of Economy and Reforms of the Republic of Moldova 2033, 1 Piata Marii Adunarii Nationale\., Chisinau, Moldova No\. 09-1333 April, 10, 1998 Ref: 2207-242 April, 6, 1998 The Government of the Republic of Moldova Dear Sirs: In conformity with the Instruction of the Government of the Republic of Moldova no\.2207-242 from April, 6, 1998 on the Completion Report on the Pre-export Guarantee Facility presented by the World Bank, we would like to point out the following\. The Ministry of Economy and Reforms generally agrees to consider the conclusions presented in the Report that refer to the implementation process and results of the project, and are impartial and well justified\. We would like to point out that according to the Table (page 10) the majority of evaluation criteria is satisfactory but for the 8th criterion, which is inferior to the satisfactory level\. In our view, this situation results from the impact of a range of objective factors: * in Moldova this Project was the first of its kind and, thus, an experimental one; * the conditions and the possibilities of the Project were new and difficult for local economic agents to assimilate; * political risks are not a priority in international transactions; * the implementation of the Project was based also on a range of reforms to be taken in different economic sectors (agriculture), the realization of which was delayed\. We also consider that both the foreign personnel and the local staff of the Implementation Agency did their best to perform their functions, although the results show that the Project could have been more effective if the Agency had a mandate to provide guarantees for commercial risks\. We would like to mention that this problem was discussed several times while the Agency was active, and that the suggestion to cover commercial risks was not accepted by the World Bank\. At the same time, we consider that the proposal for the Agency to provide commercial risk guarantees was presented relatively late\. Such proposals should have been discussed at the initial stage of preparation and negotiation of the Project, and were not implemented since the World Bank did not accept them\. In our opinion, this might be considered as the main deficiency of the Project\. Under such conditions the suspension of the Project demanded by the Government was totally justified\. To conclude, we would like to mention our agreement with the modest assessment given by the World Bank of the results of the Project, which points out that the Project did not achieve its objectives\. Respectfully yours, D\. Braghis Vice-minister National Bank of Moldova 2006, 7 Renasterii Ave\., Chisinau, Moldova Nr\.10-01 125/18 March 13, 1998 We hereby deliver you the notification of the National Bank referring to the Final Report on the Pre- Export Guarantee Project (PGP) implementation\. The Pre-Export Guarantee Facility was experimented for the first time in the Republic of Moldova without (i) conducting a thorough demand survey for guarantees against political risks; (ii) establishing favorable guarantee fees; and (iii) developing an efficient marketing system for this facility, and so the Project did not achieve its objectives, and had an impact on the budget which bore the costs related to the commitment fee until the facility cancellation date\. As correctly mentioned in the submitted Report, commercial risk coverage is considered to have priority compared to political risk coverage\. In our opinion, war risk, military conflict, as well as any restrictions on goods export and import imposed by the Government and the conversion and repatriation of currency by foreign investors covered by the PGP, are quite void of significance in the Republic of Moldova\. This facility would be appropriate in the case of Bosnia and Herzegovina, referred to in the Report, where an embargo imposed by the UN was included among the political risks covered by the facility\. This facility was approved in 1994 when the EBRD credit lines aimed at supporting small and medium size enterprises and providing micro-credit were not yet in place\. These credit lines have proven to be more viable\. Also, during the last years the amount of external private credits under nonresidents' contracts to increase working capital has gone up significantly\. The credit lines provided by correspondent banks of Moldovan commercial banks for the management of letters of credit and collections have become a frequent practice\. We consider that this facility had an indirect favorable impact on the improvement of access to credit for private enterprise, the enhancement of access to Western markets, and export promotion\. Also, the PGP, being a new tool of the World Bank, contributed to the attraction of potential foreign investors to Moldova and the improvement of the country's image on international markets\. We totally agree with the opinion that the Government should not provide guarantees covering commercial risks\. Commercial risk guarantees must be provided exclusively by commercial banks\. Along with the development of the financial sector, service sector expansion and the increase in competition among financial institutions, the banks will offer various guarantee tools against commercial risks at advantageous conditions and fees\. Vice Governor Veronica Bacalu	REVIEW
P155824	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) Report Number : ICRR0021803 1\. Project Data Operation ID Operation Name P155824 Climate Change and Green Growth in VN Country Practice Area(Lead) Vietnam Environment, Natural Resources & the Blue Economy L/C/TF Number(s) Closing Date (Original) Total Financing (USD) IDA-58760 30-Jun-2017 87,600,444\.34 Bank Approval Date Closing Date (Actual) 24-Jun-2016 30-Jun-2017 IBRD/IDA (USD) Co-financing (USD) Original Commitment 90,000,000\.00 0\.00 Revised Commitment 90,000,000\.00 0\.00 Actual 87,600,444\.34 0\.00 Prepared by Reviewed by ICR Review Coordinator Group Chikako Miwa John R\. Eriksson Christopher David Nelson IEGSD (Unit 4) 2\. Project Objectives and Policy Areas a\. Objectives The Development Policy Objectives as stated in the Program Document (Page 8) and the Financing Agreement (Schedule 1, pages 5 â 6): 1\. Improving inter-sectoral coastal planning and public investment finance programming across key sectors in support of climate change and green growth action\. 2\. developing and safeguarding selected natural resources services; and 3\. promoting selected cleaner production systems\. Page 1 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) b\. Pillars/Policy Areas This Development Policy Lending (DPL) operation was designed as the first operation in a programmatic series of three operations\. At the time of the closing date of this operation, the second operation was under preparation\. However, due to the delay in government approval of the second operation in the face of fiscal constraints, the original series was discontinued, and this operation was processed as a single operation\. This operation pursued reforms under three pillars, which are the DPL operations specific objectives indicated above\. The prior actions are shown below under their specific policy pillars\. Pillar 1\. Improving inter-sectoral coastal planning and public investment finance programming across selected key sectors in support of climate change and green growth action\. This pillar aimed at supporting the governmentâs efforts to improve inter-sectoral planning and raising financing for Integrated Coastal Zone Management (ICZM) (The ICZM approach is based on the notion that management of natural resources besides yielding positive environmental benefits, also provide resilience to agriculture, forestry and broader economic activities like tourism, that depend on healthy coastal ecosystems)\. There were two prior actions in this area\. First, the government develops and adopts the National Action Plan for ICZM and sets priorities for ICZM and second, the government specifies actions on Climate Change (CC) and Green House Gas (GHG) emissions issues as priorities under the Socio-Economic Development Plan for 2016-2020\. Pillar 2\. Developing and safeguarding selected natural resources services\. This pillar aimed at providing an enabling environment for integrating CC and green growth policies in management of natural resources (water and forests)\.There were two prior actions in this area: First, the government develops and adopts policy guidelines for one: establishing and managing water source protection corridors, and two, developing coastal forests and adopting guidelines for provincial forest carbon action plans\. Pillar 3\. Promoting selected cleaner production systems\. This pillar aimed at moving towards cleaner production systems through integrating CC and green growth policies in the transport and residential appliances sectors\. The prior actions in this area aimed at government adopting policies for: one, managing air quality for green growth\. Two, regulating vehicle emission and fuel quality standards for vehicles\. Three, new energy efficiency labelling standards for non-ducted air conditioners used in household or commercial settings not connected to central heating or cooling\. And four, the government adopts standardized Power Purchase Agreements for biomass power and waste-to-energy power generation projects\. c\. Comments on Program Cost, Financing, and Dates Financing\. The operation was financed by an IDA credit of US$90\.0 million\. The amount disbursed US$87\.60 million\. There was parallel financing for CC policy lending operations from the Japan International Cooperation Agency (JICA) and the Agence Francaise de Development (AFD)\. Dates\. The operation was approved on June 24, 2016 and closed as scheduled on June 30, 2017\. Page 2 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) 3\. Relevance of Objectives & Design a\. Relevance of Objectives Country Context\. The program objectives were relevant to country conditions at appraisal and at completion\. Strong economic growth enabled Vietnam to become a middle-income country (with a per capita gross national income of US$1,980 in 2015), and less than three percent of the population classified as poor in 2016 (as compared to 50% in 1993), in the years before appraisal\. Despite this, significant pockets of poverty remained, especially in the vulnerable coastal areas and the Mekong River and Red River deltas, where the population was exposed to adverse climate change impacts\. Also, Vietnamâs GHG emissions were disproportionately high relative to its size (with GHG emissions nearly quadrupling between 2000 and 2010 and carbon intensity of Gross Domestic Product increasing by 47%), making Vietnam the 13th most carbon intensive economy in the world)\. The operationâs objectives were important to the government strategy, as discussed below\. Government strategy\. At appraisal, the PDOs were relevant to the priorities identified in the National Climate Change Strategy and the Vietnam Green Growth Strategy\. The PDOs were relevant to the 2016- 2020 Socio-Economic Development Plan and the government Support Program to Respond to Climate Change, issued in 2015\. While the development plan underscored the need for accelerating reforms for strengthening resilience to CC and promoting green growth development path, the support program emphasized supporting policy reforms, mobilizing resources and strengthening capacity for addressing CC and green growth issues\. Relevance to Bank Strategies\. The program objectives were highly relevant to the Bank strategy\. At appraisal, the second pillar of the Country Partnership Strategy (CPS) for 2012-2016, explicitly highlighted the need for sustainable growth through CC adaptation and mitigation and disaster risk management (CPS, page 17)\. The third focus area of the Country Partnership Framework for 2018-2019 highlighted the need for ensuring environmental sustainability and resilience\. This operation built upon an earlier bank financed climate change DPL series\. The policy areas in this operation were not the same as the policy areas supported under the earlier series but focused on where the reforms needed to be extended\. While the earlier series focused on disaster risk management, this operation emphasized resiliency of coastal areas\. While the earlier series focused on integrated management of water resources, this series focused specifically on protecting water resources and irrigation efficiency\. Advisory services under the current DPL shifted to a wider set of regulatory activities aimed at energy efficiency, renewable energy investments and air quality management\. Rating High Page 3 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) b\. Relevance of Design Vietnamâs macroeconomic framework when this DPL operation was prepared, was generally satisfactory\. Economic growth exceeded six percent since 2014\. Inflation was moderate and exports had expanded rapidly (on average by 21 percent between 2010 and 2014)\. However, large fiscal deficits (5\.5% in 2015) in the years before appraisal, had eroded fiscal buffers and increased the debt service burden\. Public debt was expected to peak at 64 per cent of the Gross Document Product (GDP) in 2018 and gradually decline thereafter\. There was no International Monetary Fund (IMF) program in place when this DPL became effective (Program Document, paragraph 30)\. There is a logical causal relationship between the prior actions (discussed in section 2b) and intended objectives\. Identifying the cross-sectoral constraints in the low-lying coastal areas and mobilizing resources for public investments were relevant for advancing the governmentâs CC and green growth (GG) agenda\. Integrating CC and GG considerations in the water and forest sectors were relevant for safeguarding natural resources\. Reforms in the transport and residential appliances sectors, were likely to contribute to cleaner production systems\. However, the overall design which included policy reforms in diverse areas (managing water source protection corridors, developing coastal forests, emissions reduction in the transport sector, reduction in industrial energy use and increase in installed capacity for renewable energy generation), was overly ambitious in terms of the time frame, given that implementation of these activities typically takes several years\. This was particularly so,given that the originally envisioned three-part series was discontinued, and the operation was compressed as a single operation\. Given these moderate shortcomings, the relevance of design is rated as substantial\. Rating Substantial 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective Improving inter-sectoral coastal planning and public investment finance programming across selected key sectors in support of climate change and green growth action\. Rationale The policy reforms in this area aimed at identifying and addressing cross-sectoral obstacles across the long low-lying coast of Vietnam in the face of CC impacts and taking actions for inter-sectoral mobilization of resources for reducing GHG emissions\. There were two policy areas\. Page 4 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) One\. Enabling area-based adaptation and resilience in coastal areas\. As a prior action, the Ministry of Natural Resources and Management (MORE) developed and adopted the National Coastal Zone Action Master Plan and set priorities for ICZM\. The plan emphasized linkages to sectoral and sub-national planning\. The MORE also formalized procedures (such as, establishing the steering Committee for ICZM oversight, developing zoning plans for exploiting coastal resources, piloting co-management of fishery resources and marine and biodiversity monitoring), for guiding the provinces in preparing their ICZM plans\. This prior action was expected to increase the adoption of ICZM plans by the provinces\. Outcomes\. None of the coastal provinces adopted provincial ICZM programs when the DPL operation closed (target five provinces), due to delays in adopting the national Master Plan on Sustainable Exploitation and Use of Marine Resources\. This Master Plan was expected to be finalized in 2021\. While there was progress on provincial ICZM planning and implementation of actions under the ICZM programs, the formalization of those programs was delayed due to a procedural change on the part of government (i\.e\. to develop and adopt the national masterplan), before formal adoption of the provincial ICZM programs\. This meant that while 24 out of 28 coastal provinces have issued and implemented strategies, plans, or projects related to ICZM, 5 provinces developed or are in the process of developing their coastal inventories to inform the development of their ICZM programs, 9 provinces developed local data management systems on ICZM linking with the national data management system and 19 provinces established or are in the process of setting up coastal setback lines, the lack of formalization of the Master Plan means the impact of these initiatives remains uncertain and the reform falls short of what was intended\. Two\. Improving mobilization of resources for climate change and green growth\. As a prior action, the government issued the Decision(Number 40)\. This decision specified the principles, criteria and norms for allocating state budget funds for 2016-2020, and established CC and GG as priorities in the Socio-Economic Development Plan 2016-2020\. This prior action was expected to lead to: (i) increase in the number of provinces and priority sectors with CC and GG programs: (ii) percentage increase in the number of projects with CC and GG policy objectives in provinces and sectors\. Outcomes\. There were two outcome targets\. â¢ As of April 2019, the Ministry of Planning and Investment (MPI) identified CC and green growth investment programs in 18 provinces, exceeding the target of eight provinces\. However, investment programs were not identified in any priority sectors (as compared to the target of three)\. The balance of results between provinces and sectors were not as originally anticipated given a change in the government priorities with respect to roll-out of the methodology, and there was an intention to address this disconnect had DPF-2 gone ahead\. But given the importance of the outcome focus of the original indicator and the shortfall, there are clear shortcomings against the intended achievement\. â¢ While the amount of financing for climate change and green growth in the 18 provinces described above did grow in absolute terms, in percentage terms the number of CC and GG projects in provinces decreased by 10% between 2015 and 2017 (against a target of 15% increase)\. The focus of this policy track was âMobilization of Resources for Climate Change and Green Growthâ\. That was achieved as evidenced by a 20% increase in the volume of financing\. So while the volume of financing may well be a more meaningful metric than the number of projects financed, making the metrics work for what was achieved is not helpful to what was intended with the original investment\. Shifting the priority from breadth Page 5 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) to depth does change the nature of assessment\. In this instance, achievement against the indicator fell short\. On balance, while there was an increase in the value of investment in the provinces, no provincial ICZM programs were adopted due to the delays in the Master Plan and progress against the designated sectoral targets was not met\. On this basis, the achievement of this objective is rated as modest\. Rating Modest PHREVDELTBL PHEFFICACYTBL Objective 2 Objective Develop and safeguard selected natural resources services\. Rationale The policy reforms in this area aimed at providing an enabling environment for safeguarding natural resources: (i) through establishing protection corridors for water sources; and (ii) developing coastal forests\. i) Safeguarding natural resources in the water sector\. As a prior action, the Ministry of Natural Resources and Management adopted Decree Number 43, for regulating water resources through establishing water protection corridors\. As per the decree, provinces were required to provide detailed descriptions of the protection sites (including the length of the corridor) and specify the implementing responsibilities of provincial departments, districts and communes\. Outputs\. â¢ Twenty provinces established water protection corridors delineated on maps, and with an action plan to address threats to the integrity of the corridors\. The decision clarified the protection purposes of the corridors (protecting the resources from pollution as they are used for domestic water supply and protecting the river embankments from erosion or land encroachment)\. â¢ 23 provinces issued local policies to encourage advanced irrigation\. â¢ The Master Plan on Irrigation to 2020 was revised to cover the period up to 2030\. Outcomes\. As indicated above, twenty provinces established water protection corridors, exceeding the target of six\. This PDO indicator was however not appropriate to measure outcome-level achievements, as the indicator was limited to either establishing the protection corridors and preparing action plans and did not call for either their implementation or enforcement\. Having said that, there was an effort to transform the plans into action, so while only 320,000 hectares of farms utilized advanced and efficient irrigation practices for selected crops (below the target of 400,000 hectares), there was progress against the policy and how it was applied\. Page 6 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) The implementation aspect was intended to be captured in the stipulation on the preparation of action plans\. These were not generic plans, but rather specific inventories of encroachments within the newly established buffers and actions to be taken to address them\. Particularly in the Vietnamese context, where there is a high degree of confidence that these plans would be implemented, they were considered evidence that the corridors were not just being gazetted, but that practical steps were being taken to implement protection\. The corridors and action plans are in fact being enforced and implemented\. For instance: - HCM City has taken actions to implement the Decree 43 regulating the establishment of river protection corridor\. The City Authority assigned the responsibility to different technical departments to develop action plan to ensure the establishment and implementation with regard to river protection corridors, including DONRE to establish the physical demarcation for water sources and waterways; DOC to issue permit for construction of river embankments in urban areas and infrastructure on the river protection corridors, to investigate, monitor and handle illegal encroachment and construction of infrastructure without permit on the corridors; district and communal authority to perform the management of the river protection corridors, communicate to the people living in the areas on the requirements in management and use of the river protection corridors and relocate people out of the highly potential erosion areas\. It was reported by the City authority that most of the illegal encroachment in 2018 were handled and enforced\. New encroachments have been more effectively handled/ enforced than the illegal encroachments or construction made well before the river protection corridor establishment regulation\. At the end of 2019, HCMC authority announced that they will carry out the investigation of more than 100 construction projects along the Saigon river to identify illegal encroachments and constructions to the protection corridor\. A number of construction projects were named for their illegal encroachments and requested to stop\. In addition, a number of projects were enforced to stop because of their violation to the Decree 43: â¢ Urban development and landscape improvement project along Dong Nai river (at the section through Bien Hoa City) â¢ Infrastructure for tourism development project in Cai Be District, Tien Giang province: the embankment of Tien river (a tributary river of Mekong river at the section through Cai Be town) â¢ Pig farm project at Tuc Hung commune in Dong Nai province violating the protection corridor of Tri An reservoir\. ii) Safeguarding natural resources in the forest sector\. As prior actions, the Ministry of Agriculture and Rural Development adopted a decree, governing management, protection, restoration and development of coastal forests, to address CC considerations and developed a plan for preparing forest carbon plans\. â¢ 14,100 ha of new coastal forests were planted\. This represented 45% of the target\. â¢ The government established the Target Program on Sustainable Forestry Development, with a budget of about VND 59,599 billion\. â¢ 200 households applied nature-based shrimp aquaculture in the mangrove forests in Tra Vinh province\. â¢ A benefit sharing plan for the Emission Reduction Payment Agreement (ERPA) was developed in six provinces\. Outcomes\. Page 7 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) â¢ By the end of 2018, an additional 14,100 hectares of coastal forests were planted, representing a 4\.5% increase, as compared to the baseline of 310,695 hectares\. The realized figure however represented less than half of the expected target of a 10% increase\. â¢ There was no data available at the time of the ICR regarding the indicator on percentage reduction of the annual rate of net emissions in the selected provinces when the operation closed\. â¢ Based on additional data from the project team, during 2019, Vietnam planted an additional 3,290 hectares of coastal forest (data provided to us today by MARD)\. Compared with the target set at appraisal of DPF1, by end of 2019 the achievement is 5\.6%\. However, the Government has reviewed the coastal forest plantation program since DPF-1 preparation and adjusted its target to a total of additional 21,600 hectares by 2020\. With the total achievement of an additional 17,390 hectares by end of 2019, the Gov is on track to achieve its updated target\. These figures are in line with government targets\. Thus, while there were evident shortcomings, there is sufficient evidence to justify an overall Substantial rating\. Rating Substantial PHREVDELTBL PHEFFICACYTBL Objective 3 Objective Promoting selected cleaner production systems\. Rationale The policy reforms in this area aimed at supporting the governmentâs efforts to shift to cleaner production systems in the transport and energy sectors\. One\. Engaging in Air Quality Management (AQM) with an initial focus on planning, inventory, industrial permitting and cleaner transport\. As prior actions, the Pollution Control Department in the Ministry of Natural Resources and Environment (MONROE) finalized regulations on AQM and adopted regulations on exhaust gas emissions from vehicles (cars, buses and trucks)\. Outputs\. â¢ Five provinces adopted AQM plans, exceeding the target of three\. The plans required the industries to invest and install equipment to ensure that there was no emission of air pollutants to the environment\. â¢ The emissions registry was not established as targeted, due to the delay in the issuance of the enabling policy (Decree 40 was only issued on May 2019)\. â¢ Emissions standards for all new (imported or manufactured) cars went into effect on January 1, 2017\. Outcomes\. Page 8 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) â¢ The ICR (page xiv) noted that, none of the provincial AQM plans described above, were compliant with MONROE guidelines when the operation closed, due to the delay in the issuance of the circular on the content of AQM plans\. â¢ None of the enterprises in the six sectors/industries reported to the emissions registry as envisioned\. â¢ According to the Ministry of Transport, based on data from national vehicle registry, Nitrogen Dioxide and Nitric Oxide (NOx) emissions from light-duty road transport reduced by 7\.49% in the target year\. This exceeded the set target of 6\.85%\. Two\. Engaging in Low Green House Gas (GHG) Emissions Energy Production\. There were two prior actions\. First, the government developed and adopted new energy efficiency labelling standards for non- ducted air conditioners and second, the government adopted procedures for standardized Power Purchase Agreement for biomass and waste-to-energy projects\. Outputs\. â¢ The investments on increasing grid-connected non-hydro renewable energy were implemented as targeted\. â¢ The new policy on energy efficiency labeling standards for non-ducted air conditioners was adopted\. â¢ The policies on industrial energy efficiency in the steel, pulp and paper, plastics and beverage industries were adopted in 2016 and 2017\. Outcomes\. â¢ There was no data available at the time of the ICR regarding the percentage energy saved in selected end-use sectors as compared with the business-as-usual (BAU) case\. The ICR notes that this data was to be collected through a survey by the Ministry of Industry and Trade in 2020\. Although quantitative surveys were delayed until 2021 (another change in government plans that happened after the approval of DPF-1, for which there was no opportunity to make a later adjustment), MARDâs reports show that protection and enrichment planting activities are being carried out\. â¢ There was a 905% (2,714\.8 MW) increase in installed capacity of grid-connected non-hydro renewable energy (mostly coming from solar energy)\. This vastly exceeded the target of 250% (960 MW) increase\. â¢ 24\.9 million tons of Carbon Dioxide (CO2) equivalent (cumulative) emissions were expected to be reduced by 2030, as compared to the baseline emissions pathway in Vietnamâs Nationally Determined Contribution\. The target for the indicator was not set by program closure, even though the target was originally planned to be finalized by the end of 2016\. The amount of the baseline emissions pathway was not provided\. On balance, notwithstanding the delays in implementing the AQM plans and establishing the Emission Registry due to the delays in legislation process, this Program directly contributed to GHG emission reductions, especially the CO2 equivalent emission reductions, by supporting the establishment of the new Page 9 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) policy framework and increasing the installed capacity of grid-connected non-hydro renewable energy\. On this basis, the achievement of the objective is rated substantial\. Rating Substantial PHREVDELTBL PHREVISEDTBL 5\. Outcome The relevance of objectives is High and that of design substantial\. Overall efficacy of the PDO is substantial, with the efficacy of two sub-PDOs rated substantial and the efficacy of one sub-PDO rated modest, in view of the limited achievements\. The achievement of overall development outcome is therefore rated moderately satisfactory\. a\. Outcome Rating Moderately Satisfactory 6\. Rationale for Risk to Development Outcome Rating Government Commitment\. The risk to development outcome due to lack of government commitment is modest, given that many of the reforms were approved by the Prime Minister and that concerted action on policy reforms was taken by the respective ministries (with some exceptions, such as policy reforms pertaining to Air Quality Management)\. Institutional risk\. The ICR (paragraph 54) notes that in areas where tangible outcomes were realized from the adopted policy reforms (such as adoption of technologies for efficient use of water in irrigation or energy), policy reversals are unlikely, given that adoption is self-financing\. Likewise, backtracking on reforms associated with power purchase agreements is not likely given that these agreements have already been locked in\. However, there is risk to the investments in forest restoration as these investments are predicated on there being an international market for forest carbon in the coming years\. a\. Risk to Development Outcome Rating Modest 7\. Assessment of Bank Performance Page 10 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) a\. Quality-at-Entry This operation built upon the experiences from an earlier Bank-financed climate change DPO series\. Lessons incorporated at design included: (1) Given the incremental steps needed for effecting policy reforms, the operation envisioned sustained programmatic and multisectoral engagement on climate: (2) Cross-sectoral platform to capture synergies between the efforts of separate ministries: and (3) high-level engagement supported by targeted technical assistance\. The operation was prepared in coordination with other donors lending to complementing activities (Japan International Cooperation Agency and the Agence Francaise de Development)\. The implementation arrangements were appropriate, with the Program Coordination Unit located in the Ministry of Natural Resources and Environment â the main agency responsible for coordination, monitoring and reporting functions\. Several risks were identified at appraisal, including substantial political risks and implementation risks, given the multi-sectoral nature of the CC and green growth program\. Mitigation measures incorporated at design, included extensive technical assistance to address the risks associated with the complexity of the policy agenda and limited implementation capacity\. The arrangements made at appraisal for addressing possible environmental impacts and fiduciary compliance were appropriate (discussed in section 10)\. There were minor shortcomings in quality at entry\. As indicated in section 3b, the operation was overly ambitious in terms of the operationâs timelines\. Quality-at-Entry Rating Satisfactory b\. Quality of supervision Many analytical products and tools were developed to inform upstream government policy during implementation (ICR, paragraph 59)\. The co-task team leader for this operation was based in the Bankâs Vietnam Office and this aided in communication and coordination between the Bank, the government and other development partners\. The support provided by the team aided in realizing the limited objectives of this operation, given that only one of an expected series of three operations was processed and the targets were being evaluated ahead of schedule\. The supervision team could have provided more institutional support for monitoring, following the withdrawal of assistance from the Japan International Cooperation Agency\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Satisfactory 8\. Assessment of Borrower Performance Page 11 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) a\. Government Performance There was a high level of Government engagement with the program (with the Prime Minister publicly affirming CC as a top priority and annually endorsing the policy matrix of the Governmentâs Support Program to Respond to Climate Change (SP-RCC)\. The ICR (paragraph 62) notes that the Government showed strong leadership on the development of the reforms/policy actions through consultations with both the public (ministries and provinces) and private stakeholders (civil society organizations, research institutions, academia and the press)\. The Government demonstrated sustained commitment and ownership to achieving the policy actions of the series, even in the face of reduced policy lending and uncertainty over processing of further operations beyond this operation\. On the other hand, the ICR (paragraph 66) notes that the endorsements by the Prime Minister and oversight by the National Climate Change Committee were narrowly focused on the lists of revised policy instruments, rather than on the key principles and outcomes of the needed climate reforms and that internal accountability was focused more on policy outputs rather than impact\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance The government ministries implemented the program\. There is no separate assessment of implementing agency performance\. Implementing Agency Performance Rating Not Rated Overall Borrower Performance Rating Moderately Satisfactory 9\. M&E Design, Implementation, & Utilization a\. M&E Design The results framework adopted by all development partners and by the Government for the Support Program to Respond to Climate Change (SP-RCC), was used for this operation\. Given that most of the areas were complex as evidenced in other countries around the world and that it would require long term efforts to show significant results on the ground, the results framework appropriately included a mix of strategic processes and outcome-oriented indicators\. The governmentâs existing monitoring and reporting systems were to be used for monitoring indicators, such as the establishment of provincial ICZMs and water source protection Page 12 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) corridors, increase in the farms utilizing advanced irrigation practices and increase in the number of cities with Air Quality Management plans\. There were some issues with M&E design\. The key outcome indicator pertaining to safeguarding natural resources in the water sector were inappropriate, as the indicator only called for establishment of water source protection corridors with action plans and not for outcomes from implementation of the action plans\. There was no results indicator for energy efficiency standards for household appliances due to data constraints\. b\. M&E Implementation The Ministry of Natural Resources and Environment established a full time Project Coordination Unit (PCU) for conducting monitoring and supervision\. The PCU also assisted the line ministries in synthesizing and reporting results on results of implementation\. During implementation, monitoring was undermined by the limited full-time staff at the PCU\. This was particularly so given the data had to collected from several line ministries\. c\. M&E Utilization The limitations of M&E design precluded monitoring of some operational activities\. M&E Quality Rating Modest 10\. Other Issues a\. Environmental and Social Effects According to the Program Document (PD, paragraph 110), the Bank conducted an environmental analysis to evaluate the effects of supported policy reforms on Vietnamâs environment, forests and other natural resources\. The analysis concluded that most prior actions were either likely to have positive environmental outcomes and that the potential adverse effects could be managed by the existing environmental policies and management systems of Vietnam\. The series did not trigger any safeguard policies, and the ICR does not report on any environmental impact\. b\. Fiduciary Compliance Page 13 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) A public Financial Management Assessment conducted at appraisal, concluded that the financial management environment of Vietnam was deemed to be satisfactory (PD, paragraph 115)\. The ICR does not report any financial compliance issues\. c\. Unintended impacts (Positive or Negative) Not applicable\. d\. Other --- 11\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Moderately Outcome Moderately Satisfactory --- Satisfactory Risk to Development Modest Modest --- Outcome Bank Performance Satisfactory Satisfactory --- There were moderate Borrower Performance Satisfactory Moderately Satisfactory shortcomings in Government performance\. Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 12\. Lessons IEG concurred with the ICR Team on the lessons derived from the program with some additional points\. 1 \. Strong engagement at the sector level is essential to address climate change and green growth, as they can critically affect program outcomes\. The governmentâs change in strategy to prioritize the provinces over the sectors (i\.e\. ministries) for the envisaged expenditure reviews under this Program resulted in the modest achievements on the sector-level targets\. Considering that the need for intersectoral coordination to address climate change had been pointed out since the preceding DPF series, it would be essential to strengthen sector-level engagement and coordination\. Page 14 of 15 Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review Climate Change and Green Growth in VN(P155824) 2 \. Strengthening high-level engagement with the focus on outcomes and impacts of the policies would enhance the efficacy of the program\. PDO indicators should be directly relevant to measuring outcomes that are attributable to project interventions and need to be monitored accurately to generate adequate and robust evidence on efficacy\. Focusing only on the delivery of tangible outputs would lower the level of achievements of development outcomes\. 3 \. Good practice on coordination among development partners is required to realize the benefit of their joint inputs\. Parallel financing and joint support missions by the Japan International Cooperation Agency, the Agence Francaise de Development and the World Bank complemented each other and provided integrated support to NDC implementation\. However, the institutional capacity risk that was identified at appraisal was not adequately mitigated\. The weakened engagement of stakeholders after the discontinuation of the direct technical assistance to the PCU negatively affected the achievements of the outcomes\. 13\. Assessment Recommended? No 14\. Comments on Quality of ICR The ICR was concise and candid in presenting the DPFâs achievements\. The ICR appropriately discussed parallel contributions from the Development Partners other than the Bank to the PDOs in the Efficacy section\. The ICR draws relevant lessons from the experience of implementing this operation\. Moreover, the ICR made a substantial effort to support the efficacy of the project by providing evidence that was not collected by the PDO indicators (ICR, para 43, para 47)\. On the other hand, the ICR is excessively long, (at 36 pages, it is more than twice the recommended length of 15 pages) and would have benefitted with better editing\. a\. Quality of ICR Rating Substantial Page 15 of 15	REVIEW
P095049	Document of The World Bank Report No: ICR0000351 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-30610 IDA-30611 WBTF-28292) ON A CREDIT IN THE AMOUNT OF SDR 13\.5 MILLION (US$ 18\.9 MILLION EQUIVALENT) TO THE REPUBLIC OF MOLDOVA FOR A FIRST CADASTRE PROJECT December 18, 2007 Sustainable Development Department Ukraine, Belarus and Moldova Country Unit Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization CURRENCY EQUIVALENTS (Exchange Rate Effective December 18, 2007) Currency Unit = Moldovan Lei US$ 1\.00 = 11\.48 MDL FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS BCO - Branch Cadastre Office BTI - Bureau of Technical Inventory CAS - Country Assistance Strategy ECA - Europe and Central Asia FMS - Financial Management Specialist GDP - Gross Domestic Product IDA - International Development Association LAS - Land Arrangement Office M&E - Monitoring and Evaluation MAF - Ministry of Agriculture and Food NAGCC - National Agency for Geodesy, Cartography and Cadastre NCB - National Competitive Bidding PAD - Project Appraisal Document PHRD - Japan Policy and Human Resources Development Fund PIO - Project Implementation Office PPF - Project Preparation Facility PRSP - Poverty Reduction Strategy Paper QAG - Quality Assessment Group SALRC - State Agency for Land Relations and Cadastre SAR - Staff Appraisal Report SIDA - Swedish International Development Association TCO - Territorial Cadastre Office TOR - Terms of Reference USAID - United States Agency for International Development VAT - Value Added Tax Vice President: Shigeo Katsu, ECAVP Country Director: Paul G\. Bermingham, ECCU2 Sector Manager: Motoo Konishi, ECSSD Project Team Leader: Ellen Hamilton, ECSSD ICR Team Leader: Maha Armaly, ECSSD ii MOLDOVA FIRST CADASTRE PROJECT CONTENTS Data Sheet 1\. Project Context, Development Objectives and Design\. 1 2\. Key Factors Affecting Implementation and Outcomes \. 4 3\. Assessment of Outcomes\. 8 4\. Assessment of Risk to Development Outcome\. 12 5\. Assessment of Bank and Borrower Performance \. 12 6\. Lessons Learned \. 15 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 15 Annex 1\. Project Costs and Financing\. 17 Annex 2\. Outputs by Component \. 19 Annex 3\. Economic and Financial Analysis\. 25 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 26 Annex 5\. Beneficiary Survey Results\. 28 Annex 6\. Stakeholder Workshop Report and Results\. 30 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR\. 31 Annex 8\. Comments of Co-financiers and Other Partners/Stakeholders\. 42 Annex 9\. List of Supporting Documents \. 44 Annex 10\. Project Indicators at A Glance \. 45 MAP No\. IBRD 35771 iii A\. Basic Information Country: Moldova Project Name: FIRST CADASTRE IDA-30610,IDA- Project ID: P035771 L/C/TF Number(s): 30611,WBTF-28292 ICR Date: 12/19/2007 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Borrower: MOLDOVA Original Total USD 15\.9M Disbursed Amount: USD 18\.0M Commitment: Environmental Category: C Implementing Agencies: Agency for Land Relations and Cadastre Cofinanciers and Other External Partners: US Agency for International Development (USAID) Government of Switzerland Government of Japan Swedish International Development Agency (SIDA) Government of Norway B\. Key Dates Process Date Process Original Date Revised / Actual Date(s) Concept Review: 05/26/1995 Effectiveness: 03/05/1999 03/05/1999 Appraisal: 02/10/1997 Restructuring(s): 06/16/2005 Approval: 04/23/1998 Mid-term Review: 09/10/2001 Closing: 02/28/2004 06/30/2007 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Low or Negligible Bank Performance: Satisfactory Borrower Performance: Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing Agency/Agencies: Highly Satisfactory Overall Bank Overall Borrower Performance: Satisfactory Performance: Satisfactory i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Performance Indicators (if any) Rating Potential Problem Project Yes Quality at Entry None at any time (Yes/No): (QEA): Problem Project at any Quality of No Satisfactory time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 75 75 Sub-national government administration 25 25 Theme Code (Primary/Secondary) Land administration and management Primary Primary Other financial and private sector development Primary Primary Other urban development Secondary Secondary Personal and property rights Primary Primary E\. Bank Staff Positions At ICR At Approval Vice President: Shigeo Katsu Johannes F\. Linn Country Director: Paul G\. Bermingham Roger W\. Grawe Sector Manager: Motoo Konishi Ricardo A\. Halperin Project Team Leader: Ellen Hamilton Mats Andersson ICR Team Leader: Maha J\. Armaly ICR Primary Author: Maha J\. Armaly Solvita Klapare F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The project's objective is to develop and implement a national unified real estate registration program for urban and rural land, and thereby to establish a system of clear and enforceable ownership rights, so as to promote the privatization of land and the development of real estate markets in Moldova\. The real estate registration system ii established under the project will provide: (a) property owners with security of ownership rights such that they can sell or rent real estate at fair market prices and pass on their holdings as inheritances; (b) commercial banks with the confidence necessary to give secured credit against real estate; (c) the real estate market with information on ownership and location of property as needed for the market to function effectively; (d) government agencies and institutions with basic information for urban planning and land management; (e) the real estate market with information on property values; and (f) the private sector with opportunities to develop in areas related to real estate registration (surveyors, notaries, valuers)\. Revised Project Development Objectives (as approved by original approving authority) Board approved additional financing of SDR 2\.0 million (US$3\.0 million equivalent) on June 16, 2005\. Project's development objective was not revised\. (a) PDO Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Revised Achieved at approval Target Completion or documents) Values Target Years Indicator 1 : Unified Cadastre Agency Implement proposal for Unified national Value consolidation of real estate cadastre quantitative or N/A TCOs with Not revised system for urban Qualitative) oversight of and rural land SALRC established strengthened Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments Within SALRC, the Cadastre Enterprise is unified with the 38 Territorial (incl\. % Cadastre Offices with support from an integrated, financial, reporting and IT achievement) system, which unifies the legal and physical cadastre of land and buildings, in rural and urban areas\. Indicator 2 : Develop Real Estate Market Value quantitative or NA As market Not revised Real estate market Qualitative) develops developed Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments Real estate market developed and fully functional\. Owners of houses register (incl\. % transactions of sales, rent and inheritance\. # of transactions grew from 23\.6 achievement) thous\.in 1999 to 201\.6 thous\.in 2006, reaching 1,103 thous\.over 9 yrs period\. iii (b) Intermediate Outcome Indicator(s) Original Target Formally Actual Value Indicator Baseline Value Values (from Achieved at approval Revised Completion or documents) Target Values Target Years Indicator 1 : Number of urban real estate registrations (in thousand, cumulative) Value (quantitative 5 330 Not revised 834 or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments (incl\. % Target was exceeded already at original closing date, i\.e\., 452,000 registrations achievement) as of end CY2003\. Indicator 2 : Number of extravillan (rural) real estate registrations (in thousand, cumulative) Value (quantitative 5 300 Not revised 3,280 or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments Privatization of agricultural land completed during 1998-2000 with assistance of (incl\. % USAID 'Land' Project included issuance of ~2\.8 mil\. ownership titles, allowing achievement) for mass registration during short period of time\. As of end CY2003, 2,942,000 registrations\. Indicator 3 : Number of real estate transactions (in thousand, cumulative) Value (quantitative 0\.3 15\.9 Not revised 1,103 or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments (incl\. % Target was exceeded already at original closing date, i\.e\. 455,000 transactions as achievement) of end CY2003\. Indicator 4 : New mortgage legislation introduced (laws, regulations) Value (quantitative -- Introduced Not revised Introduced or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments (incl\. % Law on Pledges passed in 2001\. The Law allows for fast foreclosure procedures achievement) available to commercial banks in case of unpaid loans\. Indicator 5 : Number of mortgages provided (% of registered properties / thousand) Value (quantitative 1% / (0\.1) 3% / (15\.9) Not revised 0\.3% / (14\.6) or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments In 2006 # of reg\. mortgages increased 9 times (to 14,600) compared to 1999\. (incl\. % Total # reached 72,800\. % of mortgages per year of total reg\. properties is less achievement) than SAR estimate since targeted # of reg\. properties was significantly exceeded\. Indicator 6 : Number of real estate agents iv Value (quantitative 24 40 Not revised 198 or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments (incl\. % achievement) Indicator 7 : Number of information requests to Territorial and Branch Cadastral Offices (% of registered properties / thousand) Value (quantitative 2% / (0\.2) 10% / (53) Not revised 5\.4% / (228\.9) or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments Total # of cadastre information inquiries per year increased by ~9 times (to (incl\. % 228,000) compared to 1999\. % of inquiries per year of total # of registered achievement) properties lower than planned since targeted # of reg\. properties was significantly exceeded\. Indicator 8 : Number of cadastral maps produced (thousand sqkm\., cumulative) Value (quantitative 4 30 Not revised 14\.061 or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments (incl\. % achievement) Indicator 9 : Number of (examined) training participants (number, cumulative) Value (quantitative 50 250 Not revised 3,578 or Qualitative) Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments Initial training (1998) for of surveyors of urban and rural areas - 660 participants, (incl\. % training during project implementation - 2,300 participants, private sector achievement) participants in cadastral survey training - 323\. Property valuation - 295 trainees\. Indicator 10 : Relevant property laws, regulations and normative acts introduced (Laws/Regulations) Value (quantitative -- Introduced Not revised Legal system in or Qualitative) place Date achieved 04/28/1998 02/28/2004 06/30/2007 06/30/2007 Comments Law on Real Estate Cadastre (1998) and its secondary legislation; Law on (incl\. % Normative Price and Procedure for Sale and Purchase of Land (1997); Law on achievement) Real Estate Formation (2004); Tax Code (Title VI Real Estate Tax (2000); Law on Valuation Activity (2002) Indicator 11 : Valuation procedures introduced (valuation system) Value (quantitative -- Introduced (2nd Not revised Introduced or Qualitative) year) Date achieved 04/28/1998 02/28/2001 06/30/2007 06/30/2007 v Comments Legislation and implementation regulations for property valuation based on (incl\. % market values in place\. Methodology for mass appraisal developed\. Valuation achievement) included in cadastre IT system providing clients with electronic data\. Indicator 12 : Licensing system introduced for operation of private real estate agents, surveyors, notaries, valuers etc\. Value All in 1st year, (quantitative -- except for valuers Not revised Introduced and or Qualitative) in 2nd year functional Date achieved 04/28/1998 02/28/2001 06/30/2007 06/30/2007 Comments Certification of surveyors by Cadastre Agency stipulated by law\. Notaries (incl\. % certified by Ministry of Justice\. Cad\. Agency established Board certifies achievement) qualifications of valuation experts\. Prof\. associations for surveyors, notaries and valuers operative\. G\. Ratings of Project Performance in ISRs Actual No\. Date ISR Archived DO IP Disbursements (USD millions) 1 06/24/1998 Satisfactory Satisfactory 0\.00 2 06/26/1998 Satisfactory Satisfactory 0\.00 3 03/24/1999 Satisfactory Satisfactory 0\.00 4 06/30/1999 Satisfactory Satisfactory 1\.55 5 12/20/1999 Satisfactory Satisfactory 3\.10 6 03/22/2000 Satisfactory Satisfactory 3\.48 7 06/19/2000 Satisfactory Satisfactory 3\.72 8 11/13/2000 Satisfactory Satisfactory 5\.20 9 06/25/2001 Satisfactory Satisfactory 6\.00 10 12/12/2001 Satisfactory Satisfactory 7\.12 11 06/27/2002 Satisfactory Satisfactory 7\.87 12 12/04/2002 Satisfactory Satisfactory 8\.61 13 06/18/2003 Satisfactory Satisfactory 9\.58 14 12/05/2003 Satisfactory Satisfactory 11\.02 15 03/25/2004 Satisfactory Satisfactory 11\.73 16 06/10/2004 Satisfactory Satisfactory 12\.41 17 11/10/2004 Satisfactory Satisfactory 14\.00 18 05/18/2005 Satisfactory Satisfactory 15\.46 19 01/02/2006 Satisfactory Satisfactory 16\.35 20 05/15/2006 Satisfactory Satisfactory 16\.49 21 10/17/2006 Satisfactory Satisfactory 16\.72 22 06/29/2007 Satisfactory Satisfactory 17\.12 H\. Restructuring (if any) vi ISR Ratings at Amount Restructuring Board Restructuring Disbursed at Reason for Restructuring & Date(s) Approved Restructuring PDO Change Key Changes Made DO IP in USD millions 06/16/2005 N S S 15\.69 Additional financing for scale- up of activities I\. Disbursement Profile vii 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal 1\. At appraisal in 1997, Moldova had embarked on a successful stabilization program leading to declining inflation from 3 digits in 1994 to about 11\.2% in 1997\. The new currency, the Lei, established at the end of 1993 began to appreciate against the three major trading partners then, Russia, Romania and Ukraine and stabilized for a period around 4\.7 Lei/US$\. Economic stabilization came at the expense of declining standards of living as reflected in the continued decline of GDP, which fell by about 60% between 1991 and 1994\. Negative growth slowed down to a negative 8% in 1996\. In 1997, Moldova became a blend Bank/IDA country eligible for IDA financing\. 2\. At the time of appraisal, Moldova had already chosen its reform path to a market economy, albeit at a slow and interrupted pace\. While the concept of private property was widely accepted, it was applied differently depending on location (urban vs\. rural), use (private vs\. commercial), and type (buildings vs\. land)\. Land was usually associated with agriculture use rather than with property in general; land use would translate into long-term "right of use", and land values in both urban and rural areas were still drawn up according to principles of fertility and use rather than in terms of location and market price\. 3\. Privatization of the housing stock started in 1991\. By 1997, more than 85% of the housing stock was turned to private ownership\. Privatization of buildings belonging to enterprises proceeded at much slower pace\. By 1997, about a third of revenue generating activities was in private hands, and the majority of enterprises obtained ownership of their buildings\. Privatization of land lagged dramatically behind the privatization of buildings due to government regulations defining a cumbersome and costly process for registration and titling\. At the time, about 90% of all land parcels in Moldova still belonged to the state\. Privatization of agricultural land was slowed down by the split up of cooperative farms (kolkhozes)\. 4\. Overall, Moldova's economic development was impeded by insecurity of property ownership and related institutional arrangements resulting in a lack of collateralized credit and difficult real estate transaction procedures\. Order and stability of the real estate market was needed to optimize the uses of land and property\. At the same time, due to privatization and economic changes, real estate transactions were on the rise, but overall the market was hampered by lack of tenure security\. Transaction costs were high due to lack of information\. 1\.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 5\. The project's original objective was to develop and implement a national unified real estate registration program for urban and rural land, and thereby to establish a system of clear and enforceable ownership rights, so as to promote the privatization of land and the development of real estate markets in Moldova\. 6\. At the time of project appraisal and negotiations, formal indicators through the logical framework approach were not explicitly required for projects\. Nevertheless, the following outcomes were defined where the project would provide: (i) property owners with security of 1 ownership rights such that they can sell or rent real estate at fair market prices and pass on their holdings as inheritances; (ii) commercial banks with the confidence necessary to give secured credit against real estate; (iii) the real estate market with information on ownership and location of property as needed for the market to function effectively; (iv) government agencies and institutions with basic information for urban planning and land management; (v) the real estate market with information on property values; and (vi) the private sector with opportunities to develop in areas related to real estate registration (surveyors, notaries, valuers)\. 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 7\. The Project Development Objectives were not revised\. The Board of Executive Directors approved additional financing of SDR 2\.0 million (US$3 million equivalent) on June 16, 2005\. Additional financing was requested by the Government to help finance the costs associated with scaling up activities to enhance the impact of a well performing project\. 1\.4 Main Beneficiaries 8\. The Staff Appraisal Report (SAR) identifies the direct beneficiaries of the project to be existing and prospective private owners of real property\. The project also encourages private sector developments in areas involved in project implementation, including private surveyor industry, private notaries and private real estate valuers, fiscal cadastre and effective environmental land management\. 1\.5 Original Components (as approved)1 9\. Component I\. MAPPING PROGRAM (Cost: US$6\.9M, Credit: US$3\.6M): The project finances production of new maps and updating existing maps in the thirty six rayons and municipalities (i\.e\. except Transnistria)\. Financing would be for selective surveying in support of mapping activities to facilitate registration of real property ownership\. This component was to cover about 50% of urban land and 20% of privatized rural land\. 10\. Component II\. URBAN CADASTRAL SERVICES PROGRAM (Cost US$8\.6M, Credit US$7\.2M)\. This component finances urban cadastral services to provide the institutional basis for registration in urban and intravillan areas, and storage and administration of ownership information to be readily available to all potential users\. Two subcomponents are: (a) Real Estate Registration Program: finances registration of ownership rights in urban and intravillan areas and storage and administration of ownership information to be available to users\. This includes: (i) reorganizing and strengthening the existing 12 former Bureaus of Technical Inventory (BTIs) in the largest municipalities into Territorial Cadastre Offices (TCOs); and (ii) support of these offices in ownership registration, title conversion and maintenance of the legal cadastre\. The project expected to register 330,000 or 50% of urban and intravillan properties\. 1Each component cost factors in physical and price contingencies 2 (b) Information Services Program: In urban areas, this component finances: (i) installation of cadastral databases in twelve TCOs, including development and maintenance; (ii) collection and registration of cadastral information; and (iii) transfer, consolidation and maintenance of the data to the National Agency for Geodesy, Cartography and Cadastre (NAGCC), later renamed and referred to hereafter as the State Agency for Land Relations and Cadastre (SALRC) allowing users to access the information\. 11\. Component III\. RURAL CADASTRAL SERVICES PROGRAM (Cost US$3\.7M, CreditUS$2\.8M)\. This component finances activities to provide the institutional basis for registration of ownership rights in rural (extravillan) areas and storage and administration of information to be readily available to all potential users\. Two subcomponents are: (a) Real Estate Registration and Title Issuing: This part finances in rural areas: (i) adjustment of registration techniques used in rural primarias and Land Arrangement Offices (LAS); (ii) reorganization of former BTIs into Branch Cadastre Offices (BCOs) and establishment of new BCOs for a total of 24 BCOs, and integrating LAS activities into BCOs; (iii) issuance of title deeds in the context of farm privatization; and (iv) registration of ownership rights to real estates\. The project expected to register 200,000 or 20% of privatized rural land\. (b) Information Services Program: This part finances in rural areas: (i) installation of appropriate cadastral databases in twenty four BCOs; (ii) collection and registration of cadastral information in these databases; and (iii) transfer, consolidation and maintenance of the data to SALRC to allow users throughout Moldova to access information\. 12\. Component IV: INSTITUTION AND CAPACITY BUILDING PROGRAM (Cost: US$5\.4M, Credit US$2\.3M)\. This component supports institutions participating in project activities\. It includes training, technical assistance, and establishment of the Project Implementation Office (PIO)\. (a) Training: (i) in project implementation to SALRC, TCO and BCO offices, including training in modern registration methodologies and institutional reorganization; (ii) for information technology specialists; (iii) in property valuation for real estate valuers and SALRC staff administering real estate valuation through the TCOs; (iv) study abroad for a geodetic engineer and photogrammetrist; (v) one year study abroad for university lecturers in cadastre, geodesy, topography, cartography, notarial law, and property valuation; and (vi) training equipment for SALRC and the Technical and Agricultural Universities in Chisinau\. (b) Technical Assistance to develop and expand institutional knowledge and capacities in: (i) project implementation; (ii) information systems; (iii) procurement; (iv) accounting; (v) legal development; (vi) training; (vii) property valuation; (viii) public information; (ix) mapping/photogrammetry; (x) digital mapping; (xi) land registration; (xii) cadastral surveying; and (xiii) global positioning systems\. (c) Project Implementation Office to coordinate, oversee and implement the various project components\. 1\.6 Revised Components 13\. The contents of the project components were not revised, except for re-allocation of credit proceeds amongst the different components, particularly from technical assistance to urban 3 and rural surveying given donor financing for the former activities\. In June 2005, an additional SDR 2 million (US$3\.0 million equivalent) was provided to the project to upscale activities under urban and rural cadastral services program components by: (i) additional surveying and registration of an estimated 400,000 - 450,000 objects; and (ii) upgrade of the existing information system\. 1\.7 Other significant changes 14\. Project design focused on the urban cadastre registration and surveying where housing privatization had progressed sufficiently by appraisal\. The rural component was initially designed to be small to test developments in the privatization of agricultural land\. Policy discussions were still ongoing regarding rural/agricultural privatization given the primacy of the agriculture sector in Moldova, the concern of the Government at that stage about the impact of potential change in ownership of an important productive sector, and the competing political demands\. By the early stages of implementation, the Government, with support from the international community in general, and from the World Bank and the USAID Land Project in particular, took the decision to move forward with farm privatization and the break up of collective farms\. The Government requested and the Bank agreed that the project could register rural land parcels privatized under the Land Project, and not financed by USAID\. 15\. There were two amendments to the IDA credit, which extended the project closing dates by 21 months until November 2005\. The extensions allowed for the signature and completion of pending surveying contracts and use of the re-allocated funds from equipment and TA activities that were provided by other donors to the main surveying and registration activities under the project\. The second extension was necessary to overcome delays in the procurement and implementation of the scheduled surveying contracts, as well as to finalize the delayed registration of properties in the capital Chisinau due to complexities related to registration of the land in excess of privatization entitlements\. To scale up the activities of the project and to enhance the development impact, additional financing of SDR 2 million (US$3\.0 million equivalent) was approved in June 2005\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 16\. Project preparation was extensive, and supported by two Project Preparation Facilities (PPF-P2870 for US$700,000, IBRD-P2871 for US$1 million), two PHRD Grants (JPN-29498 for US$681,500, and JPN-27118 for US$396,500) and IDF Grant (WBTF-28292 for US$195,000)\. Activities financed with these funds helped to set up the Project Implementation Office with appropriate skills and to establish business procedures for the project\. These funds helped establish business procedures for the SALRC, and initiate an extensive public information programs\. Project implementation procedures were strengthened through pilot programs in three test areas involving mapping, surveying and registration activities, which served as a basis to develop adequate methodology and project design\. 17\. At the time of appraisal, there was a risk in undertaking this project due the far reaching reform pursued while Moldova was undergoing a new environment of privatization and transition to the market economy, and given the nature of the coalition government at the time, which had different opinions on the pace of reform, particularly in the privatization of agricultural land\. The Bank and the Government succeeded in furthering essential reforms that were necessary to 4 establish private property ownership as a crucial step towards transition to a market economy\. This was in full compliance with the Country Assistance Strategy (CAS) and continues to be a theme in strengthening the transition and private sector development\. The quality of the project was further strengthened by the provision of training, and grant technical assistance by Sweden and Switzerland\. 18\. While a quality at entry review was not undertaken, the Quality Assessment Group (QAG) assessment of the project during supervision (September 2004) confirmed that the project design at entry was satisfactory with sound basic parameters, specially the impact monitoring indicators\. During preparation, the task team collaborated across sectoral boundaries with ECA Agriculture Group, which had a special interest in rural cadastral work in Moldova and experience in rural cadastral work in other ECA countries\. This collaboration was assessed as a strong element of project preparation and supervision\. 19\. Project was rated as potential problem project for a period in 2000/2001\. The reason for this rating was mainly related to problems that were common to the portfolio, including lack of counterpart funding due to Moldova's deteriorating budgetary situation, as well as some reversals in reform that gave the country a risk flag\. The budget/counterpart funding problem was solved at the country level with counterpart funding provided by a Dutch Grant to Moldova to co-finance Bank supported operations\. 2\.2 Implementation 20\. Project implementation arrangements were well established during the preparation of the project through the pilot testing\. At the beginning of the project, the financial management capacity at the SALRC and the PIO was limited\. Technical assistance was provided and a financial management software `1 C' produced in Russia and broadly used in the region, was introduced satisfactorily to the project, and Bank financial management requirements were met\. In procurement, at the beginning of the project, the PIO opted to use small contracts (small works and then NCB) for surveying to first address the need to strengthen a relatively skilled surveying industry, but one that had little experience in the market\. This worked well in providing the necessary work experience for local companies, and was supported with training\. Firms bought necessary equipment and updated their staff skills to carry out the project\. However, the process proved to be too slow to achieve the project objectives in the time frame\. The Bank worked with the PIO to start larger surveying contracts using ICB procedures\. Foreign firms entered the market and, while the per parcel cost was higher than earlier works by small local firms, the management experience and increased competition contributed to project progress, as well as to the development of the market\. Foreign firms sub-contracted to local ones and improved the work environment that Moldovan firms needed to work within and adapt to a more competitive environment\. The mapping program was to be implemented by INGEOCAD, the mapping arm of the agency, which was the recipient of Swiss funding in the form of sophisticated mapping equipment, technical assistance and training\. However, INGEOCAD could not keep up with the demands of the project in a timely manner, largely due to loss of its well trained staff (for abroad)\. With this delay, the NAGCC opted to have more mapping done by ground methods at cheaper rates, though unfortunately at poorer quality, and therefore does not show under the mapping component\. 21\. The project was operating in a difficult political environment, from reform minded coalition governments that were changing often, to a more stable Government, which, however, was more hesitant about sudden and far reaching reform\. As a result, there was pressure on the 5 SALRC and attempts to change its reporting requirements to specific ministries, rather than the recommended independent office of the Deputy Prime Minister\. The Bank took quick action to stop such attempts and to keep the project on track\. At the same time, and due to similar political pressures, turnover of agency management increased\. In most cases adverse impact was averted due to strong ownership of Central Government, particularly non-sectoral ministries, such as Ministries of Finance and the Economy\. The final agreement not to replace the PIO manager and continue with the effective management of the Deputy Director of the PIO was a step in the right direction to stop such attempts and to keep the project on track and forward looking\. 22\. The East Asian and later Russian financial crisis, which occurred in the late 90's contributed to deterioration in the economic situation in Moldova\. Counterpart funding became more difficult to obtain\. The situation was solved with the Dutch Government grant to support the Bank portfolio in Moldova, which was necessary during 2000-2002\. From then on, while there were some delays in government counterpart financing, the problems were often solved expeditiously\. 23\. While not required under the project, the Ministry of Finance required repayment of the credit from the SALRC\. The SALRC paid the commitment charges, which were very low, in the first five years of the project\. The long term assessment by the PIO indicated that payment of principal would need substantial tariff increases, which were being resisted by some stakeholders, including from within the Government\. The tension created by these conflicting demands on the SALRC encouraged it to be versatile, innovative, and to take the lead in the discussions on financial sustainability of the cadastre system\. With the regular progress and financial reports, the PIO was able to show the difficulty of satisfying these competing demands without cooperation from other stakeholders\. Government agencies were not paying for the services they were increasingly demanding from the cadastre system\. The PIO was also able to show that the strategy of low tariffs (advocated to develop rural and agricultural land markets) was being undermined by notaries, who increased their fees many fold as they exercised a form of monopoly\. Additionally, the PIO monitored the increased tax revenues due to improved cadastre, both at the local and central level, and argued that since cadastre benefits accrue both at the national and local levels, all private and public users and beneficiaries should bear the cost of developing and maintaining the system\. As a result, the PIO was able to convince the Government to change the requirements to: (i) regulate notary fees; (ii) make Government agencies pay for the services required; (iii) increase the income of the Cadastre Enterprise from other sources by providing services to banks, real estate agents, valuers and others; (iv) request an exemption from 18% value added tax; and (v) change the base of fees to be the value of the property whereby wealthier real estate holders can shoulder more of the costs\. 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 24\. The appraisal Monitoring and Evaluation plan was prepared during the early stages of the Bank's emphasis on a proper monitoring and evaluation system\. The project preparation was launched before the logical framework became a standard attachment of Project Appraisal Documents (PAD) (August 1997)\. The Staff Appraisal Report identified a list of outcome/impact indicators in its Annex 4 that were monitored by the PIO throughout project implementation, despite the fact that some of the indicators were not important for the tracking of the project\. For example, the number of laws passed does not indicate good progress if one does not look into the quality of the laws and their implementation\. On the contrary, too many laws do not necessarily mean good progress\. For this reason, and with project implementation experience, the M&E concept began to be better understood by the Bank and Government teams\. In January 2000, an easy-to update one page `Project at a Glance' table was introduced to inform decision makers on 6 the project progress and to help the task team follow progress in a more informative manner (see Annex 10)\. The monitoring indicators tracked the usefulness of the system, the progress in survey and registration work by location (rural and urban), as required by the project, but also by type, such as transactions including encumbrances, as well as users (banks, valuers, government), which gave good indication as to the development of the real estate market\. The PIO supervised the survey work very closely and worked with contractors and met with them regularly to solve problems\. The PIO maintained very close ties with registration offices in the local governments, provided training and ensured efficient and correct exchange of data through extensive training and monitoring by its skilled technology team\. 2\.4 Safeguard and Fiduciary Compliance 25\. Safeguards\. There were no safeguard risks in the project (Category C)\. No social risks due to the project arose during implementation\. 26\. Financial management faced some hurdles at the beginning of the project, given the renewed emphasis and requirements by the Bank and the lack of experience in Moldova\. Financial staff were hired and trained\. A software acceptable to the Bank and utilized in the region was implemented at the PIO and staff were able to manage the system satisfactorily\. Quarterly financial reports have been prepared by the PIO staff and submitted to the Bank, generally with little or no delays and with no significant discrepancies\. Audit reports were undertaken annually with little or no delays\. Audit reports had unqualified opinions, except for the audits of FY 2004-2005\. The qualification received was explained as to the inability of the new auditor to verify project cumulative accounts (not usually in auditor's TOR), i\.e\. accounts of previous years since audits were done by different audit firms\. Annual audited project statements, however, were found to be acceptable\. The auditors mentioned a few internal control issues and recommendations to address those\. PIO/SALRC management followed up on the recommendations of the auditor to the best of its abilities\. The final audit of the project financial statements, due June 30, 2008, will be undertaken after the end of grace period (i\.e\. after October 2007)\. 27\. Procurement was well established as the PIO gained experience and technical assistance during preparation and the early stages of implementation\. Staffing was generally stable throughout project implementation with limited turnover\. PIO management opted to utilize small contracts to strengthen the bidding survey industry, which was technically competent, but lacked the necessary managerial skills to operate under competitive procedures\. In order to expedite project implementation, the Bank insisted on initiating ICB procedures\. Foreign firms entered the market and sub-contracted to local firms, thus helping the development of the local surveying contractors\. While some hurdles and complaints arose as to the use of foreign contractors and their higher costs, the knowledge transfer and progress of work became apparent\. The number of complaints increased in the last few years of the project, mainly a reflection of increased knowledge of Bank procedures by contractors\. Complaints were resolved by the PIO after consultation with the Bank, but largely with minimum Bank interference\. One case was reported to the Department of Institutional Integrity\. There was suspicion of collusion amongst contractors, including changes made to bids after they were submitted\. These charges were communicated to the PIO, but were extremely difficult to prove irrevocably and in a timely manner\. The Bank gave the PIO the option to proceed with the same proposed bid award with the potential for further investigation and declaration of misprocurement/cancellation of part of loan if any wrongdoing was proven, or to go through rebidding\. The PIO selected to rebid\. Progress reports regularly included progress on procurement and updated the procurement plan\. 7 2\.5 Post-completion Operation/Next Phase 28\. The provision of additional financing to the First Cadastre Project gave the SALRC/PIO time to prepare for the Bank's exit\. Efforts in the last 3 years focused on the sustainability of the project and plans beyond Bank assistance\. SIDA, in particular, provided focused support for these activities and assisted the PIO in preparing a business plan and strategy for the cadastre system\. Earlier actions and discussions on fees also prepared for financial sustainability\. In 2005, a corporate network was established to connect all 38 regional databases into a single centralized database of cadastre\. This became the basis for the establishment of the Cadastre Enterprise encompassing the central office at the SALRC, with PIO and other staff, and the 38 regional offices\. The corporate plan includes steps to expand services, upgrade and maintain the system and to improve its security and reliability\. The PIO has been successful in developing the strategy and in bringing together several stakeholders inside and outside the government for its support\. In 2007, the Parliament enacted amendments to the Cadastre Law stipulating that access to the central database of cadastre shall remain free for public institutions, whereas all operational costs related to the issuance of hardcopy information shall be covered from the state budget; and approved a Tariff Methodology stipulating the recovery of operational costs for the Cadastre Enterprise and its branch offices\. By 2006, specialized customers, such as commercial banks, real estate agents, brokers and private surveyors could access the centralized database\. About 50 subscribers to the system pay 350 leis per month for access\. By 2006, mass registrations (financed by the credit) constituted only 6% of the revenue of the Cadastre Enterprise, and the remainder was generated from other activities mainly from individual registrations and information requests paid for by customers as well as from requests for valuation of individual properties\. 29\. Moldova is firmly on the road to a market economy\. The physical and legal cadastre supports this route by recording private ownership and establishing the essentials for the development of the real estate and free markets\. Support for the objective of the project from several stakeholders is anchoring sustainability\. Owners are registering their properties and transactions\. Banks are using cadastre data to verify ownership and to register encumbrances\. Private investors request data from cadastre to verify property ownership before taking investment decisions\. Local governments are utilizing cadastral data to improve collections of property taxes and to improve their planning\. National Government is providing funding to expand the utilization of the system to develop addressage and fiscal cadastre\. 30\. More than 82% of real estate objects in Moldova are now surveyed and registered\. While the SALRC attaches high priority to completing the surveying and registration of all properties, it is also focusing on ensuring the development, maintenance and security of the system to avoid obsolescence\. The SALRC, through the Cadastre Enterprise, continues to attract bilateral support\. SIDA plans to continue support to the SALRC, particularly to expand the use of the cadastre system as the basis to complete the fiscal cadastre\. SIDA also continues its support in the business plan and strategy development\. Norway has expressed interest in providing support for photogrammetry\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation 31\. The project development objectives as stated in the SAR are clear and important to the agreed CAS between the Bank and the Government of Moldova\. A modern secure cadastre and 8 registration system forms a basis for Moldova's objective of strengthening policies to develop a competitive market economy\. The project outcomes continue to be relevant to the support of the current CAS priority to sustain growth and improve access to services and infrastructure, in addition to supporting Moldova's aspiration to strengthen its private sector and adapt its legal and institutional framework to approach EU standards\. The First Cadastre Project outcomes are crucial to the development of the private sector in Moldova, which continues to be an important theme in the development of strategic agreements between the Bank and the Government (CAS and PRSP)\. 3\.2 Achievement of Project Development Objectives 32\. The project's primary development objective to establish a national unified real estate registration program for urban and rural land has been achieved successfully\. The cadastre system and its supporting legal framework is based on modern practices and establishes clear and enforceable ownership rights that are necessary for developing a real estate market\. The monitoring indicators recorded throughout implementation and achieved by the end of project implementation show the progress in these areas\. The State Agency for Land Relations and Cadastre and its legal, economic cadastre, geodetic, cartography and mapping departments received training and institutional strengthening\. Within SALRC, the Cadastre Enterprise is unified with the 38 territorial cadastre offices with support from an integrated, financial, reporting and IT system, which unifies the legal and physical cadastre of land and buildings, in rural and urban areas\. 33\. The secondary objectives have also been successfully achieved\. These objectives included ensuring that: (i) property owners with security of ownership rights such that they can sell or rent real estate at fair market prices and pass on their holdings as inheritances; (ii) commercial banks with the confidence necessary to give secured credit against real estate; (iii) the real estate market with information on ownership and location of property as needed for the market to function effectively; (iv) government agencies and institutions with basic information for urban planning and land management; (v) the real estate market with information on property values; and (vi) the private sector with opportunities to develop in areas related to real estate registration (surveyors, notaries, valuers)\. The cadastre system provides owners with security and enables them to make transactions with confidence backed by legal registered records\. Mass urban registrations are about 2\.5 times the planned numbers and are at about 51% of the estimated number of real estate objects in urban areas\. About 82% of estimated total plots have been registered\. In addition, selective registrations based on transactions reached 1\.1 million\. Commercial banks, notaries, valuers and real estate agents now request information from the cadastre to verify transactions and other information for their customers\. The number of inquiries increased from about 25,000 in the beginning of the project and surpassed 200,000 inquiries in the last three years of the project reflecting increased usefulness and trust of the system and a maturing of the real estate market and its actors\. A fiscal cadastre has been developed, and the property tax law has been revised\. Property tax collections have improved based on the better information provided by the system\. 3\.3 Efficiency 34\. At appraisal, the project was expected to spur economic growth through: (i) providing guarantee of ownership and security of tenure; (ii) facilitating the functioning of real estate markets; (iii) supporting privatization in the agricultural sector by providing mechanisms for facilitating the restructuring of Kolkhozes; and (iv) supporting effective urban planning and 9 private sector development\. Such benefits were difficult to estimate then and remain difficult to quantify given the complexity of the development process that occurred in Moldova during implementation, and the many other factors that impact such benefits, which would make it difficult to isolate the impact of the project by itself\. For the financial analysis, the SAR projected costs and benefits for the life of the credit; i\.e\. 35 years, based on cost estimates at the time\. Financial benefits were expected to emerge throughout the period through incomes from fees for registrations, provision of information and royalties from the sales of maps\. The project's financial rate of return calculated based on appraisal estimates reached 8\.5%, but given the public goods nature of the project, the economic rate of return was expected to be higher\. 35\. The SAR assumptions and projections were simulated using data and information provided by the PIO\. According to this data, the majority of revenues to the project came from providing information to the private sector (commercial banks, valuers, real estate agents and notaries)\. Other important revenues due to the project are revenues from selective registration\. Computer and other equipment were assumed to be replaced every fourth year\. Based on these assumptions, the estimated financial rate of return on the project is estimated to be 24%\. 36\. At the time of the SAR, a fiscal cadastre was not envisioned (beyond a study)\. The cadastre system assists to better identify real estate objects and their development (10-20% more identified according to the PIO)\. In addition, a value based fiscal cadastre has been adopted which further increases the accuracy of market values of properties, thus increasing the potential for the public sector to recover the costs and continue to replace investments and to maintain and improve the system\. These potential benefits are not included in the analysis above, given the lack of data and the need for further investments, the costs of which are not known at this stage\. (Data provided on increase in collection of local property tax does not verify a 10-20% increase in collection)\. However, it is expected that these public revenues make the overall cost recovery for the cadastre system and its maintenance a real possibility\. Benefits of the system will continue for the future, and further estimates or attempts to quantify the impact remain speculative at best\. The necessity of a real estate registration system in any market economy is indisputable, and the benefits that could derive from such a system remain to be further tapped in Moldova\. 3\.4 Justification of Overall Outcome Rating Rating: S 37\. The overall outcome rating is based on a combination of the achievement of objectives, relevance and efficiency\. The relevance of the project development objective is significant\. The project objectives were clear yet broad, and have been achieved\. The main objective of developing and implementing a national unified real estate registration program for urban and rural land, and establishing clear enforceable ownership rights has been fully achieved in a satisfactory manner\. Moldova has established one of the most efficient cadastre systems in the region\. It is a unified system where a real estate transactions and information are secured in one system under the responsibility of the Cadastre Enterprise\. The secondary objectives have also been achieved\. The legal and infrastructure basis for a real estate market has been developed and is the cornerstone for consolidating land in rural areas through sales and leases\. Owners of real estate objects are using the system to undertake transaction of sales, rent and inheritance\. Commercial banks have expressed their confidence in the system and their desire to have more immediate access to the relevant data for them to expedite their own procedures\. The Government has initiated the use of the available system as a base for the further development of a fiscal cadastre system for property taxation\. The surveying industry has benefited from this project 10 which enabled it to consolidate to more efficient entities and provided the necessary jobs for the industry to mature\. Moldovan surveyors were able to compete and win in international competition\. Public sector surveyors remain employed by municipalities, but all project activities were done by the private sector, which practically did not exist before the project\. The development of valuation service industry is in its early stages and is being strengthened with the development of the fiscal cadastre\. The notary industry developed with hick ups, sometimes demanding fees that were too high, but the issue was also addressed by the PIO/SALRC raising it to higher Government levels\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 38\. While the project did not specifically target poverty, it had a profound impact by creating a market and facilitating transactions for real estate assets\. With the economic hardships of the disintegration of centralized planning, the change and loss of currency values, savings and employment, land and housing were the immediate real assets that were transferred to the population following the fall of centralized planning and state ownership\. These assets maintained their relative value and use during the difficult times and conditions improved significantly soon as Moldova's economy picked up momentum\. Socio-economic impact assessment carried out in mid-2003 indicates that household utilized their real estate assets as part of their wealth to weather economic hardships and/or to expand their economic potential through lease or sale of such assets\. As the economy in Moldova recovers and is on a growth path, the real estate sector is expected to play a role as a growth pole and to attract investments\. The cadastre system helped create the foundations of a more efficient and secure market to trade real estate assets and/or create new ones\. The real estate ownership framework in Moldova treats all citizens equally and is gender and ethnicity blind\. (b) Institutional Change/Strengthening 39\. Institutionally, the project successfully achieved its objective in establishing a modern institutional and legal framework for real property registration in Moldova\. The legal framework has been introduced and strengthened\. The single agency model is based on best practices by international standards that facilitates the transactions for the consumer and avoids duplication among different institutions\. The SALRC has started to make the cadastre system useful for several other purposes such as the establishment of a cadastre of addresses, and the development of fiscal cadastre\. The cost recovery requirement in the project has put the pressure on the SALRC to improve efficiency and to open dialogue with government and other stakeholders on the benefits of well maintained and responsive cadastre system\. Strong skills and capacities have been built in the SALRC, particularly in management, surveying, technical advances, and valuation\. Training had also been instituted in the Technical and Agricultural Universities that participated in training abroad, particularly in Sweden\. SALRC provides training, certification and licensing for valuers and surveyors\. Associations of cadastre professionals (real estate, valuation, surveyors) have been established with an eye on keeping professional standards of the industry\. (c) Other Unintended Outcomes and Impacts (positive or negative) 40\. Outcomes were largely as intended, but some surpassed expectation\. In particular, the number of parcels surveyed and registered went beyond appraisal estimates, largely due to 11 SALRC integrating the work of several donors to the benefit of the cadastre system\. The advance in the development of the fiscal cadastre with SIDA's assistance was also beyond expectation\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 41\. This ICR does not require a Beneficiary Survey\. A social impact assessment was carried out in mid-2003 to assess opinions of several stakeholders\. A team of international and local social scientists carried out field research throughout Moldova, including discussions with 185 stakeholders and key informants\. The work included an extensive literature review, qualitative interviews, a quantitative survey of some 600 respondents, and a series of focus groups\. The study was undertaken during a difficult period of Moldova's development when the country had just started to experience positive growth, yet the impact of more than a decade of economic decline remained strong\. The study noted difficult circumstances such as declining secondary cities, deteriorating housing stock, out-migration and human trafficking, corruption, agricultural fragmentation\. The study warned against the continuation of such an environment on the long term development of the cadastre system\. Despite the difficult environment, the direct impact and society's perception of the project and the future role of the cadastre system remained positive\. Households as well as businesses found the system fair and workable, and were able to utilize their real estate holdings to enhance their livelihoods\. 4\. Assessment of Risk to Development Outcome Rating: L 42\. Moldova is well on its way to a market economy, where private property forms the cornerstone\. Privatization has largely been completed, a real estate market is prospering and society as a whole has bought into the system and depends on it for economic activities\. The system has grown to encompass other functions such as fiscal cadastre, as well as infrastructure planning and monitoring\. The cadastre system will continue to strengthen Moldova's market orientation\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory 43\. The Bank's performance during project preparation was satisfactory\. Bank intervention was timely and successful in introducing fundamental important reforms in privatization even when there was still debate on privatization of rural land in the country\. This was in line with the Bank Country Assistance Strategy, to support of privatization and transition to a market economy\. The Bank team mobilized resources, two PHRDs, two PPFs and an IDF grant to initiate the process, review experiences and test hypotheses until a system was agreed that was best fitted to Moldova's situation\. The Bank supported the concept of a unified cadastre system - which is now considered best practice internationally, and provides efficient registration procedures for property owners, and allows for expansion of the system for multiple uses\. Pilot testing during preparation helped develop practical methodologies for project implementation, and provided useful on the job training to PIO staff in all aspects of project implementation\. 12 44\. Project risks and their mitigation measures were identified in detail during preparation/appraisal\. They included the institutional and regulatory framework for having a unified agency treating all types of properties in Moldova\. This was mitigated prior to project implementation through requirement for essential laws to be passed prior to Board approval\. The acceptance of the system by the population and the demand for information by other stakeholders were important risks\. A public information program was included in the responsibilities of the agency as well as training for stakeholders\. 45\. Project preparation included coordination with other donors\. In addition to mobilizing Japanese PHRD grants to provide essential funding for the Government to prepare the project, the preparation team sought other funding from interested donors, particularly Sweden, which continued throughout project preparation\. Switzerland maintained a long term relationship in the early years and provided valuable equipment and training, which released resources for use in more surveying and registration activities\. Norway provided funding during preparation for the public information program\. The team remained in close contact with and cognizant of the operations of the USAID in rural areas throughout project preparation and implementation\. 46\. Preparation utilized lessons learned from other operations\. The Moldova First Cadastre Project was prepared at a time when several other similar projects were prepared in the region (e\.g\. Romania, Kazakhstan, Armenia, Georgia, Russia and Ukraine)\. There was a lot of learning amongst these projects, though the design of the projects was not the same and took into consideration country circumstances and government desires\. Reciprocal exchange study visits were conducted between Moldova and Georgia cadastre projects in mid-term implementation involving about 15 members for each trip\. (b) Quality of Supervision Rating: Satisfactory 47\. The Bank supervised the project closely with an average of two missions a year\. Procurement specialist joined missions regularly, and at least one FM supervision mission was undertaken a year\. In addition, the Bank mobilized specialized skills in surveying and cadastre development, training and legal framework and used them at critical stages of the project, and in mid-term for assessment purposes\. Independent consultants from neighboring countries were brought in to assess progress on developments in the valuation and notary sectors, before deciding on canceling the proposed studies indicated in the project documents\. 48\. The Bank kept in close contact with other major stakeholders, including the Ministry of Finance and the Deputy Prime Minister, to whom the SALRC was reporting during implementation\. The Bank team effectively used and cooperated with the management of the Bank's country office in Chisinau to avert unnecessary interferences that might have impacted the direction of the project\. The Ministry of Finance support in these matters was extremely fruitful\. The Bank continued to cooperate with major donors, including USAID and SIDA and helped mobilize funding from Norway\. 49\. A Quality of Supervision Assessment was undertaken in September 2004 and found Bank supervision performance to be satisfactory with elements of best practice\. The task team's collaboration across sectoral boundaries with ECA Agriculture Group, which had a special interest in rural cadastral work in Moldova and experience in supervising rural cadastral work in other ECA countries, was assessed as a strong element of supervision process\. Focus on Development Effectiveness was rated highly satisfactory to reflect the efforts of the task team to 13 shift longer term issues of governance and sustainability well in advance of project completion\. Condor and Realism of Project Performance Ratings was also rated highly satisfactory, given the full and explicit discussion on issues and careful calibration of ratings\. Supervision of Fiduciary/Safeguards Aspects and Adequacy of Supervision Inputs and Processes were rated satisfactory\. (c) Justification of Rating for Overall Bank Performance Rating: Satisfactory 50\. Bank played a key role in supporting the Government in the development and implementation of this project\. The Bank mobilized resources for project preparation and development, and coordinated with other donors to mobilize training and technical assistance\. The Bank supported the Government's efforts to mobilize additional donor funding and worked closely, particularly with SIDA to continue and expand its support\. In addition, the Bank worked with USAID to increase registration in rural areas as the opportunity developed\. 5\.2 Borrower Performance (a) Government Performance Rating: Satisfactory 51\. The Government remained committed to the project, and provided the counterpart funds necessary to ensure implementation\. The Government monitored the project individually and within its mandate for monitoring the World Bank portfolio\. The Ministries of Finance and Economy provided strong support and balanced independent views on project implementation and direction at critical junctures when strong decisions were needed to ensure continued progress of the project\. (b) Implementing Agency or Agencies Performance Rating: Highly Satisfactory 52\. The PIO remained part and parcel of the Agency for Land Relations and Cadastre, and was not an additional or separate entity\. The PIO drew upon the professional staff of the SALRC to implement the project\. A procurement specialist and additional accounting staff were recruited to satisfy Bank requirements\. This proved very useful in utilizing and augmenting existing technical skills that remain with the SALRC\. Despite turnover in the management of the SALRC and the PIO in the beginning of the project, there was little overall staff turnover and the managerial situation stabilized\. The stable staffing ensured the continuous good implementation of the project\. Staff received state of the art training in Moldova and Sweden and developed professional skills in IT, legal, geodesy, cartography, finance and property taxation that remain valuable and necessary for the workings of a real estate market\. The knowledge of the PIO of the Moldovan environment, its adaptation to World Bank procedures and requirements, and its steadfastedness in resolving problems and improving the overall system is exemplary and deserves high praise\. The final decision to appoint the deputy manager of the PIO as the acting manager for the project for the last 3-4 years of project implementation was a good example of the cooperation between the Bank and the Government to stop political infighting\. The deputy manager was capable of maintaining PIO staff morale, keeping excellent contact with all donors and Government agencies, and mobilizing additional financing from the Bank and other donors\. 14 (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory 53\. Overall support of the Government for the project was satisfactory\. Counterpart funds were provided largely on time, at the same time, good oversight on expenditures and progress was kept\. The Government intervened at critical junctures to make decisions to keep the project on track, such as in the appointment of PIO manager, as well as to stop attempts to change the independence of the SALRC from sectoral ministries\. The performance of the SALRC and the PIO, their adaptation of Bank requirements, and their leadership in preparing the sustainability strategy and discussions with the Bank and the government are good examples of the satisfactory performance\. 6\. Lessons Learned 54\. The project benefited from the Bank's experience in developing cadastre systems, but also from the knowledge of the counterpart of the situation in their country\. Cadastre projects need a long period and sustained effort for their preparation and for the implementation results to become apparent\. The Bank needs to be flexible and adaptable\. The PIO's continued strong public information campaign sustained the interest of the population and the success of the registration program\. 55\. A unified cadastre system that is not tied to sector ministry eases the necessary coordination process and avoids specialized interests or a focus on a particular sector at the expense of other (e\.g\. urban vs\. agricultural properties)\. While agricultural land constitutes the larger part in terms of absolute area or plot numbers, the value of the system and its future development potential is likely to be skewed towards urban real estate properties because of their higher market value, the potential for use in urban development and the fiscal cadastre system\. 56\. The modular approach to the development of the IT system was beneficial to the project\. The development of the IT system was undertaken by the PIO staff themselves with international design support and advice at critical times, but the full development of the system was not contracted out\. The contracting process for IT was found to be too expensive, complex and lengthy, with little fall back for the PIO to correct errors\. The IT staff was resourceful, understood the needs of the system, and was appropriately trained on an on-going basis to be able to develop and upgrade the system\. Skills and ownership were higher and retained at the PIO (while some turnover took place as those skills became very valuable in the market)\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 57\. The Bank received the Government's report on the completion of the project through the Ministry of Finance on August 8, 2007\. The summary of the report is provided in Annex 7, and the full report available in the files\. The completion report assesses all project objectives relevant and achieved\. After closing of the project, the Government has put a strong emphasis on the future sustainability of the cadastre system\. A Strategy for Sustainable Development of Cadastre has been developed with specific actions and timelines for its implementation\. Support from donors (SIDA, Norway) has been secured to implement the strategy\. 15 58\. The completion report has identified possible internal and external risks related to the future development of the cadastre system\. These relate to (i) dependency of the financial sustainability of the system on economic growth and land market development; (ii) continuous political support to undertake such initiatives as reducing transaction costs, simplifying procedures and increasing transparency of the register to the public; (iii) public trust related to ensuring security and reliability of the system; and (iv) continuous cooperation with external donors\. 59\. The final draft ICR was sent to the Government in November 2007, and a letter of acknowledgement and agreement with conclusion was received on December 17, 2007 and is attached to the Annex 7\. (b) Cofinanciers 60\. The Swedish Aid Agency SIDA remained engaged throughout project preparation and implementation\. In 2004, prior to the Bank's provision of the additional financing, SIDA prepared a completion report of its activities within the project and in preparation for further support to SALRC\. SIDA's completion report is available in the files, and a summary is presented in Annex 8\. 61\. The draft ICR was provided to SIDA on November 6, 2007\. Comments were received by email on December 1, 2007 (available in project files)\. SIDA agreed with satisfactory rating of project outcomes - moreover, it views Moldova First Cadastre Project as one of the most successful among cadastre projects in Eastern Europe\. Donor coordination was considered to be a large success factor contributing to the achievement of the project objectives\. Design of the organizational structure, including establishment of a new unified cadastre; and opting for centralized organization, given the size of the country, was the most appropriate choice\. 62\. SIDA, however, indicated that progress in the private sector development in areas related to property surveying was below expectation or potential\. Monopolistic behavior from the state companies still exists\. Errors in surveying measurements that arose due to the speedy procedures (mainly in rural areas) remained a problem that needs to be addressed\. (c) Other partners and stakeholders (e\.g\., NGOs/private sector/civil society) 63\. Bank missions, with PIO staff consistently visited and consulted with private sector surveyors, orthophoto mapping companies, IT professionals, valuers, banks and real estate professionals to gauge their views of the project and its development\. The PIO also solicited views of the system users, including banks, valuers and notaries to determine their needs\. 16 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Appraisal Estimate Actual/Latest Components Percentage of (USD millions)1 Estimate (USD millions) Appraisal MAPPING PROGRAM 6\.20 4\.48 72\.26 URBAN CADASTRAL SERVICES PROGRAM 7\.70 11\.65 151\.30 RURAL CADASTRAL SERVICES PROGRAM 3\.30 5\.45 165\.15 INSTITUTION AND CAPACITY BUILDING 4\.80 9\.15 190\.63 PROGRAM Total Baseline Cost 22\.00 30\.73 139\.68 Physical Contingencies 1\.50 0\.00 0\.00 Price Contingencies 1\.10 0\.00 0\.00 Total Project Costs 24\.60 30\.73 124\.92 Project Preparation Fund 1\.702 1\.253 73\.53 Front-end fee IBRD 0\.00 0\.00 0\.00 Total Financing Required 24\.60 30\.73 124\.92 1Appraisal estimate does not include additional financing 2The PPF refinancing is included in the above component costs 3The PPF refinancing is included in the above component costs 17 (b) Financing Appraisal Actual/Latest Percentage Source of Funds Type of Estimate Cofinancing (USD millions) Estimate of 4 (USD millions) Appraisal SWEDEN, Govt\. of Parallel financing 1\.80 3\.48 193\.33 International Development Association (IDA) 15\.90 17\.95 112\.895 NORWAY, Gov\. of (except for Parallel Ministry of Foreign Affairs) financing 0\.10 0\.10 100\.00 SWITZERLAND: OFF\. OF FOR\.ECON\. AFF\.& SWISS Parallel 2\.80 2\.80 100\.00 AGEN\.OF DEV\. & CO financing JAPAN6 Parallel financing 1\.10 N/A USAID Parallel financing 0\.21 N/A Other Parallel financing 0\.05 N/A MOLDOVA, Govt\. of 3\.96 5\.07 128\.03 Total Financing 24\.56 30\.76 125\.24 4Appraisal estimate does not include additional financing 5IDA credit and additional financing was denominated is SDR which explains change in USD figures 6Japan, USAID and `Other' data as provided separately by the borrower 18 Annex 2\. Outputs by Component The table below lists the outputs planned for each component and compares appraisal estimates with project achievements\. Totals include foreign donor contributions\. Component/Output Appraisal Estimate1 Actual June 2007 Component I: Mapping Component Cost- total $6\.9 M $4\.48 M Credit $3\.6 M $1\.15 M Cover 50% of urban land 50% 56% Cover 20% of privatized rural land 20% 85 % Component II: Urban Cadastral Services Program Cost-total $8\.60 M $11\.65 M Credit $7\.20 M $10\.49 M TCOs refurbished strengthened 12 12 Urban Registrations 330,000 or 50% of urban 834 thous\. parcels Installation of IT in TCOs Completed / Updated Component III\. Rural Cadastral Services Cost-total $3\.70 M $5\.45 M Credit $2\.80 M $4\.43 M BCOs refurbished/strengthened 24 29 Titles registered 200,000 3,324,784 20% of privatized rural land Installation of IT in BCOs Continued / Updated Component IV: TA and Capacity Building Cost-total $5\.4 M $9\.15 M Credit $2\.3 M $1\.88 M No\. of Trainees in: Project Implementation 15 IT 6 Geodesy 1 Valuation 1 Study abroad: Geodetic Engineers 1 Study abroad: Photogrammetrists 1 2 One year study abroad for university 1/ lecturers in Cadastre, Geodesy, Topography, Cartography, No\. of Persons 26 Notary Law, and Property Valuation\. 1Physical and price contingencies are included in component costs at appraisal stage 19 Project Costs Monitoring: Actual aggregate costs in the Project by November 19, 2007 Credit: 3061 MD Currency: US$ Actual aggregate costs in the Project by November Allocated as per Credit 19 , 2007 (1997-2007) Allocated as on June 1, Agreement nr\.3061 dated 2004+G21 Item of Expenditure June 8, 1998 Credit nr\. 3061-MB SDR US$ SDR US$ WB GRM Total 1 2 3 8 9 10 11 12 Civil Works 170,000 235,042 547,811 740,802 740,244\.86 205,710\.85 945,955\.71 Goods 3,630,000 5,018,838 1,766,332 2,390,296 2,374,226\.90 290,551\.59 2,664,778\.49 Technical Services 4,000,000 5,530,400 5,466,648 7,674,346 7,712,938\.03 0\.00 7,712,938\.03 Consultants' services and training 450,000 622,170 231,836 326,043 271,941\.67 0\.00 271,941\.67 Operational Costs 1,550,000 2,143,030 2,572,764 3,491,279 3,497,091\.51 3,658,634\.03 7,155,725\.54 PPF P 2870/2871 1,350,000 1,866,610 914,609 1,252,279 1,252,279\.00 141,651\.54 1,393,930\.54 Non-allocated 350,000 483,910 0 0 0\.00 SA-A -26,326 0\.00 Total 11,500,000 15,900,000 11,500,000 15,848,719 15,848,721\.97 4,296,548\.01 20,145,269\.98 20 Project Costs Monitoring: Actual Aggregate Costs in the Project by November 19, 2007 Credit: 3061-1 MD Currency: US$ Allocated as per Actual Aggregate Project Costs by November 19, Agreement amending 2007 the Development Allocated as amended by Credit Agreement the WB on March 9, 2007 Item of Expenditure nr\.3061-1 dated 7 July, 2005 SDR US$ SDR US$ WB GRM Total 1 2 3 4 5 6 7 8 1 Civil Works 0\.00 2 Goods 67,000 100,500 424,000 642,080 612,713\.54 612,713\.54 3 Technical Services 1,933,000 2,899,500 1,576,000 2,386,600 1,627,234\.45 1,627,234\.45 4 Consultants' Services and Training 6,873\.22 6,873\.22 5 Operational Costs 769,933\.74 769,933\.74 6 PPF P 2870/2871 0\.00 7 Non-allocated 0\.00 8 SA-A 0\.00 Total 2,000,000 3,000,000 2,000,000 3,028,680 2,239,947\.99 776,806\.96 3,016,754\.95 21 Project Costs Monitoring: Actual Aggregate Project Costs by November 19, 2007 Credit: 3061 MD+3061-1 Currency: US$ Actual aggregate project costs by 19\.1\.07 (1997- Allocated initially: as per 2007) Allocated as per amendments to Credit Agreement nr\.3061 credit 3061 and 3061-1 Item of Expenditure and 3061-1 SDR US$ SDR US$ WB GRM Total 1 2 3 4 5 6 8 9 10 1 Civil Works 170,000 235,042 547,811 740,802 740,244\.86 205,710\.85 945,955\.71 2 Goods 3,697,000 5,029,338 2,190,332 3,032,376 2,986,940\.44 290,551\.59 3,277,492\.03 3 Technical Services 5,933,000 8,429,900 7,042,648 10,060,946 9,340,172\.48 0\.00 9,340,172\.48 4 Consultants' services and training 450,000 622,170 231,836 326,043 271,941\.67 6,873\.22 278,814\.89 5 Operational costs 1,550,000 2,143,030 2,572,764 3,491,279 3,497,091\.51 4,428,567\.77 7,925,659\.28 6 PPF P 2870/2871 1,350,000 1,866,610 914,609 1,252,279 1,252,279\.00 141,651\.54 1,393,930\.54 7 Non-allocated 350,000 483,910 0\.00 8 SA-A -26,326 0\.00 Total 13,500,000 18,810,000 13,500,000 18,877,399 18,088,669\.96 5,073,354\.97 23,162,024\.93 22 Detailed Project Cost (excluding donations) Credit 3061-MD / 3061-1 MD Currency: US$ Allocated as per Credit Agreement Actual aggregate project costs by June 30, 2007 (1997- November 19, 2007) nr\.3061dated June 8, 1998 and Credit amending the Credit Agreement nr\.3061-1 WB GRM Total Item of Expenditure MD Total WB 3061-MD 3061-1MD 3061-MD 3061-1MD 3061-MD 3061-1MD WB GRM Total 1 2 3 4 5 6 7 8 9 10 11 1 Civil Works 740,802 740,802 740,244\.86 205,710\.85 740,244\.86 205,710\.85 945,955\.71 1\.1 Office Rehabilitation 740,802 740,802 740,244\.86 740,244\.86 205,710\.85 945,955\.71 2 Goods 3,032,376 2,390,296 642,080 2,374,227 612,714 290,552 0 2,986,940 290,552 3,277,492\.02 2\.1 Computers and systems 2,114,376 1,472,296 642,080 1,458,077\.88 612,713\.54 122,734\.25 2,070,791\.42 122,734\.25 2,193,525\.67 2\.2 Mapping Equipment 0 7,486\.08 0\.00 7,486\.08 7,486\.08 2\.3 Training Equipment 177,000 177,000 176,548\.73 46,311\.62 176,548\.73 46,311\.62 222,860\.35 2\.4 Other office equipment 480,000 480,000 479,522\.80 97,989\.67 479,522\.80 97,989\.67 577,512\.47 2\.5 Cars 261,000 261,000 260,077\.48 16,029\.97 260,077\.48 16,029\.97 276,107\.45 3 Technical services 10,060,946 7,674,346 2,386,600 7,712,938 1,627,234 0 0 9,340,172 0 9,340,172\.48 3\.1 Contracts for aerial photography 247,040 247,040 247,040\.00 0\.00 247,040\.00 0\.00 247,040\.00 3\.2 Contracts for cadastral surveys 9,813,906 7,427,306 2,386,600 7,465,898\.03 1,627,234\.45 0\.00 9,093,132\.48 0\.00 9,093,132\.48 4 Consultants' services and training 326,043 326,043 0 271,942 0 0 6,873 271,942 6,873 278,814\.89 4\.1 Contracts for consultant's services 150,000 150,000 124,234\.65 376\.20 124,234\.65 376\.20 124,610\.85 4\.2 Staff training 176,043 176,043 147,707\.02 147,707\.02 0\.00 147,707\.02 6,497\.02 0\.00 6,497\.02 6,497\.02 5 Operational costs 3,491,279 3,491,279 3,497,092 0 3,658,634 769,934 3,497,092 4,428,567\.77 7,925,659\.28 including 5\.1 Mapping development costs 344,017 344,017 344,017\.04 797,361\.12 344,017\.04 797,361\.12 1,141,378\.16 5\.2 Registration and titling 1,961,491 1,961,491 1,961,490\.98 1,461,707\.07 430,303\.51 1,961,490\.98 1,892,010\.58 3,853,501\.56 5\.3 PIO' operational costs 1,127,663 1,127,663 1,133,475\.38 1,202,031\.10 333,806\.15 1,133,475\.38 1,535,837\.25 2,669,312\.63 5\.4 Staff training 26,373 26,373 26,372\.94 29,936\.21 26,372\.94 29,936\.21 56,309\.15 5\.5 Public information 11,768 11,768 11,768\.29 28,912\.86 11,768\.29 28,912\.86 40,681\.15 5\.6 Project audit 0 0\.00 57,907\.74 0\.00 57,907\.74 57,907\.74 5\.7 Exchange rate difference 3 3 2\.65 28,002\.82 41\.09 2\.65 28,043\.91 28,046\.56 5\.8 Bank service charges 19,964 19,964 19,964\.23 52,775\.11 5,782\.99 19,964\.23 58,558\.10 78,522\.33 6 PPF P 2870/2871 1,138,368 1,138,368 1,138,367\.51 141,651\.54 1,138,367\.51 141,651\.54 1,280,019\.05 7 Servicing PPF 113,912 113,912 113,911\.49 0\.00 113,911\.49 0\.00 113,911\.49 8 Non-allocated (contingencies) 0 0\.00 0\.00 0\.00 9 SA-A -26,326 -26,326 0\.00 0\.00 0\.00 Total 18,877,399 15,848,719 3,028,680 15,848,721\.96 2,239,947\.99 4,296,548\.01 776,806\.96 18,088,669\.95 5,073,354\.97 23,162,024\.92 23 Project Cost (1998-2007) Credit: 3061 -MD / 3061-1MD Currency: M USD Actual aggregate project costs by November 19, 2007 Total Cost estimated as GRM GRM Implementation Programs PPF WB WB Foreign per SAR* Total contribution Contribution P 2870/ 2871 (credit 3061) (Credit 3061-1) Donors (to cr\. 3061) (to cr\. 3061-1) Mapping Development Program 6\.20 4\.48 0\.56 0\.59 0\.81 0\.00 0\.00 2\.52 Urban Cadastre Services Program 9\.54 11\.65 0\.43 7\.95 1\.11 2\.11 0\.00 0\.05 Rural Cadastre Services Program 4\.48 5\.45 0\.02 4\.41 0\.81 0\.00 0\.00 0\.21 Institution and Capacity Building 4\.80 9\.14 0\.24 1\.64 1\.56 0\.00 0\.78 4\.93 Total Base Costs 25\.02 30\.73 1\.25 14\.59 4\.29 2\.11 0\.78 7\.71 Unforseen physical expenditures 1\.50 Unforseen price expenditures 1\.10 Total Project Costs 27\.62 30\.73 1\.25 14\.59 4\.29 2\.11 0\.78 7\.71 Note: Total Cost estimated as per PAD/SAR (Project Assessment Report) includes additional financing from the Credit amending the Development Credit Agreement nr\.3061-MD 24 Annex 3\. Economic and Financial Analysis 1\. At appraisal, the project was expected to spur economic growth through (a) providing guarantee of ownership and security of tenure; (b) facilitating the functioning of real estate markets; (c) supporting privatization in the agricultural sector by providing mechanisms for facilitating the restructuring of Kolkhozes; and (d) supporting effective urban planning and private sector development\. Such benefits were difficult to estimate then and remain difficult to quantify given the complexity of the development process that occurred in Moldova during implementation, and the many other factors that impact such benefits, which would make it difficult to isolate the impact of the project by itself\. For the financial analysis, the Staff Appraisal Report projected costs and benefits for the life of the credit; i\.e\. 35 years, based on cost estimates at the time\. Benefits are to emerge throughout the period\. Incomes are from fees for registrations, provision of information and royalties from the sales of maps\. The project's financial rate of return calculated based on appraisal estimates reached 8\.5%, but given the public goods nature of the project, the economic rate of return is expected to be higher\. 2\. The SAR assumptions and projections were simulated using data and information provided by the PIO\. According to this data, the majority of revenues to the project come from providing information to the private sector (commercial banks, valuers, real estate agents and notaries) for which the Cadastre Enterprise charged an average of 25 Leis\. This revenue is additional and did not exist prior to or without the project\. Revenues accrue to the project and to the Cadastre Enterprise as a result of streamlining of registration procedures and involving professional practitioners within the real estate market to give the system its legitimacy and security\. These services did not exist in a centralized planning environment, where real estate was owned by the state, and a real estate market did not exist\. Other revenues due to the project are revenues from selective registration\. This service is largely additional to the project\. Very few transactions took place under Moldova's centralized system\. Private property was limited to rural dachas, while land was owned by the government\. The analysis assumes 80% of the revenue are due to the institution of registration for private property\. Project costs were projected based on revised costs under the project\. Computer and other equipment were assumed to be replaced every fourth year\. When using the SAR methodology using credit repayments over 35 years, the rate of return is high at 24% reflecting to a large extent the benefit of the long repayment period and the IDA financing\. 3\. At the time of the SAR, a fiscal cadastre was not envisioned (beyond a study)\. The Cadastre system assists to better identify real estate objects and their development (10-20% more identified according to the PIO)\. In addition, a value based fiscal cadastre has been adopted, which further increases the accuracy of market values of properties, thus increasing the potential for the public sector to recover the costs and continue to replace investments in the system\. These additional benefits are not included in the analysis above, given weak data and the possible need for further investments, the costs of which are not known at this stage\. Data provided by the PIO does not show a significant increase in the collection of property taxation by municipalities\. Nevertheless, it is likely that future improvements in the fiscal cadastre will further strengthen the cost recovery and efficiency of the cadastre system as a whole\. Benefits of the system will continue for the future, and any further estimates or attempts to quantify the impact remain speculative at best\. The necessity of a real estate registration system in any market economy is indisputable, and the benefits that could derive from such a system remain to be further tapped in Moldova\. 25 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Names Title Unit Responsibility/ Specialty Lending Mats Andersson Sr\. Urban Management Specialist EASUR Task Management Lynn Holstein Consultant ECSSD Cadastre Specialist Monika Weber-Fahr Manager CESSB Co-Team Leader Others Supervision/ICR Maha J\. Armaly Sr\. Urban Finance Spec\. ECSSD Task Management Ellen Hamilton Sr\. Urban Planner ECSSD Task Management Bogdan C\. Constantinescu Sr\. Financial Management Financial Specialist ECSPS Management Solvita Klapare Operations Analyst ECSSD Salim Benouniche Sr\. Procurement Specialist ECSPS Procurement Sandu Ghidirim Operations Officer ECSSD Local Support Ahmet Gokce Sr\. Procurement Specialist ECSPS Procurement Lynn C\. Holstein Consultant ECSSD Cadastre Specialist Lawrence Hannah Lead Economist FEU Steven Butler Consultant Legal Issues Mihaly Kopaniy Sr\. Infrastructure Specialist SASDU Fiscal Specialist Vladimir Eftimov Consultant Valuation, Surveying Wladyslaw J\. Brzeski Consultant Delphine A\. Hamilton Sr\. Program Assistant ECSSD 26 (b) Staff Time and Cost1 Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands No\. of staff weeks (including travel and consultant costs) Lending FY94 0\.00 FY95 0\.00 FY96 0\.00 FY97 0\.00 FY98 410\.41 FY99 8\.38 FY00 0\.00 FY01 0\.00 FY02 0\.00 FY03 0\.00 FY04 0\.00 FY05 3 12\.43 FY06 0\.5 7\.57 Total: 3\.05 438\.79 Supervision/ICR FY94 0\.00 FY95 0\.00 FY96 0\.00 FY97 0\.00 FY98 17\.09 FY99 72\.62 FY00 0\.00 FY01 0\.00 FY02 0\.00 FY03 0\.00 FY04 0\.00 FY05 18 77\.78 FY06 17 46\.55 FY07 21 72\.72 FY08 9 23\.99 Total: 65 310\.75 1Missing data not provided by SAP 27 Annex 5\. Beneficiary Survey Results 1\. This ICR does not require a Beneficiary Survey\. A social impact assessment was carried out in mid-2003 to assess opinions of several stakeholders\. A team of international and local social scientists carried out field research throughout Moldova, including discussions with 185 stakeholders and key informants\. The work included an extensive literature review, qualitative interviews, a quantitative survey of some 600 respondents, and a series of focus groups\. The study was undertaken during a difficult period of Moldova's development when the country had just started to experience positive growth, yet the impact of more than a decade of decline remained strong\. The study noted difficult circumstances such as declining secondary cities, deteriorating housing stock, out-migration and human trafficking, corruption, agricultural fragmentation\. The study warned against the continuation of such an environment on the long term development of the cadastre system, yet the direct impact and society's perception of the project remained positive\. The international community, including the World Bank in the context of the country assistance strategy and work program, pay specific attention to these problems and provide Moldova with measures to mitigate and alleviate those macro social and economic risks\. The economy of Moldova is now experiencing sustained positive growth which reached up to 7% in 2005-2006\. Households as well as businesses are increasing their utilization of their real estate assets to improve their lives and contribute to economic growth\. The impact and perceptions provided during the study during 2003 were as follows\. 2\. Impacts on Households: The direct impacts of the cadastre and registration system on households have been quite significant and overwhelmingly positive\. These include: widespread mass registration of rural properties and apartments; ease and affordability of selective registrations; provision of security of tenure; enabling of inheritance; simplicity and cost- effectiveness of transactions; realization of profits/revenues from some properties (e\.g\., through sale and rental); and potential for using properties to leverage credit\. The protection of their property rights may be one of the few firm and reliable benefits that have accrued to Moldovans, who are facing many risks and challenges as they try to cope with everyday life under difficult conditions\. The registration system was also found to be relatively free of corruption, and no one reported any activities such as rent-seeking related to its use\. 3\. Impacts on Businesses: In terms of business development in general, some of the larger businesses are reportedly using their properties as collateral for loans to expand their operations, particularly in the cities of Chisinau and Balti, where land values are higher and markets are stronger\. Limitations to overall land market activity, have served to limit growth in associated businesses as a result of a lack of demand\. Real estate companies, for example, are few in number as only some 10% of the population uses such services\. The study noted that reliance on family and networks for loans, property sales (as general corruption, which makes businesses difficult to start and succeed) play a large role in curtailing the growth of commerce\. 4\. Impacts on Municipal Land Use Planning Capabilities: On a technical level, the cadastre system has reportedly had a very positive impact on local land planning and management activities, providing much improved mapping and parcel ownership data\. The study was conducted at the end of the long period of negative economic growth, particularly in secondary cities outside Chisinau and Balts\. Social problems, including human trafficking, corruption and a deteriorating housing stock were difficult issues\. While several of these issues were beyond the reach of the Project, the study highlighted the impact they could have on the sustainability of the 28 Project\. The World Bank with other donors, were and continue to be engaged in such issues, including consolidation of agricultural land, anti-corruption, and counter trafficking efforts\. 5\. Overall, the results of the impact assessment process have indicated clearly that the impacts of the cadastre/registration system itself on the stakeholders have been very positive\. The system is working effectively, in a technical sense\. Most people have been, or will shortly be, registered as part of "mass" registration processes that involve no cost or time commitment to the individuals\. Individuals and businesses who want to make transactions are using the system regularly and report very few concerns\. The system is trusted, and is seen as providing security for property rights\. 29 Annex 6\. Stakeholder Workshop Report and Results Not applicable 30 Annex 7\. Summary of Borrower's ICR and/or Comments on Draft ICR The Bank received the government's report on the completion of the project through the Ministry of Finance on August 8, 2007\. The full report is available in the files\. The report is summarized below\. Project Genesis 1\. The Government of Moldova requested, in autumn 1995, World Bank assistance for the preparation of a project to address the fundamental lack of ownership information and security with respect to real estate in Moldova\. Project preparation was carried out jointly with the National Agency for Geodesy, Cartography and Cadastre (now known as SALRC) and supported through a PHRD grant (US$681,500) made available to SALRC in spring 1996, and a Project Preparation Facility of $700,000\. Other Government agencies, such as the Ministry of Agriculture and Food (MAF), Ministry of Privatization and Management of Public Assets, Bureau of Technical Inventory (BTI), Ministry of Finance, the Ministry of Justice, and several municipalities were consulted\. In order to establish consensus among different Government and foreign financing agencies involved in the sector, a Memorandum of Understanding was drawn up and signed in 1996 by the Government, the Bank, and USAID\. 2\. As part of project preparation, SALRC initiated a pilot program in three test areas, involving mapping, surveying, and registration activities, as a basis for methodology development and project design\. Project preparation initially focused on the establishment of an urban cadastre, due to unresolved institutional issues concerning rural land registration\. However, a rural component was later integrated into project design due to the importance of real estate registration in rural areas during the ongoing farm privatization process\. To ensure project quality at entry, a second Project Preparation Facility (PPF) (US$1 million) and a second PHRD grant (US$396,500) financed technical assistance for: (i) the establishment of a Project Implementation Office (PIO); (ii) civil works and equipment for Territorial Cadastre Offices; (iii) finalization of project arrangements for rural areas; (iv) assistance with the establishment of appropriate business procedures in SALRC and; and (v) related training for involved staff\. 3\. Extensive public information activities initiated by the SALRC, including regular radio and television broadcasts and printed media have contributed significantly to awareness-raising and public education about: (i) the importance of land reform and the implementation of the new registration system, (ii) the role of individuals and public authorities within the system, (iii) property-related rights and obligations\. A special newsletter has been published with recommendations and advice provided by PIO staff, representatives of SALRC, TCOs, Ministry of Justice, commercial banks, notaries, real estate brokers, etc\. Achievement of Objectives and Outputs 4\. The objective of securing property rights was fully achieved\. A unified system for registration of real estate and ownership rights has been established and operates through a Specialized Cadastre Enterprise with 38 branches (territorial cadastre offices) across the country (except for regions located on the left bank of the Nistru River)\. Each territorial cadastre office (TCO) provides registration services within its coverage area defined by the State Agency for 31 Land Relations and Cadastre (SALRC) (covering, on average, 300 - 600 sq\. km) and keeps the property register comprising information about the real estate (parcel, constructions, separate premises), ownership and other real rights\. 5\. The real estate registration system is based on and supported by appropriate legislation comprising the Civil Code passed in 2002 and the Law on Real Estate Cadastre adopted in 1998\. The Government passed all normative acts supporting the Law on Real Estate Cadastre thereby ensuring efficient operation of the system\. The registration system supported by appropriate legislation (Civil Code adopted in 2002, Law on Real Estate Cadastre passed in 1998, Law on Pledges adopted in 2001, Law on Normative Price and Procedure for Sale and Purchase of Land adopted in 1997, Law on Real Estate Formation of 2004, etc\.) provides full security for the registered rights\. a) a property right is considered valid upon its registration; b) a property right is lost upon its removal from the Real Estate Register\. Once registered, the property right may be deleted from the Register only with the consent of the property owner or by an irrevocable court decision; c) records in the Real Estate Register are considered valid and complete until proven otherwise (evidence to the contrary has to be confirmed by a court decision); d) the Registrar alone may decide on the registration and he/she is an independent person subject to the law; etc\. 6\. Conveyance procedures are simple and relatively short\. When the real estate is already registered, the conveyance procedure is carried out in three steps, taking up to 11 20 days in total and including: i) issuance of extract from the register (3 days); ii) certification at the notary of property conveyance deed (1 day); iii) registration of ownership in the newly acquired real estate (up to 7 days)\. The registration period, however, may also be extended up to 20 days\. 7\. Tariffs for the registration of property rights are exempted of Value Added Tax (VAT) while the total cost per transaction is approximately 3,6 % of the property value a good indicator by international standards\. Total cost per transaction in the EU' countries is, on average, 5-10% of the property value\. However, when we compare the ratio "total transaction cost / average monthly salary" the picture will be different: in the EU this ratio is 4-5 and in Moldova 7- 8, i\.e\. twice as high\. 8\. Moldova put in place an innovative system for accelerated registration procedures including: i) the application of a tariff adjustment factor of 0\.25 for registrations taking more than 7 days; and ii) the application of tariff adjustment factors for urgent services (factor of 5 for services provided within 1 day and 3 within 3 days (for TCO Chisinau and Balti))\. 9\. Of particular relevance are issues related to: i) number of steps a buyer /seller has to take during a transaction (5-7 steps under selective registration); (ii) conveyance period; iii) parallel maintenance of paper-based and computer-based registers; iv) quality of cadastre data; and v) total cost of conveyance\. The Agency has undertaken specific steps to address these issues and, in particular: The State Agency for Land Relations and Cadastre is the successor organization for the National Agency for Geodesy, Cartography and Cadastre\. 32 i\. The Parliament approved amendments to the legislation stipulating a decrease of notary fees from 1% to 0\.1% of the property value recorded in cadastre\. ii\. The Government initiated changes to the Tax Code, stipulating the cancellation of taxes on income obtained from property conveyance\. Following these changes, the total cost per transaction will drop to 0\.8% of the property value\. iii\. The Government approved an Action Plan to finalize the development of cadastre in 2008-2010\. This plan provides for the (a) completion of cadastral surveys and registration of all properties in the country; (b) improving the quality of the register, (c) correction of errors in land arrangement projects\. iv\. Amendments are being introduced in the laws simplifying registration procedures and raising the security of transactions\. 10\. During 1999-2007, the Project has registered about 85% of all properties in the country (5\.5 million) or 4\.7 million real properties, including 4\.2 million through the mass procedure and 0\.5 million through the selective procedure\. Actual indicators are almost eight times greater than those envisaged by SAR\. 11\. Privatization of agricultural lands was completed successfully with the implementation of the National "Land" Program during 1998 2000, including the issuance by private and public entities of almost 2\.8 million ownership titles\. Records on all agricultural plots shall be kept in cadastre\. Simple procedures for mass registration of agricultural lands were developed under the Project and USAID program, allowing for the registration within a relatively short period of time (1999 2001) of over 2,8 million titles\. USAID-funded program came in with financial assistance for the registration of such agricultural plots, thereby saving the public budget about 18 million MDL\. The First Cadastre Project also strongly boosted the privatization of household plots and gardens\. During 1998-2007, cadastral surveys were performed in about 900 communities (in total there are 1550 communities) and approximately 1\.1 million titles for such properties were issued\. Table1: Mass Registration of Real Estate (`000 properties) Indicator Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total No of urban plan 5 47 78 98 102 - - 330 registrations real 11 31 94 130 186 139 93 60 90 834 No of rural plan 5 15 30 65 85 - - 200 registrations real 195 1 775 619 201 151 127 158 34 120 3380 plan 10 62 108 163 187 - 530 Total real 206 1 806 713 331 337 266 251 94 210 4214 % 2060% 2913% 660% 203% 180% 12\. The real estate market continues to expand each year a positive trend shown in table 2 which suggests a growing number of registered transactions (increase of 8 times), leases (40 times increase)\. Table 2: Real Estate Transactions Registered (`000) Indicator Year 1999 2000 2001 2002 2003 2004 2005 2006 Nr\. property 23\.6 53\.3 104\.8 123\.9 166\.6 177\.4 191\.1 201\.6 transactions 33 13\. The market for real estate is witnessing high growth rate both in rural and urban areas while the market for residential properties has been booming\. Almost 50% of all transactions with urban properties are in the capital (Chisinau) and such geographical distribution of the property market is typical for other countries in Central and Eastern Europe\. 14\. The market for agricultural parcels has been very active\. The completion of privatization and consolidation of agricultural lands through sale and lease transactions have played a key part in growth\. There has been a 600% growth of the market for agricultural land plots with an even geographical distribution across the country\. 15\. The objective of providing commercial banks with the confidence necessary to give secured credit against real estate was achieved\. An appropriate legal framework has been prepared for the registration of mortgages and records on mortgages are now included in the real estate register\. The registration system thus provides commercial banks with the confidence to provide secured credits against real properties\. Such efficient legislation (Collateral Law passed in 1996 was replaced by Law on Pledges of 2001) allows for quick and secure foreclosure procedures available to commercial banks in case of unpaid loans\. The registration system stipulates the conveyance of property rights to commercial banks, third parties, the state, etc\. when obligations secured by real estate are not fulfilled\. The number of mortgages registered has increased 9 times\. Table 3: Registration of mortgages Indicator Year 1999 2000 2001 2002 2003 2004 2005 2006 Nr\. of registered thou 0\.1 1\.1 3\.6 8\.6 15\.9 mortgages (000) / Estimated % 1\.0 1\.5 2\.0 2\.5 3\.0 % of those planned Actual thou 1\.2 3\.6 7\.3 10\.7 10\.8 10\.2 14\.4 14\.6 for registration % 11\.7 5\.0 4\.1 3\.2 2\.1 16\. The objective of providing the real estate market with information on ownership and location of property as needed for the market to function effectively has also been achieved\. Information from cadastre is open to the public and any willing person, upon the payment of the relevant fee, may obtain information about real estate within 1 or 3 days\. 17\. Since information from cadastre is provided at a reasonable cost, the number of applications has been steadily growing (10 times increase in applications from clients who pay)\. Cadastre offices also receive each year 35-40,000 requests for information from public authorities, courts, law enforcement bodies, etc\. The legislation also mandates TCOs/BCOs to provide on a quarterly basis, free information to local public authorities and tax bodies about changes in land ownership and leases for agricultural plots\. Annual costs incurred by the TCO/BCO for providing free information to public authorities are estimated at 500,000 MDL\. The number of requests for information is expected to increase significantly after the establishment of the central database and development of the information system of cadastre\. 34 Table 4: Number of applications for cadastre information Indicator Year 1999 2000 2001 2002 2003 2004 2005 2006 Nr\. of inquiries Estimated thou 0\.2 2\.8 10\.8 27\.4 53\.0 to TCO (,000) / % 2 4 6 8 10 % of properties Actual thou 25\.0 61\.5 120\.1 147\.9 196\.8 203\.0 223\.7 228\.9 planned for registration) % 250 85 67 43 37 18\. Information from cadastre (graphical and descriptive) is delivered free of charge to local public authorities who use these materials for: (i) mapping out the properties owned by the state and administrative &territorial entities; (ii) urban planning, rural development (Consolidation of agricultural lands, settlement of land disputes, etc)\. Central public authorities (Ministry of the Environment, Agency for Constructions and Territorial Development, Ministry of Transport) are showing greater interest in graphical information aiding them in the development of specialized cadastres\. Cadastral plans may also be used in the future for creating a national GIS system\. Table 5: Cadastral plans produced Indicator Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 Cadastre plans Planned 0\.03 0\.2 0\.6 1\.2 1\.8 produced Actual 0\.07 0\.7 12\.3 12\.9 13\.4 13\.7 14\.0 14\.1 14\.2 ('000 sq\. km) 19\. The objective of providing central and local public authorities with a basis for revenue generating mechanisms through property taxation was also achieved\. The Project has developed the necessary legislation and implementation regulations for the new property valuation system based on market values\. The key pieces of legislation are the Tax Code (Title VI "Real estate tax" (2000) and Law on Valuation Activity (2002)\. The Government of Moldova approved a package of measures aimed at implementing the new system of property valuation for taxation designed to implement the valuation of all property categories during 2004-2011\. The Swedish consultant "Swedesurvey" assisted in the development of a methodology for mass appraisal of residential properties, single-family houses and vacant lands\. The system has been automated to ensure the smooth operation of appraisal activities and to create a database comprising technical descriptions of properties\. The valuation system under the Project is based on modern information technologies and is included in the information system of cadastre providing clients with electronic data\. In 2004, all residential properties (about 350 000) and separate premises were valuated through the mass procedure for taxation purposes\. In 2005, all single-family residential houses in urban areas were appraised en masse\. The development of the mass valuation methodology was accompanied by market monitoring and analysis and information has been collected on sale prices for real estate\. SIDA is expected to continue with technical assistance for mass valuation methodology for commercial properties and a Laws have been amended and starting with 2007 costs for delivering cadastre information to local governments shall be covered from the budgets of these authorities whereas access to the cadastre database shall remain free 35 methodology for re-appraisal of real estate\. The Project has put particular emphasis on professional training of TCO personnel in mass valuation for taxation\. 20\. An important project objective was to promote private sector development in areas related to property registration (cadastral surveys, property appraisal, notaries)\. Cadastral surveys are no longer a state monopoly\. The National "Land" Program and the WB-supported Project represented a strong stimulus for the development of a vibrant sector for cadastral surveys\. Great technological progress was achieved in a relatively short period of time\. Geodetic reference data are not secret any longer while surveyors are certified by the Agency as stipulated by the legislation\. Private surveyors compete with the TCOs for services provided under selective registration\. Surveying services are currently provided by 35 40 private firms\. 21\. The Agricultural and Technical Universities of Moldova provide education in geodesy and cadastre while continuous training is offered by the Project Implementation Office (PIO)\. The Agency certifies the qualifications of cadastre engineers\. A certification committee may withdraw the certificate in cases of professional misconduct\. Surveyors have their own professional association The Employers' Association of Cadastre, Geodesy and Soil Protection\. 22\. Private notaries have been active on the real estate market of Moldova since 1998\. The new version of the Notary Law passed in February 2003 provides for the operation of public notaries alongside the private sector\. In addition to the operation of private and public notaries, some notary functions may be performed by local authorities as defined in the law\. This is to encourage competition among notaries in the rural areas\. Notaries are certified by the Ministry of Justice (MJ) which regulates the number of private and public notaries (currently there are about 250 notaries)\. All private notaries are members of any of the two professional associations\. 23\. The valuation activity in Moldova is subject to licensing\. The Cadastre Agency has established a Board to certify the qualifications of valuation experts\. This Board may withdraw the certificate if the valuation specialist violates the rules of professional conduct\. These qualification certificates serve as basis for the issuance of licenses to valuation firms\. Such licenses are issued by a special body\. The Technical University of Moldova educates sufficient well-qualified specialists in property valuation\. Professional training courses in valuation are organized by various training centers\. There are two professional associations of valuers, which operate in Moldova since 1990\. The time periods for appraisals and the quality of valuation reports can be improved by providing better access to the database of cadastre\. 24\. The Project did not have specific objectives as related to poverty reduction, gender equality or social issues\. The establishment of a secure documentation system for property rights provides women and other social categories of the population with important legal protection for the real estate they own\. The Moldovan legislation, including cadastre regulations, guarantees equal rights for all citizens without regard to their gender\. Property acquired in marriage belongs to both spouses and it does not matter that the title contains the name of one of the spouse or both of them\. However, property donated to or inherited by one of the spouses is exempt from the above legal provision and such property shall belong only to the spouse who inherited or received it as a donation\. The legislation requires that property acquired in marriage be recorded in the Register in the name of both spouses even though the title contains the name of only one of them, subject to the above exceptions (donation, inheritance, marriage contract)\. 36 Achievements by Project component 25\. Mapping development program: Four aerial photography campaigns were performed during 1998-2001 for 173 localities covering an area of 1 494 sq\. km\. INGEOCAD produced orthophoto for 655 sq\. km and contour maps for 450 sq\. km\. Cadastral surveys and production of cadastral plans were implemented by private firms\. It is a very notable project achievement that a highly competitive and professionally competent private surveying industry was so successfully promoted\. Table 6: Surveying & mapping activities supporting the project Activities Unit Total 1\. Geodesy & mapping 1\.1 Geodetic network Points 6 127 1\.2 Densification of network Localities 900 1\.3 Aerial photography sq\. km 1 494 1\.5 Mapping sq\. km 1 128 2\. Production of cadastral plans sq\. km 14151 2\.1 Updating of maps sq\. km 154 2\.2 Photogrammetry sq\. km 250 2\.3 Classic surveying sq\. km 1652 2\.4 Land planning projects sq\. km 12 070 2\.5 Planning for perennials sq\. km 25 26\. Urban/Rural cadastral surveys program: The Project successfully developed the institutional framework for the system of property registration in urban and rural area\. The establishment of cadastral offices was originally planned in stages over a period of 4 years (1999 2003)\. But actually all 12 TCOs and 28 BCOs were created by the end of 1998 as self-sufficient state enterprises reorganized on the basis of former BTIs and with a well defined service area\. The Central Bureau of Technical Inventory and Cadastre Databank were merged to create the Central Information Office "Cadastre"\. All TCOs /BCOs have been rehabilitated and received vehicles, geodesy equipment and computers\. TCO staff is well trained and the clients are satisfied with the quality of services\. Most applications for registration are processed within 7 days as compared with 20 days stipulated by the legislation\. Registration services may be provided within 1 day upon the request of the client\. 27\. Local specialists with the assistance of international consultants in 1998 have developed software (LegalCad) for the processing of descriptive data\. Two versions of this software were developed: DataBase Server which was installed in 12 TCOs and WorkStation installed in 28 BCOs\. Copies of all databases (39) are delivered monthly to the CIO for storage and data processing\. The clients are not satisfied with the frequency of data updating in the central database\. At the end of 2003 a study was carried out concerning the establishment of a unified information system of cadastre\. 37 28\. Capacity building and staff training: (a) Training was implemented throughout project implementation with some notable achievements: i) Prior to the implementation of the new registration system PIO organized initial training for staff employed with TCO / BCO as well as notaries, regional privatization agencies, surveyors with a focus on legislation, registration procedures, compilation of records for registration, etc\. Together with the Institute for Management and Advanced Training in Agribusiness training courses were organized in 1998 for surveyors of rural and urban area with a total of 18 courses and participation of 660 specialists\. ii) Training in project implementation was organized at PIO and SALRC with a total of 15 courses for 2,300 specialists: managers, registrars, surveyors, operators, accountants, etc\.) and with a focus on cadastre legislation, procedures for mass and selective registration, production of cadastral plans, real estate formation, making records in the register, correction of errors, settlement of land disputes, automated registration system\. Training was also provided to private firms, which implement cadastral surveys with a focus on production of digital cadastral plans, performance of field works, use of new technologies, collection of legal data about property owners\. iii) IT training included courses for PIO staff in various training centers abroad: FORS in Moscow and St\. Petersburg (Russia) with a focus on: "ORACLE DBA Fundamentals I" and "ORACLE DBA Fundamentals II", CISCO "CIT" and "CVOICE, Database Advanced Replication, Java Programming, Technologies for Java Programmers, Develop Web Services\. iv) Crash courses in property valuation were organized for valuation specialists employed with TCOs with a total of 13 courses and 295 trainees\. Valuers active in the private and public sector were trained by foreign teachers from UK and Sweden\. This had a positive impact on private sector development and establishment of a public association of valuation specialists\. PIO organized regional workshops in valuation (mass valuation for taxation; market valuation of properties)\. v) One-year trainings abroad\. Study visits are a key element of the training component and the Royal Institute of Technology of Sweden has offered such opportunities with financial assistance from SIDA\. vi) (a) Equipment for training in project implementation included computers for a training laboratory at the SALRC\. Similar computer laboratories were established at the Technical and Agricultural Universities of Moldova where geodetic equipment was also installed\. (b) Technical Assistance covered 13 areas such as: (i) project implementation; (ii) information systems; (iii) procurement; (iv) accounting; (v) legal development; (vi) training; (vii) property valuation; (viii) public information; (ix) mapping /photogrammetry); (x) digital mapping; (xi) land registration; (xii) cadastral surveys; (xiii) GPS\. Since 1997, the Swedish International Development Agency (SIDA) has been providing financial assistance for 11 program components; Norway has supported public information while Switzerland stepped in to support mapping and delivery of geodetic equipment\. 38 (c) Project Implementation Office (PIO) was established in 1998 and comprises of approximately 30 staff members experienced in areas necessary for successful project implementation: i) legal development; ii) information technologies; iii) procurements; iv) property valuation; v) cadastre and registration; vi) economics and accounting; vii) public information; viii) training; ix) administrative staff\. The Agency has exercised general oversight while PIO managed the operational, financial and procurement activities of the project\. Credit funds were disbursed and used in full conformity with the guidelines and IDA procedures and project records were maintained properly and audited\. Project implementation was monitored and assessed\. Key information about major performance indicators concerning the number of transactions on the market, prices for properties and market trends is regularly collected and published by the Agency in a specialized newsletter "Cadastre", which is distributed to central and local public authorities, educational institutions and libraries, notaries, commercial banks and other agencies\. There is regular monitoring and assessment and reports are presented on a quarterly basis to public authorities and the World Bank\. 29\. Impact on institutional development: The project has successfully established an efficient and reliable cadastre and title registration system for immovable properties, a modern map production capability, and a highly competitive and professionally operating private sector in registration related areas\. The Project has become an appropriate tool for effective land administration\. Surveying and mapping activities have facilitated rural and urban planning and will therefore spur economic development\. 30\. This institutional framework eliminates the need for title insurance, and the associated costs for property owners\. Some issues, however, had a negative impact on project implementation: - Frequent reshuffling of personnel, particularly at the initial phase of project implementation and in 2002; - Tendering procedures for cadastral works in 2000 were delayed by up to 6 months; - Procurement of computer equipment in 2000 was delayed and this has affected staff training, and the capacity of TCO to check digital maps produced by private firms; - The production of the cartographic base was delayed by INGEOCAD and, therefore, private firms had to change the technology of works agreed upon during the pilot project and shift to ground surveying\. 31\. Next steps for the development of the national registration system\. Moldova has made accession to the EU as its main strategic objective\. However, a key requirement for joining is for the aspiring nation to have a market economy and the rule of law\. Property registration and cadastre system represents an important element of the market economy, providing security of tenure and contributing to economic growth\. The Agency has developed a Strategy for Sustainable Development of Cadastre aimed at assuring an efficient operation of the whole system after the completion of the First Cadastre Project\. The Strategy includes the following activities: Complete privatization and registration of household plots as needed to develop the property market; Complete evaluation of all properties and implementation of re-valuation for taxation purposes; 39 Institutional strengthening of cadastre and assuring financial and institutional sustainability; Development of an integrated information system and improved public access to cadastre information; Improved access for public authorities to cadastre information; Improved quality, trust and reliability of cadastre as needed to facilitate transactions Public information and developing human capacities\. 32\. Lessons Learned (a) The team of local experts should be involved in project preparation\. This team should get proper training\. An exit strategy and aspects of sustainability after Project completion need to be considered from the outset\. (b) The Project benefited from being implemented by a single agency associated with good coordination efforts\. Missions' recommendations were implemented without the need to balance the conflicting interests of different agencies\. Strong and committed leadership is an essential precondition for successful project implementation\. (c) Learning from similar projects in other countries is essential for improvements at home\. (d) Problems and deficiencies can be effectively addressed if they are correctly identified and documented and the Bank provides recommendations\. (e) It's important for TCO services to be user-friendly and the system efficient, offering high legal protection and accepted by the society\. (f) A systematic cadastre is necessary for an effective and equitable property tax administration\. After completion of mass registration, systematic monitoring of real estate will update the database following the identification of new unregistered properties and their inclusion in the tax base\. 40 41 Annex 8\. Comments of Co-financiers and Other Partners/Stakeholders 1\. The Swedish Aid Agency (SIDA) remained engaged throughout project preparation and implementation\. In 2004, prior to the Bank's provision of the additional financing, SIDA prepared a completion report on its activities within the project and in preparation for further support to SALRC\. SIDA's completion report is available in the files, and a summary is presented below\. 2\. SIDA supported a technical assistance to Moldova First Cadastre Project (FCP) since its beginning in 1997\. The first stage of this assistance was successfully completed in 2001\. SIDA decided in November 2001to extend its technical assistance through the project "Moldova: First Cadastre Project - Fiscal Cadastre and Training"\. Most of the planned project activities were completed\. 3\. The main goal of the Swedish support has been to assist the State Agency for Land Registration and Cadastre (SALRC) in the implementation of the First Cadastral Project\. The first stage of SIDA's support was successfully finalized in 2001\. Following the first phase, the Swedish support was extended till December 2003\. In March 2004, another prolongation of the Swedish support was made until August 31, 2005\. The main objectives of the continued technical assistance were: to support the development of a real estate registration that will supply information on ownership and values of real property to the taxation authorities; to develop and carry out advanced courses for a wider spectrum of stakeholders and; to develop the business plan for the State Agency for Land Resources and Cadastre, SALRC, and the TCOs in order to support the sustainability of the unified cadastral system established in Moldova\. In summary almost all planned project activities were carried out professionally and according to plan and have met with the intended objectives and results\. 4\. The consulting companies carrying out the project since 1997 have been Swedesurvey AB and HIFAB International AB, cooperating closely with the Moldovan counterparts at the State Agency for Land Resources and Cadastre, SALRC\. 5\. A number of activities have been planned and properly implemented during Project implementation\. The results and achievements of the Project were presented in an International Seminar held in Chisinau at the end of September 2004\. The Project has contributed substantially to the implementation of the World Bank financed First Cadastral Project and to an overall success of the unified cadastral system in Moldova\. 6\. The project activities were organised on a basis of short-term visits of consultants, which provided assistance and technical support to the Moldovan experts\. SIDA consultants supported the preparation of guidelines, recommendations, training courses and seminars etc\. Cost efficiency could have been enhanced if consultant visits were longer\. This was also indicated by the client with less and more consolidated reports\. 42 7\. The project implementation has established a good basis for further development of the Fiscal Cadastre: recommendations and methodologies for different types of properties valuation are drafted and discussed; proposals for data structure and exchange of information are developed; pilot-projects to test different methods of data collection are implemented; different methods of data collection for property valuation were also tested in different pilot projects\. 8\. The training component directly contributed to human capacity building and increased professional level in the cadastral organisations\. The project has supported many international seminars in Moldova, study visits of Moldovan experts to other countries, training courses etc\. Modern training facilities are also established with the support of the project at the premises of State Agency for Land Resources and Cadastre, SALRC\. Implemented activities give a new vision and facilitate the development of a strategy for the cadastral sector\. The long-term training program Master of Science in Land Management for Moldovan students and experts is successful and its continuation is also recommended\. 9\. The general conclusion of the project evaluation mission is highly positive both regarding the project itself as well general development in the cadastral sector in Moldova\. Despite highly positive achievements of the establishment of a unified cadastral system, especially in comparison with other countries of the region, Moldova faces a lot of challenges in the land management sector\. These challenges are related to the fact that only the first steps are made in the creation of a completely new institution, lack of professionals in this area, proper experience, traditions and culture in the land management sector and the severe economic situation in the country\. One of the most critical challenges to address is the sustainability of the development of the unified cadastral system as the important element to establish land tenure security in the country\. For this reason Moldova needs the extension of support and assistance in the land management sector\. 10\. The project supported the preparation of a strategy for the cadastral sector and development of a Business Plan for Legal Cadastre in Moldova\. The developed Business Plan is a comprehensive document and the measures proposed are directed to convert the cadastral system into a self-financing organisation\. 43 Annex 9\. List of Supporting Documents Staff Appraisal Report: Republic of Moldova First Cadastre Project (March 24, 1998) Development Credit Agreement Project Paper: Proposed Additional Financing of SDR 2\.0 Million to the Republic of Moldova for the First Cadastre Project (May 23, 2005) Quarterly Project Reports Supervision Reports, Aide Memoires and ISRs Quality of Supervision Assessment Report (QSA6) (October 18, 2004) Impact Assessment: Property Rights Reform in Moldova\. Blackstone Corporation\. Resource Management Consultants\. November 15, 2003\. Fiscal Cadastre and Training Technical Assistance: Project Evaluation Report and Recommendations for further Support\. Prepared for SIDA by UConsult Sweden AB\. June 29, 2005\. (SIDA completion/assessment report) SIDA representative comments on draft ICR (December 1, 2007) Government Completion Report (July 2007), received August 2007 44 Annex 10\. Project Indicators at A Glance Item Unit 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total Pilot, PPC cumulative Real Real Real Real Real Real Real Real Real Real Real Legal framework approved 11 5 3 5 2 4 3 1 34 drafts 2 7 9 4 1 10 5 3 1 42 TCO and BCO opened number - 38 1 39 Rehabilitated offices number 2 12 19 4 1 1 39 Computerized offices - TCO number 5 7 12 BCO number 8 19 27 Training seminars 3 6 6 2 2 2 21 Cadastre Agency courses 18 36 34 21 6 15 3 7 3 2 145 trainees 660 421 598 682 94 350 97 362 214 20 3,498 Private Sector courses 5 6 6 1 2 20 trainees 78 158 47 40 37 360 Procurement total contracts, including number 16 50 184 35 25 7 34 54 6 411 cadastral surveys number 28 46 15 8 4 13 31 5 2 152 additional agreements to contracts number 24 120 3 147 First time registration number 267,412 1,869,024 785,776 390,085 396,937 318,032 308,632 133,610 51,754 4,521,262 Mass parcels 206,425 1,806,526 712,721 330,884 337,596 264,397 251,345 93,749 34,752 4,038,395 Intravilan parcels 4,813 27,831 93,653 107,594 92,394 106,753 70,168 60,215 16,440 579,861 including Chisinau parcels 1,000 807 9,351 6,350 4,256 6,389 12,478 770 41,401 social & cultural properties number 206 529 104 839 other parcels number 7,438 4,365 11,803 apartments number 6,794 2,852 55 21,656 93,792 24,516 18,310 167,975 gardens parcels 116 6667 37056 51,380 77,203 117,111 96,055 33,534 18,312 437,434 "Land" Project parcels 194,702 1,769,176 581,957 150,048 73,678 8,579 62,343 2,840,483 Correction of errors parcels 23,277 1,452 24,729 Selective parcels 60,987 62,498 73,055 59,201 59,341 53,635 57,287 39,861 17,002 482,867 Intravilan number 16,138 20,634 23,687 23,693 20,828 23,642 26,477 18,683 7,304 181,086 of which Chisinau number 594 2,192 4,921 6,767 5,726 3,250 10,235 6,488 2,369 42,542 Separate premises number 38,221 19,627 29,831 24,585 24,115 13,988 15,920 8,916 3,649 178,852 Extravilan( art\.12, gardens, ect) number 6,628 22,237 19,537 10,923 14,398 16,005 14,890 12,262 6,049 122,929 Transactions total 23,649 53,266 104,784 123,859 166,561 177,389 191,122 201,584 61,077 1,103,291 sale number 17,907 33,363 55,240 58,679 82,927 81,670 89,495 91,221 26,121 536,623 Donation, exchange number 2,325 8,027 18,610 22,141 26,888 29,591 31,204 33,038 9,852 181,676 Inheritance number 3,347 11,260 29,838 41,422 54,677 63,131 65,629 67,345 19,751 356,400 Other number 70 616 1,096 1,617 2,069 2,997 4,794 9,980 5,353 28,592 Encumbrances total 1,457 8,241 16,019 24,041 30,327 25,646 42,651 26,336 7,537 182,255 Mortgage number 1,168 3,574 7,346 10,685 10,837 10,192 14,357 14,649 4,262 77,070 Lease number 289 4,667 8,673 13,356 19,490 15,454 28,294 11,687 3,275 105,185 Mapping and geodesy - Geodetic network points 78 402 500 693 2918 1536 6,127 Densification settlements 4 150 110 72 110 127 573 Aerial photography sq\. km 56 271 821 346 1,494 Contour maps sq\. km 142 196 106 29 473 Orthophoto maps sq\. km 655 655 Cadastral maps, total sq\. km 6 65 660 11600 623 420 337 300 40 10 14,061 Updated sq\. km 4 10 40 80 20 154 photogrammetry sq\. km 20 80 100 50 250 Cadastral surveying sq\. km 2 5 50 240 303 300 322 300 40 10 1,572 land arrangement projects sq\. km 50 550 11200 200 70 12,070 Horticultural projects sq\. km 15 15 Valuation - laws and regulations drafts 4 2 3 4 1 14 approved 1 3 4 training courses 4 1 2 4 2 13 trainees 70 40 30 60 95 108 403 Pilot projects settlements 2 3 2 2 2 2 13 Funding - Total TCO' revenues, '000 lei 9755 17241 19546 17329 28345 39960 44151\.6 56009 232,337 Total funding (USD): 2734694\.5 4972778\.3 3562698\.52 2895508\.79 3023903\.4 3738558 4078180\.9 2703170\.18 1324519\.4 228456\.12 29,262,468 WB (cr\.3061-MD) 1322554\.9 1624225\.7 2275464\.48 1748954\.67 1635526\.7 2479744 3130107\.2 1630596\.91 1546\.22 15,848,721 WB (cr\.3061- 1MD) 40987\.16 632008\.5 148066 821,062 GRM 141651\.53 322546\.6 333805\.13 602277\.98 649230\.88 819429 644494\.76 783111\.15 514701\.07 80329 4,891,577 Donations total, including 1270488\.1 3026006 953428\.91 544276\.14 739145\.8 439384\.6 303578\.9 248474\.96 176263\.62 7,701,047 Switzerland 1063147\.4 1254957\.9 356557\.75 125262 2,799,925 Sweden 207340\.68 619538\.44 491784\.83 340933\.71 698280\.86 429572 299210\.74 234757\.02 158203\.67 3,479,622 France 22129\.83 22,130 Norway 49081 49,081 Japan 1078300 1,078,300 TACIS 1998\.8 1001\.24 3,000 USAID/Booz ALLEN 103499\.71 103,500 USAID/PFAP 69445\.13 32463\.86 1605\.7 103,515 USAID/LPSP 9240\.36 18044\.3 27,285 other sources (tender) 585\.38 8635\.3 8401\.08 9812\.59 4368\.16 2871\.88 15\.65 61\.12 34,751 interest earned 1215\.91 1,216 Technical assistance - Sweden weeks 50 152 80 60 58 50 48 24 12\.8 535 Switzerland weeks 9 8 8 1 26 45 IBRD 35771 27°E 28°E 29°E 30°E Dnestr To Vinnytsya UKRAINE To Chernivtsi Moghiliov-Moghiliov- To Vinnytsya OcnitaOcnita Podolski Podolski BriceniBriceni MOLDOVA B Donduseni Donduseni To Chernivtsi e EdinetEdinet SorocaSoroca s Drochia Drochia 48°N s CamencaCamenca 48°N RîscaniRîscani a FlorestiFloresti Nistru Costesti Costesti SoldanestiSoldanesti r GlodeniGlodeni a Balti Balti RîbnitaRîbnita RezinaRezina Balatina Balatina Prut r SîngereiSîngerei To Voznesens'k FalestiFalesti a Telenesti elenesti Chiperceni Chiperceni 0 10 20 30 40 Kilometers b ROMANIA OrheiOrhei 0 10 20 30 Miles SculeniSculeni i Dubasari Dubasari TRANSNISTRIATRANSNISTRIA To Pascani Mt\. Balanesti Mt\. Balanesti a Calarasi (430 m) (430 m) CriuleniCriuleni UngheniUngheni Straseni GrigoriopolGrigoriopol NisporeniNisporeni StauceniStauceni To Zhmerynka 47°N CHISINAUCHISINAU 47°N LapusnaLapusna Ialoveni Ialoveni AneniiAnenii Noi Noi Tiraspol iraspol Bender Bender LeuseniLeuseni HîncestiHîncesti (Tighina) (Tighina) SloboziaSlobozia Cainari Causeni To Odesa Plain Cimislia Cimislia This map was produced by the Map Design Unit of The World Bank\. Nistru The boundaries, colors, denominations and any other information To Birlad shown on this map do not imply, on the part of The World Bank Leova Leova Group, any judgment on the legal status of any territory, or any Bugeac Stefan-Voda endorsement or acceptance of such boundaries\. Comrat Comrat Basarabeasca Basarabeasca To Birlad Cantemir Cantemir 27°E MOLDOVA GAGAUZIA GAGAUZIA FIRST CADASTRE UKRAINE Ceadîr-Ceadîr- To Artsyz PROJECT LungaLunga 46°N SELECTED CITIES AND TOWNS Prut 46°N AUTONOMOUS TERRITORIAL UNIT Cahul Cahul Taraclia araclia CAPITALS GAGAUZIA GAGAUZIA RAIONS OR MUNICIPALITIES CAPITALS* Vulcanesti ulcanesti NATIONAL CAPITAL RIVERS MAIN ROADS RAILROADS To Imayil Black AUTONOMOUS TERRITORIAL UNIT BOUNDARIES To Bucharest Sea RAIONS OR MUNICIPALITIES and Constanta BOUNDARIES INTERNATIONAL BOUNDARIES *Names of the raions or municipalities are identical to their capitals\. 28°E 29°E 30°E NOVEMBER 2007	REVIEW
P041887	ï»¿ Document of The World Bank Report No: ICR2482 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-31770 IDA-31771 IDA-47610) ON A CREDIT IN THE AMOUNT OF SDR 143\.6 MILLION (US$ 205\.6 MILLION EQUIVALENT) TO THE PEOPLES REPUBLIC OF BANGLADESH FOR THE MUNICIPAL SERVICES PROJECT December 27, 2012 Urban Sector Unit Bangladesh Country Unit South Asia Region CURRENCY EQUIVALENTS (Exchange Rate Effective November 30, 2012) Currency Unit = Bangladeshi Taka 1\.00 = US$ 0\.01 US$ 1\.00 = Tk\. 81\.3 FISCAL YEAR July 1 â June 30 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank BMDF Bangladesh Municipal Development Fund CAS Country Assistance Strategy ERR Economic Rate of Return FOAP Financial and Operational Action Plan GOB Government of Bangladesh IDA International Development Association LGED Local Government Engineering Department MDF Municipal Development Fund MPRC Municipal Performance Review Committee MSU Municipal Support Unit NPV Net Present Value PMU Project Monitoring Unit PPA Participatory and Partnership Approach Vice President: Isabel M\. Guerrero Country Director: Ellen A\. Goldstein Sector Manager: Ming Zhang Project Team Leader: Zahed H\. Khan ICR Team Leader: Janis D\. Bernstein PEOPLES REPUBLIC OF BANGLADESH Municipal Services Project CONTENTS Page Data Sheet A\. Basic Information B\. Key Dates C\. Ratings Summary D\. Sector and Theme Codes E\. Bank Staff F\. Results Framework Analysis G\. Ratings of Project Performance in ISRs H\. Restructuring I\. Disbursement Graph Main Document 1\. Project Context, Development Objectives and Design \. 1 2\. Key Factors Affecting Implementation and Outcomes \. 7 3\. Assessment of Outcomes \. 15 4\. Assessment of Risk to Development Outcome\. 24 5\. Assessment of Bank and Borrower Performance \. 24 6\. Lessons Learned \. 27 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners \. 29 Annex 1\. Project Costs and Financing \. 30 Annex 2\. Outputs by Component \. 31 Annex 3\. Economic and Financial Analysis \. 64 Annex 4\. Bank Lending and Implementation Support/Supervision Processes \. 72 Annex 5\. Beneficiary Survey Results \. 74 Annex 6\. Summary of Borrower's ICR and/or Comments on Draft ICR \. 80 Annex 7\. List of Supporting Documents \. 99 Map IBRD 33368 A\. Basic Information Country: Bangladesh Project Name: Municipal Services IDA-31770,IDA- Project ID: P041887 L/C/TF Number(s): 31771,IDA-47610 ICR Date: 07/19/2012 ICR Type: Core ICR Lending Instrument: SIL Borrower: GOB Original Total XDR 100\.00 M Disbursed Amount: XDR 141\.86 M Commitment: Revised Amount: XDR 143\.60 M Environmental Category: B Implementing Agencies: Local Government Engineering Department, Bangladesh Municipal Development Fund Cofinanciers and Other External Partners: B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 08/31/1997 Effectiveness: 10/25/1999 10/25/1999 2/10/2005 Appraisal: 06/13/1998 Restructuring(s): 12/21/2007 08/23/2010 Approval: 03/16/1999 Mid-term Review: 03/02/2002 Closing: 06/30/2005 06/30/2012 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Satisfactory Performance: Performance: i C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project at Yes Quality at Entry (QEA): Highly Satisfactory any time (Yes/No): Problem Project at any time Quality of Supervision Yes Moderately Unsatisfactory (Yes/No): (QSA): DO rating before Moderately Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General water, sanitation and flood protection sector 20 20 Other social services 17 17 Sub-national government administration 58 58 Urban Transport 5 5 Theme Code (as % of total Bank financing) Municipal finance 22 22 Municipal governance and institution building 23 23 Participation and civic engagement 11 11 Pollution management and environmental health 22 22 Urban services and housing for the poor 22 22 E\. Bank Staff Positions At ICR At Approval Vice President: Isabel M\. Guerrero Mieko Nishimizu Country Director: Ellen A\. Goldstein Frederick Thomas Temple Sector Manager: Ming Zhang Frannie F\. Humplick Project Team Leader: Zahed H\. Khan Jonathan S\. Kamkwalala ICR Team Leader: Janis D\. Bernstein ICR Primary Author: Janis D\. Bernstein F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project Development Objective (PDO) is to improve environmental and infrastructure service delivery in urban areas\. See section 1\.2 for the entire PDO\. ii Revised Project Development Objectives (as approved by original approving authority) The Project Development Objective did not change during the implementation of the original project or the Additional Financing\. (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Target Values documents) Years Indicator 1\.1 Municipalities able to plan, prioritize, and implement service improvement by end of project\. Value Phase 1: 16 AF 2010 (Quantitative or 0 183 Qualitative) Phase 2: 40 183 Date achieved 03/16/1999 06/30/2001 06/30/2012 06/30/2012 By 2010, 92 cities had received MSU capacity building and support for community Comments mobilization\. During the AF 2010, the MSU extended the capacity building to another 91 cities\. Indicator 1\.2 Management reform in municipalities completed\. Value Phase 1: 16 AF 2010 (Quantitative or 0 183 Qualitative) Phase 2: 40 183 Date achieved 03/16/1999 06/30/2001 06/30/2012 06/30/2012 By 2010, 133 cities achieved management reform\. By June 30, 2012, another 50 completed Comments reforms in project planning, tax and water tariff collection, and managing municipal accounts\. Indicator 1\.3 Demand driven and cost recovery measures introduced for revenue generating sub-projects\. Value Phase 1: 16 AF 2010 (Quantitative or 0 168 Qualitative) Phase 2: 40 168 Date achieved 03/16/1999 06/30/2001 06/30/2012 06/30/2012 By 2010, 112 cities had introduced these measures; under the AF2010, another 56 cities were Comments required to involve participation in project selection and to initiate measures to improve cost recovery\. Indicator 2\.1 MDF created and operational for on-lending to municipalities\. BMDF operations BMDF operations streamlined and Value streamlined and its BMDF created and coordination (Quantitative or MDF not established coordination with operational with LGED and Qualitative) LGED and other other relevant agencies strengthened agencies strengthened Date achieved 03/16/1999 09/1/2004 06/30/2012 06/30/2012 iii Under the AF2010, a new indicator was introduced - to streamline its operations and to Comments strengthen coordination with LGED (for details on all of the measures taken, see Sec\. 3\.2 (b) of the ICR main text\. Municipal Performance Review Committee (MPRC) established and operational by end of Indicator 2\.2 Phase 1 Established on July 5, Value 1999 MPRC established and (Quantitative or MPRC does not exist operational Qualitative) Operational on March 16, 2002 Date achieved 03/16/1999 03/16/2002 The MPRB was established on July 5, 1999 and fully operational by March 16, 2002, when the Comments first meeting was held\. Physical investments targeting poverty and environmental improvements through community Indicator 3\.1 participation\. No target established in PAD because of 595 works Value 0 the demand driven 595 works packages packages (Quantitative or nature; by the AF of completed with BMDF completed with Qualitative) 2010, 454 works funding in 154 towns BMDF funding packages had been financed\. Date achieved 03/16/1999 06/30/2005 06/30/2012 06/30/2012 Phase II investments involved participation in planning and implementing sub-projects aimed Comments at poverty and environmental improvement\. Specific targets for Phase 1 are described below\. (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Target Values documents) Years Indicator 1\.1 Municipal Development Fund established by July 1, 2000\. BMDF established by BMDF established 0 July 1, 2000 Date achieved 03/16/1999 03/9/2002 03/9/2002 The delay was due mainly to the severe floods of 2000 which diverted project staff attention to Comments finance urgent repairs, and the transitional government putting final steps on hold until new government took over\. Indicator 1\.2 Municipal Performance Review Committee (MPRC) established by June 30, 1999\. Established by June MPRC established 0 30, 1999 Date achieved 03/16/1999 07/5/1999 07/5/1999 Comments Municipal Support Unit (MSU) fully staffed and working, as agreed with the Bank, by July 1, Indicator 1\.3 1999\. MSU fully staffed and MSU fully staffed and 0 working by July 1, working 1999 iv Date achieved 03/16/1999 10/25/1999 10/25/1999 Comments Partnership and Participatory Approach (PPA) designed, in agreement with the Bank, by Indicator 1\.4 September 30, 1999\. PPA designed in PPA designed in agreement with the agreement with Bank 0 Bank by September 30, 1999 Date achieved 03/16/1999 09/30/1999 09/30/1999 Comments All Phase I participating city corporations and municipalities implement Financial and Indicator 1\.5 Operational Action Plan by June 30, 2000\. All Phase I CCs and All Phase I CCs and municipalities municipalities 0 implement FOAP by implemented FOAPs June 30, 2000 Date achieved 03/16/1999 07/30/2000 07/30/2000 Comments Indicator 1\.6 At least 40 other municipalities implement FOAP by June 30, 2004\. 16 Phase I CCs and municipalities implemented 40 40 FOAPs Date achieved 07/30/2000 06/30/2004 06/30/2004 Comments Indicator 2\.1 Roads constructed/rehabilitated\. 50% Phase I road works completed by June 30, 2000 0 Works completed 100% Phase I road works completed by June 30, 2001 Date achieved 03/16/1999 12/31/2006 12/31/2006 By 2005, 95% of the works were completed\. Due to the need to redirect LGEDâs efforts to Comments urgent repair works related to the 2000 floods, the project did not meet original target dates\. Indicator 2\.2 Drainage facilities improved\. 67% (25 km) completed by June 30, 2000 0 Works completed 100% (37 km) completed by June 30, 2001 Date achieved 03/16/1999 12/31/2006 12/31/2006 By 2005, 95% of the works were completed\. Due to the need to redirect LGEDâs efforts to Comments urgent repair works related to the 2000 floods, the project did not meet original target dates\. Indicator 2\.3 Construction of public toilets completed\. v 68% (32 toilets) completed by June 30, 2000 Works completed 0 100% (47 toilets) completed by June 30, 2001 Date achieved 03/16/1999 12/31/2006 12/31/2006 By 2005, 95% of the works were completed\. Due to the need to redirect LGEDâs efforts to Comments urgent repair works related to the 2000 floods, the project did not meet original target dates\. Indicator 2\.4 Rehabilitation of water supply facilities completed\. 75% (9 km) of water lines completed in Khulna by June 30, 2000 0 Works completed 100% (12 km) of water lines completed in Khulna by June 30, 2001 Date achieved 03/16/1999 12/31/2006 12/31/2006 By 2005, 95% of the works were completed\. Due to the need to redirect LGEDâs efforts to Comments urgent repair works related to the 2000 floods, the project did not meet original target dates\. Indicator 2\.5 Municipal markets upgraded\. 50% (8) completed by June 30, 2000 0 Works completed 100% completed by June 30, 2001 Date achieved 03/16/1999 12/31/2006 12/31/2006 By 2005, 95% of the works were completed\. Due to the need to redirect LGEDâs efforts to Comments urgent repair works related to the 2000 floods, the project did not meet original target dates\. Indicator 2\.6 Bus/truck terminals constructed or rehabilitated in each city corporation and municipality\. Two new bus terminals constructed by June 30, 2002 Seven new bus terminals constructed by June 30, 2001 Works completed 0 Three bus terminals rehabilitated by June 30, 2001 Two new truck terminals constructed by June 30, 2001 Date achieved 03/16/1999 12/31/2006 12/31/2006 By 2005, 95% of the works were completed\. Due to the need to redirect LGEDâs efforts to Comments urgent repair works related to the 2000 floods, the project did not meet original target dates\. vi Indicator 2\. 7 Facilities for solid waste management put in place Disposal sites identified/improved in all 16 phase 1 participating cities and municipalities by June 30, 2001 All community bins 0 constructed and Works completed operated by June 30, 2001 All waste transport equipment procured and operational by June 30, 2001 Date achieved 03/16/1999 12/31/2006 12/31/2006 By 2005, 95% of the works were completed, and the original targets were not met due to the Comments 2000 floods\. Disposal sites were not improved for all 16 Phase I cities due to land acquisition issues\. New Indicator MDF-funded sub-projects in 56 more municipalities providing grant and loan funding for for AF 2010 schemes selected locally and implemented and loan repayments underway BMDF working with 112 BMDF working with BMDF worked with municipalities 168 municipalities 154 municipalities 826 km roads 1,156 km roads 1,128 km roads 8500 street lights 11,500 street lights 24,960 street lights Value (Quantitative or 175 km drains 265 km drains 260 km drains Qualitative) 75 public toilets 87 public toilets 87 public toilets 75 kitchen markets 90 kitchen markets 211 kitchen markets 137 km water supply 167 km water supply 173 km water supply pipelines pipelines pipelines Date achieved 06/1/2010 06/30/2012 06/30/2012 By 2010, BMDF had funded 454 packages that were completed\. By 6/30/2012, 595 projects Comments had been completed in 154 ULBs\. The loan recovery rate is 75%\. New Indicator Capacity building inputs by MSU extended to 50 more municipalities with expected increase for AF 2010 in holding tax collection in the 48-70% range in 20 additional municipalities\. Ongoing capacity building in Capacity building in Capacity building in 92 municipalities 142 municipalities 142 municipalities Value (Quantitative or 75 municipalities with tax 125 municipalities 142 municipalities tax Qualitative) billing computerized (total) tax billing billing computerized computerized vii 7,405 municipal staff 8,400 municipal staff 8,400 municipal staff provided training (total) provided provided training training 20% increase in tax collection 25% increase in tax 17\.5% increase in tax in 20 municipalities collection by collection by municipalities municipalities (average/range) (average/range) Date achieved 06/1/2010 06/30/2011 06/28/2012 The 17\.5% increase in tax collection is based on a sample of 39 cities; 23 had tax collection Comments rates in the 48-95% range; another 7 had collection rates in the 40-47% range\. G\. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No\. DO IP Archived (USD millions) 1 04/22/1999 Satisfactory Satisfactory 0\.00 2 07/02/1999 Satisfactory Satisfactory 0\.00 3 01/06/2000 Satisfactory Satisfactory 6\.29 4 03/22/2000 Satisfactory Satisfactory 6\.29 5 08/28/2000 Satisfactory Satisfactory 6\.29 6 03/01/2001 Satisfactory Satisfactory 10\.55 7 04/24/2001 Satisfactory Satisfactory 12\.82 8 10/29/2001 Satisfactory Satisfactory 20\.65 9 12/12/2001 Satisfactory Satisfactory 27\.70 10 06/06/2002 Satisfactory Satisfactory 30\.76 11 12/24/2002 Satisfactory Satisfactory 44\.37 12 06/24/2003 Satisfactory Satisfactory 47\.51 13 12/22/2003 Satisfactory Satisfactory 47\.51 14 06/08/2004 Unsatisfactory Unsatisfactory 59\.24 15 12/23/2004 Unsatisfactory Unsatisfactory 59\.50 16 04/25/2005 Satisfactory Satisfactory 63\.22 17 12/07/2005 Satisfactory Satisfactory 74\.37 18 06/29/2006 Satisfactory Moderately Satisfactory 92\.26 19 12/01/2006 Moderately Satisfactory Satisfactory 99\.41 20 06/08/2007 Satisfactory Satisfactory 113\.23 21 12/30/2007 Satisfactory Satisfactory 124\.53 22 06/27/2008 Satisfactory Satisfactory 129\.20 23 12/30/2008 Satisfactory Satisfactory 135\.53 24 05/26/2009 Satisfactory Satisfactory 147\.57 25 11/29/2009 Satisfactory Satisfactory 159\.65 26 05/25/2010 Satisfactory Satisfactory 161\.91 27 12/12/2010 Satisfactory Satisfactory 161\.91 28 11/10/2011 Satisfactory Moderately Satisfactory 170\.27 29 06/25/2012 Moderately Satisfactory Moderately Satisfactory 200\.19 30 07/10/2012 Moderately Satisfactory Moderately Satisfactory 200\.19 viii H\. Restructuring (if any) ISR Ratings at Amount Restructuring Board Approved Restructuring Disbursed at Reason for Restructuring & Key Date(s) PDO Change Restructuring in Changes Made DO IP USD millions Additional funding of US$11 million reallocated from another IDA project, and reallocation of $15 million from 2/10/2005 S S the BMDF component for infrastructure rehabilitation in response to a major flood in September 2004 Addition of US$25 million and extension of closing date in response 12/21/2007 S S 124\.53 to a major flood for urgent repairs to flood damaged infrastructure, and to further operationalize BMDF\. Additional financing of US$42 23/06/2010 S S million to scale up BMDF operations\. I\. Disbursement Profile ix 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal Country and Sector Background\. At the time of project appraisal, the path of economic growth in Bangladesh was uncertain\. As discussed in the Bangladesh Country Assistance Strategy (CAS) for the period 1998-2001, it could either remain a desperately poor country or become a nascent tiger economy, but it never managed to be either\. Though better than in other developing countries at that time, the countryâs growth was too slow to have a significant impact on poverty\. Nearly 36 percent of the population remained below the poverty line for the very poor; 53 percent below the poverty line for the poor\. The Government of Bangladesh (GOB) also was confronting severe challenges in overcoming the institutional constraints to pursuing sound development activities\. Despite a slowdown of population growth since independence (1971), the population (70 million) was expected to rise over the next 30 years by 60 million\. The urban population had been growing at a rate of about 4\.2 percent per annum\. Until the early 1990s, this rapid growth was occurring mainly in the countryâs four metropolitan areas (Dhaka, Chittagong, Khulna, and Rajshahi)\. By the latter 1990s, smaller municipalities were experiencing rapid growth rates as well\. Regardless of their size, all of the municipalities in Bangladesh at the time of project appraisal were facing: (a) inadequate urban infrastructure services; (b) weak management and financial capacity; (c) fragmentation of urban sector responsibilities among numerous central government agencies; and (c) an increasing level of urban poverty and accompanying environmental degradation\. To respond to these issues, as highlighted in the CAS, the Bank aimed to assist the country in improving the coverage and efficiency of basic urban services; support private sector growth and urban poverty reduction through the formulation and implementation of appropriate strategies for institutional and financial reforms in municipalities; and support fiscal decentralization\. In this context, the GOB with World Bank assistance designed the Bangladesh Municipal Services Project (MSP) to address the weak institutional and financial capacities that were undermining sustainable service delivery, and to promote sound urban management\. Rationale for Bank Assistance\. The World Bankâs involvement in the project was valuable for several reasons\. First, the Bank had supported the development of an urban strategy which mapped the policy, institutional, and financial reforms necessary to underpin and sustain the investments to be made in this sector, and thus improve municipal service delivery\. Guided by this strategy, the Bank also had experience supporting Bangladeshâs urban sector through one urban development project, five water supply projects, and its continuing dialogue on key urban development issues\. Involvement in the MSP would offer the Bank the opportunity to lead and shape the urban development agenda, particularly on policy reforms, and use its leverage to help the GOB prepare and implement institutional and financial reforms likely to have maximum impact\. Lastly, the World Bankâs participation in the project would afford the Bank the opportunity to apply its broad experience in the urban sector to help the GOB and donors coordinate appropriate responses to the urban challenges in Bangladesh\. 1 1\.2 Original Project Development Objectives (PDO) and Key Indicators The original PDO was to improve environmental and infrastructure service delivery in urban areas\. Specifically, the project would: (a) strengthen the institutional capacity of selected municipal corporations and secondary towns to plan, finance, implement, and operate urban infrastructure services in an efficient and sustainable manner, (b) improve resource mobilization and allocation, and fiscal discipline through the creation of an improved financing mechanism for urban infrastructure investment; and (c) support the GOB and municipalities to reduce urban poverty and improve environmental conditions of urban communities through the financing of critical urban infrastructure and services\. The original indicators that would be used to measure progress in meeting these outcomes included: (a) Number of municipalities able to plan, prioritize, and implement service improvements by the end of the project (Phase 1:16; Phase 2:40); (b) Number of municipalities that completed management reform (Phase 1: 16; Phase 2: 40); (c) Demand driven and cost recovery measures introduced for revenue generating sub-projects; (d) Municipal Development Fund (MDF) created and operational for on-lending to municipalities; (e) Municipal Performance Review Board established and operational by the end of Phase 1; (f) Physical investments targeting poverty and environmental improvements implemented through community participation\. 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The project was restructured three times to respond to two major floods in 2004 and 2007, and to scale up the demand-driven MDF operations\. In 2005, US$11 million was added to the project, together with relocation of US$15 million from the BMDF component to the Flood Damage Rehabilitation (FDR) component, in response to a major flood in September 2004\. After another severe flood in 2007, the Project was allocated an additional credit of SDR15\.8 million (US$24\.5 million) as part of the Bankâs Post Flood Recovery Assistance Program\. In 2010, an Additional Financing of US$42 million was approved to continue and scale up the projectâs successful program of infrastructure and capacity building support\. Thus, overall, the project received reallocations and additional funding three times for a total of US$77\.5 million\. The PDO was not revised\. The indicators were revised to reflect the additional financing\. The revised indicators are: (a) Municipalities (183) able to plan, prioritize, and implement service improvements by end of project\. (b) Management reform in municipalities completed in 183 municipalities\. (c) Introduce demand driven and cost recovery measures; the target increased to 168 municipalities\. (d) Streamline BMDF operations and strengthen coordination with LGED and other relevant agencies\. This indicator was introduced under the AF of 2010 to replace the one requiring âMDF operational for on-lending to municipalitiesâ? and âMunicipal Performance Review 2 Board established and operationalâ? because these latter two targets had been achieved during the original investment\. (e) Add 150 more works packages targeting poverty and environmental improvements through community participation funded by BMDF\. This indicator was introduced in the AF or 2010\. At that time, 454 works packages had been completed with BMDF funding; the new target became 595 works packages\. 1\.4 Main Beneficiaries As described in the PAD, the main direct beneficiaries of the project would be: (a) the residents of participating municipalities who would receive improved infrastructure services; and (b) staff at both national and local levels, who would benefit from capacity building\. The PAD also notes that long-term project sustainability through community participation in the operation and maintenance (O&M) of urban infrastructure would be achieved through the adoption of the Participatory and Partnership Approach (PPA)\. This approach would encourage greater involvement of women in planning and managing activities that would directly contribute to improving their living conditions\. The entire municipal population, including the poor and women, would benefit from the improved coverage of services as well as upgrades of the existing municipal infrastructure\. The PAD also notes that any improvements in service coverage and quality would have a disproportionately positive impact on lower income groups because they were least likely to have these services at the time of project preparation\. 1\.5 Original Components (as approved) The original project had seven components divided into two phases\. The first phase included civil works, equipment, and technical assistance (TA) to be implemented through the Local Government Engineering Department (LGED)\. Physical investments would be financed according to the traditional method of selecting investments for specific municipalities meeting IDA requirements\. The second phase would support a MDF that would finance civil works, equipment, goods, and TA\. First Phase Component 1 â Civil Works (US$35\.8 million)\. This would include the following: (a) Water Supply - rehabilitation of existing systems and equipment for O&M in 2 municipalities as well as urgent works (e\.g\., rehabilitation of hydrants, valve chambers, and overhead tanks)\. Khulna, which had the most severe water supply problems, would receive rehabilitation of 12 km of the distribution system (the largest amount)\. (b) Sanitation - construction of 47 public toilets (latrines and washing facilities for men and women) in 15 municipalities, and a pilot small-bore sewerage program in Khulna\. Communities and/or the private sector would be involved in O&M of public toilets as well as the pilot sewerage in Khulna through the PPA\. 3 (c) Roads and Drainage - upgrading and rehabilitation of existing road and drainage networks and systems\. The road improvements would include renovation of deteriorated roads; conversion of earthen, gravel, or brick roads to bitumen roads; road widening; bridge renewal; and construction of footpaths and culverts\. Drainage improvements would include drain reconstruction and conversion of earthen drains to brick-walled drains\. This first phase would include about 220 km road improvements and about 37 km of drainage improvements\. A PPA would be used in drain cleaning, and in carrying out a public awareness campaign about the need to keep drains clear from solid waste\. (d) Bus and Truck Terminals- construction and rehabilitation of bus and truck terminals in all participating city corporations and municipalities\. (e) Slum Improvement - pilots in Khulna and about five other municipalities\. Physical investments would include improved water supply, on-site sanitation, footpaths, and street lighting\. Slum communities would be organized with NGOs' assistance so they could identify their own needs and priority investments programs\. Communities would be actively involved in planning, implementation, and O&M\. (f) Solid Waste Management - equipment for primary collection\. A PPA would be used in selecting sites for communal bins\. Existing disposal sites would be improved in Khulna and Rajshahi from open to controlled dumping\. Municipalities without formal disposal sites would receive technical assistance for identifying a suitable disposal site\. (g) Markets - upgrading and/or rehabilitation of 16 existing municipal markets in the municipalities participating in this phase\. (h) Land Acquisition â to implement the bus/truck terminal and sanitation components\. Component 2 â Equipment (US$3\.9 million)\. This component includes (a) solid waste equipment to improve primary collection, including waste transport vehicles (tipping trucks and trailers) in Khulnaand Rajshahi; and (b) motor vehicles and computers for personnel located in the field, and computer equipment and consumables for support personnel at each pourashava\. Component 3 â Technical Assistance (US$ 7\.9 million)\. This would include: Institutional Development â most of the TA would aim at (i) strengthening and institutionalizing the Pourashava Support Unit of LGED into a Municipal Support Unit (MSU) to support city corporations and pourashavas; and (ii) creating a municipality performance monitoring unit within the MSU to develop a municipality information data base and related applications systems\. The MSU would consist of: (a) a Central Support Unit located at LGED; (b) a City Corporation Unit, located at the City Corporations; and (c) field advisors assigned to groups of 3 pourashavas\. In addition, a central Monitoring Unit would be set up, and consultants would be recruited for the Central and City Corporation Support Units as well as for the Monitoring Unit to design and set up systems and procedures and train MSU personnel\. 4 Municipal Data Base - TA would be provided to create and implement a municipal information data base and related applications systems\. The project also would finance the development of the database/systems and related training and implementation\. Community Development and Participation - TA would be provided for (i) hiring NGOs to develop a community participation program; (ii) conducting a workshop; and (iii) conducting a micro-credit study\. The project also would finance consultants in community participation consultants to work with the MSU at various levels\. Municipal Development Fund - TA for establishing the Municipal Development Fund (MDF) involving (i) preparation of the structure and incorporating the MDF as a legal entity; (ii) establishing the management structure of the MDF, including defining the initial organization structure, writing job descriptions, and assisting in recruiting suitable individuals to man key positions; and (iii) drafting policies and procedures both for operational areas and for financial management and accounting\. Completion of all TA activities would be considered triggers for the implementation of Phase II\. Studies â Phase I studies included: (i) Environmental Management Action Plans in Khulna and Rajshahi for sanitation and solid waste management, and (ii) a hydrogeological investigation for Khulna\. Project Implementation - TA for project management unit for design and construction supervision for two years initially, to be extended as needed during the second phase\. Training - provided to MSU, LGED, and municipalities\. Most training would be on-the-job in accounting, planning, and management\. Project Staffing and Incremental O&M - additional staff for MSU and MDF as well as incremental O&M costs for project assets and MSU operating costs\. Component 4 - Special Consideration (US$7\.6 million)\. Also referred to as the Chittagong Hill Tracts, Component 4 would finance physical investments in three municipalities (Rangamati, Bandarban, and Khagrachari) which had lagged behind other municipalities in service provision and urban development\. Component 5 - Flood Damage Rehabilitation (US$16\.2 million)\. This component would finance rehabilitation of municipalities affected by the 1998 floods\. The rehabilitation work would be determined upon completion of a needs assessment\. Second Phase Component 6 - Municipal Development Fund (US$78\.0 million)\. A Municipal Development Fund (MDF) would be established at the beginning of Phase II to start operating at the beginning of the third year of project execution\. The Fund would finance municipal subprojects consisting of civil works, equipment, goods, and technical assistance\. It would be established as an 5 autonomous agency, with resources provided through a US$70 million line of credit from IDA and GOB contributions\. Component 7 â Technical Assistance (US$4\.6 million)\. This includes (a) support to the MDF specialists in sub-project appraisal, including technical review of proposals for compliance with environmental, social, economic, and financial feasibility; (b) technical support to municipalities to help them prepare sub-project proposals and FOAPs to make them eligible for MDF financing; and (c) incremental O&M costs for the MDF and MSU during the first three years\. 1\.6 Revised Components The components were not revised\. 1\.7 Other Significant Changes Although the components did not change, there were changes in funding and the project schedule (see table below)\. As a result of severe flooding in 2004, and in view of LGEDâs demonstrated success in implementing the first phase of investment, US$15 million of the original credit was reallocated from the BMDF component, along with US$11 million from another project, to the Flood Damage Rehabilitation component to be used to restore critical communication and transportation networks in the affected municipalities\. At that time, the original closing date of June 30, 2005 was extended to June 30, 2008\. After another severe flood in 2007 and in recognition of the good implementation performance under the original project, an AF of SDR 15\.8 million (US$25 million equivalent) was approved in 2008 to help rehabilitate damaged urban infrastructure as part of the Emergency 2007 Flood Restoration and Recovery Assistance Program\. The funds were allocated to the MSP to be used to rehabilitate urban roads, bridges, culverts, and drainage channels in flood-affected municipalities\. Also at that time, the credit closing date was extended from June 30, 2008 to June 30, 2011 because activities were to be scaled up and targets enhanced\. In 2010, there was another AF of SDR 27\.8 million (US$42 million equivalent) to scale up BMDF-financed improvements in urban infrastructure as well as to continue the municipal financial and management capacity building under LGED\. This new credit extended financing for urban infrastructure improvements to an additional 170 towns and extended the municipal capacity strengthening program to about 142 out of the 315 urban ULBs in the country\. The AF also tightened fiduciary controls and supported the development of a program of improvement in urban infrastructure and institutional development over the medium term that would become the basis of projects to be funded by the Bank or other agencies\. In addition, the BMDF would provide follow-up financing to 16 municipalities that made particularly good use of the first financing and could carry out further investments, and MSU would continue its trouble shooting for the 133 municipalities that had received support for capacity building\. The AF also resulted in another extension of the closing date to June 30, 2012\. 6 Changes in World Bank Financing for MSP â 1999-2012 Component Appraisal Reallocation of Additional Additional Total Estimate $15 m from Financing Financing (1999-2012) BMDF to FR (US$25 m) for (US$42m) and US$11 m FR (Cr 3177- (Cr 4761- added from 1-BD) BD) other project Year 1999 2004 2008 2010 2012 Phase I- Physical 32\.5 32\.5 Investments (15 m of orig\. Phase II- MDF 70 credit reallocated 36\.84 91\.84 to FDR) Chittagong Hills Tracts 7\.6 7\.6 TA and Project 10\.8 4\.41 15\.21 Staffing Flood Damage Rehabilitation 16\.2 26 25 67\.2 (FDR) (US$15m +$11m ) Incremental O&M Costs 1\.5 \.75 2\.25 Total 138\.6 26 25 42 216\.6 Note: The US$11million allocated to the MSP from another project does not appear in overall project financing in the World Bank project data sheets\. The total reported by the Bank system is US$205\.6 million\. Also note that the overall total takes into account the reallocation of US$15 million from the Phase II-MDF in 2004 to the FDR component\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry QAG rating â Highly Satisfactory QAG provided the highly satisfactory rating on QAE on the basis of the following main points\. First, the team made a serious effort to analyze the difficult institutional issues and came up with the means for addressing them\. QAG also noted that the project had benefited from an earlier decision to delay project preparation in order to undertake urban sector work that provided the core of the analysis and the proposed solutions as well as the time to build up support within the country\. QAG further acknowledged the serious effort made by the team to incorporate social development issues in a sensitive, focused way that would help navigate the institutional and 7 bureaucratic difficulties, clear team commitment and support in LGED, and an understanding of the risks taken and the appropriateness of the measures contained in the project to address them\. The ICR agrees with the points raised by QAG, but not the rating\. The following are additional factors that would support a satisfactory rating\. The design was appropriate to meet the projectâs objectives\. The projectâs development objectives were clear and the components were well designed to address them\. The project would address the (i) urgent need for basic urban services, particularly in small ULBs with low- income areas, (ii) weak local government institutions through the provision of technical assistance to improve the institutional and financial capacity of participating municipalities; (iii) poor local resource mobilization and cost recovery through the establishment of a municipal development fund and capacity building; (iv) prior neglect of the O&M aspects of infrastructure by focusing on rehabilitation, and provision of technical assistance towards maintenance activities; and (v) need to improve sustainability of services through a participatory and partnership approach (PPA) in the planning, implementation, and O&M of these services\. The design took into account the Bank's experience with earlier urban projects worldwide and in Bangladesh\. The team responsible for project design was aware that many of the earlier multi- sectoral urban projects that focused on poverty alleviation through investments in basic infrastructure and housing included poorly integrated and ill-prepared components were too complex to be properly implemented\. The design took into account the need to simplify the design, be realistic in determining small municipalitiesâ financial capacities, and emphasize strengthening of their financial and institutional frameworks to help ensure sustainability\. Prior to the MSP, the Bankâs involvement with the urban sector in Bangladesh included the Urban Development Project (approved in FY88), which focused on slum upgrading in Dhaka and drainage improvements in Dhaka and Chittagong, and five IDA-financed urban water supply projects\. Although physical progress on the completed projects was satisfactory, the institutional and financial performance was not adequate and the projects confronted problems related to land acquisition, counterpart financing, and procurement\. Based on the lessons from these earlier projects, the design emphasized the need for: (a) generating broad stakeholder commitment and interest; (b) establishing the willingness of the municipal authorities to borrow for the improvements before funding would be committed, and (c) directing attention to such issues as land acquisition, sub-project design, and procurement arrangements during project preparation\. Based on the lessons from the completed projects, the design also responded to the need to: (a) achieve sustainable institutional and policy improvements by emphasizing underlying institutional problems rather than on achieving specific institutional and financial targets; and (b) establish a clear link between underlying problems, project objectives, and the project components\. These issues were addressed in the project mainly through the demand-driven approach inherent in the BMDF\. Because the introduction of the BMDF represented the first time that such a fund would be established in Bangladesh, an important lesson learned from experience in other countries was that the sustainability of such a funding mechanism would depend on the creditworthiness of its borrowers, and the need for a strong commercial orientation of the fund, which would operate without political interference\. Taking into account the weak capacity of the ULBs in Bangladesh, 8 however, the design incorporated a realistic approach to assessing eligibility by requiring a participating ULB to prepare a Financial and Operational Action Plan (FOAP), which included an assessment of capacity and a plan for improving the ULBâs financial standing so it could sustain an investment in urban infrastructure\. The design also took into account the need to establish the BMDF as a commercially oriented, autonomous agency that would introduce transparency and equity into resource allocation for urban infrastructure nationwide\. Project design took into account alternative approaches, the trade-offs between them, and the rationale for the final decisions\. The three alternative approaches included: traditional urban lending versus the MDF approach, traditional grant financing versus loan grant financing mix, and single project versus phased approach\. Unlike the traditional approach with pre-selected municipalities and components, introducing the MDF was considered optimal because the ULBs applied for demand driven financing (and differed from the supply driven approach) for providing long term and sustainable infrastructure financing and capacity building\. The loan- grant financing mix was considered preferable to traditional grant financing because it had the potential for leveraging funds for greater cost recovery\. Project design benefitted from public participation and consideration of social issues\. The project took into account the results of a social assessment, and the possibility of causing resentment on the part of the municipalities that are lagging in reforms to receive funding that had traditionally come from the central government\. To mitigate this risk, the BMDF would be set up as an autonomous agency under the Ministry of Finance, with financing decisions made by a Steering Committee/Board of Directors from different spectra of society\. The design also incorporated a PPA to help ensure ownership and the social sustainability of the project\. The design could have been improved if it included funds for carrying out beneficiary assessments during project implementation to determine the extent to which the ultimate beneficiaries were satisfied with the project-related processes and improvements\. Notwithstanding the above, the ICR team noted QAE issues that were not adequately addressed during the design of the investment\. The main project outcome indicators were not clearly defined\. Although the main PDO objectives were well articulated, there could have been clearer definitions of the PDO indicators such as âmunicipality is able to plan, prioritize, and implement service improvements by end of projectâ? and âmanagement reform was completed\.â? With regard to the outcome relating to support for reducing poverty and improving environmental conditions in urban communities through community participation, it would be difficult to establish targets for these in the PAD when a large part of the projectâs physical investments would be demand driven and determined only after the project was under implementation\. The design underestimated the time needed to establish and operationalize the BMDF\. Based on the original design, the BMDF was expected to be established as a legal entity with a clear ownership and management structure, registered with all concerned agencies, and ready to administer $78\.0 million of project funds after two years of project implementation\. The team greatly underestimated the amount of time it would take to obtain all the necessary approvals and financial flow arrangements for the MDF to be registered and operational\. 9 The design could have included mechanisms to better coordinate local capacity building with BMDF investments throughout the entire project period\. Better planned and programmed technical assistance could have been available throughout the project to help ensure that the ULBs that received funding would have the necessary capacity to adequately maintain them\. 2\.2 Implementation The MSP had a 12-year implementation period\. The project became effective on October 25, 1999 and closed on June 30, 2012, seven years after the original closing date\. The total project financing increased by $77\.5 million during the 12-year period with three reallocations and additional funding\. Several factors influenced project performance and justified the need for multiple project extensions\. The three most important factors were: (a) the implementation competence of LGED and successful implementation of Phase I investments; (b) the delay in establishing and operationalizing the BMDF, and its subsequent success leading to an AF in 2010; and (c) massive floods in Bangladesh during the years 2000, 2004, and 2007 which led to additional allocations of funds in 2004 and 2008 in order to respond to the urgent need to repair damaged infrastructure\. These and other factors are discussed below\. Phase I Performance\. Despite initial start up delays, the implementation of Phase 1 investments was carried out successfully\. More than 95% of the original MSP components (LGED portion) were completed by June 30, 2005, the original closing date\. Capacity building through the Municipal Support Unit (MSU) was set up within LGED and continued throughout the life of the project to build institutional and financial capacities in the ULBs, and to assist municipalities in meeting the eligibility criteria for project support\. The good performance under Phase 1 reflected LGEDâs strong leadership which continued throughout project implementation\. The strong performance under Phase 1 and the need to address urgent repairs caused by the floods of 2000, 2004, and 2007 also led to additional project funding, which greatly increased the number of activities to be led by LGED\. Thus some of the original target dates could not be met\. BMDF Delay and Subsequent Performance\. Although the Borrower was fully supportive of the concept of BMDF during project preparation and appraisal, the Fund was not formally registered until 2002, and not fully operational until 2004, three years behind the original schedule\. The main reasons for the delay related primarily to: (a) the fact that the government was in transition in 2001 when the BMDF was expected to become operational, and the transitional government put the decision to formally register the BMDF on hold until the new government took over; and (b) the severe floods of 2000, which diverted the attention of the project staff to finance urgent works to repair critical transportation and communications networks\. Despite the start up delays and its difficulties in securing good quality technical staff and consistent leadership, the BMDF ultimately became an effective instrument for allocating funds to ULBs for critically needed infrastructure improvements\. This assistance would not have been available to many ULBs, especially the small municipalities, if they continued to depend solely on the block grants administered from the national governments\. As a result of BMDFâs successful operation, in 2010, US$42 million was added to the project to help finance the scaling up of improvements in urban infrastructure as well as municipal 10 financial and management capacity\. At that time, the project was performing well\. There were significant benefits achieved in the participating municipalities as well as a strong demand for additional support\. The AF would help to extend the financing of urban infrastructure improvements to some 170 towns, and extend the municipal capacity strengthening program to about 183 municipalities (out of 315 urban local bodies in Bangladesh)\. The AF of 2010 also would support development of the next generation of urban improvement programs and require tightening of fiduciary controls\. By May 2010, practices adopted under the project for municipal institutional and infrastructure development represented significant improvements, including: (a) greater authority and responsibility of the municipalities in selecting and implementing the investments with matching operational and financial plans, (b) substantial self and loan financing requirements, (c) improved project evaluation and management, (d) improved municipal management and revenue systems, and (e) improved procurement practices\. Demand for BMDF Financing\. Throughout project implementation and after closing, there has been a continuous demand for BMDF support for infrastructure projects, and sense of ownership on the part of the participating ULBs and project communities\. By the time of project closing, there was a backlog of over 200 project proposals seeking funding\. Floods and Related Changes in Project Financing, Activities, and Schedule\. Following the serious flood and heavy rainfall during the 2004 monsoon, a joint decision was made by the GOB and World Bank that urgent rehabilitation works in 67 flood-affected municipalities would be undertaken with IDA support through a credit reallocation of US$15 million from BMDF to LGED\. The project also received a reallocation of US$11 million from the Private Sector Infrastructure Development Project (Cr\. 2995-BD)\. Accordingly, the DCA was amended and the credit closing date was extended to June 30, 2008\. In response to another flood crisis in 2007, through the Emergency 2007 Flood Restoration and Recovery Assistance Program, the MSP received additional financing of US$25 million to support rehabilitation of urban roads, bridges, culverts, and drainage channels in municipalities damaged by the floods\. This AF was allocated to MSP on the basis of LGEDâs strong performance under Phase I\. Through this, LGED again demonstrated its effectiveness in expediting the urgent works needed to address critical flood damage in numerous municipalities\. The change also meant an extension of the closing date to June 30, 2011\. Finally, the AF of 2010 (US$42 million) was allocated to the MSP to allow the BMDF and LGED to further strengthen their investment and capacity building programs\. The AF also supported the preparation of a follow up investment\. Mid-Term Review\. The MTR (2002) provided a comprehensive assessment of progress toward development objectives and implementation performance\. While the review recognized that the overall implementation of the projectâs first phase was satisfactory, it raised serious concerns that the project encountered what was then a two year delay in establishing the BMDF\. The Bank also noted in its review that it may have been overly optimistic given the country context, the weak institutional capacity of municipalities, and inherent governance problems to expect completion of all first phase investments, involving over 1,000 contracts within two years\. Thus, the main recommendations of the MTR were to revise some of the project outcomes and target 11 dates to take into account the delays\. Also at that time, the procurement rating dropped from satisfactory to moderately unsatisfactory due to mis-procurement affecting six contracts\. Managing Project Risks\. In June 2004, the IP rating for the project was downgraded to unsatisfactory; progress toward achieving the PDO also was made unsatisfactory because the BMDF was still not operational\. By the end of 2004, however, progress in establishing the BMDF was underway with the initial institutional arrangements in place\. It had a core team of staff headed by a Managing Director, and had advertised its program, inviting interested ULBs to apply\. It also had appointed two sets of consultants, one group to work with ULBs in proposing investments for BMDF financing, and a second group to manage and supervise the BMDF- funded works\. By March 2005, MDF had set up lending operations with construction work underway in 20 ULBs with adequate engineering supervision and quality control and fiduciary safeguards in place\. In addition, the MSU and BMDF agreed on a plan to cooperate in developing ULB capacities, and set up the means to coordinate activities and update the plan\. With these results, project performance rating was upgraded to satisfactory in April 2005, and the Bank approved a two year extension of the closing date\. During project implementation, there were only about 15 instances of mis-procurement out of a total of approximately 2000\. In Bangladesh, where there have been severe governance issues, this relatively small number was not considered to be significant and reflected overall acceptable performance\. It is also noted that procurement under the BMDF component was implemented by small municipalities with weak capacities and had no prior experiences with World Bank or other IFI-financed projects\. However, two new arrangements were put in place in the AF 2010 to improve governance in procurement and prevent or mitigate associated risks\. These were: (a) implementation of a procurement risk mitigation framework that would include preparing quarterly reports on 45 procurement performance indicators, including fraud and corruption; and (b) hiring a full time procurement officer under BMDF with good knowledge of national and international procurement\. Before the first procurement started, BMDF would ensure that each participating municipality had a procurement focal person with appropriate training on national procurement\. BMDF also would retain a consultant team that included at least one procurement specialist who would participate as a member in each bid evaluation committee\. Participatory Approach\. Another factor contributing to the success of project implementation was the Participatory and Partnership Approach (PPA) developed under the project and implemented through four Partner Organizations (POs) initially in four regions\. The POs worked with the municipalities and local NGOs to establish ownership and participation in the delivery of the sub-projects\. Municipalities later developed their own capacity for PPA under phase two\. The strong ownership for the sub-projects on the part of the mayors and the local community involved in selecting them can be expected to be a significant factor to ensure their sustainability\. Further, LGED supported community mobilization programs in municipalities to motivate all actors (for example, ULB personnel, local elites, community leaders, urban dwellers) to organize and mobilize resources for improving provision of municipal services and to have community members participate in O&M for the urban infrastructure\. 12 2\.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Design\. The PAD included a results framework with outcome indicators that could not all be used for measuring how the project would achieve its PDO\. For example, if the PDO aims at improving urban environmental service delivery, the results framework would need to specify at least one indicator with specific targets for some level of environmental improvement, or this part of the PDO should have been omitted\. The results table also could have been improved if it contained indicators relating to project sustainability\. Nonetheless, almost all of the intermediate outcome indicators were measurable and the targets were generally realistic\. Due to their efficacy, many of these indicators were retained to monitor progress under the AF or 2010\. In fact, the results framework remained essentially the same for the AF of 2010 with two outcome indicators replaced because they had been achieved under the original credit\. However, the remaining indicators, particularly those relating to municipal reform, could have been more clearly articulated for the AF\. Implementation\. LGED set up a national urban database to incorporate ULB-related data collected from the field through 11 specific formats encompassing infrastructure, urban facilities, and pertinent elements of revenue collection\. The MSU also prepared progress reports on the status of implementation of the FOAPs\. The monitoring system set up at the national level produced regular reports on investments linked to disbursement and the financial management systems in ULBs\. In addition, BMDF hired consultants to report on a monthly basis the status of sub-projects\. However, the system did not provide data relating to sub-project sustainability so it would be clear where MSU capacity building for improved cost recovery and other aspects of municipal management could be targeted\. Utilization\. The PMU, BMDF, and Bank teams used project monitoring information as the basis of their discussions during each implementation support mission\. Specifically, they used the information to identify areas of particular challenge and to identify measures to address them\. For example, the teams observed slow procurement of several major contracts and agreed on actions (such as hiring more procurement officers under Bank-finance) to speed up the process\. The relevant institutions maintained detailed monitoring systems to ensure that all were aware of any diversions from the schedule early on, and could take mitigating action as soon as possible\. In addition, the regularly collected data from different ULBs on municipal tax arrears owed by different GOB and semi-government offices were aggregated at different points in time and transmitted to the Ministry of Finance for allocation of appropriate funds for their settlement\. 2\.4 Safeguard and Fiduciary Compliance Safeguard Compliance\. All of the projectâs safeguard requirements were fully met prior to project approval, and prior to the implementation of the phase 2 investments\. During project implementation, however, both the social and environmental consultants hired by the project were not monitoring safeguard compliance in a consistent manner\. OP 4\.01 - Environmental Assessment\. The performance of the implementing agencies could have been improved with regard to OP 4\.01\. Although the types of investments under the project (that is, primarily rehabilitation of existing infrastructure) normally do not have significant negative 13 environmental impacts, there was inconsistent monitoring of these sub-projects\. For example, BMDFâs consultants were asked to send environmental specialists to carry out random sample of sub-projects to ensure that they had received the Department of Environment certification\. However, the Bankâs environmental safeguard specialist noted that the consultants did not carry out a sufficient number of field trips, and the monitoring reports did not correspond to the planned number of field visits\. Nonetheless, there were no significant negative impacts reported, and the environmental safeguard compliance has been rated satisfactory throughout the project\. OP 4\.12 - Involuntary Resettlement\. Most municipalities implemented small scale infrastructure sub-projects development with funding through the BMDF largely on the municipalitiesâ own land\. According to national laws, none of the subprojects were implemented on private land\. Nonetheless, both the World Bankâs specialist in social safeguards, and BMDFâs Social Safeguard Specialist (Consultant) visited project sites periodically to ensure that the project was in compliance\. When issues were identified, they were resolved later by BMDF\. Procurement\. Overall, procurement under the project has been satisfactory\. All of the procurements under the project were subject to compliance with the World Bank Procurement Guidelines, which were unfamiliar to the municipal authorities\. Thus, at the beginning of the project, in some cases, there were deviations leading to cancellation of bids and re-bids\. The Bank team helped the borrower overcome this issue through orientation workshops and training on World Bank Procurement Guidelines\. The BMDF also provided training to ULBs in procurement to meet World Bank rules\. Out of approximately 2,000 procurements, there were about 15 cases of mis-procurement\. In Bangladesh, where there are severe governance issues, this relatively small number of mis- procurements reflects overall acceptable performance\. Nonetheless, the performance was further improved with the introduction of a Procurement Risk Framework (PRF) under the AF of 2010\. The PRF, which included 45 indicators, was relevant to the Bangladesh context and was applied throughout the project period\. Audit\. From time to time, project activities were audited by the Foreign Aided Project Audit Directorate (FAPAD) under the Office of the Comptroller and Auditor General (OCAG), the Supreme Audit Institution (SAI) of Bangladesh\. The project was also subject to audit by private firms\. During implementation of the project, the World Bankâs appointed external audit firms (independent of LGED) two times to carry out a technical audit along with procurement and financial management audits on a sample basis\. In all cases, the findings were satisfactory\. Financial Management\. Both the LGED and BMDF met their financial management obligations\. The required audit reports were sent to the Bank; where there were any objections or issues, these entities were fully responsive\. The Bank teamâs FMS did not report any major problems since the start of project implementation\. 2\.4 Post-completion Operation/Next Phase Due to the success of MSP, the Borrower is planning a follow up project to be implemented in the countryâs secondary cities, and the BMDF already has a list of more than 200 proposals for 14 projects that need funding\. A World Bank investment, currently under preparation, will continue supporting subprojects aimed at improving urban services for the poor and providing more targeted institutional capacity building to address sub-project sustainability and broader governance issues\. The investment also would assist the BMDF in planning for its longer term sustainability after the project closes\. The MSU continues to provide technical assistance to municipalities through the Asian Development Bank (ADB) financed support for capacity building under its Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP)\. In addition, the Japanese International Cooperation Agency (JICA) and the Government intend to implement other municipal capacity building support through the MSU\. In addition, the Municipal Performance Review Committee (MPRC) continues to review the performance of municipalities\. After the MSP closed, other development institutions are using the MPRC for performance reviews of the municipalities included in the projects they support\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation The PDO, design, and implementation of the MSP remain highly relevant to the current country and global priorities as well as the Bankâs country assistance strategy at the time of project appraisal (1998) and the most recent strategy covering the period 2011-2014\. Cities in Bangladesh continue to grow at a rapid rate and the ULBs throughout the country continue to need support for planning, financing, implementing, and sustaining critically needed municipal infrastructure and improvements in urban services\. The reforms established under the project, particularly with regard to the improved resource allocation for infrastructure investment in municipalities through the BMDF, allowed ULBs that met certain criteria to obtain funds to finance critically needed improvements that would not otherwise be available if they had to continue to rely only on the block grants allocated to them by the national government\. This issue continues to be a priority for most ULBs around the country\. The implementation arrangements also continue to be highly relevant\. LGEDâs institutional and technical capacities continue to be essential for supporting ULBs in planning and implementing urban infrastructure services\. BMDF is the most appropriate vehicle for allocating resources to eligible ULBS for infrastructure investments around the country\. 3\.2 Achievement of Project Development Objectives The MSP achieved its objective of improving environmental and infrastructure service delivery in urban areas\. Through the financing of infrastructure and urban service improvements, and introduction of dedicated capacity building to selected municipalities, the participating ULBs are now more capable of selecting and preparing priority investments, delivering urban services, and contributing to an improved quality of life for the affected populations\. They also have achieved greater financial discipline and taken steps to improve cost recovery and other measures of good governance, for example, through the participatory approach to identifying priority projects\. Most of the PDO and Intermediate outcomes were achieved as described below\. 15 PDO Indicators (a) Strengthen the institutional capacity of selected municipal corporations and secondary towns to plan, finance, implement, and operate urban infrastructure services in an efficient and sustainable manner\. ï By the end of the project, 183 ULBs had developed the capacity to plan, prioritize, and implement service improvements\. This was achieved through the technical assistance provided to them in preparing the FOAPs (a requirement for project funding); the MSU Municipal Capacity Building Program support which was designed to help them prepare the plans and improve their institutional and financial capacity to ensure the sustainability of the project investments; and BMDFâs ongoing technical support during project implementation\. The Indeed, the MSU program continues to deliver capacity building as part of the Governmentâs ongoing activities\. ï Participating ULB officials are now able to carry out their municipal functions in a more efficient and sustainable manner\. Through the capacity building and training programs provided by the MSU Municipal Capacity Building Program provided to 183 ULBs, authorities and personnel, including ULB engineers and accountants, in the municipal corporations and secondary towns improved their capacities for carrying out procurement procedures, quality control of civil works, and accounts management\. The capacity building encompassed: computerization and improved management of holding tax bills and records, municipal accounts, water supply bills and records, and trade license records; development of infrastructure inventories and preparation of base maps; and support for community mobilization activities as well as requisite hardware, equipment, and logistics\. These inputs resulted in significant improvement in municipal services delivery, tax management, infrastructure planning, and O&M\. For example, based on a 2012 survey of 102 mayors, 98 percent reported an increase in revenue income, development of staff capacity and skills, improved service delivery standards, and an increase in accountability and transparency\. Among 57 water utility staff interviewed, moreover, 93 to 95 percent reported that they were able to deliver water bills on time, transparency increased due to collecting water bills through banks, and collection efficiency increased (see annex 5)\. ï Participating ULB officials obtained skills for project implementation\. Through BMDFâs capacity building support, the mayors and ULB officials directly involved in sub-project preparation and implementation obtained skills needed for preparing tender documents, tender evaluation reports, and contracts; carrying out project implementation procedures; ensuring quality control; instituting new billing systems; implementing a social impact management framework; preparing an environmental impact monitoring format; and applying the procurement risk mitigation framework\. ï Reform of tax collection systems was carried out in 142 ULBs\. Computer software developed under the project, such as those designed for holding tax, water billing, trade licensing, and non-motorized vehicle management was transferred to city corporations and municipalities\. A limited survey of municipal employees and residents confirm the benefit of the improvements in billing and tax collection (see annex 5)\. For example, 16 among 102 mayors surveyed, almost all recognized an increase in revenue, development of their staffâs capacity and skill, improved service delivery standards, and an increase in accountability and transparency\. In addition, nearly all respondents (the paurashava authority, paurashava staff, and citizens) consider the MSUâs Municipal Capacity Building Program to be well-timed with beneficial effects\. The paurashava holding tax revenue collection efficiency figures show that positive changes occurred in 80 paurashavas out of 100 paurashavas after computerization\. Water billing revenue collection efficiency also improved in 34 out of a total of 48 pourashavas\. Before computerization, there was no infrastructure database or base maps in any of the paurashavas\. Now there are 105 complete databases and 79 complete base maps out of 133 paurashavas\. Before the MSP, there was very little community-related support for paurashavas\. Citizensâ awareness campaigns, formation of Town Level Coordination Committee, Ward Level Coordination Committee, and Community Based Organizations were started for the firm time under the MCBP\. ï ULBs continue to improve in covering municipal service O&M\. Although data were not collected to confirm the extent to which all the municipalities that received financing for their sub-projects are covering the O&M costs, available data indicate that as a result of the technical assistance provided to ULBs in demand driven and cost recovery measures in 162 municipalities, about half reported improvement in their post- computerization holding tax collection\. Tax collection rates improved by 12\.7% (pre- computerization was 45\.68% compared to 58% post computerization efficiency), and water rates collection efficiency rose from 57% to 66% in 51 ULBs; the overall change was about 9%\. After the project closed, the MSU has continued to provide capacity building under ADBâs UGIIP\. Both JICA and the GOB also have plans to implement other municipal capacity building activities through the MSU, thus providing further support for municipalities in planning and implementing sustainable services\. âThrough the support from BMDF, we constructed roads, drains, and extended 4\.5 kilometers of water lines\. We also installed energy saving bulbs for street lighting\. As a result, we are able to extend services to more civic facilities\. In return, people are paying taxes\.â? (Mayor, Tongi) âWith funds from BMDF, we were able to purchase energy saving bulbs that reduced our energy costs by 40 percent\.â? (Mayor, Singra Municipality) (b) Improve resource mobilization and allocation, and fiscal discipline through the creation of an improved financing mechanism for urban infrastructure investment\. ï The BMDF was established in 2002 and fully operational in 2004\. As a result of the project, the BMDF (licensed under the Companies Act of 1994) was officially registered in 2002, became operational in 2004, and subsequently appraised and financed 584 works packages for urban infrastructure and environmental improvements in 154 ULBs\. To be eligible for funding, ULBs were required to meet the following criteria: availability of skilled engineers and accountants; rate of collection of tax at least 65%, initiation of a master plan/detailed area plan, and surplus revenue to contribute its own share\. The 17 recipient ULB is required to contribute 10% of the total cost of the non-revenue generating investment and BMDF bears 90% of the sub-project cost\. Of this 90%, BMDF provides 85% as a grant and 15% as a loan to the participating ULB\. The recipient ULB is committed to repay the loan in 37 installments with a 1 year grace period\. According to BMDF, the project achieved a 75% repayment rate\. ï BMDF improved resource mobilization and allocation as well as fiscal discipline in participating municipalities\. As a government owned company, BMDF continues to provide financial support through grants and loans to municipalities that meet certain qualification criteria with an emphasis on revenue collection and sound financial management\. Unless the municipalities fulfill these requirements, they will not be able to borrow from the BMDF\. To help establish financial discipline, ULBs that do not repay the loan would lose a portion of its block grant allocation\. The BMDF, now de-linked from the project, has created a competitive environment in the field of local resource mobilization and financial discipline\. With the creation of BMDF, a new funding window was opened for eligible municipalities\. Prior to the establishment of the BMDF, many small and medium sized municipalities had no other option for securing funding but to rely on the block grants provided by the central government\. ï During implementation of the AF of 2010, BMDF streamlined its operations\. These included: (i) development of a standard project implementation methodology and prototypical designs for urban infrastructure; (ii) contribution and use of the design and implementation of a social impact mitigation framework, environmental impact management framework, procurement risk mitigation framework, and city-specific financial and operational action plans during project implementation; (iii) restructuring of staff salaries so as to retain core BMDF officials; (iv) arranging for the monitoring and supervision consultants to occupy the same offices as the BMDF officials which facilitated activities to ensure the quality of project works; and (v) rationalizing and updating BMDF service rules and policies (for example, travel advance policy, transportation rules, advance repayment rules)\. ï During implementation of the AF of 2010, BMDF strengthened its coordination with LGED and other relevant agencies\. BMDF officials: (i) followed LGED schedules of rates in preparing estimated bills of quantities for bidding documents prior to project implementation; (ii) formally requested that the Chief Engineer of LGED provide facilities of their laboratories for testing construction materials; (iii) tested materials and workmanship in LGED laboratories; (iv) used help from the local Universities of Engineering & Technology, Science and Research Laboratories, Public Health Engineering Department as well as Department of Environment for testing materials and exchanging views regarding technical issues as and when required; (v) provided input to LGED in preparing the training module on preparing FOAPs; (vi) took an active part as resource persons in the training organized by the MSU of LGED; and (vii) jointly worked with LGED officials as members of procurement-related committees, when required\. The Municipal Performance Review Committee (MPRC) was established in 2000 at the ministry level\. Chaired by the Secretary of the Local Government Division, its main 18 purpose is to review the performance of the municipalities\. As such, all development partners have and are continuing to use the MPRC for the performance review of the municipalities included in the projects they support\. (c) Support the GOB and municipalities to reduce urban poverty and improve environmental conditions of urban communities through the financing of critical urban infrastructure and services\. ï The first phase of MSP investments financed critical urban infrastructure and services, all aimed at reducing urban poverty and improving environmental conditions\. The project addressed an urgent need for basic services in the ULBs, particularly in low-income areas, and improvement in the quality of urban services by investing in the following under the first phase of MSP implementation under LGED: o 10 water supply wells replaced, 10 abandoned wells regenerated, 20 pump houses rehabilitated\. o Rehabilitation of nearly 16 km of water distribution system, along with installation of 2,500 domestic water flow meters\. o Rehabilitation of 150 street hydrants and 54 hand pumps\. o Rehabilitation of 1 overhead tank and construction of storage shade\. o Rehabilitation of a water treatment plant and an iron removal plant\. o Installation of 35 public toilets\. o Construction of a 5 km small bore sewerage system o Upgrading and rehabilitation of about 250 km of urban roads o 40 km of drainage improvements (through drain reconstruction and/or conversion of earthen drains to brick-walled drains) o Construction and rehabilitation of 11 bus and truck terminals o Slum upgrading in Khulna that included 303 dug wells, construction of a 3,357 meter drain with footpath, roughly 7,300 meters of surface drain, a 16,852 meter footpath, and 540 meter landing approach o Provision of about 680 communal solid waste collection bins o Upgrading and/or rehabilitation of 19 kitchen markets o Acquisition of about 10\.5 ha for implementing the bus/truck terminals and sanitation investments ï BMDF investments aimed at poverty alleviation and improved urban environmental conditions\. They included: o 1,128 km of road were built or rehabilitated in 141 ULBs\. o 260 km of drain were built or rehabilitated in 103 ULBs\. o 211 kitchen markets were developed in 59 ULBs\. o 173 km of water supply pipelines were installed in 24 ULBs\. o 36 deep tube wells were constructed in 15 ULBs\. o Construction of water treatment plants in 2 ULBs\. o 87 public toilets installed in a total of 36 ULBs\. o 32 box culverts constructed in 13 ULBs\. 19 o 24,960 sets of street lights added in 24 ULBs\. o 9 bus/truck terminals established in 9 ULBs\. o 15 community centers established in 14 ULBs\. o 8 slaughterhouses built in 6 ULBs\. o 7 office complex buildings built in 7 ULBs\. ï Project beneficiaries and other stakeholders reported that the project-financed infrastructure improved their living environment and had benefits for their health and productivity\. A qualitative evaluation carried out by Development Support Link (private company) in July 2007 showed that the project investments: (i) increased the value of trade and business (ii) increased prices of land (iii) generated employment (iv) increased enrollment of both boys and girls in the schools and colleges (v) supplied a large numbers of goods and commodities (vi) improved public health (vii) eliminated water logging in some areas (viii) decreased water-borne diseases, and (ix) improved the overall environment (see annex 5)\. ï Project implementation generated employment and prospects for further job creation\. During implementation of the project, the adoption of labor intensive technology for construction works generated 13,500,000 days of short-term employment\. In addition, the O&M of the assets created under the project is expected to create longer term jobs in O&M\. âWith funds from the BMDF, we constructed kitchen markets, and vegetable growers are getting reasonable prices and side by side revenue collection is also increased\.â? (Mayor, Lalmonirhat Municipality) ï The physical investments targeting poverty and environmental improvements incorporated a participatory planning approach to promote greater involvement of the residents in selecting and implementing priority investments\. The participatory approach adopted by the project created a âsense of ownershipâ? among project beneficiaries for the BMDF-financed sub-projects\. Although one component specifically targeted slum conditions, most of the project investments in urban infrastructure aimed at poverty and improvement of the urban environment\. BMDFâs investments also emphasized not only the physical development of the ULBs, but the socio-economic improvement of its inhabitants\. For example, the improved road network would help people to move quickly, easily, and safely from one place to another and helped the municipalityâs local economy, trade, and business\. In providing community mobilization support to the municipalities, MSU helped to establish 67 town-level coordination committees, and 254 CBOs at the grassroots level\. Intermediate Outcome Indicators ï The Municipal Development Fund was established on March 9, 2002 (Indicator 1\.1)\. ï The Municipal Performance Review Committee was established on June 30, 1999 ( Indicator 1\.2) 20 ï The Municipal Support Unit was fully staffed and working by October 25, 1999 (Indicator 1\.3)\. ï The Partnership and Participatory Approach was designed, in agreement with the Bank, on September 30, 1999 (Indicator 1\.4) ï All Phase I participating city corporations and municipalities implemented a Financial and Operational Action Plan (FOAP) by June 30, 2000 (Indicator 1\.5) ï At least 40 other municipalities implemented a FOAP by June 30, 2004 (Indicator 1\.6)\. ï Almost all planned physical investments (see Annex 2 for project outputs) were implemented under phase one by December 31, 2006 (Indicators 2\.1 - 2\.7)\. ï Under the AF 2010, by the end of the project, BMDF had worked with 154 out of the planned 168 municipalities and financed 595 sub-projects with a loan recovery rate of 75 percent (New Indicator)\. ï Under the AF2010, by the end of the project, the MSU extended capacity building to 50 additional municipalities, and of the 39 municipalities surveyed, the overall average increase in collection efficiency was 17\.5 percent\. Among these municipalities, 23 had holding tax collection rates in the 48 to 95 percent range (New Indicator); another 7 municipalities had collection efficiency in the 40-47 percent range\. 3\.3 Efficiency As discussed above, the civil works undertaken under the projectâs first and second phase included road construction, water supply, sanitation, drainage, bus and truck terminals, slum improvement, solid waste management improvements, and markets\. The project also included technical and institutional support activities\. In the case of civil works under phase 1, the ICR team was not able to assess the benefits because adequate data were not available on the outputs and associated economic and technical parameters\. Because the benefits of the project-financed technical assistance and institutional support are not quantifiable, an economic analysis was not attempted for these investments\. For the phase two investments in civil works, however, it was possible to carry out an economic analysis for selected investments in roads, roadside drainage, and bus terminals given the availability of data\. Annex 3 summarizes the overall results of the economic analysis carried out for the ICR\. Measures of Economic Efficiency\. The analysis relates the project costs to the economic value stream of benefits from the specific project investments\. In the case of roads, the benefits included savings in vehicle operating costs, savings in travel time and travel costs, and the indirect benefits from the economy-wide multiplier impacts of wage incomes from construction- related expenditures for the civil works\. In the case of roadside drainage, the analysis considered the revenues from user charges and the multiplier impacts of wage incomes for the civil works\. As in the case of roads, the benefits of the bus terminals include savings in vehicle operating costs, savings in travel time and travel costs, and additional revenues from the improved bus terminals\. The summary of estimated benefit-cost ratios and the Economic Rates of Returns (ERRs) on investments are presented in the table below\. 21 Summary of Measures of Economic Efficiency of Investment Investment Economic Rate of Return Benefit-Cost Ratio Roads 27 to 30\.6 2\.3 Roadside drainage 22 1\.5 Bus terminals 23 1\.65 The analysis shows that the project yielded modest returns measured in terms of benefit-cost ratios, ERRs, and Net Present Values of cost and benefit streams\. In the case of roadside drains, there are also indirect benefits such as reduced damage to the roads and consequent savings in road repairs, improved road transport efficiency in monsoon seasons, and the environmental and health benefits of adequate drainage\. Indirect economic benefits are not included in this analysis because we do not have data on these benefits\. However, it may be noted that accounting for such benefits will significantly improve the measures of economic efficiency\. The benefits from the technical and institutional support provided under this project were not estimated because such benefits are not quantifiable\. Further, there were multiple civil works and investments under the project in two phases, including the Additional Financing of 2008 and 2010\. Because we did not have data to estimate the benefits from each of these investments, it was not possible to estimate measures of economic efficiency for the entire project\. Nonetheless, the PAD provided estimates of expected rates of return on investments in roads, drainage, and bus terminals\. Our results are in agreement with those estimates for the specific investments analyzed\. 3\.4 Justification of Overall Outcome Rating Rating: Satisfactory Achievement of the objectives of MSP is rated satisfactory\. The projectâs objectives, design, and implementation arrangement remain highly relevant\. Rapid urbanization continues in Bangladesh, overwhelming the capacities of most cities to provide the infrastructure and services to ensure the health, safety, and productivity of their populations\. The continuing demand for BMDF support and the overall success of the BMDF concept under the MSP demonstrate that the project continues to be relevant\. Further, the project substantially achieved its original intended outcomes, and most of the intermediate indicators were met or exceeded with regard to institutional reform, establishing and operating the BMDF, and the physical investments\. Although it was not possible to estimate measures of economic efficiency for the entire project, the results of an economic analysis carried out for a sample of investments in roads, drainage, and bus terminals were all positive\. They show that these investments were efficient, and generated ERRS as high as 30 percent, which are in agreement with the estimates in the PAD\. High relevance and satisfactory achievement of objectives justifies an overall outcome rating of satisfactory for the MSP\. 3\.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development The project aimed to alleviate poverty through investments in sub-projects that improved environmental conditions, especially for the poor\. The project also had positive impacts on 22 women\. During the operation of various facilities financed by the project (for example, kitchen markets, bus/truck terminals, public toilets, solid waste management systems), there was scope for increasing womenâs employment\. Over the longer term, it is envisaged that women will be employed in facility maintenance works\. In addition, the selection of sub-projects involved a participatory approach through which both women and men were afforded equal opportunity to express their views and preferences in determining investment priorities\. The participatory process by which ULB selected sub-projects for BMDF financing also contributed to project ownership and the perception on the part of citizens that the local authorities cared about its constituency and considered their views in investment decision making\. (b) Institutional Change/Strengthening The project initiated reforms in ULBs initially to make them eligible for BMDF financing and to help establish the financial discipline needed to sustain the investment\. The institutional strengthening under the project resulted in among other areas of municipal management, significant improvements in tax collection, computerization of tax records and water records, management of accounting reports, mapping, and community mobilization to support project planning and implementation\. Throughout the project and after it closed, the MSU continued its capacity building for establishing longer-term institutional development\. According to the LGED, the project resulted in âa change in mindsetâ? on the part of the municipal authorities\. Prior to project implementation, the municipal authorities focused mainly on their investment needs\. Mayors are now seeking capacity building for broader improvements in municipal governance\. (c) Other Unintended Outcomes and Impacts (positive or negative) The project demonstrated successful donor harmonization\. Both ADB and the World Bank used the same MSU to deliver capacity building\. The MSU continues its capacity building function through the implementation of the ADB-financed Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP)\. 3\.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops A full beneficiary survey and/or stakeholder workshop was not carried out\. However, the MSU carried out a survey in 2012 to evaluate the effectiveness of its Municipal Capacity Building Program\. Overall, the findings showed that the project had a highly positive effect on all stakeholders\. Nearly all mayors and councilors recognized an increase in revenue income, development of their staffâs capacity and skill, improved service delivery standard, and increase in accountability and transparency\. Annex 5 summarizes some of the most important findings\. In 2007, the BMDF contracted Development Support Link to carry out a qualitative impact evaluation of the MSP\. The methodologies used for the evaluation included focus group discussions with target beneficiaries in six municipalities and key informant interviews with the local elite, members of civil society, and other stakeholders\. The evaluation showed that the project investments: (i) increased the value of trade and business (ii) increased prices of land (iii) generated employment (iv) increased enrolment of both boys and girls in the schools and colleges (v) supplied a large numbers of goods and commodities (vi) improved public health (vii) 23 eliminated water logging in some areas (viii) decreased water-borne diseases, and (ix) improved the overall environment (see annex 5 for more detailed findings)\. 4\. Assessment of Risk to Development Outcome Rating: Moderate The risk to development outcome is rated moderate\. The BMDF demonstrated that its operations continue, and that it is committed to improving the commercial aspects of its operations\. The MSU also continues to provide technical assistance and training to ULBs\. The Bankâs continuing engagement will help ensure that the capacity building carried out under MSP can provide a foundation for continued support and strengthening so the municipalities can continue to effectively deliver and sustain the investments in urban infrastructure\. The benefits of the capacity building support of the project are likely to be sustained, although challenges remain\. Staff in most ULBs will continue to need training and mentoring in financial management, procurement, contract management, urban and strategic planning, human resources management, communications, and information management\. Sustainability of the infrastructure and services financed by the project is likely to vary by city size and level of development\. While some of the larger ULBs have reported good cost recovery and income through the income generating infrastructure (for example, kitchen markets and community centers), it is less certain that the non-income generating investments would have the same results (for example, maintenance of roads)\. Support to further improve operations and maintenance would need to be continued through the ADB project or a new World Bank project\. Another main concern relates to the sustainability of the operations of the BMDF\. It will be important for the new investment to assist the BMDF in mobilizing increasing amounts of own source revenue and securing its longer term sustainability\. At the time of this writing, however, a new World Bank investment under preparation will address this concern\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory The Bankâs overall performance was satisfactory with regard to the basic design of the project\. The team considered alternative approaches and lessons learned from investments worldwide and in Bangladesh, appropriately evaluated the risks, and ensured that there was an investment program well prepared to implement under the first phase as soon as the credit became effective\. The team also was realistic in determining the eligibility criteria for project support\. However, the rating is lower than the QAG rating because some of the outcome indicators were not 24 measurable, and the team significantly underestimated the amount of time it would take before the BMDF would be fully operational\. (b) Quality of Supervision (including of fiduciary and safeguards policies) Rating: Moderately Satisfactory The project was closely supervised throughout much of its history\. The Bank averaged two full supervision missions per year and provided ongoing support by local staff, including an urban specialist (who later became the task team leader), as well as the financial, procurement, and environmental and social safeguard specialists who were able to provide hands on support from the country office\. The task team also fielded specialists in municipal funds and institutional capacity building to address issues associated with the BMDF\. The implementing agencies reported general satisfaction with the Bankâs supervision; however, during the latter years, concerns were raised regarding the timeliness of the Bankâs responses to project financing issues\. Regarding fiduciary matters during project implementation, close attention by the Bankâs procurement specialist helped to avoid mis-procurements through the introduction of a Procurement Risk Mitigation Framework which include 45 indicators that both the LGED and BMDF were required to monitor\. The local teamâs support was continuous and very strong\. The specialist held monthly meetings to discuss and resolve any procurement issues\. Although the investments were not expected to have any significant environmental or social impacts, the teams could have provided closer supervision of safeguard issues, especially compliance with OP 4\.12\. During the long implementation period, the task teams also could have assigned greater priority to ensuring that adequate capacity building was made available to all participating ULBs to help establish effective cost recovery for the investment, improving the results frameworks and project monitoring, and requesting periodic beneficiary assessments\. Because the project implementation period extended over a period of 12 years, the project had several changes in task team leaders\. However, this did not cause significant problems, mainly because the principal team members largely remained on the team\. Project ISR ratings have been realistic and honest in reflecting situations on the ground\. Supervision could have been improved if it modified the results framework to clarify the indicators\. Although a QAG review during the early years of project implementation rated the Bankâs supervision as being moderately unsatisfactory due largely to its handling of the borrowerâs delay in establishing and operationalizing the BMDF, the ICR teamâs view is that the Bank team has been championing and actively supporting the borrower in establishing and operationalizing the BMDF, even though various difficulties were confronted during the process Given the subsequent success of the project and BMDF, and based on a review of available ISR documents and aide memoires, as well as discussions with former and current team members, the ICR team does not view the MU rating as being highly relevant for this ICR\. 25 (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory The rating of moderately satisfactory is based on the teamâs good performance in supporting the design of and supervising a high risk, high reward project that would directly address the key issues confronting the urban sector in Bangladesh while introducing a new mechanism for promoting transparency in resource allocation to municipalities and encouraging greater discipline on the part of the countryâs municipalities for identifying and sustaining priority infrastructure investments\. However, the team was less effective in establishing a well designed results framework with outcomes and targets that could be measured, and ensuring that the project was establishing the necessary conditions at the municipal level for sub-project sustainability\. During the extended period of project implementation, the Bank should have assigned greater attention to these issues and the need for beneficiary assessment\. As noted by BMDF, moreover, the Bank team could have provided more timely responses to BMDF questions related to sub-project financing issues; its late responses caused delays during the latter part of project implementation\. 5\.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory The GOB remained committed to the objectives of the project\. Although changes in government leadership stalled progress in operationalizing the BMDF by about three years, support for this new entity was never an issue\. This was especially evident in June 2007, when the Government/BMDF Board appointed a full time managing director, despite having to deal with the civic unrest occurring in the country associated with the election process\. This demonstrated the Governmentâs ongoing interest in the project, and the Boardâs capacity to act in the Fundâs best interest\. The GOB also provided counterpart funds as needed throughout most of the project implementation period\. (b) Implementing Agency or Agencies Performance Rating: Satisfactory LGED provided consistently strong leadership throughout the 12 years of project implementation\. The implementation of phase one investments and technical assistance were implemented largely on schedule, and the department was able to redirect its attention as required to accommodate the various changes in project activities and financing to address the urgent need to repair infrastructure damaged by the floods of 2000, 2004, and 2007\. In large part, the delays in project implementation occurred primarily as a result of the floods and the success of LGED in responding quickly and ably to direct the additional funds to the urgently needed investments\. The relatively good performance with regard to procurement is also notable\. 26 Despite the delays in operationalizing the BMDF, this new entity introduced in a country that was highly centralized, became an effective instrument for changing the way resources would be allocated to municipalities of all sizes around the country\. As the project progressed, the BMDF added improvements in various aspects of project management with the recruitment of additional professional staff, and preparation of an adequate social impact assessment framework\. The main concerns for BMDF was the need for more highly qualified staff to provide the necessary technical support to the ULBs in preparing good project proposals and supervising quality control\. In this regard, its operations could have been better coordinated with those of LGED and made better use of LGEDâs technical staff\. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory The GOB demonstrated its overall support for the project throughout the implementation of the original credit and subsequent AFs, and LGED provided strong and effective management of the first phase of investment, subsequent investments to address the periodic floods, and the MSU\. Moreover, the project was complex and involved introduction of a new entity that would change the manner in which resources would be allocated to cities for infrastructure improvements\. Although there was a delay in establishing and operationalizing the BMDF, its ultimate performance demonstrated that it would possible to introduce reform in Bangladesh and implement a large number of contracts in many cities around the country\. In many cases, the funding was made to small and medium sized cities that would not otherwise have access to the funding for infrastructure improvements\. 6\. Lessons Learned Allow sufficient time for a new institution to be established, especially when it accompanies a major policy reform\. Project design and implementation should take into account realistic time frames when a new institution will be created for financing municipal projects\. In the case of MSP, setting up and operationalizing the MDF took about three years longer than originally planned\. Project extension, together with the Bankâs continued intensive support, in the end allowed BMDF to be fully functional as originally envisaged\. One lesson is that the Bank should be patient and persistent in supporting this type of policy reform\. The MDF model in supporting ULB infrastructure investments was effective and should be continued with stronger technical support\. The model used in Bangladesh introduced a relative simple approach to supporting ULBs by giving them maximum flexibility in determining their own project priorities, calling the tender, selecting contractors, and maintaining quality during implementation\. However, the model could be strengthened if higher quality technical support was more widely available for assisting the municipalities on preparing good project proposals and engineering designs, and monitoring the works\. If there is a follow up project, the LGED, which has high quality technical staff and capacity to monitor sub-projects, should have a more active role in BMDF operations by supporting the ULBs in project design and supervision, and providing continued capacity building\. 27 Introducing a municipal fund where there are small cities with weak financial systems requires realistic eligibility criteria for participating municipalities and ample institutional capacity building to allow them to participate and sustain their investments\. None of the small municipalities that were able to benefit from the project could have met eligibility criteria often used in other countries where Bank projects have supported municipal development funds\. The criteria established under this project required the municipalities to assess their financial situation, demonstrate a tax collection rate of at least 60 percent, prepare a financial and operational plan (FOAP), and demonstrate commitment to its implementation\. The use of these criteria allowed many ULBs that would not otherwise have access to credit, obtain funds for priority infrastructure investments and improvements in governance and fiduciary management\. The inclusion of the capacity building under LGED helped to ensure that the participating municipalities not only would qualify for funding but would start to build capacity for O&M\. If there is a follow-up project, the capacity building should be broadened to provide technical assistance and training to the ULBs that are implementing project-financed infrastructure improvements to improve their governance structures and policies related to O&M\. Closer coordination between BMDF and LGED in providing institutional strengthening and technical support would strengthen BMDF operations\. During the implementation of MSP, the MSU capacity building provided to ULBs was made available to all ULBs\. While all could benefit from this support, a follow up investment should ensure closer coordination between MSU capacity building and BMDF sub-project financing to ensure that the municipalities receiving assistance for the investment projects are provided with the support needed to ensure quality control for the physical investments and to sustain the improvements\. The MSU was an effective vehicle for delivering and coordinating technical and institutional support to municipalities assisted by the World Bank and other donors\. After the project closed, other donors continued to use or plan to use this entity to build on the capacity building provided under the MSP\. To ensure consistency in the approach, which has been successful in the Bangladesh context, any new investments in the urban sector should aim at implementing its capacity building program through the MSU\. Including a disaster risk management (or contingent emergency response) component in projects where there is a high risk of flooding and other natural disasters facilitates an emergency response\. For projects implemented in countries such as Bangladesh, where there is high risk of flooding, project designs should include a contingent emergency response component (0 cost) that can be put into operation immediately in case of an emergency, without the need for formal project restructuring\. Following the floods of 2004 and 2007, the MSP was one of the instruments for the emergency assistance\. Having the Flood Damage Rehabilitation component in place facilitated the implementation of the additional financing without the need for formal restructuring to allow LGED to respond quickly in addressing the damage to critical transportation and communication networks\. Using the Participatory and Partnership Approach (PPA) built project ownership\. The participatory approach to identifying priority infrastructure investments proved to be successful because it encouraged greater community involvement and partnership in delivering services such as community water supply, solid waste management, and sanitation; and created a âsense 28 of ownershipâ? among the stakeholders that will help to ensure project sustainability\. This approach also helped to promote trust on the part of the population toward their local government\. The participatory approach could be been more effective if there were periodic beneficiary assessments used to determine the extent to which the PPA was effective, whether the project was meeting stakeholder expectations, and what measures could be introduced to maximize project benefits\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies See annex 6\. (b) Cofinanciers: None (c) Other partners and stakeholders: ADB representatives reviewed the draft ICR, the team revised various sections to take into account ADB reviewersâ comments\. 29 Annex 1\. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal) millions Phase I â Physical Investments 38\.60 27\.06 70\.1 Phase I â Land Acquisition 1\.10 \.77 70\.0 Phase I â Flood Rehabilitation 16\.20 36\.44 224\.9 Phase I â Technical Assistance 6\.80 14\.94 219\.7 Phase I - Project Staffing \.10 2\.35 235\.0 Phase I â Incremental O&M Costs 1\.00 2\.14 214\.0 Chittagong Hills Tracts 7\.60 7\.59 100\.0 Phase II â BMDF Line of Credit 78\.00 57\.32 73\.5 Phase II â Technical Assistance 4\.00 1\.66 41\.5 Phase II - Incremental O&M Costs \.60 \.91 151\.7 Original Total 154\.00 151\.18 98\.2 AF 2008 â Flood Rehabilitation 25\.00 25\.47 102\.0 Total AF2010 - BMDF Physical Works 36\.00 35\.9 99\.7 AF 2010 â LGED Municipal 1\.84 1\.24 67\.4 Capacity Building AF2010 â TA for Preparation of 63\.3 Improved Urban Infrastructure and 3\.41 2\.16 Institutional Development \.75 \.44 58\.7 AF2010- Incremental O&M Costs AF2010 â Total 42\.00 39\.74 94\.6 Total Financing Required 221\.00 216\.39 97\.9 (b) Financing Appraisal Actual/Latest Type of Percentage of Source of Funds Estimate Estimate Cofinancing Appraisal (USD millions) (USD millions) Borrower 15\.4 29\.8 194 International Development Association (IDA) 205\.6 203\.1 98\.8 30 Annex 2\. Outputs by Component Phase I Component I â Civil Works (a) Water Supply â Rehabilitation of existing systems and equipment purchase for Operations and Maintenance\. ï 10 wells replaced, 10 abandoned wells regenerated, 20 pump houses rehabilitated\. ï Rehabilitation of nearly 16 km of water distribution system, along with installation of 2,500 domestic water flow meters\. ï Rehabilitation of 150 street hydrants and 54 hand pumps\. ï Rehabilitation of 1 overhead tank and construction of storage shade\. ï Rehabilitation of a water treatment plant and an iron removal plant\. (b) Sanitation ï Installation of 35 public toilets\. ï Construction of a 5 km small bore sewerage system\. (c) Roads and Drainage ï Roughly 250 km of urban road were upgraded and rehabilitated\. ï 40 km of drainage improvement âthrough drain reconstruction and/or conversion of earthen drains to brick-walled drains\. (d) Bus and Truck Terminals ï Construction and rehabilitation of 11 bus and truck terminals\. (e) Slum Improvement ï Physical investments included 303 dug wells, construction of a 3,357 meter drain with footpath, roughly 7,300 meters of surface drain, a 16,852 meter footpath as well as a 540 meter landing approach\. (f) Solid Waste Management ï Phase I focused on improving primary collection through the provision of roughly 680 communal bins\. (g) Markets ï Upgrading and/or rehabilitation of 19 markets\. (h) Land Acquisition ï Roughly 10\.5 ha acquired for the implementation of the bus/truck terminals and sanitation components\. Component 2 â Equipment (a) Solid Waste Equipment 31 ï 158 handcarts, 122 rickshaw vans, 7 garbage trucks (2 5-ton garbage trucks and 5 3-ton garbage trucks), 1 demountable carrier and 28 demountable containers were purchased to improve primary collection\. (b) Motor Vehicles and Computers ï 23 computers and printers were purchased and distributed: 19 to the pourashavas and 4 to the Project Management Unit (PMU) ï 21 photocopiers purchased and distributed: 19 to pourashavas and 2 to PMU\. ï 20 fax machines were purchased and distributed: 19 to pourashavas and 1 to PMU\. ï 19 road rollers, 9 tractors/trailers, 1 vacuum tanker, 5 trunk mounted water browsers Component 3 â Technical Assistance (a) Institutional Development ï The project provided technical support to strengthen institutional and financial capacity of municipalities\. The capacity building support included computerization and improved management of Holding Tax bills and records, municipal accounts, water supply bills and records, Trade License records, development of Infrastructure Inventory and preparation of base maps, and support to community mobilization\. ï The project also provided the municipalities with equipment and logistical assistance\. ï Urban Local Body (ULB) post-computerization holding tax collection improved in 80 (out of 100) computerized ULBs\. Tax collection efficiency improved by 12\.7%\. ï Tax record reform in 100 ULBs\. (b) Municipal Data Base ï A central urban data base was set up in LGED (c) Community Development and Participation ï TA was provided for hiring NGOs to develop a community development and participation program, conduct workshops, and conduct a micro-credit study\. (d) Municipal Development Fund ï Technical assistance was provided for setting up the BMDF (e) Studies ï Environmental Action Plan ï Hydrogeological investigation for Khulna (f) Project Implementation ï Technical assistance provided to finance design and construction supervision (g) Training ï Foreign project personnel: 15 people were trained in procurement; 3 people in financial management; 2 in environment; 1 in human resource management; 1 in urban 32 management; and 1 in poverty reduction\. 3 people were involved in a workshop and 48 were involved in a study tour\. ï Local project personnel: 7 people trained in procurement; 80 in field testing of construction material; 10 in quality control; 77 in solid waste management; 8 in computer aided analysis and design; 2 in project management; 246 in finance, accounts and audit management; 1 took an office communication course; 1 took an advanced TOT course; 200 participated in foundation training; 80 participated in a workshop; 4 participated in a conference; and 2 participated in a symposium\. (h) Project Staffing ï A total of 353 individuals were staffed as project personnel\. (i) Incremental O&M Component 4 â Chittagong Hill Tracts Component ï This component focused on physical investments in three municipalities â Rangamati, Bandarban, and Khagrachari in the Chittagong Hills Tracts\. These three ULBs have historically lagged behind other municipalities in service provision and urban development\. ï Construction of 152 meters of culvert and an all traffic bridge and 177 meters of a light traffic/foot bridge\. ï Investments made in a roughly 10 km drain, 6 km footpath and a 174-meter retaining wall\. ï Installment of 9 public toilets and construction of 1 community center\. ï Development of 9 markets (kitchens), establishment of a slaughterhouse and a mini super market\. ï Water supply improvements through installment of 225 sealed surface wells, rehabilitation of GL storage reservoir, and construction of 242 tube/dug wells\. ï Installation of over 14,000 twin pit latrines\. ï Purchase of 116 communal bins and three 3-ton garbage trucks to improve solid waste collection\. Component 5 â Flood Damage Rehabilitation This component financed rehabilitation efforts of municipalities that were affected by the 1998, 2000, 2004 and 2007 floods\. ï 1998 flood damage rehabilitation included 750 km of road rehabilitation (with drain and bridge/culvert rehabilitation) and the rehabilitation of three kitchen markets\. ï 2000 flood damage rehabilitation included 270 km of road rehabilitation, with drain and bridge/culvert rehabilitation\. ï 2004 flood damage rehabilitation included roughly 1,200 km of road rehabilitation, 19 km of drain rehabilitation, 235 meters of bridge/culvert rehabilitation and rehabilitation of several other structures\. 33 ï 2007 flood damage rehabilitation included rehabilitation of roughly 25 km of drains, 300 meters of bridge/culvert, and 2\.4 km of a retaining wall\. Only 680 km of road were rehabilitated (compared to the target value of 1,125 km) because rehabilitation required additional investment in 16 km of drain, 1\.7 km of bridge/culverts and 4\.4 km of the retaining wall to ensure sustainability of the rehabilitated road\. Project Locations for Phase I ï 2 City Corporations: Khulna and Rajshahi ï 14 Pourashavas: Mongla, Satkhira, Narail, Chuadanga, Patuakhali, Perojpur, Gopalganj, Dinajpur, Saidpur, Nilphamari, Parbatipur, Kurigram, Joypurhat, and Anaogaon\. ï 3 Hill Pourashavas: Rangamati, Khagrachari, and Bandarban\. ï Road improvements in the following upazilas (upazila, district, division): o Gopalpur upazila, Natore district, Rajshahi city corp o Bera upazila, Pabhna district, Rajshahi city corp o Kaliakair upazila, Gazipur district, Dhaka division o Sonargaon upazila, Narayanganj district, Dhaka division o Sreemangal upazila, Maulvibazar district, Sylhet division o Golapgonj, Sylhet division ï Flood Damaged Rehabilitation Works o 1998 Flood: 147 flood affected Pourashavas o 2000 Flood: 19 flood affected Pourashavas o 2004 Flood: 119 flood affected Pourashavas o 2007 Flood: 65 flood affected Pourashavas 34 Phase II Component 6 â Municipal Development The Bangladesh Municipal Development Fund (BMDF), a government owned company, was created under the project to provided financial support (on a lending basis) to qualified municipalities\. It provides municipalities with an alternative to block grants from the central governments\. ï The Fund allocated US $103 million to a total 595 municipal subprojects consisting of civil works, equipment, goods and technical assistance in 154 ULBs, including 7 City Corporations, 78 A class, 49 B class and 29 C class municipalities\. ï 1,128 km of road were built or rehabilitated in 141 ULBs\. ï 260 km of drain were built or rehabilitated in 103 ULBs\. ï 211 kitchen markets were developed in 59 ULBs\. ï 173 km of water supply pipelines were installed in 24 ULBs\. ï 36 deep tube wells were constructed in 15 ULBs\. ï 2 water treatment plants constructed in 2 ULBs\. ï 87 public toilets installed in a total of 36 ULBs\. ï 32 box culverts constructed in 13 ULBs\. ï 24,960 sets of street lights added in 24 ULBs\. ï 9 bus/truck terminals established in 9 ULBs\. ï 15 community centers established in 14 ULBs\. ï 8 slaughterhouses built in 6 ULBs\. ï 7 office complex buildings built in 7 ULBs\. ï Study carried out on municipal solid waste management in four cities\. Component 7 â Technical Assistance (a) Technical support provided to the MDF to provide specialist expertise in sub-project appraisal, including technical review of proposals for compliance with environmental, social, economic and financial feasibility of subprojects\. (b) Technical support provided to municipalities to help prepare acceptable sub-project proposals, and implement agreed Financial and Operational Action Plans to make them eligible for MDF financing\. (c) Incremental operational and maintenance costs for the MDF, and the MSU in the first three years were financed under the project\. 35 Table 2: Phase I Outputs by Components Item of work Unit Target Actual progress Reasons for (As per RDPP) deviation Financial Physical Financial Physical (in lakh (Qty) (in lakh (Qty) Tk\.) Tk\.) Project Component 1: Civil Works (2 City Corporations & 14 Pourashavas) (a) Water Supply â Rehabilitation of Existing Systems, and Equipment Purchase for Operations and Maintenance Replacement of existing well no 318\.00 10 318\.00 10 Regeneration of abandoned well no 8\.93 10 8\.93 10 Rehabilitation of pump house no 52\.80 20 52\.80 20 Rehabilitation of distribution system km 39\.56 15\.827 39\.56 15\.827 Installation of domestic flow meter no 43\.92 2500 43\.92 2500 Rehabilitation of street hydrant no 5\.35 150 5\.35 150 Rehabilitation of hand pumps no 27\.47 54 27\.47 54 Rehabilitation of overhead tank no 6\.42 1 6\.42 1 Construction of storage shade no 7\.89 1 7\.89 1 Rehabilitation of water treatment plant no 8\.08 1 8\.08 1 Rehabilitation of iron removal plant no 6\.15 1 6\.15 1 (b) Sanitation â Construction of public toilets and a pilot small-bore sewerage program in Khulna\. Public Toilets no 192\.48 35 192\.48 35 Small Bore Sewerage System km 96\.92 5\.05 96\.92 5\.05 (c) Roads and Drainage â Upgrading and rehabilitation of existing network and systems\. Urban road (with bridge/culvert) km 5285\.97 252\.709 5250\.05 252\.709 Drain km 2167\.11 39\.157 2167\.11 39\.157 (d) Bus and Truck Terminals â Construction and rehabilitation of bus and truck terminals for all the participating city corporations and municipalities\. Bus / Truck Terminal no 1648\.20 11 1634\.69 11 (e) Slum Improvement â Physical investments in Khulna and about five municipalities\. Slum Improvement program no 186\.39 8 139\.55 6 Due to land issue the scope was reduced Slum / Community development -Dug well no 224\.38 303 224\.38 303 -Drain with footpath m 180\.83 3257 180\.83 3257 -Surface drain m 119\.73 7297 119\.73 7297 -Footpath m 229\.81 16852 229\.81 16852 -Landing approach m 31\.74 542 31\.74 542 (f) Solid Waste Management: Focus on improving primary collection of solid waste by providing communal bins, handcarts and rickshaw vans\. Communal Bin no 32\.05 684 32\.05 684 (g) Markets: Upgrading and/or rehabilitation of 16 existing municipal markets in participating municipalities\. 36 Market development (kitchen) no 631\.75 19 631\.75 19 (h) Land Acquisition: Land for the implementation of bus/truck terminal and sanitation components\. Land Acquisition Hac 387\.65 10\.535 387\.65 10\.535 Project Component 2 - Solid Waste Collection vehicle & equipment Handcart no 6\.91 158 6\.91 158 Rickshaw van no 14\.05 122 14\.05 122 5 ton Garbage truck no 31\.92 2 31\.92 2 3 ton Garbage truck no 21\.31 2 21\.31 2 3 ton Garbage truck no 31\.96 3 31\.96 3 Demountable carrier no 12\.75 1 12\.75 1 Demountable container no 13\.95 28 13\.95 28 Acquisition of assets/ procurement I\. Imported machinery, equipment & spares 8-10 tons Road roller no 383\.27 19 383\.27 19 Tractor & trailer no 93\.83 9 93\.83 9 Vacuum tanker no 12\.19 1 12\.19 1 Truck mounted water browser no 72\.09 5 72\.09 5 Flow meter no 33\.23 2576 33\.23 2576 UPVC pipes & fittings lot 93\.53 10 93\.53 10 Hydraulic elevating platform no 71\.07 3 71\.07 3 II\. Locally procured machinery ,equipment & spares Leveling Instrument no 12\.01 19 12\.01 19 Computer & Printer no 25\.97 23 25\.97 23 Photocopier no 15\.31 21 15\.31 21 Fax no 6\.00 20 6\.00 20 Office Furniture L\.S 26\.89 L\.S 26\.89 L\.S III\. Imported transport & vehicle Jeep no 220\.73 24 220\.73 24 IV \.Locally procured transport & vehicle Motorcycle no 26\.98 38 26\.98 38 Pick-Up no 12\.49 1 12\.49 1 Project Component 3: Technical Assistance (a) Institutional Development Institutional Development & Capacity - 4374\.86 - 4370\.55 - Building (b) Municipal Data Base (c) Community Development and Participation (d) Municipal Development Fund (e) Studies Studies - 1346\.88 - 1251\.94 - - do - (f) Project Implementation: Technical Assistance Provided to finance design and construction supervision for a period of two years initially\. Design & Supervision Consultant - 1881\.47 - 1881\.47 - (g) Training Training cost - 350\.00 - 328\.67 - (h) Project Staffing Salary & allowances - 1947\.05 - 1712\.09 - Actual (i) Incremental O&M 37 Project Component 4: Chittagong Hill Tracts Component â Physical Investments in three municipalities of Rangamati, Bandarban and Khagrachari in the Chittagong Hills Tracts\. 3 Chittagong Hill Tract Pourashavas Road km 2210\.32 70\.642 2185\.28 70\.642 Bridge/Culvert a)\.All traffic bridge / culvert m 185\.38 152 185\.38 152 b)\.Light traffic bridge / foot bridge m 47\.60 177 47\.60 177 Drain km 483\.53 9\.628 483\.53 9\.628 Stepped Footpath m 131\.87 5963 131\.87 5963 Retaining wall m 17\.01 174 17\.01 174 Lake Side landing ghat no 161\.95 17 161\.95 17 Market development (kitchen) no 65\.80 7 65\.80 7 Public toilet no 58\.90 9 58\.90 9 Community centre no 23\.23 1 23\.23 1 Slaughter house no 9\.91 1 9\.91 1 Mini super market no 73\.09 1 73\.09 1 Water Supply -Sealed surface well no 144\.07 225 144\.07 225 -Rehabilitation of GL storage reservoir no 34\.86 4 34\.86 4 -Tube well/dug well no 123\.32 242 123\.32 242 Twin pit latrine no 993\.14 14156 914\.51 14156 Solid Waste Collection Facilities -Communal Bin no 3\.67 116 3\.67 116 Project Component 5: Flood Damage Rehabilitation (c)\.Flood Damaged Rehabilitation Flood'1998 -Road rehabilitation (with drain & bridge/culvert) km 9005\.31 749\.51 9005\.31 749\.51 -Kitchen Market rehabilitation no 1\.48 3 1\.48 3 Flood'2000 -Road rehabilitation (with drain & bridge/culvert) km 3482\.66 268\.97 3482\.66 268\.97 Flood'2004 -Road rehabilitation km 15634\.29 1170 15633\.32 1170 -Drain rehabilitation km 422\.58 19 422\.58 19 -Bridge / culvert rehabilitation m 125\.66 235 125\.66 235 -Other structure rehabilitation no 5\.60 9 5\.60 9 Flood'2007 -Road rehabilitation km 20257\.95 1125\.51 20388\.08 682\.61 Actual achievements, in physical terms, are less than the DPP provision\. The main reason is: 1\. For the sustainability of the rehabilitated roads further 16\.14 km of drain, 1171 meter of bridge/culverts, 4454 meter of retaining wall (integrated with road contracts) were necessary to build as most of the municipal roads pass through ponds and ditches, did not have side 38 drains and had unstable side slopes\. The other reasons include: 2\. During preparation of detail estimate extent of damages was found more than the assessment report; and 3\. There have been changes in schedule of rates and price hike of construction materials between the period of assessment and estimate preparation\. -Drain rehabilitation km 1125\.00 25 1123\.00 24\.70 -Bridge / culvert rehabilitation m 600\.00 300 648\.50 296 -Retaining wall m 366\.30 2442 365\.75 2440 -Other structure rehabilitation L/S 300\.00 - 300\.00 - Consultancy services for flood' 2004 - 714\.55 - 714\.55 - Consultancy services for flood' 2007 - 871\.12 - 806\.98 - As per contract agreement expenditure was made\. 39 Table 3: Phase II Outputs (Components 6 and 7) by ULB IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. 3177 Road, Drain, Public 2005-2006 9,420,795\.23 5,750 29,576 01 Akkelpur -BD Toilet Road, Drain 2007-2008 10,395,583\.53 7,855 Road, Drain 2007-2008 7,203,806\.23 6,575 Sub Total 27,020,184\.99 20,180 Alamdang 3177 2005-2006 12,744,562\.50 5,800 27,230 02 Road, Drain a -BD Road 2005-2006 13,806,333\.22 5,785 Bus Terminal 2005-2006 7,515,729\.74 34,000 Sub Total 34,066,625\.46 34,000 3177 Road 2004-2005 3,148,576\.50 2,250 25,190 03 Amtali -BD Road 2004-2005 2,356,039\.80 2,755 Road 2004-2005 2,319,069\.60 2,750 Road 2004-2005 2,124,044\.10 2,750 Road 2006-2007 3,435,388\.20 2,800 Road 2006-2007 3,820,234\.50 2,250 K\. Market, P\. 2006-2007 576,804\.58 4,850 Toilet, Slaughter H\. ( Addl\. 4761 12,000 Road, Drain 2011-2012 19,476,134\.10 Funding) -BD Sub-Total 37,256,291\.38 32,405 3177 Drain 2006-2007 7,800 146,305 04 Bagerhat 11,023,369\.27 -BD Drain 2006-2007 3,462,474\.12 16,800 Sub Total 14,485,843\.39 24,600 Banskhali 3177 road 2008-2009 6,846,420\.00 7,500 35,000 05 -BD Road 2008-2009 7,533,585\.16 8,500 Sub Total 14,380,005\.16 16,000 Brahmanb 3177 Road 2005-2006 14,277,004\.20 11,250 1,85,000 06 aria -BD Road 2005-2006 11,312,377\.20 15,650 Road 2005-2006 10,103,628\.85 13,500 Road 2006-2007 11,777,681\.65 12,500 3177 road 2008-2009 7,564,953\.60 30,000 2nd Time -BD Sub Total 55,035,645\.50 82,900 3177 Road 2006-2007 10,553,271\.30 3,850 22,581 07 Bhuapur -BD Road 2006-2007 11,587,827\.10 4,500 Road 2006-2007 8,881,859\.84 5,640 Sub Total 31,022,958\.24 13,990 3177 Road, Public Toilet 2005-2006 12,557,598\.30 15,000 62,156 08 Barguna -BD Road 2005-2006 10,454,620\.50 10,000 40 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Road, Drain 2005-2006 7,900,298\.10 12,000 Road 2005-2006 7,626,383\.10 8,000 Sub Total 38,538,900\.00 45,000 Barisal Road 2004-2005 7,897,680\.00 25,000 599,162 City 3177 09 Corporatio -BD n Road 2004-2005 4,518,670\.50 15,000 Road 2004-2005 7,361,520\.30 20,000 Road 2004-2005 7,273,926\.00 13,000 Road 2004-2005 7,105,901\.40 10,000 Drain 2004-2005 5,565,877\.20 15,000 Drain 2004-2005 6,354,284\.40 12,000 Drain 2004-2005 8,967,076\.20 10,000 Drain, Kitchen 2006/-2007 3,874,096\.80 30,000 Market Water Supply,pipe 2005-2006 5,034,967\.20 10,000 line, Tubewell (Addl\. 4761 25,000 Road 2011-2012 35,172,835\.19 Funding) -BD Road, culvert 2011-2012 47,074,187\.12 22,000 Road, Drain, Street 25,000 2011-2012 33,197,412\.45 Light Road 2011-2012 20,198,828\.00 15,000 Street Light 2011-2012 18,012,741\.30 15,000 Street Light 2011-2012 17,728,423\.65 20,000 Sub-Total 235,338,427\.71 282,000 Barolekha- 4761 17,000 10 Road, Drain 2011-2012 9,241,131\.40 38,925 B -BD Sub-Total 9,241,131\.40 17,000 3177 Road 2005-2006 10,731,789\.90 4,500 50,000 11 Bagha -BD Road, Drain 2005-2006 8,798,845\.05 6,500 Road, Drain, 2005-2006 6,916,119\.30 7,350 Culvert Water Supply 2005-2006 5,433,267\.60 4,570 31,880,021\.85 22,920 Sub Total 4761 18,500 12 Barura Road 2011-2012 14,124,461\.00 38,608 -BD Sub-Total 14,124,461\.00 18,500 4761 15,000 13 Bashurhat Road 2011-2012 12,465,242\.83 45,000 -BD Sub-Total 12,465,242\.83 15,000 4761 Road, Drain, 9,500 14 Bauphal 2011-2012 9,978,349\.40 19,600 -BD Kitchen Market Sub-Total 9,978,349\.40 9,500 3177 Road 2005-2006 9,325,404\.00 5,600 15 Bera -BD 58,340 41 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Road 2005-2006 8,084,755\.80 7,500 Road, Street Light 2006-2007 13,396,840\.20 18,750 (2nd 3177 Road 2006-2007 8,769,737\.41 15,000 Time) -BD Road 2006-2007 8,116,749\.78 12,000 Road 2006-2007 8,989,576\.28 10,000 Road 2006-2007 8,010,370\.21 8,000 ( Addl\. 4761 15,000 Office Building 2011-2012 66,527,393\.04 Funding) -BD Office Building 15,000 2011-2012 26,758,279\.54 (extension) Sub-Total 157,979,106\.26 106,850 3177 Road 2006- 15,000 38,961 16 Bhanga -BD 20007 8,875,673\.86 Kitchen Market Road 2005-2006 10,160,966\.70 10,000 2006- 10,167,458\.37 3,000 Office Building 20007 Sub Total 29,204,098\.93 28,000 17 3177 Road 2006- 10,925,359\.26 3,500 60,933 Bhola -BD 20007 Drain 2006- 7,867,833\.34 4,850 20007 Road 2006- 6,463,783\.04 4,500 20007 Road, Kitchen 2006- 5,683,624\.74 4,800 Market 20007 Road 2008-2009 9,744,945\.00 3,750 ( Addl\. 4761 10,000 Road, Drain 2011-2012 24,589,349\.56 Funding) -BD Road, Drain, Street 12,000 Light, Water 2011-2012 24,672,332\.70 Supply Office Building 2011-2012 51,520,435\.63 13,000 Street Light 2011-2012 24,589,349\.56 10,000 Sub-Total 166,057,012\.83 66,400 3177 Road 2006-2007 8,423,784\.66 6,000 39,157 18 Birampur -BD Road, Kitchen 2006-2007 9,687,638\.80 5,800 Market Sub Total 18,111,423\.46 11,800 42 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Bonpara 11,000 4761 19 (Addl\. Road 2011-2012 11,362,512\.48 23,059 -BD Funding) Sub-Total 11,362,512\.48 11,000 Road, Drain, 2005-2006 11,514,482\.10 6,500 18,506 Borhanudd 3177 20 Kitchen Market in -BD Public Toilet, Truck 2006-2007 8,277,703\.56 3,500 Stand Drain, Public Toilet 2006-2007 9,257,687\.07 4,000 Sub Total 29,049,872\.73 14,000 Road, Public Toilet 2005-2006 7,547,502\.50 5,800 2,49,532 Chapai 3177 21 Nawabganj -BD Street Light 2005-2006 3,381,936\.30 4,800 Road 2005-2006 6,592,551\.30 6,500 Road, Drain, Public 2005-2006 10,103,738\.40 7,800 Toilet Road 2005-2006 6,888,034\.80 6,700 Drain 2005-2006 7,820,323\.90 7,500 3177 Road 2006-2007 9,594,654\.63 20,000 ( 2nd time) -BD Road, Drain 2006-2007 11,072,249\.10 15,000 Road, Drain 2006-2007 10,998,208\.07 10,000 Road, Drain 2006-2007 4,728,092\.40 15,000 Street Light 2006-2007 7,317,635\.80 20,000 Road, Drain 2006-2007 4,214,499\.30 10,000 Public 2006-2007 1,237,874\.40 30,000 Toilet,Slaughter House Sub Total 91,497,300\.90 159,100 3177 Road, Kitchen 2006-2007 11,814,802\.25 20,000 68,250 22 Chattak -BD Market Road 2006-2007 6,659,048\.90 10,000 Sub Total 18,473,851\.15 30,000 3177 Road 2005-2006 9,103,541\.40 1,000 60,000 23 Chatkhil -BD Drain 2007-2008 7,370,085\.21 7,000 Road, Drain, Public 2005-2006 7,556,291\.10 15,000 Toilet Kitchen Market, 2005-2006 7,852,951\.80 20,000 Box Culvert Sub Total 31,882,869\.51 43,000 3177 Drain, Kitchen 2004-2005 10,475,591\.40 6,000 16,100 24 Chatmohar -BD Market Road 2006-2007 7,732,806\.70 4,500 43 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Road 2006-2007 7,867,587\.40 4,000 Sub Total 26,075,985\.50 14,500 3177 Road 2006-2007 6,183,573\.40 9,500 35,000 25 Charghat -BD Pipe Line, 2006-2007 10,460,130\.20 14,000 Production Tubewell Road 2006-2007 9,474,296\.40 7,500 Sub Total 26,118,000\.00 21,500 Chandina Office Building, 14,000 4761 26 ( Addl\. Drain, Kitchen 2011-2012 12,184,940\.44 42,760 -BD Funding) Market, Culvert Sub-Total 12,184,940\.44 14,000 3177 Road, Drain 2004-2005 8,611,630\.00 30,000 27 Chandpur -BD 400,000 Road, Drain, 2005-2006 6,950,430\.90 50,000 Kitchen Market Road, Drain 2005-2006 4,533,218\.10 25,000 Road, Drain 2005-2006 5,346,692\.10 20,000 ( Addl\. 4761 25,000 Road, Culvert 2011-2012 23,309,937\.57 Funding) -BD Drain 2011-2012 16,498,584\.06 15,000 Road 2011-2012 14,274,943\.09 20,000 Road 2011-2012 19,848,842\.77 18,000 Street Light 2011-2012 16,910,952\.30 25,000 Sub-Total 116,285,230\.89 228,000 Chaumuha 3177 Road, Drain 2005-2006 11,720,596\.50 12,000 120,000 28 ni -BD Road, Drain 2005-2006 9,353,529\.00 7,800 Road, Drain 2005-2006 10,982,512\.80 10,000 Road 2005-2006 3,108,329\.60 3,500 (2nd 3177 2007-2008 12,333,600\.00 10,000 Road time) -BD 20072008 4,043,789\.81 12,000 Drain, Street Light Production 2007-2008 12,925,800\.00 10,000 Tubewell Water Treatment 2007-2008 13,455,899\.65 8,000 plant, pipe line Pipe Line 2006-2007 10,677,600\.35 10,000 Sub Total 88,601,657\.71 83,300 Road, Drain, Public 2005-2006 10,463,077\.80 8,700 29250 Charfassio 3177 29 Toilet n -BD Road, Drain 2006-2007 11,109,402\.00 9,000 Road, Drain 2006-2007 9,087,198\.30 17,700 Sub Total 30,659,678\.10 35,400 44 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Chandanai 3177 Road 2006-2007 5,895,351\.63 3,500 28,700 30 sh -BD Kitchen Market 2006-2007 8,588,653\.86 10,000 Sub Total 14,484,005\.49 13,500 3177 Road, Drain 2005-2006 7,994,078\.00 25,000 174,000 31 Chuadanga -BD Drain 2006-2007 4,809,087\.70 15,000 Drain 2006-2007 7,118,602\.70 10,000 Road 2005-2006 4,717,160\.10 12,000 Water Tubewell, 2006-2007 5,819,546\.40 8,000 pipe line (Addl\. 4761 18,500 Drain 2011-2012 26,327,352\.25 Funding) -BD Road, Drain 2011-2012 14,224,356\.00 13,500 Sub-Total 71,010,183\.15 102,000 Chittagong City 4761 32 Corporatio Road 2011-2012 39,993,902\.50 25,000 5,000,000 -BD n (Addl\. Funding) Road 2011-2012 38,245,339\.80 20,000 Street Light 2011-2012 12,147,961\.00 30,000 Sub-Total 90,387,203\.30 75,000 Chowgach 15,000 4761 33 a (Addl\. Road, Drain 2011-2012 17,525,820\.80 40,000 -BD Funding) Sub-Total 17,525,820\.80 15,000 3177 2007-2008 12,428,701\.76 9,000 65,000 34 Chakaria Road -BD Bus Terminal 2007-2008 10,455,167\.17 50,000 Road 2007-2008 11,906,197\.38 8,500 (Addl\. 4761 10,000 Road 2011-2012 16,573,651\.57 Funding) -BD Kitchen Market 2011-2012 10,989,000\.00 8,000 Sub-Total 62,352,717\.88 85,500 Cox's 15,000 Bazar 4761 35 Kitchen Market 2011-2012 5,966,924\.80 100,000 (Addl\. -BD Funding) 2011-2012 21,278,303\.19 12,000 Road Sub-Total 27,245,227\.99 27,000 3177 Road 2007-2008 9,461,225\.90 6,500 16,923 36 Dhunat -BD Road, Drain, Box 2007-2008 8,369,208\.64 6,000 culvert Sub Total 17,830,434\.54 12,500 3177 Road, Slaughter 2007-2008 7,193,933\.91 6,500 38,185 37 Darsana -BD House 45 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Drain 2007-2008 9,771,142\.59 7,500 Sub Total 2008-2009 16,965,076\.50 14,000 38 Debidwar 3177 9,011,161\.27 9,500 Road 35,000 -BD 22,000 4761 (Addl\. Community Centre 2011-2012 9,218,870\.10 -BD Funding) Sub-Total 18,230,031\.37 31,500 Dhaka 1,000,000 City 4761 39 Corporatio Street Light 2011-2012 20,145,735\.00 12,000,000 -BD n (Addl\. Funding) Street Light 2011-2012 34,845,060\.64 1,200,000 Sub-Total 54,990,795\.64 2,200,000 Dinajpur 18,000 4761 40 (Addl\. Road 2011-2012 29,396,155\.00 179,207 -BD Funding) Drain 2011-2012 8,438,125\.00 11,000 Sub-Total 37,834,280\.00 29,000 Dohar 13,500 4761 Road, Drain 41 (Addl\. 2011-2012 22,125,178\.50 61,790 -BD Kitchen Market Funding) Road, Drain 2011-2012 31,254,024\.10 15,500 Strret Light 2011-2012 20,297,700\.00 13,000 Sub-Total 73,676,902\.60 42,000 Dupchanch 11,500 4761 42 ia (Addl\. Drain 2011-2012 20,656,944\.00 26,136 -BD Funding) Drain 2011-2012 28,343,136\.00 12,000 Sub-Total 49,000,080\.00 23,500 3177 Road 2004-2005 2,554,807\.50 6,500 99,945 43 Faridpur -BD Road 204-2005 7,386,364\.80 7,500 Drain 2004-2005 6,945,327\.90 7,000 Pipe Line 2006-2007 8,342,362\.15 8,500 Sub Total 25,228,862\.35 29,500 Feni 15,000 4761 44 (Addl\. Road 2011-2012 20,577,877\.00 80,000 -BD Funding) Drain 2011-2012 16,914,374\.00 12,000 Sub-Total 37,492,251\.00 27,000 3177 Drain, Kitchen 25,000 45 Fulbaria 2008-2009 25,466,542\.00 34,000 -BD Market Sub Total 25,466,542\.00 25,000 3177 17,000 46 Gaibandha Road 2008-2009 2,475,344\.89 80,000 -BD Sub 17,000 2,475,344\.89 Toatal 46 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. 3177 Road 2004-2005 4,722,607\.61 5,400 723,451 47 Gazipur -BD Road, Drain 2004-2005 4,213,674\.90 4,500 Road 2004-2005 2,150,771\.60 3,500 Road, Drain 2004-2005 3,144,458\.60 4,000 Road 2004-2005 2,711,886\.30 5,600 Road 2004-2005 2,918,658\.40 6,000 Road 2004-2005 2,402,817\.40 4,500 3177 2006-2007 31,675,316\.50 350,000 ( 2nd time) Poura Bhobon -BD 2006- 37,287,703\.50 50,000 Community Center 20007 cum Auditorium Sub Total 91,227,894\.81 433,500 Galachipa 15,000 4761 Road, Drain, 48 (Addl\. 2011-2012 7,497,516\.60 40,000 -BD Kitchen Market Funding) Sub-Total 7,497,516\.60 15,000 3177 Road 2004-2005 5,345,421\.90 4,500 51,512 49 Ghorashal -BD Road 2004-2006 7,874,121\.60 7,000 Road 2004-2007 7,076,983\.50 6,500 Road 2004-2008 5,726,370\.61 6,000 3177 Road 2007-2008 6,844,098\.71 8,000 (2nd time) -BD Road 2007-2008 9,400,577\.21 7,000 Road 2007-2008 7,865,998\.03 9,000 Road 2007-2008 5,297,991\.24 4,500 Sub Total 55,431,562\.80 52,500 Gopalpur 3177 Road, Drain, 2006-2007 12,510,519\.81 25,000 57,000 50 (T) -BD Kitchen Market Drain 2006-2007 8,819,021\.63 15,000 Sub Total 21,329,541\.44 40,000 Goalonda 12,000 4761 51 (Addl\. Road 2011-2012 20,374,074\.60 45,000 -BD Funding) Sub-Total 20,374,074\.60 12,000 Gopalganj 15,000 4761 52 (Addl\. Road 2011-2012 14,697,513\.90 60,000 -BD Funding) Drain 2011-2012 10,562,342\.45 10,000 Sub-Total 25,259,856\.35 25,000 3177 Road, Drain 2006-2007 9,959,008\.30 7,500 42,241 53 Godagari -BD Road 2006-2007 8,128,411\.55 6,500 Road 2006-2007 6,856,226\.30 5,500 47 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Road,Drain 2006-2007 7,737,979\.45 6,000 21,000 4761 (Addl\. Road 2011-2012 10,900,466\.00 -BD Funding) Sub-Total 43,582,091\.60 46,500\.00 3177 Drain 2006-2007 12,755,835\.41 8,500 20,538 54 Ghatail -BD Road 2006-2007 7,370,646\.74 4,500 Road 2006-2007 7,637,354\.30 5,500 Sub Total 27,763,836\.45 18,500 Gobindago 3177 Road 2006-2007 10,259,912\.50 15,000 55 31,242 nj -BD Sub Total 10,259,912\.50 15,000 2006-2007 9,838,177\.29 20,000 27,454 3177 Road, Box culvert, 56 Gabtali -BD Slaughter House Sub Total 9,838,177\.29 20,000 3177 Road, Kitchen 2005-2006 11,485,515\.60 15,000 62,300 57 Hakimpur -BD Market Road 2006-2007 10,693,834\.60 8,000 Drain 2006-2007 8,674,085\.10 5,000 Sub Total 30,853,435\.30 28,000 58 3177 Road 11,481,300\.00 14000 50,000 Hajigonj -BD Road 9,622,799\.17 9500 (Addl\. 4761 25,000 Road, Drain 2011-2012 14,871,559\.60 Funding) -BD Sub-Total 35,975,658\.77 48,500 3177 Road,Kitchen 2006-2007 12,409,447\.96 15,000 95,000 59 Hobiganj Market -BD Bus terminal 2006-2007 9,974,989\.40 30,000 Road,Kitchen 2006-2007 3,760,902\.68 20,000 Market Road, Public Toilet 2006-2007 3,399,294\.43 25,000 (Addl\. 4761 14,500 Road, Drain 2011-2012 12,152,513\.37 Funding) -BD Sub-Total 41,697,147\.84 104,500 Horinakun 3177 2006-2007 9,746,958\.48 25,000 125,000 60 Road du -BD Road,Kitchen 2006-2007 7,789,793\.50 35,000 Market 2006-2007 2,675,411\.28 10,000 Road, Box culvert 48 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Sub Total 20,212,163\.26 70,000 Ishwarganj 15,000 4761 61 (Addl\. Drain 2011-2012 16,418,413\.51 45,000 -BD Funding) 15,000 Sub-Total 16,418,413\.51 3177 Road 2004-2005 8,210,537\.70 7,500 103,293 62 Ishwardi -BD Road 20065- 7,474,515\.30 7,000 2006 Drain 20065- 7,453,667\.70 7,500 2006 Road 20065- 7,097,016\.60 7,000 2006 Road 20065- 8,905,697\.10 8,500 2006 3177 Road 2007-2008 12,837,993\.06 9,500 (2ndtime) -BD Road 2007-2008 6,579,840\.50 6,500 Pipe Line 2007-2008 6,124,464\.40 6,000 Road 2007-2008 11,095,222\.60 9,500 Sub Total 75,778,954\.96 69,000 3177 2007-2008 10,142,772\.62 7,800 35,427 63 Islampur Road -BD Drain 2007-2008 10,772,265\.12 8,000 Road 2007-2008 5,601,095\.31 4,500 Sub Total 26,516,133\.05 20,300 3177 Road 2005-2006 8,950,855\.50 8,500 120,455 64 Jamalpur -BD Road, Drain 2005-2006 9,366,958\.80 9,000 Road, Drain 2005-2006 8,560,581\.30 8,000 Road, Drain 2005-2006 8,614,409\.40 8,500 Drain 2005-2006 5,251,596\.30 4,000 Road 2005-2006 6,814,171\.80 4,500 Road 2005-2006 6,439,972\.50 4,000 Sub Total 53,998,545\.60 46,500 3177 Road, Drain 2005-2006 5,983,344\.90 15,000 400,000 65 Jessore -BD Road, Drain 2005-2006 8,045,459\.10 20,000 Road, Drain 2005-2006 9,770,274\.90 15,000 Road, Drain 2005-2006 9,995,013\.00 10,000 Community Center 2006-2007 10,495,313\.10 25,000 Kitchen Market, 2006-2007 4,794,771\.60 20,000 Street Light Sub Total 49,084,176\.60 105,000 Jibon 3177 Road,Kitchen 2006-2007 7,966,811\.70 7,500 25,742 66 Nagar -BD Market Road, Drain, Public 2007-2008 6,105,204\.42 7,000 Toilet 49 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Road, Drain, 2007-2008 8,113,939\.25 7,500 Kitchen Market Sub Total 22,185,955\.37 22,000 Jhikorgach 3177 Road 2005-2006 10,166,480\.10 8,500 27,834 67 a -BD Road 2006-2007 10,464,120\.40 8,500 Road, Drain 2006-207 4,326,661\.08 4,500 Sub Total 24,957,261\.58 21,500 3177 Road, Kitchen 2005-2006 13,801,202\.10 9,500 96,729 68 Joypurhat -BD Market Road 2005-2006 10,214,951\.30 8,500 Road 2005-2006 10,758,619\.90 8,500 3177 Drain 2006-2007 8,650,308\.65 8,000 (2nd time) -BD 2006-2007 11,150,099\.56 9,500 Road 2006-2007 6,766,414\.70 4,500 Drain 2006-2007 8,637,164\.85 5,500 Road 2006-2007 4,682,404\.00 4,000 Sub Total 74,661,165\.06 58,000 Road, Water 2005-2006 12,567,918\.60 9,500 102250 Supply 3177 69 Jhenidah -BD Road, Public Toilet 2006-2007 8,795,797\.20 8,000 Road, Drain 2006-2007 10,803,011\.40 9,000 Road,Kitchen 2006-2007 8,444,153\.70 7,500 Market Sub Total 40,610,880\.90 34,000 3177 Road,Kitchen 2006-2007 11,687,321\.78 9,500 30,000 70 Kabirhat -BD Market Road, Community 2006-2007 12,781,637\.17 8,500 Center Sub Total 24,468,958\.95 18,000 3177 Road 2005-2006 8,742,130\.20 15,000 30,200 71 Kahaloo -BD Drain 2006-2007 9,545,824\.83 5,000 Sub Total 18,287,955\.03 20,000 3177 Road, Public Toilet 2005-2006 8,086,732\.20 6,000 18,867 72 Kalai -BD Road, Drain 2006-2007 8,169,625\.40 5,500 Drain, Kitchen 2006-2007 6,576,641\.68 4,000 Market, Public Toilet Sub Total 22,832,999\.28 15,500 73 3177 Road 2009-2010 9,542,782\.16 8,500 35,000 Kalapara -BD Road 11,520,567\.35 10,500 Sub total 21,063,349\.51 19,000 Keshabpur 11,500 4761 74 (Addl\. Road, Drain 2011-2012 11,382,681\.00 24,331 -BD Funding) 50 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Sub-Total 11,382,681\.00 11,500 3177 Road 2006-2007 8,570,878\.20 4,500 75 Kushtia 23,865 -BD Road, Drain 2006-2007 10,365,688\.80 5,000 Road 2006-2007 8,382,537\.00 3,000 Community Center 2006-2007 11,323,794\.27 10,000 Sub Total 38,642,898\.27 22,500 3177 Road 206-2007 9,111,183\.02 25,000 156,000 76 Kaliakair -BD Road 2006-2007 8,717,816\.98 15,000 Sub Total 17,829,000\.00 40,000 Kalia 25,000 4761 77 (Addl\. Community Center 2011-2012 8,934,955\.00 35,000 -BD Funding) Sub-Total 8,934,955\.00 25,000 3177 Road 2006-2007 8,962,189\.65 6,000 18,144 78 Kakonhat -BD Road 2006-2007 8,745,771\.55 5,600 Drain, Kitchen 2006-2007 3,912,214\.46 3,500 Market Sub Total 21,620,175\.66 15,100 3177 Road 2007-2008 11,707,712\.89 10,000 46,250 79 Kaligonj -BD Road 2007-2008 11,234,773\.04 8,000 Drain 2007-2008 10,374,328\.18 5,000 Sub Total 33,316,814\.11 23,000 Khulna 25,000 City 4761 80 Corporatio Road 2011-2012 32,132,835\.60 1,500,000 -BD n (Addl\. Funding) Road, 30,000 Communicity 2011-2012 34,806,192\.20 Center Road, Drain 2011-2012 35,616,999\.50 25,000 Road 2011-2012 30,916,149\.00 20,000 Sub-Total 133,472,176\.30 100,000 3177 Road 2007-2008 8,437,312\.11 8,000 35,424 81 Kalihati -BD Road 2007-2008 10,020,752\.80 7,000 Road, Kitchen 2007-2008 6,307,781\.10 15,000 Market Sub Total 24,765,846\.01 30,000 Kishorega 30,000 4761 82 nj (Addl\. Drain 2011-2012 13,033,482\.10 109,536 -BD Funding) Bus terminal 2011-2012 30,734,694\.70 80,000 51 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. 28,000 Kitchen Market 2011-2012 6,173,573\.04 Sub-Total 49,941,749\.84 138,000 Kotchandp 3177 15,000 83 Road 2008-2009 11,056,392\.00 50,000 ur -BD (Addl\. 4761 18,000 Road 2011-2012 17,694,187\.00 Funding) -BD Sub-Total 28,750,579\.00 33,000 Kumarkhal 15,000 4761 84 i (Addl\. Road 2011-2012 18,670,683\.40 50,000 -BD Funding) 15,000 Sub-Total 18,670,683\.40 Kurigram 15,000 4761 85 (Addl\. Road 2011-2012 18,262,968\.30 66,392 -BD Funding) Road 2011-2012 16,497,728\.10 16,500 Sub-Total 34,760,696\.40 31,500 3177 Road, Drain, Public 2005-2006 7,704,402\.70 3,500 21,215 86 Lama -BD Toilet Road, Drain 2005-2006 6,881,864\.40 3,000 Road, Drain, Public 2005-2006 5,889,061\.80 4,500 Toilet 3177 2007-2008 12,610,920\.60 3,000 Water Supply (2nd time) -BD Road 2007-2008 6,668,772\.67 4,500 Water Supply 2007-2008 3,122,642\.35 2,500 Road 2007-2008 3,731,369\.27 4,500 (Addl\. 4761 Water Treatment 10,000 2011-2012 35,779,340\.22 Funding) -BD Plant & Supply Water Treatment 8,000 2011-2012 14,519,827\.20 Plant & Supply Sub-Total 96,908,201\.21 43,500 3177 Road, Drain 2004-2005 5,663,052\.50 4,500 81,348 87 Laksam -BD Road, Drain 2005-2006 5,947,767\.90 5,000 Road 2005-2006 5,666,793\.30 4,500 Road 2005-2006 4,493,251\.10 4,000 Road 2005-2006 6,116,637\.60 6,500 Public Toilet 2005-2006 1,291,903\.20 2,500 (Addl\. 4761 15,000 Road, Culvert 2011-2012 8,698,541\.92 Funding) -BD Road 2011-2012 14,103,529\.20 10,000 Street Light 2011-2012 9,053,094\.00 15,000 Sub-Total 61,034,570\.72 67,000 Lakshmipu 3177 Road, Drain, Public 2007-2008 9,803,046\.60 15,000 70,000 88 r -BD Toilet Road,Drain, Box 2007-2008 11,807,106\.75 12,000 Culvert Road 2007-2008 5,917,835\.20 10,000 Sub Total 27,527,988\.55 37,000 52 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. 3177 Road, Drain 2005-2006 10,994,005\.80 9,500 26,820 89 Lalmohan -BD Road,Drain 2006-2007 8,970,503\.40 7,500 Road,Drain 2006-2007 6,360,107\.40 6,000 Road, Box Culvert 2006-2007 9,005,721\.00 7,000 Water Supply, 2006-2007 2,919,662\.40 3,500 Tubewell 3177 Road, Drain 2007-2008 12,605,969\.70 7,500 (2nd time) -BD Road, Drain 2007-2008 10,914,026\.96 6,000 Production 2007-2008 8,232,137\.50 3,000 Tubewel, Pipeline Sub Total 70,002,134\.16 50,000 Lalmonirh 3177 Road 2007-2008 12,642,251\.98 15,000 55,200 90 at -BD Kitchen Market, 2007-2008 10,147,431\.47 10,000 Slaughter House Kitchen Market, 2007-2008 7,680,563\.52 12,000 Slaughter House Sub Total 30,470,246\.97 37,000 3177 Road 2005-2006 5,587,321\.95 20,000 91 Magura -BD 125,000 Road 2005-2006 6,949,378\.80 10,000 Road 2005-2006 6,349,038\.80 7,500 Kitchen 2005-2006 5,351,181\.30 12,000 Market ,Drain Sub Total 24,236,920\.85 49,500 3177 Road 2006-2007 11,628,146\.28 30,000 230,000 92 Manikgonj -BD Water Supply 2006-2007 14,484,735\.00 5,000 Office Building 2006-2007 20,604,873\.69 50,000 46,717,754\.97 85,000 Sub Total 3177 Drain 2006-2007 7,588,074\.50 6,500 89,543 93 Madhabdi -BD Road, Drain 2006-2007 5,661,456\.30 5,500 Drain 2006-2007 5,379,881\.10 5,500 Drain 2006-2007 7,101,482\.50 7,500 Madhabdi 14,500 4761 (Addl\. Road, Drain 2011-2012 27,464,020\.00 -BD Funding) Road 2011-2012 22,807,906\.00 13,500 Street Light 2011-2012 20,601,000\.00 12,000 Sub-Total 96,603,820\.40 65,000 3177 Road, Drain 2005-2006 10,034,401\.79 5,000 64,000 94 Meherpur -BD Drain 2005-2006 8,870,669\.10 3,000 Road 2005-2006 13,900,691\.70 4,500 Road, Drain, 2005-2006 8,508,926\.70 20,000 53 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Kitchen Market Kitchen Market 2005-2006 9,712,089\.90 10,000 Pipe Line, 2005-2006 11,013,366\.60 3,000 Production Tubewell (2nd Road, Drain 2007-2008 7,400,744\.20 5,000 3177 time -BD funding) Road, Drain 2007-2008 8,714,632\.80 4,500 Street Light 2007-2008 2,827,000\.00 10,000 2007-2008 33,981,300\.00 10,000 Community Center Community Center 2007-2008 4,033,799\.00 15,000 ( extension) Sub Total 118,997,621\.79 90,000 3177 Water Supply, 2006-2007 6,958,305\.90 5,000 35,200 95 Moheshpur -BD Public Tubewell Road, Drain 2006-2007 11,469,430\.80 3,500 Road, drain 2006-2007 10,224,070\.20 4,500 Road, Kitchen 2006-2007 9,629,527\.50 4,500 Market Road, Drain 2006-2007 12,194,265\.60 4,000 50,475,600\.00 21,500 Sub Total 3177 Road, Drain 2006-2007 13,613,997\.10 15,000 50,000 96 Mathbaria -BD Drain 206-2007 1,713,935\.70 10,000 Sub Total 15,327,932\.80 25,000 Muktagach 3177 Road, Drain 2005-2006 6,731,074\.80 6,500 37,043 97 a -BD Road 2005-2006 8,036,546\.40 7,500 Road, 205-2006 11,077,685\.90 8,500 DrainBusterminal, Public Toilet, Water supply Drain 2005-2006 7,343,093\.70 7,000 Sub Total 33,188,400\.80 29,500 3177 Road, Cross Drain 2007-2008 11,760,522\.92 15,000 25,200 98 Melandah -BD Sub Total 11,760,522\.92 15,000 99 Mirsarai 3177 Road 2007-2008 10,872,191\.15 10,500 32,000 -BD Road 2007-2008 2,966,757\.43 5,700 Sub Total 13,838,948\.58 16,200 Monohardi 15,000 4761 100 (Addl\. Drain 2011-2012 6,226,018\.20 35,000 -BD Funding) Sub-Total 6,226,018\.20 15,000 54 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Monglapor 3177 8,500 101 Road 2009-2010 6,114,188\.74 45,000 t -BD Road 2009-2010 8,451,882\.78 8,500 Sub Total 14,566,071\.52 17,000 Moulvibaz 60,000 4761 102 ar (Addl\. Kitchen Market 2011-2012 23,378,119\.80 125,000 -BD Funding) Community Center 2011-2012 24,414,047\.10 30,000 Road, Drain 2011-2012 8,352,794\.52 12,000 Street Light 2011-2012 15,226,049\.70 19,500 Sub-Total 71,371,011\.12 121,500 Mundumal 12,000 4761 103 a (Addl\. Road, Public Toilet 2011-2012 20,628,000\.00 36,239 -BD Funding) Sub-Total 20,628,000\.00 12,000 Mymensin 3177 Road 2007-2008 12,807,709\.16 9,500 375,312 104 gh -BD Busterminal 2007-2008 14,442,910\.15 10,000 Road, Street Light 2007-2008 8,790,127\.99 7,500 Road 2007-2008 4,016,750\.96 3,500 Road 2007-2008 12,407,383\.37 9,000 Sub Total 52,464,881\.63 39,500 105 Nabigonj 3177 11,500 Drain, Street Light 2008-2009 8,895,781\.00 25,000 -BD Sub Total 8,895,781\.00 11,500 106 Nageswari 3177 12,000 Road 2008-2009 12,299,798\.83 27,000 -BD Road 2008-2009 7,060,272\.67 9,500 Sub Total 19,360,071\.50 21,500 Narail 15,000 4761 107 (Addl\. Road 2011-2012 11,857,802\.00 70,000 -BD Funding) Sub-Total 11,857,802\.00 15,000 3177 10,500 108 Naogaon Road 2006-2007 13,453,322\.05 57,000 -BD Road, Drain 2006-2007 14,861,081\.25 11,500 Road, drain 2006-2007 12,497,099\.40 10,000 Road 2006-2007 1,026,000\.00 3,500 Road 2006-2007 4,743,125\.00 5,000 Sub Total 46,580,627\.70 40,500 3177 13,500 109 Noakhali Road 2009-2010 16,694,817\.00 200,000 -BD Road 2009-2010 10,061,968\.00 10,000 Sub Total 26,756,785\.00 23,500 3177 Road, Drain 2004-2005 8,228,997\.00 15,000 121,780 110 Narsingdi -BD Road,Drain 2004-2005 5,722,315\.20 13,000 Road, Drain 2004-2005 5,456,037\.29 15,000 55 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Road, Drain 2004-2005 4,651,492\.82 15,000 3177 Drain 2007-2008 7,920,730\.45 10,000 (2nd time) -BD Drain 2007-2008 11,113,511\.13 9,000 Drain 2007-2008 11,418,227\.48 6,000 Drain 2007-2008 12,391,329\.75 7,200 Drain 2007-2008 14,876,662\.91 8,000 Drain 2007-2008 12,047,054\.03 6,000 Drain 2007-2008 11,002,023\.48 5,000 Drain 2007-2008 11,255,171\.22 4,000 Drain 2007-2008 11,587,552\.28 5,400 Drain 2007-2008 9,486,283\.54 1,800 Sub Total 137,157,388\.58 120,400 Narayanga 3177 Road 2004-2005 4,512,994\.60 5,500 241,393 111 nj -BD Road 2004-2005 3,333,131\.10 3,500 Road 2004-2005 6,446,683\.80 5,000 Road 2004-2005 4,458,178\.80 4,500 Drain 2004-2005 2,093,584\.60 7,800 Truck Terminal 2004-2005 5,567,897\.80 15,500 (Addl\. 4761 24,000 Road, Drain 2011-2012 34,923,446\.00 Funding) -BD Road, Drain 2011-2012 35,038,610\.00 26,000 Road, Drain 2011-2012 22,286,323\.80 20,000 Road, Drain 2011-2012 21,719,599\.00 25,000 Sub-Total 140,380,449\.50 136,800 Nilphamari 18,500 4761 112 (Addl\. Road, Drain 2011-2012 37,173,040\.20 105,200 -BD Funding) Community Center, 45,000 2011-2012 20,782,885\.00 Road, Drain Street Light 2011-2012 10754100 13,500 Sub-Total 68,710,025\.20 77,000 3177 Road 2004-2005 6,403,257\.00 7,000 42,000 113 Nowapara -BD Road 2004-2005 6,312,662\.10 12,000 Road 2004-2005 7,247,162\.70 9,000 3177 Road, Drain 2007-2008 8,366,538\.60 4,500 (2nd time ) -BD Road 2007-2008 7,763,396\.40 3,000 Drain 2007-2008 6,790,374\.00 3,500 Road 2007-2008 12,447,334\.80 4,500 Road 2007-2008 8,487,057\.60 2,500 Road 2007-2008 8,590,715\.10 3,000 56 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Sub Total 72,408,498\.30 49,000 3177 Road 2006-2007 15,279,390\.16 11,500 25,000 114 Nowhata -BD Road 2006-2007 11,065,988\.52 9,500 Pipe line 2006-2007 5,838,849\.20 8,500 12,000 4761 Road, Water (Addl\. 2011-2012 20,520,589\.10 -BD Supply Pipeline Funding) Sub-Total 52,704,816\.98 41,500 3177 Road, Drain 2005-2006 9,631,768\.50 15,000 125,942 115 Pabna -BD Road 2005-2006 6,488,460\.90 12,000 Road 2005-2006 8,868,781\.80 10,000 Road, Drain 2005-2006 9,082,185\.70 6,000 Drain, Kitchen 2005-2006 7,620,771\.60 5,000 Market Drain 2005-2006 7,025,031\.90 3,000 (Addl\. 4761 20,000 Road 2011-2012 30,704,091\.90 Funding) -BD Drain 2011-2012 14,924,532\.90 15,000 Road 2011-2012 11,195,569\.80 25,000 Sub-Total 105,541,195\.00 111,000 3177 Road, Drain, Public 2006-2007 13,550,069\.25 12,000 37,000 116 Panchbibi -BD Toilet Road, Kitchen 2006-2007 10,797,071\.40 8,000 Market Drain, Public 22,000 (Addl\. 4761 Toilet, Slaughter 2011-2012 11,317,067\.00 Funding) -BD House Sub-Total 35,664,207\.65 42,000 3177 15,000 117 Patgram Road 2009-2010 15,084,096\.00 35,000 -BD Sub-Total 15,084,096\.00 15,000 Patiya 17,500 4761 118 (Addl\. Road 2011-2012 19,359,899\.00 50,120 -BD Funding) Sub-Total 19,359,899\.00 17,500 Patuakhali 14,500 4761 119 (Addl\. Road 2011-2012 17,444,930\.21 80,000 -BD Funding) Kitchen Market, 19,000 2011-2012 30,839,786\.00 Street Light Road 2011-2012 46,107,017\.88 22,000 Sub-Total 94,391,734\.09 55,500 3177 Road, Public Toilet 2006-2007 9,589,912\.20 4,500 20,000 120 Parbatipur -BD Road, Drain, 2006-2007 8,819,966\.70 3,800 kitchen Market Road 2006-2007 5,604,989\.30 3,500 Drain, Public Toilet 2006-2007 4,444,738\.20 3,500 57 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Sub Total 28,459,606\.40 15,300 Phulpur 9,500 4761 121 (Addl\. Road, Drain 2011-2012 16,883,406\.90 30,000 -BD Funding) Street Light 2011-2012 9,818,316\.00 10,500 Sub-Total 26,701,722\.90 20,000 3177 Road 2007-2008 12,630,075\.30 15,000 60,000 122 Pirojpur -BD Drain 2007-2008 6,772,566\.44 5,000 Road 2007-2008 6,794,880\.05 12,000 Sub Total 26,197,521\.79 32,000 Rajshahi Road 2006-2007 10,676,097\.90 35,000 795,451 City 3177 123 Corporatio -BD n Road 2006-2007 9,021,598\.86 25,000 Road 2006-2007 7,827,485\.67 22,000 Road 2006-2007 9,835,645\.22 25,000 Road 2006-2007 9,514,707\.32 20,000 Road 2006-2007 8,728,942\.74 15,000 Road 2006-2007 9,584,402\.09 17,000 Road 2006-2007 6,403,797\.23 21,000 Road 2006-2007 10,335,634\.65 12,000 (Addl\. 4761 25,000 Road, Drain 2011-2012 28,425,266\.10 Funding) -BD Road, Drain 2011-2012 34,290,921\.50 20,000 Road, Drain 2011-2012 19,773,392\.60 17,000 Road, Drain 2011-2012 19,736,227\.80 22,000 Road 2011-2012 34,826,020\.60 15,000 Road, Drain 2011-2012 12,988,786\.00 19,000 Road, Drain 2011-2012 12,979,976\.90 15,000 Road, Drain 2011-2012 16,188,895\.02 12,000 Road 2011-2012 22,852,194\.00 10,000 Road, Drain 2011-2012 20,848,929\.16 13,000 Sub-Total 304,838,921\.36 360,000 3177 2006-2007 13,175,635\.15 8,000 35,000 124 Raipur Road, Drain -BD 2006-2007 12,976,743\.17 6,500 Road, Drain Road, Public Toilet, 2006-2007 14,142,408\.40 10,000 Kitchen Market 58 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Sub Total 40,294,786\.72 24,500 3177 Road 2005-2006 4,272,209\.95 8,500 55,000 125 Rajbari -BD Road 2005-2006 5,525,344\.80 6,500 Drain, Kitchen 2005-2006 9,301,685\.40 5,000 Market Drain 2005-2006 9,061,685\.10 3,500 Pipe Line 2005-2006 1,444,923\.90 2,500 Sub Total 29,605,849\.15 26,000 Rangamati 4761 126 (Addl\. Road 2011-2012 28,786,979\.00 16,500 66,836 -BD Funding) Road 2011-2012 23,885,515\.00 15,000 Street Light 2011-2012 20,465,416\.00 14,500 Sub-Total 73,137,910\.00 46,000 3177 Road, Public Toilet 2005-2006 12,356,831\.70 25,000 127 Rangpur -BD Road 2005-2006 9,361,631\.70 15,000 Road 2005-2006 10,111,655\.70 12,000 444,218 Road 2005-2006 9,551,991\.60 10,000 Road 2005-2006 8,610,545\.70 10,000 PUblic Toilet, pipe 2005-2006 7,986,263\.40 25,000 line (Addl\. 4761 15,600 Road 2011-2012 26,808,262\.20 Funding) -BD Drain 2011-2012 17,350,781\.00 14,000 Production 13,000 2011-2012 11,790,079\.00 Tubewel Road, Drain 2011-2012 29,755,141\.00 17,500 Street Light 2011-2012 18,526,950\.00 30,000 187,100 Sub-Total 162,210,133\.00 Raozan 17,000 4761 128 ( addl\. Road 2011-2012 15,961,338\.00 50,123 -BD Funding) 17,000 Sub-Total 15,961,338\.00 3177 Community Center 2004-2005 8,766,721\.80 25,000 500,000 129 Savar -BD Road, Box culvert 2004-2005 3,696,430\.50 6,500 Road 2004-2005 3,091,786\.20 5,000 Road 2004-2005 3,549,194\.10 4,500 Road 2004-2005 2,722,212\.00 5,000 ( Addl\. 4761 Drain 2011-2012 23,021,192\.00 15,000 Funding) -BD Road 2011-2012 20,567,957\.00 20,000 59 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Sub-Total 65,415,493\.60 81,000 Road 2004-2005 5,564,300\.05 4,500 48523 3177 130 Singra -BD Road, Drain, 2005-2006 11,159,528\.40 9,000 kitchen Market Road 2005-2006 10,269,836\.80 8,000 Community Center 2005-2006 12,246,334\.75 15,000 ( Addl\. 4761 25,000 Office Building 2011-2012 18,959,761\.80 Funding) -BD 61,500 Sub-Total 58,199,761\.80 Singair 14,500 4761 Production 131 (Addl\. 2011-2012 30,158,752\.68 30,000 -BD Tubewel\. Pipe Line Funding) Sub-Total 30,158,752\.68 14,500 Road, Drain 2005-2006 8,710,756\.20 15,000 35,000 3177 132 Sarishabari -BD Sub Total 8,710,756\.20 15,000 3177 Road 2004-2005 4,274,190\.00 3,500 160,000 133 Satkhira -BD Road 2005-2006 6,016,680\.90 4,000 Road 2005-2006 5,861,328\.20 4,200 Road 2005-2006 5,659,010\.10 3,200 Road 2005-2006 4,839,768\.10 2,500 Drain 2005-2006 10,496,855\.70 2,500 Drain 2005-2006 5,283,859\.50 2,700 Pipe line 2005-2006 5,950,035\.90 3,000 Pipe line 2005-2006 5,618,271\.60 2,500 Sub Total 54,000,000\.00 28,100 Shibganj 3177 Road 2005-2006 10,258,154\.10 4,500 40,000 134 (Bogra) -BD Road 2005-2006 5,996,073\.60 5,000 Road, Drain 2005-2006 7,871,673\.50 12,000 Sub Total 24,125,901\.20 21,500 3177 Road 2007-2008 8,311,719\.60 3,500 40,000 135 Senbag -BD Road 2007-2008 4,315,671\.40 4,500 Road, Drain, Public 2007-2008 9,053,152\.28 12,000 Toilet Sub Total 21,680,543\.28 20,000 136 3177 2008-2009 15,000 30,000 Setabgonj 9,603,000\.00 -BD Sub-Total 9,603,000\.00 15,000 60 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. 3177 Road, Kitchen 2006-2007 10,831,015\.25 4,500 155,000 137 Sirajganj Market -BD Road, Kitchen 2006-2007 10,291,784\.80 5,500 Market, Slaughter House Road, Drain, 2006-2007 10,690,571\.10 4,600 kitchen Market Kitchen Market, 2006-2007 10,747,693\.44 12,000 PublicToilet Sub Total 42,561,064\.59 26,600 3177 Road, Drain 2005-2006 8,263,473\.30 4,500 42,412 138 Sitakunda -BD Road, Drain, 2005-2006 3,241,798\.80 5,000 Culvert Road, Box culvert 2005-2006 7,565,165\.90 4,500 Road, Box culvert 2005-2006 8,252,830\.50 5,500 12,000 4761 (Addl\. Road, Drain 2011-2012 9,438,367\.00 -BD Funding) Sub-Total 36,761,635\.50 31,500 Shibgonj 3177 Road , kitchen 2006-2007 11,450,337\.10 4,500 35,000 139 Market (Chapai) -BD Road, Public Toilet 2006-2007 9,147,967\.40 12,000 Sub Total 20,598,304\.50 16,500 Shaistagon 3177 Road, Kitchen 2009-2010 25,000 35,000 140 12,271,905\.37 j -BD Market Sub-Total 12,271,905\.37 25,000 3177 Drain 1,975,614\.00 3,500 25,000 141 Shailkupa -BD Road,Drain 2007-2008 11,895,221\.47 550 Kitchen Market 2007-2008 10,465,164\.53 7,500 Sub Total 24,336,000\.00 11,550 3177 Road 2006-2007 8,549,337\.29 7,500 25,000 142 Santhia -BD Road,Drain, 2006-2007 10,225,729\.06 12,000 Kitchen Market Sub Total 18,775,066\.35 19,500 3177 Road 2006-2007 12,078,895\.70 8,000 45,000 143 Satkania -BD Road,Kitchen 2006-2007 9,010,076\.81 11,000 Market Road 4,888,261\.19 5,000 ( Addl\. 4761 15,000 Road 2011-2012 20,542,130\.00 Funding) -BD Road 2011-2012 8,248,991\.00 12,000 Road 2011-2012 11,466,299\.00 10,000 Sub-Total 66,234,653\.70 61,000 61 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Shahzadpu 3177 Road 2006-2007 9,411,106\.80 8,000 30,000 144 r -BD Road,Drian 2006-2007 11,701,880\.56 7,500 Road, Kitchen 2006-2007 9,061,487\.83 10,000 Market Sub Total 30,174,475\.19 25,500 3177 Road 2006-2007 9,695,027\.45 4,500 35,000 145 Sonagazi -BD 2006-2007 8,823,122\.75 5,000 Road,Drain Road,Drain 2006-2007 6,961,601\.56 5,000 Sub Total 25,479,751\.76 14,500 3177 Road 2006-2007 6,046,934\.38 4,500 40,000 146 Shakhipur -BD Road 2006-2007 10,068,648\.38 4,200 Road 2006-2007 9,646,123\.73 5,500 Sub Total 25,761,706\.49 14,200 Sreemonga 3177 Production 17,500 147 2011-2012 29,346,649\.20 71,908 l-A -BD Tubewel\. Pipe Line Sub-Total 29,346,649\.20 17,500 Road, kitchen 2006-2007 8,596,728\.50 15,000 45,000 3177 148 Sreepur Market, Public -BD Toilet Road 2006-2007 8,560,285\.67 4,500 Road, Drain 2006-2007 9,757,164\.70 5,500 Sub Total 26,914,178\.87 25,000 Swarupkat 8,500 4761 149 hi (Addl\. Road 2011-2012 10,757,492\.00 35,000 -BD Funding) Sub-Total 10,757,492\.00 8,500 Sylhet City 25,000 Corporatio 4761 150 Road 2011-2012 26,591,596\.00 1,000,000 n ( Addl\. -BD Funding) Road, Production 35,000 2011-2012 19,107,762\.17 Tubewel Drain 2011-2012 13,024,018\.00 20,000 Street Light 2011-2012 17,862,553\.80 35,000 Sub-Total 76,585,929\.97 115,000 3177 Road 2004-2005 10,487,422\.38 35,000 400,000 151 Tangail -BD Road 2004-2005 7,956,365\.20 25,000 Road 2004-2005 8,595,636\.10 22,000 Drain 2004-2005 9,198,239\.40 10,000 3177 Road, Drain 5,943,349\.14 15,000 2006-2007 (2nd time ) -BD Office Building 2008-2009 31,066,932\.75 50,000 (Addl\. 4761 Office Building 2011-2012 17,858,662\.15 50,000 62 IDA Sl Name of Cred Type of Year of Actual Total No\. of Total No\. ULB it Investment Investment Expenditure Beneficiaries Population No\. Funding) -BD (extension) 207,000 Sub-Total 91,106,607\.12 3177 Road, Drain, Public 2006-2007 9,917,369\.10 12,000 64,280 152 Tanore -BD Toilet 9,917,369\.10 12,000 Sub Total 3177 Road, Drain 2004-2005 8,539,228\.80 7,800 153 Tongi -BD 281,928 Road, Drain 2006-2007 8,137,726\.20 8,500 Road, Drain, 2006-2007 6,550,001\.10 6,500 Kitchen Market Road, Drain, Public 2006-2007 9,265,488\.30 9,500 Toilet Road, Drain 2006-2007 9,386,159\.40 10,000 Road 2006-2007 8,889,001\.96 9,000 ( Addl\. 4761 Production 5,000 2011-2012 37,895,564\.80 Funding) -BD Tubewel, Pipe Line Production 4,500 2011-2012 41,358,027\.20 Tubewel, Pipe Line Road 2011-2012 12,372,796\.60 15,000 Road, Drain 2011-2012 10,875,984\.80 17,000 Street Light 2011-2012 21,758,894\.00 15,000 Street Light 2011-2012 10,452,595\.50 20,000 Sub-Total 185,481,468\.66 127,800 9,514,838 Grand 6,824,395,543\.8 32,233,717 Total 4 63 Annex 3\. Economic and Financial Analysis Background The project was implemented in two phases and had seven components\. Phase one had five components which were investments in civil works, equipment, technical assistance, physical investments, and flood damage rehabilitation\. The civil works component included financing for water supply, sanitation, roads, drainage, bus and truck terminals, slum improvement, solid waste management, markets, and land acquisition\. The investments under the second component included solid waste equipment in Khulnaa and Rajshahi, and motor vehicles and computers for support personnel in each Pourashava\. The third component provided technical assistance for institutional development, municipal database development, community development and participation, municipal development fund, technical studies, project implementation, staffing, and training\. The fourth component (also referred to as the Chittagong Hill Tracts Component) financed physical investments in three municipalities (Rangamati, Bandarban, and Khagrachari) which were lagging behind other municipalities in service provision and urban development\. Component 5 supported rehabilitation of damaged infrastructure in municipalities affected by the 1998 floods\. Phase two of the project had two components\. The first component was the Municipal Development Fund to finance civil works, equipments, goods, and technical assistance\. The second component provided technical assistance by providing technical support to the MDF specialists and municipalities and incremental O&M support and MSU during the initial years\. Most of these technical assistance and institutional development investments are not amenable to economic analysis because the benefits could not be estimated in monetary units\. However, it is possible to quantify the benefits of the civil works investments\. Thus, economic analysis was conducted for a sample of investments in roads, water supply and sanitation, and bus terminals for which adequate data are available\. 1\. Economic Analysis of Investment in Road Development The project consisted of more than 160 roads in the participating cities and pourashavas (municipalities), some of which were very small investments\. The small road projects usually involved resurfacing of roads\. The economic analysis however was conducted for two roads for which adequate data on vehicle traffic, vehicle operating costs, travel time, and other relevant data are available\. The two roads analyzed are Kahn Bahadur Road in Pabna Pourashava and the Line Road in Rangamatti Pourashava\. The economic benefits from investment in roads are savings in vehicle operating costs, savings from decreased travel time due to improved road conditions for all types of motorized and non- motorized vehicles, and other indirect benefits including economy wide impacts from additional job creation and multiplier impacts\. Direct benefits from the investment in roads include reduction in travel costs and other indirect economic benefits\. The savings in travel costs include reduction in vehicle operating costs and savings from reduced travel times\. The indirect economic benefits include economy wide multiplier impacts of spending in road development though employment generation and consumption of construction materials\. 64 1\.1 Methodology and Data Methodology In order to estimate the benefits from the investment in roads, we estimated the savings in vehicle operating costs, travel times and travel costs saved, and the indirect economic benefits of the project\. For this analysis, let q1 be the traffic volume in the road before the project and q2 the traffic volume after the investment in the road, and let VOC1 and VOC2 be the Vehicle Operating Costs (VOC) before and after the project, respectively\. Similarly, let TOT1 and TOT2 be the Travel Time Costs before and after the project and T1 and T2 the number of travelers using the road before and after the project\. Thus, the savings in vehicle operating cost is: VOCSav= q1(VOC2-VOC1) + 0\.5(q2-q1)(VOC2-VOC1) = (VOC2-VOC1)0\.5(q1+ q2)\. In addition to the savings in VOC, the investment in roads reduces travel times and thus there is a savings in travel costs\. Let r represent the average vehicle occupancy per vehicle, T1 the travel time before investment, T2 the travel time after road investment, and w the average wage rate\. Thus, the reduced travel costs associated with reduction in travel time is: TTSav= rq1w(T1-T2)+0\.5r(q2-q1)( (T1-T2)) = (T1-T2)0\.5r(q1+q2)\. The net benefits from the investment in roads becomes Net Benefit = VOCSav + TTSav + IB +Economy wide impacts, where VOCSav is the savings in vehicle operating costs, TTSav is the savings in travel time, and IB is the economy wide benefits arising from spending in road development\. In order to estimate the indirect economy-wide benefits, it is assumed that spending in road construction creates employment and generates demand of materials in the economy and hence will have multiplier impacts on the economy\. Data Traffic volume: Traffic count data for 12 hours was collected on the roads, which was converted to 24 hour traffic using factors of 35% for market days and 20% for non-market days\. Average annual vehicle traffic is obtained by assuming wet season to be 17 weeks in a year and traffic during dry season to be 20% higher than in the wet season\. In order to conduct the field surveys, a set of questions was prepared and one person in each station along the road was stationed in each road to collect information on traffic flow for all vehicles in both directions\. Data on traffic volumes was provided by the implementing agency\. Vehicle operating cost: Vehicle operating costs (VOC) were calculated for all class/types of vehicles motorized and non-motorized at different levels of road roughness ranging from good to bad and earthen roads\. For motorized roads, data for calculating operating costs were derived from interviews with bus and truck operators, vehicle body builders and vehicle traders\. Data on vehicle operating cost was provided by the implementing agency 65 Travel time costs: Travel time costs were estimated based on the average vehicle occupancy for each type of vehicle using available information from road surveys provided by the implementing agency, and are comparable to the available information from the Bank financed Rural Roads Project\. Indirect benefits: The indirect benefits are economy-wide impacts from employment and spending in road and other construction materials used\. Such indirect benefits include the multiplier impacts of wage income of construction workers generated from the road construction/reconstruction program as well as from additional economic activities resulting from linked businesses including suppliers of construction goods and services and employment opportunities created in the services sector\. In order to compute the multiplier impacts of wage income and construction expenditures and other impacts on the economy, a multiplier of 1\.08 was used in this analysis1\. In order to convert financial costs to economic costs, the standard conversion of 0\.9 is used\. Annual operation and maintenance (O&M) costs are assumed to be 0\.5 percent of the total capital costs\. In addition to the annual O&M costs, it is assumed that additional road repairs may be required once every five years to keep the roads in good condition\. Such repairs are assumed to cost about 3 percent of the capital cost every five years\. The traffic volume in the road is assumed to grow at an annual rate of 2 percent for all modes of transport\. The life of the road is assumed to be 20 years with adequate maintenance repairs\. In order to account for the unemployment and under-employment, a shadow wage rate factor of 0\.87 is used for skilled labor and 0\.67 for unskilled labor\. 1\.2\. Project Costs, Benefits, and Economic Efficiency The initial investment in the roads was Taka 34\.07 million for the Kahn Bahadur road in Pabna Pourashava and Takka 41\.9 million for the Police Line Road in Rangamatti Pourashava\. The base case scenario assumes that all kinds of traffic in the roads will increase at an annual rate of 2 percent\. A 2 percent increase in traffic volume is reasonable because the economy is expected to grow by about 6 percent and population at 1\.2 percent\. Under the base case scenario, the results (Table A3\.1) show that the investment in the Kahn Bahadur Road yields modest returns in terms of benefit-cost ratio (2\.34) and Net Present Value of cost and benefit streams and Internal Rates of Return (30\.6%)\. Investment in the Line Road in Rangamatti Pourashava also yielded similar results with a benefit-cost ratio at 2\.2 and Economic Rate of Return (ERR) at 27 percent\. The above results could be affected by changes in traffic volume on the roads\. Hence, sensitivity analysis was done under two alternative scenarios\. The first scenario assumes a 3 percent annual increase in traffic volume for all modes of transport, a plausible scenario given the economic 1 The multiplier was arrived at as 1/(1-xyz) where x is the percentage of new income the consumer and business will spend; y is the percentage of consumer expenditures made in the state/region; and z is the percentage of business expenditure made in the state/region\. We have assumed that the values of x, y and z to be 0\.4, 0\.5 and 0\.4 respectively (Income multipliers in Economic Impact Analysis, Guide Z-108, New Mexico State University\. www\.aces\.nmsu\.edu) 66 growth and increase in disposable incomes\. The second scenario assumes that the traffic volume stays the same throughout the project life because there could be some diversion of traffic when other parallel roads are constructed\. The results of the sensitivity analysis show that even under a conservative assumption of zero traffic growth, the measures of economic efficiency are modest\. Because the traffic volume increases, the benefit-cost ratio and the Economic Rates of Return rose, as expected\. Table 1\. Measures of economic efficiency for investments in roads: base case and sensitivity analysis Kahn Bahadur road in Pabna Pourashva Line road in Rangamatti Pourashava Base case Sensitivity analysis Base case Sensitivity analysis 3% increase No increase 3% increase No increase in traffic in traffic in traffic in traffic volume volume volume volume Net Present Value 2,608 2,711 2,245 77\.5 80\.6 67\.2 of benefits (000 $) Benefit: Cost 2\.34 2\.4 2\.1 2\.2 2\.5 2\.09 ratios ERR (%) 30\.6 31\.1 29\.0 27 29 25 The above results show that based on the economic analysis of the two roads for which data are available, the investment in roads yielded modest economic returns\. These returns are comparable to the ex-ante estimates of rates of return on the roads in Nilphamari and Joypurhat, as presented in the PAD\. It may be noted that under the Municipal Services Project numerous roads of different classes have been constructed\. Because the ICR team has neither the relevant data on all of the different roads financed nor a representative sample of road investments, an aggregation of the measures of economic efficiency of road investments under the project is not attempted here\. However, the results of the economic analysis for the two roads show high levels of economic efficiency in road investments under the project\. 2\. Economic Analysis of Investment in Drainage The objectives of improved drainage facilities were to mitigate urban degradation and to improve health conditions\. In addition to the above direct benefits, the drainage investments reduced flooding of the roads during the monsoon season and thus increased road capacities\. Thus, these investments resulted in improved reliability of the roads in the monsoon season, and also reduced the road maintenance costs of the roads because proper drainage reduced deterioration and damage to the roads from stagnant water\. In order to estimate the project benefits we have only data on direct benefits in the form of payments by households for drainage services\. Because we do not have data on indirect benefits such as reduced maintenance costs and damages to the roads such benefits are not included in this analysis\. 2\.1 Data and Methods 67 In addition to the investment costs, we have assumed that the annual O&M costs are 5 percent of the investment costs\. We have also assumed that the drainage systems may require repairs and some minor reconstruction works in every five years\. The costs of such repairs and reconstruction are assumed to be about 15 percent of the investment costs\. On the benefit side, the direct benefits from the drainage investments are the charges paid by the beneficiaries and thus the revenues from the drainage services provided to the beneficiaries\. In addition to these direct benefits, there are a number of indirect benefits such as reduced urban degradation and improved health outcomes, reduced flooding of roads and thus damages to the roads, and an increase in road capacity\. We do not have data to estimate these indirect benefits and hence is not included in the economic analysis\. 2\.2\. Project Costs, Benefits, and Economic Efficiency Economic analysis of the investment in the Pabna roadside drain for which we have data is presented below2\. The initial investment in the Pabna roadside drain was Taka 9\.78 million\. In addition to the investment costs, the O&M costs and costs of repairs are also considered (see section 2\.1)\. Under the base case scenario, the user charges are assumed to increase at an annual rate of 4 percent and the life of the investment is assumed to be 20 years with necessary repairs in every five years\. Measures of economic efficiency under a base case scenario and two alternative (sensitivity analysis) scenarios are presented in table 2\. Table 2\. Measures of economic efficiency for investments in roadside drains: base case and sensitivity analysis Pabna Roadside Drain Base case Sensitivity Analysis Scenario 1 Scenario 2 Net Present Value 91\.76 135\.8 62\.62 of benefits (000 $) Benefit: Cost 1\.52 1\.77 1\.36 ratios ERR (%) 22 26 21 The base case scenario assumes that the user charges increase at an annual rate of 4 percent\. The results show modest returns to investment with an Internal Rate of Return of 23 percent and benefit-cost ratio of 1\.52\. Note that the above estimates do not include indirect economic benefits like reduced damage to the roads from drainage, improved urban environment, and health and environmental benefits from the drainage3\. Including such indirect economic benefits 2 We do not have data on benefits and user charges received for other drainage investments under the Municipal Services Project\. 3 We do not have data to estimate such benefits 68 in the benefit computations will significantly improve the measures of economic efficiency because flooding and improper drainage and the consequent economic impacts are major problems in Bangladesh\. The results of the sensitivity analysis support the above results\. Scenario 1 considers the case when the number of beneficiaries and the user charges increase by 2 percent and 4 percent, respectively\. An alternative scenario 2 considers the case when the user charges alone increase by 2 percent on annual basis\. These results show that even under conservative assumption of 2 percent increase in user charges, the returns to investment are positive with a benefit-cost ratio above 1 and an Economic Rate of Return at 21 percent\. The rate of return on drainage investments estimated at the time of project development (as presented in the PAD) used the beneficiariesâ willingness to pay measures\. These estimates yielded an Economic Rate of Return at 22 percent\. This estimate also did not consider indirect economic benefits such as savings in road maintenance costs and the environmental and health benefits of improved drainage\. Our estimates of the rates of return are very close the ex-ante results reported in the PAD, although the methods used are different\. 3\. Economic Analysis of Investment in Bus Terminals Investments in bus terminals included redesign of the terminals to provide more bus bays, paving, drainage, sites for ticket kiosks, passenger waiting areas, and other facilities\. The benefits from such investments in the bus terminals included improved traffic management, lower turnaround times, and reduced congestion in and around terminal facilities, improved passenger access, and better facilities for passengers\. 3\.1 Data and Methods In order to compute the economic benefits from these investments, we estimated the savings in vehicle operating costs for the buses operating in these terminals, and the savings from reduced passenger travel time costs that result from reduced delays for the buses\. In order to estimate the benefits from the bus terminals, we used the methodology similar to the one used in the case of investment in roads\. Data on traffic volume at the terminals before and after investment, vehicle operating costs with and without the investment, savings in travel times with the investment, and other indirect savings are used to compute the benefits from the bus terminals\. a\. Costs, Benefits, and Economic efficiency Economic analysis of the investment in the bus terminal in Mymensingh Pourashava was conducted4\. The total capital investment in the Bus Terminal was Taka 13\.93 million over a period of four years\. In addition to the investment costs, the O&M costs and costs of repairs are also considered (see section 2\.1)\. Under the base case scenario, the user charges are assumed to 4 We do not have data on benefits and user charges received for other drainage investments under the Municipal Services Project\. 69 increase at an annual rate of 4 percent and the life of the investment is assumed to be 20 years with necessary repairs every five years\. Measures of economic efficiency under a base case scenario and two alternative (sensitivity analysis) scenarios are presented in the Table 3\. The base case scenario assumes that the number of buses using the improved bus terminal increases at an annual rate of 2 percent and the vehicles and passengers will save their vehicle operating costs and travel expenses including reduced travel times\. The Internal Economic Rate of Return and the benefit-cost ratio under the above base case scenario were 23 percent and 1\.63, respectively\. These results are comparable to the estimated rates of return at project initiation presented in the PAD\. Table 3\. Measures of economic efficiency for investments in Bus terminals: base case and sensitivity analysis Bus Terminal Base Case Sensitivity Analysis Scenario 1 Scenario 2 Net Present Value 221\.9 226\.64 162 of benefits (000 $) Benefit: Cost 1\.63 1\.65 1\.42 ratios ERR (%) 23 24 22 Sensitivity analysis was conducted under two alternative scenarios\. The first scenario considers the case when the number of vehicles using the improved terminal goes up at annual rate of 4 percent and the second scenario considers a more conservative case of one percent increase in number of vehicles using the terminal\. The team only had sufficient data on one bus terminal constructed under Phase two of the project to conduct economic analysis\. The results suggest positive returns to investment in the terminal\. 4\. Economic Analysis of Water Supply Investments The project supported multiple investments in water supply sub-projects\. The major water supply investments involved replacement of existing wells, improvement of distribution systems, replacement of pumps and motors, flow meters, steel hydrants, hand pumps, pipes and valves\. These investments improved the efficiency of water distribution systems and reduced water losses and thus reduced non-revenue water\. Thus, the benefits water supply investments are increased efficiency of water supply systems, reduction in water losses, and thus increased revenue from water distribution\. Because the team did not have sufficient data to estimate the benefits of the investments in water supply, it was not possible to attempt the economic analysis for these investments\. 5\. Fiscal Impact Analysis The sustainability of the project depends on municipalitiesâ capacities to efficiently manage, operate, and maintain the assets created under the project, to continue to deliver urban services, and to mobilize local resources to finance these services\. The projectâs design required 70 municipalities to prepare Financial and Operational Action Plans (FOAPs) as pre-requisites to obtain project support for urban infrastructure\. It is envisaged that the project and investments will be sustainable with the firm commitment and ownership of the government and municipalities in following the agreed FOAPs\. Moreover, technical assistance related to institutional and financial capacity improvement was also provided to the participating municipalities to help ensure project sustainability\. Finally, the participatory approach was used to create a sense of âownershipâ? among stakeholders to help ensure project sustainability\. 6\. Conclusion The objectives of the project were to strengthen the institutional capacity of selected city corporations and secondary towns to plan, finance, implement, operate, and maintain urban infrastructure services in an efficient and sustainable manner; improve resource allocation and financial discipline through the creation of an improved financing mechanism for urban infrastructure; and reduce urban poverty and improve environmental conditions of urban communities through financing of the critical urban infrastructure and services\. The civil works undertaken as part of the project related to water supply, drainage, small bore sewerage systems, urban roads, sanitation, solid waste management, bus/ truck terminals, markets, slum upgrading, landing ghats, twin pit latrines; water supply components, and flood rehabilitation works of the urban infrastructures damaged in 1998, 2000, 2004 and 2007\. As such, the project helped improve deficient urban services by investing in physical infrastructure and by strengthening the institutional and financial capacity of the participating municipalities\. The project also provided technical support to strengthen the institutional and financial capacity of municipalities\. The capacity building support included: (i) computerization and improved management of Holding Tax bills and records, municipal accounts, water supply bills and records, Trade License records; (iii) the development of an Infrastructure Inventory and preparation of base maps; and (iii) support to community mobilization\. In addition, the project supported training (both classroom and hands-on) to municipal mayors, officers and staff on procurement, engineering, accounting, and planning\. The project also provided municipalities with requisite hardware and equipment\. All of these inputs resulted in significant improvement in municipal service delivery, tax management, infrastructure planning, O&M, and computerized records\. As a result, the municipalities are now more efficient, effective, and sustainable\. Economic analysis of selected investments in roads, bus terminals, and roadside drainage systems show that these investments were efficient with internal rates of return as high as around 30 percent\. As the municipalities in Bangladesh were facing inadequate urban infrastructure services, weak management and financial capacity of municipalities, fragmentation of urban sector responsibilities and an increasing level of urban poverty and accompanying environmental degradation Bankâs investment in this project is fully justified in the light of positive results of the economic analysis of selected investments\. 71 Annex 4\. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Jonathan Kamkwalala Sector Manager AFTN2 Task Team Leader Municipal Toshiaki Keicho Sr\. Urban Environment Specialist ECSS3 Development Environmental P\. Illangovan Manager, Operations SACAF Engineer Social Assessment Santhadevi Meenakshy Consultant and Resettlement Procurement and Paula Reed Procurement Specialist SARPS Project Support Ajay Kumar Lead Transport Economist EASIN Economic Analysis Municipal Pinki Chaudhuri Consultant Development Fund Municipal Rick Tilghman Consultant Development Fund WB Disbursement and Saibul Huda Program Officer/Disbursement Officer Dhaka Project Preparation Financial and Ali Omer Golam Morshed Consultant institutional analysis Kwabena Amankwah-Ayeh Sr\. Urban Specialist AFTU2 Project Preparation Consultant (former Unit Chief, Energy Financial and Arun Banerjee and Infrastructure Unit) Operational Issues Supervision/ICR Anthony Graeme Lee Senior Municipal Finance Specialist SASDU Task Team Leader Songsu Choi Lead Urban Specialist SASDU Task Team Leader Financial Burhanuddin Ahmed Sr\. Financial Management Specialist SARFM management Teen Kari Barua Consultant SASHN Social Development Civil Jaswant S\. Channe Consultant SASDT engineering/procure- ment Md\. Tafazzal Hossain Program Assistant SASDO Program assistance Olasumbo Adeyemo Program Assistant SASDO Program assistance Tanvir Hossain Sr\. Procurement Specialist SARPS Procurement Marghoob Bin Hussein Senior Procurement Specialist SARPS Procurement Abdur Rahman Khan Consultant SASSD Civil engineering Zahed H\. Khan Sr\. Urban Specialist SASDU Task Team Leader Resource Pratima Kochar Resource Management Officer ECACA management Rajivan Krishnaswamy Consultant FEUCA Municipal finance 72 Elizabeth Mary Madan Information Assistant SASDO Information systems Financial and Ali Omer Golam Morshed Consultant SASFP institutional analysis Zibun Nessa Pinu Program Assistant SARPS Program assistance Mohammed Sayeed Consultant SASSP Disbursement Toshiaki Keicho Senior Urban Environmental Specialist ECSS3 Task Team Leader Financial Suraiya Zannath Sr\. Financial Management Specialist SARFM management Zhiyu Jerry Chen Urban Specialist SASDU Project supervision Janis Bernstein Sr\. Urban Development Specialist SASDU ICR Principal Author Viju Ipe Consultant (Economist) SASDU ICR Economist Yasmin Bijani Consultant (Urban Development) SASDU ICR Team Member (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No\. of staff weeks travel and consultant costs) Lending FY96 19\.27 FY97 21\.27 FY98 203\.44 FY99 146\.76 FY00 5 5\.44 Total: 5 396\.18 Supervision/ICR FY96 0\.00 FY97 0\.00 FY98 0\.00 FY99 99\.08 FY00 80\.00 175\.42 FY01 57\.00 82\.73 FY02 42\.00 63\.97 FY03 54\.00 111\.28 FY04 36\.00 104\.21 FY05 48\.00 140\.35 FY06 48\.00 161\.95 FY07 50\.00 182\.86 FY08 21\.00 130\.65 FY09 32\.40 97\.20 FY10 23\.19 77\.70 FY11 28\.13 78\.20 FY12 42\.92 125\.00 Total: 562\.64 1630\.60 73 Annex 5\. Beneficiary Survey Results The following summarizes the findings from two evaluations involving qualitative analysis of beneficiary and other stakeholder inputs\. In May 2012, the Municipal Support Unit (MSU) of the Municipal Services Project (MSP) carried out a limited survey to determine the efficacy of the Municipal Capacity Building Program (MCBP)\. The survey involved a set of questionnaires administered to mayors, councilors, and paurashava staff (tax, water, trade license, accounting, and engineering sections) and citizens that were involved in the MSU program\. The rationale for the MCBP was to improve the paurashavasâ revenue-collection capacities by automating their taxes, water supply bills, trade licenses, and other relevant sections\. The components of the MCBP included: ï Computerization and improved management of tax records; ï Computerization and improved management of accounting reports; ï Infrastructure database development and base map preparation; and ï Community mobilization support to municipalities\. ï Computerization and improved management of water records; and ï Computerization and improved management of trade license records\. ï Computerization of non-motorized vehicle\. Survey Highlights 2\.1 Mayors (102) and Councilors (103): Nearly all mayors and councilors recognized an increase in revenue income, development of their staffâs capacity and skill, improved service delivery standard and increase in accountability and transparency\. Only 2 mayors and 1 councilor said that they wanted to revert to the previous (manual) system\. Paurashava Staff Tax Section (96 tax section staff interviewed): The majority of tax section staff indicated the following: ï Tax demand-collection procedures have become easier (96%); ï Preparing tax billing is less time consuming (97%); ï Possible to deliver tax bills to taxpayers on time (92%); ï Transparency has increased due to collecting tax through banks (91%); ï Collection efficiency has increased (93%); ï Reports on tax demand-collection are easily available (94%); and ï Taxpayers are happy with computerized tax billing (91%)\. ï Efficiency has increased after using the tax billing software (99%)\. Almost 40% of respondents reported that they were facing problems in using the new tax billing software; 99% said that they would not want to revert to the old system\. 74 Water Section (57 water section staff interviewed): The majority of water section staff indicated the following: ï Water demand-collection procedures have become easier (93%); ï It has been possible to prepare water billing in less time (93%); ï It has been possible to deliver water bills to customers on time (93%); ï Transparency has increased due to collecting water bills through banks (95%); ï Collection efficiency has increased (90%); ï Reports on water demand-collection are easily available (81%) and ï Customers are happy with computerized water billing (90%)\. Although over 60% of respondents reported that they were facing problems in using the water billing software, almost 100% (99%) said that they would not want to revert to the old systems of water billing\. Trade License Section (69 trade license staff interviewed): The majority of trade license staff indicated the following: ï Trade demand-collection procedures have become easier (74%); ï It has been possible to prepare license billing in less time (74%); ï It has been possible to deliver license bills to license holders on time (67%); ï Transparency has increased due to collecting license bill through banks (70%); ï License holders are happy with computerized trade licensing billing (67%)\. According to the survey, 50% of respondents reported that they were facing problems using the trade licensing software, but 96% said that they would not want to revert to old systems of trade license billing\. Account Section (96 accounting staff interviewed): The majority of accounting staff indicated the following: ï Transparency has increased or will increase in accounting (96%); ï Efficiency has increased after using the accounting software (97%); Based on the survey, 93% of respondents said that they use the Municipal Accounting Software (MAS); roughly the same percentage said that they did not want to revert to old systems of accounts keeping\. 2\.3 Pourashava Citizens (93 citizens interviewed): The majority (95%) of the citizens surveyed reported that they knew that LGED was helping their paurashava perform collection activities by providing computers\. The majority (90%) did receive computerized tax/water/trade license bills from their pourashava and of these, all felt that this was convenient\. The majority felt that: ï Bill payment through the banks is a good venture (99%); ï Banking transactions will bring transparency (100%); 75 ï Quick service delivery will be possible if all paurashava functions are performed through computers (99%)\. Summary of Findings The survey demonstrated that nearly all respondents â the paurashava authority, paurashava staff and citizens â consider the MCRP to be a well-timed program with beneficial effects\. Participating paurashavas do not want to return to manual systems and now additional paurashavas want to be included in the program\. The paurashavas also indicated that they would want to the program to continue (through LGED)\. The paurashava holding tax revenue collection efficiency figures show that positive changes occurred in 80 paurashavas, negative changes in 18 paurashavas, and no change in only 2 out of 100 paurashavas after post computerization\. Water billing revenue collection efficiency figures have also improved in 34 pourashavas (out of a total of 48 pourashavas)\. Before computerization, there was no infrastructure database or base maps in any of the paurashavas\. Now there are 105 complete databases and 79 complete base maps; 12 partially complete databases and 22 partially complete base maps in 133 paurashavas\. Before the MSP, there was very little community-related support for paurashavas\. Citizensâ awareness campaigns, formation of Town Level Coordination Committee, Ward Level Coordination Committee, and Community Based Organizations started first under the MCBP\. Finally, the majority of respondents believed that they had no opportunity for training before the program\. The MSU initiated comprehensive professional improvement training programs for paurashava employees in addition to core trainings (e\.g\. basic computer training, software operation and maintenance training, field survey training, etc\.)\. Through the program, the MSU provided: ï 4,472 days of core training (e\.g\. basic computer training on tax, accounts, water, trade license; software operation training; four-day initial survey training, etc\.) for 864 employees in 50 new paurashavas\. ï 2,169 days of refresher training for 225 employees in 130 old paurashavas\. ï 3,810 days of additional training (e\.g\. quality control and supervision, double entry accounting, orientation on software, etc\.) for 876 employees\. If there had been more time, a more comprehensive survey would have ensured a higher pool of respondents\. However, the trends suggest that mayors, councilors, pourashava staff and citizens all perceive the MCBP to have significantly enhanced their municipalityâs ability to collect taxes, water bills and trade licenses; improved transparency; and increased overall efficiency\. 76 Impact Evaluation The following is a short summary of the findings and lessons from a qualitative evaluation study entitled âImpact Evaluation of Six Project Municipalitiesâ?\. The study was financed and commissioned by the Bangladesh Municipal Development Fund and conducted by the Development Support Link (DSL) from June 1-30, 2007\. At the time, BMDF had financed 100 Urban Local Bodies (ULBs) and, upon successful completion of the first phase of the project, 13 ULBs were approved to implement the second phase development activities\. The objective of the evaluation was to assess the impacts of specific phase I project components in six municipalities (Narsingdi, Noapara, Chapai Nawabganj, Gazipur, Meherpur, Choumuhani)\. Methodology The six municipalities were selected by BMDF to ensure geographic variation\. All major stakeholders, including project beneficiaries, local elite, NGO officials, ward commissioners, retailers, and buyers were represented\. The methodologies used for collecting data and information included: ï Literature Review â reviewing secondary sources of information such as project documents, sub-project appraisal report, MIS/performance data, etc\.; ï Focus Group Discussions; ï Key Informant Interviews â with local elite and members of civil society; ï SWOT Analysis; and ï Observation â key service facilities created, developed or renovated\. The Field Research Officers (FROs) and Field Coordinator (FC) participated in a two-day training on the questionnaires and methodology of the evaluation study\. There were three separate questionnaires targeting three separate groups: (a) civil society doctor, teacher, NGO official, ward commissioner, deed writer; (b) market wholesalers, retailers, and buyers; and (c) beneficiaries\. The FROs and FC were also provided an observation checklist for the impact evaluation study\. Findings The following summarizes the main findings of the study\. The municipalities included in the evaluation of each of the key findings are indicated next to each project component\. Roads â (all six select municipalities) ï âGoodâ â no water logging, no mud; ï Road widened with footpath â pedestrian mobility increased, more transport on road; ï Increase in employment; ï Increase in enrollment in schools and colleges; ï Increase in land value, with the highest values along the road; 77 o Narsingdi: Increase to Taka 30,000 to 60,000, depending on the distance to the road\. o Noapara: Increase to Taka 15,000 to 30,000\. Several respondents indicated that the increase in land value might not have been attributable to road improvements only since land values had been increasing on their own\. o Chapai Nawabganj: Increase to Taka 5,000 to 20,000\. The majority of respondents said that the percent increase in land values had increased once roads were improved\. o Gazipur: Increase to Taka 20,000 to 70,000\. All respondents reported that land values increased on both sides of improved roads\. o Meherpur: Increase to Taka 30,000 to 50,000\. o Choumuhani: Increase to Taka 70,000 to 100,000\. ï Easy movement of patients; ï Decrease in transportation cost of both people and goods in some places and increased cost in other places; ï Increase in volume of trade and business; and ï No one was displaced and no adverse ecological/environmental impact\. Drains â (Narsingdi, Chapai Nawabganj, Gazipur, Meherpur, Choumuhani) ï Water does not clog, water logging has declined; ï Generally, bad odor does not spread; ï In some places, mosquitos have increased but they have decreased overall\. Incidences of malaria and dengue have also decreased; ï Water flows away easily â garbage is often piled up to hinder the flow of water; ï Improved environmental conditions; and ï No loss of land by individuals â increase in land value\. Public Toilet â (Chapai Nawabganj) ï Many knew about the public toilets in the municipality; ï Decrease in indiscriminate defecation and urination; ï Decrease in odor from roadside open latrines and urinals; ï Decrease in air pollution; ï Decrease in incidence of intestinal diseases; ï Overall improvement in environment; and ï Quality of toilet ranges between âgoodâ and âmoderately goodâ â water supply in toilet is through a piped supply system\. Kitchen Market: (Meherpur) ï Permanent shops have been built; ï No risk of being soaked in the rain or of losing any goods; ï Increase in supply of goods and commodities; 78 ï Buying and selling continue until late at night â volume of trade has increased; ï Increase in employment opportunities; ï Decline in bad odor; ï Improved kitchen market drainage and environmental conditions; ï Market is not large enough, resulting in congestion of buyer and sellers and leaving inadequate space for farmers to stockpile goods; and ï Mosquitos breed in the market drains\. Water Supply (pipeline and production tube well): (Meherpur) ï The majority of people drink from the water supply; ï Water quality is âmoderately goodâ? to âvery goodâ?; ï No reported arsenic content; ï Source of supply water is production tube well; and ï Decrease in incidences of water-borne diseases\. Key Recommendations Based on the findings of this limited evaluation, the main recommendations included the following: ï Roads and drains should be improved before all other improvements (water supply, public toilets, kitchen market, etc\.) are made to maximize benefits\. ï The development work, especially the work on the drains, should have been supported by an awareness campaign on proper solid waste disposal to avoid blocking drains\. ï In addition to the awareness campaigns, local level committees should be formed to help raise awareness about the importance of the project components to development goals and to improving environmental conditions\. ï Release of funds should be expedited to ensure a timely start to the work\. 79 Annex 6\. Summary of Borrower's ICR and/or Comments on Draft ICR Summaries of Project Completion Reports Prepared by LGED and BMDF LGED: Phase I of Municipal Services Project 1\.1 Background Bangladesh experienced the highest growth rate in Asia, a growth rate of about 4\.2% per annum, during the last decade of 20th century\. At that time, the urban population was estimated to be about 25 million, or roughly 20% of the total national population of about 120 million\. Although this rapid urbanization was mainly limited to the four metropolitan cities of Dhaka, Chittagong, Khulna, Rajshahi, the smaller municipalities also started experiencing high growth rates\. As a result, the GOBâs interventions had sought to both prevent the deterioration of service delivery in larger cities and forestall service deterioration in rapidly growing secondary cities\. The main issues facing the urban sector in Bangladesh were (i) inadequate urban infrastructure services, fueled by rapid urban growth; (ii) weak financial and management capacity of municipalities; and (iii) an increasing level of urban poverty and environmental degradation\. In the above circumstances, the GOB requested the World Bank to provide financing for a feasibility study in support of the Municipal Services Project (hereafter referred to as âMSPâ?)\. Accordingly, in 1993, the GOB approved a Project Preparatory Technical Assistance (TA credit No\. 2393 BD) for a Municipal Services Project (MSP)\. Under the TA, Mott Macdonald Ltd\., Louis Burger International Inc\., Engineering and Planning Consultants LTD, AQUA Consultant & Associates Ltd\. Consultant & Associates Ltd\. undertook a detailed feasibility study for preparing the MSP\. The Local Government Engineering Department (LGED) of the Local Government Division under M/O LGRD & Co-operatives, acted as the Executing Agency (EA) for the TA project\. Two City Corporations (Khulna & Rajshahi) and 14 Pourashavas (Mongla, Satkhira, Narail, Chuadanga, Patuakhali, Pirojepur, Gopalgonj, Dinajpur, Sayedpur, Nilphamari, Parbattipur, Kurigram, Joypurhat, Naogaon) were selected based on pre-specified criteria for inclusion in the MSP\. IDA fielded the Pre-appraisal Mission and the Appraisal Mission on the MSP in March and in June-July of 1998, respectively\. During the negotiation of the project it was agreed that three Chittagong Hill Tracts Pourashavas (Rangamati, Khagrachari and Bandarban) would be included in the project\. These three pourashavas were selected because they had so far lagged behind other municipalities in service provision and urban development\. In September and October of 1998, the country was severely affected by a devastating flood, resulting in heavy damage to urban infrastructure\. During project negotiation, IDA agreed to include a âFlood Damage Rehabilitationâ? component in the MSP to finance the rehabilitation efforts of all the municipalities that had been affected by the 1998 flood\. 80 Negotiation for the credit of the project was held at the World Bank, in Washington D\.C\. from December 14, 1998 to December 18, 1998\. The credit agreement was signed on April 26, 1999 with the date of effectiveness for the credit set for October 25, 1999\. The Project Concept Paper (PCP) was discussed in an Inter-ministerial Meeting (Pre-ECNEC) on December 03, 1998\. Subsequently, the PCP was approved in the ECNEC meeting held on March 03, 1999\. The 1st and the 2nd revised PPs were approved by ECNEC on May 29, 2002 and December 12, 2005 respectively and the 3rd one was approved in ECNEC meeting on January 30, 2008\. During the execution of the project, a second devastating flood resulted in acute damage in the southwestern part of the country in 2000\. Upon the consent of the World Bank the Flood Disaster Relief (FDR) component was expanded to incorporate the FDR 2000 to restore communication and transportation networks in the affected pourashavas\. After a third flood, in 2004, the World Bank allocated an additional US $26 million, which was also incorporated in this project\. After a fourth flood, in 2007, the World Bank provided an additional US $25 million\. 1\.2 Justification/Adequacy Urban services improved substantially through the MSP due to investment in physical infrastructure, institutional strengthening, investment in improving the financial capacity of municipalities, and provision of technical support to municipalities\. Sector issues addressed by the project include: (i) urgent need for basic services, particularly in low-income areas, addressed through implementation of the physical investment program in the project; (ii) weak local government institutions, addressed through the provision of technical assistance to improve the institutional and financial capacity of municipalities; (iii) improved sustainability to service provision through the involvement of the community and other stakeholders, addressed through a participatory and partnership approach\. In 1999, an Urban Management Policy Statement was issued by the Local Government Division, which stated the GOBâs policy and principles towards urban management\. A Municipal Performance Review Committee (MPRC) was established at the ministry level, chaired by the Secretary of the Local Government Division, to support institutional development efforts\. The project also supported institutional development through the creation and operation of Municipal Support Unit (MSU)\. It provided technical assistance and training for the development of management information systems and revenue enhancement measures in municipalities and city- corporations\. The capacity building support included (i) computerization and improved management of Holding Tax bills and records, municipal accounts, water supply bills and records, and Trade License records; (ii) development of Infrastructure Inventory and preparation of base maps; and (iii) community mobilization support\. The establishment of the Bangladesh Municipal Development Fund (BMDF) was one of the most important components of MSP\. BMDF was established as an independent entity under the Company Act 1994, administered by the Finance Division of the Ministry of Finance\. The projectâs coverage of basic service provision, institutional strengthening, establishment of new financing mechanism, and policy reform make it a unique and justified project\. 81 1\.3 Objectives The principal objective of the project was to improve environmental conditions, physical infrastructure and municipal service delivery\. The specific objectives of the project were to: ï Strengthen the institutional capacity of selected city corporations and secondary towns to plan, finance, implement, operate, and maintain urban infrastructure services in an efficient and sustainable manner; ï Improve resource allocation and financial discipline through the creation of an improved financing mechanism for urban infrastructure; and ï Reduce urban poverty and improve environmental conditions of urban communities through financing of the critical urban infrastructure and services\. 1\.4 Project Revisions Reasons for First Revision 1\. The original Project Concept Paper (PCP) and Project Paper (PP) were prepared on the basis of Draft Project Appraisal Document (PAD)\. During the Credit Negotiation some changes were made that include mainly (i) increased scope of physical works, and (ii) increased amount of IDA credit\. 2\. The project did not become effective until October 1999, despite the fact that the feasibility study was completed in 1995\. Due to this long gap, during field verification, the consultants found that many of the originally recommended schemes had either already been implemented by the City Corporations/Pourashavas with alternative source of financing, or the scope of works had changed considerably\. In view of this, there was a need for re-selection of some new schemes\. 3\. During Credit Negotiation, upon a request from the GOB, a flood (1998) rehabilitation component with an IDA credit allocation of $16\.2 million USD was included in the project for which, at that point of time, no assessment was in place\. After the commencement of the project, a substantial amount of time was required by the consultant to carry out the country-wide flood- damage assessment task\. 4\. During Credit Negotiation, upon a request from the GOB, three pourashavas of the Chittagong Hill Tracts region were included in the project\. At that time, the scope of work was not defined\. Afterwards, the feasibility study and identification of schemes in these pourashavas were carried out through a participatory and partnership approach (PPA)\. 5\. There had been some modifications as regards to the structure, tires, and positions in the MSU through amendment of the DCA\. 6\. To address the above issues, the first revision of the project was made and subsequently approved by the ECNEC on May 29, 2002\. During this revision the benefit due to variation in the exchange-rate was also taken into account\. 82 Reasons for Second Revision 1\. One of the most important components of the MSP was the establishment of the Bangladesh Municipal Development Fund (BMDF)\. The BMDF was incorporated as an independent entity, under the Companies Act 1994\. In the original DCA, the allocation of IDA portion of the credit to âBMDFâ? and âOther than BMDF portion (i\.e\. LGED portion)â? was not shown separately\. The DCA was later amended to separate out the allocation for these two components\. This was the prime reason of second revision\. 2\. The south-western region of the country was seriously affected by flood in 2000\. To rehabilitate the damaged structures, following consent from the World Bank, the US$4\.5 million was reallocated within the MSP budget\. This Rehabilitation works had also been included in the 2nd revision\. 3\. Following the decision of the Local Government Division and subsequent consent from the World Bank towards the governmentâs âTotal Sanitation Program,â? three pourashavas of Chittagong Hill Tracts region were incorporated in this project\. 4\. A portion of flood (2004) damage rehabilitation works for the affected pourashavas was included in this project\. The World Bank allocated US$26 million for this rehabilitation works\. 5\. Some adjustments of physical and financial targets had been made on the basis of actual requirement and also in light of the agreements reached with the World Bank supervision missions from time to time\. 6\. The advantage out of variation in exchange-rate was taken into account\. Reasons for Third Revision 1\. The World Bank agreed to provide US$27 million for rehabilitation of a portion of the municipal infrastructures damaged by the 2007 flood\. Following a number of meetings between the World Bank and GOB (ERD), it was decided to channel this assistance through the ongoing MSP so that the rehabilitation work could start quickly\. This was the prime reason for the third revision\. 2\. Out of the total World Bank assistance of US$27 million for the Flood Damage Rehabilitation (FDR) 2007 component, US$25 million of additional financing was added to the MSP and US$2 million was reallocated within the MSP (as per decision between ERD and World Bank)\. Some internal adjustment was necessary in order to make US$2 million available from within MSP, another major reason for this proposed revision\. In addition, some adjustments to the physical and financial targets were made on the basis of actual requirements\. The variation in exchange rate was not taken into account\. 83 2\.1 Project Rationale The Physical Planning, Water Supply and Housing (PPWS&H) Sector of the Planning Commission of Bangladesh covers a broad range of activities, which include: ï Delivery of basic services to the Pourashavas, including slum dwellers; ï Provision of safe drinking water, sewerage, and sanitation facilities; ï Development of basic infrastructure and services; ï Combating environmental degradation\. Therefore, the civil work activities undertaken within the Municipal Services Project â related to water supply; drainage; small bore sewerage system; urban roads; sanitation; solid waste management; bus/ truck terminals; markets; slum upgrading; landing ghats; twin pit latrine; water supply components; and flood rehabilitation works of the urban infrastructures damaged in 1998, 2000, 2004, and 2007 â were very much in line with Sector activities\. The project also helped improve deficient urban services by investing in physical infrastructure and by strengthening institutional and financial capacity of municipalities\. Sector issues addressed by the project include: ï Urgent need for basic services, particularly in low-income areas, through the implementation of the physical investment program in the project; ï Weak local government institutions through provision of technical assistance to improve the institutional and financial capacity of municipalities; ï Improved service provision sustainability by engaging community and stakeholder involvement through a participatory and partnership approach\. Moreover, the rehabilitation program mainly covered the smaller pourashavas, which typically have a greater majority of poor or low income residents\. Restoration of transport networks and commercial facilities had a great impact on employment and was crucial to restoring their livelihood\. In addition, the improvements in the drainage system and water supply had a considerable impact on improving general environmental conditions and pourashava residentsâ health and well-being\. The project also provided technical support to strengthen the institutional and financial capacity of municipalities\. The capacity building support included: (i) computerization and improved management of Holding Tax bills and records, municipal accounts, water supply bills and records, Trade License records; (iii) the development of an Infrastructure Inventory and preparation of base maps; and (iii) support to community mobilization\. In addition, the project supported training (both classroom and hands-on) to municipal mayors, officers and staff on procurement, engineering, accounting, planning etc\. The project also provided municipalities with requisite hardware and equipment\. All these inputs resulted in significant improvement in municipal service delivery, tax management, infrastructure planning, O&M, and computerized records\. As a result, the municipalities are now more efficient, effective and sustainable\. 84 3\. Project Identification A detailed feasibility study was carried out and supported through the Project Preparatory Technical Assistance\. The locations of the project were identified based on specific criteria, including population growth rate, economic growth potential, present deficiencies, local institutional and financial capacity, and potential for growth in local revenues\. An IDA Project Preparation Mission visited Bangladesh in September and October of 1997\. It was then decided that the schemes identified in the feasibility study would be included in the project, provided that the selected municipalities met the criteria for economic, financial, and administrative feasibility, and were committed to improving O&M and financial management capacity\. ï 3\.1 Project Preparation In 1993, the GOB approved a Project Preparatory Technical Assistance under TA credit No\.- 2393 BD for the Municipal Services Project (MSP)\. Under this TA, a detailed feasibility study was undertaken in preparation for the MSP\. The study examined several indicators â including population growth rate, economic growth potential, present deficiencies, local institutional and financial capacity, and potential for growth in local revenues as well as to establish specific selection criteria for project locations\. Two City Corporations (Khulna and Rajshahi) and fourteen pourashavas (Mongla, Satkhira, Narail, Chuadanga, Patuakhali, Pirojepur, Gopalgonj, Dinajpur, Sayedpur, Nilphamari, Parbattipur, Kurigram, Joypurhat, Naogaon) were selected based on the criteria\. During the appraisal in June and July of 1998, three Chittagong Hill Tracts Pourashavas (Rangamati, Khagrachari and Bandarban) were also included in the project\. Credit negotiations took place during December 14-18, 1998 but a credit agreement was not reached until April 26, 1999\. The credit became effective on October 25, 1999, with a loan disbursement of SDR 76\.190 million\. The conditions of the loan were: ï Commitment charge at a rate of 0\.5% per annum on the principal amount of the Credit\. ï Service charge at a rate of 0\.75% per annum on the principal amount of the Credit\. ï Commitment charges and Service charges are due on February 1 and August 1 of each year\. ï Grace period of 5 years\. ï Payment of the principal amount of the Credit will be through semiannual installments on February 1 and August 1 starting from August 1, 2009 and ending on February 1, 2039\. ï 3\.3 Project Approval The Project Concept Paper (PCP) was prepared and discussed in an Inter-ministerial Meeting (Pre-ECNEC) on December 03, 1998\. Subsequently, the PCP was approved in the ECNEC meeting held on March 03, 1999\. The 1st and the 2nd revised Project Papers were approved by ECNEC on May 29, 2002 and December 12, 2005, respectively\. The 3rd revision was approved in ECNEC meeting on January 30, 2008\. 85 4\. Project Evaluation Understanding of Beneficiaries\. The beneficiaries of the project do not have a detailed understanding of the overall objective of the project but do understand the benefits of reduced transportation cost, better marketing facilities, improved solid waste management, sanitation, and water supply\. They also clearly experience the benefits of the municipalitiesâ computerized billing systems\. Direct and Indirect Impacts\. The impacts of the project can be organized into direct and indirect impacts\. Direct impacts include improvements in urban service delivery and institutional strengthening and capacity building of the City Corporations and Pourashavas\. The indirect impacts of the project include an urban environment, better health and higher employment generation\. In addition, given that the project was jointly implemented by LGED and participating municipalities/City-Corporations with assistance from high level consultants (both foreign and local), it has familiarized municipal staff with advanced methodology and techniques of civil works\. Technology Transfer: Computer software developed under the project regarding holding tax, water billing, trade license, non-motorized vehicle management etc\. was transferred to participating City Corporations and Pourashavas\. Employment Generation\. 1\.35 million employment days were generated during project implementation\. Maintenance and operation activities create additional long-term employment opportunities\. Possibility of self-employment: The project created the potential for self-employment through the improvement of kitchen markets, mini super market, bus/truck terminals, and landing ghats\. Employment opportunities for women: During the operation of various facilities created under the project (like kitchen market, bus/truck terminal, public toilets, and solid waste management), it is expected that there will be increased opportunity for womenâs employment\. Moreover, in the long run, women could be employed in the maintenance works\. Womenâs participation in development: The selection of sub-projects adopted a participatory approach to ensure participation by both men and women\. Probable Impact on Socio-Economic activity: The project achieved several socioeconomic benefits\. Construction of roads and culverts ensure better accessibility and a decrease in vehicle operating costs and incidence of road accidents\. It also increases the opportunities of small business and auto rickshaw driving, health care and schooling facilities\. Drains constructed through the project improved wastewater disposal and the environment\. Public toilets and the solid waste components also contributed to improvement of the urban environment\. Construction of bus/truck terminals increase the number of passengers and cargos in road transportation and create opportunities for increased income from driving, business and other related services\. The slum development component improved living conditions and service delivery and increased employment potential in the slums\. Furthermore, institutional strengthening measures increased 86 revenue generation and enabled the urban local bodies to better implement and maintain urban infrastructure facilities\. Finally, the establishment of the Bangladesh Municipal Development Fund reduced the dependence of ULBs on Central Government\. Impact on environment: Avoidance and mitigation measures were incorporated in sub-project designing and bidding documents to reduce environmental impacts\. Improved solid waste management and provision of public toilets have substantial improved environmental conditions and public health\. Provision of cross- and storm-water drainage also reduced water-logging, which has also improved the environmental situation\. Sustainability of the project: The sustainability of the project depends on municipalitiesâ capacities to efficiently manage, operate and maintain the assets have been created under the project, to continue to deliver urban services, and to mobilize local resources to finance these services\. The projectâs design involved preparation of financial and operational action plans as pre-requisites to help ensure sustainability\. Moreover, technical assistance, related to institutional and financial capacity improvement, was also provided to the participating municipalities to help ensure project sustainability\. Finally, the participatory approach was used to create a sense of âownershipâ among stakeholders to help ensure project sustainability\. Contribution to poverty alleviation/reduction: Poverty alleviation has been partially addressed through investment in physical infrastructure, including: (a) water supply; (b) drainage; (c) urban roads; (d) sanitation; (e) solid waste management; (f) bus and truck terminals; (g) markets; (h) slum upgrading; (i) landing ghat; (j) twin pit latrine; (k) water supply components; and (l) rehabilitation works of the urban infrastructures damaged in the 1998, 2000, 2004, and 2007 floods\. The productivity of the city population, particularly of the poor, has significantly increased as a consequence of better living environment and better public health\. The civil works components of the project also created employment opportunities for the poor\. 5\. Problems Encountered During Implementation Procurement: All procurement was subject to compliance with the World Bank Procurement Guidelines\. The municipal authoritiesâ lack of familiarity with the Guidelines resulted in deviations in procurement that ultimately led to cancellation of bids and re-bids\. The problem was overcome through orientation workshops and training on the Guidelines\. Natural calamity: During implementation, the project faced three severe floods (2000, 2004, and 2007) that damaged much of the infrastructure built under the project\. These were rehabilitated through incorporation of additional financing for Flood Damage Rehabilitation Programs\. Design formulation/ approval: The project was approved in 1999, two years after it had been designed\. As a result of the long time lapse, some of the road schemes proposed in the feasibility report were no longer valid because they had been built or rehabilitated with other sources of funding\. The issue was resolved by revising the scheme list in consultation with municipal authorities\. In addition, the scope of the FDR 1998 works and three CHT municipalities was not included in the feasibility report\. These two major components were included during credit negotiation of the project\. As a result, it was not possible to start these two components 87 immediately after the approval of the project\. The schemes were adapted with the help of the D&S Consultant and by engaging the community through the Participatory and Partnership Approach (PPA) \. Time and Cost Over-run: There was a 150% increase in time and a 23% increase in overall cost compared to the original project cost and time due to inclusion of additional resources to rehabilitate the infrastructures damaged by Flood 2000, 2004, and 2007\. 6\. Remarks and Recommendations of the Project Director The project has been completed successfully within the GOB approved time (June 2010) though the IDA credit is still alive (credit closing: June 2011)\. During implementation, the project received an excellent level of co-operation and support from both the World Bank and GOB entities like the Planning Commission, IMED, Finance Division, Local Government Division, and participating urban local governments\. Through the investment program, the municipalities received invaluable support to improve/rehabilitate their infrastructure, including services to the urban poor\. Establishment of the BMDF introduced a new financing mechanism for municipal infrastructure\. The technical assistance packages brought remarkable changes in municipal management in terms of computerization, skills enhancement, and logistical support\. Many of the municipal staff, both engineering and non-engineering, received formal training from this project for the first time\. The FDR programs were extremely helpful for the 204 municipalities (most of them are smaller and weaker) who could not rehabilitate the damage infrastructures without project support\. The majority of the smaller municipalities received project support for the first time\. All of the above-mentioned activities were carried out well, and resulted in significant benefits as well as strong demand for additional support\. Therefore, scaling up and replication of similar activities through new projects/programs are essential\. To properly maintain the infrastructure developed through this project, it is critical for the municipalities to mobilize more local resources and for the central government to provide more support, particularly to the smaller and institutionally weaker municipalities\. 7\. Remarks and Comments of Agency Head The MSP is one of the main World Bank-assisted projects in the urban sector that has been successfully completed within the approved time giving remarkable benefits to the selected municipalities and city-corporations as well as the city dwellers\. In the context of continuing rapid urbanization, similar projects/programs need to be undertaken\. 88 LGED: Additional Financing Cr\. No\. 4761 BD 1\.1 Background In view of the successes and significant benefits of the main MSP (Cr 3177, and 3177-1), and also considering the large unmet demands, there was a request from the GoB to the World Bank to provide financial support for another investment project MSP-II\. In response to the request an additional financing (Cr\. No\. 4761) amounting to US$42\.0 million was arranged by the World Bank to: ï Continue infrastructure building support through Bangladesh Municipal Development Fund (BMDF); ï Continue capacity building support through Municipal Support Unit (MSU), created in LGED under MSP; and ï Prepare a follow-on project\. Out of the total additional financing, US$37\.9 million was allocated to BMDF to finance pre- apprised urban infrastructures\. The remaining US$4\.1 million was allocated to LGED to extend the ongoing municipal capacity strengthening program from 92 municipalities to 142 municipalities, and to prepare a follow-on project\. This report covers only the LGED part\. The government approved a separate Technical Assistance Project (TAP) for LGED portion (US$4\.1 million) with a time period January 2011 to December 2012\. Officially, the TAP is still âon-goingâ as per the governmentâs Annual Development Program (ADP 2012-13), although the credit was closed on June 30, 2012\. Because the TAP is on-going, the GOBâs official Project Completion Report (PCR) will be prepared after December 2012\. However this report is to be considered as âfinalâ for the ICR Mission because there will not be any additional project activities after June 30, 2012\. 1\.2 Objectives ï Help the urban local governments in the field of institutional development and capacity building; and ï Support the preparation of a follow-on project\. 2\. Expected Output Capacity Building and Institutional Development ï Computerization of tax records, accounts records and water billing in 50 more municipalities (in addition to present coverage â 92 municipalities); ï Computerized inventory and mapping of municipal infrastructure in 50 more municipalities (in addition to present coverage â 92 municipalities); 89 ï Improved institutional capacity and management reform in 50 more municipalities (in addition to present coverage â 92 municipalities) with expected increase in tax collections; and ï Increased number of trained municipal staff (from 7,405 to 8,400) 3\. Preparing a Follow-on Project ï Module A: An improved framework for selecting, designing, and implementing priority interventions for municipal development; ï Module B: Infrastructure and institutional development programs for different types of urban development situations in a sample of about 20-25 municipalities; and ï Module C: Detailed plans for infrastructure and institutional development subprojects in about 25 towns for initial implementation\. 4\. Progress Capacity Building and Institutional Development activities (training + equipment + logistics) in 50 municipalities have been done as planned\. Allocation : $1\.60 million USD Actual expenditure : $1\.54 million USD In preparing a follow-on project, it was initially planned that it will be carried out through three (3) separate modules\. Later, in view of the limited time, âModule Câ was merged with âModule Bâ in consultation with the World Bank\. Accordingly, the scope of works of the new âModule Bâ was revised\. Module A was delivered with three outputs: (a) âAnalysis of Issues and Optionsâ, (b) Advisory Notes to the Government, (c) Urban Development Program Guidelines\. Module B was delivered with two outputs: (a) Municipal Development Plans for 25 towns, and (b) Sub-project Feasibility Reports of 25 towns for initial investment\. The works of the two modules have been completed\. Module A: Allocation : $0\.30 million USD Actual expenditure : $0\.29 million USD Module B: Allocation : $1\.60 million USD Actual expenditure : $1\.18 million USD [Note: the expenditure was less than the allocation due to the reduced scope of work after merging Module B and C\.] 90 Related to Incremental Operating Cost: Allocation : $0\.60 million USD Actual expenditure : $0\.14 million USD [The expenditure was less than the allocation because expenditures against some of the staff- positions in the MSU were borne by the Asian Development Bank\.] 91 BMDF: Phase II Completion Report 1\.1 Project Objectives ï Strengthen institutional and financial capacity of ULBs; ï Improve resource allocation and fiscal discipline; and ï Support government efforts to reduce urban poverty and conserve urban environment\. 1\.2 ULB Selection Criteria ï Availability of skilled engineers and accountants; ï Rate of collection of tax is at least 65% at the minimum; ï Initiative for preparation of Master Plan/ Detail Area Plan (DAP); and ï Surplus revenue to be able to contribute its own share\. 1\.3 Eligible Sectors for Funding: roads, drains, sanitation, municipal solid waste management, office complexes, traffic management, water supply, bus and truck terminals, kitchen markets, children parks, community centers, and street lighting\. 1\.4 Project Development ï The BMDF developed an assessment based on the demand for infrastructure improvements by the ULBs; ï BMDF prepared the Preliminary Development Project Proforma (PDPP); ï BMDF processed the PDPP through the World Bank and the Financial Institutions Division of the Ministry of Finance; ï The World Bank and the Financial Institutions Division forwarded the PDPP to the Ministry of Planning for administrative approval; ï Once the PDPP was approved by the Ministry of Planning, it was forwarded to the Economic Relations Division (ERD), which searched for donors; ï ERD formally approved the PDPP and sought financial and technical assistance from development partners of the Government of Bangladesh (GOB); ï Once the fund was assured, a formal agreement was signed between ERD (on behalf of GOB) and the respective development partner/donor; ï A second formal agreement was signed between the World Bank, the Financial Institutions Division and BMDF; ï The development partner/donor released fund according to the terms and conditions laid down in the agreement\. 1\.5 Sub-Project Development ï The BMDF invited appraisal proposals from the ULBs for sub-projects\. At the same time, it hired consultants through an open tender process; ï BMDF reviewed and adjusted the appraisal reports; ï Participating ULBs opened an escrow account with a scheduled bank and deposited 10% of the total sub-project costs as a matching contribution; 92 ï The BMDF and each municipality made an agreement in a prescribed manner; ï The ULB invited open tenders for a bid to work under Public Procurement Rules and World Bank guidelines; ï The tender documents were examined and evaluated by ULB level committees; ï If approved by the committee, the Bid Evaluation Report (BER) was forwarded to BMDF; ï The World Bank and/or BMDF examined the BER to ensure compliance with all legal requirements; ï If found acceptable, BMDF sent the bid documents back to the ULB to make a Contract Agreement with the Contractor performing the work; ï Development work in the field was supervised by municipal engineers, with some assistance from hired consultants; ï The contractors were paid on the recommendation of the consultants after satisfaction of the BMDF\. The Mayors of each ULB acted as Project Managers for all civil works in their area\. They were responsible for maintaining all records of the project implementation process and anything related to financial matters\. Supervision, quality control, bill checking, and recommendation for payment were carried out through outsourcing\. BMDF officials visited the sites regularly to monitor the progress of work as per the schedule and specification\. 1\.6 Financing Policy: 85% of BMDF funding is grant-based whereas the remaining 15% is dispersed as loans\. The financing policy of BMDF is unique in nature\. The GOB receives loans from its development partners through a standard bilateral agreement in which the Economic Relations Division represents the GoB\. Then BMDF goes for a subsequent agreement with the GoB, calling it Subsidiary Loan and Grant Agreement\. BMDF reviews the appraisal reports of the ULBs and then allocates fund to the ULBs while taking into consideration the amount of grant and the demand of the ULB\. The sub-project packages constitute a blend of grants (76\.5%), loans (13\.5%), and the municipality's own contribution (10\.0%) for any infrastructural project\. In order to start a project, 10% of the project cost has to be deposited as a matching contribution with an escrow account, which is to be operated by the recipient ULB\. BMDF bears the remaining 90% of the project cost\. Of this 90%, 85% is given as a grant and 15% is given as a loan to the ULB\. BMDF transfers money to the escrow account against the bill(s) of work submitted by the recipient ULB for payment to the contractors\. The recipient ULB is committed to repaying the loan in 37 installments with a one-year grace period, thereby paying off the entire loan in 10 years\. The repayment of ULBs to BMDF is satisfactory\. 2\.1 Implementation BMDF successfully completed 454 and 141 sub-projects under IDA credit Nos\. 3177-BD and 4761-BD, respectively, with allocations of US$63 million and US$40 million, respectively\. The combined loan total of US$103 million covered 595 sub-projects in 154 ULBs, including seven City Corporations\. The BMDF also completed a study on municipal solid waste management in four cities\. 93 BMDF took advantage of an unexpected change in the conversion rate when the US$1 rose from BDT 69 (2010) to BDT (Bangladeshi Taka) 79\.95 (2012), the year of receiving the allocation under Cr\. No 4761-BD by immediately implementing 17 subprojects with the money saved\. 100% works under Cr\. No\. 3177-BD were completed but a portion of the Lama Water Treatment Plant was carried over to, and completed under, Cr\. No 4761-BD\. Of the US$63 million allotted under Cr\. No 3177-BD, only about US$61\.25 million was disbursed\. Of the US$38\.5 million allotted under Cr\. No 4761-BD, roughly US$38\.25 million was disbursed\. Financial and Operational Action Plans (FOAPs) were prepared for 154 ULBs, for improving their financial and operational management\. The following table describes the output of the work carried out through the BMDF\. Component-wise volume of work: Sl\. Component ULBs Unit Quantity 1 Roads 141 Km 1,128 2 Drains 103 Km 260 3 Kitchen Markets 59 Each 211 Water Supply 4 24 Km 173 Pipelines 5 Deep Tube Wells 16 Each 36 Water Treatment 6 2 Each 2 Plants 7 Public Toilets 36 Each 87 8 Box Culverts 13 Each 32 9 Street Lights 24 Set 24,960 10 Bus/Truck Terminals 9 Each 9 11 Community Centers 14 Each 15 12 Slaughter Houses 6 Each 8 Office Complex 13 7 Each 7 Buildings 2\.2 Operational Experience The ULBs required technical staff to help implement subprojects under the BMDF\. Those with previous experience working on BMDF projects were very effective because they understood the standard required by BMDF for implementing projects under a World Bank credit\. Unfortunately, not all ULBs had technical staff with previous experience with BMDF\. Thus, BMDF tried to improve awareness of the BMDF standard by training field engineers during the initial stage of project implementation\. A training module was developed and supplemented by lectures by professionals in the respective fields, including World Bank experts\. The training substantially improved the understanding of the field engineers\. 94 The LGED also facilitated training for ULB accountants and finance officers to ensure that the fund dispersals were in accordance to financial guidelines\. The training module was based on the requirements in the Financial and Operational Action Plan (FOAP), which was part of the agreement between the BMDF and ULBs\. The LGED shared knowledge with the BDF to improve the design of the training module\. The training helped the ULB account offices deal with financial matters as required by IDA\. The process of hiring consultants also resulted in setbacks to the project\. In some cases, consulting firms paid consultants only half of what had been originally advertised, usually because the consultants were unqualified\. Given the short project cycles of subprojects, it did not make sense to fire and hire new consultants so agencies dealt with inadequately qualified consultants\. The problem was further exacerbated when several field level consultants left during the final phases, leaving no time to fill these vacant positions\. The team leaderâs lack of experience resulted in inadequate team management, ultimately leading to sub-par implementation of the project\. In most cases, the quality of work could not be checked in time due to dependency on other departmentsâ (e\.g\. LGED, university) quality control laboratories\. A smaller quality control laboratory at the BMDF office and the City Corporation offices could have significantly streamlined this process\. Implementation Experience BMDF provided training to ULB and municipal engineers\. Appointment of Senior Municipal Engineers, Municipal Engineers and Junior Municipal Engineers was done in consultation with the Consulting Firm\. The country was divided into two zones and different sub-zones for convenience of proper supervision\. There were 2 zones and 10 sub-zones during the project under Cr\. No\. 4761-BD\. Senior structural engineers of the M&S Consultants were authorized to make changes to the design when deemed necessary\. The changes were then to be approved by BMDF\. World Bank funding disbursement was delayed due to a delay in the signing of the Subsidiary Grant and Loan Agreement between the World Bank and Financial Institutions Division\. The price of construction material was suddenly increased by an abnormal amount from August 2011 to January 2012\. This increase in price delayed the completion of work\. 2\.3 Assessment of Outcomes Improved institutional capacity\. The Municipal Support Unit (MSU) of the LGED was responsible for building the institutional capacity of the ULBs\. A substantial amount of IDA funds was allocated to MSU to conduct training programs for the municipal staff\. MSU organized training programs on procurement procedures, civil works quality control, and accounts management for ULB engineers and accountants\. In addition, BMDF organized training programs on preparation of tender documents, tender evaluation reports, contract agreements, implementation procedures, quality control, billing system, implementation of social impact management framework (SIMF), environmental impact monitoring format (EIMF), and 95 procurement risk mitigation framework (PRMF) for ULB officials and mayors directly involved in subproject preparation and implementation\. These training programs improved the institutional capacity of the ULBs\. Improved resource allocation\. BMDF allocated US$103 million to 154 ULBs under two credits\. Seven City Corporations, 78 A-class, 49 B-class and 29 C-class municipalities participated in the program\. Depending on its class and size, each municipality usually received BDT 0\.80 million to 0\.40 million from the government under the Annual Development Program (ADP) for infrastructure development\. This was inadequate for necessary infrastructure improvement\. The BMDF compensated for these gaps by providing additional financial and technical support\. In a single fiscal year, the BMDF provided BDT 10 million to 20 million under the IDA credits\. Reduction of urban poverty\. A study by the Development Support Link (DSL) found that, as a result of the infrastructural improvements, participating municipalities experienced increases in trade and business, employment, and land values; improved transportation; and improved public health due to safer drinking water, installation of sanitary public toilets, hygienic vegetable markets and slaughter houses and proper waste water drainage\. The combination of the resulting economic growth and the improved municipal service delivery enabled the ULBs to successfully raise holding and property taxes, thereby increasing municipal income\. This allowed ULBs to successfully make loan payments and helped to ensure their eventual financial independence\. 3\. Evaluation Evaluation of ULB performance: Several ULBs were unable to meet the requirement of standard design and preparation of the Draft Bidding Document because they lacked the necessary technical capacity\. As a result, BMDF had to modify many elements at the time of implementation\. Had there been Appraisal Consultants these documents could have been prepared on time\. Evaluation of World Bank performance: The World Bank ensured timely execution of the subprojects\. World Bank personnel met BMDF senior officials nearly every month to ensure that the sub-projects were being implemented on time\. They also helped maintained consistent oversight to guarantee transparent implementation, free from corruption, and effectively dealt with any problems that arose\. We had some concern over slow-decision making from the World-Bank counterparts\. At the start of the project, one visiting mission advised BMDF to drop 17 sub-projects on apprehension that they would not be completed on time\. The BMDF reviewed the project plans and found that it would be possible to complete the sub-projects on time\. Although it immediately submitted this finding to the World Bank, the Bank took roughly one month to re-approve these projects\. Unfortunately, the sub-projects became costlier for the BMDF over the 30-day lag due to a number of reasons (e\.g\. change in conversion rates, increase in construction materials)\. 96 4\. Lessons Learned 1\. The window for procurement procedure and implementation of project was only 15 months\. Twenty months would have been a more appropriate window for a project with so many sub- components\. 2\. Sudden price escalation of construction materials and man-power (e\.g\. bitumen, Mild Steel Rod, stone chips, sand, bricks and labor) hindered project implementation\. Any logical enhancement of contract price against any abnormal rise of price of construction materials with no fault of the contractor could help ensure smooth completion of project\. 3\. The time required for sub-project preparation and procurement (i\.e\. signing the sub-project appraisal report, time for tendering, bid evaluation and award to contracts) was insufficient\. Some ULBs failed to complete the total procurement process within this timeframe and the BMDF took extra time to correct some of the documents\. Eight months for preparation and procurement, with an additional 12 months for project implementation, is required\. 4\. BMDF used money saved from the conversion rate to successfully implement 17 sub- projects within 90 days\. BMDF could have 15% additional sub-projects ready at hand to quickly implement in similar situations in which sub-project funding suddenly becomes available\. 5\. The consultants managed and supervised the civil works whereas the ULBs oversaw the design\. This system of splitting up the management, design and supervision often created communication gaps and ultimately slowed down project execution\. Some sub-projects were undertaken without pre-work survey\. Consultants could be appointed before receiving the Sub-project Appraisal Report (SPAR) so that they can examine sub-projects at the initial stages\. 6\. Implementation guidelines were not flexible and sometimes found to be irrelevant with time\. Guidelines for implementation should be updated along with new project\. 7\. There was not enough technical support throughout the project\. There were only 12 municipal engineers available for monitoring and supervising 141 sub-projects in 65 ULBs over a time span of 15 months\. Sufficient technical staff should be appointed at the beginning\. 8\. Designing project components was challenging because many ULBs lacked engineers with design capacity\. BMDF had to hire a design consultant, in addition to M&S Consultants, for proper implementation of the projects\. This kind of requirement could be taken care of at the initial stage to save time and ensure better performance\. 9\. Appointment of consultants was delayed, thereby resulting in delays in management and supervision\. Timely hiring of consultants could overcome this inconvenience\. 10\. Changes in the conversion rate from USD to BTD should be considered at project planning stage\. 11\. The price of construction materials was high during the implementation period, thereby increasing the cost of implementation\. Many contractors faced complications due to price escalation\. 97 5\. Future Operation of the Project The BMDF prepared a Preliminary Development Project Proforma (PDPP) for carrying out development activities of the ULBs in Bangladesh\. The projects are designed to address a broad range of issues in development, such as municipal income generation, solid waste management, solar streetlight, infrastructure maintenance, and digitalization of ULBs, etc\. The Government of Bangladesh approved the project proposals and donors are being searched for financial assistance\. These projects are expected to improve to the overall living condition of the urban people and strengthen the capacity of ULBs for reducing urban poverty\. BMDF is planning to expand its operation to effectively deal with the challenge of urban poverty, climate change, environmental degradation, scarcity of electricity, and inadequate municipal solid waste management, among other issues\. BMDF is developing project pro-forma in different fields such as physical infrastructure development, maintenance of existing infrastructure, urban solid waste management, solar energy, digitalization, capacity building of ULBs, environmental preservation, urban health care, and water supply and sanitation\. A shortage of municipal technical staff, performance of consultants, and depending on material tests on other agencies led us to recommend the following: ï The Local Government Division of the GOB should hire an adequate number of ULB engineers so that they will not need to transfer any during implementation of work under IDA credit\. ï Borrower could be allowed to hire consultant on an individual basis following World Bank guidelines\. ï The ULBs located at the divisional headquarters could be provided with mini laboratory to facilitate carrying out basic tests of the civil works done within the jurisdiction\. ï The scope of monitoring of the IDA funded project through proper maintenance should be incorporated in the new project design\. 98 Annex 7\. List of Supporting Documents 1\. Project Appraisal Document (February 3, 1999) 2\. Development Credit Agreement between Peopleâs Republic of Bangladesh and International Development Association, April 26, 1999 3\. Bangladesh Municipal Development Fund (BMDF) Operational Manual, February 2001 4\. Peterson, George\. Bangladesh Municipal Development Fund, the Urban Institute, October 2002 5\. Bangladesh Municipal Services Project (Cr\. 3177-BD): Extension of Credit Closing Date (extension to June 30, 2008) 6\. Municipal Services Project Credit 3177-BD: Amendment to the Development Credit Agreement, March 1, 2004\. 7\. Municipal Services Project (Credit 3177-BD): Amendments to the Development Credit Agreement to Finance Flood Emergency Rehabilitation Works, March 29, 2005\. 8\. Supervision Mission Reports (Aide Memoires, Implementation Status Reports) 9\. World Bank\. Bangladesh Country Assistance Strategy (1998) 10\. Project Paper for an Emergency 2007 Flood Restoration and Recovery Assistance Program, December 21, 2007 11\. Project Paper on a Proposed Additional Credit in the Amount of SDR 27\.8 million (US$42 million equivalent) for a Municipal Services Project, May 26, 2010) 12\. Additional Financing for Municipal Services Project Agreed Minutes of Negotiations, May 24, 2010) 13\. Bangladesh Municipal Services â Quality at Entry (Draft Assessment, November 16, 1999) 14\. LGED\. Survey Findings on Municipal Capacity Building Program, May 2012 15\. Development Support Link (DSL)\. Impact Evaluation of Six Project Municipalities Financed by Bangladesh Municipal Development Fund (BMDF), July 2007\. 99 IBRD 33368R To Gangtok 88ÂºE 89ÂºE BHUTAN 90ÂºE 91ÂºE B A N GL A D ESH DISTRICT CAPITALS DIVISION CAPITALS To Dispur Panchagar NATIONAL CAPITAL To PANCHAGAR RIVERS Patna BANGLADESH MAIN ROADS LA 26ÂºN Thakurgaon LM NILPHAMARI RAILROADS O N THAKURGAON Nilphamari Lalmonirhat IR HA DISTRICT BOUNDARIES T Kurigram Rangpur DIVISION BOUNDARIES To KURIGRAM Katihar Dinajpur RANGPUR INTERNATIONAL BOUNDARIES DINAJPUR To Goalpara To I N DI A Katihar Gaibandha To 92ÂºE To Dispur Dispur GAIBANDHA JOYPURHAT SERPUR Joypurhat Sunamganj SYLHET 25ÂºN Serpur 25ÂºN NAOGAON NETROKONA SUNAMGANJ Sylhet BOGRA Jamalpur Naogaon Bogra JAMALPUR Netrokona RAJSHAHI Mymensingh SYLHET NOWABGANJ To Silchar MYMENSINGH J Jaamuna Nowabganj RAJSHAHI DHAKA Kishorganj MOULVI BAZAR na Serajganj HABIGANJ Moulvi Bazar G an Rajshahi Natore SERAJGANJ KISHORGANJ ge NATORE TANGAIL s Habiganj Tangail GAZIPUR PABNA Pabna Gazipur NARSINGDI I N D IA 24ÂºN a 24ÂºN gh n Narsingdi Brahmanbaria Me I NDI A KUSHTIA Kushtia Manikanj DHAKA BRAHMAN BARIA Meherpur Rajbari MANIKGANJ NARAYNGANJ MEHERPUR Chuadanga RAJBARI DHAKA Naraynganj Faridpur COMILLA CHUADANGA Jhenaidah Magura MUNSHIGANJ FARIDPUR G a n geMunshiganj JHENAIDAH s MAGURA Comilla HARI To SARIATPUR CHANDPUR RACH Calcutta Sariatpur Jessore Narail Madaripur Chandpur Khagrachhari KHAG MADARIPUR NARAIL JESSORE GOPALGANJ Gopalganj Feni 23ÂºN 23ÂºN KHULNA LUXMIPUR Luxmipur NOAKHALI FENI Khulna BARISAL Noakhali RANGAMATI Satkhira KHULNA Bagerhat PEROJPUR Jhalukathi Barisal Bhola C H I T TA G O N G SATKHIRA JHALUKATHI Rangamati Kaptai To Calcutta BAGERHAT Perojpur Lake CHITTAGONG BARISAL Patuakhali BHOLA a D e l t PATUAKHALI Chittagong s G a n g e Barguna BARGUNA Bandarban es 22ÂºN 22ÂºN Mt\. Mowdok ns ng (957 m) a r ba G a d Sun the BANDARBAN of COXâS ths BAZAR Mou Cox's Bazar 0 10 20 30 40 50 Kilometers Bay of Bengal 0 10 20 30 40 50 Miles MYANMAR This map was produced by the Map Design Unit of The World Bank\. 21ÂºN The boundaries, colors, denominations and any other information 21ÂºN shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries\. To 89ÂºE 90ÂºE 91ÂºE 92ÂºE Sittwe MARCH 2008	REVIEW
P040981	ï»¿ ICRR 11778 Report Number : ICRR11778 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 06/07/2004 PROJ ID : P040981 Appraisal Actual Project Name : Second Subic Bay Freeport Project Costs 108\.00 29\.80 Project US$M ) (US$M) Country : Philippines Loan/ Loan US$M ) 60\.00 /Credit (US$M) 25\.50 Sector (s): Board: PSD - Roads and Cofinancing highways (33%), Water US$M ) (US$M) supply (30%), Power (28%), Ports waterways and shipping (7%), Sub-national government administration (2%) L/C Number : L4111 Board Approval 98 FY ) (FY) Partners involved : Closing Date 06/30/2000 06/30/2003 Prepared by : Reviewed by : Group Manager : Group : Peter Nigel Freeman John R\. Heath Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The original objective was "to strengthen the capacity of the Subic Bay Metropolitan Authority (SBMA) to regulate and manage the growth of the Freeport and to support further infrastructure development, including SBMA's initial partnership with the private sector through a water supply joint venture "\. However, following political tensions and civil disturbances after the Presidential elections of May 1998, Olongapo City was no longer willing to merge its public utilities department with that of SBMA and subsequently SBMA requested the Bank to exclude those elements outside SBMA's jurisdiction\. The Board approved the restructured project on June 1st, 2001 and under the new agreement the water and much of the power component was canceled \. A revised objective was also approved : "to assist the Subic Bay Freeport (SBF) to attract and maintain private investors while remaining economically viable and environmentally sound "\. b\. Components The water supply and part of the power component amounting to US$ 23\.85m were canceled\. The restructured project was then as follows: Institutional strengthening including capacity building, human resources management assistance, technical studies and assistance, a simplified financial management system and support for the SBMA Ecology center (US$5\.6m); Power Component including equipment and works to remedy immediate system needs and funding to assist SBMA with the privatization of the power distribution network within the SBF (US$4\.5m); Roads and Bridges and Related Infrastructure including access road improvements, bridge rehabilitation, improved signalization, airport improvements and engineering and supervisory services (US$30\.7m)\. c\. Comments on Project Cost, Financing and Dates The original loan was for US$60\.00m, but following the approval to cancel part of the project, the loan amount was reduced to US$36\.15m\. At closure the amount disbursed was US$ 25\.50m, following devaluation of the peso \. The original closing date was set for June 30th, 2000, but when the project was restructured it was extended to June 30th, 2002 and then, later in order to complete unfinished works, it was further extended to June 30th, 2003\. 3\. Achievement of Relevant Objectives: The broad intention of the original objective was achieved, but the detail relating to joint ventures with the City of Olongapo in respect of water and power were not \. However, the revised objective reflecting the restructured project approved by the Board was fully achieved \. There is no doubt that private investors found the Freeport attractive \. Investments in SBF increased from US$ 2\.59 billion in 1998 to US$4\.16 billion by project closure\. The total export value of goods more than doubled from US$ 555\.9 million to US$1\.32 billion between 1998 and 2002\. Moreover, persons employed at the Freeport had increased from 7,756 in 1998 to 53,017 by project closure\.The revised objective also put greater weight on environmental aspects which were handled satisfactorily \. 4\. Significant Outcomes/Impacts: The total number of tourists visiting the SBF rose from 2\.35 million in 1998 to 7\.97 million in 2002 and the total number of ships visiting the port during the same period increased by more than 20%; A forum was established between SBMA and local government to exchange information; Customs administration was simplified and computerized systems introduced through a Build -Operate-Transfer arrangement; SBF succeeded in gaining exemption from taxation, thus improving its financial performance; Improvements were achieved in the regulation of labor and occupational health; An economic/financial model was developed to assist in logistical and planning decisions; More effective planning approaches and an integrated financial management system (IFMS) were introduced; The Ecology Center was strengthened and community partnerships were established; Power distribution was privatized; and Various infrastructure improvements were successfully completed, allowing further port expansion \. 5\. Significant Shortcomings (including non-compliance with safeguard policies): By pledging certain of its assets to creditors and giving the pledge priority over the Bank loan, SBMA breached the loan agreement\. The effectiveness of the project was delayed for 11 months before this issue was satisfactorily resolved\. The national government's constraints on the appointment of key staff restricted the degree of support available to address project implementation optimally \. Initial attempts to base the IFMS system on the existing system and an underestimation of programmer input requirements caused unforeseen delays \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Given that project restructuring was motivated by factors beyond Bank and Borrower control, OED rates this project against the revised objective, as specified in the ICR guidelines\. Institutional Dev \.: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: When a project experiences a crisis in leadership or problems related to political issues, the Bank should critically re-assess the situation and call for either a time bound action plan or a definite deadline for suspension or cancellation of the project \. Future projects for freeports and economic zones should give the highest priority to institutional strengthening and capacity building, since these are the critical success factors \. In any major project it is important to ensure that a full -time competent and experienced project manager is in place before work commences\. 8\. Assessment Recommended? Yes No Why? The success in Subic Bay, despite the problems with the adjacent Olongapo City, could be replicated elsewhere; it is important to understand why the port has grown so successfully \. 9\. Comments on Quality of ICR: This ICR was very well presented and can be considered satisfactory \. The ratings were consistent with the facts and the reasons for the change in objectives and structure were clearly explained \. Lack of data on performance indicators (Annex 1) was noted\.	REVIEW
P004168	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 20411 IMPLEMENTATION COMPLETION REPORT (36930) ON A LOAN IN THE AMOUNT OF US$190 MILLION TO THE REPUBLIC OF KOREA FOR A SCIENCE AND TECHNICAL EDUCATION PROJECT June 7, 2000 Human Development Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective June 2000) Currency Unit = Korean Won (W) W I = US$ 0\.0009 US$ 1\.00 = W 1060 FISCAL YEAR January I December 31 ABBREVIATIONS AND ACRONYMS BK21 Brain Korea 21 EOP End of Project GOK Government of Korea ICB International Competitive Bidding ICR Implementation Completion Report JTC Junior Technical College KBSI Korea Basic Science Institute L/C Loan/Credit MOE Ministry of Education MTR Mid-Term Review NCB National Competitive Bidding OU Open University O&M Operations and Maintenance PAP Policies and Actions Program PCD Project Concept Document PSR Project Status Report QAG Quality Assurance Group R&D Research & Development SAROK Supply Administration, Republic of Korea S/F Student/Faculty S&T Science and Technical TL Team Leader VHS Vocational High School Vice President: Jemal-ud-din Kassum Country Director: M\. G\. Sri-Ram Aiyer Sector Director: Alan Ruby Task Team Leader: Carol Hau-Lai Ball Primary Author: Yoko Nagashirna FOR OMCIL USE ONLY CONTENTS Page No\. 1\. Project Data I 2\. Principal Performance Ratings I 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 3 5\. Major Factors Affecting Implementation and Outcome 5 6\. Sustainability 5 7\. Bank and Borrower Performance 6 8\. Lessons Learned 7 9\. Partner Comments 8 10\. Additional Information 8 Annex 1\. Key Performance Indicators/Log Frame Matrix 9 Annex 2\. Project Costs and Financing 11 Annex 3\. Economic Costs and Benefits 13 Annex 4\. Bank Inputs 14 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 16 Annex 6\. Ratings of Bank and Borrower Performance 17 Annex 7\. List of Supporting Documents 18 This document has a restricted distribution and may be used by recipients only in the perfonnance of their official duties\. Its contents may not otherwise be disclosed without World Bank ahorizaon\. I Project ID: P004\.168 Project Name: KR-SCIENCE & TECH EDUC SECT Team Leader: Carol Hau-Lai Ball TL Unit: EASHD ICR Type: Core ICR Report Date: June 7, 2000 1\. Project Data Name: KR-SCIENCE & TECH EDUC SECT L/C/TFNumber: 36930 Country/Department: KOREA, REPUBLIC OF Region: East Asia and Pacific Region Sector/subsector: ET - Higher Education KEY DATES Original Revised/Actual PCD: 10/02/92 Effective: 05/11/94 05/11/94 Appraisal: 06/22/93 MTR: 03/01/97 10/27/97 Approval: 01/06/94 Closing: 12/31/99 12/31/99 Borrower/lImplementing Agency: GOK/MOE/KBSI Other Partners: STAFF Current At Appraisal Vice President: Jemal-ud-din Kassum Gautam Kaji Country Manager: M\. G\. Sri-Ram Aiyer Callisto E\. Madavo Sector Manager: Alan Ruby J\. Shivakumar Team Leader at ICR: Carol Hau-Lai Ball ICR Primary Author: Yoko Nagashima 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: HS Sustainability: HL Institutional Development Impact: H Bank Performance: HS Borrower Performance: S QAG (if available) ICR Quality at Entry: Project at Risk at Any Time: No 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The overall objective of the project was to assist in improving the quality of science and technical (S&T) education and research in Korea through implementation of an agreed Policies and Actions Program (PAP) by the Ministry of Education (MOE) and the provision of specialized equipment\. Specifically, the project was to: (a) support quality improvement in undergraduate science and engineering departments in selected universities; (b) assist in strengthening the teaching and research capacity of marine science institutions to address environmental problems; (c) assist in improving the quality of practical science and engineering programs in the open universities (OUs) and in selected junior technical colleges (JTCs); (d) improve opportunities for junior research activities in basic sciences through strengthening common research facilities at the Korea Basic Science Institute (KBSI), formerly the Korea Basic Science Center (KBSC); and (e) enhance the quality of training in selected vocational high schools (VHSs)\. 3\.2 Revised Objective: The project objectives were not revised\. 3\.3 Original Components: The loan was to finance equipment with a total baseline cost of US$190 million\. This equipment was to be allocated to: (1) MOE - US$170 million; and (2) KBSI - US$20 million\. The MOE's share was allocated as follows: (1) engineering departments - US$60 million; (2) natural science departnents - US$45 million; (3) marine science departments - US$20 million; (4) OUs - US$15 million; (5) JTCs - US$10 million; and (6) VHSs - US$20 million\. The Government of Korea (GOK) was to supply complementary inputs of US$134\.8 million including contingencies to ensure all the equipment would be utilized effectively\. Of this, US$63\.9 million was to finance local transportation and installation, operations and maintenance (O&M) and consumable materials for the equipment\. The GOK was also to finance physical facilities for KBSI's equipment (US$8\.8 million) and all contingencies (US$62\.D million)\. 3\.4 Revised Components: Components were not revised\. However, there were some changes in the loan allocations within the components (from private to public institutions) due to some cancellation during the financial crisis of 1998 - 1999 by the private institutions of the subsidiary loans for equipment made to them by the GOK\. 3\.5 Quality at Entry\. Not available\. -2 - 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: The project met overall project objectives\. Approximately 16,800 pieces of equipment were provided to a total of 123 MOE institutions and the KBSI by the project\. Under the MOE, the project facilitated and enhanced research capabilities and teaching programs, especially in science and technology, at 36 university engineering departments, 41 university natural science departments, 10 marine science institutions, 9 OUs, 8 JTCs, and 19 VHSs\. All equipment items are actively used for research and teaching at the project institutions (see Tables 1 and 2 of Borrower's Evaluation Report, MOE)\. The research outputs have been impressive\. Under the MOE, the number of research projects has more than doubled from 4,105 in 1995 to over 10,000 in 1999\. A total of 40,929 research activities were conducted during the implementation period, about 50% over appraisal estimates\. The results of 87% of these activities were published either domestically or internationally, 12% have been used by related industries, and 2% have been awarded patents\. Similarly, KBSI conducted over 40,000 joint research projects with universities, research institutes and industrial companies during the implementation period, and a total of approximately 600 of them have been published domestically and internationally\. The project benefited not only the project institutions but also other institutions including several in the private sectors by making the procured equipment available to them\. For example, 9 major national universities in Korea have allocated 29\.4% of their loan allocations to their research and teaching support institutes which provide common facilities and equipment to users from not only inside but also outside the project universities\. Similarly, equipment provided to the Korea Marine University was utilized by private organizations and industries for training\. 4\.2 Outputs by components: Component 1: MOE Agreed PAP was monitored and updated regularly\. The outputs of the project by component are measured against the agreed PAP\. Engineering Departments: A total of 4,055 pieces of equipment were provided to 19 public and 17 private universities\. The following PAP targets were also achieved: (a) the number of professors was increased from 6,500 in 1992 to 11,615 in 1999, more than the target of 10,840 which was expected to result from an annual increase of 620; (b) a reduction in student/faculty ratios from 37 in 1992 to 25 in 1999; and (c) a reduction in teaching load from 12 classes per week in 1992 to 9 classes per week in 1999\. Natural Science Departments: A total of 4,688 pieces of equipment were provided to 20 public and 21 private universities to help upgrade their laboratories\. The supply of equipment was complemented by an increase in the number of professors from 7,900 in 1992 to 11,563 in 1999\. This increase in staff also led the natural science departments to achieve other PAP targets: (a) a reduction in student/faculty ratios from 26 in 1992 to 19 in 1999; and (b) a reduction in teaching loads from 12 classes per week in 1992 to 9 classes per week in 1999\. The following joint targets for both engineering and natural science departments were also met: (c) expansion of library capacity; (d) an increase in the number of visiting professors which reached 806 in 1998 and exceeded the target of 120 for that year; and (e) an increase in academic research - 3 - subsidies from W20 billion in 1992 to WIOO billion in 1999\. Marine Science Departments: The project provided a total of 1,091 pieces of equipment to IO public marine science departments\. The project-funded equipment has helped these institutions to enhance their research capacity\. Under GOK's concept of centralizing expensive equipment to make it efficient to maintain and operate and to allow its utilization without institutional discrimination, the Marine Simulation Training and Research Center was built at the Korea Marine University to host the most expensive project-financed equipment item, a Full Mission Shiphandling Simulator System\. This item has been well utilized not only by the university's staff and students, but also by the private sector for training\. Open Universities: Although the project did not meet the original PAP target for provision of equipment in 1998, it made significant contributions to quality improvement of the OU's technical programs\. The project provided a total of 1,232 pieces of equipment to 9 OUs and raised the equipment provision rate from 26% of standard lists for each category of laboratory in 1992 to 73% in 1999\. Junior Technical Colleges: A total of 1,177 pieces of equipment were provided to the 4 public and 4 private JTCs\. The project raised the equipment provision rate from 54% of the standard lists in 1992 to 90% in 1998, which was well above the PAP target of 76%\. The JTCs also achieved the following PAP targets: (a) an increase in student enrollments from 159,000 in 1992 to 294,250 in 1999; (b) an increase in a number of JTC/industry cooperation committees to 60 by 1999; and (c) a reduction in student/faculty ratios from 29 in 1992 to 18 in 1999\. Vocational High Schools: The project provided a total of 4,240 pieces equipment to 19 VHSs and met the equipment provision target of 70% in 1999\. The number of Joint Practice Centers in the VHS system increased to 38 in 1999 and well exceeded the PAP target of 30\. Component 2: KBSI A total of 322 pieces of equipment were provided to the KBSI main campus and 4 regional centers by the project and were utilized for joint research projects with universities, research institutes and industrial companies during the project period\. There were a total of 44,692 research projects undertaken by 4,191 participating organizations\. Three hundred sixty eight of them were published domestically, and 242 were published internationally\. 4\.3 Net Present Value/Economic rate ojfreturn: Not applicable\. 4\.4 Financial rate of return: Not applicable\. 4\.5 Institutional development impact: The project had a significant impact oni institutional development of the selected institutions which directly received equipment from the project as well as other universities, research institutions, and industrial companies with which joint research projects were conducted\. The project-funded equipment enabled these institutions to enhance their research capabilities and teaching programs\. These impacts are evidenced in - 4 - the increased number of research projects, publications, and patent awards during the project implementation mentioned in Section 4\.1\. 5\. Major Factors Affecting Implementation and Outcome 5\. 1 Factors outside the control of government or implementing agency: The financial crisis in Korea that began in September 1997 did not cause a shortfall of counterpart funds due to the GOK's strong commitment to the project\. However, there were some changes in the loan allocations within the components (from private to public institutions) due to the cancellation during the crisis by the private institutions of the subsidiary loans for equipment made to them by the GOK\. 5\.2 Factors generally subject to government control: The GOK was highly committed to improving the quality of S&T education and to producing skilled manpower to support the country's technical advancement in the coming decades\. Therefore, the project received strong support and close collaboration from the govemment throughout its implementation period\. There were no factors subject to GOK control that negatively affected implementation or the outcome of the project\. 5\.3 Factors generally subject to implementing agency control: The performance of the project implementation agencies was satisfactory throughout the implementation period (Sections 7\.5 and 7\.6) and there was no negative impact on implementation or the outcome of the project that were subject to the implementation agencies' control\. 5\.4 Costs andfinancing: The total project cost estimated at appraisal was US$324\.8 million including contingencies of US$62 million\. There was no problem with counterpart funds throughout the project\. At project closing, the total project cost was US$322\.39 million, and cumulative disbursements were US$189\.23 million\. Financing under IBRD was 59% of total and 41% under the GOK\. Detailed project costs and financing are shown in Annex 2\. 6\. Sustainability 6\.1 Rationale for sustainability rating: The sustainability of project objectives is highly likely due mainly to: (1) the GOK's continuing strong commitment to the S&T education sector; (2) already-secured funding for future operation of the project institutions; (3) the high technical and professional knowledge of the staff working in the sector; and (4) the continuous revision of policy to meet new demands in the sector\. The GOK remains strongly committed to the expansion and improvement of S&T education and research to ensure an adequate supply of trained manpower for the rapidly changing information age\. Universities: The GOK launched Brain Korea 21 (BK 21) in 1999 to develop internationally known Korean research universities mainly in the fields of natural science and engineering\. The government is committed to investing a total of US$1\.2 billion over the next seven years for BK 21\. In addition, US$70 - 5 - million will be provided annually to procure highly-technical experimental equipment to advance the research capacity of the universities\. GOK funds have been provided to build new facilities such as the Marine Simulation Training and Research Center to house some of the more sophisticated project-financed simulation and research equipment\. The contracts for these pieces of equipment include training by the manufacturers as well as maintenance contracts\. In addition, these items generate income to the Center by providing access and training to the private sector\. Therefore, O&M funds for future operation of the equipment are expected to be adequate\. Open Universities and Junior Technical Colleges: The GOK will continue to finance experimental equipment for the OUs and selected JTCs to improve the quality of their practical science and engineering programs and research (a total of UIS$7 million will be provided to JTCs for procurement of experimental equipment in 2000)\. Vocational High Schools: The GOK will further support expansion of region-based joint practice centers for the VHSs and has committed an\. additional US$5 million to build 2 new centers in 2000\. Moreover, investment for the multimedia laboratories will be provided to a total of 774 VHSs by 2001\. Korea Basic Science Institutioft The GOK opened another KBSI regional branch center in Chonju, the fifth one, in December 1999 and is committed to further support expansion of research and development (R&D) at the KBSI and interaction with universities and industrial institutions through collaborative projects in basic science\. 6 2 Transition arrangement to regular operations: Not applicable\. 7\. Bank and Borrower Perforniance Bank 7\. 1 Lending: The Bank performance in identificalion, preparation, and appraisal was highly satisfactory\. The project was carefully prepared to respond to the government's request for assistance in the S&T education and research sector\. The project was designed within a policy and institutional framework which had been strengthened under previous Bank projects\. During preparation, a number of issues in the sector were discussed with the Borrower and appropriate actions were identified in the PAP\. The project appraisal document was well prepared and provided clear guidance to the Borrower during implementation\. Efficiency was gained during the preparation stage by combining the preparation of this project with preparation of both the Environmental Research and Education Project (Loan 3612-KO) and the Environmental Technology Development Project (Loan 3694-KO)\. 7\.2 Supervision: Supervision performance was highly satisfactory\. The Bank conducted supervision missions every six months with adequately skilled staff\. Continuity of Bank staff throughout project implementation, combining supervision with the other two projects (Section 7\. 1), and efficiently coordinated missions both by the Bank and the Borrower minimized the total staff weeks spent on supervision to below 30\. Mission supervision reports were complete with updated performance indicator, covenant compliance, and project - 6 - status reports (PSRs) which included detailed information on disbursements and procurement\. 7\.3 Overall Bank performance: The overall Bank performance is rated highly satisfactory\. Borrower 7\.4 Preparation: The Borrower's performance in identification, preparation, and appraisal was highly satisfactory\. The borrower identified the project for potential external financing before requesting Bank assistance\. Most of the preparation work was completed by the Borrower and was compliant with requests for information formulated by the Bank\. 7\.5 Government implementation performance: The GOK's implementation performance was highly satisfactory throughout project implementation\. The government had a strong commitment to the project and provided close collaboration with the Bank during the supervision missions\. The borrower was in compliance with Bank requirements for the timely submission of audit reports, semi-annual progress reports, and status reports\. The government's efficient monitoring and reporting on project implementation facilitated supervision by the Bank missions and should be given special recognition\. 7\.6 Implementing Agency: Staff of the implementation agencies (MOE and KBSI) were highly dedicated and knowledgeable in project management and implementation\. The major component of the project, procurement of specialized equipment, was handled in a highly satisfactory manner by the Supply Administration, Republic of Korea (SAROK), the government's central procurement agency which has had a long and successful experience in equipment procurement under past Bank projects\. The implementing agencies were excellent in record keeping and reporting and provided sufficient information to the Bank's supervision missions\. However, there was a change in responsible project staff toward the end of the project, causing some delays in the preparation of the ICR questionnaires and evaluation summaries due to their unfamiliarity with the project\. 7\.7 Overall Borrower performance: The overall Borrower performance is rated satisfactory\. 8\. Lessons Learned Korea originally graduated from borrower status in June 1995\. However, due to the financial crisis in 1997, Korea is now under "re-graduation" status\. This will probably be the final education loan to the GOK\. Therefore, the key lessons to be learned from this project shall apply to other projects in general\. (1) Project design and capacity of implementation agencies: The project design was simple\. The project had only two major components and these were implemented by two implementation agencies (MOE and KBSI) which had considerable experience in implementing earlier Bank projects\. The simple project design and the careful assessment of implementation agencies during project design facilitated a smooth and successful project implementation\. -7- (2) Capacity of procurement agency: The borrower's procurement agency had sufficient knowledge of the Bank's procurement procedures and capacity to prepare technical specification which greatly enhanced the project's implementation\. (3) Diffusion of project equipment: The project made the procured equipment available to outside project institutions including some universities, private organizations and industries\. This resulted in high equipment utilization rates and generated impressive numbers of researches and publications (Section 4\.1), and supplemental income for future O&M funds of equipment (Section 6\.1)\. 9\. Partner Comments (a) Borrower/implementing agency: See Annex 7 for the Borrowers comments\. (b) Cofinanciers\. Not applicable\. (c) Other partners (NGOs/private sector): Not applicable\. 10\. Additional Information -8- Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome / Impact Indicators: IndlcatorflodM,,l , , , eA!Lw In mlstmPSR Actu At Lt Estiat 1\.0 Support quality improvement in Achieved by end of project (EOP) Achieved undergraduate science and engineering departments in selected universities\. 2\.0 Assist in strengthening the teaching and Achieved by EOP Achieved research capacity of marine science institutions to address environmental problems\. 3\.0 Assist in improving the quality of Achieved by EOP Achieved practical science and engineering programs in the open universities and in selected junior technical colleges\. 4\.0 Improve opportunities for joint research Achieved by EOP Achieved in basic sciences through strengthening common research facilities at the Korea Basic Science Center (now terned Korea Basic Science Institute (KBSI)\. 5\.0 Enhance the quality of training in Achieved by EOP Achieved selected VHSs\. Output Indicators: Indlcatorflhtrlx \. \. \.Cfd In ati PSR' Ac,a LSt, Estmate Science and Engineering 1\.1 Gradually change undergraduate Ratio of 57:43 in 1998 Ratio of 54:46 in 1999 enrollment ratios in the fields of science and engineering relative to humanities; improve the capacity and graduation rates of students to better meet industrial manpower requirements\. 1\.2 Student enrollment to reach 231,000 by Reached 231,000 in 1998 Reached 280,857 in 1999 1998, an increase from 192,000 in 1992\. These increases would be subject to a review of manpower requirements in 1996\. 1\.3 Student/staff ratios to be reduced Ratio of 20:1 for science and 25:1 for Reached 19:1 in science and 25:1 in engineering engineering 1\.4 Visiting Professors program to be 120 in 1998 841 in 1999 expanded\. 1\.5 Academic subsidies for research to be 100 billion Won in 1998 150 billion Won in 1998 and 100 billion Won increased\. in 1999 1\.6 Library capacity will be increased (library 20% in 1998 20% in 1999 seats/student enrollment)\. 1\.7 Implement relevant policies and actions Implemented by ICR year Fully implemented (see Annex 2, SAR)\. 9- 1\.8 Equip all science and engineering 70% in 1996 Standard list abolished in 1997 programs to 100% of standard equipment 301\.8 billion Won for 1999 lists for each program\. Marine Science 2\.1 Equip all marine science teaching and 100% by ICR year Standard list abolished in 1997 research programs to 100% of standard equipment lists for each program by ICR year\. Junior Technical Colleges 3\.1 Admission quotas in JTCs to be 118,000 by ICR year 148,040 in 1999 exceeded target increased\. 3\.2 JTC student/staff ratios to be improved 25:1 by ICR year 18:1 in 1999 3\.3 JTC/lndustral cooperation committees 53 by 1998 60 by 1999 exceeded target to be established\. 3\.4 Enrollment percentages of population al 30% by 1998 37% in 1999 exceeded target age 18 will be increased in JTC technical programs\. 3\.5 Equip all selcted programs as a % of 76% by ICR year 90% in 1998 exceeded target standard equipment lists for each program\. Korea Basic Science Institute 100% by ICR year Program completed 4\.1 KBSI will upgrade equipment to provide improved capacity to conduct basic science research\. Vocational High Schools 70% by ICR year Standard list abolished in 1997 5\.1 The project will assist VHSs to upgrade 70% of the original list in 1999 provision rate of equipment\. Open Universities 100% by ICR year Standard list abolished in 1997 6\.1 Equip all open universities to 100% of 73% of the original list in 1999 standard equipment lists for each program\. End of project - 10 - Annex 2\. Project Costs and Financing Proiect Cost bv CoMDonent (in US$ million euiv a ent) AlDraisal Estimate Engineering Departments 60\.00 3\.61 7\.86 7\.86 79\.33 Natural Science Departments 45\.00 2\.72 6\.17 6\.17 60\.06 Marine Science Departments 20\.00 1\.20 2\.88 2\.88 26\.96 Open Universities 15\.00 0\.90 1\.92 1\.92 19\.74 Junior Technical Colleges 10\.00 1\.02 1\.4 1\.4 13\.82 Vocational High Schools 20\.00 1\.15 2\.88 2\.88 26\.91 Korea Basic Science Institute 20\.00 1\.20 2\.88 2\.88 8\.81 35\.77 Baseline Cost 190\.00 11\.80 25\.99 25\.99 8\.81 262\.59 Contingencies Physical 19 1\.18 2\.61 2\.61 0\.87 26\.27 Price Contingencies 21 2\.12 6\.3 6\.3 0\.22 35\.94 Subtotal Contingencies 40 3\.3 8\.91 8\.91 1\.09 62\.21 Total Proiect Cost 230\.00 15\.10 34\.9 34\.9 9\.9 324\.80 Proiect Cost b Comronent (i US$ million eauivalent) ActuaUlLatest Estimate GM~Mx~s rcodst Engineering Departments 76\.87 2\.20 1\.92 1\.18 10\.82 92\.99 Natural Science Departments 66\.84 1\.68 1\.54 0\.95 10\.83 81\.84 Marine Science Departments 22\.85 0\.73 0\.71 0\.43 18\.15 42\.87 Open Universities 15\.54 0\.59 0\.45 0\.28 16\.86 Junior Technical Colleges 16\.87 0\.67 0\.38 0\.23 18\.15 Vocational High Schools 32\.05 0\.73 0\.70 0\.43 33\.91 Korea Basic Science Institute 20\.00 1\.20 2\.88 2\.88 8\.81 35\.77 Total Proiect Cost 251\.02 7\.80 8\.58 6\.38 48\.61 322\.39 Submissions from KBSI and MOE dated February and April 2000 respectively, provided actual loan costs and partial project costs; where there were no project costs provided, original appraisal estimates have been used\. - 11 - Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Expendtr Cao N F 1\. Works 0\.00 0\.00 0\.00 9\.90 9\.90 _ (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 195\.60 23\.00 11\.40 0\.00 230\.00 (161\.50) (19\.00) (9\.50) (0\.00) (190\.00) 3\. Services 0\.00 0\.00 0\.00 34\.90 34\.90 Operations & maintenance (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 4\. Transportation & 0\.00 0\.00 0\.00 15\.10 15\.10 Installation (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 5\. Consumable materials 0\.00 0\.00 0\.00 34\.90 34\.90 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 195\.60 23\.00 11\.40 94\.80 324\.80 (161\.50) (19\.00) (9\.50) (0\.00) (190\.00) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Expendtur CaCoySG ~B TtlCs 1\. Works 0\.00 0\.00 0\.00 48\.61 48\.61 '0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 2\. Goods 249\.22 1\.10 0\.70 0\.00 251\.02 (187\.43) (1\.10) (0\.70) (0\.00) (189\.23) 3\. Services 0\.00 0\.00 0\.00 8\.58 8\.58 Operations & maintenance (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 4\. Transportation & 0\.00 0\.00 0\.00 7\.80 7\.80 Installation (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) 5\. Consumable materials 0\.00 0\.00 0\.00 6\.38 6\.38 (0\.00) (0\.00) (0\.00) (0\.00) (0\.00) Total 249\.22 1\.10 0\.70 71\.37 322\.39 (187\.43) (I \.10) (0\.70) (0\.00) (189\.23) * Submissions from KBSI and MOE dated February and April 2000 respectively, provided actual loan costs and partial project costs; where there were no project costs provided, original appraisal estimates have been used\. Figures in parenthesis are the amounts to be financed by the Bank Loan\. All costs include contingencies\. 2'Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units\. - 12 - Annex 3: Economic Costs and Benefits Not applicable\. - -13 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, I FMS, etc\.) implementation Development Month/Year Colmt Specialty Progress Objective Identification/Preparation 2 Economist/Technical Educator 03/92 07/92 6 Economist/Technical Educator/Environmental Technology/Environmental Science Specialist/Science Educator/Environmental Policy and Institution 12/92 6 Economist/Technical Educator/Environmental Technology/Environmental Science Specialist/Science Educator/Environmental Policy and Institution 03/93 3 Economist/Technical Educator/Environmental Science Specialist Appraisal/Negotiation 07/93 3 Economist/Technical Educator/Environmental Science Specialist 11/93 1 Economist Supervision 09/94 1 Technical Educator HS HS 12/94 3 Environmental S HS Specialist/Vocational Training Specialist/Technical Educator 07/95 3 Environmental S HS Specialist/Vocational Training Specialist/Technical Educator 12/95 2 Vocational Training S HS Specialist/Technical Educator 06/96 2 Senior Technical S HS Educator/Technical Educator 11/96 3 Environmental HS HS Specialist//Technical Educator/Senior Technical Educator 06/97 2 Procurement/Senior Technical HS HS Educator 05/98 2 Senior Technical HS HS Educator/Implementation Specialist 11/98 1 Senior Technical Educator HS HS - 14 - 05/99 2 Operations Analyst/Task HS HS Assistant ICR 11/99 1 Operations Officer HS HS (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ (°000) Identification/Preparation 30\.4 69\.8 AppraisalJNegotiation 7\.1 18\.8 Supervision 29\.6 71\.5 ICR _ 7\.1 14\.8 Total 74\.2 174\.9 - 15- Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N-Negligible, NA=Not Applicable) Rating Z Macro policies O H OSUOM O N * NA W Sector Policies O H SUOM O N O NA @ Physical H OSUOM O N O NA Z Financial * H OSUOM O N O NA M Institutional Development 0 H O SU O M 0 N 0 NA O Environmental O H OSUOM O N * NA Social * Poverty Reduction O H OSUOM O N * NA ZGender OH OSUOM ON NA O Other (Please specify) O H SUOM O N O NA Human Development Z Private sector development 0 H O SU 0 M 0 N 0 NA O Public sector management 0 H 0 SU O M 0 N 0 NA O Other (Please specify) - 16 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating O Lending OHS OS Ou OHU O Supervision * HS OS OU OHU O Overall HS OS OU OHU 6\.2 Borrowerperformance Rating O Preparation HS O s Ou OHU O Government implementation performance 0 HS 0 S O U O HU O Implementation agency performance 0 HS 0 s O U O HU O Overall OHS OS OU OHU - 17 - Annex 7\. List of Supporting Documents 1\. Implementation Completion Mission Aide-memoire, The World Bank 2\. Borrower's Project Evaluation Report, KBSI 3\. Borrower's Project Evaluation Report, MOE - 1 8 - REPUBLIC OF KOREA IBRD Progress Review Mission for The Science and Technical Education Project - Loan 3693-KO Aide Memoire I 1\. The IBRD Mission2 visited Korea from November 17 to 27, 1999, to review the implementation progress of the Science and Technical Education Project (Loan 3693- KO), and to prepare the project for closing on December 31, 1999\. 2\. During the course of its review for the project, the mission visited the Ministry of Finance and Economy (MOFE), Ministry of Education (MOE), the Supply Administration, Republic of Korea (SAROK), Korea Basic Science Institute (KBSI), Taejon City Office of Education, Chungnam Mechanical and Technical High School, Pusan National University (College of Natural Science and College of Pharmacy), Korea Maritime University, Pukyong National University, Pusan Metropolitan City Office of Education, and Kyong Nan Technical High School\. The mission would like to take this opportunity to express its appreciation for the kind hospitality and assistance extended to the mission during these visits\. 3\. The mission received two status reports, one from Ministry of Education (MOE) and one from Korea Basic Science Institute (KBSI)3\. The mission also received the FY98 Audit Report from KBSI\. The overall progress was generally satisfactory\. 4\. Summary of Procurement and Disbursement\. The Loan will be closed on schedule on December 31, 1999\. Procurement and disbursement for KBSI have been completed with their Loan allocation fully disbursed (US$20\.0 million approximately)\. The overall progress of procurement and disbursement under the MOE components has been satisfactory, and expected to reach almost full disbursement\. MOE has informed the mission that there may be about $250,000 unused funds to be cancelled at closing\. Annex 1 provides a summary of the procurement and disbursement data given to the mission by MOE and KBSI\. 5\. Procurement\. Total amount of procurement requests sent to SAROK has reached US$196\.6 (103% of the loan amount), of which US$175\.4 million was from MOE (103% of its allocation) and US$21\.2 million from KBSI (106% of its allocation)\. The total amount of signed contracts was US$186\.3 million (98% of the loan amount), of which US$165\.7 million was from MOE (97% of its allocation) and US$20\.6 million from KBSI (103% of its allocation)\. Some of the requests are in the process of being contracted, and for an-approximate amount of US$630,000, MOE would like to request the Bank's approval for procuring four research equipment packages using international shopping procedures\. The mission endorsed such procurement procedures for meeting ' This Aide Memoire is subject to the review and modification by Bank Management\. 2 The mission comprised Ms\. Carol Hau-Lai Ball, Task Leader, EASHD\. 3 KBSI component of this Loan is not under MOE, but is under the Ministry of Science and Technology\. I the relatively short procuremlent lead time in order for the project to be closed on time, and would recommend to the Bank that approval be given on an exceptional basis, if such request would forward to the Bank officially\. 6\. Disbursement\. Total disbursements have improved from US$168\.0 million (88% of total loan amount), of which US$156\.3 million was from MOE (93% of its allocation) and US$20\.0 million from KBSI (100% of its allocation)\. The mission urged MOE to speed up its disbursement activities in order to fully utilize the Loan proceeds before its Closing Date\. Both KBSI and MOE expressed their desire to request the four-month grace period in order to process disbursement documents\. The mission expressed such request will be supported by the Bank if needed\. 7\. Covenant Compliance\. All loan covenants are in full compliance\. There is no outstanding audit report\. The final Policies and Actions Program will be submitted to the Bank by December 31, 1999\. 8\. KBSI\. The mission visited KBSI in Taejon and found their procurement and disbursement activities have been nearly completed with the last Application for Withdrawal #17, totaling about US$653,346\.03, to be submitted to the Bank shortly\. The mission discussed with KBS\.[ staff the preparation activities for the Implementation Completion Report (ICR) and its purpose, and agreed on the ICR schedule including the submission of project financial data and project achievements as well as the ICR questionnaires (a simpler version of Annex 4)\. 9\. Field Visit Findings\. As stated in paragraph 2 above, the mission visited three universities and two technical high schools in Taejon and Pusan cities\. Equipment financed by the Bank represents only about 2% to 3% of the total equipment in Chungnam Mechanical and T echnical High School and Kyong Nan Technical High School (US$462,262 and US$213,422 respectively)\. Mechanical equipment and computers are well kept and highly utilized\. Graduation rate for both schools is almost 100% and employment rates are about 60% to 70% with the rest of the students entering universities and technical insltitutions\. Both high schools are very well managed with no shortage of staff and classrooms\. About 10% of the 25,000 students in Chungnam Mechanical and Technical High School stay in school dormitory, which was built in 1978\. Computer and English courses are essential part of the school curricula\. Girl enrollment represents about 30% of the total student enrollment in the Kyong Nan Technical High Schools, where as Chungnam Mechanical and Technical High School is a boys' technical high school\. 10\. The actual Loan allocations for Pusan National University, Korea Maritime University, and Pukyong Natilonal University are US$2,925,890, US$5,418,000 and US$11,931,602 respectively\. Pusan National University has a yearly budget of US$97\.8 million, Korea Maritime University US$35\.0 million, and Pukyong National University US$83\.0 million\. All three universities were participants of previous Bank-financed education projects, such as 7tt and gth education projects\. All universities expressed their gratitude toward the Bank for helping them to accomplish the science and technical academic achievements including enhancing their research capability to remain competitive in the globalization environrnent\. 2 11\. New facilities were built to house the additional expensive simulation and research equipment financed by the Loan such as the Marine Simulation Training and Research Center of Korea Maritime University, and the Cooperative Laboratory Center of Pukyong National University\. Bank-financed equipment represents about 60% to 70% in these two centers\. These two research centers are very modem buildings, and they are well maintained and managed\. Korean universities usually do not charge user fees for use of their equipment by the public, however, the Cooperative Laboratory Center has been charging small amounts of user fees since 7 months ago\. So far, they have collected about 10\.0 million Won\. They are aiming at 30\.0 million Won per year, and no charge for university students and faculties\. Different pieces of equipment are being kept in three Colleges in Pusan National University - Colleges of Natural Science, Engineering, and Pharmacy, and their utilization rates are fairly high compared to the new research centers in Korea Maritime University and Pukyong National University\. 12\. Equipment for three universities is well kept, and utilization activities are logged for each piece of equipment\. There is no shortage of funds for staff and consumables\. Several full time staff are on the job to assist research activities as well as for maintenance and inventory controls\. Some highly sophisticated pieces of equipment have included training contracts by manufacturers as well as maintenance contracts\. The most expensive equipment financed by this project and inspected by the Bank is the Full Mission Shiphandling Simulator System in the Marine Simulation Training and Research Center of the Korea Maritime University\. It costs about US$2\.0 million, which has a 270 degree bridge view\. The center also offers training courses to private sector as well\. 13\. MOFE\. The mission paid a courtesy visit to MOFE, and thanked them for their support and cooperation during the implementation of all 11 education projects\. The mission also discussed the mutual understanding of loan allocation distributions among project components\. 14\. SAROK\. Review of Bid Evaluation Reports and Contract Awards\. The mission visited SAROK in Taejon City, and reviewed a random sample of 68 procurement items out of 262 items (26% of total contract awards under this review period)\. The mission reminded SAROK that no price negotiations are allowed under the ICR procedures, and the requirement of revising the technical specifications for rebidding as well as its reasons have to be clearly documented\. The Bank's guidelines need to be strictly followed for the rest of the implementation period\. 15\. SOE Review\. There were 6 applications for withdrawals (AFWs) under MOE and I AFW under KBSI\. The mission reviewed about 12% of the items of MOE's AFWs, totaling about 25 items; and 100% of the 11 items of KBSI's AFW#16\. No discrepancies were found\. 16\. ICR Preparation\. ICR preparation and its activity schedule were agreed upon with both KBSI (see paragraph 8) and MOE (see Annex 5)\. A set of questionnaires was given to each of the implementation agencies to complete and submit to the Bank separately (see Annex 4)\. The purpose of ICR was also discussed (see Annex 2)\. 3 17\. Settlement of the Special Account\. Either AFWs or the refund of the balance of the Special Account should be done in order to settle the Special Account with the Bank's Disbursement Division\. Refund should be sent to the following World Bank account: Federal Reserve Bank of New York 33 Liberty Street, NY, NY 10045, USA Account IBRD A-General ABA no\. 210-8138-3 Attention: Foreign Department Reference: IBRD Loan 3693-KO, SA Refund 18\. Other Educational Documents\. The mission expressed its appreciation for receiving several education documents from MOE in the subject areas of: (i) introducing computers and internet access to classrooms, (ii) teacher's training on new technology, and (iii) higher education reform\. 19\. There will be no future progress review mission for this project\. The project is expected to close on December 31, 1999\. The ICR is scheduled to be finalized in June 30, 2000\. November 26, 1999 4 Project Evaluation Summary Korea The Science and Technical Education Project (Loan 3693-KO) February 15, 2000 Korea Basic Science Institute < Project Review from the Borrower's perspective > 1\. Objectives of the project The project was the second phase of a large master plan aimed at improving opportunities for joint research activities in the basic research through strengthening common research facilities and equipment at KBSI\. 2\. Benefits from the projects 2\.1 KBSI could be committed by the project to support our government's science and technology polices in serving the needs of university faculty members and professionals from public and private R & D institutes by helping to build and operate the unique and state-of-the-art equipment as well\. (Table 1, 2) 2\.2 The project would lead to improved research cooperation between institute, university and industry through more efficient research equipment and facilities for basic research\. (Table 3) 2\.3 KBSI helps to prepare the scientific and technical work force of the future by offering a variety of learning and R & D experiences to graduate students and faculty members\. (Table 4) 2\.4 Close relationship between Bank staff and the executing department has yielded several institutional benefits to KBSI\. 3\. Bank's performance 3\.1 Bank personnel were recognized as professional in all respects\. Not only mission members were always highly qualified in their respective fields but also staff appraisal report was appropriate to address the kinds of implementation problems occurring\. 3\.2 The constructive dialogue and Bank's supervision effort was quite beneficial\. 4\. Lessons learned 4\.1 The overall communications between the Bank and the Borrower, including accounting of commitments and draw-down of loan proceeds, should be sufficiently well documented and thoroughly understood so that when the changes in government or mission personnel occur, such changes will deeply affect project implementation\. 4\.2 The performance of the participating institutions in overall project planning should be reviewed to compare with the results\. 4\.3 A specialist and manual should be made available to make a thorough review of equipment specifications before going out to tender\. Moreover, clearly stated responsibilities about warranty should be pointed out in equipment specifications\. 4\.4 Bidding and reimbursing procedures should be fully recognized not to take much time in preparing and getting documents\. 5\. Project sustainability 5\.1 The sustainability of economic benefit is to provide reliable utility support and the additional necessary infrastructure required to produce the appropriate environment for conducting outstanding research\. 5\.2 In terms of technology progress, new scientific research fields came into being as a result of newly acquired equipment and we were able to commit education programs on state-of-the-art equipment\. 5\.3 The users are strongly recommended to carry out research in the basic sciences to ensure a national competence and knowledge in research and development field\. 6\. Conclusion 6\.1 During the past year, significant effort was expended on a working administrative framework for each of the equipment, and KBSI has continued its outreach programs, ranging from the dissemination of informnation about facili[ties to the development of extensive contacts through the headquarters and nation-wide branches\. Therefore, remarkable progress was made in relatively short periods\. 6\.2 Plans for the future involve the expansion of such efforts and the assumption of additional responsibility in facilitating scientific education programs\. 6\.3 This year will see completion of many of the activities developed during the project period\. 6\.4 R & D interactions between university and industry should be greatly increased by more exchange of knowledge, personnel and collaborative projects\. 6\.5 We shall continue to develop our basic understanding of the structure of our activities so that we can define meaningful measures of progress\. 6\.6 We believe that our enriched research equipment, when fully set up, will make constructive changes to revitalize the university and industry research so that our wealth of talent and facilities will contribute more effectively to our research capacities and economic growth\. Table 1\. NUMBER OF RESEARCH SERVICES AT KBSI Cases 3,671 5,386 5,968 7,870 9,647 12,150 44,692 Samples 22,611 28,589 31,211 43,455 54,160 72,094 252,120 Users 1,872 2,527 3,062 3,523 3,085 3,509 17,578 Organizations 482 591 653 573 1,041 851 4,191 Table 2\. NUMBER OF EQUIPMENT AND FACILITY (BY REGION) Dec\. 1999 Taedok Headquarters 164 Seoul Branch 71 Pusan Branch 30 Taegu Branck 30 Kwangju Branch 27 Total 322 Table 3\. RESEARCH WVORK AFTER THE PROJECT (Unit Thousand Won / One year) , ,,, , ,\. ,a,, X, , d~~~~~~~~~~~~~\., \. \. \. \. 0t : iS i- -ELi- -d - - - \.; -ii -: \. \. 0 \. -E \.-i \. \.- : X X 1\. Studies on the Structures and 28,000 Government Functions of Nucleic Acids and Proteins Which are Related to the Protein Synthesis 2\. Material Science under 320,000 Govemment Multi-extreme Conditions 3\. KSTAR System Design and 730,000 Government Integration 4\. Development of Tokamak 4,203,000 Government Structure and Vacuum Systems 5\. Development of Plasma Diagnostic 540,000 Government and Control Systems 6\. Development of Superconducting 125,000 Government Magnet Systems 7\. Studies on Three-dimensional 69,000 Government Structures of Biomolecules Using NMR 8\. Development and Application of 170,000 Government High Resolution Microimaging System 9\. Installation of Ultra High Voltage 1,000,000 Government Transmission Electron Microscope Total 7,185,000 Table 4\. EDUCATION PROGRAMS('94-'99) 1) Outlines 1994 7 165 1995 16 345 1996 18 338 1997 21 382 1998 21 313 1999 18 408 Total 101 1,951 2) Participating Organizations ' \. \.~~~~~~~~~~~ ~~~~~~~~~~~~~ ~~ \. " , :\. \.* \. 1994 124(75%) 20(12%) 21(13%) 165 1995 235(68%) 68(20%) 42(12%) 345 1996 270(80%) 31(9%) 37(11%) 338 1997 229(60%) 73(19%) 80(21%) 382 1998 245(78%) 41(13%) 27(9%) 313 1999 302(74%) 73(18%) 33(8%) 408 Total 1,405 306 240 1,951 About KOREA BASIC SCIENCE INSTITUTE In order for Korea to recover from the current economic crisis and to become an advanced nation, it is essential that we transform from the technology import mode to the creative R&D mode\. The real econonnic development takes place only when it is strongly based on science and technology\. Basic science is the basis of creative and innovative technological advances and also the source that breathes vitality into applied or exploratory research\. Korea Basic Science Institute(KBSI) was launched in August, 1988 as the first National Users' Facility to help carry out effective basic science research in Korea\. By maintaining the most advanced, state-of-the-art equipment and research facilities that are typically too expensive for individual institutes to acquire, joint use of facilities and cooperative research are being condcucted at Taedok headquarters and at four regional branches\. KBSI is also leading the national fusion R&D programn, which is to design and construct a superconducting tokamak device, called KSTAR(Korea Superconducting Tokamak Advanced Research)\. It eventually will become a world-class national users' facility\. Following the original charter mission of KBSI, we will do our best to keep it as the central institute to promote basic science, to expand its specialized areas of sc:ientific support, and to secure the user-oriented support capabilities\. We like to make sure that the users have an easy access to the equipment and facilities by establishing an user-friendly open-door operation\. Through such effort, we believe KBSI can become a world-class basic science joint research institute\. Facing upon the era of science and technology of the 21st century, we promise to do our best to provide high-level research support, based on our ten-year experience and accumulated knowledge\. And we sincerely hope that all members of the science & technology communities and related organizations around the world continue to support our mission\. Brief History 1987\. May A public hearing was held to establish the Korea Basic Science Center(KBSC)\. 1988\. Aug\. KBSC was established as an affiliate of the Korea Science and Engineering Foundation\. 1988\. Aug\. Dr\. Hyun-Nam Kim was appointed the first president\. 1991\. Aug\. Dr\. Bak-Kwang Kang was appointed the second president\. 1991\. Oct\. KBSC was reorganized under the auspices of the Korea Researcb Institute of Standards and Science\. 1992\. Mar-Apr\. Four regional branches(Seoul, Pusan, Taegu and Kwangju) were established\. 1992\. Dec\. Taeduck headquarters construction was completed\. 1993\. Apr\. Dr\. Byong-Kwon Park was appointed the third president\. 1993\. May KBSC became an affiliate of the Korea Research Institute of Standards and Science 1995\. Jan\. Dr\. Duk-In Choi was appointed the fourth president\. 1995\. Apr\. KBSC has been renamed to the Korea Basic Science Institute(KBSI)\. 1996\. Jan\. National Fusion R&D Center was established at KBSI\. 1998\. Jul\. Dr\. Jung-Soon Lee was appointed the fifth president\. 1999\. May KBSI was formally registered as a non-profit organization\. 1999\. Dec\. Chonju regional branch was established\. Function Headquarters Promote and activate high quality research in the basic science through joint use of equipment in selected fields of national importance by 1\. Install and operate the National User's Facility and Measurement Center 2\. Construct joint research system using advanced equipment 3\. Study interpretation and analysis of measurement results and develop educational training prograrn Establish Korean National Fusion R&D Program 1\. Construct a steady-state capable KSTAR Device that is Next Generation Advanced Superconducting Tokamak Device 2\. Step up the strong international collaboration joining with leading countries of fusion research Play a pivotal role in basic science research and information dissemiination by 1\. Exchange inforrmation with Scientific Research Center and Engineering Research Ceriter(SRC, ERC), and reinforce cooperation in basic science research field 2\. Establish science inforrmation center for basic research with scientific journals 3\. Promote joint use of research equipment through the DB Branches Conduct joint research with regional scientific studies and exchange information by 1\. Support joint use of equipment appropriate to the research activities and university characteristics of each region 2\. Provide measurement and analysis service for the regional university research community and industry 3\. Offer educational programs and practical training opportunities related to super accurate equipment Finance & Personnel Personnel (December 1999) l - \.' M \. V\.,\. ~66 y ~~~~~~~65 \.0 \| 2 B B E \| \| \| \. \|170 Finance(December 1999) Unit: Million Won Others 8,290(21\.1%) \| X ~~~Gov't 29,973(76\.3%9o User Fee 1,000(2\.6%)0 P Loan Repayment 6, (15\.4X Operation 1,800(4\.6%) I \| \| ~~~Expenditure 39,263\| l Basic Research nd Special Project 25,506(65\.0%) Organization(Dec\. 1999) President Auditor Research Review Committee Assistant to Auditor Advisory Council Vice-President National Fusion R&D Center Analysis & Device Measurern- Seol Pusan Taegu Kwangju Chonju Developnent Dinsion ent Computer Technical Bearch Yranch Branch Branch Branch Branch Division Administrati Dvision Laboraory Support Infornation -on Departnent _ _ar ___t Division Planning Budget & Generl Accounting Procurers- Secton Research Affairs Secton e\|t &l Mangement Secti Facietis Section Section Borrower's Evaluation Report for the IBRD Science and Technical Education Project (LN 3693-KO) 1\. Project Rationale and Objectives 1\.1 For more than two decades, the World Bank has supported the development of S&T education and research in Korea\. Emphasis has been placed on expanding the supply of technical manpower at all levels and also on qualitative improvements\. In the 1980s, attention was given to the policy framework within which S&T education and research operated and policy improvements were introduced under two sector loans (Ln\. 1800-KO, and Ln\. 2427-KO)\. This has permitted recent science and technical (S&T) education and research projects to be designed within a policy framework that was generally sound\. The next decade will be a period of accelerating technological change and Korea's S&T education system will be challenged to respond by ensuring that it continues to produce, in quantity and quality, the necessary skilled manpower to support the country's technological advancement\. The project represents the final opportunity for the Bank to assist Korea in identifying policy improvements and specifying the targets which will improve S&T education in future years\. As Korea's graduation project in education, it brings to a close the long and successful association between Korea and the Bank in the education sector\. 1\.2 The overall objective of the project was to assist in improving the quality of S&T education and research through implementation of the Policies and Actions Program and the provision of specialized equipment\. Specifically, the project would: (a) support quality improvement in undergraduate science and engineering departments in selected universities; (b) assist in strengthening the teaching and research capacity of marine science institutions to address environmental problems; (c) assist in improving the quality of practical science and engineering programs in open universities and in selected junior technical colleges; (d) improve opportunities for joint research activities in basic science through strengthening common research facilities at the Korea Basic Science Institute; and (e) enhance the quality of training in selected VHSs\. Quality improvement is being supported through the provision of up-to-date laboratory and workshop equipment\. Provision of such equipment under the project is expected to enhance the performance of faculty in a wide range of institutions\. 2\. Origin and Description of the Project 2\.1 The Government of Korea (GOK) included the project in its FY93 list of projects suitable for external financing and formally asked the Bank for assistance in November 1992\. Most of the preparation work was completed by GOK in accordance with requests for information formulated by the Bank\. The project was preappraised in March 1993 and appraised in July 1993\. Appropriateness of the loan proposal was recognized and the loan agreement was signed on February 16, 1995 for the loan of US$190,000,000 or less after negotiation on the agreement 1 conditions in Washington, D\.C\. GOK sent to the Bank all documents required for the loan such as legal comments on the agreement, etc\. The loan agreement was notified by the Bank to be effective as of May 11, 1994\. 2\.2 The project was designed to finance for equipment procurement and to be completed by December 31, 1999\. The categories of items to be financed out of the proceeds of the loan and the allocation of the amounts of the loan to each category were as follows: (a) University Engineering Departrnents US$ 60,000,000 (b) University Natural Science Departments US$ 45,000,000 (c) Marine Science Departments US$ 20,000,000 (d) Open Universities US$ 15,000,000 (e) Junior Technical Colleges US$ 10,000,000 (f) Vocational High Schools US$ 20,000,000 (g) Korean Basic Science Institute USS 20,000,000 3\. Implementation of the Project A\. Selection of Participating Institutions 3\.1 According to the criteria specified in the Loan Agreement, MOE has selected 23 public universities, 26 private universities, 9 open universities, 4 public technical colleges, 4 private technical colleges, and 19 vocational high schools\. The Korean Basic Science Institute (KBSI) that is under the Ministry of Science and Technology (MOST) was included in the project from the designing stage of the project\. KBSI was to achieve value added in the form of fostering efficient mechanism for centralizing common research activities, which would be of particular benefit to smaller institutions\. B\. Equipment Procurement 3\.2 General Procedures of Equipment Procurement\. Most of equipment procurement was undertaken by the Supply Administration, Republic of Korea (SAROK), which is highly experienced in procuring equipment under the Bank's international competitive bidding procedures\. On the basis of equipment lists and specifications submitted by project institutions, SAROK has prepared intemational competitive bidding documents, invited bids, evaluated them in collaboration with the institutions, and made contract awards with selected suppliers\. In the case of equipment procurement for vocational high schools, 16 district offices of education prepared equipment lists based on the requests from vocational high schools within their districts and submitted them to SAROK\. Toward the closing date of the project, equipment of US$627,000 equivalent was procured through the intemational shopping procedure under the permission by the Bank\. The supplier was responsible for installation, initial testing and operation of the equipment as specified in the contract\. It has usually taken 3-8 months between the procurement request to SAROK and the equipment installation\. Most of equipment was under 1 or 2 year warranty\. 2 3\.3 Equipment Procurement\. Although the final allocations of loan to categories of the project were not changed from the original one, there were some changes within categories\. Because the currency exchange rate for Korean Won to US$ became almost doubled after the unexpected crisis of national economy in 1998-1999, private institutions cancelled some of their loan allocations which had not been disbursed yet\. MOE has transferred the loan cancelled by private institutions to public institutions in 1999 under the permission by the Bank and relevant authorities of GOK (Table 1)\. 3\.4 A total of 16,483 pieces of equipment were procured under the project and US$169,373,072\.86 As of April 20, 2000, the disbursement rate of the project was 99\.63%\. The cancellation occurred mainly from university engineering departments and junior technical colleges (Table 2)\. Procurement activities were slow in the first year of the project\. However, disbursement rate increased rapidly in the following years and exceeded the appraisal estimated (Table 3)\. 4\. Evaluation of the Project Implementation 4\.1 Overall implementation was satisfactory although US$626,927\.14, 0\.37 % of the loan, is to be cancelled\. Disbursements conformed to all Bank procedures\. The allocation of the loan among disbursement categories was similar to the original estimates\. Some changes in the loan allocation among disbursement categories were mainly due to the cancellation by private institutions during the unexpected crisis of national economy in 1998-1999\. The objectives of the project were satisfactorily accomplished\. One hundred and twenty three institutions were significantly benefited by the project\. The project helped to increase sustainability of the previous assistance in Korea's S&T education by the Bank\. 4\.2 The project has facilitated and enhanced research capabilities and teaching programs, especially in science and technology at 36 engineering colleges, 41 natural science colleges, 10 marine science colleges, 9 open universities, 8 junior technical colleges, and 19 vocational high schools\. Approximately 16,483 pieces of equipment were provided under the project\. All equipment are actively used for research and teaching at the project institutions (Table 5)\. The research outputs have been impressive\. The number of research projects has been more than doubled from 3,197 in 1995 to 6,471 in 1999\. A total of 40,929 research activities were conducted during this period, about 50% over appraisal estimates\. The results of 87% of these activities were published either domestically or internationally, 12% have been used by related industries, and 2% have been awarded patents (Table 6)\. 4\.3 The project has benefited not only the selected institutions but also other institutions by making the procured equipment available to staff and students in other institutions\. For example, 9 major national universities in Korea have allocated 29\.3% of their loan allocations to the research and teaching support institutes which provide common facilities and equipment to users from not only inside but also outside of the universities (Table 7)\. These institutes were established in late 1980s or early 1990s under the concept of centralizing expensive equipment to efficiently maintain 3 and operate for any users without institutional discrimination\. Most of their equipment were relatively expensive, often over US$100,000 per piece, and procured by extemal finances such as the previous IBRD loan projects (ILn\. 3203-KO and Ln\. 3612-KO)\. Sustainability of these institutes has been improved greatly by the project\. 5\. Sustainability of the Educational Equipment Provision The Government will invest $650 million in the national universities for the next five years (2000 - 2004) including open universities\. The fund will help the universities increase the effectiveness of the educational equipment that have been supplied through the external loan projects and national funding\. It is also necessary to sustain additional provision of the fund to well maintain the machines\. The Government has already provided $500 million for the national universities, junior technical colleges, open universities\. Table 8 indicates planned annual investment of the Government from 2000 to 2004(Table 8)\. 6\. Conclusion 6\.1 Although 0\.37% of the loan is to be cancelled, overall implementation of the project was successful\. Performance of the project institutions, MOE, and SAROK was satisfactory during the project years\. The project will make substantial contribution to S&T education and research in vocational high schools, technical colleges, and universities in Korea in future years\. 6\.2 Efficient and effective guidiance by the Bank during the project years, especially approving the international shopping procedures at the last stage of implementation was greatly appreciated by MOE and the National InstrLimentation Center for Environmental Management (NICEM), the beneficiary of the approval\. 4 7\. Statistical Information Table 1\. Allocations of Loan by Categories Public/ No\. of Original Final Category Private Institutions Allocation Allocation Public 19 43,329,000 47,214,076 University Engineering Private 17 16,671,000 12,785,924 Departments ____\._\. Sub-tota ' 36 60,000,000 60,j000000 Public 20 33,816,000 35,151,778 University Natural Science Private 21 11,184,000 9,848,222 Departments __,_,__ Sub\. otal 41 45,000000 45,000,000 Public 10 20,000,000 20,000,000 Marine Science Departments Private 0 S-total 10 -20000, 20,000,000 Public 9 15,000,000 15,000,000 Open Universities Private 0 Subtotat 9 1\.0o\.-: ,000 \.15 ,0000 Public 4 7,829,000 7,989,365 Junior Technical Colleges Private 4 2,171,000 2,010,635 $ub-totai 8 10,000t00 10,000,00 Public 19 20,000,000 20,000,000 Vocational High Schools Private 0 Sub-total 19 2,0- 201,000 Total 123 170,000,000 170,000,000 5 Table 2\. Equipment procurement and the disbursement rate of the project _~~~~~~ibre Number of Public/ Loan allocation Disbursed Disbursement equipment Category Private (US$) aUnt rate (%) procured Category Private_ (US$) (US$) (pc) Public 47,214,076 45,689,320 96\.8 3,094 University Engineering Private 12,785,924 12,090,230 94\.6 961 Departments Public 35,151,778 40,665,590 115\.7 3,632 University Natural Private 9,848,222 8,584,070 87\.2 1,056 Science Departments Public 20,000,000 19,957,180 99\.8 1,091 Marine Science Private - - Departments Public 15,000,000 13,551,200 90\.3 1,232 Open Universities Private - - &boI 15O0O00 "ssip 9''i,'0 '\.3t Public 7,989,365 7,488,000 93\.7 863 Junior Technical Private 2,010,635 1,991,882 99\.1 314 Colleges __________ Public 20,000,000 19,355,600 96\.8 4,240 Vocational High Private _ _ Schools Private:j; Total I 170,000,000 169,373,072 99\.63 16,483 6 Table 3\. Loan Disbursements: Cumulative, Estimated and Actual (US$ million) Year Appraisal Estimate (US$ million) * Actual (US$ million)** Disbursed Cumulative % of Total Disbursed Cumulative % of Total 1995 20 20 10\.5 3 3 1\.8 1996 35 55 28\.9 59 62 36\.5 1997 60 115 60\.5 36 98 57\.6 199B 40 155 81\.6 50 148 87\.1 1999 30 185 97\.4 13 165\.39 97\.3 2000 5 190 100\.0 3\.98 169\.37 99\.63 * Loan allocated to KBSI was included in appraisal estimate\. * Percentage of the actual disbursement was calculated based on the total of US$170,000,000 which was allocated to institutions under MOE\. Table 4\. Summary of Project Costs by Category of Expenditure Appraisal estimate (US$M) Actual costs (US$M) Component Local Foreign Total Local Foreign Total costs costs costs costs Equipment - 170 170 61\.7 169\.37 222\.8 Equipment transportation 11\.9 - 11\.9 6\.6 6\.6 and installation Operations and Mainteanc 26\.0 - 26\.0 5\.7 5\.7 Maintenance Consumable materials 26\.0 - 26\.0 3\.5 3\.5 Civil works 8\.8 - 8\.8 39\.8 39\.8 Contingencies 62\.0 - 62\.0 0 0 Total 134\.8 170 304\.8 117\.3 169\.37 278\.4 7 Table 5\. Hours of Equipment Utilization Yearly Use-Hour (x 1,000 hr) Number of Average Category _ Equipment Use-Hour 1995 1996 1997 1998 1999 Total Items (hr) University 9 739 975 1317 1425 4,466 7,732 578 Engineering Dept\. , , , , University Natural 75 1,958 1,661 2,078 1,955 7,727 10,118 764 Science Dept\. Marine Science 4 73 118 264 290 749 2,251 332 University _ Open University 7 136 352 490 537 1,522 3,027 503 Technical College 0\.2 105 107 129 227 568 2,564 221 Vocational High 114 592 970 1,246 1,607 4,529 13,565 334 Total 21 1 3,603 4,183 5,524 6,041 19,560 39,257 498 Table 6\. Research Activities, Publications, and Patent Awards Resulting from the Project Research Activity Published Used by Patent Project Year _ Internationally Related Estimated Actual and Domestically Industries Awards 1995 3,197 4,105 3,603 475 80 1996 4,952 7,283 6,327 757 119 1997 5,928 8,921 7,854 1,018 162 1998 6,682 10,560 9,158 1,191 236 1999 6,471 10,060 8,638 1,447 232 Total 27,230 40,929 35,607 4,888 829 8 Table 7\. Loan Allocations to Research and Teaching Support Institutes of 9 Major National Universities in Korea Loan Total loan National Institute allocation to equipment disbursed by University institute (pc) university ___________ _ ____________ ____________ (U S$) (p )(U S$) Kangwon Central Laboratory 943,000 15 5,559,000 Kyungbuk Center for Scientific Instruments 754,000 9 1,858,158 Gyungsang Central Laboratory 1,355,000 6 6,634,000 Pusan Central Laboratory 0 0 2,925,890 National Instrumentation Center for 630,000 5 Environmental Management 16,432,469 Seoul Inter-University Center of Natural 6167,000 24, Science Research Facilities , 2 Chunbuk Center for University-Wide Research 1,397,000 6 2,478,545 Facilities Cheju Research Instrument Center 1,052,000 19 6,596,108 Choognam Center for Research Facilities 1,047,000 12 3,394,570 Choongbuk Center for Research Instruments and 1,269,000 6 3,890,420 Choongbuk ~~Exper'imental Facilities Total 14,614,000 102 49,769,160 Table 8\. Sustainability of the Educational Equipment Provision (Unit: Million) Detailed Gross Fund Annual Investment Plan Provision Need To '99 2000 2001 2002 2003 2004 Equipment 1,244,741 574,706 78,350 140,705 144,253 154,936 151,791 Purchase Equipment 68,708 24,764 6,650 7,516 8,375 9,883 11,520 Maintenance I Total 1,313,449 599,470 85,000 148,221 152,628 164,819 163,311 9	REVIEW
P094869	ï»¿ ICRR 13751 Report Number : ICRR13751 IEG ICR Review Independent Evaluation Group 1\. Project Data: Date Posted : 01/26/2012 Country : Dominica Project ID : P094869 Appraisal Actual Project Name : Growth And Social US$M ): Project Costs (US$M): 2\.60 2\.60 Protection Technical Assistance Credit L/C Number : C4264 Loan/ US$M): Loan /Credit (US$M): 1\.45 1\.45 Sector Board : Public Sector Cofinancing (US$M): US$M ): 1\.15 1\.15 Governance Cofinanciers : EU Board Approval Date : 02/27/2007 Closing Date : 06/01/2010 12/31/2010 Sector (s): Central government administration (100%) Theme (s): Trade facilitation and market access (23% - P); Social safety nets (22% - P); Regulation and competition policy (22% - P); Administrative and civil service reform (22% - P); Public expenditure; financial management and procurement (11% - S) Prepared by : Reviewed by : ICR Review Group : Coordinator : Fareed M\. A\. Hassan Chad Leechor Ismail Arslan IEGPS2 2\. Project Objectives and Components: a\. Objectives: The objectives were to enhance the Government âs effectiveness to deliver public goods and services by strengthening the institutional capacity of key agencies to facilitate Dominica âs private sector competitiveness and productivity and to provide targeted social assistance to reduce poverty, as stated in Section B of the PAD (para\. 25, p\.6)\. The objectives were generally consistent with those in the Legal Document \. b\.Were the project objectives/key associated outcome targets revised during implementation? No c\. Components: To achieve project objectives, reforms were supported in (i) making the public sector more efficient and effective; (ii) improving the investment climate; (iii) reforming the regulatory framework for the energy sector; and (iv) improving social protection\. I\. Making the public sector more efficient and effective (appraisal $ 1\.24 million, actual $ 1\.24 million ) This component supported the government program to : (a) improve human resources management, (b) improve and increase the transparency of auditing and modernize procurement, (c) modernize the Registry, and (d) reform customs\. Support was provided in terms of studies, technology equipment , and software programs \. II Improving investment climate (appraisal $ 0\.25 million, actual $ 0\.25 million ) Activities under this component sought to address deficiencies in the system of investment promotion as carried out by the Dominica National Development Corporation (NDC), and prepare a National Investment Strategy and an Action Plan to build a well -functioning investment promotion agency \. The component supported the activities in terms of training of staff in relevant activities (market intelligence, direct contacts with investors, services to investors, and after -care of investors) as well as upgrading office and technical equipment, publication of promotional material, installing a special software for access to foreign investors â databases as well as subscription to relevant international business information databases and services \. III Reforming the Regulatory for the energy sector (Appraisal $ 0\.69 million, actual $ 0\.70 million ) This component provided technical assistance to support the government regulate the energy sector, including establishing a regulatory commission and drafting energy legislation \. IV\. Improving social protection (appraisal $ 0\.23 million, actual $ 0\.232 million ) This component sought to strengthen government capacity to improve social protection by modernization the beneficiary selection system, and implement a public information campaign to inform the public about the new reform program\. Support was provided through technical assistance and training in data bases \. There was an allocation of $0\.18 million from the credit to a project management unit \. It was all used\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The project was financed by IDA credit of US$ 1\.45 million and parallel grant of US$0\.58 million from the European Union and Borrower contribution of US$ 0\.57 million\. The closing date of the project was extended by 6 months\. 3\. Relevance of Objectives & Design: a\. Relevance of Objectives: The objectives were, and remain,substantially relevant for Dominica âs socioeconomic development, as per its Growth and Social Protection Strategy (GSPS) for 2005/06-2009/10\. The GSPS four pillarsâfiscal policy and administrative reform; enhancing the investment climate; sectoral strategies for growth; and poverty reduction and social protectionâwere in line with the main objectives covered by the project \. The project objectives were also consistent with the pillars of the Bank âs Country Assistance Strategy (FY06-09 CAS), namely stimulating growth and improving competitiveness and reducing vulnerability by promoting greater social inclusion \. b\. Relevance of Design: The design of the project was substantially relevant \. The design built on lessons learned from pervious operations in Dominica and elsewhere in the Caribbean including Jamaica and Grenada \. The design was also informed by recent analytical work by the Bank and other donors \. Nevertheless, there were few shortcomings in the design of the operation\. Although the program was aligned well with the various strategic documents of the Government and the Bank, it was not by and large selective in the areas chosen for support \. It kept its focus fairly broad, covering eight sector /themes: trade, energy, social safety net, regulation and competition policy, civil service, public expenditure, financial management, and procurement, each with several objectives \. The objectives were phrased in general terms and the associated outcome indicators were not always measurable (see Section 10 for details)\. This in turn led to taxing Dominica's implementation capacity \. 4\. Achievement of Objectives (Efficacy): I\. Making the public sector more efficient and effective (a) Improve human resources management \. The two envisaged outcome indicators â human resource audit of ministries and public service departments, and the development, dissemination, approval and launch of a time bound, fully-costed human resource development and succession plans for ministries and departments within the public serviceâwere partially achieved\. The Human Resources Audit of Ministries and Departments of the Public Service was completed \. On the succession plans for Ministries and Departments, the Reform Management Unit/Establishment, Personnel and Training Department took an alternative approach in that rather than developing and launching time bound, fully -costed succession action plans, it developed a methodology (tool kit) for preparing succession plans when required, and it identified key positions where those plans would be applied\. Due to the Parliamentary elections at end 2009, this activity was put on hold until after the new authorities took office\. The final report was completed in October 2010, and Cabinet gave approval of the recommendations and action plan in April, 2011\. (b) Improve and increase the transparency of audit and modernize procurement \. The proposed new auditing management systems were not fully operational by the closing date \. The Auditor General Office received the IDEA software in early 2010, but staff was not able to complete training \. At the Accountant General Office, the SMART Stream system was used for the budget process, but it was not operational yet for auditing \. Regarding the new procurement legislation, consultations with key stakeholders initially scheduled to be completed by March 2010 were still ongoing one year later, and the new legislation prepared under the project was not timely finalized as agreed in the TORs discussed with the Bank \. This was due to the extended consultation process and corresponding delays in the drafting process \. However, the procurement legislation is on the agenda for the next sitting of Parliament\. The new legislation would ensure that all contracts above EC$ 1 million are awarded by competitive bidding\. As of March 2011, most but not all contracts were subject to competitive bidding, as envisaged by the outcome Indicators \. (c) Modernize the Registry \. The project financed the modernization of the Registry through the full -scale computerization of Companies and Trade Marks section of the Registry to allow for on -line business registrations and searches \. A separate Registry for companies, which also deals with patents and intellectual property, was established and companies can be registered in one day \. The improvement of the computer technology within the land titles section of the Registry helped reduce the turn -around time for registering properties\. In terms of envisaged outcome indicators, First Title registration was taking 60-90 days, compared to several years before the reform; Part of Land registration was taking about 35 days, down from 3-6 months; and Direct Transfer was taking about 30 days, compared to 3 months before the reform\. (d) Reform customs \. With the project support, Customs IT was upgraded from ASYCUDA 2\.7 to ASYCUDA World\. The new system is fully operational and is seen as a major improvement by private users \. Customs declarations need just one paper copy instead of four, while cargo manifests are now an electronic document rather than a paper one\. The expected outcome indicator was achieved, as the time for the clearance of goods was reduced from nearly 9 days in July 2010 when the new system was launched, to just over one day in the first quarter of 2011\. Overall achievements under objective I are considered substantial \. II\. II \. Improving the investment climate The project aimed at strengthening the institutional and regulatory investment environment through : (i) addressing deficiencies in the existing system of investment promotion as carried out by Invest Dominica Authority; and (ii) preparing a National Investment Strategy \. Despite delays, the strategy was approved by Cabinet in December 2010 and the restructured investment promotion agency, âInvest Dominica Authorityâ?, started to implement the strategy action plan shortly thereafter \. The number of days to process investment applications has been gradually reduced : proposals of up to EC$2 million are reviewed by a sub-committee of Cabinet within 2 weeks, while proposals above that amount are reviewed by Cabinet within 3 weeks, meeting the envisaged outcome indicators \. In terms of the second envisaged outcome indicator, a one stop shop for tourism investors was established and is fully operational \. Overall achievements under objective II are considered substantial\. III \. Reforming the regulatory framework for the energy sector III\. The project supported the establishment of an Independent Regulatory Commission (IRC) and drafting energy legislation and submitting it to Parliament for Approval \. The IRC was established in late 2007 and started to operate in July 2008 in line with the envisaged outcome indicator \. The project financed IRC in the first year, but now it is being funded by government \. A draft energy legislation was circulated and it underwent several revisions, but the process has not yet been finalized \. Currently, the final revision is being undertaken at the Chambers of the Attorney General for onward transmission to Parliament \. Cabinet has to approve the final draft before it is submitted to Parliament\. Apparently, the delay in approving legislation has adversely affected project implementation and its contribution to effectively regulating the energy sector including the production and distribution of electricity to improve competitiveness \. The ICRR noted that the rationale behind this component was that electricity tariffs in Dominica were among the highest in the Caribbean and they undermined competitiveness\. The PAD states that âthe project will benefit Dominicans through more competitive pricing of electricity as a result of a better regulated electricity sector â? (PAD para \.21, p\.6)\. Overall achievements under objective III are considered modest \. IV\. IV \. Improving social protection The project supported the government program to (i) modernized and streamline the systems for beneficiary selection and registration: (ii) strengthen the administrative capacity to deliver social assistance; and (iii) design and implementation of a public information campaign to inform citizens about new approaches to the delivery of safety net programs\. The reform of social protection had a slow start, but substantial progress was made in key elements of the program\. Public awareness campaigns were conducted \. Proxy means test and the Beneficiary Identification System (BIS) for the selection of beneficiaries were approved by Cabinet in January 2011 and their use immediately followed\. As of March 2011, information of about 75 percent of current beneficiaries was entered into the new system (BIS), and 95 percent of those were confirmed, falling slightly below the envisaged targets requiring 100 percent identification and registration of beneficiaries \. Overall achievements under objective IV are considered substantial \. 5\. Efficiency: As this was a TA project no rates of return (economic or financial) were calculated in the PAD or the ICR\. However, the value for money is not clear, with lending, supervision and Project Coordination Unit cost of over $500,000 that is relatively high compared to the total project amount \. ERR )/Financial Rate of Return (FRR) a\. If available, enter the Economic Rate of Return (ERR) FRR ) at appraisal and the re- re -estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal % % ICR estimate % % * Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome: The project relevance in terms of objectives and relevance of design was substantial \. The broad range of reforms addressed by the project led to a variety of outcomes in terms of envisaged targets and actual achievements\. Nevertheless, the analysis presented in Section 4 above indicates an overall achievement rating of substantial, though with a number of shortfalls especially concerning energy sector reforms \. The achievements under the project and their relevance merit a rating of moderately satisfactory a\. Outcome Rating : Moderately Satisfactory 7\. Rationale for Risk to Development Outcome Rating: The risk that development outcomes would not be maintained hinges on both technical and political economy factors\. On the technical side, the integration of the project implementation into the current Government structure is expected to help complete and maintain reforms \. The involvement of the champions from the various ministries and departments will help to ensure continued ownership of the components of the project even after the project is formally closed \. On the political economy side, overall, there is strong political ownership and support among the Government, the private sector, labor unions and Non Governmental Organizations (NGOs) for the package of reforms supported by the project \. These sentiments were gauged in a consultation process with key stakeholders \. The consultations, which took place in March 2006 was a key part of the pre-appraisal of the project\. The majority of stakeholders agreed on the need to systematically maintain the consultation/communication process from the beginning and throughout the implementation of the project, in a transparent and open fashion to ensure the public and private endorsement and engagement \. However, the implementation period indicated that in a number of cases, government commitment to the reform program was not as strong as envisaged \. Some elements of the reform program such as drafting energy legislation were pushed back and were not completed by the project closing date \. a\. Risk to Development Outcome Rating : Moderate 8\. Assessment of Bank Performance: a\. Quality at entry: The project was consistent with the government âs own priorities as well as with the Banks country assistance strategy\. However, while responsive to government demand, the program was quite ambitious for a small country with substantial capacity constraints, which raises some quality at entry issues \. Government officials noted that the project required a huge effort on their side, and that in the future they would hesitate to engage in a new project if it is for less than US$ 5 million\. at -Entry Rating : Quality -at- Moderately Satisfactory b\. Quality of supervision: The change of the Task Manager at Headquarters at an early stage of implementation and again toward the end of the project adversely affected the phase of implementation \. Nevertheless, efforts were made to intensively supervise the project and as government officials pointed out that Bank staff were responsive to their concerns and requests, and tried to address them expeditiously \. Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Satisfactory 9\. Assessment of Borrower Performance: a\. Government Performance: While staying the course on the reform program, government took time to approve measures and submit new legislation to parliament\. Some reforms took longer than expected due to technical reasons, such as the development of the National Beneficiaries Information System \. Others, such as procurement legislation, underwent various rounds of lengthy consultations \. On the other hand, implementation progress proceeded well in areas of strengthening pubic sector institutions and improving the environment for private sector activity\. Government Performance Rating Moderately Satisfactory b\. Implementing Agency Performance: The Project Coordination Unit (PCU) was part of the Reform Management Unit at the Ministry of Finance \. The PCU collaborated with the other agencies that were responsible for implementation as well as with the Steering Committee and the reform champions from the various ministries and departments \. The PCU also provided support to Bank supervision \. However, the departure of the first Project Coordinator who attended the Bank procurement training led to implementation delays \. In addition, implementation would have benefitted from an early preparation and adoption of the operations manual and procurement plan, as well as clear terms of reference for implementation \. Implementing Agency Performance Rating : Moderately Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10\. M&E Design, Implementation, & Utilization: a\. M&E Design: Design\. The design of the results framework was cumbersome \. The project development objective was one long general sentence that covered everything \. The outcome Indicators were also general and non -measurable (e\.g\., greater transparency and efficiency in public procurement )\. Several intermediate outcome indicators were also very general (e\.g\., design and implementation of modernization plans and reduction in the use of paper based customs declarations â?)\. Finally, some indicators that specified target values were ambitious \. For example, the specified targets for the social protection component asked for 100% compliance in hree social protection indicators, which was not realistic given that the project suggested beneficiary system is new \. b\. M&E Implementation: Several indicators that were not clearly defined and could not be tracked made implementation of monitoring difficult, and posed something of a challenge to evaluation \. In fact, the ICR noted that supervision missions and the ICR had a hard time identifying which outcome indicators needed to be monitored to assess progress in the program\. c\. M&E Utilization: The integration of the PCU in the Reform Management Unit at the Ministry of Finance is expected to help in completing the reforms which had not been finalized by the closing date as well as utilizing the Results Framework, despite limitations, to monitor progress \. M&E Quality Rating : Modest 11\. Other Issues a\. Safeguards: The project triggered none of the Bank's environmental and social safeguards \. b\. Fiduciary Compliance: A procurement supervision mission visited Dominica three months after the closing date and concluded that procurement under the project had been carried out in compliance with Bank's operational policies on procurement\. c\. Unintended Impacts (positive or negative): NA\. d\. Other: NA\. 12\. 12\. Ratings : ICR IEG Review Reason for Disagreement /Comments Outcome : Moderately Moderately Satisfactory Satisfactory Risk to Development Moderate Moderate Outcome : Bank Performance : Moderately Moderately Satisfactory Satisfactory Borrower Performance : Moderately Moderately Satisfactory Satisfactory Quality of ICR : Satisfactory NOTES: NOTES - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. - The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons: The ICR listed a number of narrow/project specific lessons and general application lessons, including the following (i) reform programs need to be kept simple and well focused so as not to diffuse Bank and Government efforts too broadly\. 14\. Assessment Recommended? Yes No 15\. Comments on Quality of ICR: The ICR provides adequate information and analysis of context and implementation of the reform program \. It also outlines the challenges faced by the reform effort \. The ICR did a good job of systematically assigning ratings for the achievement of targets for the performance indicators, but could have gone further in addressing higher level objectives to which the project contributes in areas such as energy reform \. There are a number of instances, where the ICRR document could have benefited from editing \. a\.Quality of ICR Rating : Satisfactory	REVIEW
P004399	Document of The World Bank FOR OFFICIAL USE ONLY Report No: 25704 IMPLEMENTATION COMPLETION REPORT (CPL-35910) ON A LOAN IN THE AMOUNT OF US$32\.7 MILLION TO PAPUA NEW GUINEA FOR A POPULATION AND FAMILY PLANNING PROJECT June 20, 2003 Human Development Sector Unit East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties\. Its contents may not otherwise be disclosed without World Bank authorization\. CURRENCY EQUIVALENTS (Exchange Rate Effective As of April 3, 2003) Currency Unit = Kina (PGK) PGK 0\.272 = US$ 1\.00 US$ 1\.00 = PGK 8\.89 FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AMS Area Medical Store AusAid Australian Agency for International Development CHC Community Health Clinics DHS Demographic and Health Survey DOFP Department of Finance and Planning GOVPNG Government of Papua New Guinea MCH Maternal and Child Health MCTA Managing Contractor NDOH National Department of Health NEC National Executive Council NGO Non-Government Organization NPC National Population Council NPO National Planning Office PFPP Population and Family Planning PHRB Population and Human Resources PIU Project Implementation Unit PNG Papua New Guinea PNGFPA Papua New Guinea Family Planning Association PCG Population Coordinating Group PPU Population Planning Unit PPU Population Policy Unit SAR Staff Appraisal Report STD Sexually Transmitted Disease SWAP Sector Wide Approach UNFPA United Nations Population Fund Vice President: Jemal-ud-din Kassum (EAPVP) Country Director: Xian Zhu (EACNF) Sector Director: Emmanuel Jimenez (EASHD) Task Team Leader: Janet Nassim (HDNHE) PAPUA NEW GUINEA PG-POPULATION PROJECT CONTENTS Page No\. 1\. Project Data 1 2\. Principal Performance Ratings 1 3\. Assessment of Development Objective and Design, and of Quality at Entry 2 4\. Achievement of Objective and Outputs 4 5\. Major Factors Affecting Implementation and Outcome 8 6\. Sustainability 10 7\. Bank and Borrower Performance 11 8\. Lessons Learned 14 9\. Partner Comments 14 10\. Additional Information 16 Annex 1\. Key Performance Indicators/Log Frame Matrix 17 Annex 2\. Project Costs and Financing 18 Annex 3\. Economic Costs and Benefits 21 Annex 4\. Bank Inputs 22 Annex 5\. Ratings for Achievement of Objectives/Outputs of Components 25 Annex 6\. Ratings of Bank and Borrower Performance 26 Annex 7\. List of Supporting Documents 27 Project ID: P004399 Project Name: PG-POPULATION PROJECT Team Leader: Janet Nassim TL Unit: HDNHE ICR Type: Core ICR Report Date: June 20, 2003 1\. Project Data Name: PG-POPULATION PROJECT L/C/TF Number: CPL-35910 Country/Department: PAPUA NEW GUINEA Region: East Asia and Pacific Region Sector/subsector: Health (97%); Central government administration (3%) Theme: Population and reproductive health (P); Civic engagement, participation and community driven development (P); Fighting communicable diseases (S) KEY DATES Original Revised/Actual PCD: 09/30/1991 Effective: 09/29/1993 12/22/1993 Appraisal: 04/07/1992 MTR: 11/03/1996 11/03/1996 Approval: 04/13/1993 Closing: 06/30/1999 09/30/2002 Borrower/Implementing Agency: GOVT OF PNG/DEPT OF HEALTH Other Partners: AusAID and ADB STAFF Current At Appraisal Vice President: Jemal-ud-din-Kassum Gautam Kaji Country Director: Klaus Rohland Marianne Haug Sector Manager: Emmanuel Jimenez Clifford Gilpin Team Leader at ICR: Janet Nassim Michael Porter ICR Primary Author(s): Elizabeth Wiley; Christopher James Smith; Janet Nassim 2\. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome:S Sustainability:UN Institutional Development Impact:M Bank Performance:S Borrower Performance:S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3\. Assessment of Development Objective and Design, and of Quality at Entry 3\.1 Original Objective: The key objective of the Population and Family Planning Project (PFPP) was to help the Government implement its population policy announced, after more than a decade of politically sensitive deliberations, in March 1991\. To achieve this goal the project was designed to create the capacity to bring the rate of population growth into balance with the country's potential for socio-economic development and, in particular, human resources development, and to improve the health of mothers and children through greater use of family planning\. The more specific objectives were to: (i) develop the institutional capacity to foster and manage a comprehensive population program; (ii) deliver effective family planning services; (iii) generate a greater demand for family planning; and (iv), mobilize public awareness and support for the program through government and non-government channels\. These objectives reflected essential priorities for population strategies in Papua New Guinea\. They were consistent with government planning and needs delineated in an ESW, which prioritized population as one of its principal recommendations\. This innovative and relatively complex project was to be implemented through institutions that had limited capacity\. The political and financial infrastructure needed for such a large project was not necessarily available\. However, commitment by all donors and the government of Papua New Guinea (GOV PNG) was seen to be a mitigating factor that would lead PNG to the full implementation of a national family planning program\. It is important to highlight a key feature of the project\. This project was designed as a multi-donor project including the World Bank, Australian Agency for International Development (AusAID), and Asian Development Bank (ADB)\. Created as an early Sector Wide Approach, the project, however, was designed like a parallel co-financing project, an issue that complicated its implementation\. The project was an important innovative step in providing needed support to a relatively sensitive area in a coordinated manner\. The original objectives of the project remained unchanged during implementation\. In addition to its original goal the project also provided a platform for addressing an emerging priority concern with Sexually Transmitted Diseases (STDs) and particularly HIV\. 3\.2 Revised Objective: Not applicable\. 3\.3 Original Components: Component 1: Family Planning Service Delivery: US$ 14\.5 million Total (US$ 3\.7 million Bank-funded)\. The first category, family planning, included: (a) upgrading of selected health facilities to provide effective family planning services; (b) operational support for fixed facility and outreach services including supervision and monitoring; (c) training in clinical and communication skills both in-country and externally; and (d) incremental staffing to enhance program management and supervision capacity\. Component 2: Program Support: US$ 18\.2 million Total (US$ 3\.2 million Bank-funded)\. The second group of activities were designed to build long-term capacity for the population program and included: (a) supply and distribution of contraceptives and related drugs; (b) training, technical assistance and financial support for Non-Government Organizations (NGOs); (c) development of a health and family planning promotion unit; (d) a sample national demographic survey and piloting of a provincial data system; (e) operational and behavioral research and research training; and (f) program management\. - 2 - The project design called for each of the components to be financed by different combinations of the three donors and the government\. The Bank's inputs for Component 1 were comprised primarily of civil works (US$ 2\.96 million or 80 percent of the total Bank inputs for this component), with other inputs being: consultant services (US$ 0\.33 million or 9 percent), training (US$ 0\.22 million or 6 percent), and equipment (US$ 0\.19 million or 5 percent)\. For Component 2, the Bank's financial inputs were comprised primarily of contraceptives and drugs (40 percent of the total Bank inputs for this component), as well as civil works (24 percent), consultant services (20 percent), equipment (5 percent), studies (9 percent), and training (2 percent)\. AusAID provided a majority of the funding for technical assistance\. The remaining portions of the components were financed by AusAID, ADB and the government\. The design of both components was clearly linked to the objectives listed above\. The loan focused on health and population priorities for the country, providing needed support in the areas of infrastructure, capacity building, technical assistance, pharmaceuticals, program management and research\. Both of the components drew on in-country capacity, from utilizing NGOs working in the field to capacity building for current staff, while also supplementing those areas by providing a stronger framework for population policy and programming\. 3\.4 Revised Components: The project had several extensions\. In June 1999, the closing date was extended to December 1999\. The next extension was done in 2 stages\. The first stage was a three month extension from December 1999 to March 31, 2000, to enable completion of the plan of action needed (pre-condition) for a subsequent extension\. Upon receipt of a revised action plan acceptable to the Bank, the second stage of the extension was presented and the project was then extended from March 31, 2000 to March 31, 2002\. This extension enabled delayed construction in the original six provinces to be completed and the expansion of the scope of the project to activities with the objectives of the project to six additional provinces\. At the Government's request the project was further extended in March 2002 for 6 months to September 2002 to enable construction in and equipment of a few remaining facilites to be completed as well as to enable pharmaceutical and contraceptive purchases to be finalized\. During each extension the project objectives remained unchanged as did components eligible for financing, which were construction of CHCs and MHCs, and the provision of STD drugs and pharmaceuticals, however the scope of the project was expanded from six, to include twelve of PNG's fourteen provinces, in second extension period\. 3\.5 Quality at Entry: Quality at Entry is rated Satisfactory\. The SAR documented the project and its background well, and the work program was clearly relevant to the needs of the country\. As stated above, the project was aligned with the ESW, Management, Manpower, Money: A Select Review of Health and Population in Papua New Guinea, which prioritized population as one of the country's main concerns\. The project responded to the broader needs of the country as well; including employment, poverty and geographic distribution of the population, and, more specifically, health indicators such as the extremely high maternal mortality rate, and the growing population\. The multi-donor design was innovative, but it also contributed to the complexity of the project\. Essentially there were three aspects of the multi-donor design that deserve discussion: (a) design of the project, (b) how the donors worked together and (c) financing\. In reference to design (a), the project was rather complex\. For example, there were thirteen Government agencies involved in implementation and three funding sources; the World Bank, the Asian Development Bank and AusAID\. The principal Government implementing agencies were: the NDOH (National Department of Health) for the ADB-financed components financed and NDOH and DOFP (Department of Finance and Planning) for the components financed by AusAID and the World Bank\. The way in which the donors worked together (b), however, was - 3 - much more positive\. There were joint missions and even after the formal close of the AusAID and ADB projects, the donors worked together during the implementation of World Bank extension\. Coordination of the donor reports could have been improved\. In reference to financing (c), many assumptions were made in the project design concerning flow of resources and connections between each funding agency and the government\. In reality, these assumptions did not always come to fruition\. The degree of coordination required and the different approaches adopted by bilateral and multilateral agencies appear to have been under-estimated during design\. One of the most positive aspects of the mulit-donor strategy was the fact that it responded directly to the needs of the government, which requested that the Bank work with other donors as it felt it did not have the capacity to easily deal with fragmented efforts by a number of donors\. Major risks of the project were candidly presented in the Loan and Project Summary of the SAR\. Key concerns included the government's implementation capacity, supply of contraceptives, the possibility of further decentralization within the GOVPNG, and the ability of the GOVPNG to provide the resources that were outlined in the proposal (which amounted to $9 million, a 27 percent share of total financing)\. The capacity of the health system at the time was also of concern\. Reform was needed, and the question remains whether or not this type of project should have been created with such limited capacity\. While the project design took steps to address these issues, there were things that could not be foreseen at the time of project preparation: (i) the severity of the economic crisis, (ii) the severe depreciation of the Kina, (iii) the extent and impact of Government's overall worsening financial position; (iv) and the extensive further decentralization which took place in 1995 with the enactment of the Organic Law on Provincial, and Local Level Government which fractured the bureaucratic relationship between National line agencies such of NDOH and provincial and local level Governments\. The project team took great care to involve and get the endorsement of those on the ground (such as the NGOs) and to mitigate challenges associated with the sensitivity of the topic\. For example, other organizations, such as the Council of Churches endorsed the population planning policy, and even the title was thoroughly considered and discussed\. Similar to other projects during this time period, the SAR did not specify clear output or outcome indicators\. Additionally, although a major milestone to create a family planning policy, the type of family planning approach that was used was very traditional\. A more extensive debate as to the relevance of the approach (i\.e\., semi-vertical family planning program versus a more integrated model) and other options might have better served the country and the project\. In summary, considering the state of the economy at the inception of the project and the level of commitment of donors and Government, the inputs and design seem to have been appropriate, although ambitious\. 4\. Achievement of Objective and Outputs 4\.1 Outcome/achievement of objective: Overall achievement of objectives and outputs under the project was Satisfactory\. The key project objective to help the Government implement its population policy announced in March 1991 was satisfactorily achieved\. The project, although having faced a great number of challenges, was at least marginally able to create capacity and improve the health of women and children in PNG\. The plan for the project was that it would contribute to a second externally-funded family planning and population - 4 - program within the country\. At the end of the project, the government implemented a population policy, although without the use of external funding\. PNG Government also extended its implementation of a sector wide approach (SWAP) to donor support in the health sector near the end of the project, creating a strategic implementation plan\. These were both major steps that contributed to the capacity of the government to institutionalize family planning activities and to collectively address emerging health issues (e\.g\., AIDS)\. It is difficult to determine precisely to what extent the project was able to bring the rate of population growth into balance with the country's potential for socio-economic development and, in particular, human resources development\. In 1997, outcome and output indicators were retrofitted to the project, at the suggestion of the World Bank\. The outcome indicators are outlined in Annex 1\. As is often the case, the national survey data show less positive results than do other sources\. In review of these outcomes, other considerations must be taken into account: the degree of economic instability during the financial crisis, the challenges inherent in partnering with other donors, and the lack of data available in the country for baseline and current estimates\. It should also be noted that changes in some of the outcome indicators, such as infant and maternal mortality, take many years to occur\. Therefore, at the current time, it is difficult to tell to what extent the program had long-term impact\. It should also be noted here that the demographic survey completed in 1996 was particularly successful\. Not only did it provide some baseline data, it also provided critical input for policy and program development\. A follow-up evaluation in 2006 when data is available from the next Demographic and Health Survey (DHS) that could be compared to the 1996 DHS would seem appropriate\. In spite of all the implementation problems encountered throughout the project period and the need for a longer time before evaluation of indicators is useful, early qualitative data from the health information system in the NDOH indicated some positive results\. Furthermore, it is believed that the impact of the project was felt nearly exclusively by the poor and that general awareness concerning family planning was increased\. 4\.2 Outputs by components: One major element that should be considered when reviewing this project and the outputs is the capacity of the health system in general\. As discussed in the quality at entry section (3\.5), the overall design of the project has to be seen in the light of the health system at the time, which was in need of reform\. Output indicators were established retroactively covering both components of the project\. The retroactive output indicators that were fitted to the project, however, are not reported in this document\. Reliable baseline and post-project data were not available, and not all of the indicators related directly to the World Bank\. Therefore, the following information relating specifically to the Bank-funded components was utilized to evaluate the outputs of this project\. Component 1: Family Planning Service Delivery Although some elements were problematic during implementation, notably procurement and construction delays and turnover of staff, by project close performance in this component was Satisfactory\. The family planning service delivery component included the following elements: (a) upgrading of selected health facilities to provide effective family planning services; (b) operational support for fixed facility and outreach services including supervision and monitoring; (c) training in clinical and communication skills both in-country and externally; and (d) incremental staffing to enhance program management and supervision capacity\. For this part of the project, the Bank's inputs were comprised primarily of civil - 5 - works (US$ 2\.96 million or 80 percent of the total Bank inputs for this component), with other inputs being: consultant services (US$ 0\.33 million or 9 percent), training (US$ 0\.22 million or 6 percent), and equipment (US$ 0\.19 million or 5 percent)\. Overall, the completion of the major elements of the component (such as civil works, training, and capacity building) were successful, although implementation was problematic in the context of the difficulties associated with high staff turnover, financial instability and political and social unrest\. The project was extended several times, initially to address implementation delays and later for the government to extend the provision of community health clinics (CHCs) and maternity health clinics (MHCs) into six provinces that were not originally part of the plan\. At inception the project aimed to upgrade an existing 56 health facilities in six provinces\. Although significantly delayed, by project close 51 (91 percent) of these facilities had been completed and of these 43 (84 percent) were in regular use\. The five sites where construction or renovation was not undertaken were cancelled during the project due to technical difficulties associated with the sites, such as drainage and flooding, or social unrest in the region\. Further continuing social unrest, particularly in the Southern and Western Highlands is the main reason the utilization rate of completed facilities was 84 percent at the time of the ICR\. The extension of the project allowed additional work to be undertaken at these sites in the initial six provinces, adding bathroom and toilet facilities at each of the 51 sites\. The expansion into six new provinces aimed to expand the network of MHC and CHCs into remote areas through the construction of 24 prefabricated facilities\. Of these 20 (83 percent) were completed and functional within two months of work commencing on the site\. They were completed within budget and at the close of the project greater than 80 percent were in full regular use, while the remaining 20 percent are partially operational and excepted to be fully operational in June 2003 after the arrival of additional furniture\. This result is a significant achievement, particularly given the remoteness of many of the sites, and is evidence that lessons learnt from experience with civil works in the original six provinces were applied successfully\. Of the remaining four facilities in Enga Province, two were completed within months of project close (May 2003) and two will be completed by June 2003\. These contracts are being financed by the Government\. Thus by project close, the number of completed civil works projects for this component exceeded the number planned at inception by 20 percent (71 completed facilities as opposed to the 56 envisaged), and expanded community health and maternal health services to twelve provinces as opposed to the six originally envisaged, with the majority of facilities being well-utilized\. In addition, AusAID, in their completion report for the project, notes that the training elements of the project were particularly successful, augmenting the long-term effects of the program\. AusAID reports a baseline figure of 23 percent of field staff having any familiarity with modern contraceptive methods in the early years of the project rising to 76 percent by late-1997 and near 100 percent by project close\. Component 2: Program Support This component was marginally Satisfactory\. This second group of activities was designed to build long-term capacity for the population program and included: (a) supply and distribution of contraceptives and related drugs; (b) training, technical assistance and financial support for NGOs; (c) development of a health and family planning promotion unit; (d) a sample national demographic survey and piloting of a provincial data system; (e) operational and - 6 - behavioral research and research training; and (f) program management\. For this part of the project, the Bank's financial inputs were comprised primarily of contraceptives and drugs (40 percent of the total Bank inputs for this component), as well as civil works (24 percent), consultant services (20 percent), equipment (5 percent), studies (9 percent), and training (2 percent)\. Overall this component completed most of the planned activities\. Contraceptives and other drugs were provided and support was given to NGOs\. The demographic survey completed through this component in 1996 was particularly successful\. It filled not only a need for accurate demographic data on the country, but it also provided a database for future initiatives in this area\. The government is now planning a second DHS, to follow 5 years after the 2000 census and 10 years after the initial DHS\. The health promotion part of the project, however, took a very long time to implement\. Furthermore health promotion activities were implemented at the national-level rather than provincial-level as originally planned\. This was partly due to the relatively low capacity at the provincial level and social unrest in the provinces\. Pharmaceuticals and contraceptive supplies caused some of the most pronounced and often mentioned problems\. Stock-outs of pharmaceuticals were common; some were found to be beyond their expiration dates\. The bidding process in the first procurement of pharmaceutical and contraceptives was found not to be compliant with World Bank procurement guidelines and the Government financed the contracts from its own resources\. Although measures were taken to improve the situation, procurement issues continued throughout the project\. Additionally, the World Bank also funded a portion of the studies that were completed\. Although the quality and relevance of the reports varied widely, the better materials significantly increased the stock of research data providing important contributions to the systematic study of population issues among various cultural groups in PNG, for which research data had been scarce\. Bank funds went to support civil works, training, consultant services, and equipment, as well\. The civil works and training, as discussed in the description of the first component above, were largely successful, although they took much longer than originally planned\. The procurement of consultants, at times, was a source of delays\. The time needed for the recruitment of consultants postponed the initiation of key project activities and delayed the effectiveness of the WB and ADB loans\. One aspect of the project that was a challenge for the Bank's implementation relates to the fact that AusAID provided a majority of the funding for technical assistance\. This, at times, hindered coordination of some activities due to different timetables and/or incentives\. Efforts were made from all those involved to minimize such risks\. 4\.3 Net Present Value/Economic rate of return: Not applicable to this project\. 4\.4 Financial rate of return: Not applicable to this project\. 4\.5 Institutional development impact: The institutional development impact of the project is rated as Modest\. The original design of the project, to serve as the first phase of a medium-term externally-funded assistance - 7 - strategy, was not fully realized\. However, the Government of PNG did decide to implement a population policy (National Population Policy 2000 2010) at the end of the project without the use of external funding\. Additionally, in 2002, after many iterations of the unit, a Population Coordinating Group comprised of ten technical officers was formed to provide the secretariat role to the NPC and coordinate the UNFPA-funded Population Policy and Development Project\. The formulation of the policy and the continuance of the population unit indicate tangible institutional changes\. The factors which most constrained institutional impact were the frequency of departmental and ministerial restructures, restructured decentralization, and continual changes in provincial administrations during the life of the project\. A direct consequence of this frequent restructuring and changes in provincial administrators was a high turnover of key staff which affected continuity in implementation and was further aggravated by the introduction of inexperienced staff who had very limited understanding and no institutional memory of the project\. However, during the life of the project, human and financial resources were, at times, well utilized, contributing to the institutional development impact, and AusAID, in their completion report, notes that the training elements of the project were particularly successful, augmenting the long-term effects of the program\. The involvement of providers at the local, district and provincial levels should further enhance the development impact of the project\. 5\. Major Factors Affecting Implementation and Outcome 5\.1 Factors outside the control of government or implementing agency: A number of outside factors severely affected the implementation of the project, most notably macroeconomic issues, the regional financial crisis and revised decentralization arrangements after 1995\. Additionally, due to civil unrest in some parts of the country, some of the civil works were carried out at a slower pace than expected\. 5\.2 Factors generally subject to government control: Disbursement and procurement posed a number of challenges for both the government and the implementing agencies\. For example, the project came to a virtual standstill in the mid-1990s when the government froze funds\. In addition, internal Government approval processes, especially for funding approvals and for procurement approvals through the Central Tender Board, were protracted and caused implementation delays\. Contracting issues were also of concern, as the process of finalizing contracts often took longer than expected\. Lack of adequate infrastructure (deteriorating roads) impacted the project's ability to complete all of the civil works components in a timely manner\. However, while it would appear reasonable to consider that this should have been partly expected and planned for during project implementation, the rapid deteriation in rural road infrastructure experienced since decentralization in 1995 and the the fiscal crisis has been unprecedented\. Decentralization of the government during the implementation of the project and a structural adjustment program that was instituted during the project posed some issues for implementation\. During the life of the project the Government approved the Medium Term Development Strategy 1997 2002 which meant a shift in the allocation of Government resources and hence had implications on the Government's ability to meet its counterpart requirements under the project\. The new Organic Law on Provincial and local-level Governments was also enacted which specified the transfer of key functions from the national level to the provinces\. Both of these reforms resulted in redirecting energy and time into reorganization and downsizing\. - 8 - There was also a delay in project implementation due to time lags in getting Cabinet approval and authorization for the project\. 5\.3 Factors generally subject to implementing agency control: As stated in Section 5\.2, disbursement and procurement posed a number of challenges for both the government and the implementing agencies\. Later in the project delays in disbursement were experienced because of the slow implementation of project activities and delays in submitting withdrawal applications for expenditures already made\. Withdrawal applications, at times stalled in the PIU in NDOH, were not processed on a timely basis and in some cases not processed accurately\. In addition, there were problems with the special accounts that were set up due to government regulations and therefore, the Bank and the other donors had to set up special Trust Accounts to facilitate the flow of funds\. Capacity of the implementing agency, including management and staff issues, were a major concern\. Management problems should be seen in the light of reductions and alterations in the civil service, limited financial resources, and frequent departmental and ministry restructures however in general it is clear that for most of the life of the project there were not enough project staff members available and often, the staff that were available were inexperienced\. Notations as to how project preparation was slower than expected due to loss of staff in the PIU or how capacity building had been upset due to staff turnover are cited throughout the project documentation\. In 1995, UNFPA offered to fund two staff members, but the offer was declined\. This concern was also echoed in frequent observations of poor coordination and fragmentation of management responsibilities of project components\. The lack of a counterpart in the NDOH was considered a constraining factor for the project and decreased the ability to optimally transfer skills\. Appropriate counterparts could have enhanced the momentum and sustainability of the project, while also providing continuity for the donors and the government\. 5\.4 Costs and financing: The changes in financing reflect, mainly, the financial crisis, the devaluation of the Kina and delays in initial implementation due to macro constraints\. The 1994 crisis seriously delayed project and budget activities within the country\. The Government of PNG requested that the Bank expand project activities to cover additional provinces\. Other than the main financial crisis, two main issues were (1) funding arrangements between the donors and (2) lack of capacity within the government\. The key problems underlying the funding arrangements between the donors were associated with fund-channeling and the trade-off between implementing the project on time or taking a longer time while building government capacity\. Although continuing implementation of project activities was a good option, it was less than optimal for dealing with public sector expenditure management issues\. It also meant that full coordination of various activities funded through grants, loans and from government was not achieved\. AusAID was able to negotiate a trust fund arrangement with the Government of PNG through the Managing Contractor (MCTA) to continue project implementation during the worst of the crisis\. Because of its perceived effectiveness, this arrangement continued to the end of the project\. ADB defined the problems in the following manner: "Loan effectiveness has been substantially delayed by the non-execution of the AusAID MOU and extensive conditions of loan effectiveness requested by the World Bank, because of cross-effectivity requirements included in the loan agreement\. In addition, the lack - 9 - of Government counterpart funds due to the economic crisis that hit the country in 1994-1995 resulted in additional delays in starting implementation of the loan-funded components\. Only the components funded by a grant from AusAID were implemented on schedule\." However, it should be noted that AusAID components were implemented by an outside contractor and not by the Government\. In reference to other donor issues, the fact that the AusAID and ADB components ended before the World Bank component created some challenges\. As stated, in May 2000, the World Bank project was extended to 30 September, 2002\. The project objectives remained unchanged as did components eligible for financing, but the scope of the project was expanded from six, to include twelve of PNG's fourteen provinces\. During the extension of March 2000, the World Bank agreed to increase the financing ratio for STD drugs and pharmaceuticals from 26% to 100%\. Due to slower than expected implementation, actual disbursements were lower than the yearly disbursements projections\. Many of the other issues highlighted elsewhere in this document (civil unrest and complexity of the project design) also contributed to slowing the process of disbursement\. Disbursement became more pronounced as project implementation began to accelerate and the increasing number of project activities was not matched with the capacity to generate accurate and complete withdrawal applications from the ADB and the WB loans\. This resulted in cash flow problems and tied up needed foreign exchange\. Unfamiliarity with procurement and disbursement arrangements under the loans caused delays\. There were constant problems with bidding and procurement associated with pharmaceuticals\. The Area Medical Stores (AMS), due to inadequate infrastructure, were unable to handle peak shipments\. 6\. Sustainability 6\.1 Rationale for sustainability rating: The project's sustainability is rated as Unlikely\. As stated, the original design of the project, to serve as the first phase of a medium-term assistance strategy, was not fully realized, although the Government of PNG decided to implement a population policy at the end of the project without the use of external funding\. There were significant concerns about staffing and technical resources (such as the need for computer applications for the pharmaceutical component, staff turnover, inexperience, etc\.)\. Particularly, when the Population Policy Unit (PPU) was dismantled in 2000, concerns were raised about the ability of the government to sustain a program without a secretariat to follow up on the National Population Council's (NPC) recommendation\. However in 2002 a Population Coordinating Group, (PCG) comprised of ten technical officers was formed to provide the secretariat role to the NPC and coordinate the UNFPA-funded Population Policy and Development Project\. The rationale for the unsatisfactory rating revolves around the above-mentioned issues, as well as the fact that financing remains a concern; data on the utilization of CHCs and MHCs is ad hoc and incomplete due to social unrest in Southern and Western Highlands; and regular communication with remote provinces is problematic\. Additionally, the need for health system reform becomes evident\. Without major changes that will strengthen service delivery, a program such as this will not be easily sustainable\. Hence, sustainability will require actions that go beyond the scope of this project\. - 10 - 6\.2 Transition arrangement to regular operations: As the project activities were integrated into the regular operation of the department, the need for special transition arrangements was not high\. In the short-term, the project's achievements and sustainability will be improved through sustaining, at a minimum: o retention of service providers o field supervision o periodic training o adequate supply of contraceptives and STD drugs o maintenance of health facilities o promotional and educational materials at facilities and community levels o firm political and organizational commitment o adequate budgetary support\. Most importantly, the government needs to ensure that health services, of which reproductive health is a part, are reaching the target populations\. 7\. Bank and Borrower Performance Bank 7\.1 Lending: Bank lending is rated as Satisfactory\. As the project was well-aligned with the SAR and other ESW that were performed before the beginning of the project, the Bank's theoretical alignment in identification and appraisal of the mission is considered appropriate\. Additionally, the Bank led the project in response to the government's request\. The design, however, is of more concern as discussed in Section 3\.5, as the project was a bit complex and donor interactions were not well-defined\. A better recognition of the project's risks and key variables could have added value to the outcomes and impact of the project\. The World Bank recognized and addressed most of these issues; however better controls for project management and the identification of key counterparts would have enhanced the performance of each stakeholder as well as the flow of the overall project\. The quality and quantity of World Bank staff working on this project were also relevant\. On almost every mission, there were a number of people representing a range of expertise\. The World Bank worked to supplement the skills provided by the other donors\. Financially, the amount of lending seemed to be appropriate\. More would have been disbursed without an extension had there not been a devaluation of the Kina\. Additionally, the amount set forth by the World Bank for this project was correctly estimated as under $10 million from some of the earliest project documents\. It should also be noted that loan effectiveness conditions took some time for the government to comply with, and in fact the Bank waived part of the employment of consultants conditions\. 7\.2 Supervision: The Bank's supervision is rated as Satisfactory\. - 11 - The major consideration in supervision of the project was that the Bank led this very difficult project through to completion\. Although the funding from the government was not always available and as there were numerous challenges, the Bank made some important and major decisions, such as not to close the project\. Closing the project would have only affected the poor by leaving them with unfinished clinics and unusable supplies of drugs and contraceptives\. Donor coordination was a constant challenge, but managed successfully\. Considering the complexity of the project, there were some major strongholds within the multi-donor system\. Great attention was paid to each of the other's components\. For example the World Bank provided numerous inputs on the DHS, even though this was not funded through the Bank and project coordination was assisted by ADB and AusAID even after the end of their formal commitments to the PFPP\. Additionally, flexibility between the partners was an asset\. In one instance, ADB allowed for more flexibility in the use of their undisbursed funds which allowed financing of items in the health sector which otherwise would have been starved for funds (pharmaceuticals and a few clinics)\. Quality of supervision of the project appears to have varied throughout the life of the project\. Generally, implementation progress and problems were well documented\. The performance ratings given in the PSRs were also well documented and realistic and reflect the changing circumstances of the country\. An increased frequency of missions might have alleviated some of the challenges\. Almost every implementation year (except for two), had at least two missions, as was designated in the project design\. It appears however, the GOV PNG wanted, and may have been better served by more frequent missions\. In practice, the intervals between missions at times were too long and, as it was stated in the project documents, three missions a year might have been a better fit with the needs of PNG\. It should also be noted that the Bank's office that was opened during the life of the project was very thinly staffed and could not provide much support to the implementing agency\. Had there been stronger implementation support, this could have helped\. 7\.3 Overall Bank performance: Taking into account the ratings given to the Bank's lending and supervision performance, overall Bank performance is rated as Satisfactory\. Borrower 7\.4 Preparation: Borrower's performance at preparation is rated as Satisfactory\. At the time of the preparation of the project, it was duly noted that the infrastructure and capacity of the PNG Government was not great\. However, at this time, government commitment was high, as population was known to be a challenge to economic growth and social welfare\. The commitment of the Government of PNG was shown in that early recommendations relating to population made in the sector report were quickly adopted by the Government; there was strong provincial level support; and the PNG Government took a strong role in the establishment and structure of the NPC\. In March of 1991, the adoption of the national population policy by the National Executive Council (NEC) was a major development and placed the issue on the national agenda\. This commitment, however, was diminished when, during one of the preliminary missions, the Department of Finance and Planning did not provide the strong endorsement of the project that was expected\. Additionally, there was turnover in project staff at all levels and the project had a delay in start-up because of lack of counterpart funds\. Although these were significant problems, they should be seen in the light of the country capacity and context\. - 12 - In summary, the Government of PNG responded satisfactorily to the project, although more could have been accomplished\. 7\.5 Government implementation performance: The performance of the government during implementation is considered Satisfactory\. Although political commitment has been noted to have been high at preparation, it was variable throughout the implementation period, although on balance, they were supportive\. In several Bank supervision mission reports, political commitment was noted as a high risk\. But this was not true throughout the majority of the project\. For example, in requesting an extension of the project the Government indicated commitment and belief in the project as evidenced by requesting an expanded scope with additional civil works to bring the perceived benefits of the project to another six Provinces\. Additionally, the Health Promotion component was extended on the basis of a detailed work plan with specified outputs prepared by the Government\. 7\.6 Implementing Agency: The performance of the implementing agency during implementation is considered Unsatisfactory\. One of the largest challenges facing the implementing agency throughout the project was the deployment and maintenance of appropriate staffing levels\. In general, it is stated throughout the project documents that project staff struggled with declining direction, leadership, and motivation\. For example, in the construction of the civil works, a major problem was low morale among staff leading to lack of supervision\. Along these same lines, job insecurity led some staff to accept job offers outside the Department; and in 1999 the PIU of the NDOH was restructured leaving only one effective staff member\. The limited capacity of the NDOH was also stressed by its own restructuring with expected reductions in civil service posts\. The PPU in the NPO (National Planning Office) in Treasury was also consistently understaffed during the project implementation period\. To add to this, there were problems with the appointment and retention of national counterparts\. Another underlying issue is the variable capacities and political commitment between provinces, specifically for reproductive health and generally for human and social development\. Procurement and disbursement issues were also significant challenges for the implementing agency, at times\. Unfamiliarity with procurement arrangements, lack of experience and inadequate support and supervision and seemingly constant problems with bidding and procurement associated with pharmaceuticals slowed both of the components of the project\. In addition, the medical equipment procured through national/international shopping exceeded the permissible ceiling in the Loan Agreement, and ceiling limits on cost of proposed civil works were exceeded for force account (day labor) and selective tendering\. 7\.7 Overall Borrower performance: The overall performance of the borrower is considered marginally Satisfactory\. This project was identified as a problem project by the Government and by senior management at the World Bank\. Although there was discussion as to whether or not it should be closed; it was felt by all that it was a worthwhile project that would only hurt the poor if not completed\. By the end of the project, even with the many challenges, significant progress was made due to effort on the part of the Government; flexibility, cooperation, and commitment among donors; easing of some of the factors in the project environment (the financial crisis); and intensive follow-up to recommendations of joint donor missions\. For - 13 - this reason, and as the project achieved many of its original objectives, the overall performance of the borrower is considered Satisfactory\. 8\. Lessons Learned Most of the lessons learned from this project would be relevant for a number of other projects and sectors within the Bank, as Bank operations are constantly moving in the direction of partnerships and SWAP\. These lessons were delineated by Bank staff, AusAID and ADB\. Particularly: Project Design o Indicators are important to assess progress at all levels o Need to pay special attention to institutional capacity issues to ensure smooth implementation\. o Coordination of multi-funding agencies § Moremanageableforgovernmentthanseparateprojects § Clearprinciplesfordonorcoordinationneedtobeestablishedatonset § Harmonizationoffundchanneling,procurement,andreportingarrangementswouldhelpalot, especially in places of limited capacities § Poolingofvariousfundsforsomeprojectscansimplifyimplementation\. o Project design should allow the flexibility to adapt to changing circumstances economic, financial, social context (restructuring) o The capacity of the government to provide adequate counterpart funding needs to be assured and realistic "disbursement ratios" are vital\. Project Implementation o Need for capacity building across all involved government agencies example of Ministry of Works design, procurement, supervision/monitoring and evaluation capacity o Private sector tendering for construction (and design / supervision) appears more efficient and cost effective o Government financial management needs to be streamlined especially the approval process and delegation of signing authority to minimize delays in project payments o The availability and continuity of appropriate counterpart staff is critical to the success of a project and lack of availability and continuity of counterpart staff is a significant contributor to the poor performance of projects o Simplified procurement arrangements and adequate supervision of contractors and consultants are important for effective implementation\. 9\. Partner Comments (a) Borrower/implementing agency: In summary, while generally satisfied with the implementation and outcomes of the project, the design was perhaps overly complex and coordination during implementation was difficult because of the many stakeholders\. The NDOH (National Department of Health) for the ADB-financed components and the NDOH and the Department of Finance and Planning, (DOFP), for the components financed by AusAID and the World Bank were the principal implementing agencies, but in total, across the nation, there were thirteen implementing agencies\. On one hand it helped to have a single project that broadly addressed health issues within the framework of a national health policy, but the project never realized a fully-coordinated approach\. For example to maximize the benefits of a project involving multi-donors there needs to be capacity building to familiarize government staff with donor expectations and agreement across all parties on implementation issues, for example, standardization of reporting formats, (especially - 14 - implementation progress and financial reporting)\. The different donors closed their support to the project at different times, AusAid in 1997, Asian Development Bank in 1998 and the World Bank in 2002\. The variable closing/completion dates were an added complexity that was not foreseen at the beginning of the project\. To a large extent implementation and coordination difficulties were compounded by frequent institutional restructures\. The Population Planning Unit (PPU) was created within the Department of National Planning as the overall project coordinating unit and was also the secretariat of the National Population Council, (NPC)\. In a first restructure the unit was amalgamated into an expanded Population and Human Resources Branch (PHRB) under the Sectoral Planning Division\. The limited resources of the PPU were directed away from project coordination in 1998 and 1999 towards formulation of the National Population Policy 2000-2010\. In 2000 another restructure reduced the PHRB to a single position of Senior Planner\. This had tremendous, (negative), consequences for the secretariat role to the NPC and to the project coordination\. In 2002 a Population Coordinating Group comprised of ten technical officers was formed to provide the secretariat role to the NPC and coordinate the UNFPA-funded Population Policy and Development Project\. A direct consequence of these frequent restructures was a high turnover of key staff which affected continuity in implementation and was further aggravated by the introduction of inexperienced staff who had very limited understanding and no institutional memory of the project\. There was no flexibility in the project to reflect changes in Government policy and major reforms\. During the life of the project the Government approved the Medium Term Development Strategy 19972002 which specified the expenditure priorities of Government as basic education, primary health, maintenance of transport infrastructure, and law and order\. This meant a shift in the allocation of Government resources and hence had implications on the Government's ability to meet its counterpart requirements under the project\. The new Organic Law on Provincial and local-level Governments was also enacted which specified the transfer of key functions from the national level to the provinces\. The design and structure of the project did not accommodate well these changing priorities and changed political landscape\. Also the project was designed before the economic crisis and the devaluation of the Kina and project implementation was hampered by a slow response to the worsening financial environment and social and political instability\. The overall capacity of the government to provide adequate counterpart funding was adversely affected by the economic crisis but realistic "disbursement ratios" were also vital to the project, it was not until the final extension of the project in 2000 that the disbursement ratio for STD drugs and pharmaceuticals was revised from the original 26 percent World Bank to 100 percent World Bank\. The early years of project implementation were characterized by very slow disbursement as project staff tried to come to terms with procurement guidelines\. The Asian Development Bank provided some training of three to four weeks for procurement staff but the World Bank did not provide enough procurement and financial management training\. Project staff were unfamiliar with very complex bidding documents, especially for pharmaceuticals, and as a consequence the first bidding process for pharmaceuticals and contraceptives was significantly delayed and ultimately not accepted for funding by the World Bank and the Government had to finance the initial procurement of pharmaceuticals and contraceptives from its own resources\. Partly this was a result of staff turnover and difficulties in providing appropriate counterparts but it was also compounded by a lack of training, overly complex and confusing procurement guidelines and documents, and sometimes slow and inconsistent responses from the World Bank in procurement reviews\. The relations between Government staff and World Bank staff throughout the project were cordial and productive and there was a significant transfer of knowledge\. Particularly in the early years of the project Bank missions were sympathetic to the challenges the Government was facing and were helpful in proposing strategies to address implementation problems\. Communication with the World Bank was more difficult during the final extension period of the project, partly because of the new Government - 15 - structures and staffing problems but also there were delays experienced in replies from the World Bank\. Civil works to upgrade CHC and MHC facilities in six Provinces was problematic during the first years of the project\. A significant factor was a lack of capacity within the Ministry of Public Works to supervise construction and rehabilitation\. Better progress was made once a private consulting firm was recruited to manage contracts and supervise construction\. Construction during the extension, when the project scope was expanded into six new provinces, was generally very satisfactory and a clear lesson for further projects is that there needs to be resources in the project for contract management and supervision\. If the capacity is not available in Government ministries, such as the Ministry of Works, then the scope of the project should include capacity building for such ministries as well as for the Health Ministry, alternatively management and supervising capacity should be recruited from independent private sector consulting firms\. The impact of the project is difficult to quantify because there was no baseline data and no regular, standardized collection of data during the project\. The Demographic Health Survey was a major accomplishment of the project, and has contributed significantly to the National Population Policy 2000-2010\. The Government plans to conduct another DHS in 2005 with support from the Asian Development Bank and a follow-up evaluation of the impact of the project would be possible and beneficial in 2006, based on an analysis of the new DHS data\. Overall the Government believes that the major objectives of the project were fulfilled\. (b) Cofinanciers: No comments\. (c) Other partners (NGOs/private sector): No comments\. 10\. Additional Information - 16 - Annex 1\. Key Performance Indicators/Log Frame Matrix Outcome/Impact Indicators (retrofitted from project): Indicator/Matrix 1991 1996 2001 Percentage WRA aware of modern FP Unknown 67\.7* Unknown methods Average desired family size (measured Unknown 3\.9* Unknown by wanted fertility rates) Contraceptive prevalence rate (%) Unknown 19\.8* 26+ (1995-2000) Unmet need for contraception (% of Unknown 29* Unknown married women) Total fertility rate 5\.6# (1990) 4\.84 (15-49 years)* 4` (2000) 4\.67 (15-44 years)* Infant mortality rate 82* 69* (1992-1996) 56` (2000) Maternal mortality rate (100,000) Unknown 390# 254- (1995) (2001) 59- (1996) Internal revenue per capita 795' 1025' $810 US~ (GNP) (GNP) (GNI) DHS (1996) ^UNICEF 2002 ~World Bank, World Development Indicators 2001, Washington, DC, 2001 `World Bank, www\.devdata\.worldbank\.org/hnpstats #World Bank Gender Stats +UNDP Human Development Report 2002 -PNG National Health Information System Outcome/Impact Indicators (for additional information): Indicator Health facilities visited by a 33% (1995) 33% (2002) medical officer during the past year Health facilities with PHO 53% (1995) 41% (2002) supervisory visit during the past year Out reach clinics undertaken 3\.6 (1998) 3\.1 (2002) Outpatient visits per person 1\.90 (1998) 1\.53 (2002) Supervised Deliveries 42% (1998) 38% (2002) Pregnant Women receiving 60% (1998) 57% (2002) Antenatal Care Family Planning (no\. couples / 107 (1998) 96 (2002) 1000 using family planning) Delivery Room with running 61% (2000) 51% (2002) water/sink Shortage of essential 52% (1998) 40% (2002) medications National Health Information System - 17 - Annex 2\. Project Costs and Financing Project Costs by Category (in US$) Expenditure Category Appraisal Actual Cost Percentage of Cost (Bank Only) Appraised Estimate Cost (millions) (Bank Only) Local Foreign Total Bank Local Foreign Total Civil Works 2\.5 1\.4 3\.9 3\.4 1\.87 1\.00 2\.87 84% Equipment, furniture and 0\.5 1\.1 1\.6 0\.8 0\.09 0\.19 0\.28 10% vehicles Contraceptives and STD 0\.2 3\.4 3\.6 1\.1 0\.05 1\.05 1\.10 100% drugs IEC and media production 1\.2 0\.8 2\.0 0\.0 0\.00 0\.00 0\.00 n/a Training/studies 2\.8 1\.9 4\.7 0\.6 0\.29 0\.18 0\.47 78% Technical assistance/ 1\.5 4\.6 6\.1 1\.0 0\.21 0\.59 0\.80 80% Consultant services Demographic survey 0\.8 0\.3 1\.1 0\.0 0\.00 0\.00 0\.00 n/a NGO field activities 0\.5 0\.2 0\.7 0\.0 0\.00 0\.00 0\.00 n/a Related operating costs 3\.2 0\.6 3\.8 0\.0 0\.00 0\.00 0\.00 n/a Baseline cost 13\.2 14\.3 27\.5 6\.9 2\.51 3\.01 5\.52 80% Contingencies Physical 0\.6 0\.7 1\.3 0\.0 0\.00 0\.00 0\.00 n/a Price increase 2\.3 1\.6 3\.9 0\.0 0\.00 0\.00 0\.00 n/a Subtotal 2\.9 2\.3 5\.2 0\.0 2\.51 3\.01 5\.52 80% Total 16\.1 16\.6 32\.7 6\.9 2\.51 3\.01 5\.52 80% - 18 - Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Expenditure Category Procurement Method Total cost including contingencies ICB LCB Others N\.B\.F\. Civil works 0\.0 2\.3 1\.5 0\.7 4\.5 (0\.0) (2\.0) (1\.4) (0\.0) (3\.4) Equipment, furniture and vehicles 0\.0 0\.6 0\.3 0\.9 1\.8 (0\.0) (0\.6) (0\.2) (0\.0) (0\.8) Contraceptives and STD drugs 4\.2 0\.0 0\.0 0\.0 4\.2 (1\.1) (0\.0) (0\.0) (0\.0) (1\.1) IEC and media production 0\.0 0\.0 0\.0 2\.4 2\.4 (0\.0) (0\.0) (0\.0) (0\.0) (0\.0) Training and studies 0\.0 0\.0 0\.6 5\.0 5\.6 (0\.0) (0\.0) (0\.6) (0\.0) (0\.6) Consultant services 0\.0 0\.0 1\.0 6\.2 7\.2 (0\.0) (0\.0) (1\.0) (0\.0) (1\.0) Demographic survey 0\.0 0\.0 0\.0 1\.3 1\.3 (0\.0) (0\.0) (0\.0) (0\.0) (0\.0) NGO field activities 0\.0 0\.0 0\.0 1\.0 1\.0 (0\.0) (0\.0) (0\.0) (0\.0) (0\.0) Incremental recurrent costs 0\.0 0\.0 0\.0 4\.7 4\.7 (0\.0) (0\.0) (0\.0) (0\.0) (0\.0) Total 4\.2 2\.9 3\.4 22\.2 32\.7 (1\.1) (2\.6) (3\.2) (0\.0) (6\.9) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) World Bank ONLY Expenditure Category Procurement Method Total cost including contingencies ICB LCB Others Civil works 1\.28 1\.59 0 2\.87 Equipment, furniture and vehicles 0 0 0\.28 0\.28 Contraceptives and STD drugs 1\.1 0 0 1\.1 IEC and media production 0 0 0 0\.0 Training and studies 0 0 0\.47 0\.47 Consultant services 0 0 0\.80 0\.80 Demographic survey 0 0 0 0\.0 NGO field activity 0 0 0 0\.0 Total 5\.52 - 19 - Project Financing by Expenditure Category (in US$ million equivalent) GOV PNG ADB AusAID IBRD Total Expenditure Appraisal Actual Appraisal Actual Appraisal Actual Appraisal Actual Est\. Actual Appraisal Actual Actual Category IBRD IBRD as a % Share Share of Est\. US$ US$ US$ US$ US$ US$ US$ US$ % % US$ US$ % Mill Mill Mill Mill Mill Mill Mill Mill Mill Mill Civil Works 0\.40 0\.10 0\.67 0\.91 0\.0 0\.0 3\.40 2\.87 76% 74% 4\.47 3\.88 87% Equipment, 0\.10 0\.18 0\.80 0\.42 0\.52 0\.36 0\.80 0\.28 44% 23% 2\.22 1\.24 56% Furniture & Vehicles Contraceptives 3\.10 2\.00 0\.0 0\.0 0\.0 0\.0 1\.10 1\.10 26% 35% 4\.20 3\.10 74% & STD drugs IEC & Media 0\.50 0\.02 2\.09 0\.83 0\.0 0\.0 0\.0 0\.0 0% 0% 2\.59 0\.85 33% Production Training and 0\.0 0\.0 0\.0 0\.0 1\.36 1\.13 0\.60 0\.47 11% 29% 1\.96 1\.60 82% Studies Consultant 0\.0 0\.0 1\.94 2\.77 7\.04 6\.54 1\.00 0\.80 14% 8% 9\.98 10\.11 101% Services Demographic 0\.0 0\.0 0\.0 0\.0 1\.30 0\.99 0\.0 0\.0 0% 0% 1\.30 0\.99 76% Survey NGO Field 0\.20 0\.01 0\.74 0\.15 0\.0 0\.0 0\.0 0\.0 0% 0% 0\.94 0\.16 17% Activities Incremental 4\.7 0\.71 0\.0 0\.0 0\.0 0\.0 0\.0 0\.0 0% 0% 4\.7 0\.71 15% Recurrent Costs Construction 0\.0 0\.0 0\.30 0\.15 0\.0 0\.0 0\.0 0\.0 0% 0% 0\.30 0\.15 50% Service Charge Unallocated 0\.0 0\.0 0\.63 0\.00 0\.0 0\.0 0\.0 0\.0 0% 0% 0\.63 0\.00 0% Total 9\.0 3\.02 7\.17 5\.23 10\.22 9\.02 6\.90 5\.52 21% 24% 33\.29 22\.79 68% - 20 - Annex 3\. Economic Costs and Benefits An Economic Rate of Return (ERR) was not calculated at appraisal for this project\. - 21 - Annex 4\. Bank Inputs (a) Missions: Stage of Project Cycle No\. of Persons and Specialty Performance Rating (e\.g\. 2 Economists, 1 FMS, etc\.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 12/05/1990 2 WB, 2 TOT POPULATION (1); HEALTH (1) 05/15/1991 4 WB, 4 TOT POPULATION (2); HEALTH (1); IEC (1) 11/08/1991 2 WB, 5 TOT HEALTH (1); POPULATION (1); ECONOMIST (1); PUBLIC HEALTH (1); DEMOGRAPHER (1) 03/06/1992 2 WB, 7 TOT HEALTH (2); POPULATION (1); ECONOMIST (1); PUBLIC HEALTH (1); DEMOGRAPHER (1); PROJECT COORDINATOR (1) Appraisal/Negotiation 05/22/1992 2 WB, 10 MISSION LEADER (1); TOT OPERATIONS ANALYST(1); ECONOMIST (1); PUBLIC HEALTH (2); DEMOGRAPHER (1); MANAGEMENT (1); HEALTH PROMOTION (1); DRUG SUPPLY (1); PROJECT COORDINATOR (1) 09/07/1992 4 WB, 7 TOT HEALTH (1); POPULATION (2); OPERATIONS ANALYST (1) MANAGER ADB (1); PROGRAM OFFICER (1); NOT GIVEN (1) 02/17/1993 Unknown Unknown Supervision 09/01/1993 2 WB, 2 TOT POPULATION (1); HEALTH (1) 1 1 12/08/1993 1 WB, 5 TOT HEALTH (1); NOT GIVEN* (4) HS HS 05/20/1994 2 WB, 8 TOT HEALTH (1); PROGRAM S S OFFICER (1); DEMOGRAPHER (1); NOT GIVEN* (5) 10/14/1994 2 WB, 6 TOT HEALTH (1); DEMOGRAPHER S S (1); NOT GIVEN* (4) 05/03/1995 2 WB, 6 TOT HEALTH (1); POPULATION U S (1); NOT GIVEN* (4) 03/15/1996 2 WB, 6 TOT PUBLIC HEALTH (1); U S POPULATION (1); NOT GIVEN* (4) - 22 - 10/31/1996 4 WB, 7 TOT POPULATION (1); PUBLIC U S HEALTH (1); OPERATIONS ANALYST (1); NOT GIVEN* (4) 08/20/1997 4 WB, 6 TOT POPULATION (1); S S PROCUREMENT (1); OPERATIONS ANALYST (1); DEMOGRAPHER (1); TECHNICAL ADVISER (1) NOT GIVEN* (1) 03/09/1998 4 WB, 8 TOT POPULATION (1); S S PROCUREMENT (1); OPERATIONS ANALYST (1); DEMOGRAPHER (1); NOT GIVEN* (4) 07/15/1998 2 WB, 2 TOT POPULATION (1); U S OPERATIONS ANALYST (1) 10/29/1998 5 WB, 6 TOT POPULATION (1); U S OPERATIONS (1); PROCUREMENT (1); FINANCIAL (1); ARCHITECT (1); TECHNICAL ADVISER(1) 02/25/1999 3 WB, 4 TOT MISSION LEADER (1); U S OPERATIONS ANALYST (1); DEMOGRAPHER (1); NOT GIVEN* (1) 09/15/1999 2 WB, 2 TOT POPULATION (1); S S OPERATIONS ANALYST (1) 02/25/2000 2 WB, 2 TOT OPERATIONS ANALYST (1); S S POPULATION (1) 07/13/2000 2 WB, 2 TOT OPERATIONS ANALYST (1); S S POPULATION (1) 11/09/2000 3 WB, 3 TOT POPULATION (1), S S OPERATIONS ANALYST (1); ARCHITECT (1) 03/16/2001 1 WB, 1 TOT PUBLIC HEALTH (1) S S 08/04/2001 2 WB, 2 TOT OPERATIONS ANALYST (1); U S POPULATION (1) 03/14/2002 1 WB, 1 TOT POPULATION (1) S S ICR - 23 - *Specialties of staff were not defined in the project documentation for those in the 'NOT GIVEN' category\. (b) Staff: Stage of Project Cycle Actual/Latest Estimate No\. Staff weeks US$ ('000) Identification/Preparation n\.a\. 451,866 Appraisal/Negotiation n\.a\. n\.a\. Supervision n\.a\. 876,581 ICR n\.a\. n\.a\. Total n\.a\. 1,328,446 Note: Identification/Preparation includes Appraisal/Negotiation\. Supervision includes ICR\. Excludes trust funds\. - 24 - Annex 5\. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 25 - Annex 6\. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6\.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6\.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 26 - Annex 7\. List of Supporting Documents ADB\. Project Completion Report on the Population and Family Planning Project (Loan No\. 1225-PNG[SF])\. AusAID\. PNG Population and Family Planning Project: Project Completion Report\. July 1998\. Burdon R, Polume H, Iangalio R\. The Current Status of Family Planning in Papua New Guinea\. October 2002\. Kipilan C\. Biannual Report Prepared for The World Bank, July to December 2002\. Projects Section - Department of Health\. January 28, 2003\. Kipilan C\. PFPP Semi-Annual Report : January to June 2002\. Projects Section - Department of Health\. August 22, 2002\. Kombeng W\. PFPP Handover Report, July 2000\. Projects Section - Department of Health\. Monitoring and Research Branch, Department of Health\. Annual Health Sector Review, A Preliminary National Report\. May 7, 2003\. National Statistical Office\. Recent Fertility and Motality Indices and Trends in Papua New Guinea, Report based on the Analysis of 2000 Census Data\. Port Moresby, Papua New Guinea\. April, 2003\. Raka-Koama R\. PFPP Semi-Annual Report : July to December 1998\. Population Planning Unit, Office of National Planning and Implementation\. August 31, 1999\. World Bank\. Management, Manpower, Money: A Select Review of Health and Population in Papua New Guinea\. (Report No\. 8959-PNG)\. Feb 25, 1991\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Staff Appraisal Report\. (Report No\. 11264-PNG)\. March 12, 1993\. World Bank\. Papua New Guinea: Discussions in the Human Resource Sector\. Aide Memoire\. December 1990\. World Bank\. Papua New Guinea: Loan Agreement Number 3591-PNG\. July 1993\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Aide Memoire\. April 1991\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Joint World Bank, Asian Development Bank and AIDAB Mission Aide Memoire\. October 1991\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Joint World Bank, Asian Development Bank and AIDAB Mission Aide Memoire\. February 1992\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Joint World Bank, Asian Development Bank and AIDAB Mission Aide Memoire\. April 1992\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Joint World Bank, Asian Development Bank and AIDAB Mission Aide Memoire\. September 1992\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Back to Office Memorandum\. February 1993\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Back to Office Report\. September 1993\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Project Supervision Mission Aide Memoire\. November 1993\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Donor Review Mission Aide Memoire\. May 1994\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Donor Review Mission Aide Memoire\. October 1994\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Donor Review Mission Aide Memoire\. April 1995\. - 27 - World Bank\. Papua New Guinea: Population and Family Planning Project\. Donor Review Mission Aide Memoire\. March 1996\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Technical Review Mission Aide Memoire\. October 1996\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Findings and Recommendations\. February 1997\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Progress Review Mission Aide Memoire\. August 1997\. Asian Development Bank\. Papua New Guinea: Population and Family Planning Project\. Review Mission Aide Memoire\. November 1997\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Progress Review Mission Aide Memoire\. March 1998\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Progress Review Mission Aide Memoire\. July 1998\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Progress Review Mission Aide Memoire\. October 1998\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Progress Review Mission Aide Memoire\. February 1999\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Progress Review Mission Aide Memoire\. September 1999\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Aide Memoire\. February 2000\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Progress Review Mission Aide Memoire\. July 2000\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Progress Review Mission Aide Memoire\. October 2000\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Review Mission Aide Memoire\. March 2001\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Project Review Mission Aide Memoire\. July 2001\. World Bank\. Papua New Guinea: Population and Family Planning Project\. Project Review Mission Aide Memoire\. March 2002\. - 28 - - 29 -	REVIEW
P104946	Document of The World Bank Report No: ICR00002460 IMPLEMENTATION COMPLETION AND RESULTS REPORT (TF-92181) ON A GRANT IN THE AMOUNT OF USD 6\.23 MILLION TO THE REPUBLIC OF YEMEN FOR A SAFE MOTHERHOOD VOUCHER PROGRAM January 21, 2015 Health, Nutrition and Population Global Practice Middle East and North Africa CURRENCY EQUIVALENTS (Exchange Rate Effective December 8, 2014) Currency Unit: 1 USD = 214\.9 YER FISCAL YEAR: January 1 â December 31 ABBREVIATIONS AND ACRONYMS AMR Annual Monitoring Report MTR Mid-Term Review BTOR Back-to-Office-Report MS Moderately Satisfactory CAS Country Assistance Strategy MU Moderately Unsatisfactory EFA External Financial Auditor NGO Non-governmental Organization FM Financial Management OBA Output-Based Aid GA Grant Agreement OM Operations Manual GPOBA Global Partnership for Output- PAD Project Appraisal Document Based Aid PDO Project Development Objectives GPOBA SAR GPOBA Semi-Annual Report POE Panel of Experts ID Identity Card S Satisfactory IFC International Finance Corporation SD Service Delivery IVE Independent Verification Expert SOUL SOUL for Development MDG Millennium Development Goal SGH Saudi German Hospital MNVP Maternal and Newborn Voucher Project SMP Safe Motherhood Voucher Program M&E Monitoring and Evaluation TTL Task Team Leader MTI Monitoring and Tracking Indicators USTH University for Science and Technology Hospital (Al Marwarid) Senior Global Practice Director: Timothy Grant Evans Acting Country Director: Poonam Gupta Practice Manager: Enis BarÄ±Å Project Team Leader: Ali Ahmed Al-Mudhwahi ICR Team Leader: Ali Ahmed Al-Mudhwahi Â Â iiÂ REPUBLIC OF YEMEN Safe Motherhood Voucher Program CONTENTS 1\. Project Context, Development Objectives and Design \. 1 1\.1 Context at Appraisal \. 1 1\.2 Original Project Development Objectives (PDO) and Key Indicators\. 3 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification \. 3 1\.4 Main Beneficiaries \. 3 1\.5 Original Project Components \. 4 2\. Key Factors Affecting Implementation and Outcomes \. 5 2\.1 Project Preparation, Design and Quality at Entry \. 5 2\.2 Implementation \. 7 2\.3 Monitoring and Evaluation Design, Implementation and Utilization \. 10 2\.4 Safeguard and Fiduciary Compliance\. 13 2\.5 Post-completion Operation/Next Phase\. 14 3\. Assessment of Outcomes \. 15 3\.1 Relevance of Objectives, Design and Implementation \. 15 3\.2 Achievement of Project Development Objectives \. 18 3\.3 Efficiency \. 20 3\.4 Justification of Overall Outcome Rating \. 20 3\.5 Overarching Themes, Other Outcomes and Impacts \. 20 4\. Assessment of Risk to Development Outcome \. 21 5\. Assessment of Bank and Borrower Performance\. 21 5\.1 Bank Performance \. 21 5\.2 Borrower Performance \. 24 6\. Lessons Learned\. 26 iiiÂ ICR DATA SHEET REPUBLIC OF YEMEN Safe Motherhood Voucher Program Report No\.: ICR2460 A\. Basic Information Yemen Safe Motherhood Country: Yemen, Republic of Project Name: Voucher Program Project ID: P104946 L/C/TF Number(s): TF-92181 ICR Date: 12/09/2014 ICR Type: Core ICR - SOUL for Development - Saudi Yemeni Health Care Company Lending Instrument: SIL Grantee: - Al Mawarid Company for Educational and Health Services Original Total Commitment: USD 6\.23M Disbursed Amount: USD 3\.56M Revised Amount: USD 3\.56M Environmental Category: B Implementing Agencies: SOUL for Development Saudi Yemeni Health Care Company Al Mawarid Company for Educational and Health Services Cofinanciers and Other External Partners: GPOBA B\. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 01/18/2007 Effectiveness: 09/08/2008 03/22/2011 Appraisal: 06/20/2007 Restructuring(s): 05/31/2012 Approval: 06/02/2008 Mid-term Review: 09/25/2010 09/25/2010 Closing: 06/30/2012 02/28/2014 C\. Ratings Summary C\.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: High ivÂ Bank Performance: Moderately Satisfactory Grantee Performance: Moderately Satisfactory C\.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Quality at Entry: Government: Not Applicable Unsatisfactory Implementing Quality of Supervision: Moderately Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C\.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project at No Quality at Entry (QEA): None any time (Yes/No): Problem Project at any time Quality of Supervision Yes None (Yes/No): (QSA): DO rating before Satisfactory Closing/Inactive status: D\. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Health 100 100 Theme Code (as % of total Bank financing) Other human development 25 25 Population and reproductive health 50 50 Social safety nets 25 25 E\. Bank Staff Positions At ICR At Approval Vice President: Gerard A\. Byam Daniela Gressani Country Director: Poonam Gupta Emmanuel Mbi Practice Manager/Manager: Enis BarÄ±Å Akiko Maeda Alaa Mahmoud Hamed Project Team Leader: Ali Ahmed Al-Mudhwahi Abdel-Hamid ICR Team Leader: Ali Ahmed Al-Mudhwahi ICR Primary Author: Preeti Kudesia vÂ F\. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objectives of the project are to: (a) provide quality maternal care to about 40,000 eligible women in targeted districts in Sana'a and (b) design and implement a model of maternal care which demonstrates how Yemeni public policy on maternal and child care can be effectively integrated with private health provision\. Revised Project Development Objectives (as approved by original approving authority) First revision of March 22, 2011: To: (a) provide quality maternal care to about 30,000 eligible women in targeted districts in Sana'a and (b) design and implement a model of maternal care which demonstrates how Yemeni public policy on maternal and child care can be effectively integrated with private health provision\. Second revision of May 31, 2012: To: (i) provide quality maternal care to (15,000) eligible women in the targeted districts in Sanaâa; and (ii) design and implement a model of maternal care which demonstrates how Yemeni public policy on maternal and child care can be effectively integrated with private health provision\. (a) PDO Indicator(s) Original Formally Actual Actual Formally Target Revised Actual Value Achievement achievement Revised Baseline Values Target Achieved at Indicator (before (before Target Value (from Values Completion target target Values approval (March ion revision) revision) (May 2012) documents) 2011) Indicator 1 : Number of safe deliveries Value (Quantitative or 0\.00 40,000 3,175 30,000 5,273 15,000 16,141 qualitative) Date achieved 06/30/2008 02/28/2011 03/22/2011 04/30/2012 05/31/2012 02/28/2014 Comments The revised target following two project restructurings was achieved (108%), with a (incl\. % resultant weighted average of Moderately Satisfactory achievement (Annex 3 I)\. achievement) (b) Intermediate Outcome Indicator(s) None: As described in the ICR, this project was designed as a GPOBA project did not have a Results Framework in the designated format as required by the Bank\. Therefore intermediate indicators were not defined\. Performance indicators, to be measured based on targets on a quarterly basis, were defined for the grant recipients to measure service delivery and therefore reimbursements to them\. These are described in Annex 3 (D&E)\. viÂ G\. Ratings of Project Performance in ISRs Actual Date ISR No\. DO IP Disbursements Archived (USD millions) 1 05/05/2010 Moderately Satisfactory Moderately Satisfactory 0\.15 2 01/11/2011 Moderately Unsatisfactory Moderately Unsatisfactory 0\.38 3 03/12/2011 Moderately Unsatisfactory Moderately Unsatisfactory 0\.50 4 07/05/2011 Moderately Unsatisfactory Moderately Unsatisfactory 0\.57 5 11/14/2011 Moderately Unsatisfactory Moderately Unsatisfactory 0\.98 6 07/10/2012 Moderately Satisfactory Moderately Satisfactory 1\.67 7 12/18/2012 Satisfactory Satisfactory 2\.01 8 09/23/2013 Satisfactory Satisfactory 2\.621 H\. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Approved Reason for Restructuring & Key Changes Restructuring Date(s) PDO Made DO IP in USD Change millions A revised price list for the defined safe motherhood services estimated that the allocated grant of US$5,403,960 for service provision would be able to cover the 03/22/2011 MU MU 0\.57 subsidies for only about 30,000 beneficiaries; therefore the restructuring reduced the number of target beneficiaries from 40,000 to 30,000 to reflect the revised cost structure\. Withdrawal of Saudi General Hospital (SGH), the second service provider, and revised estimations of the time that would be required to reach the revised end-target\. The restructuring changes were: (i) amendment of the revised PDO with an amended key project indicator of 15,000 beneficiaries 05/31/2012 MU MU 1\.66 based on a single service provider; (ii) extension of the project closing date from June 30, 2012 to February 28, 2014 to meet the revised target of 15,000; (iii) reallocation of Grant proceeds; and (iv) a cancellation of US$2,319, 910 from the unused grant funds because of withdrawal of SGH\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1 Â By the end of the grace period (June 30, 2014), the total disbursement amounted to USD 3,555,224\.93\.Â Â viiÂ I\. Disbursement Profile viiiÂ 1\. Project Context, Development Objectives and Design 1\.1 Context at Appraisal Country and Sector Background 1\. The Republic of Yemen was formed in 1990 by the unification of North and South Yemen\. The country has a diverse geographical topography, ranging from high mountainous regions to coastal terrains, deserts and islands\. At project appraisal, Yemenâs population of 20\.9 million was predominantly rural2 (73%), with about 42% of people living in poverty3 with limited access to basic health services, and ranked 151st out of 177 countries on the 2005 United National Development Programme Human Development Index\. 4 Yemen also had one of the highest maternal mortality ratios at 570/100,000 live births (2000 estimates) with only 27% of births attended by skilled birth attendants (2003) as well as a high fertility rate (average of seven children per woman)\. Life expectancy increased from 41\.6 years in 1970 to 62 in 2006, with that for women mirroring the overall trend\. While there was a significant increase in enrollment rate in basic education (3 million in 1996 to 4\.1 million in 2004), female literacy rates remained low at 28\.5 percent in 2002\. 2\. Many persisting challenges have affected the countryâs development, despite achievements over the last three decades\. Those that are most prominent and population-related are: (i) high maternal, infant, and child mortality; (ii) high prevalence of malnutrition particularly for children under five years; and (iii) rapid population growth\. Despite these challenges, Yemen is on track towards achieving the 4th Millennium Development Goal (MDG) (reduce child mortality) by 2015 and already achieved the 5th (improve maternal health)\. 3\. Yemen, at project preparation and today, has a fragmented healthcare system with several different public and private providers\. The number of healthcare providers in Yemen (either public or private) providing quality service is very limited\. The health facilities often lack adequate equipment and supplies, and this is compounded by a scarcity of physicians and other medical professionals, including the poor quality and reduced standards of medical training in the country\. Amongst those Yemenis that can afford to, many travel abroad for private treatment\. 4\. In the poorest communities in Yemen, poor access to quality services, lack of confidence in the healthcare providers and lack of affordability of care are contributing factors to the high maternal mortality ratio and key barriers to safe maternal care and services\. There are also certain cultural specificities in their health seeking behavior â pregnancy not being viewed as requiring any medical attention, the choice to seek medical care often being made by the husband or mother- in-law, the lack of female doctors, and a distrust of the providers\. As a result, amongst poorer communities it is not uncommon to find women not seeking any healthcare during pregnancy and opting for delivering at home\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 2 And continues with the same urban-rural distribution today, but poverty has increased to 54\.5% 3 1998 Household Survey estimate 4 World Bank, WHO sourcesÂ Â 1Â Rationale for Bank Assistance and Link to Country Assistance Strategy (CAS) 5\. The Bank Groupâs ongoing engagement in the Middle East Region and Yemen provided it with a comparative advantage to support an innovative methodology to address the challenge of high maternal mortality in the country\. The Global Partnership for Output-Based Aid (GPOBA) had the ability to provide grant financing to pilot an innovative approach to address this challenge\. This grant also helped to contribute towards addressing the maternal MDG which was a stated priority of the country; and this was well aligned with the World Bankâs 2006-09 CAS for Yemen: âThe overall objective of the Bank Groupâs program proposed in this CAS is to facilitate Yemenâs further progress towards the MDGsâ\. Moreover, under the third overarching goal related to improving living conditions and social indicators, the CAS stated the following: âSignificant improvements have been achieved over the last years, in large part thanks to a dramatic expansion of health facilities, increased immunization coverage, and improved control of major diseases (malaria, TB)\. The Development Plan for Poverty Reduction aims to build on this foundation to accelerate progress towards the MDGs through a renewed focus on the modalities of service deliveryâ\. Yemen Safe Motherhood Voucher Program (SMP) 6\. The project was a performance/output-based grant financed by the International Finance Corporation (IFC), managed by GPOBA and supervised by the Bank\. The IFC, GPOBA, and the Bank established one of the early partnerships at that time\. Senior management was interested in monitoring this collaboration and learning lessons on how these organizations worked together\. There were common objectives that brought these organizations together\. IFC was interested in exploring and promoting a role for the private sector in health services provision; GPOBA was interested in expanding its subsidy program to areas beyond infrastructure, and the health sector was selected; and the Bank was looking for an innovative model for service delivery of maternal health services\. These organizations agreed that this project would be a good experiment that would allow them to test and develop a model for service delivery for maternal health\. Each organization, however, at that time had different and separate guidelines to manage the design and implementation of their operations\.5 As part of the operating arrangements, the Bank, in addition to being responsible for project supervision, was also the Fiduciary Management Agency for the project and responsible for the recruitment and management of an Independent Verification Expert (IVE) and an External Financial Auditor (EFA)\. The Project Grant Agreement (GA) was signed on June 11, 2008 and became effective on September 9, 2008 after finalization of the project's Operations Manual (OM)\. After an extension of the original closing date of June 30, 2012, the project closed on February 28, 2014\. The grant recipients were SOUL for the Development (SOUL), a national non-governmental organization (NGO), and two private service providers, the Saudi German Hospital (SGH) and the University for Science and Technology Hospital /Al Marwarid (USTH)\.6 The project aimed to provide a âMother-Baby packageâ of essential services as defined by the World Health Organization7 to eligible poor women (based on income criteria of the household and residing in nine selected districts of Sanaâa City, Yemen\. The GPOBA grant subsidy was designed to be provided for a targeted number of safe child births by the two service providers\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 5 These differences did create certain challenges which are described later in the ICR\. 6 Â The grant was eligible only to IFC clients and this criterion had to be considered while selecting the service providers\. 7 Â Consists of antenatal care, attended childbirth, postnatal care, complicated care services and family planning services\.Â 2Â 1\.2 Original Project Development Objectives (PDO) and Key Indicators 7\. To: (a) provide quality maternal care to about 40,000 eligible women in targeted districts in Sana'a; and (b) design and implement a model of maternal care which demonstrates how Yemeni public policy on maternal and child care can be effectively integrated with private health provision (GA and OM)\. 8\. The OM) further elaborates the primary objective of the project as expanding access to safe and attended childbirth to the target population to enable the GPOBA subsidy funding to result in about 40,000 safe child deliveries by two service providers over a four year period\. This was the key project indicator\.8 1\.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 9\. The original PDO and the associated indicator were revised twice during the project\. 10\. First revision of March 22, 2011: The revised objectives of the Project: (a) provide quality maternal care to about 30,000 eligible women in targeted districts in Sana'a; and (b) design and implement a model of maternal care which demonstrates how Yemeni public policy on maternal and child care can be effectively integrated with private health provision\. The revised key indicator was about 30,000 safe child deliveries by two service providers over a four year period\. 11\. Second revision of May 31, 2012: The revised objectives of the Project are to: (i) provide quality maternal care to eligible women in the targeted districts in Sanaâa; and (ii) design and implement a model of maternal care which demonstrates how Yemeni public policy on maternal and child care can be effectively integrated with private health provision\. The revised key indicator was 15,000 safe child deliveries by service providers over the extended project period\. 12\. The justification and reasons for extension are described as part of the description of Project Restructuring in Section 1\.7 below\. 1\.4 Main Beneficiaries 13\. The main project beneficiaries were to be pregnant women living in nine selected districts in Sanaâa and fulfilling the following eligibility criteria: (i) maximum gestational age of 22 weeks; Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 8 Â The ex-TTL informed the ICR author that since this was a GPOBA project, it did not have a detailed Results Framework complying with the Bank standard format\. In the absence of which, this number (and later the revised numbers) was taken as the key indicator for the ISRs, and so also for the ICR\.Â 3Â (ii) within a reproductive age (15-49 years); (iii) with household daily income less than US$8; and (iv) with ability to pay the contributory amount of US$15\.9 1\.5 Original Project Components 14\. The project had the following components as described in the OM: 1) Project preparation and start-up cost - to SOUL for conducting a baseline study for community assessment of the targeted districts in Sanaâa, provision and installation of a biometric server and eye print/finger print equipment and office furniture and equipment\. 2) Establishment of satellite clinics10â to establish 12 satellite clinics with GPOBA providing a 50% subsidy to the service providers\. During the first two years of the project, each service provider expected to establish two new satellite clinics annually, compared to one each in year 3 and 4\. 3) Service Delivery â to subsidize the defined safe motherhood package\. Invoices for services rendered and the verification of Performance Indicators to trigger reimbursements to service providers on an output basis\. 4) Community Outreach Administrative Cost - SOUL was to: (i) conduct community outreach for the identification, evaluation and documentation of eligible beneficiaries under the Project; (ii) establish, manage and make available a database of such eligible beneficiaries; and (iii) provide capacity building to support the implementation of the project and the community outreach activity\. 5) Education and awareness campaignsâ SOUL to conduct education and public awareness campaigns to promote quality maternal care throughout the project in targeted districts in Sanaâa\. 1\.6 Revised Components 15\. Project components remained unchanged during the life of the project, though the grant financing categories were changed at the second project restructuring (described below)\. 1\.7 Other Significant Changes 16\. The project underwent two Level 1 Restructurings, including a project extension, as described below: 17\. First Restructuring, March 22, 2011: Based on an ongoing discussion and demand from the two service providers, an assessment was conducted for the Mid-Term Review (MTR) in September-October 2010, when it was determined that the unit cost per beneficiary needed to be Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 9 This copayment by the beneficiary was a GPOBA design feature, as communicated by the ex-TTL to the ICR Author\.Â 10 Â The location of satellites clinics used the following selection criteria in the priority of order: (i) population of districts; (ii) availability of other health facilities per population density; (iii) status of socio economic standards; and (iv) accessibility to the service providers\. Â 4Â increased (otherwise risking the complete withdrawal of both service providers from the project)\. A revised price list for the defined safe motherhood services was established for the project (Annex 3 A)\. With this new price list, it was estimated that the allocated grant of US$5,403,960 for service provision would be able to cover the subsidies for only about 30,000 beneficiaries of safe deliveries (referred to as âbeneficiariesâ henceforth)\. This would render the original PDO unachievable, and therefore the restructuring reduced the number of target beneficiaries from 40,000 to 30,000 to reflect the revised cost structure\. This change, reflected in the revised PDO was the only element of the restructuring\. The Project was rated Unsatisfactory at that time\. 18\. Second Restructuring, May 31, 2012: Withdrawal of SGH, the second service provider, (as conveyed to the Bank) and revised estimations of the time that would be required to reach the revised end-target, made this restructuring necessary\. As a result the project was restructured as follows: (i) an amendment of the revised PDO with an amended key project indicator of 15,000 beneficiaries based on a single service provider; (ii) an extension of the project closing date from June 30, 2012 to February 28, 2014 to meet the revised target of 15,000; (iii) reallocation of Grant proceeds;11 and (iv) a cancellation of US$2,319, 910 originally earmarked for SGH\. The Project was rated Moderately Unsatisfactory at that time\. 19\. At the time of the second restructuring, the GPOBA Panel of Experts (POE) raised certain queries concerning: replication of part (b) of the PDO, sustainability of financing after project closing particularly if there were political changes, and why 20 months was required to enroll 5,000 more women\. The Task Team Leader (TTL) responded by indicating that replication in rural areas by the private sector was more likely than in urban areas, social services were unlikely to be impacted irrespective of which political party was in power, and that the 5,000 women would be enrolled in the first 14 months and the remainder time would be needed to ensure that they got the safe delivery services\. The POE endorsed the restructuring\. 20\. A letter dated May 31, 2012, which confirmed the second amendment to the GA, referred to the partial cancelation of funds and the revised PDO with no reference to the revised target of 15,000 beneficiaries and the project extension and discontinuation of services of SGH, though these are all mentioned in the Restructuring Paper and were considered formalized by all concerned\. The numbers of beneficiaries were reflected in the revised OM\. 2\. Key Factors Affecting Implementation and Outcomes 2\.1 Project Preparation, Design and Quality at Entry 21\. Project Preparation: GPOBA has the mandate to design and fund pro-poor output-based subsidies in all sectors including health\. The project was prepared following an assessment by IFC of the Yemeni private health sector, and a Concept Note from the three then potential grant recipients was provided in early 2007\. This was prepared as the first performance/output-based contracting program with local private health providers targeting poor communities in Yemen\. It was also the first GPOBA Window 3 (subsidy-based) project in Yemen\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 11 Â To reflect a new Disbursement Category F to reflect USTH as the sole service provider and close Category E to reflect the withdrawal of SGH\.Â 5Â 22\. Project Design: The project design was built on the fact that affordable quality maternal services were not easily available through the public health system to poor women in Yemen resulting in high rates of maternal mortality, and was therefore seeking to explore contracting with the local private sector to provide the same\. It employed the output-based-aid (OBA) approach to innovatively address this issue\. Since this was being done for the first time in the country, the project interventions were restricted to selected districts in Sanaâa City (urban) while targeting women from poor households (monthly income less than US$8)\. Services were designed to be provided by two identified service providers (through an appraisal done by IFC, and both were IFC clients), while the community outreach including health education and appropriate targeting was assigned to a reputed NGO in Sanaâa\. Prerequisites that each organization had to fulfill at that time resulted in certain design weaknesses\. IFC could only provide this grant to itsâ clients thus limiting competition with non-IFC clients, taking into consideration that GPOBA required a contribution by each beneficiary to the subsidy and did not have provisions for pre-financing providers\. 23\. Quality at Entry: GPOBA/IFC and the Bank fiduciary team had discussions with the three identified grant recipients\. According to feedback received from SOUL during the ICR preparation, interaction with the Government was limited, with its reaction being reserved regarding external financing being garnered towards the private sector considering that the benefits would be accrued by poor women and households\. A detailed OM was prepared by the Grant recipients and agreed with the Bank team by August 2008 (two months after signing of the GA) resulting in project effectiveness on September 9, 2008\. However, the rules of engagement at that time between the different organizations were not clear\. The Bank team followed the guidelines available at that time and adjusted its compliance to updated guidelines as they evolved during the operation\. For example, except for the GPOBA Commitment Paper/Document 12 no project preparation documents (Project Appraisal Document (PAD), technical reports, and feasibility studies) were required to be prepared\. Critical risks and mitigation measures were identified in the GPOBA document, e\.g\.: (i) the affordability and willingness to pay by customer (mitigation measure - minimum user fees and inclusion of nutritional component); (ii) inadequate control systems within the NGO (mitigation measure - external financial and organizational audit; and (iii) the potential for collusive behavior of patients and service providers (mitigation measure - service providers required to keep standardized medical records and provide them upon request for auditing\. Random audits of claimsâ database to be done in order to identify claiming patterns that might suggest collusive behavior)\. Despite this, some of the other identified risks â (i) early reluctance of population to accept services; and (ii) the possible lack of quality staff/capacity within service providers were underestimated and adversely affected implementation, particularly during the first few years\. The most significant areas that seem to have been underestimated were the real understanding of/by the private providers to the project and the in-depth involvement and commitment of the government\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 12 It was communicated to the ICR author that for a GPOBA stand-alone project, GPOBA requires a Commitment Paper\. It is up to the Bank team to decide if a PAD is needed\. 6Â 2\.2 Implementation 24\. There was no delay in project effectiveness, and even prior to that, in August 2008 the Bank team visited Yemen to prepare for effectiveness and finalize the terms of reference for the competitive selection of the IVE and EFA who were appointed in June 2009\. However, the project faced implementation challenges almost from the very beginning\. These, including the mitigation measures undertaken, are described below: 25\. Capacity/Ability/Commitment of the service providers to reach the target of 40,000 beneficiaries: Despite an appraisal by IFC of the capacity of the private health sector in Yemen (Annex 3 A), the selection of SGH and USTH as the service providers for the project\. There were issues with their capacity that were identified as a risk as early as of August 2008, including that this may negatively impact the achievement of the target before the closing date of the project\. In August 2009, the unsatisfactory performance of SGH was highlighted by the TTL, including the lack of business standards and practices and poor understanding of the design and implementation of the project\. These continued to be highlighted as risks, as late as September 2010 (MTR)\. The role and performance of the grant recipients varied during the project phases\. SGH was the main leader for project design and led all the technical discussions and later was the first to establish its clinic, while USTH was initially hesitant to partner in the project\. Although SGH and USTH had technical and fiduciary management capacity at the hospital level, it was difficult to assess their capacity at a clinic level, given there was no prior experience\. The business standards of contracting health services in Yemen were based on passive reimbursement and not on active purchasing\. They did not have prior experience in managing Bank operations with its fiduciary management requirements and a learning curve was needed to reach an acceptable level of compliance to Bank guidelines\. This led to delays in disbursement which further affected the cash flow of these organizations\. In particular, SGH suffered more from the financial global crisis than USTH, being an international organization with more limitations from its headquarters on its cash flow\. Although SGH tried to address their problems during the first half of the project by changing the CEO of the hospital and injecting some cash into the system its Board decided to freeze their participation in the project\. On the other hand, USTH, which is backed by a local company and substantial charity funds, was able to meet with the set targets\. 26\. USTH also reported suffering from financial losses in mid-2010\. According to a note provided by the Bank TTL to GPOBA, these losses resulted from the lack of experience in implementing the innovative outputs-based disbursement service delivery model at the satellite clinics since its experience was mostly related with the service delivery at the hospital level\. These losses forced USTH to reconsider the degree of their participation in the project or to withdraw completely\. In order to continue its participation in the project, USTH requested that a higher service delivery (SD) package be reconsidered to replace the price of US$135 per beneficiary that was originally with GPOBA as a subsidy for all cases\. It was agreed that this would be reviewed at MTR\. Based on the agreements subsequently reached (described below), USTH decided to continue participating fully in the Project\. 27\. In 2010, SOUL also suffered cash flow problems that limited its ability to pre-finance activities related to enrollment and health education/awareness as planned due to the fact that: (i) SOULâs ability to achieve its targets was dependent on the reputation and performance of the 7Â service providers as well as the clinical eligibility criteria of beneficiaries; and (ii) lack of funds that would allow SOUL to pre-finance output-based disbursements\. 13 These problems were addressed by amending the OM to reflect SOUL to use: (i) the advance of the Designated Amount to fund output-based disbursements; (ii) the performance bands for performance-based indicators to apply without the need for a mandatory indicator; and (iii) expanding the eligibility criteria to include all poor pregnant women\. 28\. Difficulties in enrollment and participation: In April 2009, the Bank team highlighted that the initial enrollment rate was low â about 20% of the target\. In a Back-to-Office-Report (BTOR) in May 2009, the TTL ascribed the low enrolment rates to two groups of factors: (i) Cultural and Marketing- refusal of husbands to enroll their wives in the project\. Discussions with SOUL who was responsible for enrolment indicated that the main reason for the reluctance to enroll at the start of the project was suspicion and mistrust about the project and its motives - doubts and fears among the community about these free services that were to be offered in private clinics and hospitals\. A private collaboration of this nature was being introduced for the first time in Sanaâa resulting in skepticism; however, later when women who received services through the project spread the word to their community, the enrollment substantially improved\. The latter was primarily because of the focused marketing strategy that was later developed and implemented by SOUL, which included a short film explaining the objectives broadcasted in a couple of Yemeni TV channels, as well as posters and brochures distributed in public places in the target areas; and (ii) Provider Performance and Reputation â especially related to SGH\. It was found that the service providers were trying very early in the process to: (a) transfer the risk of the cost of complicated cases to the beneficiaries of the project or to the Bank; and (b) decrease their operating cost\. While the Bank team repeatedly communicated that the cost of the SD package would be revised during the project MTR, the providers did not demonstrate confidence, and this adversely affected the identification and enrollment of beneficiaries\. SGH was also facing additional problems such as irregularity of availability of a provider or unavailability of a female provider as promoted at the outpatient clinic; and some alleged instances of malpractice resulting in rumors that discouraged beneficiaries from participating in the project\. In addition, SGH was responsible for preparing the training content to be used to identify and enroll beneficiaries\. SGH conducted this training and provided a number of wrong messages in the training package that focused on informing the beneficiaries that they would be charged for complicated deliveries and Cesarean Sections including diagnostics and medications including those given during the antenatal care period\. According to project documentation, these messages discouraged participation\. 29\. In mid-2009, several actions were agreed upon to increase enrollment as follows: (i) modify the eligibility criteria to enroll eligible pregnant women up to 20 weeks (first five months) of pregnancy instead of 12 weeks (first three months), and to include all households that Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 13 Â GPOBA did not allow pre-financing to the other two grant recipients, and this was quoted as a constraint by the TTL\. 8Â have a daily income of less than US$8 as long as they can pay their contribution of US$15 per beneficiary; (ii) agree on a number of marketing techniques that would increase enrollment rates; (iii) develop criteria for selection of sites for establishment of satellite clinics within selected districts that ensure accessibility of providers to clinics; (iv) revise the current schedule for establishment of satellite clinics to avoid establishing more than one clinic in the same district within a short period of time to allow for accumulation of adequate demand; and (v) define the date of signature of a contract for rent of a clinic by the providers as the cut-off point to trigger identification and enrollment of beneficiaries in that district's clinic to ensure the timeliness of enrollment of beneficiaries with the establishment of clinics\. 30\. Dropouts after enrollment and issue of project criteria restricting eligibility of complicated cases â In August 2009, SOUL reported a dropout rate of almost 70%\. While this rate decreased substantially over the life of the project (25%), in part because of the targeted and effective communication strategies adopted by SOUL, one serious challenge persisted\. While this has not been clearly documented by the Bank team, reports and recommendations provided by SOUL clearly indicate that since the project, by design, was restricted to only cover 15% of complicated cases, this imposed a challenge for health providers to accept all complicated cases (the 15% cap was reiterated when the pricing issue was addressed)\. Cost of Service Delivery Package and complicated cases 31\. The cost of complicated cases was a subject of extensive discussion during the finalization of the OM (before project effectiveness) and subsequently\. The Bank team reiterated repeatedly to the service providers that these services were part of the package and that the risk was mitigated by capping the number of cesarean section cases to not exceed 15 percent of all cases\. It had also been agreed that the cost of the package would be reviewed at project MTR\. As part of the MTR assessments, a revised price list was developed based on: (i) the study of the actual costs of the two Service Providers (USTH and SGH); and (ii) the market prices of equivalent Service Providers to ensure that these prices were competitive, economical, and developed in a transparent manner\. The revised SD package amended the payment mechanism to (i) pay separately for normal delivery, complicated delivery, cesarean section; (ii) add a package for neonatal care (Annex 3 A)\. This was agreed, and ensured the continuation of participation of the service providers immediately after the MTR\. Crisis Period in Yemen in 2011 32\. The popular uprising and political turmoil in February 2011 in Yemen resulted in interrupting the provision of health services including SMP operating clinics\. The situation deteriorated with violence starting in March, escalating in June-July, and continued till close to end of the calendar year\. The Bank officially suspended disbursements to all Yemen projects on July 28, 2011\. On November 11, 2011 GPOBA wrote to the Bankâs Country Director for Yemen, requesting a special exemption from this suspension reasoning that the project was a performance- based financing not being implemented by the government, and that it was doing well despite the conflict\. However this was not agreed upon, and the suspension of disbursements for all projects was lifted only in January 2012\. USTH had established 6 clinics before the uprising, but after the suspension, only one clinic operated first, and later two more were added\. 9Â 33\. While SOUL and USTH tried to continue providing services during the crisis period, they described a number of challenges that they faced: (i) low enrollment and utilization rates due to the security situation; (ii) continuous disruption of electricity; (iii) high prices of fuel or its shortage; (iv) the increase in prices of medical supplies and drugs; (v) the attacks on the satellite clinics and ambulances; (vi) difficulty to communicate with the Bank team; (vii) the disruption of cash flow due to the suspension of disbursements by the Bank; and (viii) difficulties in conducting verification\. 2\.3 Monitoring and Evaluation Design, Implementation and Utilization Monitoring and Evaluation (M&E) Design: 34\. Since this was a GPOBA project, it did not have a designed Results Framework as per the Bankâs requirements\. 35\. The M&E design of the project was built on the performance/output based premise of the project, and therefore, the linked subsidy reimbursement measures/conditions are also described below: 36\. Performance Indicators: (i) For Service Providers: A set of seven performance indicators (which included measures of clinical practice, patient volume, client satisfaction, status of hospital equipment and waste management) (Annex 3B) was designed\. The service providers would be reimbursed on a quarterly basis, proportionate to the care provided to the eligible beneficiaries and based on the performance band against the number of targets achieved (Annex 3 D), with a caveat that the targets for three indicators (% births by skilled attendants, % of women completing four antenatal visits, and % of women completing one postnatal visit) had to be met for any subsidy to be paid (up to the maximum original subsidy of US$135 which was later enhanced)\. This would be done by the IVE verifying the quarterly hospital records and invoices from grant recipients and providing the Bank Team with quarterly Invoice Verification Reports\. The OM stated that these performance indicators and threshold targets may be modified based on revised Government indicators following the first year of operations, however there is no evidence of such discussions or review during the life of the project\. (ii) For SOUL: A set of five performance indicators and performance bands was also designed to measure the performance of SOUL (Annex 3E)\. A portion of SOULâs project start up and fixed costs was to be paid upfront by GPOBA\. The balance of reimbursement would be based on verification of delivery of services (number of educational/promotional activities, areas of coverage, and number of new pregnant women added to the program during the quarter) by IVE\. 37\. Monitoring and Tracking Indicators- Additionally, in an effort to assess and improve upon the effectiveness of its Grants, GPOBA had an interest in tracking additional project indicators that were not triggers for disbursements\. Therefore, the project also incorporated a series of 10Â Monitoring and Tracking Indicators (MTI) to measure the overall impact that the new services had on target communities\. The Bank TTL was to be responsible for reporting MTI to GPOBA semi- annually, based on information provided by the IVE and the three grant recipients\. These indicators included outputs indicators for SOUL, service providers, static data and project funding sources (Annexes 3 D-G)\. 38\. Annual Monitoring Reports (AMR) - The service providers were to provide to the Bank the AMRs specifying the social, environmental and developmental impact of service provision as described in Annex F of the OM\. This required a detailed reporting including all aspects of medical and non-medical waste management (discussed further in the Safeguards Compliance Section below)\. 39\. Project Completion Report - The grant recipients were to furnish the Bank with a Project Completion Report including details on service provision to the target community and the overall use of funds no later than six months after the Closing Date\. This report was to include a summary of Monitoring and Performance Indicators throughout the projectâs life\. In addition, the grant recipients were also meant to prepare two additional reports (âPost Project Reportsâ), each of such scope and in such detail as the Bank would reasonably request, not later than one month after the expiry of one year and two years, respectively, from the Closing Date\. 40\. Baseline Study â SOUL was to do a project baseline to document the socio-demographic and servicesârelated factors, and explore the perception of safe motherhood beneficiaries\. 41\. Identification and Verification of Beneficiaries â The project design at the concept stage had described providing vouchers for eligible women, which would then be used as a measure of verification and subsidy payment\. At the Commitment stage, the voucher design was rejected as it was thought to add an unnecessary level of complexity and costs, and was replaced with eye scanning and finger printing\. This task was assigned to SOUL who were meant to eye scan and finger print the eligible women at the time of enrolment, and this data was meant to be transferred to the service providers at their clinics/hospitals to ensure the right identification of beneficiary\. 42\. The M&E design was clearly very detailed based on the requirements of the GPOBA\. It was a complex design and its monitoring and validation depended solely on the IVE\. M&E Implementation 43\. Baseline Survey - The baseline study report completed by SOUL was available around Oct 2009\. While the OM had stated that the baseline report was to be available before the satellite clinics started offering care, three clinics were established and 273 cases enrolled and received services by August 31, 2009\. The baseline study used both quantitative and qualitative methodologies in four urban districts in Sanaâa City\. The key findings indicated that: (i) healthcare seeking behavior was far from desired mainly limited to miscarriage/abortion or stillbirth, childbirth, as well as postnatal care periods; (ii) childbirth care was preferred to be at home assisted by relatives/friends, while antenatal care was preferred at clinics assisted by skilled health providers especially females; [however, care was usually sought at public health facilities when a health problem was perceived to occur] and (iii) the use of family planning was surprisingly high at 80\.5% with preference for oral contraceptive pills and intrauterine devices, reflecting increased 11Â knowledge and a high demand\. Any discussion on the perception of women regarding service delivery by private providers was missing however, despite being the focus of the project\. 44\. Identification and Verification of beneficiaries â While this is not recorded in any of the available documents, discussion with SOUL revealed that eye scanning was never implemented because of its cost and complexity\. Finger printing was done by SOUL for all enrolled women, however because of technology constraints; they were never able to transfer the finger prints from their database (where it also occupied a large space) to that of the service providers\. Therefore, all identification and verification of eligible beneficiaries through the life of the project was done with a physical photo-identification of the Identity Cards (ID) issued by SOUL at the time of enrolment and subsequently by the IVE in order to endorse the reimbursement to SOUL\. 45\. Role of the IVE - The role of the IVE was absolutely critical for ensuring compliance with the M&E framework and subsequently the subsidy reimbursement to the grant recipients of the project\. The MTI reports provided by the TTL to GPOBA primarily depended on the reports provided by the grant recipients and IVE, and, thereby reinforcing the fact that the M&E compliance depended on the IVE14\. The IVE was competitively selected and started providing services from July 2009 onwards\. Till the MTR report (June 2010) Cardno Emerging Markets USA, Ltd\. was the IVE\. The frequency of their interactions was less, compared to when the IVE changed after MTR to Deloitte (who was also the EFA) and who had a Public Health specialist for technical verification based in Sanaâa\. In the Final IVE Report (May 2014) covering the entire project period, provided by Deloitte, there appears to be several inconsistencies in data, including misinterpretation of definitions; e\.g\., the number of women enrolled has been interpreted as meeting the final project target, which was also used by the last project ISR\. Disbursement could not be triggered to the grant recipients without the relevant IVE reports, but the quality of the data reported by Deloitte can be further investigated\. 46\. SOUL and USTH provided the mandated performance reports in a timely manner, and SOUL also maintains a full database since start of the project\. IVE reports are available, and while thorough, had data and definition inconsistencies, as described above\. 47\. A Project Completion Report from SOUL was received on October 14, 2014 and that from USTH is yet to be received though it is now close to eight months since project closing\. The realism of the requirement (described above) of further reports one and two years after project is debatable, considering the significant loss of institutional memory at present, eight months after project closing (except for SOUL)\. M&E Utilization 48\. As described above, the M&E framework for the project was primarily designed to be able to monitor and thereby provide evidence to trigger subsidy reimbursements to the grant recipients, and not as a Results Framework for the project\. It was used for this purpose as well as to assess the performance of the project\. SOUL did maintain a full database for the project and it expressed appreciation of the capacity building that this had facilitated\. As alluded to above, the M&E design Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 14 The TTL informed the ICR Author that the methodology of the IVE was later adopted by the Yemen Country Office for Third Party Monitoring for all projects in Yemen\. 12Â was complex, and some parts of it not implemented, for example the eye scan and finger printing, as a result of which only photo ID cards were used for beneficiary verification during the project\. 2\.4 Safeguard and Fiduciary Compliance Safeguard Compliance 49\. The Project was to be implemented (specifically with reference to the establishment and operation of the clinics by the service providers) according to IFCâs Performance Standards on Social & Environmental Sustainability (Annex 3B)\. This compliance was to be monitored and reported by the IVE\. Additionally, each service provider was to provide AMR to the World Bank, as described in Annex F of the OM\. The AMR information had to be collected in a manner consistent with applicable IFC Environment and Health and Safety Guidelines (Annex 3B)\. The AMR included, service providers conducting and thereby reporting, on regular re-training of staff, internal-auditing and record-keeping on sanitation, infection control and medical waste management\. 50\. While the available IVE reports do state that medical and non-medical waste management was maintained according to standards (no details provided), this ICR preparation did not have access to any AMR, and is therefore constrained to provide a comment on the safeguard compliance\. Fiduciary Compliance Financial Management and Disbursement 51\. The original project design in the GPOBA Commitment Document described a Fiduciary Agent who would be responsible for financial management for the project\. However according to the final design in the OM, the project did not have a Fiduciary Agent and all such functions were managed by the Bank team\. Since this was a performance-based project all agreed subsidy reimbursements to the grant recipients were triggered subsequent to a confirmation of achievement of targets by the Bank TTL to GPOBA\. Three types of disbursements took place during the life of the project: (i) project preparation/design and start-up costs - disbursed as subsidy to SOUL upon GPOBA grant agreement being signed; (ii) capital costs of satellite clinics - capital cost of establishing the satellite clinics split on 50:50 basis between GPOBA and the service providers\. Fifty percent of this reimbursed the service providers after commissioning of the said clinics, and the remaining 50% of GPOBA share paid after the first three months of operations and subject to a satisfactory quality performance report by the IVE; and (iii) invoiced services - starting from the first quarter of operations, GPOBA reimbursed costs of service provision based on the performance indicators described above\. 52\. A revised disbursement letter dated January 17, 2013 replaced the original disbursement letter of June 11, 2008 confirming grant recipients as only two â SOUL and USTH, with the withdrawal of SGH\. 13Â 53\. Based on reporting in the GPOBA Semi-Annual Report (SAR) and the MTR aide memoire, SOUL and USTH Financial Management (FM) departments were well staffed and each agency had an automated accounting system, acceptable FM manual, and acceptable auditing arrangements\. All Interim Financial Reports (IFRs) submitted to the Bank were reviewed by the EFA\. Audit reports were satisfactory\. Details of clinicsâ establishment and subsidies provided are not available\. It is unclear what consideration GPOBA and Bank give to the fact that while the clinicsâ establishment was provided a 50% subsidy, only one of the clinics is operational at present, and this too is unable to provide subsidies to the poor targeted women\. Procurement 54\. Procurement under the project was done by the following: (i) the Bank â of the IVE and EFA; (ii) SOUL; and (iii) both service providers\. According to the MTR aide memoire, SOUL had implemented 16 contracts (two for services and 14 for goods); USTH had completed the purchasing of equipment and furniture for the six satellite clinics; and SGH had implemented two contracts for goods\. Procurement was found to be generally satisfactory, except for that done by SGH, though details of the latter were not available in the documents reviewed\. The financial management and procurement specialists on the task team were not available for discussion for preparation of this ICR, therefore clarifications were sought by email, and those responses have been incorporated in the discussion above\. 2\.5 Post-completion Operation/Next Phase 55\. In October 2012, at a regional workshop in Amman, the performance-based financing experience of the project was presented and discussed to design an appropriate RBF model for service delivery\. This workshop was meant to evaluate the projectâs performance based contracting service delivery model compared to the KfW Voucher Project - both models were based on contracting providers, with performance based payments for providers at the facility level\. Both SOUL and USTH expressed interest in the continuation of the project and there were discussions with the public and private sectors to explore such possibilities\. There were initial discussions between USTH and the Municipality of Sanaâa to possibly replicate the project model in public clinics with the Solidarity Fund (described in Section 3\.5) envisaged by SOUL, but so far this has not been implemented, and is uncertain given the current country context\. 56\. A second workshop in March 2014 that also included the government (Ministries of Health and Finance) discussed the concept of performance based financing which was adopted by the Minister of Health during the workshop\. The workshop explored ways to link vouchers to performance-based financing\. 57\. A Maternal and Newborn Voucher Project (MNVP) was prepared by the Bank while this project was under implementation (became effective on August 28, 2014)\. Yemen Safe Motherhood Program, having been the first RBF intervention in the health sector, demonstrated lessons that using vouchers was likely easier than performance-based financing, and that it was important to work with a national quasi-governmental organization to be the payer for the scheme contracting public and private (profit and non-profit) health facilities\. The MNVP design was also informed by the lessons learned from the ongoing KfW Reproductive Health Voucher Project, which was designed in collaboration and learning from the SMP\. The MNVP PAD does make a 14Â reference to align with the satellite clinics established under this project\. While the MNVP pilot has started, the project has plans to subsequently include Sanaâa city also, though given the time lag since SMP closed and this initiative is likely to start, it is unlikely to contribute to the sustainability of the SMP clinics established\. 3\. Assessment of Outcomes 3\.1 Relevance of Objectives, Design and Implementation Relevance of the Objectives 58\. Although Yemen has made great strides in reducing the maternal mortality ratio since start of the project, it remains high at 148 deaths per 100,000 live births15, which translates to some 24 women dying every week due to pregnancy and birth-related complications\. At close of the project, nearly half of its estimated population of 25\.5 million was living on less than US$2 per day with poverty increasing to 54\.5% in 2012 and the country ranked 160th out of 186 on the 2012 HDI\. Women, who were already severely disadvantaged, suffered disproportionately as a result of the 2011 crisis, with decreased access to basic and social services and increased levels of gender violence\. 59\. The objective of providing quality maternal care to poor women in Yemen, who otherwise cannot afford the same, continues to be highly relevant today\. Given the poor quality service provision in the public sector, involvement of the private sector would no doubt substantially contribute to improved maternal and newborn outcomes in Yemen\. However, what may need further demonstration is the nature of the arrangement that would make it attractive for the private sector to be involved on a sustained basis\. Additionally, in a conflict/fragile country context, to what extent would the government be willing to, or could render its support to such partnerships is uncertain\. Relevance of the Objectives is rated as Substantial\. Relevance of Design 60\. The design of the project was innovative and new for the Yemeni health sector - a performance-based approach with the private sector\. It was originally designed as a pilot for the first 6-12 months in two districts of Sanaâa, with a plan to learn from the experience, and if successful scale up to more districts of Sanaâa\. Subsequently in the OM the design was expanded to nine of the twelve districts of Sanaâa, with a proposed phasing-in of the districts over four years\. It is unclear why this change in design took place, and in retrospect a smaller pilot may have provided useful insights into the approach, in particular the understanding of the concept itself by the private sector, its capacity, and what would make it attractive for their sustained engagement\. 61\. The project was designed to be consistent with the six core concepts of OBA: (i) providing targeted subsidies to poor groups; (ii) accountability for results; (iii) encouraging innovation and efficiency; (iv) using incentives to serve the poor; (v) conducting output verification and monitoring of results; and (vi) fostering sustainability\. This is further discussed below: Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 15Yemen National Health and Demographic Survey, 2013 15Â 62\. Targeting the poor: Income based targeting was used to ensure that subsides reached target women living in nine selected districts in Sanaâa, who otherwise could not afford quality health care\. SOUL, who was responsible for enrolment of eligible women, state in their final report that the targeting could have benefitted from stronger verification techniques for the poor â âwith the spread of the good word about the project, middle class women who can afford the service would pretend they are poor to enroll in the program\. Despite SOUL efforts in investigating their cases, logistical and financial capacity imposed a challenge for a comprehensive verification systemâ\. According to the TTL, the GPOBAâs design (to ensure sustainability) feature of copayment by the beneficiaries may have excluded some of the poor\. 63\. Accountability for results: The performance-based subsidies to the grant recipients made them accountable for the agreed results, thereby shifting the performance risk to them in accordance with the OBA concept\. \. The IFCâs appraisal had confirmed reasonableness of the rates at project inception, yet this affected the service providers and the eventual revision of rates, also resulting two changes of the project target and delayed implementation\. 64\. Encouraging innovation and efficiency: As alluded to earlier, this project was an innovative approach for Yemen and the health sector in the country\. The original GPOBA subsidy per capita of US$135 was designed to ensure âefficiencyâ/value for money for delivering the safe motherhood SD package, and this was likely the reason why it took GPOBA and the Bank till MTR to enhance the per capita subsidy, despite the private providers perceiving the subsidy to be unviable from start of the project\. While as an OBA concept, efficiency is achieved through competition or benchmarking leading to value for money, the two private service providers in this project were not selected through competition, instead through an appraisal of the private health sector in Sanaâa carried out by IFC, possibly because it being a novel approach in the countryâs health sector\. That appraisal reviewed five hospitals in Sanaâa and concluded that the quality (services, staff, facilities, equipment) and capacity of the two providersâ private hospitals far exceeded that of the other local Yemeni private providers (Annex 3 A)\. 65\. Use of incentives to serve the poor: Through the project, poor women were able to avail services which were of better quality than the public sector by contributing US$15\.16 Discussions with SOUL gave some insight into the maternal care seeking behavior in Yemen\. It was not that women were completely unaware of the benefits of delivery at a health facility, and in the 1970s women would avail of these services at public hospitals\. Over time, there was a marked decline in the quality of services provided at these hospitals, including their inappropriate behavior with the poor\. This resulted in women preferring to deliver at home and going to a public hospital when complications forced them to (as shown in the baseline study for this project also)\. During the later part of the project, based on the concerted community outreach that SOUL and positive the experience of women treated by USTH, the numbers of women wanting to enroll and avail services increased substantially\. Discussions with USTH and SOUL revel that the targeted poor communities are once again bereft of this benefit since project closing\. This is an important indication of the significance of ensuring sustainability of interventions\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 16 Â According to the appraisal, this was reasonable, however the TTL reported that this could have resulted in some exclusions\. 16Â 66\. Output verification and monitoring of results\. The project M&E framework was designed for this purpose and the IVE performed this function\. 67\. Sustainability: The project implemented a performance-based program with selected private service providers\. However the design failed to ensure sustainability of the project interventions\. Due to the many challenges that it faced and the resultant changes that ensued, the project closed with three satellite clinics (instead of 12 as envisaged); and even these, stopped providing services to the eligible group of women as no grant subsidies were available in the absence of a financial sustainability model17 In fact, SOUL stopped their enrolment process several months before project closing so as to ensure that at least those enrolled would be assured delivery services before completion of the project\. According the final report provided by SOUL (October 2014), the profitability concern of the private sector threatened sustainability of the program\. As per the original design, the satellite clinics were to be operated as profit centers\. The providers agreed to deposit profits (if any) in excess of 5% margin into an escrow account/fund to be used to fund any legitimate unexpected cost-overruns in the short-run e\.g\. larger than estimated percentage of women requiring more expensive complicated and tertiary care\. In the long run, the main purpose of these funds would be to serve as a âsustainability fundâ that could attract co- financing\. While the program was designed in a way that the satellite clinics would provide services at cost, these clinics could potentially generate additional revenues for paying patients outside the scheme and not eligible to benefit from GOPBA subsidy\. It was anticipated that successful implementation of the first phase would attract local private large corporate companies e\.g\. oil and industrial groupings to participate in the program\. Specifically, it was meant to provide a good demonstration of how private businesses in Yemen could make investments that were socially responsible and contributed to the health of poorer communities\. It was envisaged that based on the pilot, the Government of Yemen may adopt the model as well as attract other bilateral/multilateral donors and healthcare and finance providers to ensure sustainability, and scale up to other surrounding governorates in Yemen\. While some elements of this future program design relate to successful projects from other regions in a non- fragile context, the sustainability fund concept is the main element that SOUL plans to implement in the future\. 68\. The design of the project was innovative and considerable work went into developing the performance-based monitoring mechanism\. In hindsight, this was possibly an ambitious assumption that the private sector would participate fully, when financial sustainability was not built into the design\. As a model to demonstrate private participation to potentially influence Yemeni public policy, this project has shown the means, but a substantial buy-in from the public sector will likely take more time, given the past and current conflict and political situation in Yemen\. The rating for Relevance of Design is rated as Substantial\. Relevance of Implementation 69\. Implementation of the project, particularly in the early stages, was good and demonstrated proactivity in identifying challenges and bottlenecks, e\.g\., poor enrollment and the unsatisfactory performance of SGH\. SOUL was assigned to better understand the issues for poor enrollment, and subsequently implemented an aggressive and concerted marketing and communication strategy Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 17 Â One of the three clinics by USTH is currently being operated by their University Hospital\. However no documentation is available that the poor women are getting the same benefits\.Â 17Â which clearly reaped positive benefits\. While the poor performance and unwillingness of SGH to be a genuine partner in the program was evident during the first year of the project itself (though as alluded to earlier, it had taken the lead during project preparation), the Bank team gave them some more time to improve performance because of a change in their CEO and a renewed expressed commitment\. However, due to the impact of the global crisis (described earlier) they exited from the project, closing their only clinic in May 2011, and more formally in May 2012\. The dissatisfaction with the price of the SD package was evident from the start, leading even the well-performing USTH to withdraw briefly from the project, before the revised pricing was agreed to\. As the service delivery model continued to develop and to be well established, discussions were then initiated as to how to sustain the program beyond the grant financed project\. A number of sources of funding were identified, and measures on how to establish this potential/future fund were undergoing\. Later, the project faced two major challenges\. The first was the turmoil that hit the region and deeply affected Yemen\. The second was the suspension of disbursement to the service providers\. Both of them strongly affected the model that had just started to stabilize\. The security factor was in particular significant because it led to closing of many health facilities, and the suspension of disbursement deprived grant recipients from the necessary cash to advance their operation\. Despite that, USTH started to reopen these closed facilities gradually and reaching three clinics during the extended project implementation period\. 70\. The Bank team attempted to rectify several of the design weaknesses, the political turmoil and ensuing interruption of Bank oversight was a constraint in establishing a more robust dialogue with the government during the project period to ensure sustainability of project interventions\. The rating for Relevance of Implementation is rated Substantial\. 71\. The overall rating for Relevance of Objectives, Design and Implementation is Substantial\. 3\.2 Achievement of PDOs 72\. The achievement of the PDOs is discussed with reference to the three amendments that were made during the life of the project, and the achievement during those periods, before arriving at an overall assessment of the achievement\. It is to be noted, as described earlier, that since the project did not have a defined Results Framework and PDO indicators, the most appropriate indicator of number of safe deliveries by the service providers was taken as the key indicator (as described in the OM)\. While the percentage of births by skilled attendants was a performance indicator for the service providers, through the project life this was not taken as the key indicator by the project, and therefore by this ICR\. The second part of the PDO, âdesign and implement a model of maternal care which demonstrates how Yemeni public policy on maternal and child care can be effectively integrated with private health provisionâ, was not amended during the life of the project, and no specific indicator or measure was defined\. (i) Phase 1: September 9, 2008 - March 22, 2011 (2 years 6 months): number of eligible women who had safe child deliveries -5,049 18 (12\.62% of the target of 40,000); and disbursement -US$0\.57 out of 6\.23 million (9%)\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 18 % births by skilled attendants â 3,175 (7\.9%) 18Â (ii) Phase 2: March 22, 2011 â May 31, 2012 (1 year 2 months): cumulative number of eligible women who had safe child deliveries â 8,243 19 (27\.48% of the target of the target of 30,000); and cumulative disbursement - US$0\.98 out of 6\.23 million (16%)\. (iii) Phase 3: May 31, 2012 â February 28, 2014 (I year 9 months): cumulative number of eligible women who had safe child deliveries - 16,14120 (15,612 by USTH+529 by SGH) (108% of the target of 15,000); and disbursement â US$3\.56 out of 3\.92 million (91%)\. 73\. The project had a detailed M&E framework with performance indicators for both SOUL and USTH, and these indicators were reported and verified by IVE against quarterly and semi- annual targets of percentage achievement (Annex 3 D-E)\. 74\. At project MTR, a total of 3,989 women were enrolled of which 1,189 women (1026 by USTH and 163 by SGH) had safe child deliveries (2\.98%) with a disbursement of US$0\.29 million (4\.8%)\. Extensive discussions on the pricing of the SD package, its impact on the need to reduce the target of beneficiaries, and the unsatisfactory performance of SGH took place during the MTR, including the potential need for a project extension (a decision on extension was deferred to July 2011)\. Following these conclusions, the first restructuring took place five months after the MTR and addressed the SD package pricing, and therefore the need to reduce the end-project target of beneficiaries\. The second restructuring done 3 years and 8 months of the (till then) four year project, when disbursement was 16% and cumulative achievement of the revised target was 27\.48%, formalized the exclusion of SGH as a service provider resulting in a further reduction of end-project target, an extension of the project, and partial cancelation of the Grant\. It can be argued the project could have benefitted from an earlier comprehensive restructuring of the project soon after the MTR that would have realistically taken into account all the challenges that the project was encountering, however given the socio-political context prevailing in the country, and some of the constraints of working with three grant recipients,21 the Bank team made appropriate and feasible decisions\. 75\. In the absence of a measurable indicator defined for part (b) of the PDO, this ICR attempts on assessing the extent to which the project enabled designing and implementing a model of maternal care which demonstrated a potential engagement with the private sector and a subsequent dialogue with the government\. At MTR, the Bank team requested the original IVE, Cardno, to provide an evaluation report on all aspects of the project including an analysis of the service delivery model; and also contracted Options, a consulting firm, to provide advice on the most suitable service delivery model for maternal health services based on experiences in Yemen\. In addition to the review report, Options helped organize the Amman workshop (referred to earlier)\. Further discussions and sharing of the KfW experience resulted in the Bankâs MNVP project, thereby initiating garnering of the governmentâs buy-in into a focus on results and contracting with service providers for service delivery\. Therefore, this project, as an innovative model and through a difficult implementation in a fragile conflict country context, provided several lessons for the future engagement in Yemen towards addressing maternal mortality, though it may take more time Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 19 % births by skilled attendants â 5,273 (17\.5%) 20 % births by skilled attendants â 12,282 (81\.9%)Â 21 Â There were three grant recipients bound by one legal agreement which imposed inflexibility to reach a consensus during design and implementation, and the requirement of getting written formal requests for restructuring and cancellation, thus the time lag between reaching agreements on the ground and reflecting them in aide memoires and the actual finalization of restructuring\. 19Â to build sustainable models of engagement with the private sector\. There was a missed opportunity of amending part (b) of the PDO during either or both of the project restructurings, to make it more measurable and possibly realistic\. 76\. Taking into account the weighted average of the PDO during the three phases of the project (Moderately Satisfactory) and the assessment of part (b) of the PDO, the overall achievement of the PDO is rated as Substantial\. 3\.3 Efficiency 77\. At the Commitment stage, a preliminary analysis was conducted based on secondary research and the Programâs cost assumptions; and it was deemed that a quantitative economic and financial analysis of the Program would not provide useful insights into the program, primarily as there were minimal revenue streams (minimal user fees of US$15 per patient) as compared to the per patient investment of US$135 made by GPOBA\. Further, in the absence of detailed pricing and household spending data, quantifying the expected economic benefits and conducting a robust economic analysis was deemed not feasible and inappropriate\. An IRR was calculated for the satellite clinics and estimated to be 11%\. Details of the costing and pricing are provided in Annex 3 A\. 78\. Only a single maternal mortality was recorded amongst the deliveries reported under the project, which indicates substantial gains for the limited group of project beneficiaries, given the high maternal mortality ratio in Yemen\. The assisted delivery rate reached 80%, ante and post natal care 70%, and cesarean sections ranged between 5-15% for the enrolled women\. Clearly a group of poor women in their reproductive age benefitted from the project, however a more detailed analysis was not possible as the population of beneficiaries was difficult to define (particularly because the number of complicated pregnancies that could enroll with the project was capped at 15%)\. In addition, due to the overall limited time and significantly delayed access to data, and inability for a visit to or relevant discussions with stakeholders in Yemen the analysis was limited\. Efficiency is therefore rated as Modest\. 3\.4 Justification of Overall Outcome Rating 79\. Given the fact that the project was indeed a bold endeavor to test a new model of engagement in the reproductive health sector in Yemen, combining the Substantial rating for the relevance of objectives, design and implementation, and achievement of the PDOs and Modest rating of efficiency, the Overall Outcome rating is Moderately Satisfactory\. 3\.5 Overarching Themes, Other Outcomes and Impacts 80\. Discussion with, and reports from SOUL, indicate that their participation in the project has contributed to their capacity enhancement, and that they now feel better equipped and more confidant to support similar initiatives, particularly working with external/international organizations\. Influenced by their experience, they have submitted a proposal to the Islamic Bank for Development to Finance a âSolidarity Fundâ that would potentially support poor women to avail the much needed maternal and child care services\. This Fund was potentially meant to be linked to the project beneficiaries and service providers, but has not happened so far\. 20Â 81\. It is debatable the extent to which the project contributed to the capacity enhancement of the two private service providers â one opting out during the project, and the other, USTH performed well because of a champion (he had even initiated some discussions with the Municipality /Government to operationalize some public clinics based on this model)\. However, unfortunately this gentleman passed away recently, and USTH no longer seems to have a champion\. However, the project did build USTHâs capacity in working at the clinic level and introducing the concept of performance-based financing, provided that institutional memory is retained\. The conflict of 2011 and current political uncertainty in Yemen have no doubt had a negative on timely implementation\. 4\. Assessment of Risk to Development Outcome 82\. As discussed above, Part (a) of the project was met with the substantially revised and reduced target during the extended period of the project\. However, according to available information, no part of the intervention is being continued after project closing (no enrollment of poor women or provision of subsidized maternal care to them by the private service provider) because the grant subsidy is no longer available and the financial sustainability model envisioned was not realized\. Because of the prevailing uncertain country context, sustained Government commitment is yet to fully materialize, as it may be less of a priority for the Government, given the situation\. The follow-on Bank project which supports maternal and newborn care is a performance-based voucher program working with public hospitals in the rural areas and urban slums of selected parts of Yemen, so far is not linked to project intervention in Sanaâa\. Based on this assessment, the Risk to the Development Outcome is rated High\. 5\. Assessment of Bank and Borrower Performance 5\.1 Bank Performance Bank Performance in Ensuring Quality at Entry: 83\. The project was prepared based on a GPOBA Concept Note\. For the period following the Concept Note and till the GPOBA Commitment Document and GA (signed on June 8, 2008), no other documents were prepared\. Subsequently a detailed OM was prepared (providing all necessary details, but differing from the Commitment Document at several places) enabling Project Effectiveness on September 9, 2008\. Feedback from SOUL indicates that while the project was being prepared (and till MTR) despite many interactions with the Bank team, there was a near complete lack of understanding of the project concept itself on part of the two selected private service providers (IFC clients)\. Therefore, the service providers did not comprehend fully the nature of the innovative model and the capacity requirements of implementing the project, particularly setting up and operating the satellite clinics\. And most importantly, the service providers were dissatisfied with the pricing of the SD package, perceiving it as being financially unviable for them\. This was dealt with by the Bank and IFC team by capping the complicated cases/cesarean sections at 15% of all cases received, thereby forcing SOUL not to/be able to enroll the high risk pregnancy cases, thereby defeating the very objective of the project of providing access to quality services to all eligible women As per discussions with the TTL, GPOBA guidelines placed certain constraints during implementation, e\.g\., being unable to provide pre- financing to the service providers and the co-payment by the beneficiaries\. This raises the concern 21Â of whether GPOBA guidelines were flexible enough to the respond to the evolving project context and increasing fragility to meet project objectives by all stakeholders\. The setting of the original target of 40,000 beneficiaries may have been ambitious given the overall context\. Given the above, the project could have been better prepared to ensure the full commitment and engagement of all parties, including setting of a realistic end-project target 22 , thereby mitigating many of the implementation challenges and project restructurings that ensued\. Therefore, on balance, given an innovative design, but lack of clarity with the main stakeholders, the rating of Bank Performance in ensuring Quality at Entry is rated as Moderately Unsatisfactory\. Quality of Bank Supervision: 84\. As alluded to earlier in the ICR, the Bank team identified several of the key implementation challenges early during implementation, and was proactive in supporting some remedial measures, such as working with SOUL to improve enrollment rates\. The revision of the SD package and rates, and thereby the first revision to the number of target beneficiaries was done soon after MTR\. However, it took till almost (about three months before) till the original project closing, to bring the other necessary changes into effect, which resulted in lost time and limiting the model for demonstration to a single service provider, finally having to extend the project with a partial cancelation of the Grant to be able to reach the revised the end-project target of beneficiaries served\. Discussions with the TTL revealed that these delays were a result of the inability of convincing an IFC client to withdraw from the project and legal issues related to that, as described earlier\. 85\. The early confusion regarding IFC, GPOBA vs Bank requirements to be followed resulted in only GPOBA Semi-Annual Reports (SAR) from the TTL to GPOBA for missions in August 2008, December 2008 and May 2009\. Following this, and a clarification from OPCS, the first aide memoire was provided for a mission in March 2010\.23 Following that four more missions are recorded by their respective aide memoires, the last one being in November-December 2013 (no final project closing mission is documented through an aide memoire)\. GPOBA SARs were also produced resulting in a duplication of effort by the task team\. The ICR was delayed beyond six months of closing due to inability to visit the country\.24 86\. As per the September 2010 GPOBA SAR, a Quality Assessment of Lending Portfolio was conducted for the project in May 2010 and its recommendations included a two year extension of the project\. On September 16, 2010, GPOBA provided a no objection to the Bank to make amendments to the payment mechanism (described earlier in the ICR) and a two year project extension\. A MTR for the project started in September 2010 and was completed the following month after an agreement reached on the pricing of the SD package\. The implementation challenges that the project was facing were highlighted at MTR, and the need to restructure the project (including a request from the Grant recipients) was referred to in the January 2011 mission\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 22 Â August 2008 GPOBA SAR, before project effectiveness, states the ability of the grant recipients to reach the target of 40,000 as one of the risks\.Â Â 23 Â Discussion with the TTL indicated that he would combine missions for different tasks in Yemen â preparation of the Health and Population Project and a Schistosomiasis Project, however unfortunately those documents had little reference to this project\. 24 Â This ICR Author was requested to take the task in mid-July 2014 and no ICR mission was possible because of the security situation in the country\. 22Â This mission rated the project as âUnsatisfactoryâ25and indicated that a project extension of two years would likely be required to reach the revised proposed target of 30,000 women\. This proposed extension and upgrading of project rating to âSatisfactoryâ was made conditional (by the Bank and GPOBA) to the formal revision of the PDO target and an enrollment of 10,000 beneficiaries by June 30, 2011\. The next reported mission (reverse mission in Amman, Jordan) after that was in October 201226 after both the first and second restructurings were completed and rated the project as âSatisfactoryâ\. The government also participated in this mission and the project experience and implementation model was shared with them\. No other discussions with the Government are recorded through the supervision period\. Management letters for two of the five aide memoires were available for review for the ICR\. ISRs were also prepared following the OPCS clarification, and a total of eight ISRs (Seq\. 2-9) from December 2010 to June 2014 were available for review - with PDO/IP ratings being Moderately Unsatisfactory (MU)/MU till Nov\. 2011, with an upgrading to Moderately Satisfactory (MS)/MS in July 2012 and further to Satisfactory (S)/S in December 2012 which was maintained till project closing\. The ISRs however provided no discussion or justification of the ratings and their change, and no issues were brought to Managementâs attention\. Comments by Management were provided in the last ISR\. While the main dependence was on IVE reports, there is no documented evidence of the Bank team following up on issues such as only the finger-printing being used as the verification means (and in reality only IDs), or safeguards compliance (for which documentation in the required format was not available)\. 87\. Performance of the Independent Verification and Evaluation Agency- the IVE performed its designated tasks through the project (though there was a change in the IVE as described earlier)\. Given the critical importance that the IVE monitoring and reporting played in the project design, and that there are some data discrepancies and interpretation of key definitions, including in its final report, IVEâs Performance is rated as Moderately Unsatisfactory\. 88\. Overall, the project design and implementation challenges were identified early on and substantial hand-holding was provided by the Bank team till MTR\. This resulted in two project restructurings which enabled part (a) of the PDO to be achieved\. There was likely a missed opportunity in addressing the ambiguity of measurement of part (b) of the PDO, however the Bank team did work towards learning from the demonstration model\. Subsequently the conflict period was difficult for supervision and monitoring, and these events likely adversely affected a more meaningful engagement with the government\. In conclusion, the Quality of Bank Supervision is rated as Moderately Satisfactory\. Justification of Rating for Overall Bank Performance: 89\. Proactive identification and addressing of the challenges early during project supervision helped achieve part of PDO following the restructurings\. The highly satisfactory performance of SOUL, described below, was no doubt facilitated and supported by the Bank team\. Lessons were learned and appropriately incorporated into the MNVP project including the decision to use vouchers instead of performance-based financing\. Therefore, Overall Bank Performance is rated Moderately Satisfactory\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 25 Â Though the February 2011 ISR rates are MU/MUÂ 26 Â The hiatus due to the conflict in 2011, but does not explain the gap of almost one year and nine months\.Â 23Â 5\.2 Borrower Performance 90\. The Government did not substantially participate in the project beyond project approval\. Performance of the Grant Recipients (Implementing Agencies): 91\. To begin with the project was implemented by three grant recipients, however with the withdrawal of one of them, the project closed with two\. Their individual performance is described below\. 92\. SOUL - SOUL was responsible for three main tasks - community outreach to promote and execute marketing for the project; enrollment of eligible women; and education/awareness campaigns on maternal and child health\. At the start, the project baseline was also done by SOUL\. Throughout the project, SOUL was a willing and enthusiastic partner, understood the project, and met its performance targets on a regular basis\. SOUL represented the grant recipients as the Project Coordinator throughout the life of the project (though originally envisaged to be on a six-monthly rotational basis)\. It, likely went even beyond its terms of reference to help resolve challenges, e\.g\., when it played the role of an effective mediator between the Bank team and USTH when the latter was proposing to withdraw from the project in 2010\. The tailor-made communication campaign developed by SOUL and implemented in response to the doubts and suspicions that the community had about the project paid dividends in terms of marked improvements in enrollments\. Even later in the project during its extended phase, SOUL launched a three-track health education campaign targeting â the field (schools, mosques, other community places); medical staff to increase awareness of maltreatment of patients; and media\.27 By the end of field promotion for enrollment in September 2013, according to their database (which is maintained till date) they had approached and registered 34,271 women\. However the total number of ID issued was 20,499 - around 25% of women dropped out for personal reasons or were declined enrolment as they had complicated pregnancies\. SOULâs final report (October 2014) documents their feedback that this project had a unique and untraditional design (and first for Yemen) that created a partnership between NGOs and the private sector to address the maternal mortality challenge; and that the results-based design contributed to the achievements\. Inspired by the project experience, SOUL has initiated the process of establishing a Fund to enable poor women to get critical maternal services\. SOULâs Performance is rated as Highly Satisfactory\.28 93\. USTH â In terms of performance as measured by timely setting up of the satellite 29 clinics and service delivery indicators, USTH performed well through the project\. However, because of financial losses that it was facing, USTH expressed its desire to withdraw from the project around September 2010, and its 5 clinics stopped providing services\. According to the Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 27 Â In the last two weeks of December 2013, 8 Radio short dialogues were prepared and broadcasted on Sanaâa Radio\. The dialogues were repeated three times a day to total up to 18 minutes a day\. Female audience is estimated to have reached around 100,000 only in Sanaâa, besides more audience in different parts of the country where Sanaâa Radio reaches\. SOUL website and blog\. Facebook SMP page got 1700 likes\.Â 28 While the ICR author was informed that, SOUL, during the same period of project implementation was rated Unsatisfactory for two other projects in Yemen (the Healthy Mother Project, and the Youth Project), this assessment is based only on what SOUL was meant to do in this project and how it performed\. 29 Two satellite clinics established by August 2009, 5 by MTR and one after that, all 6 closed in 2011, 2 reopened in April 2012, 1 more reopened in October 2012, therefore 3 clinics then operated till closing\.Â 24Â Bank team, these losses resulted from the lack of experience in implementing the innovative outputs-based disbursement service delivery model at the satellite clinics, as USTHâs was mostly related with service delivery at the hospital level\. USTH also successfully implemented certain cost containment measures at their clinics after the MTR\. Since post-MTR agreements, USTH was fully engaged in the project, and by closing of the project had provided safe delivery services to 15,612 women of which 1,172 were complicated\. A total of 10,316 (66%) of these women availed of four antenatal visits, and 10,407 (66\.7%) had one postnatal visit\. USTHâs Performance is rated as Satisfactory\. 94\. SGH â The unsatisfactory performance, and doubts of its commitment to the project was highlighted by the Bank team from August 2009 onwards30, despite SGH having been an IFC client\. SGH seemed to be the most dissatisfied with the pricing of the SD package\. At MTR, SGH was operating one clinic and had provided delivery services to 163 women\. At the close of MTR, SGH expressed a renewed interest to participate, and the Bank team agreed on time-bound actions which included opening of more clinics; however in January 2011 it conveyed to the Bank that it would not be opening any new clinics\. The Bank even agreed that SGH would continue operating only one clinic and that their end-project target would be reduced to 2,000\. While the formal withdrawal of SGH from the project was in May 2012 (second restructuring),31 it had stopped providing services since May 2011 when its sole clinic was closed\. However SGH delayed the formal agreement because of their reluctance to formally withdraw from the project\. Till then, SGH had provided safe delivery services to 529 women of which 56(10\.6%) were complicated\. A total of 207 (39%) of these women availed of four antenatal visits, and 204 (39%) had one postnatal visit\. While SGHâs withdrawal was attributed largely to the financial crisis, based on the assessment, SGHâs Performance is rated as Highly Unsatisfactory\. Justification of Rating for Overall Borrower Performance: 95\. Despite the highly unsatisfactory performance of SGH, given the fact that the project was able to reach its revised end- target of reaching eligible poor women with safe maternal care services despite many implementation challenges, significantly because of the commitment of SOUL and USTH, the Overall Borrower Performance is rated as Moderately Satisfactory\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 30 Â In 2009 when SHG had not yet established its first satellite clinic and it was providing services to eligible beneficiaries through an outpatient clinic in its hospital, it was working with less than minimum staff which increased its reputational risk thereby negatively affecting enrollment rates\. SGH was allowed a transitional period up to May 31, 2009 to continue to operate through this outpatient clinic to provide services only for the already enrolled cases, and it was agreed that enrolled new cases would be referred to the new clinic, once established and fully operational\. Â 31 Â The TTL informed the ICR that SGH took a long time to sign the legal papers that marked their withdrawal from the project\. 25Â 6\. Lessons Learned Â Ensuring a Standard of Practice for the World Bank Group: 96\. This project has an important lesson demonstrating the importance of a clear understanding and agreement of guidelines, requirements and its implications for project preparation and implementation by different members of the Group\. A better clarity and realism on the applicability of GPOBA policies and procedures to Bank projects is critical\. Some of the guidelines, e\.g\., inability to pre-finance service providers, and the implications of working with an IFC client later caused considerable implementation delays, including that GPOBAâs principle of copayment by the beneficiaries may have excluded some of the poor\. Establish a more thorough understanding of the country context, capacity and requirements of all project participants during project identification and continue to promote this understanding with sustained collaboration throughout implementation: 97\. While the project design was no doubt innovative for the Yemen health sector and benefitted from this pilot, with hindsight it could have benefited from a much more robust assessment of readiness of all parties, and, given the innovative project approach and fragile context, from more intensive collaboration amongst all parties during preparation and implementation\. Although the project clearly addressed needs identified in the CAS, Government was not involved throughout the project to the level envisioned at inception, yet it was assumed that they would be positively influenced by the experience\. Non-governmental participants, specifically the private sector and NGO service providers, were consulted during project design and inception; however, it is unclear that the nature and extent of discussions were sufficient for full understanding of the requirements involved in such an innovative program and within the fragility context\. This lack of clarity was reported to have diminished the original enthusiasm and interest of the providers\. Introducing innovations through smaller pilots with regular reviews, particularly in a conflict- fragile country: 98\. When introducing innovations, which are no doubt needed to influence desired development outcomes, smaller pilots with regular reviews may be more effective\. The project may have benefitted had it retained the original project design of a pilot of six months to one year followed by a critical review, and then gradually expanded with additional service providers and more government participation based on lessons from the pilot and any adjustments needed to account for the increasingly fragile context\. This is particularly important in this instance where the project attempted a number of simultaneous innovations, including influencing change in health seeking behaviors that have deep cultural roots, introducing an output based approach to service delivery and inviting collaboration between the government and the non-governmental sector, both for-profit and not-for-profit, with an intent to influence public policy, all against the context of escalating fragility\. Clear targeting of the poor and opportunities for cross subsidization: 99\. The PDO included the distinct goal focused on providing quality maternal care to a targeted group of poor women\. The project used both geographic targeting and a variety of 26Â marketing methods to reach this goal\. Poverty and fragility levels continued to increase during the project period, yet it is not fully clear the extent to which this affected the project, as this requires deeper examination beyond the scope of this report\. 100\. The project design envisioned that satellite clinics would eventually operate as profit centers in that future phases would see participation by the non-poor (specifically through company and industry health programs) at differentiated pricing levels\. This non-poor participation would generate additional revenues earmarked for a sustainability fund, a mechanism used successfully in other regions\. For the complex contextual reasons presented throughout, this vision was not realized; however, SOUL plans to adopt this sustainability fund approach\. 101\. There was evidence of sustained demand for these services, as reported by SOUL, both from the poor and, more surprisingly, from non-poor individuals (not through companies), who tried to enroll in the last two years of the project\. There appears to have been no project mechanism for capitalizing on the desired participation of non-poor individuals, which may have provided an alternative source of some cross subsidization and project strengthening\. Complexity vs Need for a Robust M&E System: 102\. There is no doubt that all projects require M&E; that robust M&E is a core concept for successful performance based projects; and, that independent verification is required because the payment of grant subsidies is based on achievement of individual outputs\. There is an important distinction to be made between a robust system and a complex system\. The set of performance indicators, monitoring and tracking indicators and performance bands were all reported; however, heavy reporting requirements (all of which translate to increased costs for all parties), data inconsistencies and misinterpretation raise the issue whether a simpler system would have been more useful, provided for more straightforward evaluation and ensured better oversight\. Additionally, the absolute dependence on the IVE reports may merit an adjustment for future similar projects\. A more structured and concerted engagement with Government, the Ministry of Health (required) and also the Ministry of Finance (desirable), is required for any project that wishes to effectively influence public policy, especially one that envisions growth using government and donor mobilized resources, as in this instance\. 103\. Involvement could be facilitated by exposure to similar experience and technical dialogue with counterparts from other countries, as well as close monitoring of the evolving country context, and within that context, the changing priorities for government\. 7\. Comments on Issues Raised by Borrower/Implementing Agencies/Partners a) Borrower/Implementing Agencies: A completion report by SOUL is available and can be accessed separately\. b) Co-financiers: Not applicable\. c) Other Partners and stakeholders: Not applicable\. 27Â REPUBLIC OF YEMEN Safe Motherhood Voucher Program Annex 1\. Project Costs and Financing a) Project Cost by Component (in USD Million equivalent) Prior to the restructuring: Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) Project Preparation and Start-up 0\.049440 0\.047159 95\.39% Establishment of Satellite Clinics 0\.466200 0\.16968324 36\.40% Service Delivery 5\.403960 2\.54810569 47\.15% Community Outreach Administrative 0\.356600 0\.55276798 155\.01% Education and Awareness Campaigns 0\.189000 0\.23750902 125\.67% Beneficiaries contributions 0\.612000 0\.24531032 40\.08% Total Financing Required 7\.077200 3\.800535 53\.7% After restructuring: Appraisal Actual/Latest Percentage of Components Estimate (USD Estimate (USD Appraisal millions) millions) Project Preparation and Start-up 0\.049440 0\.047159 95\.39% Establishment of Satellite Clinics 0\.169690 0\.16968324 100\.00% Service Delivery 2\.815480 2\.54810569 90\.50% Community Outreach Administrative 0\.557740 0\.55276798 99\.11% Education and Awareness Campaigns 0\.319840 0\.23750902 74\.26% Beneficiaries contributions 0\.612000 0\.24531033 40\.08% Total Financing Required 4\.52419 3\.800535 84% Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 32 As per the FTR 33 Â As per the FTRÂ 28Â b) Financing Â Actual/Latest Source of Appraisal Estimate Percentage of Type of Co-financing Estimate Funds (USD millions) Appraisal (USD millions) WB Grant 6\.232100 3\.56 62\.9% (GPOBA) 41\.4% Beneficiaries Copayment 0\.612000 0\.245310 40% Service Contribution to 0\.233100 0\.169690 72\.8% Providers Construction of SCs Total 7\.07 4\.34 61\.3 % Â Â 29Â REPUBLIC OF YEMEN Safe Motherhood Voucher Program Annex 2\. Final Disbursement Table Â Â Category Original Amount of Actual Percentage Grant the Grant Disbursement of Allocation Allocated Expenditures after to be (US$) restructuring Financed after (US$) restructuring (A) Project Preparation and Start- 49440 49440 47,159 95\.39% up - SOUL (B) Community Outreach 356600 557740 552,767\.98 99\.11% Administrative Cost-SOUL (C) Education and Awareness 189000 319840 237,509\.02 74\.26% Campaigns-SOUL (D) Establishment of Satellite Clinics D-1 USTH-AL MAWARID 116550 150260 150,258\.24 100\.00% D-2 SYHC 116550 19430 19,425 99\.97% (E) Service Delivery Subsidies 5403960 2815480 2,548,105\.69 90\.50% Total 6232100 3,912,190 3,555,224\.93 90\.88% 30Â REPUBLIC OF YEMEN Safe Motherhood Voucher Program Annex 3\. Outputs by Components A\. Pricing of Safe Motherhood Service Delivery Package Appraisal Survey by IFC - Summary of costs from five Yemeni hospitals (US$) Saudi German Mother Azal Hospital German UST Hospital Yemen Hospital Hospital Hospital Antenatal Care 54 57 64 64 34 Delivery 155 180 149 180 68 Family Planning 18 29 20 20 12 Basic Package 227 266 233 264 114 C-Section 300 750 390 450 298 1\. According to the Concept Note, a preliminary local costing market research was conducted to determine an indicative average cost per patient of the defined package of services that could be used as a basis to launch the pilot\. The average cost amounted to US$160 ($120 for antenatal care + delivery + family planning, $31 built-in subsidy to allow for a maximum of 20% caesarian sections, $5 built-in subsidy for other diseases during pregnancy, and $4 for the Voucher Management Unit fees (original design was voucher-based)\. The Panel of Experts at the Concept Stage endorsed a package price of US$150 that was negotiated and agreed with the service providers\. While the package price was discounted to current quoted prices, it is deemed fair given that the bulk of services would be delivered at the community and not hospital level\. A minimal user fee of US$15 would be contributed by each targeted women, which would be paid in month 8 or 9 of the pregnancy, prior to delivery\. The US$15 was determined based on the current practice of Yemeni families giving US$10-US$20 on the day of delivery to whoever helped the pregnant woman deliver\. The costs of treatment and medication in the package price including an assumed estimated 15% of patients requiring caesarian sections/emergency care\. This price was also compared to local and international peer pricing\. While the package price agreed by the two 31Â providers was within the range of pricing of other private Yemeni providers, the quality (services, staff, facilities, equipment) and capacity of the two providersâ current private hospitals far exceeded that of the other local Yemeni private providers\. Internationally, the package pricing was also comparable e\.g\. costs of similar quality services by similar quality providers in India range from US$350-1500\. 2\. Original: Service Delivery Package price - up to a maximum of US$150\.00 â with GPOBA subsidy up to maximum of US$135\.00 and Beneficiary Contribution of US$15\.00\. Revised Pricing of Safe Motherhood Service Delivery Package agreed at MTR34 Revised Price of Service Beneficiary GPOBA Subsidy Unit Cost (US$) Package Contribution (US$) (US$) Category A: Normal 15\.00 120\.00 135\.00 Delivery Category B: Special 15\.00 200\.00 215\.00 Pregnancies and Deliveries Category C: Cesarean 15\.00 450\.00 465\.00 Section and Emergency Operations Optional: Neonatal Care in 125\.00 incubator for unlimited number of days B\. Environmental and Social Performance Requirements as per Grant Agreement 3\. Throughout the duration of the project: 4\. The Service Providers shall: (a) design, construct, operate, maintain and monitor the Project in compliance with the Government of Yemen and local requirements as well as the applicable IFC Performance Standards on Social & Environmental Sustainability), and the applicable Environmental, Health, and Safety General Guidelines (General Environmental, Health and Safety, and Health Care Facilities), and (b) provide AMR to the World Bank, as specified in section 6\.3\.6 and Annex F of the OM\. The AMR information has to be collected in a manner consistent with applicable IFC Environment and Health and Safety Guidelines (which include Environmental and Health and Safety â General Guidelines (April 2007) and Environmental and Health and Safety Guidelines for Health Care Facilities (April 2007) and the requirements of the Country\. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 34 Â The revised price list was developed based on: (i) study of the actual costs of the two Service Providers (USTH and SGH) and (ii) the market prices of equivalent Service Providers to ensure that these prices were competitive, economical, and developed in a transparent manner\. The price list also provided incentives for efficiency to contain costs and ensure the continuation of Service Providers in the delivery of the package of services under the Project\.Â 32Â 5\. For each clinic, the Service Providers will ensure the following: a) each clinic has, prior to opening, prepared written procedures dealing with sanitation, infection control and medical waste handling, and has trained the staff in application of these procedures; and b) relevant aspects of the Environmental and Social Management Systems for the Service Providers (as detailed in the OM) will be applied in all aspects of the day-to-day operations of the clinics, including in particular: i\. regular re-training of staff on sanitation, infection control and medical waste management; ii\. regular internal auditing of environmental and social performance; and iii\. Appropriate record-keeping and reporting on sanitation, infection control and medical waste management\. C\. Details of Targeted Districts and Clinics Established and their Operationalization No\. District No\. of Satellite Service Providers Clinics Planned Actual Planned Actual 1\. Â 1 1 USTH Bani-Al Hareth SGH 2\. Â 2 0 - Al-Thurah SGH 3\. Â 2 1 SGH SGH Shua'ob 4\. Â 1 0 SGH - Sana'a Old City 5\. Â 2 1 USTH Ma'een USTH 6\. Â 1 1 USTH Al-Safia USTH 7\. Â 1 1 USTH USTH Azal 8\. Â 0 1 - Al-Tahrir USTH 9\. Â 0 1 - Al Wehda USTH 10\. Â 1 0 USTH - Al-Sabeen Â 12 7 6 SGH â 6 USTH 1 SGH â 6 Total USTH 33Â Operationalization of Satellite Clinics over the 3 Project Periods Service Period 135 (Sep 2008 â Mar Period 236 (Apr 2011 â May Period 3 (Jun 2012 â Feb Provider 2011) 2012) 2014) Planned Actual % Planned Actual % Planned Actual % USTH 6 6 100 6 2 33\.3 6 3 50 SGH 6 1 16\.6 Total 12 7 58\.3 6 2 3\.33 6 3 50 Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 35 Represents the period prior to the first amendment to the GA\. 36 Represents the period prior after the first amendment till the second amendment to the GA\.Â 34Â D\. Performance Indicators and Bands for Service Providers USTH output table Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Cumulative Total Indicator Sep 08-Jun 09 Oct-Dec 09 Oct-Dec 10 Oct-Dec 11 Oct-Dec 12 Oct-Dec 13 Jan-Mar 10 Jan-Mar 11 Jan-Mar 12 Jan-Mar 13 Apr-Jun 10 Apr-Jun 11 Apr-Jun 12 Apr-Jun 13 Jan-Feb 14 Jul-Sep 09 Jul-Sep 10 Jul-Sep 11 Jul-Sep 12 Jul-Sep 13 Unit Performance based indicators Actual 0 28 99 171 482 999 664 523 489 805 591 212 306 587 651 782 1146 1677 1608 252 12,072 % of births assisted by skilled Target 0 46 147 215 618 1343 1259 787 649 1125 797 281 342 705 806 922 1344 1927 1857 337 15,507 attendants (Target of >= 80%) % 0% 61% 67% 80% 78% 74% 53% 66% 75% 72% 74% 75% 89% 83% 81% 85% 85% 87% 87% 75% 78% % of women with potential or Actual 0 3 13 19 55 80 28 29 26 60 74 45 44 71 56 69 89 190 173 48 1,172 acute obstetric complication Target 0 46 147 215 618 1343 1259 787 649 1125 797 281 342 705 806 922 1344 1927 1857 337 15,507 referred to the hospital (Target % 0% 7% 9% 9% 9% 6% 2% 4% 4% 5% 9% 16% 13% 10% 7% 7% 7% 10% 9% 14% 8% of 5-15%) Actual 0 44 121 205 387 554 631 459 455 702 464 66 285 590 488 851 1141 1431 1105 337 10,316 % of women that complete Target 0 46 147 215 618 1343 1259 787 649 1125 797 281 342 705 806 922 1344 1927 1857 337 15,507 basic antenatal care visits (4 visits) (Target of >= 75%) % 0% 96% 82% 95% 63% 41% 50% 58% 70% 62% 58% 23% 83% 84% 61% 92% 85% 74% 60% 100% 67% Actual 0 36 107 213 475 816 602 580 414 533 376 157 239 447 451 716 1154 1545 1546 0 10,407 % of women that complete Target 0 46 147 215 618 1343 1259 787 649 1125 797 281 342 705 806 922 1344 1927 1857 337 15,507 basic postnatal care visits (1 visit) (Target of >= 75%) % 0% 78% 73% 99% 77% 61% 48% 74% 64% 47% 47% 56% 70% 63% 56% 78% 86% 80% 83% 0% 67% 35Â USTH output table as per the restructuring periods Period 137 (Sep 2008 â Mar 2011) Period 238 (Apr 2011 â May 2012) Period 3 (Jun 2012 â Feb 2014) Indicator Target Achievement % Target Achievement % Target Achievement % 4415 2966 67\.18 3899 2990 76\.69 7898 6703 84\.87 % of births assisted by skilled attendants (Target of >= 80%) 4415 227 5\.14 3981 278 6\.98 7898 696 8\.81 % of women with potential or acute obstetric complication referred to the hospital (Target of 5-15%) % of women that complete basic 4415 2401 54\.38 3194 1972 61\.74 7898 5943 75\.25 antenatal care visits (4 visits) (Target of >= 75%) % of women that complete basic 4415 2829 64\.08 3194 1719 53\.82 7898 5859 74\.18 postnatal care visits (1 visit) (Target of >= 75%) Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 37 Â Represents the period prior to the first amendment to the GA\. 38 Represents the period prior after the first amendment till the second amendment to the GA\.Â 36Â SGH Output table Q2 July - Sept 2009 Q5 Apr-June 2010 Q9 Apr-June 2011 Q6 July-Sept 2010 Q4 Jan-Mar 2010 Q8 Jan-Mar 2011 Q3 Oct - Dec 2009 Q1 Sep 2008-June Q7 Oct-Dec 2010 Cumulative Total 2009 Indicator Unit Actual 0 9 24 25 27 5 81 38 1 210 Target 0 31 49 39 44 56 126 114 69 528 % of births assisted by skilled attendants ((Target of >= 80%) % 0% 29% 49% 64% 61% 9% 64% 33% 1% 39\.77% Actual 0 2 5 6 16 2 15 10 0 56 % of women with potential or acute obstetric complication referred to the hospital Target 0 31 49 39 44 56 126 114 69 528 (Target of 515%) % 0% 6% 10% 15% 36% 4% 12% 9% 0% 10\.61% Actual 0 13 11 21 17 36 36 54 19 207 % of women that complete basic antenatal care visits (4 visits) (Target of >= Target 0 31 49 39 44 56 126 114 69 528 75%) % 0% 42% 22% 54% 39% 64% 29% 47% 28% 39\.20% Actual 0 6 22 32 31 6 66 40 1 204 % of women that complete basic postnatal care visits (1 visit) (Target of >= 75%) Target 0 31 49 39 44 56 126 114 69 528 % 0% 19% 45% 82% 70% 11% 52% 35% 1% 38\.64% 37Â SGH output table as per the restructuring periods Period 139 (Sep 2008 â Mar Period 240 (Apr 2011 â May Period 3 (Jun 2012 â Feb 2011) 2012) 2014) Indicator Target Achievement % Target Achievement % Target Achievement % 528 210 39\.77 % of births assisted by skilled attendants (Target of >= 80%) % of women with potential or acute obstetric complication referred 528 56 10\.61 to the hospital (Target of 5-15%) % of women that complete basic antenatal care visits (4 visits) 528 207 39\.20 (Target of >= 75%) % of women that complete basic postnatal care visits (1 visit) 528 204 38\.64 (Target of >= 75%) NB: the targets were calculated for the respective periods from the different updates and not the cumulative Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 39 Represents the period prior to the first amendment to the GA\. 40 Represents the period prior after the first amendment till the second amendment to the GA\.Â 38Â E\. Performance Indicators and Bands for SOUL Table 1: Output Table (SOUL) SOUL Unit Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20 Sep 08-Jun 09 Jul 09-Sep 09 Project Total Jan-Mar 10 Jan-Mar 11 Jan-Mar 12 Jan-Mar 13 Apr-Jun 10 Apr-Jun 11 Apr-Jun 12 Apr-Jun 13 Oct-Dec 09 Oct-Dec 10 Oct-Dec 11 Oct-Dec 12 Oct-Dec 13 Jan-Feb 14 Jul-Sep 10 Jul-Sep 11 Jul-Sep 12 Jul-Sep 13 Indicator Intermediate Indicators Number of women enrolled in the project 406 245 575 968 1795 1231 907 1157 896 346 0 854 936 1051 1449 1979 1833 240 10 0 16,878 Performance based indicators Target 720 900 1080 1200 1736 2128 1500 2100 1504 NR 489 NR 840 NR 708 NR 768 NR 704 704 19,053 % of total women targeted per six months which are enrolled/registered in the project (Target of 75%) Actual 406 245 575 968 1795 1231 907 1157 896 NR 346 NR 1790 NR 1449 NR 1833 NR 10 10 16,888 % 56% 27% 53% 81% 103% 58% 60% 55% 60% N/A 71% N/A 213% N/A 205% N/A 239% N/A 1% 1% 89% % of total women as per the annexed # Reached 43 137 139 380 1080 NR NR NR NR NR 785 NR 1658 NR 1976 NR 1976 NR 1404 1404 23,429 table for the health education campaigns reached in sessions #Targeted 406 245 575 968 1795 NR NR NR NR NR 346 NR 1790 NR 1449 NR 1833 NR 10 10 16,888 (Target of 70%) 14040 14040 % 11% 56% 24% 39% 60% N/A N/A N/A N/A N/A 227% N/A 93% N/A 136% N/A 108% N/A % % 139% NR = Not required to report 39Â SOUL output table as per the restructuring periods Period 141 (Sep 2008 â Mar 2011) Period 242 (Apr 2011 â May Period 3 (Jun 2012 â Feb 2014) 2012) Targ Indicator Target Achievement % Target Achievement % Achievement % et Number of women enrolled in the 7647 2388 31\.22 1482 3032 204\.59 5967 6562 109\.97 project (until Dec 2011) % of total women targeted per six 11364 7284 64 2833 3032 107 4856 6572 135\.3 months which are enrolled/registered in the project (Target of 75%) NB: the targets were calculated for the respective periods from the different updates and not the cumulative Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 41 Â Represents the period prior to the first amendment to the GA\. 42 Represents the period prior after the first amendment till the second amendment to the GA\. 40Â F\. Payment Recommended for SOUL and Service Providers Based on Performance Targets Met Â Year 2009 2010 2011 2012 2013 Entity 1st 2nd 1st 2nd 1st 2nd 1st 2nd 1st 2nd SOUL missing 1/5 missing missing missing missing missing 5/5 5/5 3/5 USTH missing 4/5 missing missing missing missing missing 5/7 7/7 6/7 Year 2009 2010 2011 2012 2013 WB Rating SOUL Moderately Moderately Moderately Moderately Satisfactory Satisfactory Satisfactory Unsatisfactory Satisfactory USTH Moderately Moderately Moderately Moderately Satisfactory Satisfactory Satisfactory Unsatisfactory Satisfactory Â G\. Project Funding Sources (per period)Â Â Table 4: Project Funding Sources Â Unit Unit cost Total Planned USD 6,232,100 GPOBA subsidy Actual 3,560,000 Planned USD 612,000 User contribution Actual 245,310 Planned USD 233,100 Private financing Actual 169,690 Planned USD 7,077,200 Total Actual 3,975,000 Â Â Â Â Â 41Â Â H\. Education and Awareness Component â Planned and ActualÂ % of women in the target areas reached by health education Period Targeted Reached campaigns 2008+2009(a) 1,226 319 26% 2010 4,901 3,851 79% 2011 2,399 2,943 123% 2012 4,290 5,310 124% 2013+2014(b) 4,072 11,006 270% Total 16,888 23,429 139% I\. Assessment of PDO Achievement Â Original PDO Revised PDO Revised PDO (2\.6 years from (1\.2 years after (1\.9 years after Overall start) original) first revision) 1 Rating U MU S 2 Rating value 2 3 5 0\.41with 2\.58 with Total disbursed 3 0\.57/6\.23 cumulative cumulative 3\.56 US$million 0\.98/6\.23 3\.56/3\.92 Weight % (total disbursed/final 0\.41/3\.56%=11% 2\.58/3\.56%=73% 4 0\.57/3\.56%=16% 100% disbursed amount of US$million) Weigh value 3x0\.11=0\.33 5 2x0\.16=0\.32 5x\.73=3\.6 4\.25 (2 X 4) 6 Final rating MS A\. Note: HU (1); U (2); MU (3); MS (4); S (5); HS (6) 42Â REPUBLIC OF YEMEN Safe Motherhood Voucher Program Annex 4\. Bank Lending and Implementation and Support/Supervision Process (a) Task Team Members Responsibility/ Names Title Unit Specialty Lending/Grant Preparation Carmen Nonay TTL GPOBA Olaf Smulders STC GPOBA Samantha Naidoo IFC Investment Officer IFC Investment Officer Salah-Eddine Kandri Senior Investment Officer IFC Sr Investment Officer Mikael Sehul Mengesha Procurement Specialist WB Procurement Spec\. Jamal Abdulla Abdulaziz Procurement Specialist WB Procurement Spec\. Josephine Masanque FM Specialist WB FM Specialist Ai Chin Wee Senior Operations Officer WB Sr Operations Officer Meskerem Brhane Senior Social Development WB Sr\. Social Development Specialist Specialist Ghada Youness Legal Counsel WB Legal Counsel Lars Johannes Peer Reviewer GPOBA Peer Reviewer Supervision/ICR Financial Management Moad M\. Alrubaidi Financial Management Specialist MNAFM Specialist Samira Al Harithi Procurement Specialist MNAPR Procurement Specialist (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including travel No\. of staff weeks and consultant costs) Lending 10\.32 72,219\.56 Supervision/ICR 55\.98 818,300\.88 Total: 66\.30 890,520\.44 43Â REPUBLIC OF YEMEN Safe Motherhood Voucher Program Annex 5\. Documents Made Available for the ICR 1\. Operations Manual (August 2008)\. 2\. Draft GPOBA Concept Note, January 2007\. 3\. GPOBA Commitment Document, June 2007\. 4\. GPOBA Grant Agreement June 11, 2008\. 5\. Grant Amendment Letters i\. March 22, 2011, and ii\. May 31 2012 with Restructuring Paper\. iii\. Revised Disbursement Letter Jan 17, 2013\. 6\. Aides Memoires and Management Letters (ML) i\. AM dated March 30-31, 2010 with ML dated April 15, 2010; ii\. MTR AM Sep 25-29 & Oct 16-27, 2010, no ML; iii\. Post MTR Mission AM Jan 15-16, 2011, no ML; iv\. AM dated October 14-16, 2012 with ML dated Nov\. 10, 2012; v\. AM (without Annexes) dated Nov 28-29 and Dec\. 17-18, 2013, no ML\. 7\. BTORs â May 2-6 2009\. 8\. Semi-Annual Status Report GPOBA â Aug 2008, Feb 2009, Aug 2009, Feb 2010, Sep 2010, April 2011, Oct 2011, and Aug 2012 9\. ISRs â (i) Seq 2 - Dec\. 29, 2010; (ii) Seq\. 3 â Feb\. 20, 2011 (iii) Seq\. 4 â Jun\. 14, (iv) Seq\. 5 - no date specified (possibly Nov\. 14, 2011 as inferred from next ISR); (v) Seq\. 6 - Jul\. 10, 2012; (vi) Seq\. 7 â Dec\. 18, 2012; (vii) Seq\. 8 - Sep\. 23, 2013; (viii) Seq\. 9 â Jun\. 3, 2014\. 10\. IVE Reports (i) SOUL Quarterly Invoice Verification Reports - Q14, Q16, Q 16-17, Q 18&19; and one draft management letter for period Jan1 - June 30, 2012\. (ii) USTH- Quarterly Invoice Verification Reports - Q 14, Q 16, Q 16-17, Q 18, Q 18&19, Q20\. (iii) Final Term Review for SOUL, USTH and SGH - Sep 2008 - Feb 2014 11\. Project Completion Report from SOUL October 2014\. 12\. Others: PAD Maternal and Newborn Voucher Project, December 2013 44Â REPUBLIC OF YEMEN Safe Motherhood Voucher Program COUNTRY MAP 45Â	REVIEW
P004213	ï»¿ ICRR 11335 Report Number : ICRR11335 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 08/15/2002 PROJ ID : P004213 Appraisal Actual Project Name : Ozone Depleting Project Costs 1\.63 1\.60 Substances (ODS) US$M ) (US$M) Recycling Project Country : Malaysia Loan /Credit (US$M) Loan/ US$M ) 0 0 Sector (s): Board: ENV - Other Cofinancing 1\.63 1\.60 environment (100%) US$M ) (US$M) L/C Number : Board Approval 92 FY ) (FY) Partners involved : Montreal Protocol Ozone Closing Date 12/31/1994 12/31/2001 Trust Fund Prepared by : Reviewed by : Group Manager : Group : Elaine Wee-Ling Ooi Andres Liebenthal Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The overarching objective of the project was to assist the government of Malaysia to meet its obligations under the Montreal Protocol (MP)\. The specific objectives were to provide financial and technical assistance to the government to: a) support the reduction of ODS consumption in mobile air -conditioning and fire extinguishers through recycling; and b) support efficient project implementation through institutional strengthening \. b\. Components i) Mobile Air-Conditioning (MAC) subproject ($880,000): technical assistance (TA) and investment components to Department of Environment (DOE) to strengthen its capability to implement and monitor ODS phase -out projects; computerized data bases; training of trainers and 4,000 MAC technicians; public awareness campaigns; and acquisition of 120 sets of recycling and leak detection equipment for selected service stations \. ii) Halon Recycling subproject ($720,000): TA and investment components to the Fire Services Department (FSD) to strengthen its project implementation and monitoring capabilities; engineering services to start up 7 recovery/recycling units and training of personnel in their use; setting up of systems and training programs for control/recovery/recycling of Halon 1301; laboratory equipment to test the quality of recycled halon; acquisition of Halon 1211 recovery/recycling units for installation at 50 fire stations and one central location; and acquisition of one Halon 1301 recycling and storage unit\. Component ii) was re-designed and its main activities became the contracting of a private company to establish and operate Malaysia Halon Bank (MHB); the maintenance of an inventory of Halon users; public awareness and the preparation and dissemination of information on halon alternatives; and the training of officials from FRD, DOE and the Customs Department\. c\. Comments on Project Cost, Financing and Dates The project received grant funding from the Ozone Trust Fund (OTF) for the amount of $1\.63 million\. The project was extended by 7 years due primarily to the performance of the Halon subproject which was affected by the general lack of knowledge then of ODS markets and technologies; and overestimation of client capacity \.` 3\. Achievement of Relevant Objectives: The objectives of the project were partially achieved after the prolonged project extension by 7 years\. a) reduce ODS consumption in MAC and fire extinguishers through recycing : achieved\. An approximate drop in consumption of 200-350 tons of CFC 12 in MAC (against 250 tons at appraisal) and 200 units (versus 130 at appraisal) of CFC recovery/recycling (R/R) machines were installed in service stations \. ICR also reported a drop in demand of 900 ozone depleting potential (ODP) tons of halons\. b) support efficient project implementation through institutional strengthening : partially achieved\. Notwithstanding the lack of client experience, the absence of a legal framework and to a lesser degree, appropriate financing mechanisms in the project design, negatively affected project outcome \. Overall CFC recycling targets were met but service stations were not sufficiently motivated to invest in non CFC technology \. The Halon subproject was even more negatively affected and had to be re -designed - but the attempt to use a private contractor to operate the Halon Bank was not feasible without the proper regulation \. The situation improved with the enactment of the Halon Management Regulation in 2000 and the reassignment again of FRD to manage the MHB \. Overall, DOE was considerably strengthened by the project and there appeared to be no significant implementation issues for the MAC component\. However only 250 MAC technicians were trained against 4,000 targeted\. Capacity development of FRD was achieved late in the project \. 4\. Significant Outcomes/Impacts: Enactment of the Halon Management Regulation in 2000 and the Refrigeration Management Regulation in 1999\. Both will contribute to subsequent ODS phase out initiatives in the country and in particular, the follow on National CFC Phase out project approved in 2001\. Organizational infrastructure put in place in FRD to manage the subsequent phase out of Halons - establishment of MHB and a halon data base\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Inappropriate project design characterized by the lack of regulatory framework to support achievement of project objectives and overly tight implementation period (2 years) which did not take into account the inexperience of clients (to Bank procedures and overall ODS management )\. Implementation problems and delays necessitated project extension by 7 years\. Private sector participation in the redesigned Halon component was not achieved \. 250 MAC technicians were trained against 4,000 targeted at appraisal Capacity development of FRD was achieved late in the project and it is unclear how adequately the training provided to the FRD and customs officials supported the reduction of halon demand \. It was not established in the ICR how significant was the reduced demand for 900 ODP tons of Halon 1211 in the overall context of halon reduction, especially when the Borrower had given high priority to the recycling of Halon 1301 (ICR 4\.1) Government did not meet its 2000 ODS phase out schedule\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Moderately Satisfactory This was not a particularly difficult or complex project yet it was only able to partially achieve its objectives after an extension of 7 years\. In addition to shortcomings in section 5, it is likely that the institutional building achievements benefited from other ODS projects in the country\. The modest efficacy and efficiency ratings of the project lead to a moderately satisfactory outcome rating Institutional Dev \.: Modest Modest Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Performance was marginally satisfactory \. The poor project design could be partly explained by the lack of overall global experience with ODS projects\. There did not appear to be any supervision from 1992-1995, even when original project completion date was 1994\. Borrower Perf \.: Satisfactory Satisfactory Performance was marginally satisfactory, due to inexperience and low capacity of implementation agencies\. Borrower commitment however was high throughout the project\. Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: Bank procedures for OTF assistance should be reviewed to ensure simpler and faster processing in order that ODS phase out obligations of MP signatory countries could be met \. Appropriate regulatory framework and raising of public awareness to support such regulations are necessary to support ODS phase out activities Financial subsidies for recycling CFC machines and training in the handling of non CFC technology should be provided to service stations \. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The quality of the ICR is marginally satisfactory, mainly because it does not discuss how this project fitted in with and contributed to the larger context of ODS phaseout in the country \. The ICR should have assessed the efficacy of the project as an instrument to assist the country to meet its obligations under the MP (as specified in the Country Program), inter alia, by providing adequate statistical information on the outcomes and impacts of the project in relation to the schedule for ODS phase out, and the status of, and results from, the MP compliance verification process\. Also given the global nature of the ODS problem, and the limited grant funds available to address them, it would have been useful for the ICR to include a discussion of the project's cost effectiveness, including comparison with MP thresholds and other ODS projects \. The discussion of the Halon subproject could have also been more thorough with respect to its revised targets \. It would also have been useful for the ICR to have attached Borrower comments, in view of implementation problems that were faced \.	REVIEW
P117107	Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) Report Number : ICRR0020289 1\. Project Data Project ID Project Name P117107 CN-Tech Vocational Ed Country Practice Area(Lead) China Education L/C/TF Number(s) Closing Date (Original) Total Project Cost (USD) IBRD-79180 31-Dec-2015 74,000,000\.00 Bank Approval Date Closing Date (Actual) 01-Jun-2010 31-Dec-2015 IBRD/IDA (USD) Grants (USD) Original Commitment 40,000,000\.00 0\.00 Revised Commitment 39,756,451\.15 0\.00 Actual 39,756,451\.15 0\.00 Sector(s) Workforce Development/Skills(99%):Public Administration - Education(1%) Theme(s) Education for the knowledge economy(100%) Prepared by Reviewed by ICR Review Coordinator Group Anthony Martin Tyrrell Judyth L\. Twigg Joy Behrens IEGHC (Unit 2) 2\. Project Objectives and Components a\. Objectives The project development objective (PDO) for the Liaoning and Shandong Technical and Vocational Education and Training (TVET) Project as per the Loan Agreement (approved June 10, 2010, signed August 9 and becoming effective November 5, 2010) was: "to improve the quality and relevance of technical education in eight schools in Liaoning and Shandong and produce lessons from this experience as a guide for future school reforms and policy development\." The same objective was also noted in the Project Appraisal Document (PAD, p\. 5), A project restructuring in January 2015 involved the formal revision of the PDO to read: "to improve the quality and relevance of technical education in project schools in Liaoning and Shandong provinces and produce lessons from this experience as a guide for future school reforms and policy development\." This revision reflected the fact that one of the targeted schools dropped out of the project\. (All Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) participating schools were located in urban areas, but served a predominantly rural population with about 70 percent of their enrollment -- just over 70,000 enrolled across the seven participating schools -- coming from low-income families, and another 15 percent from urban families receiving the basic living subsidy\.) The restructuring also involved the refinement of one outcome indicator for consistency with government reporting: "percent of graduates finding initial employment within three months in the specialties in which they were trained" was changed to "percent of graduates finding initial employment within six months in the specialties in which they were trained\." The estimated targets for the revised indicator remained the same, noting the targets referenced 91% and 98% success rates for Liaoning and Shandong provinces respectively\. The loss of one participating school had no material effect on the PDO or indicators\. The revision of the definition of the PDO indicator was warranted for consistency with client systems\. The fact that already ambitious targets were not revised was reasonable\. A split rating is therefore not warranted\. Finally, for the purposes of this validation exercise, this review assesses the project across the following two objectives contained within the overall PDO: â¢ Objective 1: To improve the quality and relevance of technical education in project schools in Liaoning and Shandong provinces; and â¢ Objective 2: To produce lessons from this experience [as Objective 1] as a guide for future school reforms and policy development\. b\. Were the project objectives/key associated outcome targets revised during implementation? Yes Did the Board approve the revised objectives/key associated outcome targets? Yes Date of Board Approval 20-Jan-2015 c\. Components The project had two components and a total of nine subcomponents, six under Component 1, and three under Component 2\. Component 1: School-Based Reforms and Innovation had six sub-components (original World Bank commitment, $39\.24 million total, actual $39\.24 million)\. The ICR does not provide specific detail on actual counterpart contribution (original counterpart financing commitment was $34\.13 million), but the ICR notes that "throughout implementation, counterpart funding was assured, often in amounts above what had been envisaged" (p\. 9)\. This component set out to introduce reforms that provided goods, services, and works through the following six sub-components: Subcomponent 1\.1: Strengthen the linkage between schools and industry\. This subcomponent aimed to strengthen and institutionalize linkages between the schools and local industry to promote a more efficient flow of information and services between the parties affecting the quality and relevance of the training offered by schools\. Subcomponent 1\.2: Improvement of school management\. This subcomponent aimed to build capacity to ensure the effective use of school resources and production of the learning outcomes needed by a market-led economy\. Subcomponent 1\.3: Curriculum reform\. This subcomponent aimed to introduce a new, more flexible competency-based training (CBT) curriculum developed from competency standards established in consultation with local industry to promote improvements in quality and relevance of the training offered\. Subcomponent 1\.4: Improvement of student assessment and quality assurance\. This subcomponent aimed to improve quality by helping establish a competency-based benchmark for measuring student and school performance and by providing employers with a tool to assess the level of competencies acquired\. Subcomponent 1\.5: Improvement of instructor capacity\. This subcomponent aimed to strengthen instructional capacity and the quality of training by providing services to train instructors through pre-service and in-service measures to use the competency-based curriculum and a learner-centered pedagogy\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) Subcomponent 1\.6: Upgrading of instructional equipment and facilities\. This subcomponent aimed to expand instructional facilities and equipment where there was evidence of market demand for the skills to be developed\. Component Two\. Knowledge Development, Policy Studies and Capacity Building (original World Bank commitment, $0\.66 million, actual $0\.42 million; original Korean Trust Fund commitment $0\.20 million, actual $0\.20 million)\. The ICR does not provide specific detail on actual counterpart contribution (original counterpart financing commitment was $0\.20 million), but the ICR notes that "throughout implementation, counterpart funding was assured, often in amounts above what had been envisaged" (p\. 9)\. Learning from school-based reforms and innovations was an important feature of the project intended to support better management and policy development for technical and vocational education and training throughout China\. This component was to provide support under three subcomponents as follows: Subcomponent 2\.1\. Conduct of monitoring, evaluation, and policy studies\. This subcomponent aimed to finance local and international services and goods (e\.g\., monitoring and evaluation system school-based reforms and innovations, a management information system containing the monitoring indicators, analysis of indicators and regular reporting of results, provincial level policy studies)\. Subcomponent 2\.2\. Dissemination of knowledge and good practices\. This subcomponent aimed to enhance knowledge acquired from monitoring and evaluation produced in regular reports and made publicly available in a variety of forms\. Subcomponent 2\.3\. Enhancing project management and coordination\. This subcomponent aimed to build capacity for project management through training and other supports to project management\. d\. Comments on Project Cost, Financing, Borrower Contribution, and Dates Project Cost: The project was estimated to cost a total $74\.53 million\. The ICR does not provide detail on actual overall costs, but notes that 99\.40% of planned World Bank financing was consumed, as was 100% of financing from the Korean Trust Fund\. Financing: The project was financed by a $40 million IBRD loan of which $39\.76 million (99\.40%) was disbursed\. $200,000 was also provided by the Republic of Korea Economic Development Cooperation Fund, of which 100% was disbursed\. Borrower Contribution: Planned borrower contribution was $43\.53 million\. The ICR does not provide detail on actual borrower contribution but, as above, it notes that "throughout implementation, counterpart funding was assured, often in amounts above what had been envisaged" (p\. 9)\. Dates: The project was restructured once, on January 20th 2015, to reflect in the PDO that one of the participating schools had dropped out of the project\. Funds originally allocated to the school that dropped out ($3\.50 million) were distributed across the other three schools in the Liaoning Province to meet price increases associated with civil works, materials, and equipment, as well as exchange rate losses\. The Level 1 restructuring also modified the second PDO indicator from "percentage of graduates finding initial employment within three months in the specialties in which they trained" to "percentage of graduates finding initial employment within six months in the specialties in which they trained\." This aligned the indicator with the Government's updated standardized indicator\. 3\. Relevance of Objectives & Design a\. Relevance of Objectives At preparation, the project's objectives were aligned with high-level goals â strengthening market institutions through reforms that would enhance performance and accountability of TVET institutions and increasing the relevance of technical and vocational education -- set out in the Governmentâs 11th Five-Year Plan (2006â2010), and with the World Bank Groupâs 2006â2010 Country Partnership Strategy (CPS) for the Peopleâs Republic of China (with particular reference to Pillar 5 - Improving Public and Market Institutions)\. The project also responded to restructuring of local economies in Liaoning and Shandong and the shift beyond low-skilled, labor-intensive manufacturing to more capital- and skill-intensive growth\. At completion, the project's objectives continued to be relevant to high-level goals set out in both the countryâs 12th Five- Year Plan (2010â2015) and the World Bank Groupâs 2013â2016 CPS\. The objectives were also relevant with reference to the Governmentâs "Development of Modern Vocational Education Plan 2014â2020," and its "Medium- to Long-Term Education and Talent Development Plans for 2010â2020," that proposes increased access, increased quality, and improved relevance through stronger school-industry linkages, improved TVET curricula, and flexible transitions between secondary and vocational education\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) Rating Revised Rating High Not Rated/Not Applicable b\. Relevance of Design Project design was broadly robust and well thought through\. The Results Framework was well defined, with a clear objective and a logical flow between planned activities and intended outcomes\. The focus on just two components ensured manageability\. However, the lack of an overarching, single co-ordination mechanism resulted in what were, effectively, two separate projects in one bundle, which had implications during implementation in terms of coordinated progress and in terms of developing a critical mass of evidence to support ongoing policy development\. Rating Revised Rating Substantial Not Rated/Not Applicable 4\. Achievement of Objectives (Efficacy) PHEFFICACYTBL Objective 1 Objective To improve the quality and relevance of technical education in project schools in Liaoning and Shandong provinces\. Rationale For the purposes of this validation exercise, the PDO is divided in two parts\. The first part could notionally be further divided in two to deal separately with "quality" and "relevance"; however, the majority of relevant indicators are, in fact, pertinent to both\. Outputs: â¢ The percentage of instructors trained in industry attachments increased from 50% and 18% in Liaoning and Shandong respectively in 2010, to 71% and 80% in 2015, exceeding respective targets of 70% and 76%\. â¢ The percentage of industrial experts from the enterprises who taught in schools increased from 20% and 24% in Liaoning and Shandong respectively in 2010, to 60% and 55% in 2015, exceeding respective targets of 50% and 45%\. â¢ The number of new or enhanced internal school regulations and procedures increased from zero (0) in each of Liaoning and Shandong in 2010, to, respectively, 31 and 200 in 2015, exceeding a target of 12 for each province\. â¢ The number of new practices / school reform initiatives implemented increased from zero (0) in each of Liaoning and Shandong in 2010, to, respectively, 48 and 100 in 2015, exceeding a target of 36 in the case of each province\. â¢ The percentage of students in both Liaoning and Shandong enrolled in modular, competency-based training (CBT) increased from zero (0) in 2010 to 100% in each province in 2015, meeting targets\. â¢ The percentage of students in both Liaoning and Shandong assessed with outcomes-based student assessment systems increased from zero (0) in 2010 to 100% in each province in 2015, meeting targets\. â¢ The percentage of students in both Liaoning and Shandong utilizing upgraded instructional equipment aligned with new CPT curricula increased from zero (0) in 2010 to 100% in each province in 2015, meeting targets\. â¢ The percentage of instructors in both Liaoning and Shandong using new CBT curricula increased from zero (0) in 2010 to 100% in each province in 2015, meeting targets\. â¢ School management information systems in all 7 participating schools were improved, meeting targets\. â¢ The number of provincial capacity-building activities in Liaoning and Shandong increased from zero (0) in each province in 2010 to 8 in Liaoning Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) and 35 in Shandong in 2015, exceeding respective targets of 6 and 20\. â¢ The number of participants in provincial capacity building activity in Liaoning and Shandong increased from zero (0) in each province in 2010 to 180 participants in Liaoning and 130 in Shandong, exceeding a target of 100 participants for each province\. Outcomes: â¢ The percentage of graduates who passed skill certification exams increased from 90% in Liaoning and 93\.5% in Shandong in 2010, to, respectively, 96% and 98% in 2015, meeting targets in each instance\. â¢ The percentage of graduates who found initial employment within six months in the specialties in which they were trained increased from 72% in Liaoning and 73\.4% in Shandong in 2010, to, respectively, 91% and 98% in 2015, exceeding respective targets of 82% and 88\.2%\. â¢ Levels of trainee and employer satisfaction increased from, respectively, 3\.66 (trainee) and 4 (employer) in Liaoning and 4\.19 (trainee) and 3\.88 (employer) in Shandong in 2010, to 4\.53 (trainee) and 4\.47 (employer) in Liaoning in 2015, and 4\.38 (trainee) and 4\.66 (employer) in Shandong, 2015 (no target set)\. Rating High Revised Objective The objective and key associated outcome targets were not materially revised\. Revised Rationale The objective and key associated outcome targets were not materially revised\. Revised Rating Not Rated/Not Applicable PHEFFICACYTBL Objective 2 Objective To produce lessons from this experience as a guide for future school reforms and policy development\. Rationale This aspect of the overall objective refers to an output (lessons produced) rather than an outcome (that might, for example, have sought to trace the influence of lessons learned)\. It is also noted that no reference is made to the quality of the lessons that may be generated and, reflecting the parallel structure of the project across the two provinces, no reference is made to overarching lessons having produced reform or influenced policy\. In fact, by design, all measured activities and outputs are separately presented on a province-by-province basis\. In line with this limitation, the results framework presents related output indicators only (as below)\. That said, the TTL informed IEG that that learning from the project has been put to use in various forms, for example, to inform the ongoing expansion and development of TVET to other provinces, and to inform World Bank Group input to Education 2030 (Incheon Declaration and Framework for Action Towards inclusive and equitable quality education and lifelong learning for all)\. Outputs: â¢ Improved student tracer and beneficiary studies were implemented and analyzed in all seven participating schools\. â¢ Employer satisfaction surveys were implemented and analyzed in both Liaoning and Shandong\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) â¢ The number of knowledge products produced in Liaoning and Shandong increased from zero (0) in 2010 to, respectively, 80 and 160 in 2015, exceeding respective targets of 75 and 100\. Rating Substantial Revised Objective The objective and key associated outcome targets were not materially revised\. Revised Rationale The objective and key associated outcome targets were not materially revised\. Revised Rating Not Rated/Not Applicable 5\. Efficiency The PAD referred to a cost-benefit analysis undertaken to support investment in the project\. That analysis was largely focused on increased numbers of students registered with the participating schools, and the public-good element of anticipated lessons about the application of the competency-based approach\. Public investment was further justified on grounds of market failures and social equity, noting that private capacity is constrained by access to capital for underwriting the more costly investment in technology required for advanced skills training\. The analysis also stated that the project would improve social equity by investing in eight schools that enroll large numbers of the rural and urban poor, and would open pathways for young women to non-traditional employment in higher-paying occupations\. The PAD also specifically noted, although this was not expressed as a target, that the project would disproportionately benefit students from rural areas, who were to make up 105,000 of the projected 134,000 graduates, and would also benefit 20,000 students from households with low socio- economic status receiving urban basic living subsidies\. The ICR states it was not possible to recalculate an ex-post, cost-benefit analysis based on the assumptions set out during preparation, but rates efficiency as "Substantial" based on analysis of the extent to which assumptions made in the PAD materialized (with reference to numbers of graduates and available wages)\. Assessment of efficiency is also based on findings from evaluation reports, equity indicators, and efficiency in resource usage, including unit cost comparisons\. The ICR states that the analysis confirms a growth rate of graduation of CBT courses that is higher than original assumptions, higher wages for graduates of CBT courses over those taking non-CBT courses, increased participation of students from rural areas and with low socioeconomic status, and unit costs of construction, training, and publishing lower than comparable provincial averages\. There were minor shortcomings in efficiency of implementation involving initial delays, especially in Liaoning Province, with procurement arrangements\. These delays were associated with the need to clarify the respective relationships and roles of the Project Management Office (also represented by management consultants hired as intermediaries) and schools in managing procurement\. More generally, implementation units in project schools struggled with the World Bankâs procurement and financial management (FM) procedures, although this issue was ultimately addressed through the provision of training in procurement and FM\. Efficiency Rating Substantial Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) a\. If available, enter the Economic Rate of Return (ERR) and/or Financial Rate of Return (FRR) at appraisal and the re-estimated value at evaluation: Rate Available? Point value (%) Coverage/Scope (%) 100\.00 Appraisal ï¼ 7\.50 ï¨Not Applicable 0 ICR Estimate 0 ï¨Not Applicable Refers to percent of total project cost for which ERR/FRR was calculated\. 6\. Outcome The objectives were highly relevant to country conditions, Bank strategy, and government strategy\. Design was substantially relevant, with logical and plausible linkages between planned activities and intended outcomes\. The objective to improve the quality and relevance of technical education in project schools in Liaoning and Shandong provinces was highly achieved, with most output and outcome targets exceeded\. The objective to produce lessons from project experience as a guide for future school reforms and policy development was substantially achieved, with studies completed and lessons learned, but little evidence to date on actual application to school reform or new policy\. \.Efficiency was substantial\. Overall outcome is rated Satisfactory, which is indicative of only minor shortcomings in preparation and implementation\. a\. Outcome Rating Satisfactory 7\. Rationale for Risk to Development Outcome Rating The Government continues to demonstrate political and financial commitment in the area of TVET/CBT reflecting continued policy relevance as set out in the 12th five year plan, and the expansion of CBT-based projects to other provinces\. As such, risk to development outcome is negligible\. a\. Risk to Development Outcome Rating Negligible 8\. Assessment of Bank Performance a\. Quality-at-Entry Project preparation began in 2006\. The project was to be the first education project to include a project agreement directly with beneficiary provinces and to provide for fund transfers directly to participating schools\. Project design took into account earlier World Bank support for TVET in China (relevant projects closing in 1997, 2002, and 2006), taking on board specific lessons such as the value of quality labor market information in linking learners, providers, and employers\. In addition, the PAD lists a range of lessons learned from broader, international experience that informed project design, including, for example, the need for strong school/industry links, the importance of pathways to progression, and the broader promotion and support of lifelong learning\. In July 2006, the Chinese State Council approved proposals from three Provinces - Guangdong, Shandong, and Liaoning - each to borrow US$20 million (under a combined loan) from the World Bank for a TVET operation designed to support emerging skill needs in their more advanced economies\. The project overall was expected to serve as a pilot and to explore innovative approaches for reforming the TVET Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) system in China\. Initial proposals focused mainly on financing infrastructure activities and equipping model schools rather than reviewing curricula and improving school management, but the focus was gradually widened through workshops and exchanges with existing projects (e\.g\., the Australian-supported Chongqing TVET Project), particularly with reference to curriculum reform, the setting up of school-industry linkages, and advisory/coordination committees with industry participation\. The project was to be designed without a central government component, and without a central government coordinating agency, which was innovative and in line with new thinking on decentralized models of delivery in China\. However, the absence of a coordinating agency among the three provinces slowed preparation, despite supportive efforts (additional workshops and study tours) from the World Bank and other development partners\. In May 2008, as a result of uneven progress, the Government agreed to allow Guangdong to move ahead under a separate pilot project, which was ultimately approved with World Bank support on June 2, 2009\. To help progress the overall effort, the World Bank secured US$600,000 from the Korean Trust Fund, which was utilized, inter alia, to help focus efforts in Liaoning and Shandong, complete the selection of participating schools, and finalize proposals, including work with Liaoning Province to resolve institutional issues associated with the proposed governance structure for the project in that province\. Ultimately, the Results Framework for the Shandong and Liaoning TVET Project was succinct, with measureable indicators\. The second of three PDO indicators was formally amended in 2015 to reflect the dropout of one of eight participating schools\. The three PDO indicators were outcome focused (relating to completion, employment, and satisfaction outcomes), albeit focused on relatively simple and locally based outcomes\. There was no outcome indicator to measure the extent to which the experiment influenced policy and investment as a whole or relating to the quality of lessons learned and produced; measurement of that aspect of the PDO was located in an output indicator associated with the production and dissemination of knowledge products\. The ICR notes, given the long lead time, that some of the documentation (i\.e\., project manuals) could have been prepared in advance of approval, although it also notes that their preparation in the earliest stages of implementation helped develop buy-in for necessary policies and procedures\. Early investment in local capacity through technical assistance and the inclusion of strong risk mitigation provided a robust platform that managed, in the main, to counter implementation complexities (particularly in relation to Liaoning province)\. The PAD identified three main risks, including the possibility of overemphasis on upgrading technology and infrastructure at school level without due attention to CBT- based curriculum reforms, weak technical capacity at provincial and school levels to implement CBT-based curriculum and management, and weak institutional and technical capacity for project management and ability to provide coordination, especially in Liaoning province where the provincial management structure was complicated\. In mitigation, the provision of buildings and equipment was tied to CBT-based curriculum reforms, TA was front-loaded, funding for innovation and reform was ring-fenced, capacity-building inputs were provided for provincial Project Management Offices (PMOs) and school Project Implementation Units (PIUs), and Provincial Expert Teams were established to provide technical assistance and a Project Steering Committee (PSC) to provide coordination in both provinces\. Mechanisms were included to support successful implementation in the form of industry advisory committees, technical advisory committees, working groups of industry and school instructors, workshops, study tours, and the provision of technical assistance and training\. Each province had a coordinating office, and below that level, each sub-project (province) was further supported by an inter-bureau PSC to provide policy guidance and overall direction, a PMO to implement day-to-day project activities, coordinate with participating schools, and handle communication with the World Bank, and, at the level of each participating school, a PIU\. Although that design supported effective implementation within each province on a stand-alone basis, it was a minor shortcoming that project design (through political imperative) allowed for two very different types of implementing agencies with overall coordinating responsibility\. These agencies operated in parallel to each other in the respective provinces - the Shandong Education Bureau, and the Liaoning Urban Construction Office (this latter had financial management and procurement expertise but no background in education policy or practice) -- representing a level of complexity that would make overall coordination and aggregation of lessons challenging in certain respects\. Quality-at-Entry Rating Satisfactory b\. Quality of supervision There were nine formal World Bank implementation support missions from July 2011 to November 2015, including the Midterm Review (MTR) mission in March 2013\. The implementation team received significant input from a country office-based task team leader who had participated actively in project preparation\. The implementation team was particularly involved in addressing delays in implementation associated with the less orthodox, or less linear, project management arrangements in Liaoning province\. The Bank team worked with relevant stakeholders (the PMO and participating schools) to achieve compromise that allowed for progress\. In the case of Shandong province, slow early disbursement was addressed\. Prior to the MTR (March 2013), ongoing monitoring had, as relevant, rated implementation progress moderately unsatisfactory, but by the time of the MTR, implementation had improved and was judged moderately satisfactory, noting progress toward meeting outcome indicator targets\. In both provinces, infrastructure development was well under way, but the most serious common barrier was slow disbursement on school reform expenditures\. The MTR also identified a number of issues, including little exchange and sharing of experiences among the project schools, and potential bottlenecks to more effective and continued school-level reform (e\.g\., the fact that linkage between the new standards and programs being developed by schools and the national skills certification system that had not Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) yet been updated)\. These issues were progressively addressed post-MTR\. In addition, the MTR noted the need to amend the PDO to reflect the withdrawal of one school (because of a mandatory school site change); however, the formal restructuring request was forwarded to the World Bank only on September 15, 2014 (and was approved January 2015)\. The delay in submitting the formal request was associated with protracted discussions between the Liaoning PMO and the three remaining schools in the province regarding the re-distribution of resources previously earmarked for the school that had to leave the project\. Overall, the supervision and support provided was thorough, marked by strong commitment and continuity, and a strong results focus on the part of the implementation support team\. Quality of Supervision Rating Satisfactory Overall Bank Performance Rating Satisfactory 9\. Assessment of Borrower Performance a\. Government Performance The Government was highly committed to the project and has continued, through its broader support for TVET and the competency based approach, to be supportive of project outcomes\. The Government participated actively in early workshops, knowledge exchanges, and study tours\. The Government was committed to competency-based skills development as the preferred mode of instruction in TVET schools and was instrumental in emphasizing the desirability of scaling up this model to other provinces through a process of knowledge sharing and dissemination\. The project operated on a decentralized basis, again with Government support, including support in the face of issues that could jeopardize implementation (i\.e\., the Government worked with the World Bank in promoting a solution to institutional issues in Liaoning that surfaced during early implementation, detailed in Section 9b)\. Counterpart funds required for implementation were provided on a regular and timely basis\. The ICR notes that "throughout implementation, counterpart funding was assured, often in amounts above what had been envisaged" (p\. 9), which also suggests substantive commitment\. Government Performance Rating Satisfactory b\. Implementing Agency Performance Early difficulties arose in the project structure in the Liaoning province associated with challenges encountered by the PMO, which was familiar with World Bank FM and procurement procedures but less so with education policy and practice, in working with the PIUs in the project schools with respect to the contracting of support to those schools\. The PIUs felt that proposed consultancy involvement would duplicate the role, as they understood it, of the PMO\. However, indicative of the positive contribution of the Government and the World Bank, as well as the more general goodwill among stakeholders at various levels, this issue was satisfactorily resolved\. Implementation in Liaoning lagged that in Shandong for a while, but the province subsequently caught up\. Both PMOs assumed an increasingly proactive and supportive role in working with the PIUs located in participating schools, focused on the provision of technical support as required, facilitation of implementation, follow-up on the collection of monitoring data, and submission of project expenses\. Both PMOs maintained commitment to evaluation of results in project schools, including through beneficiary assessments\. The PMOs also played a key role in promoting the dissemination of project experiences and cross-fertilization of implementation lessons\. At the school level, the PIUs supported implementation and performed well despite initial unfamiliarity with World Bank procedures and frequent changes in staffing\. Procurement was consistently rated Satisfactory although, as noted above, difficulties in procurement management, particularly in Liaoning Province, caused initial delays\. Implementing Agency Performance Rating Moderately Satisfactory Overall Borrower Performance Rating Moderately Satisfactory Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) 10\. M&E Design, Implementation, & Utilization a\. M&E Design a\. M&E Design The PAD committed to three types of M&E activities: regular/routine monitoring to inform ongoing project management (the PAD also committed, to the extent possible, to the integration of project M&E into the existing data collection and utilization mechanism of participating schools), mid-term review to be led by the PMOs, and impact evaluation (to validate outcomes and identify lessons on types and modalities of interventions that work) at project conclusion\. The impact evaluation efforts, also coordinated and managed by the provincial PMOs, were to employ quantitative and qualitative methodological approaches to collecting and analyzing data, including student tracer studies, beneficiary (graduate) assessments, and employer surveys (baseline, midterm, and completion)\. M&E activities were embedded in the project's design under Subcomponent 2\.1 and formed part of an inclusive capacity building effort that sought to enhance planning and management at the school level\. The ICR notes that the design of the Results Framework was highly participatory, supported by World Bank M&E specialists\. Intermediate outcome indicators were linked, as appropriate, to project components and subcomponents, and baseline and target values were provided for all indicators\. As noted above, the indicator that was formally modified at the same time as the Level 1 modification to the project objective in the January 2015 restructuring was compatible, as defined, with the Governmentâs respective indicator, and was adjusted to reflect a subsequent change in the Governmentâs standard indicator\. b\. M&E Implementation At the outset, schools were slow to begin submitting data on school-level outputs and outcomes, and the PMOs were slow in consolidating the information according to the projectâs Results Framework\. The Bank team reinforced the importance of M&E in support of desired reforms\. Over time, M&E improved at the school (PIU) and PMO levels, although Shandong province demonstrated greater capacity in this regard than Liaoning given the more complex set of project management arrangements in the latter case\. However, the ICR notes that, by early 2014, both provinces were routinely submitting progress reports with updated output and outcome indicators, were adjusting annual plans on the basis of progress, and had contracted consultants to carry out evaluation\. Furthermore, all seven participating schools carried out an employer satisfaction survey and beneficiary survey; however, variations in methods, definitions, and baselines for survey data made consolidation of survey data difficult, possibly reflecting the absence of a single coordinating unit for the project as a whole\. c\. M&E Utilization Baseline data for both provincesâ evaluations was compiled in 2011, and each of the provinces completed their evaluations by December 2014 and updated the evaluations with data up to December 2015\. The World Bank mobilized funding to support evaluation and also provided active support to local researchers, applying lessons from the evaluation of the Guangdong TVET Project that had originally been linked to this project\. This adaptive learning approach ensured higher quality evaluations in Liaoning and Shandong than in Guangdong\. The experience also helped build local capacity in evaluation\. The ICR notes that the building of M&E and evaluation competence has led to changes at the school, provincial, and national levels, as evidenced, for example, by the institutionalization of school-industry cooperation, including standardized agreements, and the use of project school CBT textbooks by the provincial expert team to promote CBT development in other TVET schools\. M&E Quality Rating Substantial 11\. Other Issues a\. Safeguards The project was classified as Category C for its minimal adverse environmental impacts according to OP 4\.01 - Environmental Assessment\. It is worth noting that one of the schools constructed in Liaoning, the Liaoning Urban Construction School, is an ecological energy-saving, low carbon emissions building that has received awards at the provincial and municipal levels as a demonstration project, has received a âNational Construction Energy Saving Demonstration Programâ award, and has been awarded a national patent for its Composite Ground Cooling and Heating System\. Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) b\. Fiduciary Compliance A number of FM challenges were identified during implementation, including: initial delays in PMOsâ drafting of "Guidelines for School Reform Expenditures," and later confusion about the eligibility of recurrent expenditures for school reforms; non-submission of withdrawal applications from project schools to PMOs, and/or PMOs needing to return poorly completed submissions from project schools unfamiliar with disbursement requirements; initial delays in contracting management consultants to provide TA in support of, for example, FM to the Liaoning Province PMO; high FM staff turnover, especially at the individual school level; and delays in submission of the project restructuring (that involved additional funding for civil works in remaining project schools in Liaoning)\. All audits were carried out and delivered on time and contained unqualified opinions\. The World Bank carried out a detailed FM review and support mission as part of the MTR that identified the need to improve FM staff capacity, noting minor project accounting issues, although internal controls, funds flow arrangements, external audits, and random transaction reviews were judged to be sound\. The review recommended that the PMOs take responsibility to provide more FM training, support, and guidance\. A subsequent review found that the projectâs FM had improved, although minor shortcomings - loan disbursements continued to lag project implementation and contracting/payment - were evident\. c\. Unintended impacts (Positive or Negative) None reported\. d\. Other --- 12\. Ratings Reason for Ratings ICR IEG Disagreements/Comment Outcome Satisfactory Satisfactory --- Risk to Development Outcome Negligible Negligible --- Bank Performance Satisfactory Satisfactory --- Difficulties in procurement management, particularly in Borrower Performance Satisfactory Moderately Satisfactory Liaoning Province, caused initial delays\. Quality of ICR Substantial --- Note When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006\. The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate\. 13\. Lessons IEG concurs with lessons learned as set out in the ICR (p\. 25), many of which are tied to the specifics of the project type in question, such as: Independent Evaluation Group (IEG) Implementation Completion Report (ICR) Review CN-Tech Vocational Ed (P117107) â¢ The need to pay attention to scheduling of activities for curricular reforms to be successful; and, â¢ The potential desirability of a competitive bidding process for participation (by schools) in innovative initiatives to ensure local commitment and buy- in, and the benefits of delegating to allow for autonomy in effectively tailoring approaches\. IEG also concurs with lessons with broader reach such as: â¢ The benefits, in terms of coordination and efficiency, of working through a single coordinating agency (rather than multiple agencies)\. In this instance, the fact that each province operated to a different structure meant effectively meant the operation of two independent sub-projects, and this had implications that impacted timing and sequencing as well as learning and evaluation\.and, â¢ The assertion that demand-driven design of TVET programs can produce strong outcomes i\.e, where courses and programs are designed in response to identified student and local industry need\. In this instance, pre-project rates of graduation in both provinces were already high\. The key outcome associated with the introduction of a competency based approach calibrated to local need, was a significant increase in the rate of employment of graduates in jobs associated with their field of study\. This ensures greater rates of efficiency and sustainability in the longer term\. 14\. Assessment Recommended? No 15\. Comments on Quality of ICR The ICR is concise and well written\. It provides useful and informative coverage of the history and context for the project as well as sound analysis of project implementation and achievements\. However, while the ICR provides an easy-to-follow narrative of project implementation and activities undertaken in that regard, it does not provide particular insight into the extent to which lessons from the project acted, per the PDO, as a guide for future school reforms and policy development\. The ICR does not provide detail on actual, total project cost, with particular reference to actual Borrower contribution\. a\. Quality of ICR Rating Substantial	REVIEW
P045576	ï»¿ ICRR 10543 Report Number : ICRR10543 ICR Review Operations Evaluation Department 1\. Project Data : Date Posted : 04/24/2000 PROJ ID : P045576 OEDID:OEDID : Appraisal Actual Project Name : Second emergency US$M ) Project Costs (US$M) 20\.00 23\.49 rehabilitation project Country : West Bank & Gaza Loan/ US$M ) Loan /Credit (US$M) 20\.00 20\.00 Sector, Major Sect \.: Other Non-sector US$M) Cofinancing (US$M ) 0 3\.49 Specific, Multisector L/C Number : FY ) Board Approval (FY) 97 Partners involved : Closing Date 12/31/1997 06/30/1999 Prepared by : Reviewed by : Group Manager : Group : Antti P\. Talvitie John Johnson Gregory K\. Ingram OEDST 2\. Project Objectives and Components a\. Objectives This emergency project had the same objective as its predecessor project : to help alleviate the current crisis by delivering widespread and tangible benefits to broad sectors of the Palestinian population as quickly, equitably and effectively as possible \. It planned to do this by: (i) removing the most critical infrastructural bottlenecks; (ii) improving essential facilities and services; (iii) creating productive employment; (iv) building capacity; and (v) providing institutional support in the area of project and program management \. b\. Components The project included civil works (90% of cost, a total of 68 projects); goods (1%); consultant services (5%); and payments for operating expenses (4%) with the specific targets to create 77,000 person days of employment in the first 3-4 months, and 225 person days of employment in the first 10 months, with the proviso that 60% of the jobs would be in Gaza\. c\. Comments on Project Cost, Financing and Dates The appraised project costs were US$ 20\.0 million, contributed by the Bank's credit trust fund \. During implementation, a cofinancier contributed US$ 3\.5 million\. All monies were disbursed\. The project closed a year and a half later than planned, in part because of the cofinancing that became available in July 1997 (the original closing date was December 1997)\. There also were changes in the operating environment \. The border closures that created the original urgency for the project abated \. This development relieved pressure on employment creation, but continued to hinder the flow of construction materials to West Bank & Gaza \. In sum, most of the project (80%) was disbursed by the original closing date, and the extension covered difficult components created either by internal or external circumstances\. There was no ERR calculated for this emergency project \. 3\. Achievement of Relevant Objectives : The project essentially achieved its objectives \. It removed infrastructure bottlenecks and provided essential facilities and services\. The specific employment targets were not met, however \. The project created less than half of the target person days of employment \. This was due in part to the changing implementation environment, the learning curve in the labor-intensive mode of project work, and the impact of other World Bank and donor projects directed toward the same objective\. There were no specific institutional development activities, but the undertaking of projects enhanced project and program management capacity and, importantly, provided a learning ground for small-scale private contractors \. 4\. Significant Outcomes /Impacts : The most significant result was the implementation of numerous infrastructure projects in communities that had not received any investment for years \. The response to the small-scale, labor-intensive projects was enthusiastic and prompted voluntary contributions in money and kind to either expand or improve the service of the project \. There were unanticipated positive benefits to women and children in terms of better access to health care and educational facilities for children, especially for girls \. 5\. Significant Shortcomings (including non -compliance with safeguard policies ): A significant shortcoming in the project was its inability to resolve the access -issue in the Jabalia water project \. This cofinaned project, is experiencing problems because the beneficiaries do not make household connections although the water network has been successfully completed \. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Satisfactory Satisfactory Institutional Dev \.: Partial Modest Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf \.: Satisfactory Satisfactory Quality of ICR : Satisfactory 7\. Lessons of Broad Applicability : There are two broad lessons \. First, emergency assistance projects require good judgments and flexibility of response to quickly changing circumstances, including cases where prior information proves flawed or simply does not exist\. This means that project staff, in the Bank and on the ground, must be able to monitor the projects in order to learn quickly to modify behavior appropriately \. Second, good dialogue with the borrower, its organizations, and, especially, with the direct beneficiaries throughout the project, makes crucial contributions to project success \. 8\. Audit Recommended? Yes No Why? There is a general need to audit the Bank's emergency projects \. 9\. Comments on Quality of ICR : This was an intensive learning ICR \. It is of acceptable quality\. Many interesting issues and ideas are covered \. However, in the absence of a beneficiary and stakeholder survey, and in the absence of direct evaluation of the stakeholder concerns as expressed in the stakeholder meeting, it is not clear if all the relevant issues are addressed \. There is a need to benchmark the IL -ICRs\. The video prepared as part of this IL -ICR was not available for review\. The 'lessons learned' section in this IL -ICR is thin\. They are neither deeper, nor explained and substantiated any more than would be the case in a traditional ICR \.	REVIEW
P008287	ï»¿ ICRR 11775 Report Number : ICRR11775 ICR Review Operations Evaluation Department 1\. Project Data: Date Posted : 06/14/2004 PROJ ID : P008287 Appraisal Actual Project Name : Gas Rehab Project Costs 24\.6 18\.5 US$M ) (US$M) Country : Azerbaijan Loan /Credit (US$M) Loan/ US$M ) 20\.2 17\.2 Sector (s): Board: EMT - Oil and gas Cofinancing (100%) US$M ) (US$M) L/C Number : C2923; CP986 Board Approval 97 FY ) (FY) Partners involved : Closing Date 06/30/2001 06/30/2003 Prepared by : Reviewed by : Group Manager : Group : Kavita Mathur Fernando Manibog Alain A\. Barbu OEDST 2\. Project Objectives and Components a\. Objectives The objectives of the project were to: (a) promote more efficient use of gas and reduce non-technical losses by replacing obsolete and inaccurate metering, improving measurement instrumentation, installing meters where none presently exist, and establishing associated meter testing facilities; (b) improve the physical accounting for gas and encourage an improved commercial basis for gas trading through the upgrading of metering and instrumentation; (c) ensure the efficient operation and preserve the value of existing pipeline assets through investments in cathodic protection, gas analysis and leak detection equipment; and (d) support the commercialization of Azerigaz and further development of the sector through technical assistance, training programs and the acquisition of modern office equipment\. b\. Components The project included the following components: metering (appraisal US$ 11\.0 million, actual US$ 9\.7 million) cathodic protection (CP) system rehabilitation (appraisal US$ 4\.8 million, actual US$ 5\.1 million) analytical equipment (appraisal US$ 1\.4 million, actual US$ 1\.1 million) corporatization support (appraisal US$ 2\.4 million, actual US$ 2\.6 million) c\. Comments on Project Cost, Financing and Dates The total actual cost of the project is US$ 18\.5 million compared to appraisal estimate of US$ 24\.6 million\. At project closing, US$ 17\.2 million was disbursed and US$ 1\.9 million was cancelled\. The project closed on June 30, 2003, two years after the original closing date\. 3\. Achievement of Relevant Objectives: The objective of promoting a more efficient use of gas and reducing non-technical losses was partially achieved\. Azerigaz installed new meters for all of its large and medium sized customers and meter stations were rehabilitated to promote efficient use of gas\. The government, however, failed to support payment discipline\. For the household and small customers, 55,000 meters were procured but only 6,216 meters were installed\. Metering network is not yet complete and many households are still being billed on the basis of consumption estimates\. Azerigaz technical losses were halved from an estimated 15% at inception to 7% at the end of the project\. However, this reduction was only partly due to the project\. The ban on gas imports was partly responsible for reduction in rate of leakage as this resulted in lowering the pressure in the pipeline network\. The objective improving the physical accounting for gas was largely achieved (see the first bullet above)\. The objective of ensuring the efficient operation and preserving the value of existing pipeline assets was achieved\. The project resulted in the installation of 223 cathodic protection stations and 33 drainage stations\. A new gas laboratory of international standards was constructed to verify gas quality and heat content of the gas supply from State Oil Company of Azerbaijan (SOCAR)\. To detect leaks, the Azerigaz staff is regularly using the leak detection equipment\. A large range of leak detectors was purchased including hand-held gas detectors, portable gas detectors, calibration unit for detectors, and two vehicles suitable for high-speed searches for leaks\. The objective of improving the commercial focus of Azerigaz was not achieved\. 4\. Significant Outcomes/Impacts: The capacity to produce more accurate calibration efficiently has been enhanced\. Two fully automatic meter testing stations were procured under the project and are operational\. The speed of meter installation has been increased\. With the purchase of three mobile workshops to install new meters and rehabilitate old ones, meters can be installed within 2 to 3 hours compared to one day\. Furthermore, calibration of meters can now be done in one hour compared to 2-3 days\. Public safety has been improved through reduced risk of explosion due to undetected leaks\. 5\. Significant Shortcomings (including non-compliance with safeguard policies): Quality at entry is poor\. The Bank made an incorrect assumption that the project would provide sufficient leverage to carry out the gas sector reforms\. The project did not comply with financial covenants dealing with improved collection rates and achieving minimum rates of return\. Training of Azerigaz staff in planning, budgeting, finance accounting and marketing was not implemented\. The government lacked commitment to support payment discipline and rationalize the tariff structure\. The computer software and hardware for network modeling was not acquired\. 6\. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Unsatisfactory Moderately [the ICR's 4-point scale does not provide for a Unsatisfactory "moderately unsat\." rating]\. OED's rating is based on the partial or full achievement of some of the project's physical objectives\. The project's objective of improving the commercial focus of Azerigaz was not achieved\. Institutional Dev \.: Modest Modest Sustainability : Likely Likely Bank Performance : Unsatisfactory Unsatisfactory Borrower Perf \.: Unsatisfactory Unsatisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13\.55, but are listed for completeness\. 7\. Lessons of Broad Applicability: The key lesson that emerges from the project is that the investment credit instrument by itself does not provide sufficient leverage to bring about difficult restructuring and pricing reform\. The conditionalities attached to the ongoing adjustment credit (SAC II) were more effective in tackling some of the sector issues\. 8\. Assessment Recommended? Yes No 9\. Comments on Quality of ICR: The overall quality of the ICR is satisfactory\. However, there are three shortcomings: (i) the ICR does not discuss the reasons for the extension of the projectâs closing date by two years, (ii) the ICR does not explain the lower total project costs, and (iii) the section on the lessons learned is parsimonious, and should have included one that is more substantively related to the Bank's reform dialogue with the Government\.	REVIEW